Good day and thank you for standing by. Welcome to the Alpine Q2 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 11 on your telephone. You will then hear an automated message advising you your hand is raised. 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 speaker today,

Jenna McKinney. Please go ahead. Thank you. Joining me and participating on the call this morning are John Albright, President and CEO, Phillip Mays, COO, and other members of the executive team that will be available to answer questions during the call. As a reminder, many of our comments today are considered forward-looking statements under federal security laws. The company's actual future results may differ significantly from the matters discussed in 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 presentations which contain reconciliations of the non-GAAP financial measures we use on our website at www.alpinereat.com. With that I will turn the call over to John. Thank you Jen and good morning

everyone. We are pleased to report FFO for shared growth of 2.3 percent in the quarter and 4.8 percent year-to-date compared to the same period last year. Discerning for us was driven by our investment activity over the last year. We remain focused on our barbell investment strategy carrying higher yielding acquisitions supported by quality tenants and solid real estate fundamentals which select investment grade tenants to maintain a diversified and balanced portfolio that delivers favorable risk adjusted returns maintaining discipline and adhering to our underwriting criteria we did not complete any additional property acquisitions this quarter following a busy first quarter in which we closed 39.7 million dollars of property acquisitions at a weighted average initial yield of 8.6 percent however we are actively pursuing multiple interesting investment opportunities and anticipate some closing in the second half of the year turning to property dispositions during the quarter we sold five net lease properties for 16.5 million dollars and weighted average exit cap of 7.9 percent these cells included two Walgreens, a Dollar Tree, Verizon, and Old Time Pottery. We have now reduced our Walgreens exposure over the past year by 500 basis points to 7% of ADR and have moved it from our largest tenant concentration a year ago to currently our fifth largest. Further, we continue to make progress on our recently vacated properties. The Theater of Reno is under contract to be sold and we are actively negotiating the potential sale of our Long Island property previously leased by-party city on a commercial loan front this order we provided seller financing in conjunction with our old-time potter disposition and originated one first mortgage loan combined these loans settled six point six million dollars and were fully funded at closing with a weighted average initial yield of nine point eight percent this brings our year-to-date loan closings to forty six point two million with a weighted average initial yield of nine point one percent. The ability to originate select commercial loans is another tool and are disposable to further diversify our income streams and deploy capital attractive returns. Further, the linear relationships we have cultivated are generating some unique loan investment opportunities. We are actively underwriting several high-yielding loans backed by high-quality sponsors with strong credit metrics and real estate fundamentals and expect one or two of these transactions to close in the back half of a year moving to our property portfolio as of the quarter and our portfolio consists of 129 properties telling 3.9 million square feet across 34 states it was ninety eight point two percent occupied our top two tenants are investment grade day supporting goods and loads that together represent 20% of the portfolio AVR more broadly 51% of our portfolio AVR is derived from investment grade rated tenants. Notably, our weighted average remaining lease term now stands at 8.9 years, up from 6.6 years just a year ago. Lastly, a couple of specific tenant updates. Bass Pro Shops completed its full renovation of approximately 66,000 square foot building located on nine acres in Minnesota. This property formerly leased to Camping World was assigned to Bass Pro Shops and we amended the lease to a new 20-year initial lease term which commits upon their opening in mid-bay. Additionally at home filed for bankruptcy in June however both of our properties leased at home paid rent in July and neither were on the initial closure list. With that

