Q3 2025 W.P. Carey Inc Earnings Call

Speaker #4: Hello and welcome to WP Carey s third quarter , 2020 Earnings Conference call . My name is Diego , and I will be your operator today .

Operator: Hello and welcome to W. P. Carey Inc.'s third quarter 2025 earnings conference call. My name is Diego and I will be your operator today. All lines have been placed on mute to prevent any background noise. Please note that today's event is being recorded. After today's prepared remarks, we will be taking questions via the phone line. Instructions on how to do so will be given at the appropriate time. I will now turn today's program over to Peter Sands, Head of Investor Relations. Mr. Sands, please go ahead.

Speaker #4: All lines have been placed on mute to prevent any background noise . Please note that today's event is being recorded . After today's prepared remarks , we will be taking questions via the phone line .

Speaker #4: Instructions on how to do so will be given at the appropriate time . I will now turn today's program over to Peter Sands , Head of Investor Relations .

Speaker #4: Mr. Sands, please go ahead.

Speaker #5: Good morning , everyone , and thank you for joining us this morning for our 2025 third quarter earnings call . Before we begin , I'd like to remind everyone that some of the statements made on this call are not historical facts and may be deemed forward looking statements and factors that could cause actual results to differ materially from WP Carey expectations are provided in our SEC filings .

Peter Sands: Good morning everyone and thank you for joining us this morning for our 2025 third quarter earnings call. Before we begin, I'd like to remind everyone that some of the statements made on this call are not historic facts and may be deemed forward-looking statements, and factors that could cause actual results to differ materially from W. P. Carey Inc.'s expectations are provided in our SEC filings. An online replay of this conference call will be made available in the Investor Relations section of our website at WPC, where it'll be archived for approximately one year and where you can also find copies of our investor presentations and other related materials. With that, I'll pass the call over to Jason Fox, Chief Executive Officer.

Speaker #5: An online replay of this conference call will be made available in the Investor Relations section of our website at COVID-19 , where it'll be archived for approximately one year , and where you can also find copies of our investor presentations and other related materials .

Speaker #5: And with that , I'll pass the call over to Jason Fox Chief Executive Officer .

Speaker #6: Good morning, everyone, and thank you for joining us. The strong momentum we established over the first half of the year has continued.

Jason Fox: Good morning everyone and thank you for joining us. The strong momentum we established over the first half of the year has continued in the second half, and we remain ahead of our prior expectations. As a result, we're further raising our full year AFFO guidance, resulting in mid 5% year over year growth, which we believe will be among the highest in the net lease sector this year. Our raised guidance is supported by several positive trends within our business. Year to date, we've completed $1.65 billion of investments at attractive initial cap rates averaging in the mid 7s, primarily with fixed rent escalations averaging in the high 2% range.

Speaker #6: In the second half , and we remain ahead of our prior expectations . As a result , we're further raising our full year guidance , resulting in mid 5% year over year growth , which we believe will be among the highest in the net lease sector this year .

Speaker #6: Our raised guidance is supported by several positive trends within our business . Year to date , we've completed $1.65 billion of investments at attractive initial cap rates , averaging in the mid seven s , primarily with fixed rent escalations averaging in the high 2% range .

Speaker #6: The strength of our investment activity year to date has put us just over the midpoint of prior guidance range . So I'm pleased to say we're raising our full year expectations for investment volume to between 1.8 and $2.1 billion .

Jason Fox: The strength of our investment activity year to date has put us just over the midpoint of prior guidance range, so I'm pleased to say we're raising our full year expectations for investment volume to between $1.8 and $2.1 billion. Our sector leading same-store rent growth continues to be in the mid 2% range and is expected to remain around there or be slightly higher in 2026. The progress we've made funding our investments this year, primarily through asset sales, is expected to continue in the fourth quarter, achieving better than initially expected disposition cap rates and attractive spreads to where we're reinvesting the proceeds. Our original rent loss assumption, which reflected a degree of caution given the backdrop of broader economic uncertainty earlier in the year, proved to be conservative, and the performance of our portfolio has enabled us to lower our estimate as the year has progressed.

Speaker #6: Our sector-leading same-store rent growth continues to be in the mid-2% range and is expected to remain around there or be slightly higher in 2026.

Speaker #6: The progress we've made funding our investments this year , primarily through asset sales , is expected to continue in the fourth quarter , achieving better than initially expected disposition cap rates and attractive spreads to where we're reinvesting the proceeds .

Speaker #6: Our original rent loss assumption , which reflected a degree of caution given the backdrop of broader economic uncertainty earlier in the year , proved to be conservative , and the performance of our portfolio has enabled us to lower our estimate as the year has progressed .

Speaker #6: And the strength and flexibility of our balance sheet , with over $2 billion of liquidity , including our recent forward equity sales , provides us with additional flexibility to fund future investments .

Jason Fox: The strength and flexibility of our balance sheet, with over $2 billion of liquidity, including our recent forward equity sales, provides us with additional flexibility to fund future investments. This morning I'll review this progress and our confidence in sustaining that momentum into 2026. Toni Sanzone, our CFO, will focus on our results and guidance raise and touch upon aspects of our portfolio and balance sheet. As usual, we're joined by our Head of Asset Management, Brooks Gordon, to answer questions starting with the transaction environment and investment volume. Lower interest rate volatility has helped keep net lease cap rates relatively steady this year, and that sense of stability has positively impacted our transaction activity both in the U.S. and Europe, especially sale-leasebacks, which have comprised the large majority of our investments to date.

Speaker #6: This morning , I'll review this progress and our confidence in sustaining that momentum into 2026 . Toni Sanzone , our CFO will focus on our results and guidance , raise and touch upon aspects of our portfolio and balance sheet .

Speaker #6: And as usual , we're joined by our Head of Asset Management , Brooks Gordon , to answer questions starting with the transaction environment and investment volume , lower interest rate volatility has helped keep net lease cap rates relatively steady .

Speaker #6: This year , and that sense of stability has positively impacted our transaction activity , both in the US and Europe , especially sale leasebacks , which have comprised large majority of our investments to date .

Speaker #6: Our continued strong pace of investment activity , adding close to $660 million of investments during the third quarter and about $170 million so far in the fourth quarter , brings our year to date investment volume to $1.65 billion at a weighted average initial cap rate of 7.6% .

Jason Fox: Our continued strong pace of investment activity, adding close to $660 million of investments during the third quarter and about $170 million so far in the fourth quarter, brings our year-to-date investment volume to $1.65 billion at a weighted average initial cap rate of 7.6%. We continue to structure leases with attractive rent escalations, the significant majority of which were fixed bumps averaging 2.7% for our investments year to date. When factoring in rent escalations and a weighted average lease term of 18 years, our average initial cap rates in the mid 7% range translate to average yields in the mid 9% range. By transacting at these levels, we continue to generate very attractive spreads to our cost of capital. Warehouse and industrial represents over three quarters of our investment volume year to date.

Speaker #6: We continue to structure leases with attractive rent escalations . The significant majority of which were fixed bumps , averaging 2.7% for our investments year to date .

Speaker #6: When factoring in rent escalations and weighted average lease term of 18 years . Our average initial cap rates in the Mid sevens translate to average yields in the mid 9% range by transacting at these levels , we continue to generate very attractive spreads to our cost of capital warehouse and industrial represents over three quarters of our investment volume year to date , although we continue to invest in a diverse range of property types .

Jason Fox: Although we continue to invest in a diverse range of property types, and while the large majority of our investment volume was in the U.S. where we've continued to see a significant number of opportunities at attractive spreads, we also continued to grow our investment volume in Europe relative to the last couple of years. The investment we've made over the last 27 years to steadily build and develop our European platform continues to serve as a key competitive advantage there. Today, our European team consists of over 50 people across our offices in London and Amsterdam, which has built strong broker and developer relationships and has the local expertise necessary to successfully execute across Europe.

Speaker #6: And while the large majority of our investment volume was in the US , where we've continued to see a significant number of opportunities at attractive spreads , we also continued to grow our investment volume in Europe relative to the last couple of years .

Speaker #6: The investment we've made over the last 27 years to steadily build and develop our European platform continues to serve as a key competitive advantage .

Speaker #6: There . Today , our European team consists of over 50 people across our offices in London and Amsterdam , which has built strong broker and developer relationships and has the local expertise necessary to successfully execute across Europe .

Speaker #6: Moving to our pipeline and capital projects , our near-term pipeline remains strong , with several hundred million dollars of transactions currently in process at cap rates and weighted average lease terms consistent with where we've been transacting year to date .

Jason Fox: Moving to our pipeline and capital projects, our near-term pipeline remains strong with several hundred million dollars of transactions currently in process at cap rates and weighted average lease terms consistent with where we've been transacting year to date. We expect many of those deals to close in the fourth quarter, although some may spill over into next year depending on where they are in the closing process, which would set us up for a strong first quarter. Our near-term pipeline includes close to $70 million of capital projects scheduled for completion in the fourth quarter. We also have approximately $180 million of additional capital projects underway, the large majority of which will deliver in 2026. While capital projects are something we've been doing for a long time, it's an area we can allocate more capital to, often with higher returns compared to acquiring existing assets over time.

Speaker #6: We expect many of those deals to close in the fourth quarter , although some may spill over into next year depending on where they are in the closing process , which would set us up for a strong first quarter .

Speaker #6: Our near-term pipeline includes close to $70 million of capital projects scheduled for completion in the fourth quarter . We also have approximately $180 million of additional capital projects underway .

Speaker #6: The large majority of which will deliver in 2026 . While capital projects are something we've been doing for a long time , it's an area we can allocate more capital to , often with higher returns compared to acquiring existing assets .

