Q4 2021 National Retail Properties Inc Earnings Call

Speaker 1: Good day, ladies and gentlemen, and welcome to the National Retail Properties fourth quarter and 2021 operating results.

Good day, ladies and gentlemen, and welcome to the National retail properties fourth quarter and 2021 operating results.

Speaker 1: At this time, all participants have been placed on a listen-only mode, and we will open up the floor for your questions and comments after the presentation.

At this time, all participants have been placed on a listen only mode and we will open up the floor for your questions and comments after the presentation.

Speaker 1: It is now my pleasure to turn the floor over to your host, Jay Whitehurst, the president and CEO of National Retail Properties.

It is now my pleasure to turn the floor over to your host Jay Whitehurst, President and CEO of National retail properties, Sir the floor is yours.

Speaker 2: Thanks, Holly. Good morning and welcome to the National Retail Properties 2021 fourth quarter earnings call. Joining me on the call this morning is our Chief Financial Officer, Kevin Hobbitt, and our current Chief Operating Officer and soon to be our new Chief Executive Officer, Steve Horn. Let me start by saying how pleased I am with our board's decision to elevate Steve to the role of CEO upon my retirement at the end of April .

Thanks, Holly good morning, and welcome to the National retail properties 2021 fourth quarter earnings call. Joining me on the call. This morning is our Chief Financial Officer, Kevin <unk>, and our current Chief operating officer and soon to be our new Chief Executive Officer, Steve Horn, let.

Let me start by saying how pleased I am with our board's decision to elevate Steve to the role of CEO . Upon my retirement at the end of April .

Speaker 2: I was one of the people who interviewed Steve back in 2003, and it's been a true pleasure to watch his career at National Retail Properties grow and develop.

I was one of the people who interviewed Steve back in 2003, and it's been a true pleasure to watch his career at national retail properties grow and develop Steve.

Speaker 2: Steve understands every aspect of our business and our culture, and there's no one better qualified to lead our company into the future.

Steve understands every aspect of our business and our culture and there's no one better qualified to lead our company into the future.

And while we're while we're looking forward I also want to welcome commodity Wetherspoon to the board of directors of National retail properties.

Speaker 2: And while we're looking forward, I also want to welcome Kamalu Weatherspoon to the Board of Directors of National Retail Props.

Speaker 2: Camaro's background with senior positions at Target, Young Brands, and UnitedHealthcare, and now as the recently appointed CEO of Shipt.

<unk> background with senior positions at target young brands, and United Healthcare and now as the recently appointed CEO of shift.

Speaker 2: as well as his impressive service as an officer in the U.S. Navy, will add value to our company in the areas of strategic planning and consumer retailing.

As well as impressive service as an officer in the U S. Navy will add value to our company in the areas of strategic planning and consumer retailing.

Speaker 2: Much like the rest of national retail properties, our board is very well positioned as we look ahead to the future.

Much like the rest of national retail properties. Our board is very well positioned as we look ahead to the future.

Speaker 2: And lastly, I want to thank our board and all my colleagues, especially Kevin Hobbitt, for the privilege of working with you for the last 30 plus years. We're family and I could not be prouder of what we've built together.

And lastly, I want to thank our board and all my colleagues, especially Kevin Harvick for the privilege of working with you for the last 30 years 30, plus years, where family and I could not be prouder of what we've built together.

Speaker 2: As Steve assumes the role of CEO in April , I know that the company is in the best possible hands to continue its long track record of success and growth in the years ahead.

As Steve assumes the role of CEO in April I know that the company is in the best possible hands to continue its long track record of success and growth in the years ahead.

Speaker 2: Turning now to the numbers. After a solid quarter, we're pleased to announce 2021 Core FFO per share of $2.86, which is a 10.4% increase over 2020.

Turning now to the numbers after a solid quarter. We're pleased to announce 2021 core <unk> per share of $2 86.

Which is a 10, 4% increase over 2020.

We're also pleased to increase our guidance for 2022 core <unk> per share to a range of $2 93 to $3 per share.

Speaker 2: We're also pleased to increase our guidance for 2022 CoreFFO for share to arrange $2.93 to $3 per share.

Speaker 2: Our business model is designed and executed to deliver mid-single digits growth per share on a consistent multi-year basis. And we are clearly on that tape.

Our business model is designed and executed to deliver mid single digits growth per share on a consistent multi year basis, and we are clearly on that cadence.

Speaker 2: Let me now turn the call over to Steve for more color on our fourth quarter and 2021 performance. Thank you, Jeff. Good morning, everyone. Thanks for joining the call. Before discussing a few of NN's key metrics, I'd like to express how grateful I am for the opportunity to be the CEO of NN.

Let me now turn the call over to Steve for more color on our fourth quarter and 2021 performance. Thank you Jack Good morning, everyone. Thanks for joining the call before discussing a few key metrics I'd like to express how grateful I am for the opportunity to be the CEO of <unk> and then at the end of April .

Speaker 3: In addition, I want to personally thank Jay for all his mentoring, encouragement, and support of the nearly two decades that we worked.

In addition, I want to personally thank J, Ross med flooring encouragement and support nearly two decades that we work together without question, we'll Miss you Havent Jr. App.

Speaker 3: without question, we'll miss J. Heaven J around. With that being said, I'm confident with the foundation J established, along with the deep management team and talented associates of M&N, there is no doubt the mission to deliver outstanding results and create sheer older value year over year.

But that being said I am confident with the foundation <unk> established along with a deep management team and talented associates of M&A.

No doubt the mission to deliver outstanding results and create shareholder value year over year will continue.

Speaker 3: I'd also like to thank our entire board of directors for their confidence and support as M&N moves into another chapter.

I would also like to thank our entire board of directors for their confidence and support and then moves into another chapter.

Now, let's turn to <unk> recent performance.

Speaker 3: We acquired 49 new properties for 100 million in the fourth quarter, bringing the 2021 acquisition volume to 550 million and 156 properties at an initial cash cap rate of six and a half with an average lease duration of over.

We acquired 49, new properties for $100 million in the fourth quarter, bringing the 2021 acquisition volume $550 million and 156 properties.

<unk> cash cap rate of six five with an average lease duration of over 18 years.

Speaker 3: For the most part, our accusations for the year involve new long-term leases on NNN.

For the most part of our acquisitions for the year involve new long term leases.

<unk> lease form.

As we have mentioned in the past our focus on long duration that lease create a highly stable and growing income stream is far superior to the more variable cash flow from other areas of commercial entities.

Speaker 3: As we have mentioned in the past, our focus on long duration, that leads to a highly stable grinding comes dream, that is far superior to the more variable cash flow from other areas.

Speaker 3: consistent with our historical trends, two-thirds of our 2021 acquisition by and came from over 20 relationship tenants, with which we do multi-year shifts.

Consistent with our historical trend two thirds of our 2021 acquisition buying came from over 20% relationship tenants with which we do multi year sale leaseback transaction.

Speaker 3: Our acquisition team on a daily basis is focused on building and identifying new relationships in various lines, without Mistress

Our acquisition team on a daily basis is focused on building and identify new relationships in various lines of trade coupled that with our current stable of relationship tenants that are picking up the pace of growth organically and through M&A results in our pipeline currently stands very strong for 2022.

Speaker 3: Coupled that with our current stable relationship tenants that are picking up the pace of growth, organically and through M&A, results in our pipeline currently being very strong for 2022.

Turning to some of our key portfolio metrics.

Speaker 3: Employee will remain very strong with accuracy of 40 basis points to 99% from the third quarter.

Folio remains very strong with occupancy up 40 basis points to 99% from the third quarter collections of both current rent and deferred rent is right on schedule.

Speaker 3: Collections are both current right and the third rent is right off the edge

Speaker 3: And ten at least renewals are running about 85% from the year, which is right in line with our historic last.

And tenant lease renewals are running about 85% for the year, which is right in line with our historical average.

Speaker 3: During the quarter, we also sold 21 properties for 51 million. For the year, that total was 74, that generated 122 million, which we invested into new accusations with long-term.

During the quarter. We also sold 21 properties for $51 million for the year that totaled 74 that generated $122 million, which we invested into new acquisitions with long term leases based on a dollar volume about one third of our dispositions were vacant properties.

Speaker 3: Based on a dollar volume, about one third of our disposition were vacant problems.

