Alpine Income Property Trust - Q3 2024
October 18, 2024
Transcript
Operator (participant)
Good day, and welcome to Alpine Income Property Trust Q3 2024 Earnings Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. Instructions will be given at that time. As a reminder, this call may be recorded. I would like to turn the call over to John Albright, President and CEO. Please go ahead.
John Albright (President and CEO)
Good morning, everyone, and thank you for joining us today for Alpine Income Property Trust Third Quarter 2024 Conference Call. Before we begin, I'll turn it over to Phil to provide customary disclosures regarding today's call. Phil?
Philip Mays (CFO)
Thanks, John. 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 contain reconciliations of the non-GAAP financial measures we use on our website at www.alpinereit.com. With that, I will turn the call back to John.
John Albright (President and CEO)
Thanks, Phil. We are very pleased with our third quarter results across all aspects of our strategy as we successfully continued accretive asset recycling, originated a high-yielding loan, raised our quarterly dividend, reduced our Walgreens exposure, and lengthened our weighted average lease term. These combined efforts resulted in another quarter of strong earnings growth, reduced leverage, and enabled us to again raise full-year earnings and investment guidance. Beginning with property acquisitions, during the quarter, we acquired four net lease properties for $37.5 million at a weighted average initial cap rate of 8.8%. Three of these properties, all located in the greater Tampa Bay area, were purchased for $31.4 million at a sale-leaseback transaction with a subsidiary of Beachside Hospitality Group. The leases for these properties have a lease term of 30 years and include 2% annual escalations.
While these properties did sustain some damage during Hurricane Helene and Milton, the operator expects to have them open and operating again toward the end of the year or the first part of next year. Further, our leases require robust insurance requirements, and these properties have more than adequate insurance coverage. Accordingly, we do not expect to have any material interruption in collecting rent from these properties due to the recent hurricanes. Additionally, in September, we purchased and amended a first mortgage construction loan secured by a Publix anchored shopping center in Charlotte, North Carolina. The current loan commitment is for $17.8 million, of which $10 million was funded at closing and has an initial yield of 10.25%.
On the disposition front, we sold eight properties during the quarter for $48.6 million at a weighted average cash cap rate of 6.8%. These sales generated aggregate gains of $3.4 million and included two Walgreens locations, as well as properties leased to Hobby Lobby, Lowe's, Chick-fil-A, Tractor Supply, and Long John Silver's. As previously disclosed, we are actively reducing our exposure to Walgreens, and with the sale of the two Walgreens during the quarter, Walgreens has dropped from our largest tenant concentration to the second largest. Additionally, given the attractive locations of our remaining Walgreens assets, we expect to continue reducing our exposure for them to continue moving down our tenant concentration list.
Overall, for the quarter, our $55 million of investment activity, including both acquisitions and structured investments, generated a weighted average yield of 9.2%, a positive spread of 240 basis points to the 6.8% weighted average cap rate on dispositions completed. As a result of our strategic asset recycling efforts, investment-grade rated Dick's is now our largest tenant at 11% of ABR, and the Beachside Hospitality Group is now our third largest. Notably, over 52% of our ABR is still derived from investment-grade tenants, and we have increased our weighted average lease term to 8.8 years. Regarding our investment strategy going forward, we continue to see attractive opportunities across the tenant landscape, including higher-yielding investments.
Accordingly, while we continue to invest in attractive investment-grade opportunities, we are also comfortable allocating additional capital to more accretive opportunities given the attractive risk-adjusted yields. We expect our investment activity will result in a barbell approach, with longer-term investment-grade activity balanced by investments in higher yielding and more accretive assets. Now turning to the loan investment front. At the end of the quarter, our loan portfolio had an aggregate outstanding balance of $43.2 million at a weighted average yield of 10.4%. Generally, we target our structured investment portfolio to be about 10% of the total asset value, but this will scale up or down to some extent, depending on the quality of the opportunities we see.
