Alpine Income Property Trust, Inc. Q1 FY2025 earnings call

• Earnings: Achieved AFFO of $0.44 per diluted share, up 5% y-o-y; raised common dividend to $0.285 quarterly. - Investment Activity: Acquired $39.7M in properties, originated $39.5M in mortgages, total investment $79.2M; sold $11.7M in properties. - Dividend: Dividend yield remains one of the highest in the sector; AFFO payout ratio ~65%. - Liquidity: Ended quarter with $65 million liquidity, revolving credit facility can expand to ~$100 million with acquisitions. - Portfolio: Acquisitions had average WALT of 14.3 years, sold properties had WALT of 4.7 years; portfolio WALT now 9 years.

Total revenue for the quarter was $14.2 million, consisting of $11.8 million in lease income and $2.3 million in interest income from commercial loans. AFFO was $0.44 per diluted share, representing a 5% growth compared to the first quarter of the prior year. During the quarter, the company acquired three properties for $39.7 million, originated two mortgages plus upsized existing ones for a combined $39.5 million, and total investment activity (property acquisitions and structured finance investments) totaled $79.2 million. Additionally, the company sold three properties for $11.7 million.

• Increased FFO and AFFO guidance for 2025 to a range of $1.74 to $1.77 per diluted share from prior range of $1.70 to $1.73. - Assumes investment volume of $70 million to $100 million and dispositions of $50 million to $70 million. - Sold one Walgreens in April and expects to close sale of another in May, reducing Walgreens properties to eight.

• Tariff volatility and uncertainty, but company well-positioned due to tenant mix and sector diversification; will continue to monitor evolving situation.

Q: 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 kinda walk through the factors that drove your ability to raise your earnings guidance this quarter?

A: 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 per 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 an 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 bps 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, 1 and a half cents or so, and that's what drove the increase in the guidance.

Q: 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.

A: 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, you know, a higher amount, but we funded about $20 million. So combined for the quarter, we were about $60 million funded and out the door. Got it.

Q: 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 and now you're buying back stock. So can you just kinda 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 how active do you think you'll be across the board kind of through the balance of the year?

A: 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 and such a high dividend yield. Certainly, we've had a the 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 at the at the, you know, closer to the end of our $10 million buyback. So you know, we'll you we'll see kind of you know, after, you know, the program kind of, you gets filled up kind of where where we sit. But given our free cash flow stance and, you know, we can always sell assets and and and do that, but that know, obviously, is shrinking the company and not exactly the the plan. But as we see, you know, loan opportunities and and some of these loans are be maturing here this year, and that will come in and and pay down pay down debt and kind of get us in a good spot for acquisitions as as Phil mentioned in his prepared remarks, we got plenty of liquidity. So we're, you know, we're taking trying to take advantage of, some good opportunities out there, and, you know, the pipeline looks good. So it's really a a mixture of kinda balancing between buybacks and and acquisitions and investments.