W. P. Carey (WPC) 28 Apr 232023 Q1 Earnings call transcript

Hello and welcome to W. P. Carey's First Quarter 2023 Earnings Conference Call. My name is Jesse and I will be your operator today. All lines have been placed on mute to prevent any background noise. event recorded. today's that note is being Please After via the remarks, we taking questions will be phone today's prepared lines. Instructions on appropriate the be given how to do time. so will at

to Investor I Sands, go program turn will over now ahead. Head Mr. Relations. of Sands, please today’s Peter

everyone. us morning Good XXXX Thank for for call. earnings quarter you our joining morning this first

Before of historic on made are not the facts statements. I maybe this like forward-looking remind to would begin, statements we everyone some deemed and that call

Investor differ to An materially W. Factors this that for copies other results and materials. our at could in available website approximately investor filings. of cause expectations Carey’s be SEC conference made provided related one Relations online from year are you of the archived find be will actual and our P. of in also wpcarey.com, presentations call where section where our will it replay can

Chief Fox. with I to will pass the over call Jason Executive our And Officer, that,

Thanks start to Peter We've to and good contractual made generate investment the lease the the rent also sector. through to a activity. continued net highest pleased our we've say in year growth morning everyone. I'm strong

to average coming its in for and XXXX, around even off elevated with XXXX. to inflation remain X% peak expect We

positioning. Management, recent of take to Park, This cover Head Sanzone, sheet on our raising our guidance the results, our investment morning, CFO, also President; Gordon, Asset details review John I'll activities the briefly our questions. balance and will capital Brooks in and Toni are of call our

the $XXX million million totaled second million, in $XXX quarter, during Investment closed the year-to-date volume with far first quarter. growth. $XXX external Starting so comprising

and weighted of lease term XX rate a of at Our investments average completed year-to-date weighted a years. X.X% average were cap

sale in driver of the focus, virtually largest with leasebacks single as million, portfolios, to at industrial our industrial line each $XXX course, addition, the In transaction over $XX including Apotex were all three core million.

acquisitions. example of transaction, recap and capital with partner stack It with our we sale-leasebacks able have demonstrates a private large excellent execute own corporate is especially deals entirely ones, balance so ability the utilizing to being I'll the ability equity and to our which sale an sheet. also as fund large leaseback, competitive Apotex our of briefly as sponsors, to well transactions, advantage sizable by that was part source as

the In fact, few size of we unavailable this environment. a using buyers is compete or uneconomical even current without believe that close fewer very against lease of could in we net debt, the and something generally asset-level transaction

operations. the over vast in was this the and transaction business, representing a a pharmaceutical the are Canada. generic Tenant's XX an The to payable mission-critical locations [ph] advanced attractive dollars where of properties rent infill structured its industrial in we've fixed are executed line single-digits. for in X% in accretive term. tenant's triple-net Toronto the This year primarily low manufacturing the real comprises facilities estate located and largest And is drug company in manufacturer a in portfolio global rates pharmaceutical for lease and majority with global R&D master vacancy with and campuses, rent XX-year US escalations as others

closed closed transaction but on and XX, April buyout on funded The March private Apotex with equity concurrently was of X. the

our timing, first portfolio Apotex not appear the therefore did in Given quarter metrics. supplemental

portfolio XX% to far ABR. so warehouse of third another ABR. approximately industrial tenant, And investment pro completed and largest we've in However, the quarter, second our along overall it with representing over as forma of on industrial just our exposure a ranks increases basis, to X%

rates closed last investment on February, points XX Turning was averaging In we basis fourth the higher US, with backdrop year-to-date it the the same investments our to in compared quarter. earnings cap investments to largely our the about environment. the as remains call during on the

that of increasing to the in continued US we’ve we've start year fourth range Europe the target, driven alternatives. providing fourth rates we year opportunities trajectory, we in at set as current sellers a transaction a longer quarter, sale In a In has seen most. opportunities best see number to last is of Europe, leasebacks by in the opportunity opportunities in the interest backdrop similar follow quarter funding it increased to pickup interesting the growing respects, the of similar the the in cap and of versus progresses, driven expect the industrial, the Within the higher many rates. by competitiveness

