National Retail Properties (NNN) 3 Aug 222022 Q2 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to the National Retail Properties Second Quarter 2022 Earnings Call. [Operator Instructions] It is now my pleasure to turn the floor over to your host, Steve Horn, CEO. Sir, the floor is yours.

Thank you, Ali. Good morning, and welcome to the National Retail Properties Second Quarter 2022 Earnings Call.

call Financial the Kevin on me is Officer, Chief Habicht. Joining

occupancy, National morning's strong performance high solid press tenant this our Retail driven results, recons by acquisitions release continued produce As relationships. to reflects Properties proprietary and continues in including impressive XXXX

into consistent on In in in one move paid only July, we to further August, a roughly X% in position increase of two we to companies common this XXXX a consecutive as announced a of stock under our our be including half which are National increase annual of share. continue core $X.XX enhancing of announced XXXX REITs, second to public $X.XX We continued value thus making have share achieved companies, per dividend Based of XXXX our dividend shareholder FFO performance, Retail XX the other to we the and beyond. range record. per XXrd impressive today XX select track guidance is Properties a U.S. increase. our on

designed deliver Our in is growth second reflected on this discipline of to basis. strategy consistent long is growth per our increase guidance a long-standing multiyear year. share This

financial of Retail highlights the to Turning Properties results. second National quarter

average Our long-term high of perform single-tenant XX% occupancy a portfolio of or remains retail maintained our X,XXX plus to exceedingly level which well, freestanding properties continue above of fraction. XX.X%, minus

XXXX, will that of original as paid which have we days $XX.X at that the provided of rents expect. early million XXX% for collections. the of XX% $XX.X XX.X% second or Staying million tenants rent track deferrals also the due We on time. of is continue select been pandemic back, during to the deferred bit we due is rent a At the quarter. collected The the rent a the to little more end

one new cap the we were of an years, the in regard moved XX business. which main tenants duration with initial north our Buster’s of $XXX event relationship on acquisitions, in the top portfolio, of of June. topic tenants repeat deals we quarter, continue during the XX invested tenants, we top our acquisition of XX XX While of With with Dave million, & just do average of with X.X%, properties lease the over from XX which an at XX rate to programmatic

with partners, comfortable our and our landlord-friendly form, and X.X%, of $XXX more guidance year, NNN will on million the The triple-net of lease in to a remain the invested long-duration, with of with market million of duration of to disciplined stable company's meet rates exceed hopefully are relationship our ability average emphasize of environment half with we transactions million, sale-leaseback than continue which $XXX near cap In but pipeline properties tenants. direct sale-leaseback XX.X. thoughtful first historic lease of through lows, our we our primarily showing XXX 'XX via is dialogue deals underwriting where Based over acquisition our XXXX with acquisition with we deal. initial $XXX to still cap and signs approach. new an rate an our volume continue adjusting, increased

from to including we be of XX XX raised almost sold million properties, the second $XX we new $X of also now vacant. acquisitions. quarter, X million properties, have sale During the in raised proceeds Year-to-date, reinvested proceeds the of

a is our does release always it. job leasing outstanding Although one team of job and an vacancies

a do we sell not to We rental within will if nonperforming continue see assets, income generating frame. path a reasonable clear to time

sector. remains strongest sheet the balance one of Our the in

closing, fund our $XX I'd we is mid-XXXX. like approximately debt positioned a outstanding thank guidance. well maturities of of plenty NNN have no has NNN pre-pandemic balance until finish associates hard In our success for call facility over credit and NNN and their as only dedication Our to to strong future. over color with material million, and XXXX XXXX detail our capacity multiple for for to years numbers turn let position more and to guidance. work look back With Kevin quarterly and to on we the that, updated acquisition momentum me putting in the

Steve. Thanks,

greater from results As company's usual, be be law. we the certain from of disclosed will cautionary matters results actual from from to release after statements actual reflect the share release and in X.X% not that that, or the differ I'll time quarter of made. that's detail that provisions per FFO start differ time SEC are future and securities from over could preceding With XXXX, we to the statements with statements filings discussed this $X.XX quarter of press with to That's in note release. $X.XX results risks for may press federal The up statements in and forward-looking quarter in the these changes report materially may Factors XX.X% forward-looking these up core the to make second under XXXX. the $X.XX may to statements, that of this company's headlines first morning's XXXX. quarterly and considered significantly or second cause morning's forward-looking immediately expectations were

