Q2 2023 NNN REIT Inc Earnings Call
Greetings and welcome to the N and M. REIT second quarter 2023 earnings Conference call.
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I'll now turn the conference over to your host Mr. Steve Horn, Sir you may begin.
Thanks Ali.
And welcome to <unk> second quarter 2023 earnings call joining me on the call as Chief Financial Officer, Kevin Habicht.
As this morning's press release reflects an enhanced performance in the second quarter produced one 3% core <unk> per share growth over prior year's results.
Along with investments of slightly over $180 million with a seven point to initial cash yield.
The solid acquisitions for the quarter are driven by our tenant relationships.
In addition, our portfolio continued with the high occupancy of $99 four and strong lease renewals for the quarter that had been trending above historical levels year to date.
These results have and then in position to create shareholder value as we transition into the second half of 2023 and beyond.
In July we announced an increase in our common stock dividend to be paid August 15th.
Thus, making 2023, our 34th consecutive year of annual dividend increases.
And then just in select company.
Under 75 U S public companies, including two other rigs, which have achieved this impressive record of accomplishment.
Based on our first six months performance, we announced an increase of our 2023 core <unk> guidance to a range of $3 17 to $3 22 per share.
Our long standing strategy designed to deliver consistent per share growth on a multiyear basis.
This discipline of this long term approach is reflected in the guidance increase during the current challenging economic backdrop.
Turning to the highlights of the quarter our portfolio of 3479 freestanding single tenant properties continued to perform exceptionally well maintained high occupancy levels of $99 four for four consecutive quarters, which remains above our long term 98% average.
At quarter end, and then only had 22 vacant assets, which is the result of our leasing departments effort working the nonperforming properties and creating value for internet.
In addition, nearly 90% of the leases that were up for renewal during the quarter exercise and extension at 105% in the prior rent.
Moving to acquisitions.
During the quarter, we invested just starting with $180 million and 36, new properties with an initial cash cash cap rate of seven two with an average lease duration of $19 seven.
We closed on 19 transactions in the quarter and 17 were from our relationship task that we do repeat business.
The first half of the year, we invested over $337 million and 79, new properties with an initial cash cap rate of seven one average lease duration of $19 four.
Given that <unk> closed on roughly 60% of the original midpoint acquisition guidance, coupled with the visibility of our acquisition pipeline and demand has bumped up acquisition volume guidance to $600 million to $700 million of the year.
Almost all of our acquisitions this year, a long term lease deals defined 15 to 20 years.
That is a result of the calling effort <unk> acquisition team and then prides itself on maintaining the relationship business model and targeting sale leaseback transaction.
There is a lot that goes into deploying capital at the right risk adjusted returns and the value of <unk> <unk> four is a tool that mitigate risk within the portfolio, which is easier to obtain if you had the sale leaseback model can sometimes we overlook.
With regard to the acquisition pricing environment as I mentioned in the May call. We are seeing that cap rate increases started to plateau and stabilize.
That played out in the second quarter as expected with a 20 basis point increase over Q1 versus a 40 basis point pick up in the quarter before the.
The first six months cash cap rate was seven one which is 90 basis points higher year over year as.
As far as the second half of the year are seeing evidence initial cap rates slightly higher than the second quarter in the range of 10 to 20 basis points.
During the quarter. We also sold seven properties too, which were vacant raised $28 million of proceeds with a five one cap rate to be easily reinvested into accretive acquisitions.
Year to date, we have now raised $40 million of proceeds at a five six cap rate from the sale of 13 properties, including 5 billion.
Although job one this release vacancies and year to date, and then that has had a 97% rent recapture with minimal Ti dollars reinvested.
We'll continue to sell nonperforming assets, if we cannot see a clear path to generate rental income within a reasonable timeframe.
The current banking conditions, along with the higher interest rates.
Our trading a softer 10 31 market, but <unk> is navigating the waters successfully.
Our balance sheet remains one of the strongest in our sector. Our credit facility has plenty of capacity no material debt maturities until mid 2020 for strong free cash flow and a viable disposition strategy and then and is well positioned to fund our 2023 acquisition guidance.
Closing I want to thank our associates for their dedication and hard work of putting <unk> in position to finish 2023 saw strong and set up set us up for 2024 and beyond with that let me turn the call over to Kevin for some more color and detail on our quarterly numbers and updated guidance.
Steve as usual I'll start with our cautionary statement, we will make certain statements that may be considered to be forward looking statements under federal Securities law.
