Q1 2024 Consolidated-Tomoka Land Co Earnings Call
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Operator: Good day, and thank you for standing by. Welcome to the CTO Q1 2024 earnings conference call. At this time, all participants are in listening mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to turn the conference over to your speaker for today, Lisa Veracombe. Please go ahead.
Speaker Change: Good day, and thank you for standing by and welcome to the C. T. O Q1, 2024 earnings conference call. At this time, all participants are in a listen only mode.
Speaker Change: After the Speakers' presentation there'll be a question answer session.
Speaker Change: I'll ask a question during the session you will need to press star one on your telephone.
Speaker Change: We'll then hear an automated message advising your hand is raised.
Speaker Change: Withdraw your question. Please press star one again.
Speaker Change: Please be advised that today's conference is being recorded.
Speaker Change: I would now like turn the conference over to your speaker for today.
Please go ahead.
Speaker Change: Yeah.
Lisa M. Vorakoun: Good morning, everyone, and thank you for joining us today for the CTO Realty Growth First Quarter 2024 Operating Results Conference Call. With me today is our CEO and President, John Albright.
Speaker Change: Good morning, everyone and thank you for joining us today for the CTO royalty growth first quarter 2024 operating results conference call with me today is our CEO and President John Albright before we begin I'd like to remind everyone that many of our comments today are considered forward looking statements under federal Securities.
Lisa M. Vorakoun: Before we begin, I'd like to remind everyone that many of our comments today are considered forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we undertake no duty to update these statements. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K, Form 10-Q, and other SEC filings. You can find our SEC reports, earnings release, supplemental, and most recent investor presentation on our website at ctoreet.com. And now I'll turn it over to John for his prepared remarks.
The company's actual future results may differ significantly from the matters discussed in these forward looking statements and we undertake no duty to update these statements.
Speaker Change: Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's Form 10-K Form 10-Q, and other SEC filings you can find our SEC report earnings release supplemental and most recent investor presentation on our website at <unk> Dot com.
Speaker Change: And now I'll turn it over to John for his prepared remarks.
John P. Albright: Thanks, Lisa. Good morning, everyone, and thank you for joining us. I'd like to start off by thanking our former CFO, Matt Partridge, for his many contributions to our company. We wish him well in his new opportunity. We've engaged the National Search Forum to assist us in identifying our new CFO and have started interviewing candidates. Today, we'll provide a brief overview of our first quarter results, discuss the continued strength we're seeing in the leasing front, and highlight our recent transactions.
John P. Albright: Thanks, Lisa good morning, everyone and thank you for joining us I'd like to start off by thanking our former CFO for his many contributions to our company.
John P. Albright: Wish him well with his new opportunity.
John P. Albright: Gauged the national search firm to assist us in identifying our new CFO that started interviewing candidates.
John P. Albright: Today, we will provide a brief overview of our first quarter.
John P. Albright: <unk> discussed the continued strength, we're seeing in the leasing front and highlight our recent transactions.
John P. Albright: Starting with our operating business, we had yet another successful quarter of leasing activity in the first quarter. We signed over 100,000 square feet of new leases, renewals, options, and extensions at an average rent of $2712 per square foot. That's over 200,000 square feet of leasing activity in the past six months. The leasing activity was relatively widespread and included the signing of a replacement of Regal Cinemas at Beaver Creek Crossing in Apex, North Carolina.
John P. Albright: Starting with our operating business.
John P. Albright: Got yet another successful quarter of leasing exit activity in the first quarter, we signed over 100000 square feet of new leases renewals options and extensions and an average rent of $27 12 per square foot.
John P. Albright: That's over 200000 square feet of leasing activity in the past six months.
Leasing activity was relatively widespread included the signing of a replacement of Regal cinemas at Beaver Creek crossing at Apex North Carolina.
John P. Albright: The new 45,000 square foot lease is with a well-known, successful regional fitness operator. The rent is meaningfully higher than the rent under the existing Regal lease, given the reduced rent in place associated with the bankruptcy of Regal. The fitness operator tenant is tentatively scheduled to open for business in mid 2025.
John P. Albright: 245000 square foot lease is worth a well known and successful regional fitness operator.
John P. Albright: The rate is meaningfully higher than the rent under the existing Regal lease given the reduced rent in place associated with the bankruptcy of Regal.
John P. Albright: Operator.
John P. Albright: Is tentatively scheduled to open for business in mid 2025.
John P. Albright: Comparable growth in new cash-based rents versus expiring rents stood at an impressive 68%, which includes a significant impact of the regal replacement tenant. We anticipate this activity will help push SaneStore into line in 2024, but even more so in late 2025 when we get the full benefit of our rent commencement under some of the larger leases signed on acquired vacancy. Given our recent leasing activity, our signed-but-not-open pipeline now represents 3.5% of prospective occupancy pickup and over 5% of our existing quarter-end cash flow base rent. We ended the quarter with a strong increase in occupancy, finishing at 92.6%, an increase of 2.3% from year-end 2023. Additionally, our lease occupancy increased by 1% from year-end 2023 to 94.3%.
