Essential Properties Realty Trust (EPRT) 25 Jul 242024 Q2 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to Essential Properties Realty Trust Second Quarter 2024 Earnings Conference Call. [Operator Instructions] This conference is being recorded, and a replay of the call will be available 2 hours after the completion of the call for the next few weeks. The dial-in details for the replay can be found in yesterday's press release.

Additionally, there will be an audio webcast available on Essential Properties' website at www.essentialproperties.com, an archive of which will be available for 90 days.

On the call this morning are Pete Mavoides, President and Chief Executive Officer; Mark Patten, Chief Financial Officer; Rob Salisbury, Head of Capital Markets; Max Jenkins, Head of Investments; and A.J. Peil, Head of Asset Management.

pleasure the my Rob over now Salisbury. is to call turn to It

Good thank Earnings everyone, us you, morning, Thank operator. and Essential Second today Properties' you Quarter Call. XXXX Conference for joining for

considered results may the call, these after could company's changes in reflect were conference to made. forward-looking discussed materially in that those law. to certain statements in are may federal filings time will risks and statements During not SEC and time significantly to yesterday's forward-looking actual cause differ the Factors from the forward-looking greater this detail under to results future we statements earnings company's in we actual with disclosed release differ press statements from revisions statements, expectations make that from and release. be may The matters securities the

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

quarter interest characterized how markets. for Thank Properties. the lending On you, us suited been well environment, joining Rob, current first volatile and standards today tight call, everyone for and market you which Essential in business to is earnings has we by your thank our capital our discussed

in and valued. as value second the market long-term our consistent Our relationships targeted our a providing reliable business backdrop, our of capital quarter strengths industries. well-capitalized this capital to sheet, is proposition a provider a position results balance and continued showcase highly Against our middle to with growth model of

liquidity our of $X.X quarter forma by leverage spreads. of our grow our generated $XXX investing sheet existing of per growth the to our well value share to quarter's base. the XX% second In results by end tenant AFFO to investments in balance provide at from portfolio This With investments, of industries resulting attractive portfolio were driven X.Xx underscoring healthy of market us middle positions over in million core were relationships, our we continue billion, pro a and X%. and quarter,

solid tenant strong with investment well performing is credit volumes. and business The trends

of However, posture by the leverage the elected offset headwinds we short conservative the above. these share volatility given per are on term discussed markets take positives in capital the earnings to

this us capital but to earnings and in continue and our drive believe of allow growth will competitive capacity more beyond. review will cost to in Mark strong we balance detail, XXXX sheet

For AFFO XXXX, reiterated we of our $X.XX share per $X.XX. have range guidance to

As operate at strong industries. level. our tenants portfolio XX with to ended XX.X% in XXX in to second We were the quarter indicate, results properties XXXX operating continues our investments that quarter leased a

a last the from as headwind impacted the at five leased. slightly end, down bankruptcy. year-over-year remainder X.X%, from the down portfolio rent Our rejected the of was were Red level quarter weighted slightly rent was XXXX. From and rent that XX absorbed average years quarter weighted were our that of Chapter XX.X properties the X.Xx from occupied second Two small by in this Same-store as these the quarter properties of up ratio we process, with coverage which only health is annual lease base growth a unit X.X% term average quarter. at stood through tenant are perspective, last quarter, part while Lobster own expiring

with During a year separate weighted from of points we quarter XX a average second basis through our invested XX cash relatively at million up the transactions X%, quarter, yield and consistent ago. $XXX last

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

X.X%, rent escalation initial quarter, weighted of average a This generating average and X.X%. our of GAAP weighted at term yield years, of average an annual XX.X investments a lease

ongoing subject million. per The to direct originated and quarter average which with of property the requirements. sale-leasebacks, were $X.X financial Our average through investments rent this coverage weighted was this form the X.Xx reporting quarter had level majority are unit vast investment investments our a lease of

