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DATE
Friday, October 24, 2025 at 9:00 a.m. ET
CALL PARTICIPANTS
Chief Executive Officer — John P. Albright
Chief Financial Officer — Philip K. Mays
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TAKEAWAYS
AFFO per Share Growth -- AFFO per share increased 24.5% year-over-year, reported at $0.46 per diluted share.
FFO per Share -- Also reported at $0.46 per diluted share, reflecting 24.5% year-over-year growth compared to the prior year.
Total Quarterly Revenue -- $14,600,000, with $12,100,000 from lease income and $2,300,000 from interest income on loan investments.
Dividend -- Quarterly cash dividend of $0.285 per share, annualized yield was approximately 8.25%, with an AFFO payout ratio of 62%.
Property Acquisitions -- Acquired two ground-leased Lowe's properties for $21,100,000 at a 6% cap rate and 11.6-year WALT; total year-to-date property acquisitions of $60,800,000 at a 7.7% cap rate and 13.6-year WALT through Q3 2025.
Property Dispositions -- Sold three assets for $6,200,000; Year-to-date through Q3 2025, dispositions totaled $34,300,000, of which $29,000,000 excluding vacant properties was sold at an 8.4% exit cap rate.
Portfolio Metrics -- 128 properties totaling 4,100,000 square feet across 34 states, 99.4% portfolio occupancy, and 48% of ABR from investment grade tenants.
Loan Originations -- Originated two loans and one upsized loan totaling $28,600,000 at a 10.6% weighted average initial yield; $74,800,000 of loan commitments year-to-date through Q3 2025 at a 9.9% yield.
Post-Quarter Loan Activity -- Originated three loans since Q3 2025, including a luxury residential development in Austin, Texas, with a $14,100,000 initial funding (total commitment $29,500,000 for phase one, up to $31,800,000 phase two) at an interest rate structure starting at 17% and stepping down over time.
Current Loan Portfolio -- As of the earnings call on October 24, 2025, the loan portfolio was approximately $94,000,000 at a weighted average interest rate of 11.5%; $21,000,000 scheduled to mature in 2026 at a 10.4% weighted average rate.
Liquidity Position -- $61,000,000 of liquidity at quarter end, with the revolver expandable to a total potential liquidity exceeding $90,000,000 via incremental bank commitments.
Impairment Charge -- Recorded a $1,900,000 impairment related to a Walgreens property currently under contract to be sold.
Annualized Base Rent (ABR) -- $46,300,000 on a straight-line basis at quarter end, with approximately $2,900,000 from restaurant properties acquired via sales leaseback in 2024, classified as interest income under GAAP.
2025 Guidance -- Increased full-year FFO and AFFO guidance to a range of $1.82-$1.85 per diluted share for 2025, up from $1.74-$1.77.
Credit Rated Tenant Exposure -- Credit rated tenants declined due to downgrades or lost ratings, most notably Walgreens and specific others, as discussed.
SUMMARY
Alpine Income Property Trust (PINE 0.93%) is shifting capital allocation into higher-yielding originated loans with rates up to 17%. The strategic pivot includes expanded acquisition of investment grade tenants, exemplified by Lowe’s becoming the portfolio’s largest by ABR, and an increased focus on recycling capital via continued property and loan dispositions. Management emphasized robust liquidity, flexible capital deployment between property and loan investments, and an intent to maintain above-market dividend coverage while managing leverage within committed facilities.
Philip K. Mays stated, activity is now approximately $94,000,000 at a weighted average interest rate of 11.5% as of October 24, 2025, emphasizing continued growth in loan balances post quarter-end.
Albright signaled that the loan origination strategy has evolved from "opportunistic" transactions to a repeatable, permanent fixture in the capital allocation model, responding to borrower demand for flexibility and speed over bank financing.
Management confirmed that proceeds from 2026 loan maturities, senior loan sales, property dispositions, and the credit facility will be used to fund new loan commitments.
Albright clarified the Austin, Texas, residential loan has full entitlements for both phases, mitigating development risk, with a loan-to-value characterized as "in the seventies," as described by management during the earnings call.
Exiting lower-rated and vacant assets remains a priority, with ongoing disposition of legacy Walgreens, Advance Auto Parts, and various dollar stores to boost overall credit quality.
Mays specified that any loan sales before year-end would be classified as dispositions and could push total 2025 disposition volumes above the high end of guidance.
