Q2 2024 Essential Properties Realty Trust Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Essential Properties Realty Trust second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone. This conference is being recorded, and a replay of the call will be available two hours after the completion of the call for the next few weeks.

Operator: The dial-in details for the replay can be found in yesterday's press release. Additionally, there will be an audio webcast available on Essential Properties' website at www.essentialproperties.com, an archive of which will be available for 90 days. On the call this morning are Pete Mavoides, President and Chief Executive Officer, Mark Patten, Chief Financial Officer, Rob Salderg, Head of Capital Markets, Max Jenkins, Head of Investments, and A.J. Peel, Head of Asset Management. It is now my pleasure to turn the call over to Rob.

Speaker Change: Good morning, ladies and gentlemen, and welcome to Essential Properties Realty Trust's second quarter 2024 earnings conference call.

Speaker Change: At this time, all participants are on a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Speaker Change: This conference is being recorded and a replay of the call will be available two hours after the completion of the call for the next few weeks.

The dial-in details for the replay can be found in yesterday's press release. Additionally, there will be an audio webcast available on the Essential Properties website at www.essentialproperties.com, an archive of which will be available for 90 days.

Robert Salisbury: Thank you, operator. Good morning, everyone.

Robert Salisbury: And thank you for joining us today for Essential Properties' second quarter 2024 earnings conference call. During this conference call, we will make certain statements that may be 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 may not release revisions to those forward-looking statements to reflect changes after the statements were made. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's filings with the SEC and in yesterday's earnings press release. With that, I'll turn the call over to Peter.

Pete: Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's filings with the SEC and in yesterday's earnings press release. With that, I'll turn the call over to Pete.

Peter M. Mavoides: Thank you to everyone joining us today for your interest in essential properties. On our first quarter earnings call, we discussed how our business is well suited for the current market environment, which has been characterized by tight lending standards and volatile capital markets. Our position as a reliable and consistent long-term capital provider to our middle market relationships is highly valued. Against this backdrop, our second quarter results continued to showcase the strengths of our business model with a well-capitalized balance sheet and a value proposition of providing growth capital in our targeted industry. This quarter's results were driven by a healthy portfolio and $334 million of investment, resulting in AFFO per share growth of 5%. In the second quarter,

Pete: Against this backdrop, our second quarter results continue to showcase the strengths of our business model, with a well-capitalized balance sheet and a value proposition of providing growth capital in our targeted industries.

Pete: This quarter's results were driven by a healthy portfolio and $334 million of investments, resulting in AFFO per share growth of 5%.

Peter M. Mavoides: Eighty-two percent of our investments were generated from existing relationships, underscoring the value we provide to our middle market tenant, with quarter-end pro forma leverage of 3.8 times and liquidity of over $1.1 billion. Our balance sheet positions us well to continue to grow our portfolio by investing in our core industries at attractive spreads. The business is performing well, with solid tenant credit trends and strong investment volume. However, these positives are offset in the short term by the earnings per share headwinds of the conservative posture on leverage we elected to take, given the capital markets volatility discussed above.

Pete: In the second quarter, 82% of our investments were generated from existing relationships, underscoring the value we provide to our middle market tenant base.

Pete: With quarter-end pro forma leverage of 3.8 times and liquidity of over $1.1 billion, our balance sheet positions us well to continue to grow our portfolio by investing in our core industries at attractive spreads.

Unknown Executive: The business is performing well with solid tenant credit trends and strong investment volumes.

Pete Mavoides: However, these positives are offset in the short term by the earnings per share headwinds of the conservative posture on leverage we elected to take, given the capital markets volatility discussed above. Mark will review this in more detail, but we believe our balance sheet capacity and competitive cost of capital will allow us to continue to drive strong earnings growth in 2025 and beyond. For 2024, we have reiterated our AFFO per share guidance range of $1.72 to $1.75. As our second quarter results indicate, our portfolio continues to operate at a strong level. We ended the corridor with investments in 2009 properties.

Pete: However, these positives are offset in the short term by the earnings per share headwinds of the conservative posture on leverage we elected to take, given the capital markets volatility discussed above.

Peter M. Mavoides: Mark will review this in more detail, but we believe our balance sheet capacity and competitive cost of capital will allow us to continue to drive strong earnings growth in 2025 and beyond. For 2024, we have reiterated our AFFO per share guidance range of $1.72 to $1.75. As our second quarter results indicate, our portfolio continues to operate at a strong level, and we ended the quarter with investments in 2009 properties. There were 99.8% of leaves.

Pete: Mark will review this in more detail, but we believe our balance sheet capacity and competitive cost of capital will allow us to continue to drive strong earnings growth in 2025 and beyond.

Mark: For 2024, we have reiterated our AFFO per share guidance range of $1.72 to $1.75.

Mark: We ended the quarter with investments in 2009 properties that were 99.8% leased to 395 tenants operating in 16 industries.

Pete Mavoides: That were 99.8% leased to 395 tenants operating in 16 industries. Our weighted average lease terms stated 14.1 years at quarter end, which is up year over year, with only 4.1% of annual base rent expiring through 2028. From a tenant health perspective, our weighted average unit level rent coverage ratio was 3.7 times this quarter, down slightly from last quarter. Same store rent growth in the second quarter was 1.4%, down slightly from last quarter, as the portfolio absorbed the small headwind from the five properties that we owned that were impacted by the Red Lobster bankruptcy. Two of these properties were rejected as part of the Chapter 11 process, while the remainder are occupied and leased.

Peter M. Mavoides: 395 tenants operating in 16 industries. Our weighted average lease term stood at 14.1 years at quarter end, which is up year over year with only 4.1% of annual base rent expiring through 2028. From a tenant health perspective, our weighted average unit level rent coverage ratio was 3.7 times this quarter, down slightly from last. Same store rent growth in the second quarter was 1.4%, down slightly from last quarter as the portfolio absorbed the small headwind from the five properties that we own that were impacted by the Red Lobster Bank.

Mark: Our weighted average lease term stood at 14.1 years at quarter end, which is up year over year with only 4.1% of annual base rent expiring through 2028.

Pete: From a tenant health perspective, our weighted average unit level rent coverage ratio was 3.7 times this quarter, down slightly from last quarter.

Pete: Same store rent growth in the second quarter was 1.4% down slightly from last quarter as the portfolio absorbed a small headwind from the five properties that we own that were impacted by the red lobster bankruptcy.

Peter M. Mavoides: Two of these properties were rejected as part of the Chapter 11 process, while the remainder are occupied and leased. During the second quarter, we invested $334 million through 35 separate transactions, at a weighted average cat shield of 8%, relatively consistent with our last quarter and up 60 basis points from a year ago.

Pete: Two of these properties were rejected as part of the Chapter 11 process, while the remainder are occupied and leased.

Pete Mavoides: During the second quarter, we invested $334 million through 35 separate transactions at a weighted average cat shield of 8%. Relatively consistent with our last quarter, and up 60 basis points from a year ago. Our investment activity in the quarter was broad-based across most of our top industries, with no notable departures from our investment strategy. This quarter, our investments had a weighted average initial lease term of 17.8 years, and a weighted average annual rent escalation of 1.9%. Generating an average cat yield of 9.1%. Our investments this quarter had a weighted average unit level rent coverage of 3.0 times, and the average investment per property was 3.4 million.

Pete: During the second quarter, we invested $334 million through 35 separate transactions at a weighted average cap shield of 8%.

Pete: Relatively consistent with our last quarter and up 60 basis points from a year ago.

Peter M. Mavoides: Our investment activity in the quarter was broad-based across most of our top industries, with no notable departures from our investment strategy. This quarter, our investments had a weighted average initial lease term of 17.8 years and a weighted average annual rent escalation of 1.9%. Generating an average GAAP yield of 9.1%, our investments this quarter had a weighted average unit level rent coverage of 3.0 times. And the average investment per property was $3.4 million.

Pete: Our investment activity in the quarter was broad-based across most of our top industries with no notable departures from our investment strategy.

Pete: This quarter, our investments had a weighted average initial lease term of 17.8 years and a weighted average annual rent escalation of 1.9%.

Pete: Generating an average gap yield of 9.1%.

Pete: Our investments this quarter had a weighted average unit-level rent coverage of 3.0 times. And the average investment per property was $3.4 million.

Peter M. Mavoides: The vast majority of the investments this quarter were originated through direct sale leaseback, which are subject to our lease form with ongoing financial reporting requirements. Additionally, 76% contained a master lease provision. Looking ahead to the third quarter, our investment pipeline remains solid and up year over year in the context of what is typically a seasonally slower period in the calendar. As we have discussed in the past, we expect that the recently rejuvenated expectation of Fed easing could result in modest cap rate compression later in the year. However, we have not seen this in our current pipeline, which currently suggests a cap rate similar to the second quarter.

Pete Mavoides: The vast majority of the investments this quarter were originated through direct sale lease backs, which are subject to our lease form with ongoing financial reporting requirements. Additionally, 76% contained vast release provisions.

Pete: The vast majority of the investments this quarter were originated through direct sale leasebacks, which are subject to our lease form with ongoing financial reporting requirements.

Pete: Additionally, 76% contained master lease provisions.

Pete Mavoides: Looking ahead to the third quarter, our investment pipeline remained solid and up year over year, in the context of what is typically a seasonally slower period in the count. As we have discussed in the past, we expect that the recently rejuvenated expectation of Fed easing could result in modest capric compression later in the year. However, we have not seen this in our current pipeline, which currently suggests a capric similar to the second quarter. From a tenant concentration perspective, our largest tenant represents 4.7% of ABR at quarter end. And our top 10 tenants now account for only 18.6% of ABR.

Pete: Looking ahead to the third quarter, our investment pipeline remains solid and up year over year in the context of what is typically a seasonally slower period in the calendar.

Pete: As we have discussed in the past, we expect that the recently rejuvenated expectation

Pete: However, we have not seen this in our current pipeline, which currently suggests a cap rate similar to the second quarter.

Peter M. Mavoides: From a tenant concentration perspective, our largest tenant represents 4.7% of ABR at quarter end, and our top 10 tenants now account for only 18.6% of ABO. Tenant diversity is an important risk mitigation tool and a differentiator for us, and it is a direct benefit of our focus on middle market operators, which offers an expansive opportunity set.

Pete: From a tenant concentration perspective, our largest tenant represents 4.7% of ABR at quarter end and our top 10 tenants now account for only 18.6% of ABR.

Pete Mavoides: Tenant diversity is an important risk mitigation tool and a differentiator for us. And it is a direct benefit of our focus on middle market operators, which offers an expansive opportunity set.

Pete Mavoides: Dispositions were below our trailing a quarter average in 2Q, reflecting a persistently wide bid-ass spread in the market. We sold six properties of this quarter for 4.8 million in net proceeds. This represents an average of approximately $800,000 per property, highlighting the importance of owning fungible liquid properties, which allows us to proactively manage portfolio risks. The dispositions in this quarter were executed at a 7.3% weighted average cash yield, with a weighted average unit level rent coverage ratio of 0.5 times. Over the near term, we expect our disposition activity to remain relatively in line with our trailing a quarter average during bioportunistic asset sales and unveiling portfolio management activities.

Peter M. Mavoides: Dispositions were below our trailing 8.25% average in 2Q, reflecting a persistently wide bid-ask spread in the market. We sold six properties this quarter for $4.8 million in net proceeds. This represents an average of approximately $800,000 per property. Highlighting the Importance of Owning Fungible Liquid Properties, which allows us to proactively manage portfolio risk. The dispositions this quarter were executed at a 7.3% weighted average cash yield, with a weighted average unit level rent coverage ratio of 0.5 times. Over the near term, we expect our disposition activity to remain relatively in line with our trailing eight-quarter average, driven by opportunistic asset sales and ongoing portfolio management activity.

Pete: This represents an average of approximately $800,000 per property, highlighting the importance of owning fungible liquid properties.

Pete: which allows us to proactively manage portfolio risks.

Pete: The dispositions this quarter were executed at a 7.3% weighted average cash yield with a weighted average unit level rent coverage ratio of 0.5 times.

Pete: Over the near term, we expect our disposition activity to remain relatively in line with our trailing 8 quarter average, driven by opportunistic asset sales and ongoing portfolio management activity.

Pete Mavoides: With that, I'd like to turn the call over to Mark Patton, our CFO, who will take you through the financials and the balance sheet for the second quarter. Mark?

