Q1 2023 Broadstone Net Lease Inc Earnings Call
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Hello, and welcome to both down at least this past quarter I tried to 'twenty three earnings conference call. My name is Emily and I'll be your operator today.
Please note that today's call is being recorded.
I'll now turn the call over to Mike Carey say senior Vice President of corporate strategy and Investor Relations at Bernstein.
Please go ahead. Thank you operator, thank you everyone for joining us today for broad so net leases first quarter 2023 earnings call.
On today's call you will hear prepared remarks from CEO , Jon Marino, President and COO, Ryan Albano, and CFO , Kevin Phenol all.
All three will be available for the Q&A portion of this call.
Before we begin I would like to remind everyone that the following presentation contains forward looking statements, which are subject to risks and uncertainties that could cause actual results to differ materially due to a variety of factors. We caution you not to place undue reliance on these forward looking statements and refer you to our SEC filings, including our Form 10-K for the year ended.
At December 31, 2022 for more detailed discussion of the risk factors that may cause such differences.
Any forward looking statements provided during this conference call are only made as of the date of this call.
I will now turn the call over to John .
Thank you, Mike and good morning, everyone.
What continues to be a challenging macroeconomic environment.
Proud to report our first quarter 2023 results are.
Our core mission is to create long term stockholder value through investing in managing net lease real estate.
There remains a lot of uncertainty in the market as the Federal Reserve continues its balancing act in the fight against persistent inflation and major headwinds surface of the banking world.
As stewards of Investor capital, we believe a conservative prudent and selective approach to capital allocation is the best path to navigate this uncertain market and our first quarter results reflect that belief.
While we sourced and evaluated billions of dollars in potential new acquisitions, given current pricing dynamics and market risks, we did not feel that cap rates had increased enough to justify a significant outlays of capital.
During the first quarter, we were purposeful in how we evaluated opportunities sourced year to date and limited our pursuit to only those investments that we believe were priced appropriately and accretive to earnings.
Times like these requires discipline and selectivity, but also creativity and opportunism.
The debt capital markets and the banking systems adjusted to higher interest rates and structural dislocations in lending we saw opportunities to partner with our existing tenants as well as developers who have turned to us as an alternative financing solution.
Through these relationships, we were able to secure a creative and accretive ways to deploy capital on a risk adjusted basis, and two existing tenants and relationships and real estate with strong fundamentals as I stated in February we are not interested in growth for growth's sake, but rather we are focused on making prudent capital allocation decisions that do.
<unk> sustainable and accretive earnings growth over the long term.
This has always been a core principle and one that is critically important in the current environment.
While we don't expect uncertainty and volatility to dissipate in the near term.
We do believe the strength of our existing portfolio and fortified balance sheet have positioned us to continue to deliver consistent and reliable results for our shareholders.
With 221 different tenants in 54 different industries are best in class diversification defensively positioned P&L to weather this period of sustained uncertainty and economic pressure.
While substantially all our tenants underlying operating profiles remain healthy we believe a heightened level of scrutiny is only prudent given today's backdrop and are paying close attention to tenants, who may be more susceptible to the topical pressures of today's environment.
Including tenants with capital structures that may face refinancing risk in the near and medium term.
Our portfolio continues to demonstrate its resiliency. Despite many of the macro headwinds that have captured headlines as of late as evidenced by 100% rent collections and 99, 4% occupancy in the first quarter as.
As of quarter end only two of our 801 properties were vacant and not subject to a lease.
Market conditions like these also demand a flexible and fortified balance sheet would be announced certainly has at five one times leverage on a net debt to annualized adjusted EBITDA basis, we have ample liquidity and flexibility to fuel our selective growth strategy for the remainder of 2023.
Prudent capital markets execution last year has afforded us the ability to make decisions, we want to not decisions, we have to more to come from Kevin on this.
On the capital allocation front, we continue to find ourselves in an extended period of price discovery seller expectations remain high and lag changes in both public and private buyer cost of capital.