XX% provisions. Additionally, master contained lease

Looking a year-over-year typically in up slower what in ahead the is the context period third investment the of and quarter, our seasonally solid remains calendar. pipeline to

result As later of the we cap have could expectation discussed rate modest in the past, in in we recently year. the expect compression easing Fed that rejuvenated

not is mitigation for XX.X% our on benefit of important an and currently in Tenant the us operators, this tenant risk our now and tenants set. ABR. similar and However, a expansive X.X% only we differentiator concentration our offers which current tool market seen diversity focus suggests top have cap a at is which quarter tenant represents end middle it account perspective, our a for pipeline, a largest quarter. From an second ABR XX rate to opportunity of of direct

in average were Dispositions in approximately of market. liquid Bid/Ask average million manage properties a $X.X represents highlighting were level spread cash We this $XXX,XXX an property, average unit proceeds. a for of sold quarter proactively with to persistently wide dispositions a reflecting us ratio the X.Xx. net portfolio quarter six the of below which allows rent importance weighted XQ, average our executed trailing at in owning fungible yield, This coverage X-quarter in properties this per weighted X.X% risks. The

near financials Patten, with to will for our remain balance the over take our X-quarter in I'd that, sales the driven to relatively who the and term, we trailing activities. With Mark ongoing the sheet our line average, through management turn second Over quarter. the asset CFO, expect like disposition to portfolio Mark? and by you activity opportunistic call

good Pete, everyone. morning, Thanks, and

of XX%. On X% which As cap of versus cash a $XX.X highlighted investments second our $XX.X Pete an million headlines quarter, $X.XX, was for in up our at we solid strong from noted, X% totaled that's of which quarter, per a period over the by quarter nominal Among level the the rate. XXXX, a was an same is increase of had QX the share million basis, AFFO XXXX. an AFFO increase

investments of performance the line underlying we A later AFFO those within was guidance was by our expectations, last closing This volume quarter. stronger-than-anticipated updated in offset provided range the with quarter. investment partially timing

within cash from a of these guidance of this this related we $X.X was of recognition legal prior other Additionally, to in we proceeds this and received expenses Because matter impacted settlement. our of we anticipated recruitment our million represents income periods, recognized Resolution range. commensurate updated the AFFO note, that negatively other quarter of settlement and proceeds other AFFO quarter. income included legal in this

Total relating QX we invest XXXX team. $X.X to $X.X expense G&A same the the as period was increased in million of with versus increase XXXX, compensation our continue in in million the for majority to

as a ago. of a the Our compares revenue was year the X.X% same quarter, recurring to total G&A period cash in the favorably which for percentage X.X%

cash quarter. expectations the also G&A total were and G&A our Our recurring line in with for

on enable our platform G&A decline and cash percentage generates portfolio a basis, to of a larger expect scaling to higher over total revenue that an leverage as asset continue invest will at manage to us operating annual a base We as our levels.

which payout declared We ratio of an quarter, of AFFO a second XX%. cash the represents $X.XX in dividend

cash million free second dividends per build, flow retained annum. in million Our after reaching the to over $XX.X to continues $XXX quarter, equating

continue We flow as support attractive capital retained view cash to of an source our our free to investment program.

of balance expect in assets $X.X assets asset our sheet. continues reached our level scale diversity of gross continues an of $X scale quarter our XXXX be to of flows our increasing our The at mitigation. our a billion to increasing investments, and year-end. provides to income-producing by income-producing and cash base risk QX to Turning we The and underpinning billion build, $XXX of end. the favorable approach million With significant and durability reliability

a of all markets the million on productive of $XXX the of sale our was On worth no of was during we is unsettled end. weighted $XXX stock, results a being ATM forward average price quarter capital side, unsettled program, Through totaled our second forwards, at our million our above balance it which settlements One the With element forward our share approximately highlighting quarter. second at end. current equity materially the quarter, completed price of $XX.XX that's basis. quarter quarter also

treasury we stock shares for account the method, potential these in the share forward dilution diluted from count. our Under

share related At of we adjustment as timing our shares For stock level, treatment a million an the for XXX.X matter this forward for included treasury calculation. forward count investments be shares and our the diluted second have little to while accounting view unsettled these our of equity the calculation closed high near-term to as equity this XXX,XXX creates will impact of it impact from headwind in a unsettled settled a notably no shares later should Therefore, XXXX this to AFFO are year. our fund metrics, this share as business, to the share current ultimately to beyond. per earnings quarter, per

forward growth. EBITDAre, as significant leverage maintaining adjusted sheet annualized for end. unsettled liquidity fuel was quarter external to adjusted committed our to debt We X.Xx net and to with low remain balance a at equity well-capitalized continue forma to pro Our

profile elevated leverage debt markets With volatility, approach prudent, the believe maintained historical has range. mid-Xx have substantially of our conservative a prevailing forma capital the average of We in particularly we below recent light of our been pro costs. backdrop

prospect later With metrics loan with the Central to this delayed for Bank Subsequent higher we may levels. more to million closed year, term of end, normalized a drift our a quarter easing $XXX on draw leverage features.

