Participants

Philip Mays; Senior Vice President, Chief Financial Officer and Treasurer; Alpine Income Property Trust Inc

John Albright; President, Chief Executive Officer, Director; Alpine Income Property Trust Inc

Kathryn Graves; Analyst; UBS

Gaurav Mehta; Analyst; Alliance Global Partners

Rob Stevenson; Analyst; Janney Montgomery Scott LLC

Matthew Erdner; Analyst; Jones Trading

Alex Fagan; Analyst; Baird

John Massocca; Analyst; B. Riley Securities, Inc.

Craig Kucera; Analyst; Lucid Capital Markets, LLC

Presentation

Operator

Good day, and thank you for standing by. Welcome to the Alpine Q4 year-end 2024 earnings conference call. (Operator Instructions) Please be advised that today's conference is being recorded.
I would now like to hand the conference over to your speaker today, CFO, Philip Mays. Please proceed.

Philip Mays

Thank you. I would 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 contains reconciliations of the non-GAAP financial measures we use, on our website at www.alpinereit.com.
With that, I will turn the call over to John.

John Albright

Thanks, Phil. The fourth quarter was a strong finish to an excellent 2024 for PINE, as we executed successfully in all areas of the business plan.
Starting with earnings, we achieved AFFO of $1.74 per diluted share for the year, representing growth of 17%. This robust growth in earnings, along with free cash flow, permitted us to once again raise our common dividend to a new quarterly rate of $0.285 effective the first quarter of 2025. This new annualized dividend of $1.14 continues PINE's achievement of increasing its annual dividend each year since its IPO in November of 2019, while continuing to provide shareholders an attractive, well-covered dividend yield.
Driving our earnings growth was a successful quarter and a year of investment activity. During the fourth quarter, we acquired six properties for $50.5 million at a weighted average cash cap rate of 7.6%. This brings our full-year acquisition activity to 12 properties for $103.6 million at a weighted average cash cap rate of 8.2%. Our 2024 acquisitions included investment grade rated Best Buy, Dick's Sporting Goods, and Lowe's, along with three beachfront restaurants, increasing our waltz to 8.7 years from 7 years at the beginning of the year. Further, we ended the year with 51% of our ABR attributable to investment grade rated tenants.
Supplementing our 2024 property acquisitions, we originated three commercial loans during the year for $31.1 million at a weighted average yield of 10.7%. Taking loan originations and property acquisitions together, we successfully completed $134.7 million of total investments during 2024 at an average yield of 8.7%.
Additionally, during the year, we successfully pruned our portfolio, selling $62 million of property at an average cap rate of 6.9%. These dispositions reflected a strategic effort to improve the diversification of our cash flow and reduce risk, and included three Walgreens, moving Walgreens from our largest tenant in terms of ABR to our fourth largest tenant. Notably, BBB-rated Dick's Sporting Goods and BBB-plus-rated Lowe's are now our two largest tenants, each representing 10% of ABR. Additionally, we were able to reinvest net proceeds from these dispositions into new acquisitions at a positive yield spread.
As we look to 2025, we continue our investment strategy employing a barbell approach with regards to property acquisitions. On one side, we will invest in investment grade rated tenants to provide consistent and stable cash flows, while on the other side, we will seek higher yielding opportunities to provide growth and diversification. Additionally, we will continue to augment and complement our property investments by selectively originating commercial loans.
Phil will discuss 2025 earnings guidance, but I do want to make note of a couple related items. First, as you are aware, Party City filed for bankruptcy. PINE does have one Party City lease in its portfolio. This lease is for a property located in Oceanside, New York, on Long Island. The densely populated and desirable location of this property will provide us with multiple alternatives to release or sell it.
Second, in late 2024, Cinemark did not renew its lease for our theater in Reno. We are anticipating that this and had this property under contract to be sold. However, the buyer had an unanticipated event that prevented closing. Accordingly, we are now focused on selling this asset and redeploying the capital.
These two matters will be short-term earnings headwinds until lease are sold and the proceeds redeployed. As we look ahead, we see an active and attractive pipeline of opportunities across the tenant landscape and remain focused on executing our strategy to deliver for PINE's investors.
With that, I'll turn the call over to Phil.

