Alpine Income Property Trust, Inc. (NYSE:PINE) Q2 2023 Earnings Conference Call July 21, 2023 9:00 AM ET
Company Participants
John Albright - President & CEO
Matt Partridge - CFO
Conference Call Participants
Matthew Erdner - JonesTrading
Rob Stevenson - Jannie Montgomery Scott
Wesley Golladay - Robert W. Baird
Barry Oxford - Colliers International
RJ Milligan - Raymond James
Michael Gorman - BTIG
Operator
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’ll 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.
Matt Partridge
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 laws. 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 the 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.
John Albright
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 assets 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 various 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 8.3 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 rate interest rate exposure, and no debt maturities until 2026. All 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.