Financial Data and Key Metrics Changes - For Q2 2022, the company's FFO was $0.47 per share, a 23.7% increase compared to Q2 2021, while AFFO also stood at $0.47 per share, reflecting a 20.5% year-over-year increase [15][16] - Year-to-date FFO reached $0.97 per share and AFFO was $0.95 per share, representing year-over-year growth of 23% and 16% respectively [15] - General and administrative expenses totaled $1.5 million, a 15% year-over-year increase, but offset by a 71% revenue growth [16] - The company paid a cash dividend of $0.27 per share, an 8% increase year-over-year, with a current annualized yield of approximately 6% [17] Business Line Data and Key Metrics Changes - The company sold $73 million of properties at a blended cap rate of 7.1%, generating gains on sale of $15.6 million or $1.15 per share [5] - Retail property dispositions focused on non-rated or below investment grade tenants, with $34 million of retail assets sold at a blended cap rate of 5.8%, generating over $8.5 million in gains [6][7] - The company acquired 19 properties in Q2 2022 at a weighted average cap rate of just over 7%, resulting in an attractive net investment spread relative to the 5.8% cap rate on retail property dispositions [9] Market Data and Key Metrics Changes - The portfolio consists of 143 properties totaling 3.4 million square feet, with tenants operating in 26 sectors across 35 states [11] - The top three tenants are now Walgreens, Lowe's, and Dollar General, all with investment grade credit ratings [11] Company Strategy and Development Direction - The company is focusing on capital recycling, selling lower-quality assets and reinvesting in higher-quality properties with stronger tenant credits [4] - The company anticipates acquiring between $215 million and $235 million of retail net leased properties during 2022, subject to market conditions [21] - Disposition guidance has been increased to reflect confidence in selling assets at attractive valuations, allowing for positive net investment spreads [20] Management's Comments on Operating Environment and Future Outlook - Management expects to acquire high-quality properties at more favorable pricing due to rising interest rates and a challenging debt market [4] - The company anticipates a broader economic slowdown but has increased full-year FFO and AFFO per share guidance [19] - Management is confident in the portfolio's performance despite the volatile economic environment, emphasizing the quality of the real estate and tenant performance [25] Other Important Information - The company ended the quarter with a net debt to total enterprise value of 54% and a fixed charge coverage ratio of nearly five times [18] - The company has received all deferred rent repayments related to COVID-19 [67] Q&A Session Summary Question: What is the visibility on rent escalation? - Management indicated that the range of 75 to 125 basis points for rent escalation remains a good estimate [28] Question: Are there plans to rotate out of low credit tenants? - Management confirmed intentions to continue selling lower credit tenants and reinvesting in higher quality opportunities [29] Question: What is the timeline for exploring strategic alternatives if valuation gaps persist? - Management stated that they would explore alternatives if the portfolio does not resonate with investors after further improvements [35][36] Question: How much more disposition can be done after this year? - Management indicated that further dispositions would be limited and focused on trimming around the edges of the portfolio [38] Question: What is the annualized base rent in the portfolio today? - After the acquisition of Lowe's, the annualized base rent is $40.2 million [47]
Alpine me Property Trust(PINE) - 2022 Q2 - Earnings Call Transcript