Q2 2024 Sila Realty Trust Inc Earnings Call

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Operator: Good morning and welcome to the second quarter, 2024, Seal of Realty Trust earnings conference call and webcast. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star, T, followed by zero.

Operator: Good morning, and welcome to the second quarter 2024 Sila Realty Trust earnings conference call and webcast. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. I will now turn the conference over to your host, Miles Callahan, Senior Vice President of Capital Markets and Investor Relations for Sila. You may begin.

Speaker Change: Good morning and welcome to the second quarter 2024 Sila Realty Trust earnings conference call and webcast. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Miles Callahan: I will now turn the conference over to your host, Miles Callahan, Senior Vice President of Capital Markets and Investor Relations for SEALA. You may begin.

Speaker Change: I will now turn the conference over to your host, Miles Callahan, Senior Vice President of Capital Markets and Investor Relations for Sila. You may begin.

Miles Callahan: Good morning, and thank you for joining us today to discuss Seal of Realty Trust financial results for the second quarter of 2024. Yesterday, we issued our earnings release for the second quarter of 2024. The earnings release as well as our earnings supplement are available on the investor section of our website at investors dot sealofrealtytrust dot com.

Miles Callahan: Good morning, and thank you for joining us today to discuss Sila Realty Trust's financial results for the second quarter of 2024. Yesterday, we issued our earnings release for the second quarter of 2024. The earnings release, as well as our earnings supplement, are available on the investor section of our website at investors.silarealtytrust.com. Joining today's call with me are Michael Seaton, President and Chief Executive Officer; Kay Neely, Executive Vice President and Chief Financial Officer; and Chris Lowhouse, Executive Vice President and Chief Investment Officer.

Speaker Change: Good morning, and thank you for joining us today to discuss SILA Realty Trust's financial results for the second quarter of 2024.

Speaker Change: Yesterday, we issued our earnings release for the second quarter of 2024. The earnings release, as well as our earnings supplement, are available on the Investors section of our website at investors.silarealtytrust.com.

Miles Callahan: Joining today's call with me are Michael Seaton, President and Chief Executive Officer; Kay Neely, Executive Vice President and Chief Financial Officer; and Chris Blowhouse, Executive Vice President and Chief Investment Officer. We will begin with the pair of remarks, and then open up the call for any questions.

Speaker Change: Joining today's call with me are Michael Seaton, President and Chief Executive Officer, Kay Neely, Executive Vice President and Chief Financial Officer, and Chris Flowhouse, Executive Vice President and Chief Investment Officer. We will begin with prepared remarks and then open up the call for any questions.

Miles Callahan: We will begin with prepared remarks and then open up the call to any questions. Before we begin, I would like to remind you that today's comments will include forward-looking statements under federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts, such as statements about expected financial performance, are also forward-looking statements. However, actual results may differ materially from those contemplated by such forward-looking statements.

Miles Callahan: Before we begin, I would like to remind you that today's comments will include forward-looking statements under federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts, such as statements about expected financial performance, are also forward-looking statements. Actual results made different material from those contemplated by such forward-looking statements. A discussion of the factors that could call the material difference in our results compared to those forward-looking statements is contained in our SEC filings.

Miles Callahan: A discussion of the factors that could cause a material difference in our results compared to those four forward-looking statements is contained in our SEC filing. Please note that on today's call, we will be referring to non-GAAP measures. You can find the reconciliation of these historical non-gap measures to the most directly comparable gap measures in our second quarter earnings release and in our earnings supplement, both of which can be found on the investor section of our website and in the Form 8K we filed with the SEC yesterday. With that, I will now turn the call over to our President and Chief Executive Officer, Michael C.

Speaker Change: Before we begin, I would like to remind you that today's comments will include forward-looking statements under federal securities laws.

Speaker Change: Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases.

Speaker Change: Statements that are not historical facts, such as statements about expected financial performance, are also forward-looking statements. Actual results may differ materially from those contemplated by such forward-looking statements.

Speaker Change: A discussion of the factors that could cause a material difference in our results compared to those forward-looking statements is contained in our SEC filings.

Miles Callahan: Please note that on today's call, we will be referring to non-gab measures. You can find the reconciliation of the historical non-GAAP measures to the most directly comparable GAAP measures in our second quarter range release and in our earnings supplement, both of which can be found on the investor section of our website and in the Form 8-K we filed with the SEC yesterday.

Speaker Change: Please note that on today's call, we will be referring to non-GAAP measures.

Speaker Change: You can find the reconciliation of these historical non-GAAP measures to the most directly comparable GAAP measures in our second quarter earnings release and in our earnings supplement, both of which can be found on the Investors section of our website and in the Form 8K we filed with the SEC yesterday.

Michael Seton: With that, I will now turn the call over to our President and Chief Executive Officer, Michael C. Thank you, Miles. I'm excited to welcome everyone to COA Realty Trust's first earnings call as a publicly traded company. We appreciate you taking the time to join us today. For those who may not be as familiar with COA, I will begin by providing some background on the company and a flavor for how we approach the business of investing in healthcare real estate and running COA Realty Trust. Next, our Chief Investment Officer, Chris Flowhouse, will provide an overview of our portfolio, as well as market observation, and K-Neely, our Chief Financial Officer, will address our financial performance.

Speaker Change: With that, I will now turn the call over to our President and Chief Executive Officer, Michael Seaton.

Michael Seaton: I'm excited to welcome everyone to Sila Realty Trust's first earnings call as a publicly traded company. We appreciate you taking the time to join us today.

Michael Seaton: Thank you, Miles. I'm excited to welcome everyone to Sila Realty Trust's first earnings call as a publicly traded company.

Michael Seaton: For those who may not be as familiar with SILA, I will begin by providing some background on the company and a flavor for how we approach the business of investing in healthcare real estate and running SILA Realty Trust. Next, our Chief Investment Officer, Chris Flowhouse, will provide an overview of our portfolio, as well as market observations, and Kay Neely, our Chief Financial Officer, will address our financial performance. I will wrap up with a few closing comments before opening the call to questions.

Michael Seaton: We appreciate you taking the time to join us today. For those who may not be as familiar with SILA, I will begin by providing some background on the company and a flavor for how we approach the business of investing in healthcare real estate and running SILA Realty Trust.

Speaker Change: Next, our Chief Investment Officer, Chris Flowhouse, will provide an overview of our portfolio, as well as market observation, and Kay Neely, our Chief Financial Officer, will address our financial performance.

Michael Seton: I will wrap up with a few closing comments before opening the call to questions. First and foremost, as most of you know, we listed Sila Realty Trust on the New York Stock Exchange on June 13, 2024. We are excited to be publicly traded and for the opportunity to present the merits of our stock to a wide audience of investors. Our decision to go public via a direct listing was motivated in part to give our existing shareholders liquidity optionality. However, with invested assets of approximately $2.2 billion dollars, a proven and successful track record, a robust operating platform scaled for growth, and many years of real estate investment experience, we strongly believe that Sila was more than ready for the public equity market.

Michael Seaton: I will wrap up with a few closing comments before opening the call to questions.

Michael Seaton: First and foremost, as most of you know, we listed Tila Realty Trust on the New York Stock Exchange on June 13th, 2024. We're excited to be publicly traded and for the opportunity to present the merits of our stock to a wide audience of investors. Our decision to go public via a direct listing was motivated, in part, to give our existing shareholders liquidity optionality. However, with invested assets of approximately $2.2 billion, a proven and successful track record, a robust operating platform scaled for growth, and many years of real estate investment experience, we strongly believe that SILA was more than ready for the public equity market. Given our strong and flexible balance sheet, we did not need to raise capital through a traditional and typically expensive IPO mechanism.

Michael Seaton: First and foremost, as most of you know, we listed Tila Realty Trust on the New York Stock Exchange on June 13, 2024.

Michael Seaton: We are excited to be publicly traded and for the opportunity to present the merits of our stock to a wide audience of investors.

Michael Seaton: Our decision to go public via a direct listing was motivated, in part, to give our existing shareholders liquidity optionality.

Michael Seaton: However, with invested assets of approximately $2.2 billion dollars,

Michael Seaton: a proven and successful track record.

Michael Seaton: a robust operating platform scaled for growth

Michael Seaton: and many years of real estate investment experience, we strongly believe that CELA was more than ready for the public equity market.

Michael Seton: Given our strong and flexible balance sheet, we did not need to raise capital through a traditional and typically expensive IPO mechanism. In fact, we believe we have plenty of drive power to meet our strategic objectives over the next 12 to 24 months. However, being a publicly traded company opens the door wider to capitalize on growth opportunities in the large, growing, and sustainable healthcare market. We also believe Sila is uniquely positioned within the REIT universe. As a net lease REIT focused solely on quality healthcare properties, we believe we offer investors the best of both worlds. Participation in the attractive large market of the defensive healthcare sector and a triple net lease REIT structure with longer lease terms and a conservative approach to leverage.

Michael Seaton: Given our strong and flexible balance sheet, we did not need to raise capital through a traditional and typically expensive IPO mechanism. In fact, we believe we have plenty of dry powder to meet our strategic objectives over the next 12 to 24 months.

Michael Seaton: In fact, we believe we have plenty of dry powder to meet our strategic objectives over the next 12 to 24 months. However, being a publicly traded company opens the door wider to capitalize on growth opportunities in the large, growing, and sustainable healthcare market. We also believe SILA is uniquely positioned within the REIT universe. As a net lease REIT focused solely on quality health care properties, we believe we offer investors the best of both worlds, participation in the attractive large market of the defensive health care sector and a triple net lease REIT structure with longer lease terms and a conservative approach to leverage.

Michael Seaton: However, being a publicly traded company opens the door wider to capitalize on growth opportunities in the large growing and sustainable healthcare market.

Coelho: We also believe Sila is uniquely positioned within the REIT universe.

Coelho: as a NetLease-free

Coelho: focused solely on quality health care properties, we believe we offer investors the best of both worlds.

Coelho: participation in the attractive large market of the defensive health care sector and a triple net lease restructure with longer lease terms and a conservative approach to leverage.

