Good day, and welcome to the Alpine Income Property Trust Second Quarter 2023 Operating Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. Instructions will be given at that time. As a reminder, this call is being recorded. I would like to hand the call over to Matt Partridge, Chief Financial Officer. You may begin. Good morning, everyone, and thank you for joining us today for the Alpine Income Property Trust second quarter 2023 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 non-GAAP financial measures we use on our website at alpinereit.com. I'll now hand the call over to John for his prepared remarks. Thanks, Matt, and good morning, everyone. Before I outline our investment activity for the quarter, I want to highlight the progress we've made with our asset recycling strategy and provide some insight into what we're seeing in the transactions market. For over a year now, we've focused our attention on asset recycling as a way to take advantage of attractive pricing relative to the rapidly rising interest rate environment, improve the overall quality of our portfolio, bolster our balance sheet, and drive attractive returns on investment. This has been accomplished in spite of the volatile capital markets environment that has been driven in part by an unprecedented rise in interest rates. From the first 25 basis point federal funds rate increase in March of 2022, we've sold nearly $235 million of properties below a 6.4% cash cap rate, generating gains of $39 million. These asset sales have funded investments above a 7% cash cap rate, of which 78% of the acquired rents have been from investment grade-rated tenants. As a result, we've quickly transformed our portfolio by selling our remaining office investment, raising our investment grade tenant exposure from 48% - 63% in just 12 months, and shifting more of our portfolio into very stable, industry-leading tenants such as Lowe's, DICK'S Sporting Goods, Walmart, Dollar Tree, Family Dollar, Best Buy, and Home Depot. Our accretive net investment spreads and robust gains on sales have allowed us to reduce our leverage from 8.3x at the end of Q2 2022 to a current 6.4 x at the end of Q2 2023. I'm pleased to say we've had no floating rate interest rate exposure and no debt maturities until 2026. All of this progress, while not reflected in our stock price, has us well positioned to be opportunistic in the evolving transaction market, where we're starting to see more high-quality opportunities, especially from merchant developers. During the second quarter, we invested more than $60 million at a 6.8% cash cap rate, with 85% of the annualized base rent coming from tenants with investment-grade credit ratings. These investments include household names such as Chick-fil-A, Home Depot, Lowe's, Best Buy, DICK'S Sporting Goods, Verizon, HomeGoods, Starbucks, and Marshalls. We prioritize investment grade-rated tenants because of their well-capitalized balance sheets, forward-thinking operating strategies, and outsized financial and operational transparency, while also emphasizing discount and non-discretionary sectors that should outperform, even if there is a broader economic slowdown. Conversely, our disposition efforts have centered around selective tenant and sector concentrations within our portfolio, as well as the sale of non-investment grade-rated tenants. During the quarter, we sold nearly $23 million of properties at a 6.4% cash cap rate. Our Q2 dispositions consisted entirely of non-investment grade-rated tenants, including two properties leased to Academy Sports. While these Q2 asset sales, we've now sold $79 million of assets year to date at a cash cap rate of 6.2%, generating gains on the sale of $5.2 million. We're proud of our execution that has taken place over the past 12 months, our focus is adding long-term value for our shareholders. Today, we're evaluating two development loan agreements anchored by industry-leading tenants. These agreements would allow us to put capital to work at yields meaningfully above our year-to-date acquisition cap rates and with a potential opportunity to buy assets following the completion of construction. In an effort to address the public to private disconnect in our stock price, our board has approved an expanded share repurchase program up to $15 million. There are no guarantees we'll be active on the program, but as our stock price sits near an 8% cash cap rate, it's hard to justify the underlying discount, especially relative to our investment grade-focused peers. With that, I'll now turn the call over to Matt to discuss our quarterly results, balance sheet, and revised guidance. Thanks, John. As of the end of the quarter, portfolio occupancy was 99.5%, and our portfolio consisted of 143 properties, totaling 3.9 million sq ft, with tenants operating in 25 sectors within 34 states. Home Depot replaced Academy Sports in our top 10 tenant list, joining industry-leading operators such as Walgreens, Lowe's, DICK'S Sporting Goods, Dollar Tree, Family Dollar, Dollar General, Walmart, Hobby Lobby, and Best Buy. Second quarter 2023 FFO and AFFO were both $0.37 per share, a $0.10 per share, or 21% decrease compared to the second quarter of 2022. Our quarterly results benefited from a 1.4% increase in total revenues, which was largely driven by a positive net