I'll turn the call over to Phil. Thanks John. Beginning with financial results. Before the quarter, total revenue was $14.9 million, including lease income and interest income from commercial loans of $2.7 million. FFO and both 44 cents per diluted share, representing 2.3 percent growth over the comparable quarter of the prior year. Year-to-date, total revenue was $29.1 million, including lease income of $23.8 million and interest income from commercial loans of $5 million dollars. FFO and FFO year-to-date were both 88 cents per share, representing 4.8% and 3.5% growth respectively over the comparable periods of the prior year. Consistent with the prior quarter, given the relative attractive valuation of Pines common shares, we continue to opportunistically repurchase shares. During this quarter, we repurchased approximately 273,000 common shares for 4.3 million dollars at an average price of $15.81 per share. And year to date, we have now repurchased approximately 546,000 shares for $8.28 million at an average price of $15.07 per share. With regards to our common dividend, as previously announced, during the first quarter, we increased our quarterly cash dividend to $0.285 per share and maintained that rate in the second quarter, providing a current attractive dividend yield close to 8%. Even with this increase, our dividend remains well covered. Moving to the balance sheet, we ended the quarter with NetSense Proforma adjusted EBITDA at 8.1 times and $57 million of liquidity consisting of approximately $9 million of $80 million of LARGEST vacant properties. If the eight are located in giving the interesting investment opportunities we are seeing, we have determined it's more likely and redeployed approaching. We ended the quarter, this includes approximately $3.8 million of straight line rent related to three single tenant part in 2024 to sell laid-back transactions under gas fee we are currently renting six million dollars of gas interest income as opposed to 3.8 million dollars of straight line rent income from these properties we are referring to 1.74 cents to 1.77 cents per deluded share for the full year of 2025. the assumptions underlying our guidance remain largely unchanged except for investment volume, which we are increasing by $30 million to a few days after development in Charlotte, North Carolina, with an outstanding balance of $25.5 million and a yield of 9.5%. Our interest income from commercial loans will decrease until the withdrawal of an existing loan. With that operator, please open the call to questions.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. One moment while we compile our Q&A roster. Our first question is going to come from the line of Matthew Edner with Jones Trading. Your line is open. Please go ahead.

Hey, good morning, guys. Thanks for taking the question. With the given increase to the investment guidance and the opportunities that you guys kind of mentioned within the loan book, Like, you know, how should we kind of look at, you know, investments for the remainder of the years? It's still kind of along those 50-50 lines between properties and loans. You know, any help there would be great.

Hi, John. Sorry, I'm at a loud airport, but I'll take the first part there. You know, we're seeing right now pretty active on the both acquisition front and loan front, but I would say that more the structured loan investment activity seems to be closer to happening than the acquisitions. So, you know, we're hopeful that in the next 60 days we're going to have some activity here on the structured loan investments that we're very excited about. On the acquisition side, we're pursuing things, but it's pretty competitive, as you know, and so less sure about the timing of those investments.

got it that's helpful there and then as a follow-up to that you know with these loans as they kind of come in and pay off I know that you don't have any maturities for the remainder of the year you know but if you were to experience any early payoffs should we expect it those are going to go towards paying down the credit facility rather than you know reinvestment yeah I mean

just like Phil had mentioned as far as on the public loan and in Charlotte you You know, that basically paid off and went to pay down the facility. We're, you know, working really hard to sell the party city and the theater in Reno. And, of course, that would go to pay down the facility as well. But as we see these structured finance investments, we'll make those. And if we need to, we'll either sell off something or sell an asset and just keep the leverage reasonable.

got it thank you guys I appreciate it thank you one moment as we move on to our next question our next question is going to come from the line of RJ Milligan with Raymond James your line is open please go ahead

hey good morning guys two questions for Phil just curious with the payoff the

public's payoff in July what what should be the what's going to be the quarterly the AFFO impact on that?

Yeah, RJ, so it was $25.5 million. It was yielding 9.5%. It'll go to pay down the line, the variable portion of the line, which is around six. So it's around a 300 basis point, a little more spread. Impact, a couple hundred grand a quarter, just a kind of full penny, a little bit more than a full penny.

Okay, and then, Phil, a second question is just in terms of we've seen

quite a few other REITs to go out and issue debt or get term loans, and I'm curious where you think the market is today for Pine

in terms of doing a term loan.

Yeah, so Pine, we're going to do a five-year term loan now with the banks and swap it with the around five.