Michael Seton: Now I would like to spend a few minutes discussing the steps we took to build Sila into the company it is today and what we believe are key differentiators for those new to our story. First, while we may be newly publicly traded, we are not a new company. I co-founded what is now Sila in 2014, as well as a predecessor REIT with a similar strategy in 2010. In 2019, we merged Sila with its predecessor company, which at the time owned solely healthcare properties to gain size and scale with an eye toward further growth. Two years later, in 2021, we sold $1.3 billion in non-core assets to focus exclusively on high quality healthcare properties.

Michael Seaton: Now I would like to spend a few minutes discussing the steps we took to build Sila into the company it is today and what we believe are key differentiators for those new to our story. First, while we may be newly publicly traded, we are not a new company. I co-founded what is now Sila in 2014, as well as a predecessor REIT with a similar strategy in 2010. In 2019, we merged Sila with its predecessor company, which at the time owned solely healthcare properties to gain size and scale with an eye toward further growth.

Speaker Change: Now, I would like to spend a few minutes discussing the steps we took to build Sila into the company it is today and what we believe are key differentiators for those new to our story.

Michael Seaton: Two years later, in 2021, we sold $1.3 billion in non-core assets to focus exclusively on high-quality healthcare properties, specifically medical outpatient buildings, inpatient rehabilitation facilities, and surgical and specialty facilities. As of the end of the second quarter of 2024, we had 137 properties with a focus on markets with strong and growing demographics and a portfolio lease rate of approximately 97.5%. Our team has been active acquirers of real estate over the past 14 years, having purchased over $4 billion, with the majority of that being healthcare real estate.

Speaker Change: First, while we may be newly publicly traded, we are not a new company. I co-founded what is now Sila in 2014, as well as a predecessor REIT with a similar strategy in 2010.

Speaker Change: In 2019, we merged Sila with its predecessor company, which at the time owned solely healthcare properties to gain size and scale with an eye toward further growth.

Speaker Change: Two years later, in 2021,

Speaker Change: We sold $1.3 billion in non-core assets to focus exclusively on high-quality health care properties, specifically medical outpatient buildings, inpatient rehabilitation facilities, and surgical and specialty facilities.

Michael Seton: Specifically, medical outpatient buildings, inpatient rehabilitation facilities, and surgical and specialty facilities. As at the end of the second quarter of 2024, we had 137 properties with a focus on markets with strong and growing demographics, with a portfolio lease rate of approximately 97.5%. Our team has been active acquires of real estate over the past 14 years, having purchased over $4 billion, with the majority of that being healthcare real estate. As a result, we are tried and tested healthcare real estate investors focusing on acquiring high quality healthcare properties that are critically important to our tenants' operation. We also focus on properties which have health system and large-scale operator affiliations.

Speaker Change: As of the end of the second quarter 2024, we had 137 properties with a focus on markets with strong and growing demographics, with a portfolio lease rate of approximately 97.5%.

Speaker Change: Our team has been active acquirers of real estate over the past 14 years, having purchased over $4 billion, with the majority of that being healthcare real estate.

Michael Seaton: As a result, we are tried and tested health care real estate investors focusing on acquiring high quality health care properties that are critically important to our tenants' operations. We also focus on properties that have health system and large scale operator affiliations. We especially seek out facilities with branding so that our buildings appeal to the specific client and catchment area that supports our tenants' business objectives. Some of the brands associated with our buildings and tenants are Post Acute Medical, Tenant Healthcare, Baylor Scott & White, and Cleveland Clinic, to name just a few.

Speaker Change: As a result, we are tried-and-tested healthcare real estate investors focusing on acquiring high-quality healthcare properties that are critically important to our tenants' operations.

Speaker Change: We also focus on properties which have health system and large-scale operator affiliations. We especially seek out facilities with branding so that our buildings appeal to the specific client and catchment area that supports our tenants' business objectives.

Michael Seton: We especially seek out facilities with branding so that our buildings appeal to the specific client and catchment area that supports our tenants' business objectives. Some of the brands associated with our buildings and tenants are Post-Acute Medical, tenant healthcare, Baylor Scott and White, and Cleveland Clinic, to name just a few. By design, our portfolio is highly diversified both geographically and across various health care types. We have built-in organic growth to our least stream of income through contractual 2.2% average annual rent escalators by 83.6% of the portfolio, while the remaining 16.4% of our portfolio, having base rent increases indexed to the consumer price index or CPI, as of June 30, 2024.

Speaker Change: Some of the brands associated with our buildings and tenants are Post Acute Medical, Tenant Healthcare, Baylor Scott & White, and Cleveland Clinic, to name just a few.

Michael Seaton: By design, our portfolio is highly diversified, both geographically and across various health care types. We have built in organic growth to our least stream of income through contractual 2.2% average annual rent escalators on 83.6% of the portfolio, while the remaining 16.4% of our portfolio will have base rent increases indexed to the Consumer Price Index, or CPI, as of June 30, 2024. Being active in the market for so many years, we have expanded our channels for sourcing properties to acquire through both on and off market partners and have historically enjoyed seeing strong deal flow in an overall real estate transaction market that is currently seeing significantly reduced volume due to the higher interest rate environment and dislocation in the capital and banking markets.

Speaker Change: By design, our portfolio is highly diversified, both geographically and across various healthcare types.

Speaker Change: We have built in organic growth to our leased stream of income through contractual 2.2% average annual rent escalators on 83.6% of the portfolio.

Speaker Change: while the remaining 16.4% of our portfolio having base rent increases indexed to the Consumer Price Index, or CPI, as of June 30, 2024.

Michael Seton: Being active in the market for so many years, we have expanded our channels for sourcing properties to acquire through both on- and off-market partners and have historically enjoyed seeing strong deal flow. And an overall real estate transaction market that is currently seeing significantly reduced volume due to the higher interest rate environment and dislocation in the capital banking markets, we continue to see interesting opportunities, and we have the capital to take action. That being said, we remain disciplined and focused in deploying capital as we have always been. We stick to the mantra that you can only invest a dollar one time, so make it count. And that's exactly what we try to do.

Speaker Change: Being active in the market for so many years, we have expanded our channels for sourcing properties to acquire through both on and off market partners and have historically enjoyed seeing strong deal flow.

Speaker Change: And an overall real estate transaction market that is currently seeing significantly reduced volume due to the higher interest rate environment and dislocation in the capital and banking markets.

Michael Seaton: We continue to see interesting opportunities, and we have the capital to take action. That being said, we remain disciplined and focused on deploying capital as we have always been. We stick to the mantra that you can only invest a dollar one time. So make it count.

Speaker Change: We continue to see interesting opportunities and we have the capital to take action.

Speaker Change: That being said, we remain disciplined and focused in deploying capital as we have always been.

Speaker Change: We stick to the mantra that you can only invest a dollar one time so make it count and that's exactly what we try to do

Michael Seaton: And that's exactly what we try to do. We have found that what many would perceive as our best defense, low leverage and a flexible balance sheet, is actually our greatest offensive tool as it offers us the liquidity and speed with which to execute on opportunities while our competitors may be forced to sit on the sidelines. I'm extremely proud of what our company has achieved to date in terms of acquisitions. This year alone, through July, we have purchased eight properties for over $163 million, including our most recent $28.3 million acquisition of a leading inpatient rehabilitation facility in Fort Smith, Arkansas.

Michael Seton: We have found that what many would perceive as our best defense, low leverage and a flexible balance sheet, is actually our greatest offensive tool, as it offers us the liquidity and speed with which to execute on opportunities while our competitors may be forced to sit on the sidelines.

Speaker Change: We have found that what many would perceive as our best defense, low leverage, and a flexible balance sheet is actually our greatest offensive tool as it offers us the liquidity and speed with which to execute on opportunities while our competitors may be forced to sit on the sidelines.

Michael Seton: I'm extremely proud of what our company has achieved to date in terms of acquisitions. This year alone through July, we have purchased eight properties for over $163 million, including our most recent $28.3 million acquisition of a leading inpatient rehabilitation facility in enforcement Arkansas. While continuing to seek out additional acquisition opportunities for the remainder of 2024, we will be thoughtful and disciplined with any acquisition to ensure it meets our strict criteria for building a portfolio and company that is built to last. With our current size, every accretive acquisition can have a meaningful impact on our financial results.

Speaker Change: I'm extremely proud of what our company has achieved to date in terms of acquisitions.

Speaker Change: This year alone, through July , we have purchased eight properties for over $163 million, including our most recent $28.3 million acquisition of a leading inpatient rehabilitation facility in Fort Smith, Arkansas.

Michael Seaton: While continuing to seek out additional acquisition opportunities for the remainder of 2024, we will be thoughtful and disciplined with any acquisition to ensure it meets our strict criteria for building a portfolio and company that is built to last. At our current size, every accretive acquisition can have a meaningful impact on our financial results. I would like to reiterate what I stated earlier, that our company is built to scale. From a personnel and an expense perspective, we can add meaningful assets to the company with minimal additional cost to run the company.

Speaker Change: While continuing to seek out additional acquisition opportunities for the remainder of 2024, we will be thoughtful and disciplined with any acquisition to ensure it meets our strict criteria for building a portfolio and company that is built to last.

Speaker Change: With our current size, every accretive acquisition can have a meaningful impact on our financial results.

Michael Seton: I would like to reiterate what I stated earlier that our company is built to scale. From a personnel and an expense perspective, we can add meaningful assets to the company with minimal additional costs to run the company.

Speaker Change: I would like to reiterate what I stated earlier, that our company is built to scale. From a personnel and an expense perspective, we can add meaningful assets to the company with minimal additional cost to run the company.

Michael Seton: I'm very proud of our experience leadership team, which has strong real estate, financial, and operating expertise. Kay Neely, our chief financial officer, has been with our company for over eight years and CFO for the past six years and previously had an extensive career in public accounting with a Big Four audit firm. First Flouhouse, our chief investment officer, who joined us recently after a distinguished 25-year banking career, brings a strong background in corporate finance, real estate M&A, and lead advisory experience. We are supported by almost 50 other employees involved in all facets of our business from acquisition, investment management, research, and tenant credit, in-house property management, and all finance, accounting, and reporting in capital markets functions.

Michael Seaton: I'm very proud of our experienced leadership, which has strong real estate, financial, and operating expertise. Kay Neely, our Chief Financial Officer, has been with our company for over eight years and has been CFO for the past six years, and she previously had an extensive career in public accounting with a Big Four audit firm. Chris Flowhouse, our Chief Investment Officer, who joined us recently after a distinguished 25-year banking career, brings a strong background in corporate finance, real estate M&A, and REIT advisory experience.

