National Retail Properties (NNN) 12 Feb 192018 Q4 Earnings call transcript

Good day, ladies and gentlemen and welcome to National Retail Properties' Fourth Quarter and Year-End 2018 Earnings Call. All lines are placed on a listen-only mode and the floor will be opened for questions and comments following the presentation. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, CEO, Jay Whitehurst. Sir, the floor is yours.

Thank you, Cat. to Earnings Retail Call. welcome and Fourth and XXXX Year-End morning the Properties' National Quarter Good

while remarks, over call Joining with ending Chief detail a Habicht. share opening very Financial per on on annual Officer, turn XXXX me this already Retail of impressive actually productive growth Kevin core After call our results. statistics. busy improving some FFO Properties for and to our XXXX Kevin over is results, National our, I'll X.X% more the had brief quarter, fourth leveraged

mid-single is per leverage Our and is power business model designed and consistent basis growth executed another multi-year to a that deliver of the of digits on example XXXX share strategy. neutral

REIT XX X, XX steady wins. Our XX, XX, respectively. X, years and averages steady over but for total history exceeded shareholder return we and X, not XXXX, We're slow, once that are shows the again,

customer single-tenant services, year, which assume continue of Our higher The businesses to healthy e-commerce respective XX.X%, of of properties Virginia that and average X,XXX lose in broadly of resistant necessities consumer are default we XXX-plus primarily minor due we necessities. are their struggling leases. two that with operate portfolio some rate Every XX%. tenants retail lease rent have diversified is our properties Currently, long-term ShopKo our occupancy remained to almost tenants: and we'll retailers. than a focused customer to on slightly exposure College, which an

create should guidance factored these vacancies us our these are for of defaults we than expect our additional X% tenants into XXXX. total for for to rent, account I do events note less XXXX. Although annual these in that two combined some

Turning to new investments.

cash almost and legal initial million very management properties $XXX of as diligence, in invested we active X.X%. in due at were new an XXX the yield retail fourth quarter single-tenant acquisition, teams Our asset

initial at cash XXXX, with and yield single-tenant of XXX an invested retail $XXX term of average an in over new For the million lease X.X% we year properties years. XX.X

markets below average disposition recycle in to cap Kevin strategic rate meaningfully our in but in million model, lines our namely majority opportunities. our more rate almost validates and past issuance dollars the different XX% of I As one maturity will has a the of acquisition years, accretively. typical capital tenants, activity, another our in on the of our redemption for acquisition few the was quarter. provide upper our average relationship details cap with were also disposition the XX XX of operating rate generating relationships pool tenant provided properties sold diversified fourth active debt invested been over X% our to advantages In were the $XXX fourth XXXX, our early about $XXX ability range of of The cap range trade. well-priced do selling blended of the the XX over We XX million the low Year-to-date, at front, proceeds. the on X% $XXX of highlight that million capital in want quarter. our a in fact of XXXX in business properties we equity of X.X%,

All of in balance beyond. and excellent which position for puts XXXX our sheet

the business returns execution of that delivering powder, basis. our The share and plan that years, a multiyear people consistent. mid-single annual at on Properties describes steady, look consecutive dividend with focus maintains flexibility sheet Retail growth we consistently back recurring, properties, balance dry As Consistent retail consistent, culture, National the averages. XXXX, consistent REIT and consistency shareholders a on rewarded total of for disciplined digits last exceed word philosophy single-tenant one conservative our basis per XX multiyear has consistently no take than on better investment increasing