Okay, I think that's it for me, guys. Thanks.

Thank you, and one moment for our next question. Our next question is going to come from the line of Michael Goldsmith with UBS. Your line is open. Please go ahead.

Good morning. Thanks a lot for taking my questions. Just first on Walgreens, you continue to pare down your exposure there. So can you just talk a little bit about what the market is like for Walgreens as well as at home? You know, who are the potential buyers? What sort of cap rates are we looking at there? and just the overall level of interest in boxes from those two tenants.

Thanks, Michael. Yeah, so in general, you know, the market is fairly active. So as we see, you know, reasonable pricing, we'll keep moving through the Walgreens, and we're actually, you know, working on a couple more sales. But, you know, the pricing just obviously depends on location, of course, and your lease term. But, you know, the cap rates can be anywhere from, you know, high sevens to, you know, early 10s or 11s, just depending on, again, location and quality. And, you know, we're seeing, you know, basically people that, you know, a lot of high net worth people buying Walgreens are saying, okay, I'm going to take the rest of the term and get good yield. and then it's a great location or a good location, and I know another tenant's going to want it because these are corners and drive-throughs, so they're not really worried about knowing exactly who's going to backfill it, just knowing that on a macro sense it's a good investment. So a fairly active market on the Walgreens side. Like at-homes, you're seeing users that want to get these big box positions, And as you know, most of the at-homes are low rent payers. So, you know, a lot of these are in the money as far as market rates versus what at-home's paying. And so it's really, you know, as big boxes become less available, there's, you know, there's a fair amount of people, you know, again, if it's a good location, good market, that, you know, people are interested in taking those down and either redeveloping them or their users that will take the box are split up. I hope that's helpful.

No, John, that was particularly helpful. Thanks for that. And just as a follow-up, right, like you got the loan repaid. You know, it was a bit of a slower, you know, deployment of capital quarter after a busy first quarter. And so just, and then you were also a share repurchaser. So just as you think about, you know, how you want to allocate your capital going forward, it sounds like the pipeline is building and the acquisitions will be and loans will be a focus going forward. Can you talk about just the balance between all the different options as well as, you know, reducing leverage and just how you're thinking through all of that?

Yeah, sure. You know, look, we are seeing more opportunities, very interesting opportunities, good sponsors. And unfortunately, the deals are taking a little bit longer, so we didn't get one in the quarter. One we were very hopeful to get in the quarter, but they're actually, you know, discussing with the tenant about expanding. And it's going to take a little while for them to go through a real estate committee and all that kind of stuff. So unfortunately, that didn't happen in the quarter, but hopefully this quarter will. But, you know, and we'll keep on selling through some of the credits that we don't like going forward. And, you know, maybe a little bit, you know, of, you know, selling assets and paying down debt, which as, you know, Phil mentioned on the loan repayment, you know, there's obviously a little bit of hit to earnings. But, you know, given that, you know, we're such a low multiple stock, we're not, you know, worried about kind of managing that. We just want to do the right thing, and we are very optimistic about, you know, the acquisitions and loan investments in front of us, which we think will be very accretive to the company and, you know, will be eventually reflected in the stock price, we hope. But, you know, I think we'll be fairly active this quarter, so we're pretty excited by the opportunities that we see.

Thanks for that, John. Good luck in the back half and safe travels.

Thanks. Appreciate it.

Thank you. And one moment for our next question. And our next question is going to come from the line of Westlake Holliday with Baird. Your line is open. Please go ahead.

Hey, good morning, guys. Can we look at the at-homes, the ones that you have currently operating? Would those be better productivity sites for them? Do you have any insight into that?

