Q2 2025 Essential Properties Realty Trust Inc Earnings Call

July 24, 2025

Participants are in a listen only mode.

Later, you will have the opportunity to ask questions. During the question and answer session.

You May Register task question by pressing the star and one or your telephone keypad.

You may remove your question by pressing star two.

This conference call is being recorded and a replay of the call will be available three hours. After the completion of the call for the next two weeks.

The dialing details for the replay can be found in yesterday's press release.

Additionally, there will be an audio webcast available on essential properties website at www dot essential properties dotcom and.

Please stand by your program is about to begin.

An archive of which will be available for 90 days.

Pete: On the call. This morning are Pete <unk>, President and Chief Executive Officer.

Speaker Change: Good morning, ladies and gentlemen, and welcome to essential properties. Realy trusts second quarter 2025 earnings conference call.

Pete: Mark Patten Chief Financial Officer.

Speaker Change: At this time, all participants are in a listen-only mode.

Speaker Change: Max Jenkins Chief operating officer.

Speaker Change: Later, you will have the opportunity to ask questions during the question and answer session.

Speaker Change: A J P L Chief investment officer.

Speaker Change: You may register to ask questions by pressing the star and 1 are your telephone keypad.

Bravo Salisbury: And Bravo Salisbury head of corporate finance and strategy.

Speaker Change: You may remove your question by pressing star 2.

Speaker Change: It is now my pleasure to turn the call over to Robert Salisbury. Please go ahead.

Speaker Change: Thank you operator, good morning, everyone and thank you for joining us today for our central properties second quarter 2025 earnings Conference call.

Speaker Change: This conference call is being recorded and are replay of the call will be available 3 hours after the completion of the call for the next 2 weeks.

Speaker Change: The dialing details for the replay can be found in yesterday's, press release.

Speaker Change: During this conference call, we will make certain statements that may be considered forward looking statements under federal Securities law.

Speaker Change: The company's actual future results may differ significantly from the matters discussed in these forward looking statements and we may not release revisions to those forward looking statements to reflect changes after the statements were made facts.

Speaker Change: Additionally, there will be an audio webcast available on essential properties website at www.essentials.uk.com.

Speaker Change: An archive of which will be available for 90 days.

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

Speaker Change: On the call this morning, our peat, Moes president and chief executive officer.

Mark Patton: Mark Patton Chief Financial Officer.

Max Jenkins: Max Jenkins Chief Operating Officer.

Speaker Change: The investment officer.

Pete: Thanks Scott.

Speaker Change: And thank you everyone joining us today for your interest in essential properties.

And bra salesbury head of corporate finance and strategy.

Speaker Change: In the second quarter.

Speaker Change: A macroeconomic backdrop that remains volatile.

Speaker Change: It is now my pleasure to turn the call over to Rob salesbury. Please go ahead.

Speaker Change: Operating environment was favorable for our business as our team continued to source attractive investment opportunities focusing on middle market sale leasebacks with growing operators within our targeted industries.

Speaker Change: Thank you, operator. Good morning, everyone. And thank you for joining us today for essential properties. Second quarter, 2025 earnings conference call.

Speaker Change: During the quarter, we continued to support our existing relationships, which contributed 88% of our $334 million of investments.

Speaker Change: Underscoring the value of recurring business with our tenant base.

Speaker Change: During this conference call, we will make certain statements that may be considered forward-looking statements under Federal Securities Law. The company's actual future results May differ significantly from the matters. Discussed in these 4 looking statements and we may not release revisions to those forward-looking statements to reflect changes. After the statements were made.

Speaker Change: Pricing was favorable in the quarter with a weighted average cash yield of seven 9% and a particularly strong average GAAP yield of nine 7%.

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

Speaker Change: Our portfolio continued to perform well with.

Pete: Thanks Rob.

Speaker Change: With tenant credit trends and same store rent performance healthy and ahead of our budgeted credit losses.

And thank you to everyone joining us today for your interest in essential properties.

Pete: In the second quarter.

Speaker Change: We further extended our capital position during the quarter issuing $119 million of equity through our ATM program.

Pete: Despite a macroeconomic backdrop that remains volatile.

Speaker Change: Our pro forma leverage is three five times and we have $1 3 billion of liquidity.

Pete: The operating environment was favorable for our business as our team continued to Source attractive investment opportunities, focusing on Middle Market sale. Lease backs with growing operators within our targeted Industries.

Speaker Change: This positions us well to continue to invest and support our relationships and grow our portfolio, while generating sustainable earnings growth for our shareholders.

Pete: During the quarter, we continue to support our existing relationships which contributed 88% of our 334 million dollars of Investments.

Speaker Change: With the portfolio performance and investment activity ahead of budgeted expectations. We are increasing our 2025 <unk> per share guidance to a range of $1 86.

Pete: Underscoring, the value of recurring business with our tenant base.

Speaker Change: To $1 89.

Pete: Pricing was favorable in the quarter with weighted average cash Shield of 7.9% and a particularly strong average Gap yield of 9.7%.

Speaker Change: On our first quarter earnings call, we discussed our expectation that competition could build as capital markets normalize resulting in cap rate compression.

Pete: Our portfolio continued to perform. Well,

Pete: With tenant credit Trends. And same store, rent performance, healthy and ahead of our budgeted credit losses.

Speaker Change: So we have not yet seen this materialize and our opportunity set we continue to expect our investment cap rates in 2025 to trend lower.

Pete: We further extended our Capital position during the quarter, issuing 119, million of equity, through our ATM program.

Speaker Change: Having closed $642 million of investments in the first half of the year. Our pipeline today gives us conviction to also increase our investment guidance range by $100 million to a new range of 1 billion to $1 2 billion.

Pete: Our ProForm Leverage is 3.5 times and we have 1.3 billion dollars of liquidity.

Pete: This positions us well to continue to invest support our relationships and grow our portfolio. While generating sustainable earning growth for our shareholders.

Speaker Change: Importantly, we do not need to raise any incremental capital to achieve our guidance range. This year.

Pete: for 4 layer, performance and investment activity at

Speaker Change: If we executed at the midpoint of our investment guidance guidance range and did not raise any additional equity capital our year end leverage would be under four times, leaving us ample capital runway into next year.

Pete: A head of budgeted expectations. We are increasing our 2025 afo per share, guidance to arrange of $1.86 to $1.89.

Speaker Change: Turning to the portfolio, we ended the quarter with investments in 2190 properties that were leased over 400 tenants operating in our targeted core industries.

Pete: On our first quarter earnings call, we discussed our expectation. That competition could build as capital markets, normalized resulting in cap rate compression.

Speaker Change: Our weighted average lease term stood at 14 years at quarter end in line with a year ago with just four 9% of our annual base rent expiring over the next five years.

Pete: So we have not yet seen this materialized in our opportunity set. We continue to expect our investment cap rates in 2025 to Trend lower.

Speaker Change: From a tenant health perspective, our weighted average unit level coverage ratio was three four times this quarter indicative of the profitability and cash flow generation by our tenants at the unit level.

Having closed 642 million of investments in the first half of the Year. Our pipeline today, gives us conviction to also increase our investment guidance, range by 100 million to a new range of 1 billion to 1.2 billion.

Pete: Importantly, we do not need to raise any incremental Capital to achieve our guidance range this year.

Speaker Change: With that I'll turn the call over to Max Jenkins, our Chief operating officer, who will provide an update on our investment activities in the current market dynamics.

Max Jenkins: Thanks, Pete on the investment side during the second quarter, we invested $334 million at a weighted average cash yield of seven 9% or.

Pete: If we executed at the midpoint of our investment guidance guidance range and did not raise any additional Equity Capital, our year-end leverage would be under 4 times leaving us ample Capital Runway into next year.

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

Pete: Returning to the portfolio. We ended the quarter with an investments in 2,190 properties that were leased to over 400 tenants operating in our targeted core Industries.

Max Jenkins: This quarter, our investments had a weighted average initial lease term of $19 five years and a weighted average annual rent escalation of two 2%.

Max Jenkins: Generating a strong GAAP yield of nine 7%.

Pete: Our weighted average lease term stood at 14 years a quarter end in line with a year ago with just 4.9% of our annual base rent expiring over the next 5 years.

Max Jenkins: Our investments this quarter had a weighted average unit level rent coverage of three four times, reflecting our conservative rent level unhealthy unit profitability for our operators.

Pete: From a tenant Health perspective, our weighted average unit level coverage ratio was 3.4 times this quarter indicative of the profitability and cash flow Generation by our tenants at the unit level.

Max Jenkins: During the quarter, we closed 25 transactions comprising of 77 properties of which 93% were sale leasebacks the.

Max Jenkins: The average investment per property declined to $4 million this quarter as our deal activity was characterized by granular freestanding properties, which is one of the core elements of our strategy.

Mark Patton: With that, I'll turn the call over to Max Jenkins. Our chief operating officer will provide an update on our investment activities and the current market dynamics.

Max Jenkins: Thanks Pete on the investment side. During the second quarter, we invested 334 million at a weighted average cash yield of 7.9%.

Max Jenkins: Looking ahead, our investment pipeline remains strong across all of our targeted industries.

Max Jenkins: <unk> and our pipeline is relatively consistent with our second quarter transactions with cap rates in the high 7% range and strong contractual escalations, which is supportive of our long term growth trajectory.

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

Max Jenkins: This quarter, our investments had a weighted average, initial lease term of 19.5 years and a weighted average annual rent escalation of 2.2%.

Combined with our investments of $642 million in the first half of the year, we have sufficient line of site to support our increased full year investment guidance range of 1 billion to $1 2 billion.

Max Jenkins: With that I'll turn the call over to AJ <unk>, our Chief investment Officer, who will provide an update on our portfolio asset management activities.