Speaker Change: I'm very proud of our experienced leadership team.

Speaker Change: which has strong real estate, financial, and operating expertise.

Speaker Change: Kay Neely, our Chief Financial Officer, has been with our company for over eight years and CFO for the past six years, and previously had an extensive career in public accounting with a Big Four audit firm.

Speaker Change: Chris Flowhouse, our Chief Investment Officer, who joined us recently after a distinguished 25-year banking career, brings a strong background in corporate finance, real estate M&A, and REIT advisory experience.

Michael Seaton: We are supported by almost 50 other employees involved in all facets of our business, from acquisitions, investment management, research, and tenant credit, in-house property management, and all finance, accounting, and reporting and capital markets functions. Our board of directors is represented by individuals with diverse perspectives that bring a personal commitment to strong corporate governance with the highest integrity. As a publicly traded company, we will put shareholders first with an eye towards transparency, just as we always have. We have been an SEC registrant for over 10 years. For years, we have provided shareholders with comprehensive disclosures, financial reporting, and transparent communication, and that simply will not change.

Speaker Change: We are supported by almost 50 other employees involved in all facets of our business from acquisitions, investment management, research and tenant credit, in-house property management, and all finance, accounting, and reporting and capital markets functions.

Michael Seton: Our board of directors is represented by individuals with diverse perspectives that bring a personal commitment to strong corporate governance with the highest integrity. As a publicly traded company, we will put shareholders first, with an eye towards transparency, just as we always have. We have been an SEC registrant for over 10 years. For years, we have provided shareholders with comprehensive disclosures, financial reporting, and transparent communication, and that simply will not change.

Speaker Change: Our board of directors is represented by individuals with diverse perspectives that bring a personal commitment to strong corporate governance with the highest integrity.

Speaker Change: As a publicly traded company, we will put shareholders first with an eye towards transparency, just as we always have.

Michael Seton: Now, let me address some recent portfolio activities. As previously reported in an 8-K in June 2023 and discussed in our subsequent period filing, the sponsor of a tenant at 17 of our properties, GenesisCare, filed for Chapter 11 bankruptcy. The 17 properties were released to GenesisCare under a master lease. This lease was not rejected, and GenesisCare paid us full rent throughout the bankruptcy process. Subsequent to GenesisCare's emergence from bankruptcy in February 2024, we entered into an amended master lease covering 7 of the 17 properties, all located in Florida. Six of the 10 properties that were severed from the lease were released to new tenants who acquired the operations at each of the properties.

Michael Seaton: Now let me address some recent portfolio activity. As previously reported in an AK in June 2023 and discussed in our subsequent period filing, the sponsor of a tenant at 17 of our properties, Genesis Care, filed for Chapter 11 bankruptcy. The 17 properties were leased to Genesis Care under a master lease. This lease was not rejected, and Genesis Care paid us full rent throughout the bankruptcy process. Subsequent to Genesis Care' emergence from bankruptcy in February 2024, we entered into an amended master lease covering 7 of the 17 properties, all located in Florida.

Michael Seaton: Six of the ten properties that were severed from the lease were leased to new tenants who acquired the operations at each of the properties. DLNL has four unleased GenesysCare-related assets remaining and is in final negotiations for leasing one of those properties, and is in different active stages of selling the other three. Kay will discuss the impact of this on second quarter results. Also impacting second quarter results was the closure of operations at the company's sole property lease to Stewart Healthcare, which filed for bankruptcy in May of 2024. Fila is in the process of selling this asset. I will now turn the call over to Chris to discuss the positioning of SILA's portfolio and the healthcare real estate environment.

Michael Seton: Deal and L has four unleased GenesisCare related assets remaining, and is in final negotiations for leasing one of those properties, and is in different active stages of selling the other three. Kay will discuss the impact of this on second quarter results. Also, impacting second quarter results was the closure of operations at the company's sole property lease to Steward Health Care, which filed for bankruptcy in May of 2024. FEMA is in the process of selling this asset.

Christopher Flouhouse: I will now turn the call over to Chris to discuss the positioning of SEALUS portfolio and the health care real estate environment. Thank you, Michael. SEALUS portfolio is well diversified across 137 properties with an emphasis in the smile states across the Southern US for populations that demand for health care growing. In fact, approximately 65% of our portfolio is located within the Smile States. Our top five markets by ABR, our Dallas, Oklahoma City, San Antonio, Akron, and Tucson. At the end of the second quarter, we earned assets in 64 markets across the United States, providing meaningful geographic diversification.

Chris Lowhouse: Thank you, Michael. Sila's portfolio is well-diversified across 137 properties, with an emphasis on the Smile States across the southern U.S., where populations in demand for health care are growing. In fact, approximately 65% of our portfolio is located within the Smile States. Our top five markets by ABR are Dallas, Oklahoma City, San Antonio, Akron, and Tucson. At the end of the second quarter, we owned assets in 64 markets across the United States, providing meaningful geographic diversification.

Chris Flowhouse: I will now turn the call over to Chris to discuss the positioning of SILA's portfolio and the healthcare real estate environment.

Chris Flowhouse: Thank you, Michael. Sila's portfolio is well-diversified across 137 properties, with an emphasis in the Smile States across the Southern U.S., where populations in demand for healthcare are growing. In fact, approximately 65% of our portfolio is located within the Smile States.

Chris Lowhouse: Our portfolio consists of approximately 5.3 million rentable square feet, a 97.5% weighted average lease rate, and 8.2 years of weighted average remaining lease term, or WAL, with only 21% of the annualized base rent maturing within five years. Our tenant credit profile is balanced and consists of 36.4% investment grade rated tenant, guarantor, or affiliate, 28.1% rated tenant, guarantor, or affiliate, and 35.5% non-rated.

Christopher Flouhouse: Our portfolio consists of approximately 5.3 million rentable square feet. A 97.5% weighted average lease rate and 8.2 years weighted average remaining lease term or wall with only 21% annualized base rent maturing within five years. Our tenant credit profile is balanced and consists of 36.4% investment grade rated tenant, guarantor, or affiliate; 28.1% rated tenant, guarantor, or affiliate; and 35.5% non-rated. As of June 30th, using ABR, our portfolio was comprised of 37.4% medical outpatient buildings, 28.6% inpatient rehabilitation facilities, and 34% surgical and specialty facilities. Our top 10 tenants comprised 62% of our ABR, though no single tenant accounts for more than 16% of our revenue.

Chris Lowhouse: As of June 30th, using ABR, our portfolio was comprised of 37.4% medical outpatient buildings, 28.6% inpatient rehabilitation facilities, and 34% surgical and specialty facilities. Our top 10 tenants comprise 62% of our ABR, though no single tenant accounts for more than 16% of our revenue. Furthermore, our largest tenant, Post Acute Medical, is mitigated through our ownership of 15 individual assets, of which we receive regular financial reporting of property operating performance. Due to our stringent underwriting standards and focus on the most advantageous risk-adjusted returns for our shareholders, we strive to acquire properties that exhibit high and increasing rent coverage ratios.

Chris Flowhouse: As of June 30th, using ABR, our portfolio was comprised of 37.4% medical outpatient buildings, 28.6% inpatient rehabilitation facilities, and 34% surgical and specialty facilities.

Chris Flowhouse: Our top 10 tenants comprise 62% of our ABR, though no single tenant accounts for more than 16% of our revenue.

Christopher Flouhouse: Furthermore, our largest tenant, Post-Acute Medical, is mitigated through our ownership of 15 individual assets, of which we receive regular financial reporting of property operating performance. Due to our stringent underwriting standards and focus on the most advantageous risk-adjusted returns for our shareholders, we strive to acquire properties that exhibit high and increasing rent coverage ratios. As of June 30th, 2024, the 68% of ABR of our portfolio that provides financial reporting to us maintained a 4.64 times EBID arm coverage ratio. Of the 32% that do not report, approximately one-third is related to investment-grade rated tenants or guarantors.

Chris Lowhouse: As of June 30, 2024, the 68% of ABR of our portfolio that provides financial reporting to us maintained a 4.64 times EBITDARM coverage ratio. Of the 32% that do not report, approximately one-third is related to investment grade rated tenants or guarantors.

Speaker Change: Of the 32% that do not report, approximately one-third is related to investment grade rated tenants or guarantors.

Christopher Flouhouse: Moving on to the market environment, medical outpatient buildings are demonstrating strong fundamentals with increasing patient volumes. We're seeing high-quality MOB opportunities in large part because so much of the industry's attention has been focused on senior housing, leaving MOBs out of the conversation. We have both the focus and expertise in MOB transactions to take advantage of these opportunities. In the inpatient rehabilitation market, countrywide demand continues to grow for on- and off-campus post-acute care facilities to provide a lower cost environment than general acute care hospitals. We are focused on newer facilities, least to best-in-class operators, as exemplified by our most recent acquisition and for Smith, Arkansas.

Chris Lowhouse: In the inpatient rehabilitation market, nationwide demand continues to grow for on- and off-campus post-acute care facilities that provide a lower-cost environment than general acute care hospitals. We are focused on newer facilities leased to best-in-class operators, as exemplified by our most recent acquisition in Fort Smith, Arkansas. We also keep a keen eye on the outpatient behavioral health market, where we've seen greater interest in demand, but remain diligent to ensure that any property acquisition has a strong and proven operator who can achieve appropriate levels of profitable margin for its business.

Speaker Change: In the inpatient rehabilitation market, countrywide demand continues to grow for on- and off-campus post-acute care facilities that provide a lower-cost environment than general acute care hospitals.

Christopher Flouhouse: We also take a keen eye on the outpatient behavioral health market for using greater interest in demand, but remain diligent to ensure that any property acquisition has a strong and proven operator who can achieve appropriate levels of profitable margin for its business. Insurgical, especially hospitals, health systems are looking to grow revenue, which could mean larger facilities for additional beds and perhaps more monetizations that we've seen in the past. Across all of our asset categories, we're seeing supply being strained and don't anticipate any meaningful inventory growth around the corner. This sets up for an environment that supports the occupancy and rents of our facilities.

Chris Lowhouse: In surgical and specialty hospitals, health systems are looking to grow revenue, which could mean larger facilities for additional beds and perhaps more monetizations than we've seen in the past. Across all of our asset categories, we're seeing supply being constrained and don't anticipate any meaningful inventory growth around the corner.