John P. Albright: Comparable growth in new cash base rents versus expiring rents stood at an impressive 68%, which includes the significant impact of the Regal replacement tenants. We anticipate this activity will help push same store NOI in 2024, but even more so in late 2025, when we get the full benefit of our rent commencement.
John P. Albright: Under some of the larger leases signed.
John P. Albright: On the acquired vacancy.
John P. Albright: Given our recent leasing activity are signed but not opened pipeline now represents three 5% of the perspective occupancy pick up.
Over 5% of our existing quarter and cash flow base rents.
John P. Albright: We ended the quarter with a strong increase in occupancy, finishing at 92, 6% increase of two 3% from year end 2023. Additionally, our leased occupancy increased by 1% from year end 2023 to 94, 3%.
John P. Albright: Turning to our investments for the quarter, we acquired the final property within the Sprouts Grocery Anchored Exchange at Gwinnett in Buford, Georgia for $2.3 million. Additionally, as announced in March, we purchased Marketplace at Seminole Town Center in the Sanford Submarket of Orlando, Florida for $68.7 million. The multi-tenanted retail power center is over 315,000 square feet and is located on 41 acres along I-4, just over 20 miles northeast of downtown Orlando. The property is 98% leased and is anchored by Burlington, Marshalls, World Market, Petco, Ross Dress for Less, Old Navy, Ulta, Beauty, and Five Below.
John P. Albright: Turning to our investments for the quarter, we acquired the final property within the sprouts grocery anchored exchange that Gwinnett in Buford, Georgia for $2 3 million.
John P. Albright: Additionally.
John P. Albright: As announced in March we purchased marketplace at Seminole Towne Center in the same submarket of Orlando, Florida for $68 $7 million.
John P. Albright: The multi tenanted retail power center has over 315000 square feet located on 41 acres along I for just over 20 miles northeast of downtown Orlando. The property is 98% leased and is anchored by Burlington Marshalls World market.
John P. Albright: So Ross dress for less old Navy Ulta beauty five below.
John P. Albright: With this acquisition, the Orlando Metroplex, which has seen tremendous growth over the past few years, is now in our top five markets, representing over 8% of our in-place cash-based rent. And Florida has moved into our top three states with over 17% of our annual cash-based rent.
John P. Albright: This acquisition, the Orlando Metroplex, which has seen tremendous growth over the past few years is now in the top five.
John P. Albright: Five markets, representing over 8% of our in place cash base rent in Florida has moved into our top three states with over 17% of our annual cash base rent.
John P. Albright: Additionally, we originated a $10 million first mortgage loan on a retail development in West Palm Beach, Florida, at a fixed interest rate of 11%, of which $6.7 million was funded during the first quarter. On the disposition front, we are pleased to complete the sale of our mixed-use property in Santa Fe, New Mexico, for $20 million, an exit cap rate of 8.2%, and a gain of $4.6 million. From a capital recycling perspective, we will continue to prioritize selling smaller non-core assets for redeployment into attractive investment opportunities.
John P. Albright: Additionally, we originated $10 million first mortgage loan on a retail development in West Palm Beach, Florida.
John P. Albright: Fixed interest rate of 11% of which $6 7 million was funded during the first quarter.
John P. Albright: Disposition front, we were pleased to complete the sale of our mixed use property in Santa Fe, New Mexico for $20 million and exit cap rate of eight 2% and a gain of $4.6 million.
John P. Albright: From a capital recycling perspective, we will continue to prioritize selling smaller noncore assets for redeployment into attractive investment opportunities.
John P. Albright: After quarter end, the company issued just over 1.7 million shares of our 6.38% preferred stock for net proceeds of $33 million. With the net proceeds from this issuance and the $15 million early prepayment of the Sable Pavilion Seller Financing Loan, we were able to pay down all of our floating rate debt under our credit facility subsequent to the quarter end. This gives us ample liquidity to pursue larger format retail center acquisitions in what we believe is a very favorable environment with limited buyer competition. With that, I'd like to hand the call back over to Lisa.
John P. Albright: After quarter end the company issued just over one 7 million shares of our 6.38% preferred stock for net proceeds of $33 million.
John P. Albright: With the net proceeds from this issuance and the $15 million early prepayment of this stable civilian seller financing loan we were able to pay down all of our floating rate debt under our credit facility subsequent to the quarter end.