As we are currently seeing a lot of opportunities to originate high quality, high yielding loans secured by real estate, this portfolio is likely to scale up a bit in the near-term future. One quick balance sheet note. During the quarter, we were also pleased to opportunistically access the equity capital markets, utilizing the company's common ATM program, raising the net proceeds of $11.1 million. Phil will discuss our balance sheet and earnings in more detail and provide our increased outlook for the remainder of the year. However, before turning the call over to Phil, I wanted to take a moment on behalf of all here at the company to send our best wishes to the many impacted by the recent severe weather and our hope for them to have a speedy recovery. And with that, I'll turn the call over to Phil.
Philip Mays (CFO)
Thanks, John. Beginning with financial results, FFO was $0.45 per diluted share for the quarter, an increase of 22% compared to the $0.37 reported in the third quarter of two thousand and twenty-three. AFFO was $0.44 per diluted share for the quarter, an increase of 16% compared to the $0.38 reported in the third quarter of two thousand and twenty-three. Total revenue was $13.5 million for the quarter, including lease income of $11.7 million, and interest income from commercial loans of $1.7 million. There are two notable accounting matters that may have caused loan interest income to be higher than some of you anticipated and lease income to be lower than anticipated. First, the three properties acquired this quarter through a sale-leaseback transaction.
These properties constitute real estate for both legal and tax purposes, and consequently, we include them in our property portfolio statistics. However, because the tenants have purchase options, GAAP requires this transaction to be treated as a financing. Second, as discussed last quarter, we sold an A-1 participation interest in our portfolio loan, and GAAP also requires this transaction to be reported as a financing. If you exclude these two items from our commercial loan investment, they total $43.2 million outstanding at quarter end, consistent with the amount John discussed earlier, whereas our GAAP balance sheet reflects loan investments of $86.6 million. While the GAAP reporting for these matters may cause some line item classification differences, it does not have any significant impact on FFO or AFFO. Now moving to the balance sheet.
During the quarter, we utilized our common equity ATM program to issue approximately 620,000 shares at a weighted average share price of $18.09 per share, resulting in total net proceeds of $11.1 million. As a result of this equity raise, along with the increase in our earnings from accretive asset recycling and growing commercial loan portfolio, we were able to incrementally improve leverage, ending the quarter with net debt-to-EBITDA of 6.9 times, compared to the 7.4 times reported last quarter. Further, we currently have approximately $80 million of liquidity and no debt maturing until 2026. With regard to our common dividend, given our increased earnings and forward outlook, we raised our quarterly common dividend from 27.5 cents per share to 28 cents per share.
Our dividend remains well covered, as this represents a healthy AFFO payout ratio of 64%. Lastly, with regards to guidance, we are raising our full-year 2024 outlook to an FFO range of $1.67-$1.69 per share, and an AFFO range of $1.69-$1.71 per share. We have now closed $84 million of investments and $69 million of dispositions, inclusive of both property and structured investment activity. Accordingly, we are increasing our investment guidance to a range of $100 million-$110 million, and narrowing our disposition to a range of $70 million-$75 million. With that, operator, open the line for questions.
Operator (participant)
Thank you. If you'd like to ask a question, please press star one, one. If your question has been answered and you'd like to remove yourself from the queue, please press star one again. Our first question comes from Michael Goldsmith with UBS. Your line is open.
Michael Goldsmith (US REITs Analyst)
Good morning. Thanks a lot for taking my questions. You know, transaction activity picked up pretty materially from the first quarter and the second quarter. You know, can you just talk a little bit about the transaction environment, what you're seeing out there? Is the increased activity reflective of just a more liquid environment overall?
John Albright (President and CEO)
Yeah. Thanks, Michael. Yeah, it definitely liquidity environment has improved, so you are seeing more folks that have wanted to sell assets go ahead and come to market and move through that sort of strategy. And so there are more opportunities out there. We're bidding on more acquisitions and finding you know assets that we like and like the risk reward. And so you know we're very pleased to see the environment being much more improved as far as opportunities both on you know core acquisitions and on some loan investments.