Speaker #6: Over time . We've built up a dedicated in-house project management team with deep real estate expertise and strong local connections to development resources , and we have a long track record of build to suits expansions , renovations and development projects .

Jason Fox: We've built up a dedicated in-house project management team with deep real estate expertise and strong local connections to development resources. We have a long track record of build-to-suits, expansions, renovations, and development projects. Historically, capital projects have averaged around 10% to 15% of our annual investment volume, and we believe we can expand that proportion. Turning now to our capital sources, since our last earnings call, we've made further progress with our strategy of funding investments with accretive sales of non-core assets this year, including operating self-storage properties. Currently, we're in the market with the second half of our self-storage portfolio and have closed further sales since quarter end. We're confident we'll close additional sales during the fourth quarter. We're also maintaining a degree of optionality on the timing and execution of certain storage sub-portfolios.

Speaker #6: Historically , capital projects have averaged around 10 to 15% of our annual investment volume , and we believe we can expand that proportion .

Speaker #6: Turning now to our capital sources . Since our last earnings call , we've made further progress with our strategy of funding investments with accretive sales of non-core assets this year , including operating self storage properties .

Speaker #6: Currently , we're in the market with the second half of our self-storage portfolio and have closed further sales since quarter end . We're confident we'll close additional sales during the fourth quarter , but we're also maintaining a degree of optionality on the timing and execution of certain storage sub portfolios .

Speaker #6: And while we expect asset sales to fund our fourth quarter investment activity , the approximately $230 million of forward equity we recently sold gives us additional flexibility as well as enabling us to get ahead of our funding needs for 2026 .

Jason Fox: While we expect asset sales to fund our fourth quarter investment activity, the approximately $230 million of forward equity we recently sold gives us additional flexibility as well as enabling us to get ahead of our funding needs for 2026. Let me pause there and hand the call over to Toni to discuss our results and guidance.

Speaker #6: So, let me pause there and hand the call over to Tony to discuss our results and guidance.

Speaker #7: Thanks , Jason . Af0 per share for the third quarter was $1 . $0.25 , representing a 5.9% increase compared to the third quarter of last year .

Toni Sanzone: Thanks, Jason. AFFO per share for the third quarter was $1.25, representing a 5.9% increase compared to the third quarter of last year. Our strong results continue to benefit from both the pace and volume of our investment activity as well as the internal rent growth generated by our portfolio. We've raised and narrowed our full year 2025 AFFO guidance, driven largely by higher investment volume and lower expected rent loss within the portfolio, and we currently expect AFFO to total between $4.93 and $4.99 per share for the year, implying 5.5% year-over-year growth at the midpoint. As Jason mentioned, given the investments we've completed to date and our outlook for the remainder of the year, we've raised our expected 2025 investment volume to a range of $1.8 to $2.1 billion.

Speaker #7: Our strong results continue to benefit from both the pace and volume of our investment activity , as well as the internal rent growth generated by our portfolio .

Speaker #7: We've raised and narrowed our full year 2025 AFFO guidance , driven largely by higher investment volume and lower expected rent loss within the portfolio .

Speaker #7: And we currently expect Af0 to total between $4.93 and $4.99 per share for the year , implying 5.5% year over year growth at the midpoint .

Speaker #7: As Jason mentioned , given the investments we've completed to date and our outlook for the remainder of the year , we've raised our expected 2020 .

Speaker #7: Five investment volume to a range of 1.8 to $2.1 billion . As we continue to fund our investment activity this year , with proceeds from dispositions of operating and non-core assets .

Toni Sanzone: As we continue to fund our investment activity this year with proceeds from dispositions of operating and non-core assets, we're also revising our expected disposition volume to total between $1.3 and $1.5 billion, which is increased to include additional sales of operating self-storage assets. Based on the successful execution we've had to date, we expect to generate overall spreads of approximately 150 basis points between our investments and dispositions for the year. On the expense side, G&A continues to track in line with our expectations to fall between $99 and $102 million for the full year. Property expenses are expected to total $51 to $54 million with a minimal increase to the lower end of the range, and tax expense is expected to be between $41 and $44 million, representing a marginal reduction at the midpoint.

Speaker #7: We're also revising our expected disposition volume to total between 1.3 and $1.5 billion , which is increased to include additional sales of operating self-storage assets .

Speaker #7: And based on the successful execution , we've had to date , we expect to generate overall spreads of approximately 150 basis points between our investments and dispositions for the year .

Speaker #7: On the expense side, G&A continues to track in line with our expectations to fall between $99 million and $102 million for the full year.

Speaker #7: Property expenses are expected to total 51 to $54 million , with the minimal increase to the lower end of the range and tax expense is expected to be between 41 and $44 million , representing a marginal reduction at the midpoint .

Speaker #7: Turning now to our portfolio , which continues to generate strong internal growth . Contractual same store rent growth for the quarter was 2.4% year over year , comprised of CPI linked rent escalations averaging 2.5% for the quarter , while fixed rent increases averaged 2.1% for the full year .

Toni Sanzone: Turning now to our portfolio, which continues to generate strong internal growth, contractual same-store rent growth for the quarter was 2.4% year-over-year, comprised of CPI-linked rent escalations averaging 2.5% for the quarter, while fixed rent increases averaged 2.1% for the full year. We expect contractual same-store rent growth to average around 2.5% based on current inflation levels and further supported by the higher fixed increases we are achieving on new investments. Our contractual same-store growth is expected to remain strong in 2026, likely surpassing the 2.5% growth we expect to see this year. Comprehensive same-store rent growth for the quarter was 2% year-over-year and is expected to track in line with our contractual rent growth for 2025 at around 2.5%.

Speaker #7: We expect contractual same-store rent growth to average around 2.5%, based on current inflation levels and further supported by the higher fixed increases we are achieving on new investments.

Speaker #7: Our contractual same store growth is expected to remain strong in 2026 , likely surpassing the 2.5% growth we expect to see this year .

Speaker #7: Comprehensive same store rent growth for the quarter was 2% year over year and is expected to track in line with our contractual rent growth for 2025 .

Speaker #7: At around 2.5% . Despite the uptick in vacancy flowing through the back half of the year . Portfolio occupancy declined to 97% at the end of the third quarter , which we view as temporary in nature and was factored into our earlier guidance .

Toni Sanzone: Despite the uptick in vacancy flowing through the back half of the year, portfolio occupancy declined to 97% at the end of the third quarter, which we view as temporary in nature and was factored into our earlier guidance of the 3% total vacancy at the end of the third quarter. Around a quarter has since been resolved or is in the final stages of closing, and another half is in process and well underway to being resolved. Hellweg added minimally to our third quarter vacancy following planned store takebacks in September, and our asset management team continues to further reduce our exposure through re-leasing and dispositions. Hellweg now represents our 14th largest tenant, down from 6th largest a quarter ago, and we expect it to be out of our top 25 next year.

Speaker #7: Of the 3% total vacancy at the end of the third quarter , around a quarter has since been resolved or is in the final stages of closing , and another half is in process and well underway to being resolved , Helveg added minimally to our third quarter vacancy following planned store Takebacks in September .

Speaker #7: And our asset management team continues to further reduce our exposure through releasing and dispositions . Hellwig now represents our 14th largest tenant , down from sixth largest a quarter ago , and we expect it to be out of our top 25 next year .

Speaker #7: We've experienced minimal rent disruption this year , enabling us to further reduce the rent loss assumption embedded in our guidance to $10 million , down from our prior estimate of between 10 and 15 million .

Toni Sanzone: We've experienced minimal rent disruption this year, enabling us to further reduce the rent loss assumption embedded in our guidance to $10 million, down from our prior estimate of between $10 million and $15 million. Currently, we have visibility into total rent loss of about $7 million for the year, representing about 45 basis points of ABR, which includes the downtime on the Hellweg assets we took back. The balance of our reserve includes ongoing caution towards Hellweg, which remains current on rent but is still navigating a challenging turnaround, and we hope for that to be conservative with only two months of the year remaining. Other lease-related income totaled $3.7 million for the third quarter, down from $9.6 million in the second quarter, and is expected to total in the mid $20 million range for the full year.

Speaker #7: Currently, we have visibility into total rent loss of about $7 million for the year, representing about 45 basis points of ABR, which includes the downtime on the Hellwig assets.

Speaker #7: We took back the balance of our reserve includes ongoing caution towards Hellwig , which remains current on rent but is still navigating a challenging turnaround and we hope for that to be conservative .

Speaker #7: With only two months of the year's remaining other lease related income totaled $3.7 million for the third quarter , down from 9.6 million in the second quarter , and is expected to total in the mid $20 million range for the full year .

Speaker #7: Turning to our operating properties so far this year , we've completed sales of 37 operating self-storage properties and one student housing property , and converted four operating self-storage properties to long term net leases .

Toni Sanzone: Turning to our operating properties, so far this year we've completed sales of 37 operating self-storage properties and one student housing property and converted four operating self-storage properties to long-term net leases. Factoring in the additional sales we expect to close before year end, we estimate operating property NOI for the fourth quarter will total between $7 million and $9 million, reducing further in 2026. Moving now to our balance sheet and capital markets activity, our balance sheet remains strong and extremely well positioned to fund our continued growth, further bolstered by our equity and debt capital markets activity this year.

Speaker #7: Factoring in the additional sales we expect to close before year-end, we estimate operating property NOI for the fourth quarter will total between $7 million and $9 million, reducing further in 2026.

Speaker #7: Moving now to our balance sheet and capital markets activity, our balance sheet remains strong and extremely well positioned to fund our continued growth, further bolstered by our equity and debt capital markets activity this year.

Speaker #7: Since the start of the third quarter , we sold approximately 3.4 million shares , subject to forward sale agreements through our ATM program at a gross weighted average price of $68.05 per share .