John P. Albright: This gives us ample liquidity to pursue larger format retail center acquisitions, and what we believe is a very favorable environment with limited buyer competition with that I'd like to hand, the call back over to Lisa.
Lisa M. Vorakoun: As of the end of the quarter, our income property portfolio consisted of 20 properties comprised of approximately 3.9 million square feet of rentable space located in 8 states and 11 markets. The geographic makeup of our portfolio includes top performing markets such as Atlanta, Dallas, Richmond, Orlando, and Jacksonville. As we've mentioned in the past, these markets have demonstrated outstanding potential for growth and are delivering extensive employment and population expansion, which bodes well for our tenants and the underlying value of our property. From a tenant makeup perspective, our top retail tenants consist of well-known operators such as Best Buy, Ross, Whole Foods, TJ Maxx, Dick's Sporting Goods, Darden Restaurants, and Publix.
Lisa: Thanks, John.
Lisa: The end of the quarter. Our income property portfolio consisted of 20 properties comprised of approximately $3 9 million square feet of rentable space located in eight states in 11 markets.
Lisa: The geographic makeup of our portfolio includes top performing markets, such as Atlanta, Dallas, Richmond, Orlando and Jacksonville as we.
Lisa: As mentioned in the past these markets have demonstrated outstanding potential for growth and are delivering extensive employment and population expansion, which bodes well for our tenants and the underlying value of our property.
Lisa: From a tenant makeup perspective, our top retail tenant consistent well known operators such as best buy Ross T.
T J maxx.
Lisa: Darden restaurant and public.
Lisa M. Vorakoun: As John previously mentioned, at quarter end, occupancy was 93%, and our leased occupancy was 94%, with 95% of our portfolio's annualized cash-based rents coming from retail and mixed-use properties, and the majority of those rents coming from grocery-anchored, lifestyle, and power center assets. The overarching fundamentals for real estate are strong, and these properties continue to benefit from outsized tenant demand and limited supply. Jumping into our earnings results for the quarter, our earnings for the first quarter of 2024 exceeded expectations, with Core FFO per share coming in at $0.48 per share, representing a 23% increase compared to the first quarter of 2023.
Lisa: As John previously mentioned at quarter end occupancy was 93% and our leased occupancy was 94% with 95% of our portfolio's annualized cash base rent coming from retail and mixed use property and the majority of those rents coming from grocery anchored lifestyle and power center asset.
Lisa: Overarching fundamentals of real estate are strong and these properties continue to benefit from outsized demand.
Lisa: Limited supply.
Lisa: Jumping into our earnings results for the quarter our earnings for the first quarter of 2024 exceeded expectations with core <unk> per share coming in at 48 per share representing a 23% increase compared to the first quarter of 2023.
Lisa M. Vorakoun: First quarter 2024 AFFO was $0.52 per share, representing a 21% increase over the first quarter of 2023. First quarter 2024 Core FFO and AFFO as compared to the first quarter of 2023 benefited from a full quarter's impact of our second quarter 2023 acquisition, which included Plaza at Rockwall and out parcels at the Exchange at Gwinnett, as well as the partial quarter impact of Marketplace at Seminole Town Center, offset by asset dispositions in the same period.
Lisa: First quarter 2024, <unk> was <unk> 52 per share representing a 21% increase over the first quarter of 2023.
Lisa: First quarter 2024 core <unk> <unk> as compared to the first quarter of 2023 benefited from a full quarter's impact of our second quarter 2023 acquisition, which included Plaza at Rockwell and out parcels at the exchange Equinix as well as the partial quarter impact of marketplace at Seminole Towne Center offset.
Lisa: By asset dispositions in the same period.
Lisa M. Vorakoun: 4FFO and AFFO also benefited from rent commencements at several properties. Our same property, NOI, increased by 6% compared to the first quarter of 2023, which increase was largely due to the lease-up of several properties, including the collection at Forsyth and West Broad Village, as well as increased percentage rents at several properties. We do anticipate our same property NOI growth will normalize during the remainder of 2024 due to certain one-time benefits included in our first quarter 2024 results, primarily related to finalizing our 2023 CAM reconciliation billing.
Lisa: <unk> also benefited from rent commencement at several properties.
Lisa: Our same property NOI increased by 6% compared to the first quarter of 2023, which increase was largely due to the lease up of several properties.
Lisa: And the collection of foresight and west broad village as well as increased percentage rents at several properties.
Lisa: We do anticipate our same property NOI growth will normalize during the remainder of 2024 due to certain onetime benefits included in our first quarter of 2024 result, primarily related to finalizing our 2023 Cam reconciliation billing.