of the of million bank on revolving of support as fully repay at of facility. our drew our outstanding join closing, have to transaction. executing was appreciative banking we and very our relationships portion the banks part were to continued are We group new which $XXX X used core pleased this a We balance credit

January in available options to we XXXX. us, the Assuming term extension would mature exercise loan the

initial to the Consistent $XXX goals months assets, our with remaining draw a capital our at over funding term equity match XXXX source for for unsettled our commitment investment net extended swapped our the as billion, the a At expect loan. We funding our draw pipeline. forma pro liquidity of efficiently rate coming the of fully for the quarter at over million we stood weighted million $XXX fixed our X.XX%. and debt term end, forward average $X.X of of

year, sheet conservative into and company execute balance XXXX. on and capital plans growth the the XXXX well for our met With for our positions strong our leverage to equity debt needs and

share as to press $X.XX, which of implies release, AFFO noted Lastly, have over range the growth midpoint. at we XXXX the our per guidance rate reiterated we in X% an $X.XX earnings

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

questions. are In about remain with Operator, prospects very call the pleased business. for second and Mark. quarter open summary, for please optimistic our Thanks, we the results the

Haendel [Operator first Instructions] from St. comes question Our

Mizuho. Juste with

It at even at larger a I of pipeline, seems point? I'm the First you cost curious little why cylinders, capital. a like it and is question, bit this volumes, everything all noted, strong is not as firing improved on guess, raise guide.

the factors of of And So that that built in stock through perhaps might talk guide? the some on that quantify potential you or are that can guide. And color the maybe headwinds embedded be method treasury aware from raising it's any keeping not maybe here? even some give the dilution we're accounting in you

on firing cylinders. continues to to are I would clearly, capital deploy The Things all say, you're we Yes. we Haendel, statements. continue said certainly right. as build, and pipeline the in

seeing it that, is capital the that, some can. of given And earnings. Mark, color really really want guidance the give to doesn't on Our position you just us provide that majority the in drive if But headwind we're visibility up. it our to -- the you

as to a share, you back brought Yes. the which you're execution of go out if buy that going get as means what shares think Haendel, the basically, $XX.XX to method, about can is at granular treasury you're at many treasury. proceeds really the $XX fewer with it. and those you stock settlement, shares the you in But assuming into as too stock treasury comes get doing not about and you're

a issuance. to kind got really probably amount $X.XXX. dilutive think of if it's we headwind, tried about -- the you've you it, shares that's but So quantify net the of And from

Got it. it. Got

full that's Haendel, for the way, the year. By

think, I I I Full release quarter to guess, you Also, was guys year, maybe think, Got noted, is highest yes. that acquisitions in highest date. Got -- the the this it. the it. volume the

of a maybe can in at of we more to So the you to run forward engage? seeing term? capital? market. near willing stay the that And could you better maybe you're Are seeing just is rate some discuss you going sellers Or this cost expect are then dynamics

you guide a to our Yes, good indicator average of is I continue rate. the run X-quarter to would

many million, the said a of work to of of couple have invest tenants really or in last market it's we the relative market the middle that are given lack the options, system. very facing financing But capital we for As with we hard transact assets, cost to into it's, good alternatives of put work. much to us quarters, can we're $X capital the million so only way doing go the we to and market working $XX million and put deals $X through there's

some have bigger quarter to this transactions. fortunate we're And

and to full, feel robust a As we which market. on our pipeline quarter we here, early remains it's suggest the call, of investment continue good but too really tell, we the about may kind to said but work hard, third

We put advantage, competitive continue work. to to at strong hard have capital a we're and relatively working

McGinniss next with Our question is from Greg Scotiabank.

much Just around $XXX at then thinking today? you the is a much, Because this the that's guidance. to I have sounds done on to I appreciate to LOI where that think quarters, $XX confident just a sure another you're which, trailing to closed million kind one too want of And going how standpoint? PSA target QX, quarter. not went from but make following more acquisition get under it like million. you're looking significant X you're amount up I date

appreciated. be So color any would

tough. quarter Obviously, always is third Yes.

on of June people in it's put away vacation, then eager working. then bed. You the on they work your end second engaged to get of kind get the and go deals other phone, And back to quarter and to end hard deals the hard come of and people at to September, closed

of one it's hard course So to the forecast.