Michael Goldsmith (US REITs Analyst)
Got it. And then my second question is related to the sale-leaseback of the properties in Tampa. Can you provide a little bit more color on the insurance arrangement? Many of these restaurants are closed right now, so you know, just. Just providing some more detail there. And then, you know, separately, you know, while these have increased the WALT of the portfolio, it's also reduced the investment grade percentage. So can you just talk about how you're thinking about kind of those two offsetting factors as you continue to build out the portfolio? Thanks.
John Albright (President and CEO)
Yeah. So on the restaurant, so they really had more impact from the first storm, Helene, and then the second storm, Milton, really didn't do much more damage. And so they're rapidly working to get those back open, and there'll probably be better news on that as far as happenings, you know, next thirty days, rather than at the end of the year. And as far as on insurance, there's two years of business interruption... And then they're full replacement insurance, and so we're in good shape, and we're in contact with the operator. And the good thing is the operator has, you know, a significant amount of restaurants throughout the state. They're the ones that they have on the East Coast have been open.
The ones they have in Clearwater opened really fast after the storm. And so, they're busy getting these reopened, and they're gonna be in a pretty good shape because, unfortunately, there are some other people that probably won't be reopening as fast, and so there's gonna be less competition. So there's gonna be some pent-up demand for those restaurants. And then as far as on your question on, you know, weighted average life, you know, basically, it is closer to nine now than before. And we'll look to keep on increasing the weighted average term, lease term of our portfolio, but we're not going to let it really be the tail that wags the dog.
We can go to a lot of the tenants right now if we want to, and quickly do lease extensions early, but they're gonna want some sort of benefit as far as a reduced rate. And if you look at our portfolio, you know, our basis is so low compared to our competitors, and our lease rates are already so low that we would just really be giving away the store for no reason, but to, you know, satisfy Wall Street. So if we thought that we really had to do that and needed to do that, we could quickly go to tenants and do early extensions.
But, you know, that's been part of our strategy, is to take advantage of, leases with maybe six, seven years, get a higher cap rate because, they're great real estate, and there's other tenants that would take over those spots. And so that's always been the strategy. And but, you know, we can. You know, definitely, we'll try to, you know, load up some more and extend the term when we see fit, but it's really been the opportunity to, to grab some really good real estate at really good yields and having a little bit lower, lease duration, but knowing that the rent's below market and way below replacement cost basis, that's been kind of the strategy.
Michael Goldsmith (US REITs Analyst)
Very helpful, and if I can squeeze one more in. You know, you talked about the loan portfolio, you know, being kind of, you know, 10% of the overall portfolio, but, you know, at times like now, when there could be a little bit more activity there, you would take it higher. How high would you take it? And then inherently, like, with the loan portfolio, it adds a little bit more lumpiness to the earnings. So how do you go about kind of managing that, going forward? Thanks.
John Albright (President and CEO)
Yeah. So I think as Phil mentioned in his remarks that, you know, we're looking to kind of not go above 10% of total enterprise value as far as our loan book. But we could, if we saw some opportunities, and as the loan book naturally pays off, you know, that'll come down.
But, you know, given that we have some great relationships with these developers, and we're starting to do, you know, second transactions with them and third transactions with them, now that they know the process, and we have the loan docs, you know, maybe, you know, we'll see- we're seeing situations where, you know, the deal we just did with a Publix anchored shopping center in Charlotte with, you know, Chase pad site, a Whataburger pad site, so incredibly great credits, long duration leases, 20-year lease on Publix, 15 years or so on Chase.
And so, you know, the property is only, you know, nine months away from being finished, and they had a situation where construction costs have increased, and there's a gap in basically between the first mortgage and what needs to be to complete it. We would love to own it, and this developer has other Publix sort of developments. And if that happens, where same sort of situation, we're here to help. And we have first right of refusal to buy the Publix and the Chase if the cap rates go above a certain level. So, we'd love the opportunity. It's great risk-adjusted yields and great markets, so we're gonna wade in if we see the opportunities. We're looking at one additional one, but it's a couple of months away.
