Q2 2024 Four Corners Property Trust Inc Earnings Call

Good morning all and thank you for joining us for the FCPT second quarter 2024 financial results conference call.

Kali: 2024 financial results conference call. My name is Kali, and I'll be the call coordinator for today. During the presentation, you can ask a question by pressing star followed by one on your telephone keypad, and to remove yourself from that line of questioning, you can press star followed by two. I'll now hand over to Patrick Wernig, who will begin. Please go ahead.

Carly: My name is Carly, and I'll be the cool coordinator for today. During the presentation, you can register a question by pressing staff, followed by one on your telephone keypad, and to remove yourself from that line of questioning, you can press staff, followed by two.

Carly: My name is Carly and I'll be the call coordinator for today. During the presentation you could register a question by pressing star followed by one on your telephone keypad and to remove yourself from that line of questioning you can press star followed by two. I'll now hand over to Patrick Wernig to begin. Please go ahead.

Carly: I'll now hand over to Patrick Wernig. Let's begin.

Patrick Wernig: Thank you, Garly. During the course of this call, we will make forward-looking statements, which are based on our beliefs and assumptions. Actual results will be affected by known and unknown factors that are beyond our control or ability to predict. Our assumptions are not a guarantee of future performance, and some will prove to be incorrect.

Patrick Wernig: During the course of this call, we will make forward-looking statements that are based on our beliefs and assumptions. However, actual results will be affected by known and unknown factors that are beyond our control or ability to predict. Our assumptions are not a guarantee of future performance, and some will prove to be incorrect.

Patrick Wernig: For more detailed description of some potential risks, please refer to our SEC filings, which can be found at FCPT.com.

Patrick Wernig: For a more detailed description of some potential risks, please refer to our SEC filings, which can be found at fcpt.com. All the information presented on this call is current as of today, August 1st, 2024. In addition, reconciliation to non-GAAP financial measures presented on this call, such as FFO and AFFO, can be found in the company's supplemental report. With that, I will turn the call over to Bill.

Patrick Wernig: All the information presented on this call is current as of today, August 1, 2024. In addition, reconciliation to non-GAAP financial measures presented on this call, such as FFO and AFO, can be found in the company's simple mental report.

Bill: With that, I will turn the call over to Bill. Good morning. Thank you for joining us to discuss our second quarter results. I will make introductory remarks. Josh will comment further on the investment market, and Patrick will discuss our financial results in capital position. We reported second quarter AFFO of 43 cents per share, which is up 1 cent or 2.4 percent from Q2 last year. Our existing portfolio continues to perform very well with higher rent collections and occupancy. Our EBITDA or rent coverage in the second quarter was 4.9 times for the majority of our portfolio that reports this figure.

Bill: Good morning. Thank you for joining us to discuss our second quarter results. I will make introductory remarks, Josh will comment further on the investment market, and Patrick will discuss our financial results and capital position. We reported second-quarter AFFO of 43 cents per share, which is up 1 cent or 2.4% from Q2 last year. Our existing portfolio continues to perform very well, with high rent collections and occupancy. Our EBITDA to rent coverage in the second quarter was 4.9 times for the majority of our portfolio that reports this figure.

Patrick Wernig: Good morning.

Speaker Change: You for joining us to discuss our second quarter results I will make introductory remarks, Josh will comment further on the investment market and Patrick will discuss our financial results and capital position.

Josh: We reported second quarter <unk> of 43 per share, which was up one or two 4% from Q2 last year.

Speaker Change: Our existing portfolio continues to perform very well with high rent collections in occupancy or EBITDAR to rent coverage in the second quarter was four nine times for the majority of our portfolio that reports this figure.

Bill: This remains amongst the strongest coverage within the industry. As an update on the restaurant industry performance, we are seeing overall positive performance. According to Baird Research, year-over-year sales for the restaurant sector as a whole improved in the second quarter in the 5% range, after 2% results in the first quarter. Similar to last quarter, casual dining saw small, but improving, growth. We note this broad view of the industry includes local restaurants and small regional chains.

Bill: This remains amongst the strongest coverage within the industry. As an update on the restaurant industry performance, we are seeing overall positive performance. According to Baird Research, year-over-year sales for the restaurant sector as a whole proved in the second quarter in the 5 percent range after 2 percent results in the first quarter. Similar to last quarter, casual dining saw small, but improving the clients of strong levels from the prior year. We note this broad view on the industry includes local restaurants and small regional chains. FCPT's casual dining operators are national brands and sector leaders that generally outperform the industry.

Speaker Change: <unk> remains amongst the strongest coverage within the industry.

Bill: As an update on the restaurant industry performance, we are seeing overall positive performance. According to Baird research year over year sales for the restaurant sector as a whole proved in the second quarter in the 5% range.

Bill: After 2% results in the first quarter.

Speaker Change: Similar to last quarter.

Speaker Change: Casual dining saw small but improving.

Bill: Declines of strong levels from the prior year. We note. This broad view on the industry include local restaurants, and small regional chains F. Cpt's casual dining operators are national brands and sector leaders that generally outperformed the industry for example, Darden and reported a 4% increase for longhorn and a modest one 5% decline in same store.

Bill: FCPT's casual dining operators are national brands and sector leaders that generally outperform the industry. For example, Darden reported a 4% increase for Longhorn and a modest 1.5% decline in same-serve sales for Olive Garden for the quarter ending May 26, with an overall increase of 1.6% for fiscal year 2024. Overall, for Darden Operated Brands, restaurant-level EBITDA margins improved 20 basis points to 20.9%, reflecting commodity pricing and productivity improvement. Our second-largest tenant, Brinker, reported chilly same-store growth of 3.5%.

Bill: For example, Darden reported a 4 percent increase for LongHorn and a modest 1.5 percent decline in sales for Olive Garden for the quarter and May 26. With an overall increase of 1.6 percent for fiscal year 2024. Overall, for garden operated brands, restaurant level EBITDA margins improved 20 basis points to 20.9 percent, reflecting commodity pricing and productivity improvements. Our second largest tenant, Brinker, reported chilly, same-store growth of 3.5 percent. In their restaurant, level EBITDA margin improved 90 basis points to 14.1 percent for their latest quarter ended March 27. We also note Darden continues to see external growth opportunities.

Bill: Sales for Olive garden for the quarter ending May 26.

Speaker Change: With an overall increase of one 6% for fiscal year 2024.

Speaker Change: Overall for Darden operated brands restaurant level, EBITDA margins improved 20 basis points to 29%, reflecting commodity pricing and productivity improvements.

Speaker Change: Our second largest tenant Brinker reported chili's same store growth of three 5%.

Bill: At the restaurant level, EBITDA margin improved 90 basis points to 14.1% for their latest quarter ended March 27. We also know Darden continues to see external growth opportunities. The company recently announced the acquisition of the casual dining Tex-Mex brand Chewy's. Chewy's has 101 locations and will be the 10th brand under the Darden umbrella.

Bill: And their restaurant level EBITDA margin improved 90 basis points to 14, 1% for their latest quarter ended March 27th.