Speaker 3: Before Kevin discusses our financial metrics, I'll share a few highlights by saying the balance sheet remains from the strongest nurse sector, at 176 million of cash in the bank at year end, no material debt maternity's until 2024 had zero balance on our 1.1 billion line of credit. With that, let me ask Kevin to provide his additional comment on the balance sheet at year end.

Before Kevin discusses our financial metrics I'll share a few highlights by saying our balance sheet remains the strongest in our sector with $176 million of cash in the bank at year end no material debt maturities until 2024 and zero balance on our $1 1 billion line of trends with that let me ask Kevin to provide.

Additional comments on our balance sheet at year end results, Thanks, Steve and as usual I'll start with our usual cautionary statement that we will make certain statements that may be considered to be forward looking statements under federal Securities law.

Speaker 3: Thanks Steve and as usual start with our usual cautionary statement that we will make certain statements that may be considered to be forward looking statements under federal security law.

Speaker 4: companies' actual future results may differ significantly from the matters discussed in these forward-looking statements. And we may not release revisions to these forward-looking statements to what changes after the statements were made.

<unk> actual future results may differ significantly from the matters discussed in these forward looking statements and we may not release revisions to these forward looking statements to reflect changes after the statements were made.

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 filings with the SEC and in this morning's press release.

Speaker 4: Factors in risk that could cause actual results to differ materially from expectations or disclose from time to time in greater detail in the company's following with the SEC and in this morning's press.

Speaker 4: with that out of the way. So headlines from this morning's press release report, quarterly, FFRO results of 75 cents per share for the fourth quarter of 2021. That's up 4 cents from the preceding third quarters, 71 cents per share and up 12 cents from the prior years, 63 cents, which was affected by the lockdowns in 2020.

With that and all the way so headlines from this morning's press release report quarterly core <unk> results of <unk> 75 per share for the fourth quarter of 2021.

<unk> from the preceding third quarter's 71 per share up <unk> 12 from the prior years.

63, which was affected by the Lockdowns in 2020 today.

Speaker 4: Today we also reported that AFFO per share was 77 cents per share for the fourth quarter, which is up 2 cents from the preceding third quarter's 75 cents.

Today, we also reported that <unk> per share was <unk> 77 per share for the fourth quarter, which is up <unk> <unk> from the preceding third quarter's 75 cents.

Speaker 4: I would characterize fourth quarter results as very good. They did come in about two cents better than expected. Approximately half of that came from some one-time revenue items, particularly connected to lease termination or rent settlement income of about $1.4 million. And the other half coming from GNA reduction from lower stock compensation expense approval.

I would characterize fourth quarter results as very good.

They did come in about <unk> <unk> better than expected approximately half of that came from some one time revenue items.

Particularly in <unk>.

Connected to lease termination of rent settlement income of about one $4 million and the other half coming from G&A reduction from lower stock compensation expense accrual.

Speaker 4: We did footnote, a fourth quarter AFFO included $2.9 million of deferred rent repayment and our crude rental income adjustments for the fourth quarter, without which we would have produced AFFO 76 cents.

We did footnote fourth quarter <unk> included $2 $9 million of deferred rent repayment in our crude rental income adjustments for the fourth quarter without which we would have produced <unk> 76 per share.

Speaker 4: As these scheduled deferred rent repayments continue to taper off from the peak levels in the first half of 2021, we're seeing the improved results kicking in from our increased acquisition levels in 2021.

As these scheduled deferred rent repayments continue to taper off from the peak levels in the first half of 2021.

Seeing the improved results kicking in from our increased acquisition levels in 2021.

Speaker 4: Full year 2021 core FFO results of $2.86 per share. We're up 10.4% over 2020.

Full year 2021 core <unk> results of <unk>.

$2 86 per share were up 10, 4% over 2020.

Speaker 4: Looking at AFFO, we reported full year 2021 AFFO $3.6 for share, and that's up 21.9% over 2020's $2.51 for share. Again, we've noted these results, excluding the deferred rent repayment.

Looking at <unk>, we reported full year 2021, <unk> $3 <unk> per share and that's up 21, 9% over 2000, Twenty's $2 51 per share again, we footnoted. These results excluding the deferred rent repayments.

Speaker 4: which showed adjusted 2021 to AFFO 292 for share versus $2.68 in 2020 with those deferred rent repayment strip down. And that would represent a 9%.

<unk> showed adjusted 2021, and <unk> $2 92 per share versus $2 68.

In 2020 with those.

FERC rent repayments stripped down and that would represent a 9% increase.

Speaker 4: the AFFO line item, which I understand believes more in line with a core AFFO's 10.4.

The <unk> line item, which understandably more in line with.

Core <unk> was 10, 4% increase.

Speaker 4: Excluding all deferral repayments, their AFFO dividend payout ratio for the full year 2021 was 72%, which is fairly consistent with pre-pandemic levels.

Excluding all deferral repayments, our <unk> dividend payout ratio for the full year 2021 was 72%, which is fairly consistent with pre pandemic levels as Steve mentioned occupancy was 99% a year.

Speaker 4: As Steve mentioned, the occupancy was 99% at year end. That's up slightly from recent quarters. G and X, Vest came in at $9.9 million.

Year end, that's up slightly from recent quarters G&A expense came in at $9 $9 million.

Speaker 4: And we ended the quarter with $713.2 million of annual base rent in place for all leases as of December 31.

And we ended the quarter with $713 $2 million of annual base rent in place for all leases as of December 31 2021.

Speaker 4: We mentioned rent collections continue to remain strong on the fourth quarter. Today we reported rent collections of approximately 99.4% for the fourth quarter, which is very close to kind of the pre-lockdown levels we had previously. Collections from our cash basis tenants, which represent about 7% of our annual base rent, improved to approximately 98% for the fourth quarter rent.

Steve mentioned rent collections continue to remain strong in the fourth quarter today, we reported rent collections of approximately 99, 4% for the fourth quarter, which is very close to kind of the pre lockdown levels. We have previously.

Collections from our cash basis tenants, which represent about 7% of our annual base rent improved to approximately 98% for the fourth quarter rent and Thats up from 94% in the third quarter, So doing well on the collection front back to what we consider fairly typical normal.

Speaker 4: And that's up from 94% in the third quarter. So doing well on the collection front back to what I, we consider fairly typical normal level.

Levels across the board.

Speaker 4: Today we increased our 2022 core FFO for share guidance from a range of $2.90 to $2.97 to a new range of $2.93 to $3 per share.

Today, we increased our 2022 core <unk> per share guidance from a range of $2 90 to $2 97 to a new range of $2 93 to $3 per share and similarly, similarly increased <unk> guidance to a range of $3 <unk> to $3.

Speaker 4: Similarly, increased AFFO guidance to a range of $3.1 to $3.7 for share, which reflects the scheduled slowdown in deferral repayments in 2022 as noted on page 13 of today's press.

<unk> per share, which reflects the scheduled slowdowns and deferral repayments in 2022 as noted on page 13 of today's press release.

Speaker 4: The supporting assumptions for our 2022 guidance are on page 7 of today's press release and there are largely unchanged from our last quarters guidance. I'll be if we are excluding any executive retirement charges from our guidance.

The supporting assumptions for our 2022 guidance are on page seven of today's press release and are largely unchanged from our last quarter's guidance, albeit we are excluding any executive retirement charges from our guidance we.

Speaker 4: We continue, we expect to continue to the high and current levels of rent collection rates and we've assumed a 1% rent loss assumption in our guidance, which is what we've normally assumed in our guidance for a number of years despite not typically reaching those loss We continue to have a 1% rent loss assumption in our guidance for a number of years despite not typically reaching those loss

We continue.

We expect to continue to the Hyatt current levels of rent collection rates and we've assumed a 1% rent loss assumption in our guidance, which is what we've normally assumed in our guidance for a number of years. Despite.

Not typically reaching those loss level.

Speaker 4: As usual, we do not include any of our assumptions for capital market activity, but our general assumption in this regard is that we intend to behave in a fairly leveraged neutral manner over the lump.

As usual as usual we do not include any of our assumptions for capital markets activity, but our general assumption. In this regard is that we intend to behave in a fairly leverage neutral manner over the long term.

Switching over the balance sheet fourth quarter was fairly quiet in terms of capital markets activity in October we redeemed $345 million of our five 2% preferred shares. So we no longer have any preferred stock outstanding and round numbers for the full year 2021, we raised nine.