Chris Lowhouse: This sets up an environment that supports the occupancy and rents of our facility. We also take a proactive approach to asset management and actively evaluate our portfolio to ensure we are optimizing returns for our shareholders. We are in various active stages of selling our one Stewart Healthcare property, the Stoughton Healthcare Facility, and three Genesis Care properties. In addition, we are in the process of releasing another GenesisCare asset to high-quality credit tenants.

Christopher Flouhouse: We also take a proactive approach to asset management and actively evaluate our portfolio to ensure we are optimizing returns for our shareholders. We are in various active stages of selling our one steward health care property, the student health care facility, and three Genesis Care properties. In addition, we are in the process of releasing another Genesis Care asset to high-quality credit credit.

Speaker Change: We also take a proactive approach to asset management and actively evaluate our portfolio to ensure we are optimizing returns for our shareholders.

Christopher Flouhouse: Moving on to our second quarter activity, we acquired a $10.8 million medical outpatient building and renting Pennsylvania. The 30,000 square foot facility was constructed in 2020 and serves as an outpatient treatment center for former patients of the adjacent inpatient behavioral facility and other patients who only require outpatient care. This purpose-built facility is fully leased to Redding Behavioral Health Care, a joint venture between Acadia Health Care, the largest provider of behavioral health care services in the U.S. and Tower Health, a regional health care system, headquartered in West Redding Conservatives. Subsequent to quarter-end on July 25, we close on a $28.3 million in patient rehabilitation facility in Fort Smith, Arkansas.

Chris Lowhouse: Moving on to our second quarter activity, we acquired a $10.8 million medical outpatient building in Redding, Pennsylvania. The 30,000 square foot facility was constructed in 2020 and serves as an outpatient treatment center for former patients of the adjacent inpatient behavioral facility and other patients that only require outpatient care. This purpose-built facility is fully leased to Redding Behavioral Health Care, a joint venture between Acadia Healthcare, the largest provider of behavioral health care services in the U.S., and Tower Health, a regional health care system headquartered in West Redding, Pennsylvania.

Speaker Change: Moving on to our second quarter activity, we acquired a $10.8 million Medical Outpatient Building in Redding, Pennsylvania.

Speaker Change: The 30,000 square foot facility was constructed in 2020 and serves as an outpatient treatment center for former patients of the adjacent inpatient behavioral facility and other patients that only require outpatient care.

Chris Lowhouse: Subsequent to quarter end on July 25th, we closed on a $28.3 million inpatient rehabilitation facility in Fort Smith, Arkansas. This market-leading facility is 100% leased to a joint venture between Mercy Hospital of Fort Smith and Affiliate of Mercy Health of Missouri, which carries an investment-grade rating and LifePoint Health. We are pleased to add these facilities to our portfolio as we believe they exemplify our commitment to sourcing and acquiring what we believe are creative opportunities critical to our tenants' operations and the communities they serve.

Speaker Change: Subsequent to quarter end on July 25th, we closed on a $28.3 million inpatient rehabilitation facility in Fort Smith, Arkansas.

Christopher Flouhouse: This market leading facility is 100% leads to a joint venture between Mercy Hospital of Fort Smith and affiliate of Mercy Health and Missouri, which carries an investment-grade rating and LifePoint Health. We are pleased to add these facilities to our portfolio as we believe they exemplify our commitment to sourcing and acquiring what we believe are creative opportunities critical to our tenants' operations and the communities they serve. As previously mentioned, we're actively seeking additional opportunities that we believe will be accretive to our portfolio, but we will remain diligent as it relates to capital deployment.

Speaker Change: We are pleased to add these facilities to our portfolio as we believe they exemplify our commitment to sourcing and acquiring what we believe are creative opportunities critical to our tenants' operations and the communities they serve.

Chris Lowhouse: As previously mentioned, we're actively seeking additional opportunities that we believe will be accretive to our portfolio, but we will remain diligent as it relates to capital deployment. I'll now turn the call over to Kay for the financial report.

Speaker Change: As previously mentioned, we're actively seeking additional opportunities that we believe will be accretive to our portfolio, but we will remain diligent as it relates to capital deployment.

Kay Neely: I'll now turn the call over to Kay for the financial report. Kay. Thank you, Chris. I will now speak to our second quarter results, and since this is our first earnings call, I will also provide insight into our year-to-date results. Our gap net income for the second quarter was $4.6 million or $8 per diluted share, compared to $3.9 million or $7 per diluted share in the second quarter of 2023. Our gap net income for the first half of 2024 was $19.6 million, or $34 per diluted share, compared to $18.1 million, or $32 per diluted share for the first half of 2023.

Speaker Change: I'll now turn the call over to Kay for the financial report. Kay?

Kay Neely: I will now speak to our second quarter results and, since this is our first earnings call, I will also provide insight into our year-to-date results. Our GAAP net income for the second quarter was $4.6 million, or $0.08 per diluted share, compared to $3.9 million or $0.07 per diluted share in the second quarter of 2023. Our adjusted net income for the first half of 2024 was $19.6 million or $0.34 per diluted share compared to $18.1 million or $0.32 per diluted share for the first half of 2023.

Kay Neely: Thank you, Chris. I will now speak to our second quarter results, and since this is our first earnings call, I will also provide insight into our year-to-date results.

Kay Neely: Our GAAP net income for the second quarter was $4.6 million, or $0.08 per diluted share, compared to $3.9 million, or $0.07 per diluted share in the second quarter of 2023.

Kay Neely: Our GAAP net income for the first half of 2024 was $19.6 million, or $0.34 per diluted share, compared to $18.1 million, or $0.32 per diluted share for the first half of 2023.

Kay Neely: Our cash in a line was $39.9 million in the second quarter of 2024 as compared to $42.4 million in the second quarter of 2023, or a 5.8 percent decrease. This decrease is primarily due to a decrease in same-store cash and a Y of $1.2 million, and the decrease in non-same-store cash and a Y of $1.2 million. The decrease in same-store cash and a Y is primarily related to four vacant properties, formalities to Genesis Care, and the closure of operations at our only property leads to Steward Healthcare, which Michael spoke to previously, resulting in $1.7 million in lower cash in a Y compared to the same period in 2023.

Kay Neely: Our cash NOI was $39.9 million in the second quarter of 2024 as compared to $42.4 million in the second quarter of 2023, or a 5.8 percent decrease. This decrease is primarily due to a decrease in same-store cash NOI of $1.2 million and a decrease in non-same-store cash NOI of $1.2 million. The decrease in same-store cash NOI is primarily related to four vacant properties formerly leased to Genesis Care and the closure of operations at our only property leased to Steward Health Care, which Michael spoke to previously, resulting in $1.7 million in lower cash NOI compared to the same period in 2023.

Kay Neely: Our cash NOI was $39.9 million in the second quarter of 2024, as compared to $42.4 million in the second quarter of 2023, or a 5.8% decrease.

Kay Neely: This decrease is primarily due to a decrease in same-store cash NOI of $1.2 million and a decrease in non-same-store cash NOI of $1.2 million.

Kay Neely: The decrease in same-store cash NOI is primarily related to four vacant properties formerly leased to Genesis Care.

Kay Neely: and the closure of operations at our only property leased to Steward Health Care, which Michael spoke to previously, resulting in $1.7 million in lower cash NOI compared to the same period in 2023.

Kay Neely: This was partially offset by second quarter 2024 increases at our other things or properties of 2.3 percent or approximately $760,000 when compared to the second quarter of 2023, as a result of annual rent escalation. The decrease in non-same-store cash and a Y is the result of cash and a Y loss from dispositions exceeding cash and a Y gained from acquisition relating to the timing of redeployment of proceeds from dispositions. Cash and a Y was $86.8 million for the first half of 2024 as compared to $88 million for the first half of 2023, or 1.3 percent decrease.

Kay Neely: This was partially offset by second quarter 2024 increases at our other same-store properties of 2.3%, or approximately $760,000 when compared to the second quarter of 2023 as a result of annual rent escalation. The decrease in non-same-store cash NOI is the result of cash NOI loss from dispositions exceeding cash NOI gained from acquisition relating to the timing of redeployment of proceeds from disposition. Cash NOI was $86.8 million for the first half of 2024, as compared to $88 million for the first half of 2023, or a 1.3% decrease.

Kay Neely: This was partially offset by second quarter 2024 increases at our other same-store properties of 2.3% or approximately $760,000 when compared to the second quarter of 2023 as a result of annual rent escalation.

Kay Neely: The decrease in non-same-store cash NOI is the result of cash NOI loss from dispositions exceeding cash NOI gained from acquisition relating to the timing of redeployment of proceeds from dispositions.

Kay Neely: Cash NOI was $86.8 million for the first half of 2024, as compared to $88 million for the first half of 2023, or a 1.3% decrease.

Kay Neely: This decrease is the result of the net effect of an increase in same-store cash and a Y of $1.6 million and a decrease of non-same-store cash and a Y of $2.8 million. The increase in St. George Cash and a Y is primarily the result of receiving a $2 million one-time payment from Genesis Care as consideration for the removal of 10 of the properties from the master lease during the first half of 2024. This offset a decrease of $1.8 million in cash and a Y in the first half of 2024 related to the four vacant properties formally leads to Genesis Care and the closure of operations that the only property leases doered compared to the same period in 2023.

Kay Neely: This decrease is the result of the net effect of an increase in same-store cash NOI of $1.6 million and a decrease in non-same-store cash NOI of $2.8 million. The increase in same-store cash and why is primarily the result of receiving a $2 million one-time payment from Genesis Care as consideration for the removal of 10 of the properties from the master lease during the first half of 2024. This offset a decrease of $1.8 million in cash in Hawaii in the first half of 2024 related to the four vacant properties formerly leased to Genesis Care and the closure of operations of the only property leased to Stewart compared to the same period in 2023.

Kay Neely: This decrease is the result of the net effect of an increase in same-store cash NOI of 1.6 million dollars and a decrease of non-same-store cash NOI of 2.8 million dollars.

Kay Neely: The increase in same-store cash NOI is primarily the result of receiving a $2 million one-time payment from GenesisCare as consideration for the removal of 10 of the properties from the master lease during the first half of 2024.

