Realty Income (O) 3 Aug 232023 Q2 Earnings call transcript

Good afternoon, and welcome to the Realty Income Second Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Steve Bakke, Vice President of Capital Markets and Investor Relations. Please go ahead.

Thank you all for joining us today for Realty Income’s second quarter operating results conference call.

Vice be Executive President Officer Vice and Pong, will Officer; Chief and results Corporate Jonathan Kelly, of Christie President, Senior our Sumit and Roy, Executive Treasurer; Finance. Discussing Head President, Chief Financial

During the may considered this any matters laws. Company’s discussed forward-looking that may results statements. securities be actual federal in conference future will under differ statements we The call, make statements significantly forward-looking from

We’ll the be the detail a factors may Company’s greater Form the in in XX-Q. to give during the disclose will limit to everyone We of the call observing order cause two-question that portion opportunity differences Q&A participate. in

If you may you questions, ask would like additional reenter the queue. to

turn I CEO, over Roy. the our to call will now Sumit

Thank Welcome, you, Steve. everyone.

clients second across thank strength commitment of continue see continue all results. serving We to successfully We quarter focus our the in estate Team and quality executed stakeholders. our platform and the to sincerely quarter’s I on momentum the would business our like propel our One and were whose evident the our to and to our believe business. in portfolio strategy real forward, of

low-price portfolio durability the who a and properties predictable XX,XXX in leaders our Partnering at partnering earnings capital dividend, $X AFFO diversified are share. high-quality a across year industries. consistent is flows on results continues to in X% interest over in spreads of of basis. dividend nondiscretionary, last real Income. stable grew Combined XX-month have this Delivering Realty to with while mission a pleased source Underlying and service-oriented invest are foundational that Despite our and X.X% growth return challenging with our at from share per of to over us to of environment, estate rate growth, payments. to accretive our our delivered point we operational per nature industry in revenues, offers cash total clients a team cost our properties leaders with trailing and

and our more closed as larger investment to transaction year-to-date billion on select and acquisitions in situations, unique activities robust rates in which we Our investments, our stabilized meaningful have a in to advantages access investment remain markets. estate Cap interest size sale-leaseback favorable source a portfolio second over activity find we to to take the transactions period $X.X allow real rate In quarter, to to brings the relationships, approximately $X.X our unique appear continue demonstrate scale to where of high-quality terms. platform of are that billion. us continue Though close to after advantage on opportunities we and higher environment. adjustment capital and

a resulted initial XXX realized Our second approximately leverage-neutral on of basis-point a in basis a using quarter increase quarter. points basis of compared second in X.X% XXX the cash of cost to XXXX and raised lease debt yield the and of calculating equity spread investment when quarter represents WACC the our

closing on geographic new the active two million Group, quarter, addition million vertical investments for in initial yields. includes activity healthy during to at convenience $XXX our addition cash $X.X the lease cash acquisition Ireland U.S. we of In EG the X.X%. billion an we This $XX yield acquired store of where a at remained internationally of from international second closing properties

as become of accretive our meaningful our the platform increasingly over years. X% In and differentiators of we for environment constrained first compared the have of source acquired to investments today’s half Year-to-date, average found are last the Given year, size for for five XXXX. have more to volume over capital, velocity growth have we the have XX% outlook investment seek $X increasing an the transaction we we we of billion opportunities. achieved in scale

and perform, occupancy ended a to XX%, Shifting we the period This at to our third level. reporting quarter end quarter portfolio with over the matches that the in highest at of occupancy years. our of consecutive continues operations, XX

Additionally, XXX.X% across new XXX increased the renewed rate XXX our bringing recapture to leases, renewed XXX.X% last executed rent across the year-to-date from and quarter new recapture leases to rates or period. in

and leading last further X% last testament less is This lowest our to list and level portfolio stability As of the partner, than watch declined with rental our revenue. annualized our of in five from the the years. we whom clients client represent the quarter now

growth the revenue XX% of CPI-based purposeful international as escalators, in of in X.X% the rental seek portfolio. leases uncapped tangible with rent a decision increased our present characteristics internal quarter, same-store our the benefit our result well of Finally, as nearly opportunities higher growing to investment in

leases meaningful increasingly to growth annual with as helped a growth rent rent with portfolio X.X% efforts to per second a approximately contractual contribute annum the at has escalators basis. pursue on Our quarter, X% of or levered contractual

value tremendous positive period Realty Before brought Officer. a company has Board and to it to mark. as our I through turning a like a for as first leadership she to then Chief would Financial left over active Income, very Her recognize member, counsel has the and Christie, lasting

like As upcoming Jonathan on his well, also to promotion Christie? congratulate I to would CFO.

Thank you, Sumit.