Dividend increases are expected to remain minimal to retain capital for asset allocation needs, with REIT payout obligations serving as the primary constraint.
INDUSTRY GLOSSARY
WALT (Weighted Average Lease Term): The average remaining term in years across all leases in the property portfolio, weighted by rental income.
ABR (Annualized Base Rent): The gross annual rental income derived from the property portfolio, excluding expense reimbursements or straight-line adjustments unless otherwise specified.
Cap Rate (Capitalization Rate): The initial yield on real estate investment, calculated as net operating income divided by acquisition cost.
AFFO (Adjusted Funds from Operations): A REIT performance metric adjusting funds from operations for capital expenditures and certain non-cash items, providing a proxy for recurring cash flow available to shareholders.
FFO (Funds from Operations): An industry-standard measure for REIT earnings, adding depreciation and amortization back to net income while excluding gains or losses from property sales.
Full Conference Call Transcript
John Albright: Thank you, Jenna, and good morning, everyone. We are pleased to report another strong quarter highlighted by AFFO per share growth of 4.5% compared to the same quarter last year and meaningful investment activity both during and shortly after the quarter end. We believe this investment activity has set a foundation for continued earnings growth through the remainder of 2025, and into 2026. Starting with our investment activity, during the quarter we acquired two properties ground leased to Lowe's for $21,100,000 at a weighted average initial cap rate of 6% and a weighted average lease term or WALT of 11.6 years.
Investment grade rated Lowe's is now our largest tenant by AVR surpassing investment grade rated DICK'S Sporting Goods, which now ranks number two. Year to date, through the third quarter, property acquisition volume totaled $60,800,000 at a weighted average initial cap rate of 7.7% in a WALT of 13.6 years. Regarding the property dispositions during the quarter, we sold three assets for $6,200,000 including an Advance Auto Parts, our vacant theater in Reno, and a vacant property formerly leased to a convenience store. Year to date disposition volume through September 30 was $34,300,000 of which $29,000,000 excluding vacant properties was sold at a weighted average exit cap rate of 8.4%.
As of quarter end, our property portfolio consisted of 128 properties totaling 4,100,000 square feet across 34 states, with approximately 99.4% occupied with 48% of ABR derived from investment grade rated tenants. In a WALT of 8.7 years. Additionally, after the quarter end, we acquired a four-property portfolio for $3,800,000 with a weighted average initial cap rate of 8.4% and went nonrefundable on a sales contract of one of our eight remaining Walgreens for $5,500,000. Now moving to our loan investments. As a result of our long-term reputation and deep relationships, we continue to see and capitalize on exciting opportunities to originate high-yielding quality loans with strong sponsors at compelling risk-adjusted returns.
During the quarter, we originated two loans and one upsized loan totaling $28,600,000 at a weighted average initial yield of 10.6%. This included a first mortgage loan for industrial redevelopment and a seller financing note related to the sale of our former theater in Reno. Year to date through September 30, we originated $74,800,000 of commitments for loan investments at a weighted average initial cash yield of 9.9%. Additionally, as disclosed in our earnings release, we have originated three loans since the quarter end, most notably, a first mortgage loan secured by luxury residential development located in Austin, Texas metropolitan area.
Under this loan agreement, we have funded $14,100,000 at closing related to a phase one loan with a total commitment of $29,500,000. The loan agreement also provides for a phase two loan with a commitment of up to $31,800,000. All additional funding is subject to the borrower's satisfaction of certain conditions. Currently, we anticipate funding the balance of the phase one loan by year end, and the phase two loan in early 2026. The 36-month loan initially bears interest at 17%, inclusive of 4% paid in kind interest for the full loan term, stepping down to 16% for months seven to twelve and fourteen percent thereafter.
The loan will be repaid as collateralized home lots are sold, with such sales anticipated to begin as early as late 2025. We believe this loan, as all of our loans, is secured by strong real estate backed by high-quality sponsors. As is often the case with our larger loans, there is institutional interest in pursuing a purchase of a senior tranche of this loan, and we currently anticipate participating a portion of it out to reduce our net hold and further enhance our yield. In summary, we believe that our recent investment activity across both property and loan investment positions Alpine Income Property Trust, Inc. for continued growth through the remainder of 2025 and into 2026.
With that, I'll turn the call over to Phil.
