ALPINE Q3 2026 EARNINGS CALL - ALPINE INCOME PROPERTY TRUST INC

Good day and thank you for standing by. Welcome to the Alpine Third Quarter 2026 Earnings Conference Call. At this time, all participants are on 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 2-1 again. Please be advised, today's conference is being recorded. I would like to turn 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 Chief Executive Officer, Philip Mays, Chief Financial Officer, and other members of the executive team who 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 to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K, Form 10Q, 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.alpinereet.com. With that, I will turn the call over to John. Thank you, Jenna, and good morning, everyone. We're pleased to report another strong quarter. AFFO per diluted share grew 19.6% over the third quarter of last year, and we invested approximately $41 million at a weighted average initial yield of 8.5%. Our investment activity has accelerated meaningfully this year, including our pending $117.3 million industrial portfolio acquisition, which I'll discuss in a moment. Our closed and under-contract investments year-to-date now exceed $300 million, a company record that surpasses our full year 2025 total of $277 million. As a result of this investment volume, we are raising our full-year 2026 AFFO guidance, which Phil will walk through shortly. Starting with acquisitions, during the quarter, we closed $39.2 million of property acquisitions at a weighted average initial cash cap rate of 8.5%. percent. Key tenants included a Best Buy in McAllen, Texas, a Lowe's in Fairfax, Virginia, a Dick's Sporting Goods in Asheville, North Carolina, which are all investment grade rated and among our top five tenants by ABR. Year to date, we've closed on $85.8 million of property acquisitions at a weighted average initial cap rate of 8 percent. We continue to target well-located properties we can buy at low basis at attractive initial yield and we look to selectively recycle lower yielding properties into new higher yielding opportunities subsequent to quarter end we acquired a burlington in chandler arizona for 7.9 million dollars and earlier this month announced an agreement to acquire a 13 property industrial portfolio for 117.3 million or approximately $63 per square foot. The industrial portfolio totals about 1.9 million square feet across 11 states. It is 100% leased to nine tenants on an absolute triple net basis with annual rent escalations. A weighted average remaining lease term of 10.2 years and no expiration before late 2031. While industrial is not a strategic focus, this portfolio stood out for a few reasons. First, it offers an attractive initial yield. Second, the tenant base is diversified and tenants have operated at their sites for an average of 40 years and invested significant capital in them. Third, we believe in-place rents are below market and benefit from annual escalations. We expect to close in the middle of the fourth quarter, subject to customary closing conditions. The new financing Phil will discuss gives us ample capacity to fund it. At quarter end, our property portfolio consisted of 130 properties, totaling 4.8 million square feet across 31 states, with 99.6% occupancy, and a weighted average lease term of 8.7 years. Annualized straight-line base rent was $53.9 million. Approximately 68% of ABR comes from credit-rated tenants and 56% from investment-grade rated tenants. On our commercial loan portfolio, we received earlier payment in full on two loans totaling $17.9 million and a weighted average yield of 10.2%. At quarter end, the portfolio consisted of 11 loans with outstanding face amount of $160.1 million and weighted average coupon, including pick interest, of 13.4%. The loan book is near our target of approximately 20% of total undepreciated asset value. It complements our property portfolio and increases the overall yield on our investments. As a reminder, the timing of fundings and repayments can cause the relative size of the loan portfolio to vary from quarter to quarter. With that, I'll turn the call over to Phil. Thanks, John. Starting with our results, third quarter total revenue was $20.5 million, including lease income of $12.8 million and interest income from commercial loan investments of $7.6 million. FFO and AFFO were both $0.55 per diluted share, up approximately 20% from the third quarter of last year. As a reminder, second quarter results included approximately $0,02 per diluted chair of non-recurring termination fee income. This quarter did not include any one-time or non-recurring income. For the nine months ended September 30th, total revenue was $58.9 million, including lease income of $38.1 million and interest income from commercial loan investments of $20.7 million. FFO and AFFO were $1.65 and $1,66 per diluted share, both up approximately 23% from the same period last year. Turning to the balance sheet, during the quarter, we raised $8.2 million of net proceeds through our common and preferred ATM programs. Year-to-date, we have now raised approximately $70 million of met proceeds across both programs. We ended the quarter with net debt to pro forma adjusted EBITDA of 6.5 times. While this is consistent with last quarter, it is more than a full-term lower than the 7.7 times we reported a year ago. As of quarter end, we had $398.5 million of debt outstanding at a weighted average interest rate of 4.48% and no debt maturing until 2029. As previously disclosed, we have $100 million of SOFR swaps at 2.05% that mature in January 2027 and will be replaced with swaps fixing SOFR at 3.54%. Notably, subsequent to quarter end we received bank commitments for a new $100 million four-year term