Max Jenkins: Our investments. This quarter had a weighted average unit level. Rent coverage of 3.4 times reflecting a conservative rent level in healthy unit profitability for our operators.

Speaker Change: Thanks, Max at a high level, our portfolio credit trends remain healthy with same store rent growth in the second quarter of one 4% and occupancy of 99, 6% as a reminder, the weighted average lease escalation of our same store portfolio was lower than our overall portfolio as a higher lease escalations on investments executed over the past several quarters have not entered the same store pool yet.

Max Jenkins: During the quarter, we closed 25 transactions, comprising of 77 properties of which 93% were sale East backs.

Max Jenkins: The average investment per property declined to $4 million this quarter as our deal activity was characterized by granular freestanding properties, which is 1 of the core elements of our strategy.

Max Jenkins: Looking at our investment pipeline remains strong across all of our targeted Industries.

Speaker Change: While there were no known or the credit events during the second quarter, we received resolution regarding the zips car wash bankruptcy.

Speaker Change: As a reminder, zips filed for bankruptcy earlier this year at which time, we own three properties, representing approximately 20 basis points of ABR.

Max Jenkins: Pricing in our pipeline is relatively consistent with our second quarter. Transactions with cap rates in the high 7% range and strong contractual escalations, which is supportive of our long-term growth trajectory

Speaker Change: Now from a peak exposure in 2017 have 16 sites with over 5% of ABR.

Speaker Change: Of the three sites that remain in our portfolio at the time of bankruptcy, we sold two and one remains the operator the.

Max Jenkins: Combined with our investments of 642 million. And the first half of the year we have sufficient line of sight to support our increased full year investment, guidance range of 1 billion to 1.2 billion.

Speaker Change: The overall recovery rate was consistent with our historical recoveries and in line with our budgeted credit loss assumptions.

With that, I'll turn the call over to AJ, peel, our chief investment officer who will provide an update on our portfolio and asset management activities.

Speaker Change: From a tenant concentration perspective, our largest tenant equipment share represents three 7% of our ABR at quarter end, our top 10 tenants account for just 17, 6% of ABR in our top 20 accounts for 28, 8% of ABR tenant.

Speaker Change: Tenant diversity is an important risk mitigation tool and it is a direct benefit of our focus on middle market operators.

AJ Peel: Thanks Max at a high level. Our portfolio credit Trends, remain healthy with same store, rent growth in the second quarter of 1.4% and occupancy of 99.6%. As a reminder, the weighted average lease escalation in our same store portfolio is lower than our overall portfolio as a higher lease escalations on investments executed over the past. Several quarters, have not entered the same store pool yet.

Speaker Change: On the disposition front, we had an active second quarter selling 23 properties for $46 2 million in net proceeds. This represents an average of approximately $2 million per property highlighting the importance of owning fungible liquid properties, allowing us to proactively manage portfolio risk with this.

AJ Peel: There are no noteworthy, credit events during the second quarter, we received resolution regarding the Zip Car. Wash bankruptcy

AJ Peel: As a reminder, zip file for bankruptcy earlier this year at which time we own 3 properties, representing approximately 20 basis points of ABR.

AJ Peel: down from a peak exposure in 2017 of 16 sites with over 5% of our

Speaker Change: As physicians this quarter were executed at seven 3% weighted average cash yield over the near term, we expect our disposition activity to be more muted driven by opportunistic asset sales and ongoing portfolio management activity with that I'd like to turn the call over to Mark Patten, Our Chief Financial Officer, who will take you through the financials and balance sheet for the second quarter.

AJ Peel: Of the 3 sites that remain in our portfolio at the time of bankruptcy we sold 2 and 1 remains leaked to the operator.

AJ Peel: The overall recovery rate was consistent with our historical recoveries and in line with our budgeted credit loss assumptions.

Speaker Change: Thanks, Hey, Jay overall, we were pleased with our second quarter results highlighted by the strong level of investments that Pete and Max outlined at a seven 9% cash cap rate.

AJ Peel: From Lieutenant concentration perspective, our largest tenant equipment share represents 3.7% of our ABR at quarter. End our top 10 tenants account for just 17.6% of ABR and our top 20 account for 28.8% of our

Speaker Change: Alright, <unk> per share totaled 46, which represents an increase of 7% versus Q2 2024.

AJ Peel: Tenant diversity is an important risk mitigation tool and it is a direct benefit of our focus on Middle Market operators.

Speaker Change: On a nominal basis, our <unk> totaled $93 million for the quarter, which is up 21% from the same period in 2024.

Speaker Change: <unk> performance was consistent with our expectations.

AJ Peel: On the disposition front, we had an active second quarter selling 23 properties for 46.2 million in net proceeds, this represents an average of approximately 2 million dollars per property highlighting, the importance of owning fungible liquid properties, allowing us to proactively manage portfolio risk.

Speaker Change: As reflected in our guidance range.

Speaker Change: Total G&A in Q2, 2025 was $10 7 million versus $8 7 million for the same period in 2024, which is consistent with our budgeted expectations.

Speaker Change: The majority of the year over year increase is related to increased compensation expense as we continue to expand our team in support of driving our growth ambitions.

The dispositions, this quarter were executed at a 7.3% weighted average cash yield over the near term. We expect our disposition activity to be more muted driven by opportunistic, asset sales and ongoing portfolio management activity with that. I'd like to turn the call over to Mark Patton. Our Chief Financial Officer who will take you through the financials and balance sheet for the second quarter.

Speaker Change: Our cash G&A was $7 $2 million this quarter, which is consistent with our guidance range of 28 million to $31 million for the year and represents just five 2% of total revenue.

Thanks AJ. Overall, we were pleased with the second quarter results, highlighted by the strong level of Investments, That Pete and Macs outlined at a 7.9% cash cap rate.

Speaker Change: Down from five 6% the same period a year ago.

Speaker Change: All right, afo for shared total 46 cents, which represents an increase of 7% versus Q2 20224.

Speaker Change: We declared a cash dividend of <unk> 30 in the second quarter.

Speaker Change: Which represents an <unk> payout ratio of 65%.

Speaker Change: On a nominal basis. Our afo totaled 93 million for the quarter, which is up, 21% from the same period in 2024.

Speaker Change: Our retained free cash flow after dividends, which we view as an attractive source of capital to support our growth continues to build reaching $34 4 million in the second quarter equating to over $130 million per annum on a run rate basis.

Speaker Change: To say afo performance was consistent with our expectations as reflected in our guidance range.

Speaker Change: Total GNA and Q2 2025 was 10.7 Million versus 8.7 million for the same period in 2024, which is consistent with our budgeted expectations.

Speaker Change: Based on our investment guidance for 2025 that would represent more than 10% of our capital needs to fund our external growth.

Speaker Change: Turning to our balance sheet with a net investment activity. In Q2 2025 are income producing gross assets reached $6 6 billion at quarter end.

The majority of the year-over-year increase is related to increased compensation expense, as we continue to expand our team in support of driving our growth ambitions.

Speaker Change: The increasing scale and diversity of our income producing portfolio continues to build improving our credit profile.

Speaker Change: Our cash DNA was 7.2 million this quarter, which is consistent with our guidance, range of 28 million to 31 million for the year and represents just 5.2% of total revenue.

Speaker Change: Down from 5.6% the same period a year ago.

Speaker Change: On the capital markets front, we raised approximately $119 million of equity through our ATM program and settled $20 million of forward equity in the quarter.

Speaker Change: We declared a cash dividend of 30 cents in the second quarter, which represents an afo payout ratio of 65%.

Speaker Change: Leaving us with a balance of unsettled forward equity totaling $507 million at quarter end.

Speaker Change: We expect to utilize.

Speaker Change: These funds in the near term to support our investment activities and preserve our balance sheet flexibility by repaying our revolving credit facility balance in the third quarter.

Speaker Change: Our retained free cash flow after dividends, which we view as an attractive source of capital. To support our growth continues to build reaching 34.4 million in the second quarter, equating to over 130 million dollars per animal on a run rate basis.

Speaker Change: Similar to last quarter, our share price remained above the weighted average price of our unsettled forward equity of $30 73 at quarter end.

Speaker Change: Based on our investment guidance, for 2025 that would represent more than 10% of our Capital needs to fund our external growth.

Speaker Change: As a result under the Treasury stock method the potential dilution from these forward shares is included in our diluted share count.

Speaker Change: Assets reached 6.6 billion a quarter end.

Speaker Change: For the second quarter, our diluted share count of $199 6 million included an adjustment for <unk>.

Speaker Change: The increasing scale and diversity of our income producing portfolio continues to build, improving our credit profile.

Speaker Change: 6 million shares from our unsettled forward equity related to this treasury stock calculation.

Speaker Change: This represented a modest headwind to our <unk> per share for the quarter, which was consistent with our budgeted expectations.

Speaker Change: On the capital Markets Front, we raised approximately 119 million dollars of equity through our ATM program and settled 20 million of forward equity in the quarter.

Speaker Change: Based on our current share price, we continue to expect a modest headwind again in the third quarter.

Speaker Change: Leaving us with a balance of unsettled forward Equity totaling 507 million at quarter end.

Speaker Change: We expect to utilize.

Speaker Change: Our pro forma net debt to annualized adjusted EBITDA as adjusted for unsettled forward equity was three five times at quarter end.

Speaker Change: These funds in the near-term to support our investment activities and preserve our balance sheet flexibility by repaying our revolving credit facility balance in the third quarter.

Speaker Change: We remain committed to maintaining a well capitalized balance sheet with low leverage and significant liquidity to continue to fuel our external growth and allow us to service our tenant relationships in this choppy capital market environment.