Philip Mays: Thanks, John. Beginning with financial results. For the third quarter, total revenue was $14,600,000 including lease income of $12,100,000 and interest income from loan investments of $2,300,000. FFO and AFFO for the quarter were both $0.46 per diluted share representing 24.5% growth respectively, over the comparable quarter of the prior year. Year to date, through September 30, total revenue was $43,600,000 including lease income of $36,000,000 and interest income from loan investments of $7,400,000. FFO and AFFO were both $1.34 per share representing 39.1% growth respectively over the comparable period of the prior year. Regarding our common dividend, as previously announced, during the quarter, we declared and paid a quarterly cash dividend of $0.285.
Our dividend represents an annualized yield of approximately 8.25% and remains well covered with an approximate AFFO payout ratio of 62% for the third quarter. Moving to the balance sheet, we ended the quarter with net debt to pro forma adjusted EBITDA at 7.7 times and $61,000,000 of liquidity consisting of approximately $1,200,000 of cash available for use and $60,200,000 available under our revolving credit facility. However, with in-place bank commitments, the double capacity on our revolving credit facility can expand an additional $31,300,000 as we acquire properties providing total potential liquidity of more than $90,000,000. Regarding our property portfolio, we ended the quarter with annualized base rent of $46,300,000 on a straight-line basis.
As noted before, this amount includes approximately $3,800,000 of ABR related to three single-tenant restaurant properties acquired in 2024 through a sales leaseback transaction. Under GAAP, we are accounting for these specific sales leaseback transactions as finance. Accordingly, their current annual cash payments of approximately $2,900,000 are reflected as interest income in our statement of operations as opposed to lease income. Given the level of loan activity after quarter end, let me provide a current update. Our loan portfolio as of today, reflecting the activity John discussed and some other recent activity, is now approximately $94,000,000 at a weighted average interest rate of 11.5%.
Notably of this amount, approximately $21,000,000 at a weighted average rate of 10.4% is scheduled to mature in 2026. We currently expect to utilize proceeds from these 2026 maturities, selling a senior tranche of one or more loan investments, property dispositions, and existing capacity on our revolving credit facility to fund loan commitments. One quick note, the $1,900,000 impairment charge recorded this quarter relates to Walgreens that is currently under contract to be sold. Now turning to guidance.
As a result of our recent elevated investment activity, we are increasing both our FFO and AFFO outlook for the full year of 2025 to a new range of $1.82 to $1.85 per diluted share from the previous range of $1.74 to $1.77 per diluted share. With that, operator, please open the call to questions.
Operator: Thank you. We'll pause for a moment while we compile our Q and A roster. Our first question comes from Michael Goldsmith with UBS. Your line is open.
Michael Goldsmith: Good morning. Thanks a lot for taking my questions. A lot of investment activity both during the quarter and subsequent to quarter end. So can you just provide a little color on how you're thinking about funding all of this activity?
John Albright: Hey, Michael. It's John. Thanks. Yeah. Look, we as you know, we've been, you know, very busy on the recycle side. So some of that's going to come from asset sales as we keep on continuing to increase the credit quality of our portfolio. And then, a little bit of this is our loans maturing. And then, you know, basically, a little bit's gonna be net growth in anticipation of additional sales. So a little bit of balance on both sides.
Michael Goldsmith: Got it. Thanks for that, John. And then, you know, all this loan activity, you're seeing really nice yields on that. I guess, the way it cuts the other way is it can generate lumpiness in the quarters as they come due. So can you talk a little bit about how you're thinking about managing that and lease expiry and these loan expirations just to ensure the AFFO doesn't move around too much?
John Albright: Yeah. So, you know, obviously, a good question. I mean, when we started this, you know, kind of loan program about three years ago, you know, that was a little bit of the pushback was, well, you can't replace these loans at these rates. But here we are. We are doing it with really existing relationships without even trying. And so, you know, certainly as we see more opportunities, part of that funding that Phil mentioned is selling off a senior pieces of these loans. And these loans are very bite-sized and there's a lot of capital out there. So there's a lot of opportunity.
So I would I would I'm not worried about replacing these and having kind of, you know, earnings coming down because these are one-time sort of opportunities. We're seeing a strong, you know, pipeline of super high-quality kind of assets and sponsorships.
Michael Goldsmith: Got it. Well, if you're doing this without really trying, it's exciting to excited to see what you do when you put some effort into it. I'm just kidding. Thank you very much. Good luck in the fourth quarter.
Operator: Thank you. Our next question comes from RJ Milligan with Raymond James. Your line is open. Hey, good morning, guys.