The company's actual future results may differ significantly from the matters discussed in these forward looking statements and we 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.
The company's filings with the SEC and in this morning's press release.
Okay with that headlines from this morning's press release report quarterly core <unk> results of <unk> 80 per share for the second quarter of 2023.
<unk> <unk> or one 3% over a year ago results of <unk> 79 per share at.
At first half 2023 results were $1 60 per share, which represents an increase of two 6%.
Over the prior year results.
<unk> for the first half of 2003 was $1 62 per share and Thats, a one 3% increase over prior year results.
As we footnoted on page one of the press release.
Absent the accrual basis deferred rent repayments in both 2022 and 2023. This <unk> <unk> per share growth would've been two and a half a percent for the first half of 2023.
Similarly, the scheduled cash with ages deferred rent repayments continue to taper off.
As anticipated in 2023 and can be seen in the details provided on page 13 of the press release.
Absent these cash basis deferred rent repayments in both 'twenty, two and 'twenty three core <unk> per share would have increased three 2% for the first half of 2023.
Separately I guess I'll note too that in the second quarter of 2023 results included $290000 of lease termination income and that compared with $1 $7 million in the first quarter, but overall overall, a good quarter at which was in line with our expectations.
Moving on our <unk> dividend payout ratio for the first half of 2023 was approximately 68%.
And that created approximately $95 million of free cash flow after the payment of all expenses and dividends for the first half.
As Steve mentioned after quarter end, we announced that we will.
What will be our 34th consecutive annual increase in our dividend that gets paid.
A couple of weeks of August 15.
Occupancy was 99, 4% at quarter end, that's flat with the prior quarter and flat with year end 2022 <unk>.
G&A expense was $10 $7 million for the quarter, but represented five 3% of total revenues and it was five 7% for the first half of 2023.
Notably our midpoint guidance for this line item is still $44 million for the full year 2023, and that should put us closer to about five 5% of revenues for the year.
Lastly, we ended the quarter with $794 $5 million of annual base rent in place for all leases as of June 32023.
Steve mentioned, we did increase our 2023 core <unk> guidance.
Increasing the bottom end by <unk> <unk> and the top end by <unk> <unk>.
So a range of $3 17 to $3 22 per share <unk> guidance was increased to a range of $3 20 to $3 25.
Per share the smaller increase in the <unk> guidance range is primarily a result of projected capitalized interest expense.
From increased investment of what we call split funded acquisitions.
Our acquisitions that are funded over time as the property is constructed which we think is the value to our customer we're.
We're doing more of that this year the difficult typical year, probably 20% to 25% of our acquisition dollars are and that type of program, where construction gets funded this year, we're probably pushing closer to 35% in terms of total dollars invested and that sort of.
Good.
But overall in terms of per share growth.
The more modest growth in 2023 reflects really a couple of things in my mind.
The high bar from last year's 2020, 298% growth created and the lack of tailwind that were helpful. In 2022, coupled with the slowdown in our scheduled deferred rent repayments in 2023 as noted on page 13 with.
With 23 guidance and key supporting assumptions are on page seven of today's press release, we're really the only notable change between a $100 million increase in our 2023 acquisition volume guidance, which is now $600 million to $700 million.
Switching over to the balance sheet, we maintain a good leverage and liquidity profile with over $750 million of liquidity.
The second quarter was quiet in terms of capital markets activity, we issued.
$13 million of equity in the second quarter and $30 million of equity for the first half of 2023.
So it was fairly modest equity raise of $30 million in the first half plus $95 million of free cash flow in the first half and $40 million of property disposition proceeds totaled $165 million, which allowed us to fund nearly all of the equity portion of our 337.
First half acquisitions on a leverage neutral basis.
Consistent with our plan and prior comments, we have begun to use our bank line a little more after few years of virtually nearly no.
Usage.
It's part of the plan to navigate this rock year interest rate.
And capital market environment.
Weighted average debt maturity is over 12 years and that includes the bank line, which is among the longest in the industry are our debt outstanding is all fixed rate with the exception of the bank line, which represents about 8% of our total debt.
Couple of numbers.
Debt to gross book assets was 48% as of June 30.
Net debt to EBITDA was five five times at June 30.
Interest coverage and fixed charge coverage was four six times for the second quarter.
All properties owned by <unk>, and then our unencumbered by mortgages.
So in closing we're in good shape to navigate the what seems to be elevated economic and capital market uncertainties and to be able to continue to grow per share results, which we view as the primary measure of success fundamentals as Steve mentioned.