Speaker Change: Similar to last quarter, our share price remained above, the weighted, average price of our unsettled forward Equity of $30.73 a quarter end.

Pete: Lastly, as we noted in the earnings press release, we have increased our $2025 <unk> per share guidance to a new range of $1 86 to $1 89, representing 8% growth at the midpoint importantly, this guidance guidance range requires no incremental equity issuance with that I'll turn the call back over to Pete.

Speaker Change: As a result under the treasury stock method, the potential dilution from these forward, shares is included in our diluted share count.

Speaker Change: for the second quarter, our diluted share count of 199.6 million included an adjustment for

Speaker Change: 0.6 million shares from our unsettled, forward Equity related to this treasury stock calculation.

Pete: Thanks, Mark in summary, we.

Speaker Change: This represented a modest headwind to our afo per share for the quarter, which was consistent with our budgeted expectations.

Speaker Change: We are happy with our second quarter results.

Speaker Change: The portfolio is performing well the.

Speaker Change: Based on our current share price, we continue to expect a modest headwind again in the third quarter.

Speaker Change: The investment market is exceptional and the capital markets are supportive.

Speaker Change: We remain excited about the prospects for our business.

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

Speaker Change: Our proforma, net debt to annualized adjusted i-bidder as adjusted for unsettled forward. Equity was 3.5 times a quarter in

Speaker Change: Thank you and at this time.

Speaker Change: I'd like to ask a question. Please press star one on your telephone keypad.

Speaker Change: Draw your question by pressing Star Q.

We remain committed to maintaining a well. Capitalized balance sheet with low, leverage and significant liquidity to continue to fuel our external growth and allow us to service our tenant relationships in this choppy Capital Market environment.

Speaker Change: Once again that is certainly one for your questions.

Speaker Change: We will take our first question from Eric Gordon with BMO capital markets. Please go ahead.

Eric Gordon: Hey, good morning, everyone.

Speaker Change: Lastly, as we noted in the earnings press release, we have increased our 2025 afo per share, guidance, to a new range of 1.86 to a189 representing 8% growth at the midpoint

Eric Gordon: Just with acquisitions year to date tracking above the midpoint of your raised guidance and your positive commentary around the pipeline in your prepared remarks understand that you do expect some competition here, but just curious.

Speaker Change: Importantly, this guide guidance range requires, no incremental Equity issuance.

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

Pete: Thanks, Mark in summary.

Pete: We are happy with our second quarter results.

Eric Gordon: What's preventing you from leaning more into the acquisitions, just given the presumed really strong fourth quarter.

Pete: The portfolio is performing well.

Pete: The investment Market is exceptional, and the capital markets are supportive.

Eric Gordon: But also understand there is some offset with seasonality in the third quarter. Thank you.

Pete: We remain excited about the prospects for our business.

Operating was, please open the call for questions.

Eric Gordon: Yes, listen I think.

Speaker Change: Thank you. And at this time,

Eric Gordon: We are leaning strong into acquisitions.

Eric Gordon: As I said in the prepared remarks, the investment market continues to be pretty exceptional for US was the word I use so.

Speaker Change: We draw your question. By pressing star 2.

Speaker Change: And once again, that is star and 1 for your questions.

Eric Gordon: We are leading strong in to acquisitions I think your question is more around guidance and really the guidance on investment volume more is just really conservatism because we rarely have more than 90 days of visibility on the pipeline, but youre correct. The fourth quarter tends to be elevated and we will see what the.

Speaker Change: We'll take our first question from Eric bourdon with BMO Capital markets. Please go ahead.

Hey, good morning everyone. Um

Eric Gordon: Fourth quarter brings.

Eric Gordon: From an earnings perspective, the fourth quarter investments.

Eric Gordon: Impact 2025, a lot more of them impact the out years.

Eric Gordon: We will adjust our guidance accordingly throughout the year as we always do.

Speaker Change: just you know with Acquisitions here today tracking about the midpoint of your raise guidance and you know, positive commentary around the pipeline and your prepared markets, understand that you know you do expect some competition here but just curious, you know, what's preventing you from leading more into the Acquisitions, just given the presumed really strong fourth quarter, um, but also understand there's some offset with seasonality in the third quarter. Thank you.

Eric Gordon: Okay. Thank you and then just on the occupancy side.

Eric Gordon: Occupancy dipped slightly sequentially to still solid 99, 6%.

Eric Gordon: Is there anything specific to call out there and then just taking a step back as it relates to the 40 bps of total vacancy what is the quantum of assets that make up that bucket and then can you provide an update on either.

Eric Gordon: Leasing progressions or potential dispositions.

Allison: Yes Allison.

Speaker Change: There's a lot in that and it really just all goes to asset management.

Speaker Change: Vacancies, we had nine properties at a 2100 and I think that was up from six is that correct AJ correct.

Speaker Change: Yeah, listen, I, I think, um, you know, we are a leading strong into Acquisitions, you know? And, uh, as I said, in the prepared remarks, the the investment Market, uh, continues to be, uh, pretty exceptional for us, or was the word I used? So, um, we are a leading strong attack Acquisitions. I I think your question is more around guidance. And, you know, really the, the guidance on investment value more is uh, just really conservatism because we, we rarely have more than 90 days of visibility on the pipeline but you're correct. The fourth quarter tends to be elevated.

Speaker Change: You are talking with average property value of $3 million $27 million of value.

Speaker Change: It's not really material there is always ebbs and flows tenants who.

Speaker Change: And and we'll see what the fourth quarter brings. Uh, from an earnings perspective, the, you know, the fourth quarter Investments, don't um impact 2025 a lot and more impacted out years. And, you know, we'll adjust the guidance accordingly throughout the year as we always do.

Speaker Change: No longer wanted to be in the properties with expiring leases and we're selling those engaging those anything specific you'd call out Asia No I would say the majority of the vacant.

Speaker Change: In the restaurant space.

Speaker Change: And I think what Youll see is the recoveries are consistent with our historical recoveries, which begin in around $80. When we re let those assets or sell them off.

Speaker Change: That's really what makes up the vacant bucket today gotcha.

Speaker Change: Nothing material, there and I think the bigger point is.

Speaker Change: <unk>.

Speaker Change: The forward indicators of risk around coverage and recover and same store sales and back to the prepared remarks. The portfolio credit health is is very strong.

Speaker Change: Well. Thank you very much I appreciate the time.

Speaker Change: Hey, Thank you for the questions.

Speaker Change: Thank you. Our next question comes from Michael Goldsmith with UBS. Please go ahead.

Michael Goldsmith: Good morning, Thanks, a lot for taking my question.

Speaker Change: Back to the competition piece you noted on the first quarter call that you expected it could.

Speaker Change: To show up in that Hasnt, yet so I guess what are you looking for in order for that to show up and start to drag cap rates down a little bit.

Speaker Change: Is it.

Speaker Change: Yes.

Speaker Change: What is it exactly that you are looking for and when are you expecting that.

Speaker Change: Start to impact cap rates. Thanks.

Speaker Change: Yes, listen I've I've been saying it for.

Speaker Change: Almost a year now and.

Speaker Change: I really I don't control capital our competition when it comes it comes and we just know that there is substantial amount of capital that's been raised and targeted towards net lease investments than we expected.

Speaker Change: Two impact.

Speaker Change: US in the transaction market, but we continue to have an ample opportunity set of counterparties continue to value, our consistency and reliability and we continue to be very aggressive in deploying capital and if you think about it.

Speaker Change: And average GAAP yield of nine 7%.

Speaker Change: The type of investing which is pretty extraordinary so I don't know I don't know one has come and I have been wrong I guess for the last two years, but yes.

Speaker Change: Yes.

Speaker Change: I'll stick to my guns.

Speaker Change: Say, it's coming.

Speaker Change: Got it thanks for that.

Speaker Change: My follow up.

Speaker Change: I think your bread and butter has been doing kind of individual deals small properties.

Speaker Change: <unk>.

Speaker Change: Acquisition size of <unk>.

Speaker Change: Property value of $4 million, but we'll know in the past couple of quarters, you've done a couple of portfolio deals so is that going to be in.

Speaker Change: As you get larger and need to continue to acquire more is that going to increasingly become part of your repertoire or is this just more.

Speaker Change: Just two opportunities that you have identified and you should get back to kind of doing.

Speaker Change: A bunch of individual property deals going forward. Thank you.

Speaker Change: Yes.

Speaker Change: The average profile of our deal is going to be 10 to 15 million involving.

Speaker Change: Two to five properties with within <unk>.

Speaker Change: And a tenant and that Hasnt changed in every quarter, there that can flex up to $50 million to $100 million.

Speaker Change: And I think one of the reasons, we provide the stats around our investments.

Speaker Change: As to kind of give you a view as to our consistency there in <unk>.

Speaker Change: Max gave the commentary in the prepared remarks, and I think.

Speaker Change: In the second quarter was certainly consistent with past quarters.

Speaker Change: As we get bigger we have the capacity to do bigger deals whether it be a 100 million or.

Speaker Change: And we did $100 million deal in the second quarter without.

Speaker Change: Hey, sorry, it's my fault.

Speaker Change: Without blowing.

Speaker Change: <unk>.

Speaker Change: Our concentration limits.

Speaker Change: But you should expect us to continue to be very granular in our investments in our properties.

Speaker Change: Thank you very much good luck in the back half.

Speaker Change: Thank you very much I appreciate it thanks, Michael for the question.

Speaker Change: Thank you. Our next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.

Caitlin Burrows: Hi, Good morning, maybe just back to the cap rate side. So like you mentioned the cash cap rate of seven 9% in <unk> is pretty consistent with the past eight quarters, but then the GAAP rate GAAP cap rate was higher. So can you go through what drove that higher is it due to industry mix strategy on Lee steps, some combination or something else.