McKinsey to the as Directors the Holden to over call Betsy's of and with Advisor currently Before of the Retail and will Senior Company, areas consumer the & Properties. National Foods governance boards I coupled a of turn Board welcome invaluable and her retailing. of experience Co-CEO major as strategy, depth be background I Kraft of former Betsy in Kevin, to breadth at public on company want other

additional high-quality Over few well-positioned ahead is last board quarter Properties; with four our years and Kevin me that, refreshed our to year-end the comments we've ask we rest let Retail our With much fourth board provide look future. of like the to the new very directors, National results. his on as

company's per I'll short-term consistent bottom over Securities forward-looking this share reflect of in We expectations core rate my actual year that's amounts which may be Factors detail our while changes X.X% is of disclosed on XXXX release. $X.XX of be to cautionary press usual a The after With that morning's results guidance the that release. statements FFO represents and/or were to significantly cause in increased materially risks prior forward-looking and not we at from the under report these make that, guidance on That core the are gave page XXXX strong $X.XX statements of left XXXX in results with increase and share, actual liquid Details to year share X.X% and a results statements with this do and may and per this statements FFO implies and filings fourth for the guidance November. Jay, start SEC discussed time the maintaining quarter company's release from We to midpoint. the could with we growth and quarterly debt. today's unchanged six morning's the of differ Thanks, of XXXX. large headlines back $X.XX sheet release to for $X.XX XXXX forward-looking floating relying balance the per differ made. of results not Federal full from these and to Law. time statements greater that certain to in the considered may press statement revisions we future will in press from matters

ratio result leases December a vacancies of dividend XXXX. AFFO to his Our and in that's seasonal tenant XXXX payout down for as down XX.X% from Jay comments. XXst several ticked slightly XX.X% was Occupancy noted at expiring

We to X.X% G&A that decreasing a expense revenues additional continue XXXX. efficiencies ago. of drive X.X% And year compares to for with with operating

Just quick our is that here side we note local item G&A line in and that municipalities. expense taxes corporate state various includes pay

from that exclude put separate REITs a line Some G&A that on and item.

in results, modeling place of the rent all XXXX For of purposes $XXX.X as for million. leases was base XX, December annual XXXX

X.X some common fourth equity full of projections We issuance or the our for quarter So this ATM. shares in take timing of allows Common the acquisitions you starting million and via of or totaled the $XXX QX million. dispositions X, out XXXX. issued on to estimation year guesswork equity January

issuance combination a million million million of we plus XX.X% of new equity this payments. has in investments of So $XXX total which cash flow in operating dividend acquisition $XXX property proceeds $XXX of combining approximately during provided year. the invested all disposition free That that's is million with XXXX, $XXX equity the after of

a consistent near-term an us profile liquidity XXXX, very and with leverage does it's leaves it this bit. maintaining But getting this strategy So is capital available acquisition bit maintain in again a a and weigh albeit when a share conservative our long-held active growth of per on good and position well-priced. into effort leverage to

was until million the were paid fourth notes the of penalty off quarter were using million that the charge XXXX. unsecured due in the quarter of and XX-year the prepayment of XX million X.X% make-whole quarter. proceeds in XXXX from we issued in of FFO our announced previously third excluded and we we core fourth $XXX that The results. notes not as $XXX We July, some Additionally XXXX, $XX.X AFFO from

lock that to million the or expense shares. Just core note, then additionally that three a we that expense had on notable redemption its increased so from I pushed and additional through XXXX as share impacts; quarter X.X interest one, an in the and outstanding notes, note of of activity FFO had due terms And was treasury really cost, count fourth a not and had AFFO; quick discount results up mentioned, a bit; to expense ran that the capital interest debt note write-off increased the side we -- secondly, back interest added pending the impact XXXX just payoff markets the we the quarter. fourth in of lastly note

structure a all results remained ended three outstanding -- fourth $XXX So, those We've million year we of strong. but to very no flexibility, with Leverage on bit. sheet are items metrics and quarter We per a markets share are good notable bank will in may an keep And the activity in been financial effective more had offense. capital on more cash. and Again, Capital outstanding short weighed undrawn our a $XXX bit million inclined line. the amounts results when and of with allow capacity run, asset. cause this markets lines balance and volatile. defense credit the so

in next weighted Our is X.X debt and years. average debt maturity maturity is XXXX are now

our of outstanding sheet weather acquisitions economic potential and our to rate good in remains market is and capital and debt All balance fixed fund future position turmoil.