Kay Neely: This offset a decrease of $1.8 million in cash-in-a-while in the first half of 2024 related to the four vacant properties formerly leased to Genesis Care and the closure of operations of the only property leased to Stewart compared to the same period in 2023.

Kay Neely: Additionally, there was a 2.1 percent increase or $1.4 million in other same-store property cash and a Y in the first half of 2024 when compared to the same period in 2023 as the result of annual rent escalation. The decrease in non-sane-store cash and a Y is the result of cash and a Y loss from disposition exceeding cash and a Y gained from acquisition related to the timing of redeployment of proceeds from disposition.

Kay Neely: Additionally, there was a 2.1% increase, or $1.4 million, in other same-store property cash-in-a-line in the first half of 2024 when compared to the same period in 2023 as a result of annual rent escalation. The decrease in non-same-store cash NOI is the result of cash NOI loss from dispositions exceeding cash NOI gained from acquisitions related to the timing of the redeployment of proceeds from dispositions.

Kay Neely: Additionally, there was a 2.1% increase

Kay Neely: or $1.4 million in other same-store property cash NOI in the first half of 2024 when compared to the same period in 2023 as a result of annual rent escalation.

Kay Neely: During the first half of 2024, Sila invested $135.7 million to purchase seven real estate properties and three separate transactions compared to an investment of $9.9 million for one property in the same period in 2023. ASSO decreased 2.3 percent to $30.8 million, or $54 per diluted share, during the second quarter of 2024 compared to $31.6 million, or $55 per diluted share, during the second quarter of 2023. In addition to the cash and a Y items just discussed, ASSO includes income received from investments in money market accounts in which we invested the $185 million in net cash proceeds that we received after the repayment of outstanding variable rate debt from the sale of a FFO. Also, FFO includes a decrease in interest expense compared to the second quarter of 2023.

Kay Neely: During the first half of 2024, Sila invested $135.7 million to purchase seven real estate properties in three separate transactions compared to an investment of $9.9 million for one property in the same period in 2023. ASFO decreased 2.3% to $30.8 million or $0.54 per diluted share during the second quarter of 2024 compared to $31.6 million or $0.55 per diluted share during the second quarter of 2023, in addition to the cash NOI items just discussed.

Kay Neely: During the first half of 2024, SILA invested $135.7 million to purchase seven real estate properties in three separate transactions compared to an investment of $9.9 million for one property in the same period in 2023.

Kay Neely: ASFO decreased 2.3% to $30.8 million or $0.54 per diluted share during the second quarter of 2024 compared to $31.6 million or $0.55 per diluted share during the second quarter of 2023.

Kay Neely: ASFO includes income received from investments in money market accounts, in which we invested the $185 million in net cash proceeds that we received after the repayment of outstanding variable rate debt from the sale of a significant asset in December 2023 until we redeployed the funds. The second quarter of 2024 AFFO also includes a decrease in interest expense compared to the second quarter of 2023. AFFO for the first half of 2024 increased 5% to $69.1 million, or $1.20 per diluted share, compared to $65.8 million, or $1.15 per diluted share, for the first half of 2023. In addition to the year-to-date cash NOI items previously discussed, AFFO includes income received from investments and money market funds, as well as a decrease in interest expense from the same period in 2023.

Kay Neely: In addition to the cash NOI items just discussed, AFFO includes income received from investments in money market accounts.

Kay Neely: in which we invested the $185 million in net cash proceeds that we received after the repayment of outstanding variable rate debt from the sale of a significant asset in December 2023 until we redeployed the funds.

Kay Neely: The second quarter of 2024 AFFO also includes a decrease in interest expense compared to the second quarter of 2023.

Kay Neely: ASSO for the first half of 2024 increased 5 percent to $69.1 million, or $1.20 per diluted share, compared to $65.8 million, or $1.15 per diluted share, for the first half of 2023. In addition to the year-to-day cash and a Y items previously discussed, ASSO includes income received from investments in money market funds, as well as a decrease in interest expense from the same period of 2023. As of the quarter end, we were conservatively leveraged with total net debt of $438 million, which equated to 3.1 times EBITDA RE. We had cash, cash equivalent, and availability under our credit facility of approximately $587 million, providing us with substantial liquidity to make acquisitions, which we believe enhanced the value of our portfolio for the benefit of our shareholders.

Kay Neely: AFFO for the first half of 2024 increased 5% to $69.1 million, or $1.20 per diluted share, compared to $65.8 million, or $1.15 per diluted share, for the first half of 2023.

Kay Neely: In addition to the year-to-date cash NOI items previously discussed, AFFO includes income received from investments in money market funds, as well as a decrease in interest expense from the same period of 2023.

Kay Neely: As of the quarter end, we were conservatively leveraged with total net debt of $438 million, which equated to 3.1 times EBITDA RE. We had cash, cash equivalents, and availability under our credit facility of approximately $587 million, providing us with substantial liquidity to make acquisitions which we believe enhance the value of our portfolio for the benefit of our shareholders. At quarter end, our outstanding debt was 100% fixed through interest rate swaps, a testament to the conservative balance sheet management which we have always undertaken.

Kay Neely: As of the quarter end, we were conservatively leveraged, with total net debt of $438 million, which equated to 3.1 times EBITDA RE.

Kay Neely: We had cash, cash equivalents, and availability under our credit facility of approximately $587 million, providing us with substantial liquidity to make acquisitions which we believe enhance the value of our portfolio for the benefit of our shareholders.

Kay Neely: At quarter end, our outstanding debt was 100% fixed through interest rate swap, a testament to the conservative balance sheet management, which we have always undertaken. Going forward, we believe a leverage ratio of approximately 4 to 5 times net debt to EBITDA RE is an appropriate level for the company, which is generally lower than the peers in our space. Though at times we may run lower or we may run higher. In the beginning of the year, we were successful in recasting and amending our $250 million term loan with a new up to 5-year term loan when taking into account extension options exercisable by the company at an attractive borrowing spread over SOFR equal to the prior spread of the refinance term loan.

Kay Neely: At quarter end, our outstanding debt was 100% fixed through interest rate swaps, a testament to the conservative balance sheet management which we have always undertaken.

Kay Neely: Going forward, we believe a leverage ratio of approximately 4-5 times net debt to EBITDA RE is an appropriate level for the company, which is generally lower than the peers in our space. So, at times, we may run lower, or we may run higher.

Kay Neely: Going forward, we believe a leverage ratio of approximately 4 to 5 times net debt to EBITDA RE is an appropriate level for the company, which is generally lower than the peers in our space, though at times we may run lower or we may run higher.

Kay Neely: In the beginning of the year, we were successful in recasting and amending our $250 million term loan with a new up to five-year term loan when taking into account extension options exercisable by the company at an attractive borrowing spread over SOFR equal to the prior spread of the refinanced term loan. The syndication of this recast was approximately 18% oversubscribed, providing testament to our lenders' confidence in Sila. Now that Sila is publicly traded, we expect to have more options to access debt capital than the traditional bank market. I will now speak about our approach to our debt.

Kay Neely: In the beginning of the year, we were successful in recasting and amending our $250 million term loan.

Kay Neely: with a new up to five-year term loan when taking into account extension options exercisable by the company at an attractive borrowing spread over SOFR, equal to the prior spread of the refinanced term loan.

Kay Neely: The syndication of this recast was approximately 18% oversubscribed, providing testament to our lender's confidence in Sila. Now that Sila is publicly traded, we expect to have more options to access debt capital than the traditional bank markets.

Kay Neely: The syndication of this recast was approximately 18% oversubscribed, providing testament to our lenders' confidence in Sila. Now that Sila is publicly traded, we expect to have more options to access debt capital than the traditional bank markets.

Kay Neely: I will now speak about our approach to our dividend. We currently pay our dividend monthly and understand the importance of the durability of the payment to our shareholders. We maintain a conservative payout ratio to provide confidence in the stability of our dividend. Our most recent quarter payout ratio was 75% of AFSO. On July 16, our Board of Directors authorized a monthly dividend of 13 cents per share of common stock, payable on August 15 to stockholders of record at the close of business on July 31. This distribution represents an annualized aggregate dividend of $1.60 per share.

Kay Neely: We currently pay our dividend monthly and understand the importance of the durability of the payment to our shareholders. We maintain a conservative payout ratio to provide confidence in the stability of our dividend. Our most recent quarter payout ratio was 75% of AFFO. On July 16th, our Board of Directors authorized a monthly dividend of $0.13 per share of common stock payable on August 15th to stockholders of record at the close of business on July 31st.

Speaker Change: I will now speak about our approach to our dividend.

Speaker Change: We currently pay our dividend monthly and understand the importance of the durability of the payment to our shareholders.

Speaker Change: We maintain a conservative payout ratio to provide confidence in the stability of our dividend. Our most recent quarter payout ratio was 75% of AFFO.

Speaker Change: On July 16th, our Board of Directors authorized a monthly dividend of $0.13 per share of common stock, payable on August 15th to stockholders of record at the close of business on July 31st.

Kay Neely: This distribution represents an annualized aggregate dividend of $1.60 per share. As Michael mentioned at the beginning of the call, we successfully listed SILA on the New York Stock Exchange under the ticker symbol S-I-L-A on June 13th of this year. On the date of the listing, we launched a modified Dutch auction tender offer for the purchase of up to $50 million in value of our outstanding common stock at a price range between $22.60 per share on the low end and $24 per share on the high end, subject to the tendering party's election.

Speaker Change: This distribution represents an annualized aggregate dividend of $1.60 per share.

Kay Neely: As Michael mentioned at the beginning of the call, we successfully listed Sila on the New York Stock Exchange under the ticker symbol SILA on June 13 of this year. On the date of the listing, we launched a modified Dutch auction tender offer for the purchase of up to $50 million in value of our outstanding common stock at a price range between $22.60 per share on the low end and $24 per share on the high end, subject to the tendering party's election. We established the tender price range at levels that we believed to be highly accreted to the intrinsic value of our company.

Speaker Change: As Michael mentioned at the beginning of the call, we successfully listed SILA on the New York Stock Exchange under the ticker symbol SILA on June 13th of this year.

Speaker Change: On the date of the listing, we launched a modified Dutch auction tender offer for the purchase of up to $50 million in value of our outstanding common stock at a price range between $22.60 per share on the low end and $24 per share on the high end.