Caitlin Burrows: Yes, I think it's really Caitlin it just comes down to the math.

Caitlin Burrows: When you have a longer average lease term right at $19 five versus past quarters at 17, and then you have.

Caitlin Burrows: Better bumps and I think overall, our ability to negotiate longer lease terms and better bumps.

Caitlin Burrows: Just reflective of the competition that we're facing in the market.

Caitlin Burrows: We're always trying to get the best economic returns, we Canada deal and ultimately competition drives our ability to drive those numbers.

Caitlin Burrows: Thank you. Our next question comes from Caitlin Burrows with Goldman Sachs. Please go ahead.

Caitlin Burrows: Hi, Good morning, maybe just back to the cap rate side. So like you mentioned the cash cap rate of seven 9% in Q2 is pretty consistent with the past eight quarters, but then the GAAP rate GAAP cap rate was higher. So can you go through what drove that higher is it due to industry mix strategy on lease steps, some combination or something else.

Caitlin Burrows: We're pretty happy with the results in the second.

Speaker Change: I guess, what you said then competition point that because there was less competition you are able to push it more in the second quarter.

Caitlin Burrows: I think thats accurate yes.

Caitlin Burrows: Got it.

Speaker Change: And then sticking on the competition point, So you mentioned that 88% with repeat business. So I guess when you think of the other 12% could you go through some of like your strategy on how you identified that business. It seems like that could be a way to somewhat avoid the competition going forward as long as you have.

Caitlin Burrows: Yes, I think it's really Caitlin it just comes down to the math.

Caitlin Burrows: When you have a longer average lease term right now at $19 five versus past quarters at 2017, and then you have.

Caitlin Burrows: Better bumps and I think overall, our ability to negotiate longer lease terms and better bumps.

Speaker Change: Incremental new business to go after.

Speaker Change: Access to you, Jeff why don't you answer.

Speaker Change: Thanks Pete.

Caitlin Burrows: Just reflective of the competition that we're facing in the market and.

Speaker Change: We kind of take a three pronged approach number one it's always going to be repeat business and referrals.

Caitlin Burrows: We're always trying to get the best economic returns, we Canada deal and ultimately competition drives our ability to drive those numbers.

Speaker Change: In the middle market are operators, they all talk within their industries and the fact that we've been doing this consistently for years since inception, and sticking to our core thesis providing growth capital through sale leaseback financing to a middle market operators.

Caitlin Burrows: We're pretty happy with the results in the second.

Speaker Change: I guess would you say then that competition point that because there was less competition you are able to push it more in the second quarter.

Speaker Change: That's a strong sourcing method.

Caitlin Burrows: I think thats accurate yes.

Speaker Change: Obviously, you called outreach and visit industry conferences, and so that three pronged approach continues to drive new operators and new relationships and were continuing to do that every quarter and have been since inception.

Caitlin Burrows: Got it.

Caitlin Burrows: And then sticking on the competition point. So you mentioned that 88% was repeat business. So I guess when you think of the other 12 person could you go through some of like your strategy on how you identified that business. It seems like that could be a way to somewhat avoid the competition going forward as long as you have incremental new business to go after.

Speaker Change: And the percentage is kind of volume weighted so we're always adding new relationships every quarter and just depends on the transaction size and so sometimes that can be skewed one way or another.

Jeff: Access to Jeff why don't you answer.

Caitlin Burrows: Thanks Pete.

Speaker Change: Got it thanks.

Speaker Change: We kind of take a three pronged approach number one it's always going to be repeat business and referrals.

Speaker Change: Thanks Keith.

Speaker Change: Thank you. Our next question comes from handle Sandy Joseph with Mizuho. Please go ahead.

Sandy Joseph: Hey, guys. Good morning, Thanks for taking my question.

Speaker Change: Pete I was hoping you could give us.

Speaker Change: <unk> be some insight into your thought process on acquiring the portfolio the whistle car washes in the quarter I think many of US expected your car wash exposure.

Speaker Change: That's a strong sourcing method.

Speaker Change: To head lower Youre sitting here around 15%. So maybe some color on that thought process and also if theres any color you can share on the price paid for the portfolio cap rate rent coverage bumps in any of those details. Thank you.

Speaker Change: Thanks for the question.

Speaker Change: I think I'll take.

Speaker Change: <unk> question, and then kick it to a J for the details on the.

Speaker Change: Transaction itself, but.

Speaker Change: We always have articulated a soft ceiling of 15% on industry concentration.

Speaker Change: Got it thanks.

Speaker Change: Thanks Keith.

Speaker Change: Thank you. Our next question comes from handle Sandy just with Mizuho. Please go ahead.

Speaker Change: Bringing car wash down.

Speaker Change: Through the fourth quarter into the first was very deliberate because we we had visibility on the whistle transaction and so.

Sandy: Hey, guys. Good morning, Thanks for taking my question.

Sandy: Pete I was hoping you could give us maybe some insight into your thought process on acquiring the portfolio. The whistle car washes in the quarter I think many of US had expected your car wash exposure to.

Speaker Change: We're.

Speaker Change: Happy with our ability to manage that exposure or bring it down to fill up capacity too.

Speaker Change: Add new tenants with good investments in terms of specifics AJ why don't you.

Sandy: <unk> had lower are you sitting here around 15%. So maybe some color on that thought process and also if theres any color you can share on the price paid for the portfolio cap rate rent coverage bumps in any of those details. Thank you.

Speaker Change: Not get too specific but given overseeing that transaction sure handoff. So.

Speaker Change: As Peter mentioned, we are working the exposure down.

Speaker Change: <unk> was always an existing tenant and we have the opportunity to partner with them on the sale leaseback transaction as they acquire the carwash portfolio driven brands.

Sandy: Well thanks for the question.

Sandy: I think I'll take.

Sandy: Tracy question, and then kick it to a J for the details on the.

Sandy: Transaction itself, but.

Speaker Change: The assets we acquired.

Speaker Change: We always have articulated a soft ceiling of 15% on a concentration.

Speaker Change: Well established season sites.

Speaker Change: The portfolio coverage was greater than two times.

Speaker Change: So we had really good economics on the lease Escalations.

Sandy: Bringing car wash down.

Sandy: Through the fourth quarter into the first was very deliberate because we we had visibility on the whistle transaction and so.

Speaker Change: We're able to provide attractive sale leaseback financing to an existing tenant.

Speaker Change: Really happy with the transaction.

Speaker Change: Page.

Speaker Change: Thanks.

Sandy: We're happy with our ability to manage that exposure to bring it down to fill up capacity too.

Speaker Change: Great I appreciate it.

Speaker Change: Yes go ahead, given given the size of the operator and the quality of the assets the cap rate on that investment was.

AJ Peel: Add new tenants with good investments in terms of specifics AJ why don't you.

Speaker Change: Inside of the average for the quarter.

AJ Peel: Not get too specific but given over transaction share handoff, so as Peter mentioned.

Speaker Change: Okay I appreciate the detailed comments.

AJ Peel: We are working to your exposure down.

Speaker Change: And just one more just going back to the.

AJ Peel: This was an existing tenant when we have the opportunity to partner with them on the sale leaseback transaction as they acquired the Carwash portfolio driven brands.

Speaker Change: The conversation around the competition set obviously the list of folks who entered the single tenant space here has been growing in recent quarters I guess I'm curious is there anything about their strategies that you are able to identify our ascertain that suggests that there may be less likely or perhaps less of a competitive threat to what some people might perceive.

AJ Peel: The assets we acquired.

AJ Peel: Well establish season sites.

AJ Peel: The portfolio coverage was greater than two times.

AJ Peel: So we got really good economics on the lease Escalations.

Speaker Change: Just curious if you don't get any insight into.

AJ Peel: We're able to provide attractive sale leaseback financing to an existing tenant.

Speaker Change: Perhaps they might be doing or targeting.

AJ Peel: Really happy with the transaction.

Speaker Change: Currently that could.

AJ Peel: Page.

Speaker Change: Suggest less of a threat. Thank you.

AJ Peel: Thanks.

AJ Peel: Great I appreciate it.

Speaker Change: Yes.

Speaker Change: I can't really speak to other shops, and how they're organized and what the competitive advantages or I can.

AJ Peel: Yes go ahead, given given the size of the operator and the quality of the assets the cap rate on that investment was.

Speaker Change: Certainly speak to ours.

AJ Peel: Inside of the average for the quarter.

Speaker Change: And.

Speaker Change: I think our ability to consistently provide capital into these industries, our ability to do small transactions.

AJ Peel: Okay I appreciate the detailed comments.

AJ Peel: And just one more just going back to the.

AJ Peel: The conversation around the competition set obviously you know the list of folks who've entered the single tenant space here has been growing in recent quarters I guess I'm curious is there anything about their strategies that you are able to identify a ascertained that suggests that there may be less likely or perhaps less of a competitive threat to what some people might perceive.

Speaker Change: And our.

Speaker Change: <unk> data around to support those investments is what differentiate differentiates us in the market we tend to see.

Speaker Change: The most acute competition on the bigger broadly marketed deals.

Speaker Change: And you see cap rates on those deals really getting away from us and well inside of where currently deploying capital.

AJ Peel: Just curious if you don't have any insight into.

AJ Peel: Perhaps they might be doing or targeting.

AJ Peel: <unk>.

AJ Peel: Could suggest.

Speaker Change: <unk>.

AJ Peel: Suggest less of a threat. Thank you.

Speaker Change: I think it's.

Speaker Change: You are a new shop, you're going to rely on the brokerage network and compete solely based upon your cost of capital, which is not how we go to market.

