Q1 2025 NNN REIT Inc Earnings Call
No.
Just got to get the real time update.
Speaker Change: Greetings and welcome to the N and M. REIT, Inc. First quarter 2025 earnings call. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.
Speaker Change: One should require operator assistance during the conference. Please press Star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to your host Steve Horn CEO you may begin.
Vince: Hey, Thanks, John Hey, Good morning, and thank you for joining <unk> first quarter 2025 earnings call with me today is Vince <unk>, our Chief Financial Officer.
Vince: And I'd like to start with a high level update on our bank in furniture and restaurant assets before we delve into the first quarter results.
Vince: We're making excellent progress resolving these vacancies and I'm confident that we will be in a solid position to have the vast majority resolved by year end and a post quarter update in terms of our 35 furniture stores 15 are resolved through leasing or sale and 15 have significant interest and we anticipate near.
Vince: <unk> all be handled by the end of the third quarter.
Vince: For the restaurant assets, we gained full possession this quarter. Following the conclusion of the eviction process, we've leased or sold 38 and a strong interest in the other 31.
Vince: Looking ahead as we fully put to bed the two tenant defaults from the fourth quarter of 2024, we anticipate a total impact of only one and a half to $2.05 on our stabilized core <unk> per share for the year, that's less than 1%. This minimal effect serves to highlight the lasting.
Vince: <unk>, a robust real estate fundamentals throughout the duration of a 20 year lease.
Vince: Let's go to the highlights of our first quarter financial performance our portfolio of 3641 freestanding single tenant properties continue its strong track record.
Vince: At the end of the quarter was 97, seven a slight dip from our long term average of approximately 98, plus or minus due to the finalization of the eviction process.
Vince: We are encouraged by the significant interest in our available properties from numerous strong national and regional tenants and I expect our occupancy rate to trend upwards as the year progresses.
Vince: Notably, we experienced limited to no credit losses within the portfolio during the first quarter.
Vince: Given the current macroeconomic backdrop I am confident in the portfolio's ability to deliver excellent performance over the long term our portfolio stability through events like GSE and the pandemic with minimal impact underscore its strengths, we prioritize relationships with sophisticated tenants and actively manage our assets.
Vince: To prepare for future uncertainties.
Vince: While maintaining our disciplined underwriting approach, we successfully acquired 82 new properties during the quarter for approximately 232 million. These acquisitions featured an attractive initial cap rate of seven four and a long term lease duration of over 18 years significantly all of our acquisitions this past quarter of our sale.
Vince: Leaseback transaction, a testament to the effectiveness of <unk> acquisition team and relationship focused efforts.
Vince: And then then takes pride in its relationship driven business model, which facilitates consistent repeat business not only in the current environment, but every transaction we remain highly selective in our underwriting and we will continue to prioritize sale leaseback transactions with our established tenant relationships and not operators or developers that are financial engineer.
Vince: Yes.
Vince: Regarding the current acquisition pricing market trends, we began the year with the first quarter initial cash cap rate of 704. This compression was in line with the February discussion.
Vince: We anticipate some cap rate pressure in 2025 compared to the previous year now at the start of May 2nd quarter cap rates are mostly holding steady with the first quarter. However, we are seeing significant compression in the larger portfolio deals, causing us to forgo those opportunities in.
Vince: In the first quarter, we executed strategic dispositions, we sold 10 properties and generated $16 million and proceeds and only one of those assets was vegan. These.
These funds are earmarked for reinvestment in new acquisitions, and this activity aligns with our full year disposition guidance.
Vince: In our history, a sound financial management, then and the team have ensured a robust balance sheet. We finished the first quarter with nearly $1 1 billion of availability on our $1 2 billion line of credit and $400 million debt maturity in the fourth quarter is manageable.
Vince: This reinforces the effectiveness of our self funding model.
Vince: The strong financial footing provides the company with the necessary flexibility to execute our 2025 acquisition guidance of 5% to $600 million.
Vince: To summarize our first quarter performance and occupancy and leasing and rent collection further validates our consistent long term strategy. This involves acquiring well located properties with strong regional national tenants at appropriate rates supported by strong and flexible balance sheet with that I will turn the call over to Ben for more detailed review of our quarterly numbers and updated guidance.