Realty honor an serve colleagues, stakeholders during Income. Board this our It’s exciting and at to time

President, who passing for be FP&A the this Senior CFO is as to Jonathan capital will to brings previously of current of having his experience Jonathan Finance. our time our at retiring As role, Pong, Company here. has overseen and derivatives functions we announced relations, CFO and significant year, the investor the been nine Head Vice during our Corporate the markets, I end and last years with baton

together years, joining torch part have the to succession, Jonathan as the last a planned forward. and carry closely the is well team, management positioned worked since of moving we Over X.X

the over Jonathan that, results hand would With from our over to like quarter. financial I the call to go to

and laid continues for to your as all would I acknowledging Company foundation grateful remiss support leadership, our during Christie. which many I’m your to business guidance, the have stakeholders evolve. and you, without tenure. excellence contributions Thank be its of your for the

Realty XX-year X-year, my experienced and industry significant Over types. growth we new have in at verticals, geographies property Income,

as dividend business. finished of pro ratio growing To by as second to forma adjusted a leverage critical measured annualized However, times EBITDA remains and view at net the we sheet our healthy balance and well-capitalized solid reliable to fixed times. debt coverage quarter end, that X.X X.X with of we’ve a charge components our continued

quarter, $X.X again forward of in raising once via of are billion equity million the We unsettled remains $XXX ATM, today. capital outstanding active of aggregate the issuers equity the second in as approximately

been billion average This inventory, raising and of through spread of products resulted to source €X.X offering a average offering added weighted As euro-denominated our weighted our platform capital has Last a has unsecured advanced supported annual business a tranche month, years to the we X capital access over our in tenure time, yield maturity markets. our debut range X.XX%. investment of to another bonds. by and public of in grown wide dual

million had from Establishing the hedge the basis bond market previously access into combined debt the time paper revolver and Proceeds programs, quarter significant we repaid of investor equity yield source of well U.S. quarter on the a commercial forward effectively inside third of are which $XXX income believe $XXX borrowings end balance at allowed for on liquidity a denominated indicative capital base, offering our short-term of XX generate bond earnings points presence and euro cash a in a and with dollar of diversify at priced we natural capitalized was unsecured and pricing million at execution. end. us to approximately heading fixed of that million multicurrency with quarter. hand mentioned, $XXX the of Combined

earnings approximately guidance the midpoint the X.X% Finally, from growth to at narrowing is though midpoint. outlook of our an representing AFFO guidance per XXXX we perspective, the $X.XX, $X.XX of unchanged, are range share

I call back the to would like that, With Sumit. to over turn

Thank you, Jonathan.

of U.S. advantage to of consistent second our investors dollar also well provides acquisition toggle a results public competitive we our a economic company in have of is The lower to provide to through it the different grow positioned reach As market. environments capital sources variety our of cost to is quarter broadens results optionality oftentimes channels. of and and variety different a as alternative between a capital illustrate,

today. Meanwhile, compares approximately our and This XXX representing making relative Realty capital debt from same over yields XXX XX% than is of to Income’s priced between quantify to we debt solutions capital basis-point initial corporate trillion cash which more XXX basis available to providers, S&P Looking group’s of count bond $X.X with a XXX competitively past. anywhere at opportunity, firms constituents this XXXX lease deals real of have near-term in sale-leaseback our the as To a the frame, time even increase outstanding trillion basis within average the us in estate. the for the XXX XXXX and on risen owned $X.X addressable between group the market, maturing XXXX. approximately has capital investments points

of of for ever this convergence including replace made corporates to maturing look of capital be case cost provides, because there sale-leaseback more to benefits of to is sale-leaseback believe risk, the than maturity Because a we to elimination financing financing debt. the and compelling many

we sale-leaseback debt growth continue As attractiveness debt basis. for believe of the to on financing will looming opportunities our expand maturities sustainable accelerates a and elevated with costs, corporates

Operator? time, it questions. we open can this for At up

first Please [Operator come We will will Paribas. from BNP question-and-answer session. Nate now begin Instructions] question our of And ahead. the Crossett go

points are quarter. the in I there. guidance could just the What’s the guys unpack, guidance. pipeline kind go now? guys on the on but And right basis the acquisition of Maybe AFFO question of cap a volume then kind midpoint XX over guidance, your same. just takes the also, just what you assuming in you for you Maybe and remained of and rates puts think outlook down were Maybe of kind can you increased

enter rates Opportunistically, where With take puts first could the question to cap in the it would rates announced that assuming we second the drive But within That’s settled that quarter. that and to the hand modeling code takes the request I’ll we talk are are in quarter. Jonathan those where Nate, regards where and within the ZIP rate, and and cap to first, the to for So earnings to purposes, second you ZIP be the regards announced have in off we’ve we about believe guidance. keep first there we rate second quarter then higher. codes cap that we’ve situations I these your down. cap it with Jonathan? could I’ll into

midpoint Hey same our of say, the start as the the would, guide I the at the was it of Nate, guidance as first of on all is question, the year.