Speaker 4: Switching over the balance sheet fourth quarter was fairly quiet in terms of capital market activity in October We redeem three hundred and forty five million dollars of our 5.2 percent preferred shares So we no longer have any preferred stock out thin

Speaker 4: in round numbers for the full year of 2021, we raised $900 million of 30 year, unsecured debt.

$100 million of 30 year unsecured debt.

Speaker 4: with a 3.25% average coupon. And we use the approximately 700 million.

The $3.

Two 5% average coupon and we used approximately $700 million.

Speaker 4: to redeem or repay, outtainly dead and preferred stock with an average 4.25% Q.

To redeem or repay outstanding debt and preferred stock with an average for two 5% coupon.

We ended the fourth quarter with $171 million of cash on hand, and no amounts outstanding on our $1 $1 billion Bank credit facility, So our liquidity.

Speaker 4: We ended the fourth quarter with $171 million of cash on hand and no amount of outstanding on our $1.1 billion bank credit to the civil.

Speaker 4: Our liquidity remains in excellent shape. Our weighted average debt maturity is now approximately 14.7 years, which we suspect is among the longest in the end of the-

<unk> remains in excellent shape.

Weighted average debt maturity is now approximately $14 seven years, which we suspect is among the longest in the industry and.

Speaker 4: With the benefit of a few months of hindsight, we're very glad. We went with very long maturities inside last year.

And with the benefit of a few months of hindsight, we're very glad.

Went with very long maturities in size last year.

Speaker 4: Our next debt maturity is $350 million with a 3.9% coupon in mid 2024, and all of our outstanding debt is fixed.

Our next debt maturity is $350 million with a three 9% coupon in mid 2024, and all of our outstanding debt is fixed rate.

Speaker 4: So our leverage and liquidity are very good shape in the balance sheets well-positioned for 2022.

So our leverage and liquidity are very good shape and the balance sheet is well positioned for 2022.

Couple of stats.

Speaker 4: couple of stats, net debt to growth book assets at year end was 39.9% net debt to EBITDA was 5.2 times at year end, which at this point is the same as net debt plus preferred since we no longer have any deferred. Interest coverage was 4.6 times and 6 charge was 4.4 times for the fourth quarter of 20.

The gross book assets at year end was 39, 9% net debt to EBITDA was five two times at year end.

Which at this point is the same as net debt plus preferred since we no longer have any preferred.

Interest coverage was four six times and fixed charge was four four times for the fourth quarter of 2021.

Speaker 4: So 2021 produced good growth in the per share results and we think we're well positioned to continue that growth in the 2022 with our current 2022 core FFO guidance suggesting about 4% growth to the mid.

So 2021 produced good growth in per share results and we think we're well positioned to continue that growth into 2022 with our current 2022 core <unk> guidance, suggesting about 4% growth to the midpoint.

Speaker 4: But as usual, our focus remains on the long term as we continue to endeavor to grow per share result.

But as usual our focus remains on the long term as we continue to endeavor to grow per share results.

Speaker 4: And with that, we'll take questions. I will say, Jay, thanks so much. It's been fun. Thanks for keeping me on a trouble for a lot of years, and it's been great working together. I know you'll miss these earnings calls and investor conferences, et cetera. But I know we'll stay in touch and wish you the very, very best. Thanks.

And with that we'll take questions.

I will say Jay thanks, so much.

Thanks for keeping me out of trouble for a lot of years and it's been great working together I know, you'll Miss these earnings calls and investor conferences et cetera.

I know, we'll stay in touch and wish you the very very best Thank you.

Speaker 5: Thank you. All right, Holly, we'll take questions.

Thank you.

Alright, we will take questions.

Speaker 1: Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold on.

Ladies and gentlemen, the floor is now open for questions.

Any questions or comments. Please press star one on your phone at this time, we ask that while posing your question you. Please pickup your handset with sitting on speaker phone to provide optimum sound quality. Please hold while we poll for questions.

Speaker 1: Your first question for today is coming from Brad Hepburn. Please announce your affiliation, then pose your question.

Your first question for today is coming from Brad Heffern. Please announce your affiliation and pose your question.

Hey, good morning, everyone, Brad Heffern from RBC.

Speaker 6: Hey, good morning everyone. Brad Hepperm from RBC. Congratulations, Dave, on the retirement and Steve on the new roll. Question on cost of capital. So obviously it's moved tire here. Have you seen any change in cap rates in the acquisition markets that will preserve spreads or does the 2020 guide assume that spreads will just be more narrow on a similar asset base?

Congratulations day on the retirement and Steve on the new role.

Question on cost of capital. So obviously, it's moved higher here have you seen any change in cap rates in the acquisition market that will preserve spreads or does the 2020 guide assume that spreads will just be more narrow on a similar asset base.

Speaker 3: Brad, this is Jay out. Thank you very much for your comments Steve. I'll let you talk about what you're seeing in the caprate. Yep, Mark in the market. Absolutely. Caprates, I mean they've compressed even further, if we kind of saw the second half of the year. And it's been a result more of, you know, supplying the market. It didn't feel like there's a lot of inventory. I mean there's still enough inventory out there to, you know, do acquisitions. Caprates compressed, there's a lot of caprawther.

Brian This is J R. Thank you very much for your comments, Steve I'll, let you talk about what youre seeing in the cap rate in.

And the market cap.

Cap rates.

Compressed even further if we kind of saw the second half of the year.

It's been a result more of supply in the market.

Didn't feel like Theres, a lot of inventory and there is still enough inventory out there.

Two acquisitions, but cap rates can pass.

So there's a lot of capital out there chasing deals.

Speaker 3: As far as our guidance, we don't guide on the cap rate, but 6.5 was a cap rate for 2021, and we're seeing to get compressed a little bit for 2020.

As far as.

Since we don't guide on the cap rate.

$6 five was the cap rate for 2021.

And we're seeing it get compressed a little bit for 2022.

Speaker 6: Okay, got it. And maybe for Kevin, you know, looking at the new guide, it seems like the increase would have been, you know, entirely covered by the lower GNA, but I know you also reduced the delinquency guide, so there's an offsetting negative factor in there that's resulting in where the guide ended up.

Okay got it.

Maybe for Kevin looking at the New guide it seems like the increase would have been.

Entirely covered by the lower G&A, but I know you also reduced the delinquency guidance too.

So is there an offsetting negative factor in there thats, resulting in where the guide ended up.

Speaker 4: No, not really. I think your on target in terms of what's driving most of that guidance improvement is some GNA as well some improvement in the reduced loss assumption if you will from rent collections. And so those two items are the bulk of it. You know, of course, then thrown in the mix is our assumptions that it relates to capital market that the city would.

No not really I think.

We are on target in terms of what's driving most of that guidance improvement is some G&A as well as some improvement in the.

Reduced loss assumption, if you will from rent collections and so those two items are the bulk of it and of course, then thrown in the mix as our assumptions as it relates to capital markets activity, which we don't feel it's in our projections, but we don't give guidance because we try to be opportunistic in accessing those capital markets. So we don't.

Speaker 4: We don't really, it's in our projections, but we don't get guidance, because we try to be opportunistic in accessing this capital market, so we don't really wanna be held to that, to that assumption in our metrics. So that's the other piece that might be impacting the guidance a bit that the folks can model into SICELY.

Really want to be held to that.

To that assumption in our in our metrics and so thats the other piece that might be.

Impacting the guidance a bit but.

Jokes camp model when precisely.

Okay. Thank you.

Speaker 1: Your next question is coming from Spencer all the way. Please announce your affiliation, then pose your question.

Your next question is coming from Spencer I'll away. Please announce your affiliation then pose your question.

Speaker 7: Hi, so with Green Street, thanks for taking a question. Kevin, maybe just more specifically, just in terms of your, you know, thinking about your way to cross the Capitol currently, one, just, you know, how comfortable are you with where your leverage is at this point, how much more debt, you know, do you think you'd be comfortable taking on? And then in terms of 22 acquisitions, can you just talk about your expectations in terms of funding split between equity debt?

Hi, with Green Street.

Thanks for taking the question, Kevin maybe just more specifically just in terms of your thinking about your weighted cost of capital. Currently one just how comfortable are you with where your leverage is at this point how.

How much more debt do you.

You think you'd be comfortable taking on and then in terms of 22 acquisitions can you just talk about your expectations in terms of funding split between equity debt.