Bill: We also know Darden continues to see external growth opportunities. The company recently announced the acquisition of casual dining Tex Mex brand choice choice has 101 locations and will be the 10th brand under the Darden umbrella.

Bill: The company recently announced the acquisition of casual dining text next brand Chouis. Chouis has 101 locations and will be the 10th brand under the Darden umbrella. I would imagine the key intent would be to grow this brand store count in the near term. Importantly, we remain disciplined allocators of capital. As we've stated to the past several quarters, we have established mental models and structured our team incentives to discourage deploying capital just to grow the company's size without also increasing pressure metrics of earnings or intrinsic value. Our investment team compensation goals are not tied to acquisition volumes, and we have never given acquisitions or earnings guidance.

Bill: I would imagine the key intent would be to grow this brand's store count in the near term. However, importantly, we remain disciplined allocators of capital. As we've stated in the past several quarters, we have established mental models and structured our team incentives to discourage deploying capital just to grow the company's size without also increasing per share metrics of earnings or intrinsic value. Our investment team compensation goals are not tied to acquisition volumes, and we've never given acquisition or earnings guidance.

Speaker Change: I would imagine a key intent would be to grow this brand store count in the near term.

Bill: Importantly, we remain disciplined allocators of capital as we've stated in the past several quarters, we have established mental models and structure our team incentives to discourage deploying capital just to grow the company size without also increasing per share metrics of earnings or intrinsic value.

Bill: Our investment team compensation goals are not tied to acquisition volumes and we've never given acquisitions or earnings guidance.

Bill: These mental models and team structure have allowed us to remain nimble, and we believe that we have operated successfully through today's environment. As such, we are seeing a lot of interesting opportunities that both are quality guidelines and are priced in a manner that makes sense for FCPT, by which I mean accretive. We will continue to look to add to the pipeline in a meaningful way in the second half of the year while maintaining our quality standards. Regarding Red Lobster, we have been in communication with the management Fortress and external advisors since they entered into bankruptcy.

Bill: These mental models and team structure have allowed us to remain nimble, and we believe that we have operated successfully in today's environment. As such, we are seeing a lot of interesting opportunities that fit both our quality guidelines and are priced in a manner that makes sense for FCPT, by which I mean accretive. We will continue to look to add to the pipeline in a meaningful way in the second half of the year while maintaining our quality standards.

Bill: These mental models and team structure have allowed us to remain nimble and we believe that we have operated successfully through today's environment.

Speaker Change: We're seeing a lot of interesting opportunities that fit both our quality guidelines.

Bill: Priced at a matter that makes sense for F CPT by which I mean accretive.

Bill: We will continue to look to add to the pipeline in a meaningful way in the second half of the year, while maintaining our quality standards.

Bill: Regarding Red Lobster, we've been in communication with the management, Fortress, and external advisors since they entered into bankruptcy. As we stated last quarter, our 18 stores are well covered and profitable, and after reviewing the store's latest updated financials as of May, they continue to be. Importantly, our conversations with Red Lobster have also confirmed our belief that our stores are performing well and in strong locations. While negotiations and proceedings are ongoing, we expect all of our Red Lobster locations to remain open, with there to be very minimal or no disruption from a rent perspective.

Speaker Change: Regarding red lobster, we've been in communication with the management fortress and external advisors since they entered into bankruptcy as we stated last quarter, our 18th stores are well covered and profitable.

Bill: As we stated last quarter, our 18 stores are well covered and profitable, and after reviewing the stores' latest updated financials as of May, they continue to be. Importantly, our conversations with Red Lobster have also confirmed our belief that our stores are performing well and in strong locations. While negotiations and proceedings are ongoing, we expect all of our Red Lobster locations to remain open for there to be very minimal or no disruption from a rent perspective. We think this speaks to the quality of FCPT's underwriting and asset selection process. That said, we note that the bankruptcy process is still ongoing, and we, along with our other landlords, are awaiting official confirmation.

Bill: After reviewing the stores latest update updated financials as of May they continue to be.

Bill: Importantly, our conversations with Red lobster have also confirmed our belief that our stores are performing well and in strong locations, while negotiations and proceedings are ongoing we expect all of our red lobster locations to remain open.

Bill: Further it would be very minimal or no disruption from a rent perspective.

Bill: We think this speaks to the quality of SCPT's underwriting and asset selection process. That said, we note that the bankruptcy process is still ongoing, and we, along with their other landlords, are awaiting official confirmation. We expect them to exit the restructuring process before the end of Q3.

Speaker Change: This speaks to the quality of of Cpt's underwriting and asset selection process that.

Bill: We note that the bankruptcy process is still ongoing.

Bill: And we along with other landlords are awaiting official confirmation.

Bill: We expect them to exit the restructuring process before the end of Q3. On the issue of potential credit issues, we wanted to remind investors that FCPT's medical retail portfolio specifically avoids all pharmacy and medical office buildings. We have a graded vanishing that our portfolio was formed after the advent of the cell phone, online shopping, and other new trends. We take a cautious approach to general retail merchandise, dollar stores, car wash, and large box retail, including theater and gyms. While potential softening and consumer spending will rip through the entire economy, we believe our portfolio is very well positioned.

Bill: We expect them to exit the restructuring process before the end of Q3.

Bill: On the issue of potential credit issues, we wanted to remind investors that FCP's medical retail portfolio specifically avoids all pharmacy and medical office buildings. We have a great advantage in that our portfolio was formed after the advent of COVID-19, of the cell phone, online shopping, and other new trends. We take a cautious approach to general retail merchandise, dollar stores, car wash, and large box retail, including theaters and gyms. While a potential softening in consumer spending will ripple through the entire economy, we believe our portfolio is very well positioned. With that, I'll turn it over to Josh to further discuss the investment environment.

Speaker Change: On the issue of potential credit issues, we wanted to remind investors that fcp's medical retail portfolio, specifically avoids all pharmacy and medical office buildings, we have a great advantage in that our portfolio was formed after the advent.

Josh: Of the cell phone on my shopping and other new trends.

Josh: We take a cautious approach to general retail merchandise dollar stores, Carwash and large box retail, including theater and gyms.

Bill: Well the potential softening in consumer spending will ripple through the entire economy. We believe our portfolio is very well positioned with that I'll turn it over to Josh to further discuss the investment environment.

Josh: With that, I'll turn it over to Josh to further discuss the investment environment. Thank you, Bill. During the quarter, FCPT acquired 17 properties for $45.5 million at a 7.2% cap rate, roughly 30 pH point improvement from last quarter. The acquisitions this quarter will roughly split between auto service and medical retail properties at 49% and 47% of our volume, respectively, the balance being a single casual dining restaurant. For the year, we've been more weighted to medical retail, with 61% of our volume coming in that category. As we stated before, these sectors all have similar pricing and quality, but the opportunities we close can vary from quarter to quarter.

Bill: Yeah.

Josh: Thank you Bill.