all when a of takes a on going that you revisit the probability-weighted about puts we at, together, lot and at of the we the how happen. of are not and We at the basis, puts put think takes know going look year, so, beginning to that quarter. there’s guidance And every happen are all to

so puts was year, a expected going you that about increasing when of quarters guidance think that but now, two at always and we bit. to the there be acquisition had And that the was that a takes could offset scenario start

think the I one short-term interest biggest been us rates. has for

SOFR and that look January increase. at today, in was it February what XX implying a back what on you is When basis-point you to curve, implied compare the about forward

alone half that back the share $X.XX so is And per for year. of in business the our

start came would say taking more other less appropriately, the out being a accurate I get we the we over the things of the always that, slightly from what on about also So that conservative year good feel very more at or there’s second we’re year. that half and but some of view maybe we

in just Okay. Maybe That’s much the lower debt Europe. helpful. on rates are one

better deal. that kind there how raise to of about capital? kind recent did of like theoretically of advantage size? Can Are of in You the there you cost talk over of take any like hindrances like could just bond you much terms

Yes, Nate.

that go to have crazy relative in denominated. we going it’s currency, to currency significantly foreign have liabilities in especially the more when same not We’re one assets denominated and denominated

If for of and natural so us, for to about risk out lot that when that hedge. expense the do that, to don’t the in issuing have, type we’re out interest a that And reason serve currencies, might a not thinking and as various income there’s issuance. have we’re in we going using go of FX we we’re currency and statement, us

very active that We all also denominated capital some We point dollars, currencies. the going at really need to know in sterling we have a across or euro. know pipeline acquisition we’re that

us, think about XX basis-point diversification. to a how It we it’s U.S. that’s was relative but So, for pickup comparable about it. really dollar,

term. utilize And you everything set so, least to forward. us think we the can euro the But near in toolkit our expect for are I side, going at on all

question Scotiabank. McGinniss next from comes of The Greg

any in XXX those you still portfolio addressable sale-leaseback in interested S&P But point, a deals. the uptick market. opening companies any noticed interest potential? larger always, of developing as regarding the your And this remarks material have So, I’m or that we potentially appreciate at size is from

post I quarter. that. guess, these we And have I think large one we’ve per to transactions done of

year, If gaming you of we’ve in last what we $X.X asset, which that’s at was the look when fourth quarter closed done on billion. the

it look we was the deal transaction. the at second quarter, the announced the CIM first was million. $X.X $XXX You That large circa EG billion did portfolio And and in $X.X billion the Group transaction. closed a quarter, we’ve in

having we in sharing support is our and pipeline data this are what we why conversations of reason seeing the currently. develop to all look, are help that the are And we

we clearly, the terms have drivers And of how are increased our time to acquisitions. that of by that we another why transactions, optimistic. $X of one billion guidance very But tell. much of gets in translated main Now, is close will

just slightly in function of of capital feel the transactions, we wish what actual the is -- pipeline of in it’s capital But market. feel like we happening and like better. So, cost our I largely a debt is terms robust was

your tenant are where of maybe What of some want earnings growth and higher thoughts to debt push the it. investments exactly offset level cost not Okay. you on that of It’s capital? increasing

doing investment of we we available Income. feel best a the on so can down the for the we walls Realty Greg, quantify an is wherever Well, four whichever of going to within loan path doing versus sale-leaseback underwrite invest the go and yields the of capital And of And return. we benefits are ourselves direct one the company. debate think a clients, like our to as risk we stack always of risk-adjusted where

we So, Income. certainly yes, one my Realty done of and haven’t with discussing colleagues but at have up it for that been we one discussion, is here it’s those,

Heffern comes The of next question from Capital Please Markets. RBC Brad go ahead.

thoughts the strikes, broadly reported which the your can release the recently updated things on theoretically how normal. Obviously, about to isn’t right Sumit, you then but feel some and AMC week, have best give you now? schedule theater will at business its back affecting start point you

better this or given feeling you strength? at are So, recent worse point the

Yes.