Speaker 4: Yeah, so, we're to answer the first question I guess is, you know, we're very comfortable with our, our,

Yes so.

To answer the first question I guess is we're very comfortable with our hour.

Speaker 4: Our leverage profile today and we think the rating agencies there as well and we think investors are generally said I don't think that's going to change much as it relates to funding 2022 acquisitions, you know, we it's interesting at this point at year end we've got about a hundred and seventy million dollars of cash in the bank So nothing need to be raised there the company will produce after payment of all dividends will produce about a hundred and forty million dollars of mitt

Our leverage profile today than we think.

The rating agencies are as well and we think investors are generally so I don't think that's going to change much as it relates to funding 2022 acquisitions.

It's interesting at this point at year end, we've got about $170 million of cash in the bank. So nothing needs to be right. There. The company will produce after payment of all dividends will produce about $140 million of free cash flow.

Just from operations and then.

Speaker 4: And then, you know, we've guided to about $100 million of disposition. So, $170 million of cash, $140 million of operating cash flow, and $100 million of dispositions is about $400 million. And so, you know, versus our guide of about 600 million of acquisitions.

We've guided to about $100 million of disposition, so $170 million of cash of $140 million of operating cash flow.

<unk> hundred million dollars of dispositions is about $400 million.

And so versus our guide of about $600 million of acquisitions.

Speaker 4: We're pretty well funded already for 2022X.

Pretty well funded already for 2022 acquisition.

Okay. Thank you and then I know you mentioned just on the cap rate front in terms of maybe a slowdown in the fourth quarter in terms of acquisition activity.

Speaker 7: Okay, thank you. And then I know you mentioned just, you know, on the cap rate front in terms of maybe a slow down and in the fourth quarter in terms of acquisition activity, you know, a lot of capital tracing deals, but anything else in terms of broader industry themes, you can point to the kind of, can also be attributed to the slow down and are tenants delaying activities, slowing them in aid all.

A lot of capital chasing deals, but anything else in terms of broader industry themes, you can point to that.

Kind of can also be attributed to the slowdown in our tenants delaying activity slowing M&A at all.

Hey, Steve.

Speaker 3: Hey, Spencer Steve. No, it's the activities out there. As far as, you know, we didn't find the right investments in the fourth quarter. You know, we are comfortable with the $100 million that we bought. 2022, as I stated, you know, our...

The activities out there.

Far as you know we didn't find the right investments in the fourth quarter and yes, we are comfortable with the $100 million that we bought.

2022, as I stated our relationship tenants are getting back in the market, adding new stores through development and our M&A. So we're still seeing a robust M&A market specifically in the <unk>.

Speaker 3: relationship tenants are getting back in the market, you know, adding new stores through development and or M&A. So we're still seeing a robust M&A market specifically in the QSR, line of trade and still in the automotive services in particular the car wash sector.

Line of trade and still on the automotive services in particular, the car wash sector.

Great. Thank you.

Your next question is coming from Wes Golladay. Please announce your affiliation then pose your question.

Speaker 1: Your next question is coming from West Galaday. Please announce your affiliation. Then pose your question.

Hey, good morning, everyone. It's Wes Golladay from Baird can you talk a little bit about the dispositions in the quarter I see that you've person disclosure, the camping world and where those operating camping world and it was that drove the cap rate higher.

Speaker 4: Hey, good morning everyone. This is West Holiday from Barred. Can you talk a little bit about the dispositions in the quarter? I see that you've perished and exposure to the camp in the world. And were those operating camp in the world? And was that the wood drove the cap right higher?

Speaker 3: I know you're David Weston Steve. Now you're exactly right. The camp rate was higher on distance this year. We do the barbell approach when we're looking at distance.

Dave It's Steve.

Exactly right.

The cap rate was higher on dispositions. This year, we do the barbell approach when we're looking at dispositions.

Speaker 3: We're opportunistic when somebody offers us some price for our property that we believe is extremely high and we should sell it and then we do a fair amount of portfolio management with regard to camping world those work dark assets paying rent that we get some portfolio management and work to deal out with camping world and we're going to do some development for some other future funds.

We said we are opportunistic when somebody offers us a price for a property that we believe is extremely high and we should sell it and then we do a fair amount of portfolio management and with regard to camping world.

Those were dark assets paying rent that we did some portfolio management and work to deal out with camping world.

We're getting decent development form some other future fundings.

Speaker 4: Gotcha. And then, I guess, you know, looking at the first quarter, or the fourth quarter of I'm, it was about 100 million, but what we heard from the industry was there's a lot of deal activity in the fourth quarter, and maybe some of it spilled into the first quarter, they sure, I, it's trying to build about that last century it gave. Did you have that happen to you, where maybe it's just someone who was just a push out?

Gotcha and then.

I guess looking at the first quarter or the fourth quarter volume it was about $100 million, but what we heard from the industry or is there still a lot of deal activity in the fourth quarter and maybe some of it spills into the first quarter of this year.

Just trying to build up that last answer you gave did you have that happen to you or maybe it's just some of it was just a pushout.

Speaker 3: Now we define the market a little bit different than our peers. Our average lease term is north of 18 years on our acquisitions because we do sell these facts and we try to find deals directly with tenants.

When we define the market a little bit different than our peers.

Our average lease term is north of 18 years on our acquisitions, because we do sale leasebacks.

We try to find deals directly with tenants I agree with our peers. So there was a significant amount of deal volume out there, but thats. The 10 31 market and existing portfolios, which had lease term burned I can recall several portfolios out there at 911 years.

Speaker 3: I agree with our peers. There was a significant amount of field volume out there, but that's the 1031 market and existing portfolios which had leased term burns. And I can recall several portfolios out there that had 9, 11 years. I'm in a term in a variety of different.

The term a variety of different industries.

Speaker 3: I'm also our peers aren't really focused directly on retail. They have a little bit wider than that doing industrial. I mean I can't speak to the industrial side just we don't see all the...

Also our peers arent really focused directly on retail yes, they have.

A little bit wider but net do in industrial but I can't speak to the industrial side, we don't see all of those deals.

Yes fair enough.

Speaker 8: Yeah, well fair enough. And maybe last one I think I might have missed it or maybe it wasn't explicitly said, but what are the, I guess, the bad debt assumptions in guidance currently?

Last one I think I might have missed it or maybe it wasn't.

Explicitly said, but what are the I guess, the bad debt assumptions in guidance currently.

Speaker 4: Yeah, we're kind of getting back to what Kevin Haywell, what normally...

Yes.

Getting back to work.

Hey, Ross.

What's normally.

We would assume which is 100 basis points, 1% rent loss and it typically typical year like I said, despite the fact that we usually don't reach that loss level. We just think thats, a reasonable prudent number to put in our and our internal guidance and projections to assume something somewhere.

Speaker 4: We would assume, which is 100 basis points, 1% rent loss in a typical year. Like I said, despite the fact that we usually don't reach that law level, we just think that's a reasonable, prudent number to put in our internal guidance and projections to assume something somewhere may have an issue. But like I say, normally we don't get to that law level, but that's what's baked into the numbers.

May have an issue, but like I say normally we we don't.

Get to that loss level, but that's what's baked into the numbers.

Speaker 8: Got it. Thanks a lot guys and congratulations to both J and C. Thanks very much.

Got it thanks, a lot guys and congratulations to both Jay and Steve Thanks very much.

Speaker 1: Your next question is coming from Katie McConnell. Please announce your affiliation. Then pose your-

Your next question is coming from Katie Mcconnell. Please announce your affiliation then pose your question.

Speaker 9: It's Michael Belliman here with Katie with us from City.

Yes, it's Michael Bilerman here with Kt from Citi.

Speaker 9: Maybe it's even just starting with you. You've obviously been with the company for, I think just almost 20 years. Obviously very key on the acquisition side.

Maybe Stephen just starting with you you've obviously been.

With the company for Okay.

I think just almost 20 years.

Obviously very key on the acquisition side I guess as you enter the CMC.

Speaker 9: I guess as you enter the CEC, what is your strategy and what if you communicate it to the board or maybe what the board wants from you to sort of narrow the evaluation discount to which in-and-end trades may have the stock.

Is your strategy and what have you communicated to the board or maybe what the board once your new sort of narrow the.

The valuation discount to which they then trade.

<unk> is currently at least two to three multiple points below the peers trades at a discount to consensus NAV.

