Good day and thank you for standing by. Welcome to the Alpine Income Property Trust Q3 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 the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised today's conference is being recorded. I would like to hand the conference over to your speaker today. Jenna

McKinney, please go ahead. 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 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 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 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. With that, I will turn the

the call over to John. Thank you, Jenna, and good morning, everyone. We are pleased to report another strong quarter highlighted by AFFO per share growth of 4.5 percent compared to the same quarter last year and meaningful investment activity both during and shortly after the quarter end. We believe this investment activity has set a foundation for continued earnings growth through the remainder of 2025 and into 2026. Starting with our investment activity, during the quarter required two properties ground leased to Lowe's for $21.1 million at a weighted average initial cap rate of 6% and a weighted average lease term, or WALT, of 11.6 years. Investment-grade rated Lowe's is now our largest tenant by AVR, surpassing investment-grade rated Dick's Sporting Goods, which now ranks number two. Year-to-date through the third quarter, property acquisition volume totaled $60.8 million at a weighted average initial cap rate of 7.7% in a walt of 13.6 years. Regarding the property dispositions during the quarter, we sold three assets for $6.2 million, including in advanced auto parts, our vacant theater in Reno, and a vacant property formerly leased to a convenience store. Year-to-date disposition volume through September 30th was $34.3 million, of which $29 million, excluding vacant properties was sold at a weighted average exit cap rate of 8.4 percent as of quarter end our property portfolio consisted of 128 properties telling 4.1 million square feet across 34 states with approximately 99.4 percent occupied with 48 percent of ABR derived from investment grade rated tenants in a walt of 8.7 years additionally after the quarter end we we acquired a four-property portfolio for $3.8 million with a weighted average initial cap rate of 8.4% and went non-refundable on a sales contract of one of our eight remaining Walgreens for $5.5 million. Now moving to our loan investments. As a result of our long-term reputation and deep relationships, we continue to see and capitalize on exciting opportunities to originate high-yielding quality loans with strong sponsors at compelling risk-adjusted returns. During the quarter, we originated two loans and one upsized loan totaling $28.6 million at a weighted average initial yield of 10.6%. This included a first mortgage loan for industrial redevelopment and a seller financing note related to the sale of our former theater in Reno. Year-to-date through September 30th, we originated $74.8 million of commitments for loan investments and a weighted average initial cash yield of 9.9%. Additionally, as disclosed in our earnings release, we have originated three loans since the quarter end, most notably a first mortgage loan secured by a luxury residential development located in Austin, Texas, metropolitan area. Under this loan agreement, we have funded $14.1 million at closing related to a Phase I loan with a total commitment of $29.5 million. The loan agreement also provides for a Phase 2 loan with a commitment of up to $31.8 million. All additional funding is subject to the borrower satisfaction of certain conditions. Currently, we anticipate funding the balance of the Phase 1 loan by year-end and the Phase 2 loan in early 2026. The 36-month loan initially bears interest at 17%, inclusive of a 4% paid-in-kind interest for the full loan term, stepping down to 16% for months 7 to 12 and 14% thereafter. The loan will be repaid as collateralized home lots are sold, with such sales anticipated to begin as early as late 2025. We believe this loan, as all of our loans, is secured by strong real estate backed by high-quality sponsor. As is often the case with our larger loans, there is institutional interest in pursuing a purchase of a senior tranche of this loan, and we currently anticipate participating in a portion of it out to reduce our net hold and further enhance our yield. In summary, we believe that our recent investment activity across both property and loan investment positions pine for continued growth through the remainder of 2025 and into 2026. With that, I'll turn the call over to Phil.