to spread sheet. majority Xs. rates to up The Cap our to provide investment range to capital cap in comfortable our to span we're range mid- strength a opportunities high the large of of of the Xs of this in in cost given rates ability confident continue execute in our and a regions and balance the both evaluating we're continue into the

markets cap rates remain capital additional year. expect the of second unsettled or higher, pressure upward on if the However, in move we see to borrowing half costs would

expensive, in we of While an sellers remain explore the to to be leveraged sponsors more M&A equity more corporate driving type major increase companies high-yield where market continuing for including refinancings. debt loans to overall the that sale considering leasebacks, transaction, proportion The this transactions leasebacks. private we as of sale beneficiary leader And slowed, and seeing in corporate environment remains leasebacks and the has sale expect with are are favorable, and trend. of

the close grade execution given sheet to also of target. advantage below sellers balance is strength about on risk, which our we a to just have asset the ability relevant level We debt, continue that without relying competitive and investment concerned deals with for tenants particularly

meaningfully we're investment environment last track higher and relative to year. close investment the remains to volume on constructive, Overall,

investments early-stage various an including hundred dollars with handful at several Europe. active pipeline, have million of We in of stages a opportunities

high even X% mind, this projections and flows X% around in of is end Keep also to on through in tied escalations based And evidence inflation contractual around growth returning there is inherent of growth given the inflation. rents cool, very rent lag on it at keep our which of next internal in Our beginning the is with proportion XXXX. that year. leases same-store remains the X% to by XXXX over strong, though rent inflation to

So rent remains growth to elevated. X%, remain same-store inflation also will the extent our above

to Moving raising. capital

We capital cover variety equity the sources. to Toni continue a at ending to issued our to forward details, of prices above activity settle well high by driven will utilize current significant quarter was but the capital available access first raising levels. a quarter at with level, equity

million, the work to and potential fund continue the therefore well-positioned accordion week, put with Earlier a completed €XXX feature. through have guidance. capital volume this remain investment in to our million We term we its three-year €XXX to go up embedded loan to to

reiterate we Lastly, a increasing, portfolio have recession in well-diversified with the real half leases. a that the critical of odds estate second year long-term to want of to large leased on I this companies of

has with demonstrated numerous flows our of throughout proven over resiliency economic and stability test. Our the cash the COVID stress portfolio cycles

have remains Occupancy collections. tenant with very high as industry terms watch particular a rent for in benign themes of we do no property And list type.

also dividend, In addition we a around yielding currently to downside protection, well-covered growing X%. pay

we're the from well access as the well-positioned REITs And we're in the making the achieving. environment, strength investment various pleased growth and a particularly sector-leading we're forms of apart balance rent by us sets XXXX. with reported other lease our volume most capital sheet closing, as to progress net in current In of

with Toni. I'll the over And to call that, pass

and everyone. Jason, Thank morning, you, good

year. For of the and X.X% the diluted we from share per period estate XXXX $X.XX share, the generated same quarter quarter, to compared first for total real AFFO last prior up per flat AFFO

end, investment volume discussed, has to of quarter As Jason year-to-date ABR majority been large $XXX million at million. about the early quarter. in adding The $XX closed second subsequent strong