Periods of dislocation like this always provide unique opportunities many of which we have been able to successfully capitalize on it.
First we have had continued success selling assets that we believe possess heightened credit <unk> residual risk.
And we have done so at attractive accretive cap rates.
These types of sales provide the simultaneous benefits of mitigating risk within the current portfolio.
While building dry powder to be accretively recycled at attractive spreads.
We have had success sourcing opportunities as an alternate financing provider given the conditions in the traditional debt markets. Our relationship based approach to investing has yielded a pipeline of opportunities to partner with our existing tenants on revenue generating capital expenditure projects that provide a mutually beneficial solution.
These projects have helped us to continue to deploy capital at accretive yields in addition to our more traditional acquisition sourcing channels.
We have also seen an increase in opportunities to partner with developers on build to suit transactions, most notably a 200 plus million state of the art temperature controlled food distribution facility.
Opportunities like this I won't make market dislocations exciting and our the reward for maintaining our discipline and selectivity throughout the year.
This milestone transaction will add the single largest asset to our portfolio and provide numerous long term benefits for our shareholders.
Most importantly growth in <unk> future earnings profile.
Through this transaction, we have locked in an accretive yield and corresponding investment spread on a high quality asset that would not have been possible just a year ago. This coupled with a long term lease with a leading operator that includes solid fixed annual rent escalations will translate into consistent earnings growth over the life of the investment.
We are focused on making prudent capital allocation decisions that drive value for our shareholders over the long term not just in the current calendar year and this opportunity and Capsulate that mission and showcases our ability to source and execute on accretive opportunities. Despite the current challenging environment and with that I will now turn the call over to Ryan who will provide additional.
Details on the health of our existing portfolio are accretive capital recycling efforts and our investment activity, including this exciting build to suit opportunity.
Thanks, John .
And thank you to all the listeners who have joined us today.
Given current economic conditions and business pressures, let's start with portfolio monitoring. We're currently focusing our efforts on both granular individual tenant considerations as well as higher more thematic factors from an individual tenant standpoint, we continue to closely monitor our exposure to carvana red lobster and green.
Valley Medical Center, which we discussed in detail on our previous earnings call.
There have been no material update since our call in February we remain confident in our investments and the underlying value of the real estate. Despite many of the recent headlines concerning these tenants.
These three tenants coupled with a handful of other smaller tenants as a percentage of ABR comprised the individualized tenant specific portion of our watch list, which is largely consistent quarter over quarter.
Our moral somatic monitoring efforts include focusing on tenants, whose capital structures may be susceptible to near term refinancing risk given the current conditions in the lending market rent.
Rent collections and occupancy continued to be the most accurate real time measures of the health of our portfolio and as John stated earlier, we're 100% and 99, 4% respectively. During the first quarter, while prudent management requires enhanced portfolio monitoring efforts in these conditions and also presents opportunities for us.
Our proactive asset management initiatives.
The current market environment has provided a unique opportunity to sell assets. We believe is that outsized credit <unk> residual risk at attractive pricing levels due to the quality of the underlying real estate.
During the first quarter, we sold three properties for gross proceeds of $51 9 million at a weighted average cash capitalization rate of 6%.
The dispositions include a $32 million sale of an office asset, which together with a simultaneous lease buyout of $7 5 million represented an all in cash capitalization rate of six 1%.
As a result of the sale, we reduce our office exposure to five 8% of ABR at quarter end.
Since quarter end, we have sold an additional three assets for a total of $39 $4 million and a weighted average cash capitalization rate of five 2%.
The pipeline of additional dispositions at various stages of execution.
Together with our first quarter dispositions, we sold six properties for gross proceeds of $94 $3 million and a weighted average cash capitalization rate of five 4%.
We intend to continue to strategically sell assets to proactively mitigate risks within our existing portfolio, while also generating proceeds to be accretively redeploy.
Have made it challenging to identify opportunities that we believe are appropriately priced on a risk adjusted basis, especially in non investment grade segment of the market.