AJ Peel: Yes.

AJ Peel: I can't really speak to other shops, and how they're organized and what their competitive advantages or I can.

AJ Peel: Certainly speak to ours.

Speaker Change: Okay.

AJ Peel: And.

Speaker Change: Thank you.

AJ Peel: I think our ability to consistently provide capital into these industries, our ability to do small transactions.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from Rich Hightower with Barclays. Please go ahead.

AJ Peel: And our our proprietary data around to support those investments is what difference that differentiates us in the market.

Speaker Change: Hey, good morning, everybody I think most of my questions have been asked and answered, but maybe I was just curious for a little more color on the credit side of things. It sounds like maybe if we go back in time and think about.

AJ Peel: We tend to see.

AJ Peel: The most acute competition on the bigger broadly marketed deals.

Speaker Change: Expectations 90 days ago I think.

AJ Peel: And you see cap rates on those deals really getting away from us and well inside of where currently deploying capital.

Speaker Change: Sentiment was probably a little worse than it is today or has proven out to be so why do you think that is.

Speaker Change: What's in the Crystal ball from what you can sort of tell.

AJ Peel: And.

AJ Peel: I think it's.

Speaker Change: With your existing portfolio of companies and just what there what the feedback is what youre seeing in the numbers just give us a little more color on credit side. Thanks.

Speaker Change: You are a new shop, you're going to rely on the brokerage network and compete solely based upon your cost of capital, which is not how we go to market.

Speaker Change: Yes, I think I would start our position on the credit as a super senior secured landlord.

AJ Peel: Okay.

Speaker Change: Thank you.

AJ Peel: Thank you.

Speaker Change: Thank you. Our next question comes from Rich Hightower with Barclays. Please go ahead.

Speaker Change: Mains pretty pretty durable and we don't see any erosion in our.

Rich Hightower: Hey, good morning, everybody.

Speaker Change: <unk> cash flows or delinquencies or things that give us concern.

Rich Hightower: Most of my questions have been asked and answered, but maybe I was just curious for a little more color on the credit side of things. It sounds like maybe if we go back in time and think about.

Speaker Change: Looking at the operators and the numbers in the industries.

Speaker Change: Generally we see flat trends.

Rich Hightower: Expectations 90 days ago I think.

Speaker Change: With not not.

Speaker Change: <unk>.

Rich Hightower: Sentiment was probably a little worse than it is today or has proven out to be so why do you think that is and what's what's in the crystal ball from what you can sort of tell.

Speaker Change: Sales at our same store sales that are growing it at a high rate and we're seeing slightly improved margins, but I think overall, we're encouraged by the stability that we're seeing in our industries.

Rich Hightower: With your existing portfolio of companies and just what there what the feedback is what youre seeing in the numbers just give us a little more color on the credit side. Thanks.

Speaker Change: And.

Speaker Change: I don't see we don't see any major concerns emerging.

Speaker Change: Yes, I think I would start our position on the credit as a super senior secured landlord.

Speaker Change: Okay.

Speaker Change: Good news and then just.

Speaker Change: I guess ask another follow up on the competition side, if you break down the <unk>.

Speaker Change: Remains pretty pretty durable and we don't see any erosion in our.

Speaker Change: Typical deal between going in yield escalators waltz industry.

Speaker Change: Cash flows are either delinquencies or things that give us concern.

Speaker Change: Those are that sort of thing is more and more competition comes in.

Speaker Change: Looking at the the operators.

Speaker Change: <unk> in the industries.

Speaker Change: Even if it's not precisely in the sandbox that you guys typically play in I mean, where would you expect.

Speaker Change: Generally we see.

Speaker Change: <unk> trends.

Speaker Change: With.

Speaker Change: In terms to change out of out of kind of those mix of.

Speaker Change: <unk>.

Speaker Change:

Speaker Change: Different elements of every deal.

Speaker Change: Sales or same store sales that are growing.

Speaker Change: Yes, I think the moat.

Speaker Change: At a high rate and we're seeing slightly improved margins, but I think overall, we're encouraged by the stability that we're seeing in our industries.

Speaker Change: You can certainly look back at our disclosure.

Speaker Change: We're deploying capital back in 2020 in 2021.

Speaker Change: I think the low on the initial cap rate was six nine and the low on the Escalations was one four and a low on lease term was call. It 15.

Speaker Change: And.

Speaker Change: I don't see we don't see any major concerns emerging.

Speaker Change: Okay.

Speaker Change: Good news and then just.

Speaker Change: I guess ask another follow up on the competition side, if you break down the <unk>.

Speaker Change: We negotiate all of those economic terms I think the point of most sensitivity is going in cap rate followed by Escalations.

Speaker Change: Typical deal between going in yield escalators wall.

Speaker Change: Industry.

Speaker Change: With lease term being the least sensitive to these operators and certainly when we're doing a deal we want an operator, who is committing to the long term. So I think the first.

Speaker Change: Those are that sort of thing I mean, as more and more competition comes in.

Speaker Change: Even if it's not precisely in the sandbox that you guys typically play in I mean, where would you expect.

Speaker Change: In terms to change out of out of kind of those mix of.

Speaker Change: Place Youre going to see it is in the initial cap rate and then it will trickle down through Escalations.

Speaker Change: Different elements of every deal.

Speaker Change: Yes, I think the moat.

Speaker Change: Very helpful. Thank you.

Speaker Change: You can certainly look back at our disclosure.

Speaker Change: Thank you.

Speaker Change: We're deploying capital back in 2020 in 2021.

Speaker Change: Our next question comes from Tayo Okusanya with Deutsche Bank. Please go ahead. Your line is open.

Speaker Change: I think the low on the initial cap rate was six nine and the low on the Escalations was one four and a low on lease term was call. It 15.

Speaker Change: Yes.

Tayo Okusanya: Hi, Yes, good morning, Congrats on the continued solid execution.

Tayo Okusanya: Quick question on the acquisition front, so we kind of have the firewood fundamental deal just curious again, if something like that ends up being too large for you guys to look at whether again pricing on deals like that becomes an issue just kind of curious again I know youll wheelhouse is doing these smaller grant.

Speaker Change: We negotiate all of those economic terms I think the point of most sensitivity is going in cap rate followed by Escalations.

Speaker Change: With lease term being the least sensitive to these operators and certainly when we're doing a deal we want an operator, who is committing to the long term. So I think the first.

Tayo Okusanya: <unk> deals, but for something that bigger, but not too big.

Speaker Change: Place Youre going to see it is in the initial cap rate and then it will trickle down through it escalations.

Tayo Okusanya: How did you guys kind of think through an opportunity like that.

Speaker Change: Quite frankly, we didnt, even take a look at it we have an ample opportunity set of freshly originated deals through our relationships.

Speaker Change: Very helpful. Thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Tayo Okusanya with Deutsche Bank. Please go ahead. Your line is open.

Speaker Change: I think the bar for me to buy someone elses.

Speaker Change: Yes.

Tayo Okusanya: Hi, Yes, good morning, Congrats on the continued solid execution.

Speaker Change: Underwriting someone else's existing portfolio.

Speaker Change: Quick question on the acquisition front. So we kind of had the starwood fundamental deal just curious again, if something like that ends up being too large for you guys to look at whether again pricing on deals like that becomes a huge just kind of curious again I know you'll wheelhouse is doing these.

Speaker Change: It was pretty high.

Speaker Change: Would have to be wide of where we're deploying capital and.

Ultimately I don't think that transaction.

Speaker Change: Was priced at <unk>.

Speaker Change: Seven nine was where we deployed capital in the second quarter end.

Speaker Change: I think anecdotally that that <unk>.

Speaker Change: Transaction price closer to 7%.

Speaker Change: Smaller granular deals, but for something that bigger, but not too big.

Speaker Change: Fair enough. Thank you.

Speaker Change: Thank you Teo.

Speaker Change: This deal how did you guys kind of think through on opportunities that like that.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Jon <unk> with Wells Fargo. Please go ahead.

Speaker Change: Yes, quite frankly, we didnt, even take a look at it we have an ample opportunity set of freshly originated deals through our relationships and.

Speaker Change: Thank you good morning.

Speaker Change: Maybe just on that topic, we haven't really touched.

Speaker Change: In a quarter now since some tariffs have been in place you know some of that pause, but I'm curious as you look across the sectors are you getting unit level coverage data, if youre seeing any delta performance by certain sectors being more impacted than others.

Speaker Change: The bar for me to buy someone elses.

Speaker Change: Underwriting someone else's existing portfolio.

Speaker Change: It's pretty high.

Speaker Change: It would have to be wide of where we're deploying capital and.

Speaker Change: We really arent.

Speaker Change: Ultimately I don't think that transaction.

Speaker Change: And.

Speaker Change: It's not our portfolio is largely service and experience right 90, plus percent and theyre not buying goods that are subject to tariffs that have been selling reselling to the consumer and so.

Speaker Change: Was price data.

Speaker Change: Seven nine was where we deployed capital in the second quarter end.

Speaker Change: I think anecdotally that that transaction price closer to 7%.

Speaker Change: Fair enough. Thank you.

Speaker Change: As I mentioned earlier the portfolio trends have been incredibly stable.

teo: Thank you Teo.

Speaker Change: Thank you.

Speaker Change: Okay.

John Kelly: Next question comes from John Kelly <unk> with Wells Fargo. Please go ahead.

Speaker Change: And then maybe just on the guidance raise I think you touched on this a little bit earlier, but how do you think about raising the low end versus the high end does that more of a product of better than expected credit performance or is that the outperformance on the on the acquisition side or some some group of both and why does that not impact the high end.

John Kelly: Thank you good morning.