Net quarter was assets from down booked at our Looking metrics. end debt-to-gross slightly that's a leverage ago. XX.X% year

X.X metrics them. for conclusion, More we've easy, minds. will and Interest was and solid particularly we that capital share at the operating sheet a XXXX X,XXX times at comps good of sourcing properties coverage was totaling times the relevant, per on XXXX. $XX.X know, cap are our five is years driving million. debt-to-EBITDA when not that around are for investment forefront results based therefore is multiple results December leverage and charge capital basis year relevant, for decisions, believe X.X believe you not was encumbered multiyear our coverage of be don't XXXX growth and and we market prior are been making times and another manage our by allocation mortgages, As found fixed balance net of and In we XX. Only X.X

Our investment years. any type, balance sheet open very many strategy tenant it to property of our been And have strategy type, that, questions. up and terms with will we for consistent in

Stanley. Instructions] question is from floor now our questions. The from for ahead. And you. open comes Thank Egan Kevin first [Operator Morgan Go

my Thanks taking call. for

question, around quick terms it And assets a give little those I you're it a what quarter. that Could you sale the color are? ticked-up in like of bit to any assets held them? Just just seems of looking for what dispose noticed this

Nothing that. Yeah. read into to that

for but increased $XXX sold anything XXXX disposition read noted, number it have of little a was will as normal activity sale. for as shouldn't you for is higher million than We'd well. properties, into bit what's that our which really to As us,

additional World Thank those that properties what XQ. you the Were you of World start and between seems or Camping it it were XQ that locations just then And was those Camping like noticed one again, nature paying more, acquired, that? for I the properties ticked-up that. seven or rent

properties dealership to in World we Camping Outdoor of acquisitions They brand-new quarter. additional closed fourth some properties. were were on that the unrelated sites. Those morning. Camping Good World Gander are Kevin. Yeah. the These

Got you, okay, Thanks all lot. right. a

from Capital. comes Brian RBC question Brian. next head, Go from Our Hawthorne

the My first just Restaurant or question What an Was on Hi. Flynn happened merger is Group. that I guess? acquisition there?

operated Good restaurants acquired are Group. quarter of a morning. We largest by fourth Taco number in of QSR restaurant Flynn portfolio the including franchisees Restaurant Yes. concepts a of of the one Bell. different They

a Flynn And a we've Arby's and leaseback fourth Bell of they a under acquisition franchisee for we did a So, Group become business. transaction umbrella. Arby's been various part that of in had as their of of Taco acquired and that did franchise their the years properties sale have a to relationship have with the quarter, number

Bell the as same the those American? Are

Yes. parent They're yes. of a American, company Bell

then and And guess Virginia for properties College? what are ShopKo vacant for Okay. your the plans I

Right.

Just the receivership to are not in and -- but in College that which were the get rejected. technically on effectively in we same three properties Virginia to color as some they if technically put it's own weeds bankruptcy

are back our we the in had that They're So, part in portfolio. -- those vacancies XXXX. of our

too is the on any working working team released. to are may It's leasing schools report those. leasing properties. very is just are But those There other results. Our be early team excellent interested on some in that are getting that those properties

sold in also the we fourth We -- one quarter. ShopKo

they and ShopKos So, bankruptcy. filed XXXX we entered three have with

listed is as the still now going list, leasing find they're on team Our They're opportunities properties those of business going properties open. right out And are again for the properties re-tenanting that those out sale. store to well. working are but there closure through our

mentioned in that, is for into as guidance XXXX. of comments, we our All our factored

for you Okay. Thank my taking questions.

next Christy. Christy Go the from comes McElroy from Citi. question ahead And

Christy. with Good morning. This is on McConnell Katy

growth? drag and rental how Just impacted rental you regarding a the same-store footnote of can XXXX on much and bankruptcies for And then watch-list of of names income, impact you in XXXX the could the these QX expect on and the same-store specify that do you how be others much occupancy growth? mentioned this SunTrust on