Philip Mays

Thanks, John.
Beginning with financial results, total revenue was $13.8 million for the quarter, including lease income, $11.5 million, and interest income from commercial loans of $2.2 million. FFO and AFFO for the quarter were both $0.44 per diluted share, representing growth of 19% and 16%, respectively, over the comparable quarter of the prior year.
For the full year, total revenue was $52.2 million, including lease income of $46 million and interest income from commercial loans of $5.8 million. FFO for the year was $1.73 per diluted share, representing 18% growth over the prior year, and AFFO was $1.74 per diluted share, representing 17% growth over the prior year. Driving this earnings growth for the quarter and the year was the investment activity John discussed, along with prudent and disciplined capital management.
During the fourth quarter, we issued approximately 436,000 common shares under our ATM program at a weighted average price of $17.98 per share, generating $7.7 million in net proceeds. For the full year of 2024, we issued 1.1 million common shares under our ATM program at a weighted average price per share of $18.04, generating $18.8 million in net proceeds.
Notably, and of equal importance, during 2023 and into the first quarter of 2024, the company opportunistically repurchased 0.9 million common shares for $15.4 million and an average price of $16.26, which is $1.78 below our weighted average issuance price in 2024. Our 2024 ATM activity and net issuance of over 1 million shares allowed us to both grow and reduce leverage.
Specifically, we ended the year with net debt to EBITDA at 7.4 times compared to 7.7 times at the beginning of the year. As a reminder, we have no debt maturing until 2026, after which our debt maturities are well staggered and we have utilized SOFR rate swaps to fix the interest rate on over 80% of our debt, resulting in a weighted average interest rate of 4.1% at year-end.
Further, we had $95 million of liquidity, consisting of approximately $5 million of available cash and $90 million available under our revolving credit facility. In addition, with current in-place commitments, the available capacity of our revolving credit facility can expand an additional $50 million as we acquire properties, providing total potential liquidity of approximately $150 million.
During the fourth quarter, we paid a quarterly cash dividend of $0.28 per common share to our stockholders of record on December 12, 2024. This represents a healthy AFFO payout ratio of 64%. As discussed earlier, our Board of Directors recently approved increasing our quarterly dividend to $0.285, effective in the first quarter of 2025. After this increase, our dividend remains well covered and supported by free cash flow.
Finally, turning to guidance for 2025. Our initial earning guidance for the full year of 2025 is a range per diluted share of $1.70 to $1.73 for both FFO and AFFO. Key assumptions reflected in our initial guidance include: investment volume of $50 million to $80 million, dispositions of $20 million to $30 million, and weighted average shares outstanding of $16 million to $16.5 million.
With regards to Party City bankruptcy and the vacant theater in Reno, our guidance at this time assumes they will impact 2025 FFO and AFFO per share by approximately $0.08. However, if there is an assumption of the Party City lease and we timely execute on planned property acquisitions and loan originations, we could be on the high end of our range or exceed it.
One last note, the annual run rate for our external management fee is now $4.5 million, reflecting the full impact of the $7.7 million of net equity proceeds raised in the fourth quarter.
With that, operator, please open the line for questions.

Question and Answer Session

Operator

(Operator Instructions) Michael Goldsmith, UBS.

Kathryn Graves

Great. This is Kathryn Graves on for Michael Goldsmith. Thank you for taking my question. My first is, you decreased your Walgreens exposure in the quarter. Should we expect a further paring down of this tenant type? And in general, what's a comfortable level of exposure for you there?