During the first quarter, we sourced approximately $8 billion of new acquisition opportunities. The large majority of which we elected to pass on given our view on the Ms calibration between risk and return.
Salaries continue to slowly adjust their price expectations and in many cases have delayed transacting in hopes of achieving more attractive pricing in the future when market conditions stabilize.
With more traditional sourcing channels, providing sub optimal opportunities. We are focused on finding creative ways to continue to accretively deploy capital starting with revenue generating capital expenditure projects with our existing tenants.
First quarter investment activity totaled approximately $20 million at a weighted average initial cash cap rate of 7%, which included a single one off retail property acquisition for $5 2 million.
The majority of our first quarter investment activity came in the form of revenue generating capital expenditure projects with existing tenants.
During Q1, we invested a total of $14 $8 million in two of our existing industrial assets at a weighted average initial cash cap rate of 7%.
Partnering with existing tenants as a capital provider, who has been a compelling way to generate attractive accretive yields while simultaneously growing the underlying value of our assets with very little risk.
We have seen an increase in these types of opportunities as lending conditions become tighter and currently have $18 million of unfunded commitments towards future investments in our existing properties with a growing pipeline of additional potential future projects currently under active consideration.
We currently have $225 $2 million of investments under control.
Which we define as executed contract or letter of intent.
The substantial majority of under control volume is comprised of the build to suit transaction that John mentioned earlier.
A source from an existing relationship who we have worked within the past.
Acting as a capital solution, we have the opportunity to fund the development of a 1 million square foot state of the art temperature controlled food distribution facility in Florida leased to a leading north American operator.
While we are still negotiating and finalizing the terms of the deal we expect to fund approximately half of the total estimated $200 million during 2023, the balance of which will be funded next year with targeted delivery and subsequent rent commencement estimated for early Q4 2024.
During the construction period.
We will earn capitalized interest at an attractive yield on our invested capital, which upon the commencement of rent translates into an initial cash yield in the low sevens.
We are acting solely as a capital provider and not an at risk development Party.
Upon completion, the asset will be subject to a long term lease with annual rent escalations consistent with our industrial portfolio.
Given where we are in the deal process, we will provide additional disclosure following contract execution.
We are thrilled with the opportunity to invest in our high quality asset and a strong market with an attractive return profile on a risk adjusted basis that will generate future earnings growth. This transaction demonstrates our patient and thoughtful approach to capital allocation, which will drive value for our shareholders for years to come and with that I will.
Now turn the call over to Kevin.
Ryan Good morning, everyone as John reiterated again this quarter, even with significant capital in hand, with an attractive cost. We are focused on selectively deploying available dry powder on opportunities that are both accretive and appropriately priced on a risk adjusted basis.
We once again ended the period in a position of financial strength and flexibility. Despite there being no capital markets activity during the quarter.
Given the disposition activity that Brian outlined we were able to reduce the balance on our revolver by nearly 90 million in the quarter, resulting in more than $890 million remaining borrowing capacity.
This combined with our low leverage profile with no significant maturities until 2026 continues to provide us with ample liquidity as we selectively pursue investment opportunities.
Our substantially fixed rate debt capital structure has insulated us from many of the upward pressures associated with higher for longer interest rate expectations.
All of our debt excluding our revolver is fixed at a weighted average interest rate of three 7% after considering the effect of our nearly $974 million interest rate swaps that have staggered maturities beginning in 2024 and running through 2034.
As we think about equity we continue to view, our ATM as a core component of our overall capital market strategy that allows us to opportunistically consider raising equity alongside investment volume if needed.
Given no activity in the quarter, we maintained $145 million of capacity on the current program.
Turning to our financial results during the quarter, we generated <unk> of $67 5 million or <unk> 34 per share versus $65 6 million or <unk> 36 per share in Q4.
The decline was driven by the effect of additional shares from settling the 13 million share forward offering at the end of the year.
We incurred $8 5 million of cash G&A expense in the quarter, which tracks in line with our guidance.