loan and a $75 million increase to our revolving credit facility. We expect this financing to close in late October and we'll use the term loan proceeds to reduce borrowings outstanding on our revolting credit facility. In total, this financing adds $175 million of potential liquidity. Now turning to guidance. As John said, our investment volume has led us to raise guidance. For full year 2026, we are raising our FFO outlook to $2.19 to $1.21 per diluted share, up from $2 and 10 cents to $20 and 13 cents. We are raising or FFO Outlook to $22 cents to $2 22 cents per dilute share, up from two dollars and 12 cents to two dollars and 15 cents. At the midpoint, this represents approximately 17% FFO per share growth over 2025. Our new guidance ranges reflect our increased investment volume assumption of $310 million to $350 million. Further, they reflect the expected timing of investments, dispositions, and financing activity, as well as this quarter's $17.9 million of early loan repayments John discussed, and a $7.4 million loan with a 10.25% yield maturing in the fourth quarter. Finally, based on equity issued this quarter, our quarterly base management fee run rate is now approximately $1.5 million. 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 1-1 on your telephone. If your question hasn't been answered or you wish to move yourself from the queue, please stress star 1 again. We will pause for a moment while we compile our Q&A roster. Our first question comes from Jay Kornreich with Cantor Fitzgerald. Your line is open. Hey, thanks. Good morning. I was wondering if you could just give any further details on the industrial portfolio you now say acquire, you know, if there's anything further along, you know, what the yield was on it and more specifically just in terms of how you anticipate financing it and if there is any maybe guidelines around what you think pro forma leverage might be. hey Jay it's John thanks for the question I'll let Phil talk about the financing aspects of it because it's under contract we haven't closed yet we'll probably save more details for until after it closes but obviously we've given a fair amount of detail on our investor deck on it without having it been closed but we love the portfolio because it is higher yielding It has a nice wall of over 10 years. It has annual escalations. It's dispersed in 13 properties, nine tenants, and incredibly low rental rate per square foot. So it fits all the boxes of things that we like to buy where there's good yield and limited downside and nice upside. But, Phil, you want to talk about the financing side? Yeah. Hey, Jay. So next week we should close on our new financing that's disclosed and the earnings release, new term loan, a four-year term loan for $100 million, for which the proceeds will be used to pay down the line. And then we're actually growing the line and hitting the accordion there to increase the line $75 million. So we'll initially take it down on the line on debt-to-e, but if you just want to look at that solely by itself, we go from mid-6s to low 7s, probably 7.3-ish. You know, and then we'll look at, you know, we still have some room in our dispo guides and all to get back down later. OK, I appreciate that. That's helpful. And then maybe just more broadly, you Know, the industrial portfolio acquisition, it brings some incremental diversity to the otherwise largely retail portfolio. So I'm just wondering how you're thinking about what the ideal makeup of your portfolio is going forward. Are you targeting more industrial or other asset classes, or was this transaction really just more of a one-off? For right now, it's basically a one‑off, but we had mentioned in our previous earnings calls that we were open to other sectors. And so finding that great risk‑adjusted yield in sectors. And as you know, we already have an industrial property in our portfolio before this acquisition. So I don't see anything else in the sort of window kind of like what we're looking at, but we're open to it. Okay. All right. I'll hold it there. Thank you. Thank you, one moment for our next question. our next question comes from matthew erdner with jones your line is open hey good morning guys and thanks for taking the question um i'd like to touch on the loan portfolio a little bit and you know kind of the plans with that capital as it does start to run off um you look to keep that portfolio at or near 20 or should we expect to see some of that capital kind of redeployed into properties. And then on top of that, I guess towards the end of the quarter, shares started trading down, which could present an attractive repurchase opportunity. So how do you guys kind of balance the three of those? Yeah, thanks. So on the loan book, it's not a hard set as far as an amount that we'll have out there. So there could be a situation where the loan book, you know, pays down, pays off, and we don't replace it to the amount it is now. But I will say in this environment, you know, we are seeing interesting opportunities to replace the loans that we have. So, you know, nothing, you know, right now, but certainly this is a good environment where to get, you know, really terrific sponsors, terrific assets, great locations, great basis. And so I would expect that there'll be more opportunities, but it could be a situation where it does pay down. And anyway, that's kind of where we are with the loan book. Got it. Appreciate that. And then looking at dispositions, are there any credits that you guys may look to move on to or on from and call it 27 as we continue to go forward? yeah i mean we're constantly as you know pruning the portfolio um and of course you know we have uh you know some walgreens left but their credit gets better and we're just kind of cash flowing