investment spread from our asset recycling program. As was the case in the first quarter, the positive effects of our asset recycling were partially offset by the revenue drag from our first quarter and second quarter asset sales, for which the proceeds were not immediately reinvested, as well as the year-over-year negative reinvestment spread that resulted from the sale of our sole remaining office property that occurred in the second quarter of 2022. General and administrative expenses for the quarter increased 12%, largely driven by the management fees paid to our external manager, which increased as a result of our equity issuance activity over the past 12 months. The current annual run rate for the management fee before any assumed new equity issuance or repurchases is $4.4 million. Higher interest expense resulting from higher interest rates contributed to the decrease in FFO and AFFO per share, but was partially offset by an overall lower outstanding debt balance. Year-to-date, FFO was $0.72 per share and AFFO was $0.73 per share, representing year-over-year per share decrease of 25.8% and 23.2%, respectively, when compared to the first six months of 2022. For the second quarter of 2023, the company paid a cash dividend of $0.275 per share, representing a 1.9% year-over-year increase over the company's Q2 2022 cash dividend and a current annualized yield of nearly 7%. Second quarter FFO and AFFO payout ratios were both 74%. During the quarter, we repurchased nearly 24,000 shares of common stock on the open market under the previously authorized $5 million share repurchase program, for a total cost of $400,000 at an average price of $15.22 per share. The previously instituted $5 million share repurchase program was replaced with the newly authorized $15 million share repurchase program John previously referenced. We ended the quarter with net debt to total enterprise value of 46%, net debt to pro forma EBITDA of 6.4 x, and we continue to maintain a strong fixed charge coverage ratio of 3.3 x. As previously referenced, we have no floating interest rate exposure, no debt maturities until 2026, and total liquidity at quarter end is more than $225 million. We begin the third quarter with portfolio-wide in-place annualized straight-line base rent of $39.7 million or $39.3 million of in-place annualized cash base rent. In consideration of the timing of dispositions and acquisitions in 2023, and higher than forecasted equity drag from increased asset sales, we've revised our 2023 guidance. We've reduced the top end of our full year FFO and AFFO guidance ranges by $0.02 per share, respectively, resulting in revised FFO and AFFO per share guidance ranges of $1.50-$1.53 per share, and $1.52-$1.55 per share, respectively. The top end of our investments guidance has been revised down by $25 million to a new range of $100 million-$125 million of retail net lease investments. We've increased the bottom end of our disposition guidance by $25 million to account for increased year-to-date asset sales and revised expectations for dispositions through the balance of the year. Overall, 2023 has been a year of positive transition for our portfolio and balance sheet. We head into the back half of the year with more flexibility to drive long-term value and future earnings growth. With that, operator, please open the line for questions. Thank you. If you would like to ask a question, please press star one one. If your question hasn't answered and you'd like to remove yourself from the queue, please press star one one again. Our first question comes from Matthew Erdner with Jones Trading. Your line is open. Hey, guys. Morning. Thanks for taking the question. If the purchase market doesn't develop like you anticipate, given the lower guidance, do you think you end up being net sellers in 2023? We're seeing, you know, we're definitely seeing more opportunity now. A lot of it's being driven by the constraint in the debt market. I think we're pretty optimistic we'll find some good acquisitions here for the rest of the year. Gotcha. How are you viewing new acquisitions or share repurchases at the moment? Well, certainly, where our stock is trading, you know, we're not seeing the as good an opportunity as buying our own stock. You know, if you look at our book value per share, we're at now, we're at $19.30 per share, trading at an 8%, you know, implied cap rate. Lots of reasons to be, you know, very interested in buying, repurchasing shares versus just buying some regular way asset. That being said, we are being picky on what we're acquiring, and we're finding, you know, good opportunities. Awesome. Thank you. Thank you. Rob Stevenson with Janney Montgomery Scott, your line is open. Looks like. Rob Ste- Hello? Hello. Hey, Rob. Hey- We can hear you. Yep, go ahead. Sorry. John, what does the cadence look like from a acquisition, disposition standpoint the back half of the year? Are these remaining quarters gonna be relatively equal in terms of acquisitions matched by dispositions? Or, you know, is it gonna wind up being front or back-end loaded on one of those things? Hey, Rob, it's Matt. you know, I think in Q3, it'll be relatively even, maybe a little bit more weighted towards the disposition side of things. In Q4, probably a little bit more on the acquisition relative to