One off of why starts the seasonally slow. reasons it

As roughly transactions there's the, in always we as pipeline of I the is some would don't of we and call, timing, timing currently in always ahead upon often. our X.XX the between somewhere what last variability where said control X transactions in M&A into was depending range. it quarter, closes the we're supporting year, say, and the

out. active the in to and where do. think see of got early the supports work pipeline it it's we'll shakes We an So We left lot a quarter. quarter,

cap. some were are acquire could X% give you equipment -- some also more you quarter you're details this whether targeting can I also portfolio of shares? -- and looking -- larger transactions able maybe to a around the get kind that of done you to know large as we can And that then

space company? go but So maybe for just that there's more over you'd a bit there, if little curious that

million, within Yes. When we million, industries. $XX million it's deals, larger $XX say portfolio sale-leasebacks bigger targeted just $XX our

So kind it's portfolio of of existing a assets. not bigger lease

we and And more carwash than $XX sizable and did quarter a operators would with childcare the sale-leaseback so greater just it's in sizable, bigger sell say, well to I as sizable in the the assets as million. sale-leaseback quarter

opportunities. them as to comfortable tenant, continue them continues X%. discipline feel not very terms In diversity unlikely above have tenant above number. company that grow tenant and of we're to to equipment X% present run to we share, have wanting That a but us around largest We continues to with our

next Our BMO question Borden Eric comes with from Capital Markets.

you funded price stock yourself just shares I just here But order up equity Or any appreciate issue the the and for to liquidity. that lock of are color forward trying year of set around your in and where in are being you to future given would potentially for fully today, willing to XXXX? mitigate just treasury to plenty be kind dilution?

in the capital take to allowing -- $XX our we a But out and getting second north active $XX We $XX.XX. putting Rob been behind to when if compelling, get at in look us seller's get think Mark an raised quarter ATM, quarter there and we've we issue upside of there, you terms let I'll shares. very pretty willing execute -- stab in Certainly, is had were of we back. we terms our aggressive and there's is to guidance and us certainly, to closer that. And shares Yes. and at as some clearly XXXX I and but remorse the of

continue will opportunistic the on be to equity we So side.

you position. But a in to continue Rob, to stay do add anything good Mark, that? will We capital

Yes.

our ample address I'd of sort what is. We've first to I opportunities. got liquidity think say

we've the think the generating. the from we get unsettled it bottom still levered cash of -- we're our in free otherwise, have of would us got range to the And you there, flow standpoint easily equity, of loan, be if we've low remainder of term liquidity So the the even $XXX about you terms end million pretty articulated. to

we consistent don't opportunistic I said sort then other away we've ATM. move pipeline from remarks. do strong So in the again, would And of respect, on been wouldn't an in in we thing the And then, said, been But good think, that have one seeing the the certainly as a anything if we've indicator approach. have start a into to good as spot. opportunity there. price visibility be we've we pretty that tends that we a that Pete is could to

So can be -- but opportunistic. right is news now, the we we have things don't so good very

$X on to $XXX business good of always not do of extending plan. just runway of we're in said, defensively, add having with plenty ahead execute to And flexibility anything we're a leverage to Yes. capacity I'd current mindful us our of that today, for being equity the million billion offensive being position. and there's but

you you you helpful. sale plays to the foresee towards do seemingly How to months just with weighted mix XX traditional remain heavily of the next here? Do Or on X cuts think acquisitions you picture bigger outlook. acquisition leasebacks? the That's turning do Maybe for table? the will a the think becoming out rate part

Yes.

own to that has filling with just by to sale viewpoints where that's underwrite and capital. context rate counterparty is portfolio existing leases of own an capital deploy XX% believe XX% in and your prefer environment. the We deals and value-added We the a a constructed deals. need. of to structure independent in higher leasebacks. putting the And our been It's work lease way Our operator not our to capital sale-leaseback

focused to executing you I forward, continue largely think sale-leaseback us going transactions. expect should So to on be

Burrows is Goldman question next Caitlin from Sachs. Our with

alternatives for market gets way EPRT is maybe do to business how get a as what your opportunity I given a better? previously, but change could how And the know rates last your expect Maybe just like what could Maybe come one. and for but another down? that of you lack customers, good worse it's for follow-up asked mentioned you EPRT

Yes.

to regardless It capital I in a markets just condition. sale-leaseback think, there's the happens of proposition tighter always a value-add be capital markets. better capital to