increase to were represents immediately per basis That's reported up share per million quarter. would $X.XX was first for income likewise, to rent per rental year-to-date per for in $X.X XXXX, and quarter's the of that XX.X% up first year-over-year. Today, from half, accrued results AFFO deferred the included produced income half share We also deferred our preceding in $X.XX half without without $X.XX second repayments per same for accrued share share. have quarter. AFFO half of the for First quarter half repayments And adjustment the a will which did XXXX, share which first our for rental of first the have AFFO that included on XXXX, core of of rent first $X.XX the the would $X.XX of AFFO second per $X.XX. for adjustment quarter million share FFO second of we compares the produced that footnote $X.X XX.X% $X.XX AFFO which the

the deferred continue half the and calculations. also our kicking repayments note off XXXX, are that from we property XXXX in first connection I of improved charge the a will levels FFO from took our in As we from the in acquisitions. $X.X was and taper And of scheduled quarter results XXXX to the in that seeing rent in second retirement million April. excluded with AFFO core peak CEO

Page there's the say, for XX% quarters. year for payout should Steve increase, was XXXX. end. dividend share, scheduled share. guidance for with approximately which FFO the XXXX quarter half XX from of ago midpoint on if and of for Excluding the we both core our million first X% for to properties.” increase ratio it capital slowdown was you purposes proceeds quarter. the of deferred about guidance and G&A mentioned, expense the it moving by run were compared to All on. down So levels share deferral And $X.XX $X.XX year as new million $X.XX last our rate for, FFO million That's the AFFO per repayments, of significant it to in full XX.X% rent flow release. of new for to did as are at of at of range in dividend to And our share of with noted XX%. especially press that decisions recent a guidance. a allocation The -- our And and $X.X of we And free create similarly, all to as investors, from flow after this mind, reflects of $X.XX but discussed with press That recent release free in guidance $XXX of AFFO on equity consistent couple making assumptions with suggests cost the XXXX quarter AFFO per per been, cash from the modestly new need the fine-tuned nothing we've about approximately increased a for of will that we second guidance. was Page X today's is a of from previous Today, acquisitions, $X.XX part $XXX and dispositions. Occupancy is "free guidance $X.XX $XXX XXXX, dividends quarter's payment range a expenses a to XXXX burdened to repayments supporting million XXXX. per cash are increased our core $X.XX range

We was million. charges acquisition are, as retirement from by any $XX executive our I excluding XXXX mentioned, bumped and guidance up volume

markets guidance behave term. new the the our on leverage-neutral any balance FFO capital most X% in guidance we important assumption to The expect for that general over except a assumptions XXXX intend by Switching don't per to that for to takeaway core long sheet. usual, over manner we fairly from the activity, As in results we about to this all grow midpoint. share the is give

in million of unhappy a issue be was terms capital are quarter were We in did activity. on The at moment. not of second markets million debt quarter investing on in credit very the half and with the million active in to despite sidelines XXXX the markets first quiet the amount We $XX the second outstanding only $XXX facility the equity, modest ended bank quarter of during the year. $XX our and billion $X.X

in remains liquidity our shape. So excellent

industry. Our years, to in be among maturity which the XX.X seems weighted the debt is now longest average

to was outstanding coupon quarter. debt million due in with Interest debt fixed book the end. rate is exception next that fixed assets for with to X.X% our was Net mid-XXXX. Our And quarter of gross and at on at debt coverage $XX maturity XX.X% of June was $XXX line. X.Xx the EBITDA second charge X.Xx all our bank is coverage million XX. Net debt a

suggesting very to our in importantly, about without growth per heroic assumptions. strong to we're XXXX guidance FFO share any growth good So core with midpoint, X% produce a shape

price. our sheet on in least bit sectors growing acquisition If benefit. may But on over think a results on quarters, growth-focused per more investor per will balance be a volume asset to slowing long time at We so, contest recent focus Our managing accrue and getting focus in the or remains term. results will disciplined we the think share many share little renewed tell.

While of market such. levels currently of there increased economic an and are capital increased is level we positioned well -- for uncertainty,

And to up we'll questions. So Ali, I'll it open it with that, there. any close

[Operator is Instructions] from coming Your Brad first Heffern. question

And moved? Can credit across a quality? have difference cap has Bradley about across much industry there you Heffern RBC. rates or the of from much been how talk

of cap second market. in the half a The rates. before institutions interest started this we're kind some seeing business We or started rates money line conversation cap the in to high rates interest starting out up, drawing moving seeing More we're cracks private quarter. the the up, had cap of movement now X in in yes, when the rates, lot we net see of And kind call with the the Xs. of equity the of sand lease it, moved moving are --

we're basis by we've little meaning we XX triple of within a about see but net lost -- given the the competition did the we for lease a So importantly, move asset a long-term XX-year But there quality starting quarter. target, more transaction, market. yes, that average sale-leaseback basis to the -- XX our way for

the the Okay. thoughts variable on of that in a and to tenant roster debt And flows rate any exposure through? risk as amount that represents potential credit that then you whether have