But yeah, we like it, and it keeps us abreast with a lot of the merchant developers, and it's great for the pipeline.
Michael Goldsmith (US REITs Analyst)
Thank you very much. Good luck in the fourth quarter.
John Albright (President and CEO)
Thank you.
Operator (participant)
Thanks. Thank you. Our next question comes from RJ Milligan with Raymond James. Your line is open.
RJ Milligan (Managing Director)
Hey, good morning, guys. Obviously, in the quarter, John, you took down your Walgreens exposure a little bit with some of the dispositions and now under 10%. I'm just curious how you feel about your current exposure to Walgreens, and maybe you could give us some detail on the nearest lease term expiration for the Walgreens and average lease duration.
John Albright (President and CEO)
Sure. So the average lease duration, RJ, is seven point six years. The nearest coming up is six years. And we have a lot of these on the market, and we're getting active bids. We're being selective. You know, if we have a larger acquisition to do, we may push through a couple more. But you know, we're getting good bids because of the locations we have and the lease duration. And obviously, you saw, you know, Walgreens had a bit of a lift this week from good earnings. So it's a very manageable portfolio. It's only 11, but obviously, given our small size, you know, it kind of sticks out a bit.
But as you can tell, given that we sold two and we have bids on additional two, it doesn't take much to get this off the top ten if we really wanted to, but it would be nice to match it up with an acquisition.
RJ Milligan (Managing Director)
Thanks. That's helpful. And so more broadly, how do we think about, you know, the current macro environment and the potential impact on credit loss? And obviously, I know that you guys can't provide 2025 guidance, but as you're looking into 2025, what's your outlook for, you know, potential credit loss and just given the current macro environment?
John Albright (President and CEO)
Yeah, I mean, really, our portfolio is in pretty good shape, and we've been proactive early on selling things that, you know, could be issues. I would say the only one really is At Home, that clearly At Home has a balance sheet issue, not an operations issue. And so I suspect that the lenders will, you know, negotiate something with the company that, you know, you're not-- they're not going to harm their position. So I assume they'll work that out. But I would say if there's any sort of, you know, credit issue, I'd say At Home would be the one, but, you know, those very low basis type properties, and we can split up these big boxes and do leasing of smaller tenants to fill it up.
RJ Milligan (Managing Director)
That's helpful. That's it for me. Thanks, guys.
John Albright (President and CEO)
Thanks.
Operator (participant)
Thank you. Our next question comes from Wesley Golladay with Baird. Your line is open.
Wesley Golladay (Senior Research Analyst)
Hey, good morning, guys. Just sticking with the tenant front, any plans to reduce exposure to the dollar stores?
John Albright (President and CEO)
You know, a very good question. They're just so small. They're like $800,000 apiece or $1 million apiece, and just really, you know, we're just been focused more on the Walgreens side. And but, yes, the answer is we do have some of them on the market for sure. It just hasn't been a priority, given that the Walgreens properties are more kind of $3 million-$4 million. So, that's really been the real push, rather than the Family Dollar and Dollar Generals.
Wesley Golladay (Senior Research Analyst)
Okay. Can you give some background on the Tampa deal? How did that come about? How quickly were you able to close? And then I think you mentioned there was a purchase option. Can you talk about the timing on that and what the cap rate would be?
John Albright (President and CEO)
Sure. So, the relationship with Crabby's, as you know, at CTO, we built two restaurants on the beach, and we had. And this goes back, you know, seven years ago. We had an operator that didn't work out, that didn't perform. So we brought in Crabby's to take over a different concept, and they've done fabulous. They really know how to operate, and the sales have been very high performing, and so we've stayed in touch with them about other things we can do together, and they had a unique opportunity to purchase some real iconic restaurants over on the West Coast. They're very big-ticket sort of items as far as this restaurant group that they were purchasing, roughly $50 million in value.