Yeah, so they are. So we don't expect them to reject these whatsoever. um uh they're you know they're have good operations uh so you know good good locations so uh don't don't see uh that and actually we have uh you know people that are more interested in them being gone than being there so um you know so we'll monitor it but uh so far so good

okay and then how does the watch list look going forward after at home uh after at home i mean

it's not you know we've been as you know very proactive in the last couple years of of pruning through um you know different credits and you know it's just really not not very deep uh you know we've kind of taken taken the hits so you know where you know it's happened so we're you know there's not really anything that kind of keeps us up at night if you will okay and then

you mentioned though looking to sell the two vacant assets would those both be in the held for sale bucket, and any insight into how much, I guess, probably have a little bit of negative NOI from those assets, what would the drag be? Sure. I'll let Phil talk about the accounting of

that. Yeah. So, neither of them are classified as held for sale. I was just on the call, kind of giving you a heads up that we're kind of more likely, I think, at this point to just avoid the carry cost and move on with the interesting investment opportunities we're seen um big negative drive on those um you know it's just kind of the i mean you got real estate

taxes insurers problem so it's not it's not huge but it's definitely not fun so once once those are sold you know and you're paying down your your leverage it's quickly accretive yeah okay thanks

guys thank you and one moment as we move on to our next question and our next question is going to come from the line, Agurav Mehta with Alliance Global Partners. Your line is open. Please go

ahead. Thank you. Good morning. I wanted to go back to the acquisition market and wanted to get some more color on what kind of properties you're targeting. Are you looking for investment grade properties that longer lease terms or are you kind of open to what you're

seeing in the market? Yeah, I mean, we're definitely doing the barbell approach, as we mentioned in the call that, you know, we're looking for investment grade, longer duration leases, or at least good locations where we think we can do an extended and blend after acquiring a property. And then in, you know, basically coupling that with the kind of higher return yielding, you know, sort of investment. So we're pursuing on both sides. And, you know, we feel like uh we'll we'll get something done here for sure this quarter uh but yeah that's that in general is like we're going for a higher quality on the on the acquisition side to couple that with

the loan investment side okay and then uh second question on the balance sheet your leverage was 8.1 times uh as of 2q can you provide some more color on how you think about the leverage and

where you guys are targeting that number yeah i mean uh as we're you know selling assets that will come down and it would have come down in the quarter if the loan payoff happened in the quarter, but it happened a day after. So, you know, we can easily manage that on the leverage side and obviously buying back stock accretively on earnings and accretively on NAV, you know, drives up the leverage a little bit, but it's the right thing to do. And we have, you know, nice free cash flow. So we use that to keep leverage in check as well. But, you know, looking for the opportunities to make investments you know that would basically take up the leverage a little bit but then quickly sell through the Walgreens to bring it back down so you know just appropriately managing the

balance sheet okay and then maybe last year on the Walgreens you know you obviously brought down the next four year so where do you think that that target number is for you guys as far as you know how much AB are you getting

from Walgreens and Phil at the end of the quarter on Walgreens it's down to about seven I think it's actually just a little under like six six six point six six point seven percent of AVR is where it currently stands target I think we'd like to get it down below five percent okay thank you that's all I had great

Thank you. One moment as we move on to our next question. And our next question is going to come from the line of Craig Kucera with Lucid Capital Markets. Your line is open. Please go ahead.

Yeah, thanks. Good morning, guys. John, I think earlier this year you were seeing some compression on structured financial yields versus last year. Is that still the situation today?

The most interesting thing, you would think that the banks would be back at it and it would be competitive. But all of a sudden, you know, talking to very high quality sponsors with very high quality projects are said that the banks are shrinking again, at least for the activities that these folks are taking on. And so we're seeing, you know, yields being as good or even maybe better on some certain situations. So luckily, we're back to a target rich environment.

got it that that makes sense um and phil i just want to go back to the guidance particularly as relates to the investment guidance increasing 30 million is that basically just saying hey we got back you know 27 28 million dollars and we're going to redeploy that or are we have you are you lifting like the total amount or the net amount by 30 million versus the prior guide

yeah so we did get the 25 million back and i think just with the interesting opportunities percent in particular on the loan side, we think later in the year, you know, we can get that redeployed. So that was kind of the real reason for the checkup. Okay, just wanted to double

check there. And just one more for me, you've got the Bass Pro Shops lease taking occupancy here in the third quarter. Was there any lift in that lease or any change? Yeah, there was. The rent

rolled up about $40,000, $50,000 a quarter or a month, and almost half a million a year. Okay. And additionally, the lease term that was remaining prior to that assignment was less than 10 years, and now it's 20 years.

