Alpine Income Property Trust, Inc.

Good day and welcome to the Alpine Income Property Trust second quarter 2023 operating results 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. Instructions will be given at that time. As a reminder, this call is being recorded. I would now 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 alpineread.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 investments. 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 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% to 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 creative net investment spreads and robust gains on sales have allowed us to reduce our leverage from 8.3 times at the end of Q2 2022 to a current 6.4 times at the end of Q2 2023. And I'm pleased to say we have no floating rates 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 outsize 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, Lisa, 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. While 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 the potential opportunity to buy assets following the completion of construction. Additionally, 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.