Ben: Thank you Steve let me start by letting you know that during this call. We will make certain statements that may be considered forward looking statements under federal securities laws. The company's actual future results may differ significantly from the matters discussed in these forward looking statements and we may not release revisions to these forward looking statements to reflect changes. After the statements were made factors and risks that could cause.
Ben: Actual results to differ from expectations are disclosed in greater detail in the company's filings with the SEC and in this morning's press release.
Ben: And with that out of the way before I get into the quarterly review I wanted to start with some broader commentary on initial observations.
Ben: Although today's elevated level of uncertainty has created volatility in the capital markets, our fortress balance sheet and our deeply experienced team battled tested portfolio is well positioned for long term success in almost any environment. We know this because we've been there in addition to the weather and the GMC and COVID-19 that Steve mentioned, we are also the only.
Ben: Public net lease REIT to have experienced black Monday, the bursting of the dot com bubble and the attacks on September 11th all while delivering 35 years of consecutive dividend growth.
Ben: While our long and successful track record gives me comfort that we can manage today's economic environment is the strength of the <unk> platform and its people that give me the confidence that we will continue to create shareholder value in the years ahead and through economic cycles.
Ben: <unk> talent, the strength of the processes and systems and the experience of the team are true differentiators within the REIT Universe I'm.
Ben: Im not sure if everyone knows this but the average associate has been with <unk> for over 10 years and the senior leadership team has been here for over 20.
Ben: This deep institutional knowledge is a key competitive advantage, particularly in times like these and then truly is a well oiled machine.
Ben: With that I'll get off my soapbox and get into the quarter.
Ben: This quarter. This morning, we reported core <unk> of <unk> 86 per share an inflow of <unk> 87 per share for the first quarter of 2025, each up three 6% over the prior year period, while annualized base rent was up over 5% year over year.
Ben: Results were slightly ahead of our internal plan, driven primarily by lower than planned bad debt and net real estate expenses.
Ben: Our NOI margin was 95, 9% for the quarter, while SG&A as a percentage of total revenues was five 6% and five 9% as a percentage of NOI.
Ben: Free cash flow after dividend was about $55 million in the quarter.
Ben: This quarter benefited from $8 2 million of lease termination fees or about <unk> <unk> per share. This fee was expected and largely driven by one lease that was dark but paying for some time, we were able to negotiate a deal to recapture the PV of the remaining rent and are now looking to sell the property.
Ben: Turning to operating results overall leasing activity for the quarter was strong with 25 renewals and eight new leases completed in the quarter for blended rent recapture rate of 98%.
Ben: Reflecting the high quality of the portfolio.
Ben: Occupancy remained high at 97, 7%. Despite the fall off from that talking fishes and has never dipped below 96, 4% over the past 20 years, reflecting the stability of the portfolio and its cash flows.
Ben: As Steve mentioned, we are making good progress on addressing our vacancies and are now released or sold almost 50% of our former bad tuck ins versus stores and only about two quarters and we have good visibility or good activity on the vast majority of the remaining stores are testament to the strengthening underlying real estate.
Ben: Although these two tenants have created some near term noise. The reality is that our experienced operations teams are well equipped to effectively handle these situations as they have over the last 40 plus years.
Ben: As Steve noted when all said and done we expect less than a 1% impact to annualize the bulk share and importantly, we expect to achieve this outcome with minimal tenant capex.
Ben: From a watch list perspective things have not changed much since last quarter no new tenants were added in our primary concern remains at home, which we have been flagged for some time as a reminder, we have 11 at homes that account for about 1% of ABR in place rents are low at just over $6 50 per square foot and our stores are well established with average tenure of.
Ben: About 12 years.
Ben: Turning to the balance sheet, our triple B plus balance sheet remains in great shape, and it's what keeps keeps the let me sleep well at night, despite what's going on in the World. We ended the first quarter with a sector, leading 11 six years of term remaining on our debt maturities and just two 5% of our total debt tied to floating rates, which gives us strong visibility.