Peter M. Mavoides: With that, I'd like to turn the call over to Mark Patten, our CFO, who will take you through the financials and the balance sheet for the second quarter. Mark? Mark Patten. Thanks.

Mark E. Patten: With that, I'd like to turn the call over to Mark Patten, our CFO , who will take you through the financials and the balance sheet for the second quarter. Mark?

Mark Patten: Thanks, Pete.

Mark E. Patten: Thanks, Pete, and good morning, everyone. As Pete noted, we had a solid second quarter, which was highlighted by a strong level of investments at an 8% cash cap rate. Among the headlines from the quarter were our AFFO per share of 43 cents, which is an increase of 5% versus Q2 2023. On a nominal basis, our AFFO totaled $77.1 million for the quarter. That's up $15.2 million over the same period in 2023, an increase of 25%.

Mark Patten: Good morning, everyone. As Pete noted, we had a solid second quarter, which was highlighted by a strong level of investments at an 8% cash cap rate. Among the headlines from the quarter was our AFFO per share of 43 cents, which is an increase of 5% versus Q2 2023. On a nominal basis, our AFFO totaled $77.1 million for the quarter. That's up $15.2 million over the same period in 2023, an increase of 25%. This AFFO performance was in line with our expectations, underlying the updated guidance range we provided last quarter. As stronger than anticipated, investment volume was partially offset by later timing of closing those investments within the quarter.

Mark E. Patten: Thanks, Pete, and good morning everyone. As Pete noted, we had a solid second quarter, which was highlighted by a strong level of investments at an 8% cash cap rate.

Speaker Change: Among the headlines from the quarter was our AFFO per share of 43 cents, which is an increase of 5% versus Q2 2023.

Speaker Change: On a nominal basis, our AFFO totaled $77.1 million for the quarter. That's up $15.2 million over the same period in 2023, an increase of 25%.

Mark E. Patten: This AFFO performance was in line with our expectations underlying the updated guidance range we provided last quarter, as stronger-than-anticipated investment volume was partially offset by the later timing of closing those investments within the quarter. Additionally, of note, we recognize $1.5 million of other income this quarter related to cash proceeds we received from a legal settlement. Because this settlement represents the recoupment of our legal and other expenses that negatively impacted AFFO in prior periods, we included these proceeds within AFFO this quarter. Resolution of this matter and commensurate recognition of other income was anticipated in our updated guidance range.

Speaker Change: This AFFO performance was in line with our expectations underlying the updated guidance range we provided last quarter. A stronger than anticipated investment volume was partially offset by later timing of closing those investments within the quarter.

Mark Patten: Additionally, of note, we recognized $1.5 million of other income in this quarter related to cash proceeds we received from a legal settlement. Because the settlement represents the recruitment of our legal and other expenses that negatively impacted AFFO and prior periods, we included these proceeds within AFFO this quarter. The resolution of this matter and commensurate recognition of other income was anticipated in our updated guidance range. Total GNA and Q2 2024 was $8.7 million versus $7.6 million for the same period in 2023. With the majority of the increase relating to increased compensation expense as we continue to invest in our team.

Speaker Change: Additionally of note, we recognize 1.5 million dollars of other income this quarter related to cash proceeds we received from a legal settlement.

Speaker Change: Because this settlement represents the recoupment of our legal and other expenses that negatively impacted AFFO in prior periods, we included these proceeds within AFFO this quarter.

Speaker Change: Resolution to this matter and commensurate recognition of other income was anticipated in our updated guidance range.

Mark E. Patten: Total G&A in Q2 2024 was $8.7 million versus $7.6 million for the same period in 2023, with the majority of the increase relating to increased compensation expense as we continue to invest in our team. Our recurring cash G&A as a percentage of total revenue was 5.6% for the quarter, which compares favorably to the 6.1% in the same period a year ago. Our total G&A and recurring cash G&A were also in line with our expectations for the quarter.

Speaker Change: Total G&A in Q2 2024 was $8.7 million versus $7.6 million for the same period in 2023, with the majority of the increase relating to increased compensation expense as we continue to invest in our team.

Mark Patten: Our Recurring Cash DNA, as a percentage of total revenue, was 5.6 percent for the quarter, which compares favorably to the 6.1 percent in the same period a year ago. Our total DNA and recurring cash DNA were also in line with our expectations for the quarter. We continue to expect, on an annual basis, our Cash DNA, as a percentage of total revenue, will decline, as our platform generates operating leverage over a scaling asset base. To enable us to manage a larger portfolio and invest at higher levels. We declared a cash dividend of 29 cents in the second quarter, which represents an AFFO payout ratio of 67 percent.

Speaker Change: Our recurring cash G&A as a percentage of total revenue was 5.6% for the quarter, which compares favorably to the 6.1% in the same period a year ago. Our total G&A and recurring cash G&A were also in line with our expectations for the quarter.

Mark E. Patten: We continue to expect that on an annual basis, our cash G&A as a percentage of total revenue will decline as our platform generates operating leverage over a scalating asset base to enable us to manage a larger portfolio and invest at higher levels. We declared a cash dividend of $0.29 in the second quarter, which represents an AFFO payout ratio of 67%.

Speaker Change: We continue to expect that on an annual basis our cash G&A as a percentage of total revenue will decline as our platform generates operating leverage over a scaling asset base to enable us to manage a larger portfolio and invest at higher levels.

Speaker Change: We declared a cash dividend of $0.29 in the second quarter, which represents an AFFO payout ratio of 67%.

Mark Patten: Our retained free cash flow, after dividends, continues to build, reaching $26.9 million in the second quarter, equating to over $100 million per annum. We continue to view our retained free cash flow as an attractive source of capital to support our investment program.

Mark E. Patten: Our retained free cash flow after dividends continues to build, reaching $26.9 million in the second quarter, equating to over $100 million per annum. We continue to view our retained free cash flow as an attractive source of capital to support our investment program. Turning to our balance sheet, with our $334 million in Q2 2024 investments, our income-producing gross assets reached $5.5 billion at quarter end. The scale of our income-producing assets continues to build, and we expect to approach $6 billion by year-end.

Speaker Change: Our retained free cash flow after dividends continues to build, reaching $26.9 million in the second quarter, equating to over $100 million per annum.

Speaker Change: We continue to view our retained free cash flow as an attractive source of capital to support our investment program.

Mark Patten: Turning to our balance sheet, with our $334 million in Q2 2024 investments, our income producing gross assets reached $5.5 billion in a quarter end. The scale of our income producing assets continues to build, and we expect to approach $6 billion by year end. The significant diversity and increasing scale of our asset base continues to be a favorable underpinning of the reliability and durability of our cash flows, and provides an increasing level of risk mitigation.

Speaker Change: Turning to our balance sheet, with our $334 million in Q2 2024 investments, our income-producing gross assets reach $5.5 billion at quarter end.

Speaker Change: The scale of our income-producing assets continues to build, and we expect to approach $6 billion by year-end. The significant diversity and increasing scale of our asset base continues to be a favorable underpinning of the reliability and durability of our cash flows and provides an increasing level of risk mitigation.

Mark E. Patten: The significant diversity and increasing scale of our asset base continues to be a favorable underpinning of the reliability and durability of our cash flows and provides an increasing level of risk mitigation. On the capital markets side, it was a productive second quarter. Through our ATM program, we completed the sale of approximately $137 million of stock, all on a forward basis.

Mark Patten: On the capital market side, it was a productive second quarter. Through our ATM program, we completed the sale of approximately $137 million of stock, all on a forward basis. With no settlements during the quarter, our balance of unsettled forward equity totaled $390 million at quarter end. One element of our second quarter results that's also worth highlighting is our current share price, being materially above the weighted average price of our unsettled forwards, which was $24.75 at quarter end. Under the Treasury stock method, we account for the potential dilution from these forward shares in our diluted share count.

Speaker Change: On the capital markets side, it was a productive second quarter. Through our ATM program, we completed the sale of approximately $137 million of stock, all on a forward basis.

Mark E. Patten: With no settlements during the quarter, our balance of unsettled forward equity totaled $319 million at quarter end. One element of our second quarter results that's also worth highlighting is our current share price, being materially above the weighted average price of our unsettled forwards, which was $24.75 at quarter end. Under the Treasury stock method, we account for the potential dilution from these forward shares in our diluted share count. For the second quarter, our diluted share count was $177.6 million.

Speaker Change: With no settlements during the quarter, our balance of unsettled forward equity totaled $319 million at quarter end.

Mark E. Patten: Shares included in the adjustment for 904,000 shares from our unsettled Forward Equity related to this treasury stock calculation. At a high level, we view the impact of the accounting treatment for this unsettled forward equity as a matter of timing, as these shares will ultimately be settled to fund the business, notably as investments are closed later this year. Therefore, while this calculation creates a near-term headwind to our current earnings-per-share metric, it should have little to no impact on our AFFO per share in 2025 and beyond.

Speaker Change: One element of our second quarter results that's also worth highlighting is our current share price, being materially above the weighted average price of our unsettled forwards, which was $24.75 at quarter end.

Speaker Change: Under the Treasury stock method, we account for the potential dilution from these forward shares in our diluted share count.

Mark Patten: For the second quarter, our diluted share count of 177.6 million shares included in adjustment for 904,000 shares from our unsettled forward equity related to this Treasury stock calculation. At a high level, we view the impact of the accounting treatment for this unsettled forward equity as a matter of timing, as these shares will ultimately be settled to fund the business, notably as investments are closed later this year. Therefore, while this calculation creates a near-term headwind to our current earnings per share metrics, it should have little to no impact to our FFO per share in 2025 and beyond.

Speaker Change: For the second quarter, our diluted share count of 177.6 million shares included an adjustment for 904,000 shares from our unsettled forward equity related to this Treasury stock calculation.

Speaker Change: At a high level, we view the impact of the accounting treatment for this unsettled forward equity as a matter of timing, as these shares will ultimately be settled to fund the business, notably as investments are closed later this year.

Speaker Change: Therefore, while this calculation creates a near-term headwind to our current earnings per share metrics, it should have little to no impact to our AFFO per share in 2025 and beyond.

Mark Patten: Our performance in that debt to annualize to just the EBITRE as adjusted for unsettled forward equity was 3.8 times a quarter end. We remain committed to maintaining a well-capitalized balance sheet with low leverage and significant liquidity to continue to fuel our external growth. With a recent backdrop of capital market volatility, we have maintained a pro-forma leverage profile substantially below our historical average of the mid-four times range. We believe our conservative approach has been prudent, particularly in light of elevated prevailing debt costs. With a prospect for central bank easing later this year, our leverage metrics may drift higher to more normalized levels.

Mark E. Patten: Our pro forma net debt to annualized adjusted EBITDA RE as adjusted for unsettled forward equity was 3.8 times at quarter end. We remain committed to maintaining a well-capitalized balance sheet with low leverage and significant liquidity to continue to fuel our external growth. With the recent backdrop of capital markets volatility, we have maintained a pro forma leverage profile substantially below our historical average of the mid four times range. We believe our conservative approach has been prudent, particularly in light of elevated prevailing debt costs.

Speaker Change: Our pro forma net debt to annualized adjusted EBITDA RE as adjusted for unsettled forward equity was 3.8 times a quarter end.

Speaker Change: We remain committed to maintaining a well-capitalized balance sheet with low leverage and significant liquidity to continue to fuel our external growth.

Speaker Change: With the recent backdrop of capital markets volatility, we have maintained a pro-forma leverage profile substantially below our historical average of the mid-4 times range. We believe our conservative approach has been prudent, particularly in light of elevated prevailing debt costs.

Mark E. Patten: With a prospect of central bank easing later this year, our leverage metrics may drift higher to more normalized levels. Subsequent to quarter end, we closed on a $450 million term loan with a delay draw feature. We are very appreciative of the continued support of our core banking relationships, and we were pleased to have four new banks join our bank group as part of executing this transaction. We drew $320 million at closing, a portion of which was used to fully repay the outstanding balance on our revolving credit facility.

Speaker Change: With the prospect for central bank easing later this year, our leverage metrics may drift higher to more normalized levels.

Mark Patten: Subsequent to quarter end, we closed on a $450 million term loan with a delayed draw feature. We are very appreciative of the continued support of our core banking relationships, and we were pleased to have four new banks join our bank group as part of executing this transaction. We drew $320 million at closing, a portion of which was used to fully repay the outstanding balance on our revolving credit facility. Assuming we exercised the extension options available to us, the term loan would mature in January 2030. We expected draw the remaining $130 million over the coming months as a source of funding for our investment pipeline.