Lisa M. Vorakoun: As we announced in February, we distributed a first quarter regular cash dividend of $0.38 per share, resulting in a Q1 2024 ASFO payout ratio of 73% and an attractive current annualized yield of approximately 8.8%. Turning to our balance sheet, as of the end of the quarter, our total long-term debt outstanding was $543 million. Net debt to total enterprise value was just over 53%, and our net debt to EBITDA was 7.6 times
Lisa: As we announced in February we distributed our first quarter regular cash dividend of 38 cents per share, resulting in a Q1 2024 <unk> payout ratio of 73%.
Lisa: <unk> current annualized yield of approximately eight 8%.
Lisa: Turning to our balance sheet as at the end of the quarter. Our total long term debt outstanding was $543 million net debt to total enterprise value was just over 53% and our net debt to EBITDA was seven six times.
Lisa M. Vorakoun: While we ended the quarter with total cash and restricted cash of nearly $15 million and had $59.5 million of floating rate debt on our revolving credit facility, as John mentioned earlier, in April, we were able to pay down our revolver balance, and we currently have no floating rate debt outstanding on the revolver. On the capital markets front, during the first quarter, we repurchased nearly 41,000 shares of our common stock in the open market for approximately $700,000 at an average price of $16.28 per share.
Lisa: We ended the quarter with total cash and restricted cash of nearly $15 million and had $59 5 million of floating rate debt on our revolving credit facility as John mentioned earlier in April we were able to pay down our revolver balance and we currently have no floating rate debt outstanding on the revolver.
Lisa: On the capital markets front during the first quarter, we repurchased nearly 41000 shares of our common stock in the open market for approximately $700000 at an average price of $16 28 per share.
Lisa M. Vorakoun: We also issued over 125,000 shares of common stock through our ATM program for total net proceeds of $2.1 million at an average issuance price of $17.05 per share. And finally, as a part of the earnings released yesterday, we increased our full year 2024 core FFO and ASFO earnings guidance to take into account our first quarter results and go forward expectations. Our 2024 Core FFO and AFFO guidance both increased by $0.04 per share.
Lisa: We also issued over 125000 shares of common stock through our ATM program for total net proceeds of $2 1 million at an average issuance price of $17 five per share.
Lisa: And finally as a part of the earnings release yesterday, we increased our full year 2024 core <unk> and <unk> earnings guidance to take into account, our first quarter results and go forward expectations.
Our 2024 core <unk> guidance, both increased by <unk> <unk> per share.
Lisa M. Vorakoun: We also reduced our disposition guidance to a range of $50 million to $75 million for the balance of the year. And with that, I'll turn the call back to the operator to open the line for questions and answers.
Lisa: We also reduced our disposition guidance to a range of $50 million to $75 million for the balance of the year and.
Speaker Change: And with that I'll turn the call back to the operator to open the lineup for questions and answers.
Operator: Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone. We also ask that you wait for your name and company to be announced before you proceed with your question. One moment while we compile the Q&A roster. And our first question today will be coming from Gaval Mehta from Alliance Global Partners. Your line is open.
Speaker Change: Thank you <unk>.
Speaker Change: If you would like to ask a question. Please press star one on your telephone.
So as that you wait for your name and company to be announced before you proceed with your question.
Speaker Change: One moment.
Operator: Compile the Q&A roster and our first question today will be coming from Gaurav Mehta from Alliance Global Partners. Your line is open.
Gaval Mehta: Good morning. Thanks. I wanted to ask you about your Orlando acquisition, hoping to get some more color on any value-add opportunities in that property and maybe some color on the mark-to-market rent upside.
Gaurav Mehta: Good morning. Thanks.
Gaurav Mehta: I wanted to ask you on your Orlando acquisition.
Gaurav Mehta: Hoping to get some more color on any value add opportunities in that property and maybe some color on the mark to market rent upside.
John P. Albright: Yeah, thanks very much. So there's not a lot of value added there. It's fairly stabilized, but what we liked about it was that there was some vacancy that we think we'll be able to get leased up. And then there are some below-market leases that really have a lot of opportunity. Roughly 20,000 to 40,000 square feet is the below-market rate. And so even though it's very stabilized as far as occupancy, there is some future opportunity to drive some, you know, high growth.
Gaurav Mehta: Yes, thanks, very much so theres not a lot of value add there is fairly stabilized about what we liked about there was some some vacancy that we think will be able to get leased up.
Gaurav Mehta: And then there are some below market.
Gaurav Mehta: Leases that are really have a lot of opportunity.
Gaurav Mehta: Roughly.
Gaurav Mehta: Roughly 20% to 40000 square feet is below market.
Gaurav Mehta: And so even though it's very stabilized as far as arguments a there is some future opportunity to drive some.
Gaurav Mehta: High growth.
John P. Albright: Okay, second question on your disposition guidance that was lowered. I'm hoping to get some more color on why that was lowered. Yeah, we're, I mean, we don't want to feel
Gaurav Mehta: Okay.