At our quarterly meeting our board of directors approved a 28% dividend per common share and op unit, which is a one 8% increase from last quarter.
This represents our fifth semiannual dividend increase since our IPO and is payable to holders on or before July 14th 2023.
The dividend continues to be well covered aligns with our targeted <unk> payout ratio in the mid to high 70% range and represents an attractive dividend yield relative to many of our net lease peers.
Finally, we are maintaining our 2023 per share guidance today with an <unk> range of $1 40 to $1 42 per share, though we are increasing our disposition volume given the success, we have experienced year to date.
We will continue to evaluate guidance revisions as we progress further into the year and gain more clarity into both the pace of asset repricing and conditions in the capital markets.
Our guidance range reflects the following key assumptions investment volume between $300 million and $500 million, which includes amounts to be funded this year under the aforementioned build to suit transaction.
Disposition volume between $150 million and $200 million, which has been revised higher.
And total cash G&A between $32 million and $34 million, which remains unchanged.
As a reminder, our per share results for the year are sensitive to both the timing and amount of acquisitions dispositions and capital markets activity occur throughout the year.
And with that we'll now open the call up for questions.
Thank you thank.
If you'd like to ask a question today. Please do so now by pressing star followed by the number one on your telephone keypad. If you change your mind I would like to be removed from the queue. Please press star and then K when preparing to ask a question. Please ensure that your microphone and Youll device on me too likely.
Our first question today comes from Anthony Powell with J P. Morgan. Please go ahead.
Okay. Thank you and good morning.
My first question is just on the large build to suit that you announced I know you said, you'll give more details I guess in future quarters, but can you maybe talk a bit more about say the credit behind it Nate.
Nature of the either operate or developer.
Or any further details there.
Thanks, Tony.
As we mentioned that one still needs the dot semis crossing the t's on it so theres going be some more information that we'll have in the future, but as we talked about in our prepared remarks were really excited for this one.
So really solid operator, good credit great location really stable business model in terms of the distribution that happens that will be happening out of facility. Once it's completed.
This is a transaction that we really feel is unique for US right now and is unique in the net lease market. One of the things that gets talked about often is with the additional stress that's being put on the financing system.
Traditional debt capital markets, the availability of financing for build to suits has gotten a lot more stressed than it has in the past 12 months and so it provides us a really great opportunity for companies like us to step in as an alternative source of capital here in a way that a year ago. The markets were perfectly operating in.
Be able to find the financing they were looking for.
And if we were to look at this on the back side of it when it was fully stabilized and built out the pricing would be significantly below where it is today and we would be able to afford it probably so we're very excited about it there's a lot more to come on it once we have definitive documentation and we're going to look forward to talking with you all in more detail at that point.
Okay.
And then just as a follow up.
Maybe can you talk a bit about how you how you thought about maybe selling more assets and maybe buying back stock and I get the economics of that and how that makes sense, but how did you think about in terms of the context of just shrinking the overall business and.
Yes.
The negative leverage on scale that comes with that.
Yes so.
Maybe the first place to start where there is that we continue to believe our shares are undervalued and so thats not a place that we're looking at from a cost of capital standpoint in terms of how we're going to grow this portfolio.
We are still in a place as Ryan talked about where we have the opportunity to sell off assets that we have some concerns about from a risk mitigation standpoint, whether its tenants credit profile underlying industry business operations or it's a lease rollover risk at the end of it but they continue to have solid real estate fundamentals that are.
Attractive for other sets of buyers outside of sort of long term holders in the net lease industry. So with that dislocation, we're able to execute on those.
As we talked about in the high fives and low sixes relative to where we are then reinvesting in the 7% cap range. We feel is a great accretive spread.
We get excited about that and it's something that we'll continue to lean into.
For so long as we're looking at a share price that we think is undervalued now the repurchase program. We put it in place. So that we have a tool there is limited windows throughout the year, where you can put one in place and if you were ever were in a position where you wanted to be able to utilize it which we're not right now as you saw we put it in place but didn't buy any shares back.
