Q1 2024 NETSTREIT Corp Earnings Call
Operator: Ladies and gentlemen, good morning and welcome to the NetStreetCorp first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Amy An, in Western relations. Please go ahead.
Ladies and gentlemen, good morning, and welcome to the net Street Corp, first quarter 'twenty 'twenty four earnings conference call.
Operator: At this time all participants are in a listen only mode.
Amy An: A brief question and answer session will follow the formal presentation.
Speaker Change: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Operator: As a reminder, this conference is being recorded.
Amy An: It is now my pleasure to introduce your host Amy and Investor Relations. Please go ahead.
Amy An: Thank you for joining us for NetStreet's first quarter 2024 earnings conference call. In addition to the press release distributed yesterday after the market closed, we posted a supplemental package and an updated investor presentation. Both can be found in the investor relations section of the company's website at www.netstreet.com. On today's call, management's remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995.
Amy An: We thank you for joining us for that Street first quarter 2024 earnings Conference call. In addition to the press release distributed yesterday after market close we posted a supplemental package and an updated investor presentation, which can be found on the investor Relations section of the company's website at Www Dot net street Dot com.
Amy An: On today's call management's remarks, and answers to your questions may contain forward looking statements as defined in the private Securities Litigation Reform Act of 1995 forward looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today.
Amy An: Forward-looking statements address matters that are subject to risk and uncertainties that may cause actual results to differ from those discussed today. For more information about these risk factors, we encourage you to review our Form 10-K for the year ended December 31st, 2023, and our other SEC filings. All forward-looking statements are made as of the date hereof, and Netstreit assumes no obligation to update any forward-looking statements in the future. In addition, certain financial information presented on this call includes non-GAAP financial measures. Please refer to our earnings release and supplemental package for definitions of our non-GAAP measures, reconciliations to the most comparable GAAP measure, and an explanation of why we believe such non-GAAP financial measures are useful to investors.
Amy An: For more information about these risk factors. We encourage you to review our Form 10-K for the year ended December 31, 2023, and our other SEC filings.
Amy An: All forward looking statements are made as of the date hereof and that street assumes no obligation to update any forward looking statements in the future.
Amy An: In addition, certain financial information presented on this call includes non-GAAP financial measures. Please refer to our earnings release and supplemental package for definitions of our non-GAAP measures reconciliations to the most comparable GAAP measure and an explanation of why we believe such non-GAAP financial measures are useful to investors.
Amy An: Today's conference call is hosted by NetStreet's Chief Executive Officer, Mark Manheimer, and Chief Financial Officer, Dan Donlan. They will make some prepared remarks, and then we will open the call for your questions. Now, I'll turn the call over to Mark.
Amy An: Today's conference call is hosted by net Street's, Chief Executive Officer, and Mark Manheimer, and Chief Financial Officer, Dan Donlan.
Amy An: They will make some prepared remarks, and then we will open the call for your questions now I'll turn the call over to Mark Mark.
Mark Manheimer: Thank you, Amy, and thank you all for taking the time to join us this morning for our first quarter 2024 earnings. First, I want to extend my thanks to the NetStreet team. Our strong start to the year would not have been possible without their fantastic work.
Mark Manheimer: Thank you Amy and thank you all for taking the time to join US. This morning on our first quarter 2024 earnings call.
Mark Manheimer: First I want to extend my thanks to the net street team and our strong start to the year would not have been possible without their fantastic work.
Mark Manheimer: We kicked off the year as one of only two REITs to raise follow-on equity in January, while also remaining active on our ATM program. We have raised nearly $230 million of equity year-to-date, which gives the team ample dry powder to transact at our current investment pace through year-end. Due to a drastic decrease in competition, we are continuing to pursue investment opportunities at attractive prices. The team remains diligently focused on investing in properties with the strongest tenants in defensive retail sectors that heavily rely on their physical locations to make profits.
Mark Manheimer: Kicked off the year as one of only two reach to raise follow on equity in January while also remaining active on our ATM program.
Mark Manheimer: We have raised nearly $230 million of equity year to date, which gives the team ample dry powder to transact at our current investment pace through year end.
Mark Manheimer: Due to a drastic decrease in competition, we are continuing to pursue investment opportunities at attractive prices.
Mark Manheimer: The team remains diligently focused on investing in properties with the strongest tenants and defensive retail sectors that heavily rely on their physical locations to make profit.
Mark Manheimer: We continue to see great opportunities with not only investment-grade tenants, which now make up a sector-leading 71.1% of our portfolio, but also with investment-grade profile tenants and low-risk, sub-investment-grade, and unrated tenants. And while the buyer pool has thinned, we also continue to execute on strategic dispositions to lower our concentration in certain tenants and recycle the capital into investments with longer leases and better rent escalation In the first quarter, we completed over $129 million of gross investment activity at a blended cash yield of 7.5%, a 30 basis point sequential quarter-over-quarter increase. Acquisitions closed in the quarter were with strong nationally recognized tenants such as Tractor Supply, Dollar General, and Bridgestone Firestone, to name a few.
Mark Manheimer: We continue to see great opportunities with not only investment grade tenants, which now make up eight a sector, leading 71, 1% of our portfolio, but also with investment grade profile tenants and low risk sub investment grade and unrated tenants.
Mark Manheimer: And while the buyer pool has been we also continued to execute on strategic dispositions to lower our concentration in certain tenants and or recycle the capital into investments with longer leases and better rent escalations.
Mark Manheimer: In the first quarter, we completed over $129 million of gross investment activity at a blended cash yield of seven 5%, a 30 basis point sequential quarter over quarter increase.
Mark Manheimer: Acquisitions closed in the quarter with strong nationally recognized tenants such as tractor supply dollar general and Bridgestone Firestone to name a few.
Mark Manheimer: From a tenant perspective, 84.8% of our investments completed in the quarter were with investment-grade tenants, which included the completion of 10 new developments. Moving to our disposition activity, we sold 12 properties for $21.6 million at a 6.8% cash yield in the quarter. These properties were leased to tenants in the Dollar Store, Drugstore, Pharmacy, Discount Retail, and Convenience Store industries. At Quater End, our portfolio consists of 628 investments with an ABR of $140.3 million.
Mark Manheimer: From a tenant perspective 84, 8% of our investments completed in the quarter with investment grade tenants, which includes the completion of 10 new developments.
Mark Manheimer: Moving to our disposition activity, we sold 12 properties for $21 $6 million at a six 8% cash yield in the quarter.