Speaker 9: This currently at least two to three multiple points, lower than peers, it trades at a discount, the consensus NAV will most of your peer set trades at a premium.

Most of your peer set trades at a premium.

Speaker 9: And obviously given the fact that Integral growth is light your as a net lease company your strategy is to go out and acquire and create the accretion

And obviously, given the fact that.

Internal growth as light your.

<unk> company your strategy is to go out and acquire and create the accretion.

Speaker 9: And what the we could cost the capital it obviously affects that

We kicked off the capital obviously affects that so.

Speaker 9: So I guess when you look at becoming CEO , what do you think is the reasons for that discount? And what are you gonna do to address it and does the board share that with you?

I guess when you look at it is becoming CEO , what do you think.

The reason for that discount and what are you going to do to address it.

And does the board share that with you.

Speaker 3: I think that the board shares my strategy, otherwise I don't think I'd be in this position. But one thing I could say I'm not gonna change is I believe in the year over year, FFO growth, the low single digits, I firmly believe in that strategy as far as...

I think that the board shares my strategy, otherwise I don't think I'd be in this position, but one thing I can say I am not going to changes I believe and the year over year <unk> growth to low single digits I firmly believe in that strategy as far yes.

Speaker 3: the mid-stingled digits. Now the one thing as far as our equity price, yeah, we've reviewed the long term, and I think right now we're in a little bit of a draw, just like we wore back in 0809, but I think if we deliver quarter after quarter, we'll get that market premium back.

Mid single digits.

But one thing as far as our equity price.

Yes, we view the long term and I think right now we're in a little bit of a trough.

Just like we were back in <unk> nine, but I think if we deliver growth quarter after quarter, we will get that market premium back.

Speaker 9: But a mid-single-digit growth is not very different than the overall peer set. It actually is probably a little bit lighter. So why do you think your stock would then trade at a premium, or even in line with peers? I guess what are going to be the things to get you there?

But a mid single digit growth is not very different than the overall peer set it actually is probably a little bit lighter. So why do you think your stock within trade at a premium or even in line with peers.

I guess, what are going to be the things that get you there.

Speaker 3: I mean, we can debate is that 4 or 5% growth, right? Or 5 or 6% growth? I think you kind of touched a little bit on my background as acquisitions. So I do believe you know the acquisition, or I expect the acquisition by two pick up. And you might see a little bit more growth, but not exceedingly much higher.

I mean, we can debate is at four 5% growth rate or five or 6% growth I think you've kind of touched a little bit on my background is acquisitions. So I do believe the acquisition or I expect the acquisition by to pick up and it might be a little bit more growth, but not exceedingly have much higher.

Is there a strategy to reengage with investors.

Speaker 9: Is there a strategy to re-engage with investors to maybe understand if that's the right strategy or if other alternatives should be done?

B understand if that's the right strategy or other alternatives should be.

Be done.

Speaker 9: I think you can't be happy with where the maybe you are maybe coming into the CF you want a low stock price But I imagine that you know, this is not somewhere where Where the company or with the board wants to see it

I guess you can't be you can't be happy with where the maybe you are maybe coming into the seat you want a low stock price.

Jim.

This is not something where we're we're the company over the board wants to see it.

Speaker 3: Over the long term, I agree. Nobody wants to see that. There's not our expectations of management of the board. And I expect it to increase over the long run. And that's how I'm going to manage the company. Now as far as investor relations and meeting with investors, absolutely. I think being new to the sea, you're going to see me a lot more out in the public eye in the near term to express the strategy of MNN.

Over the long term I would agree it's nobody wants to see that that's not our expectation of the management of the board and I expect it to increase over the long run and that's how I'm going to manage the company, thus far as Investor Relations and meeting with investors, absolutely I think being new to the sea youre going to see a lot more.

Sure.

In the near term to Kevin.

Expressed the strategy of M&A.

Hi, everyone. This is Katie just for a quick follow up here.

Speaker 10: Hi everyone, this is Katie just for a quick follow up here. So since 4-2 deal volume came in at the lower end of the range, can you just discuss what the active pipeline looks like today and how we should be thinking about timing of that $600 million guidance you laid out for the year?

<unk> volume came in at the lower end of the range can you just discuss what the active pipeline looks like today and how are you.

You should be thinking about timing of that $600 million guidance you laid out for the year.

Speaker 3: Hey, Katie, it's Steve. As far as timing, I couldn't, you know, the first quarter, we're hitting our numbers, but as you know, in the real estate world, for the most part, my visibility out three months is zero. And I just want to remind you that the 600 million that we've guided to this year is an all time high for NNN as far as guided.

It's Steve.

As far as timing the.

First quarter, we're hitting our numbers, but as you know in the real estate world for the most part my visibility out three months is zero.

Just want to remind you that the $600 million that we've guided to this year is an all time high for M&A as far as guidance.

Speaker 3: We're just based in that historical levels talk into our relationships, what I know is out there in the market and what our acquisition guys are telling us. But the pipeline, as I stated in the opening comments, I feel very good about our 2022 pipeline, as I sit here today. And hey, Katie, Kevin. And typically, and also holds for 2022.

We're just based on that.

Historical levels talking to our relationships, what I noticed out there in the market and what our acquisition guys are telling us.

But the pipeline as I stated in the opening comments I feel very good about our 2022 pipeline as I sit here today.

Okay, Kevin and then typically in.

It also holds for 2022, we normally assume.

Speaker 4: A little bit of back end weighted acquisition volume, so something like 40% first half, 60% second half, kind of...

A little bit of back end weighted.

Acquisition volume, so something like 40% first half, 60% second half kind of.

Speaker 4: you know, round numbers is generally what we assume and that's what we've got included in our guidance for 20.

Round numbers is generally what we would assume and that's what we've got included in our guidance for 2022 as well.

Okay. Thanks.

Speaker 1: Your next question for today is coming from Ronald Camden. Please announce your affiliation, then pose your question.

Your next question for today is coming from Ronald Camden. Please announce your affiliation then pose your question.

Hey, it's Ron from Morgan Stanley , Hey, just two quick ones.

Speaker 4: Hey, it's Ron from Oregon Stanley. Hey, just two quick ones. Sort of follow up topics have been touched on before. One is just on the transition and obviously congratulations to both of you. You hit on the strategy, but is there any changes sort of operationally reporting lines or anything like that that's being constantly that we should be thinking about just how the business is going to be operating and so forth?

Sort of follow ups topics have been touched on before one is just on the <unk>.

Transition and obviously congratulations to both of you.

You hit on the strategy, but is there any changes sort of operationally reporting lines.

Or anything like that that that's being contemplated that we should be thinking about just how the business is going to be operating and so forth.

Speaker 3: As far as the internal change, today, thanks for the congratulations. If I were you, because I actually told our associates during the transition.

As far as the internal changes thanks for that.

Yes, if I were you.

You actually have told our associates during the transition.

Speaker 3: You know, 2014 I was chief acquisition officer mid 2020 became COO upon really tall bears retirement from the company. So I've assumed a lot of responsibility over the last couple of years. So yeah, there's gonna be some internal evaluation and as far as the, I'm gonna kind of filter my responsibilities within the organization. As far as operationally from the outside, you're not gonna notice a difference.

2014, I was Chief acquisition Officer, mid 2020 became COO upon really Paul payers retirement from the company.

Assumed a lot of responsibility over the last couple of years. So yes, there's going to be some internal evaluation.

And as far as I'm going to kind of filter my responsibilities within the organization as far as operationally from the outside Youre not going to notice a difference the strategy is going to remain the same as far as the <unk> growth in multi year strategy.

Speaker 3: The strategies can remain the same as far as the FFO girls and multi-year strides.

Speaker 11: Got it. And then I wanted to sort of hit the cap rate compression question, maybe a little bit differently. I think we've all seen sort of the PE announcements coming into triple nets. I think historically, guys have talked about being granular, being focused, having the relationships.

Got it and then I wanted to sort of hit.

I hit the cap rate compression question, maybe a little bit differently I think we've all seen sort of the p/e announcements coming into triple nets I.

I think historically you guys have talked about being granular being focus having the relationships being a big competitive advantage. Just maybe can you comment on whats competition has looked like over the last three to six months and what you expect going forward.

Speaker 11: being a big competitive advantage. Just maybe can you comment on what's competition's look like over the last three to six months and what do you expect going forward as sort of more and more capital. Private capital continues to go come into the space.