Yes. of XXXX supplemental at you're the which actually. a disclosure Gander really of number This the impact the rent talked Yes, think Mountain Katy. is I for in about was quarters terms on looking same-store Kevin biggest we've

And through in which College lesser those so X.X% amount, those that's kind a is a ShopKo point of now. is but is XXXX Virginia -- played ShopKo impacted both right numbers. tenant of a

be in no XXXX. would potential that had impact that the So on impact XXXX

see won't this later you The were related for So, anything that until vacant at colleges to ShopKo. Virginia XX/XX/XX. year

and So have a will XXXX on that XXXX XXXX play about and impact out. Mountain itself the will million Gander delta $X between

So I question. don't your that answers know if

rent. between XXXX. million There's College XXXX of and $X about $X delta there's ShopKo So Virginia about of million

Katy, let make there. one other me point

a talk think with step back a for this about us. think I strategy take just moment is and the to --

hold a of if waited all get have on that vacancies hold to decision for and what same-store a of does longer. stores properties. XXXX Kevin SunTrust. to settlements those was was both big And on And thing the might numbers. It burden easy of sales have on for -- they Gander rent some business out, to good As try part quickly interest were the two structured ago at Gander of instances, the XX-year sales take very but impact rent do. best a the Gander to vacant and elected Mountain release renewed properties do make XXXX, we started a of an and the in hand important in on were of long-term again to the of -- expense of we And that SunTrust, structured us. case those bumps at tenant of It with impact But an increase In that and the of mathematical do. now. that that get part the its settlement. lease was for And those it was were same-store those years -- to right where leases thing long-term Mountain, to for similarly not vast quickly we to almost those to pointed we just the properties became the part might those number creditworthy those the majority with renewal to leases the structured overall in Mountain was trying

is this -- I'd And Kevin.

to to I of Just time. whether might go way minds, year. built increase it's over guess. to talked out the And have business. And it's into which the with of always be take reason we of been They occupancy lease during investors or a out or Offsetting they that be about we that, years at the properties plus a prudent think our many might macro have we're step factor in. change we've over growth our moment, company, to kind never said X.X% that At maintain that many, certain typically to dark back a are quick we're we when tenant for always X.X%. my which able minus Having The is XX% about about X.X% or leases X% rent But in going we have that we see don't or retailers. rent it usually years. in any our assume our is in go outlook. investors as to to X% should that given point mind

us a remaining the then you leases SunTrust follow-up. And eight Can great. that Okay, you just have? maybe quick update on

want continue those some real are properties those estate. some mentioned vacancies with hard. still of to that's to leasing better -- I something impact These for work the XXXX eight remaining vacancies. four us want of four; to real I remaining of remaining properties and our better working SunTrust have partly estate And us calls. maximize the point is our on. from why Yes. locations that in resolution group those the of We -- then seeing do of still you're really of previous are the We team out pending vacant, those entered to

nine eight, the Not whole or but note At pretty it's for well the transaction. the on side of At we’ve a update on And SunTrust. whole played the day, of the that again end supplement recap bottom one transaction. an gave us. the Page on out just

the few we're been with last of But worked or properties some with had So it’s we dealing as it largely that investment. in expected that we've pleased process. out and

you. Thank helpful. really That’s

Katy. Thanks

Collin. Mings question Go Raymond James. Our ahead next from comes Collin from

Thank I you. Guys two Collin me. just here. questions -- Mings for

you call can a about in just rise the First, category, bucket talk opportunities to little just XXX Jay that service that sequentially. about on continues specific about, maybe automotive point basis up you're attention on gotten bit Especially that well sourcing, as of having front? that a as given being this the e-commerce-resistant? that lot viewed just most is has recently as success the bucket automotive competition the

our Thanks acquisition take to wash basis And and us. teams a repair big programmatic good in build try And multiyear relationships very the we companies. repeat with which picture in know business to retailers operators you is, with what tire building and we've had with and Yes. business do service on relationships tenants. is job Collin. We -- growing relationships back some a done the relationship auto do as step great auto those for service of part of car always have auto a

in the and we're with And we're the and so of what estate with building fruits business you're repeat locations where tenants -- strength. our new business happy acquisition with the tenants' relationships happy seeing efforts is in real tenants'

