Q1 2025 Four Corners Property Trust Inc Earnings Call

During the presentation you can register a question by pressing star followed by one on Yoki part if you change your mind. Please press star followed by T O.

Patrick: I will now hand over to your host Patrick <unk> Chief Financial Officer begin. Please go ahead.

Speaker Change: Thank you Becky.

Speaker Change: During the course of this call we will make forward looking statements, which are based on our beliefs and assumptions actual results will be affected by known and unknown factors that are beyond our control or ability to predict our assumptions are not a guarantee of future performance and some will prove to be incorrect for a more detailed description of some potential risks. Please refer to our SEC filings, which can be found at <unk> dot.

Speaker Change: Com all.

Speaker Change: All the information presented on this call is current as of today May One 2025. In addition reconciliation to non-GAAP financial measures presented on this call such as <unk> can be found in the Companys supplemental report.

Bill: With that I will turn the call over to Bill.

Bill: Good morning.

Speaker Change: Following our typical cadence after my introductory remarks, Josh will comment further on the investment market and Patrick will discuss our financial results and capital position.

The start of 2025 continued the momentum we had in the second half of 2024, we took advantage of our sustained strong cost of capital and added to the pipeline finding deals that both met our quality standards and with pricing that makes sense.

Speaker Change: This led to a Q1 being the highest acquisition volume for the first quarter in the company's history, which similarly, followed our highest Q4 volume.

Speaker Change: So far this year, we've closed $70 million of acquisitions at a blended six 7% cap rate.

Speaker Change: Looking back to when we fully turned the acquisition machine back on in late August we have close to $269 million of acquisitions over the past eight months.

Speaker Change: While we do not give acquisition guidance, we are continuing to add toward the pipeline and are seeing opportunities that are consistent with our quality thresholds and within our pricing standards.

Speaker Change: We note that we have not seen much change in cap rates for recently priced deals.

Speaker Change: We've continued to build significantly liquidity, while delevering to preserve optionality on funding new opportunities as they arise. This includes leaning in on the equity sales via our ATM program, which we have used to raise $475 million in equity since July of last year.

Including our unsettled equity forwards, we now have our lowest leverage levels in the last seven years.

Speaker Change: Simply put we are well positioned for uncertainty.

Speaker Change: Shifting to our in place portfolio, we continue to perform well with higher rent collections in occupancy a rent coverage in the first quarter was four nine times for the majority of our portfolio that reports. This figure this remains amongst the strongest coverage within our industry.

Speaker Change: <unk> largest tenants our nationally branded restaurant operators, namely Olive garden, Longhorn and Chili's. They are leaders for their sectors and generally outperformed the industry peers as well as fine dining or local mom and pop brands. Most recently Brinker reported Chili's same store sales grew 31, 6%.

Speaker Change: For the quarter ended March 25, Similarly, olive garden, and Longhorn reported same store sales growth.

Just shy of 1% and two 6% year over year for the three months ended February 2025, respectively.

Speaker Change: While these brands remain core to our portfolio and strategy as we approach 10 years as a public company. We would also highlight our diversification progress over that period, we've grown from 418 properties inception to 1236 leases today Darden has dropped from 100% of our rent roll to now 47.

Speaker Change: Percent combined across all of their brands.

Speaker Change: This improvement is despite acquiring 47 darden properties post spin.

Speaker Change: Our top five brands make up 55% of our annual base revenue.

On sector diversification, 67% of our annual base rent comes from casual dining and 11% from quick service.

Speaker Change: Side of restaurants automotive services, our largest sector at 11% of ABR, followed by medical retail at 9% of ABR.

Speaker Change: As for portfolio management, we are not yet experiencing any material tenancy issues in the portfolio and no current indicators that inflation or tariff issues will impact our rent payments.

Speaker Change: Further while the current tariff environment remains uncertain, we expect restaurants to be one of the least tariff affected sectors. Similarly, our other service based tenants should fare better than average retail operators given their low exposure to imported goods as part of their operations.

Speaker Change: While we would expect in a recession that we would see some pullback in our tenant performance. We believe that we are well positioned with cushion on our rent coverage to weather any potential issues.

Speaker Change: Turning to the materials, we published last night, we would like to highlight a few new slides in our investor presentation that point to what we believe is.

Speaker Change: CPT being com port in the storm our portfolio was built brick by brick to be resilient and we've paired that with a prudent capital management, we have significant liquidity no near term debt maturities granular low basis properties high rent collections and low overhead.

Speaker Change: <unk> portfolio is made up of well capitalized sophisticated operators, who we believe will be able to navigate and gained share in this challenging macro environment.

Speaker Change: We pride ourselves on transparency and best in class disclosure. So in addition to our press release regime on new acquisitions. This quarter, we decided to further break out our portfolio to the top 35 brands, which make up more than 80% of our ABR.

Speaker Change: Our goal is for our investors to understand our tenant exposures and have confidence that we will stay disciplined on meeting quality quality expectations for the properties we buy.

Speaker Change: To that end you will see in our filings, we have zero or near zero exposure to the problem net lease sectors, such as theaters pharmacy high rent car washes in big box retail.

Josh: Over to you Josh.

Thank you Bill.

Speaker Change: During the fourth quarter, we acquired 23 properties for $57 million at a blended six 7% cap rate with a weighted average lease term of 17 years, we did not sell any properties in the quarter.

Speaker Change: While Q1 is typically our slowest quarter, we continued to deliver on the strong investment momentum we achieved in the second half of 2024.

Speaker Change: As a result, we believe that we stand very well positioned at the end of the first four months 825, having both come off a record Q1 to start the year right. After a record Q4 last year as we continue to build out the pipeline.

Turning to the materials, we published last night, we would like to highlight a few new slides in our investor presentation that point to what we believe is.

Speaker Change: We are achieving this without compromising on the quality of our asset selection or the credit standards to meet yield or volume target.

F C P T being a com port in the storm our portfolio was built brick by brick to be resilient and we've paired that with a prudent capital management, we have significant liquidity no near.

Speaker Change: Our disclosure regime is particularly helpful. In times like these where investors can read through our frequent press releases to see how our acquisitions and the brands. We work with are highly consistent with past years.

Speaker Change: Our team is being patient and organized tracking our opportunity sets for both on and off market investments and including robust analytics to help us identify the best opportunities and.

Speaker Change: In other words, we are not chasing deals, but rather selecting the best ones that fit our portfolio, even if that means weaning and slightly on cap rate to capture these high quality deals all while still protecting accretion.

Speaker Change: Reflecting back on Q1, 83% of our investment volume was via sale leaseback as operators continue to seek stable financing solutions in this current market.

Operator: During the presentation, you can register a question by pressing star followed by 1 on your keypad. If you change your mind, please press star followed by 2.

To understand what kind of exposures and have confidence that we will stay disciplined on quality quality expectations for the properties we buy.

Speaker Change: As such our weighted average lease term this year was much higher at 17 years in particular, we had three sale leaseback of note with <unk> operators, one with burgers from corporate and other with a large multi unit Burger King franchisee and lastly, with a water broker franchisee.

Becky: I will now hand over to your host, Patrick Wernig, Chief Financial Officer, to begin. Please go ahead.

Does that and you will see in our filings, we have zero or near zero exposure to the problem net lease sector, such as theaters pharmacy high rent car washes and big box retail.

Patrick Wernig: Thank you, Becky.

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

Josh: Over to you Josh.

Speaker Change: The two Burger King deals were both part of M&A transactions, while the water broker deal was for the newly built stores.

Josh: Thank you Bill.

Speaker Change: During the fourth quarter, we acquired 23 properties for $57 million at a blended six 7% cap rate with a weighted average lease term of 17 years, we did not sell any properties in the quarter.

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

Speaker Change: It's worth noting that similar to <unk>, our properties typically command very aggressive cap rates in the upper five to low 6% cap rate range when sold piecemeal.

Patrick Wernig: All the information presented on this call is current as of today, May 1st, 2025.

Speaker Change: While Q1 is typically our slowest quarter, we continued to deliver on the strong investment momentum we achieved in the second half of 2024.

Speaker Change: Individual investors favor to these small price points per property and the fungibility of the real estate.

Patrick Wernig: In addition, reconciliation to non-GAAP financial measures presented on this call, such as FFO and AFFO, can be found in the company's sample model report.

Speaker Change: However, our team was able to achieve accretive pricing here by offering a portfolio solution and efficient execution for our operating partners all.

Speaker Change: As a result, we believe that we stand very well positioned at the end of the first four months and 25, having both come off a record Q1 to start the year right. After our record Q4 last year as we continue to build out the pipeline.

Bill: With that, I will turn the call over to Bill. Good morning. Following our typical cadence, after my introductory remarks, Josh will comment further on the investment market, and Patrick will discuss our financial results and capital position. The start of 2025 continued the momentum we had in the second half of 2024. We took advantage of our sustained strong cost of capital and added to the pipeline, finding deals that both met our quality standards and with pricing that made sense. This led to a Q1 being the highest acquisition volume for a first quarter in the company's history, which similarly followed our highest Q4 volume.

Speaker Change: All three transactions were negotiated off market and a product of years of relationship cultivation from our investment team.

Speaker Change: Looking forward, we will continue to target similar opportunities nationally recognized brands operated by best in class operators with appropriate basis.

Speaker Change: We are achieving this without compromising on the quality of our asset selection or the credit standards to meet yield or volume target.

Speaker Change: While this quarter ended up having more quick service restaurants, some automotive and no medical retail investments, we remind everyone that our team does not specifically allocate target buckets are quoted across our investment sectors.

Speaker Change: Our disclosure regime is particularly helpful. In times like these where investors can redo our frequent press releases to see how our acquisition and the brands. We work with are highly consistent with past years.