Mark Manheimer: These properties were leased to tenants in the dollar store drug store pharmacy discount retail and in convenience store industries.
Mark Manheimer: At quarter end, our portfolio consisted of 628 investments with an ABR of $143 million.
Mark Manheimer: Our 88 tenants operate in 26 industries across 45 states, with 84.4% of our portfolio leased to investment grade or investment grade profile tenants. Our focus on long-term leases and high-quality tenants has provided us with a favorable lease expiration schedule. For example, subsequently, at quarter end, we renewed the one lease that was expiring in 2024 for a 12.5% increase in rent. Looking at 2025, we have 1.8% of ABR expiring, which our team is actively addressing.
Mark Manheimer: Our 88 tenants operate in 26 industries across 45 states with 84, 4% of our portfolio leased to investment grade or investment grade profile tenants.
Mark Manheimer: Our focus on long term leases and a high quality tenants has provided us with a favorable lease expiration schedule.
Mark Manheimer: For example, subsequent to quarter end, we renewed the one lease that was expiring in 'twenty 'twenty four for a 12, 5% increase in rent.
Mark Manheimer: Looking out to 'twenty 'twenty five we have one 8% of ABR expiring, which our team is actively addressing.
Mark Manheimer: We currently expect these expirations to have a positive impact on our cash flow and our portfolio weighted averagely. We believe our high credit quality and minimal lease expiration risk in the near term will provide stability for our cash flow. Turning to recent tenant headlines, I wanted to provide some commentary as it relates to Dollar Tree and their concentration within our portfolio. In March of this year, Dollar Tree, which acquired Family Dollar in 2015, announced that it intends to close several stores across the country, the bulk of which will be Family Dollar-branded stores.
Mark Manheimer: We currently expect these explorations to have a positive impact on our cash flow and our portfolio weighted average lease term, we believe or we believe our high credit quality and minimal lease exploration risk in the near term. It provides stability of our cash flows.
Mark Manheimer: Turning to recent tenant headlines I wanted to provide some commentary as it relates to dollar tree and their concentration within our portfolio.
Mark Manheimer: In March of this year, a dollar tree, who acquired family dollar in 2015 announced that they intend to close several stores across the country. The bulk of which will be family dollar branded stores. This was not a surprise to us as we have been addressing how our family dollar locations via asset sales and proactive leasing lease extensions over the past few years.
Mark Manheimer: This was not a surprise to us, as we have been addressing our Family Dollar locations via asset sales and proactive lease extensions over the past few years. With that in mind, we currently own 19 Family Dollar branded stores, which comprise 1.4% of our ABR. Two of those stores, or 13 basis points of our ABR, have a lease that expires within five years. We would also note that in the last 12 months, we extended the initial lease terms of 10 stores, with the 7 remaining stores having leases that were already long-term in nature.
Mark Manheimer: With that in mind, we currently own 19 family dollar branded stores, which comprised one 4% of our ABR.
Mark Manheimer: Of those stores were 13 basis points are already are at a lease that expires within five years.
Mark Manheimer: We would also note that in the last 12 months, we extended the initial lease terms of 10 stores with the seven remaining stores, having leases that were already long term in nature.
Mark Manheimer: As such, we are confident in the productivity of our stores, and we were pleased to see none of our locations among the 103 Family Dollar stores on the initial closure. Our relationship with Dollar Tree is strong, and we plan to continue working with them to minimize risk and maximize cash flows for our investors. Before I turn the call over to Dan, I wanted to reiterate a couple points as it relates to our balance sheet, portfolio, and tenants.
Mark Manheimer: As such we are confident in the productivity of our stores and we were pleased to see none of our locations. Among the 103 family dollar stores on the initial closure list.
Mark Manheimer: Our relationship with dollar tree is strong and we plan to continue working with them to minimize risk and maximize cash flows for our investors.
Mark Manheimer: Before I turn the call over to Dan I wanted to reiterate a couple of points as it pertains to our balance sheet portfolio and tenancy.
Mark Manheimer: While there are multiple reported cross-currents as it pertains to the health of the economy and the U.S. consumer, we believe our portfolio and tenant focus are well-positioned to weather a prolonged negative impact on consumer spending, as well as provide a robust opportunity set from which to grow should economic growth remain stable. Similarly, our low-leverage and well-capitalized balance sheet provides us with sufficient capacity to grow externally should the capital markets remain volatile, while also allowing us to remain highly competitive and opportunistic on the investment front should the environment for spread investing improve from current levels. With that, I'm going to turn the call over to Dan to discuss our key financial highlights for the quarter.
Mark Manheimer: While there are multiple reported crosscurrents as it as it pertains to the health of the economy in the U S. Consumer we believe our portfolio and tenant focus are well positioned to weather, a prolonged negative impact and consumer spending as well as to provide a robust opportunity set from which to grow should the exit economic growth remained stable.
Dan: Really our low leverage and well capitalized balance sheet provides us with sufficient capacity to grow externally should the capital markets remain volatile, while also allowing us to remain highly competitive and opportunistic on the investment front should the environment for spread investing improve from current levels.
Mark Manheimer: That I'm going to turn the call over to Dan to discuss our key financial highlights for the quarter.
Dan: Thanks Mark.
Daniel Paul Donlan: Looking at our first quarter earnings results, we report a net income of $1 million, or $0.01 per deleted share. Core FFO for the first quarter was $22.5 million, or $0.30 per diluted share, and AFFO was $22.9 million, or $0.31 per diluted share, which was a 3.3% increase over last year. Turning to the expense front, we saw total G&A x one-time severance payments decline 1% year-over-year to $4.85 million, while our cash G&A x one-time severance payments declined 11% year-over-year to $13.4 million.
Dan: Looking at our first quarter earnings results, we reported net income of $1 million or one cents per diluted share.
Daniel Paul Donlan: <unk> for the first quarter was 22, and a half million dollars or <unk> 30 per diluted share and <unk> was $22 $9 million or <unk> 31 per diluted share, which was a three 3% increase over last year.
Daniel Paul Donlan: Turning to the expense front, we saw total G&A ex one time severance payments declined 1% year over year to $4 $85 million, while our cash G&A ex one time severance payments declined 11% year over year to $13 4 million.
Daniel Paul Donlan: In addition, with our total quarterly G&A, X1 times severance payments representing 13% of total revenues in the quarter versus 17% of total revenues in the prior year quarter, our G&A continues to steadily rationalize relative to our revenue base.