Josh: During the quarter, FCPT acquired 17 properties for $45.5 million at a 7.2% cap rate, roughly 30 basis points improvement from last quarter. The acquisitions this quarter were roughly split between auto service and medical retail properties at 49% and 47% of our volume, respectively, with the balance being a single casual dining restaurant.

Josh: During the quarter F. CPT acquired 17 properties for $45 $5 million and a seven 2% cap rate roughly 30 basis point improvement from last quarter. The acquisitions. This quarter were roughly split between auto service and medical retail properties at 49% and 47% of our volume respectively. The Bal.

Josh: <unk> being a single casual dining restaurant.

Josh: For the year, we've been more weighted to medical retail, with 61% of our volume coming in that category. As we've stated before, these sectors all have similar pricing and quality, but the opportunities we close can vary from quarter to quarter. We still expect that we will be roughly even between these categories over the long term.

Josh: For the year, we've been more weighted to medical retail was 61% of our volume coming in that category. As we stated before these sectors all have similar pricing and quality, but the opportunities we closed can vary from quarter to quarter.

Josh: We still expect that we will be roughly even between these categories over the long term. Our largest single transaction this quarter was a $20 million sale east back of eight properties with Mavis Tire. Mavis is a large consolidator in the auto service space with over 1,800 locations nationally. We had acquired some properties of Mavis from other landlords in the past, but this was our first direct sale East back with them. This is a case where we have been interested in this brand for some time, and it has a way for pricing to meet our return thresholds.

Josh: We still expect that we will be roughly even between these categories over the long term.

Josh: Our largest single transaction this quarter was a $20 million sale each of eight properties with Mavis Tire. Mavis is a large consolidator in the auto service space with over 1,800 locations nationwide. We had acquired some Mavis properties from other landlords in the past, but this was our first direct sale leaseback with them. This is a case where we have been interested in this brand for some time but had to wait for pricing to meet our return threshold.

Josh: Our largest single transaction this quarter was a $20 million sale leaseback of eight properties with Mavis tire. Maybe this is a large consolidator in the auto service space with over 800 locations nationally.

Josh: We had acquired some properties of Mavis from other landlords in the past, but this was our first direct sale leaseback with them. This is a case, where we have been interested in this brand for some time and it has to wait for pricing to meet our return thresholds.

Josh: Mavis has a long-running program of selling sites one at a time at tighter cap rates, but there's a niche for FCPT to provide optionality for tenants like Mavis to also utilize mid-sized portfolio sales. As Bill mentioned, we are remaining disciplined on pricing and consistent with our established quality thresholds for new acquisitions. As the hire-for-longer rate dynamic continues, we are seeing the bid-ask spread between buyers and sellers narrow.

Josh: Mavis has a long running program of selling sites one at a time at Tire cap rates, but there's a niche for FCPT to provide optionality to tenants like Mavis to also utilize mid-size portfolio sales. As Bill mentioned, we are remaining disciplined, unpricing, and consistent with our established quality thresholds for new acquisitions. As a higher-for-longer rate dynamic continues, we are seeing the bid-ask spread between buyers and sellers narrow. The supply of net lease inventory continues to build up, and our team is well positioned to take advantage of these opportunities. Increasingly, we are finding attractive opportunities over a 7% cap rate with quality tenants and real estate.

Speaker Change: <unk> has a long running program of selling sites one at a time at tighter cap rates, but there is a niche for <unk> to provide optionality to tenants like maybe to also utilized midsized portfolio sales.

Josh: As Bill mentioned, we are remaining disciplined on pricing and consistent with our established quality thresholds for new acquisitions as a higher for longer rate dynamic continues we are seeing the bid ask spread between buyers and sellers narrow the supply of net lease inventory continues to build up and our team is well positioned to take advantage of these opportunities increasingly.

Josh: Supply and Net Lease Inventory continues to build up, and our team is well positioned to take advantage of these opportunities. Increasingly, we are finding attractive opportunities over a 7% cap rate with quality tenants and real estate. We also note that all acquisitions this quarter were with investment-grade or large corporate tenants and a weighted average lease term of 13 years. We have momentum in the pipeline building today, and we expect that to continue into Q4.

Josh: We are finding attractive opportunities over a 7% cap rate with quality tenants and real estate.

Josh: We also note that all acquisitions is quarter, we are with investment grade or large corporate tenants, and a weighted average lease term of 13 years. We have momentum in the pipeline building today, and we expect that we will continue into Q3. Overall, our portfolio now stands at 1,154 leases in Darden, now at 51% of our annual base rent and restaurants at 79%. Non-restrons is now 21% of our portfolio, with automotive as our largest non-restrons sector at 10%, followed by medical retail at 8%.

Josh: We also note that all acquisitions this quarter with investment grade or large corporate tenants and a weighted average lease term of 13 years, we have momentum in the pipeline building today and we expect that will continue into Q3.

Josh: Overall, our portfolio now stands at 1,154 leases, with Darden now at 51% of our annual base rent and restaurants at 79%. Non-restaurants are now 21% of our portfolio, with automotive as our largest non-restaurant sector at 10% followed by medical retail at 8%.

Josh: Overall, our portfolio now stands at 1154 leases and Darden now at 51% of our annual base rent and restaurants at 79%.

Josh: Non restaurants is now 21% of our portfolio with automotive as a largest non restaurant sector at 10% followed by medical retail at 8%.

Josh: On the disposition front, we do not sell any properties in Q2 of this year. However, we frequently receive reverse inquiries on our properties and continue to consider strategic dispositions both as a potential alternative to issuing new capital and as part of our active portfolio management strategy. We are fortunate that our portfolio continues to attract buyers, and we can utilize dispositions for a creative capital recycling when needed or when capital markets are less attractive.

Josh: On the disposition front, we did not sell any properties in Q2 of this year. However, we frequently receive reverse inquiries on our properties and continue to consider strategic dispositions both as a potential alternative to issuing new capital and as part of our active portfolio management strategy. We are fortunate that our portfolio continues to attract buyers, and we can utilize dispositions for creative capital recycling when needed or when capital markets are less attractive.

Josh: On the disposition front, we did not sell any properties in Q2 of this year. However, we frequently receive reverse inquiries on our properties and continue to consider strategic dispositions, both as a potential alternative to issue new capital and as part of our active portfolio management strategy.

Josh: We are fortunate that our portfolio continues to attract buyers and we can utilize dispositions for accretive capital recycling when needed or when capital markets are less attractive.

Josh: Turning to leasing, we have 45 leases come due between January and December 2024. Almost all of these are now resolved, with a very strong result of 95% being renewed or swapped for new brands. These results reinforce our underwriting confidence that we are partnering with the right tenants and that renters are set at appropriate levels for the tenants in our portfolio.

Josh: Turning to leasing, we had 45 leases come due between January and December 2024. Almost all of these are now resolved with a very strong result of 95% being renewed or swapped for new brands. These results reinforce our underwriting confidence that we are partnering with the right tenants and that rents are set at appropriate levels for the tenants in our portfolio. Patrick, I'll turn it back over to you. Thanks, Josh.