RJ Milligan: John, you know, with the recent activity now in residential development, I think you guys have a loan in industrial. Just can you tell us how you're thinking about other property types and if you're gonna continue to pursue things outside of retail?
John Albright: Yeah. It's not it's not, you know, by design kinda going out here or just these unique opportunities with very strong sponsors and very strong assets. The industrial property that we did in Fremont outside of San Francisco, you know, that was actually a retail property, that the sponsor is basically converting to industrial to higher and best use. So part of our underwriting on that is if it was if we ever had to foreclose roughly 50% of the acquisition, it could still be retail and work. On our basis. So, to answer your question, we're gonna, you know, stay, you know, more focused on the retail side for sure.
But, you know, not know, but if we see unique opportunities and they're short duration, we're not opposed to, you know, taking on those opportunities.
RJ Milligan: Okay. That's helpful. And then, Phil, you talked about some of the sources of capital next year, some of the loan maturities, potential asset sales, should we expect that to get reinvested? Or will those proceeds be used to pay down debt lower leverage?
Philip Mays: A little bit of both, but I think first, they're gonna get reinvested into a lot of the loans that were recently done. RJ. So the maturity is coming back from the 2026 loans. Know, we're gonna we're just kind of proactively redeploying that capital a little early with the loans going out first, the new loans going out first. So a lot of that's gonna just recycle into that. But, you know, on the margin, if you could see leverage tick down a little bit.
RJ Milligan: Okay. That's helpful. Thanks, guys.
Operator: Thanks. One moment for our next question. Our next question comes from Alex Fagan with Baird. Your line is open.
Alex Fagan: Hey. Good morning, and thanks for taking my question. So on the luxury residential development in Austin, can you talk about how you got comfortable with the loan and what stage of development it currently is at?
John Albright: Yeah. So, you know, we're familiar, you know, if you think back at, our origins of CTO and when I got here, you know, fourteen years ago, you know, we had, you know, 14,000 acres of land in Daytona Beach to sell. So we are very familiar with residential lot developments through that experience. So with regards to kinda where this project is, it's really at the kind of finish line of delivering lots. And, actually, there'll be some lot sales starting next week, in fact. So it's really kinda coming in at the late stage and not on the early stage.
Alex Fagan: Nice. And kind of on that loan, how much of the loan are you looking to sell?
John Albright: Probably, you know, look to sell potentially 50% of it. It really depends on how fast the proceeds come back. You know? So it could be could be less, but, you know, potentially 50 up to 50%.
Alex Fagan: Nice. And switching gears a bit, with the vacant assets that were sold in the quarter, much do we need to remove from operating expenses that you're carrying?
Philip Mays: Yeah. This is Phil. So the two largest vacant properties we have are the Theater and Reno, which was sold that had an annual run rate on the expense side of about $400,000. And the one that we have left that's large is the former Party City, that also has a run rate of close to $400,000 on an annual basis. So you can if you were to run rate the current quarter, that'll come down another about $400 on an annual basis once Party City is sold.
Alex Fagan: Wait. And Party City wasn't sold this quarter that It was not. Reno was sold in the quarter. It was sold early in the quarter. So pretty much the full impact of that is reflected. But Party City is not sold yet.
Philip Mays: Okay. There were two vacant assets sold in the quarter. So the other one just Yeah. There was a little bit warmer. We have an those are the two largest Reno and Party City. We have a few. We had former convenience stores that are really small. There's so wonder in the corner. There's two left. Altogether, those don't even come up to a $100 on an annual run rate. So they're very small and on the margin. Got it.
Alex Fagan: Thank you, guys.
Operator: One moment. You. One moment for our next question. The next question comes from Rob Stevenson with Janney Montgomery Scott. Your line is open.
Rob Stevenson: Hi. Good morning, guys. Is the sale of the large loan interest that you may do is that in the disposition guidance, or are dispositions just properties in terms of the guidance?
Philip Mays: It's if we were that's not it would be on the high end, Rob, if that happened or exceeding the end if it happens before the end of the year. You know, the timing on it is a little hard to predict. It could be just before the end of the year. Or it could be a little bit after the end of the year. If it were to happen before the end of the year, that would put us on the high end or over the high end of guidance on the dispo side.
Rob Stevenson: Okay. But your class you would classify that as a disposition Yeah. Okay. We've historically put dispositions of loans with properties there.