And we're not currently in a place where we think that's something that we would do but it's another tool in the toolkit.
Evan would tell you we have been adding tools to the toolkit each year over the last three years since we went public and this is just the latest one that we added.
Okay. Thank you.
Okay.
Okay.
Our next question comes from John Kim with BMO. Please go ahead John .
Hey, Good morning, guys, it's Eric on for John I, just want to start with the acquisition pipeline outside of the investments under control whats the size of the pipeline today and then if you could comment on the split between opportunistic investments in traditional <unk>.
Triple net assets and maybe the split between marketed and off marketed transaction. So it would be great. Thanks.
So I mean, the pipeline I think everyone can agree.
Volumes are lower this year.
And particularly if you're comparing it to 'twenty. One 'twenty. Two you are back at a point where volumes look a lot more like that 17 to 19 period 2017 2019.
For us if you take a step back and think about what's available out there on the pipeline I think there is a set of facts that pretty much I need at least company could agree with you right now.
In addition to lower volumes seller expectations continue to sort of stubbornly stay where they are particularly for the best product the best product on the marketplace, you're seeing sellers that are looking to hold or are waiting even two posted for sale.
Financing conditions are conditions are much tighter levered buyers are predominantly out at this point because of the higher for longer interest rate environment.
Youre seeing a little bit of stress now in the 10 31 market.
Then on top of all that cap rates have moved a lot in the last 12 15 months, but it looks like they've plateaued a little bit. So when you take the view in the bond market and how people are pricing and risk for operators and you compare it with the cap rates, we don't necessarily believe that the cap rates have moved.
All the places where they should have so.
You can have all of those facts and agreed to a 100% and you can still choose to go in a couple of different directions.
What we've done is we've chosen to be selective prudent patient with how we're looking to allocate capital. There is others that can agree with everything I, just said and decided to work their way up the risk spectrum, because they want to continue to deploy capital and put it into whatever product is available out there. So.
In terms of the volume that's out.
Pretty healthy split in terms of deals on assumptions.
New product on the sale leaseback market as everyone is anticipating we are seeing more product come as a result of difficulties in getting debt financing. So the sale leaseback market is becoming more attractive for cfos to think about how theyre going to finance their business.
And maybe just to bring it back to the build to suit opportunity. That's a perfect example that opportunity came to us because the financing the capital source provider on that was not able to commit and complete their obligations and so they had a broken financing situation and brought it back to us so.
Overall, the market is certainly leaner than it was before but we're still seeing ample opportunity to execute on.
We just are taking the conservative approach to it and the way that we're going to be deploying capital right now.
Okay. That's helpful and then more of a big picture one for me just kind of curious from what the foot traffic data from the underlying consumer is telling you.
Curious if youre seeing any change in consumer behavior across regions.
<unk> levels.
Anything you could point to where you yourself or maybe seeing some signs of changing behavior I understand that the retail and the restaurant portions if not us.
Eliminates industrial but just curious if you have any thoughts there.
Sure.
We have certainly seen some softness at least in the casual dining space as you look back over the last year or so but generally remain healthy I think that foot traffic seems to continue to correlate along with <unk>.
Visit those sites, so we feel pretty comfortable about it we've seen a little bit of softening, but at the end of the day. It hasnt been a significant amount overall and I wouldn't really say that theres been.
Any difference of impact categorically by region.
Or by concept specific.
Okay. That's helpful. Thanks, guys I appreciate the time.
Our next question comes from Michael Gorman with BPI J Michael. Please go ahead.
Yeah. Thanks, Good morning, I Wonder if we could go back to the acquisition market just for a minute and kind of walk through the $8 billion that you underwrote how much of that was strictly a pricing issue and then I think Brian made an interesting comment that some of the sellers didn't actually wind up transacting. So is there any sense for how much of that.
That's still out there because of the bid ask spread or.
What amount of that actually went to a seller ultimately even if the pricing mismatch on your side.
Sure.
A little hard to track through across the board what I would say is.
Overall.