Of our business remain in good shape occupancy re leasing renewals acquisition and disposition volumes at cap rates that we.
Feel like we're on a pretty good track for this year with that we'll open it up.
Any questions.
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One moment, please while we pull for questions.
Thank you.
Our first question is coming from Brad Heffern with RBC you May proceed.
Hey, good morning, guys, Kevin a couple for you. So on the new <unk> guidance last quarter. I think you mentioned things were trending towards the high end of guide.
We see the acquisition total went up so can you talk about what the offset was that kept the high end of guidance for moving higher I know in the prepared remarks, you mentioned the capitalized interest, but I think that's got backed out.
Correct me, if I'm wrong on that.
Yes, so youre talking about the core <unk> guidance or <unk> or both.
<unk> really what's dragging that back a little bit as two things this year is it.
Is the scheduled accrual basis deferred repayments, which is a piece of the equation, but that's been out there for a while so that's not changing much it's really the capitalized interest piece because we're more of our acquisition investments are being done in what we call was funded.
Program.
That creates more capitalized interest we back out capitalized interest.
In calculating <unk>. So so that's a bit of a drag on our <unk> for this year relative to prior years I would say generally if you go back pre pandemic you would see our <unk> on a quarterly basis, our <unk> is normally a penny more than our core <unk>.
Generally round numbers and so penny a quarter for a year, maybe five times a year. That's typical kind of pre pandemic kind of level, we're working our way back there we came and Renee close this quarter.
Our <unk> 80.
We were like seven hundreds of one penny from roundly in the 81 set so just want rounding it went to 80.
So we think it's still largely in line with our expectations.
But because of the incremental capitalized interest expense currently it's a little bit of a weight on our <unk> number.
In the short term.
Okay got it.
And then as you mentioned and our line of credit is obviously being used more I think the cost on that.
6% plus with the latest fed hike.
It seems like that would be wide, where you could get by issuing bonds or doing a term loan. So what's your desire to continue to let that float versus terming it out.
Yes Fair question, Yes, you're right. It's the bank line cost is right at about 6% now which is not.
Which.
I think we're comfortable.
The bank line up to about 50% of our capacity, that's probably align that we preferred not to cross so I think in some.
Time period, yet we would obviously be thinking about looking to take that out with longer term debt, which as you know is price.
As well, if not a little better than that.
The Bank line currently has so.
Yes, we don't give guidance on our capital markets activities, but.
But yes, that's fair comment.
Over time, we will look to take that out with longer term capital, whether it'd be debt or equity.
Okay. Thank you.
Thank Keith.
Our next question is coming from Joshua <unk> with Bank of America. You May proceed.
Hi, This is <unk> on behalf of Josh that airline.
I had a quick question about bad debt assumptions in your guidance and maybe what's already been incurred here today.
Especially with the increase.
Yeah, So our typical bad.
Bad debt assumption, we assume we're going to lose 100 basis points or 1% of our rent every year.
That's in.
I would think.
Virtually every year for the last number of years and so it's not we don't have any expectation of it being elevated currently.
What we're seeing in terms of our tenants behavior and their position.
We don't think.
We needed to do anything besides what we normally do we just.
Over the years.
Decided it was prudent to assume that everything will work out perfectly.
And so we've assumed a 100 basis points, we've not used very much of that at all I would say, even though we assume in our guidance of 100 basis points typically is probably closer to half of that meaning about 50.
<unk> 50 basis points of rent loss.
So far this year I would say, we're going to be still in that kind of normal zone.
The way things look like they're shaping up.
Okay. Thank you.
Also I wanted to touch on.
Hello, There may be tenant watch list.
I think I saw the news about Walgreens from Walgreen stores closing as well as our last quarter, we had touched on a bed bath and beyond.
So I'm curious if you can give an update.
Yes, so yes.
<unk> I guess globally I would.
Note that.
The size and the shape of our credit watch list I view is largely unchanged.
From recent quarters.
The specific tenants you mentioned as you know a bed Bath <unk> beyond.
Filed for bankruptcy, we had three stores with them.
2% of our annual base rent, we will be getting our getting back three those three stores and so that.
That.
Leases are rejected.
And then.
As it relates to what was the other one you asked about <unk>.
Walgreens.
Yeah, Yeah Walgreens.
Not worried at all about their ability to pay rent I guess, that's the most important thing.
They did announced store closures, none of ours are in that list and so.
Don't have any concerns at all on that front and just a reminder, even to <unk>.