Speaker Change: Rather we make investments when opportunities meet our underwriting criteria that being said, we still expect these sectors to be roughly even split between these three target categories of ours over the long term.

Speaker Change: Our team is being patient and organized tracking our opportunity sets for both on and off market investments, including robust analytics to help us identify the best opportunities and.

Bill: So far this year, we've closed $70 million of acquisitions at a blended 6.7% cap rate. Looking back to when we fully turned the acquisition machine back on in late August, we have closed 269 million of acquisitions over the past eight months. While we do not give acquisition guidance, we are continuing to add toward the pipeline and are seeing opportunities that are consistent with our quality thresholds and within our pricing standards. We note that we have not seen much change in cap rates for recently priced deals. We've continued to build significant liquidity while de-levering to preserve optionality on funding new opportunities as they arise.

Speaker Change: In other words, we're not chasing deals, but rather selecting the best ones that fit our portfolio, even if that means weaning and slightly on cap rate to capture these high quality deals all while still protecting accretion.

Speaker Change: Looking forward.

Speaker Change: Cpt's opportunity set continues to grow despite a volatile macro environment.

Speaker Change: We have a steady pipeline built out for Q2 and aim to continue to execute on our strategy with discipline Patrick back over to you.

Speaker Change: Reflecting back on Q1, 83% of our investment volume was via sale leaseback as operators continue to seek stable financing solutions in this current market.

Patrick: Thanks, Josh.

Patrick: I'll start by talking about capital sourcing and the state of our balance sheet.

Patrick: CBT, we're highly focused on efficient capital raising we raised over $169 million in 2025 to date on top of the $318 million equity in 2024 today.

Speaker Change: As such our weighted average lease term this year was much higher at 17 years in particular, we had three sale leasebacks of note with <unk> operators, one with Burger King corporate and other was a large multi unit Burger King franchisee in last week with a water broker franchisee.

Patrick: Today, we have $254 million of unsettled equity forwards the ability to raise 400 ATM quickly and at scale has allowed us to match sources and uses more effectively.

Bill: This includes leaning in on the equity sales via our ATM program, which we have used to raise $475 million in equity since July of last year. Including our unsettled equity forwards, we now have our lowest leverage levels in the last seven years. Simply put, we are well-positioned for uncertainty. Shifting to our in-place portfolio, we continue to perform well with high-rent collections and occupancy. Our rent coverage in the first quarter was 4.9 times for the majority of our portfolio that reports this figure. This remains amongst the strongest coverage within our industry. FCPT's largest tenants are nationally branded restaurant operators, namely Olive Garden, Longhorn, and Chili's.

Speaker Change: The two Burger King deals were both part of M&A transactions, while the water broker deal was for their newly built stores.

Patrick: Furthermore, the high sulfur rate has allowed for a minimum drag of our foreign balance given we receive interest income on the balance at over 4%.

Speaker Change: It's worth noting that similar Q, it's our properties typically command very aggressive cap rates in the upper five to low 6% cap rate range when sold piecemeal.

Patrick: With respect to overall leverage our net debt to adjusted EBITDA in Q1 continued to move lower to four four times inclusive of outstanding net equity forwards as of March 31.

Speaker Change: Individual investors favor to the small price points per property and the fungibility of the real estate.

Patrick: This leverage is at a seven year low and provides capacity for us to continue to execute our business plan, even if the current volatility persists or were unable to raise additional capital for the rest of the year.

Speaker Change: However, our team was able to achieve accretive pricing here by offering a portfolio solution and efficient execution for our operating partners.

All three transactions were negotiated off market and a product of years of relationship cultivation from our investment team.

Patrick: Software layered in additional hedges to our floating rate exposure raising us to over 95% through Q3 2027.

Speaker Change: Looking forward, we will continue to target similar opportunities nationally recognized brands operated by best in class operators with appropriate basis.

Patrick: Our revolver is fully available at $350 million and we have with extension options essentially no debt maturities for nearly two years. Additionally.

Bill: They are leaders for their sectors and generally outperform the industry peers, as well as fine dining or local mom-and-pop brands. Most recently, Brinker reported Chili's same-store sales grew 31.6% for the quarter ended March 25. Similarly, Olive Garden and Longhorn reported same-sales sales growth of just shy of 1% and 2.6% year-over-year for the three months ended February 2025, respectively. While these brands remain core to our portfolio and strategy, as we approach 10 years as a public company, we would also highlight our diversification progress over that period. We've grown from 418 properties at inception to 1,236 leases today.

Speaker Change: While this quarter ended up having more quick service restaurants, some automotive and no medical retail investments, we remind everyone that our team does not specifically allocated target buckets are quoted across our investment sectors.

Patrick: Additionally, our fixed charge coverage ratio is a healthy four four times.

Patrick: Altogether this puts us in a great liquidity position, we have approximately $617 million available for funding acquisitions between cash unsettled forward equity and Undrawn revolver capacity.

Speaker Change: Rather we make investments with opportunities meet our underwriting criteria that being said, we still expect these sectors to be roughly even split between these three target categories of ours over the long term.

Patrick: No further equity issuance, we have an approximate $565 million of available capital before reaching six times net leverage.

Patrick: Now turning to some of our financial highlights for Q1.

Looking forward.

Speaker Change: Cpt's opportunity set continues to grow despite a volatile macro environment, we have a steady pipeline built out for Q2 and aim to continue to execute on our strategy with discipline.

Patrick: We reported Q1, <unk> <unk> 44 per share, which is up two 3% from Q1 last year.

Patrick: Non cash rental income was $63 2 million representing growth of nine 1% for the quarter compared to last year.

Speaker Change: Throw it back over to you.

Speaker Change: Thanks, Josh.

Patrick: On a run rate basis current annual cash base rent for leases in place as of quarter end is $243 $9 million and our weighted average five year annual cash rent escalator remains one 4%.

Speaker Change: I'll start by talking about capital sourcing and the state of our balance sheet.

Bill: Darden has dropped from 100% of our rent roll to now 47% combined across all of their brands. This improvement is despite acquiring 47 Darden properties post-spent. Our top five brands make up 55% of our annual base revenue. On sector diversification, 67% of our annual base rent comes from casual dining and 11% from quick service. Outside of restaurants, automotive service is our largest sector at 11% of ABR, followed by medical retail at 9% of ABR. As for portfolio management, we are not yet experiencing any material tenancy issues in the portfolio and no current indicators that inflation or tariff issues will impact our rent payments.

Speaker Change: <unk>, we are highly focused on efficient capital raising we raised over $169 million in 2025 to date on top of the $318 million equity in 2024 today.

Patrick: Cash G&A expense, excluding stock based compensation was $4 9 million, representing seven 7% of cash rental income for the quarter compared to seven 9% for the quarter last year.

Speaker Change: Today, we have $254 million of unsettled equity forwards the ability to raise foreign ATM quickly and at scale has allowed us to match sources and uses more effectively. Furthermore, the high sulfur rate has allowed for a minimum drag of our foreign balance given we receive interest income on the balance and over 4%.

Patrick: This progress illustrates our continued efforts at efficient growth and the benefits of improving scale.

Patrick: We're still expecting cash G&A will be in the range of 18% to $18 5 million for 2025 as a reminder, we take a conservative approach and do not capitalize any of the compensation costs related to our investment team.

Speaker Change: With respect to overall leverage our net debt to adjusted EBITDA in Q1 continued to move lower to four four times inclusive of outstanding net equity forwards as of March 31.

Patrick: As we are managing our lease maturity profile. Our team has made significant progress on 2025 maturities with 80, 588% of those tenants already extending their leases are indicating and intend to do so.

Speaker Change: This leverage is at a seven year low and provides capacity for us to continue to execute our business plan, even if the current volatility persists or were unable to raise additional capital for the rest of the year.

Bill: Further, while the current tariff environment remains uncertain, we expect restaurants to be one of the least tariff-affected sectors. Similarly, our other service-based tenants should fare better than average retail operators, given their low exposure to imported goods as part of their operations. While we would expect in a recession that we would see some pullback in our tenant performance, we believe that we are well positioned with cushioned on our rent coverage to weather any potential issues.

Patrick: As of quarter end explorations represent just 5% of ABR in 2022, 3%.

Speaker Change: We've also layered in additional hedges to our floating rate exposure raising us to over 95% through Q3 2027.

Patrick: Our portfolio occupancy today is 99, 4% and we collected 99, 5% of base rent for the first quarter.

Speaker Change: Our revolver is fully available at $350 million and we have with extension options essentially no debt maturities for nearly two years initially.

Patrick: There were no material changes to our collectability or credit reserves, nor any balance sheet impairment.

Speaker Change: Additionally, our fixed charge coverage ratio is a healthy four four times.

Becky: That we will turn it back over to Becky for questions.

Speaker Change: Altogether this puts us in a great liquidity position, we have approximately $617 million available for funding acquisitions between cash unsettled forward equity and Undrawn revolver capacity.

Bill: Turning to the materials we published last night, we would like to highlight a few new slides in our investor presentation that point to what we believe is FCPT being a comport in the storm. Our portfolio was built brick by brick to be resilient, and we've paired that with our prudent capital management. We have significant liquidity, no near term debt maturities, granular low basis properties, high rent collections, and low overhead. FCPT's portfolio is made up of well-capitalized, sophisticated operators who we believe will be able to navigate and gain share in this challenging macro environment. We pride ourselves on transparency and best-in-class disclosure, so in addition to our press release regime on new acquisitions, this quarter we decided to further break out our portfolio to the top 35 brands, which make up more than 80% of our ABR.

Patrick: Thank you.

Speaker Change: To ask a question. Please press star followed by one on your telephone keypad now.

Speaker Change: Is there any reason you wish to raise your question. Please press star followed by <unk>.

Speaker Change: No further equity issuance, we have an approximate $565 million of available capital before reaching six times net leverage.