Ben: Liquidity stood at $1 1 billion net debt to EBITDA was five five times and 100% of our assets are unencumbered, giving us great flexibility to execute our business plans.
Ben: On April 15th we announced a 58%.
Ben: Quarterly dividends per share, which equates to an attractive five 4% annualized dividend yield at a conservative 66% <unk> payout ratio.
Ben: Lastly, I'd like to provide some color on our outlook for the balance of the year as we discussed last quarter, we signed leases on former versus locations that will add the greater of $2 8 million annually or 7% of sales when rent commences on may one.
Ben: Also as discussed last quarter, we embedded a credit loss reserve of 60 basis points in 2025 outlook.
Ben: Given that we've had no notable credit losses year to date and in light of our outlook for the balance of the year, we feel comfortable with the 60 basis points for the full year.
Ben: Finally, we have a $400 million, 4% bond maturing in November for perspective, we believe current pricing on a new 10 year issuance would be about five 6%.
Ben: We also have capacity on our revolver, which is priced zophar plus 87, five basis points and had an effective rate of five 2% in the first quarter.
Ben: As always we will be opportunistic and look for ways to capitalize on the current market volatility as we manage our financing needs.
Ben: Also while we do not provide guidance on termination fees given theyre inherently unpredictable timing as you are updating your models. Please keep in mind that the $8 2 million booked in the first quarter was unusually high and not reflective of a normalized run rate.
Ben: To $3 38, and <unk> per share of $3 39.
Ben: Details regarding the underlying assumptions supporting our guidance also remain unchanged and can be found on page three of this morning's press release.
Ben: Lastly, you may have noticed some changes to the earnings release presentation, we take pride in the transparency of our disclosures and are committed to providing investors and analysts with the information they need to efficiently and effectively underwrite the long term value of our company.
Ben: We hope you find the changes we made helpful. In your analysis and I'm always available to discuss ideas on how we can improve our reporting.
Ben: Before I turn the call back to the operator for Q&A I want to thank the executive team and the board of directors for Entrusting me as the <unk> is only the second CFO in <unk> history. There's a long tradition of success here that I along with the rest of the team will work tirelessly to continue.
John: With that John Please open up lines for questions.
Speaker Change: Certainly at this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
Daniel Barden: [noise] moment, please while we poll for questions. Once again, please press star one if you have a question or a comment. The first question comes from Daniel Barden with Bank of America. Daniel. Please proceed.
Daniel Barden: Good morning.
Daniel Barden: Do you see less competition in the transaction markets.
Ben: And I mean.
Ben: We operate in a highly competitive market and we've been it's been a highly competitive market for 20 plus years I've been doing it just the names have come and gone.
Ben: The result was all of our transactions, except one or sale lease back primarily through the relationships.
Ben: But it was elevated just more timing youre going into the fourth quarter. We knew there were some M&A deals that we're looking to get done and they landed in the first quarter. However, it was within our guidance range for the full year and it was primarily the auto services again was the sector, where theres a fair amount of consolidation going on.
Ben: Got it and if I could just a follow up on that could you touch on the expected pace of acquisitions moving forward and do you plan on expanding into the auto services.
Ben: We did a bottom up approach.
Ben: We will hit that guidance range, given where we stand today, but given everything that's going on in the macro economy and the uncertainty I don't think it's prudent to elevate acquisition volume since I don't have visibility to the third or fourth quarter, yet however that being said if everything maintain.
Ben: <unk> maintained status quo.
Ben: I could see us hitting good.
Ben: Good acquisitions for the year.
Ben: Got it thank you.
Spencer Glimcher: The next question comes from Spencer Glimcher with Green Street. Please proceed.
Spencer Glimcher: So deals or that we had in the pipeline were cancelled because of what's going on.
Ben: They don't want to Miss out on opportunities if things settle down so kind of what I alluded to the first question. Our pipeline for Q2 is pretty solid and we're just starting to look at stuff for Q3, but no. After our tenants are still looking to grow at the margin I don't think youre going to see any hero.
Spencer Glimcher: M&A deals in the near term.
Ben: So we've noticed that patient slowed down in the U S.