Speaker Change: Second question on your disposition guidance that goes lower.
Speaker Change: Hoping to get some more color on why that was lower.
John P. Albright: We don't want to feel pressed to sell some assets. If we had a larger acquisition lined up, we would certainly move through some assets we want to sell, but we want to be patient on the sell side.
Speaker Change: Yes.
Speaker Change: We don't want sales press two to sell some assets. If we had some acquisition larger acquisition lined up we would certainly move through some assets, we want to sell but we want to be.
Speaker Change: Patients on.
Speaker Change: The sell side and so.
Speaker Change: After doing the preferred.
Raise kind of like what enroll a real need to kind of push through some disposition.
Speaker Change: Okay. Thank you.
Robert Chapman Stevenson: Thank you one moment for our next question. Our next question will be coming from Rob Stevenson of Janie, Montgomery & Scott. Your line is open.
Speaker Change: Thank you.
Speaker Change: One moment for our next questions.
Speaker Change: Our next question will be coming from Rob Stevenson of Janney Montgomery Scott Your line is open.
John P. Albright: Good morning, guys. John, I guess just continuing on the theme of dispositions, any incremental update on your thinking on the remaining office asset at this point? Is that something that you guys think will transact this year, or is it looking like more of a 25 or later? How should we be thinking about that?
Robert Chapman Stevenson: Good morning, guys.
Robert Chapman Stevenson: John I guess, just continuing on the theme of dispositions any incremental update on your thinking on the remaining office asset at this point is that something that you guys think will transact this year or is it looking like more of a 25 years later, how should we be thinking about that at this point yes.
John P. Albright: Yeah, I mean, I don't really feel like it's going to be this year. We're talking with the tenant, but the tenant is in no rush. You know, the facility is fine for their uses, and they have other things that they're working on. So, you know, we're not, you know, we kind of need to be in the queue as far as when they can kind of get around to discussions with us.
Robert Chapman Stevenson: I don't really.
John P. Albright: Don't feel like it's going to be this year, we're talking with the tenants, but the tenant is in.
John P. Albright: In no rush.
John P. Albright: LT is is fine for their users and they have other things that they're working on so we're.
John P. Albright: We're not we're kind of need to be in the queue as far as when they can kind of get around to.
John P. Albright: So, you know, unless we have, like, you know, again, a really large acquisition that we're able to transact on, we're not going to feel like we need to be in a hurry with that. I would love to take you out there sometime because once you see what's going on in the area, the property position is only getting better and better with time. So it's kind of like a nice bottle of Bordeaux in the cellar.
John P. Albright: Discussions with us so last we have liked.
John P. Albright: Again, a really large acquisition that we're able to transact on.
John P. Albright: We're not going to feel like we need to be in a hurry with that love to take you out there some time because once you see what's going on in the area.
John P. Albright: Property.
John P. Albright: Physicians are getting better and better with time, so it's kind of like a nice bottle.
John P. Albright: It's only getting better. I know a lot of people, obviously, rightfully get nervous about office work, and that's why we moved through a lot really fast. But this one, you don't really need to feel like you have exposure.
Bordeaux and the seller, it's only getting better.
John P. Albright: Lot of people, obviously for rightfully get nervous about office.
John P. Albright: And that's why we moved through a lot really fast, but this one you don't really need to feel like you have exposure.
John P. Albright: Okay. And then I think in your prepared comments, you talked about the least but not open yet portion of the portfolio. When do the bulk of those leases commence and start paying rent? Is that late this year with the biggest financial impact in 2025, or is it really mostly all in 2025 that you'll start actually seeing that pop up in the occupancy numbers and then also in the rental line?
John P. Albright: Okay, and then I think in your prepared comments you talked about.
John P. Albright: The lease but not opened yet.
John P. Albright: <unk> on the portfolio.
John P. Albright: When did the bulk of those leases commence and start paying rent is that late this year with the biggest financial impact in 'twenty five or is it really mostly all in 'twenty five that youll start actually seeing that pop up in the vacancy in the occupancy numbers and then also in the <unk>.
John P. Albright: Yeah, it's mostly the back half of this year, so 2025 is really the year that's going to get a lot of love on the revenue coming forward. You know, especially the replacement of the Regal, you know, that one's probably mid-2025, but the rest of the signed but not open is really the back half of this year.
John P. Albright: Rental line.
Speaker Change: It's mostly the back half of this year. So 2025 is really the year, that's going to get a lot of love on.
Speaker Change: Revenue coming forward.
Speaker Change: Specially the replacement of the Regal.
Speaker Change: It's probably mid 2025, but.
Speaker Change: But the rest of the signed but not opened as really the back half of this year.