Im going to ask a question that peso shares advice is likely.

Speaker Change: Our first question comes from John Keller Chomsky from Wells Fargo.

Speaker Change: Now turning to some of our financial highlights for Q1.

Speaker Change: We reported Q1 <unk> of <unk> 44 per share, which is up two 3% from Q1 last year.

Speaker Change: Line is now open. Please go ahead.

Speaker Change: Good morning.

Speaker Change: Q1 cash rental income was $63 2 million representing growth of nine 1% for the quarter compared to last year.

Speaker Change: Afternoon. Thank you.

Speaker Change: Maybe just on a little bit of slight yield compression in the quarter.

Speaker Change: On a run rate basis current annual cash base rent for leases in place as of quarter end is $243 $9 million and our weighted average five year annual cash rent escalator remains one 4%.

Speaker Change: Is that due to the fact that there's maybe more competition in your sector for these assets given the installation from tariffs.

Speaker Change: Hard to say I would say the vast majority is related to the high percentage of <unk> restaurant acquisitions in the quarter.

Speaker Change: Cash G&A expense, excluding stock based compensation was $4 9 million, representing seven 7% of cash rental income for the quarter compared to seven 9% for the quarter last year.

Bill: Our goal is for our investors to understand our tenant exposures and have confidence that we'll stay disciplined on meeting quality expectations for the properties we buy. To that end, you will see in our filings we have zero or near zero exposure to the problem net lease sectors such as theaters, pharmacy, high rent car washes, and big box retail.

Speaker Change: Okay, and then maybe just on the pipeline more generally.

Speaker Change: Progress illustrates our continued efforts at efficient growth and the benefits of improving scale.

Speaker Change: Big fourth quarter, followed up with a very strong first quarter.

Speaker Change: We're still expecting cash G&A will be in the range of 18% to $18 5 million for 2025.

Speaker Change: What's your governor on growth and maybe just some color around what your pipeline looks like I am curious Patrick you talked about smart capital raising I'm curious if that's it or if it's just the amount of deals or if it's the size of your your team I am curious what keeps you from maybe taking up a step further from here.

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

Josh: Over to you, Josh. Thank you, Bill. During the fourth quarter, we acquired 23 properties for $57 million at a blended 6.7% cap rate with a weighted average lease term of 17 years.

Speaker Change: As for managing our lease maturity profile. Our team has made significant progress on 2025 maturities with 80, 588% of those tenants already extending their leases or indicating and intend to do so.

Speaker Change: Sure John.

John: John maybe just.

John: We're completely answer your first question I think if we were targeting.

Speaker Change: As of quarter end explorations represent just 5% of ABR in 2022, 3%.

Josh: did not sell any properties in the While Q1 is typically our slowest quarter, we continue to deliver on the strong investment momentum we achieved in the second half of 2024. As a result, we believe that we stand very well positioned at the end of the first four months in 2025, having both come off a record Q1 to start the year, right after a record Q4 last year, as we continue to build out the pipeline. We are achieving this without compromising on the quality of our asset selection or the credit standards to meet yield or volume targets.

Sectors that we're very exposed to tariffs.

John: We would have a much higher cap rate, obviously, but as the great research published recently we have.

Speaker Change: Our portfolio occupancy today is 99, 4% and we collected 99, 5% of base rent for the first quarter.

Speaker Change: There were no material changes to our collectability or credit reserves or any balance sheet impairments.

John: Very low tariff exposure in our portfolio.

As far as governors to growth.

Speaker Change: I will turn it back over to vacuum for questions.

John: A much longer answer, but I think the the.

Speaker Change: Thank you.

John: Kind of acquisitions that we're working on.

Speaker Change: Just to ask a question. Please press star followed by one on your telephone keypad now.

John: Is what largely determines.

Speaker Change: If for any reason you wish to meet a question. Please press star followed by <unk>.

John: How much we buy in a quarter, so whether it's sale leasebacks, which were prominent in this quarter and in Q4.

Im going to ask a question that peso shares advice is likely.

Josh: Our disclosure regime is particularly helpful in times like these, where investors can read through our frequent press releases to see how our acquisitions and the brands we work with are highly consistent with past. Our team is being patient and organized, tracking our opportunity sets for both on- and off-market investments, and including robust analytics to help us identify the best opportunities. In other words, we are not chasing deals, but rather selecting the best ones that fit our portfolio, even if that means leaning in slightly on cap rate to capture these higher quality deals.

Speaker Change: Our first question comes from John Keller Celski from Wells Fargo.

John: And much more efficient individual one off deals.

It becomes challenging to have that many balls in the year on $2 million acquisitions.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: Good morning.

Speaker Change: Afternoon. Thank you.

John: $3 million acquisitions to put up.

Speaker Change: Maybe just on a little bit of slight yield compression in the quarter.

John: Larger volumes, but we really don't look at it that way, we're trying to score assets and buy assets that have sufficient quality and then making sure that we raise the money the right way and I think.

Speaker Change: Is that due to the fact that there's maybe more competition in your sector for these assets given the installation from tariffs.

Speaker Change: Hard to say I would say the vast majority is related to the high percentage of <unk> restaurant acquisitions in the quarter.

John: We feel particularly proud over the last couple of years that when the <unk>.

Josh: all while still protecting accretion. Reflecting back on Q1, 83% of our investment volume was via COE spec, as operators continue to seek stable financing solutions in this current market. As such, our weighted average lead time this year was much higher at 17 years. In particular, we have three sale-e-specs of note with QSR operators, one with Burger King Corporate, another with a large multi-unit Burger King Franchisee, and lastly with a Whataburger Franchisee. The two Burger King deals were both part of M&A transactions, while the OneBurger deal was for their newly built store. It's worth noting that similar QSR properties typically command very aggressive cap rates in the upper 5% to low 6% cap rate range when sold.

John: Environment was.

John: Sufficient for acquisitions, but our cost of capital wasn't there.

Speaker Change: Okay, and then maybe just on the pipeline more generally you know you have a big fourth quarter, followed up with a very strong first quarter.

John: We responsibly paused, but then when the.

John: There was alignment where there was acquisitions to do and our cost of capital was there.

Speaker Change: What's your governor on growth and maybe just some color around what your pipeline looks like I'm curious Patrick you talked about smart capital raising I'm curious if that's it or if it's just the amount of deals or if it's the size of your your team I was curious what keeps you from maybe taking up a step further from here.

We acted with with emphasis.

John: Alright, thank you.

Speaker Change: Thank you. Our next question comes from Michael Goldsmith from UBS. Your line is now open. Please go ahead.

Patrick: Sure John.

John: John maybe just a.

Speaker Change: We're completely answer your first question I think if we were targeting.

katherine grades: Hi, this is katherine grades.

katherine grades: Grades from Michael Thank you for taking my question.

Speaker Change: Sectors that we're very exposed to tariffs.

Josh: Individual investors favor these small price points per property and the fungibility of it realistically. However, our team was able to achieve accretive pricing here by offering a portfolio solution and efficient execution for our operating partner. All three transactions were negotiated off-market and a product of years of relationship cultivation from our investors. Looking forward, we will continue to target similar opportunities, nationally recognized brands operated by best-in-class operators with appropriate base.

Speaker Change: We would have a much higher cap rate, obviously, but as the great Research you published recently we have.

Greg: Thanks, Greg.

Speaker Change: Just looking at the volume that you achieved in Q2 last year, the acquisition sort of ramped up through the year.

Speaker Change: Can you provide any color on what you're expecting as far as the cadence for this year, especially starting at such a higher base.

Very low tariff exposure in our portfolio.

Speaker Change: As far as governors to growth, that's a much longer answer, but I think the the.

Speaker Change: Yes.

Speaker Change: Q4 has historically been a <unk>.

Speaker Change: Kind of acquisitions that we're working on.

Speaker Change: Very strong quarter for us.

Speaker Change: Is what largely determines.

Speaker Change: And I'm not sure why Katherine to be honest with you.

Speaker Change: How much we buy in a quarter, so whether it's sale leasebacks, which were prominent in this quarter and in Q4.

Speaker Change: There's a dynamic where people want to get things done in a fiscal year perhaps.

Josh: While this quarter ended up having more quick service restaurants, some automotive, and no medical retail investments, we remind everyone that our team does not specifically allocate target buckets or quotas across our investment sector. Rather, we make investments when opportunities meet our underwriting criteria. That being said, we still expect these sectors to be roughly even split between these three target categories of ours over the long term. Looking forward, FCPT's opportunity set continues to grow despite a volatile macro environment.

Speaker Change: But we have a very good pipeline right now.

Speaker Change: And much more efficient individual one off deals.

Speaker Change: Deals typically have 60 to 90 day.

Speaker Change: It becomes challenging to have that many balls in the year on $2 million acquisitions.

Speaker Change: Sort of lifecycle 60 would be a minimum.

Speaker Change: So we're really don't have a lot of visibility on the second half of the year and certainly with all the macro uncertainty, it's very hard to tell.

Speaker Change: $3 million acquisitions to put up.

Speaker Change: Larger volumes, but we really don't look at it that way, we're trying to score assets and buy assets that have sufficient quality and then making sure that we raised the money the right way and I think.

Speaker Change: But we are staffed and capitalized and very focused and organized and executing the rest of the year, but we don't give guidance because really.

Patrick Wernig: We have a steady pipeline built out for Q2 and aim to continue to execute on our strategy with Patrick, back over to you.

Speaker Change: We feel particularly proud over the last couple of years that when the environment was.

Speaker Change: We want to make sure that we have the best sort of decision, making hygiene and making acquisitions.