Speaker Change: Subsequent to quarter end, we closed on a $450 million term loan with a delayed draw feature. We are very appreciative of the continued support of our core banking relationships and we were pleased to have four new banks join our bank group as part of executing this transaction.

Speaker Change: We drew $320 million at closing, a portion of which was used to fully repay the outstanding balance on our revolving credit facility.

Mark E. Patten: Assuming we exercise the extension options available to us, the term loan would mature in January 2030. We expect to draw down the remaining $130 million over the coming months as a source of funding for our investment pipeline. Consistent with our capital goals of efficiently matching funding our assets, we swapped the initial $320 million draw for the fully extended term of the debt commitment at a weighted average fixed rate of 4.99%. At quarter end, our liquidity stood at over $1.1 billion.

Speaker Change: Assuming we exercise the extension options available to us, the term loan would mature in January 2030.

Speaker Change: We expect to draw the remaining $130 million over the coming months as a source of funding for our investment pipeline.

Mark Patten: Consistent with our capital goals of efficiently match funding our assets, we swapped the initial $320 million draw for the fully extended term of the debt commitment at a weighted average fixed rate. At quarter end, our liquidity stood at over $1.1 billion, pro forma for our unsettled forward equity in our 2030 term loan.

Speaker Change: Consistent with our capital goals of efficiently match funding our assets, we swapped the initial $320 million draw for the fully extended term of the debt commitment at a weighted average fixed rate of 4.99%.

Speaker Change: At quarter end, our liquidity stood at over $1.1 billion, pro forma for our net unsettled forward equity and our 2030 term loan.

Mark E. Patten: Pro Forma for our Net Unsettled Forward Equity and our 2030 Term Loan. With our equity and debt capital needs met for the year, our strong balance sheet and conservative leverage positions the company well to execute on our growth plans for 2024 and into 2025. Lastly, as we noted in the earnings press release, we have reiterated our 2024 AFFO per share guidance range of $1.72 to $1.75, which implies an over 5% growth rate at the midpoint. With that, I'll turn the call back over to...

Mark Patten: With our equity and debt capital needs met for the year, our strong balance sheet and conservative leverage position the company well to execute on our growth plans for 2024 and into 2025.

Speaker Change: With our equity and debt capital needs met for the year, our strong balance sheet and conservative leverage positions the company well to execute on our growth plans for 2024 and into 2025.

Mark Patten: Lastly, as we noted in the earnings press release, we have reiterated our 2024 AFFO per share guidance range of $1.72 to $1.75, which implies an over 5% growth rate at the midpoint.

Speaker Change: Lastly, as we noted in the earnings press release, we have reiterated our 2024 AFFO per share guidance range of $1.72 to $1.75, which implies an over 5% growth rate at the midpoint.

Pete Mavoides: With that, I'll turn the call back over to Pete. Thanks, Mark. In summary, we are very pleased with our second quarter results and remain optimistic about the prospects for the business.

Speaker Change: With that, I'll turn the call back over to Pete.

Peter M. Mavoides: In summary, we are very pleased with our second quarter results and remain optimistic about the prospects for the business. Operator, please open the call for questions.

Pete: Thanks, Mark.

Pete: In summary, we are very pleased with our second quarter results and remain optimistic about the prospects for the business.

Unknown Executive: Operator, please open the call for questions. Thank you. At this time, we'll be conducting a question-and-answer session. If you'd like to ask a question, please press store one on your telephone keypad. A confirmation to all indicates your line is in the question queue. It may press start two if you'd like to remove your question from the queue. For participants who use speaker equipment, it may be necessary to pick up your handset before pressing the store keys. One moment, please, while we poll for questions.

Speaker Change: Operator, please open the call for questions.

Operator: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation to all indicates your line is in the question queue. You may press start, too, if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing start. One moment, please, while we poll for questions. Our first question comes from Haendel St. Juste with Mizzouho. Please proceed with your question.

Speaker Change: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press Star 1 on your telephone keypad.

Speaker Change: A confirmation to all indicate your line is in the question queue.

Speaker Change: You may press star 2 if you'd 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 star keys.

Speaker Change: One moment, please, while we poll for questions.

Haendel Juste: My first question comes from Handel St. Jude with Mizzouho. Please proceed with your question.

Speaker Change: Our first question comes from Haendel St. Juste with Mizzouho. Please proceed with your question.

Haendel Juste: Yes.

Haendel Emmanuel St. Juste: Yes, good morning, guys. Thanks for taking the question. The first question, I guess, is about the guide.

Haendel Juste: Good morning, guys. Thanks for taking a question. First question, I guess, is on the guide. I'm curious why not raise it even a little bit at this point. It seems like everything is firing and all. It's about cylinders, strong volumes, a larger pipeline, as you noted, and approved across the capital.

Speaker Change: Yes, good morning guys. Thanks for taking the question.

Speaker Change: The first question, I guess, is on the guide.

Haendel Emmanuel St. Juste: I'm curious, why not raise it even a little bit? At this point, it seems like everything is firing on all cylinders, strong volumes, a larger pipeline, as you noted, and an improved cost of capital. So maybe you can talk to or even quantify some of the potential headwinds that are built in here and maybe get some color on the treasury stock method accounting dilution that is embedded in the guide and any factors that perhaps we're not aware of that might be keeping you from raising the guide. Thanks.

Speaker Change: I'm curious, why not raise it even a little bit at this point? It seems like everything is firing at all. Cylinders, strong volumes.

Speaker Change: A larger pipeline, as you noted, an improved cost of capital. So maybe you can talk through or even quantify some of the potential headwinds that are built in here and maybe get some color on the Treasury stock method accounting dilution that is embedded in the guide and any factors that perhaps we're not aware of that might be keeping you from raising the guide. Thanks.

Pete Mavoides: So maybe you can talk to you or even quantify some of the potential headwinds that are built in here and maybe get some color on the treasury stock method accounting delusion that it's embedded in the guide and any factors that perhaps we're not aware of that might be keeping it from raising the guide. Thanks. Yeah, I would say, you know, Handel, you're certainly right. Things are, you know, firing on all cylinders. The pipeline continues to build, and we continue to deploy capital. You know, clearly, as we said in the statements, you know, our capital position is really the majority of the headwind that we're seeing in our earnings, and, you know, given that.

Peter M. Mavoides: Yeah, I would say, you know, Handel, you're certainly right, things are firing on all cylinders, the pipeline continues to build, and we continue to deploy capital. But, clearly, as we said in the statements, our capital position is really the majority of the headwind that we're seeing in our earnings, and given that, it really just doesn't give us the visibility to drive the guidance up. Mark, if you want to provide some color on that, you can.

Speaker Change: Yeah, I would say, you know, Haendel, you're certainly right. Things are, you know, firing on all cylinders. The pipeline continues to build and we continue to deploy capital. You know, clearly, as we said in the statements, you know, our

Speaker Change: Capital position is really the majority of the headwind that we're seeing in our earnings and you know

Mark Patten: You know, it really just doesn't give us the visibility to drive the guidance up. But Mark, if you want to provide some color on that, you can. Yeah, Handel, basically, you know, not to get too granular about it, but if you think about the treasury stock method, what you're really doing is you're assuming the execution of the settlement, which comes in at 2475 a share. And the treasury stock is you go out and buy as many shares as you can with those proceeds. That at 30 bucks means you're going to get fewer shares brought back into treasury.

Mark: Given that, you know, it really just doesn't give us the visibility to drive the guidance up. But, Mark, if you want to provide some color on that, you can. Yeah, Haendel, basically, you know, not to get too granular about it, but if you think about the treasury stock method, what you're really doing is you're assuming the...

Mark E. Patten: Yeah, Haendel basically, you know, not to get too granular about it, but if you think about the treasury stock method, what you're really doing is you're assuming the execution of the settlement, which comes in at $24.75 a share, and the Treasury stock is you go out and buy as many shares as you can with those proceeds, that at $30 means you're going to get fewer shares brought back into And that's really, we tried to kind of quantify it, but if you think about the headwind, it's probably, it's probably a penny and a half.

Mark: Execution of the settlement, which comes in at $24.75 a share, and the treasury stock, as you go out and buy as many shares as you can with those proceeds, that at $30 means you're going to get

Mark Patten: So you've got a net delutive amount of shares from the issuance. And that's really, we tried to kind of quantify it, but if you think about the headwind, it's probably a penny and a half. Got it, that's helpful. By the way, Endel, that's for the, that's for the full year. Full year, yes, got it, got it.

Mark: Fewer shares brought back into Treasury, so you've got a net dilutive amount of shares from the issuance.

Speaker Change: And that's really, we tried to kind of quantify it but if you think about the headwind it's probably, it's probably a penny and a half.

Mark E. Patten: Got it, got it. That's helpful. By the way, Haendel, that's for the full year. Full year.

Haendel Emmanuel St. Juste: Yes. Got it. Got it.

Speaker Change: Thank you very much.

Peter M. Mavoides: Also, I guess you guys know that in the release at this, maybe the highest, I think it's the highest acquisition volume quarter to date. So maybe you could discuss some of the dynamics you're seeing in the market. Are you seeing more sellers willing to engage? Are you just costing yourself the capital? And then maybe is this a run rate that we can expect to stay at going forward in the near term? Yeah, I would, you know, continue to guide you to our

Haendel Juste: Also, I guess you guys know that I think I'm going to release that this was the, maybe the highest; I think it's the highest acquisitions volume quarter to date. So maybe you could discuss some of the dynamics here to see in the market. Are you seeing more sellers willing to engage, or are you just better cost a capital, and then maybe it's just a run rate. That we can expect out to stay going forward in your term. Thanks.

Speaker Change: Full year, yes, got it, got it.

Speaker Change: Maybe the highest, I think it's the highest acquisitions volume quarter to date. So maybe you could discuss some of the dynamics you're seeing in the market. Are you seeing more sellers willing to engage? Are you just, you better cost the capital? And then maybe is this a run rate that we can expect to stay at going forward near term? Thanks.

Pete Mavoides: Yeah, I would, you know, continue to guide you to our quarter average as a good indicator of the run rate. As we have said in the last couple of quarters, it's a good market for us to invest, really, given the lack of capital alternatives that many of the middle market tenants we work with are facing, or the cost of relative financing options, and we're working very hard to transact. And put capital to work. But you know, the way we go to market, you know, doing $10 million deals and $2, $3 million assets, it's, you know, there's only so much we can, we can put through the system, and we're fortunate this quarter to have some, some bigger transactions.

Peter M. Mavoides: Yeah, I would, you know, continue to guide you to our eight-quarter average as a good indicator of the run rate. As we have said in the last couple of quarters, it's a good market for us to invest in, really given the lack of capital alternatives that many of the middle market tenants we work with are facing or the cost of relative financing options, and we're working very hard to transact and put capital to work.

Speaker Change: Yeah, I would, you know, continue to guide you to our eight-quarter average as a good indicator of the run rate. As we have said in the last couple quarters, it's a good market for us to invest, really given the lack of capital alternatives that many of the middle market tenants we work with are facing, or the cost of relative financing options, and we're working very hard to transact.

Peter M. Mavoides: But, you know, the way we go to market, you know, doing ten million dollar deals and two, three million dollar assets, there's only so much we can put through the system, and we're fortunate this quarter to have some bigger transactions. You know, as we said on the call, our pipeline remains full, and we continue to work hard, which may suggest, you know, a robust third quarter here, but it's kind of too early to really tell. But we feel good about the investment market. We continue to have a relatively strong competitive advantage, and we're working hard to put capital to work.

Speaker Change: and put capital to work. But, you know, the way we go to market, you know, doing $10 million deals into $2, $3 million assets, it's...

Speaker Change: You know there's only so much we can we can put through the system and we're fortunate this quarter to have some some bigger transactions

Haendel Juste: You know, as we said on the call, our pipeline remains full and we continue to work hard, which, which, you know, may suggest, you know, a robust third quarter here, but kind of too early to really tell. But we feel good about the investment market. We continue to have a relatively strong competitive advantage, and we're working hard to put capital to work. Thank you, guys. Appreciate it.

Speaker Change: As we said on the call, our pipeline remains full and we continue to work hard, which may suggest a robust third quarter here, but it's kind of too early to really tell.