Toni Sanzone: Since the start of the third quarter, we sold approximately 3.4 million shares subject to forward sale agreements through our ATM program at a gross weighted average price of $68.05 per share, all of which remains outstanding, resulting in gross proceeds of approximately $230 million available to fund future investment activity. On the debt side, as previously announced, early in the third quarter we enhanced our liquidity position with the opportunistic issuance of $400 million U.S. dollar bonds priced at a coupon rate of 4.65%, which was used to repay amounts outstanding on our credit facility. Our weighted average interest rate for the quarter was 3.2%, and we continue to believe we have one of the lowest cost of debt in the net lease sector through our mix of U.S. dollar and Euro denominated debt. Our debt maturities remain very manageable.

Speaker #7: All of which remains outstanding , resulting in gross proceeds of approximately $230 million available to fund future investment activity and on the debt side , as previously announced early in the third quarter , we enhanced our liquidity position with the opportunistic issuance of 400 million US dollar bonds priced at a coupon rate of 4.65% , which was used to repay amounts outstanding on our credit facility .

Speaker #7: Our weighted average interest rate for the quarter was 3.2%, and we continue to believe we have one of the lowest costs of debt in the net lease sector.

Speaker #7: Through our mix of US dollar and euro denominated debt , our debt maturities remain very manageable . We have a €500 million bond maturing in April of 2026 , and our next US dollar bond maturity isn't until October of next year .

Toni Sanzone: We have a €500 million bond maturing in April of 2026, and our next U.S. dollar bond maturity isn't until October of next year. We currently expect that we would refinance these bonds with issuances in the same currencies at or near their maturities. We ended the third quarter with liquidity totaling about $2.1 billion, comprised of availability on our credit facility, cash on hand and held for 1031 exchanges, and unsettled forward equity, with dispositions expected to fund investment activity for the remainder of this year. We have a great deal of flexibility in accessing the capital markets, taking into account our free cash flow of over $250 million annually. In addition to our unsettled forward equity, we expect to be well ahead of our funding needs for new investments as we enter 2026. Our key leverage metrics remained within our target ranges.

Speaker #7: We currently expect that we would refinance these bonds with issuances in the same currencies at or near their maturities . We ended the third quarter with liquidity totaling about $2.1 billion , comprised of availability on our credit facility , cash on hand , and held for 1031 exchanges and unsettled forward equity with dispositions expected to fund investment activity for the remainder of this year .

Speaker #7: We have a great deal of flexibility in accessing the capital markets , taking into account our free cash flow of over $250 million annually .

Speaker #7: In addition to our unsettled forward equity , we expect to be well ahead of our funding needs for new investments as we enter 2026 .

Speaker #7: Our key leverage metrics remained within our target ranges at quarter end net debt to adjusted EBITDA , inclusive of unsettled equity forwards , was 5.8 times , excluding the impact of unsettled equity forwards , net debt to adjusted EBITDA was 5.9 times .

Toni Sanzone: At quarter end, net debt to adjusted EBITDA inclusive of unsettled equity forwards was 5.8 times. Excluding the impact of unsettled equity forwards, net debt to adjusted EBITDA was 5.9 times. In September, we increased our quarterly dividend by 4% year over year to $0.91 per share, equating to an attractive annualized dividend yield of 5.4%. Our dividend continues to be well supported by our earnings growth as we maintain a healthy year to date payout ratio at approximately 73% of AFFO per share. With that, I'll hand the call back to Jason.

Speaker #7: In September . We increased our quarterly dividend by 4% year over year to $0.91 per share , equating to an attractive annualized dividend yield of 5.4% .

Speaker #7: Our dividend continues to be well supported by our earnings growth as we maintain a healthy year-to-date payout ratio at approximately 73% of AFO per share.

Speaker #7: And with that , I'll hand the call back to Jason .

Speaker #6: Thanks , Tony . In closing , the investment volume , we've completed year to date and lower rent loss assumption have enabled us to again raise both our full year investment volume and AFO guidance ranges .

Jason Fox: Thanks Toni. In closing, the investment volume we've completed year to date and lower rent loss assumption have enabled us to again raise both our full year investment volume and AFFO guidance ranges. We've repeatedly raised our guidance this year and have consistently executed strong investment volumes since mid 2024, completing well over $2 billion of new investments over the trailing twelve month period. We have the infrastructure, expertise, and team in place to continue performing at these levels as we look ahead. We have an active deal pipeline that extends into the first quarter of 2026. We're not seeing anything in the transaction environment that would take us off our current pace of activity given where our debt and equity is pricing.

Speaker #6: We've repeatedly raised our guidance this year and have consistently executed strong investment volumes since mid-2024, completing well over $2 billion of new investments over the trailing 12-month period.

Speaker #6: We have the infrastructure , expertise and team in place to continue performing at these levels . As we look ahead , we have an active deal pipeline that extends into the first quarter of 2026 .

Speaker #6: We're not seeing anything in the transaction environment that would take us off our current pace of activity , given where our debt and equity is pricing , we view all the elements as being in place to continue generating double digit total shareholder returns in 2026 .

Jason Fox: We view all the elements as being in place to continue generating double digit total shareholder returns in 2026 through a combination of AFFO growth that would put us in the top tier of net lease REITs and our dividend yield. That concludes our prepared remarks, so I'll hand the call back to the operator for questions.

Speaker #6: The recombination of AFFO growth that would put us in the top tier of net lease REITs and our dividend yield . That concludes our prepared remarks .

Speaker #6: So I'll hand the call back to the operator for questions.

Speaker #4: At this time , we will take questions . If you would like to ask a question , simply press star . Then the number one on your telephone keypad .

Operator: At this time we will take questions. If you would like to ask a question, simply press Star then the number one on your telephone keypad. If you would like to withdraw your question, please press the Star then the number two. Our first question comes from John Kilichowski with Wells Fargo. Please state your question. John Kilichowski, your line is open. Please go ahead.

Speaker #4: If you would like to withdraw your question, please press the star, then the number two. And our first question comes from John Kieliszkowski with Wells Fargo.

Speaker #4: Please state your question . John , your line is open . Please go ahead .

Speaker #6: You might be unmute John .

Jason Fox: You might be on mute, John.

Speaker #4: Go ahead . John Kolakowski . All right . We'll move on to the next question . And our next question comes from Anthony Paolone with JP Morgan .

Operator: Go ahead. John Kilichowski. All right, we'll move on to the next question. Our next question comes from Anthony Paolone with JPMorgan. Please state your question.

Speaker #4: Please state your question .

Speaker #8: Thanks . Good morning . You know , now that you guys are rounding the corner on the operating self-storage asset sales , can you maybe give us a sense as to what the menu of non-core and other internally generated capital sources may be as we start to think about your deal activity next year and maybe , perhaps how to help fund it .

[Analyst]: Thanks. Good morning. Now that you guys are rounding the corner on the operating self-storage asset sales, can you maybe give us a sense as to what the menu of non-core and other internally generated capital sources may be as we start to think about deal activity next year and maybe perhaps how to help fund it?

Speaker #6: Yeah , sure . I mean , certainly , you know , when we think about , you know , next year equity is going to be a much bigger picture .

Jason Fox: Yeah, sure. I mean certainly, you know, when we think about, you know, next year, equity is going to be a much bigger picture and part of that story than this year. We're not currently teeing up a disposition program anything close to what we did this year. Dispositions should revert back to a more typical run rate. We do have a couple operating properties left, but apart from the possibility of some self-storage sales slipping into next year, we should be back at more normalized levels. Disposal will still be a source of incremental capital for us, but it won't be significant like it was this year. The expectation is we're kind of back to normal core spread investing. Typical the net lease company where issue equity and debt, keep leverage targets in mind, and use it to do deals and generate spreads.

Speaker #6: And part of that story than this year . And , you know , we're not currently teeing up a disposition program . Anything close to what we did this year .

Speaker #6: So disposition should revert back to a more typical run rate . We do have , you know , a couple operating properties left , but apart from the possibility of some self-storage sales slipping into next year , you know , we should be back in more normalized levels .

Speaker #6: You know , disposal still , be a source of incremental capital for us , but it won't be significant like it was this year .

Speaker #6: You know , so the expectation is we're kind of back to normal course spread investing . Typical . The net lease company where issue equity and debt you know keep leverage targets in mind and and use it to do deals and generate spreads .

Speaker #6: So that's kind of the plan going forward . You know I think the other thing to note is and Tony talked about this , that we do have lots of funding flexibility right now looking into 2026 .

Jason Fox: That's kind of the plan going forward. I think the other thing maybe to note is, and Toni talked about this, that we do have lots of funding flexibility right now. Looking into 2026, revolver at a little over $2 billion is mostly undrawn. She referenced, call it $250 million of free cash flow. As we talked about earlier, we have gotten a head start on equity needs. We have $230 million of forwards that we recently issued on the ATM. We're in good shape and we think we're ahead of the game there for funding for next year.

Speaker #6: The revolver at a little over 2 billion is mostly undrawn . She referenced call it $250 million of free cash flow . And then as we talked about earlier , you know , we have gotten a head start on equity needs .

Speaker #6: We have $230 million of forwards that we recently issued on the ATM . So we're in good shape . And , you know , we think we're ahead of the ahead of the game there for funding for next year .

Speaker #8: Okay . Thanks . And then just follow up . You know , are you seeing any competition or greater competition on deals from some of the the the private net lease platforms that are out there in any part of your , your buy box ?

[Analyst]: Okay, thanks. Just to follow up, are you seeing any competition or greater competition on deals from some of the private net lease platforms that are out there in any part of your buy box?