Our built contractual our and above X.X% as same-store benefit for first fourth year-over-year, rent growth reported is basis was record ago higher quarter we from the than the strength rent the results year XXX the points basis continued escalations quarter quarter. which XX portfolio, to it points into of of

the During X.X% the XX% This rates to rent averaging were timing highest quarter, escalate. we've went was leases rent with of lag uncapped first largely seen at our date, leases escalations. which the for by CPI-linked driven that increases on through ABR approximately inflation-linked CPI

growth historical As above a to even for moderate. remain X% XXXX, to in and lag, expect to same-store about of around this beginning our rent contractual at elevated inflation average XXXX levels with result X% we

first AFFO the was Comprehensive our which included is growth the X.X% we on quarter same-store the based portfolio for the at quarter our the year. in year-over-year, occupancy ended lease from rent in rent and end of XX.X% XX.X% net pro rata with up

of comprised properties five quarter proceeds gross million. for the activity $XX Disposition during first

quarter Additionally, of our were those during for the payments of termination received income. totaling in on $XX.X sales early lease-related lease negotiated the properties recognized first we which dispositions, million, other and were contingent and two

lease-related other expect we with For the remain to full XXXX in year, to line XXXX. continue income

its net lease quarter option received the facilities. reclassifications XX of on gain the we balance income during statement sale notice on purchase anticipated, intention the both quarter. and to during of first As $XXX and million rent U-Haul certain of our the exercise triggered portfolio from accounting notice This in asset the on our sheet resulted of the recognition in a first our self-storage

have AFFO, impact or these portfolio metrics. no ABR on However, our

options we quarter, disposition have expected X.X%. disposition and the rate that end not we around in occur portfolio. resulting will estimate is the a do to XXXX proceeds, calculated approximately other in $XXX in our million purchase first significant receive CPI based we of on Currently, any around cap which Notably,

Non-operating realized income $X.X for the primarily comprised totaling million. gains from hedges currency quarter first foreign

with rates cash around gains. euro first strengthen, gains euro in our continues partly line in resulting guidance the by If in positively net assume those it currency quarter. will at the hedging remain currency continues first offset hedges generated during to impact lower quarterly or levels, Our flows, quarter to

during generated to the the and operating NOI of properties $XX quarter, Operating NOI lease operating net converted this two from totaling year. properties, from self-storage XX months in January portfolio of Marriott our hotels million that from primarily in aggregate, operating first

continue Marriott franchise or are operate Marriott agreements. non-core. are targeted to we for Nine operating for hotels remain properties these Until under sale to will the and attractive pursue redevelopment them manage three. continue sold opportunities redeveloped, and other assets long-term

of as for approximately majority And progress. we the the updates remain late But for will balance purposes provide until from total sheet in to continue million properties result, a expect guidance, year. $XXX our we operating as will on XXXX. NOI vast assume to all we We continue to make our

Turning prior the same expense for in totaled to the prior million from million $XX quarter the quarter, flat year. $XX first and expenses. up Interest period the with

ago which interest fourth given Our was quarter, year the in weighted X.X% the with rate up the from line higher quarter, average but for for X.X% was rates. base quarter,

quarter from ago expenses for quarter, and property quarter. X% $XX.X from the fourth X% first the Non-reimbursed million declining the year were

course the increased of XXXX. portfolio that which expenses into last versus earlier, continue occupancy decline mentioned property quarter, factors expectation non-reimbursed I over will As to our

the an G&A for expense increase compensation professional higher the CPA:XX fees in as was $XX.X costs million of and quarter, first merger. result reflecting a

than in a As reminder, quarter the typically to primarily expense of certain higher due the G&A payroll-related of year, the rest the items. trends timing first

and continue For we the G&A full between to to $XXX year, million. fall $XX expect million

for AFFO on the quarter first same Tax assets reflects period on also in year, merger. increases and expense of quarter million year-over-year the acquired addition CPA:XX impact the $XX as an The the the result from of fourth a up CPI-linked both foreign primarily rents. increase totaled basis, the of last

guidance. on $X.XX which midpoint year-over-year full AFFO year share. briefly of maintaining the AFFO Turning $X.XX our to X% real to per at range growth estate guidance almost our implies share, per We're

and investment $X.XX year million. assume $XXX to for to $XXX between million volume continues disposition billion of and $X.XX guidance billion volume Our the

markets Moving our to activity now and positioning. sheet balance capital

utilize to continue our We of a sources. variety capital access to

we raising, week. activity loan earlier capital First equity quarter more term by this followed announced by driven recently was the