John Kelly: Maybe just on that topic, we haven't really touched it's been a quarter now since some tariffs have been in place you know some of that pause, but I'm curious as you look across the sectors are you getting unit level coverage data if youre seeing any delta in performance.

Speaker Change: Okay.

With the model sand, but mark do you want to yes, I mean listen I think.

John Kelly: Certain sectors being more impacted than others.

Speaker Change: The first two things you mentioned are probably right we had a strong.

John Kelly: We really arent.

John Kelly: And.

Speaker Change: First and second quarter and investment levels strong cap rates.

John Kelly: Our portfolio is largely service and experience alright, 90, plus percent and theyre not buying goods that are subject to tariffs.

Speaker Change: We were expecting so that gives us comfort on the bottom end of the range and credit loss I think was better than we were expecting.

John Kelly: Selling reselling to the consumer and so.

Speaker Change: But when youre at Youre at an 8% growth rate on the <unk> <unk> per share for the year.

John Kelly: As I mentioned earlier the portfolio trends have been incredibly stable.

Speaker Change: For Us I think it's a function of we just didn't think as Pete said the model is telling us we should we should both the top end.

John Kelly: Okay.

John Kelly: And then maybe just on the guidance raise I think you touched on this a little bit earlier, but how do you think about raising the low end versus the high end does that more of a product of better than expected credit performance or is that the outperformance on the on the acquisition side or some some group of both and why does that not impact the high end.

Speaker Change: Got it thank you.

Speaker Change: Thank you. Our next question comes from Brian <unk> with Green Street. Please go ahead.

Brian: Good morning, Thanks for taking my question.

Mark Patton: It's just what the models, but mark you want to yes, I mean listen I think.

Brian: Since that 15% ABR soft ceiling was nearly achieved for car washes, assuming those acquisitions in that segment, so down which other retail areas are most attractive and where you hope to grow exposure to close out the year.

John Kelly: John The first two things you mentioned are probably right we had a strong.

John Kelly: First and second quarter investment levels strong cap rates, while we were expecting so that gives us comfort on the bottom end of the range and credit loss I think was better than we were expecting.

Brian: I think youre going to see our investment activity be pretty pro rata and the portfolio grow ratably.

John Kelly: But you know when youre at Youre at an 8% growth rate on the <unk> <unk> per share for the year.

Brian: We will continue to invest in car washes in.

Speaker Change: For Us I think it's a function of we just didn't think as Pete said the model is telling us we should we should both the top end.

Brian: Really.

Brian: <unk>.

Brian: As I look at the end of the year the percentages of our industry mix will be pretty consistent.

Speaker Change: Got it thank you.

Brian: Great. Thanks, and then there are two industrial acquisitions over the quarter I know that is very small but anything.

Speaker Change: Thank you. Our next question comes from Brian <unk> with Green Street. Please go ahead.

Brian: Any expanded interest there or is this just sort of opportunistic as you see them.

Brian: Good morning, Thanks for taking my question.

Speaker Change: Since that 15% ABR soft ceiling was nearly achieved for car washes, assuming those acquisitions in that segment, so down which other retail areas are most attractive and where you hope to grow exposure to Clos closed out the year.

Brian: Yes, I think we don't we don't we like industrial we like doing sale leasebacks with middle market tenants, we like servicing our relationships and when we find good opportunities we deploy capital there.

Brian: I would say.

Speaker Change: I think youre going to see our investment activity be pretty pro rata and the portfolio grow ratably.

Brian: Our industrial investments tend to be characterized by very fungible.

Brian: Real estate asset real estate assets industrial assets that have.

Speaker Change: We will continue to invest in car washes in.

Brian: Ready alternative uses we try to avoid big.

Speaker Change: Really.

Speaker Change: Thank you.

Speaker Change: As I look at the end of the year the percentages of our industry mix will be pretty consistent.

Brian: Big Chunky special use assets, but.

Brian: But we do see good opportunities there and when we do we take advantage of.

Speaker Change: Great. Thanks, and then there are two industrial acquisitions over the quarter I know thats very small, but anything any expanded interest there or is this just sort of opportunistic as you see them.

Brian: Okay.

Brian: Often I appreciate the color. Thank you.

Brian: Thank you.

Brian: Your next question comes from Kevin Kim with Suntrust. Please go ahead.

Speaker Change: Yes, I think we don't we don't we like industrial we like doing sale leasebacks with middle market tenants, we like servicing our relationships.

Kevin Kim: Thanks, Good morning, guys.

Brian: Just a couple follow ups here can.

Brian: Can you just comment on any foot traffic or sales trends.

Brian: You've noticed in your restaurants or entertainment segment.

Speaker Change: When we find good opportunities, we deploy capital there.

Speaker Change: I would say.

Brian: Okay.

Speaker Change: Our industrial investments tend to be characterized by very fungible.

Brian: Hey, Jay what do you got.

Speaker Change: And so anecdotally I would I would tell you that.

Speaker Change: Real estate asset real estate assets industrial assets that have.

Speaker Change: We use placer AI internally to monitor that.

Speaker Change: And we have noticed a marked increase in particularly on the entertainment sector as June rollover on the calendar I think that was flowing through the restaurant space as well.

Speaker Change: Ready alternative uses we try to avoid.

Speaker Change: Chunky special use assets.

Speaker Change: But we do see good opportunities there and when we do we take advantage of.

I wouldn't want to call. It any one specific restaurant, our entertainment content with where we are noticing this but we do keep an eye on and we have seen traffic increase.

Speaker Change: Yes.

Speaker Change: Often I appreciate the color. Thank you.

Speaker Change: Thank you.

Speaker Change: Okay and for the tenants that are under one five times coverage bucket.

Speaker Change: Thank you and our next question comes from Kevin Kim with Suntrust. Please go ahead.

Speaker Change: Thanks, Good morning, guys.

Speaker Change: Just curious has that coverage been a.

Speaker Change: Just a couple follow ups here can.

Speaker Change: Stable or improving overtime.

Speaker Change: Can you just comment on any foot traffic or sales trends.

Speaker Change: Yes, listen I would say it's.

Speaker Change: You've noticed in your restaurants or entertainment segment.

Speaker Change: We don't really think about it as tenants, we think about it as properties.

Speaker Change: Okay.

Speaker Change: Hey, Jay what do you got.

Speaker Change: Yes.

Speaker Change: Individual properties or sub performing for some reason.

Speaker Change: So anecdotally I would I would tell you that.

Speaker Change: We use placer AI internally to monitor that.

Speaker Change: And it tends to be very transitory.

Speaker Change: Sites, where it's underperforming and the operator.

Speaker Change: And we have noticed a marked increase in particular in the entertainment sector as June rollover on the calendar I think that just flow through the restaurant space as well.

Speaker Change: There is a new manager and <unk> performing well.

Speaker Change: Sites that.

Speaker Change: Luiz.

Speaker Change: I wouldn't want to call out any one specific restaurant our entertainment content is where we're noticing this but we do keep an island, we have seen traffic increase.

Speaker Change: I am Luisa manager and tend to perform poorly. We also have sites that are pro forma sites that are coming online that tend to ramp.

Speaker Change: Okay and.

Speaker Change: <unk> come in and out of that bucket. So it's there's a lot of different situations going on it.

Speaker Change: For the tenants that are under one five times coverage bucket.

Speaker Change: Just curious has that coverage been a stable.

Speaker Change: Within our 21 on your properties that kind of influence that.

Speaker Change: Or improving overtime.

Speaker Change: Okay. Thank you.

Speaker Change: You got a queue.

Speaker Change: Yeah listen I would say it's.

Thank you.

Speaker Change: We don't really think about it as we think about it as properties.

Speaker Change: Next question comes from.

Speaker Change: <unk> with Citi. Please go ahead.

Speaker Change: Individual properties or sub performing for some reason.

Speaker Change: Hi, Thanks.

Speaker Change: Just wanted to ask you you mentioned.

Speaker Change: It tends to be very transitory.

Speaker Change: Mark in your in your remarks that you guys will look to probably settle the.

Speaker Change: Sites, where it's underperforming and the operator hires a new manager and gets us performing well or <unk>.

Speaker Change: Ford equity over the balance of the year and I was just wondering as you think about next year given your low pro forma leverage would you anticipate.

Speaker Change: Sites that.

Speaker Change: Please.

Speaker Change: Using leverage as a higher percentage of external growth.

Speaker Change: M <unk> manager and tend to perform poorly. We also have sites that are pro forma sites that are coming online that tend to ramp.

Speaker Change: Next year and kind of maybe kind of how would you think about getting to sort of a more normal leverage level I guess.

Speaker Change: Come in and out of that bucket.

Speaker Change: You are kind of on the low end I think of where you would.

Speaker Change: It's there's a lot of different situations going on it.

Speaker Change: It would be over time.

Speaker Change: Okay.

Speaker Change: Appreciate that question Smedes.

Speaker Change: Within our 21 on your properties that kind of influence that.

Speaker Change: I guess, what I would say is first and foremost.

Speaker Change: Okay. Thank you.

Speaker Change: When you think about our capital sourcing you could probably use a split of 50% to 55% equity.

Speaker Change: Got it.

Speaker Change: Okay.

Speaker Change: Thank you our next.

Speaker Change: Question comes from Smedes Rose with Citi. Please go ahead.

Speaker Change: 35%.

Smedes Rose: Hi, Thanks.

Speaker Change: At give or take and then that 10% free cash flow, which is improving every quarter.

Speaker Change: Just wanted to ask you you mentioned.

Speaker Change: I think mark in your in your remarks that you guys will look to probably settle the.

Speaker Change: So I think for us.

Speaker Change: Every year, we're going to be sourcing that capital.

