Good morning, and welcome to the Alpine Income Property Trust Fourth Quarter and Full Year Earnings Conference Call. All participants will be in listen-only mode. Please note this event is being recorded. I would now like to turn the conference over to John Albright, President and CEO. Please go ahead.

Good morning, everyone and thank you for joining us today for the Alpine Income Property Trust fourth quarter and yearend 2020 operating results conference call. With me is Matt Partridge, our new Chief Financial Officer. Before we began, I’ll turn it over to Matt to provide the customary disclosures regarding today’s call. Matt?

Thanks, John. 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 in our earnings release, which contain reconciliations of non-GAAP financial measures we use on our website at alpinereit.com. With that, I will now turn the call back over to John.

Thanks, Matt. In our first full operating year 2020 was filled with unprecedented challenges and a number of notable achievements for us here at PINE. We had a significant fourth quarter, capping off a very strong first year despite the challenged macroenvironment, highlighted by outstanding recollections, strong dividend growth and beating our full year acquisition guidance. In the fourth quarter, we invested in three properties in Texas, Arizona and Washington State for $17.4 million at a weighted average cap rate of 7%. For the second quarter in a row 100% of our required rent from investment-grade tenants where we continue to add exposure to Dollar General and Walgreens while also adding Kohl's to our portfolio of high-quality list of tenants. The weighted average lease term of our fourth quarter investments was nearly 10 years at the time of acquisition. For the full-year 2020, we acquired 29 properties for $116.6 million at a weighted average cap rate of 6.9% performing towards the top end of our cap rate guidance exceeding our acquisition volume guidance. Taking a step back and looking at the acquisitions we made throughout the year, we were able to invest in a mix of industry-leading tenants and credits and high quality real estate. This performance throughout the pandemic demonstrated the attractiveness and long-term viability of operational success at the various locations. We added exposure to 10 sectors in 2020 including the grocery, convenience store, dollar store, automotive parts, consumer electronics, home furnishings, entertainment, pharmacy, general merchandising QSR sectors with 76% of acquired annualized base rent focused on the better performing grocery, general merchandise dollar sourcing resource. Over 60% of the rents acquired during 2020 was concentrated investment-grade rated tenants including best-in-class operators such as Dollar General, Walmart, 711, Kohl's and Walgreens in the 28% of acquired rents associated with non-rated tenants, 61% was related to Hobby Lobby who was maintained an credit profile and sector-leading operations in spite of the challenges many tenants have faced during the pandemic.

Thanks John. As John referenced, the quality of our assets and stability of our tenants resulted in excellent recollections during the fourth quarter of 2020 and for the first two months of 2021 where we collected 100% of contractual base rents for each month. Total revenues for the fourth quarter of 2020 were $5.4 million and total revenues for the full-year 2020 were $19.2 million. The calculation of the percentage contractual base rent includes the required repayments of previously deferred rent and I'll remind everyone that 100% collection rate represents rents that were contractually due in each respective month and include the positive and negative effect of rent deferrals or abatements agreed to prior to the rent payment date.

Thanks Matt. As evidenced by the execution of our investment strategy since the IPO, strong portfolio performance in 2021 guidance we're excited about our accomplishments and looking forward to what the future holds for Alpine. I want to thank our shareholders for their continued support and congratulate our team on a terrific year. At this time, we'll open it up for questions. Operator?

We'll now begin the question-and-answer session. The first question comes from Barry Oxford of D.A. Davidson. Please go ahead.

John if you could give me a little color on the acquisition pipeline as it relates to the type of tenants that you're currently looking at right now, I know you don't want to mention a specific tenant, but if you can give me the kind of types of tenants that are currently kind of in that pipeline?

So the pipeline includes various amounts of tenants who we don't presently have in ownership. So it would be great on the diversity of their well-known tenants with very substantial operations. So I don't want to probably go too much into categories but whether the company's are dominant in their sector or the real estate that we're looking at is so strong and strong performing store in operations for tenants that we feel very confident that even if this operations and work in the future that the real estate will be very strong for another operator. So it's a little bit of a mix, but the good news is it's a mix of tenants that we don't presently in the ownership.

And when you guys are not competing for these acquisitions, is the environment more competitive now today than maybe it was previously? What are you saying and then are there any different types of buyers that are showing up at the table than what you had typically seen?

Yeah I'd say that for the really favored type of 1031 tenant property, you're seeing really a lot of competition and cap rates compressing whether it's a grocery store with 20 years or something like that, you're going to see some unusually low cap rates than traditional. So there is a flop to quality and strength and durability, but what we're looking for we're finding our pockets and we're finding really a good attraction as part of different opportunities that we're looking at potential opportunities where the real estate is very strong, tenant may have renewed but it's just too big for the mom-and-pop 1031 capital. And it's a lot of one-off type transaction where we can kind of -- we can focus on it really quick and execute really quick. So before it gets too far out into the competition.