to the and pretty anytime revenue to close we So Brad, XX to to going it that release I’ve of levels in of situations the just theater long it levels it goes of type function bit little always a big about to to largely you’ve get which put levels business was that a tent have that have the you And that content. back stated we’re the studios had this was as the develop And is where continues ability strike, obviously big one as in those terms like a of tent a XX, content breaker you back releases, pre-pandemic, described does XXXX. movies. continue to it circa

completed, release. because and else being don’t I a so it’s have But a I for got is about remember staging strike lot a term, Amazon I The we’ve months. lasted, a near-term if put think these a good on big budget The today’s beyond are having these good already is a there. big question that released. thing. many was time get studios a four it all from releasing last correctly four how versus which could this of of equal, and yes, movies Netflix movies mix of in lot and But strike, today been movies, I’d not Do a the good in see disruption news news more the there the environment have just the impact, -- longer

a itself this and but -- we I that where is together if yes, last believe that like closely. the Friday, my are couple a was there’s studios getting what And soon. should And there’s are expectation, and time, is all meeting on But it are hope actors resolve situation next of we is watching writers the the that. it months. my it the closely. so, anything in monitoring resolution with this of And a

that give your whether Cineworld or of just rejected the there’s those, Okay. the I and releasing some any that. of opportunities sites it’s you for expectations talk if maybe with through a development opportunity them? can then And appreciate for were typical

Yes.

not go guidance. we completely I’m Cineworld our because yet. Brad, potential reflected just situation, updated any give the earnings into been haven’t details that to going say penned So have the -- economic contract the will I outcomes in the of quite What is of

So, to just few that’s we And back. we stuff will expect at going already a there past, started get sites. have assets I’ve look to with alternatives talked situation. what And I’m in add leave to be to particular those the about that the it how the something are at already that Cineworld I’ll

they’re movie from be asset redevelopment an it, last a the runs taking and retailer though ourselves. is. the for site to even potentially the use a asset i.e., about more complete the And situations And operators, bucket selling use, alternative where i.e., as just alternative for just an to of gamut and theater talking have to re-entitling is, selling industrial not the potentially value asset the coming in will creating we as

not So, than that. get that assets going this go a we handful will permutations any considered to all of rejected being various into expect process. of more are on through But, those I’m detail

St. The next comes question Haendel from

Mizuho. go of ahead. Juste Please

to the past I’d a i-grade. back conversation go in Sumit, had to on like we’ve

returns. continues historically. i-grade. drop, the a You big your a and about But particularly, but this continue the lower in focused in average higher-yielding it talked acquiring And here share trend we past, risk-adjusted than generating to experience you’re assets that having with of the i-grade of you’ve deals had below know source best on quarter, I

should that is to Thank Is we the continue expect a about this forward? we just share this dynamic norm? I guess, How should i-grade a you. new of going going forward? think So

for Sure. that question, Haendel. Thank you

to so an we If it’s reiterate we economic dictate return. as But the to that risk-adjusted that is the to investment-grade that’s whether So are profile investment-grade. we are best yield going continue to it investment point, just invest. ultimately, the not so or not are and it. going targeting it are that What targeting happens of client opportunities be to

the truth Today, looking of we be cannot these pencil and at investment-grade told, are some returns. risk-adjusted opportunities

more finding subinvestment-grade that’s And value We that that far return opportunity. commensurate what’s for to risk that and But looking are done areas willing is the in us the second I that’s the XX%, driving particular a profile give is who investment-grade about at the are closings we’re tenants XX% in quarter. where year-to-date how with we think approximately think, world. close we’ve to inherent

line, and And to there’s make a these of have being rates point the I’d basis some seen two are X.X% is out thing numbers. lease just And it certain in because about other these a reports I’ve we’re if of points. layer sort an talking about yield, you bit additional mixed cash When that match. conflating reported a equivalent just talking of I seen the XXX we’re cap straight

the would yields. points where to in of So much line yields straight our when represented I compared it billion just growth argue, acquisitions. of seeing that’s with, value, That’s the increase basis to $X.X closer X.X% clearly, make we on XXX worth And better apples-to-apples, profile. cash are to are

so that be number something that and you you were portfolio, shift to expect it. shouldn’t forward. dynamic happens not about back we XX% it’s and And going then target, how investment-grade it we to have if But us will this was XX%, that us that’s that to be suddenly should to that targeting So just our go in think our Haendel.

spreads type your level trade. to I your there I color wanted of you. anything investing require you, curious or in one would updated seeing a assets really you’re past, appreciate you’ve get helpful. talked know returns that potential there? interest. -- or Thank if an potential And there. of guess, you incremental That’s out more. interest thoughts And your in on I what specifically, the having I’m gaming about in the I interest today today. Bellagio

Sure.