Okay.

growth lot about a tied specifically? there, carwashes again we just to of the being think should So

it is – and No, service. tied I that. think part carwashes of smaller to are auto more It's tires a

to – was on the in bigger the That's on just all just as But quickly proposed I SunTrust, overall. curious, as really just update bank then the provided appreciate helpful. just well the transaction, your And thinking supplemental. again right. about going BB&T back Okay, exposure picture that

rents But only proposed just deal and think initial portfolio. your of I now. X.X% any it's on that thoughts

Sure.

off, First exposure our SunTrust. entirely almost branch is bank

are for low for is SunTrust its branch bank I X.X SunTrust have, in year. rent portfolio These branches leased We rents. SunTrust our per bank remaining average leased believe very the portfolio. The average XX $XXX,XXX years with at

two BB&T have are what we a and opportunity. when to BB&T appears and about has us. tenant is we our at looked of at that, miles the a I Collin see So it properties at of within we our when transaction us that with SunTrust look XX% looked property. relationship But properties been

long-term unrelated to of are. my our BB&T, have – that think, have early We at lease your properties comments of great about what sell process is to a XXXX opportunity at relationship tenant conversation where the conversation situation. rates it it recycling It's been I a long-term a remaining what part and X% good acquisition in and point to number cap a do all too other capital low able One lower. about rent they of below tenant we right through on is of our properties, yields now. would I else for like get very do. transaction forward want I cap that SunTrust owner need with They going been as they number in relates in to that have to we're that to or has that like, that make, merger. their in to what decide the that be portfolio properties, that in SunTrust to could good rates of And But position to very those feel someone have to dispose we're we think them where sold talked able

have well. properties very as for recycling been So good those

had rent is obvious, but the And years. maybe case us scenario again, It's a reminder. the worst for to just nine next pay they

and So so... we near feel that good about intermediate pretty the in term

Understood. Very Thank you. color, helpful guys.

Thanks, Collin.

D.A. Our Barry. ahead, Oxford next question from comes from Barry Davidson. Go

numbers, anomaly is When kind of jumped to to look of recovery saw so caused expenses but quick, what's sort that your X%. that going how your Right. I'm but looking on also Thanks the jumped I Real forward? of tenant much. the up going of quarter, margins that guys. this going up, in an quarter? that's kind Is Or about kind be down of at

expenses? talking You're property about

yes. Yes,

Yes.

Okay.

recoveries those expenses of with combined. both Kevin, tenant Property along

Yes. And that…

but went They kind it. pin yet many kind margin head. is your can overall down. the jumped both And of how a get of of dance I up, angels this on

that's think net we think expenses And We about. Yes. property way of the tenant about reimbursements.

And year that So quarter is the it million for about about X.X%. compares revenues. was million, to $X.X That $X.X which the was before. X.X% for of

year quarter. If always the so in little a you there's -- look the at full noise

in as at expenses That full revenues. property XXXX, be well. had year property million compares look that of happened $X.X of $X.X was to You and net expenses of that net exactly we million And with X.X% X.X% XXXX.

a expenses So there. year-over-year, are number of more nothing but year absolute little higher notable, we net percent a because company, than vacancy or trends as a bit really drifted the did changing we're just bigger a move. a little revenues, ago, I did The don't think have property today

Okay, question. great. switching then one It’s gears. And just of kind follow-up

You guys But is again are low argue conservative. very investors which very some you're position. in might over-equitized and an debt that great carrying

raising debt that XXXX, really you in expect or You given money fact the we have low ATM. did or position? But of job in your a what off of can AMT the great very ATM

to in is additional acquisition those property then if earnings $XXX $XXX we to fair dividends not to million we reminder we good million it's plan, I the year And $X over are have which you volume two the are after very raise you million. and meaningful XXXX's another provides that all virtually combination and it question. of even note of $XXX accurate equity retained the a carry equity things of or your really alluded my large yes, via think a ATM paid of a all pre-funded will in call if no as dispositions -- A provide to a position we that about well to don't markets, capitalized our again, But as Yes. I we And have generally. on folks in degree, totally. for will be to point, like need we'd game notes, if have

good point we your so do have very, Barry, the will raised we're really amounts, as But when at caution any as we capital available real don't to raise to We and I've So need well-priced. shape. I moment. no capital have historically, have said, very plans it's to that in