Kay Neely: We established the tender price range at levels that we believe to be highly accretive to the intrinsic value of our company, and we received sufficient tendered shares at the low end of the range, or $22.60, allowing the company to successfully purchase approximately 2.2 million shares, reducing the outstanding share count of the company by approximately 3.9% to 55 million shares. Now I'll turn the call back to Michael for his closing remarks.

Speaker Change: subject to the tendering party's election. We establish the tender price range at levels that we believe to be highly accretive to the intrinsic value of our company.

Kay Neely: We received sufficient tender shares at the low end of the range or $20.60, allowing the company to successfully purchase approximately 2.2 million shares, reducing the outstanding share count of the company by approximately 3.9% to 55 million shares.

Speaker Change: We received sufficient tendered shares at the low end of the range or $22.60.

Speaker Change: allowing the company to successfully purchase approximately 2.2 million shares, reducing the outstanding share count of the company by approximately 3.9% to 55 million shares.

Michael Seton: Now I'll turn the call back to Michael for his closing remarks. Thank you, Kay. I would like to take a moment to thank my colleagues at Sila Realty Trust, who have been the backbone of building our company and who continue to move the company forward.

Speaker Change: Now, I'll turn the call back to Michael for his closing remarks.

Michael Seaton: Thank you, Kay. I would like to take a moment to thank my colleagues at Sila Realty Trust who have been the backbone of building our company and who continue to move the company forward. On behalf of my leadership partners and our board of directors, let me express our greatest appreciation to all who have contributed to CELA's success, and we appreciate everyone on this call joining us today to hear more about our company. We look forward to establishing long-lasting and productive relationships with the investor and analyst community. That concludes our prepared remarks. Operator, please begin the Q&A.

Michael: Thank you, Kay. I would like to take a moment to thank my colleagues at Sila Realty Trust who have been the backbone of building our company and who continue to move the company forward.

Michael Seton: On behalf of my leadership partners and our Board of Directors, let me express our greatest appreciation to all who have contributed to Sila's success, and we appreciate everyone on this call joining us today to hear more about our company. We look forward to establishing long lasting and productive relationships with the investor and analyst community.

Michael: On behalf of my leadership partners and our Board of Directors, let me express our greatest appreciation to all who have contributed to SILA's success, and we appreciate everyone on this call joining us today to hear more about our company.

Michael: We look forward to establishing long-lasting and productive relationships with the investor and analyst communities.

Speaker Change: That concludes our prepared remarks. Operator, please begin the Q&A.

Michael Seton: Thank you.

Operator: Thank you. And at this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue by pressing star two. Once again, that is star one to ask a question. And our first question will come from Nate Crossett with BNP Paribas. Please go ahead.

Operator: And at this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue by pressing star two.

Speaker Change: Thank you, and at this time, if you would like to ask a question, please press star 1 on your telephone keypad. You may remove yourself from the queue by pressing star 2.

Nathan Crossett: Once again, that is star one to ask a question, and our first question will come from Nate Crossett with BNP Paribas.

Speaker Change: Once again, that is star one to ask a question and our first question will come from Nate Crosset with BNP Paribas. Please go ahead

Nathan Crossett: Please go ahead.

Nathan Crossett: Hey, good morning, everybody. Yeah, a bunch of questions.

Nate Crossett: Hey, good morning, everybody. Yeah, I have a bunch of questions. First, I don't think you guys gave us formal guidance, so maybe you could just talk us through some of the main guideposts we should be thinking about for the back half of this year. Like what, how should we be thinking about acquisition volumes, the cap rates you're looking at for acquisitions, GNA disposed of? I think it'd be helpful to give us kind of some parameters there.

Nathan Crossett: First is, I don't think you guys gave formal guidance. So maybe you could just talk us through some of the main guideposts we should be thinking about for the back half of this year. Like what's how you're thinking about acquisition volumes, the cap rates you're looking at for acquisition, GNA, dispos, I think it would be helpful to give us kind of some parameters there.

Nate Crosset: Hey, good morning everybody. Yeah, a bunch of questions. First is, I don't think you guys gave formal guidance.

Nate Crosset: So, maybe you could just talk us through some of the main guideposts we should be thinking about for the back half of this year. Like, how should we be thinking about acquisition volumes, the cap rates you're looking at for acquisitions?

Speaker Change: gna-dispose. I think it'd be helpful to give us kind of some parameters there.

Michael Seton: Sure, Nate. This is Michael Seton. Thank you for joining the column. It's great to reconnect again.

Michael Seaton: Sure, Nate. This is Michael Seton.

Speaker Change: Sure, Nate. This is Michael Seton. Thank you for joining the call and it's great to reconnect again.

Michael Seaton: Thank you for joining the call, and it's great to reconnect again. Let me kind of help sketch it out for you. From an acquisition perspective, it's our strategy to, overall, as a base case, grow our balance sheet by approximately 10 to 15 percent per year from a cap rate perspective, and that's giving us the runway that Kay spoke to earlier as well with respect to that kind of 12 to 24 months of, I'll call it, available liquidity that we have today. With respect to acquisition cap rates, we are seeing in the marketplace today and as evidenced by recent acquisition Generally speaking, cap rates are in the range of seven to eight percent.

Michael Seton: Let me kind of help you help help sketch it out for you. From an acquisition perspective, it's our strategy to overall, as a base case, grow or balance you by approximately 10 to 15% per year. From a cap rate perspective, and that's giving us the runway that case spoke to earlier as well with respect to that kind of 12 to 24 months of equal available liquidity that we have today with respect to acquisition cap rates. We are seeing in the marketplace today and evidence by recent acquisitions, generally speaking, cap rates in the range of seven to eight percent.

Speaker Change: Let me kind of help you, help sketch it out for you.

Speaker Change: From an acquisition perspective, it's our strategy to, overall as a base case, grow our balance sheet by approximately 10-15% per year.

Speaker Change: from a cap rate perspective and that's giving us the runway that Kay spoke to earlier as well with respect to that kind of 12 to 24 months of I'll call it available liquidity that we have today.

Speaker Change: With respect to acquisition cap rates, we are seeing in the marketplace today, and evidenced by recent acquisitions,

Speaker Change: Generally speaking, cap rates in the range of 7 to 8 percent.

Michael Seton: So that's for the higher quality institutional type and assets that we own.

Michael Seaton: So that's for the higher quality, institutional-type assets that we own. And I think that's a pretty good sketch of what we'll see in the coming months, in terms of overall, kind of to break down. We don't give guidance. We didn't give guidance.

Speaker Change: So that's for the higher quality institutional type assets that we own and I think that's a pretty good

Michael Seton: And I think that's a pretty good sketch of what we'll see in the coming months.

Speaker Change: sketch of what we'll see in in the coming months.

Michael Seton: In terms of overall kind to break down, we don't give guidance. We didn't give guidance, but in terms of breaking down the current quarter to give you a picture. We reported our NOI this quarter, and that's pretty close to what a good run rate will be. We had certain one-time revenue and expense items in this quarter.

Speaker Change: In terms of overall, kind of to break down,

Michael Seaton: But in terms of breaking down the current quarter, to give you a picture, we reported our NOI this quarter, and that's pretty close to what a good run rate will be. We had certain one-time revenue and expense items in this quarter, but particularly as we go forward and we seek to sell, and we're in different stages, as mentioned, in terms of the strategy around selling our currently vacant assets, we'll be relieved of those kind of carrying costs associated with that.

Speaker Change: We don't give guidance, we didn't give guidance, but in terms of breaking down the current quarter to give you a picture

Speaker Change: We reported our NOI this quarter.

Speaker Change: and that's pretty close to what a good run rate will be.

Speaker Change: We had certain...

Michael Seton: But particularly as we go forward and we seek to sell and we're in different stages, as mentioned in terms of the strategy around selling our currently vacant assets will be relieved of those kind of carry costs associated with that. So kind of to get a picture of a run rate looking at the current quarter, the NOI is reflective of that. Obviously, you would layer in. We spoke about our contractual rental rate increases. So, as we look forward, you could apply kind of our base contractual rental increase to that annualized figure, but that gives you kind of a picture of the NOI going forward.

Speaker Change: one-time revenue and expense items in this quarter.

Speaker Change: but particularly as we go forward and we seek to sell and we're in different stages, as mentioned.

Speaker Change: in terms of the strategy around selling.

Michael Seaton: So kind of to get a picture of a run rate, looking at the current quarter, the NOI is reflective of that. Obviously, you would layer in, we spoke about our contractual rental rate increases. So as we look forward, you could apply kind of our base contractual rental increase to that annualized figure. But that gives you kind of a picture of the NOI going forward.

Speaker Change: are currently vacant assets.

Speaker Change: We'll be relieved of those kind of carry costs associated with that. So, kind of to get a picture of a run rate.

Speaker Change: looking at the current quarter, the NOI is reflective of that. Obviously you would layer in, we spoke about our contractual rental rate increases, so as we look forward you could apply kind of our

Speaker Change: base contractual rental increase to that annualized figure, but that gives you kind of a picture of the NOI going forward. So hopefully that's helpful as a run rate. What that doesn't take into effect though, I will tell you, is our most recent acquisition of Fort Smith.

Michael Seaton: So hopefully that's helpful as a run rate. What that doesn't take into effect, though, I will tell you, is our most recent acquisition in Fort Smith. We made an acquisition of an inpatient rehab facility for $28.3 million in July.

Michael Seton: So hopefully that's helpful as a run rate.

Michael Seton: What that doesn't take into effect, though, I will tell you, is our most recent acquisition of Fort Smith. We made an acquisition of an impatient rehab facility for $28.3 million in July most recently. That was, of course, after the quarter ran. So that's not in that NOI figure. I'm going down from there. I'll kind of take you all the way down. That's N-O-Y. We have interest expense and, of course, GNA. And just to give you a picture of that as well to sketch it out, GNA for this quarter, we separate out our listing expenses. Of course, we had our listing June 13, so it occurred in this quarter that is separate out in our income statement.

Michael Seaton: Most recently, that was, of course, after the quarter end. So that's not in that NOI figure. Going down from here, I'll kind of take you all the way down. That's NOI.

Speaker Change: We made an acquisition of an inpatient rehab facility for $28.3 million in July most recently. That was, of course, after the quarter end. So that's not in that NOI figure.