Folks investors, even if a tenant closes a steward the brands did walk the first.
It doesn't change their obligation to pay us rent for those properties and so but.
This particular phase Walgreens.
We don't have any close stores on the closure list.
And this just really a follow up on the Walgreens that was a transaction we primarily did in the fourth quarter last year. So there was a self selection process that Walgreens went through to sign a 15 year leases.
And also if you have a few comments on Regal cinemas.
Yes, so regal actually just exited.
Bankruptcy yesterday, maybe.
We recently and so we.
We only had one property with them.
We're going to come out fine there.
We offered up a.
A small rent reduction, but in exchange got the ability to develop an out parcel on that property. So I think when the dust settles down the road.
We will be pretty much even in terms of where we were but it is a very small exposure.
<unk>.
1% of rent and a and b.
It was a very modest rent reduction offered up in exchange for this ability to develop an out parcel on the property, which is reasonably well located so.
Kind of like our odds on all of that but yes.
We won't have any impact on our bottom line.
Great. Thanks, so much for the color.
Thank you.
Our next question is coming from Eric Wolfe with Citi.
You May proceed.
Hey, thanks.
I'm looking at your cap rate.
In the quarter or seven 2%.
How wide was the cap rate range around that and was there anything done north of an eight com in the quarter.
Can you say that last part again kind of broke up on me.
How do you just how like if I think about the top end of where you are behind us or was there anything done at north of an eight.
I'm just trying to understand how wide the cap rate range was.
So the bandwidth on our cap rates, so that 72.
It's fairly tight.
Is that kind of just looking at the overall less it's probably.
We had a couple of legacy deals that we are.
Sports content deals that we priced midway.
Midway through last year that kind of dragged their feet. We are in the high sixes.
The highest cap rate deal. We did was kind of mid sevens, so it's pretty tight bandwidth.
Got it yeah I mean, the reason why I asked the question was I was just curious if youre seeing any pockets of the market that are seeing a little bit more distress, maybe a little bit less access to capital.
Causing sort of acquisition yields.
Is there in space.
Our risk profile.
And then you talked about that I think you called split level acquisitions, I mean I guess.
I'd be curious how you underwrite those relative to.
Oh, one normal.
The acquisition, where youre getting all the income.
Immediately.
Yes, as far as the underwriting we've been doing split funded.
For a decade, we were one of the first movers in the REIT industry to do it.
Where we used the current relationship primarily our tenants.
They will identify the site and then essentially acts like a bank, we're not taking the risk of development.
We like the split funded deals because there's no developer profit in them. So the tenants.
<unk> interests are aligned to keep rent low.
That's one part we like his.
Historically, we always had kind of a 50 75 basis point spread over the market.
And then in recent times that spreads compressed, but we're still seeing kind of a 2030 basis points.
Spread split funded.
Again, the rents typically lower because theres no profit baked in it's not a developer lease it's an amended form lease so theres a lot of risk mitigation that goes into those deals.
And the side note on that.
These are relatively simple small smaller projects in the scheme of things.
And so these are these projects don't go on for years, either measured in months typically and so they get develop pretty quickly and so the pricing that we said on that we're very comfortable kind of holding that during the construction period. If you will.
Hey, Jeff I wanted to mitigate we do in those leases if they do drag on for some unknown reason, we have as we say we've got to close the window and rent has commenced.
Building is complete or not.
All right.
Related to your question, because I want to broaden back the lens a little bit just.
Because I think the thought was that the more stress tenants get under the higher the cap rate.
And it might be an opportunity for higher cap rates.
Acquisitions and.
While there is an element of that is true for us.
Raising the cap rate is not a great way to solve a risk profitable in our opinion.
Is that tends to only make the risk greater meaning the cap rates higher which means that rents higher which means the tenants are less likely to succeed at that location and so so we've not over the years found.
Increasing the cap rate is a good way to address risks.
For us what would be a better approach and what we prefer and pushed to do is to is to reduce the proceeds.
<unk> invested in our property.
And not increase the cap rate materially and so that's.
That's the way we go at it we think that way you end up with.
Safer investment less proceeds in the property mean lower rent tenant more likely to.
To the extent the tenant doesn't succeed more easy.
That brand could be it can be replaced more easily by either the next tenant whoever that might be and so so we just go at it a little differently. So when we see risk out there we don't run to raise cap rate as the mitigate if you will but we don't think that.
It works in the short run I am sure, but we don't think Thats a great long term approach.