As all of bumps the rate cuts and pressure rates with expect more and lease with in that we've come competitors back rate manifests on along of and goes some and terms being itself of more term that buyers normalized, and terms to down, and already seen in downward -- the competitive and that. everything and prospects becoming leveraged competition market, cap coming we the that

And it's differentiate partner reliable other ourselves providers, to do. we a and relationships intend imperative for that's from to to capital us be capital to value-added be and what

-- the invested over competition So market certainly competitive a set, today, a but prepared normalizes. little since when this and across continue public, we've we're bringing to add value company transact competition less to and hyper there's

And the rent quarter in Xx coverage slightly, still -- declined bit on looked a that the so little X.Xx. unit X.Xx, like X Okay. but level to the then to the basically the exposure to it under side, increased

could And or in So about anything bucket? that? do whether proactive that you want who's talk there's can to you about

start factor, coverage because with by couple at defaulted risk it credit one we coverage, isn't risk, to saying it Yes. alone and is in recognition. lease a tend I or look and coverage to would result going

and about we actually every our XX from points as that is XX quarter, basis basis the XXX down, of credit risk which disclose is list coverage so, And intersection by to points. points quarter-over-quarter, down basis watch risk, credit

rent has is cash pay sites see even bucket one open where development a that the aren't our the what coming sites against stabilized tenant operating. under there you of the about think we As fully lot and and or online

look an don't impaired we if little to that an high. that's able confidence business sell at a to think weather or business permanently that that problem being to make there's to number in plan do that been fix our see have is going And a we'll of and asset that's impairment we'll active So and the it. part and that. we our we strategy continue artificially And unit, credit the

and portfolio doesn't said really the great in a shape. margin performing perspective the we think well, is from that is call, the that And the so tweaks very operating macro These I we're in minor change portfolio base. as strong that at

from Smedes is with Citibank. question next Rose Our

to your but question from weakness have I'm think, any we're little wanted your I follow-up some not just on last to in lines to because just through you're the a low-end tenants feedback other in I kind sectors consumers, consumers. bit tenant you hearing higher of base, along see general? starting flowing wondering end those around if to

lag. We mind we on aren't, that and collect quarter Smedes. in keep are we And landlords data passive a one

that pretty so across our I coverage for see hearing subject sentiments exceptions of service and tied strongly. we days. that few to aren't real a numbers very perspective, the with And tenants board and those are are XX being I time, are XXX really to up that's think in in that And wouldn't sort really industries Generally, the our you're think experience-based portfolio operating in to discretionary largely spending. industries from

as you a this. in the Okay. rates Or at the downward that got And this of probably changed at sort on covered I year we then drift still late. all? But if through has a of expecting sorry bit call cap you point? little move are little a bit

think, Smedes. I right, that's

pressure competition and coming historically interest levels. high we of start our off would As expect some down, on to cap normalizes initial rates see rates these

Securities. Ki is question Our Bin with next Truist Kim from

follow-ups. of couple a Just

a On drag increase, some maybe be that might driven the you newly But little much down development around developed decreased versus help just tenant but like assets cash a of flow. have that appreciate coverage bit stabilize by XX I bit. that break that basis how in categories Xx seen that coverage deterioration? further, Was under little a quarter. was this some points can unit they that level as your on might comments us -- some that

there's like are nothing reason. industries, operators challenges, industries, situational Yes. points, in going systemic sector we're struggling those basis an really XX that I for basis XX it's across to finely, that group whatever that our split some to that or about is the specific non-development into points. What going or the but not really movies it are guys say just having I thematic would operator say would

to going And Okay. back you landscape, favorable guys. which competitive has the been for

history curious, If does further, sector. how Just competitors up rise your in do quickly to the given how sector? decline in -- start quickly to long your rates start

Yes.

the you peers, have of visibility think capital or public I they cost think, a for visibility supports really cost really and And cost a that capital, capital private their of of it's a -- market right, is prices of think, when daily I basis. the guys, to bond them. on

will private until the little it some get and we've some more guys, you a And start public bit into the already of So stability guys into they'll lag the right bond back But market. get seen bidding. go that.

so think I will And it be quick.

from ] with Wells question Fargo. Next [ is Cheryl Cole

John here for This Cheryl. is

breakout So of to your portfolio kind going here.