As sort of more and more capital.

Private capital continues to come into the space.

So we felt that over the last six months, the additional capital coming into the space without question.

Speaker 3: So we've felt that over the last six months, the additional capital coming into the space without question, and that's just reflecting on the cap rates. However, that being said, we touched on a little bit earlier about the large volume of our peers or just the industry in general doing in the fourth quarter, that the additional money coming into our space isn't really hitting the QSR franchisee of Taco.

Reflecting on our cap rates, however that being said, we touched on a little bit earlier about the large volume of our peers or just the industry in general and in the fourth quarter that the additional money coming into our space isn't really hitting it.

<unk> franchisee of Taco bells, it's the 10 31 open market because what we do it's tough and it takes years to establish relationships in the market. It's easy to go buy a 12 year lease that's already in place in the open market, that's easy to do but the mandate to go find a long term lease.

Speaker 3: 1031 open market because what we do it's tough and it takes years to establish relationships in the market It's easy to go buy a 12-year lease that's already in place in the open market. That's easy to do But the mandate to go find the long-term leases that's a challenge that's difficult to do and new money coming into our space is an effect in our company yet

That's a challenge that difficult to do at new money coming into our space isn't affecting our company yet.

Alright Thats it from me thanks, guys.

Speaker 1: next question is coming from Joshua Dennerline. Please announce your affiliation then pose your questions.

Your next question is coming from Joshua <unk>. Please announce your affiliation and pose your question.

Yes, hey, everyone.

Speaker 12: Yeah, everyone. It's a few days of affiliation. Jake, congrats on the retirement. We'll give a nice retirement party plan and some good vacation ahead. Just maybe I wanted to touch base on your tenant watch list. What's on it today?

Ebay's affiliation.

Hey, congrats on the retirement.

Firemen Party plan.

Jason.

Head.

Just maybe wanted to touch base on your tenant watch list.

What's on it today.

Yeah, Hi, it's Kevin really no change from where it has been in recent quarters.

Speaker 4: Yeah, hey, Kevin, really no change from where it has been in recent quarters. It's a smattering of...

Yes.

It's a smattering of the.

Speaker 4: the four lines of trade that we had concerns about back in 2020 that we are...

Four lines of trade that we had concerns about.

Back in 2020 that we are we are very slow to take things off our list and so we keep watching them, having said that we are our collections are very high we have no tenants that we're communicating to you or the market that we're worried about and so.

Speaker 4: We are very slow to take things off our list and so we keep watching them. Having said that, our collections are very high. We have no tenants that were communicating to you or the market that we're worried about. And so...

Speaker 4: Despite the list not really changing much with you know like I say some casual

Despite the list not really changing much.

I'd say its in casual.

Speaker 4: casual dining and that kind of Exposure on that list we just it's at the moment We we feel very comfortable with kind of our collection expectation

Casual dining.

<unk>.

That kind of tenant exposure on that list we just.

At the moment, we feel very comfortable with kind of our collection expectations in the creditworthiness of our.

Speaker 4: creditworthiness of our tenants. So we're in pretty good shape in that regard.

Tenant so we're in pretty good shape in that regard.

Alright, Thanks, Kevin maybe kind of.

Speaker 12: Okay, thanks Kevin. Really kind of related to follow up. It...

Related to follow.

Yes.

Speaker 12: I heard it correctly, I think you're now assuming 1% bad debt expense in guidance for 2022 versus...

I heard you correctly I think you are now assuming 1% bad debt expense and guidance for 2022 versus 5% previously right what drove that change if the tenant watch list hasn't hasn't really moved.

Speaker 12: 1.5% previously. What drove that change if the tenant watch was, hasn't really moved.

Speaker 4: Yeah, you know, it's really just continued solid collection performance. So like I said, and so...

Yes.

It's really just continued.

Solid collection performance, so like I say and so.

Speaker 4: We may be and may be Kevin, maybe just...

We may be and maybe it might be Kevin may be.

Just.

Speaker 4: just different as to how we think about panic credit watch list. And so...

Different as to how we think about tenant credit watch list and so.

Speaker 4: companies tend to go on and stay on until we have a compelling reason to take them off. For example, Barnes & Noble, who I think we have like a half a dozen stores with and we love the stores and the locations and are very happy with them, they've been on our credit watch list for more than a decade probably. If you recall, Amazon started as a book retailer and was designed to put them out of business. Some others still hanging in there, I wish them well, they've done great, they've surfaced as long as they have.

Companies tend to go on and stay on until we have a compelling reason to take them off for example, Barnes and noble who I think we have like a half a dozen stores with and we love our stores and locations and are very happy with them they've been on our credit watch list for more than a decade, probably if you recall Amazon started as a book retailer does.

And to put them out of business. So now they are still hanging in there I wish them well they've done great certified as long as they have.

Speaker 4: But they're on the list, but they continue to pay rent, and I'm not worried about next month when coming from a miser. So I think it might be a philosophy or distinction about how we put companies on and off that list. And so...

They are on the list, but they continue to pay rent and I'm not worried about next month rent coming from them either so.

Think it might be a philosophy, our distinction about how we.

Put companies on and off that list and so.

Like I said.

Speaker 4: like a sad. I'm trying to communicate that despite it hasn't really changed much, that's not what drives our guidance directly. In fact, the company's stay on that list for a period of time. They may very well continue to perform and pay rent as you...

I'm trying to communicate that despite it hasn't really changed much.

That's not what drives.

Our our guidance.

Correct.

If in fact, the company stay on that list for a period of time.

They may very well continue to perform and pay rent as usual.

Speaker 4: Got it. One quick one, the term fees that you're seeking for to you, you just, I didn't hear the mallet in this per share impact. Yeah, it was about $1.4 million. And that was actually, we launched all together at least termination and what we call rent settlement together. It's kind of one time.

Got it.

One quick one.

The term fees that you received in <unk> could.

Can you just.

I didn't hear the amount per share impact, yes, it was about $1 $4 million and that was actually we lump altogether at lease termination and what we call rent settlement.

Together, it's kind of one time.

Speaker 4: So somewhat surprising fun that show up. I'll give you one example. So it was 1.4 million, a little over 500,000 of that in the fourth quarter came from Gander Mountain, out of the blue, bankruptcy court, you know, settlement.

Somewhat surprising.

Funds that show up I'll give you one example.

So it was $1 4 million a little over 500000 of that in the fourth quarter came from Gander mountain out of the Blue bankruptcy Court.

Settlement.

Speaker 4: It just shows up and the funds go out to various unsecured creditors and you don't really know precisely when or how much it might be. And so it's that kind of thing that's in that line item.

It just shows up.

Funds go out the various unsecured creditors and you don't really know precisely when or how much it might be and so that kind of thing.

In that line item.

Okay. Thanks, everyone.

Once again, if there are any questions or comments. Please press star one.

Speaker 1: Once again, if there are any questions or comments, please press star one.

Speaker 1: Your next question for today is coming from John Misaka. Please announce your affiliation, then pose your question.

Your next question for today is coming from John Masako. Please announce your affiliation and pose your question.

I am with Ladenburg Thalmann.

Speaker 12: I am with Latinburg Fulmott. First off, Steven Jay, congratulations to both of you.

First off Steven J, congratulations to both of you.

Thanks, Matt Jeff.

Speaker 12: In terms of the G&A reduction, that was kind of the change in guidance versus your three-key results. Or the point you guys.

In terms of of the G&A reduction that was kind of the change in guidance versus your <unk> results.

R 22 guidance versus results how much of that if any is being driven by the CEO transition.

Speaker 12: How much of that, if any, is being driven by the CEO transition, is any down the kind of an updated stock, stock, stock outlook, and maybe what are the other factors that are driving that, that was up to you.

Is there any down to kind of an updated stock stock comp outlook and maybe what are the other factors that are driving that debt reduction.

Yeah.

Speaker 4: I'd say, yeah, that's part of the equation for sure. And I think the other thing too is just our assumptions on incentive comp in 2022 and where those levels will be. Those two things are, I'd say broadly.

I'd say, that's part of the equation for sure and I think the other thing too is just.

Our assumptions on incentive comp in 2022, and where those levels will be those two things are.

I'd say broadly.

Speaker 4: defining or creating some of that benefit to the GNA line item in 2022. Versus there are some.