Patrick Wernig: Let's uh... Start by talking about capital sourcing and the state of our balance sheet. At FDBT, we are highly focused on official capital raising. We raised over $169 million in 2025 to date, on top of the $318 million equity in 2024. Today, we have $254 million of unsettled equity forwards. The ability to raise forward ATM quickly and at scale has allowed us to match sources and uses more effectively. Furthermore, the high SOFR rate has allowed for a minimum drag of our forward balance, given we receive interest income on the balance at over 4%. With respect to overall leverage, our net debt adjusted EBITDA REIT in Q1 continued to move lower to 4.4 times, inclusive of outstanding net equity forwards as of March 31st.

Speaker Change: Sufficient for acquisitions, but our cost of capital wasn't there.

Speaker Change: All right fair enough. Thank you and then my second question.

Speaker Change: We responsibly cost, but then when the the there was alignment where there was acquisitions to do at our cost of capital was there.

Speaker Change: You acquired several Burger Kings in this past quarter and I'm sure you saw that was recently.

Speaker Change: Large franchisee who filed for bankruptcy is your sense that this is.

Speaker Change: We reacted with with emphasis.

Speaker Change: So the best franchisee specific issue or has anything changed just alright, how you monitor the health of FBR.

Speaker Change: Alright, thank you.

Speaker Change: Okay.

Speaker Change: Thank you. Our next question comes from Michael Goldsmith from UBS. Your line is now open. Please go ahead.

Speaker Change: Very much a specific issue to that franchisee.

Speaker Change: Got it thank you.

katherine grades: Hi, this is katherine grades.

Anthony: Thank you. Our next question comes from Anthony <unk> from JP Morgan. Your line is now open. Please go ahead.

Speaker Change: Great from Michael Thank you for taking my question.

Speaker Change: Thanks, Chris.

Michael Goldsmith: Just looking at the volume that you achieved in Q2 last year the acquisition sort of ramped up through the year can you provide any color on what you're expecting as far as the cadence for this year, especially starting at such a higher base.

Patrick Wernig: This leverage is at a 7-year low and provides capacity for us to continue to execute our business plan even if the current volatility persists or we are unable to raise additional capital for the rest of the year. We've also layered in additional hedges to our flooding rate exposure, raising us to over 95% fixed through Q3 2027. Our revolver is fully available at $350 million and we have, with extension options, essentially no debt maturities for nearly two years. Additionally, our fixed charge coverage ratio is a healthy 4.4 times. Altogether, this puts us in a great liquidity position.

Anthony: Yes. Thank you.

I know this may not be completely apples to apples because I understood yet understand the skew towards <unk> with your cap rates, but we do see some of the other net lease names doing deals in the sevens and so I was wondering if you can maybe give us some sense as to maybe how you see the difference between going from like say high <unk> into the low mid sevens.

Speaker Change: Yes.

Speaker Change: Q4 has historically been.

Speaker Change: A very strong quarter for us.

Speaker Change: And I'm not sure why Katherine to be honest with you.

Anthony: And what the give and take might be there.

Speaker Change: Dynamic where people want to get things done in a fiscal year, perhaps but.

Anthony: Okay.

Speaker Change: But we have a very good pipeline right now.

Anthony: Okay.

Anthony: We certainly see.

Speaker Change: Deals typically have 60 to 90 day.

Patrick Wernig: We have approximately $617 million available for funding acquisitions between cash, unsettled forward equity, and undrawn revolver capacity. Assuming no further equity issuance, we have an approximate $565 million of available capital before reaching six times net leverage.

Anthony: Things that are for sale that are.

Speaker Change: Sort of lifecycle 60 would be a minimum.

Anthony: Let's start drug too fine a point on it call it 705 caps and north.

Speaker Change: So we're really don't have a lot of visibility on the second half of the year and certainly with all the macro uncertainty, it's very hard to tell.

Anthony: And they typically have.

Anthony: Have.

Anthony: They're either in Subsectors that we don't like like pharmacy or experiential.

Patrick Wernig: Now turning to some of our financial highlights for Q1. We reported Q1 amplifo of $0.44 per share, which is up 2.3% from Q1 last year. Q1 cash rental income was $63.2 million, representing growth of 9.1% for the quarter compared to last year. On a run rate basis, current annual cash-based rent for leases in place as of quarter end is $243.9 million, and our weighted average five-year annual cash rent escalator remains 1.4%. Cash G&A expense, excluding stock-based compensation, was $4.9 million, representing 7.7% of cash rental income for the quarter, compared to 7.9% for the quarter last year.

Speaker Change: We are staffed and capitalize and very focused and organized and executing the rest of the year, but we don't give guidance.

Anthony: We haven't historically been involved with.

Anthony: Or are the credit isn't very good.

Speaker Change: Does really.

Anthony: Or the rents are really high.

Speaker Change: We want to make sure that we have the best sort of decision, making hygiene and making acquisitions.

Anthony: And so all of those factors show up in our scorecard to scores that are insufficient for us to proceed.

Speaker Change: Okay.

Speaker Change: Okay Fair enough. Thank you and then my second question.

Anthony: Now that doesn't mean that there isn't one transaction, where you feel like youre getting a great price or another transaction, where you still see real strategic reasons to lean in by 20 basis points or something like that but on average what we use what we have seen is that cap rates there.

Speaker Change: You acquired several Burger Kings in this past quarter and I'm sure you saw that was recently.

Speaker Change: Large franchisee who filed for bankruptcy is your sense that this is fran.

Franchisee specific issue or has anything changed as far as how you monitor the health of that'd be great.

Patrick Wernig: This progress illustrates our continued efforts at efficient growth and the benefits of improving scale. We are still expecting CAS G&A will be in the range of $18 to $18.5 million for 2025.

Speaker Change: Very much of the specific issue to that franchisee.

Our.

Anthony: Higher enough from what we're posting to matter involved.

Anthony: Measurably more risk.

Speaker Change: Got it thank you.

Anthony: And I would say that one of the things that I think very hopeful about our reporting regime as you know what we're buying for that cap rate.

Patrick Wernig: As a reminder, we take a conservative approach and do not capitalize any of the compensation costs related to our investment. As for managing our lease maturity profile, our team has made significant progress on 2025 maturities with 88% of those tenants already extending their leases or indicating an intent to do so. As of quarter end, expirations represent just 0.5% of ABR and 2026 is 2.3%. Our portfolio occupancy today is 99.4% and we collected 99.5% of base rent for the first quarter. There were no material changes to our collectability or credit reserves nor any balance sheet impairments.

Speaker Change: Thank you. Our next question comes from Anthony <unk> from JP Morgan. Your line is now open. Please go ahead.

Anthony: What we see some of our peers do pursue what I would call barbell strategies, where they disclose.

Anthony <unk>: Yes. Thank you.

Anthony <unk>: I know this may not be completely apples to apples, because I understand I understand the skewed towards Q Sars with your cap rates, but we do see some of the other net lease names doing deals in the sevens and so I was wondering if you can maybe give us some sense as to maybe how you see the difference between going from like say high sixes into the low mid <unk>.

Anthony: Tenants that.

Anthony: Shareholders are happy that they are buying.

Anthony: Disclose a cap rate that involves a bunch of tenants.

Anthony: They don't talk about.

Anthony: So I think our straightforward very transparent strategy.

Anthony: Should give you comfort that what we're buying.

Anthony <unk>: And what the give and take might be there.

Anthony: As thoughtfully selected and not to hit some.

Anthony <unk>: Okay.

Becky: With that, we'll turn it back over to Becky for questions. Thank you. If you wish to ask a question, please press star followed by one on your telephone keypad now. If for any reason you wish to remove your question, please press star followed by two. When preparing to ask your question, please ensure your device is unmuted locally.

Anthony <unk>:

Anthony: Metric for a quarterly.

Anthony <unk>: We certainly see.

Anthony: Disclosure.

Anthony <unk>: Things that are for sale that are.

Anthony: Okay. Thanks, and then.

Anthony <unk>: Let's start drug too fine a point on it call it seven and a half caps in north.

Anthony: Just on the pipeline.

Anthony: Are there any larger type transactions that you see in the mix or is it pretty much all the one by one.

Anthony <unk>: And they typically have.

Anthony <unk>: They're either in Subsectors that we don't like like pharmacy or experiential.

John Kilichowski: Our first question comes from John Kilichowski from Wells Fargo. Your line is now open, please go ahead. Good morning, or afternoon, thank you. Uh, maybe just on a little bit of slight yield compression in the quarter, um, is that due to the fact that there's maybe more competition in your sector for these assets given the insulation from tariffs? Hard to say. I would say the vast majority is related to the high percentage of QSR restaurant acquisitions in the quarter.

Anthony: It's a mix.

We're always working on larger transactions, we have a handful in the hopper I would reflect that.

Anthony <unk>: Or are we haven't historically been involved with.

Anthony <unk>: Or are the credit isn't very good.

Anthony: We haven't really seen a dynamic where there is portfolio.

Anthony <unk>: Or the rents are really high.

Anthony <unk>: And so all of those factors show up in our scorecard to scores that are insufficient for us to proceed.

Discounts in fact in some cases, we found that the larger transactions have more competition and I think we saw that clearly in a large transaction.

Anthony <unk>: Now that doesn't mean that there isn't one transaction, where you feel like you're getting a great price or another transaction, where you still see real strategic reasons to lean in by 20 basis points or something like that but on average what we use what we have seen is that cap rates.

Anthony: One of our peers did last winter so.

Anthony: It's a mixed Anthony but but I also wouldn't say that large transactions come at bargain prices by any means.

Anthony: Okay. Thanks.

John Kilichowski: Okay, and then maybe just on the the pipeline more generally, you know, you have a big fourth quarter followed up with a very strong first quarter. You know, what's your governor on growth and maybe just some color around what your pipeline looks like?

Anthony <unk>: That are.

Anthony: Thank you.

Anthony <unk>: Higher enough from what we're posting to matter involved.

Speaker Change: Our next question comes from Wes Golladay from Baird. Your line is now open. Please go ahead.