Thanks, John. Beginning with financial results. For the third quarter, total revenue was $14.6 million, including lease income of $12.1 million and interest income from loan investments of $2.3 million. FFO and AFFO for the quarter were both $0.46 per diluted share, representing 2.2% and 4.5% growth respectively over the comparable quarter of the prior year. Year-to-date through September 30th, total revenue was $43.6 million, including lease income of $36 million and interest income from loan investments of $7.4 million. FFO and AFFO were both $1.34 per share, representing 3.9% and 3.1% growth, respectively, over the comparable period of the prior year. Regarding our common dividend, as previously announced, during the quarter we declared and paid a quarterly cash dividend of 28.5 cents. Our dividend represents an annualized yield of approximately 8.25% and remains well covered with an approximate AFFO payout ratio of 62% for the third quarter. According to the balance sheet, we ended the quarter with net debt to pro forma adjusted evita at 7.7 times and $61 million of liquidity consisting of approximately $1.2 million of cash available for use and $60.2 million available under our revolving credit facility. However, with in-place bank commitments, the available capacity on our revolving credit facility can expand an additional $31.3 million as we acquire properties providing total potential liquidity of more than $90 million. Regarding our property portfolio, we ended the quarter with annualized base rent of $46.3 million on a straight-line basis. As noted before, this amount includes approximately $3.8 million of ABR related to three single-tenant restaurant properties acquired in 2024 through a sales leaseback transaction. Under GAP, we are accounting for these specific sales leaseback transactions as financings. Accordingly, their current annual cash payments of approximately $2.9 million are reflected as interest income in our statement of operations as opposed to lease income. Given the level of loan activity after quarter end, let me provide a current update our loan portfolio as of today reflecting the activity john discussed and some other recent activity is now approximately 94 million dollars at a weighted average interest rate of 11.5 percent notably of this amount approximately 21 million dollars at a weighted average rate of 10.4 percent is scheduled to mature in 2026. we currently expect to utilize proceeds from these 2026 maturities, selling a senior tranche in one or more loan investments, property dispositions, and existing capacity on a revolving credit facility to fund loan commitments. One quick note, the $1.9 million impairment charge recorded this quarter relates to Walgreens that is currently under contract to be sold. Now turning to guidance, as a result of our recent elevated investment activity, we are increasing both our FFO and AFFO outlook for the full year of 2025 to a new range of $1.82 to $1.85 per diluted share from the previous range of $1.74 to $1.77 per diluted share. With that operator, please open

the call to questions. Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star 11 on your telephone. If your question has been answered to resume yourself from the queue, please press star 1-1 again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Michael Goldsmith with UBS. Your line

is open. Good morning. Thanks a lot for taking my questions. A lot of investment activity both during the quarter and subsequent to quarter end. So, can you just provide a little color and how you're thinking about funding all of this activity? Hey, Michael. It's John. Thanks.

Look, as you know, we've been very busy on the recycling side, so some of that's going to come from asset sales as we keep on continuing to increase the credit quality of our portfolio. And then a little bit of this is our loans maturing, and then basically a little bit's going to be net growth in anticipation of additional sales, so a little bit of balance on both sides.

Got it. Thanks for that, John. And then, you know, all this loan activity, you're seeing really nice yields on that. I guess the way it cuts the other way is it can generate lumpiness in the quarters as they come due. So can you talk a little bit about how you're thinking about managing that and these loan expirations just to ensure the AFFO doesn't move around too much?

Yeah, so, you know, obviously a good question. I mean, when we started this, you know, kind of loan program about three years ago, you know, that was a little bit of the pushback was, you know, well, you can't replace these loans at these rates. But, you know, we here we are. We we're doing it with really existing relationships without even trying. And so, you know, certainly as as we see more opportunities, you know, part of that funding mechanism that, you know, Phil mentioned is selling off a senior pieces of these loans and these loans are very are very bite sized and there's a lot of capital out there. So there's a lot of opportunity. So I would I would I'm not worried about replacing. these and having kind of, you know, earnings coming down because these are one-time sort of opportunities. We're seeing a strong, you know, pipeline of super high-quality kind of assets

and sponsorships. Got it. Well, if you're doing this without really trying, it's exciting to see what you do when you put some effort into it. I'm just kidding. Thank you very much.