dispositions. That being said, you know, part of the reason for the revised guidance is we are selling earlier, and we have more visibility into selling earlier. There's a little bit more drag on the earnings because of the timing related to the dispositions versus acquisitions. Okay. When you guys look at the portfolio today, how much of the portfolio is a strong recycle candidate today versus just, you know, obviously, everything's for sale at any point in time. Somebody wants to offer you a 1% cap rate, I'm sure you'll take it. I mean, in terms of just the way that you look at the portfolio today, how much of this today is a likely recycle candidate in the next, you know, 12-18 months versus not? I mean, we're getting down to, obviously, a smaller amount of properties for recycling, for sure, since we've been so active. Having said that, we're being, you know, patient. We're just not going to sell to sell. You know, we have particular price points and so forth, and as 1031 buyers are in the market, and they can't find something to buy, you know, we're out there trying to take advantage of that. We're, you know, not an incredible amount, but enough to keep us busy. The potential development plays that you talked about on the prepared comments, what is the sort of timeframe? Is that a, you know, a 2024 event, or are these things going to finish up sometime in 2023, where you would take possession of them? How should we be thinking about that from a timing standpoint and the impact on 2023 investment numbers? The funding will be this year on these particular investment opportunities. Whether we end up acquiring the properties depends on a function of, you know, their ability to execute at cash cap rates they think they'll be able to sell at versus where we're a buyer. We kind of have a last-look sort of a position on high quality credits and high-quality locations. Okay. Last one for me, Matt, is the dispositions enough to fund the acquisitions for the remainder of 2023, or are you going to need to finance anything? Is that going to be on the line if it is? No, we, in guidance, we assumed that we'll be sort of a match funder, and that, you know, some small amount of share buybacks would be funded by available cash and disposition, so there'd be no incremental funding off the revolver through the end of the year. Okay, that's helpful. Thank you, guys. Have a good weekend. Thank you. You, too. Thank you. Our next question comes from Wesley Golladay with Baird. Your line is open. Hey, good morning, everyone. Just a quick question on the lowered acquisition volume, for the year. Is that just, clearly a function of the higher cost of capital that you have right now at the moment? Yeah, Wes, it's purely a function of, you know, limited access to equity. Given the visibility we have on the dispositions front and what we think we can work through by the end of the year, we're sort of solving for acquisition volume related to that. Okay. You know, how do you balance a buyback? I mean, I understand the argument that your stock is clearly cheap versus where you could buy in the private market. You also you need to scale the business and eventually, you know, go to internalization at some point, hopefully in the next few years. How do you balance those dynamics? you know, look, it's, you know, it's a buyback program, obviously, to take advantage of kind of, hopefully, a moment in time where we're trading versus kind of the value of the company and where the peers are trading. obviously, we've been active, you know, in the last 12 months in issuing equity where it makes sense for us to grow the platform. we're optimistic that as we've improved the value and the portfolio composition of the company, that we'll get a little bit of love from the markets in the back half of the year. you know, we still expect to be able to grow the platform, given, you know, kind of what we've done with the portfolio and how we rank with other folks. Okay. Can you maybe talk about your Walgreens exposure and double-digit exposure there? The debt has started to weaken modestly. Still a solid IG, but just how do you view that risk or your locations within the franchise? Yeah, we, you know, clearly look at the locations and make sure they're strong locations. We talk with Walgreens, and we've done a lot of lease extensions with them. You know, we'll pare back where it makes sense, or we'll be growing other credits, and Walgreens will move around as a natural kind of progression of the portfolio. Great. Thanks, everyone. Thank you. Thank you. Our next question comes from Barry Oxford with Colliers Securities. Your line is open. Great. Thanks, guys. real quick, to build off of Rob's question, you guys were talking about, you know, match funding, acquisitions and dispositions. Do you guys feel fairly confident that you'll be able to get some sort of spread, i.e., you know, sell at lower cap rates and buy at higher cap rates, you know, over the next few quarters, rather than just making sure this isn't an exercise of running in place? Yeah, for sure. We certainly wouldn't be doing it if we're just running in place. There's always. Right. Right. I didn't mean to imply that. No, no. No, no, that's fine. No, we're- Yeah ... yeah, looking for this recycling program to not only improve the