Speaker #6: Yeah , I mean , look , the net lease market has always been competitive . Especially in the US . And we have seen a bit of a pickup in new competition .

Operator: Yes.

Jason Fox: I mean, look, the net lease market has always been competitive, especially in the U.S., and we have seen a bit of a pickup in new competition. It's mainly the private equity players, as you mentioned, and they're finding that lease attractive. We really don't think we've run into them all that much. We don't always have full visibility on who we may be competing with, and that's at least thus far right now. I'd imagine we'll see incremental competition that comes up, and that likely leads to some pricing pressures. It feels manageable right now, and we certainly have a cost of capital to allow us to compete on price when needed. I think that's okay. I think it's also worth keeping in mind that, especially on sale-leasebacks, experience and track record on execution matter quite a bit.

Speaker #6: It's mainly the private equity players . As you mentioned , and they're finding that least attractive . We really don't think we've run into all that much .

Speaker #6: We don't always have full visibility on on who we may be competing with . And that's at least thus far right now . So I'd imagine we'll see .

Speaker #6: Incremental competition that comes up in , you know , that likely leads to some pricing pressures , but it feels manageable right now .

Speaker #6: And , you know , we certainly have a cost of capital to allow us to compete on price . You know , when needed .

Speaker #6: So I think that's I think that's okay . You know , I think it's also worth keeping in mind that , you know , especially on sale leasebacks experience and track record on execution matter , you know , quite a bit .

Speaker #6: So , you know , newer entrants may have a little bit more of a hurdle to , to cover there . And , you know , our reputation and kind of history should be a real competitive advantage to .

Jason Fox: Newer entrants may have a little bit more of a hurdle to cover there, and our reputation and kind of history should be a real competitive advantage, too.

Speaker #8: Okay . Thank you .

[Analyst]: Okay, thank you.

Speaker #4: Your next question comes from Smedes Rose with Citi . Please state your question .

Operator: Your next question comes from Smedes Rose with Citi. Please state your question.

Speaker #9: Hi . Thanks a lot . I wanted to ask you first just a little bit . If you could just give us an update or reminder , I guess , on where you are on the on the Hellwig process in terms of leases that I think you had expected seven to be terminated by this time of the year .

[Analyst]: Hi. Thanks a lot. I wanted to ask you first, just a little bit, if you could give us an update or a reminder, I guess, on where you are on the W. P. Carey process in terms of leases that I think you had expected seven to be terminated by this time of the year, and then maybe I think five more to go. Is that still kind of the case? Maybe where you are on stores that are expected to be sold versus re-leased?

Speaker #9: And then maybe I think five more to go . Is that is that still kind of the case and maybe where you are on , on stores that are expected to be sold versus released .

Speaker #6: Yeah , sure . Brooks , do you want to cover that ?

Jason Fox: Yeah, sure. Brooks, you want to cover that?

Speaker #10: Yeah . So first , maybe just a broader status update , you know , as Tony mentioned , they remain current on rent .

Brooks Gordon: Yeah. First, maybe just a broader status update. As Toni mentioned, they remain current on rent. We've reduced them down to our number 14 tenant, and we're making good progress on our plan to reduce that. Specific to your question, we're taking a number of actions to reduce our exposure there. We've sold three occupied stores in Q3 and expect a couple more over the next few months. As you mentioned, we took back seven. The first seven of the 12 in total were taken back. Of those seven, we signed leases with new operators at two, and one is in process, so it should be signed soon. Four are under contract to sell. Those will close in Q4 and into Q1. As I mentioned, we're taking back another five in 2026.

Speaker #10: We've reduced them down to our number 14 tenant . And you know , we're making good progress on our plan to to reduce that specifically to your question , you know , we're taking a number of actions to reduce our exposure .

Speaker #10: There . We've sold three occupied stores in Q3 . Expect a couple more over the next few months . There . As you mentioned , we took back seven .

Speaker #10: The first seven of the 12 in total . We're taking back . So of those seven we signed leases with new operators at two and one is in process .

Speaker #10: So it should be signed soon for our under contract to sell . Those will close in Q4 and into Q1 . And then as I mentioned , we're taking back another 5 in 2026 .

Speaker #10: We signed leases on on three of those locations . One more in process , and then one will be targeted for sale . So making very good progress on that strategy .

Brooks Gordon: We signed leases on three of those locations, one more in process, and one will be targeted for sale. Making very good progress on that strategy. We would look to reduce the exposure on top of that quite quickly. We're targeting out of our top 25 sort of toward midyear of 2026, and we think we have a path to get them out of the top 50 by the end of 2026. We expect the exposure to come down meaningfully going forward.

Speaker #10: And we would look to reduce the exposure on top of that quite quickly. You know, we're targeting out of our top 25, sort of toward mid-year of 2026.

Speaker #10: You know , and we think we have a path to get them out of the top 50 kind of by the end of 2026 .

Speaker #10: So we expect the exposure to come down meaningfully going forward .

Speaker #9: Great . Thanks . And then you mentioned in the fourth quarter . Maybe having gone in a little too conservative around rent loss assumptions .

[Analyst]: Great, thanks. You mentioned in the fourth quarter maybe having gone in a little too conservative around rent loss assumptions. As you think about next year, any thoughts on how you could sort of maybe assess that? I mean, are you concerned about the underlying economy at all that would maybe drive you to be maybe more conservative than you have been historically, or just any kind of thoughts on how you're thinking about that at this point?

Speaker #9: And as you just think about next year , any thoughts on how you could sort of maybe assess that or are you concerned about the underlying economy at all ?

Speaker #9: That would maybe drive you to be maybe more conservative than you have been historically , or kind of just any kind of thoughts on how how you're thinking about that at this point ?

Speaker #6: Yeah . Brooks , you want to take that one as well ?

Jason Fox: Yeah. Brooks, you want to take that one as well?

Speaker #10: Sure . I mean , you know , without kind of projecting forward any specific guidance . You know , I think what's important to note is that our our broader watch list and kind of credit quality has has improved materially over recent quarters , you know , again , that's driven by resolutions on true value and hearthside .

[Analyst]: Sure.

Brooks Gordon: I mean, without kind of projecting forward any specific guidance, I think what's important to note is that our broader watch list and kind of credit quality has improved materially over recent quarters. Again, that's driven by resolutions on True Value and Hardside and the progress we're making on Hellweg. We continue to closely monitor that turnaround at Hellweg and we'll continue to have caution there. That said, our broader credit watch universe has come down meaningfully. We will continue to take a conservative and cautious approach there with respect to credit broadly and Hellweg specifically. We expect to be able to drive strong earnings growth even net of that.

Speaker #10: And , you know , the progress we're making on Hellwig . And , you know , we continue to closely monitor that turnaround at Hellwig .

Speaker #10: And we'll continue to have caution there . That said , you know , our broader credit Watch universe has come down meaningfully . So , you know , we'll continue to take a conservative and cautious approach there with respect to credit broadly and how specifically .

Speaker #10: But we expect to be able to drive strong earnings growth, even net of that.

Speaker #9: Thank you. I appreciate it.

[Analyst]: Thank you. Appreciate it.

Speaker #4: Your next question comes from Michael Goldsmith with UBS . Please state your question .

Operator: Your next question comes from Michael Goldsmith with UBS. Please state your question.

Speaker #11: Good morning. This is Catherine Graves on for Michael. Thank you for taking my questions. So my first question is, you've completed $1.6 billion of investments so far year to date.

[Analyst]: Good morning, this is Katherine Graves on for Michael, thank you for taking my questions. My first, you've completed the $1.6 billion of investments so far year to date, you raised investment guidance. Can you maybe just provide some color on what's currently in your pipeline as far as the incremental volume increase, anything just in terms of geographic split between Europe and U.S., property type mix, you know, industrial versus retail, and anything on cap rates that you're currently seeing in the pipeline as you build for Q4.

Speaker #11: You raised investment guidance . Can you maybe just provide some color on the what's currently in your pipeline as far as the incremental volume increase ?

Speaker #11: Anything just in terms of geographic split between Europe and the U.S., property type mix, industrial versus retail, and anything on cap rates that you're currently seeing in the pipeline as you build for Q4.

Speaker #6: Yeah , sure . So near term , you know , currently includes , I would call it several hundred million dollars of identified transactions , most of them in advanced stages .

Jason Fox: Yeah, sure. Near term, currently includes, I would call it, several hundred million dollars of identified transactions, most of them in advanced stages. We think many of those will close in the fourth quarter, although this time of year it's always hard to predict and some may slip into next year, which would set us up for a strong start to 2026. On top of that, which you can also factor in and we include in our SUP, is about $70 million of capital projects that are scheduled to complete this year. These are the build-to-suits and expansions that we regularly do. You probably would also note that in addition to that $70 million, we have another $180 million that are in construction. Much of that, probably most of that, would close in 2026.

Speaker #6: We think many of those will close in the fourth quarter , although , you know , this time of year , it's always hard to predict in some , you may slip into next year , which would set us up for a strong start to 26 .

Speaker #6: I think on top of that , which you can also factor in , and we include in our Sup is about $70 million of capital projects that are scheduled to complete this year .

Speaker #6: These are , you know , the build to suits and expansions that we . Regularly do . You probably would also note that we have , in addition to that , 70 , we have another $180 million that are in construction .

Speaker #6: You know , much of that probably most of that would close in 2026 . In terms of geographies , I mean , one of the things that we've that's maybe worth noting is more activity in Europe .