Speaker Change: Turning to leasing we had 45 leases come due between January and December 2020 for almost all of these are now result, with a very strong result of 95% being renewed or swap for new brands.

Josh: These results reinforce our underwriting confidence that we are partnering with the right tenants and that rents are set at appropriate levels for the tenants in our portfolio.

Patrick Wernig: Patrick, I'll turn it back over to you. Thanks, Josh. For Q2, our cash rental revenues grew 11.4% on a year-over-year basis, including the benefit of rental increases in $204 million of acquisitions in the last 12 months. Through 40, 57.9 million dollars of cash rental income in the second quarter after excluding $0.6 million of straight line and other non-cash rental adjustments. On a run rate basis, current annual cash-based rent for the leases in place as of June 30, 2024, is $223.6 million, and our weighted average five-year annual cash rent escalator remains at 1.4%. Portfolio occupancy stands today at 99.6% and remains well positioned with only 0.7% and 2% annual base rent material in 2024 and 2025, respectively.

Josh: Patrick I'll turn it back over to you.

Patrick Wernig: Thanks, Josh.

Patrick Wernig: For Q2, our cash rental revenues grew 11.4% on a year-over-year basis, including the benefit of rental increases and $204 million of acquisitions in the last 12 months. We reported $57.9 million of cash rental income in the second quarter after excluding $0.6 million of straight line and other non-cash rental adjustments. On a run rate basis, the current annual cash-based rent for the leases in place as of June 30th, 2024 is $223.6 million, and our weighted average five-year annual cash rent escalator remains at 1.4%.

Patrick Wernig: For Q2, our cash rental revenues grew 11, 4% on a year over year basis, including the benefit of rental increases and $204 million of acquisitions in the last 12 months.

Patrick Wernig: We reported $57 9 million of cash rental income in the second quarter. After excluding zero point $6 million, a straight line and other noncash rental adjustments on a run rate basis current annual cash base rent for leases in place as of June 32024 is $323 $6 million and our weighted average five year annual cash rent escalator.

Speaker Change: <unk> at one 4%.

Patrick Wernig: Portfolio occupancy stands today at 99.6% and remains well positioned with only 0.7% and 2% annual base rent maturing in 2024 and 2025, respectively. As mentioned earlier, most of these 2024 lease maturities have already confirmed their extension.

Patrick Wernig: Portfolio occupancy stands today at 99, 6% and remains well positioned with only <unk>, 7% and 2% annual base rent maturing in 2024 and 2025, respectively.

Patrick Wernig: As mentioned earlier, most of these 2024 lease materials have already confirmed their extension. We collected 99.8% of base rent for the second quarter, and there were no material changes to our collectability or credit reserves, nor any balance sheet impairments. Our high occupancy in collections is directly tied to the efforts of our asset management and accounting teams. In particular, FCPG has dedicated resources so that we can remain in tight communication with our tenants and be proactive on upcoming lease materials. Cash DNA expense excluding stock-based compensation was $4.3 million, representing 7.4% of cash rental income for the quarter and compares to 7.8% for Q2 2023.

Patrick Wernig: Mentioned earlier most of these 2024 at least maturities have already confirmed that extension.

Patrick Wernig: We collected 99.8% of base rent for the second quarter, and there were no material changes to our collectability or credit reserves, nor any balance sheet impairments. Our high occupancy in collections is directly tied to the efforts of our asset management and accounting teams. In particular, FCBG has dedicated resources so that we can remain in tight communication with our tenants and be proactive on upcoming lease maturities.

Patrick Wernig: 99, 8% of base rent for the second quarter and there were no material changes to our collectability or credit reserves, nor any balance sheet impairments.

Speaker Change: Our high occupancy and collections is directly tied to the efforts of our asset management and accounting teams in particular <unk> has dedicated resources. So that we can remain in tight communication with our tenants and be proactive on upcoming lease maturities.

Patrick Wernig: Cash G&A expense excluding stock-based compensation was $4.3 million, representing 7.4% of cash rental income for the quarter in comparison to 7.8% for Q2 2023. We continue to expect CAF G&A will be approximately $17 million for 2020. As a reminder, we take a conservative approach and do not capitalize any of the compensation costs related to our investment team.

Patrick Wernig: Cash G&A expense, excluding stock based compensation was $4 3 million, representing seven 4% of cash rental income for the quarter and compares to seven 8% for Q2 2023.

Patrick Wernig: We continue to expect cash DNA will be approximately $17 million for 2020. As a reminder, we take a conservative approach and do not capitalize any of the compensation costs related to our investment team. Turning to capital sources, we issued $2.4 million of equity in the second quarter at an average offering price of $25.14. As a reminder, in March, we issued $85 million of term loans under our existing credit facility to refinance a June 2024 debt maturity. With respect to overall leverage, our net debt to adjusted EBITRI in the second quarter was 5.7 times, and our fixed charge-covered ratio was a healthy 4.3 times.

Patrick Wernig: We continue to expect cash G&A will be approximately $17 million for 2020.

Patrick Wernig: As a reminder, we take a conservative approach and do not capitalize any of the compensation costs related to our investment team.

Patrick Wernig: Turning to capital sources, we issued $2.4 million of equity in the second quarter at an average offering price of $25.14. As a reminder, in March, we issued $85 million of term loans under our existing credit facility to refinance a June 2024 debt maturity. With respect to overall leverage, our net debt to adjusted EBITDA REIT in the second quarter was 5.7 times, and our fixed charge covered ratio was a healthy 4.3 times.

Patrick Wernig: Turning to capital sources, we issued $2 $4 million of equity in the second quarter at an average offering price of $25 14.

Patrick Wernig: As a reminder, in March we issued $85 million of term loans under our existing credit facility to refinance at June 2024 debt maturity.

Patrick Wernig: With respect to overall leverage our net debt to adjusted EBITDA in.

Patrick Wernig: In the second quarter was five seven times and our fixed charge coverage ratio was a healthy four three times.

Patrick Wernig: We have $240 million of liquidity comprised of $17 million of cash and $223 million of undrawn revolver capacity. We are committed to maintaining a conservative balance sheet and laboring our debt maturity profile. Our balance sheet remains in great shape today, with our next debt maturity not scheduled until November 2025. Taking a step back to think about our overall cost of capital, we have been pleased to see sector equity multiples improved, including FCPT's. We have also seen some relief and Treasury yields and the all-in rates for new debt issuance. Today, our cost of capital is looking much more attractive than last quarter, which gives us some good optionality for match-bonding new acquisitions.

Patrick Wernig: We have $240 million of liquidity comprised of $17 million of cash and $223 million of undrawn revolver capacity. We are committed to maintaining a conservative balance sheet and limiting our debt maturity profile. Our balance sheet remains in great shape today with our next debt maturity not scheduled until November 2025. Taking a step back to think about our overall cost of capital, we've been pleased to see sector equity multiples improve, including FCPT's.

Patrick Wernig: We have $240 million of liquidity comprised of $17 million of cash and $223 million of Undrawn revolver capacity.