Speaker Change: Going down from there, I'll kind of take you all the way down. That's NOI.

Michael Seaton: We have interest expense and, of course, G&A. And just to give you a picture of that as well as to sketch it out, G&A for this quarter, we separated out our listing expenses. Of course, we had our listing on June 13th, so it occurred in this quarter.

Speaker Change: We have interest expense and, of course, G&A. And just to give you a picture of that as well,

Speaker Change: to sketch it out. G&A for this quarter, we separated out our listing expenses. Of course, we had our listing June 13th, so occurred in this quarter. That is separate out in our income statement. G&A for this quarter is reflective of a run rate. So again, can be multiplied by four.

Michael Seaton: That is separate out in our income statement. G&A for this quarter is reflective of a run rate, and so, again, can be multiplied by four.

Michael Seton: GNA for this quarter is reflective of a run rate. So again, it could be multiplied by four with respect to interest expense for the year. It's pretty close. So again, taking the current interest expense, multiplying that by four for this year.

Michael Seaton: With respect to interest expense for the year, it's pretty close. So, again, taking the current interest expense, and multiplying that by four for this year. Going forward, meaning in terms of next year, if you look at our financial statements, we do have some hedges burning off or expiring, I should say, at the end of this year. They have a very low interest rate. That swapped rate is 0.93% on $250 million. It does expire this year.

Speaker Change: with respect to interest expense.

Speaker Change: for the year.

Speaker Change: Pretty close. So again taking the current interest expense multiplying that by four for this year

Michael Seton: Going forward, meaning in terms of next year, if you look at our financial statements, we do have some hedges burning off or expiring, I should say, at the end of this year. They're very low interest rate. That swapped rate is 0.93 percent on $250 million. It does expire this year. We will seek to most likely re-headge that at the appropriate time. That's tied to a term loan that we've got. And rates are obviously, it feels like coming the right direction in terms of that. We've waited intentionally, obviously, for the Fed to act or the market to perceive those rates coming down.

Speaker Change: Going forward, meaning in terms of next year, if you look at our financial statements, we do have some hedges.

Speaker Change: burning off or expiring, I should say, at the end of this year. They are a very low interest rate.

Speaker Change: that

Speaker Change: swapped rate is 0.93% on 250 million dollars. It does expire this year.

Michael Seaton: We will seek to most likely rehedge that at the appropriate time. That's tied to a term loan that we've got. And rates are obviously, it feels like they are coming in the right direction in terms of that. We've waited intentionally, obviously, for the Fed to act or the market to perceive those rates coming down. So, we will act opportunistically with respect to the timing of that, and we have in place all of our counterparty ISDA agreements and the like to be able to execute on that at a moment's notice.

Speaker Change: We will seek to most likely re-hedge that at the appropriate time.

Michael Seton: So we will opt at opportunistically with respect to the timing of that. And we have in place all of our counter-party agreements and the like to be able to execute at a moment's notice on that.

Michael Seton: So, just also on the interest expense side, let me give you kind of a picture broad brush. Again, that $250 million that expires this year is hedged at a swap rate of 0.93 percent. You take into account, obviously, our margin borrowing, which is tied to leverage related to that debt, which currently is 1.25 percent. So that's additive. So again, it's approximately 2.1 percent all in cost related to that $250 million. If we were to do a new three or four years swap today, roughly speaking, that base rate would be approximately in the neighborhood of about 3 percent or slightly over, roughly speaking.

Michael Seaton: So just also on the interest expense side, let me give you kind of a picture, broad brush, again, are that is that 250 million dollars that expires this year is hedged at a swap rate of 0.93 percent you take into account obviously our margin borrowing which is tied to leverage related to that debt which currently is 1.25 percent so that's additive so again it's approximately 2.1 all in cost related that 250 million if we were to do a new three or four year swap today roughly speaking that base rate would be approximately in the neighborhood of about three percent or slightly over roughly speaking so three to three three point one five percent then we layer in our 1.25 percent current currently applied leverage borrowing rate so we get into our all in cost there so we'll see an adjustment we anticipate in our interest expense next year relative to this year but we're fully anticipating that and again we'll act opportunistically to take advantage of where we see an opportunity in the market.

Michael Seton: So 3 to 3.15 percent, then we layer in our 1.25 percent current, currently applied leverage borrowing rate. So we get into our all-in cost there. So we'll see an adjustment. We anticipate in our interest expense next year relative to this year. But we're fully anticipating that. And again, we'll act opportunistically to take advantage of where we see an opportunity in the market. I hope that's helpful.

Speaker Change: currently applied leverage borrowing rate, so we get into our all-in cost there. So we'll see an adjustment, we anticipate, in our interest expense next year relative to this year, but we're fully anticipating that, and again, we'll act opportunistically to take advantage of

Michael Seaton: Yeah, that's all helpful. I was going to ask, as part of the investment strategy, would you guys consider adding buybacks potentially to that, just given the cap rate on your stock and the fact that your leverage is incredibly low? Like, would you use that to maybe blend your acquisition cap rates higher by maybe buying back stock as well?

Speaker Change: where we see an opportunity in the market.

Nathan Crossett: Yeah, that's all helpful. I was going to ask as like an addition to that. So part of the investment strategy, would you guys consider adding buybacks potentially to that? Just giving the same cap rate is on your stock. And the fact that your leverage is incredibly low. Like, would you use that to maybe blend your acquisition cap rate higher by maybe buying back stock as well?

Speaker Change: I hope that helps.

Speaker Change: I was going to ask, as an addition to that, so part of the investment strategy, would you guys consider adding buybacks potentially to that, just given the way the cap rate is on your stock and the fact that your leverage is incredibly low?

Michael Seton: We would, and we, as you know, we just did a Dutch tender and completed that, and that was successful in terms of the buyback, and we're pleased that the buyback occurred at the lower end of that range, although we would have been happy at any point in that range. We do consider a share buyback to be good use of our capital, provided that the stock price, obviously at which we're executing, is what we view to be a sufficient discount to our intrinsic value. We think that is there today. We obviously just completed our listing, came off of the Dutch tender, and I think we'll continue to monitor that and discuss with the board, which are suggesting, and balancing, of course, with the acquisition opportunities, but we would certainly consider that, yes.

Michael Seaton: We would, and as you know, we just did a Dutch tender and completed that, and that was successful in terms of the buyback, and we're pleased that the buyback occurred at the lower end of that range, although we would have been happy at any point in that range. We do consider a share buyback to be a good use of our capital, provided that the stock price, obviously, at which we're executing, is what we view to be a sufficient discount to our intrinsic value.

Speaker Change: We would and we as you know we just did a Dutch tender and completed that.

Speaker Change: And that was successful in terms of the buyback, and we're pleased that the buyback occurred at the lower end of that range, although we would have been happy at any point in that range.

Speaker Change: we do consider.

Speaker Change: a share buyback to be

Speaker Change: good use of our capital, provided that the stock price, obviously, at which we're executing, is what we view to be a sufficient discount to our intrinsic value. We think that is there today. We obviously just completed our listing, came off of

Michael Seaton: We think that is there today. We obviously just completed our listing, came off of the Dutch tender, and I think we'll continue to monitor that and discuss with the board what you're suggesting, balancing, of course, with the acquisition opportunities, but we would certainly consider that.

Nathan Crossett: Okay, that's helpful.

Nathan Crossett: Maybe one on just ten and credit, is there anything on the watch list that we should be tracking just outside of the news full of Steward and Genesis, and is there any kind of bad debt assumption you guys have for the back half of this year that's not Genesis or Steward? In terms of our watch list, let me describe what we do as it relates to the watch list. We have a scaled watch list. So we have a watch list, which is not just, for instance, situations like the steward or Genesis Care, which do fall into, how just described as our high monitoring watch list.

Speaker Change: Okay, that's helpful. Maybe one on just tenant credit. Is there anything on the watch list that we should be tracking?

Speaker Change: Just outside of the new school of Stewart and Genesis And is there any kind of bad debt assumption you guys have? For the back half of this year, that's not Genesis or Stewart

Speaker Change: So, we have a watch list, which is not just, for instance, situations like the steward or Genesis Care, which do fall into, I'll just describe it as our high monitoring watch list.

Michael Seton: We have others where it may just be a performing tenant, strong coverage, and maybe at least it's coming up, and we're negotiating that lead. So we call that our watch list as well, because it's got particular focus on that asset.

Speaker Change: We have others where it may just be a performing tenant.

Speaker Change: strong coverage and maybe a lease is coming up and we're negotiating that lease so we call that our watch list as well because it's got particular focus on that on that asset.

Michael Seton: I think you're asking specifically about those situations, which are more akin to sort of imminent payment issues or the like, and we have no material tenants on our high monitoring watch list. In fact, Genesis Care has dropped off our top ten tenant list, meaning the remaining Genesis Care entity that continues to lease seven assets from us as part of that, originally part of that master lease. And Stoten, of course, is not a material tenant, but we thought appropriate as kind of best-in-class disclosure to disclose that tenant. By the way, Stoten, as a percent of scheduled ABR in June, was only about 1.1% ongoing.

Speaker Change: I think you're asking specifically about...

Speaker Change: those

Speaker Change: And in fact, Genesys Care has dropped off our top 10 tenant list.

Speaker Change: as part of that, what was originally part of that master lease.

Speaker Change: and Stoughton, of course, is not a material tenant, but we thought it appropriate as kind of best-in-class disclosure to disclose that tenant. By the way, Stoughton as a percent of scheduled ABR in June

Nathan Crossett: Okay. That's helpful.

Nathan Crossett: Maybe just the last one, just like on the deal flow pipeline, how would you guys characterize the funnel right now? Maybe look at that. Give us any numbers here, but like just looking into three queue, like what are you seeing? How many opportunities are there? How long is it taking you to start to finish? Just like helping us size things a bit would be helpful. Sure.

Speaker Change: Okay, that's helpful. Maybe just the last one, just like on the deal flow pipeline, like...

Speaker Change: How would you guys characterize the funnel right now? I'm not trying to give us any numbers here, but just looking into 3Q, what are you seeing?

Speaker Change: How many opportunities are there? How long is it taking you to start to finish? Just like helping us size things a bit would be helpful.