Speaker Change: But we feel good about the investment market. We continue to have a relatively strong competitive advantage, and we're working hard to put capital to work.

Unknown Executive: Time to color.

Speaker Change: Thank you guys. Appreciate the time and the color.

Unknown Executive: Thanks. I know.

Greg McGuinness: Our next question is from Greg McGuinness with Scotia Bank. Please proceed with your question.

Haendel: Thanks, Haendel.

Greg Michael McGinniss: Our next question is from Greg McGinniss with Scotiabank. Please proceed with your question.

Speaker Change: Our next question is from Greg McGinniss with Scotiabank. Please proceed with your question.

Greg Michael McGinniss: Hey, good morning. Just another one on the acquisition guidance. I appreciate, you know, looking at the trailing eight quarters, which following Q2 went up $30 million to around $275 million. I just want to make sure that's kind of where you're thinking from a target standpoint and then how much you have under LOI PSA today because I think... Close to date is not too much, but it sounds like you're confident that you're going to get a significant amount more done this quarter, so any color would be appreciated.

Greg McGuinness: Good morning. Just another one on the acquisition guidance. I appreciate, you know, looking at the trailing eight quarters, which following due to went up 30 million to around 275 million. I just want to make sure that's kind of what you're thinking from a target standpoint. And then how much you have under L.O.I. PSA today, because I think, you know, close to date is not too much, but sounds like you're confident that you're going to get a significant amount more done this quarter. So any color would be appreciated. Yeah, obviously, you know, third quarter is always tough.

Greg Michael McGinniss: Hey, good morning. Just another one on the acquisition guidance. I appreciate, you know, looking at the...

Greg Michael McGinniss: I just want to make sure that's kind of where you're thinking from a target standpoint, and then how much you have under LOI PSA today.

Speaker Change: close to date is not not too much but sounds like you're confident that you're going to get

Speaker Change: significant amount more done this quarter, so any color would be appreciated.

Peter M. Mavoides: Yeah, obviously, you know, third quarter is always tough. You work hard to get your second quarter deals closed at the end of June, and then people kind of go away on vacation, and, you know, it's hard to get people on the other end of the phone engaged and working. And then they come back in September eager to put deals to bed. So it's one of the harder quarters to forecast. One of the reasons why it starts off seasonally slow. As we said in the call, our pipeline is currently ahead of where it was last year. You know, roughly, you know, in the, I would say somewhere between 2 and 250 range.

Speaker Change: The third quarter is always tough. You work hard to get your second quarter deals closed at the end of June , and then people kind of go away on vacation.

Greg McGuinness: You work hard to get your second quarter deals closed at the end of June. And then people kind of go away on vacation. And, you know, it's hard to get people on the other end of the phone engaged in working. And then they come back in September eager to eager to put deals to bed. So it's one of the harder quarters to forecast. One of the reasons why it starts off seasonally slow. As we said in the call, our pipeline currently is ahead of where it was last year. You know, roughly, you know, in the, I would say somewhere between two and two 50 range.

Speaker Change: You know, it's hard to get people on the other end of the phone engaged and working.

Speaker Change: And then they come back in September eager to put deals to bed. So it's one of the harder quarters to forecast.

Speaker Change: One of the reasons why it starts off seasonally slow.

Speaker Change: As we said in the call, our pipeline currently is ahead of where it was last year.

Speaker Change: I would say somewhere between 2 and 250 range. There's always some variability into what closes in the quarter, depending.

Greg McGuinness: You know, there's always some variability in, you know, what closes in the quarter, depending upon timing. And we don't always control the timing of the transactions as we're supporting, you know, M&A transactions often. So it's early in the quarter. We got a lot of work left to do. We think the pipeline supports, you know, an active quarter. And, you know, we'll see where it shakes out.

Peter M. Mavoides: There's always some variability in, you know, what closes in the quarter depending upon timing, and we don't always control the timing of the transactions as we're supporting, you know, M&A transactions often. So it's early in the quarter. We have a lot of work left to do. We think the pipeline supports, you know, an active quarter, and, you know, we'll see where it shakes out.

Haendel: upon timing and we don't always control the timing of the transactions as we're supporting you know M&A transactions often.

Haendel: So, it's early in the quarter. We've got a lot of work left to do. We think the pipeline supports an active quarter and we'll see where it shakes out.

Peter M. Mavoides: Thanks. Could you also give some details around some of the larger portfolio transactions that you were able to get done this quarter? If you are looking to acquire more equipment shares, I know that you're targeting 5% as a cap, so maybe there's a little bit more space there, but just curious if you'd go over that for that question.

Greg McGuinness: Thanks, and could you also give some details around some of the larger, probably the transactions that you were able to get done this quarter. And then also, you know, whether we can, you can are looking to acquire more equipment shares. I know that you're kind of targeting 5% as a cap. So maybe there's a little bit more space there, just curious if you'd go over that for that company. Yeah. Yeah, you know, when we say larger portfolio deals, you know, it's just bigger, you know, 30, 50, 60 million dollar sale leasebacks within our targeted industries.

Speaker Change: Thanks. Could you also give some details around some of the larger portfolio transactions that you were able to get done this quarter?

Speaker Change: Whether you are looking to acquire more equipment shares, I know that you're kind of targeting 5% as a cap, so maybe there's a little bit more space there. Just curious if you'd go over that for that company.

Peter M. Mavoides: Yeah, you know, when we say larger portfolio deals. You know, it's just bigger, you know, $30, $50, $60 million sale leasebacks within our targeted industries, so it's not a bigger portfolio of, you know, kind of existing lease assets, and so it's just bigger operators with more assets to sell, and we did a sizable car wash sale leaseback in the quarter, as well as a sizable child care sale leaseback in the quarter, and sizable, you know, I would say greater than 50 million.

Speaker Change: Yeah, you know when we say larger portfolio deals

Speaker Change: You know, it's just bigger, you know, $30, $50, $60 million sale leasebacks within our targeted industries. So it's not a...

Greg McGuinness: So it's not a bigger, bigger portfolio of, you know, kind of existing lease assets. And, and so it's just bigger operators with more assets to sell. And we did a sizable car wash. So at least back in the quarter as well as a sizable child care. So at least back in the quarter and sizable, you know, I would say greater than 50 million terms of equipment share. You know, we continue to have tenant diversity discipline around, you know, not wanting to have a tenant above 5%. That company continues to grow and continues to present us opportunities.

Speaker Change: kind of existing lease assets. And so it's just bigger operators with more assets to sell. And we did a sizable car wash sale lease back in the quarter, as well as a sizable child care.

Peter M. Mavoides: In terms of equipment share, you know, we continue to have tenant diversity discipline around not wanting to have a tenant above 5%. That company continues to grow and continues to present us opportunities. We feel very comfortable with them as our largest tenant, but we're unlikely to run them above that 5% number.

Speaker Change: In terms of equipment share, we continue to have tenant diversity discipline around not wanting to have a tenant above 5%. That company continues to grow and continues to present us opportunities.

Greg McGuinness: We feel very comfortable with them as our largest tenant. But we're unlikely to run that them above that 5% number.

Greg Michael McGinniss: Okay, thank you very much.

Greg McGuinness: Okay.

Unknown Executive: Thank you very much. Thank you.

Unknown Executive: Great.

Speaker Change: Okay, thank you very much.

Greg Michael McGinniss: Thank you, Greg.

Eric Borden: Our next question comes from Eric Borden with BMO Capital Markets. Please proceed with your question.

Eric Borden: Our next question comes from Eric Borden with BMO Capital Markets. Please proceed with your question.

Speaker Change: Our next question comes from Eric Borden with BMO Capital Markets. Please proceed with your question.

Eric Borden: Hey guys, good morning. I appreciate the color around being fully funded for the year and plenty of liquidity. But just given what your shares are today, you know, would you be willing to issue forward equity here in order just to lock in that price and, you know, kind of set yourself up for 2025? Or are you just potentially trying to mitigate any future treasury stock dilution?

Eric Borden: Hey guys, good morning. Appreciate the call there around being fully funded for the year and plenty of liquidity. But just given what your shares are today, would you be willing to issue forward equity here in order just to lock in that price and kind of set yourself up for 2025? Or are you just potentially trying to mitigate any future Treasury stock dilution?

Eric Borden: Hey, guys. Good morning. Appreciate the call there around being fully funded for the year and plenty of liquidity.

Eric Borden: But just given what your shares are today, would you be willing to issue forward equity here in order just to lock in that price and kind of set yourself up for 2025? Or are you just potentially trying to mitigate any future Treasury stock dilution?

Pete Mavoides: Yeah, you know, we, and I'll let Mark and Rob take a stab at that. But, you know, certainly, you know, we had an active quarter in the second quarter in terms of the ATM. And we've been very aggressive in terms of, you know, putting, getting our capital raised and behind us and allowing us to execute. You know, if we were willing to issue shares at 2475, you know, certainly, you know, north of 30 is pretty compelling. But there's some seller's remorse when you look back and, you know, I clearly think, you know, as we get closer 25 and we get 2025 guidance out there.

Peter M. Mavoides: Yeah, you know, we, and I'll let Mark and Rob take a stab at that. But, you know, certainly, we had an active quarter in the second quarter in terms of the ATM. And we've been very aggressive in terms of, you know, getting our capital raised and behind us and allowing us to execute. You know, if we were willing to issue shares at, you know, 2475, certainly, you know, north of 30 is pretty compelling. But there is some seller's remorse when you look back. And, you know, I clearly think so.

Speaker Change: Yeah, you know, we, and I'll let Mark and Rob take a stab at that, but, you know, certainly, you know, we had an active quarter in the second quarter in terms of the ATM.

Speaker Change: And we've been very aggressive in terms of, you know, putting, getting our capital raised and behind us and allowing us to execute, you know, if...

Speaker Change: If we were willing to issue shares at $24.75, certainly north of $30 is pretty compelling. But there is some seller's remorse when you look back. And I clearly think...

Mark E. Patten: You know, as we get closer to 25 and we get 2025 guidance out there, there are upsides to our shares. So we will continue to be opportunistic on the equity side. We will continue to stay in a good capital position. But, Mark, and Rob, do you have anything to add to that? Yeah, I think what I'd say first is, you know, we've got ample liquidity to address sort of our – Our Opportunities.

Mark E. Patten: You know, as we get closer to 25 and we get 2025 guidance out there, you know, there's upsides to our shares, so we will continue to be opportunistic on the equity side. We will continue to stay in a good capital position, but Mark, Rob, do you have anything to add to that? Yeah, I think what I'd say first is, you know, we've got ample liquidity to address.

Mark Patten: You know, you know, there's upsides to our shares, so we will continue to be opportunistic on the equity side. We will continue to stay in a good capital position.

Mark Patten: But Mark, Rob, you get that? Yeah, I think what I think what I'd say first is, you know, we've got ample liquidity to address sort of our opportunity. So, if you think about it from the standpoint of the unsettled equity, we have free cash slower generating. And otherwise, the remainder of the term loan, you know, we've got, you know, $700 million of liquidity easily to get us to, even there, you'd be still pretty low-levered in terms of the bottom end of our range we've articulated. So, in one respect, we don't have to do anything, as we've sort of said in the remarks. But then again, you know, we've been opportunistic on the ATM.

Mark E. Patten: I think what I'd say first is we've got ample liquidity to address our problems and our opportunities, so if you think about it from the standpoint of...

Mark: sort of our

Mark: Our opportunities, so if you think about it from the standpoint of...

Mark E. Patten: The unsettled equity, we have free cash flow we're generating, and otherwise, the remainder of the term loan, we've got $700 million of liquidity easily to get us to even there. You'd still be pretty low levered in terms of the bottom end of the range we've articulated. So in one respect, we don't have to do anything, as we've sort of said in the remarks, but then again, you know, we've been opportunistic on the ATM, certainly wouldn't think we'd move away from that approach.

Mark: The Unsettled Equity, we have free cash flow regenerating and otherwise the remainder of the term loan, you know, we've got, you know, $700 million of liquidity easily to get us to even there you'd be still pretty low levered in terms of the bottom end of our portfolio.

Mark E. Patten: The range we've articulated.

Mark E. Patten: So, in one respect, we don't have to do anything, as we've sort of said in the remarks, but then again, you know, we've been opportunistic on the ATM, certainly wouldn't think we'd move away from that approach, and then the other thing, you know, we've been

Mark Patten: Certainly wouldn't think we would move away from that approach. And then the other thing, you know, we've been pretty consistent that if we start seeing, you know, visibility into a strong pipeline, that tends to be a good indicator that we might have an opportunity there. And as Pete said, the price is in a good spot. So, but right now, you know, the good news is we don't have things, so we can be very opportunistic.