Daniel Paul Donlan: In addition, with our total quarterly G&A ex one time severance payments, representing 13% of total revenues in the quarter versus 70%, 17% of total revenues in the prior year quarter. Our G&A continues to steadily rationalized relative to our revenue base.
Daniel Paul Donlan: Turning to the balance sheet, our total adjusted net debt, which includes the impact of all forward equity as of quarter end, was $395.1 million. Our weighted average debt maturity is 3.9 years, and our weighted average interest rate is 4.36%, including extension options which can be exercised at our discretion. We have no debt maturing until January 2027.
Daniel Paul Donlan: Turning to the balance sheet, our total adjusted net debt, which includes the impact of all foreign equity as of quarter end was $395 1 million.
Daniel Paul Donlan: Our weighted average debt maturity is three nine years and our weighted average interest rate is 436%.
Daniel Paul Donlan: Including extension options, which can be exercised at our discretion, we have no debt maturing until January 2027.
Operator: During the quarter, please note that we drew the remaining $100 million on our 2029 term. As Mark mentioned, we were active on the capital markets front this quarter. Utilizing the constructive matchwork backdrop that existed in early January, we sold over $198 million of forward equity at $18 per share in a follow-on offer. Additionally, we have remained optimistic with our ATM program, with year-to-date forward sales of $31 million through the end of April, including $2 million sold in March.
Daniel Paul Donlan: During the quarter. Please note that we drew the remaining $100 million on our 2029 term loan.
Operator: As Mark mentioned, we were active on the capital markets front this quarter.
Operator: Utilizing the constructive macro backdrop that exist in early January we sold over $198 million of Ford equity at $18 per share and a follow on offering. Additionally, we remain opportunistic with or ATM program with year to date forward sales of 31 million through the end of April including 2 million sold in March.
Operator: At quarter end, our liquidity was $638.1 million, which consisted of $22.3 million of cash on hand, $324.9 million available on a revolving credit facility, and $290.9 million of unsettled forward transactions at quarter end. Including the $28.7 million of unsettled equity from our April ATM activity, our pro forma liquidity at quarter end was $666.82. Turning to leverage, our adjusted net debt to annualized adjusted EBITDA RE was 3.1 times at quarter end, which remains well below our targeted leverage range of 4.5 to 5.5 times.
Operator: At quarter end, our liquidity was $638 1 million, which consisted of $22 3 million of cash on hand, $324 9 million available on our revolving credit facility and $299 million of unsettled forward equity.
Operator: Including the $28 7 million or one set of equity from our April ATM activity, our pro forma liquidity at quarter end was $666 8 million.
Operator: Turning to leverage our adjusted net debt to annualized adjusted EBITDA was three one times at quarter end, which remains well below our targeted leverage range of four five to five five times.
Operator: Furthermore, adjusting for April ATM activity, our pro forma leverage declines to $2.9 million. Given this forward equity cushion, we can modestly exceed our 2023 net investment activity level and still end the year below the low end of our targeted leverage range with no additional equity required this year. Moving on to guidance, we're increasing the low end of our 2024 AFO per share guidance to a new range of $1.25 to $1.28. In addition, we continue to expect cash G&A to range between $13.5 and $14.5 million, which is exclusive of transaction costs and one-time severance.
Operator: Anymore adjusting for April ATM activity, our pro forma leverage declined to $2 9 million.
Operator: Given this forward equity cushion, we can modestly exceed our 2023 net investment activity level and still end the year below the low end of our targeted leverage range with no additional equity required this year.
Operator: Moving onto guidance, we are increasing the low end of our 2024 <unk> per share guidance to a new range of $1 25 to $1 28.
Operator: In addition, we continue to expect cash G&A to range between 13, and a half and $14 5 million, which is exclusive of transaction costs and one time severance payments.
Operator: Lastly on April 20, <unk>, the board declared a quarterly cash dividend of 25 cents per share.
Operator: Lastly, on April 23rd, the board declared a quarterly cash dividend of $0.205 per share. The dividend will be payable on June 14th to shareholders of record as of June 3rd. Based on the dividend amount, our AFFO payout ratio for the first quarter was 66%. With that, Operator, we will now open the line for questions.
Operator: The dividend will be payable on June 14th to shareholders of record as of June 3rd.
Operator: Based on the dividend amount, our <unk> payout ratio for the first quarter was 66%.
Operator: With that operator, we will now open the line for questions.
Operator: Yeah.
Speaker Change: Thank you.
Operator: Ladies and gentlemen, we will now be conducting a question and answer session. If you would like to ask a question, please press star and 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start button. Ladies and gentlemen, we will wait for a moment while we poll you for questions. Our first question is from the line of Haendel Juste with Mizzou Securities; please go ahead.
Speaker Change: Ladies and gentlemen, we will.
Speaker Change: We'll now be conducting a question and answer session if you'd like to ask a question. Please press star and one audio telephone keypad.
Haendel Emmanuel St. Juste: A confirmation tone will indicate your line is in the question queue.
Haendel Emmanuel St. Juste: You May press Star two if you would like to remove your question from the queue.
Operator: All participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Operator: Ladies and gentlemen, we will wait for a moment, while we poll for questions.
Haendel Emmanuel St. Juste: Our first question is from the line of Handel St Juste with Mizuho Securities. Please go ahead.
Haendel Emmanuel St. Juste: Hey, good morning to you guys. Good morning.
Haendel Emmanuel St. Juste: Hey, good morning to you guys.
Haendel Emmanuel St. Juste: Good morning.
Haendel Emmanuel St. Juste: So, uh... My first question is, you know, how should we interpret or extrapolate from the first-quarter activity and what it means for your capital deployment over the near-term. You've mentioned a few times that you can continue to buy at a sustainable pace without getting above your leverage metrics. But I'm curious how you should be thinking about the cap rates and spreads here. Are they indicative of where your cost of capital allows you to buy I-grades in the current market?
Haendel Emmanuel St. Juste: So.
Haendel Emmanuel St. Juste: My first question I guess is on how should we appropriate for what we can extrapolate from the first quarter activity and what it means to your capital deployment over the near term you've mentioned a few times that you can.
Haendel Emmanuel St. Juste: To buy renewable pace without getting above your leverage metrics, but I'm curious, how we should be thinking about.
Haendel Emmanuel St. Juste: Cap rates and spreads here are they indicative of where your cost of capital as you buy high grade in the current market.
Haendel Emmanuel St. Juste: Yeah.
Mark Manheimer: Bye-bye.
Speaker Change: Yeah sure I mean, I think with our current cost of capital and.