Jason Fox: In terms of geographies, one of the things that may be worth noting is more activity in Europe. While year to date North America still makes up about 75% of the deals that we've done, in the third quarter we saw the split closer to 50/50 between North America and Europe. The themes that we're seeing in Europe are probably similar to those in the U.S. where rate stability has led to a tightening of bid-ask spreads and sellers who may have been on the sidelines for a while now are willing to transact. That has translated into more activity and that's both in the U.S. and Europe. It's maybe most notable that we've seen more deal flow in Europe over the last, call it, quarter, quarter and a half compared to the prior years.

Speaker #6: While year to date North America still makes up about 75% of the deals that we've done , the third quarter , we saw the split closer to 50 over 50 between North America and Europe .

Speaker #6: And you know, I think the themes that we're seeing in Europe are probably similar to those in the U.S., where rate stability has led to a tightening of bid-ask spreads.

Speaker #6: And , you know , sellers who may have been on the sidelines for a while now are willing to transact . And that's kind of translated into more activity .

Speaker #6: And that's that's both in the US and Europe . But I think it's maybe most notable that we've seen , you know , more deal flow in Europe over the last quarter , quarter and a half compared to , the prior years in terms of property type .

Jason Fox: In terms of property type, we continue to see the best opportunities in industrial and that includes both manufacturing and warehouse. That's reflected in our deals completed to date and it also makes up the bulk of our pipeline as well. You asked about pricing as well. We continue to target deals in the sevens and we've been transacting on average in the sevens and that's been the case pretty consistently throughout 2025. It's also largely where the pipeline is right now. Cap rates have mostly remained unchanged year to date. As I mentioned earlier, I would expect to see some tightening as we head into 2026, especially if rates stay at the current levels in that 4% zone. Certainly, increased competition could factor into that as well. That remains to be seen. Overall, the pricing still works for us very well.

Speaker #6: You know , we continue to see the best opportunities in industrial and that includes both manufacturing and warehouse . I think that's reflected in our deals completed to date .

Speaker #6: And it's also makes up the bulk of of our pipeline as well . I think you asked about pricing as well . And , you know , we continue to target deals in the sevens .

Speaker #6: And we've been transacting on average in the sevens . And that's been , you know , the case for pretty consistently throughout 2025 .

Speaker #6: And it's also largely where the pipeline is right now . So cap rates have mostly remained unchanged year to date . But as I mentioned earlier , I would expect to see some tightening as we head into 2026 , especially if if rates stay at the current levels in that 4% zone .

Speaker #6: And certainly increase competition could factor into that as well . But that's , you know , kind of remains to be seen . So , you know , I think the pricing still works for us very well .

Speaker #6: And you know , we always , you know , want to make sure we remind people that , you know , if we're achieving kind of mid seven initial cap rates , that equates to an average yield in kind of the nines , which , you know , we still believe that's among the highest in the net least sector .

Jason Fox: We always want to make sure we remind people that if we're achieving kind of mid 7% initial cap rates, that equates to an average yield in kind of the 9%, which we still believe that's among the highest in the net lease sector and certainly provides really interesting spreads relative to how we're funding these deals.

Speaker #6: And certainly provides , you know , really interesting spreads relative to to how we're funding these deals .

Speaker #11: Got it . Thank you for the comprehensive answer . That's super helpful . And then my second same store rent growth looks like it ticked up about ten basis points this quarter .

[Analyst]: Got it. Thank you for the comprehensive answer. That's super helpful. My second same-store rent growth looks like it ticked up about 10 bps this quarter. I know you talked about the expectations for the remainder of the year, but just thinking through the roughly 50% of rents currently tied to CPI, how should we think about the sustainability of that, like mid 2% growth if inflation moderates? Should we also sort of expect in the future to see more fixed rent bumps in future acquisitions going forward?

Speaker #11: And I know you talked about the the expectations for the remainder of the year . But just thinking through the roughly 50% of rents currently tied to CPI , how should we think about the sustainability of that mid 2% growth if inflation moderates ?

Speaker #11: And then should we also sort of expect in the future to see more fixed rent bumps in future acquisitions going forward ?

Speaker #6: Yeah , let me take the second question . And maybe Tony can just comment on on how we kind of look on a , on a go forward basis of the CPI impacts on our , on our same store in terms of should we continue to expect to see inflation ?

Jason Fox: Yeah, let me take the second question and maybe Toni can just comment on how we kind of look on a kind of go forward basis of the CPI impacts on our same-store in terms of should we continue to expect to see inflation. I think since we saw the inflation spike a couple years back, it's gotten a little bit more difficult as we're negotiating rent structures and sale-leasebacks. It's been a little bit more difficult to get inflation at least in the U.S. Year to date, looks like about one quarter of our deals have CPI-linked increases and a lot of that is in Europe and that's where it's still customary to get those increases in Europe and we would expect to continue to see that.

Speaker #6: I think , you know , since we saw the inflation spike a couple of years back , it's gotten a little bit more difficult as we're negotiating kind of rent structures and sale leaseback .

Speaker #6: It's been a little bit more difficult to get inflation , at least in the US year to date . Looks like about one quarter of our deals have CPI linked increases .

Speaker #6: And you know, a lot of that is in Europe. And that's where it's still customary to get those increases in Europe.

Speaker #6: And we would expect to continue to see that . But I think what CPI increases or inflation changes have also impacted is our fixed increases .

Jason Fox: I think what CPI increases or inflation changes have also impacted is our fixed increases and the levels at which we're able to negotiate those. I think historically we've probably been closer to 3% on average and now we're typically seeing new deals with fixed increases in the maybe 50 to 100 basis points above that. Year to date, the deals that we've done have averaged a fixed increase of 2.7% and the pipeline is fairly consistent with that. While we're not getting as much inflation on new deals, our same-store is still quite strong and it should remain that way. Toni, I don't know if you have any views into moderation of inflation, kind of the timing of our bumps and how that could flow through.

Speaker #6: And the levels at which we're able to negotiate those . I think historically , we've probably been closer to 3% on average . And now we're typically seeing new deals with fixed increases in the .

Speaker #6: Maybe 50 to 100 basis points above that . I think year to date , the deals that we've done have averaged a fixed increase of 2.7% .

Speaker #6: And , you know , the pipeline is is fairly consistent with that . So while we're not getting as much inflation on new deals , our same store is still quite strong .

Speaker #6: And and should remain that way . Tony , I don't know if you have any any views into moderation of inflation in kind of the timing of our bumps and how that could flow through .

Speaker #7: Yeah , I think it's helpful to just think through the way that our leases work . And we've mentioned this historically , you know , the CPI based leases specifically have a bit of a look back .

Toni Sanzone: Yeah, I think it's helpful to just think through the way that our leases work. We've mentioned this historically, you know, the CPI-based leases specifically have a bit of a look back. They're looking at inflation really in this kind of last quarter of the year, if you will. We have a pretty reasonable line of sight into what next year's same-store could look like, especially just given how many of our leases bump in January or in the first quarter. Even with, you know, CPI stabilizing kind of at its current levels or decreasing slightly, we do still expect our contractual same-store to be even north of where it is this year. Some of that, as I mentioned, is supported by the fixed increases being higher than what they've been historically, but also with the expectation that CPI stabilizes. Again, north of 2.5% is our expectation for next year.

Speaker #7: So, they're looking at inflation really in this kind of last quarter of the year, if you will. So, we have a pretty reasonable line of sight into what next year same store could look like, especially just given how many of our leases bump in January or in the first quarter.

Speaker #7: So even with , you , CPI stabilizing kind of at its current levels or decreasing slightly , we do still expect our contractual same store to be even north of where it is this year .

Speaker #7: And some of that , as I mentioned , is supported by the the fixed increases being higher than what they've been historically , but also with the expectation that CPI stabilizes .

Speaker #7: So again , north of 2.5% is is our expectation for next year .

Speaker #11: Got it . Thanks so much . Appreciate the color .

[Analyst]: Got it. Thanks so much. Appreciate the color.

Speaker #6: You're welcome .

Jason Fox: You're welcome.

Speaker #4: Your next question comes from Greg McGinnis with Scotiabank. Please state your question.

Operator: Your next question comes from Greg McGinniss with Scotiabank. Please state your question.

Speaker #12: Hey good morning . My apologies if I missed it , but did you did you provide the disposition cap rate achieved on the self assets ?

[Analyst]: Hey, good morning. My apologies if I missed it, but did you provide the disposition cap rate achieved on the self-storage assets, and do you expect to fully sell out early next year at similar cap rates?

Speaker #12: And do you expect to fully sell out , you know , next year early next year at similar cap rates ?

Speaker #6: Brooks you want to cover that .

Jason Fox: Brooks, you want to cover that?

Speaker #10: Yeah , sure . So we we were not going to speak to the active transactions . But as we mentioned on our Q2 call , we've thus far transacted just inside of a 6% cap rate on on the storage assets , you know , in total , I'd expect it to be right around 6% , some maybe a little higher , some a little lower , really depends on exactly the mix .

Brooks Gordon: Yes, sure. We were not going to speak to kind of active transactions, but as we mentioned on our Q2 call, we've thus far transacted just inside of a 6% cap rate on the storage assets. In total I'd expect it to be right around 6%, some maybe a little higher, some a little lower. It really depends on exactly the mix this year. With respect to the full platform, as Jason mentioned, we're in the market with the balance of it. We do retain a bit of flexibility in terms of the exact timing in what sub portfolios transact, but over the medium near term we'll be exiting the full operating storage platform.

Speaker #10: This year . And with respect to the the the full platform , as Jason mentioned , we're in the market with the balance of it .

Speaker #10: We do retain a bit of flexibility in terms of the exact timing and what support folios transact. But over the medium to near term, you know, we'll be exiting the full operating storage platform.

Speaker #12: Is there any difference in terms of the operations or occupancies of those assets that would lead you to believe that maybe cap rates might be different geography , something like that .