X.X settled $XXX at first of we million the raising million. outstanding forwards equity, For equity quarter, end under shares the

timing, Given second will quarter reflected share count. in fully the be shares our diluted the

forward we program equity quarter, our net through million. ATM also the anticipated $XXX for first proceeds During sold of additional

with In conjunction equity the with $XXX therefore, about to we, prior forwards, million equity available ended settle. unsettled forward quarter of

funded the the the day and approximately X.X of $XXX on quarter that of XX.X%. first last quarter our debt million with commencing debt-to-gross investment was ended to for as key quarter. in from start Apotex liquidity at we EBITDA investment times the metrics, the Net second EBITDA leverage at assets our For the

forwards, to of I want to end undrawn the ranges liquidity to within credit EBITDA. a leverage of mid-XXs to highlight on We to EBITDA target forwards low would at leverage position equity transaction. the billion impact well the do quarter funding reflect the totaling strong debt billion, of million which undrawn metrics our low on forma that net gross again, times drawn our end, our our of bring assets to to debt facility maintained equity expect not approximately range. and currently $X.X due our revolving high net pro settling primarily Apotex $X.X to mid- including target five debt $XXX despite on to We being remain

to week, capital As $XX investment a fully leverage-neutral year, an were on executed Jason opportunistic the equity the and €XXX pay loan, are volume capital. availability and in end embedded this return closing completed basis without was proceeds per remain the raise unsettled The our facility. credit over through well-positioned swap, facility, share The disposition and noted, us drawn remaining raised revolving earlier million, mean to guidance fixing term credit proceeds need of the to we rate enabling XXXX. at our we this our expected the down at a on X.X% we primarily loan interest to fund markets unsecured three-year the term forwards when at used rate to combination XXXX of

near-term manageable. our remain Lastly, maturities debt

We $XXX due over bonds April have a maturing of portion of and million be just retired part plans, which until as of disposition no in our will XXXX, XXXX. mortgages

sale on we're that in year start for to growth. the our closing, to leasebacks superior on transaction that drive remains a environment focused rent In inflationary environment continues and building an strong favorable

hand call to for And the questions. with I'll the that, operator back

proceed Our Thank of questions. from [Operator Street. At coming we you. question with time, will Allaway your line take is with Green this question. Instructions] Please Spenser the first

the marketed Europe? on in the market both the Can you you. can being heavily? are What Europe? provide split provide sourced transaction color the of you industry U.S. between seeing and some And U.S. additional rough most Thank a then you and Yes. deal

mean I the backdrop, would at I beginning very sure. the Yes, year. of similar it say, remains was where the to

of U.S., equilibrium we've to we've in rates than and an in maybe think adjust more Europe. the cap seen I continue seen reach

I'd more to to I characterize current was think the is Europe adjust at a when kind rate similar start of earlier of beginning little environment. sellers the U.S. stage. the it quarter bit fourth to the how interest

So -- and flow. in reflected our that's deal

us that US, cap levels We've for to are. really more rates now. think right the come where the that's seen up deals of for I that work

in Europe. now, think I Europe, XX% the think pipeline is probably right I about

more now? So weighted we're some the seeing US to right activity towards going but still be it's

quarter. Okay. assets several guys divested And then office you the in

unfavorable, for color curious if this would what is as a in So just you some you could decision to extended be I the the time, that say, this follow property little a well, but type properties quarter been drove would few office that's the the in leases on then quarter? helpful. that provide guys And

give Yeah. you do on office to color want dispositions? any Brooks, the

noted, were termination office, in that will think Toni dispositions. calls, context I well. as remain that to in we're tied overweight be as and we've sizable Yeah, in underweight particular noted our These deals Sure. lease prior payments pretty specific. we a And deal

value overall the in included be there. should really that So

was In of second question? your the terms of part -- sorry, what

Sorry, assets been just decision of asset the to like first quarter an in some given kind the just for I office it's divest asking unfavorable time. just the about was

it. Got

this it's which The in recall, termination execution a $XX was those strong. Chicago, property quarter about particular where largest deal-specific. prior quite million. we a a quarter, Not So larger you of the had in in payment was much may executed really

economics is those the from total terminations the So of pretty sizable a amount. kind sales plus

properties, of specific in these on particular deal execution good So but timing. terms really

Great. Thank guys. you

you. Thank

from Please Our next with question. proceed question Heffern with is coming Brad your RBC.