We came in in the low $30 million to buy the real estate, sell lease back to them. They have a lot of equity in. They can bring a lot of operating synergies to the properties. And then we structured it, where after a certain amount of years, after six years, they have an option, not the obligation, to buy out the lease. And that would be at an IRR that's, you know, basically double digits to us. So, you know, we love the real estate, love the yield, love the annual escalation. So worst case scenario in our minds is, you know, six years gets sold out at big numbers for us, for the shareholders.
Wesley Golladay (Senior Research Analyst)
Okay, that sounds good. The presentation or the press release indicated the end of period rent was $41.5 million. Can you clarify if that is a cash rent number, and does that include the Tampa properties?
John Albright (President and CEO)
I'll let Phil answer that one.
Philip Mays (CFO)
Yeah. Yeah. So that number is a GAAP number. The cash number is just a little lighter than that. It's not that different, it's like thirty-nine. But the number you're referring to is the GAAP number and the GAAP run rate.
Wesley Golladay (Senior Research Analyst)
Okay, fantastic. And then one last one for me. When you look at the balance sheet, the capital markets, any plans for the fourth quarter? You do have a little bit floating on the line. Would you clear that out or get more swaps?
Philip Mays (CFO)
You know, I think we're okay with a little floating rate there. Obviously, depending on the capital markets, you know, we might look to utilize the ATM again, but, you know, we have $280 million in debt, $200 million fixed rate, we got $80 million floating. That rate is coming down, so we're okay with a little floating rate exposure there.
Wesley Golladay (Senior Research Analyst)
Okay. Thanks, everyone.
John Albright (President and CEO)
Thank you.
Operator (participant)
Thank you. Our next question comes from Rob Stevenson with Janney Montgomery Scott. Your line is open.
Rob Stevenson (Managing Director and Head of Real Estate Research)
Good morning. John, beyond the Walgreens and maybe some of the dollar stores, how much of the portfolio today is stuff that you really want to sell over time?
John Albright (President and CEO)
You know, it's really opportunistically selling at this point. So where we have an acquisition lined up, maybe the capital markets still are trading us at a big discount to what we think the company is worth, and so we may sell something that we would like to keep. But you know, more of the recycling, Rob, as you've seen us in the past. So I would say we're kind of, you know, everything left is really muscle versus, you know, things that we'd like to discard. So not a lot beyond the Walgreens and dollar stores and that sort of thing.
Rob Stevenson (Managing Director and Head of Real Estate Research)
Is that how you would characterize the Lowe's sale in the quarter?
John Albright (President and CEO)
The Lowe's sale was basically a group that had a 1031 need, could not find anything to buy in the market, and were really desperate to acquire the property because they knew the property very well, and they're very comfortable. So we were able to sell that at a premium price just given that their situation, not our desire.
Rob Stevenson (Managing Director and Head of Real Estate Research)
Okay. And you've talked about the, you know, the Walgreens exposure. How are you guys feeling about the Dick's exposure and the prospect of potentially taking it above the current 11%?
John Albright (President and CEO)
I don't, I don't think it's going to grow beyond 11%, unless there's some sort of unique opportunity, but then we might look to sell down property. So I wouldn't, I wouldn't expect it to go above where it is right now.
Rob Stevenson (Managing Director and Head of Real Estate Research)
Okay. And then fourth quarter is typically big transaction volume in the triple net space in a normal year. Can you talk about the size of your funnel today and how, you know, that's looking today, you know, given the, you know, the interest rate cuts, the sort of buyers and sellers, and, and how we should be thinking about the next couple of quarters in terms of volume of transactions, et cetera?