Mark E. Patten: And then the other thing, you know, we've been pretty consistent that if we start seeing, you know, visibility into a strong pipeline, that tends to be a good indicator that we might have an opportunity there, and as Pete said, the price is in a good spot. But right now, you know, the good news is we don't have to do anything, so we can be very opportunistic.

Pete: Pretty consistent that if we start seeing, you know, visibility into a strong pipeline, that tends to be a good indicator that we might have an opportunity there, and as Pete said, the price is in a good spot. So, but right now, you know, the good news is we don't have things, so we can be very opportunistic.

Mark Patten: Yeah, I just add, with 750 million to a billion of leverage capacity today, there's plenty of flexibility for us to execute on the current business plan. And that being said, we're always mindful of extending our equity runway and being ahead of not having to do anything defensively. So, we're in a good offence of position.

Pete: And I'd just add, with $750 million to a billion of leverage capacity today, there's plenty of flexibility for us to execute on the current business plan. And that being said, we're always mindful of extending our equity runway and being ahead of not having to do anything defensively. We're in a good offensive position.

Eric Borden: And that's helpful.

Peter M. Mavoides: That's helpful. Maybe just turning to the acquisition outlook, how do you think the next 6 to 12 months plays out for you with rate cuts seemingly on the table? Do you think the mix will remain heavily weighted towards sale-leasebacks, or do you foresee traditional acquisitions becoming a bigger part of the picture here?

Eric Borden: Maybe just turning to the acquisition outlook, you know, how do you think the next six to 12 months plays out for you, you know, with rate cuts seemingly on the table. Do you think the mix will remain heavily weighted towards at least backs, or do you foresee traditional acquisitions becoming a bigger part of the picture here? Yeah, you know, our portfolio has been 80 to 90% constructed with sell lease backs. We believe in, you know, putting capital work in the context of the sell lease back where your counterparty is, is an operator filling a capital need.

Speaker Change: That's helpful. Maybe just turning to the acquisition outlook, how do you think the next 6 to 12 months plays out for you, with rate cuts seemingly on the table? Do you think the mix will remain heavily weighted towards sale-leasebacks, or do you foresee traditional acquisitions becoming a bigger part of the picture here?

Peter M. Mavoides: Yeah, you know, our portfolio has been 80 to 90% constructed with sale leasebacks. We believe in putting capital to work in the context of the sale leaseback, where your counterparty is a business tenant and an operator. Filling a capital need is just a higher-value-added way to deploy capital. And, you know, that viewpoint is independent of the rate environment. You know, we prefer to structure our own leases and write our own deals and not buy existing lease deals. So, you know, going forward, I think you should expect us to continue to be largely focused on executing sale leaseback transactions. Thank you.

Speaker Change: Yeah, you know, our portfolio has, you know, been 80 to 90 percent constructed with sale-leasebacks. We believe in, you know, putting capital to work in the context of the sale-leaseback where your counterparty is a business tenant and an operator. Filling a capital need is just a higher value-added way to deploy capital. And, you know, that viewpoint's independent of the rate environment.

Eric Borden: Thank you. I appreciate the time.

Pete Mavoides: It's just a higher value-added way to deploy capital. And, you know, that's that viewpoints independent of the rate environment. You know, we prefer to structure our own leases and write our own deals and not by existing lease deals. So, you know, going forward, I think you should expect us to continue to be largely focused on executing sell-leaseback transactions.

Speaker Change: You know, we prefer to structure our own leases and write our own deals and not buy existing lease deals. So, you know, going forward, I think you should expect us to continue to be largely focused on executing sale-leaseback transactions.

Eric Borden: Thank you. Appreciate the time.

Caitlin Burrows: Thank you. Our next question is from Caitlin Burrows with Goldman Sachs. Please proceed with your question.

Speaker Change: Thank you. I appreciate the time.

Speaker Change: Thank you.

Caitlin Burrows: Our next question is from Caitlin Burrows with Goldman Sachs. Please proceed with your question.

Speaker Change: Our next question is from Caitlin Burroughs with Goldman Sachs. Please proceed with your question.

Caitlin Burrows: Hi. Good morning, everyone.

Caitlin Burrows: Hi.

Caitlin Burrows: Good morning, everyone. Maybe just a follow up to that last one. And I know previously you mentioned how it's a good market for APRT given the lack of alternatives for your customers. But maybe ask another way is like, how do you expect your business and opportunity could change as rates come down? Maybe what could get worse for APRT, but what gets better? Yeah, I think, you know, there's always a value-add proposition to sell leaseback capital regardless of the capital markets condition. It just happens to be better in a tighter capital markets as rates come down. You know, we expect the competition to normalize, and we've seen some of that already with the prospects of rate cuts and, you know, competitors coming back to the market, the leveraged buyers becoming more competitive.

Caitlin Burroughs: Hi, good morning everyone. Maybe just a follow-up to that last one, and I know previously you mentioned how it's a good market for EPRT given the lack of alternatives for your customers, but maybe ask another way. It's like, how do you expect your business and opportunity could change as rates come down? Maybe what could get worse for EPRT, but what gets better?

Speaker Change: Yeah, I think...

Speaker Change: You know, there's...

Speaker Change: Always a value-add proposition to say at least back capital regardless of the capital markets condition. It just happens to be better in the tighter capital markets. As rates come down, we expect the competition to normalize, and we've seen some of that.

Peter M. Mavoides: Maybe just a follow-up to that last one, and I know previously you mentioned how it's a good market for EPRT given the lack of alternatives for your customers, but maybe ask another way. It's like, how do you expect your business and opportunities to change as rates come down? Maybe things could get worse for EPRT, but what gets better?

Peter M. Mavoides: Yeah, I think there's always a value-add proposition to say at least back capital, regardless of the capital markets condition. It just happens to be better in the tighter capital markets. As rates come down, we expect competition to normalize, and we've seen some of that already with the prospect of rate cuts and competitors coming back to the market, the leveraged buyers becoming more competitive, and all that manifests itself in downward pressure on terms and the cap rate, in terms of being the least term and bumps and everything that goes along with that.

Speaker Change: already, with the prospects of rate cuts and, you know, competitors coming back to the market, the leveraged buyers becoming more competitive.

Pete Mavoides: And more, and all that manifests itself in downward pressure on terms and cap rate, in terms being lease term and bumps and everything that goes along with that. And, you know, it's imperative for us to be reliable and be evaluated capital from our partner to relationships to differentiate ourselves from other capital providers. And that's what we intend to do. So, you know, over the, since bringing this company public, we've invested across a hyper-competitive, you know, market set.

Speaker Change: And more, and all that manifests itself in downward pressure on terms.

Speaker Change: And cap rate in terms of being lease term and bumps and everything that goes along with that. And, you know, it's imperative for us to be reliable and be evaluated capital partner to relationships to differentiate ourselves from other capital providers. And that's what we intend to do. So, you know, over the.

Peter M. Mavoides: It's imperative for us to be reliable and be a value-added capital partner in relationships to differentiate ourselves from other capital providers, and that's what we intend to do. So since bringing this company public, we've invested across a hyper-competitive market set, and there's a little less competition today, but we're certainly prepared to add value and continue to transact when competition normalizes.

Speaker Change: Since bringing this company public, we've invested across a hyper-competitive market set and there's a little less competition today, but we're certainly prepared to add value and continue to transact when competition normalizes.

Pete Mavoides: And, you know, there's a little less competition today, but we're certainly prepared to add value and continue to transact when competition normalizes. Okay. And then on the unit level rent coverage side, it looks like that declined a little bit in the quarter, still 3.7 times, but the exposure to the under one times increased slightly, so did the one to basically 1.5 times. So could you talk about who's in that bucket and whether there's anything proactive you can or want to do about that? Yeah. I would start by saying, you know, coverage is one risk factor, and we tend to look at coverage.

Peter M. Mavoides: Okay. And then on the unit-level rent coverage side, it looked like that declined a little bit in the quarter, still 3.7 times, but the exposure to the under one times increased slightly, so did the one to basically 1.5 times. So could you talk about who's in that bucket and whether there's anything proactive you can or want to do about that? Yeah, I would start by saying...

Speaker Change: Okay. And then on the unit level rent coverage side, it looked like that declined a little bit in the quarter, still 3.7 times, but the exposure to the under one times increased slightly, so did the one to basically 1.5 times. So could you talk about who's in that bucket and whether there's anything proactive you can or want to do about that?

Peter M. Mavoides: Yeah, I would start by saying, you know, coverage is one risk factor, and we tend to look at coverage and couple it with credit risk because, you know, coverage alone isn't going to result in a defaulted lease or rent remission. And so as we disclose our credit watch list every quarter, which is the intersection of credit risk and coverage risk, that is actually down, quarter over quarter, about 10 basis points from 100 basis points to 90 basis You know, as we think about The under one bucket and what you see there is a lot of our development sites coming online where the tenant has cash to pay rent against sites that aren't fully stabilized or even open and operating. So that's going to make that number a little artificially high.

Speaker Change: Yeah, I would start by saying, you know,

Speaker Change: Coverage is one risk factor and we tend to look at coverage and couple it with credit risk because

Pete Mavoides: And coupled with a credit risk because coverage alone isn't going to result in a default at least, or a rendition. And so, as we disclose, you know, our credit watch list every quarter, you know, which is the intersection of credit risk and coverage risk, you know, that is actually down quarter over quarter about 10 basis points from 100 basis points to 90 basis points. You know, as we think about the under one bucket and what you see there is a lot of our development sites coming online where the tenant has, you know, cash pay rent against sites that aren't fully stabilized or even open and operating.

Speaker Change: You know, coverage alone isn't going to result in a defaulted lease or a rent admission. And so, as we disclose, you know, our credit watch list every quarter, you know, which is the intersection of credit risk and coverage risk.

Speaker Change: That is actually down quarter over quarter, about 10 basis points from 100 basis points to 90 basis points. As we think about...

Speaker Change: The under one bucket and what you see there is a lot of our development sites coming online where the tenant has, you know, cash pay rent against sites that aren't fully stabilized or even open and operating.

Pete Mavoides: So that's going to make that number a little artificially high. And, you know, if we see an asset that we think is permanently impaired and there's a credit that we don't have confidence in being able to, you know, whether that impairment or fix the problem at the unit, you know, we'll look to sell it. And that's been an active part of our business plan and our business strategy, and we'll continue to do that. And so, you know, I think that as we said in the call, the portfolios in great shape. You know, these minor tweaks, you know, at the margin really doesn't change that macro perspective that the portfolio is forming very well and operating from strong base.

Speaker Change: So that's going to make that number a little artificially high.

Peter M. Mavoides: And if we see an asset that we think is permanently impaired and there's a credit we don't have confidence in being able to weather that impairment or fix the problem at the unit, we'll look to sell it. And that's been an active part of our business plan and our business strategy, and we'll continue to do that. And so I think, as we said in the call, the portfolio is in great shape. These minor tweaks at the margin really don't change that macro perspective that the portfolio is performing very well, and we're operating from a strong...

Speaker Change: And, you know, if we see an asset that we think is permanently impaired and there's a credit that we don't have confidence in being able to, you know, weather that impairment or fix the problem at the unit, you know, we'll look to sell it. And that's been an active part of our business plan and our business strategy and we'll continue to do that. And so,

Speaker Change: I think, as we said in the call, the portfolio is in great shape. These minor tweaks at the margin really doesn't change that macro perspective that the portfolio is performing very well and we're operating from a strong base.

Pete Mavoides: Thanks.

Unknown Executive: Thank you.

Speaker Change: Thanks.

Speaker Change: Thank you.

Smedes Rose: Our next question is from Shmeeds Rose with Citibank. Please proceed with your question.

Smedes Rose: Our next question is from Smedes Rose with Citibank. Please proceed with your question.

Speaker Change: Our next question is from Smedes Rose with Citibank. Please proceed with your question.

Smedes Rose: Hi, I think I just wanted to follow up a little bit on the last question around your tenant base because we're starting to see in other sectors, you know, some weakness. Not just in low-end consumers, but kind of flowing through the higher, you know, higher-end consumers, I'm wondering if you're hearing any feedback along these lines from your tenants in general.