So what I’ll vertical. about in grow desire the our to going I’m not said again, but specifics, to about gaming talk repeat I’ve past our

in looking along previous at to answered are today thankfully, obviously for of fairly yes, question. lines the And And the opportunities. many going robust view We environment terms I of gaming. it’s we’re how a these how it’s opportunities,

So that’s particular for from this you us what should vertical. expect

The next question of of Bank America. Dennerlein Please comes Joshua from go ahead.

your domestic saw looks it for I on about then, a developments, is was just acquisitions I and it X.X%. cap X.X% like -- -- rates like

point of basis Some small. kind seems spread

in is when the of of -- just function that seeing something tenants of profile just deals were the a or you’re broadly that just So kind struck market? or risk the

Very question, Joshua. Yes. good

long of very were into does it, duration As and you enter have. have that build-out is to those become its what’s duration with associated by what of know, when when you going a that transactions period. which definition, development a function It into the is entered transactions

And few so, those the yields what you tracking yields in our function noticed last when if did over a marked largely of developments. noticed on It’s strike increase cash might those. a you’ve we have development quarters, you’re is

-- things cash reflected with us to And clients largely being become what in yield a continue that. interest to able of the having generation to development the higher environment opportunities. we the quarters entered into quarters, our development So through paying get starting the domestic work next few it’s on side, rate three in as therefore, slightly a older the should get function Trends some opportunities anticipating transactions similar that fully to developed and see two you when looking of sort a start second over yield are quarter, to much cycle. which the of last you into higher to you’re filter saw were see to has those that and

quarters. on should next just trend that’s eye think a keep you I and the close few So the see manifest that over itself

pushing answered Was to All I clarify, acquisition anything the top just Jonathan wanted Just you there? sense. That think down rate end right. it that’s like $X.XX. have so. took pressure I or top put down environment makes guidance, might of but interest bit, looks in then the downward Okay. -- this, a just on range guidance else it that curious, given And

we the impact brought Cineworld something and built earlier, is impact tat of Hey we now us. Josh. quarter, there possibilities the Sumit up uncertainty into felt into it of the To it is resolution, was the that, was greatest range known high end where the that there, address And out going the was what a that to low end.

And it trending, so confidence where to bringing by take addition low with a down that of $X.XX. greater appropriate to was sense high now $X.XX that’s end the by we end felt the up in

comes question ahead. UBS. next Please go Michael of from The Goldsmith

Income in while, or CFO a new is for doing overall? Jonathan, Realty as you’re doing a developing would different But you’ve seat, creative there is there that been is financing reputation Realty position from about that move approaches anything different perspective. different their you solution Thanks. with think for anything and think you the a to into I what a --

we’re the Thanks, Michael. long the these in balance as of one question. to be And regardless we’ve for I over commitment sheet. established, made seats. in would thing done, so it’s we’ve to Income I appreciate is to that say, existence successful as what what verticals going a what’s fortress look, that’s Realty us years, sacrosanct the

very worked we’re things sacrifice And to going we like hard AX get. not to that rating minus so, the credit

now to different the community across the We’re fixed trust currencies. income that three going of spans sacrifice not

us of very be going you’re and we’re see to on to standpoint. liquidity to plenty continue And low that focus so, from predictable going leverage,

be volume we’re really the and pretty that we’ll the given of countries forward, more on of more of I external business, see, complexity I the now. we added think it’s The well of think we’re going the think things, the established. operations I in, that the side to different continue focus transaction internal volume, a in,

We’re the I momentum frankly, it’s and created, lease real estate about differentiator net the is going internal to in industry this continuing be think industry. a we think which the continue platform building that to and on we’ve in creative. But

is Is improving at And the on like a size on growing? Sumit, there? deals least feel Are you you versus and size strength feel scale, you gap your as of times you your -- like advantage the and scale the not some peers? the that widening if competitive advantage, seeing larger out X and mentioned is fewer Do of bidders and Thanks. call. competitive do twice, that

size the I’m big sources it us work us said our the hear fact within have confidence four confidence that not and speaks question, and peers. more to of When the that very be we to estate the table. this It’s we XXX that. that when first have is it’s of REIT some S&P the playing that to see we I conversations might not who really it’s that is we the just are registry, from partners gives continued want in They Their are we continued against those to game when want they’re only times. are bar I to it about for who itself Michael. clients are so clients our close who when net -- much. our with we from ability a engaging recently believe at -- the us the name that big the capital, in scale answer, that to with and to smaller be we to private have say are for Thanks real choice We gets actually clients hearing. new invited And of write comments be different added want none. itself stand our they their gives it what trying And to when reputation some is ability checks. who to that the sure. is that lease they space with it being is for ability of we space. say. And considered appreciated the competing by big table these who’ve in something believe. what folks And in we clients have We think questions names. been