those out until you know find that 1031 uh buyer um and you know мы have an at home as you know but the at home is in charlotte in a terrific location we had a other uh another user that wanted to buy it and at home didn't want to leave. So, you know, the locations that we have are really strong. We have one sportsman's warehouse where we have someone that wants to buy that. The party city in Long Island, we're far along on a lease to replace that. So we're always pruning but nothing that got it thank you guys one moment for our next question our next question comes from RJ Milligan with Raymond James your line is open thanks good morning guys John maybe you could just give some comments on what you're seeing in terms of maybe a shift in cap rates, or if you're seeing the market move at all, just given the higher interest rate environment? Sure. I mean, clearly, you know, we're, you know, saving our capital for, you know, really good opportunities where we are getting that higher yield potential. So, you know, I would say that people are out in the market right now selling something, that means they want to clear the deck. So you probably have in this environment people that are going to sell, going to transact no matter what, versus a market where they're seeing better pricing and they're taking something out to market. So this is the time that gets us excited. So hopefully we'll have some good hunting here. Thanks for that. And Phil, just given the new debts or the new financings and then the swap burn-offs, is there any way to quantify what the potential impact is next year as we think about the higher rates and the swap burn-off? Yeah, there's two swaps, RJ, that expire both in January. One is for $100 million at close, and I talked about it in my prepared remarks, at around 200 basis points so it's going to roll we have a forward swap in place that will replace it that is below market but higher than the 200 that that swap was at so that 100 million will roll up about 150 basis points and then the only other swap we have burning off is 50 million um and it also matures in january we do not have a fort to replace it but it's closer to market. It's maybe 50 bits below market. So that one won't, it's smaller, it's 50 million and it's Closer to Market. So, that one will have a little sting, but not as much. Those are the two biggest moving parts on our rates for next year. Okay, great. Thanks, guys. Thank you. One moment for our next question. our next question comes from michael goldsmith with ubs your line is open good morning thanks a lot for taking my question um you know just obviously big big industrial portfolio um and yet the implied fourth quarter guidance is sort of similar to the third quarter AFL focus here? So can you kind of bridge, you know, the moving pieces from the third quarter to the fourth quarter? And then, you Know, is that like, 55 cents, like the right runway to think about just kind of going forward, I guess, building off of that last question? Yeah, hey, Michael, it's Phil. So in the quarter, as we noted, John noted, we had a couple of loans that paid off. And then in the fourth corner, if you look at our loan schedule, there's one for $7 million, $8 million. It's also scheduled to pay off. In addition to that, we do have the rate that adjusts down on the large residential loan. So the $0.55 in the third quarter, if you kind of adjust for all that, just the loan activity, you know, it probably falls back to call it $53 or so. And then with the acquisitions we announced in particular the industrial portfolio, you know, that will, you know, kind of replace it. So, it looks like, you know, in the middle of our guidance, the run rate's kind of consistent with the third quarter, but there's really moving parts there, a little less loan, and then the acquisition, industrial acquisition, bringing it back to 55. And look, it could be, you know, higher or lower. It'll just be, depend on timing of when the acquisitions close versus any dispositions. got it thanks for that and then um leverage ticking up here you know over over the last year you worked to take it down um i guess just what's the plan to work the leverage down from here um and just how are you thinking about that in this current environment yeah i'll take the first part of it, and Phil can follow on. You know, look, we have some DISPO plans and even the industrial portfolio, there might be some properties we want to spin out on that one. So, you know, it's really, I would say, you Know, asset sales, you Now, obviously, if the capital markets are, are there, there may be some help there. But, you know, we Have a fair amount of properties with lower cap rate sort of attributes. So that's sort of the plan. Yeah, as John said, dispos will be the biggest mover there, but also just, you know, we do have some annual bumps in the portfolio where NOI will grow, and, you know, recycling, not just straight dispos, could also help, you know, earnings grow in addition to disposition. So, we've got, you know, a phase to incrementally move leverage down. Got it. Thanks so much. Good luck in the fourth quarter. Thank you. One moment for our next question. Our next question comes from Gaurav Mehta with Alliance Global Partners. Your line is open. Thank you, good morning. I wanted to ask you on the financing for industrial portfolio. I don't know if I missed it, but can you provide the cost of financing of the term loan? How much was the rate on the term loan the the new term loan has not closed yet there's a swap in it it'll is the rate will be a little higher than the other two term loans but it'll generally be fairly consistent with it and then you know our variable rate that now you know call it five percent little higher depending on you