Got it it makes sense. Thank you.
Thank you. Our next question is coming from Spencer Alloway with Green Street you May proceed.
Yes, Thank you and maybe just following up on that the cap rate question. Just curious now that we've moved into <unk> and has anything changed in terms of pricing.
Pricing either by credit or retail industry.
We're somewhat through this quarter.
Kevin I mentioned in the prepared remarks can stay in that 10 to 20 basis point price increase in the third quarter I'm not expecting it any higher just given the resistance.
And primarily the deal flows for US is coming from the C store category Auto service primarily.
Yeah, we're not seeing any significant increase but just given the recent fed rate hike, we deal with sophisticated tenants and they understand the cost of capital.
Increasing so we're able to pass through some of that.
Yes, Okay that makes sense and then again, sorry, if I missed it in your prepared remarks, but can you just probably a little bit more color on that positioning you buy clothes and five one cap rate I believe.
Again, sorry, if I missed it.
The $5 one was the overall weighted average of the seven assets or five assets because two of them were vacant.
We're not counting that.
We were opportunistic somebody.
Saw some land that they saw with a lot more valuable than <unk> thought. It was so we were willing to depart in an extremely low cap rates, but theres a barbell approach in there still weighted average cap rate. We did some defensive sales in there that were 758 cap.
But then we had a couple in the force.
To bring that down to a $5 one.
Okay. Okay, great. Thank you guys.
Thanks.
Thank you. Our next question is coming from Linda Tsai with Jefferies.
You May proceed hi, Mike good.
Good morning.
You talked about headwinds and <unk> 23 to earnings growth nearly 10% growth last year's slowdown in scheduled rent payments and capitalized interest being backed out of <unk>. How are you thinking about 'twenty. Four you know the comparison will be easier to rent repayment isn't as much of a headwind do you think capitalized interest remains.
Headwind or are there other items to consider.
Yes.
We haven't put out any guidance on 2004, yet but.
It feels like.
At this point.
I know, it's really early in the world is changing fast and feels like.
We will get back to what we think of as a more normal cadence.
Still some headwinds out there in the capital markets would be my presumption for 'twenty four.
And I think cap rates will need to adjust some more in my opinion.
But.
Yes, we should have worked her way through.
A lot of the onetime items, both good and bad.
And 2024 and so.
Hopefully, we can get back to what we think of as a more normal cadence of kind of mid single digit kind of per share growth. It is interesting. If you look at 2022 and 2023 in combination.
Those that two year period.
Right at kind of mid single digit growth rate. It just happened to be that a lot of it came in 2022 and not so much in 'twenty three but if you look at the average of the two years, it's kind of.
What we think of as kind of our sweet spot.
Our goal of long term per share growth rate and so 2024 at the moment feels like the deferrals will be pretty much all behind us.
The capitalized interest may continue because we're still doing more elevated.
Our split funded deals than historically like I say normal in normal year for us is 2025% of our investments and the splits funded approach.
This year, just happens to be closer to 35% probably.
And so I think that will probably normalize with time, but.
We'll see we don't have any visibility on that so it's really hard for me to.
Be very definitive with my thoughts on that.
Thanks, and then in terms of the balance of the year for acquisition volumes do you expect volumes to be evenly distributed between <unk> and <unk>.
Okay.
We're a very lumpy business.
Yes, as I sit here today, yes.
Yes.
A little more even than historically.
Just given the visibility I have on the third Q.
Thanks.
Thank Keith.
Once again, if you have any remaining questions or comments. Please press star one on your phone at this time.
Our next question is coming from Alec Fagan with Baird you.
You May proceed.
Hi, Thanks for taking my question. The first one is are you seeing any acceleration in either new retailer or developer relationships now that.
Although I think conditions are more difficult.
So we're always in the market talking to developers, but are split funded program.
Usually with the tenant.
And what we find is we can talk about that a lot of the capitalized interest and we're a little bit above our historical averages and that's a result of theres not as much M&A in the market and our retailers still want to grow organically. So they are finding good opportunities redevelop in existing sites. So thats why it.
With kind of leaned into it a little bit more.
Historically.
But as far as new developer because they can get now we typically shied away from the developer because theres a lot of risks when you're doing those deals because the developer is negotiating the lease and they don't look to hold it long term so theres a lot of.
Known risks that are very difficult to underwrite within that lease so we'd like to go back to our tenant relationships and find a lot of good opportunities there.
Thank you for that.
So out of the.