from next Citi. comes of go Please Eric ahead. The question Wolfe

receptive up the follow ago? on to conversation? say those addressable the pushback? you that receptive Greg’s at question. understand has your perhaps to look market to typical couple sale-leaseback just what years peers, wanted Just Just curious of And a are aren’t percentage When that would S&P And trying versus how as for changed changed. has you your how what’s

chose done with. I the of look first a never candidates, can’t But they’re they’ve some what Think larger and sale-leaseback before, give right? all time And I just is point we’ve to [ph] -- and Eric. percentages, Wind. about done you done transactions were can They they it about we who done ago. us. sale-leaseback portfolio. ended years at sale-leaseback have EG that doing was never winners up was the chose time. And not at do in when This they’ve Farms of chance before. a with Cumberland actually the Their being it to Group three, they do to it Think best sale-leaseback they a four

are by why ourselves that maturing, And driven so the of and suddenly markets, capital a were find the as capital an especially being traditionally is as that alternative markets environment candidates. as investment-grade for to compared that beneficial lower debt or raise we is I certainly that in believe the sale-leaseback names product is sub-investment-grade part to reason vis-à-vis capital we quite sale-leaseback finding

That over that speak And that can line to believe I again that other like candidates. grow. there that get transactions continue. will will to And that yes, feel will be we finish so to. we be continue hope And the first-time we that will

your last pretty at the or look like moves of you That’s helpful. want meaningfully the When interest pricing couple on And see trying look rate of will you understand XX-year some potentially future you how return to sort real-time how volatility it’s capital weeks. at acquisitions even and then and re-trade this quickly adjust up whatever deals, to or just all and market you over those? changes

Yes.

movements point place. We I’m try unanticipated talk that a XX I anticipate Eric, in I’ll So about strategy okay? to we things what to clear. want bit to going just do in make Jonathan have about talk very But have we to hedging that one call little a years,

that by how second. different upward absolutely adjust take people for a cost about lag much environment. that more that capital and their does volatility And how a these be. much capital the That’s these sticky opinion people movements period if And cost pretty cap the Our time, difficult. there’s cap a to sticky should cost And -- it rates to move. not of higher of capital rates gets around how that makes of adjustment is. movements, view There of time mark-to-market is that lot drives have what a

within today in from reflect X.XX, seen movements God of do rates X.X we’ve then a a sheet days, a yes, X.XX, X.XX balance basis-point sustainable you’re the going So movement X.X. see that. this I’ll XX-years, XX to this sort that those matter we X.XX, on -- not do cap in XX-year forbid, we what I X.X perspective speak to unless to become mean, see to anticipate X.XX situations? movement But rate. more have of Jonathan to

active which very I the but for to been FX, alluded on the on also We’ve front. interest rate hedging front, earlier, Thanks, Sumit. both

far in some billion We April early of might the we see the money we the year first imagine, us If as you reason around tender. billion, we $X debt now. that of $X.X because really March, chose which up do rising coming you’ll as year. The in reason in maturities the on next purchased swaptions, went it’s billion, look have place rates right quarter, go quarter out actually put January against from those of to next healthily protects why the in out we first late you X and XX-Q is pretty January at until that why hedges the

see be what for opportunities we to to we risk. do sheet a market, taken or mitigate -- risk, balance that the we We time over the that primary potential we can’t that up risk look standpoint, we’ve X risk from have we’re coming So to can months, proactive. is always refi on X exposure but the where going out want we have to but

the so swapped we able done did And and twice, a we’ve million middle the gain. first of something pandemic, were monetize it -- that’s now to that time and $XX at that was we what

about risk. going but always thinking managing that’s to be not how We’re we’re fortunate, so

of from The next Baird. Golladay Wes comes question

low low. just about just is talk Can on I’m this volume, volume looks pricing, going like just or is still just in curious it the UK? what’s deal was you over It of function lagging if there? a

little to side quarter. Neil that That opportunities redemption created pressures really issue it and were timing is a year first for last momentum on It some had amazing experiencing momentum bit a the driven into funds needs continued the some work great think. I end Yes. harder, us. as we towards the by of

the we very Second U.S. but number, quarter driven big what -- it side, about dominated We largely got is million on by a still did by was which $X.X billion. just it’s $XXX healthy. did the

we’ve around take trying look at a of the XX%. that -- European billion done, represented, you the quick were which $X.X you to we international math what and say, business billion, would $X.X at If away, do right I

excited look, there’s come. and that’s the international I’m business generally that -- been where about more has and So very to But contributed. business,

having And once I’m of Okay. and would I what risk opinion to net potentially actually good is it this curious bigger this yes, it good. inflation the the bigger That’s credit Neil. price good It next Would would question picture. lease? of be is cycle? job, sounds more be, be escalators, point kind what at guess tenant volume your adjusted.