Mark Manheimer: Yeah, sure. I mean, with our current cost of capital and the opportunity set that we're seeing, I think you can expect us to continue to deploy at a pretty, pretty similar pace. As far as you know, what to interpolate out of what we've acquired. So far this year, you know, I think, you know, it looks a lot like what we've acquired over the past, you know, several quarters. Investment grade spreads and non investment grade spreads have certainly gotten a lot more attractive than what they were.
Mark Manheimer: The opportunity set that we're seeing I think you can expect us to continue to deploy it at a pretty pretty similar pace.
Mark Manheimer: As far as what to interpret laid out of what we've acquired.
Mark Manheimer: So far this year.
Mark Manheimer: It looks a lot like what we've acquired over the past several quarters.
Mark Manheimer: You know investment grade spreads in non investment grade spreads have certainly gotten a lot more attractive than what they were historically on the non investment grade side.
Mark Manheimer: Historically, you know, on the non investment grade side, we've, we've really focused on the very healthy non investment grade tenants and industries that aren't facing a lot of headwinds with real estate that we think is, is fungible and rents that we think are replaceable, whether they be non investment grade or just investment grade. I think you may see, you know, some more opportunities on Sally's backside for the remainder of the year, certainly in the second quarter. We see a few of those that we think are pretty attractive.
Mark Manheimer: We've really focused on the very healthy non investment grade tenants and industries that aren't facing a lot of headwinds with real estate that we think is is fungible.
Mark Manheimer: And rents that we think are replaceable, whether they'd be non investment grade.
Mark Manheimer: Or just anything we're investment grade profile.
Mark Manheimer: You may see some more opportunities on the sale leaseback side for the remainder of the year or certainly in the second quarter, we see a few of those that.
Mark Manheimer: That we think are pretty attractive, we'll see if we get there on pricing, but I think you could see up to as much as half of what we do.
Mark Manheimer: We'll see if we get there in terms of pricing, but I think you could see up to, you know, as much as half of what we do in the second quarter kind of fit some of that bucket. But, you know, really seeing a lot more attractive opportunities on the investment grade side and the, you know, what I call kind of the healthy non-investment grade side.
Mark Manheimer: In the second quarter kind of fit some of that bucket.
Mark Manheimer: But we're really seeing a lot more attractive opportunities on the investment grade side and the what I call kind of the healthy non investment grade side.
Daniel Paul Donlan: Yeah, and Haendel, it's Dan. As we think about any kind of future equity raising or debt raising, look, we've raised what we want to do for the year and, frankly, through the first quarter. So we can afford to be fairly patient and see if the market comes to us, whether it's on the capital side or if the opportunity set gets more attractive in terms of higher yields. So you know, that's why we are where we are with the capital position; we want to be able to be opportunistic if something comes available, and we have plenty of time to write out whatever this capital market environment may be over the next three to four quarters.
Mark Manheimer: Yeah and handle it stand as we think about kind of future equity raising or debt raising look we've raised.
Daniel Paul Donlan: I wanted to do for the for the year and frankly through the first quarter. So we have we can be we can afford to be fairly patient and see if the market comes to us whether it's on the capital side or with the opportunities that gets more attractive in terms of higher yields so.
Daniel Paul Donlan: That's why we are where we are with the with the capital position is we want to be able to be opportunistic if something comes available.
Daniel Paul Donlan: We've got plenty of time to write out whatever.
Daniel Paul Donlan: This capital markets environment may be over the next.
Daniel Paul Donlan: 3% to four quarters.
Daniel Paul Donlan: I appreciate that. Maybe as a follow-up, just a bit more on how you're thinking about your ability to achieve your target, you know, 75 or 100 basis points of spread here. Should we, I guess, expect you to continue using maybe more term loans versus, you know, kind of given where the spot cost of a 10-year unsecured debt here is?
Haendel: Got it I appreciate that maybe the follow up just a bit more on how you're thinking about your ability to.
Daniel Paul Donlan: To achieve your target, 75% to 100 basis points of spread here should.
Daniel Paul Donlan: Should we I guess expect you to continue using maybe more term loan versus kind of given where the spot cost of 10 year unsecured debt here.
Daniel Paul Donlan: Yeah, I mean, look, right now, at just north of $2 billion in gross assets, you know, looking to the 10-year market is not nearly as efficient as looking to the bank term loan market. That being said, you know, where we are today with all the forward equity that we have, you know, $320 million; you think about the pace that we're on, and you know, our near-term capital needs will easily be able to be covered by the forward equity as well as our credit facility.
Daniel Paul Donlan: Yeah, I mean look right now at just north of 2 billion and gross assets.
Daniel Paul Donlan: Looking to the 10 year market is not nearly as efficient is doing is looking to the bank term loan market.
Daniel Paul Donlan: That being said, where we are today with all the forward equity that we have $320 million you think about the pace that we're on.
Daniel Paul Donlan: Our near term capital needs will easily be able to be covered by the forward equity as well as our credit facility. We really don't look we're really not looking to do anything.
Daniel Paul Donlan: So, you know, we're really not looking to do anything, you know, longer-term in nature until we get out to kind of early to mid-2025, and we'll just have to see where the market is for term loans, for, you know, 7-year private placements, 10-year private placements, whatever it may be. You know, Thankfully, we have the capital right now not to have to, you know, concern ourselves with that right
Daniel Paul Donlan: Longer term in nature until we get out to kind of our early to mid 2025, and we'll just have to see where the market is for term loans for seven year private placement 10 year private placements whatever it may be.
Daniel Paul Donlan: I think Lee we have the capital right now not to have to concern ourselves with that right now.
Speaker Change: Got it got it my second question is on big lots.
Daniel Paul Donlan: Wanted to check in there or not in your top 10 list anymore I'm curious if you're selling with the market is.
Haendel Emmanuel St. Juste: Got it, got it. My second question's on big lots. I just wanted to check in. They're not near the top 10 tenant lists anymore. I'm curious if you're selling, what the market is, and just generally where you'd like that exposure to get to. Thanks.
Speaker Change: And just generally where you'd like that exposure to get too. Thanks.
Speaker Change: Yes, sure Thanks and Bill.
Haendel Emmanuel St. Juste: Yes.
Haendel Emmanuel St. Juste: We continue to monitor what's going on with Big lots closed 48 stores last year, none of none of which are ours. They also opened another 15.
Mark Manheimer: Yeah, sure. Thanks, Haendel.
Mark Manheimer: Yeah, no, like, I mean, you know, we continue to monitor what's going on with Big Lots. You know, they closed 48 stores last year, none of which are ours. They also opened another 15.