John Albright (President and CEO)
Yeah, I mean, the really, the funnel right now is kind of plus or minus $200 million. They're rather chunky. So it's not, you know, a bunch of five million dollar deals. It's maybe a portfolio here and there. And so, you know, we're being picky as always, but it seems like as we, you know, do a transaction, there's always something else behind it coming to us. So we feel very good about the ability to take advantage of the market right now, given that there is more capital out there, a lot more buyers, but, you know, the lending market is still constrained.
And so, we're, you know, trying to be aggressive here, as it still feel like it's a good opportunity set for us.
Rob Stevenson (Managing Director and Head of Real Estate Research)
Okay. And then, Phil, when you look at the, you know, roughly $1.7 of interest income from commercial loans and investments, you still got, I think, almost $8 million to fund on the public stuff. How much else is in the portfolio today that's committed but not yet funded, that we should be expecting to flow through there over the next couple of quarters?
Philip Mays (CFO)
Well, look, you know, the loan portfolio is a little grossed up because the sale-leaseback transaction is treated as a financing. And then we have the participation sale that I talked about in my comments of about $13 million. That kind of grosses up the portfolio also. And when you net all that out, it's about $43 million currently outstanding. The commitments are for about $55, so a little over $10 million spread there between outstanding and the commitments.
Rob Stevenson (Managing Director and Head of Real Estate Research)
Okay. But neither the three restaurants that are being treated as a financing transaction nor the sale that should continue to impact on that line item on a quarterly basis, similarly going forward, right? Is it?
Philip Mays (CFO)
Yeah.
Rob Stevenson (Managing Director and Head of Real Estate Research)
There isn't any falloff or step-ups with that. It's just the incremental $10 million of deployment and the timing from the $10 million that you did deploy in the third quarter, right?
Philip Mays (CFO)
Yes, generally correct. Just keep in mind that the sale-leaseback, there's not a full quarter in there, so it'll be a little higher next time. So the amount kind of coming through, interest income, if you will, related to that, is close to $700,000 on a full run rate going forward.
Rob Stevenson (Managing Director and Head of Real Estate Research)
Okay, that's very helpful. Thanks, guys, and have a good weekend.
John Albright (President and CEO)
Thanks. You, too.
Operator (participant)
Thank you. Our next question comes from Matthew Erdner with JonesTrading. Your line is open.
Matthew Erdner (Director and Equity Research)
Hey, good morning, guys. Thanks for taking the question. I noticed that quarter over quarter, the Florida exposure went up and Texas kind of went down. Can you talk about, you know, where you're seeing the most transaction activity and kind of where the sellers are popping up in the market?
John Albright (President and CEO)
Yeah, I wouldn't say it's any kind of geographic. You know, it really just goes to the big states. You know, there's a lot of stuff in California that's still priced pretty tight. We are seeing a fair amount in Texas and Florida. Those are favored sort of acquisitions for 1031 markets. So you know, the pricing is sometimes challenging. So, you know, I wouldn't say there's any kind of theme to one jurisdiction over the other, but you're just seeing it from, you know, more of the major states is where the predominance of the volume is coming from.
Matthew Erdner (Director and Equity Research)
Yeah, that's good to know. And then I'm glad you guys made it out mostly unscathed in Florida down there. But do you think that kind of presents an opportunity going forward, you know, with sellers kind of wanting to get out of those markets? You know, are you seeing anything like that starting to happen?
John Albright (President and CEO)
Yeah, I mean, we're not seeing it starting to happen, but we're certainly, you know, keeping our eyes out for those opportunities where maybe someone suffered some damage and really doesn't want to go through a restoration work, or they're just kind of, you know, done with it. And, you know, we're, you know, we don't see anything right now, but, you know, certainly, you know, keeping our eyes out for it, if there are some unique circumstances.
Matthew Erdner (Director and Equity Research)
Great. Thank you, guys.
John Albright (President and CEO)
Thank you.
Operator (participant)
Thank you. And our last question comes from John Massocca with B. Riley Securities. Your line is open.
John Massocca (Senior Research Analyst)
Good morning.
John Albright (President and CEO)
Good morning.