And feel so, we've done any but brings depends It today, that. what more? doesn’t do capital Will like our that we way. that it markets

drive And some that yes, decision process. of so that But will point well taken.

on Yes. But Barry very man's equitization We just another job of and at sheet. that the short-term the it philosophy we some operate balance obtaining Kevin to just a equity our end One part for even DNA quarter, reiterate Kevin's we going drag is though prudent and knew -- point. of did powder good dry That's over fourth to man's very, by. was core results. well-priced the us the

Right.

than be So than XXXX is more be likely? least will would it at say XXXX fair to lower it

that It moment. at way the feels like

Right. Right.

so of Thanks all you. guys. Okay, much

Wells And Fargo. ahead, our from next question Todd. comes Todd Go from Stender

Thank Good you. Hi. morning.

Just initial lease on lower. acquisitions. average We yield edge saw the

what maybe So, provide range if your the you're rates market to the on quarter maybe across XXXX? cap seeing just from for highest? just acquisitions the you of And Thanks. then just in in lowest comments can

Yes.

Yes.

The rates for pipeline would But the the looks look in say good. XXXX have XXXX Todd, low the cap at If Xs you numbers. from I for low Xs XXXX. to don't -- precise for a ranged bandwidth I

of source relationship try majority acquisitions we we -- tenants. the to from usual As our source do

there. having year that the out at acquisition our for the typical pipeline. We're are this conversations pipelines you kind we're feels looking of out look relationship officers grow these are And and continuing It normal at are that and so there. when that portfolios also to very

we've trending year, to from what -- if prior to from close be relates trending anything long feel feel cap But to up. a they're rates that like down as I’ll little pretty we cap flat just is said may rates I last they it. they for bit generally call a flat. like say will it remaining As time are opposed

grade rated rates about cap And do an cap where cap tenants, little below not in comments guys coming you the have rate to for And that are? -- a maybe you're appetite how more get when not a As bit, get investment rates there? looking, you're either any lower of or credit? still willing are

Yeah. -- things we for reasonable of primarily price -- finding regional safe and at relationship deals estate a a us. out that for are portfolio where What rent. good, are we work And real look reasonable we’re getting tenants locations still our are national what there think are for

like So to business usual that. it when it comes just feels as

background her impressive Okay. also guys But you of credibility Thanks, of of -- Betsy of more Co-CEO Holden the you it is caliber. to the Kraft. to may board. call. Her about someone talk addition speak the very addressed attract little that you just have at to bit a Can the And question. beginning last Jay. can it the a talk But you

news like a to join someone side on REIT encouraging REIT’s it’s board. maybe So just for her the

I we outside at same get Thank But of to you, yes. our you. to that when through with so experienced one to from that smart, our a validation had is nice agree And of pleased you be served join I savvy, hope the she It very her seems she another way were Betsy And excited She's board. we businessperson. other capacity. to members said feels do. REIT somebody Todd. that's were world with the introduced who in company, board

you. Thank Great.

Thanks a lot, Todd.

our Go John. And Thalmann. Massocca question Ladenburg John from ahead, next from comes

Good morning.