Hey, good morning, everyone.

inflation of between dependent much rent the growth figure X% the about it XXXX. is then? this and on over at how How what is of is point? trajectory now that for much in baked talked of You And contractual

details have Yeah. you Toni, around do that? some

can morning. I that. Good Yeah, cover

talked is CPI next more the of the I to assumes year same-store end year on X% large say where are is towards baked certainly think the escalations majority -- starts largely leases. given fully in XXXX. timing the referencing into stabilize the we about we're the our the for of that this I'd that rent kind

X% So expecting all we're see it think roughly that's there, that the next factored think to but could into from I certainly move I year.

had it. escalations. Got you annual on what deal, the you And escalators. seems would Apotex obviously Okay. I X% it That than see for typically said think higher fixed then

how So environment and much the is it we're of just of how that is curious the in specific I'm that much situation.

Yeah. it Look, I the a think of lot do environment. has with to

more conversation We But to are of more maybe increases CPI-based bit a still a it's now course, little focused on leases. in our get. of difficult and

more. It's was bit I alternative it's customary to our not to increases, a of US through when need of and is as fixed think negotiate an think that example the that it to we're Canada. Apotex still we but in I little flowing where, that part getting And Europe CPI an in inflation-based maybe that is negotiation. increase and with something

we market also these are that markets what that want long low structure our reflect in, a specific period year the factors markets do certainly could over deals, are think lease bumps strong And expect think, markets, we our I infill vacancies. to do. strong single-digit grow industrial at when to of what properties, in here very X% Toronto And really we we're we rents time. is investing these a

you to that. obviously, being an U-Haul past, Got next will But then offset you've and diluted potential option that for XXXX? be the it. I be And shares math the the year. offset see Lineage how walk the you talked guess can that think Okay. about I in in an to potentially through

point expected. in kind the years we've that of time been number in maybe number where a of this Look, quarters, talking transaction, been about it's for U-Haul at Yes. of a

And with also up cap the up has option think I I rate purchase market. gone the think meaningfully given gone reinvestment the with inflation. price has

dilution has or meaningfully won't and the the all So that be spread selling I that on come think material. asset down

Lineage, that's couple timing a U-Haul, you think $XXX our times offset size mentioned have to good that. We don't think into visibility an on similar asset at with And mark I we the around now like is Lineage, million. I right do that and

I think when to using visibility at and in sometime asset that there's it. then currently don't it that's selling couple any a we we offer does event that capital years, of probably liquidity exit, be have million that would next us into $XXX dividend But the but paying accretively reinvest. not all in

can going to seven seven if wildly we're million seven You of and cap. $XXX portfolio zero on about pretty dilution caps the from it selling any in low of reinvesting U-Haul and around a would reinvesting Xs and the kind of a offsets think at see kind is significant again, we and

So line that timing on asset perfectly, pretty up there's focus may less we're think that it's but valuable and been holding. a I Lineage

you. Thank

Welcome.

you. Thank

question next proceed from Our Paolone JPMorgan. with coming line your question. the is Anthony of Please with

this one around rates guess, but to deceleration Great. is thinking like is Thanks. starting cap be to pretty still for in that assets? seem update private Can or the yet operating see you. market us business that Jason, I on growth, market your self-storage just seems you It strong.