John Albright

Yeah, thanks. We have another one kind of in the pipeline to sell as far as negotiations, but we're really kind of trying to time it with acquisitions. And so these properties are -- even though it's a challenge sort of credit and story, there is a market for these, so we're trying to pair them up with acquisitions. But there's probably another one coming out possibly in the quarter.

Kathryn Graves

Got it. Thank you. And then my second question, within your investment outlook for 2025, can you provide any color on maybe your appetite for acquisitions versus construction loans? And what would make you more constructive on one lever versus the other in 2025?

John Albright

Yeah. So as I've talked before in the past, we really like some of the loan opportunities we see because you're really getting an enhanced credit. For instance, the Publix-anchored sort of out parcel developments with a buffer of equity beneath you as a developer has a lot of equity in the projects. And the LTVs are certainly obviously lower than if you went out and bought these assets.
And of course, the yields are higher than owning them. So we really like the opportunity as the capital markets are still constrained for developers. And I would say that we're seeing a very active pipeline on both the loan side, as well as the acquisition, the more of the core acquisition side. So we're seeing robust sort of opportunities on both sides. So I could see us kind of being 50-50 on that sort of investment program.

Kathryn Graves

Got it. Thanks so much.

Operator

Gaurav Mehta, Alliance Global Partners.

Gaurav Mehta

Yeah, thank you. Good morning. I wanted to follow up on the commercial loan opportunity. You have four commercial loans maturing in 2025, and I wanted to ask you what your expectations were.

Philip Mays

Yeah. So we do have four maturing. I think one will actually probably pay off, three will probably extend. And we don't think there'll be any problem, as John talked about, with our robust pipeline of loans here replacing the one of them that will likely pay off. And they'll likely pay off mid-year. And we're pretty confident we'll replace that. So don't expect the balance to come down. Expect it to kind of stay where it's at and maybe grow towards the latter part of the year.

Gaurav Mehta

Okay. And then a second question on the acquisition disposition guidance. Can you provide some color on the expected timing on when you guys are planning to sell and acquire properties in the year?

John Albright

On selling which properties? So I think the pipeline is probably the strongest we've seen this time of year in the five years we've been doing this, and so we're pretty optimistic. But as you know, the deals could fall through. But I would expect sort of more of the activity to happen at the end of the first quarter.

Gaurav Mehta

Okay. Thank you.

Operator

Rob Stevenson, Janney Montgomery Scott.

Rob Stevenson

Good morning, guys. John, are The Beachside Group assets back to their full capacity after the storm damage? And is their revenue back to where you guys underwrote it at the initial deal?

John Albright

Yeah. So we were actually out there last week. And they are all open and performing, and some are performing better than pre-hurricane with new equipment, more efficient kitchens as they had the opportunity to reconfigure where they wanted to.
I would say the sandbar isn't at max capacity yet as they're -- it's really a lot. They do a lot of weddings and so forth, but they're just now getting into season. But everything's trending to either the same or better than pre-hurricane. Unfortunately, for the market, some of the competition has not come back online. So they are kind of the only game in town. So anyway, they're pretty excited kind of about their positioning.

Rob Stevenson

All right. And they had insurance -- business interruption insurance to be able to pay you for anything that is missing at this point, right?

John Albright

Correct.

Rob Stevenson

Okay. And then you and Phil talked about the Party City and the Cinemark. Beyond those two assets, are there any other locations that you expect to be vacant at some point in 2025 or early '26 at this point?

John Albright

No. And we're being proactive on things that kind of the watch list sort of tenants, for instance, At Home, we're very active in discussing about selling a couple of those. So the theater deal, obviously, last fall, we had it under contract. And unfortunately, there was a health issue with the buyer. So that really kind of messed up our plans that should have been sold last year. And so we had to restart with that.
And so we do have active offers on both the Party City and the theater. We're trying to be -- trying to get the best price possible. But we certainly will see the benefits if we decide to sell it earlier and have that capital put into production by either paying down the debt or making an acquisition or investment. And so we clearly see the benefits of monetizing those sooner rather than later. And so we may do that.

