Yahoo Finance Alpine Income Property Trust, Inc. (NYSE:PINE) Q1 2024 Earnings Call Transcript
Alpine Income Property Trust, Inc. (NYSE:PINE) Q1 2024 Earnings Call Transcript April 19, 2024
Alpine Income Property Trust, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good day, and thank you for standing by. Welcome to the Alpine Q1 2024 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. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Lisa Vorakoun, Chief Accounting Officer. Please go ahead.
Lisa Vorakoun: Good morning, everyone, and thank you for joining us today for the Alpine Income Property Trust's first quarter 2024 operating results conference call. With me today is our CEO and President, John Albright. Before we begin, I'd like to remind everyone that many of our 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 reports, earnings release and most recent investor presentation, which contain reconciliations of the non-GAAP financial measures we use on our website at alpinereit.com. Now, I'd like to turn the call over to John for his prepared remarks.
John Albright: Thanks, Lisa, and good morning, everyone. I'd like to start off by thanking our former CFO, Matt Partridge, for his many contributions to our company. We wish him well with his new opportunity. We have engaged a national firm to search for a new CFO and have started interviewing candidates. Reviewing our first quarter investment activity, although the traditional acquisition market was quiet for us during the quarter, we did originate a $7.2 million first mortgage loan investment, of which $3.6 million was funded during the quarter. We also acquired the land under our CVS in Baton Rouge for $1 million. The initial yield on our loan investment was 11.3%, and the cash cap rate for our land acquisition was 7.3%. The loan investment made during the quarter was to provide a $7.2 million of funding with a two-year term towards a six pad retail development anchored by Chick-fil-A in a growing sub-market of Atlanta, Georgia.
On the property acquisition front, we saw fewer attractive core investment opportunities due to the reluctant sellers. However, we anticipate that as the market further adjusts to higher for longer rates, the transaction market may become more productive for us. We are seeing additional high-yielding and better risk-adjusted loan opportunities which we expect to pursue in the second quarter. As of the end of the quarter, our portfolio was 99% occupied and consisted of 138 properties totaling 3.8 million square feet with tenants operating in 23 sectors within 35 states. Our top tenants remain unchanged from our year-end earnings call in mid-February with Walgreens, Lowe's, Dick's Sporting Goods, Family Dollar, Dollar Tree, and Dollar General as our top five tenants, all of whom carry investment-grade credit ratings.
We ended the quarter with 65% of our total annualized base rents coming from tenants with an investment-grade credit rating, which is an increase of 700 basis points from this time last year. We have a strong balance sheet and no debt maturity until 2026, and this stability compliments the strength of our high-quality portfolio. I also want to highlight the valuation discount with our current stock price trading at approximately $15 a share, which is an implied cap rate of over 8.5% and a current dividend yield of over 7.25%. Considering our book value is over $18 per share, and in the past year we have repurchased almost a million shares or over 6% of our company's capitalization at an average price of approximately $16.25 per share, we believe Alpine stock provides an attractive value and yield investment, which we will work on better communicating with the investment community in the near future.
On the disposition side, we're starting to see more activity on some of the assets we would like to sell and recycle into higher yielding opportunities. This recycling of capital to organically grow earnings should be an active area for us this year. With that, I'll now turn it over to Lisa to talk about our first quarter performance, balance sheet, capital markets, and guidance.
Lisa Vorakoun: Thanks, John. Beginning with our financial results, first quarter 2024 FFO was $0.41 per share, a $0.05 per share or 13.9% increase over the first quarter of 2023. First quarter 2024 AFFO was $0.42 per share, a $0.06 per share increase or 16.7% increase over the first quarter of 2023. Our results benefited from an 11.7% increase in total revenues, which was primarily driven by the interest income generated by our loan portfolio. While our seven former Mountain Express properties still created a negative impact on our lease income revenues as compared to the first quarter of 2023, rent on three leases with new operators commenced during the quarter, and we anticipate a fourth lease will commence during the second half of 2024.
We are in active discussion for the potential lease or sale of the remaining three properties. G&A as a percentage of revenues in the first quarter was 12.4%, a year-over-year decrease of nearly 121 basis points. Our G&A benefited from our reduced external management fee as a result of our recent share repurchases. For the first quarter of 2024, the company paid a cash dividend of $0.275 per share, representing a current annualized yield of over 7.25%. FFO and AFFO first quarter payout ratios were 67% and 65% respectively, down from 76% in the first quarter of last year. We anticipate announcing our regular quarterly cash dividend for the second quarter towards the end of May. We repurchased over 45,000 shares of common stock on the open market for a total cost of $800,000 at an average price of $16.90 per share, which completed the previously authorized $15 million share repurchase program.
As we previously discussed, our balance sheet is well-stabilized with no debt maturities until 2026, and total liquidity at quarter end was $185 million. We ended the quarter with net debt to total enterprise value of 54%, net debt to pro forma EBITDA of 7.4 times, and our fixed charge coverage ratio remains very healthy at 3.4 times. As we look forward to the balance of 2024, we begin the second quarter with portfolio-wide, in-place, annualized straight-line base rent of $38.9 million, or $38.5 million of in-place, annualized cash base rent, as well as annualized interest income from loan investments of $3.6 million. We maintained our full-year FFO and AFFO guidance of $1.51 to $1.56 per share, and $1.53 to $1.58 per share, respectively. Our investment guidance remains unchanged at a range of $50 million to $80 million of investments, contingent on reasonable market conditions, and includes the potential for additional loan investments.
Our disposition's guidance also remains unchanged at a range of between $50 million and $80 million. With that, I'll now turn the call back over to John for his closing remarks.
John Albright: Thanks, Lisa. Overall, we're confident our unique asset recycling strategy, ample liquidity, de-risk balance sheet, and high-quality portfolio has us well positioned to drive value over the long run, and we look forward to executing on our 2024 guidance and positioning us for future earnings growth in 2025. I want to thank the team for their hard work and our shareholders and business partners for their continued support. With that, operator, please open the line for questions.
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