Alpine Income Property Trust, Inc.

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Alpine fourth quarter 2022 earnings conference 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 1-1 on your telephone keypad. Joining us today are Mr. Matt Partridge, Chief Financial Officer, and Mr. John Albright, Chief Executive Officer. At this time, I would like to turn the conference over to Mr. Matt Partridge. Sir, please begin.

Good morning, everyone, and thank you for joining us today for the Alpine Income Property Trust's fourth quarter and year-end 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 release, and most recent investor presentation, 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. We had a nice finish to the year as we continued to execute on our accretive asset recycling program, reduce leverage, and improve the overall quality of our retail net lease portfolio. Our acquisitions during the quarter emphasized high-quality, investment-grade-rated tenants, demonstrating strong operating trends in well-performing sectors, such as grocery, home improvement, sporting goods, and dollar stores. In total during the fourth quarter, We acquired seven properties for just under $42 million at a weighted average cap rate of 7.4% and a weighted average remaining lease term of 8.2 years. Notably, 100% of the acquired rents come from tenants with an investment grade rating, including the first Home Depot in our portfolio, as well as Family Dollar, Dollar Tree, Dick's, Sporting Goods, and Walmart. For the whole year 2022, we acquired 51 retail net lease properties for just over $187 million at a weighted average going in cap rate of 7.1% and a weighted average remaining lease term at acquisition of 8.7 years. 77% of the rents we acquired during the year were from tenants with an investment grade credit rating and more than half of the rents acquired are in MSAs with over a million people. While we did see cap rates move higher, As we made our way through 2022, we've seen a decrease in the number of assets listed for sale in the market to start 2023, which is contributing to a higher or tighter bid-ask spread. Sellers with high-quality properties in strong markets with in-demand tenants and sectors have maintained conviction in their pricing expectations, and we're starting to see buyers be more aggressive as they look to put capital to work to start the year. This is resulting in cap rates either holding from where they were a few months ago, which is in spite of the higher interest rates, or in the case of investment grade rated tenants and smaller price point assets, we're starting to see cap rates compressed because those assets are more easily financed at better terms, offer a hedge against continued inflation, and provide solid risk adjusted returns in a relatively volatile macroeconomic environment. On the disposition front, we sold five properties for a total disposition volume of $31 million at a weighted average exit cap rate of 6.5%, generating total gains of $6.6 million. The dispositions include properties leased to Freddy's, Frozen Custard, Big Lots, Rite Aid, and Harris Teeter. These sales and the subsequent redeployment and nearly 100 basis point net investment spread during the quarter allowed us to drive a better return on equity while moving out of some of the assets where we felt we had incremental risk. The proceeds also provided us with attractively priced capital to put to work in the acquisition market that resulted in a higher yield and increased investment grade rated tenant exposure. Year to date, we've sold 16 properties for approximately $155 million and a weighted average exit cap rate of 6.5%, or 5.9% when removing the impact of our last remaining office property we sold during the second quarter. These sales during the year generated gains of $34 million, and because we started this asset recycling process back in April, we've been able to maximize the value of the sold properties, even as interest rates moved against us. As of the end of the year, our portfolio consisted of 148 properties, totaling 3.7 million square feet, with tenants operating in 26 sectors within 34 states. Occupancy did tick lower, below 100% for the first time, as a result of a vacant out parcel we acquired as part of a property acquisition in the fourth quarter. We ascribe no value to this vacant property at acquisition, but we're cautiously optimistic we can lease the asset to drive organic rent growth within the existing portfolio. Since our last earnings call in mid-October, Dick's Sporting Goods is now our number two tenant, joining Walgreens, Family Dollar, Dollar Tree, Lowe's, and Dollar General as our top five tenants. all of whom carry investment grade ratings. We enter 2023 with 54% of our total annualized base rents coming from tenants or the parent of a tenant with an investment grade credit rating, which we anticipate will grow throughout the year as we continue to recycle out of non-investment grade rated tenants and into high quality industry leading retailers with balance sheets positioned to outperform in nearly any economic environment. We're hopeful that as our portfolio metrics start to better parallel our higher valuation multiple peers, we'll see an uptick in our own stock valuation, reflecting the continuous refinement of our portfolio, our stock's increased liquidity, a de-risk balance sheet, and consistency of execution as we've continued to drive attractive returns on equity for the benefit of all of our shareholders. Matt will outline the details of our 2023 guidance in a moment, but it's important to note that we do plan to continue our opportunistic approach to asset recycling. We've identified a number of properties that we think will garner strong pricing in the market as a result of the quality of the underlying real estate, allowing us to continue to generate attractive net investment spreads on the redeployment of the proceeds. I'll now turn the call over to Matt to talk about our performance in the quarter. and the year as well as our capital markets activities improved balance sheet and 2023 guidance.