Speaker Change: Ford equity over the balance of the year and I was just wondering as you think about next year given your low pro forma leverage would you anticipate you.

Speaker Change: Certainly I think Pete said in his remarks, maybe I, even did as well.

Speaker Change: The good news for US today, as we don't have to do anything on the equity side to achieve our.

Speaker Change: Using leverage as a higher percentage of external growth.

Speaker Change: Next year and kind of maybe kind of how would you think about getting to sort of a more normal leverage level I guess.

Speaker Change: Got ample dry powder to take us into 2026.

Speaker Change: For us in terms of accessing that capital, it's opportunistic for us but in terms of the mix I think you should expect for us to do what we've been doing for frankly.

Speaker Change: Since you're kind of on the low end I think of where you would.

Speaker Change: It would be over time.

Speaker Change: I mean, you know what.

Smedes Rose: I appreciate that question Smedes.

Smedes Rose: I guess, what I would say is first and foremost.

Speaker Change: We have come public, but certainly just use the last 12 quarters.

Smedes Rose: When you think about our capital sourcing you could probably use a split of 50% to 55% equity.

Speaker Change: That leverages somewhere around four five times.

Speaker Change: So I think.

Speaker Change: Okay.

Smedes Rose: 35%.

Smedes Rose: At give or take and then that 10% free cash flow, which is improving every quarter.

Speaker Change: Okay. Thank you.

Speaker Change: Thanks, Amit.

Smedes Rose: So I think for us.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Jana Galan with Bank of America. Please go ahead.

Smedes Rose: Every year, we're going to be sourcing that capital.

Smedes Rose: Certainly I think Pete said in his remarks, maybe I, even did as well.

Speaker Change: Thank you and good morning.

Speaker Change: Just a quick question on the strong growth of the company and the team growing given mark called out the compensation expense. How do you think about the scale of the platform are you targeting an overall G&A as a percent of revenue where assets are you just looking to meet the needs of the company with new hires.

Smedes Rose: The good news for US today, as we don't have to do anything on the equity side to achieve our.

Smedes Rose: Got ample dry powder to take us into 2026.

Smedes Rose: For us in terms of accessing that capital, it's opportunistic for us but in terms of the mix I think you should expect for us to do what we've been doing for frankly.

Speaker Change: Okay.

Speaker Change: Yes, I think more than anything we're trying to drive sustainable earnings growth and to do that it requires.

Smedes Rose: We have come public, but certainly just use the last 12 quarters.

Smedes Rose: That leverage is somewhere around four five times.

Speaker Change: One we grow our investment teams to meet the growing investment.

Smedes Rose: So I think.

Smedes Rose: Thanks.

Speaker Change: Opportunity set that we capitalize on and then growing the portfolio management team to manage the growing portfolio and then growing the finance and accounting team accordingly, and so.

Smedes Rose: Okay. Thank you.

Smedes Rose: Thanks Smedes.

Smedes Rose: Thank you.

Speaker Change: Our next question comes from Jana Galan with Bank of America. Please go ahead.

Speaker Change: We've grown the company since coming public pretty steadily both in terms of assets and people.

Smedes Rose: Thank you good morning, Justin.

Speaker Change: I need to invest in our people to do that G&A really is an output of that we look at our infrastructure. We look at our organization. We look at what we need to execute the business plan that really is ultimately driven by growth and growth in earnings.

Smedes Rose: Yes.

Smedes Rose: Yes, I think more than anything we're trying to drive sustainable earnings growth and to do that it requires.

Speaker Change: Thank you.

Smedes Rose: One we grow our investment teams to meet the growing investment.

Speaker Change: Thank you.

Speaker Change: Our next question comes from Daniela Guglielmo with capital One Securities. Please go ahead.

Opportunity set that we capitalize on and then growing the portfolio management team to manage the growing portfolio and then growing the finance and accounting team accordingly, and so.

Speaker Change: Hi, everyone. Thank you for taking my question.

Daniela Guglielmo: Just one from me you all are always nimble on the industry as you invest into and there was an uptick in the convenience store space.

Smedes Rose: We've grown the company since coming public pretty steadily both in terms of assets and people.

Daniela Guglielmo: With all subs and a new top 10 tenant as well what are some key characteristics you look for in that business type is it hot food option necessary yours fuel traffic and location. Most important anything you can give there would be helpful.

Smedes Rose: And we'll continue to invest in our people to do that G&A really is an output of that we look at our infrastructure. We look at our organization. We look at what we need to execute the business plan that really is ultimately driven by growth and growth in earnings.

Speaker Change: Hey, Judy.

Daniela Guglielmo: So just a quick clarifying point.

Daniela Guglielmo: All subs, we previously branded that way, it's a dual brand and theyre growing the <unk> platform. So we just put the new logo in so that was not a new investment it's something we've owned for well over a year at this point.

Smedes Rose: Thank you.

Smedes Rose: Yeah.

Smedes Rose: Thank you.

Speaker Change: Our next question comes from Danielle Guglielmo with capital One Securities. Please go ahead.

Daniela Guglielmo: And then more broadly just in the convenience store space.

Daniela Guglielmo: We're looking for groups that have reasonable size and scale, we tried gallons sold inside store sales.

Danielle Guglielmo: Hi, everyone. Thank you for taking my question.

Danielle Guglielmo: Just one from me you all are always nimble on the industry as you invest in <unk> and there was an uptick in the convenience store space with all subs as a new top 10 tenant as well what are some key characteristics you look for in that business type is it hot food option necessary skilled traffic and location most important.

Daniela Guglielmo: And then underwrite the underlying profitability of the unit and make sure of the corporate credit is stable. So that when we make the investments. We are generally looking for well positioned C stores with ample inside store sales and very strong gallon sold.

Daniela Guglielmo: Great I appreciate that clarification too thank you.

Danielle Guglielmo: Anything you can give there would be helpful.

Judy: Hey, Judy.

Speaker Change: So just a quick clarifying point all subs, we previously branded that way.

Daniela Guglielmo: Thank you.

Greg Mckinney: We will move next week, Greg Mckinney with Scotiabank. Please go ahead.

Speaker Change: <unk> brand and Theyre growing the <unk> platform. So we just put the new logo in so that was not a new investment it's something we've owned for well over a year at this point.

Speaker Change: Hey, good morning.

Speaker Change: I appreciate your earlier commentary on the acquisitions in the industrial category, but given the size of those transactions with an average rents forex.

Speaker Change: And then more broadly just in the convenience store space.

Speaker Change: Portfolio average could you provide some more details on those and why youre comfortable making bigger bets in that space.

Speaker Change: We're looking for groups that have reasonable size and scale, we tried gallons sold inside store sales.

Speaker Change: Okay.

Speaker Change: Yes, listen I don't I don't think it was a bigger bet.

Speaker Change: And then underwrite the underlying profitability of the.

Speaker Change: Very granular investments in.

Speaker Change: The unit and make sure that the corporate credit is stable so that when we make the investments we're generally looking for well positioned C stores with <unk>.

Speaker Change: Like the real estate and the tenants that we're signing long term leases to be in that space.

Speaker Change: Ample inside store sales and very strong gallon sold.

Speaker Change: The ABR was up $2 5 million with the two investments there. So it seems to imply there at least bigger on the rent side now.

Speaker Change: Great I appreciate that clarification too thank you.

Speaker Change: Yes, I mean part of Thats, the initial cap rate to an.

Speaker Change: Thank you.

Speaker Change: It was three different investments.

Speaker Change: We will move next with Greg Mckinney sweep Scotia Bank. Please go ahead.

Speaker Change: So, yes, the bigger assets, but still under $20 million and certainly with the size and scale of our portfolio we have.

Speaker Change: Hey, good morning, Pete.

Speaker Change: Peter I appreciate your earlier commentary on the acquisitions in the industrial category, but given the size of those transactions with an average rents Forex a portfolio average could you provide some more details on those and why you are comfortable making bigger bets in that space.

Speaker Change: Not outsized risk.

Speaker Change: Okay. Thanks, and then.

Speaker Change: We understand there is no necessarily a need to raise equity in order to hit acquisition guidance, given the ample dry powder, but what the stock's not materially below where you issued last quarters any reason not to is there any reason to expect that you wouldn't use the ATM at this time to help continue to pre fund investments.

Speaker Change: Yes, listen I don't I don't think it was a bigger bet.

Speaker Change: We're very granular investments in.

Speaker Change: Like the real estate and the tenants that we're signing long term leases to be in that space.

Speaker Change: I would say we will execute accordingly.

Speaker Change: The ABR was up two and a half million dollars with the two investments there. So it seems to imply there at least bigger on the rent side now.

Speaker Change: She is a market performs we're in a great position from a liquidity and leverage perspective.

Speaker Change: Yes, I mean part of Thats, the initial cap rate too.

Speaker Change: We see the opportunity to continue to.

Speaker Change: It was three different investments.

Speaker Change: Maintain that position, we will or not.

Speaker Change: And so yes, the bigger assets, but so under $20 million and certainly with the size and scale of our portfolio we have.

Speaker Change: It will just depend on how the market reacts.

Speaker Change: Okay. Thank you.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Perhaps not outsized risk.

Speaker Change: And we'll move next to John <unk> with B Riley Securities. Please go ahead.

Speaker Change: Okay. Thanks, and then.

Speaker Change: We understand there's no necessarily a need to raise equity in order to hit acquisition guidance, given the ample dry powder.

Speaker Change: Good morning, everybody.

Speaker Change: Good morning, John.

Speaker Change: The stock's not materially below where you issued last quarters any reason not to is there any reason to expect that you wouldn't use the ATM at this time to help continue to pre fund investments.

Speaker Change: So how should we kind of feel about the cadence of transaction volume in the current quarter.