Philip Mays: And if you look at guidance, we kind of added a line for that. A little bucket when we put year to date actuals. And there was a line that had loan sales, and it showed zero just to kinda help clarify that we do kinda look at that as a disposition. But if the loan one were to happen, we would probably be just over our high end.
Rob Stevenson: Okay. Because the reason why I ask is if I look at the year to date, investment and disposition volumes versus the guidance, they're sort of implying between $50,000,000 and $65,000,000 of net investments in the fourth quarter. You got $27,500,000 in terms of rough numbers from the proceeds from the repayment of Publix and Verizon. Just trying to figure out how you're going to finance that you know, especially given where the stock price is. I don't know, John, if you're comfortable issuing equity here.
Or whether or not you guys just use the line, was sort of curious as to like, how you guys are thinking about sort of incremental there and where does sort of leverage peak out at you know, here in the fourth quarter, if you do decide to fund any of those, net investments on the line.
Philip Mays: Yeah. So just before, and then I can I'll let John answer. But on the investments, you know, we always put the full amount for the properties, obviously. And for the loans, we put the origination or the initial amount committed. So today, we're sitting at almost $200,000,000 if you include all the stuff subsequent activity on investment. And of that, a $130,000,000, a $135,000,000 is loans, Rob. But only $72,000,000 have funded so far. So we also, in the guidance, put in brackets there kind of on the loans just to help clarify because it's a great question. You know? How much of the loans have funded year to date?
The full amount of that won't fund because the loans won't fully fund by the end of the year.
Rob Stevenson: Okay. So the net the net would wind up being lower than that sort of $50,000,000 to $65,000,000 that you're implying because that's including the full value.
Philip Mays: Yeah. I mean, there could be $5,060,000,000 of that. That's loans that are not funded.
Rob Stevenson: Okay. That's helpful. Because it was it was looking like the leverage was gonna peak out at something more substantial here if you guys did it all on the line. Yeah. So
Philip Mays: So there could be $50,000,000 to $60,000,000 of that number that's loan related That's unfunded by year end. And then on top of that, you could also see, like, an a note sale prior to the end of the year. That would further help lighten that load for funding.
Rob Stevenson: Okay. And then, I guess, John, what is sort of left within the property portfolio that you want to sell? I mean, is it is this going through and, you know, sort of cleaning up anything remaining? Is it, you know, whittling down some of the dollar stuff? How are you thinking about, you know, when you look at dispositions not only in the fourth quarter, but in 2026, like, what are you sort of thinking that you're gonna wind up selling And, you know, where is the market for those type of assets today?
John Albright: Yeah. So, you know, as we discussed previously, you know, we still have some Walgreens that we definitely are moving through. And we you know, dollar stores as you hit on certainly will be something we'll we'll trim back on. Then there's some other, you know, that we've sold the Advance Auto Parts and that sort of things. And Tractor Supplies. And so, you know, those sort of you know, assets will continue kind of grind through, if you will, as we see you know, good pricing.
So it's it's just really, you know, using that as a as a way to kind of you know, reinvest in some of the high credits that we put on you know, this quarter lows and so forth. So you'll see us, you know, be active the end of the year here with continuingly bringing in some real super high quality type, credits. And, you know, we're looking forward to kinda what this company looks like know, starting next year.
Rob Stevenson: And then I guess given the acquisition of the Lowe's, was that opportunistic or, you know, just from your standpoint, is the property acquisitions going forward going to be more targeted towards the higher credit quality and basically investment grade and, you know, above quality tenants, or are you still looking to acquire stuff across the spectrum on a property specific basis.
John Albright: Yeah. And on the Lowe's, you know, that was off market. It was a relationship driven. We had seen these assets before a couple years ago, and they're pulled off the market. So we're extremely excited about having those in our in our portfolio. With regards to you know, so you'll see more of the high quality, you know, credit big box sort of assets coming in. You probably won't see us be active in buying, you know, a generic, you know, Tractor Supply Clearly, we don't have any car washes, so we like that distinction. That, you know, no car washes in the portfolio.
So, you know, it's you know, we're feel like we're set up pretty strong to kinda offer investors something a little bit different, you know, getting the lows and dicks in the top, you know, five, you know, just gives investors an exposure that they can't get other locations.
Rob Stevenson: Okay. And then last one for me. Is all of Beachside open and producing? At this point, or is there still some of that stuff that's down and that you're getting insurance payments on?