Good luck in the fourth quarter. Thank you. One moment for our next question. Our next question comes from rj milligan with raymond james your line is open hey good morning guys um john you

know with the the recent activity now in residential development i think you guys have a loan in industrial just can you tell us how you're thinking about other property types and and if

you're going to continue to pursue things outside of retail uh yeah it's not it's not you know uh by design, kind of going out here, just these unique opportunities with very strong sponsors and very, you know, strong assets. You know, the industrial property that we did in Fremont outside of San Francisco, you know, that was actually a retail property that the sponsor is basically converting to industrial to a higher and best use. So part of our underwriting on that is if we ever had to foreclose roughly 50% of the acquisition, it could still be retail and work on our basis. So to answer your question, we're going to stay more focused on the retail side for sure, but if we see unique opportunities in their short duration, we're not opposed to taking on those opportunities.

okay that's helpful and then phil you you talked about uh some of the sources of capital next year some of the loan maturities potential asset sales should we expect that to get reinvested or will those proceeds be used to pay down debt lower leverage you know a little bit of both but

i think first they're going to get reinvested into a lot of the loans that were recently done margin. So the maturity is coming back from the 26 loans. We're just kind of proactively redeploying that capital a little early with the loans going out first, the new loans going out first. So a lot of that's going to just recycle into that. But on the margin, you could see leverage take down a little bit. Okay. That's helpful. Thanks, Chris.

Thanks. One moment for our next question. Our next question comes from Alec Fagan with Baird.

your line is open. Hey, good morning, and thanks for taking my question. So, on the luxury residential development in Austin, can you talk about how you got comfortable with the loan

and what stage of development currently is that? Yeah, so, you know, we're familiar, you know, if you think back at our origins of CTO and when I got here, you know, 14 years ago, So, you know, we had 14,000 acres of land in Daytona Beach to sell. So we are very familiar with residential lot developments through that experience. So with regards to kind of where this project is, it's really at the kind of finish line of delivering lots. And actually, there will be some lot sales starting next week, in fact. So it's really kind of coming in at the late stage and not on the early stage.

Nice. And kind of on that loan, how much of the loan are you looking to sell?

Probably look to sell potentially 50% of it. It really depends on how fast the proceeds come back. So it could be less, but potentially up to 50%.

And switching gears a bit, with the vacant assets that were sold in the quarter, how much do we need to remove from operating expenses that you're carrying?

Yeah, this is Phil. So the two largest vacant properties we have are the Theater in Reno, which was sold, that had an annual run rate on expense size of about $400,000. And the one that we have left that's large is the former Party City that also has a run rate of close to $400,000 on an annual basis. So you can, if you were to run rate the current quarter, that'll come down another about $400,000 on an annual basis once Party City is sold. And Party City wasn't sold this quarter? It was not. Reno was sold in the quarter. It was sold early in the quarter. So pretty much the full impact of that is reflected. But Party City is not sold yet.

Okay. There were two vacant assets sold in the quarter. So is the other one just minor?

Yeah, there was a little former. We have – those are the two largest, Reno and Party City. We have a few. We had former convenience stores that are really small. There's sold one during the quarter. There's two left. Altogether, those don't even come up to $100,000 on an annual run rate. So they're very small and on the margin.

Got it. Thank you, guys.

One moment for our next question. Our next question comes from Rob Stevenson with Janie Montgomery Scott. Your line is open. Good morning, guys.

Is the sale of the large loan interest that you may do, is that in the disposition guidance or are dispositions just properties in terms of the guidance?

We're exceeding the high end if it happens before the end of the year. The timing on it is a little hard every day. It could be just before the end of the year, or it could be a little bit after the end of the year. If it were to happen before the end of the year, that would put us on the high end or over the high end of guidance.

Okay, but you would classify that as a disposition?