Speaker Change: It looks like they've finally, right size inventories starting to now finally see improvement in margins there.
Speaker Change: Are there cost cutting appears to be helping but at the end of the day, we really need to kind of see that sales bottom out and hopefully start to increase for the full.
Mark Manheimer: You know, looks like they've finally right-sized inventories and are starting to now finally see improvement margins. Their cost cutting appears to be helping. But at the end of the day, we really need to kind of see the sales bottom out and hopefully start to increase for us to have full confidence in their turnaround. So, you know, we're really relying on the strong real estate that we've got left after selling off a handful of those locations. You know, now we've got locations with below-market rents and attractive infill retail corridors. And so that's really our ultimate, ultimate backstop.
Mark Manheimer: Full confidence in their turnaround so we're really relying on the strong real estate that we've got left after selling off a handful of those locations now we've got locations with below market rents and attractive infill retail corridors and so that's really our ultimate ultimate backstop.
Mark Manheimer: But we're we're open to potentially selling some more we just don't feel like we have have to be price takers.
Mark Manheimer: With how attractive the real estate is that we're left with their.
Mark Manheimer: There continues to be a market for those assets.
Haendel Emmanuel St. Juste: But we're, you know, we're open to potentially selling some more. We just don't feel like we have to be price takers, you know, with how attractive the real estate is that we're left with. There continues to be a market for those assets. I think, you know, we'd really like to see the cap rates be a little bit more aggressive for us to pull the trigger. But we've got a couple of dealers out in the market, so I would not be surprised to see us move a couple more. Great, I appreciate it.
Mark Manheimer: I think we'd really like to see the cap rate would be a little bit more aggressive versus the pull the trigger but we've got a couple of feelers out in the market. So I would not be shocked to see us.
Haendel Emmanuel St. Juste: Move a couple more.
Speaker Change: Great appreciate the color guys. Thank you.
Haendel Emmanuel St. Juste: Okay.
Haendel Emmanuel St. Juste: Okay.
Speaker Change: Thank you.
Haendel Emmanuel St. Juste: Our next question is from Smedes Rose with Citibank. Please go ahead.
Speaker Change: Alright, thank you.
Haendel Emmanuel St. Juste: Since your last call with investors.
Haendel Emmanuel St. Juste: Narrative is kind of just.
Haendel Emmanuel St. Juste: Great. I appreciate the call, guys. Thank you.
Haendel Emmanuel St. Juste: Higher for longer has taken hold and I was just wondering if you could talk about what youre seeing in terms of.
Operator: Our next question is from Smedes Rose with Citibank. Please go ahead.
Smedes Rose: Hi, thank you. I think since your last call with investors, there's this narrative of kind of just, you know, higher for longer that has taken hold. And I was just wondering if you could talk about what you're seeing in terms of sellers, pricing, do you think there are more people just retreating at this point, given what I assume is an upward bias in cap rates, or maybe just talk a little bit about the landscape of what you're seeing?
Smedes Rose: Seller pricing do you think there's more people just retreating at this point given what I assume is an upward bias in cap rates or maybe just talk a little bit about the landscape of what you are seeing.
Speaker Change: Yes sure.
Speaker Change: Certainly an interesting.
Smedes Rose: Market.
Smedes Rose: It does feel like the.
Smedes Rose: The expectations.
Smedes Rose: Have been muted on a lot of a lot of cuts coming we started the year.
Mark Manheimer: Yeah, sure. It's certainly an interesting market. It does feel like expectations have been muted on a lot of cuts coming. We started the year with the expectation, at least from the market, that we'd see six or seven cuts during the year, which is largely why we raised some equity because we kind of didn't see the macro quite the same way. But the seller market at that point in time was still really kind of banking on those rate cuts coming. Now, obviously, I think the consensus is that we might get one in December or nothing at all.
Smedes Rose: With the expectation at least from the market that wed see call six or seven cuts during the year, which is largely why we raised some equity because we we kind of didn't see the macro quite quite the same way.
Mark Manheimer: But the seller market at that point in time, we're still really kind of banking on.
Mark Manheimer: Those rate cuts coming and obviously I think.
Mark Manheimer: The consensus is that we might get one in December or nothing at all.
Mark Manheimer: And so I think there is there has been a little bit more of an acceptance that we could be in a higher for longer market, we've seen a lot more.
Mark Manheimer: And so I think there's been a little bit more of an acceptance that we could be in a higher for longer market. We've seen a lot more opportunities than I would have expected. And that really keeps a lot of our competition on the sidelines. It allows us to be very selective, allows us to really negotiate terms the way we like to see them, where we're not really competing against other people that are trying to buy the assets that we are.
Mark Manheimer: Actually opportunities than I would've expected.
Mark Manheimer: And that really keeps a lot of our competition on the sidelines that allows us to be very selective allows us to really negotiate terms.
Mark Manheimer: The way, we like to see them, where we're not really competing against other people that are that are trying to buy the assets that we that we are so.
Mark Manheimer: Yes.
Mark Manheimer: Cap rates have continued to move up.
Mark Manheimer: What we're seeing in the second quarter, I think will likely look a lot like the first quarter.
Mark Manheimer: So yeah, I mean, cap rates have continued to move up. What we're seeing in the second quarter, I think, will likely look a lot like the first quarter. But yeah, I think there has been a little bit more of an acceptance that the Fed's not going to turn around and just start cutting rates and bring us back to 2021.
Mark Manheimer: But yes, I think there has been a little bit more of an acceptance that.
Mark Manheimer: The fed is not going to turnaround and just start cutting rates and bring us back to 2021.
Speaker Change: I'm, sorry, you said second quarter cap rates should be kind of in line with what you saw in the first quarter or do you think it'll be the sequential increase will be similar.
Mark Manheimer: I think the cap rates will be similar in the second quarter than the first we still havent, depending on what closes we're still sourcing a few more opportunities in the second quarter, but kind of what we have in the pipeline today looks pretty similar.
Mark Manheimer: So, sorry, you said second quarter cap rates should be kind of in line with what you saw in the first quarter, or do you think it'll be, or did you mean the sequential increase will be similar? You know, I think the price will be similar in the second quarter.
Mark Manheimer: Although the lease term now we're getting a much longer lease terms with better better rental increases.
Mark Manheimer: You know, I think the rates will be similar in the second quarter than in the first. Yeah, we still haven't, you know, depending on what closes, you know, we're still sourcing a few more opportunities in the second quarter, but kind of what we have in the pipeline today looks pretty similar. Although the lease term, we're getting a much longer lease term with better rental increases.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you our next.