John Albright: No. It's all been open for a while. I mean, they open those up, you know, less than four months after the hurricane last year, and interesting enough, I mean, they still when they opened, they weren't they weren't obviously as, you know, polished looking as they were previous to the hurricane, but they did better sales than they did pre hurricane. So a lot of pent up demand from customers and unfortunately, some of their competition did not reopen. So it just kinda drove more traffic to those restaurants.
Rob Stevenson: Okay. So rent coverage today is actually higher than where it was? Pre hurricane?
John Albright: Yes.
Rob Stevenson: Okay. Guys. Appreciate the time, and have a great weekend.
John Albright: You too.
Operator: One moment before I ask a question. Our next question comes from Gaurav Mehta with Alliance Global Partners. Your line is open.
Gaurav Mehta: Wanted to ask you if you had any update on your properties that are leased to at home.
John Albright: Yes. So, you know, those properties as we've kind of the one is in Concord, North Carolina that you know, could be sold in the in the know, not too distant future. And the others you know, are the same situation where we're monitoring kind of you know, what At Home's doing. But if they come back we have we're working on replacement tenants. So, the idea would be if at home vacated one of the properties we would have a replacement tenant in, and then we would sell it at a better cap rate than as at home. So it's a manageable exposure and potential upside.
Gaurav Mehta: Okay. Second question, I wanna go back to the two loans. That you'd date after September, the interest rates on both of them are higher. Than the year to date loan activity Can you provide some color on why the rates were higher at 1716%?
John Albright: Phil, you want to handle that?
Philip Mays: So he was just asking about why the interest rates on the residential and the mixed use are significantly higher than the blended rate for the portfolio.
John Albright: Yeah. So on that, you know, basically, because it's such short duration loan, that you know, so kinda give you more background than maybe you want. Is that you know, the competition for a loan for that sort of product would be mainly from a opportunity fund or a credit fund. And those funds, you know, really aren't looking to invest where the duration is less than two years in order to kinda get a multiple. So we're able to give highly flexible loan, but for that, we charge much higher rate. And so just the flexibility of our of our loan in the short duration, gives us that higher, interest rate investment.
Gaurav Mehta: Alright. That's all I had. Thank you.
Operator: One moment for our next question. Our next question comes from John Massocca with B. Riley Securities. Your line is open.
John Massocca: Morning. So maybe given all of the investment activity on the loan front, in particularly substance quarter end. Do you view that as maybe kind of the max level you wanna be at in terms of a loan balance if this all kind of blends out? Or could you kinda pursue more of that and become I guess, maybe more of, like, a mixed loan net lease type REIT. It feels like the amount of loan investments are starting to certainly, in terms of the investment activity outweigh the net lease transactions.
John Albright: You know, I would say that, you know, the it just kinda really kinda came together here this you know, last quarter. But, the loan activity could tick up from here for sure. But as, you know, it's real little bit in anticipation of things, you know, burning off, paying down, paying off. And then you know, we are, you know, super active on the core net lease side. With, you know, larger type assets.
So, you know, you'll see this you'll see this similar balance, but we think we're, you know, delivering you know, we know we're delivering really strong free cash flow and, you know, high earnings and you know, and there's other net lease rates out there that do the loan program as well. And then you have, you know, REITs like VICI that have know, a balance of net lease and loans. So it's not like we're we're in a new frontier here.
John Massocca: No. It's I remember thinking, and maybe I'm misremembering, the loans are kind of an opportunistic thing, a couple of years ago, and now it feels like they've become a bigger part of the investment strategy. I'm wondering if that's something you view as, like, permanent on a go forward basis or if it's still something that's temporary where you found this kind of opportunistic way to kind of accretively deploy your capital even in a challenged equity market?
John Albright: No. It's it's yeah. It's definitely a good point. Yeah. So when we were opportunistically thinking that it was like a one time opportunity, it's become it's become repeat. Customers are coming back to us because of the flexibility and the speed that we can transact on. They're willing to pay a higher rate. And then as you know, we get right of first refusal on acquiring these assets. So if there if the market stalls and cap rates, you know, tick up, we have the opportunity to bring these into our portfolio.
And so, like I've said before, you know, we're getting paid a much higher yield than going out and buying you know, some sort of generic net lease property out in the middle of nowhere. You know, we're, you know, basically in Austin with you know, very opportunistic type deals on very with very high quality sponsor and high quality asset. And then, you know, the publics that we had payoff in Charlotte you know, a publics in Charlotte, you know, that and I think that paid off they sold it at five and a quarter cap. You know?