credit. think would I tenant it’s

the environment. You’ll on obviously which risk persistence pressures you see net and the have inflationary interest various those view resulting of to lease pressures, look take driven at credit higher all then where these this businesses of by different largely inflationary do the is rate in a

net lies. filter the net businesses, going and exposure their through that’s companies sort lease where impact it think differently, of lease makeup depending will on to of I

the For that inflation one of of perfectly do that have -- we is, can’t. advantages inherent can we with -- me, we we have, match the growth we rates

yes. categorical be a a much will of The X%. is leases? of if So growth Today portfolio, and bit But were basis -- and grow going our have the our I’m overall answer done part my there’s and remarks, mismatch. on I you inherent do profile to talking closer was levered think Income, by prepared nothing, of to X.X% we, it of about a better job growing a now a always Realty to

the it to able of inherent markets. built into we’ve growth benefited increasing that on international been them the growth non-capped to is assets Some our And rate. that actually in greatly from of rates one-third those have CPIs CPI get have contributed

be somewhat not could rate muted in perfectly business. on risks that versus your matched, So, leases going it’s into growth translate to but your impact bigger the risk much matched having a is credit inherent never perfectly of overall

question ahead. of next The from Morgan comes Kamdem go Ronald Stanley. Please

ones. two Just quick the tenant on Staying credit risk.

X.X% like So, And it opening looks think versus watch still reported but quarter. with And the in your interesting. ticked mentioned I a ever. it was list XX%; pretty comments, occupancy up know that last lowest EBITDA, see I sort lag, that’s the of basically you I X.X% median

things So you as like feeling forward, stuff hear in certainly when loans property pretty for But sort Florida. you insurance are look starting of good. student again

impact tenant about what potential did that or side? Just your on sort team it does the curious, how think that, test of have stress the of Thanks. sort

that impacted student they lowest and those But to years. you will five going will to to if in not low-price go. constituted of we’ve Yes. to what we going said watch spend, the of businesses, facing on point, the the are to resilient the discretionary are get how be be much And focused that service-oriented our Of the first. be more are discretionary that’s list It’s falls? last today. back the income the are economic created compressed, be credit Xs. it income it’s wasn’t discretionary the have when that question, in It’s portfolio being get And is that questions. you just last be five Those our impacted? are the course, industries under loans going one that is consist portfolio been like that we’ve they that what last clarify, What types years are Good I businesses again to these Could of things that can. go? at when assets things is that very is And good it lot very instituted nondiscretionary, look the first largely are a conditions Ronald. getting right?

it that with So, X.X%. And that’s how ourselves our by list is Ronald. business, is watch run find is that a circa design. we by It credit not we luck

was of about big three two back a cost of sort what so the one, in just the and this interest can hit which think year, Great. year? to And guidance headwind, a sort I you facing this -- you or right, then my second little as one onetimey issues was bit going we comp thinking just back ‘XX? on the taking are this going guidance be step that of, for -- ‘XX But is was again anything of because does year. whatever it presumably, maybe there is year, issue the for ‘XX that be But be for that’s comp not of this should it mindful property not to could to tax, an happen else that sort not just be or unique tough. sort could

I impact regarding even the year-over-year to X%. really this I’ll is when year. it’s versus zoom back look -- about But what talked earlier about rates. off XXXX, half on all said expand It’s Hey at and based the short-term say to $X.XX, $X.XX Jonathan. Ron, versus which XXXX it’s out of I’ll We you guide midpoint closer impact. or the of greater you a of our

volume that this doing, quarter. a a And out if take we’re at the a doing X.X% year-over-year that were you basis, so, to management X% you trending from everything on and number and we’re that standpoint, asset normalized we’re portfolio closer

the if a in other recall reserve first We tougher little did The first have XXXX. quarter significant quarter comp, did industry. a have you of the reversal of a bit

So that’s a the why first quarter bit was flat. little

a back level. more outside of is normalized getting towards rates quarter Second

to even half the an exposure do the to on comps have some back just year, XX% difference. So, we given of that of front. rates, that’s X%, see given be continue magnitude the SOFR biggest I you’ll move, think going to difficult the the variable And

go The Linda from ahead. Tsai Jefferies. comes next question of Please

trending? that domestic does points. the between the you How your would comment spread in international And Just of rates, of investment to those two cap basis see where vary investments? going spreads XXX investment back stickiness categories regarding and

Yes.