last to can't consider with deals You a hitting grow pipeline that where moving impact as carwashes. and much? soft you're mentioned point of there industry, those that maybe How forward, XX% quarter, any really if you get the cap for kind ability a your into does was you

Yes.

opportunity adequate set, upon to it's robust our incumbent professionals investment a source have support investment We volume to and our needs.

continue and invest do incremental to you and us carwash, quarter, We the accordingly. deals in gives $XX million just that price if then we $XXX stay those in flat million to

cap any our way. robust is in and And washes on car in constrained isn't set opportunity the that so

parse out those what that's there question more lower? unit-level of metric be Got same-store anything development follow-up it. may driving sort to of And then numbers coverage. the just a of there on like is Is artificially last so that that we the kind a could

list. -- and why our that's we that's it's mean, I -- really. credit Not disclosed watch

think, we and risk quarter-over-quarter level is to was we ebb around our the is are informative, in kind and the the those our sub, flow that indicator a but that's I and and points which unit over of list, and think number. coverage up disclosed and leading watch coverage indicator data same-store we going X.X%, disclosure of that's that's a sales quarters. adequate one disclosed We our recoveries, disclosed just number

Our next Michael with Goldsmith from is UBS. question

consumer. on or low change mixed or tenant low-end just times different the data others certain touched the in individual to you the been couple think on Would does how into call backdrop, a points on macro from the lean that have categories the about categories tenants? current Recognize given It's you you backdrop? on consumer, of away shy uncertain exposure but

make And we've hasn't. we industries we've this as in XX-year built investments been years. experience-based fungible estate platform service of focused properties, really over this investment operate that very has real thesis and It been developed and out XX granular on and

ebbs so really thesis. investment change year-over-year And don't and flows long-dated materially our underlying

And to as fact percentage talk You've down? for about can little G&A a horizon as and follow-up, expense bit compensation a to mentioned you there. as a -- trend a the time

down any to or think, So goes how developments provide kind sort percentage of time? over into can us I notable you can you your see, platform anything of G&A that insight

linear Yes. assets. It's been pretty as we've our grown

you like. how a at Our the industry in give a picture of G&A And that to pretty as a $X $XX looking platform kind what the percent good just $X sense of revenue of that has trended billion look can think like downward. to And comps run trend we give of data billion, a billion, you there's points and $X this efficiently. billion might

peers efficiently as we And our and market. possible as look at as the market. is competitors ambition run than and the in to better Our other

gone it's know And think I billion. So I down. it public, but exact don't the billion... $X $X when probably today, was it's came $XX billion, about numbers, we

under $X billion. It's

go down. very to there's continue large to going And it's a And competitors.

assume You floor. that's can a

John comes from with B. next Our Riley question Securities. Massocca

Lobsters were quick handed ones back, the Red kind that you've lot the property Red know did The just me. is it quarter? already Lobster? was kind of lease reflected that of else so in similar of to the And detailed ground, vacancy two include kind metrics of from in covered what that I I were that in reported? guess, a termination if is And

the Anything the bucket quarter. part Lobsters fitted vacant of five else, were the Well, vacant Red A.J.? assets and during to our

and are In property the the two [indiscernible] vacant bucket, shares

Yes.

So a assets. couple just three other of

So your question, hopefully, answers there something that John. it? Was else on

Are That look what's And still to you assets? in possibility those this portfolio, any ton because is there That historically inclined of you it. retenanting properties? a was had makes the towards the guess, them? haven't of of those sell but I kind Or sense. repositioning

Yes.

tend economic the Our be or experienced the find And qualified sale. basically works to to and for best is asset. process we best find different, outcome higher for just local to we try lease broker and

to And to is going developer re-tenant try who to a so selling is less then outcome. generally, attractive a

selling to really we're we've after tenant so able And a take them. assets been only to not find

So our in of dual for assets solutions vacant a we're five all to hard on track find bucket. working those

what's for swapping sorry plan call, just if Are Mark, once there out draw interest term any leaving is drawn? kind where the I rate today? swap is the this to potential like Okay. of given swapping environment And going the floating then, out but thoughts remaining the that missed new Or loan? that in or earlier you the on not