portfolio, but be accretive on the acquisition side. You feel that's doable as far as what you're seeing in the marketplace? Yes. All right. Thanks, guys. Thank you. Yep. Thank you. Our next question comes from RJ Milligan with Raymond James. Your line is open. Hey, guys. Good morning. Just wanted to follow up on Wes's question. Just thinking about leverage. Leverage has come down considerably over the past 18 months. You know, thinking about how do you guys weigh buying back shares versus, you know, now you have leverage within your targeted range? Yeah. I think for us, buying back shares has a sort of double benefit, right? Because we're trading at a material discount to NAV, and to John's point, an implied cap rate that's significantly wide of private market values. It also reduces the G&A load from the management fee, and so there's sort of a double benefit there. I think everybody should expect that we'll stay below that 7x net debt to EBITDA. The share buyback program, while it'll be opportunistic, it's not going to be a material levering up event just to take advantage of what's happening in the market. Got it. Thanks, Matt. Then, John, just, I was wondering if you could provide some commentary on the overall market and transaction market. Clearly, we've seen a bigger gap out in cap rates for non-rated below investment grade credits. I'm just curious, you know, how you think the next 6-18 months play out for investment grade properties and what sellers' expectations are. Do you anticipate that they're going to be, you know, hoping or waiting for declining interest rates and therefore, you know, will stick to their pricing? Do you see some give there on the seller side for investment grade? Yeah, I mean, I think, you know, sellers probably realize that they're not gonna be banking on cap rates, tightening or going lower. If they need to sell, wanna sell, you know, this market is good enough, especially comparable to where interest rates are. I don't, I don't think you see any, like, false hope out there from people that. You know, I would say that people that don't have to sell, aren't selling because they, you know, like the properties, and they're not comfortable with their alternative investments, and so they're sitting tight. People that, you know, whether they have debt coming due, they have investors that want capital, they're meeting the market. Then I would say, on the marginal assets out there, whether non-IG credits and just, you know, maybe, you know, marginal locations, you're definitely seeing buyers being picky, choosy, and so those properties are just kind of languishing because there's just less appetite to take on that risk. You know, the cap rates are wide enough there, where the sellers, you know, just don't wanna take the pain. Understood. All right, thanks, guys. Thank you. Thank you. Our next question comes from Michael Gorman with BTIG. Your line is open. Yeah, thanks. Good morning. John, I just wanted to ask about the development funding side of the equation, and I'm just curious, kind of the scale of the opportunities that you're seeing there. Also, understanding that you have the option or at least the look to take these properties out at the end, how do you balance out the opportunity and being opportunistic in terms of the earnings potential now versus, you know, layering on a lot of higher-yielding investments that could burn off in a couple of years from now and maybe create a bit of an FFO headwind? How do you balance that out? Yeah, I mean, look, that's definitely a high-class problem, is that you're investing with high yield now that may be burn off in the future, and what's the world look like? Are you reinvesting at lower rates? We'll take that risk, if you will, because, you know, we're getting paid outsized returns on quality real estate because of the non-functioning debt market. The opportunity set for that is larger than we can accommodate. It's nice being picky and choosy on what we do, we'd like, yeah, wish we could do more, it'll keep us busy here. Okay, great. Matt, just a quick one. on the dividend side, what does the retained cash flow look like now? do you have any room, as, you know, as maybe FFO grows as a result of some of these new investments, to keep the dividend steady and retain more cash flow? Or are you kind of at the baseline in terms of the taxable payout? Yeah, it's a good question. you know, free cash flow today is called plus or minus $6 million-$7 million. Certainly the payout ratio is attractive, and we've been able to retain a decent amount of cash flow relative to the size of the company. you know, it's a balance, growing the dividend, especially with the net investment spreads that we're driving on the asset recycling side, but also retaining cash flow to grow the platform. We have some flexibility there that we'll evaluate going into the back half of the year and probably more specifically in the fourth quarter. you know, we're conscious that investors, especially on the retail side and the fixed income side, also like to see some dividend growth as well. Understood. Thanks for the time, guys. Thank you. Thank you. There are no further questions at this time. Thank you all for your participation. This does conclude the program, and you may now disconnect. Everyone, have a great day.