Rob Stevenson

Okay. And then you mentioned At Home, that was my last question. You talked earlier about there being a market for Walgreens today. Is there really a market for At Home assets these days, given their size and their credit rating? And is that something that you'll look to match any dispositions there to acquisitions as well?

John Albright

Yeah. I mean, we'll go ahead and we won't because they are a little bit lumpier. We won't match it up with acquisitions. We'll -- the buyer ready to buy it, then we'll move through the process with them.
And the reason there is more activity on them than you may think because of the size, as you mentioned, is that remember, these are on large parcels with a lot of parking and a large configuration at a very low basis. And you just can't find that anymore. I mean, redevelopment of any of this sort of product is closer to $300 a square foot these days with land. So ese are unique opportunities for investors, developers, tenants, and people understand that.

Rob Stevenson

Okay. And then I guess one last question for Phil. You gave guidance in terms of the numbers and the investments and dispositions, but in terms of the income statement, anything in 2025 looking to be either abnormally high line items, abnormally high or low, X, excluding revenue and interest expense, depending on what you guys do from a buy and sell and financing standpoint? Anything in G&A or anything that's going to wind up being otherwise lumpy or extraordinary that you're anticipating in 2025?

Philip Mays

No. I imagine most things will be a pretty even run rate quarterly over the year, nothing lumpy. And G&A, as I noted, our management fee, given the fact to all the equity that went out the door in the fourth quarter, is now $4.5 million on an annual basis. And that assumes we don't issue any more equity, but that's the current run rate.
But I think most things will be generally an even run rate over the year. And just absent the timing of acquisitions and dispositions, but no unusual one-time fees or kind of lumpy things that you need to worry about.

Rob Stevenson

Okay. Thanks, guys. Have a great weekend.

Operator

Matthew Erdner, Jones Trading.

Matthew Erdner

Hey. Good morning, guys. Thanks for taking the question. I'd like to talk about cap rates a little bit and kind of where pricing is there right now, given the higher-for-longer outlook. It seems like pricing has held pretty steady over the past couple of quarters. But when you strip out the loans, what is your going in cap rate on these acquisitions for kind of the past couple of quarters?

John Albright

So it's basically averaging out close to the 8% cap rate range. As you saw in the last -- in the fourth quarter, we did dive down for quality where we picked up a Lowe's to really show the market that we're the only net lease REIT with a Dick's or a Lowe's in the top five, maybe in the top 10 credit.
So trying to show the market that if you want sort of a diversification of investment, we're really the only sort of a net lease REIT that you can kind of get exposure to different credits. Everyone else seems to have the same sort of credit profiles. And so really striving to get that story told. But in general, besides diving down and picking up a quality Lowe's with a long duration, we're kind of trending to the 8% cap range.

Matthew Erdner

Got you. That's helpful. And then because you guys didn't provide any guidance, should we expect kind of the same plan in 2025, strong credit and then the loans, obviously, to boost the yield there?

John Albright

Yeah, absolutely. I think you -- hopefully, some of these deals happen, and I think you'll be impressed with the quality and the yield.

Matthew Erdner

Awesome. Great. Thank you, guys.

Operator

[Alex Fagan], Baird.

Alex Fagan

Hi. Good morning, and thank you for taking my question. So you've already mentioned with the Party City and the Cinemark that you have offers potentially. Are you planning on selling them or releasing them? And did you potentially talk about the impact on valuation?

John Albright

Yeah. So we have leasing opportunity as well. And certainly, the best, best execution would be to lease and then sell. But that would take the whole year, really, to have that execution.
And realizing how finicky the investor market is as far as stock investors feel like having the money and put it redeploying earlier is probably going to be more prudent and pay off for our shareholders. And so that's kind of -- so we do have optionality on both, whether we lease and hold or sell, but we're tending to gravitate towards the monetization.