Patrick Wernig: We are committed to maintaining a conservative balance sheet and lowering our debt maturity profile our balance sheet remains in great shape today with our next debt maturity not scheduled until November 2025.

Patrick Wernig: Taking a step back to think about our overall cost of capital we've been pleased to see sector equity multiples improve including CPT is we've also seen some relief in treasury yields and the all in rates for new debt issuance today, our cost of capital is looking much more attractive than last quarter, which gives us some good optionality for match funding new acquisitions.

Patrick Wernig: We've also seen some relief in treasury yields and the all-in rates for new debt issuance. Today, our cost of capital is looking much more attractive than last quarter, which gives us some good optionality for matching funding new acquisitions. That said, we have liquidity and revolver capacity to meet our needs without new external capital. With that, we'll turn it back over to Carly for investor Q&A.

Patrick Wernig: That said, we have liquidity and revolver capacities to meet our needs without any external capital.

Patrick Wernig: That said, we have the liquidity and revolver capacity to meet our needs without new external capital.

Carly: With that, we will turn it back over to Carly for investor Q&A. Thank you. If you'd like to ask a question, please press star, followed by one on your telephone keypad now. If you'd like to remove yourself from that line of questioning, please press star full of by two.

Carly: With that I will turn it back over to currently for Investor Q&A.

Kali: Thank you. If you'd like to ask a question, please press star followed by 1 on your telephone keypad now, and if you'd like to remove yourself from that line of questions, please press star followed by 2. Our first question comes from Anthony Paolone. Your line is now open.

Carly: Thank you.

Carly: Ask a question. Please press star followed by one telephone keypad now and if you'd like to remove yourself from that line of questioning. Please press star followed by two.

Kali: Yeah.

Anthony Paolone: The first question comes from Anthony Pellone. Your line is now open. Thank you. First one, just one to confirm on the Red Lobster point. I guess they had just put out a bunch of new closures, and I guess you guys didn't have anything on that list, either. Yeah, we're not aware of any of our stores are going to close, and our conversations with them have been very productive. The stores are doing well.

Anthony Paolone: Our first question comes from Anthony <unk>.

Anthony Paolone: Your line is now open.

Anthony Paolone: So I guess just the first one just wanted to confirm on the Red Lobster point. I guess they had just put out a bunch of new closures, and I guess you guys didn't have anything on that list either.

Anthony Paolone: Thank you.

Anthony Paolone: So I guess just first one just wanted to confirm on the Red Lobster point I guess, they had just put out a.

Speaker Change: A bunch of new closures and I guess, you guys didn't have anything on that that last either.

Patrick Wernig: Yeah, we're not aware of any of our stores going to close, and our conversations with them have been very productive. The stores are doing well.

Speaker Change: Yes, we're not aware of any of our stores are going to close in our conversations with them have been very productive stores are doing well.

Anthony Paolone: Okay, thanks.

Anthony Paolone: Okay, thanks. And then the other credit that has come up is, I guess, one of the larger Pizza Hut franchisees went bankrupt, DYM, I think. And do you all have any exposure there that we should be thinking about?

Speaker Change: Okay. Thanks, and then the other credit that has come up is I guess one of the larger pizza hut franchisees went bankrupt <unk> tank and you all have any exposure there.

Anthony Paolone: And then the other credit that has come up is, I guess, one of the larger pizza franchises went bankrupt. Do you why am I think? And do you all have any exposure there that we should be thinking about? Yeah, we have a couple stores; best of my knowledge, they're paying, and we have a personal guarantee from the founder of the company.

Anthony Paolone: That we should be thinking about.

Patrick Wernig: Yeah, we have a couple stores. To the best of my knowledge, they're paying, and we have a personal guarantee from the founder of the company.

Speaker Change: Yes, we have a couple of stores.

Patrick Wernig: Thats my knowledge there.

Patrick Wernig: Paying and we have a personal guarantee from the founder of the company.

Anthony Paolone: Okay, thanks.

Patrick Wernig: Okay. Thanks, and then just.

Anthony Paolone: Okay, thanks. And then just last one for me, you know, in terms of cap rates being pretty steady here in the low sevens, and it seems like, if anything, interest rates are stabilizing, and there's some expectations of rates starting to come down. Do you think we've seen sort of the end of cap rates backing up, or how should we think about where the pipeline looks like today?

Anthony Paolone: And then just last one for me, in terms of the cap rates have been pretty steady here in the low sevens, and it seems like if anything, interest rates are stabilizing, and there's some expectations of rates starting to come down. Do you think we've seen sort of the end of cap rates backing up, or how should we think about where the pipeline looks like today? Yeah, hard to tell; there was obviously a substantial six to nine month delay in cap rates going up. Hard to know what will happen in the going forward. Our focus has really been in high rating our pipeline to make sure we have very high quality properties that we're closing on.

Patrick Wernig: Last one for me.

Speaker Change: In terms of the cap rates have been pretty steady here in the in the low sevens and it seems like if anything interest rates are stabilizing and theres some expectations of rates starting to come down do you think we've seen sort of the end of cap rates backing up or how should we think about where.

Speaker Change: Where the pipeline looks like today.

Patrick Wernig: Yeah, you know, hard to tell there was obviously a substantial 6- to 9-month delay in cap rates going up. Hard to know what will happen going forward. Our focus has really been on high-rating our pipeline to make sure we have very high-quality properties that we're closing on.

Anthony Paolone: Yeah.

Speaker Change: Hard to tell there was obviously a substantial <unk>.

Patrick Wernig: Six to nine month delay and cap rates going up.

Patrick Wernig: Hard to know what will happen going forward.

Patrick Wernig: Focus has really been the high grading our pipeline to make sure we have very high quality properties that we're closing on.

Anthony Paolone: Okay, thank you. Yep, thanks.

Anthony Paolone: Okay, thank you.

Speaker Change: Okay. Thank you.

Speaker Change: Yep. Thanks.

John Kilisowski: Our next question comes from John Kilisowski of Wells Fargo. John Mulan is not open. Thank you.

John Kieliszewski: Our next question comes from John Kieliszewski of Wells Fargo. John, your line is now open.

Speaker Change: Our next question comes from John <unk> of Wells Fargo.

John Kieliszewski: John Your line is now open.

Patrick Wernig: Thank you. I guess first, could you talk about what drove the increased acquisitions quarter over quarter? Was that a result of an improving cost of capital or just greater seller willingness?

John Kilisowski: I guess first could you talk about what John the increased acquisitions quarter of a quarter was that a result of an improving capital or just greater seller of willingness? Yes. Yeah, I think really for the second half of the year, it will be a combination of both. Our equity cost of capital has improved. Rates have come down. Credit spreads have narrowed. So our sources of funds are much more attractive. And there's still a build up in supply in the market, which we can take advantage of. And so we have been thoughtfully conservative. When our cost to capital wasn't there, and now we are very much in the green zone and looking to grow.

John Kieliszewski: Thank you I guess first can you talk about what drove the increased acquisitions quarter over quarter was that a result of an improving cost of capital or just greater seller willingness.