So business? just that thoughts thinking you're the of any updated how about on segment

something evaluate. Yes, Yes. it's that to Sure, look, Tony. continuing we're

these own And We a net the couple convert we them did ago. then to continue lease. about, net assets options also think three the transaction sell still could which likely into reinvest at attractive your we assets. that of we years rates to point, cap to lease we I talk can operating have and broad the as to similar operating is

that. I to all the and and always think options, we'll all continue do good considering we're options

mid-single-digit like in we we in has meantime, still portfolio. are our think decelerated, the while seeing I same-store the growth

to of also a a net is it's self-storage nice And recession. resiliency lease complement our in portfolio. We frankly, event like the

to do something there's imminent there, and evaluate, now. but right continue think nothing, I say, So we'll I would to

that on. again, Thanks. look Okay. items get out to just, And we're color guess starting XXXX to then I to of some some starting these

what How that with next we loan. Las happens think about You have year? the should retail Vegas

Yes, sure.

location a we loan was that So June construction was on Strip. a in just on retail development prime prime, for It a quick as the Las a XXXX. loan reminder, was of that Vegas originated a it

argue was Strip. about think locations commitment million, or around it's and XX% $XXX of right can funded one now. maximum You the on the million I best It a $XXX --

All is going well.

budget, on we're think we're schedule. on I

to would possibility just quarter fourth lease-up that loan think the I markets. given refinancing really look that at But at our of the the some do that that its the our I year we partner at point, of for broader complete there's longer, really, in gone bit expect little a capital well. end but stays suspect would place this and also

exercise to purchase we'll have which want also that remind have and consider we away. units, completion, options on net you of don't to we the I do some right upon lease those

message and But it's also that's So, update. the quite planned -- is as of kind the of well. think I is going going broader kind

it it But view or think or where I other from the take I higher an at option just mean, guess? as the outcome something I'm out either rate to -- because point we exercise a way, maybe the should Okay. earnings you trying you about additive purchase and more think of is reinvest

there's and going some outs. be Look, to Yes. ins

units. I we think accretive. broader broader that an some the get I loan highly point the the that I in could in option is be but to reinvest And have repaid that portfolio net which lease can we the think repaid think development, or being time, also into could to buy offset at the

options. more meaningful think I the loan come are think your right on decisions repayment those any I some on offsets to that, when So, happens. But we point, to now don't have that to make there to

Okay, great. Thank you.

welcome. You're

is from Please with Eric next with you,. Citi. The question. proceed your Wolfe Thank question

Thanks and good morning.

year. would should hold than next And points have well. to into also insight year. next whether whether of less before just that in this over same-store that comprehensive growth extent the sort noted being You hold the XXX curious you It this as through about just be commentary commentary should about then basis growth at this year, X% point, year I'm that. X% your contractual this

Yes, can that. I cover

we there. quarter you're next. do to around long-term that point one lag the between is contractual about typically, and what see The line with expectation basis move XXX quarter seeing in is comprehensive comprehensive from think this our I

that's I So, a think reasonable assumption.

then saying sort with go your they to I Apotex that they're is such them, that just real if about to going if concern go sort deal, backfill others. applicable never they that not dark. ability could dark But And I'm -- and were Okay. that talk the you of not to of be them guess the a of of did, ever is piece it's for sort estate might specialized for

Just the how talk in context in and about that assets at maybe and of fungibility sort then your the general? of for you industrial look

Yes, sure. advanced think, is is I a here I manufacturing. Apotex to deal, number that one, basis we're to important mean of the there nature think couple -- the things our below emphasize one it, of meaningfully cost, specialized for where I replacement some is type but

certainly think generic government I pretty in operations. the in would Canada, Canadian of keep kind critical these two, to number that are think I pharmaceuticals, production want something assets for especially

be that exports been They in credit. great as Apotex markets US important They thing good for around Canada. into and is do a would for market needed there's have also Apotex there'd more big our is There's time, we it's think happen, lot think something the the to facilities of So think and that were we alternative But be demand event that. long the maybe well. users. a share I company, capacity other a here in that a certainly they've have