X-Eleven a mean, drove the stayed that quarter-over-quarter. little kind But in I of came So same. down your decline? exposure store bit what maybe exposure convenience

or areas, that the I'm to convenience any had John. think in remember. decline overall of that. The about don't -- trying stores convenience changed growth store really was just I we sold anything exposure else other

so if to just into might it much, not but sure I'm rounding there much move didn’t a is issue, be that. read It

a Virginia education properties. more to to they not little And us to color going of are and particularly locations on give regards be Okay. Can how if And the fungible then College released operator? are with boxes? size the another of, you they those kind

feet one in something square be the John. made And we Yeah. And sense. that Their And locations. to the see just they Texas pretty in Denver for and on to XX,XXX One's run they're re-tenanted Austin would One's in else, the area. Knoxville. good XX,XXX had to is what boxes are area. in extent numbers

– releasing release possible. to job at as for try to if is Our job one and all is first two is us

We more them working trying rent announcing if on properties. find TI properties, as is accept better lease if is But to we're to rent to fit some users have types on right that our report now, later. But, other putting could dollars lower can will leasing that a opposed spread. of and those team we see in we we'll then and as

Understood. the What maybe the roughly you of loss to of was the kind balance excluding debt. going – XXXX? to to impact on all debt have anything interest around And the maybe potentially extinguishment XQ of in noise do switching into expense XQ carryover then one-time repayment? sheet, And

will interest I over. of XXXX to through weighed expense in was It like nothing carry note that that million No results. about redemption the $X.X on XQ said noise connected flowed

its way So, going XXXX. yeah, but nothing into will find

right. very you That's All Okay. Thank it much. for me.

John. Thanks,

Street question Spenser Go Advisors. next comes Spenser. ahead, Our Instructions] Green from [Operator Allaway from

working that should you properties seem And through properties. your prepared to of mean, But I your disposition I you be through ShopKo that was College in noted a you. this you year. up vacant function – the working we vacancies. Virginia expect remarks SunTrust part to know Thank of then and need of trend guys the

retail levels? vacancies should to expect that forecast, moving vacancies kind levels back going present go Or environment elevated the overall to of but forward? of to we do this hard understanding that are more you think to more normalized is challenged So

as be mentioned, Kevin occupied may to be vacant always we're around going – understanding XX% for future. your the always have that's going well some there's – Spenser properties. to We if Well, question foreseeable I'm correctly. If

As vacancies. the before sale it to relates vacant is one properties, release mentioned job to as of I've those

look sell work properties. before for And hard so other we tenants, we very any decide to to

years. in back the vacant average XXXX, sold before properties at vacant look looked than sold two properties we you If period I that those was them hold our and for more we

basis could sell an as to mathematical decided for restart rent hard to worked those rent is the decision the best end, or what and us then what calculate the proceeds we calculation we to those in reinvest properties. properties based dollars TI might put if get alternatives. we we But what on -- the from and it's we So could get very better as disposition just before we what's for in a those

sales I'd case. the is a property a detail gives of chunk point, supplement had XXXX, -- as vacant your elevated Page of good a would us. as are Yes, can disposition. we would it this in XX property for call to were those footnotes do that just so sure -- land five XX number -- that bit those and list X or relates SunTrust land, parcels, not we of everybody not, which vacant we To point properties if The little of I'm quibble so but we excess

quarters. clearly of properties but were number and the them -- notably so will SunTrust decline And coming XX in that obviously

number of our selling will to of hard comes point, where lower is the there if that job Jay's work sense. I'm on the from more time and But I'd To betting, out. on we'll see, it drift properties are say a makes we vacant we've And properties handful we'll leasing so play where front today. sold a

a sold but probably And I'd of if lower XXXX. in I'm was I drifts -- so we'll vacant betting, see, say number properties

guess, more prior may is be unforeseen more as some insulated properties so and closed that in Yes, in retail, just forward that's net those fact that seeing probably kind it just I challenged not. the of the either fact years really what was I alluding we or could footnotes to helpful. be moving of won't see given as Okay, tenants been general, and has lease

and try abreast to of keep We we're kind what seeing of going market the we're in and what's buying selling. and what we're Yes. on what

So, that. do we'll to continue

you. Thank Okay.