Patrick Wernig: Yeah, I think really for the second half of the year, it'll be a combination of both. Our equity cost of capital has improved, rates have come down, and credit spreads have narrowed. So our sources of funds are much more attractive, and there's still a buildup in supply in the market, which we can take advantage of. And so we have been thoughtfully conservative when our cost of capital wasn't there, and now we are very much in the green zone and looking to grow.

Speaker Change: Yes, I think really for the second half of the year it'll be a combination of both.

Patrick Wernig: Our our equity cost of capital has improved rates have come down credit spreads have narrowed so our or SOR.

Patrick Wernig: Sources of funds are much more attractive and there is still a buildup in supply in the market.

Patrick Wernig: Which we can take advantage of and so we have been.

Patrick Wernig: Thoughtfully conservative when our cost of capital wasn't there and now we are.

Patrick Wernig: Much in the Green zone.

Patrick Wernig: Looking to grow.

John Kilisowski: Got it.

John Kieliszewski: Got it. And then an interesting question here, just kind of looking forward, as I look at your lease maturity schedule, obviously, it inflects from 27 through 33. Is there any desire on your part to have conversations with those tenants about amending those leases and maybe, you know, flattening that, that role? Or do you see that as an opportunity to reprice? I would expect the vast...

Speaker Change: Got it and then interesting question here, just kind of looking forward as I look at your lease maturity schedule. Obviously at Implex from 27 through 33 is there any desire on your part to have conversations with those tenants about amending those leases and maybe you know.

John Kilisowski: And then an interesting question here, just kind of looking forward as I look at the least maturity schedule. Obviously, it inflicts from 27 through 33. Is there any desire on your part to have conversations with those tenants about amending those leases and maybe flattening that role, or do you see that as an opportunity to reprise? I would expect the vast, vast maturity of those leases, which are predominantly the garden leases from Span, that are, you know, five and a half, six times covered; that those will be extended according to their contractual terms. So, very, very well covered and not something that's a big concern for us at all.

John Kieliszewski: Flattening that that role or do you see that as an opportunity to reprice.

Patrick Wernig: I would expect the vast, vast majority of those leases, which are predominantly Darden leases from SPIN, that are five and a half, six times covered, that those will be extended according to their contractual terms. So, very, very well covered, not something that's a big concern for us at all.

Speaker Change: I would expect the vast vast majority of those leases, which are predominantly the darden leases from spin that are <unk>.

Patrick Wernig: 556 times covered that those will be extended according to their contractual terms, so very very well covered and not something that's a big concern for us at all.

John Kilisowski: Got it. Thank you.

Speaker Change: Got it thank you.

John Kilisowski: Thanks.

Speaker Change: Yep. Thanks.

Mitch Germain: Our next question comes from Mitch Germain of Citizens JMP. Your line is not open. Sorry, Mitch, your line is not open. Yeah, that may be on Mitch's line. Mitch, I could ask you to raise a question again to see if that improves the line. That would be great.

Patrick Wernig: Yeah.

Mitch Germain: Our next question comes from Mitch Germain of Citizens JMP. Your line is now open.

Speaker Change: Our next question comes from Mitch Germain of citizens J M P.

Speaker Change: Your line is now open.

Mitch Germain: Okay.

Mitch Germain: Okay.

Mitch Germain: Oh.

Mitch Germain: Yes.

Kali: Sorry, Mitch, your line is not very clear. Yeah, that may be on Mitch's line. Mitch, if I could ask you to raise the question again to see if that improves the line, that would be great. We'll move on to the next question. Our next question comes from Alec Feagan of Baird. Your line is now open.

Speaker Change: Sorry, Mitch you're in line they correlate in.

Speaker Change: Trouble hearing it.

Kali: Yeah, maybe I'll niches line, Mitch if I could ask you to raise the question again.

Mitch Germain: See if that interest line that would be great.

Mitch Germain: We'll move on to the next question.

Speaker Change: Next question.

Alex Vegan: Our next question comes from Alex Vegan of Bed. Your line is now open. Hi, good morning, and thank you for taking our questions. So to go back on the franchises with some large franchises going bankrupt may provide some details about the health of franchises in the four corners portfolio, as well as the percentage of the restaurant exposure is from franchises versus corporates. Yeah, we have very little franchise exposure overall, and the portfolio is 99.8% occupied. So we're in we're in terrific shape there. And again, we're talking about a couple properties on 1150 Property portfolio. Got it.

Kali: Our next question comes from Alex Vegan.

Kali: Your line is now open.

Alec Feagan: Hi, good morning, and thank you for taking our questions. So, to go back on the franchises, with some large franchises going bankrupt, may you please provide some details about the health of the franchises in the Four Corners portfolio, as well as the percentage of the restaurant exposure is from franchises versus corporates?

Alec Feagan: Hi, good morning, and thank you for taking our questions. So to go back on the franchises with some large franchises going bankrupt may provide some details about the health of the franchises in the four corners portfolio.

Alec Feagan: As well as the percentage of the restaurant exposure is from franchises versus corporates.

Patrick Wernig: Yeah, we have very little franchise exposure overall, and the portfolio is 99.8% occupied, so we're in terrific shape there. We're talking about a couple properties on a 1,150 property portfolio.

Speaker Change: Yes, we have very little franchise exposure overall in the portfolio was 99, 8%.

Patrick Wernig: <unk>. So we're in we're in terrific shape there.

Patrick Wernig: And again.

Patrick Wernig: We're talking about a couple of properties on a 1100 50 property portfolio.

Alec Feagan: Got it. And overall, how's the watch list looking? We talked about Red Lobster. Anything else that we should be aware of? Any changes? No. Got it. And the last one for me is, have you looked at Chewy's and talked with Darden about potentially partnering up for a sale leaseback, or a different way to grow their store count?

Speaker Change: Got it.

Alex Vegan: And overall, how was the watch list looking like talked about Red Lobster, anything else that we should you're aware of? Any changes? No. Got it.

Speaker Change: And overall how is the watch list looking like I talked about Red lobster.

Alec Feagan: Anything else that we should are you aware of any changes.

Alec Feagan: No.

Alex Vegan: And the last one for me is, have you looked at Chewies and or talked with Darden about potentially partnering up for a sale-leaseback or a different way to grow their store count? Yeah, they don't have a lot of owned real estate on their books, but we're in constant conversation with Darden and a number of other tenants all the time about supporting their growth. But I think that brand has a really strong brand proposition and a lot of white space to grow. If you think about Darden's other brands that are several hundred properties, that would be a multiple of the hundred or so properties in the Chewies brand today.

Alec Feagan: Got it.

Alec Feagan: Last one for me is have you looked at chili's and or talked with Garda and about potentially partnering up for a sale leaseback or a different way to grow their store count.

Patrick Wernig: Yeah, they don't have a lot of owned real estate on their books, but we're in constant conversation with Darden and a number of other tenants all the time about supporting their growth. But I think that brand has a really strong brand proposition and a lot of white space to grow. If you think about Darden's other brands, which are several hundred properties, that would be a multiple of the hundred or so properties in the Chewy's brand today.