Got it.

Thank you. And one moment for our next question. Our next question is going to come from the line of John Masilka with the Riley Securities. Your line is open. Please go ahead.

Morning, everyone. So, I'll be looking at the loan portfolio again. I know it wasn't a particularly early prepayment, but do any of the other loans have kind of early repayment options? Could that be kind of a significant thing here if interest rates were to decline, call it in the next six to 12 months?

Yeah, you're not going to see as much early repayments because, you know, it's really inefficient for the sponsors. You know, our loans are fairly short duration anyway. They're not going to go do a refi to save, you know, 200, 300 BIPs and spread. It's really they're looking to sell these assets primarily. So if insure rates drop, I wouldn't expect any sort of, like, you know, mass payoff, early payoffs.

Okay, that's understandable. And then as you think about the timing of investments, you know, given the increase to the investment volume guidance, should we expect maybe the delta between what's kind of currently in guidance and what was in guidance, you know, the time of 1Q earnings to close really late in the year. I'm just trying to kind of, you know, circle the square, if you will, of the increase in investment volume guidance and the fact that kind of AFO guidance stayed flat.

Yeah, I would say that. Go ahead, Phil. No, I would say, yeah,

we would expect that to kind of get deployed later in the year.

Is there anything, you know, I think about guidance in 2Q versus 1Q, anything baked in there in terms of maybe additional conservatism around at home? Obviously, I know the two assets you have are thus far retained, but are you kind of factoring in something, you know, as this kind of bankruptcy process is ongoing that, you know, obviously, you're probably going to get paid here for the next couple months, but that could change, you know, in the back half of the year?

You know, both of the at-homes, we're on the list for closure, both of them paid July rent, and we generally expect to collect rent for the, you know, remainder of the year. So, there's nothing specific in there, but I mean, it is one of the reasons, I think, you have a range, because, you know, unexpected things can happen, but at this point in time, we fully expect to get paid on our at-homes.

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

Thank you. And one moment for our next question. And our next question comes from the line of Rob Stevenson with Janie Montgomery Scott. Your line

is open. Please go ahead. Phil, the $50 to $70 million disposition guidance, that's just properties. That doesn't include loan repayments, does it? That's correct. That's just property on the disposition side. Okay. Then, John, given your comments about the difficult acquisition environment these days, you know, you increased the investment guidance but left the dispositions the same. Why not look to sell more assets, especially with the stock trading at roughly an implied 10 cap rate, and use those proceeds to both lower debt and buyback stock?

I think that certainly could be a possibility, but we are seeing good investments that are accretive to the company rather than shrinking the company. I think we're seeing some really good investment opportunities which will make the enterprise worth more. So you won't see us rapidly selling just to buy back stock. As we're selling assets, we're being patient about it and not some sort of fire sale. So it's a little bit just kind of taking our time with it unless we see a big acquisition happen and we really want to speed it up, which we would do that.

Okay. And then, Phil, other than the – I think you said it was a penny drag between the yield on the public's loan versus the repayment of debt associated with that. Anything other than that that's a headwind in the back half of this year earnings-wise as we think about the quarterly progression and the investments being back half-stacked?

No, nothing overly specific. The repayment alone will be the only really identified.

All right. Have a good weekend. Thanks.

This concludes today's question and answer session. This also concludes today's conference call. Thank you for participating, and you may now just connect. Everyone, have a great day.