Michael Seton: We see, it's comparing it to give you some texture of, we came out of, as you well know, a zero interest rate environment, you know, two and a half years ago or so. And we saw a very robust market where there was tremendous liquidity in the bank market and the equity markets for folks who were buying. So we saw private buyers be very active; we saw rebuyers, traded rebuyers be very active as well. Then obviously the breaks were put on to a large degree as the Fed started to raise rates. So we've seen tremendous drop-up and volume, drop-off and volume overall.

Speaker Change: Comparing it to give you some picture of, we came out of, as you well know, a zero interest rate environment, you know, two and a half years ago or so, and we saw a very robust market where there was tremendous liquidity in the bank market, in the equity markets, for folks who were buying. So we saw private buyers be very active, we saw REIT buyers, traded REIT buyers, be very active as well.

Speaker Change: Then obviously the brakes were put on to a large degree as the Fed started to raise rates. So we've seen Tremendous drop up in volume drop off in volume overall We were active last year in terms of acquisitions acquiring over 150 million dollars of property even in a market That was you know, very very muted

Michael Seton: We were active last year in terms of acquisitions, acquiring over $150 million of property, even in a market that was, you know, very, very muted. This year we've acquired over $163 million of property in what is still a reasonably, I would say, muted market, meaning volumes weigh down from what we saw, you know, roughly speaking, two and a half years ago. What we are seeing opportunities, it is, we will seek out opportunities to close between now and year end, but we're going to be disciplined. We see opportunities every week. They're prioritized. We see opportunities; new opportunities arrive. Will bid on opportunities.

Speaker Change: This year, we've acquired over $163 million of property in what is still a reasonably, I would say, muted market, meaning volumes way down from what we saw, you know, roughly speaking, two and a half years ago.

Speaker Change: What we are seeing opportunities.

Speaker Change: It is, we will seek out opportunities.

Speaker Change: to close between now and year-end, but we're going to be disciplined.

Speaker Change: We see opportunities every week.

Speaker Change: They're prioritized.

Speaker Change: They, we see opportunities, new opportunities arrive, we'll bid on opportunities.

Michael Seton: There's not a lot of competition in the market today. I would tell you we can be very choosy in terms of the opportunities, and we are being very disciplined and choosy in terms of even submitting bids and executing. One thing that I think we do have a reputation for in the market is if we're going to submit a bid and pursue an opportunity, we'll follow through on that pricing that we indicate.

Speaker Change: There's not a lot of competition in the market today. I would tell you we can be very choosy in terms of the opportunities, and we are being very disciplined and choosy in terms of...

Speaker Change: even submitting bids and executing. One thing that I think we do have a reputation for in the market is if we're going to submit a bid and pursue an opportunity

Michael Seton: We saw that earlier in a larger transaction that we executed of a portfolio five properties in the first half of this year, and it was kind of a more of a distress situation of the seller, but the properties were not distressed, and we were picked over other very qualified bidders because we ultimately followed through in a very short order because, again, we are a true cash buyer, and then our liquidity is available at a moment's notice, essentially three days notice. So we have tremendous availability under our credit facility of almost $500 million. So we remained, I would tell you, poised. The pipeline is what I would expect in this current market relative to the total market volume, and I do anticipate we will find opportunities between now and your end.

Speaker Change: will follow through on that pricing that we indicate. We saw that earlier in a larger transaction that we executed of a portfolio of five properties in the first half of this year.

Speaker Change: and it was a kind of a more of a distressed situation of the seller but the properties were not distressed and we were picked over other very qualified bidders.

Speaker Change: because

Speaker Change: We ultimately followed through in a very short order because, again, we are a true cash buyer and that our

Speaker Change: Liquidity is available at a moment's notice, essentially three days notice, so we have tremendous availability under our credit facility of almost $500 million.

Speaker Change: We remained, I would tell you, poised. The pipeline is...

Speaker Change: what I would expect in this current market relative to the total market volume.

Speaker Change: And I do anticipate...

Michael Seton: When you ask about, I'll call it just station period of real estate, it's long, and what I mean by that is, unfortunately, it's not 30 days or less, but the bidding process through ultimately putting a property under contract, beginning to end, is certainly no less than 60 days typically, sort of in a best case scenario, but can be as far as 120 days. I hope that answers your question. No, that's all incredibly helpful.

Speaker Change: we will find opportunities between now and year-end. When you ask about, I'll call it gestation period of real estate, it's long. What I mean by that is, unfortunately, it's not 30 days or less, but the bidding process to ultimately putting a property under contract.

Speaker Change: You know, beginning to end is certainly no less than 60 days typically, sort of in a best-case scenario, but can can be as far as 120 days.

Speaker Change: I hope that answers your question. No, that's all incredibly helpful.

Nathan Crossett: That's it for me for now, but thank you for taking the questions, and congrats on the first public order. Thank you very much, Nate.

Speaker Change: That's it from me for now but thanks for taking the questions and congrats on the first public order.

Speaker Change: Thank you very much, Nate.

Operator: As a reminder, if you would like to ask a question, please signal by pressing star one, and we will pause for a moment to have more questions to queue.

Operator: Thank you very much, Nate. And, as a reminder, if you would like to ask a question,

Michael Seaton: ....

Nate Crossett: Okay, that's helpful. Maybe one on just tenant credit.

Michael Seaton: Is there anything on the watch list that we should be tracking? Just outside of the news flow of Stewart and Genesis? And is there any kind of bad debt assumption you guys have for the back half of this year that's not Stewart or Genesis?

Michael Seaton: In terms of our watch list, let me describe what we do as it relates to the watch list. We have a scaled watch list. So we have a watch list which is not just, for instance, situations like the steward or Genesis Care, which do fall into, I'll just describe it as our high monitoring watch list. We have others where it may just be a performing tenant, strong coverage, and maybe a lease is coming up, and we're negotiating that lease.

Michael Seaton: So we call that our watch list as well because it's got a particular focus on that asset. I think you're asking specifically about those situations which are more akin to sort of imminent payment issues or the like, and we have no material tenants on our high monitoring watch list. And in fact, Genesis Care has dropped off our top 10 tenant list, meaning the remaining Genesis Care entity that continues to lease seven assets from us as part of what was originally part of that master lease.

Speaker Change: And as a reminder, if you would like to ask a question, please signal by pressing star 1 and we will pause for a moment to allow more questions to queue.

Michael Seaton: And Stoughton, of course, is not a material tenant, but we thought it was appropriate as kind of a best in class disclosure to disclose that tenant. By the way, Stoughton's percent of scheduled ABR in June was only about 1.1% ongoing. Okay.

Nate Crossett: um, that's helpful maybe just the last one just like on the deal flow pipeline. How would you guys characterize the funnel right now? Like maybe look at, I'm not trying to give us any numbers here, but like just looking into 3Q. What are you seeing? How many opportunities are there? How long is it taking you?

Michael Seaton: Sure, we see Comparing it to give you some idea of, we came out of, as you well know, a zero interest rate environment, you know, two and a half years ago or so, and we saw a very robust market where there was tremendous liquidity in the bank market and the equity markets for folks who were buying. So we saw private buyers be very active. We saw REIT buyers, traded REIT buyers, be very active as well. Then, obviously, the brakes were put on to a large degree as the Fed started to raise rates. So we've seen a tremendous drop off in volume overall.

Michael Seaton: We were active last year in terms of acquisitions, acquiring over $150 million of property, even in a market that was very, very muted. This year, we've acquired over $163 million of property in what is still a reasonably, I would say, muted market, meaning volumes way down from what we saw roughly speaking two and a half years ago. We are seeing opportunities. We will seek out opportunities to close between now and year-end, but we're going to be disciplined. We see opportunities every week. They're prioritized.

Michael Seaton: We see opportunities. New opportunities arrive. We'll bid on opportunities. There's not a lot of competition in the market today.

Michael Seaton: I would tell you we can be very choosy in terms of opportunities, and we are being very disciplined and choosy in terms of even submitting bids and executing. One thing that I think we do have a reputation for in the market is that if we're going to submit a bid and pursue an opportunity, we'll follow through on that pricing that we indicate. We saw that earlier in a larger transaction that we executed on a portfolio of five properties in the first half of this year, and it was a kind of distressed situation for the seller, but the properties were not distressed, and we were picked over other very qualified bidders because we ultimately followed through in a very short order because, again, we are a true cash buyer in that our liquidity is available at a moment's notice, essentially three days' notice

Michael Seaton: So we have tremendous availability under our credit facility of almost $500 million. So we remained, I would tell you, poised. The pipeline is what I would expect in this current market relative to the total market volume, and I do anticipate we will find opportunities between now and year-end. When you ask about the, I'll call it, gestation period of real estate, it's long. And what I mean by that is, unfortunately, it's not 30 days or less, but the bidding process to ultimately putting a property under contract, you know, beginning to end, is certainly no less than 60 days, typically, sort of in a best-case scenario, but can be as far as 120 days. I hope that answers your question.

Nate Crossett: No, that's all incredibly helpful. That's it from me for now, but thanks for taking the questions and congrats on the first public order.

Michael Seton: And with no further questions, I would now like to turn the conference back to Mr. Michael Seton, President and CEO, for closing comments.

Operator: And as a reminder, if you would like to ask a question, please signal by pressing star one, and we will pause for a moment to allow more questions to queue. And with no further questions, I would now like to turn the conference back to Mr. Michael Seaton, President and CEO, for closing comments.

Speaker Change: And with no further questions, that will conclude our question and answer session. I would now like to turn the conference back to Mr. Michael Seaton, President and CEO for closing comments.

Michael Seton: Thank you, operator. Once again, thank you to our new investors and longstanding investors, as well as members of the research community. We appreciate your interest in Sila, and we look forward to speaking with you again soon.

Michael Seaton: Thank you, operator. Once again, thank you to our new investors and longstanding investors, as well as members of the research community. We appreciate your interest in SILA, and we look forward to speaking with you again soon. Have a great day.

Michael Seaton: Thank you, operator. Once again, thank you to our new investors and long-standing investors, as well as members of the research community. We appreciate your interest in Sila, and we look forward to speaking with you again soon. Have a great day.

Michael Seton: Have a great day.

Operator: And this will conclude today's conference. Thank you for your participation, and you may now disconnect.

Operator: And this will conclude today's conference. Thank you for your participation, and you may now disconnect.

Speaker Change: And this will conclude today's conference. Thank you for your participation and you may now disconnect.