Speaker Change: They don't have a lot of owned real estate on their books, but we're in constant conversation with Darden in a number of other tenants.

Patrick Wernig: All the time about supporting the growth, but I think that brand has really strong brand proposition and a lot of white space to grow.

Patrick Wernig: Think about darden's other brands that are several hundred properties that would be a multiple of the 100 or so properties in that brand.

Brandon: Brandon today.

Alex Vegan: Got it, that's it for me. Thank you.

Alec Feagan: Got it. That's it for me. Thank you.

Speaker Change: Got it that's it for me thank you.

Jim Cameray: Next question comes from Jim Cameray of Apical. Jim, your line is not open. Thank you. Good morning. Both Josh and Patrick touched on the strong sort of releasing or addressing all the lease exposure for 2024. I'm curious; can you share anything about the economics? I say, I'm sure a fair bit were maybe fixed option exercise and whatnot, but what sort of recapture rates, I guess, did you get on rent then moved to market, if you will? Yeah, it was positive, but I would really caution that it's a very small sample size because the vast majority took down their contractual options, which is typically one and a half percent per year; occasionally, it's a ten percent every five years. But economically, think about as one and a half percent per year, but the vast majority were the contractual extensions.

Jim Kammeray: Our next question comes from Jim Kammeray of Epicor. Jim, your line is now open.

Speaker Change: Our next question comes from Jim Kemery of ethical Jim Your line is now open.

Jim Kammeray: Thank you. Good morning.

Jim Kammeray: Thank you and good morning.

Speaker Change: Both Josh and Patrick touched on you know the strong sort of.

Jim Kammeray: Re leasing or addressing all the lease exposure for 2024, I'm curious can you share anything about the economics I'm sure a fair bit we're BB fixed option exercise and whatnot.

Patrick Wernig: Both Josh and Patrick touched on the strong sort of releasing or addressing all the lease exposure for 2024. I'm curious, can you share anything about the economics? I'm sure a fair bit were maybe fixed option exercises and whatnot, but what sort of recapture rates, I guess, did you get on rents that moved to market, if you will?

Speaker Change: What sort of recapture rates I guess did you get on.

Patrick Wernig: Mark you mentioned moved to market if you will.

Patrick Wernig: Yeah, it was positive, but I would really caution that it's a very small sample size because the vast majority took down their contractual options, which is typically 1.5% per year. Occasionally, it's 10% every five years, but economically, think about it as 1.5% per year, but the vast majority were contractual extensive. Just a very small hand in size, but a positive number if you were to look at that very small.

Speaker Change: Yes. It was it was positive, but I would really caution thats, a very small sample size because the vast majority took down their contractual options, which is typically one five per cent per year occasionally it's a.

Patrick Wernig: 10% every five years, but economically you think about it as one 5% per year, but the vast majority of where the contractual.

Patrick Wernig: Tensions.

Jim Cameray: Just a very small size, but a positive number. If you were to look at that very small sample size. Okay, but then thinking about, then obviously it builds, and we talked about most of its Darden in the out years, but is that pretty representative in build? Most of your deals have that, you know, fixed one and a half percent type increment in the new lease rent from the prior expiring rent. Yeah, that's a very nice majority. Okay, very helpful. Thank you. Yep.

Patrick Wernig: Just a very small size.

Patrick Wernig: But but but a positive number if you were to look at that very small sample size.

Jim Kammeray: Okay, but then thinking about that obviously, it builds. We talked about most of its darn in the out years, but is that pretty representative and build most of your deals have that, you know, fixed one and a half percent type increment in the new lease rent from the prior expiring rent. Okay, very helpful. Thank you.

Patrick Wernig: Okay, and then thinking about obviously it builds and we talked about most of its darden in the out years, but.

Jim Kammeray: Is that pretty representative and bill most of your deals have it fixed wanted to 5% type increment and the new lease rent from the expiring rent.

Jim Kammeray: Yes.

Jim Kammeray: Majority.

Jim Kammeray: Okay very helpful. Thank you.

Jim Kammeray: Yep.

Carly: As a reminder, if you'd like to raise a question, please press star followed by one on your telephone keypad, and to remove yourself from that line of questioning, please press star followed by two.

Kali: As a reminder, if you'd like to raise a question, please press star followed by one on your telephone keypad. And if you'd like to remove yourself from that line of questions, please press star followed by two.

Speaker Change: As a reminder, let's raise a question. Please press star followed by one on your telephone keypad and he let's remove yourself from that line of questioning please press stuff too.

RJ Milligan: Our next question comes from RJ Milligan of Raymond James. RJ, your line is now open. Thanks, and good morning, guys. The ability to give some restaurant, same-stored sales numbers at the beginning of the call, and I'm just curious, if we do see or start to see a downtrend in those numbers, does that create more buying opportunity? Does that reduce the buyer pool for those types of assets? You know, I don't think that that will happen, would be my guess. You know, the performance of the restaurant, at least, at a high level has been very strong, especially the kind of brands that we focus on, the large public companies.

Speaker Change: Our next question comes from RJ Milligan of Raymond James J. Your line is now open.

Unnamed: Thanks, and good morning, guys. Billy gave some restaurant and same store sales numbers at the beginning of the call. And I'm just curious, if we do see or start to see a downtrend in those numbers, does that create more buying opportunity? Does that reduce the buyer pool for those types of assets?

Speaker Change: Thanks, Good morning, guys.

Unnamed: Bill you gave some restaurant same store sales numbers at the beginning of the call and I'm. Just curious if we do see or start to see a downtrend in those numbers does that create more buying opportunity.

Unnamed: Does that reduce the buyer pool for those types of assets.

Speaker Change: I don't think that that will happen would be my guess.

Unnamed: The performance of the restaurant, at least at a high level, has been very strong, especially the kind of brands that we focus on, the large public companies.

Speaker Change: The performance of the restaurant and at least at a high level has been very strong, especially the kind of brands that we focus on the.

Unnamed: Large public companies.

RJ Milligan: Hopefully, it will provide an opportunity, but I don't think I'd count on that.

Speaker Change: Hopefully it will provide an opportunity, but I don't think I'd count on that.

Unnamed: Yeah.

RJ Milligan: Okay, that was it from you guys. I appreciate it. Thanks, Roger. Thank you.

Speaker Change: Okay that was it for me guys I appreciate it.

Unnamed: Thanks, Roger.

Roger: Okay. Thanks Roger.

Speaker Change: Thank you. Our next question comes from Mitch Germain of citizens JMP Mitch Your line is now open.

Mitch Germain: Our next question comes from Mitch Germain of Citizens' JMP. Mitch, your line's not open. I will try this again.

Mitch Germain: I will try this again. How does the math of a one-off Mavis look versus the portfolio? I know that Josh indicated pricing was a little bit tighter.

Speaker Change: I will try this again.

Mitch Germain: <unk>.

Mitch Germain: How does a math of a one, how does a math of a one off me just look versus the portfolio? I know that Josh indicated pricing was a little bit tighter. Josh? Yeah.