Alex Fagan

And with the buyer that pulled out because of health issues, was there any sort of termination income or one-time income that we should expect from that?

John Albright

We got a little bit, but we really -- we could have taken more, but we obviously felt bad about the circumstances and released some escrow back that we didn't need to. But given the extreme nature of the health issue, we did that.

Alex Fagan

All right. Thank you.

Operator

John Massocca, B. Riley Securities.

John Massocca

Good morning. Maybe digging in a little bit more on the acquisition guidance. I mean, how much of that is stuff you kind of visibly see in the pipeline today or is under kind of LOI and how much is theoretical? I mean, just kind of asking that in the context of $80 million at the top end of the range is significantly less than you did last year, but you kind of were saying you felt the pipeline was stronger than it had been at any other point during this time of the year. So just kind of trying to circle that square, if you will.

John Albright

Yeah. No, that's a good point. So because these investments are fairly lumpy, we are negotiating with a fair amount of the pipeline, but you just never know what's going to happen. And then on the theoretical, it's more we have identified assets that we're pursuing, but we don't know whether we'll win them at the yields that work for us. And so I would say it's what we have that we're negotiating where terms have been really agreed upon is a fair amount of the guidance.

John Massocca

Okay, that's helpful. And then in terms of yields on those investments, I mean, is it going to be comparative to last year? I mean, has the cap rate market moved at all given some of the volatility in interest rates or macro uncertainty?

John Albright

I would say that the yields on the structured finance investments have maybe come down slightly. And then the yields on the acquisitions have either been steady from what you've seen in the past or maybe even come up a little bit as far as higher yield.

John Massocca

Okay. And then on guidance again, any credit loss kind of baked into that number beyond the two vacancies you called out specifically?

Philip Mays

Yeah. I mean, we always keep a small general reserve in the forecast, but we don't see anything large that's looming right now.

John Massocca

Okay. And then last kind of detail one for you, Phil. Real estate expense kicked up a little bit quarter over quarter. Was that just reflecting the situation in Reno or was there something else going on there?

Philip Mays

Yes. The Reno lease expired in November and it kind of kicked up primarily due to that.

John Massocca

Okay. That's it for me. Thank you very much.

Operator

Craig Kucera, Lucid Capital Markets.

Craig Kucera

Yeah. Thanks. Good morning, guys. Phil, about half of the revolver balance now is floating. Are you contemplating any swaps there? Or are you likely to keep that floating?

Philip Mays

So yeah. So it's about $100 million outstanding on the revolver. As you mentioned, half is swapped and $50 million is not swapped. We might consider, if the balance starts to get up a little higher, just it kind of depends on how the timing of acquisitions and dispositions lay out. We want to always have some flexibility there, Craig, to be able to pay down the line rates.
And when it's swapped, then you're just sitting on the cash earning nothing. So if it gets -- if it continues to get up a little higher, we'll probably look at swapping. Or we may opportunistically do it if there's a dip in rates. We might consider doing it a little earlier.

Craig Kucera

Got it. Just one more for me. I guess you guys have had a really good track record of getting a positive cap rate spread on your acquisitions and dispositions. Is that still anticipated this year? Or does the fact that some of the assets you're looking to sell might need to be leased up to kind of maximize the value?

John Albright

Yeah. I mean, there's definitely going to be some assets like the Walgreens and maybe At Homes that will be at yields that are the same or higher than what we're acquiring. So you won't see that accretive recycling. But with regards to Party City and the theater, I mean, those are fairly chunky amount of money for our small company that's obviously earning negative that once we get that redeployed, we'll be very accretive.

Craig Kucera

Okay, great. Thanks.

Operator

Thank you. And this is going to conclude our question-and-answer session. Ladies and gentlemen, this is also going to conclude today's conference call. Thank you for participating and you may now disconnect. Everyone, have a great day.