We historically put dispositions of loans with properties there. And if you look at guidance, we kind of added a line for that, a little bucket when we put year-to-date actuals. and there was a line that had loan sales and it showed zero just to kind of help clarify that we do kind of look at that as a disposition. But if the loan one were to happen, we would probably be

just over our high end. Because the reason why I ask is if I look at the year-to-date investment and disposition volumes versus the guidance, they're sort of implying between 50 and 65 million of net investments in the fourth quarter. You've got 27.5 million in terms of rough numbers from the proceeds from the repayment of Publix and Verizon, just trying to figure out how you're going to finance that, especially given where the stock price is. I don't know, John, if you're comfortable issuing equity here or whether or not you guys just use the line, but was sort of curious as to how you guys are thinking about the sort of incremental there and where does sort of leverage peak out at here in the fourth quarter if you do decide to fund any of those net investments on the line?

Yeah, so just before, and then I'll let John answer, but on the investments, you know, we always put the full amount for the properties, obviously, and for the loans we put the origination or the initial amount committed. So today we're setting at almost $200 million if you include all the subsequent activity on investments, and of that, $130, $135 is the loan drop, but only 72 have funded so far. So we also, in the guidance, put in brackets there kind of on the loans just to help clarify, because it's a great question, you know, how much of the loans have funded year to date. So the full amount of that won't fund because the loans won't fully fund by the end of the year.

Okay, so the net would wind up being lower than that sort of 50 to 65 million that you're implying, because that's including the full value.

Yeah, I mean, there could be 50, 60 million of that as loans that are not funded.

Okay, that's helpful because it was looking like the leverage was going to peak out at something more substantial here if you guys did it all on the line.

Yeah, so there could be 50 to 60 million of that number that's loan-related that's unfunded by year-end. And then on top of that, you could also see like an A-note sell prior to the end of the year that would further help lighten that load for funding.

Okay. And then I guess, John, what is sort of left within the property portfolio that you want to sell? I mean, is this going through and, you know, sort of cleaning up anything remaining? Is it, you know, whittling down some of the dollar stuff? How are you thinking about, you know, when you look at dispositions not only in the fourth quarter but in 2026, like, what are you sort of thinking that you're going to wind up selling and, you know, where is the market for those type of assets today?

Yeah, so, you know, as we discussed previously, you know, we still have some Walgreens that we definitely are moving through, and we, you know, dollar stores, as you hit on, certainly will be something we'll trim back on, and then there's some other, you know, that we've sold advanced auto parts and that sort of things in tractor supplies, and so, you know, those sort of, you know, assets will continue to kind of grind through, if you will, as we see you know good pricing um so it's just really you know using using that as a as a way to kind of um you know reinvest in some of the high uh credits that we we put on um you know this this quarter and lows and so forth so you'll see us you know be active uh at the end of year here with uh continually bringing in some real super high quality type of uh credits and uh you know, we're looking forward to kind of what this company looks like, you know, starting next year.

And then I guess given the acquisition of the Lowe's, was that opportunistic or, you know, just from your standpoint, is the property acquisitions going forward going to be more targeted towards the higher credit quality and basically investment grade and, you know, above quality tenants or are you still looking to acquire stuff across the spectrum on a property

specific basis? Yeah. And on, on the lows, you know, that was off market. It was a relationship, uh, driven. We had seen these assets before, uh, a couple of years ago and they're pulled off the market. Uh, so we're extremely, uh, excited about having those in our, in our portfolio, with regards to, you know, so you'll see more of the high-quality, you know, credit, big-box sort of assets coming in. You probably won't see us be active in buying, you know, a generic, you know, tractor supply. Clearly, we don't have any car washes, so we like that distinction that, you know, no car washes in the portfolio. So, you know, it's, you know, we feel like we're set up pretty strong to kind of offer investors something a little bit different. Getting the lows and dicks in the top five just gives investors an exposure that they can't get other locations.