Ben: Okay, and then any changes to rent coverage is just the ongoing tariffs and.
Ben: Thanks.
Ben: Related to consumer spending.
Ben: Yeah, Hey, Spencer this is Evan.
Ben: As far as rent coverage and tariffs and all of that I mean, I would just say on a tariff perspective.
Ben: Tween service tenants and non discretionary tenants, that's about 85% of our ABR and so we feel relatively.
Ben: Relatively okay about tariff impacts other than the impact on the overall economy, which will filter through.
Ben: If things stay in place or I'm, not sure where we're at today, but in any case, we feel like we're comfortable on the tariff side as far as rent coverages go as you know we don't we don't really talk about rent coverages in detail.
Ben: But.
Ben: The data is usually a little stale and so it's not it's not reflective of any sort of tariff impact at this point anyway, but but generally speaking I would say rent coverages have remained stable.
Speaker Change: Yeah, I'll add a little kind of real time coverage for Ya Spencer.
Spencer Glimcher: Our team was out of the car Wash conference. This past weekend and reported that the car wash sales were very strong for the quarter.
Ben: And the Ceos that I spoke with and if it was collision or in the tire sector within the auto services.
Ben: The last two months they've seen an uptick in their sales so that was all positive.
Speaker Change: Yes to add to what Ben said for the most part I would expect on rent coverages to be pretty stable throughout the portfolio.
Speaker Change: Okay. Thank you for the color.
Speaker Change: The next question comes from John Gillette Chomsky with Wells Fargo. Please proceed.
Speaker Change: Good morning, Thank you I guess, an extension of the tariff question.
Speaker Change: Sounds like the existing portfolio is still performing well, but maybe as we think about you know your strategy at underwriting go forward for new investments.
Speaker Change: Tariffs impacted that at all or are you looking at different sectors or is it you know.
Speaker Change: Bold seybold.
Speaker Change: So if you look across our portfolio.
Speaker Change: Tariff proved by any means but we have a very solid tariff resistant portfolio and since two thirds to three quarters of our deal flow comes from our tenant base I still expect it to be representative of our current portfolio now when you get into discretionary tenants. This is what separates the sale leaseback model opposed to buying from.
Ben: Developers.
Ben: The sale leaseback model, it's an inherent the tenant does some underwriting and theyre signing the 15 to 20 year lease so they do a self selection and they know their consumer better than any real estate.
Ben: Executive.
Ben: So we sit down with the tenants and it's more on the discretionary side that we are kind of sidestepping deals right now that might be pro forma.
Alex: Alex It's family Entertainment sector, where it's a little bit more discretionary income, but I think the auto services and C store as the opportunities come we'll still lean into those.
Speaker Change: Okay, and then maybe just jump into the fishes of Bangkok side are we appreciate the the update how has that impacted the non reimbursable percentage of your Opex outlook. It sounds like credit is your credit expectations are still flat.
Alex: Yes, I mean, if you look at our guidance for net rent net real estate expenses.
Alex: A little bit higher than we've historically reported which is probably more in the 13 million a range of <unk> 16 for the year on guidance, that's reflective of some of the vacancies from Bangkok and fishes.
Ben: So as we release those or sell them over the course of the year that should improve but that's all embedded in our in our outlook.
Alright, thank you.
Ben: Okay.
Speaker Change: The next question is from Michael Goldsmith with UBS Michael. Please proceed.
Michael Goldsmith: Good morning, Thanks, a lot for taking my question acquisition cap rates ticked down about 10 basis points in the quarter. So in terms of what youre seeing in the pipeline or are you expecting that trend to kind of continue that ticked down or maybe just kind of flatline from there just trying to get a sense of where we're headed from a cap rate perspective.
Speaker Change: Yes, good question, Michael I'm, not seeing a material move up or down for the second quarter pricing is pretty much in line with the first.
Ben: Quarter now as deals like slide in the third quarter, you might have a 510 basis points either way.
Ben: But the 740 <unk> is kind of where I'm looking at the <unk>.
Ben: Second quarter against third quarter is too far out to speculate.
Ben: But as we run out of our models were not.
Ben: Increase in cap rates, because people with first half of the year looking at deploy money so deals cap.