Speaker Change: How does a loud and clear path of one.

Mitch Germain: How does the math of a one off me this look versus the portfolio I know that Josh indicated pricing was a little bit tighter.

Josh: Josh Yes.

Mitch Germain: Yeah.

Mitch Germain: Well, this is Patrick. I'd say that there might be a 75 basis point portfolio discount. You know, the cap rates throughout and at least have moved significantly in the last 12 months, but you are seeing the return of a portfolio discount for buyers like ourselves that can take down more than one at a time. Yeah, I may try to just elaborate. For a number of years, there wasn't a sort of, there wasn't a ton of value in providing certainty of being a professional buyer assets. Folks understood that if a 1031 exchange fell out, they'd be able to put it back under contract in no time, potentially at a tighter cap rate.

Patrick Wernig: Well, this is Patrick. I'd say that there might be a 75 basis point portfolio discount, you know, the cap rates throughout NetLease have moved significantly in the last 12 months. But you are seeing the return of a portfolio discount for buyers like ourselves, who can take down more than one at a time.

Patrick Wernig: Well this is Patrick.

Speaker Change: I would say that there might be 75 basis point.

Patrick Wernig: Portfolio discount and cap rates throughout and at least have moved significantly in the last 12 months, but you are seeing the return of the portfolio discount for buyers like ourselves that can take down more than one at a time.

Josh: Yeah, Mitch, I just elaborated that for a number of years, there wasn't a lot of people understood that if a 1031 exchange fell out, they'd be able to put it back under contract in no time, potentially at a tighter cap rate. Now, because of the capital markets uncertainty, I think a trend that we're seeing is perhaps people trying to get deals closed before the election, and a little bit more value in being a large, established, professional buyer of buildings.

Speaker Change: Yeah metric just elaborate.

Josh: For a number of years there wasn't a.

Josh: There wasn't a ton of value and providing certainty of being a professional buyer of assets.

Josh: Folks understood that if a 10 31 exchange fell out they'd be able to put it back under contract and no time potentially at a tighter cap rate now because of the capital markets uncertainty I think the trend that we're seeing as perhaps people trying to get deals closed before the election.

Mitch Germain: Now, because of the cap of markets uncertainty, I think a trend that we're seeing is perhaps people trying to get deals closed before the election, a little bit more value in being a large established professional buyer of buildings.

Josh: A little bit more value in being a large established professors professional buyer of buildings.

Mitch Germain: That's super helpful, but to that point though, you're not seeing any buyers, sorry, sellers pull back to wait for the potential rate cut to see if that changes the pricing dynamic. We had seen some portfolios that had been on the market called late last year, early this year, not transact, and so always hard to, you know, read the minds of sellers, but I think that that was a dynamic. But as the foreword, so for curve would be a place that I would look for data, indicates rates will be relatively elevated for the next 12, 18 months. You know, that's the borrowing reference rate that a lot of sellers have of floating rate debt that's more flexible for pre-payment.

Patrick Wernig: That's super helpful. But to that point, though, you're not seeing any buyers, sorry, sellers pulled back to wait for the potential rate cut to see if that changes the pricing dynamic.

Speaker Change: That's super helpful, but to that point, though you're not seeing any buyers.

Speaker Change: Sorry, sellers pulled back to wait for the.

Speaker Change: Potential rate cut to see if that changes the pricing dynamic.

Speaker Change: We had seen some portfolios that had been on the market call. It late last year early this year, not transact and so always hard too.

Patrick Wernig: read the minds of sellers, but I think that that was a dynamic. But as the forward SOFR curve, which would be a place that I would look for data, indicates, you know, rates will be relatively elevated for the next 12-18 months. You know, that's the borrowing reference rate that a lot of sellers have, a floating rate debt that's more flexible for prepayment.

Patrick Wernig:

Speaker Change: Read the minds of sellers, but I think that that was a dynamic but.

Patrick Wernig: As for work so for curve would be a place that I would look for data <unk>.

Patrick Wernig: The case rates will be relative.

Patrick Wernig: Relatively elevated for the next 12 18 months.

Patrick Wernig: That's the.

Patrick Wernig: The borrowing reference rate that a lot of sellers have a floating rate debt that's more flexible for prepayments.

Mitch Germain: That's super helpful.

Mitch Germain: That's super helpful. Last one for me.

Patrick Wernig: That's super helpful last one for me.

Mitch Germain: Last one for me, obviously, Guilflow was centered away from the restaurant sector in this quarter. Was that by choice, or was that just a function of the assets that were available that made your underwriting criteria? The latter, for sure. The latter. Just 13 weeks is too short of a time to draw any conclusions. Other than we are excited to be buying assets in the auto service and medical sector, but we're always looking at restaurants. There's plenty in our pipeline. You'll see that percentage go up and down by quarter.

Speaker Change: Honestly deal flow was centered away from the restaurant sector this quarter.

Speaker Change: Was that by choice or was that just a function of the assets that were available that may your underwriting criteria.

Patrick Wernig: Obviously, DealFlow was centered away from the restaurant sector this quarter. Was that by choice, or was that just a function of the assets that were available that met your underwriting criteria?

Speaker Change: The latter for sure.

Patrick Wernig: A lot of it. 13 weeks is too short of a time to draw any conclusions.

Speaker Change: A lot of it.

Speaker Change: 13 weeks is too too short of a time to draw any conclusions other than we are excited to be buying assets in the auto service medical sector, but we're always looking at our restaurants, there's plenty in our pipeline.

Patrick Wernig: Other than that, we are excited to be buying assets in the auto service and medical sectors, but we're always looking at restaurants. There are plenty in our pipeline. You'll see that percentage go up and down quite quickly.

Patrick Wernig: You'll see that percentage go up and down by quarter.

Mitch Germain: Thank you. Have a good rest of the summer. Great. Thanks, Mitch. Thank you.

Mitch Germain: Thank you. Have a good rest of the summer.

Speaker Change: Thank you and have a good rest of the summer.

Kali: This concludes today's call. Thank you to everyone for joining us. You may now disconnect your lines.

Speaker Change: Great. Thanks, so much thanks, so much.

Kali: Yeah.

Bill: We currently have no further questions, so how am I back to Bill Ann? Terrific. Well, exciting quarter. We're very excited for the second half of the year. Again, the combination of lower borrowing costs, a higher stock price, and an attractive acquisition market, both well for the next six months.

Speaker Change: We currently have a nice to have a question so how back to build on them.

Speaker Change: Terrific well.

Kali: Exciting quarter, we're very excited for the second half of the year again, the combination of lower borrowing costs, a higher stock price.

Speaker Change: Attractive acquisition market.

Kali: Bodes well for the next six months thanks, everyone.

Bill: Thanks, everyone. This concludes today's call. Thank you to everyone for joining.

Kali: Yeah.

Kali: This concludes today's call. Thank you to everyone for joining E mail disconnect your lines.

Carly: You may have disgruntled your lines.

Kali: [music].