Mark Manheimer: Question is from Greg Mcginniss with Scotia Bank. Please go ahead.
Speaker Change: Hey, good morning.
Speaker Change: Acquisition side I'm, just curious as we kind of expect to see.
Speaker Change: More of the same in terms of what you are looking to target from a concept and industry standpoint or are there any kind of new concept industries out there that given your cost of capital, maybe you're now able to address or where cap rates have changed youre now able to address.
Operator: Thank you. Our next question is from Greg McGinniss with Scotiabank. Please go ahead.
Greg Michael McGinniss: Good morning. On the acquisition side, I'm just curious, do we kind of expect to see more of the same in terms of what you're looking to target from a concept and industry standpoint, or are there any kind of new concept industries out there that, given your cost of capital, maybe you're now able to address, or where cap rates have changed, you're now able to address, or I guess just any changes in terms of the industries that you're
Greg Michael McGinniss: I guess, just any changes in terms of industries that you're targeting.
Speaker Change: Yes, sure and so you've seen.
Greg Michael McGinniss: Specific mostly to dollar generally assume that concentration move.
Greg Michael McGinniss: Move up quite a bit a lot of that was funding developers that we committed to.
Greg Michael McGinniss: Last year, So I think we've got maybe another.
Greg Michael McGinniss: Call it four or five months left of kind of kind of funding some of that.
Greg Michael McGinniss: That's going to be a little bit less than what <unk> seen.
Mark Manheimer: Yeah, sure. And so I mean, specific mostly to the dollar generally, you've seen that concentration move up quite a bit; a lot of that was funding developers that we committed to, you know, last year. So I think we've got maybe another, you know, call it four or five months left of kind of funding some of that. But that's going to be a little bit less than what you've seen in the past. You will see a few new tenants come into the portfolio. We do think it's important for us to increase the diversification, not only in the top 20, but just, you know, just broadly across the portfolio.
Greg Michael McGinniss: In the past you will see a few new tenants.
Mark Manheimer: Come into the portfolio, we do think it's important for us to.
Mark Manheimer: To increase the diversification not only in the top 20.
Mark Manheimer: Just broadly across the portfolio.
Mark Manheimer: And we are seeing.
Mark Manheimer: Some attractive sale leasebacks and other opportunities that we had in the past there is a few that we've been active with on the development side that maybe haven't popped into our top Tony but are kind of getting close there and.
Mark Manheimer: And the collision space. So I think you will see a few new tenants.
Mark Manheimer: And of the portfolio that I think.
Mark Manheimer: And we are seeing, you know, some attractive sales specs and other opportunities that we have had in the past. There's a few that we've been active with on the development side that, you know, maybe haven't popped into our top 20, but are kind of getting close there in the collision space. So I think you will see a few new tenants, you know, pop into the portfolio that we find to be very attractive, and cap rates would have been, you know, much lower, call it, 18-24 months ago that we would not have been able to put in the portfolio.
Mark Manheimer: We find to be very attractive and cap rates would have been much lower call. It 18 to 24 months ago that we would not have been able to open the portfolio.
Speaker Change: Okay, and then on that development side I believe you previously mentioned that you've been able to negotiate escalators into some of those development deals that previously didn't have them have there been any other changes on the on the leasing side in terms of being able to build and escalators or different terms as the financing market has changed.
Mark Manheimer: Yes.
Mark Manheimer: Not much of a change quarter over quarter, but yes, I mean, we're getting better rent escalators in leases.
Mark Manheimer: Okay, and then on the development side, I believe you previously mentioned that you've been able to negotiate escalators into some of those development deals that previously didn't have them. Have there been any other changes on the leasing side in terms of being able to build in escalators or different terms as the financing market has changed?
Mark Manheimer: Historically had been flat, so thats driven a lot of our capital recycling program.
Mark Manheimer: Bringing in some of those tenants with now longer leases with better rent bumps and then turnaround and selling.
Mark Manheimer: Yeah, I mean, I think, you know, not much of a change quarter over quarter, but yeah, I mean, we're getting, you know, better rent escalators in leases that historically have been flat. So that's driven a lot of our capital recycling program, you know, bringing in some of those tenants with now longer leases with better rent bumps and then turning around and selling, you know, some of the flat leases with less term out of the portfolio and being able to do that, you know, slightly accretively, has been something that we focused on, but no real big change quarter over quarter.
Mark Manheimer: The flat leases with less term.
Mark Manheimer: Out of the portfolio and being able to do that slightly accretively.
Mark Manheimer: As has been something that we've focused on.
Mark Manheimer: But no real big change quarter over quarter.
Speaker Change: Okay, Thanks and final for me.
Speaker Change: Apologies if you've already addressed this but have you guys talked about bad debt expectations built into guidance for the year.
Mark Manheimer: Yes, we did on the last call I think as we sit here today, we're still on an annualized basis, we're still modeling somewhere between 20 to 25 basis points at the high end of our <unk> guidance range.
Greg Michael McGinniss: Okay, thanks, and final for me. Apologies if you've already addressed this, but have you guys talked about bad debt expectations built into guidance for the air? Yeah, we did on the last call, I think as we sit here.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you our.
Greg Michael McGinniss: Next question is from the line of Alex Fagan with Baird. Please go ahead.
Mark Manheimer: Yeah, we did on the last call. I think as we sit here today, you know, we're still on an annualized basis. We're still modeling somewhere between 20 to 25 basis points at the high end of our AFFO guidance range.
Speaker Change: Hi, Thank you for taking my questions. This morning first one for me is can you just talk about what are the categories that are in the assets held for sale.
Operator: Our next question is from the line of Alec Feygin with Baird. Please go ahead.
Alec Gregory Feygin: Yes, it's a pretty big mix.
Alec Gregory Feygin: Hi, thank you for taking my question this morning. The first one for me is, can you just talk about what the categories that are in the assets held for sale are?
Alec Gregory Feygin: Yes, we've got some of the big lots are in there.
Alec Gregory Feygin: And a lot of the dollar stores that I mentioned.
Alec Gregory Feygin: We're we're kind of recycling through to improve the escalators.
Mark Manheimer: Yeah, it's a pretty big mix. You know, some of the big lots are in there. And, you know, a lot of the dollar stores that, you know, I mentioned, where we're kind of recycling through to improve the escalators, but it's a pretty broad mix of property types.
Mark Manheimer: Pretty broad mix of.
Mark Manheimer: A property type.