Ben: Cap rates get compressed a little bit.
Ben: Justifiably I would say as I mentioned in my opening remarks, there was some large portfolio transactions that got done.
Ben: And they look like they were gone sub seven.
Ben: Didn't think that was the right price.
Ben: The portfolios.
Ben: And I'm, a little jealous, though it wasn't able to make this as a car wash conference this year, but.
Ben: Mister car wash earnings they talked about study refer you to the competitive intrusion with a number of competitive new build since the peak in 2023, but then also talk a little bit about more.
Ben: Get rationalization over the next several years so do you think.
Ben: Those ones that you're partnering with.
Ben: Winners over time.
Ben: The limited downside from that thanks.
Ben: I am very comfortable with our Carwash holdings I mean, the reality is carwash real estate really solid in demand real estate and the vast majority of our car wash holdings are with Mister Carwash argued.
Ben: Arguably the best operator in the business and we did those deals well before the market gap overheated. So our average cost in the Mister car wash is significantly lower than the deals that were done in the last few years and our acquisition team did a fabulous job passing on the deals.
Ben: Where they thought their financial engineers getting into the car wash business. So we are comfortable and I think we're going to be net winners in the long run on our car wash holdings. Fortunately, we didn't do any exists for example.
Ben: That was a good one not to do for us, but the rest of our operators, we think are pretty solid and underwrote the assets appropriately.
Ben: Thank you very much good luck in the second quarter.
Speaker Change: Thanks Mark.
Speaker Change: Once again, if you have a question or a comment please indicate so by pressing star one up next we have Smedes rose with Citi. Please proceed.
Matti Franchise: Hey, Good morning. This is matti franchise on 15th.
Speaker Change: Do you have any overall concerns.
From a tenant perspective on knees and is there maybe anything differentiating about the particular locations that you own that maybe make you less concerned from a risk perspective.
Speaker Change: Yes.
Ben: So our rent coverage in the peak during Covid, who would've thought camping world would explode and become a cash cow.
Ben: That we were over eight times covered in those assets and that's a testament to the management team at camping world of calling us up and renegotiating leases selling assets.
Ben: Only wanting to stay in the strong assets. So the camping world property level coverage I am very happy with and comfortable.
And the same goes with Dave <unk>, Buster or Dave <unk> Buster exposure, primarily was from main event over a decade ago are doing deals with them and the main event management team were true operators I wanted to keep the rent law. So our property level coverage, David Foster is very solid and kind of what I alluded to there is a couple of deal.
Ben: In the past year, which we passed on David Foster because they were newer assets and then we just thought the cap rates, we are getting a little bit too low for us, but they're a good partner.
Ben: Going forward, we will probably do more deals with them in the future.
Speaker Change: And I think Steve said, it pretty well so I don't have too much to add there, but the coverage is on Dave and Busters is pretty healthy year end on camping world. They just reported yesterday no stock.
Ben: Tariffs and uncertainty and possible economic slowdown camping world.
Ben: Theyre not catering to the highest end side of that market and so we think that's relatively better. But then also the used business can really help offset.
Ben: Some of the tariff effects and that was quite strong this spring.
Speaker Change: Up next is Linda Tsai with Jefferies. Linda. Please proceed.
Linda Tsai: Hi, Thanks for taking my question.
Ben: Did less than expected bad debt contribute to one Q and then of your 50 Bips embedded reserves.
Ben: How much of that is like known versus unknown.
Ben: Yeah, Hey, Linda it's been so in the first quarter, we really didn't have much in the way of bad debt or credit loss. So if you think about it 10 basis points of credit losses about half a cent of.
Ben: <unk> per share. So that you can think about it that way for the first quarter.
Ben: As far as known or unknown I mean, we've talked about at home that's probably the one on our watch list. That's the one that we're most focused on but but at this point, we have no credit loss associated so.
Ben: Alright.
Ben: Yep.
Ben: Thanks, and then on at home what would be like the possible outcome.
Speaker Change: Do you think you would be able to sell those leases or would there be a backfill.
Speaker Change: Yes, let me just start with at home in terms of their potential impacts right. I mean, I know there's been some news out there on them.