So these are you know, we're getting double digit unlevered yields on assets that will sell for you know, really, really low, you know, cap rates. So it's it's great to see the opportunities that we're able to kinda it's become more of a permanent fixture as the you know, the sponsors are still very active in the development side on these credit tenants. And they're and the banking system just really is slower, less proceeds, and this is we're just basically providing an answer to their capital needs on in a much more efficient fashion.
John Massocca: Understood. And then maybe on a very, like, micro level, with Cornerstone Exchange, you know, pretty significant jump up in the amount you're you're kinda lending on that project. Why I guess, maybe why did it increase by so much?
John Albright: It's basically they ended up signing some additional lease So as they proven out their development with leases. We wouldn't we wouldn't loan on it until they have a signed lease. And so that's that's what happened. The development's gotten larger as they've signed leases.
John Massocca: K. Makes sense. And that's it for me. Thank you very much.
John Albright: Great. Thanks.
Operator: One moment for our next question. Our next question comes from Greg Kusera with Lucid Capital Markets. Your line is open.
Greg Kusera: Yeah. Hey. Good morning, guys. John, I wanna circle back with a few questions on the Austin loans. It sounds like you're not taking any entitlement or approval risk at least on phase one. Is that a fair assessment as phase two need to be approved?
John Albright: It's fair assessment on both. Know, the entitlements are there for both phases and everything needed to basically deliver.
Greg Kusera: Okay. Great. And what is the current LTV?
John Albright: At those loan you know, I would I would put that one in kind of the on a on a discount NPV basis. We're in the seventies.
Greg Kusera: Okay. And if you were to sell the senior tranche or a portion of those loans, and I think Phil mentioned it might be upwards of 50%, what would your yield be if you're holding the junior piece?
John Albright: You know, I don't wanna, like, go out there with I mean, it'll be higher. I don't wanna give you specific numbers.
Greg Kusera: Fair enough. Alright. Changing gears to Lake Cox Way. Mixed use development. Is that just raw land now, or has the developer started or kind of where in the process is that? Development?
John Albright: Yeah. The developer has started, so kinda we're coming in, like, when they really need to really start, you know, doing some additional work and delivering pads and that sort of thing.
Greg Kusera: Okay. Okay. That's it for me. Thanks, guys.
John Albright: Thank you.
Operator: One moment for our next question. Our next question comes from Barry Oxford with Colliers International. Your line is open.
Barry Oxford: Great. Thanks, guys. John, real quick, couple of questions on the dividend. Given what I'm hearing on the conference call, you wanna retain as much capital as possible. Is it fair to say that know, even though you could raise the dividend for lack of a better word, substantially, any dividend increase will probably be minimal because you wanna retain as much capital from an asset allocation.
John Albright: That's right. I mean, so and so, you know, as we progress here and earnings grow, you know, there'll be pressure to raise the dividend just based on what we need to pay out as a REIT.
Barry Oxford: Right. So you don't run afoul of the REIT rules?
John Albright: Well, we don't wanna pay a check to the IRS. We'd rather give it to our shareholders.
Barry Oxford: Right. Right. Right. And then you know, one thing that I noticed you know, in the press release was the credit rate at tenants. Now your investment grade tenants, you know, the percent of the portfolio, was still roughly the same. But you had a fairly good drop with the credit rate tenants. What was going on there?
Philip Mays: Just the oh, you want three k. Credit rated as a percent of the total portfolio. So at the end of the last quarter, it was 51%. Went from yeah, it went from 81 to 66. Oh, from the credit? Rated.
Barry Oxford: Yeah. Yeah. The credit is fine. That was more Barry, that's more the Walgreens and the like that used to have a credit rating dropping them.
Philip Mays: That were very low and had gone from credit rating to, you know, not or from investment grade to not investment grade, but we're still carrying a rate. It's more for related to a couple of tenants like that They got home. Walgreens and such. Dropping the credit rating altogether, and that's what caused that decrease.
Barry Oxford: Okay. Makes sense. Alright, guys. Thanks. Have a good weekend.
Philip Mays: You're welcome.
John Albright: K.
Operator: I'm not showing any further questions at this time. And as such, this does conclude today's presentation. We thank you for your participation. You may now disconnect, and have a wonderful day.