Speaker Change: Just kind of thinking about I know, we're early in <unk>, but you've only close to $8 million year to date quarter to date and you had pretty good.

Speaker Change: I would say we will execute accordingly.

Speaker Change: The amount you would think still lapping kind of the PSA or LOI bucket, even Kevin netting out what you're close between the end of May and at the end of <unk>, just kind of curious if theres something chunky out there is the stuff that's kind of falling in and out of the pipeline.

Speaker Change: Yes, the market performs we're in a great position from a liquidity and leverage perspective.

Speaker Change: If we see the opportunity to continue to.

Speaker Change: Maintain that position, we will or.

Speaker Change: It will just depend on how the market reacts.

Speaker Change: Just trying to get a feel for transaction volume maybe on the Super short term basis.

Speaker Change: Okay. Thank you.

Speaker Change: Great.

Speaker Change: Yeah week over week.

Speaker Change: Thank you.

Speaker Change: Thanks, Jeff.

Speaker Change: And we'll move next with John <unk> with B Riley Securities. Please go ahead.

Speaker Change: Sure.

Speaker Change: Look too much into it we have a pipeline we're happy with where it is it's pretty consistent and some timing with July 4th and the start of summer but.

Speaker Change: Good morning, everybody.

Speaker Change: Morning, Jeff.

Speaker Change: So.

Speaker Change: When looking to read into the 8 million, but overall pipeline is strong and consistent with prior quarters. What is the pipeline. Currently currently sitting at about $290 million at a 708.

Speaker Change: Can you kind of feel about the cadence of transaction volume in the current quarter.

Speaker Change: Kind of thinking about.

Speaker Change: We're early in <unk>, but you've only closed 8 million year to date quarter to date and you had.

Speaker Change: Great.

Speaker Change: Helpful.

Speaker Change: And then on the debt side.

Speaker Change: The amount you'd think still lapping kind of the PSA or LOI bucket, even Kevin netting out what you've closed between the end of May and at the end of <unk>, just kind of curious if theres something chunky out there or is there stuff that's kind of falling in and out of the pipeline.

Speaker Change: How are you thinking about maybe potentially raising some debt I know you talked about the ability to use the in place forward equity.

Speaker Change: To fund the rest of the year as investment activity, but you took 200 down the line. It seems like markets are getting pretty accommodative from a spread perspective, I mean would that be something you would consider.

Speaker Change: Just trying to get a feel for transaction volume maybe on the Super short term basis.

Speaker Change: In Q H.

Speaker Change: Week over week.

Speaker Change: Yes.

Speaker Change: Thanks, you for.

Speaker Change: I guess, thanks for that question by the way I look.

Speaker Change: Sure.

Speaker Change: Look too much into it we have a pipeline we're happy with where it is it's pretty consistent and yes, the timing with July 4th and the start of summer, but I.

Speaker Change: I'd say, we maintain our view regarding the merits of returning to the bond market.

Speaker Change: It was a logical long term source of permanent debt capital.

Speaker Change: When looking to read into the 8 million, but overall the pipeline is strong and consistent with prior quarters.

Speaker Change: Particularly that's.

Speaker Change: Optimizing the alignment with our weighted average lease term.

Speaker Change: Pipeline currently currently understanding that about $290 million at a seven eight.

Speaker Change: And gratefully since we last were on a call.

Speaker Change: Sure.

Speaker Change: Right.

Speaker Change: The spread environment for us if you use our current one existing bond has has got has improved markedly.

Speaker Change: Helpful.

Speaker Change: And then on the debt side.

Speaker Change: How are you thinking about maybe potentially raising some debt I know you talked about the ability to use the in place forward equity.

Speaker Change: Obviously, the 10 year remains somewhat volatile, but I guess, what I'd say is the.

Speaker Change: The equity deal we did in March a good quarter on the ATM in the second quarter really puts us in a position where we are.

Speaker Change: To fund the rest of the year's investment activity, but you took 200 out in line. It seems like markets are getting pretty accommodative from a spread perspective, I mean would that be something you would consider.

Speaker Change: But I would tell you that I would expect in this.

Speaker Change: In Q H.

Speaker Change: We'd be looking for that spot too.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: I guess, thanks for that question by the way you look.

Speaker Change: But I guess.

Speaker Change: I'd say, we maintain our view regarding the merits of returning to the bond market.

Speaker Change: Said and I think I did in my remarks, we don't need the capital today, we're in a great position in terms of liquidity.

Speaker Change: You know as a logical long term source of permanent debt capital.

Speaker Change: Our dry powder runway. So that's why we're in them.

Speaker Change: Particularly that's.

Speaker Change: Really optimizing the alignment with our.

Speaker Change: Weighted average lease term.

Speaker Change: And gratefully since we last were on a call.

The spread environment for us if you use our current one existing bond has has got has improved markedly obviously the 10 year remains somewhat volatile, but I guess, what I'd say is.

Jack: Awesome. Thanks Jack.

Speaker Change: Okay Alright.

Speaker Change: Breaking up or as you break that market here and a mark to Mark there.

Speaker Change: You said you were great analyst.

Speaker Change: Yeah.

Speaker Change: The equity deal we did in March a good quarter on the ATM in the second quarter really puts us in a position where we.

Speaker Change: I did say that ready to satellite.

Speaker Change: I don't know if you I don't know if you heard the part about we still view that the bond market is the logical long term source for permanent debt capital going forward lined up with our wall.

Speaker Change: But I would tell you that I would expect in this.

Speaker Change: We'd be looking for that spot too.

Speaker Change: And that the environment's improved certainly if you use our one issuance out I'm not sure if thats still coming through but.

Speaker Change: Okay.

Speaker Change: But I guess.

Speaker Change: Said and I think I did in my remarks, we don't need the capital today, we're in a great position in terms of liquidity.

Speaker Change: Our liquidity position today really puts us in a spot where we can be opportunistic somewhere in the second half to your question.

Speaker Change: Our dry powder runway. So that's why we're in.

Speaker Change: Most likely.

Speaker Change: Yeah, I know just to give the only the one piece that outstanding.

Speaker Change: Unsecured debt outstanding Alright unsecured bonds outstanding.

Speaker Change: Awesome. Thanks Jack.

Speaker Change: Okay, alright that breaking up with you Brian I couldn't hear the end of March Mark there.

Speaker Change: Term loan market, even more accommodative than that just given a little bit of an orphan issuance at this point.

Speaker Change: You said you were great analysts.

Speaker Change: Yeah.

Speaker Change: Well I guess I'd say it a different way the term loan market, we think still open to us and obviously has an attractive.

Speaker Change: I did say that ready to satellite.

Speaker Change: All in swap rate, but if.

Speaker Change: If you think about it.

Speaker Change: There is a real benefit in the bond market, where we think thats. The long term solution as I mentioned in terms of the best long term permanent type term out our debt needs.

Speaker Change: And that the environment's improved certainly if you use our one issuance side I'm not sure if thats still coming through but.

Speaker Change: Our liquidity position today really puts us in a spot where we can be opportunistic somewhere in the second half to your question.

Speaker Change: We align more closely with our weighted average lease term.

Speaker Change: Guess, what I'd say is there is a benefit to continuing to build your complex in the unsecured bond market, which is why even though they might price a little higher than let's call. It in the.

Speaker Change: Most likely.

Speaker Change: Yeah, I know just to give you only the one piece of debt outstanding.

Speaker Change: Unsecured debt outstanding Alright unsecured bonds outstanding.

Speaker Change: High fives.

Speaker Change: We just think long term, that's going to be a better strategic solution for us.

Speaker Change: Term loan market, even more accommodative than that just given a little bit of an orphan issuance at this point.

Speaker Change: In terms of accessing that capital.

Speaker Change: Okay.

Speaker Change: Understood. Thank you very much.

Speaker Change: Yeah. Thanks, Josh.

Speaker Change: Well I guess I'd say it a different way the term loan market. We think is still open to us and obviously it has an attractive.

Speaker Change: Hi.

Speaker Change: Thank you.

Speaker Change: And this conclude our Q&A session I will now turn the call back to Pete.

Speaker Change: All in swap rate, but.

Speaker Change: If you think about it.

Speaker Change: For closing remarks.

Speaker Change: There is a real benefit in the bond market, where we think thats. The long term solution as I mentioned in terms of the best long term permanent to Perm out our debt needs certainly align more closely with our weighted average lease term. So I guess, what I'd say is there is a benefit to continuing to build your complex.

Speaker Change: Great well. Thank you all for participating in today's call.

Speaker Change: As we hopefully conveyed the business is in a great spot and we look forward to engaging with you all in the coming months. Thank you.

Speaker Change: Thank you and based off conclude today's program. Thank you for your participation you may disconnect at any time.

Speaker Change: In the unsecured bond market, which is why even though they might price a little higher than let's call. It in the <unk>.

Speaker Change: High fives.

Speaker Change: Just think long term, that's going to be a better strategic solution for us.

Speaker Change: In terms of accessing that capital.

Speaker Change: Okay.

Speaker Change: Understood. Thank you very much.

Speaker Change: Yeah. Thanks, Josh.

Speaker Change: Okay.

Speaker Change: Thank you Andrew.

Speaker Change: That does conclude our Q&A session I will now turn the call back to Peter <unk> for closing remarks.

Speaker Change: Great well. Thank you all participating in today's call.

Speaker Change: As we hope we conveyed the businesses in a great spot and we look forward to engaging with you all.

Speaker Change: In the coming months. Thank you.

Speaker Change: Thank you and this does conclude today's program.

Speaker Change: Thank you for your participation you may disconnect at any time.

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Speaker Change: Hello, Matt.

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