Anthony <unk>: Measurably more risk.

Wes Golladay: Hey, Good morning, guys can you talk about how you underwrite the smaller franchisees I think you mentioned you do get a corporate guarantee but how smaller some of these franchisees.

Anthony <unk>: And I would say that one of the things that I think very hopeful about our reporting regime as you know what we're buying for that cap rate.

John Kilichowski: I'm curious, Patrick, you talked about smart capital raising. I'm curious if that's it, or if it's just the amount of deals, or if it's the size of your, you know, your team. I'm curious what keeps you from maybe taking up a step further from here. Sure. And John, maybe just to more completely answer your first question. I think if we were targeting sectors that were very exposed to tariffs, we would have a much higher cap rate, obviously. But as the great research you've published recently, we have very low tariff exposure in our portfolio.

Anthony <unk>: And what we see some of our peers do pursue what I would call barbell strategies, where they disclose.

Speaker Change: Yes, so our small franchisees I think would be considered very large for our peers. We don't have a ton of franchisee exposure and the franchise. The exposure we have tends to be with franchise times.

Anthony <unk>: Okay.

Anthony <unk>: Tenants that.

Anthony <unk>: Shareholders are happy that they are buying.

Anthony <unk>: But disclose a cap rate that involves a bunch of tenants that they.

Wes Golladay: <unk> hundred.

Anthony <unk>: They don't talk about and.

Wes Golladay: Type size franchisees. So we get financials, we do a typical credit underwriting, but franchisee credit is not a big part of our.

Anthony <unk>: And so I think our straightforward very transparent strategy.

Anthony <unk>: Should give you comfort that what we're buying.

Anthony <unk>: As thoughtfully selected and not to hit some.

Patrick Wernig: As far as governors to growth, that's a much longer answer. But I think the kind of acquisitions that we're working on is what largely determines how much we buy in a quarter. So whether it's sale leasebacks, which were prominent in this quarter and in Q4, are much more efficient. Individual one-off deals, it becomes challenging to have that many balls in the air, you know, on $2 million acquisitions, $3 million acquisitions, to put up... We really don't look at it that way. We're trying to score assets and buy assets that have sufficient quality and then making sure that we raise the money the right way.

Wes Golladay: Business and I would say the.

Anthony <unk>: Metric for our quarterly <unk>.

Wes Golladay: The dynamic where.

Anthony <unk>: Disclosure.

Wes Golladay: Some of our peers will sort of put people into business by buying real estate for them, we're developing real estate for them and Baidu.

Anthony <unk>: Okay. Thanks, and then just on on the pipeline.

Anthony <unk>: Are there any larger type transactions that you see in the mix or is it pretty much all the the one by one.

Wes Golladay: By definition, that's a very very small sort of individual size.

Wes Golladay: Business entity is not something we do.

Anthony <unk>: It's a mix.

Speaker Change: Okay, and then you have been building up the team development a lot of new relationships over the last few years, just curious how much the new deal flow is from these new relationships.

Anthony <unk>: We're always working on larger transactions, we have a handful in the hopper I would reflect that.

Anthony <unk>: We haven't really seen a dynamic where their portfolio.

Speaker Change: Theres some of that but a lot of it is frankly deals that we've been tracking for years.

Anthony <unk>: Discounts in fact in some cases, we found that the larger transactions have more competition and I think we saw that clearly in a large transaction.

Speaker Change: And now have.

Speaker Change: Advantage cost of capital in.

Sellers are more willing to meet us on price because of the overall macro uncertainty so I don't think its.

Anthony <unk>: One of our peers did last winter so.

John Kilichowski: And I think we feel particularly proud over the last couple of years that when the environment was sufficient for acquisitions, but our cost of capital wasn't there, we responsibly paused. But then when there was alignment where there was acquisitions to do and our cost of capital was there, we acted with emphasis. All right, thank you.

Anthony <unk>: It's a mixed Anthony but but I also wouldn't say that large transactions come at bargain prices by any means.

Speaker Change: The algorithm isn't something like new acquisition person at six months has four relationships in the 12 months is eight.

Speaker Change: Okay. Thanks.

Speaker Change: Therefore, you can count on deal flow from that we have.

Speaker Change: Thank you our.

Speaker Change: Next question comes from Wes Golladay from Baird. Your line is now open. Please go ahead.

Speaker Change: Been doing more Outreached outreach recently and as you mentioned we've <unk>.

Expanded our acquisition team, we have the largest acquisition <unk>.

Wes Golladay: Hey, Good morning, guys can you talk about how you underwrite the smaller franchisees I think you mentioned you do get a corporate guarantee but now how smaller some of these franchisees.

Speaker Change: <unk> coming in the summer three folks.

Speaker Change: Out of underground too in terms and we're really excited to get them up to speed.

Operator: Thank you.

Catherine Graves: Our next question comes from Michael Goldsmith from UBS.

Speaker Change: Yes, so our small franchisees I think would be considered very large for our peers. We don't have a ton of franchisee exposure and the franchise. The exposure we have tends to be with franchise times.

Speaker Change: I think it will make a real impact.

Catherine Graves: Your line is now open, please go ahead.

Speaker Change: Okay. Thanks.

Catherine Graves: Hi, this is Catherine Graves on for Michael. Thank you for taking my question. So my first, just looking at the volume that you achieved in one cue. So last year, the acquisition sort of ramped up through the year. Can you provide any color on what you're expecting as far as the cadence for this year, especially starting at such a higher base? Yeah. Q4 has historically been a very strong quarter for us, and I'm not sure why, Catherine, to be honest with you. There's a dynamic where people want to get things done in a fiscal year, perhaps, but we have a very good pipeline right now.

Speaker Change: Thank you next.

Speaker Change: Our next question comes from <unk> <unk> from Janney. Your line is now open. Please go ahead.

Wes Golladay: 100.

Wes Golladay: Type size franchisees. So we get financials, we do a typical credit underwriting, but franchisee credit is not a big part of our.

Speaker Change: Hey, good morning, guys. What is the range of EBITDAR coverage ratios for recent acquisitions and is there any difference between restaurant and non restaurant segments there.

Wes Golladay: Business and I would say the.

Speaker Change: Yes, we don't disclose.

Speaker Change: On a quarterly basis.

Wes Golladay: The dynamic where.

Speaker Change: Coverage ratios.

Wes Golladay: Some of our peers will sort of put people into business by buying real estate for them, we're developing real estate for them and you know by definition, that's a very very small sort of individual size.

Speaker Change: Obviously, we have to sign confidentiality agreements.

Speaker Change: To get financials and so.

Speaker Change: I don't think were going to be in a position to disclose those on a quarterly basis I would say on a.

Wes Golladay: Business entity is not something we do.

Speaker Change: I think the credit metrics are fairly similar across the different industries, although I would say within medical.

Wes Golladay: Okay, and then you have been building up the team developing a lot of new relationships over the last few years, just curious how much the new deal flow is from these new relationships.

Patrick Wernig: Deals typically have 60- to 90-day sort of life cycles, 60 would be a minimum. So we really don't have a lot of visibility on the second half of the year, and certainly, with all the macro uncertainty, it's very hard to tell. But we are staffed and capitalized and very focused and organized in executing the rest of the year, but we don't give guidance because, really, we want to make sure that we have the best sort of decision-making hygiene and making acquisitions.

Speaker Change: It's a little bit harder to define four wall, because you might have a patient who's.

Speaker Change: Visiting our retail.

Wes Golladay: It's there is some of that but a lot of it is frankly deals that we've been tracking for years.

Speaker Change: Outpatient Center for example, but also as part of their care going to the hospital system that is associated with so so saying that that four wall is ex us.

Wes Golladay: And you know.

Wes Golladay: Now have a advantage cost of capital.

Wes Golladay: Sellers are more willing to meet us on price because of the overall macro uncertainty. So I don't think its the <unk>.

Speaker Change: Is a little bit more ambiguous, but the credit is very similar on a corporate leverage basis.

Algorithm isn't something like new acquisition person at six months has four relationships in the 12 months of eight.

Speaker Change: Being in the mid single digits and four wall coverage being.

Catherine Graves: Fair enough, thank you.

Speaker Change: Typically three plus times.

Catherine Graves: And then my second question, you acquired several Burger Kings in this past quarter, and I'm sure you saw there was recently a large franchisee who filed for bankruptcy. Is your sense that this was sort of a franchisee-specific issue, or has anything changed as far as how you monitor the health of your Burger Kings? Very much a specific issue to that franchisee. Got it.

Wes Golladay: Therefore, you can comment on deal flow from that.

Speaker Change: Okay, and then at what point would you guys consider lease too conservative where there is potential opportunity cost in the form of loss rents and then on the flip side, what point would you feel uncomfortable underwriting a new lease in terms of coverage just trying to get a range and how you guys think about that thanks.

Wes Golladay: Been doing more outreach outreach recently and as you mentioned we've.

Wes Golladay: Expanded our acquisition team, we have the largest acquisition <unk>.

Wes Golladay: Class coming in the summer three folks.

Wes Golladay: Out of underground to interns, and we're really excited to get them up to speed.

Speaker Change: Yes, so if I understand your question.

Wes Golladay: I think they'll make a real impact.

Speaker Change: Is could we take more risk and still be in a safe position.

Wes Golladay: Okay. Thanks.

Catherine Graves: Thank you.

Speaker Change: Yes, that's the gist, yes, exactly yes.

Wes Golladay: Thank you our.

Anthony Paolone: Our next question comes from Anthony Paolone from J.P. Morgan. Your line is now open, please go ahead. Yeah, thank you. I know this may not be completely apples to apples because I understand the skew towards QSRs with your cap rates, but we do see some of the other net lease names doing deals in the sevens. And so I was wondering if you can maybe give us some sense as to maybe how you see the difference between going from, like, say, high sixes into the low-mid sevens and what the give and take might be there. You know, we certainly see things that are for sale that are You know, let's not draw too fine a point on it.