John P. Albright: Okay, and then, on the other side of that coin, any known move outs at this point of note over the next, you know, 18 to 24 months?
Speaker Change: Okay, and then Eddie on the other side of that coin any known move outs at this point of note over the next 18 months to 24 months.
John P. Albright: No, we keep on having the antennas up for any issues, but so far, all green light.
Speaker Change: No.
Eddie: We keep on having the incentives for any any issues but.
John P. Albright: Okay, and then last one for me. After the preferred deal, how are you thinking about the incremental use of preferreds going forward? Do you think the cap structure right now is maxed out at this point on preferreds? Is there still room for you to be able to do that if the common isn't at a price that's to your liking? How should we be thinking about that and where that sort of fits in your capital stack?
Eddie: So far all Green light.
Speaker Change: Okay, and then last one for me.
Speaker Change: After the preferred deal alright.
Speaker Change: Are you thinking about incremental use of preferred is going forward do you think the cap structure right now is maxed out at this point on preferreds is there still room for you to be able to do that if the comment isn't at a price that is to your liking how should we be thinking about that and where that sort of fits in your capital stack, Yes, I mean, we feel like we did the appropriate amount.
John P. Albright: Yeah, I mean, we feel like we did the appropriate amount. And, you know, what one thing I'd point out is we did the size necessary for the preferred to be index qualified. And it's gone into the index.
Speaker Change: <unk>.
Speaker Change: What what one thing I'd point out is we did the size necessary for the preferred to be index qualified.
John P. Albright: And as you probably noticed, the preferred is just ripping in price and volume, so that's going to give us a nice tailwind of cost of capital in the future. But, you know, if we get productive here on some acquisitions, we probably won't lean into the preferred until kind of balancing out the rest of the capital structure.
Speaker Change: It has gone into the index and as you probably noticed that preferred is just ripped.
And price.
Volume, so that's going to give us a nice tailwind of cost of capital in the future.
Speaker Change: We get productive here on some acquisitions, we probably won't lean into that preferred until kind of balancing out the rest of the capital structure.
Robert Chapman Stevenson: Okay, that's helpful. Thanks and have a great weekend. Thank you, you too.
Speaker Change: Okay. That's helpful. Thanks, and have a great weekend. Thank you you too.
Richard Jon Milligan: Thank you. At this time, if you would like to ask a question, please press star 1-1 on your telephone. Our next question will be coming from... R.J. Milligan of Raymond James. Your line is open.
Speaker Change: Thank you.
Speaker Change: If you would like to ask a question. Please press star one on your telephone.
Speaker Change: Our next question will be coming from.
Speaker Change: J Milligan of Raymond James Your line is open.
Richard Jon Milligan: Hey, good morning. First, just to clarify, I'm not sure if I missed it, but for the big safe start NOI growth and single tenant, is that percentage rent, or is that CAM catch-up, or is it both?
Richard Jon Milligan: Hey, good morning.
Richard Jon Milligan: First just to clarify im not sure if I missed it but for the big same store NOI growth in single tenant is that percentage rents or is that can catch ups or is it both.
Lisa M. Vorakoun: Yeah, I'm going to let Lisa answer that, RJ.
Richard Jon Milligan: Yes, im going to let Lisa answer that RJ.
Lisa M. Vorakoun: Hey, RJ. Yeah, so really, what that is on the single-tenant side is our properties we have in Daytona Beach that we bought in the back of 2024. We kind of bought those as vacant, and rents came on board in Q3 of 2023. So what you're seeing there is about $140,000 of rent in Q1 2024 when there was none in Q1 of last year. So that's about 15% of the 21% increase there.
Lisa: Hey, RJ, yes, so really what that is on the single tenant side is our our.
Lisa: Our properties, we have in in Daytona Beach that we bought in the back of 'twenty 'twenty four we kind of bought those as Bacon and rent came onboard in Q3 of 2023. So what you are seeing there is about $140000 of rent in Q1 2024, when there was none.
Lisa: In Q1 of last year, so that's about 15% of that of the 21% increase there.
Richard Jon Milligan: That's helpful. Thank you.
That's helpful. Thank you and then John maybe you could just elaborate a little bit more on the acquisition environment. Obviously, there's been some adjustment in the higher for longer interest rate environment, and just curious what youre seeing out there in terms of sellers and seller expectations.
John P. Albright: And then, John, maybe you could just elaborate a little bit more on the acquisition environment. Obviously, there's been some adjustment in this higher-for-longer interest rate environment. I'm just curious what you're seeing out there in terms of sellers and seller expectations.
John P. Albright: Yeah, so the good news is we're seeing plenty of opportunities. So we're kind of, you know, being patient and, you know, bidding appropriately for where we think there's value, but there are clearly other buyers out there, but, you know, it's really finding, given that we're an all cash buyer, we're seeing a lot of the competition on the buyer side needing financing. So it's really the sellers who, you know, they kind of go through the analysis.
