Alpine Income Property Trust, Inc.

The conference will begin shortly. To raise your hand during Q&A, you can dial star 1. Good day and thank you for standing by. Welcome to the Alpine Income Property Trust second quarter 2022 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 will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Matt Partridge, Senior Vice President, Chief Financial Officer, and Treasurer. Please go ahead.

Good morning, everyone, and thank you for joining us today for the Alpine Income Property Trust Second Quarter 2022 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 reliefs, and most recent investor presentations in which contain reconciliations of non-GAAP financial measures we use on our website at alpinereit.com. With that, I'll now turn the call over to John.

Thanks, Matt, and good morning, everyone. As we've discussed during our first quarter earnings call, we believe we will have an opportunity to acquire high-quality property at more favorable pricing in the back half of the year as the rising interest rate environment, challenged debt markets, and volatile macroeconomics backdrop puts upward pressure on cap rates. As a result, we emphasized capital recycling in the second quarter where we locked in attractive pricing on our asset dispositions and then redeployed the proceeds into better risk-adjusted opportunities with stronger tenant credits and more favorable cap rates. During the quarter, we sold $73 million of properties at a blended cap rate of 7.1%, generating gains on sale of $15.6 million, or $1.15 per share. This includes the previously announced sale of our loan remaining office property that generated a gain of $7 million. If we remove the office property from our disposition statistics, we sold $34 million of retail assets at a blended cap rate of 5.8%, generating more than $8.5 million of gains. Given that office investments are no longer part of our portfolio, we think the retail-only execution is a more relevant mark to market of our portfolio and highlights the excellent quality of our real estate we've been able to acquire over two and a half years. The retail property dispositions were largely focused on non-rated or below investment grade tenants where we had elevated exposure to both the tenant and the sectors in which they operate. The sold properties were leased to Sportsman's Warehouse, At Home, Hobby Lobby, and Cheddar's Scratch Kitchen. allowing us to reduce concentrations in the sporting goods, home furnishing, general merchandise, and casual dining sectors. On the acquisition front, we've emphasized discount and value-oriented retailers that should benefit from consumers becoming more price conscious as they look to maximize their buying power as they grapple with significant inflation pressures and rising costs of capital. During the quarter, we acquired 19 properties located in nine states, leased to industry-leading operators such as Best Buy, Little Caesars, LA Fitness, Dollar General, Harbor Freight, Dollar Tree, and Family Dollar. Our second quarter acquisitions were purchased at a weighted average cap rate of just over 7%, resulting in a very attractive net investment spread relative to the 5.8% cap rate on our retail property dispositions. Year-to-date, we've acquired 35 net lease properties for $109 million at a weighted average going-in cash cap rate of 6.9% and a weighted average remaining lease term at acquisition of 9.4 years. Subsequent to the end of the quarter, we sold our Scarbles Car Wash in Jacksonville, Florida for a 4.8% cap rate and we have invested the remaining disposition proceeds that were on our balance sheet in the form of 1031 restricted cash into a property leased to Lowe's. Today, our portfolio consists of 143 properties totaling 3.4 million square feet with tenants operating in 26 sectors in 35 states. Taking into account these third quarter transactions, our top three tenants are now Walgreens, Lowe's, and Dollar General. which all have investment grade credit ratings. With all of the ins and outs related to our year-to-date transaction activity, our 100% retail portfolio is now much more comparable to our peers who currently have much higher valuation multiples. As we continue to sell at low cap rates and reinvest at higher yields, we're confident we'll be able to incrementally de-lever our balance sheet improve our overall property metrics, and drive higher quality FFO and AFFO per share. I'll now let Matt talk about our performance in the quarter, capital market activities, and increased guidance.