Speaker Change: And then the upper limit to conservative coverage ratio like at what point.

Speaker Change: Next question comes from Katherine <unk> from Janney. Your line is now open. Please go ahead.

Thanks.

Speaker Change: <unk>.

Speaker Change: Hey, good morning, guys. What is the range of EBITDAR coverage ratios for recent acquisitions.

Speaker Change: Sure so.

Speaker Change: Okay.

Speaker Change: Well I guess I'd make two reflections.

Speaker Change: Are there any difference between restaurant and non restaurant segments there.

Speaker Change: Back test are we being too conservative.

Speaker Change: Yeah, we don't disclose.

Speaker Change: We do go back and look at things that we looked at and didn't do it.

Speaker Change: On a quarterly basis coverage ratios.

Speaker Change: And it's very clear to us that the outcomes of the things that we passed on are far less favorable than what we've done okay and thats both.

Speaker Change: Obviously, we have to sign confidentiality agreements.

Speaker Change: To get financials and so.

Speaker Change: I think we're gonna be in a position to disclose those on a quarterly basis I would say on a.

Speaker Change: And taking.

I think the credit metrics are fairly similar across the different industries.

Buildings that to the naked eye.

Speaker Change: It's a business that we bought it's a brand that we've bought but what you can't see is the leases to short or the rents are too high or the tenant has bad financials that that.

Speaker Change: Though I would say within medical.

Speaker Change: A little bit harder to define four wall, because you might have a patient who is.

Anthony Paolone: Call it seven and a half caps in north. And they typically have... They're either in subsectors that we don't like like pharmacy or experiential, or we haven't, you know, historically been involved with, or the credit isn't very good, or the rents are really high. And so all those factors show up in our scorecard to scores that are insufficient for us to proceed. Now, that doesn't mean that there isn't one transaction where you feel like you're getting a great price or another transaction where you still see real strategic reasons to lean in by 20 basis points or something like that.

Speaker Change: Visiting our retail <unk>.

Speaker Change: Outpatient Center for example, but also as part of their care going to the hospital system that is associated with so so saying that that four wall is ex us.

Speaker Change: Very frequently things that we've looked at and passed on have turned out to be.

Speaker Change: Unfortunate outcomes. So that's one.

Two I would observe that rents on that lease.

Speaker Change: He is a little bit more ambiguous, but the credit is very similar on a corporate leverage basis.

Speaker Change: A relatively random and so you may have a burger king that has $70000 worth of rent and one that has a $107000 for the rent and one that has $170000 worth of rent.

Speaker Change: Being in the mid single digits and four wall coverage being.

Speaker Change: Typically three plus times.

Speaker Change: And they look exactly the same other than the rent number and so the coverage would obviously be way different on the $70000 worth of rent than the 170, and so I think a big part of our job is.

Speaker Change: Okay, and then at what point would you guys consider lease too conservative where there is potential opportunity cost in the form of loss rents and then on the flip side, what point would you feel uncomfortable underwriting a new lease in terms of coverage just trying to get a range and how you guys think about that thanks.

Anthony Paolone: But on average, what we've what we have seen is that cap rates that are Higher enough from what we're posting to matter involve, you know, measurably more risk. And I would say that one of the things that's, I think, very helpful about our reporting regime is you know what we're buying for that cap rate. And what we see some of our peers do is pursue what I would call barbell strategies, where they disclose... tenants that shareholders are happy that they're buying, but disclose a cap rate that involves a bunch of tenants that they don't talk about.

Speaker Change: Searching for properties that have great performance, but reasonable rents.

And so I don't think that there is an upper limit of what we would consider now obviously when that lease matures, which is usually very far into the future given the extension options. We have some rent upside and we have experienced some positive outcomes there.

Speaker Change: Yes, so if I understand your question.

Speaker Change: Is could we take more risk and still be in a safe position.

Speaker Change: Yes, that's the gist, yes, exactly yes.

Speaker Change: And then Mike upper limit to conservative coverage ratio like at what point is that.

Speaker Change: One thing I'd point out maybe a different answer for your question.

Speaker Change: Thanks.

Speaker Change: Having gone through the financial crisis earlier in my career that the Dot com bust very early in my career.

Speaker Change: <unk>.

Speaker Change: Sure so.

Speaker Change: Well I guess I'd make two reflections.

Speaker Change: Covid more recently.

Speaker Change: Back test or are we being too conservative we do go back and look at things that we looked at and didn't do and it's very clear to us that the outcomes of the things that we passed on are far less favorable than what we've done okay and thats both.

Speaker Change: There is a dynamic where when there is substantial uncertainty and you have the ability to be on offense theres enormous advantage to that and so we go into this current environment with the lowest leverage we've had in a long time.

Anthony Paolone: And so I think our straightforward, very transparent strategy should give you comfort that what we're buying is thoughtfully selected and not to hit some, you know, metric for quarterly disclosure. Okay, thanks.

Speaker Change: We have more liquidity.

Speaker Change: Undrawn forward than we've had in a long time and we have a portfolio that is in fantastic shape. So if the issue is we might be a little bit too conservative historically I'll take that.

Speaker Change: In taking.

Speaker Change: Buildings that to the naked eye.

Speaker Change: Brown, it's a business that we bought it's a brand that we bought but what you can't see is the leases to shore or the rents are too high or the tenant has.

Anthony Paolone: And then just on the pipeline, are there any larger type transactions that you see in the mix, or is it pretty much all the one by ones? It's a mix. You know, we're always working on larger transactions. We have a handful in the hopper. I would reflect that We haven't really seen a dynamic where there's portfolio discounts. In fact, in some cases, we've found that the larger transactions have more competition. And I think we saw that clearly in a large transaction that one of our peers did last winter. So it's a mix, Anthony, but I also wouldn't say that large transactions come at bargain prices by any means.

Speaker Change: In order to be.

Speaker Change: In a position to be aggressive if opportunities knock.

Speaker Change: Our financials that there.

Speaker Change: At.

Speaker Change: Very frequently things that we've looked at and passed on have turned out to be a unfortunate.

Speaker Change: Thank you I appreciate the context.

Speaker Change: Yes.

Speaker Change: Thank you as a reminder to ask a question. Please press star followed by one on your telephone keypad.

Speaker Change: Unfortunate outcomes. So that's one.

Speaker Change: Two I would observe that rents on that lease.

Speaker Change: Our next question comes from RJ Milligan from Raymond James Your line is now open. Please go ahead.

Speaker Change: A relatively random and so you may have a burger king that has $70000 worth of rent and one that has a $107000 for the rent and one that has $170000 worth of rent.

RJ Milligan: Yeah, Hey, good afternoon guys.

Speaker Change: Bill you talked about running leverage at the lowest level, it's been in quite some time right and cloud ever.

Speaker Change: And they look exactly the same other than the rent number and so the coverage would obviously be way different on the $70000 worth of rent than the 170, and so I think a big part of our job is.

Speaker Change: Just curious given the fact that your cost of capital is attractive to you or how do you think about potentially further delevering or loading up the balance sheet for opportunities that might arise later.

Searching for properties that have great performance, but reasonable rents.

Speaker Change: So.

Operator: Okay, thanks. Thank you.

Pat: It's a great question and I think the interesting dynamic as Pat mentioned, when <unk>, 4% and so that.

Speaker Change: And so I don't think that there is an upper limit of what we would consider now obviously when that lease matures, which is usually very far into the future given the extension options. We have some rent upside and we have experienced some positive outcomes there.

Wes Golladay: Our next question comes from Wes Golladay from Baird.

Wes Golladay: Your line is now open, please go ahead. Hey, good morning, guys. Can you talk about how you underwrite the smaller franchisees? I think you mentioned you do get a corporate guarantee, but how small are some of these franchisees? Yeah, so our small franchisees I think would be considered very large for our peers. We don't have a ton of franchisee exposure, and the franchisee exposure we have tends to be with franchise times, you know, 100 type size franchisees. So we get financials, we do a typical credit underwriting, but franchisee credit is not a big part of our business.

Speaker Change:

Speaker Change: You pay your dividend in essence on the forward and you received so far.

Speaker Change: There are some fees involved but thats the basic building blocks.

Speaker Change: Last thing I'd point out maybe a different answer to your question.

Speaker Change: The cost of having this liquidity is very low.

Speaker Change: Having gone through the financial crisis earlier in my career that the Dot com bust very early in my career.

Speaker Change: When rates were zero and you're paying a 5% dividend.

Speaker Change: Covid more recently.

Speaker Change: While shocks it gets expensive if you have too much of a forward youre not using it in the <unk>.

Speaker Change: There is a dynamic where when there is substantial uncertainty and you have the ability to be on offense theres enormous advantage to that and so we go into this current environment with the lowest leverage we've had in a long time.

Speaker Change: Finally manner, so we felt that the.

Speaker Change: Opportunity cost of having substantial liquidity was very.

Speaker Change: Minimal.

Speaker Change: And we were opportunistic.

Speaker Change: We have more liquidity.

Speaker Change: Undrawn forward than we've had in a long time and we have a portfolio that is in fantastic shape. So if the issue is we might be a little bit too conservative historically I'll take that.

Wes Golladay: And I would say the dynamic where... Some of our peers will sort of put people into business by buying real estate for them, or developing real estate for them.

Speaker Change: Because of the fee structure of the ATM and just so everyone's clear ATM has been the technology, we've used to raise equity.

Speaker Change: Almost explore exclusively for something like the last seven or eight years.

Speaker Change: In order to be.

Speaker Change: In a position to be aggressive if opportunities knock.

Wes Golladay: And, you know, by definition, that's a very, very small sort of individual size business entity is not something we do.