[Analyst]: Is there any difference in terms of the operations or occupancies of those assets that would lead you to believe that maybe cap rates might be different by geography, something like that?

Speaker #10: Each portfolio is different . As I mentioned , some will trade a little higher , some will trade a little lower . But on average we would expect , you know , the total self-storage exit to be in and around a 6% cap rate .

Brooks Gordon: Each sub-portfolio is different, and as I mentioned, some will trade a little higher, some will trade a little lower. On average, we would expect the total self-storage exit to be in around a 6% cap rate.

Speaker #12: Okay . Thanks . And then I appreciate the color you guys provided on on your thoughts on acquisitions . And you've certainly been busy over the last couple of quarters .

[Analyst]: Okay, thanks. I appreciate the color you guys provided on your thoughts on acquisitions. You've certainly been busy over the last couple quarters. Based on guidance, Q4 may slow down a little bit. I'm just trying to clarify whether or not you expect to generally maintain this level of investment pace in 2026.

Speaker #12: Some guidance Q4 may slow down a little bit , but I'm just trying to clarify whether or not you expect to generally maintain this level of investment base in 2026 .

Speaker #6: Yeah , sure . Look , it's hard to predict since the macro certainly factors in and , you know , at this point , we typically only have visibility out maybe 60 to 90 days .

Jason Fox: Yeah, sure. Look, it's hard to predict since the macro certainly factors in, and at this point we typically only have visibility out maybe 60 to 90 days. Our intention is certainly to keep the pace, and I think you can look at what we've done. I referenced earlier that if you go back on a trailing 12-month basis, we've been well over $2 billion, and there's not a lot that we're seeing right now that's a catalyst to change that dynamic. The infrastructure and team is in place here. We have lots of liquidity, including meaningful free cash flow. We referenced the equity forwards that we've raised already and improved cost of capital. That works. We should continue to see good activity. We can lean into pricing and kind of feed that net lease growth algorithm.

Speaker #6: But our intention is certainly to keep the pace . And I think you can look at what we've done . You know , I referenced earlier that if you go back on a trailing 12 month basis , we've been well over 2 billion .

Speaker #6: And , you know , there's not a lot that we're seeing right now . That's a catalyst to change that dynamic . And , the infrastructure team is in place here .

Speaker #6: We have lots of liquidity , including meaningful free cash flow . We referenced the equity forwards that we've raised already and an improved cost of capital that works .

Speaker #6: So, we should continue to see good activity. We can lean into pricing and kind of feed that in, at least, growth algorithm.

Speaker #6: So you know , we we do feel good , but it's hard to predict exactly where where things will go .

Jason Fox: We do feel good, but it's hard to predict exactly where things will go.

Speaker #12: Thanks , Jason .

[Analyst]: Thanks, Nathan.

Speaker #6: Welcome .

Jason Fox: Welcome.

Speaker #4: Your next question comes from Mitch Germain with Citizens JMP. Please state your question.

Operator: Your next question comes from Mitch Germain with Citizens JMP. Please state your question.

Speaker #13: Thank you . And congrats on the quarter . It seems like you know , the operating storage assets are going to be dwindled down .

[Analyst]: Thank you and congrats on the quarter. It seems like, you know, the operating self-storage assets are going to be dwindled down. How should we think about the remaining operating properties? I think you still have a couple of hotels, like maybe one other student housing asset. Are those also sale candidates?

Speaker #13: How should we think about the remaining operating properties ? I think you still have a couple of hotels that maybe one other student housing asset is that are those also sell candidates .

Speaker #6: Yeah. Do you want to take that?

Operator: Yeah.

Jason Fox: Brooks, you want to take that?

Speaker #10: Yeah . You're right . So we own four operating hotels . So that includes three of the former net lease marriotts that we still own .

Brooks Gordon: Yeah, you're right. We own four operating hotels, so that includes three of the former net lease Marriotts that we still own. One is a Hilton in Minneapolis. We'll sell that when the time is right. That could be in 2026, something we're evaluating. The three Marriotts are all slated for either sale or redevelopment. We're evaluating both paths. They're all operating normally in the meantime. I'd say the first is one in Newark, which we're still in our final evaluation phase there. Towards mid 2026, we would seek to trigger a redevelopment into warehouse there. The others are great locations in Irvine and San Diego, but we're being patient there. You mentioned we have one remaining student housing property in the U.K., something we're evaluating from a sale perspective. That could be a near-term sale candidate, something we're evaluating now.

Speaker #10: One is a Hilton in Minneapolis. You know we'll sell that when the time is right. That could be in 2026; something we're evaluating.

Speaker #10: The three marriotts are all slated for either sale or redevelopment . We're evaluating both paths . They're all operating normally . In the meantime , I'd say the first is one in Newark , which , you know , we're still in our final evaluation phase there .

Speaker #10: But towards mid 26 , we would would seek to trigger a redevelopment into warehouse . There . The others are great locations in Irvine and San Diego , but we're being patient there .

Speaker #10: And then you mentioned we have one remaining student housing property in the UK , something we're evaluating from a sales perspective . Again , that that could be a near-term sale candidate , something where we're evaluating now .

Speaker #13: Great. That's helpful. And then maybe Brooks, will I have you the rent recapture on your retail leases a little bit lower than the rest of your portfolio?

[Analyst]: Great, that's helpful. Maybe, Brooks, while I have you, the rent recapture on your retail leases is a little bit lower than the rest of your portfolio. Is that kind of how we should expect the leases that you're looking to release going forward?

Speaker #13: Is that Hellwig and is that kind of how we should expect the leases to that you're looking to release going forward ?

Speaker #10: No , actually , this is totally unrelated . These are just two AMC theaters , so we only own four movie theaters total .

Brooks Gordon: No, actually this is totally unrelated. These are just two AMC theaters. We only own four movie theaters total. We'll bring that number down to zero as quickly as we can. It is a very, very small piece of ABR if you look at the actual contribution there. We rolled those rents down to keep those theaters open and operating.

Speaker #10: We'll bring that number down to zero as quickly as we can , but it's very , very small piece of AVR . If you look at the the actual contribution , there .

Speaker #10: So , you know , we rolled those rents down to keep those theaters open and operating .

Speaker #13: Thank you .

[Analyst]: Thank you.

Speaker #4: Your next question comes from Jason Wayne with Barclays . Please state your question .

Operator: Your next question comes from Jason Wayne with Barclays. Please state your question.

Speaker #14: Hi . Good morning . Yeah , just on the move outs that led to the sequential drop in occupancy . So those have been known for a few quarters .

Brooks Gordon: Hi, good morning. Just on the move outs that led to the sequential drop in occupancy. This has been known for a few quarters. I know you said that many of those have been resolved or nearly resolved by now. Just wondering, kind of the strategy you think about managing occupancy when you're aware of some known vacates. Vacancy did tick up a bit, as Toni mentioned. Just to recap, the largest addition were two warehouses formerly to Tesco that we had discussed previously. That's about 50 basis points of occupancy. Also, two former True Value warehouses for about 45 basis points and several Hellweg locations for about 20 basis points. All of those are in process of being resolved and should be closing imminently. If you step back and look at our total vacancy, we really do view this as a temporary spike of the total.

Speaker #14: I know you said that many of those have been resolved or nearly resolved by now . So just wondering kind of the strategy you think about managing occupancy when you're aware of some known vacates ?

Speaker #10: Yeah . So vacancy did pick up a bit . Yeah . Vacancy did tick up a bit . As Tony mentioned . You know , just to recap , the largest additions were two warehouses , formerly the Tesco that we had discussed previously .

Speaker #10: That's about 50 basis points of occupancy . Also , two former true value warehouses for about 45 basis points and and a couple of helwig's for or several helwig's for about 20 basis points .

Speaker #10: All of those are in process of being resolved and should be closing imminently . You know , if you step back and look at our total vacancy , we really do view this as a as a temporary spike of the total , roughly 30% of the vacant square footage has either already closed or is closing imminently .

Brooks Gordon: Roughly 30% of the vacant square footage has either already closed or is closing imminently. Another 50% of that is in active negotiations or diligence. We'd expect the vacancy rate to get back to a normal place over the next quarter, quarter and a half time frame. Periodically, we'll get a bigger building back vacant. We work very proactively to resolve those, and that's why these resolutions are well on their way. Thanks. Just on a couple debt raises expected next year. Wondering what kind of pricing you're seeing in the U.S. and Europe right now.

Speaker #10: And then another 50% of that is in active negotiations or diligence . So we'd expect the vacancy rate to get back to a normal place kind of over the next quarter or quarter and a half time frame .

Speaker #10: So periodically, we'll get a bigger building back vacant. We work very proactively to resolve those, and that's why these resolutions are well on their way.

Speaker #14: Thanks . And then yeah , just on a couple debt raises expected next year . Just wondering what kind of pricing you're seeing in the US and Europe right now .

Speaker #6: Sure . Yeah . We have we have two bonds coming due next year . I think the expectation is that we would probably , you know , repay each of those in kind of the same currency in terms of where we're seeing pricing .

Jason Fox: Sure, yeah. We have two bonds coming due next year. I think the expectation is that we would probably repay each of those in kind of the same currency. In terms of where we're seeing pricing, I think in the U.S. you can kind of think of it as low 5%, and in Europe it's probably maybe 100, 125 basis points below that. Kind of think about it, high 3% in and around 4% is roughly where they are.

Speaker #6: I think in the US , you can kind of think of it as , as low fives . And in Europe it's probably , you know , maybe 100 , 125 basis points below that .

Speaker #6: So kind of think about it . High threes in and around 4% is , is is roughly where they are .

Speaker #14: Great . Thank you .

Brooks Gordon: Great, thank you.