We have certainly seen some transactions even dating back to maybe Q2 Q3 of last year that stalled out from seller expectations that re approach the market some of which have re approached at higher pricing levels, I'm, sorry, lower pricing levels higher.
Higher cap rates and our.
Clearing at those levels.
When I think about sort of the mix on a cap rate basis.
I'd say.
Probably.
About 50 50 in terms of what's above a 7% cap rate versus what's below maybe a little bit more heavily weighted towards what's above.
In terms of the breakdown of that $8 billion.
Okay, Great and then maybe as a follow up I guess part of what I was also getting at is within that 8 billion did any of the transaction activity fallout because you've rethought credit standards have you rethought kind of economic exposure because of what's going on in the market beyond just kind of pricing as you think about spring.
Money to work.
Yeah, absolutely I would say the good majority of that was actively passed on by us versus passing on from a pricing expectation perspective.
When I look at the breakdown I would say the majority of that did fall into categories that were either.
Credit related.
Our real estate fundamental related where we werent comfortable with the pricing in this current market.
We feel that it needs to be a bit wider at a price and the risk and we passed on it that said there were certainly some opportunities that continue forward at aggressive pricing levels that wouldn't make sense for us today, but generally speaking if you think about where our cost of capital is from the capital that we're actually deploying based on.
Disposition proceeds as well as dry powder, where the market is transact and where youre seeing our peers transact at the 7% plus Mark we could've made all of those work economically we just chose not to.
Got it got it that's helpful and maybe last one for me it's just.
Maybe this goes a little bit back to the off market question, but are you seeing any difference.
In the market today between kind of the secondary property market versus the sale leaseback origination and just maybe any increased pressure on some of those.
Companies looking to originate because of the other lending options that maybe they had in the past that they don't have now is that is that becoming a better target market.
I'd say early stages.
I think seller expectations are still sort of working their way through and I also think that companies are beginning to work their way through their capital stack and understand what their options truly are and what access to capital they have or downtown and at what pricing level. So I think that's sort of at early stages at least in terms of the sale leaseback market.
What has become abundantly clear is that we are seeing opportunity on the build to suit side of things where the access to capital.
Has dried up a bit and we are seeing.
Good amount of opportunities on that front for new build build to suit opportunities and I think we can be a solution in that market as time moves forward here.
Great. Thanks for the time guys.
Our next question comes from Keith <unk> with Jefferies.
Please go ahead.
Okay.
Thanks, Good morning.
Any updates on Red lobster, you can share in terms of the store performance in your portfolio.
Yes, I would say rub <unk> performance has been.
We're a little bit on a lag in terms of financial reporting.
But what I would say is that we've seen it.
Pretty neutral quarter over quarter.
<unk> see some recent news out of Thai Union that was positive on the robots are front.
It seems to be early stages of turnaround, but overall feel pretty good about our position the value we have on that real estate as well.
Well as the operating performance of those sites quarter over quarter.
And any other tenants that might be entering to watch list off note.
Nothing of note we had one one additional add to the watch list and we had one come off.
We've had a couple.
More immaterial items I'd say, maybe just an update on the larger ones that we've talked about before red lobster I just gave the update from a carvana perspective.
You need to move along.
Some recent news on some of the creditors, considering a debt for equity swap.
So that that's just early kind of positive news potentially.
And then from a Green Valley medical perspective, they continue to progress towards hospitals ICD.
And just last one here the Bob Evans is that mostly restaurants are or is that actually like a distribution facility.
Is that a pretty <unk>.
Tenant today.
We have both we have industrial facilities as well as restaurants.
Comfortable with both operating performance at both look good.
Okay. Thank you.
Yeah.
Our next question comes from Ronald Camden with Morgan Stanley . Please go ahead.
Hey, Yes, you have Danny on for Rob. Thanks, a lot for taking my question. So my first can you talk a little bit more about like how much dry powder do you have the available O'malley ICU raised our disposition guidance, maybe talk a little bit more on any specifics sub sector that you are folks onto itself.