John P. Albright: Yes. So the good news is we're seeing plenty of.
John P. Albright: Opportunities.
John P. Albright: So we're kind of being patient and.
John P. Albright: Bidding appropriately for where we think there's value, but they're clearly other.
Speaker Change: There are buyers out there but.
Speaker Change: It's really finding given that we're an all cash buyer, we're seeing a lot of the competition on the buyer side.
John P. Albright: Do they want to take a risk going with a buyer that needs financing, subject to financing, which that buyer is typically higher than us? Or do they just want to go with an all cash, more certain buyer at a lower price? And so it's really, you know, waiting for those good opportunities for us. So the good news is there's plenty of opportunities out there. So I think, you know, sellers are, if they're in the market now, it's really part of their plan to sell, whether there's financing that's coming due, whether there's redemption clauses in the funds that own these properties, or, you know, just basically partners, you know, looking for, you know, a time to sell, sort of thing. So, you know, it's a good environment, and we're just trying to be patient.
Speaker Change: <unk> financing so it is really the sellers who.
Speaker Change: Yes.
Speaker Change: I go through the <unk>.
Speaker Change: <unk> us do they want to take a risk going with a buyer that needs financing subject to financing, which that buyer is typically higher than us or do they just want to go with an all cash more certainty buyer at a lower price and so it's really.
Speaker Change: Waiting for those.
Speaker Change: Good opportunities for us so the good news is there's plenty of opportunity out there so I think.
Speaker Change: Sellers are if they are in the market now it's really part of their plan to sell whether there is financing thats coming due whether theres redemption queues in the funds that own these properties.
Speaker Change: Or is it just basically partners looking for time to sales sort of thing. So so it's a good environment and we're just trying to be patient.
John P. Albright: Thanks, John. And just to add to that, I'm curious about the interest rate environment where you think that there are going to be more transactions. Is it stability in interest rates, or is it lower interest rates? Because obviously, this morning, we're seeing the 10-year come down. And just there were a lot of sellers who said, you know what? We think rates are going to come down later. So we're going to stay on the sidelines. And I'm just curious, are you looking more for stability or just for lower rates in general?
Speaker Change: Thanks, Sean just to add to that I'm curious what is the interest rate environment, where you think that there's going to be more transactions is it stability in interest rates or is it lower interest rates because obviously this morning, we're seeing the 10 year come down and just there's been a lot of sellers who said.
Speaker Change: We think rates are going to come down later, so we're going to stay on the sidelines I'm just curious.
Speaker Change: Are you looking more for stability or just for lower rates in general.
John P. Albright: I think, you know, I think from the sell side, people are, you know, not really waiting, you know, if they're in the market now, you know, they need to sell in the next six months or so. I think that as far as your general question there, I think with stability and, you know, kind of knowing that there's going to be some, some rate cuts in the future. I think you're going to see more buyers come off the sidelines. And so that's not going to be good for us.
Speaker Change: I think.
Speaker Change: I think from the sell side people are not really waiting if they are in the market now.
Speaker Change: They're they need to sell in the next six months or so.
Speaker Change: I think the as far as your general question there.
Speaker Change: I think with stability and knowing that there's going to be some.
Richard Jon Milligan: But, you know, we're all trying to kind of, you know, get some transactions while they're getting good. So, you know, we are surprised to see some transactions happen at cap rates that are, you know, just slightly above the 10-year. And so it's just like, how does that math ever work? But there are, you know, some, some, some buyers that that kind of fits in their model. So, I think any kind of stability in interest rates really kind of does the trick.
Speaker Change: Some rate cuts in the future I think youre going to see more buyers come off the sideline and so that's not going to be good for us but.
Speaker Change: We're all trying to kind of.
Speaker Change: And transactions, while the getting is good.
Speaker Change: So we are surprised to see some transactions happen at cap rates that are.
Speaker Change: It's slightly above the 10 year.
And so it's just like how does that math work, but.
Speaker Change: There are some some some buyers that thats kind of thats in their model.
Speaker Change: I think any kind of stability in the interest rates really kind of does the trick.
Richard Jon Milligan: Thanks so much. That's it for me. Thank you.
Speaker Change: Thanks, So much that's it for me thank you.
Matthew Erdner: Thank you. One moment for the next question. And our next question is coming from Matthew Erdner. Jones Trading, your line is open.
Speaker Change: Thank you one will move to the next question.
Speaker Change: And our next question is coming from Matthew elsewhere.
Matthew: Jones trading your line is open.