No, It's really our out related It's bank debt. million any billion we $XX exposure. credit facility. our like of Yes. million feel the $X.X to we notable $XX don't only of have only

all we have to like any real don't feel variable at interest rate exposure we risk. So

meant level. Sorry, at tenant Kevin, I the

tenants in capital their variable structure. rate like who So debt have

perhaps And with but fine, look they issues face costs. the things at store rising interest level, so might

say the that. kind time. about of clearly, our terms for debt some variable equity you are and date, clarifying the do, tenant much tend private of X/X Yes, not rate. too not at backed point I'd this lot in have our corporate operate tenants if at under Thanks seen they property level roster stress, To level a really and Yes. at that of to is we of definitely will,

credit found near-term is some sub if challenges get appears little at it challenging It's -- got tough think little our some it the investment-grade can a we for to debt just -- have you've refinance. maturities not it on that a the moment. any that having today's world. you tenants I market debt gets -- in are side a more But refinancing

from Spenser question coming next is Allaway. Our

your backdrop. It's broader XQ guys have economic given the front, bit obviously Green guidance. just success in talk customer by as growth, on had you about a Street. and know little existing can the you regards evidenced I deal to results sentiment just But

are there any gone? Just conversations industries how And at tenant this curious than that more a point have perhaps bit others? recent little if are cautious

relationships. NNN's of little debt on our in base participating little first a a in cautious, increasing and more the with that bit they're the been we a organic on The and of we more tenant deal market development than less seen basis And where seeing? over of year with bit found, a quarter of the our growth that resilient the front. has The consumer are there's was entered months second obviously, and pretty being the that store We've kind our the we tenants in tenants daily, weekly lot of consumer. doing conversations, base. conversations the been tenant X new M&A What

But squeezed profitability. top a it's they're in low just a price growth. stopping worried the bit discovery. about with the going them finding but are on growing, little to hesitant not from line not more the And obviously, the So little getting inflation, they're be margins

a That what in terms then of new regards of new changes there term or looking agreements or escalators are whether being lot as with tenants, you whatnot? tenants just executing makes have CPI-linked just Okay. to been any And that's in for tenants or sense. shifts some lease or existing and are with

regional the deal But escalators. think here as constant can we I in shorter rent tenants. term want large less that's at is with entire the in pushing -- rent NNN, dialogue as negotiations higher always escalators. sophisticated my have we're XX-year we hard a and career we for But so reality tenant

commercial the now X% in years. every right our is market X annual, that product So XX%

seeing steady it's over not But and future, XX institutions shift. shifts course enough we're currently. the years. any been increase the If pushing it it, the market So might of keep foreseeable pretty in

Nicholas Our coming Joseph. is next question from

from Nick to Maybe Citi. transaction back is market. This the

guidance, into cap back decel does the a you've the market. of rate accomplished the half what from how the year you acquisition does but on But play guidance? second touched Obviously, half in the You broader movement that raised year-to-date. assume

of of Yes. the year, higher anticipating we're a April rate. A closed The We back a of in half deals quarter second fair cap bit the the closings. reflected of rate. X.X% amount had the little cap that a lot

deal call and So those the to XX- we And cap that was a rates it's February, were negotiated cut. window to closed. we in a get price, it, deal XX-day in locked the

XX, quarter, QX XX third second the increase. Now of the half pricing for basis point we're seeing that

kind Is I bit? bit guess half a for the in volume also you're that decision pausing volume. the And on Or either market is of it just active kind assuming what the year? Or you? of decision, the in a just by of it back more is being is just conservative

we're But for focus towards looking out the acquisitions not we to the looking main in The have quarter, quarter. at yet volume. not visibility is growing creeping the but comfortable XXXX. of hit. blow Our yes, of quite third the going headline we're Obviously, per numbers the FFO share, And expense that. fourth to we're we're acquisition don't to

about touched you think at then least or bit how on of cost a And equity internally. you

little a You is. a in which and it issued equity where came, I share, Street $XX the NAV is quarter, little below a think,

internally, about how equity X%, issuance to least you you think And it? of I do mentioned you at that So think about cost around NAV. relative think how relative capital, to

modest amount out. a Yes, put Yes, Nick, Kevin. it's we

think in a by So to little was, under We're that. yes, at I wouldn't driven gross It attractive. our on shop it's which And investors and returns that over little share focus NAV purposes sensitive very read then not we're approach cross XX. we too not that. either. a I creates with per growing long NAV with much think, are total trying a over you into and exclusively But that at time results, price know we're XX as to

news. good the that's so -- So

So you're time it the part, note, we very X in much have not the call very reason we for will didn't like tell. last, was priced. you large But just it, is appropriately issued feel equity In quarters. mentioning will