Yes, I think the first part of the question I think you've heard us probably talk in the past, having some pretty clear religion around staying inside at six times leverage metric. So if you think about where we are today there is quite a bit of room, there and more thematically I would say we operate the business in that mid $5 range. So.
You take that in conjunction with the availability we have on our revolver you can sort of back into pretty clear answer that we've got room to run inside of our guidance range and then as you pointed out.
Disposition front.
Sort of a unique opportunity to capital source for us that we've had a lot of success with Brian .
Brian if you want to talk about the disposition fees.
Sure.
Terms of dispositions we have another.
Call. It 75 plus million dollars of active disposition activity working its way through various stages of negotiating.
All around the six cap Mark.
And then behind that we have.
Couple of hundred million dollars of opportunities that we've identified that we could bring to market and think about selling being sellers are in this market.
Thanks.
With regards to your acquisition pipeline I see the cap rate is 7% can you talk a little bit more like how much more do you expect.
Is it like eight wing alright.
Comparable level.
Sure I'd say, there's not a specific target in mind.
Very focused on risk versus return.
And we're being very selective so the things that you see us executing on or advancing in the pipeline around that seven mark.
We have.
Specifically chosen not to push out on the risk spectrum, we certainly could there dearth of opportunities to do so.
And and whatnot, but we feel that we're not interested in taking on the additional risk. We don't think it's priced in.
So the spot that we'd be comfortable with at this point. So I would say you should expect us to continue to identify opportunities around that.
7% yield zone, but that's not a hard and fast rule.
Okay.
Yeah.
Our next question is a follow up question from Keith and Kevin from Trust.
Please go ahead.
Alright, Thanks again.
Just a quick question on dispositions when you take a look at the portfolio.
I guess what is the total scope of possible dispositions that you can make at a low six cap rate or lower because obviously with that but the cost of capital where it is.
It's realistic to assume that you are going to continue to sell assets to buy higher yielding assets.
Sure I'd say in general, we certainly feel that our assets are.
From a market pricing perspective.
Well.
Inside of our stock price right now so we think that there is plenty of room and opportunity to execute on the disposition front in today's market.
The two key themes that we focused on early on.
Our properties and tenants, where we felt like there was either heightened credit risk.
Our heightened residuals last rollover risk associated with those properties that we didn't necessarily want to incur but at the end of the day the market was pricing aggressively.
I think we still have.
The opportunity to be where we would be a seller today.
We will continue to execute there.
So maybe I can ask it in a different way quicker.
Quick service restaurants.
Likely will get a lower cap rate than some of your other asset classes. So when you kind of go down the category list.
What does that.
Basket look like just trying get a sense of like.
In our models and forecasting just trying to understand like how much more runway you have in terms of selling these.
Accretive deals.
Sure look I think the runways far and long one.
When we look today at the opportunities that I just referenced earlier in the Q&A session. We've got a couple of hundred million dollars of opportunities that we could bring to market that arent at market right now as well as another $75 million to $100 million are actively.
Being negotiated for sale. So I don't think it does a whole lot of used to go beyond that at the moment, we're focused on executing one by one in whats with what's in front of us today and.
And Accretively redeploying that.
I think that gives us plenty of runway to accomplish our guidance this year.
And continuing to fuel the machine.
Okay. Thank you again.
Okay.
Okay.
As a reminder, if you would like to ask any further questions. Today. Please do so now by pressing star followed by the number one on your telephone keypad.
At this time, we have no further questions registered I'll turn the call back to John for closing remarks.
Thanks, everybody really appreciate the questions today, Thank you for joining and your interest in P&L.
Going forward to seeing many of you at the upcoming conferences, if youre not already on our scheduled please reach out to Michael Rousseau, We'll get you on the calendar.
Strong portfolio accretive pipeline 45 flexible balance sheet.
We believe we are well positioned to navigate 2023 and grow in 2024 and beyond.
Thank you all for your time and hope you all have a great day.
Thank you everyone for joining us today. This concludes our call and you may now disconnect your lines.
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