Speaker Change: Got it thank you.
Mark Manheimer: Second one is may provide some color on the current in place rents for the 19 family dollar stores in the portfolio and where you think the market is at for those properties. If you did need to release them.
Alec Gregory Feygin: Got it. Thank you. Second one is, could you please provide some color on the current in-place rents for the 19 family dollar stores in the portfolio and where you think the market is at for those properties if you did need to release them?
Alec Gregory Feygin: Yes, I mean, youre talking about 90 to $100000 per property. So an annual rents of very inexpensive rents that we think are largely replaceable that being said.
Mark Manheimer: Yes, I mean, you're talking about, you know, $90,000 to $100,000 per property, so an annual rent, so very inexpensive rents that we think are largely replaceable. That being said, you know, we've worked very closely with the tenant there to understand the profitability and their commitment to our site, so we still feel good that there's, you know, they could always close a couple if they're going to close as many stores as they're talking about, but, you know, certainly pleased to see on their first list of 103 locations that none of ours were on that list.
Mark Manheimer: We've worked very closely with with the tenant there and understanding the profitability and their commitment to our sites. So we still feel good.
Mark Manheimer: That there is.
Mark Manheimer: They could always closed a couple of dollars that are going to close as many sources as they're talking about but certainly pleased to see.
Mark Manheimer: Their first list of 103 locations that none of ours were on that list.
Mark Manheimer: But that being said, we do think that a lot of ours are pretty infill locations than we would have a lot of interest from.
Mark Manheimer: But that being said, you know, we do think that, you know, a lot of ours are pretty infill locations, and we would have a lot of interest from, you know, various different tenants to take those assets at similar rents or potentially even higher rents. Got it. That's helpful.
Mark Manheimer: Various different tenants to take those assets at similar rents or potentially even higher ends.
Mark Manheimer: Got it that's helpful. Thank you.
Speaker Change: Thank you.
Mark Manheimer: Ladies and gentlemen, a reminder, if you wish to ask a question. Please press star and one.
Alec Gregory Feygin: Got it. That's helpful. Thank you.
Operator: Ladies and gentlemen, a reminder, if you wish to ask a question, please press star and 1. Our next question is from the line of Joshua Denalang with Bank of America. Please go ahead.
Alec Gregory Feygin: Our next question is from the line of Joshua <unk> with Bank of America. Please go ahead.
Joshua Denalang: Hi, This is for all granite on behalf of Josh.
Joshua Denalang: Hi, this is Farrell Granath on behalf of Josh.
Joshua Denalang: Wanted to know if you could touch on.
Farrell Granath: Yeah, sure. I mean, you know, I'll take the first piece, which is, you know, we, you know, our most recent quarter, we're called, you know, seven and a half. I think you're going to kind of expect that to be similar. In the second quarter, you know, we really only have visibility going out, you know, into the second quarter, and, you know, not as far as
Joshua Denalang: What youre seeing in investment spreads relative to where you can deploy capital today.
Farrell Granath: Yeah, sure I mean ill.
Speaker Change: I'll take the first piece.
Farrell Granath: Which is.
Farrell Granath: Most recent quarter over seven five I think youre going to kind of expect that to be similar.
Farrell Granath: In the second quarter, we really only have visibility going out into the second quarter and not as far as getting into the third so.
Farrell Granath: Tough to project.
Mark Manheimer: Great. And I know you already touched on Big Lots and Family Dollar. I was curious if there's any other color on the tenant watch list.
Farrell Granath: Beyond that but certainly gives us a pretty healthy spread off of where we raise capital earlier this year.
Mark Manheimer: Great and I know you already touched on big lots in family dollar I was curious if there's any other color on tenant watch list.
Mark Manheimer: Yeah, sure. I mean, nothing on the watch list, you know, to give you a little bit more color than that. I mean, we are focused on, you know, the product mix of our tenants, you know, how discretionary that product mix is, and who their customer is. And if they're kind of the lower income, you know, type consumer, that's really where we're seeing pressure. You know, the consumer overall is healthy. And so you see a lot of those government numbers come out that look pretty healthy, but it's, you know, kind of been a tale of two cities.
Mark Manheimer: Yes, sure I mean, nothing on the watch list, but.
Mark Manheimer: To give you a little bit more color than that I mean, we are focused on.
Mark Manheimer: The product mix product mix of our tenants, how discretionary that product mix is and who their customer is and if there are kind of on the lower income.
Mark Manheimer: Type consumer that's really where we're seeing pressure.
Mark Manheimer: <unk> overall is healthy.
Mark Manheimer: And so you see a lot of those government numbers come out that look pretty healthy, but it's kind of been a tale of two cities.
Mark Manheimer: You know, we're the kind of, you know, middle and upper end consumer is doing well, but the lower end consumer is certainly struggling. And you see that with, you know, some tenants having trouble passing on inflationary costs to the consumers. I mean, Walgreens is, you know, has been very topical.
Mark Manheimer: Where the kind of.
Mark Manheimer: Middle and upper.
Mark Manheimer: Consumer is doing well, but the lower end consumer is certainly struggling and you see that with.
Mark Manheimer: Some tenants, having trouble passing on inflation inflationary costs onto the consumers I mean Walgreens.
Mark Manheimer: That's why you've really seen their gross margins kind of come in and, you know, from kind of 22, 23% to 18 plus percent. So that's, you know, really impacting their cash flow. And so we're really making sure that we're getting out ahead of those types of risks and then looking at, you know, the balance sheets of our tenants. Fortunately, there's really not much in there that is of concern.
Mark Manheimer: It has been topical thats why you have really seen their gross margins kind of come in from 'twenty, two 'twenty, 3% 18, plus percent, so thats really impacting their cash flow and so we're really making sure that we're getting out ahead of those types of risks.
Mark Manheimer: And then looking at the.
Mark Manheimer: The balance sheets of our tenants Fortunately theres really not much in there that is of concern.
Mark Manheimer: But you know, when a lot of these tenants have to refinance their debt, it's going to be a lot more expensive than it was if they had, you know, financed themselves a few years ago. And even just the ability to access debt has been, is likely to be more challenging for some of these tenants. So those are the things that we're focused on. But yet, nothing really is popping up that rises to the level of getting on our watch list at this.
Mark Manheimer: But a lot of these tenants have to refinance their debt is going to be a lot more expensive than it was if they.
Mark Manheimer: Finance themselves a few years ago, and even just the ability to access that has been and is likely to be more challenged for some of these tenants. So that's those are the things that we're focused on.