Speaker Change: At this point in the year as I said, we don't have any loss associated and so if something were to happen. We think are 60 basis points. We would still cover us. If you think about if there is some kind of filing or something like that that we'd have some a couple of months of additional rent as they go through that proceedings and so.
Speaker Change: At 100 basis points.
Speaker Change: Everything were to be rejected.
Speaker Change: 50 basis points, but we think thats pretty pretty highly unlikely given our low rent basis of just over $6.50.
And so we feel comfortable with our with our outlook for credit loss as far as the recovery on an at home as they are much larger as you know so.
Speaker Change: By default it probably will take us a little longer than your more fungible boxes that would typically invest in.
Speaker Change: But there isn't a lot of good interest we're already getting inbounds from some really high quality tenants.
Speaker Change: Some of the spaces, which we're pretty happy about and we've also got some flexibility in terms of how we manage these properties I mean, yes, there's good potential sale, but they sit on eliminate or lots and so that gives us a lot of optionality in terms of redevelopment carving up the boxes and things like that so.
Speaker Change: We're still evaluating all the different <unk>.
Speaker Change: Options, but we do feel pretty good.
Speaker Change: Yes.
Thanks for the context the context.
Speaker Change: Sure.
Speaker Change: Your final question comes from John <unk> with B Riley Securities. Please proceed Jon.
John: Good morning, good morning, good morning.
Speaker Change: John.
Speaker Change: So just on the lease termination income.
Speaker Change: Apologies, if I misheard something on that but it seems like you know there's kind of this constant narrative.
Speaker Change: A little unusual to have this much but then theres a couple of quarters.
Speaker Change: It's been pretty heavy and in recent quarters, what do you consider the new maybe a run rate to assume.
Speaker Change: Lease termination income and maybe kind of what drew.
Speaker Change: Lease termination didn't come in and in <unk>.
Speaker Change: Hey, John This is Dan yeah. So in the first quarter as I mentioned in my prepared remarks, I mean, we did have basically one tenant that really drove the bulk of the $8 2 million book.
Speaker Change: Quarter.
Speaker Change: He was a dark and paying tenant that had been dark for a while.
Speaker Change: It's a six years five years something like that we.
Speaker Change: We were able to negotiate a great deal, where we got basically the entire PV of the rent that was owed over the balance of the lease and we're now able to to potentially sell that asset.
Speaker Change: Redeploy those assets those.
Speaker Change: That capital so we feel good about that outcome as far as the go forward run rate its really tough I mean, I would say lease termination fees are definitely part of the business. They are recurring they're just very hard to predict.
Speaker Change: And that's why we don't really guide on it.
Speaker Change: Look historically, we've probably been.
Speaker Change: Our long term average call it $2 million to $3 million a year, but recent years, it's been a lot higher than that so it's hard for me to say what the go forward run rate is just because it is unpredictable but.
Speaker Change: We do have additional lease terminations are embedded in the outlook, but certainly not.
Speaker Change: $2 million going forward.
I mean, I'll, just kind of add a little bit more just on the in the lease term.
Speaker Change: Sure.
Speaker Change: As we get bigger lease term fees. There is more opportunities. If you actively manage your portfolio youre going to have lease termination fees. The lease termination fee is solving future problems and redeploying those proceeds into current opportunities.
Speaker Change: I agree with Ben we don't know is kind of lightning in a bottle and they strike you don't know as Youre actively managing the properties, but the elevated lease term in the last couple of years as a result of us really focusing in and creating a high quality of earnings going forward.
Speaker Change: But is there something maybe in terms of the tenant base or your portfolio of a certain vintage that drives this or something that's occurred in the last two or three years. It seems like it wasn't really something that got.
Speaker Change: Called out on earnings calls, you know five or more years ago as much as it has been in the last call it eight quarters.
Speaker Change: It is primarily been just one tenant working with us reconfiguring their portfolio.
Speaker Change: And they are larger boxes higher rents, so thats why theres been elevated.
Speaker Change: Okay.
Speaker Change: On the friction side or former refrigerated side.
Speaker Change: I know, it's early days, but the new tenant in.