I need an quite credit. time to good we think confident about feel event that consider And that's we're soon. don't So and any

last question. Understood. And then just

I said given some the the the just the You remarks rates were do sectors? other you're you think more have what industrial guess, your that's that opposite case? expanded cap looking noise more asset other I in than expect, assets it's at. classes of in would Why

the and biggest that say would leaseback. quarters been The is doing transactions. I The have these reason last almost Yeah. way over of sourcing sale been everything we're number the we've bulk,

of warehouse leasebacks to -- tend options a more obviously, both companies industrial And sale maybe it's for and own this manufacturing. be combination real that is estate. So good

more to And equity to alternatives sourcing capital high-yield corporates expensive, have gotten leveraged their all it needs, and so it's quite available in about loans we're how that if private the markets, the or those sponsors debt fund at all. have

deals that's the driver I in So rates doing. think cap the our that industrial we're for probably biggest

Thank you. Got it.

welcome. You're

Thank you.

Our next is Evercore Please proceed with question coming your with ISI. Jim from Kammert question.

morning. Obviously, the Thank basically top here. Good is portfolio occupancy you. taking

a pill, like be the but number list to and not though, with the perhaps what watch if of does the today, could, look you curious, associated Just on tenants them? ABR

Yeah. do take you want to Brooks, that?

Sure.

balance think benign. around X% mentioned his there's in completing come will which out and balance watch tenant-specific I Jason geographic And list better process tenants X.X% list, much into sheet. As when it's actual situation. there, story. are And concentrations mean a that portion list that's of with watch remarks, there. those, likely stood for that, up few context really restructures of the off our they and an is a peaked critical matured COVID, the has complete pretty or any line about sheet has ABR last be on default really I watch estate Not And ever to industry during those of important It's that. in note our a to quarter. really only historically very real in those small

So thus far, watch list place. in a is stable very

exposure. then office, you've reducing And Terrific. bit on purposely just a back Okay. little your been circling clearly the

looks it office $XX portfolio. got average like on curious, you've existing the about remaining Just rent

you any total two some years in two three the are coming or exposure? curious, down is on blocks up longer of renewals of in next Just what terms the And the seeing of your plan terms to side? over headaches road whittling year three office to next maybe the

hand mean message here I'll it I'll is office has down and come there, meaningfully. start Yes. I Maybe think broader to I the the exposure over Brooks.

mentioned XX%, you once office I or We and in downward factor I five and bought closed office continue. overweighting earlier, will deals we're and XX%, post-quarter were the and trajectory really lower goes think at that of years think other we haven't in we are transactions our Brooks that as ago, over six any couple even and disposition. Apotex industrial now a

So on, basis. what specifics. -- know is if a that on leases have maturing different think lot don't don't regular all to anything on you of office continue. office add there's a portfolio generally think than We our any just anything Brooks will the of -- I I as an REIT. But

You Andalucia, lease XX credit our remaining. years XX largest our the exposure is term look can at list office of of over and seat with top investment-grade

is office. little we changed So lower to scenario, move there have certainly, but fundamentals it's in the and a different a there, conscious understand to continue effort

you very much. Perfect. Thank

welcome. You’re

Thank you.

from of Our Josh of next line Bank question question. is Please Dennerlein the your proceed with coming with America.

spoke, everyone. we morning, were in last were their going through pipeline, some a dragging the there Good larger portfolios but your sellers Yes. with you bit many transaction. mentioned feet Jason, on time maybe

I two questions. really guess

the we in first, kind from pipeline? And one, conversation? the portfolio the of end Just increased year any seeing like kind sellers, -- there at are then you are still that when of of the urgency had

Yes, Apotex that sure. we recently large referring one and was to are closed. the I mean, clearly, portfolios deal of

more but that that closed has we're some there's some were other there and our size, not -- some still larger also than deals think still at. I that and deal looking there's average

active. kind the So, pipeline remains of

of price attractive the themes competitive. aren't in past important the options your namely, for capital about And the sale as for broader corporates and as think it's or I to that markets there And lot just a question, still financing talked are and alternative the drivers we leasebacks.