Defining.

We're creating some of that.

Benefit to achieve the G&A line item in 2022 versus our assumptions.

Speaker 8: I mean, as we look out in 2023, is there anything kind of structural in there that, you know, maybe...

I mean, as we look out in 'twenty three is there anything kind of structural in there that maybe.

Speaker 12: stock price goes off, you know, obviously, it's probably not gonna have a CEO retirement in 22. So hopefully as well, I mean, so is there anything else in there that maybe could keep that? You know, increase those efficiency, if you will, versus kind of 2021. 2021.

If your stock price goes up obviously, youre, probably not going to have the CEO retirement, and hopefully as well I mean, so is there anything else in there that maybe you can keep that.

Increased those efficiencies if you will versus kind of 2021 .

Numbers, yes.

Speaker 4: Yeah, so I think over time, I think that's what you've seen from us over the years is been able to improve our efficiency in that regard. Last year in 2021, GNA was about 6.1% of revenues, five years earlier was about 6.8%. So we've been able to continue to press operating efficiencies. And I think our guidance for 2022 suggests about 5.8%.

Yes so.

Think over time, I think thats, what <unk> seen from us over the years.

<unk> been able to improve our our efficiency in that regard last year in 2021, G&A was about six 1% of revenues.

Five years earlier was about six 8%. So we've been able to continue to press operating efficiencies and I think as our guidance for 2022 suggests about five 8%.

Speaker 4: GNA as a percentage of revenues and so you'll continue to see if move the the not that efficiency lower Even if GNA may creep higher over time The revenues are growing fast

G&A as a percentage of revenues and so youll continue to see us move the.

That efficiency lower.

Even if G&A may creep higher over time.

Revenues are growing faster than that.

Okay.

Speaker 12: Okay. And then in terms of stame-store growth, the number you reported with the kind of supplemental, obviously was heavily impacted by deferrals. I mean, I guess if you could back those deferral repayments.

And then in terms of same store growth.

The number you reported with the kind of supplemental obviously was heavily impacted by deferrals I mean, I guess, if you could back those deferral repayments.

Speaker 13: Out of that number, what would have kind of a more normalized things were growth?

Out of that number what would a kind of a more normalized same store growth.

Speaker 4: Number of thin. Yeah, fair question. And we're glad you brought up because it is heavily influenced by the deferrals and lots of noise that went on in 2020 and 2021. And so it's just some of the same store numbers are just a little noisy for sure. And so what we've communicated to investors consistently and it remains true today is that you should think about a one and a half percent rent increase.

Number of Ben Yeah, Yeah Fair question, we're glad you brought up because.

Is.

Heavily influenced by the deferrals and lots of normally is that went on in 2020 in 2021 and so it just some.

Some of the same store numbers or just.

A little noisy for sure and so what we've communicated to investors consistently and remains true today that you should think about a one 5% rent increase.

Speaker 4: over the long term. And that's top line because we're triple net lease that all drops to the bottom line. And so creates some internal growth opportunity for us.

Over the long term and Thats top line, because we're a triple net lease that all drops to the bottom line and so it creates some internal growth opportunity for us.

But I guess I mean net of as we look out then net of kind of what youre assuming in terms of credit loss is that basically a 50 basis point then.

Speaker 13: But I guess I mean net of, as we look out then, net of kind of what you're assuming in terms of credit loss. I mean, is that basically a 50 basis point then?

Speaker 4: Yeah, fair assumption. Yeah, 1.5% top line growth. If you assume 50 basis points of loss rent, which might be a reasonable assumption than what's in our guidance, then yeah, you're about a 1% all in growth. Yeah, third.

Yes, yes, yes, fair fair assumption, yes, one 5% topline growth.

So 50 basis points of Los Brent, which might be a REIT.

More reasonable assumptions on what's in our guidance.

And about a 1% kind of all in kind of growth yes, Sir.

Okay, and I guess going back to your original question kind of as we think about the historical performance last year. I mean is that kind of in line with that historical outlook or was it maybe a little bit.

Speaker 13: And I guess, going back to your original question, kind of as we think about the historical performance last year, I mean, was that kind of in line with that historical outlook? Or was it maybe a little bit elevated?

Elevated.

Speaker 13: You know, lower, just, you know, on a more normalized, non-kind of repayment of, of, of past tense.

Lower just on a more normalized non kind of a repayment of a pass through basis.

I'm not sure I follow Kevin on what Jonathan.

Speaker 2: I'm not sure I've fallen Kevin I think what John said is if you if you pulled out the deferred rent uh then oh yeah oh we own that kind of uh half a basic point one and a half basis point yes yes yes yes yes is the answer to that yeah correct thank you yeah that was the question Jay you thank you that's I'm standing in a minute what are we going to do next board I'm starting to earn my consulting fee already John thank you I don't know thank you very much that's all my question

If you pulled out the deferred rent.

Then.

We own that kind of yes.

Half a basis 0.5 basis points, yes, yes, yes same store, yes, yes, yes correct.

Yes that was the question Jay it's David.

Yes.

We're going to do next quarter Im starting to earn my consulting fee already John Thank you.

I don't know well. Thank you very much that's all my questions.

Speaker 1: Your next question is coming from Chris Lucas. Please announce your affiliation. Then pose your...

Your next question is coming from Chris Lucas. Please announce your affiliation and pose your question.

Oh.

Speaker 9: Capital One Securities. First off, there's Steve Jay. Congratulations to both of you. I just had a couple of quick follow up questions. Kevin, I guess.

Capital one securities.

D J congratulations to both of you.

Just had a couple of quick follow up questions, Kevin I guess.

We've seen rates move.

Speaker 9: You know, seeing rates move in the last few weeks, just curious as to what you're seeing in terms of maybe go back to the 30-year debt you priced back in October .

In the last few weeks just curious as to what Youre seeing in terms of maybe go back to the 30 year debt and priced back in.

Total.

Speaker 4: What would that cost you the day and what is sort of the 10 year kind of money cost that would quite today, do you have sense? Yeah, so yeah, fair point. Yeah, so that's why I mentioned in my comments, we were glad we issued a lot of long-term debt last year. Our last issue in 30 years was a 3% coupon. Today, if we did that, I think that would be...

What would that cost you today, and what is sort of a 10 year money cost look like today.

Yes.

Fair point, yes.

Why I mentioned in my comments were correct, we issued a lot of long term debt last year, our last issuance 30 year was a 3% coupon.

Today, if we did that.

I think that would be in.

Speaker 4: In the mid three, so solids 50, maybe a little bit more basis points higher and raise than where we just issued not too long ago, not too many months ago. And then 10 year death today for us is probably in the high twos, the way I think about it.

In the mid three so a solid 50, maybe a little bit more basis points higher in.

Right and where we just issued not too long ago, not too many months ago, and then 10 year debt today for US is probably in the high twos the way I'd think about it.

And so yes.

Speaker 4: So yeah, it's definitely more expensive. Good news is we are, like I mentioned, I think in another question earlier, we're well funded for 2022 acquisition, so we really don't need to do anything on that front of this year.

Definitely more expensive. Good news is we are like I mentioned I think in another question earlier, we're well funded for 2022 acquisitions. So we really don't need to do anything on that front this year.

Okay and then.

Speaker 9: Okay, and then I guess Steve just thinking about the couple questions. One is is that will your role be back still at some point, or either internally or externally?

I guess, Steve just thinking about the.

A couple of questions one is that.

You will be back filled at some point either internally or externally.

Speaker 3: Oh yeah, I think my full role, though, I'll keep some of the responsibilities, well, currently evaluating all the responsibilities I have, and then over time, I'll start shitting some of those responsibilities and it could be internally or externally. All things will be a value.

Yes.

My whole role.

So I'll keep some of the responsibilities Curran.

Currently evaluating all the responsibilities I have and then over time.

I'll start shedding some of those responsibilities and it could be internally or externally.

Things will be evaluated.

Speaker 9: Okay, so and then just in terms of the cap rate environment, I mean, you talked about how competitive it was in the fourth quarter. Just wondering about it, sort of trying to understand your thinking is it relates to sort of your expectations for cap rates for 22 given, you know, we've definitely seen rates move. Who knows where they move, you know, a higher.

Okay. So.

Then just in terms of the cap rate environment.

<unk> talked about how competitive it was in the fourth quarter, just wondering about sort of trying to understand your thinking as it relates to sort of your expectations for cap rates from 'twenty two given.