know where SOFR sits. Okay. A question for the commercial loan portfolio. What's the timing of 75 million unfunded commitments in the portfolio? They're really, it's spread out over a couple of years. And then, you know, we also, that's just the unfund it piece. You know, keep in mind that over those two years, there will also be some loans maturing. So, you know, the net funding will not be $75 million. It'll be something less net of the loans matoring. And you can see the schedule. You can see those maturity dates on there. We have $8 million paying down in the fourth quarter alone. So repayments will help fund some of the draws actually going out so that You know, we never have to really come out of pocket the 75 at any moment in time. Those draws are spread out over two years and can be at least partially handled with just loans maturing. All right. Thank you. That's all I had. One moment for our next question. Our next question comes from Alec Fagan with Baird. Your line is open. All right. Thank you for taking my question. You know, on the swaps, are you assuming for the $50 million and the $100 million, are you assuming to swap that in the fourth quarter or, you know, will that drag into the first quarter? they um the for the hundred the new hundred million four-year term loan it's already uh swapped we have a ford on it um and so that rate will be called 4.75 ish on that um so we don't really have to do that we already had a for that that we can just move over to that swap. So there's no new swap to fix it. So it'll be fixed at closing. It doesn't go all the way out to the full term of it. We'll at some point look to do the tail later, but it'll be 4.75-ish at close. Okay. That's helpful. You talked in your prepared remarks about the loan maturing and as well as the rate being lowered on that residential construction loan. Do you have any visibility in any of your lenders potentially doing any early prepayments or payoffs in the loan book? There's some, but not a material amount. Got it. Thank you. That's it for me. Sure. One moment for our next question. Our next question comes from John Masoka with B-Raleigh Securities. Your line is open. Good morning, everyone. I know you're not providing kind of 27 guidance at this point, but how are you thinking about kind of investment volume in the first half of next year, just given taking down kind of a sizable transaction here at the end of the year? And, you know, I know there's some offsets to it, but you do have some of these loan commitments outstanding. I mean, is it kind of fair, you and some of your peers have kind of also indicated that you might slow transaction volume at the start of next year just as this capital market situation kind of shakes out, or is that kind of being too much into things? Well, since we're basically doing the amount of investment volume this year equal to our market cap, you can probably figure that's going to be, should be less next year. So I don't know how many years we can kind of keep on doing our market gap investment. So, but, you know, look, we always, you Know, it is too early, but you know for sure if we find opportunities that really fit, we're going to find the capital and it could be a partner and that's easy. If the capital markets are kind to our stock and our securities, then we'll find external capital. There's an incredible amount of that right now in the net lease space. As you guys probably follow on better than, follow it better than we do, that, you know, every private equity group, mammoth private equity groups have or are starting net lease groups. So there's no shortage of capital. So we look forward to kind of finding those opportunities. And that's our job is to find the right capital for it. Okay. Maybe circling back to the industrial acquisition, I know you haven't closed it yet, so maybe you're kind of reticent to provide too many details. But when did this kind of come across your desk as we kind of get more color on pricing? I mean, is this kindof pricing in the new interest rate environment, or is this something that kind of was still attractive but maybe kind of sourced prior to the kind of tenure moving up significantly here in August and September this year? Yeah, the portfolio sort of happened, you know, it was not a long, drawn-out process. I mean, it had been fully marketed, but, you Know, it was one where, you KNOW, the pricing is somewhat reflecting this new environment. of higher interest rates, so we're still very comfortable with where the cap rate is relative to where the 10-year is. Okay. That's it for me. Thank you very much. One moment for our next question. Our next question comes from Craig Coursera with Lucid Capital Markets. Your line is open. hey good morning um john it's obviously a pretty tough housing environment given interest rates um can you give us an update on how the projects underlying residential land loans are performing you know are they on track relative to budget or and and how are you feeling about exposure to residential landowners right now yeah i mean we feel very very good with uh the the the ones that we're in because they're second home, third home, fourth home sort of communities. And actually, believe it or not, the fall market is the strongest market. And I think what you're seeing on the high net worth sort of folks is that owning sort of sticks and bricks isn't a bad thing to have. So we're not worried about kind of where our position in these. It's not like, you know, first-time homebuyers or move-ups. This is sort of like, you know a lot of discretionary capital. Got it. So not very interest sensitive, more of a cash pay is what you're saying? Exactly. Okay. Okay. That's it for me. Thank you. 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.