follow the points basis XX I business registering, you are headline think the rates If actually we that cap international higher. was

this actual But, there that your again, So, terms to domestic is of that the is spread the we and markets discussion and an going a very should international going much the what to Linda. be is answer realize, product-by-product between markets. opportunity-by-opportunity are advantage question, in

different. think advantages I are the very

experience there’s that. market, sale-leaseback mature clearly we are the more U.S. U.S. competition, The much the In more in a market, market. markets, don’t Here international is more there players. however,

are still would viable the international market but it product. so curve. whereas stages of as And the sale-leaseback the I more one in, a It is in that maturing, is nascent opportunities say participate there can behind is

allows And both for ourselves us, to that markets to and of is what we these to points position from strength transactions. us want in then win try work our do

that capital XXX Our actually basis points, average of been XXX basis been to has quarter, And tracking business. help from finance spreads. time points raised our based we’ve was first spread on it the realized we

This it’s quarter, on, XXX basis same based points. method, again, the

been. XXX it’s opportunity-driven. difficult, It’s to you’re geography forward, So, points our going out But Linda going very to still going you, very of one basis average that year-to-date, versus have dominate tell historical spread average north to it’s the is much has if what you another.

I leases the you open leases nature of international CPI. that other of uncapped? to the versus that your uncapped those are is think then And XX% have it. XX% that What tenants have said Got of don’t

bit Linda, Of are growth, a driver have international Yes. leases CPI of let of them precise. internal more XX% me third one or the uncapped. the that be as

in of So drivers all growth. CPI have markets leases not our international the of internal

So, see growth to is market more again, CPI the it A -- seeing a much to the metric that of is to want I they’re in that. function that as their for used And receptive make to leases, market. continuing very clarification. far just

say, that’s pushback to we to go markets, sheer suddenly these been happens "Sorry, an a that. commercial of client who going it’s not we very growth", be get the here want just to you’re has some some difficult given to there magnitude and client that. in But, to experienced trying of Now about be and inflation being investment-grade are CPI

CPI see do in than see the that is more So evolving. And yes, we yes, markets to uncapped we -- tend international but too here. growth we

comes next of The Harsh from Green Hemnani question Street.

is sort Sumit, you sourced. illiquid luxury the thinking XX%. on annually, How roughly you’ve to quarter, close past, all what to it have XX remain Do at of worry Income, you idea. you in lease at what of closing $X you’re transaction billion And to X% might to market and closer are sourcing, continues be your the have that mentioned execute in net the the about to that billion of you next this was that the maybe $X were you and looking not as as you second past selective or you months? third best over Realty

to Harsh, or yet. Well, is haven’t third executing we our that ideas best gone the second on news, good

fortunate. very We’re

fourth light the some XX%. this we shed me transaction XX% on skewing that of the is sourcing in quarter $X.X the that traditionally X% in billion. What quarter, probably I the but had the say, clearly in this is last would year. sourced volume we’ve Let is which the billion than second to closing in of done, on reflected closed rather asset, We denominator it’s what not $XX

lag a engage So, that much And see. between mismatch sometimes the that’s sourcing it a I get this sourced create more In closes. that volume we the we is And line particular there time, or does does is over the versus real generally conversation, ways finish think mismatch. where some lag transaction occurs. what when in when i.e., did is when

were away that’s then -- closing a the billion $X.X ended $X.X $XX we at year billion that look if to XX%. take we billion, in So, billion, and a of where the up quarter in that $XX source sort we still

probably that’s the about that think we I the So, quarter. saw mismatch in think second way this to

gaming, imagine might et not how your that you balance trillion S&P share cetera, So, real of $X.X you’re company estate go sheet. would then that actually $X.X And maybe want Could much trillion is provided on I that assets. you retail have to estate in you helpful. portfolio? That’s there’s How after? much actively of is commercial that real of you that acquiring office XXX Okay. that the

to we Yes. et are cetera. It super we These in the clear trillion include does prepared finance remarks. and when And great have did we estate companies, in shared That’s energy like banks, not in cetera, question, statistics It operating also not sectors just real this a businesses other that be does $X and include Harsh, that $X companies, about the assets. that et companies. trillion about particular U.S. here Europe. talk certain

easy way think that an it it is assume let’s about office. of And half to is,

is XX% to is is maturing another it companies versus years. that today environment to the the cost over we something experience. to It’s And are wouldn’t is of years. the a to especially really three this XX% given it these $X.X that X or have point of a their going a the lot trillion, point. XX% are are assume going sale-leaseback companies And trillion debt, this next That’s this want. next refinance these of of the Let’s the of doing number. that cost that if them, refinancing that is sale-leaseback massive that should debt that $X.X of Even over be conversation in appealing a

conference This remarks. to for concludes like Roy our back over Sumit question-and-answer closing the any session. turn I would to

today. you joining us Thank all for

conferences various fall. summer. of of the forward looking good Have rest this your We’re seeing Bye, at to a you bye. many

and you Thank conference disconnect. may attending now you has The today’s now for concluded. presentation,