Speaker #6: Okay . You're welcome .

Jason Fox: Yeah, you're welcome.

Speaker #4: Your next question comes from Eric Borden with BMO Capital Markets . Please state your question .

Operator: Your next question comes from Eric Borden with BMO Capital Markets. Please state your question.

Speaker #10: Hey, good morning, everyone. I just wanted to talk a little bit more about the cap rate expectation going forward. I know you mentioned you expect maybe some compression just given where the ten-year sits today, but I’m just curious if there's any difference or bifurcation between cap rates in the U.S. versus cap rates in Europe.

Brooks Gordon: Hey, good morning everyone. I just wanted to talk a little bit more about the cap rate expectation going forward. I know you'd mentioned you expect maybe some compression just given where the 10 year sits today, but just curious if there's any difference or bifurcation between cap rates in the U.S. versus cap rates in Europe.

Speaker #10: Thank you .

Speaker #6: Yeah , sure . I mean , over the last couple of years , cap rates , obviously it's a pretty wide range depending on , you know , a lot of the specifics of the transaction .

Jason Fox: Yes, sure. I mean, over the last couple of years, cap rates, obviously it's a pretty wide range depending on a lot of the specifics of a transaction. In Europe, geographies matter as well. I think on average we've been roughly in line between the U.S. and Europe. Maybe this year we've seen a little bit of tightening in Europe. I would attribute that to rates stabilizing a little bit earlier there than over here. It's also important to note, and I just mentioned it, that we can borrow meaningfully inside of where we can borrow in the U.S., so we're still generating better spreads in Europe. I think they're roughly in line. Maybe it's 25 basis points delta between the two.

Speaker #6: And in Europe , geographies matter as well . But I think on average , you know , we've been roughly in line between the US and Europe .

Speaker #6: You know , maybe this year we've seen a little bit of tightening in Europe . I would attribute that to to rates stabilizing a little bit earlier .

Speaker #6: There than over here . You know . But it's also important to note and I just mentioned it , that we can borrow meaningfully inside of where we can borrow in the US .

Speaker #6: So we're still generating better spreads in Europe . But but yeah , I think they're roughly in line . Maybe it's 25 basis points .

Speaker #6: Delta between the two .

Speaker #10: Okay great . And then can you just remind us of your hedging strategy . And how movements in exchange rates .

Brooks Gordon: Okay, great. Can you just remind us of your hedging strategy and how movements in exchange rates impact AFFO per share? If you have any thoughts or indications on the impact positively or negatively in 2026.

Speaker #14: Impact AFFO .

Speaker #10: Per share. And then if you have any thoughts or indications on the impact, positively or negatively, in 2026.

Speaker #6: Sure. Tony, do you want to cover that?

Jason Fox: Sure. Toni, do you want to cover that?

Speaker #7: Yeah , I think just a big picture in terms of our strategy . We continue to hedge our European cash flows first . Naturally , we do that with our expenses .

Toni Sanzone: Yeah, I think just a big picture in terms of our strategy, we continue to hedge our European cash flows first. Naturally, we do that with our expenses. If you think about our interest expense, the denominated euro, and certain of our other property expenses, that really reduces our gross AFFO currency exposure to less than 20% of AFFO for the euro before hedging. If we focus on that, we've implemented a cash flow hedging program beyond that to further reduce our exposure on the vast majority of the remaining net cash flows. Really, material movements in the currencies are not expected to have an impact on AFFO, positive or negative. I'd say over the course of this entire year, we saw pretty meaningful movements in the euro and that maybe added about $0.02 to our total AFFO this year relative to where we started the year.

Speaker #7: So if you think about our interest expense, denominated in euros, and certain of our other property expenses, that really reduces our gross AFFO currency exposure to less than 20% of AFFO for the euro before hedging.

Speaker #7: So if we focus on that , we've implemented a cash flow hedging program . Beyond that to further reduce our exposure on the vast majority of the remaining net cash flows .

Speaker #7: So really , material movements in the currencies are really not expected to have an impact on AFO , positive or negative , I'd say over the course of this entire year , we saw pretty meaningful movements in the euro , and that , maybe added about $0.02 to our total AFO .

Speaker #7: This year relative to where we started the year from an expectation standpoint . You know , I wouldn't want to go as far as to predict what next year would look like from an FX rate and movements there .

Toni Sanzone: From an expectation standpoint, I wouldn't want to go as far as to predict what next year would look like from an FX rate and movements there. I would just say that our strategy should continue to be effective from a hedging standpoint so that we wouldn't see any material movement to the bottom line from an AFFO perspective.

Speaker #7: I would just say that our strategy should continue to be effective from a hedging standpoint , so that we wouldn't see any material movement to the bottom line from an AFO perspective .

Speaker #10: I appreciate it . Thank you for the time .

Brooks Gordon: Appreciate it. Thank you for the time.

Speaker #4: Your next question comes from Daniel Bayon with Bank of America . Please state your question .

Operator: Your next question comes from Daniel Bayan with Bank of America. Please state your question.

Speaker #15: Good morning . I appreciate the update on your potential rent loss forecast . I was wondering if you could touch on how that compares historically for your portfolio and whether it was more weighted towards Europe or the US .

[Analyst]: Morning. I appreciate the update on your potential rent loss forecast. I was wondering if you could touch on how that compares historically for your portfolio, and whether it's more weighted towards Europe or the U.S. Thanks, Brooks.

Speaker #15: Thanks , Brooks .

Speaker #6: Do you want to take that ?

Jason Fox: You want to take that?

Speaker #10: Sure . So , you know , as Tony mentioned , with respect to the rent loss forecast , you know , there's a degree of caution embedded in that .

[Analyst]: Sure.

Brooks Gordon: As Toni mentioned, with respect to the rent loss forecast, there's a degree of caution embedded in that. We've continuously brought that down throughout the year. I think in terms of a good way to think about credit loss in any given year, as we've discussed in the past, kind of the spread between our contractual and comprehensive same-store, you know, that number will move around, but we expect that on average to be something like 100 basis points for a round number. We think out of that 100 basis points, about 30 to 50 could relate to credit, with the balance being other kind of portfolio activity. That kind of 30ish basis points is a good kind of average credit loss assumption, and that matches up closely to what our actual data suggests from the last 20 plus years. That's kind of a good rule of thumb.

Speaker #10: We've we've continuously brought that down throughout the year . You know , I think in terms of a good way to think about credit loss in any given year , as we've discussed in the past , the spread between our contractual and comprehensive same store , you know , that number will move around .

Speaker #10: But we expect that on average to be something like 100 basis points for a round number . You know , we think out of that 100 basis points , about 30 to 50 could relate to credit , with the balance being other kind of portfolio activity .

Speaker #10: So that kind of 30 ish basis points is a good kind of average credit loss assumption . And that matches up closely to what our actual data suggests from the last 20 plus years .

Speaker #10: So , you know , that's kind of a good , good rule of thumb . Again , that's going to move around in any given period .

Brooks Gordon: Again, that's going to move around in any given period, but that has been our history. With respect to geographic concentration, I don't have that data directly in front of me, but I would expect that to broadly track our overall portfolio ABR allocation of 2/3 U.S.

Speaker #10: But that has been been our history with respect to geographic concentration . I don't have that data directly in front of me , but I would expect that to to broadly track our overall portfolio .

Speaker #10: AVR allocation of kind of two-thirds U.S.

Speaker #15: Thank you . I guess for my second question , I think you mentioned that escalators are trending in the high twos , which sectors delivered the strongest rent escalations in Q3 and where are you seeing pressure , if any ?

[Analyst]: Thank you. I guess for my second question, I think it was mentioned that escalators are trending in the high 2%. Which sectors delivered the strongest rent escalations in Q3? Where are you seeing pressure, if any?

Speaker #6: Yeah , Tony , I don't know if you have any details around that .

Jason Fox: Toni, I don't know if you have any details around that.

Speaker #7: This is on the new deals . You're referencing .

Toni Sanzone: This is on the new deals you're referencing.

Speaker #16: Correct .

[Analyst]: Correct?

Speaker #6: Oh , on New Deal . Let me take that out that she mentioned in the same store growth at the portfolio . I mean , most of what we've been doing this year has been industrial .

Jason Fox: Oh, on new deals. Let me take that out that you mentioned. In the same-store growth at the portfolio, I mean, most of what we've been doing this year has been industrial, and that's a mix of both manufacturing and warehouse. I think one of the maybe drivers of our ability to achieve higher negotiated rent bumps within these leases is the fact that it's in an asset class that the market for those assets tends to have higher expected market rent growth compared to, say, retail, where a lot of those leases, especially with the investment grade retailers, tend to be flat. If they're not flat, you see them in maybe the 1% to 2% range on average. There is a bit of a driver behind the mix that more of what we're doing is industrial. I think that's a theme.

Speaker #6: And that's a mix of both manufacturing and warehouse . And I think one of the maybe drivers of our ability to achieve higher negotiated rent bumps within these leases is the fact that it's in an asset class that , you know , the market for those assets tends to have higher expected , you know , market rent growth compared to , say , retail , where a lot of those leases , especially with the investment grade retailers , they tend to be flat .

Speaker #6: And if they're not flat , you see them in maybe the 1 to 2% range on average . So yeah , there is a bit of a driver behind the mix that more of what we're doing is industrial .

Speaker #6: So yeah , I think that's a theme .

Speaker #15: Got it . Thank you .

[Analyst]: Got it. Thank you.

Speaker #6: You're welcome .

Jason Fox: You're welcome.

Speaker #4: Okay . Thank you . And a reminder to the audience to ask a question . Press star One on your phones . Now once again to ask a question .