And then John just lastly, you touched on the ground lease and that you wanted to do a little more of that. Can you give me a sense of how deep that market is and maybe how much volume you're looking at right now? Well obviously the ground lease kind of category is such a favored sector. So we wanted to -- we never had highlighted it before that we own these ground leases, but given that people are looking at companies that are trading at incredible multiple, we decide we can definitely need to highlight that we have ground leases in our portfolio and we're looking at acquisitions with ground leases, but it’s not unusual structure for us to execute on whether it's an origination or an acquisition, so you're going to see us highlighting it more in the future.

The next question comes from Rob Stevenson of Janney. Please go ahead.

Matt, the guidance, what level of acquisitions beyond the $4.5 million that you’ve done thus far in the first quarter is it based on?

Yeah Rob, obviously there is a lot of assumptions in the guidance and given the size of the company and the fluid nature of a lot of those assumptions, timing probably the most impactful, we're going to disclose specifics. So I am not going to outline what the volume assumptions are very because it's based on the low-end and the high end, but you can expect us to be pretty active this year on the acquisition front.

Okay. And then I guess the other question on that would wind up being like how are you guys thinking about capital raising at this point with given your cash position, you still got debt capacity etcetera, but the stock price is up. It's obviously a strong market for preferred as well, how are you guys thinking about the equity side of the capital equation at least here early in 2021?

Yeah obviously has done pretty very well over the last 30 days, yesterday probably the best day for the company from a stock price performance standpoint. We're focused on driving risk adjusted returns. To John's point on the acquisitions pipeline, we've got a lot of good opportunities we're looking at. So we're trying to find opportunities that are high-quality that are additive to the portfolio and then we'll evaluate the right capital to fund those transactions as they materialize.

Okay. How exposure to Dollar General do you feel comfortable with? You guys have done a bunch of those over the last few quarters. Was there a upper limit as you're obviously the wells and the Helton stuff you inherited at the beginning of the company, but from the standpoint of adding incremental Dollar Generals, is there a upper limited that you and the board feel comfortable with before you say hey, I need to diversify even if it's within other dollar store operators or within that merchandise category?

Yeah so I think you can it's safe to say that as you’ve mentioned we've done a lot of Dollar General lately, but I think that's kind of the invest for now. So as we grow the company, we're certainly -- we certainly like that operator. They're very strong as you can get almost in as part of credit and their performance and we have long leases and so we like the exposure definitely, but you can see the yield probably see going forward this year that exposure will go down as we grow the portfolio with other credits.

Okay. And then last one for me John, how much have you and the board held back the dividend growth just to be prudent given COVID in the market environment versus if that had never really happened, how much more aggressive the dividend growth would have been over the last year?

Look obviously there is room as you can see on the payout ratio for more growth, but you're just being conservative as we move it up. So certainly as we progress, it will move up given just what we have to pay out as a REIT for sure. So we're not looking to increase it dramatically and pull it forward just going to be methodical about it.

And Matt, where are you given the new dividend level versus payout of taxable net earnings?

Yes so at the end of the year, we were just over 100% taxable income. Obviously we weren’t fully invested throughout 2020. So we had to grow and a little bit to the dividend. I think you're going to expect us to target around 100% taxable income. Free cash flow is our most efficient form of equity but with the existing guidance to John's point, it's a pretty attractive payout ratio right now.

The next question comes from Michael Gorman of BTIG. Please go ahead.

Thanks. Good morning. If I can follow-up on that one on the dividend, you talked about free cash flow as a source of equity. As you think about the payout ratio, you definitely have plenty of room there, but how do you balance that or how do you think about balancing that returning cash flow to shareholders versus having that source of equity to continue to fund your growth in 2021? How do you strike that balance?

Yes so it's a good question Michael. The board looks at it on a quarterly basis. Obviously, we have our own internal projections for the year and beyond this year and we try to balance the growth with the payout ratios that we were talking about. I think for us, providing a consistent and predictable dividend is first and foremost for the shareholders, but well covered debt and dividend given our size and growth profiles probably a pretty important consideration at this point for the board.

And John you talked about some of your market activity in 2020 and some of the concentrations and demographic trend that you're seeing and I just wonder if you’ve seen any cap rate moves or cap rate arbitrage between markets based on what happened in 2020? Have you seen cap rates move down in some of your target market versus some of the more traditional coastal-type markets? Have you seen any cap rate movement yet because of what happened in the pandemic?

Yes I think you're not seeing as much the cap rate improvement a little bit, but you're seeing a lot more buyers. So definitely investors have shifted the focus from the Northeast or something like that or even California is still a strong market for capital but definitely those California investors are now looking at showing up in Arizona and Texas and so forth. So you're seeing more buyers, but not cap rates not as much compression.