Smedes Rose: Hi, I think I just wanted to follow up a little bit on the last question around your tenant base, because we're starting to see in other sectors some weakness, not just in low-end consumers but kind of flowing through to higher, you know, higher-end consumers. I'm wondering if you're hearing any feedback along those lines from your tenants in general.

Smedes Rose: Hi, I think I just wanted to follow up a little bit on the last question around your

Smedes Rose: tenant base because we're starting to see in other sectors, you know, some weakness.

Smedes Rose: Not just to low-end consumers, but kind of flowing through to higher, you know, higher-end consumers. I'm wondering if you're hearing any feedback along those lines from your tenants in general.

Pete Mavoides: Well, we aren't Shmeeds and, you know, keep in mind that, you know, we are passive landlords and we collect data on a, you know, one quarter lag. And so, you know, I think, you know, that the those sort of sentiments that you're hearing very real time, we wouldn't really see in our numbers for, you know, 90s, 120 days. Generally, you know, across the board, our industries are up from a coverage perspective with few exceptions, and, you know, the portfolio and our tenants are operating, you know, pretty strongly. And I think that's, you know, really tied to being in, you know, largely service and experience-based industries that aren't subject to discretionary spending.

Peter M. Mavoides: We aren't, Smedes, and, you know, keep in mind that, you know, we are passive landlords and we collect data on a, you know, one-quarter lag. And so, you know, I think, you know, those sort of sentiments that you're hearing very real-time, we wouldn't really see in our numbers for, you know, 90 to 120 days. Generally, you know, across the board, our industries are up from a coverage perspective, with few exceptions, and, you know, the portfolio and our tenants are operating, you know, pretty strongly, and I think that's really tied to being in, you know, largely service and experience-based industries that aren't subject to, you know, discretionary spending.

Smedes Rose: We aren't, Smedes, and, you know, keep in mind that, you know, we are...

Smedes Rose: Passive landlords and we collect data on a, you know, one quarter lag. And so, you know, I think

Smedes Rose: You know, those sort of sentiments that you're hearing very real-time, we wouldn't really see in our numbers for, you know, 90 to 120 days.

Speaker Change: Generally, across the board, our industries are up from a coverage perspective.

Speaker Change: With few exceptions and the portfolio and our tenants are operating pretty strongly and I think that's really tied to being in largely service and experience based industries that aren't subject to discretionary spending.

Pete Mavoides: And so, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know, you know Okay, and then sorry, if you covered this, I got on the call a little bit late, but are you still sort of expecting probably a little bit of a downward drift and cap rates as we move through the year at this point or is that changed at all?

Smedes Rose: Okay, and then sorry, if you covered this, I got on the call a little bit late. But are you still sort of expecting a little bit of a downward drift in cap rates as we move through the year at this point? Or has that changed at all? I think that's right, Smedes, about competition.

Speaker Change: Okay, and then sorry if you covered this, I got on the call a little bit late, but are you still sort of expecting probably a little bit of a downward drift in cap rates as we move through the year at this point, or has that changed at all?

Peter M. Mavoides: I think that's right, Smedes. As competition normalizes, and interest rates start coming down, we would expect to see some pressure on our initial cap rates off of these, you know, historically high levels.

Pete Mavoides: I think that's right, Smedes. As competition normalizes and interest rates are coming down, we would expect to see some pressure on our initial cap rates off of these historically high levels.

Smedes Rose: I think that's right, Smedes. As competition normalizes and interest rates start coming down, we would expect to see some pressure on our initial cap rates off of these, you know, historically high levels.

Unknown Executive: Okay, thank you. Okay.

Speaker Change: Okay, thank you.

Ki Bin Kim: Our next question is from Ki-Bin Kim with Truist Securities. Please proceed with your question.

Ki Kim: Our next question is from Keybend Kim, with Trueist Securities. Please proceed with your question.

Speaker Change: Our next question is from Ki-Bin Kim with Truist Securities. Please proceed with your question.

Ki Bin Kim: Thanks. Good morning.

Ki Kim: Thanks for the morning. Just a couple follow-ups on the unit level coverage that decreased a little bit.

Peter M. Mavoides: Just a couple of follow-ups. On the unit level coverage that decreased a little bit, I appreciate the comments around some newly developed assets that might be a drag on that as a stabilized cash flow, but maybe you can help us just break that down a little bit further. Under one-times coverage increased about 50 basis points in this quarter. But was that, like how much of that was driven by development versus some tenant categories that might have seen some deterioration?

Ki Bin Kim: Thanks. Good morning. Just a couple follow-ups.

Speaker Change: On the unit level coverage, that decreased a little bit.

Ki Kim: I appreciate the comments around some newly developed asses that might be a drag on that as a state-class cash flow, but maybe you can help us to spray that down a little bit further under one-time coverage increase, but 50 basis points in this quarter. Was that, like, how much of that was driven by development versus some, you know, tenant categories that might have seen some deterioration? Yeah, I would say, you know, we're not going to split it that finely: 50 basis points.

Ki Bin Kim: I appreciate the comments around some newly developed assets that might be a drag on that as they stabilize cash flow, but maybe you can help us just break that down a little bit further. The under one-times coverage increased about 50 basis points in this quarter. How much of that was driven by development versus some...

Speaker Change: You know, tenant categories that might have seen some deterioration.

Peter M. Mavoides: Yeah, I would say, you know, we're not going to split it that finely, 50 basis points. What I would say is, you know, the guys going into that group, in the non-development sector, are really situational, specific, you know, to those industries, like movies, or, you know, just an operator having some challenges. But there's nothing systemic or thematic about that across our industries. It's really operators that are struggling for whatever reason.

Speaker Change: Yeah, I would say, you know, we're not going to split it that finely, 50 basis points. What I would say is, you know, the guys going into that group in the non-development sector are really situational, specific, you know, to those industries, like movies or, you know, just an operator having some challenges, but there's nothing systemic or thematic about that across our industries, it's really operators that are struggling for whatever reason.

Pete Mavoides: What I would say is, you know, the guys going into that group in the non-development sector are really situational specific, you know, to those industries, like movies or, you know, just an operator having some challenges. But there's nothing systemic or thematic about that across our industries; it's really operators that are struggling for whatever reason?

Ki Bin Kim: Okay. And going back to the competitive landscape, which has been favorable for you guys, just curious, given your long history in the sector, if rates start to decline further, how quickly do competitors start to rise in your sector?

Pete Mavoides: And going back to the competitive landscape, which has been favorable for you guys, just curious, you know, given your long history and the sector, if we start to decline further, you know, how quickly do competitors start to rise up into your sector? Yeah, I think, you know, it's really, you know, when they have a cost of cash, or visibility to a cost of capital, right? And I think, you know, you think of public peers, you know, they're cost of capital prices on a daily basis. And for the private guys, visibility is really a bond market that supports them.

Speaker Change: Okay, and going back to the competitive landscape, which has been favorable for you guys, just curious, you know, given your long history in the sector, if rates start to decline further, you know, how quickly does, how quickly do competitors start to rise up in your sector?

Peter M. Mavoides: Yeah, I think, you know, it's really, you know, when they have a cost of capital or visibility to a cost of capital, right, and I think, you know, you think of public peers, their cost of capital prices on a daily basis, and for the private guys, visibility is really the bond market that supports them. So the private guys will lag a little bit until you get some more stability in the bond market, but, you know, the public guys, they'll go get right back into it and start bidding, and we've already seen some of that, and so, you know, I think it'll be quick.

Peter M. Mavoides: Yeah, I think, you know, it's really, you know, when they have a cost of capital or visibility to a cost of capital, right, and I think, you know, you think of public peers, you know, their cost of capital prices on a daily basis, and for the private guys, visibility is really a bond market that supports them, and so the private guys will lag a little bit until you get some more stability into the bond market, but, you know, the public guys, you know, they'll go get right back into it and start bidding, and we've already seen some of that, and so, you know, I think, you know, it'll be quick.

Pete Mavoides: And so the private guys will lag a little bit until you get some more stability into the bond market. But, you know, the public guys, you know, they'll go get right back into it and start dating. And we've already seen some of that. And so, you know, I think, you know, it'll be quick.

Ki Kim: Thank you, Cuban.

Cuban: Okay, thank you. Thank you, Cuban.

John Massocca: Our next question is from Cheryl Call with Wells Fargo.

Cheryl Call: Our next question is from Cheryl Call with Wells Fargo. Please proceed with your question.

Speaker Change: Our next question is from Cheryl Call with Wells Fargo. Please proceed with your question.

John Massocca: Please proceed with your question. This is John Gilachowski. So, kind of going to your portfolio breakout here. And you mentioned last quarter, there was a 15% soft cap for any industry. And you're kind of hitting that with car washes. How does that impact your ability to grow the pipeline moving forward? If you may be getting to a point, you know, what you can't really consider those deals as much.

John Kilichowski: This is John Kilichowski. So kind of going to your portfolio breakout here, you mentioned last quarter there was a 50% 15% soft cap for any industry, and you're kind of hitting that with car washes. How does that impact your ability to grow the pipeline moving forward? If you maybe get into a point, you know, where you can't really consider those deals as much?

John Kilichowski: This is John Kilichowski. Going to your portfolio breakout here, you mentioned last quarter there was a 15% soft cap for any industry and you're hitting that with car washes. How does that impact your ability to grow the pipeline moving forward if you get to a point where you can't really consider those deals as much?

John Massocca: Yeah, you know, we have a robust opportunity said, and it's incumbent upon our investment professionals to source, you know, adequate volume to support our investment feeds. We continue to invest in car washers. And it was $300 million, you know, in a quarter. That gives us, you know, $45 million incremental, just to stay, you know, flat. And then, you know, you price those deals accordingly. And so, you know, our opportunity set is robust.

Peter M. Mavoides: Yeah, you know, we have a robust opportunity set, and it's incumbent upon our investment professionals to source, you know, adequate volume to support our investment needs. We continue to invest in car washers, and if we do $300 million in a quarter, that gives us, you know, $45 million in incremental revenue just to stay, you know, flat. And then, you know, you price those deals accordingly. And so, you know, our opportunity set is robust, and, you know, the cap on car washes isn't constraining that in any way. I got it.

Speaker Change: Yeah, you know, we have a robust opportunity set and it's incumbent upon our investment professionals to source, you know, adequate volume to support our investment needs.

Peter M. Mavoides: We continue to invest in car washers and if we do $300 million in a quarter, that gives us $45 million incremental just to stay flat.

Peter M. Mavoides: And then, you know, you price those deals accordingly, and so, you know, our opportunity set is robust and, you know, the cap on car washes isn't constraining that in any way.

John Massocca: And, you know, the cap on car washes has been constrained that in a play. Got it.

John Kilichowski: Got it. And then just to follow up to the last question on the unit level coverage, is there anything there that is more of like a same store metric so that we could sort of parse out what may be development that's kind of artificially driving those numbers lower?

John Massocca: And then just to follow up to the last question on the unit level coverage, is there anything there that is more of a like a same store metrics so that we could sort of parse out what may be development that's kind of artificially driving those numbers lower? Not really, I mean it's, you know, and that's why we disclose our credit watch list. You know, I think disclosure on unit level coverage, you know, is informative, but that's a leading indicator of risk. And, you know, we disclose the same store sales number in our sub, which was, you know, a 1.4%, you know, that's a quarter over quarter number.

Speaker Change: Got it. And then just to follow up to the last question on the unit level coverage, is there anything there that is more of like a same-store metric so that we could sort of parse out what may be development that's kind of artificially driving those numbers lower?

John Kilichowski: Not really. I mean, it's, you know, and that's why we disclose our credit watch list. You know, I think disclosure on unit level coverage is informative, but that's a leading indicator of risk, and, you know, we disclose the same store sales number in our sub, which was, you know, up 1.4%. You know, that's a quarter over quarter number. We disclose our watch list, and we disclose our recoveries, and we think those are adequate kinds of data points, and that, you know, coverage, you know, is just one indicator, and that's going to ebb and flow over the quarters.

Speaker Change: Not really, I mean it's...

Speaker Change: And that's why we disclose our credit watch list. I think disclosure around unit level coverage is informative, but that's a leading indicator of risk. And we disclose the same store sales number in our SUP, which was up 1.4%. That's a quarter-over-quarter number.

John Massocca: We just close our watch list, and we just close our recoveries, and we think those are adequate kind of data points and that, you know, coverage, you know, is just one one indicator and that's going to have a flow of information. Got it.