John P. Albright: Hey, good morning, guys. Thanks for taking the question. Could you talk a little bit about acquisition timing? You know, should we expect that to kind of happen more so in the near term, or is it back half-ended? And then, you know, can you also talk about the difference in opportunities that you're seeing between the loans and just overall acquisitions or asset acquisitions?
Matthew: Hey, good morning, guys. Thanks for taking the question could you talk a little bit about acquisition timing should we expect that to kind of happen more so in the near term or is it back half ended and then can you also talk about the difference in opportunities that youre seeing between the loans and just overall.
John P. Albright: Yeah, so the acquisitions are more kind of in the back half of the year. We were hoping to have something in the first half of the year, but it didn't work out. With regard to loans, there are certainly some acquisitions that we weren't the winners in, and we felt like there'd be buyers that would need some help on the financing side, so we've offered it up. But so far, there have been no takers. But I think we're hopeful that we'll have a little opportunity there, as there are really some great basis properties, value-add, a lot of heavy lift. So the financing market's not going to be very productive for these buyers, and there'll be a pretty big gap in the capital structure, which we hope to fill. Yeah, that's helpful. Thank you, guys.
Matthew: Asset acquisitions. Thanks.
Matthew: Yes, so the acquisitions are more kind of back half of the year.
Matthew: We are hoping to have something in the first half of the year, but didnt work out.
Matthew: With regards to loans there are certainly some some acquisitions that we werent the winner and we felt like there would be buyers that would need some help on the financing side. So we.
Matthew: We've offered it up but so far no takers.
Matthew: But I think we'll we're hopeful that we'll have a little opportunity there.
Matthew: There are some.
Really some great basis sort of property value add a lot of heavy lifting so the financing market is not going to be very productive for these buyers and.
Matthew: And there'll be a pretty big gap in the capital structure, which we hope to fill.
Matthew Erdner: Yeah, that's helpful. Thank you, guys. Thank you.
Speaker Change: Yeah. That's helpful. Thank you guys.
John James Massocca: Thank you. One moment for the next question. And our next question will be coming from John Mascotta of B... Riley Securities.
Speaker Change: Thank you one moment to the next question.
Speaker Change: And our next question will be coming from John Musk water.
Speaker Change: B.
John James Massocca: Riley Securities.
John James Massocca: Good morning.
John James Massocca: Um, just kind of quickly on the Regal, the old Regal box, you mentioned those leases; the rents are kind of higher versus what Regal is paying. I guess, how do they compare to Regal's rents, maybe pre-bankruptcy?
John James Massocca: So just kind of quickly on the on the Regal deal.
John James Massocca: Regal box you mentioned those leases the rents are kind of higher versus what Regal is paying I guess, how do they compare to regal rents maybe pre bankruptcy.
John P. Albright: Yeah, so pre-bankruptcy, it's basically double digits percentage higher from their previous rent.
Speaker Change: Yes, so pre bankruptcy, it's basically double digits percentage up from their previous ramp.
John P. Albright: Very helpful. And then, the Lake Worth loan investment or loan you put in place, are there any kind of options on that to purchase the property or any kind of other kind of moving pieces to that loan besides just, you know, obviously the interest income and the drawdowns? Yeah, definitely.
Speaker Change: Okay very helpful and then.
Speaker Change: And the Lake worth loan investment or loan.
Speaker Change: Yeah.
Speaker Change: <unk> put in place.
Speaker Change: Are there any kind of options on that the purchase of the property or any kind of other kind of moving pieces that loan. Besides just obviously the interest income and the drawdowns yes.
John P. Albright: We do have a right of first refusal if certain cap rates are above a certain level, so we do have the right to acquire if the yields get to a level that interests us.
Speaker Change: Yes.
We do have a writer first refusal at certain cap rates are are above a certain level. So we do have the right to acquire the yields get to too.
John James Massocca: Okay, that's very helpful. And then, kind of, last, kind of, quick detail question, as we think about disposition guidance, I mean, is the seller loan repayment included in that, or the SABAL, or is that kind of excluded just given the actual transaction occurred last year? Yeah, it does not include that.
Speaker Change: The level of interest to us.
Speaker Change: Okay. That's very helpful. And then kind of lastly quick detail question as we think about disposition guidance. I mean is the seller loan repayment included in that or.
Speaker Change: The small or is that kind of actually just given the actual transaction occurred last year.
Speaker Change: Yes. It does not include that.
John James Massocca: Okay, that's it for me. Thank you very much. Great. Thank you.
Okay.
Speaker Change: That's it for me thank you very much.
Operator: Thank you. This concludes our Q&A session. As well, this concludes the meeting for today. Thank you all for joining us. You may disconnect.
Thank you.
Speaker Change: Thank you. This concludes our Q&A session as well. This concludes our meeting for today. Thank you all for joining you may disconnect.
Speaker Change: Okay.
Speaker Change: [music].