Core Insights - The article discusses the anticipated rotation between asset classes, highlighting sectors poised for outperformance in 2026, particularly focusing on manufactured housing, discounted preferreds, and triple net REITs. Group 1: Manufactured Housing - Manufactured housing (MH) is expected to outperform due to its price advantage over site-built housing, making it a viable solution for many consumers facing high housing costs [3][4]. - Flagship Communities (MHCUF) demonstrates strong fundamentals with a same-store NOI growth of 10%, yet trades at a low valuation of 14.5X AFFO, which is significantly below the typical 20X AFFO for such growth rates [5][8]. - The sector can sustain organic rent growth of 5%-8% annually for the next decade, contributing to robust NOI growth of 8%-12% across the industry [4][5]. Group 2: Discounted Preferreds - Preferred stocks, particularly those of Gladstone Land (LAND), are currently mispriced, with the market treating them similarly to common stocks despite their different payout profiles [11][12]. - LAND's preferreds are seen as highly opportunistic due to their stability and the underlying asset class of farmland, which has a strong asset value protection [13][22]. - The preferreds have a total liquidation preference of $392 million, with sufficient asset coverage to protect against declines in farmland value [26][24]. Group 3: Triple Net REITs - Triple net REITs, such as Broadstone Net Lease (BNL), are positioned for recovery as the market has undervalued them based on past low growth rates, ignoring potential future growth [32][45]. - The average triple net REIT is currently trading at an AFFO yield of 8.1%, which is considered undervalued for a growing stream of cash flows [45][46]. - BNL is highlighted as a strong investment opportunity due to its combination of value and durable growth, trading at 11.51X AFFO with an 8.7% AFFO yield [46][49].

Core Thesis - Alpine Income Property Trust (PINE) presents a compelling value proposition with an AFFO yield of nearly 12%, which comfortably supports its 7.6% dividend, but faces various challenges that may affect its quality compared to peers [1][2] Value Proposition - The company's value is driven by a low cost-basis and a stock price that results in an enterprise value of $150 per square foot, significantly below the replacement cost of over $200 per foot [3] - Each $100 invested in PINE generates $11.94 of AFFO, with comparable properties trading at cap rates of 6.5%-9%, indicating that PINE offers superior cash flow compared to direct real estate investments [4] Cash Flow Stability - Cash flows are secured with a weighted average lease term of 9 years, and 50% of tenants hold investment-grade ratings, which is favorable compared to triple net peers [7][9] Market Position - PINE's AFFO multiple of 8.7X is low relative to the broader market and even within the REIT sector, where the average AFFO multiple is 13.1X, indicating that while PINE is cheap, the valuation gap with peers is not substantial [11][12] Quality Concerns - PINE is considered lower quality due to its exposure to cyclical retailers, with a significant number of at-risk tenants, including pharmacies and dollar stores, which have faced recent struggles [13][15] - The company has a longer list of watchlist tenants, and recent bankruptcies among tenants like At Home raise concerns about future cash flows [19][20] Loan Portfolio - PINE has a loan portfolio totaling $69.6 million, which is substantial relative to its $212 million market cap, and the expiration of these loans could negatively impact AFFO [22][23] Future Growth Outlook - Despite an attractive AFFO multiple, PINE's growth is expected to be weaker than peers over the next four years due to elevated tenant churn and the roll-off of lucrative loans [27] - The company may become a more attractive investment if it successfully replaces troubled tenants with more stable ones or if it can reinvest expiring loans into equally high-return investments [29]