We've definitely seen rates move who knows where they move.

Any higher or whatever but I guess I'm just trying to wonder.

Speaker 3: How soon do you expect or do you expect any sort of reaction to higher long term rates as part of this sort of cap rate equation in 22? Yeah, in 2022 our expectations that cap rates overall of our portfolio that we acquire will be compressed some. Yeah, there's been a little bit of a rate increase in the near term, but truth is, you know, deals get priced and it takes 90 days to clear the market.

How soon do you expect or do you expect any sort of reaction to a higher long term rates as part of this sort of cap rate equation in 'twenty two.

In 2022, our expectation that cap rate overall.

Of our portfolio that we acquire will be compressed yes.

Yes, there has been a little bit of rate increase in the near term, but truth is deals get priced so that it takes 90 days to clear the market until the rates stay up and are sustained for six months nine months I'm not expecting any cap rate change increase again, we kind of touched on there's a lot of new capital.

Speaker 3: Till the rates stay up and are sustained for six months, nine months, I'm not expecting any cap rate change increase. Again, we've got a touch on that. There's a lot of new capital in the market, so you're seeing the cap rates stay a little bit lower.

In the market, so youre seeing cap rates stay a little bit lower.

Okay and then my last question relates to sort of the business environment with some of your core areas.

Speaker 9: My last question relates to sort of the business environment for some of your core areas like...

Speaker 9: restaurants have seen some IPOs that I think is more on the way. I guess just curious as to the acceptance or the A.S.

Restaurants, we've seen some ipos I think this is more on the way I guess just curious as to.

<unk>.

Yes.

The opportunity that that has.

Speaker 9: the opportunity that those kinds of businesses have with the public markets today, but that helps your opportunity with them or is that a non-issue, I'm just kind of curious just to sort of how the landscape changing on the restaurant front might impact your...

Kinds of businesses have with the public markets today does that help you.

Your opportunity with them or is that a non issue. Let me just kind of curious as to sort of how the landscape changing on the restaurant side might impact you.

Speaker 3: When we look at acquisitions, you know, you're looking not only at the credit, but the real state fundamentals.

Okay.

When we look at acquisitions were looking not only at the credit, but the real estate fundamentals and the tenant's ability to pay rent.

Speaker 3: the tenets ability to pay rent. If the rent is low enough, you know, what we're going to do the deal. That's how we...

<unk> is low enough, we're going to do the deal that's how we when.

Speaker 3: When we look at risk, we reduce rent. We don't increase the cap rate. But yeah, we're seeing a lot more restaurant activity, casual dining specifically. I mean, QSR has been pretty robust for the last 18 months. But now we're starting to see, because some private equity groups are going into the casual dining sector that we're starting to see, if there's more opportunities there. We're starting to see a lot more.

When we look at risk, we reduce rent, we don't increase the cap rate, but yes, we're seeing a lot more restaurant activity casual dining specifically I think <unk> been pretty robust for the last 18 months, but now we're starting to see because some private equity groups or gone into the casual dining sector that were starting to CFT more opportunities there.

Okay, great. Thank you I appreciate it this morning.

Your next question is coming from Linda Tsai. Please announce your affiliation then pose your question.

Speaker 1: Your next question is coming from Linda Si. Please announce your affiliation, then pose your question.

Hi from Jefferies.

Speaker 14: Hi, from Jeffries. Let me add my congrats as well to Jane Steve. Steve, would you consider adding non-retail to the portfolio at any point?

My congrats as well to change Steve.

Steve would you consider adding non retail to the portfolio at any point.

Speaker 3: Every quarter, every board meeting, we talk strategy and we evaluate our strategy continuously. Yeah, it's one of, you know, J.B. into my head over the years is, you know, every day wake up and think of some other stuff we can do. And we always kind of circle back that were experts in retail real estate. But yeah, the option is always in the future when we evaluate that, you know, we couldn't, you know, expand our asset class. But currently we're just looking at retail.

Every quarter every board meeting, we talk strategy and we evaluate our strategy continuously.

J P. It into my head over the years.

Every day wake up and think of some other stuff, we can do and we always kind of circle back that we're experts in retail real estate, but yet the option is always in the future when we evaluate that we couldn't.

Expand our asset class, but currently we're just looking at retail.

Speaker 14: Thanks. And then in terms of LA fitness and AMC, how are you feeling about the outlook of these concepts?

Thanks, and then in terms of la fitness at AMC, how are you feeling about.

The outlook of these concepts.

Speaker 3: As far as LA business, very comfortable, they've rebounded nicely, and in particular because they have the subscription model on their revenue. Meaning if the government says you're open, you can charge 100% of your revenue. AMC, that's a short term, we're very comfortable because they've raised so much money, but the theater industry has improved and they're back.

As far as la fitness very comfortable they've rebounded nicely and in particular, because they have the subscription model on the revenue and meaning if the government says you are open.

You can charge a 100% of your revenue AMC, that's it I think.

Short term, we're very comfortable because they've raised so much money.

But the theater industry Hasnt proven that they're back the good news is our portfolio our theater portfolio.

Speaker 3: Good news is our portfolio, our theater portfolio.

Speaker 3: We average about $10.5 million per asset, which means our rent is extremely low at those sites. So once they rebound operationally, they'll be able to sustain the rent opposed to in recent years where a lot of the deals were done at $25 million.

We averaged about $10 $5 million per asset, which means our rent is extremely low at those sites. So once they rebound and operationally there'll be able to sustain the rent opposed to in recent years, where a lot of the deals were done at $25 million of the theater industry and we took a step back for probably three.

Speaker 3: And we took a step back for probably three years in the theater industry. So we're very comfortable with our theater role.

Years in the theater industry.

So we're very comfortable with our theater holdings.

Speaker 14: Thanks. And then just a final question. On the 80 to 100 million of dispositions, you're forecasting. How do you think the mix would be, you know, in terms of vacant boxes versus occupied? And then, you know, how might the blended cap rate compare to 2021 6.1%.

Thanks, and then just a final question.

On the $80 million to $100 million of dispositions, you're forecasting how do you think the mix would be in terms of vacant boxes versus occupied and then how might the blended cap rate compare to 2020, 161%.

Speaker 3: I expect the Flundet capric, most likely, will be lower in 2022 than 2021, but how we viewed this decision is a third I'm going to be vacant, a third are going to be opportunistic, meaning somebody's going to pay a ridiculously low capric to own it.

Yes.

The blended cap rate, most likely will be lower in 2022, 2021, and how we view dispositions as a third are going to be baked yet a third are going to be opportunistic.

Somebody is willing to pay a ridiculously low cap rate to own it.

Speaker 3: Third, it's kind of a portfolio management that we're trying to get ahead of the curve of active portfolio management in the future where we feel that assets at risk because we're looking to, you know, repeat these rents. So we'll do that best.

Third is kind of a portfolio management that we're trying to get ahead of the curve of active portfolio management in the future, where we feel that assets at risk because we're looking to.

Repeat these rent so we will divest it.

Thank you.

Speaker 1: There are no further questions in queue. I would now like to turn the floor back over to Jay for any closing.

There are no further questions in queue I would now like to turn the floor back over to Jay for any closing comments.

Speaker 2: Thanks, Holly, and thank you to all the folks who offered their congratulations. I speak on behalf of Steve, both of us very much appreciate that. In closing, I do want to emphasize that every aspect of national retail properties is in a great position to address the future.

Thanks, Holly and thank you to all the folks who offer their congratulations speaking on behalf of Steve both of US very much appreciate that and in closing I do want to emphasize that every aspect of national retail properties is in a great position to address the future from a balance sheet that is tremendous.

Speaker 2: from a balance sheet that has tremendous capacity as Kevin discussed to fund new investments to as Steve discussed tenant relationships that generate high quality properties and stable income. And to the management and board leadership enhancements that we've talked about that put the right people and the right seats for the long term. This company is poised for future growth and success. And I wanna thank you all again for joining us today. All the best.

Capacity as Kevin discussed to fund new investments to as Steve discussed tenant relationships that generate high quality properties and stable income and to the management and board leadership enhancements that we've talked about to put the right people in the right seats for the long term. This company is poised for future growth in <unk>.

And I want to thank you all again for joining us today all the best.

Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day.

Speaker 1: Thank you ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

For your participation.