Speaker Change: It has a very advantaged fee and discount structure and so when that capital was available because the opportunity cost of holding that for position was minimal.

Speaker Change: Thank you I appreciate the context.

Speaker Change: Yeah.

Wes Golladay: Okay, and then you have been building out the team developing a lot of new relationships over the last few years. Just curious how much the new deal flow is from these new relationships? Um, you know, it's there's some of that, but a lot of it is frankly deals that we've been tracking for years. And, you know, now have an advantage cost of capital and Seller's are more willing to meet us on price because of the overall macro uncertainty. So I don't think it's, um, you know, the algorithm isn't something like new acquisition person at six months has four relationships and at 12 months has eight, and therefore you can count on deal flow from that.

Speaker Change: Thank you as a reminder to ask a question. Please press star followed by one on your telephone keypad.

Speaker Change: We took advantage of it and.

Speaker Change: I think that puts us in a really good position.

Speaker Change: Our next question comes from RJ Milligan from Raymond James Your line is now open. Please go ahead.

Speaker Change: When I say, it's volatile out there it's not sort of my opinion, you can look at the VIX and it's a quite volatile environment.

RJ Milligan: Yeah, Hey, good afternoon guys.

Speaker Change: But we're we love being very <unk>.

Speaker Change: Bill you talked about running leverage at the lowest level, it's been in quite some time or whatever.

Speaker Change: Illiquid when there is stress in the streets.

Speaker Change: I'm just curious given the fact that your cost of capital is attractive to you or how do you think about potentially further delevering or loading up the balance sheet for opportunities that might arise later.

Speaker Change: Okay, and so bill you had given some same store stats on some of the tenants are at the beginning of the call. Obviously concerns out there that we might head into a recession or downturn, obviously the data has been pretty mixed.

Speaker Change: Yes so.

Speaker Change: It's a great question and I think the interesting dynamic as Pat mentioned, when <unk>, 4% and so that.

Speaker Change: But if we were to see a downturn or a recession. How do you think that might change the pipeline, whether it being volume competition or pricing.

Wes Golladay: You know, we have been doing more outreach recently, and as you mentioned, we've, you know, expanded our acquisition team. We have the largest acquisition class coming in the summer, three folks out of undergrad and two interns, and we're really excited to get them up to speed. You know, I think they'll make a real impact. Okay, thanks.

Speaker Change:

Speaker Change: You pay your dividend in essence on the forward and you'll receive sofa.

Speaker Change: There are some fees involved but thats the basic building blocks.

Speaker Change: We went through.

Speaker Change:

Speaker Change: Covid and our portfolio performed extremely well, but I wouldn't say there were bargains to be had on any sustained basis during that time.

Speaker Change: Cost of having this liquidity is very low.

Speaker Change: When rates were zero and you're paying a 5% dividend.

Speaker Change: Well shucks it gets expensive if you you.

Operator: Thank you.

Speaker Change: This is a different scenario I think our portfolio will perform very well.

Kyle Katorincek: Our next question comes from Kyle Katorincek from JANI. Your line is now open, please go ahead. Hey, good morning, guys.

Speaker Change: Too much of a forward, meaning you're not using it in a timely manner. So we felt that the.

Speaker Change: The opportunity cost of having substantial liquidity was very.

Speaker Change: We're essentially 100% occupied so I can't promise that it would improve because it's about as full as it can be but I think we'd be in really good position do we then have.

Kyle Katorincek: Where is the range of EBITDA coverage ratios for recent acquisitions, and is there any difference between restaurant and non-restaurant segments there? Yeah, we don't disclose on a quarterly basis coverage ratios. Obviously, we have to sign confidentiality agreements to get financials. And so I don't think we're going to be in a position to disclose those on a quarterly basis. I would say on a I think the credit metrics are fairly similar across the different industries, although I would say within medical, it's a little bit harder to define four-wall because you might have a patient who's visiting our retail outpatient center, for example, but also as part of their care going to the hospital system that it's associated with.

Speaker Change: Minimal.

Speaker Change: And we were opportunistic.

Speaker Change: Because of the fee structure of the ATM and just so everyone's clear ATM has been the technology, we've used to raise equity.

Speaker Change: Interesting opportunities to deploy capital.

Speaker Change: And acquisitions.

Speaker Change: Unclear to an earlier question, we tend to target sectors that have less targeted tariff exposure theres been two wall Street research reports on the net lease industry and tariff exposure I think we we were sort of the most favorable of the industry in both of those I'd encourage you to attract them down.

Speaker Change: Almost explore exclusively for something like the last seven or eight years.

Speaker Change: He has a very advantaged fee and discount structure and so when that capital was available because the opportunity cost of holding that forward position was minimal.

Speaker Change: We took advantage of it.

Speaker Change: But.

Speaker Change: Will we get the situation, where we have really interesting investment opportunities.

Speaker Change: I think that puts us in a really good position.

Speaker Change: When I say, it's volatile out there it's not sort of my opinion, you can look at the VIX and it's a quite volatile environment.

Speaker Change: Can't say for sure I can say that we have the money for it we have the people for it we're focused on it.

Speaker Change: But we need the market to come to us to find high quality deals that we can buy it at better than historic prices.

Speaker Change: But we're.

Speaker Change: We love being very liquor.

Speaker Change: Liquid when there is stress in the streets.

Kyle Katorincek: So saying that that four-wall is X is a little bit more ambiguous, but the credit is very similar on a corporate leverage basis, you know, being in the mid-single digits and four-wall coverage being, typically three plus times.

Speaker Change: Okay. That's helpful. Thanks, guys.

Speaker Change: Okay, and and so Bill you had given some same store stats on some of the tenants are beginning of the call. Obviously concerns out there that we might head into a recession downturn, obviously the data has been pretty mixed.

Speaker Change: Thank you.

Speaker Change: Next question comes from Jason Wang from Barclays. Your line is now open. Please go ahead.

Speaker Change: But if we were to see a downturn or a recession. How do you think that might change the pipeline, whether it being volume competition or pricing.

Jason Wang: Hi, good afternoon.

Kyle Katorincek: Okay, and then at what point would you guys consider lease too conservative where there's potential opportunity costs in the form of lost rents? And then on the flip side, what point would you feel uncomfortable underwriting a new lease in terms of coverage? Just trying to get a range of in how you guys think about that. Thanks. Yeah, so if I understand your question... is could we take more risk and still be in a safe position? Yeah, that's the gist of it. Yeah, exactly. And then, like, upper limit to conservatives of the coverage ratio. Like, at what point is that?

Jason Wang: Rent collections ticked up a bit this quarter on there is still strong, but just wondering what types of tenants and non paying now and if youre working on anything at those properties to increase the collections numbers further.

Speaker Change: Yeah.

Speaker Change: Uh huh.

Speaker Change: We went through.

Speaker Change: <unk> in our portfolio performed extremely well, but I wouldn't say there were bargains to be had on any sustained basis during that time.

Jason Wang: Yes, it's basically one tenant.

Jason Wang: We have a personal guarantee from that tenant that we're pursuing and we've made substantial progress releasing the buildings. So it's very very small.

Speaker Change: This is a different scenario I think our portfolio will perform very well.

Jason Wang: Sort of.

Jason Wang: A one off thing.

Kyle Katorincek: Is that six and a half times? So, um... Well, I guess I'd make two reflections. To back test are we being too conservative, we do go back and look at things that we looked at and didn't do. And it's very clear to us that the outcomes of the things that we passed on are far less favorable than what we've done. Okay, and that's both and taking buildings that to the naked eye, you know, it's a brand, it's a it's a business that we bought, it's a brand that we've bought, but what you can't see is the leases too short or the rents are too high or the tenant has bad financials that that very frequently things that we've looked at and passed on have turned out to be, you know, unfortunate outcomes.

Speaker Change: We're essentially 100% occupied so I can't promise that it would improve.

Mhm.

Jason Wang: And what kind of re leasing spreads.

Speaker Change: Because it's about as full as it can be but.

Jason Wang: Yes.

Jason Wang: Okay, that's like that historically.

Speaker Change: Think we'd be in really good position do we then have a <unk>.

Jason Wang: It's just a couple of buildings I think we'll be in a good spot.

Speaker Change: Interesting opportunities to deploy capital.

Jason Wang: We're not going to comment on ongoing lease negotiations when it's only a couple of buildings.

Speaker Change: And acquisitions.

Speaker Change: Unclear to an earlier question, we tend to target sectors that have less targeted tariff exposure that's been to Wall Street research reports on the net lease industry and tariff exposure I think we we were sort of the most favorable of the industry in both of those I'd encourage you to track them down.

Jason Wang: Thank you for the questions.

Jason Wang: Yes.

Speaker Change: Thank you. Our next question comes from James <unk> from Evercore. Your line is now open. Please go ahead.

Speaker Change: Thank you thanks for the time and kind of a bigger picture question Bill.

Speaker Change: But.

Will we get the situation, where we have really interesting investment opportunities.

Speaker Change: You mentioned Youre building acquisitions to half and half and you've got the balance sheet in a great position are you, adding other capabilities or data sets to your underwriting I know you've been pleasing like deal path technology et cetera to date and I'm. Just curious how you are setting up for the next phase of growth.

Speaker Change: Can't say for sure I can say that we have the money for it we have the people for it we're focused on it.

Speaker Change: But we we need the market to come to us to find high quality deals that we can buy it at a better than historic prices.

Kyle Katorincek: So that's one. Two, I would observe that rents on that lease are relatively random. And so you may have a Burger King that has $70,000 worth of rent and one that has $107,000 worth of rent and one that has $170,000 worth of rent. And they look exactly the same other than their rent number. And so the coverage would obviously be way different on the $70,000 worth of rent than the $170,000. And so I think a big part of our job is... searching for properties that have great performance but reasonable rents. And so I don't think that there's an upper limit of what we would consider.