John Massocca (Senior Research Analyst)
Sorry. So sorry if I missed this earlier in the call, but as we think of the kind of remaining investments, kind of implying guidance for the rest of the year, what's kind of the split between mortgages and net leasing acquisitions?
John Albright (President and CEO)
You know, there's kind of, I would say, a mix of a third on the loan investment side and the balance being core properties.
John Massocca (Senior Research Analyst)
Okay. That, that's very helpful. And then in terms of kind of cap rate, I mean, you know, the Beachside Hospitality portfolio was kind of its own thing. So maybe backing that out, it seemed like the cap rate on the Golf Galaxy was, like, in the high sevens. I mean, is that typical of what you're seeing in the market today?
John Albright (President and CEO)
Well, I mean, for what we're looking at, we're targeting predominantly seven and a half caps and above. But we may see an opportunity to bring in investment-grade exposure or maybe find a Lowe's to replace the Lowe's we had. So we wouldn't mind. We wouldn't be opposed to dipping down the sixes to bring our Lowe's exposure back up. So it's a little bit of a you know kind of, as Phil mentioned earlier, barbell. But that's roughly what we're seeing is on the straight-up acquisition side, non-investment grade, kind of in the seven and a half and above.
John Massocca (Senior Research Analyst)
Okay. Is that specific to Lowe's? Or, you know, given, you know, the non-investment-grade exposure increased in the quarter due to the big portfolio transaction, are you looking systematically to kind of increase investment-grade exposure again, or are you kind of agnostic?
John Albright (President and CEO)
Agnostic a little bit. I mean, we like to have the exposure, but it doesn't seem like the market really appreciates it. So we're not gonna get, you know, really wedded to it. But if opportunistically, we can kind of, you know, put, as I mentioned, like, a Lowe's back in, higher up in our credit stats, I think that would be helpful. So we'll look to do that, but not kind of married to it.
John Massocca (Senior Research Analyst)
Okay. And then last one for me. In terms of the three assets in Florida you bought in the quarter, or, you know, the restaurant assets in Florida you bought in the quarter, how big a percentage of Crabby's business are those? And I guess, what was kind of... You know, the hurricane created some disruption in terms of metrics, but what was kind of the trailing coverage on those assets, rent coverage?
John Albright (President and CEO)
You know, roughly where we were, basically buying the real estate, it was like a 15% kind of yield to our basically valuation on their NOI.
John Massocca (Senior Research Analyst)
In terms of the size of the overall portfolio for them as an operator?
John Albright (President and CEO)
Well, they're 11%, Phil. As far as, you know, there in our credit stats, they're 11%.
John Massocca (Senior Research Analyst)
So that, I mean, that.
John Albright (President and CEO)
Okay.
John Massocca (Senior Research Analyst)
Those three assets.
John Albright (President and CEO)
Oh, oh.
John Massocca (Senior Research Analyst)
As a percentage of the business.
John Albright (President and CEO)
Sorry. I would say there it's about 25%, maybe 20%.
John Massocca (Senior Research Analyst)
Okay. Really appreciate the color. That's it for me. Thank you.
John Albright (President and CEO)
Great. Thanks.
Operator (participant)
Thank you. We have a question from Craig Kucera with Lucid Capital Markets. Your line is open.
Craig Kucera (Managing Director and Equity Research)
Yeah. Hey, good morning, guys. I noticed your G&A had picked up a bit this quarter due to legal expenses. Was that just a function of the higher transaction volume during the quarter, or should we expect somewhat higher G&A going forward?
John Albright (President and CEO)
No, that was, it was one time. It didn't have to do with, you know, the certain amount of acquisitions, but I mean, that was a little bit of it. But, you know, that was really more one-time legal.
Craig Kucera (Managing Director and Equity Research)
Okay, great. Thanks.
John Albright (President and CEO)
Thank you.
Operator (participant)
Thank you. There are no further questions at this time. This does conclude the question and answer session. You may now disconnect. Everyone, have a great day.