I've And where at do it was share debt before, changes, the a debt that But And the we and year we executed of more last mentioned like piece price may was so have as rises. all. equity to didn't extent we attractive. a because did really equation we the very interest lot that of much

that's And all so those attractive managing piece to capital most the sheet keeping we and the leverage try of while time, on liquidity our eye metrics the pivot and to at the balance things. our and

not in bit bit our but interest art equity. from a an of goes in science, a of and we'll little of here where issuing it's see terms so it any And

is question Golladay. from coming next Wes Our

Wesley Golladay.

question doesn't last pipeline that talk want equity, a with Can maybe when of list, high about running talk fund little issuing line be cash cost how the little you your out broader. a like balance. debt to maybe maybe but equity. flow, bit called sticking for it maybe sound free bit It you about bit could on at you look maybe higher Just would a and little appetite on you of you near-term the

out and called Or return markets take the where of that balance want And line, and XX How I typically, be context think take how you is average you to carry don't could comfortable are would you've line? but high earlier, you sheet? You positioned weighted in with? capital the your years. line that a

and we've and think is But bit never in it it's debt little to weighted I with now maturity near-term maturities. XX-year all little rate. months asking point, you're with debt average luxury in a that and what line which a to what want investors is have fixed I have we take your given very articulated recent the high. that We

what recent our to the had we've have past. luxury able in being line use the than of more We

average usage X think line X like bank last over I the million. think $XX weighted on the over something the average outstanding years is I years, the last

And equity line. attractive. use so really were amount debt well, the because We so The why of of the debt that? just capital was markets their didn't raising -- ourselves and and long-term say, copious people and that -- kind found

we lots pivot still Now that and in now shape liquidity. can have bank more the rockier, balance very line that's a capital are have markets still and good sheet our and of use

put before the our it to We're it to good going than go that How half less line, way. use nervous. get need of does that's news. So let's high we well bank

to my gets then $XXX it year if dispositions, million. terming equity. annual so as that And thinking that get prepared of debt $XXX flow just on And in $XXX remarks, to a $XXX million and/or cash of serious with But $XXX goes about about long more out way we'll million, have or maybe the $XXX a to year million I capital alluded $XXX average, million a plus million, funding that's acquisition. to million even of

and/or -- said, And not debt. stay very great is so we've need line for I So the of got equity availability on the within metrics. as either plenty that bank still just conservative and

And into this the the is tenants it at more Are the business Ahern them? your call. X you then mentioned top top a Or saw tenant of with I the just made XX Got list. doing you that of it. function combining

and #XX tenants -- largely to list. pulled had a function we #XX so that them It on the above was combined from yes, X them, of up

are I think, we're with with, so just our and very property are the infrastructure. of their are metrics we in tenant way terms that we level comfortable -- moving world a comfortable that And is aware that's

I down are so we will at bit corporate issue shape. quarters. that's, in worked a But will, debt weighing refinance coming the think And level. the on satisfactory a They at think, be in they we them get good that think, staring

high. strong -- think for in capital -- estimate It have issue of with an cover of issues your could. you I then pretty that. one if ballpark And some pretty there last one, capital mentioned seems coverage. that know I where call happen typical you is I it, a are, Would just it you. the the if these like recovery in exact to stat scenarios past the with was Ahern, and don't a structure for I half you know structure Yes. good have

and Yes. event fine. is, well-located a in our held We I yes, don't obviously, of we metrics. piece corporate mean those the both very, -- you we just properties of occupancy But one. have that, if a stress good have had unit-level And that of very an has come had and 'XX tests, out you even issue, exact that experience balance sheet well pandemic if to the flavor our up will. XXXX through have it.

that's And our so been experience.

from Kamdem. Our is next coming question Ronald

quick from is A couple This Morgan of Stanley. ones. Ron

the assuming guidance. you're this you Can us reserves on one for for bad Just what remind year? debt

Yes.

the loss consistent XXX has internally, despite our that We point for XX have than experience shop, we within better in meaning rent about less. -- our in many projections always been basis last years our a assumed that, the points been fact potential we've or basis