And then I apologize if I missed it, but you mentioned the unlocking of the ground lease, which is obviously great value add. What was kind of the consideration on the other side in your conversations with the location if you could share for them giving up that out parcel or given up the rights that out parcel?

Yeah they had gone through bankruptcy and we had basically because of their lease default, we had the chance to just terminate them and that site that they had or have is very attractive and they're paying a very low rent and they have a very large parcel. And so for us allowing them to come back into the lease, we got the out parcel approval from them, so we can go out and execute on out parcel whether it's ground lease or a cell and we have several offers already in combination of a sale in the lease. So it just shows the strength of the location that we have plenty of opportunity there. So we'll try to pick the best we can as far as rent and credit, but that's how it shook out.

And then last one for me just Matt, I didn’t see it in the release, have you guys made any use of the ATM on a year-to-date basis just looking at what's happened to the stock price?

No we haven’t used the ATM year-to-date.

The next question comes from Wes Golladay of Robert. Please go ahead.

Did you guys mention how much of I guess benefit from the schedule repayments this year from the deferred rent?

Hey Wes no, that's a good question, so if you look at the 2020 financials, we have a specific line item for COVID deferrals and repayments, which had a net impact of $338,000 for 2020. We expect the impact for 2021 to be around $400,000 of repayment that are positive which is call it $0.05 upside on the current share count for AFFO on a relatively basis.

And then maybe you could talk about the I guess long term plans with the balance sheet. I know timing of the transactions is going to probably move the numbers, if you were to do one this year, but maybe just a big picture, would you look to the bank loan market and if so, what kind of rate could you borrow at?

So currently we've obviously got over $40 million of availability on the facility. So in the near-term I think what you can expect us to do is probably term out through the banking relationships, term loan as we continue to grow the outstandings on the facility to stager out the maturities and then we'll see how the other capital sources and uses materialized, but I think for the foreseeable future, continuing to grow the banking relationships, grow the bank group and terms out the balances is the long-term strategy.

And then maybe one on acquisitions, are there any constraints outside of equity for the company, now that equity price has clearly rebounded, but I guess is there what the deal flow would that be a potential constraint or resources at the company. Is there anything other than capital?

Look we're in good shape. We have a good pipeline in front of us and it’s all about kind of executing and we have a team that's well structured. We run people last year and so everything is in good shape and for us really concentrating on executing on some acquisitions in the first quarter and then we'll see how things progress.

The next question comes from Craig Kucera of B. Riley Securities. Please go ahead.

Thanks for the color on the deferred rent. Is that going to be weighted more towards the first half of 2021? I think that was the expectation last quarter or does the activity in the fourth quarter make that a little bit more ratable throughout 2021?

That's a really good question, Craig. It will be weighted more towards the first and second quarter. So I think you can expect approximately half of that in the first quarter and then it's a little bit more ratable throughout the rest of the year.

And as far as the pipeline goes, you have the two large office assets that performed very well during COVID. Are you looking at primarily retail as you were I think in the second half of the year of any office assets you're potentially looking at?

It's a 100% retail. There is no office in the pipeline, but we're mainly focused on retail.

Got it and as you become a larger company over time, do the office assets potentially become sources of additional capital just to become more of a pure play in retail or are those better long-term holds?

Look it definitely could be that opportunity to become pure retail, but we know the value of those properties. So we have to execute on a cell there where we know that the value being fully recognized by the buyer. So it's nothing that's going to happen anytime soon, but could be in the future when things stabilize in the macro market.

Got it and just circling back to capital, I know you still have some room on the line credit $40 million plus, is there an opportunity or an existing accordion feature there if you needed it.

There is -- when we expanded the facility in the fourth quarter, we also expanded the accordion to take it up to $200 million obviously with additional commitments from the lender group.

And our next question comes from RJ Milligan of Raymond James. Please go ahead.

Most of my questions have been answered, but I'm curious on the more captive pipeline through CGO, do you expect to -- how much do you expect to become available through CTO this year, how much do you expect to potentially source from that revenue?

Look there are some attractive assets at CTO and as CTO continues to work through the selling this single tenant type properties, we feel like still be some opportunity for sure for Alpine this year.

Do you expect the mix of acquisitions say over the next two to three years to increase from CTO or do you think that's going to be a smaller portion of the overall total acquisitions?

I would say that it's really in the next 18 months that you would see activity if there's a good opportunity for Alpine to buy some attractive cap rates, so they will probably be in the next 18 months?

This concludes our question-and-answer session. I'd like to turn the conference back over to John Albright for any closing remarks.

Thank you very much for attending the conference call.

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.