Mullen Group Ltd. [PINE] Q4 2022 Earnings Conference Call February 10, 2023 9:00 AM ET

Company Participants

John Albright - President & CEO

Matt Partridge - CFO

Conference Call Participants

Gaurav Mehta - EF Hutton Group

Rob Stevenson - Janney Montgomery Scott

RJ Milligan - Raymond James

Matthew Erdner - JonesTrading

Michael Gorman - BTIG

Wes Golladay - Robert W. Baird

Craig Kucera - B. Riley Securities

Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Alpine fourth quarter 2022 earnings conference call. [Operator Instructions]. 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.

Matt Partridge

Good morning, everyone and thank you for joining us today for the Alpine Income Property Trust 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 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.

With that, I’ll now turn the call over to John.

John Albright

Thanks, Matt. We had a nice finish to the year, as we continue 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 emphasize 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 full 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 within 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 compress 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.