I think for look more alternative, that sale corporate seeing continued, refinancing. especially we're leasebacks has trend that an and So companies to more

that area important I thing on. to focus is for think that's us an

leaseback. debt prefer see coming like a I they good some for opportunities cheaper look sale think alternative there, as to have a we'll companies and due,

then, And expirations like X.X% Thanks than kind south I then is else less and -- tenants? dialogue those U-haul. little lot. is it on year a to I for just XXXX maturities, half Okay. think with of that next of kind lease rather, touch for just up looks or of latest exploration looks wanted the and you [ph] like the coming What what's a

you handle that? do want Brooks, to

Yes. Sure. Yes.

half that, inspiring. As U-Haul almost of you is that's mentioned,

It's industrial. then by dominated and with types pretty is a it's The and of So other that. chunk mixed big well property beyond is that story U-haul. U-Haul really warehouse

to still to three advance, is project tend earlier. early to but if those earnest in Conversation conversations It's in well. begin not two we outcomes, around sometimes really years going too

making of good we're lot it. progress So and there about pretty a feel

Thanks.

Capital is Kim next proceed. question Markets. with Instructions] from [Operator you. BMO John Please, Thank Our

the I top to $XX Good because But you just wondering -- the Thanks. million. if and at closer quarter think your largest ABR was post if to they the you tenant look were list, tenant I clarify be could morning. you mentioned transactions million. Apotex that $XX when deal,

I to clarify So just that. wanted

going it's our the our mean, not to on I the rates top as think rate maybe high but or tenant is was in now, Yeah, Xs which XX we're targeting, for right three we're that into as specific competitive come mid reasons of within cap range number kind I cap list. ABR the disclosing the to Xs.

meaningful and Apotex for component weighted obviously, did quarter we sorry, average is the the the year, of year-to-date, mention a X.X%, for volume cap that rate for the And year. I'm deal the or --

short it'll that range rate that on answer cap be maybe a tenant but comes ABR-based until a So it's with I mentioned. U-Haul number off, effectively three the is

in Okay. puzzle. much also That's unique you the does taking that? portfolio Apotex pretty pieces rents international paying for that have cover Is of dollars. tenants? sales to enough lot the are risk, US that or Jason, a an the FX they And of US mentioned

for leases. unique much pool Canadian buyers for Those tend not It's clearly deeper There's US to be in US denominated a Yeah. deals. of dollars. dollar

of second the But they be revenue. equation. do if is maybe have the I US would US important dollar revenue. of And question dollar meaningful that but they part meaningful concern another they mean, well. didn't, they that's do, your as have So part

or that's hedge being a lease nice the alignment with dollars. denominated US in And so

looking question final you the wondering of you've to on capital then And and you started kind that was I Okay. what And remind is the do? identified if for into redevelopment those redevelopment. to if they're assets? put what portfolio projects you're could us Marriott in, stage assets three

you one? do want take to Brooks, that

Sure. Yes.

So there's three properties.

started will near working capital. the at and is speak. in industrial airport. mentioned, a San sciences project, create we area, one for in Irvine, going in location. continue prime We that meantime. in in there's maybe hotels And in upzoning They're that a for life be One term. the probably to on Diego they have through planning year. Toni medium not later planning there's That's will California, which two very will XXXX as value Diego properties over in property some as It's well-suited Then in appoint the one and operating phases We're Newark, San the of lot a us.

residential kind frame at from excellent evaluate a constrained could flux. all resi that continue warehouse that more but in of situation, a we time a of little development a site really be perspective. little would case, In in lot later, bit locations sale as operating location, XXXX any then more a that of but maybe bit XXXX, we'll Irvine, either either hotels certainly and sites, or likely that's upside, and one's in has a and Fantastic the So quality time. XXXX

Thanks for the update.

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

on your in the Jesse, Carey. everybody, P. thanks, line Thanks, and for interest W.

have XXX-XXX-XXXX. call. call you Relations today's Investor questions, additional at concludes If That please

may now You disconnect.