Capitalized interest being a drag and I guess so is there any other one time items in the quarter, we should be aware of going forward.
No nothing beyond that I mentioned.
Lease termination income.
<unk>, which can be lumpy and it was elevated in the first quarter and was not in the second that was kind of it but that's kind of an ongoing thing and then.
Like I said, the deferred rent repayments, which are.
A detailed.
And.
Page 13 of the press release give you kind of all the the numbers vistaprint on that topic.
And so those are really the elements, but I think the broad answer to your question is no.
We don't see any one time.
Pluses or minuses going forward.
Thank you Kurt.
Have a good rest of your day.
Thank you we do have a question from Ronald come then with Morgan Stanley .
You May proceed.
Hey, sorry, I jumped on a little late.
Can you just taking a big step back.
Just give us an update on maybe the the watch list.
Bad bad debt, that's baked into the guidance and how that's trended year to date and any you know.
Any sort of particular, whether its bed bath or any other sort of exposures you have in test already would be great.
Yeah, So yeah I think.
As you know our assumption at the beginning of the year in terms of guidance as we assume we'll lose 100 basis point of rent, 1% of our rent will be lost for some reason or the other related to a tenant issues.
That's our typical.
Rent loss assumption in our guidance historically, we have not.
Realize that level normally it's probably half half a percent 50 basis points.
Or less I would say this year is trending to be normal meaning.
<unk> or the scope of the year.
It'll be closer to that 50 basis points.
Yes.
And so nothing unusual in that regard and I would say nothing changed.
In terms of the quantity and the quality of the credit Watch list. If you will doesn't feel like there's any big changes brewing there.
Alluded to already.
Two.
Tenants that were bankrupt.
Exited bankruptcy or not exited but bankruptcies closer bed bath and beyond as is gone. So we had three stores there in <unk>.
2% of our rent and so those are new vacancies. If you will that will re lease I think I've mentioned in prior calls the rent on those properties.
$2014 a square foot so that's something.
We think will create a big challenge to replace.
And then we had one regal.
Enema property Regal did exit bankruptcy I believe yesterday and.
That won't create any.
Any.
Notable impact on our on our <unk>.
Revenue or bottom line.
There is.
But the list still has the AMC on its question Mark still has.
Some refreshes restaurants, one Eric question, Mark Rite aid drug in it but those those have not changed in my opinion, notably in recent.
Quarters, and so we'll just keep watching those.
And deal with them.
Whatever comes up it's interesting as we look back over the years.
For tenants that filed bankruptcy.
On average they end up assuming 85% of our leases. So the bankruptcy is not the end of the world necessarily is the rejection of the lease that create.
The potential for some loss revenue in the short term.
But even then if we get the property back and we released it we were able to recoup.
The vast majority of that rent with the next tenant and again, we've tried to do that with little too little to no incremental ti dollars or capex and so.
So all in all we think we're still in pretty good shape on the on the <unk>.
Watch rent loss kind of.
Arena.
Great and then just last one just just kind of pulse on the alcoholic acquisition market, which is obviously.
$324 million in the quarter and so forth but.
So just compare to three to six months ago right is the pipeline building unchanged.
Is there a more distress.
Is there more sort of sale leaseback activities for people in need of capital.
And then obviously some cap rate commentary would be helpful. But just trying to get a sense of how things are evolving today versus.
If we were doing this call three to six months ago.
Yes based on.
Bump in guidance on acquisition volume.
Pipelines are a little stronger today than it was three to six months ago.
The sale leaseback market is still fairly robust.
We're not seeing the distressed sale leaseback, just because we don't want to do business with the company as being distressed and has to do it.
As far as the cap rates.
We picked up 20 basis points second quarter over the first quarter and we're kind of in the range of 10 to 20 basis points in the third quarter over.
The second quarter, but definitely starting to stabilize not accelerated at the rate. They were in the second half of last year.
But we feel good about our pipeline.
We're getting our fair share of deals.
And then is in good shape as far as hitting this results on acquisitions going forward.
Great. Thanks, so much.
Thanks, Ron.
Thank you.
We have no further questions in queue at this time, so I'll hand, it back to Mr. Horn for any closing comments.
Now kind of as I stated we are in good shape to deliver the remainder of 2023 and position ourselves well in 2024. So thanks for joining US. This morning, and there is some Hawaiian style and we look forward to seeing many of you in person at our fall conference season.
During the day.
Thank you. This concludes today's conference and you may disconnect. Your lines at this time, we thank you for your participation.
Yeah.