Mark Manheimer: But yes, nothing really is popping up that rises to the level of getting on our watch list at this point.
Speaker Change: Okay and I was also curious is there anything in the market that you are waiting to see.
Farrell Granath: Okay, and I was also curious, is there anything in the market that you're waiting to see, or what's maybe leading to some hesitancy on providing net investment guidance?
Mark Manheimer: Or maybe.
Mark Manheimer: Maybe lean into some hesitancy on providing a net investment guidance.
Farrell Granath: Yes, I mean, I, just think theres been a lot of volatility.
Farrell Granath: In the markets over the past couple of years, obviously, and then we really wanted to see cap rates move up obviously, making some progress there.
Mark Manheimer: Yeah, I mean, I think there's been a lot of volatility in the markets over the past couple of years, obviously. And then, you know, we really wanted to see cap rates move up. Obviously, we're making some progress there. We really wanted to, early in the year, but we really didn't think it made a lot of sense to come up with a number and then, you know, potentially change it, you know, one or two times over the year.
Mark Manheimer: We really wanted to early in the year, we really didn't think it made a lot of sense to come out with a number and then potentially change at one or two times over the year, but I think just overall for acquisitions, which we haven't given guidance on that but I think a good way to think about that is.
Mark Manheimer: If the environment persists in the similar manner, you can expect us to deploy capital.
Mark Manheimer: But I think just overall for, you know, acquisitions, which we haven't given, you know, guidance on that, but I think a good way to think about that is, you know, if the environment persists in a similar manner, you can expect us to deploy capital at a similar quantum that we did last year. Okay, thank you so much.
Mark Manheimer: At a similar quantum that we did last year.
Mark Manheimer: Okay. Thank you so much.
Speaker Change: Thank you.
Mark Manheimer: Our next question is from the line of thought Thomas with Keybanc capital markets. Please go ahead.
Speaker Change: Hi, Good morning. This is <unk> on for Todd Thomas Apologies. If you discussed this already but could you discuss your current investment pipeline and where it stands just thinking about <unk> and <unk> volumes.
Operator: Thank you. Our next question is from the line of Todd Thomas with KeyBank Capital Markets. Please go ahead.
Todd Michael Thomas: Yeah sure I mean, I think the volumes will probably be.
Todd Michael Thomas: Hi, good morning. This is Intaranak Choudhury on behalf of Todd Thomas. Apologies if you discussed this already, but could you discuss your current investment pipeline and where it stands, just thinking about 2Q and 3Q volumes?
Todd Michael Thomas: <unk> continued to be spread fairly evenly over the year if market conditions continue to be similar.
Todd Michael Thomas: And so I don't think youll see much of a change in yield.
Mark Manheimer: Yeah, sure. I mean, I think the volumes will probably, you know, continue to be spread fairly evenly over the year if, you know, market conditions continue to be similar. And so I don't think you'll see much of a change in yield or, you know, or how much we deploy in the second quarter or third quarter. It's probably a little bit too far out for us to figure out. But you may see a couple, you know, chunky deals that are in the sale-e-spec category and some that we're developing a little bit more or funding development for a little bit more than we have in the past.
Todd Michael Thomas: Or.
Mark Manheimer: Yes.
Mark Manheimer: Or how much we deploy in the second quarter third quarter, probably a little bit too far out for us to figure out, but you may see a couple chunky deals that are in the sale leaseback category and some that were developing a little bit more funding development for a little bit more than we have in the past.
Speaker Change: Okay got it and on disposition pricing are you still able to achieve a sub seven cap rate or our disposition cap rates trending higher.
Mark Manheimer: They are trending higher a little bit on the margin.
Todd Michael Thomas: Okay, got it. And on disposition pricing, are you still able to achieve a sub-7 cap rate, or are disposition cap rates trending higher?
Mark Manheimer: And I think depending on what we sell is going to.
Todd Michael Thomas: To drive that a little bit.
Mark Manheimer: They're trending higher a little bit on the margin. And I think, you know, depending on what we sell is going to drive that a little bit. But I, you know, cap rates have moved up a little bit. I think really what the issue has been on the disposition side, and us getting, you know, kind of, figuring out how we want to approach dispositions is that there just aren't as many buyers.
Speaker Change: Cap rates have moved up a little bit I think really what the issue has been on the.
Mark Manheimer: On the disposition side and us getting kind of figuring out how we want to approach dispositions is there just aren't as many buyers and so that helps us on the acquisition side, where we're not really competing with anybody.
Mark Manheimer: For acquiring the properties that we want to acquire but then on the disposition side. It takes a little bit longer than the buyers have been a bit of a little bit flake ear than they've been in the past. So that's something that we're just making sure that we're.
Mark Manheimer: And so that helps us on the acquisition side, where, you know, we're not really competing with anybody for acquiring the properties that we want to acquire. But then on the disposition side, you know, it takes a little bit longer, and the buyers have been a little bit flakier than they've been in the past. So that's, you know, something that we're just making sure that we're, you know, staying on top of costs and not incurring a bunch of dead deal costs.
Mark Manheimer: On top of cost and not incurring a bunch of dead deal costs, but cap.
Mark Manheimer: Cap rates have moved up a little bit on dispositions, but I think what we're looking at potentially selling in this quarter.
Mark Manheimer: Very likely it could be below 7%.
Speaker Change: Okay got it thank you.
Speaker Change: Thank you.
Mark Manheimer: But cap rates have moved up a little bit on dispositions, but I think, you know, what we're looking at potentially selling in this quarter could very likely be below $7,000. Okay. Got it. Thank you.
Mark Manheimer: As there are no further questions I now hand, the conference till about two Mark Manheimer for his closing comments.
Speaker Change: Well, Thank you Ed and thank you everyone for joining really appreciate the support and have a great day.
Speaker Change: Thank you the conference off net suite Caulk has now concluded. Thank you for your participation you may now disconnect your lines.
Todd Michael Thomas: As there are no further questions, I now hand the conference over to Mark Manheimer for his closing comments. Mark? Mark Manheimer Well, thank you everyone.
Todd Michael Thomas: [music].
Mark Manheimer: Thank you everyone for joining me. I really appreciate the support, and have a great day.
Mark Manheimer: Yeah.
Mark Manheimer: Yeah.
Mark Manheimer: Okay.
Mark Manheimer: Okay.
Speaker Change: Uh huh.
Mark Manheimer: [music].
Operator: Thank you. The conference of Netstreit Corp has now concluded. Thank you for your participation. You may now disconnect your lines. [inaudible]
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