John Kilichowski: We disclose our watch list and we disclose our recoveries, and we think those are adequate kind of data points, and that, you know, coverage, you know, is just one indicator, and that's going to ebb and flow over the course.

Michael Goldsmith: Thank you. Our next question is from Michael Goldsmith with UBS.

Speaker Change: Got it. Thank you.

Michael Goldsmith: Our next question is from Michael Goldsmith with UBS. Please proceed with your question.

Thank you.

Speaker Change: Our next question is from Michael Goldsmith with UBS. Please proceed with your question.

Michael Goldsmith: Please proceed with your question. Good morning. Thank you all for taking my question. You know, it's been touched on a couple of times on the call in the mixed data points on the consumer.

Michael Goldsmith: Good morning. Thanks a lot for taking my question. You know, it's been touched on a couple of times on the call and the mixed data points on the consumer. Recognize you have low exposure to low-end consumers, but just given the, you know, the uncertain backdrop, has that changed how you think about different tenant categories or individual tenants? Would you lean into certain categories or shy away from others in the current macro backdrop?

Michael Goldsmith: Good morning. Thanks a lot for taking my question. It's been touched on a couple of times on the call on the mixed data points on the consumer. I recognize you have low exposure to low-end consumer, but just given the uncertain backdrop, has that changed how you think about different tenant categories or individual tenants? Would you lean into certain categories or shy away from others in the current macro backdrop?

Michael Goldsmith: Recognize you have low exposure to low end consumer, but just given the, you know, the uncertain backdrop, does that change how you think about different tenant categories or individual tenant? Would you lean into certain categories or shy away from others in the current macro backdrop. Really, as an, and, you know, we, we've been very focused as we've built this platform on service and experience based industries that operate out of granular and fungible real estate properties, and we make 20 year investments. And, you know, this investment thesis has been developed over 20 years, and, and so, you know, year over year, ads and flows really don't materially change or underlying long dated investment thesis.

Peter M. Mavoides: And, you know, we've been very focused as we've built this platform on service and experience-based industries that operate out of granular and fungible real estate properties, and we make 20-year investments, and this investment thesis has been developed over 20 years. And so, year-over-year ebbs and flows really don't materially change our underlying long-dated investment thesis.

Peter M. Mavoides: It really hasn't, and, you know, we've been...

Peter M. Mavoides: We're very focused, as we've built this platform, on service and experience-based industries that operate out of granular and fungible real estate properties, and we make 20-year investments, and this investment thesis has been developed over 20 years.

Speaker Change: Year-over-year ebbs and flows really don't materially change our underlying long-dated investment thesis.

Mark Patten: Thanks for that, and as a follow-up, can you talk a little bit about the time horizon for DNA to, to, as a percentage to trend down? You've mentioned compensation expenses, a fact there. So any sort of notable developments, you're platform or anything that that you can see. To, to provide insight into how DNA percentage kind of goes down over time. Yeah, it's, it's been pretty linear as we've grown our assets or our DNA is a percent of revenue as, you know, trended downward and, you know, we, we think, you know, just looking at the comps in the industry can give you a pretty good picture of, you know, how to run the platform like this efficiently and, you know, there's, there's data points at 2 billion, 6 billion, 9 billion and 50 billion to kind of give you a sense of what that trend might look like, you know, our ambition is to run as efficiently as possible and, and better than market and, as we look at our peers and, and the, the other competitors in the market and so, you know, it, it's gone down, I don't know the exact numbers, but I think when we came public was probably about 11 today, it's 6, 7, it's under 6 and it's, it's going to continue to go down and, you know, there's, there's a very large competitors, you can assume that's a floor.

Michael Goldsmith: Thanks for that. And as a follow-up, can you talk a little bit about the time horizon for G&A as a percentage to trend down? You've mentioned compensation expense as a factor, so any sort of notable developments to your platform or anything that you can see to provide us insight into how the G&A percentage kind of goes down over time?

Thanks for that. And as a follow-up, can you talk a little bit about the time horizon?

for GNA as a percentage to trend down. You've mentioned compensation expense as a factor, so any sort of notable developments to your platform or anything that you can see to provide us insight into how GNA percentage kind of goes down over time?

Peter M. Mavoides: Yeah, it's been pretty linear as we've grown our assets. Our G&A as a percent of revenue has trended downward. And we think just looking at the comps in the industry can give you a pretty good picture of how to run a platform like this efficiently. And there are data points at $2 billion, $6 billion, $9 billion, and $50 billion to kind of give you a sense of what that trend might look like.

Yeah, it's...

Speaker Change: It's been pretty linear as we've grown our assets. Our G&A as a percent of revenue has trended downward.

We think, you know, just looking at the comps in the industry can give you a pretty good picture of...

You know, how to run a platform like this efficiently, and, you know, there's data points at 2 billion, 6 billion, 9 billion, and 50 billion to kind of give you a sense of what that trend might look like. You know, our ambition is to run as efficiently as possible and better than market, and as we look at our peers and the other competitors in the market.

Peter M. Mavoides: Our ambition is to run as efficiently as possible and better than the market, and as we look at our peers and the other competitors in the market, And so it's gone down. I don't know the exact numbers, but I think when we went public, it was probably about 11, and today it's 6, 7. It's under 6. And it's going to continue to go down. And you know, there's a very large competitor. You can assume that it's a floor.

You know, it's gone down, I don't know the exact numbers, but I think when we came public it was probably about 11, and today it's 6, 7. It's under 6. And it's going to continue to go down, and you know, there's a very large competitor, you can assume that's a floor.

Michael Goldsmith: Thank you very much.

Michael Goldsmith: Thank you very much. Good luck in the back half.

Michael Goldsmith: Good luck in the back half. Thank you.

Peter M. Mavoides: Hey, thank you very much. I appreciate it.

Thank you very much. Good luck in the back half.

Peter M. Mavoides: Thank you very much.

John James Massocca: Our next question comes from John Massocca with B. Reilly Securities. Please proceed with your question.

John Massocca: Our next question comes from John Massocca with B.

Our next question comes from John Massocca with B. Riley Securities. Please proceed with your question.

John Massocca: Riley Securities. Please proceed with your question. Good morning. Thank you. I know everybody covered a lot of grounds. Just kind of too quick detail once from me.

John James Massocca: Hey John. Hey John.

Good morning.

John James Massocca: I know we've already covered a lot of ground, just kind of two quick detail ones from me. The red lobsters that were handed back, were those in the quarter, and is that kind of reflected in the vacancy metrics that were reported? And I guess what else was in the property subject to lease termination if it did include red lobsters?

Hey John. Hey John.

I know we've already covered a lot of grounds, just kind of two quick detail ones from me. The red lobsters that were handed back, was that in the quarter and is that kind of reflected in the vacancy metrics that were reported? And I guess what else was kind of in the property subject to lease termination if it did include red lobster?

John Massocca: The red lobsters that were handed back was that in the quarter and is that kind of reflected in the vacancy metrics that were reported. And I guess what else was kind of in the property signature to least termination if it did include lobster. Well, the red lobsters were to the vacant bucket and five vacant assets during the quarter. Anything else, AJ? In the vacant bucket, if it's too few of us are probably in the convenience store. Yeah. So just a couple of them. Yeah. Three other assets. So hopefully I answered your question, John. Was there something else on it?

Peter M. Mavoides: Well, the red lobsters were put into the vacant bucket and were part of our five vacant assets during the quarter. Anything else, AJ?

Well, the red lobsters were put into the vacant bucket and part of our five vacant assets during the quarter. Anything else, AJ?

AJ Peel: It's in the vacant bucket at 2QSR Properties and Convenience Store.

Speaker Change: In the vacant bucket, you've got two QSR properties and a convenience store.

Peter M. Mavoides: So just a couple of, you know, three other assets. So hopefully, that answers your question, John. Was there something else on it? It makes sense. Nope, that was it.

Peter M. Mavoides: So just a couple of, you know, three other assets. So hopefully that answers your question, John . Was there something else on it? It makes sense. Nope, that was it.

John Massocca: It makes sense. Nope. That was it.

John James Massocca: It makes sense. Nope. And I guess because you haven't historically had a ton of this in the portfolio, but what's the outlook for repositioning those properties? Are you still kind of inclined to sell them, or is there any possibility of re-tenanting those assets?

John Massocca: And I guess because you haven't historically added a ton of this in the portfolio. But what's the look towards revisiting those properties? Are you still kind of inclined to sell them? Or is there any possibility of returning those assets? Yeah. Our process is basically to hire a qualified and experienced local broker to find the best economic outcome for least or sale. And we tend to be indifferent. We just try to find what works best for the asset. And so, you know, generally, you know, selling to a developer who is then going to try to find out what's the plan for swapping out or not swapping out the kind of remaining draw on the new term loan.

And I guess because you haven't historically had a ton of this in the portfolio, but what's the look towards repositioning those properties? Are you still kind of inclined to sell them, or is there any possibility of re-tenanting those assets?

Peter M. Mavoides: Our process is basically to hire a qualified and experienced local broker to find the best economic outcome for lease or sale. We tend to be indifferent.

Yeah, our...

Our process is basically to hire a qualified and experienced local broker to find the best economic outcome for lease or sale and we tend to be indifferent and we just try to find what works best for the asset.

Peter M. Mavoides: We just try to find what works best for the asset. Generally, selling to a developer who is then going to try to re-tenant is a less attractive outcome. And so, we're really only selling assets after we've not been able to find a tenant to take them. So, we're working hard down a dual track to find solutions for all five of those assets in our vacant bucket.

And so, you know, generally, you know, selling to a developer who is then going to try to re-tenant is a less attractive outcome.

And so, you know, we're really only selling assets after, you know, we've not been able to find a tenant to take them. So we're working hard down, you know, a dual track to, you know, find solutions for all five of those assets in our vacant bucket.

Mark E. Patten: And then, Mark, sorry if I missed this earlier in the call, but what's the plan for swapping out or not swapping out the kind of remaining draw on the new term loan? Are you going to swap that once it's drawn, or are there any potential thoughts of leaving that floating, just given where the interest rate environment is today? Yeah, I appreciate that.

Mark Patten: And then Mark, sorry if I missed this earlier in the call. But what's the plan for swapping out or not swapping out the kind of remaining draw on the new term loan? Are you going to swap that once drawn, or is there any potential thoughts leaving that floating just given where the interest rate environment is today? Yeah, appreciate that. I think our primary intent is that we would swap it out when we drew it. Haven't really looked at thinking thinking through leaving it floating. Just don't think there's, despite your appropriate point, that there might be some reduction in rates.

Cheryl Call: And then, Mark, sorry if I missed this earlier in the call, but what's the plan for swapping out or not swapping out the kind of remaining draw on the new term loan? Are you going to swap that once it's drawn, or is there any potential thoughts of leaving that floating just given where the interest rate environment is today?

Mark E. Patten: Yeah, I appreciate that. I think our... The primary intent is that we would swap it out when we draw it. I haven't really looked at thinking through leaving it floating. I just don't think there's an appropriate point at which there might be some reduction in rates, just our plan is to swap it when we...

Yeah, I appreciate that. I think our...

primary intent is that we would swap it out when we drew it haven't really looked at thinking thinking through leaving it floating just don't think there's despite your

Appropriate point that there might be some reduction in rates just our plan is to is to swap it when we

Mark Patten: Our plan is to swap it when we're.

John James Massocca: Okay, that's it for me. Thank you very much.

John Massocca: Okay, that's it for me. Thank you very much. Thanks.

Great. That's it for me. Thank you very much.

Operator: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. One moment while we poll for questions. Our next question comes from Josh Dennerlein with Bank of America. Please proceed with your question.

Unknown Executive: As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. One moment while we pull for questions.

As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. One moment while we poll for questions.

Joshua Dennerlein: Our next question comes from Josh Dennerland with Bank of America. Please proceed with your question.

Our next question comes from Josh Dennerlein with Bank of America. Please proceed with your question.

Joshua Dennerlein: I was curious, for the deals that you're pricing today, how did the spread to the cost of capital compare to maybe what you're considering as normal, and how much does that change just given the kind of the rally that you've seen over the past month?