And then last one for me, is all of Beachside open and producing at this point, or is there still some of that stuff that's down and that you're getting insurance payments on?

uh no it's all been been open for for a while i mean they they opened those up you know less than four months after the hurricane uh last year and and interesting enough i mean they still when they open they weren't they weren't obviously as you know polished looking as they were previous to the hurricane but they did better sales than they did pre-hurricane so a lot of pin-up demand from customers. And unfortunately, some of their competition did not reopen. So it just kind of drove more traffic to those restaurants. Okay. So rent coverage today is actually higher

than where it was pre-hurricane? Yes. Okay. Thanks, guys. Appreciate the time and have a

great weekend. You too. One moment for our next question. Our next question comes from Gaurav Mehta with Alliance Global Partners. Your line is open. Thank you.

I wanted to ask you if you had any update on your properties that are leased to at home.

Yes. So, you know, those properties as we kind of – one is in Concord, North Carolina, that, you know, could be sold in the, you know, not too distant future, and the others, you know, or the same situation where we're monitoring kind of, you know, what at home's doing, but if they come back, we have, we're working on replacement tenants. So the idea would be if at home vacated one of the properties, we would have a replacement tenant in, and then we would sell it at a better cap rate than as at home. So it's a manageable exposure and potential upside.

okay second question i want to go back to the two loans uh that you did after september the interest rates on both of them are higher than the year-to-date uh loan activity can you provide some color on on why the rates were higher at 17 and 16 percent phil you want to handle it yeah

so he was just asking about why the interest rates on the residential and the mixed use are

significantly higher than the blended rate for the portfolio uh yeah so uh on that uh you know basically because it's such short duration loan uh that you know so so kind of give you more more background than maybe you want is that you know the competition for um a loan for that sort of product would be mainly from an opportunity fund or a credit fund, and those funds really aren't looking to invest where the duration is less than two years in order to kind of get a multiple. So we're able to give highly flexible loan, but for that, we charge a much higher rate. And so just the flexibility of our loan in the short duration gives us that higher interest rate investment.

That's all I had.

One moment for our next question. The next question comes from John Masaka with B-Raleigh Securities. Your line is open. Good morning.

um so maybe given all of the investment activity on the loan front in uh particularly substance quarter end do you view that as maybe kind of the max level you want to be at in terms of a loan balance once this all kind of blends out or could you kind of pursue more of that and become i guess maybe more of like a mixed loan net lease type reek it feels like the amount of loan investments are starting to, certainly in terms of the investment activity, outweigh the net lease transactions?

You know, I would say that, you know, it just kind of really kind of came together here this, you know, last quarter. But the loan activity could tick up from here for sure. But as, you know, it's a little bit in anticipation of things, you know, burning off, paying down, paying off. And then, you know, we are, you know, super active on the core net lease side with, you know, larger type assets. So, you know, you'll see this, you'll see this similar balance, but we think we're, you know, delivering, you know, we know we're delivering really strong free cash flow and, you know, high earnings and, you know, and there's other net lease REITs out there that do the loan program as well. And then you have REITs like Vichy that have a balance of net lease and loans. So it's not like we're in a new frontier here.

I remember thinking, and maybe I'm misremembering, the loans were kind of an opportunistic thing a couple of years ago, and now it feels like they've become a bigger part of the investment strategy. I'm wondering if that's something you view as like permanent on a go-forward basis or if it's still something that's temporary where you've found this kind of opportunistic way to kind of accretively deploy your capital even in a, you know, a challenged equity market.