Speaker Change: Is there any other incremental steps that you are doing to further enhanced underwriting. Thanks.

Speaker Change: Okay. That's helpful. Thanks, guys.

Speaker Change: That's a really good question.

Speaker Change: I think like every company we are.

Speaker Change: Thank you our next.

Speaker Change: Our next question comes from Jason Wang from Barclays. Your line is now open. Please go ahead.

Trying to figure out how AI will make us more efficient.

Speaker Change: I think we have just more people to work on projects and to explore potential new industries.

Jason Wang: Hi, good afternoon.

Rent collections ticked up a bit this quarter on there is still strong but I'm just wondering what types of tenants are not paying now.

Speaker Change: We've built more substantially more muscle in our asset management group with some really exciting hires there that are getting up to speed historically, we didn't need much of that function, but as we have added several hundred buildings it's become.

Speaker Change: If you're working on anything at those properties to increase collections numbers further.

Speaker Change: Yes, it's basically one tenant.

Kyle Katorincek: Now, obviously, when that lease matures, which is usually very far into the future given extension options, you know, we have some rent upside and we have experienced some positive outcomes there.

Speaker Change: We have a personal guarantee from that tenant that we're pursuing and we've made substantial progress releasing the buildings. So it's very very small.

Speaker Change: Our portfolio.

Speaker Change: It is in fantastic shape, but theres more to do.

Speaker Change: But I am really excited as I said about the new folks that are joining.

Kyle Katorincek: The last thing I'd point out, maybe a different answer to your question, having gone through the financial crisis earlier in my career, the dot-com bust very early in my career, COVID, more recently, there is a dynamic where when there's substantial uncertainty and you have the ability to be on offense, there's enormous advantage to that. And so we go into this current environment with the lowest leverage we've had in a long time. We have more liquidity from undrawn forwards than we've had in a long time. And we have a portfolio that's in fantastic shape. So if the issue is we might be a little bit too conservative historically, I'll take that in order to be in a position to be aggressive if opportunities knock.

Speaker Change: There'll be able to.

Speaker Change: Sort of.

Speaker Change: A one off thing.

Speaker Change: Use the technology that we have will be able to put more emphasis.

Speaker Change: And what kind of re leasing spreads.

Speaker Change: On automating things that can be automated.

Speaker Change: Have you gotten on trade outs like that historically.

Speaker Change: But there is there is a lot.

Speaker Change: That we can do with the existing technology that we have and as you mentioned.

Speaker Change: It's just a couple of buildings I think we'll be in a good spot.

Speaker Change: But we're not going to comment on ongoing lease negotiations when it's only a couple of buildings.

Speaker Change: Deal path as an integral part of running our business.

Speaker Change: We've done a number of investor.

Speaker Change: Thank you for the questions.

Speaker Change: Sessions, where we take people through our underwriting and deal path. If there are those who would like to do that we'd be more than happy to do it I think investors have almost universally founded a valuable 45 minutes of their time.

Speaker Change: Yep.

Speaker Change: Thank you. Our next question comes from James come up from Evercore. Your line is now open. Please go ahead.

James Come: Thank you thanks for the time and it kind of a bigger picture question Bill you mentioned in your building acquisitions to half and half venue.

Speaker Change: Yes.

Speaker Change: Thank you for your time.

Speaker Change: Okay.

Speaker Change: Thank you.

James Come: The balance sheet in a great position are you, adding other sort of capabilities or data sets to your underwriting I know you've been pleased with like deal pad technology, except for today, but I'm just curious how you're setting up for the next phase of growth and if <unk> any other incremental steps that you joined it further enhanced underwriting.

Speaker Change: Currently have no further questions. This concludes our Q&A and consequently today's call. Thank you for joining US you may now disconnect your lines.

Kyle Katorincek: Thank you. I appreciate the contact.

Operator: Thank you, as a reminder to ask a question please press star followed by 1 on your telephone keypad.

RJ Milligan: Our next question comes from RJ Milligan from Roman James. Your line is now open, please go ahead. Yeah, hey, good afternoon, guys. Billy talked about running leverage at the lowest level it's been in quite some time, if not ever. I'm just curious, given the fact that your cost of capital is attractive to you, how do you think about potentially further de-levering or loading up the balance sheet for opportunities that might arise later? Yeah, so, it's a great question, and I think the interesting dynamic is, as Pat mentioned, when SOFR is 4%, and so the... pay your dividend in essence on the forward and you receive so for and there's some fees involved but that's the basic building blocks.

James Come: That's a really good question.

James Come: I think like every company we are.

James Come: Trying to figure out how AI will make us more efficient.

James Come: I think we have just more people to work on projects and to explore potential new industries.

James Come: We've built more substantially more muscle in our asset management group with some really exciting hires there that are getting up to speed you know historically, we didn't need much of that function, but as we have added several hundred buildings it's become.

James Come: Our portfolio is in fantastic shape, but theres more to do.

James Come: But I'm really excited as I said about the new folks that are joining.

James Come: There'll be able to.

James Come: Use the technology that we have will be able to put more emphasis.

RJ Milligan: The cost of having this liquidity is very low. When rates were zero and you're paying a 5% dividend, well shucks, it gets expensive if you...

James Come: On automating things that can be automated.

James Come: But theres a theres a lot.

James Come: And that we can do with the existing technology that we have and as you mentioned.

Operator: at www.larryweaver.com.

<unk> path is a integral part of running our business in a.

Speaker Change: We've done a number of investor.

James Come: Sure.

James Come: Sessions, where we take people through our underwriting and deal path. If there are those who would like to do that we'd be more than happy to do it I think investors have almost universally founded a valuable 45 minutes of their time.

James Come: Yeah.

Speaker Change: Thank you for your time.

Bill: almost exclusively for something like the last seven or eight years has a very advantaged fee and discount structure and so when that capital was available because the opportunity cost of holding that forward position was minimal we took advantage of it and I think that puts us in a really good position you know when I say it's volatile out there it's not sort of my opinion you can look at the VIX and it's it's a quite volatile environment but we're you know we love being very liquid when there's stress in the streets Okay, and so Bill, you had given some same source stats on some of the tenants at the beginning of the call.

James Come: Okay.

Yeah.

Thank you. We currently have no further questions. This concludes our Q&A and consequently today's call. Thank you for joining US you may now disconnect your lines.

James Come: [music].

James Come: Yeah.

James Come: [music].

Bill: Obviously, concerns out there that we might head into a recession, downturn. Obviously, the data has been pretty mixed. But if we were to see a downturn or a recession, how do you think that might change the pipeline, whether it be volume, competition, or price? You know, we went through COVID and our portfolio performed extremely well, but I wouldn't say there were bargains to be had on any sustained basis during that time. This is a different scenario. I think our portfolio will perform very well. You know, we're essentially 100% occupied, so I can't promise that it would improve, because it's about as full as it can be.

Bill: But I think we'd be in a really good position. Do we then have interesting opportunities to deploy capital in acquisitions? Unclear. To an earlier question, we tend to target sectors that have less targeted tariff exposure. There's been two Wall Street research reports on the net lease industry and tariff exposure. I think we were sort of the most favorable of the industry in both of those.

Bill: I'd encourage you to track them down. You know, will we get this situation where we have really interesting investment opportunities? I can't say for sure, I can say that we have the money for it, we have the people for it, we're focused on it, but we need the market to come to us to find high quality deals that we can buy at better than historic prices. Okay, that's helpful. Thank you guys. Thank you.

Jason Wayne: Our next question comes from Jason Wayne from Barclays. Your line is now open, please go ahead. Hi. Good afternoon. Rent collections ticked up a bit this quarter.

Jason Wayne: They're still strong, but I'm just wondering what types of tenants are nonpaying now and if you're working on anything at those properties to increase the collections numbers further? Yeah, it's basically one tenant. We have a personal guarantee from that tenant that we're pursuing. And we've made substantial progress releasing the buildings. So it's very, very small, sort of one off.

Jason Wayne: And what kind of releasing spreads, you know, have you gotten on trade-outs like that historically? Yeah, it's just a couple buildings. I think we'll be in a good spot, but we're not going to comment on ongoing lease negotiations when it's only a couple buildings. Thank you for the questions.

James Kammert: Thank you. Our next question comes from James Kammert from Evercore. Your line is now open, please go ahead. Thank you. Thanks for the time.

James Kammert: Kind of a bigger picture question, Bill. You know, you mentioned you're building acquisition staff and have been. You've got the balance sheet in a great position. Are you adding other sort of capabilities or data sets to your underwriting? I know you've been pleased with like DealPath technology, et cetera, to date. But I'm just curious, you know, how you're setting up for the next phase of growth and if that entails any other incremental steps that you're doing to further enhance the underwriting. Thanks. That's a really good question. You know, I think like every company, we're trying to figure out how AI will make us more efficient.

Bill: I think we have just more people to work on projects and to explore, you know, potential new industries. We've built more, substantially more muscle in our asset management group, with some really exciting hires there that are getting up to speed. You know, historically, we didn't need much of that function. But as we have added several hundred buildings, it's become, you know, a lot more efficient. Our portfolio is in fantastic shape, but there's more to do. But I'm really excited, as I said, about the new folks that are joining. They'll be able to... use the technology that we have, we'll be able to put more emphasis on automating things that can be automated, but there's a lot that we can do with the existing technology that we have.

Bill: And as you mentioned, DealPath is an integral part of running our business, and we've done a number of investor sessions where we take people through our underwriting in DealPath. If there are those who would like to do that, we'd be more than happy to do it. I think investors have almost universally found it a valuable 45 minutes of their time.

Operator: Thank you for your time. Thank you. We currently have no further questions.

Operator: This concludes our Q&A and consequently today's call. Thank you for joining us.

Operator: You may now disconnect your lines.