Joshua Dennerlein: I was curious, for the deals that you're pricing today, how do the spreads to the cost of capital compare to maybe what you're considering as normal, and how much does that change just given time to rally that you've seen over the past month? Yeah, I would start by saying, we don't fake; we don't price deals based upon our cost of capital. We price deals based upon the market dynamic and our perception of the appropriate risk-adjusted returns for each individual investment. The spread to our cost of capital is kind of an output, not an input. We've seen that spread fluctuate from as low as 150 basis points to as high as 300 basis points or plus.

I was curious, for the deals that you're pricing today, how did the spreads to the cost of capital compare to maybe what you're considering as normal, and how much does that change, just given kind of the rally that you've seen over the past month?

Peter M. Mavoides: Yeah, I would start by saying we don't price deals based upon our cost of capital. We price deals based upon the market dynamics and our perception of the appropriate risk-adjusted returns for each individual investment. The spread to our cost of capital is kind of an output, not an input. We've seen that spread fluctuate from as low as 150 basis points to as high as 300 basis points or plus. Currently, depending on where you pay our cost of capital, it's somewhere in the twos and certainly adequate and healthy for us to continue to invest.

Yeah.

I would start by saying we don't price deals based upon our cost of capital. We price deals based upon the market dynamic and our perception of the appropriate risk-adjusted returns for each individual investment. The spread to our cost of capital is kind of an output, not an input.

We've seen that spread.

fluctuate from as low as 150 basis points to as high as 300 basis points or plus, you know, currently, you know, depending on where you pay or cost of capital, it's somewhere in the twos and certainly adequate and healthy for us to continue to invest.

Joshua Dennerlein: You know, currently, depending on where you pay our cost of capital, it's somewhere in the twos and certainly adequate and healthy for us to continue to invest. Yeah, we've certainly gotten to benefit from the stock price movement, and then also a much more favorable spread on our current 10-year bond issuance. So yeah, to pay its point, we've probably seen a 50 basis point kind of appreciation in our net investment spread.

Mark E. Patten: Yeah, we've certainly gotten a benefit from, A, the stock price movement, and then also a much more favorable spread on our current 10-year bond issuance. So, yeah, to Pete's point, we've probably seen a 50-basis point kind of appreciation in our growth. Net investment spread.

Yeah, we've certainly gotten a benefit from, A, the stock price movement, and then also a much more favorable spread on our current 10-year bond issuance. So, yeah, to Pete's point, we've probably seen a 50 basis point kind of appreciation in our...

Net investment spread.

Joshua Dennerlein: Great, and also just thinking about the acquisitions kind of going forward, how much can you buy before hitting your leverage targets.

Joshua Dennerlein: Great. And also, just thinking about the acquisitions kind of going forward, how much can you buy before hitting your leverage targets?

Great. And also, just thinking about the acquisitions kind of going forward, how much can you buy before hitting your leverage targets?

Peter M. Mavoides: As Rob said earlier, we have somewhere between 700 and a billion in dry powder, depending on, you know, within our targeted range.

Mark Patten: As Rob said earlier, we have somewhere between a 700 to a billion in dry powder, depending on, you know, within our targeted range.

As Rob said earlier, we have somewhere between $700 to $1 billion in dry powder.

depending on, you know, within our targeted range.

Joshua Dennerlein: And I guess just quickly, I know we were talking a little bit about the watch list.

Joshua Dennerlein: And I guess just quickly, I know we were talking a little bit about the watch list, if there's been any updates either on individual tenants or if you can also make any comments on, I think it was brought up on the last earnings call, Red Robin, only just because of some credit downgrades going across them.

And I guess just quickly, I know we were talking a little bit about the watch list, if there's been any updates either on individual tenants or if you can also make any comments on

Mark Patten: If there's been any updates, either on individual tenants or if you can also make any comments on, I think it was brought up on the last earnings calls, Red Robin, only just because of some credit downgrades going across them. Yeah, you know, I go back to the commentary that the portfolio is in great shape and performing well. You know, our Red Robin investment, you know, back to my earlier comment of picking 20 year investments, and certainly I don't think our perspective on Red Robin is going to change in a quarter. You know, they continue to our assets continue to perform well.

I think it was brought up on the last earnings call, Red Robin, only just because of some credit downgrades going across them.

Peter M. Mavoides: Yeah, you know, I go back to the commentary that the portfolio is in great shape and performing well. You know, our Red Robin investment, back to my earlier comment of making 20-year investments, and, you know, certainly I don't think our perspective on Red Robin is going to change in a quarter. You know, they continue to, our assets continue to perform well. There may be some noise around the equity story of that company, but, you know, the restaurant assets that we own are doing fine.

Yeah, you know, I go back to the commentary that the portfolio is in great shape and performing well. You know, our Red Robin investment, you know, back to my earlier comment of making 20-year investments, and, you know, certainly I don't think our perspective on Red Robin is going to change in a quarter. You know, they continue to, our assets continue to perform well.

Mark Patten: There may be some noise around the equity story of that company, but you know, the restaurant assets that we own are doing fine.

There may be some noise around the equity story of that company, but the restaurant assets that we own are doing fine.

Joshua Dennerlein: Great, thank you so much.

Spencer Alloway: Thank you. Our next question comes from Spencer Alloway with Green Street Advisors.

Great, thank you so much.

Thank you.

Joshua Dennerlein: Great. Thank you so much. Thank you. Our next question comes from Spenser Allaway with Green Street Advisors. Please proceed with your question.

Our next question comes from Spenser Allaway with Green Street Advisors. Please proceed with your question.

Spencer Alloway: Please proceed with your question. Thank you. Maybe just one more on your opportunities that acquisition continue to fall within your targeted industries, as you mentioned, but just curious if there's been anything you've looked at.

Spenser Bowes Allaway: Thank you. Maybe just one more on your opportunity set. Acquisitions continue to fall within your targeted...

Thank you. Maybe just one more on your opportunity set. Acquisitions continue to fall within your targeted industries, as you mentioned, but just curious if there's been anything you've looked at that would be an interesting new venture for EPRT.

Pete Mavoides: That would be an interesting new venture for EPRT. Yes, sorry, this point, you, Spencer, but now, you know, we're sticking to what we do. You know, we conduct sourcing activities and our verticals to identify high quality operators that are growing and who value us, and, you know, that's really where we spend our energy and where our opportunity set comes from. So we're fortunate we don't need to really expand the box, and we're continuing to kind of invest in our course in our core industries with our core thesis. Thank you.

Peter M. Mavoides: Yeah, sorry to disappoint you, Spenser, but no, we're sticking to what we do. We conduct sourcing activities in our verticals to identify high-quality operators that are growing and who value us, and that's really where we spend our energy and where our opportunity set comes from. So we're fortunate we don't need to really expand the box, and we're continuing to kind of invest in our core industries with our core thesis.

Yes, sorry to disappoint you Spenser, but no, you know, we're sticking to what we do.

You know, we conduct sourcing activities in our verticals to identify high-quality operators that are growing and who value us, and, you know, that's really where we spend our energy and where our opportunity set comes from, so we're fortunate we don't need to really expand the box, and we're continuing to kind of invest in our course.

and our core industries with our core thesis.

Peter M. Mavoides: And then, Pete, you also mentioned the persistent bid-ask spread that weighed on dispositions in 2Q. Can you just comment on how wide that spread was in the quarter, and has that changed at all thus far into 3Q? It hasn't changed in 3Q, and I would say it's probably anywhere between 25 to 75 basis points between where we would sell a well-leased performing asset and where the market would buy it. And if you think about our dispositions in the quarter at a 7.3 of really at-risk assets, I think you see that in the coverage of high-quality, well-performing assets. I think our strike price would be in the low sixes, so I think that's kind of where the bid-ask would be.

And then, Pete, you also mentioned the persistent bid-ask spread that weighed on dispositions and M2Q. Can you just comment on how wide that spread was in the quarter, and has that changed at all thus far in the 3Q?

It hasn't changed in 3Q, and I would say it's probably anywhere between 25 to 75 basis points between where we would sell.

And on the last slide, we have a well-leased performing asset and where the market would buy it, and if you think about our dispositions in the quarter.

You know I had a 7-3 of really at-risk assets. I think you see that in the coverage, you know.

The high quality, well performing asset, I think, you know, our strike price would be in the low sixes, so, you know, I think that's kind of where the bid ask would be.

Thank you.

Thank you.

Greg Michael McGinniss: Our next question comes from Greg McGinniss with Scotia Bank. Please proceed with your question.

Our next question comes from Greg McGinniss with Scotiabank. Please proceed with your question.

Elmer Chang: Hi, good morning again. This is Elmer Chang on with Greg.

Hi, good morning again. This is Elmer Chang on with Greg. We just have a couple follow-up questions.

Peter M. Mavoides: We just had a couple of follow-up questions. So most of your top 10 in industry exposure seem to be highly fragmented industries whereby you can jump in on an investment in a consolidation event. What has M&A Academy been like year-to-date in your top tenant industries, and how do you see that playing out in the rest of the year?

So most of your top ten in industry exposures seem to be highly fragmented industries whereby you can jump in on an investment in a consolidation event.

What has M&A activity been like to date in your top tenant industries and how do you see that playing out in the rest of the year?

Peter M. Mavoides: You know, M&A activity is generally down, and, you know, obviously with capital harder to come by, and so, you know, we're transacting at a higher level despite a depressed level of M&A activity, which is really an indicator of the challenges of getting alternative financing. And so we would think M&A would pick up as capital markets normalize, rates start coming down, and, you know, multiples come, you know, expand, and, you know, more sellers are willing to sell, and that should create more opportunities for us.

You know, M&A activity is generally down, and you know, obviously with capital harder to come by, and so, you know, we're transacting at a higher level despite a depressed level of M&A activity.

which is really an indicator of the challenges to get alternative financing. And so we would think M&A would pick up as capital markets normalize and rates start coming down and multiples come.

expand and, you know, more sellers are willing to sell. And that should create more opportunities for us. That will be offset by, you know, a broader range of capital alternatives for people transacting.

Peter M. Mavoides: That will be offset by, you know, a broader range of capital alternatives for people transacting. So, on balance, we think it will be neutral, but there should be more consolidation in M&A activity in the back half of the year.

So, on balance, we think it will be neutral, but there should be more consolidation and M&A activity in the back half of the year.

Peter M. Mavoides: Got it. That makes sense. And then. Similar question to those asked earlier about expectations of a rate cut, increasing, I think you just mentioned it as well, but, Do you see, with competition starting to come back to the market, do you see that impacting lease terms and rent bumps in your current pipeline that is further along in negotiations or more so in your newer negotiations?

Got it. That makes sense.

And then similar question to those asked earlier about expectations of a rate cut.

increasing, I think you just mentioned it as well, but...

Do you see, with competition starting to come back to the market, do you see that impacting lease term and rent bumps in your current pipeline that is further along in negotiations or more so in your newer negotiations?

Peter M. Mavoides: Yeah, I would say the current pipeline is relatively consistent with what we experienced in the second quarter and that, you know, we would expect the competition to impact cap rates in terms of, you know, into probably the fourth quarter and first quarter of next year.

Yeah, I would say the current pipeline is relatively consistent with what we experienced in the second quarter, and that, you know, we would expect the competition to impact cap rate in terms, you know, into probably the fourth quarter and first quarter of next year.

Pete Mavoides: Great, thank you.

Greg Michael McGinniss: Okay, great. Thank you.

Okay, great. Thank you.

Unknown Executive: We have reached the end of the question and answer session.

Peter M. Mavoides: We have reached the end of the question and answer session. I would now like to turn the call back over to Pete Mavoides for closing comments.

We have reached the end of the question and answer session. I would now like to turn the call back over to Pete Mavoides for closing comments.

Pete Mavoides: I would now like to turn the call back over to Pete Mavoides for closing comments. Great. Well, thank you all for your time today. We look forward to the rest of the summer and engaging with you all in September, as we're on the road with several investor conferences coming up. And so, thank you for your support.

Peter M. Mavoides: Great. Well, thank you all for your time today. We look forward to the rest of the summer and engaging with you all in September as we're on the road with several investor conferences coming up, and so thank you for your support. Have a great day. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

Great. Well, thank you all for your time today. We look forward to the rest of the summer and engaging with you all in September as we're on the road with several investor conferences coming up and so thank you for your support. Have a great day.

Operator: The conference has ended. Please disconnect your lines. Thank you.

Unknown Executive: Have a great day.

Unknown Executive: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation. The conference has ended. Please disconnect your lines. Thank you.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

The conference has ended, please disconnect your lines.

Thank you.