No, it's, you know, it's definitely a good point. Yeah. So when we're opportunistically thinking that it was like a one-time opportunity, it's become repeat customers are coming back to us because of the flexibility and the speed that we can transact on. They're willing to pay a higher rate. And then, as you know, we get right of first refusal on acquiring these assets. So if the market stalls and cap rates tick up, we have the opportunity to bring these into our portfolio. And so, like I've said before, we're getting paid a much higher yield than going out and buying some sort of generic net lease property out in the middle of nowhere, you know, we're, you know, basically in Austin with, you know, very opportunistic type yields on very, with very high quality sponsor and high quality asset. And then, you know, the Publix that we had pay off in Charlotte, you know, Publix in Charlotte, you know, I think that paid off because they sold it at five and a quarter cap. You know, so these are, you know, we're getting double digit unlevered yields on assets that will sell for really, really low cap rates. So it's great to see the opportunities that we're able to kind of, it's become more of a permanent fixture as the sponsors are still very active in the development side on these credit tenants and the banking system just really is slower, less proceeds, and we're just basically providing an answer to their capital needs in a much more efficient fashion.

And then maybe on a very, like, micro level, with Cornerstone Exchange, you know, pretty significant jump up in the amount you're kind of lending on that project. Why – I guess maybe why did it increase by so much?

It's basically they ended up signing some additional leases. So as they've proven out their development with leases, we wouldn't loan on it until they have a signed lease. And so that's what happened. The development's gotten larger as they've signed leases.

Yep, that makes sense. And that's it for me.

Thank you very much. One moment for our next question. Next question comes from Greg Cucera with Lucid Capital Markets. Your line is open.

hey good morning guys um john i want to circle back with a few questions on the austin loans um it sounds like you're not taking any entitlement or approval risk at least on phase one is that a fair assessment as phase two need to be approved uh it's fair assessment on both

uh you know the entitlements are there for both uh phases and and everything needed to uh to basically deliver. Okay, great. And what is the current LTV at those loans? You know, I would put that one in kind of the, on a discount NPV basis, we're in the 70s.

Okay. And if you were to sell the senior tranche or a portion of those loans, and I think Phil mentioned it might be upwards of 50%, what would your yield be if you're holding the junior

piece uh you know i don't want to like go out there with it may not be higher i don't want to

give you specific numbers fair enough um all right changing gears uh to lake coxway mixed use development is that just raw land now or has the developer started or kind of where in

the process is that development yeah the developer has started so uh kind of we're coming in like when they really need to really start, you know, doing some additional work and delivering pads and that sort of thing.

Okay. Okay, that's it for me.

Thank you.

One moment for our next question. Our next question comes from Barry Oxford with Colliers International. Your line is open.

Great. Thanks, guys. John, real quick, a couple of questions on the dividend. Given what I'm hearing on the conference call, you want to retain as much capital as possible. Is it fair to say that, you know, even though you could raise the dividend, for lack of a better word, substantially, any dividend increase will probably be minimal because you want to retain as much capital from an asset allocation?

That's right. I mean, so, you know, as we progress here and earnings grow, you know, there'll be pressure to raise the dividend just based on what we need to pay out as a REIT.

Right. So you don't run afoul of the REIT rules.

Well, we don't want to pay a check to the IRS. We'd rather give it to our shareholders.

Right, right, right. And then, you know, one thing that I noticed, you know, in the press release was the credit-rated tenants. Now, your investment-grade tenants, you know, the percent of the portfolio was still roughly the same, but you had a fairly good drop with the credit-rated tenants. What was going on there?

just the credit rated as a percent of the total portfolio so at the end of the last quarter

51 yeah it went from yeah it went from 81 to 66. oh from credit rated yeah yeah the credit is

that was more very that's more the Walgreens and the like that used to have a credit rating dropping them that were very low and had gone from credit rates to you know not or from investment grade to not investment grade, but we're still carrying a rating. It's more related to a couple of tenants like that. They got home, Walgreens, and such, dropping the credit rating altogether, and that's what caused that decrease.

Makes sense. All right, guys. Have a good weekend.

You're welcome. And I'm not showing any further questions at this time, and as such, this does conclude today's presentation. We thank you for your participation. You may now disconnect and have a wonderful day. Thank you.