Operator: Thank you. A reminder to the audience to ask the question, press Star one on your phones now. Once again, to ask a question, press Star one on your phones now. Our next question comes from Ryan Caviola with Green Street. Please state your question.

Speaker #4: Press star one on your phones . Now . And our next question comes from Ryan Gaviola with Green Street . Please state your question .

Speaker #17: Good . I hello .

Speaker #18: Good morning everyone with acquisitions in the quarter across Europe , Canada and Mexico , could you provide any color on international competition and has any of the private capital that has entered the net lease space competed on international deals , or do they stay primarily in the US ?

[Analyst]: Good morning, everyone. With acquisitions in the quarter across Europe, Canada, and Mexico, could you provide any color on international competition, and has any of the private capital that has entered the net lease space competed on international deals, or did it stay primarily in the U.S.? Thanks.

Speaker #18: Thanks .

Speaker #6: Yeah , sure . Yeah . Europe historically has been less crowded . Certainly there's there's you know , there's not a , you know , many if any , you know , pan European , you know , public .

Jason Fox: Yeah, sure, yeah. Europe historically has been less crowded. Certainly there's not many, if any, pan-European public REITs. It's more on the private side, and that's what it's been historically. I would say we are seeing a little bit of competition pop up there, and much of those are U.S. funds that are looking to kind of enter in Europe. It's probably worth noting that that's easier said than done. I mean, we've been on the ground and investing in Europe for over two and a half decades. I mentioned earlier that we have a team of over 50 people on the ground there across our London and Amsterdam offices. We have deep relationships. We have a very good brand and track record across Europe. We know the various markets well. We also know how to optimize leases and tax structures and have scale, and all that stuff matters.

Speaker #6: Right . So it's more on the private side and that's , you know , that's what it's been historically . I would say we are seeing a little bit of competition pop up there .

Speaker #6: And you know , much of those are , you know , us funds that are looking to kind of enter in Europe . You know , it's probably worth noting that , you know , that's easier said than done .

Speaker #6: I mean , we've been on the ground in investing in Europe for over two and a half decades . I mentioned earlier that we have a team of over 50 people on the ground there across our London and Amsterdam offices .

Speaker #6: You know , we have deep relationships . We have a very good brand and track record across Europe . We know the various markets well .

Speaker #6: We also know how to optimize leases and tax structures and and have scale and all that stuff matters . So we have our advantages over there .

Jason Fox: We have our advantages over there. That said, even with a little bit more competition, it's still a big, fragmented market. I think activity levels are increasing with more opportunities opening up. We still feel good about our prospects for more deal volume in Europe.

Speaker #6: You know , that said , even with a little bit more competition , it's still a big fragmented market . I think activity levels are increasing with more opportunities opening up .

Speaker #6: So so we we still feel good about our prospects for more deal volume in Europe .

Speaker #18: Thanks. I appreciate that. And then.

[Analyst]: Thanks, appreciate that.

Speaker #6: Yeah you're welcome .

Jason Fox: You're welcome.

Speaker #18: Just kind of going back to the US I know there's been more of a focus on industrial and the acquisition front , but I did notice Dollar General assets have been consistent additions to the portfolio the last few quarters .

[Analyst]: Just going back to the U.S., I know there's been more of a focus on industrial and the acquisition front, but I did notice Dollar General assets have been consistent additions to the portfolio the last few quarters, and then that larger deal in the fourth quarter of last year. Now they're top 2010. Could you just update us on that relationship and how you feel about the dollar store space in general and how much you'd like to grow that?

Speaker #18: And then that larger deal in the fourth quarter of last year . Now their top 2010 . And could you just update us on that relationship and how you feel about the dollar store space in general and how much you'd like to grow that ?

Speaker #6: Yeah , sure . I mean , we do have a relationship with with the company itself as a as a good sized landlord .

Jason Fox: Yeah, sure. I mean, we do have a relationship with the company itself as a good sized landlord. Now, those deals, and I think pretty much all or most Dollar General deals that are traded in the market, come through the development pipeline. We have relationships with most of our deals that came through from developers that were recently built stores. I think we've been opportunistic there. Dollar General took a little bit of a credit hit mid last year when they reported on lower growth expectations and their stock price went down. We took advantage of that. I think a lot of our peers are pretty full on Dollar General, maybe dollar stores more broadly. I look at it as opportunistic pricing and we've been able to layer in a really good credit, good concept, long leases. Would we do a lot more? I don't know.

Speaker #6: Now , those deals and I think pretty much all or most Dollar General deals that are traded in the market come through the development pipeline .

Speaker #6: So we have relationships with a , you know , most of our deals that came through were from developers that were recently built stores and , you know , I think we've been opportunistic there .

Speaker #6: The , you know , Dollar General took a little bit of a of a credit hit mid last year when they reported on lower growth expectations .

Speaker #6: And their stock price went down . But you know , we took advantage of that . I think a lot of our peers are pretty full on Dollar General .

Speaker #6: Maybe dollar stores more broadly . So I look at it as opportunistic pricing . And we've been in a layer in , you know , a really good credit , good concept , long leases .

Speaker #6: And so , you know , would we do a lot more I don't know , I mean their top 20 now , could they enter our top ten at some point perhaps .

Jason Fox: They're top 20 now. Could they enter our top 10 at some point? Perhaps, but it's going to be more opportunistic based on pricing.

Speaker #6: But it's going to be more opportunistic based on pricing.

Speaker #18: Thanks . Appreciate the color .

[Analyst]: Thanks. Appreciate the color.

Speaker #6: Yeah . You're welcome .

Jason Fox: Yeah, you're welcome.

Speaker #4: Thank you . And your next question comes from Jim Cramer with Evercore ISI . Please state your question .

Operator: Thank you. Ann. Your next question comes from Jim Kammert with Evercore ISI. Please state your question.

Speaker #19: Hi . Good morning . Thank you . Are you able to provide any sort of visibility or details regarding , say , the 26 and 27 lease expirations ?

[Analyst]: Good morning. Thank you. Are you able to provide any sort of visibility or details regarding, say, the 2026 and 2027 lease expirations?

Speaker #19: I'm just curious about maybe what percentage of that is kind of being actively discussed with the tenants today . If you will , versus , you know , letting it run to the last moment .

Jason Fox: I'm just curious about maybe what percentage of that is kind of being actively.

[Analyst]: Discussed with the tenants today, if you will, versus letting it run to the last moment?

Speaker #6: Yeah , sure . You want to take that ?

Jason Fox: Yeah, sure. Brooks, you want to take that?

Speaker #10: Yeah . So virtually all , if not all of the 2026 and 2027 expiring ADR is actively being worked on . You know , our our general process is that 3 to 5 years out , we're really engaging with and strategizing .

Brooks Gordon: Yeah. Virtually all, if not all, of the 2026 and 2027 expiring ABR is actively being worked on. Our general process is that three to five years out we're really engaging with and strategizing, and then, you know, three-ish years out really engaging with tenants. Virtually all that's active. 2026 is a pretty manageable year, 2% and 2.7% of ABR expiring, and we're working on virtually all of that.

Speaker #10: And then , you know , three ish years out really engaging with with tenants . So virtually all that's active 2026 is pretty manageable .

Speaker #10: Year two . And 2.7% of ADR expiring . And so we're we're working on virtually all of that . .

Speaker #19: Great . And you can kind of tease out as it related question , just looking at the average , ABR per square foot seems a little lower in 26 versus 27 .

[Analyst]: Great.

Jason Fox: You can kind of tease out, as a related question, just looking at.

[Analyst]: The average ABR per square foot seems.

Jason Fox: Like a little lower in 2026 versus 2027.

Speaker #19: But I'm just trying to think about the organic . Is there any tilting towards industrial or retail across those next two years or getting too granular here ?

[Analyst]: I'm just trying to think about the organic.

Jason Fox: Is there any tilting towards industrial?

[Analyst]: Retail across those next two years or getting too granular here?

Speaker #10: Well , both years have reasonably similar breakdown in terms of property type . There . Call it 60% warehouse and industrial . You know , in 2026 we have , you know , a couple warehouses which we expect to be able to put .

Brooks Gordon: Both years have reasonably similar breakdown in terms of property type. They're, call it, 60% warehouse and industrial. In 2026, we have a couple warehouses which we expect to be able to put new tenants in at much higher rents. These are very high quality warehouses in the Lehigh Valley where rents are, call it, 40% or 50% below market. We're working on those actively. The others, often tenants have renewal options at continuing rent. We don't necessarily always get a true mark to market opportunity, so it'll be a mix. I think we think it's a very manageable year with some opportunities to push rents.

Speaker #10: New tenants in at much higher rents . These are very high quality warehouses in the Lehigh Valley , where rents are , call it 40 or 50% below market .

Speaker #10: So , you know , we're working on those actively , you know , the others . Often tenants have renewal options at continuing rent .

Speaker #10: So we don't necessarily always get a true mark to market opportunity . But so it will be a mix . But you know I think we think it's very manageable year with some you know some opportunities to to push rents .

Speaker #19: Yeah . Appreciate your time . Thank you .

Jason Fox: Appreciate the time.

[Analyst]: Thank you.

Speaker #4: Thank you . And at this time I am not showing any further questions . I'll now hand the call back to Mr. Sands .

Operator: Thank you. At this time, I am not showing any further questions. I will now hand the call back to Mr. Sands.

Speaker #5: Thank you. And thank you, everyone, for joining us and for your interest in W.P. Carey. If anybody has additional questions, please call Investor Relations directly at (212) 492-1110.

Peter Sands: Thank you and thank you everyone for joining us and your interest in W. P. Carey. If anybody has additional questions, please call Investor Relations directly at 212-492-1110. That concludes today's call. You may now disconnect.