Speaker Change: The leased assets re leased assets, but any outlook on to how their performance has been just given some of the rent there is contingent on that.
Speaker Change: Yeah.
Speaker Change: Just like any new retail concept when they first opened they come out of the market really strong there is that honeymoon period and we are currently in that honeymoon period. So they are performing exceedingly well currently.
Speaker Change: As we look forward.
Speaker Change: <unk> that a little bit, but very optimistic I spoke with the CEO recently in the last week everything's going well for them.
Speaker Change: Getting stores opened slowly, but surely and I would expect here in the next six months, we'll have I'll be able to answer that question as far as their performance a little bit more clear for you.
Speaker Change: Sure.
Speaker Change: And then with the remaining kind of former restaurant properties is the view with most of those but they would also remain restaurants or.
Speaker Change: You know he's a thought that either.
Speaker Change: Wherever you sell them to wear yourself, if youre looking to release them, that's going to convert them to something else and if that is the case yeah.
Speaker Change: What kind of Capex outlook there maybe.
Speaker Change: For you or a potential buyer.
Speaker Change: It's too early to talk about the Capex side of things, but we are getting interest. If it's carwash is if it's convenience stores and if the large regional convenience store operators great credit.
Speaker Change: And then there is some <unk> involved and we're early in negotiations. So we don't know if its going to be a ground lease and theyre going to fund the building or theyre going to expect some capex for Mas currently but that being said we have.
Speaker Change: Some good interest on those sites right now.
Speaker Change: Okay.
Speaker Change: Maybe the way you kind of phrase it would be fair to assume those are some of the later assets that are going to get dealt with in terms of both the former refreshes and former backups.
Speaker Change: I think that chart.
Speaker Change: Definitely.
Speaker Change: Page the former refreshes.
Speaker Change: The <unk>.
Speaker Change: Because we are probably going to sell more of those and the freshness. There is a lot of redevelopment opportunities and just by definition redevelopment takes a longer period of time to go through the permitting process and stuff like that.
Speaker Change: Okay.
Speaker Change: That's it for me I appreciate all the color. Thank you.
Speaker Change: We have one additional question in the queue coming from Ronald Camden with Morgan Stanley. Please proceed.
Speaker Change: Hey, this is Danny on for Rob. Thanks for taking my question I'm, just curious if there's any specific like retail new cough up like you're looking to reduce exposure.
Speaker Change: Next 12 to 18 months.
Speaker Change: I mean, one that we're looking to reduce exposure I mean, obviously, we have our watch list and so those are ones that we would love to pare back exposure, but.
Speaker Change: Fortunately by the time they are on the watch list, it's a little hard to get economics that makes sense. So I'll give you. An example, I mean AMC is on there.
Speaker Change: On there forever more from a category perspective, not so much from the bottom up performance.
Speaker Change: Recent issues or anything like that but.
Speaker Change: It's not the easiest.
Speaker Change: To sell those and so.
Speaker Change: That's sort of our target list. We also have the DARPA paying list we have the sub so at least wisdom those are the ones that where we're trying to proactively manage.
Speaker Change: The festival mode.
Speaker Change: But it's not specific to a concept per se.
Speaker Change: Yeah that makes sense regarding the acquisition volume and like in the last 20 days or so do you see any changes in the competition landscape or compared to last year.
Speaker Change: I think if you can make some comment on that.
And I think the landscape is pretty similar you probably have a little bit more of the private guys entering the market again.
Speaker Change: As we move through the year, but again kind of what I said earlier, we work in a highly competitive market just the names change so I'm not seeing any more or less overall competition.
Speaker Change: Okay.
Speaker Change: Any of opportunity for us to hit our numbers.
Speaker Change: And so much that's all for me.
Jay: Thanks Jay.
Jay: We've reached the end of the question and answer session I will now turn the call over to Steve Horn CEO for closing remarks.
Speaker Change: You guys, taking the time this morning and jumped on the call and we look forward to seeing you guys in the upcoming conference season here.
Jay: Thanks.
Jay: This concludes today's conference and you may disconnect your lines at this time.
Jay: Thank you for your participation.