Instructions] next Chris Chris. from [Operator One. from comes ahead question Capital Lucas And our Go

good guys. morning Hey

items Just of Kevin. a panful housekeeping

College in rent So, you $XXX excluded or included million that number on the number? that the December for plus, that annualized the Virginia give rent XXst from as is of

they were excluded from as that vacant number. That of Yes, year-end. is

that was in or ShopKo then out? And

still the rent and been still and leases. because in was That they're current paying have rejected

So, that's paying and and rent. leased still occupied

XX/XX/XX. So, that in at was

year have XXXX? was as I'm provided curious there this and then rate for that the specifically? great. impacted XXXX, was the Okay, it year You And renewal number what just anything do to last for it you

the XX branches expirations lease occurred apart. the renewal -- and the months Chris, Bank SunTrust

either currently you XX% rent. months average renewals or to and XX% if ago be of those putting renewals XXX% expirations, of XX% XX So, to the prior all the SunTrust long-term our normalize to by those of out all works of top it right at of on

XX% normalize what, was, you think I SunTrust. it if

where was operate. So, right it typically in we

the number TI more It Gander. year-over-year, year TI Okay. weaker it adjust that higher activity. just caused on deals then was out And higher? specific But me, if leasing the there just numbers on for for the there Was the you re-leasing. interestingly last were was

Yes. vacant TI return funded took got of releasing renovations on Chris, of properties all of the relationship dollars and majority and our we over of was the tenants vast our for the one on who a those that dollars. one

land a TI. the into But we we and renovations just had falls look will a for relationship buy this we we our of their like return dollars. got on already them of fund those So then properties tenants. case, the one the this and building types that it as we bucket and leased at In building funded then where more

Okay.

other That’s our comparable with our on return investments.

helpful, Jay. Thanks. That’s Okay. it. Appreciate

instances or involved. in just to -- XX-year typically we've I that dollars a though And million, that's where do we’re on big that dollars less $X renewals for $X that And those to renewals we got while put where out point in longer was Chris, think dollars there also I we there's because think. I of some both get even point, with the number, lease the in renewals included renewals. next not than want

five-year we it got So invested in -- the renewal not to for order dollars value was standard those for additional some

guess you all And to Okay. preferred market just That's the the is topic at? XX-year sheet point? what last on debt then at Kevin, and my capital the of question, be able price helpful. would balance And funding. I open at this

for debt low in X.X. today the probably meaning us XX-year Xs, is

I treasuries -- I we C, the plus think the probably preferred XXX for that's X.X. particularly that don't So to well of think capital where we open enough kind The I of at X.X, it's B. piece it's don't don't it’s it. of because A, like that -- us priced. so, stack have moment, about pursue And feel think or probably want

So today. probably not there go inclined to

one do preferreds, outstanding as a perpetual two we X.X% capital. and coupon which have and one We capital, at X.X% coupon view like that a in

have the while how priced you at XX-year on guess I'm I out today? looked topic. And guess that's debt, I

I To be honest, have not.

a where probably there, I think September, be had high would little X.X% issued from to call last not come close Xs coupon. it probably where might today. I'd to But is the mid a lot. that bit we It's but where we be in

plenty attractive choices. So of

choices Yes. obviously to extent if XX-year where that’s so... which the most is would preferred be in the priced, Plenty not out, may there, regardless of pencil it fact that option the that where attractive is

time morning. Sure. Thank you. Appreciate your this

Thanks.

Thanks, Chris.

And from our Go John. Ladenburg John last question from Thalmann. Massocca ahead comes

operators tenant your that Virginia Just follow-up are there quick tenant? education your a was - portfolio? Or the -- other exposure is the education in me, only College any for one in

only exposure. John our just it thinking quickly. three is those It's I'm properties. I believe

for it me. much. Okay. very Thank you That’s

Thanks John.

to be back There like further this no management. you. appears now you I'd questions, -- to turn Thank to

day. Have thank conference season for all we you. forward joining and look this approaches. the visiting as to a spring us Thank with many you good We morning of you

thank does participation. Thank you. conference. This for conclude We you your today's

disconnect lines You this a may have day. and wonderful at time your