I that. Yes, appreciate

our swap -- primary is thinking at, in that when plan I our that out think, it your swap we would it. rates, intent might reduction just to I despite we to looked leaving floating. just there's it it, don't point some really be is drew think haven't there appropriate

of next [Operator Josh question comes Instructions] Our from America. with Bank Dennerlein

the just how to today. maybe the was much you've of deals How spread compared month? kind that for cost has as is changed what over given that capital of you're considering the that rally normal? seen curious And I you're pricing past

basis market returns of is to upon for our I our price capital of appropriate would the an perception cost don't of cost you to spread Currently, seen we it's in invest. We've And low saying the for input. and Yes. capital, Xs spread somewhere to risk-adjusted kind and capital, cost our from of basis start we price as points individual upon as that an us each the XXX depending adequate not and continue plus. our points the investment. of high where to certainly XXX based deals dynamic output, as fluctuate or peg on healthy by based deals as

spread a Yes. issuance. from, and more a, We've benefit then XX-year favorable price the certainly our movement the gotten on stock bond much current also

point point, seen spread. we've to net probably kind in of Pete's So yes, our investment XX appreciation basis a

leverage of you forward, Great. how And about before kind thinking acquisitions the also, much hitting your just buy going targets? can

to billion million powder $X we in have earlier, depending said dry our Rob $XXX between within As targeted somewhere range.

been we watch tenants? you brought just know only call, guess it comments If any on little individual last I some credit of also because a bit downgrades quickly, them. up the on talking about if -- earnings either list. across was just make on I And were Red the I Robin, can updates Or think, going any there's

great Yes. and I in performing to go the is shape back that portfolio commentary well. the

They Our that continue think certainly -- assets we're to I to assets the be going and perform investment, that of some investments noise perspective continue our earlier company, may on in comment but is a making restaurant doing don't well. There Robin of Red to own the Robin we change Red equity to fine. my quarter. our XX-year back story around are

Street with from Our comes Advisors. Allaway Spenser question Green next

EPRT. interesting one curious set. just new venture fall anything on Acquisitions Maybe but looked that for been just there's industries, would opportunities more your targeted continue mentioned, within an as if be your to you at you've

we us where activities are Spenser. you, sourcing comes disappoint and do. operators our we're value what to sticking high-quality to where But really we verticals Sorry to that identify and our from. who our that's growing and energy spend in We set conduct opportunity no,

box, thesis. really our don't we're expand to of invest core the So we industries we're kind need with our continuing to fortunate in and core

persistent that on you Can has XQ. at in Okay. And spread in wide weighed how changed also on you XQ? all thus was Pete, bid-ask just the quarter? spread And into that then dispositions that mentioned comment far the

it's I we quarter, in would at-risk a in about at the points the a say our X sell basis where think well-leased to if and XQ. X would anywhere between market of XX asset would changed assets. dispositions [ hasn't where probably ] buy really And it. performing It XX you And between

I think it you coverage, see that in well-performing the asset. high-quality, was

I think our in the strike Xs. would low price be

that's So bid-ask kind think where I be. would the of

Our from McGinniss Greg comes next question Scotiabank. with

on a Chang questions. Greg. Elmer is with just We of had follow-up This couple

jump year? an top your has in So a out how And the consolidation on do of rest to investment in you tenant industries, can be most M&A exposure in year-to-date like see highly of top the tenant been in your industries? that seem activity event. you What industry whereby playing fragmented

harder come And M&A -- is to obviously, capital with activity by. down. with generally

the level a of depressed level financing. at transacting is challenging really activity, of indicator despite a challenges an we're M&A to so And higher which -- get alternative

as and think create sellers broader markets coming and are capital for normalize should a us. more start to of M&A pick expand that And And up sell, would That alternatives capital rates people by so down. and we multiples for transact. range would opportunities willing more be will offset

consolidation think should there be the of will and the activity be we more back year. but balance, neutral, M&A in it half on So

then, makes cut That a similar And about asked those to expectations increasing. sense. earlier it. rate question of Got

mentioned to the pipeline impacting just current along so newer more back lease you do But see rent further starting competition as your or negotiations is well. with in and you in term market, see -- do think, that bumps that you your I it in come to negotiations?

impact next current and what second expect that the with quarter quarter Yes, of experienced pipeline quarter would is competition the say relatively first and terms would fourth rate I probably year. cap the we we to consistent and in the into

reached of now We Pete the I turn back have call the question-and-answer to for closing would over session. to like end Mavoides the comments.

Well, September the the we're you coming thank summer conferences forward to all of look road and up. as We your you the with Great. on time in investor today. with engaging for all several rest

your you so for thank Have a day. And great support.

conference. This concludes today's

may we for time, You at thank your disconnect your you lines and this participation.