And that keep somewhat be but general just so we to conservative. -- assumption out there

on Makes health and then staying forth. And so tenant sense. just

what you as that on or may Just trying that in -- that asked there so differently you are know have a either there be you're downturn that looking doing sectors sectors to forth. the questions different side? go doing in. or industries do or already more pausing Is broadly, when we at -- potentially just anything or you're when thinking is hearing into you're But more and you're anything from others that. I tenant less

even will we than the Going consumer minding relationships better still knows forward, portfolio. the strategy tenant our And their current be know. of our

and bit selling when the they're are lease. because you sign selling good pretty a participate. assets through new willing they're a little that So because store leaseback, do do have XX-year benefit you we'll of drop, to you M&A comfortable sale when the you underwriting different they're the just growth, to XX-, tenant asset, or the Remember, is

our to over why which renewal have typically rate Hence, underwriting, goes high a aspect XX% self-selection a we overlooked. there's the year. So

that to buy approach. Ron, "Hey, have the want and into So We sale, to acquisitions can yes, the want remember, foremost. do FFO, achieve do we're we stuff only that. But we and not first sectors because to to bottoms-up -- what And what go grow we we for target grow mid-single-digit say, then we that's area. more never we

really the thing we target. that's So first

Now our pandemic, industries, same. that in We so not first, theatres before thought still on isn't the of we're those But important. a industry. you is years got looking other if focus on out add the movie real as couple of process the the to estate credit

at a -- underwrite real good heart, we're locations. find So the we the and estate small

one, Great. And my just then if I last may.

about think the is the I $X.XX sort rent if number, -- deferred basically forth. AFFO which collections and So once of so you all back out back the all

and is So forth, about through coming anything but higher of maybe a mindful anything going nonrecurring Because of? sounds so that's going acquisitions in be or are and that there as higher, $X.XX be there is else? the number as that forward cost obviously that's we interest is else -- should like run that potentially you're thinking you're But to rate you're obviously sort rate, there it environment. could the onetime

No.

any impact second The is big of variable lease a be some hardly guidance the clean. was capital the on the quarter. kinds as that But material in first we We termination has relatively income, have potential to just that quarter activity. much markets usual, have didn't -- did give don't we which

months capital. to the since And we years, it what last assumed bit last part those we like is better $XXX the and debt. the raise available we and we actually of we a really debt. debt take think always our no just decision. for no it's can And because and in of X last we've for year issued and year make months history, that X our about that. we at tries process XXXX, Well, the to the XX-year before the like -- value some relative we flexibility XX time. little hindsight, We of want past that's out, obviously And place equity, that we for not so turns marketplace out publish of of maximum what's a at in benefit and for capital what -- what assume of to But felt raising did we'd -- to point the least do initial the of that million beginning with around us of in equity the best of in don't at the kind talk issued or evolving and is rationale part retain moment not laying thought I advantage million at issued the shares rationale assumptions was we

question next Tayo is coming from Our Okusanya.

again, of the when earnings, we concerns a guys, of kind or would acquisition on front. of why seem guess I'm or the have so question slowed quick capital things ventured cap talking credit, just doesn't kind One down stock have currently concern acquisition year-to-date. everyone Gentlemen, rates. about much on of quarter would the But level Everyone's guidance. not would outlook price headwinds of backdrop down positivity on at a of rising have was ventured that rates appetite to still kind changed you lot these a peers curious, an acquisition around acquisition mean I And side, about happening. some -- and have all there's and the just moving such a just much, end the still ilk. acquisitions acquisition I of market reading of strong that first some have I front, the were given that the quarter your

of can on of the capital it. of here take side Kevin can in and it, just markets chime part kind I

time rates And we quarter the the pipeline. guided, long the we've and in was appetite the XXX -- the was year, on it or based a XXX then as beginning far of As been the business midpoint. the was midpoint, at first were $XXX had starting And was we that the kind We million talking we to the what at for based year-end. the of -- I came I the they're fortunate, of into think touch year to relationships of on, now with cash move. Cap outlook year. kind

So rates grow, we do accordingly. to looking the tenants well-funded current going And -- now that talking our acquisitions year. will cap they're into to we our had adjust

second of our the comfortable number. on the bullish So half year. we're with We're acquisition

low understanding might record call not a ask over the volume your some to down on many the and we've to XX where amount of to so that at I'm -- to which, mean one market acquisition it, cap not months prior sufficient the its respect. on lot about to is fully make best a the decided one. us rates. accretion that in the surprise last, XXXX, job but that cap it talked on our And be we like it double didn't pace rates was in sense, question, growth, sentiment coming minds driving in to was, I at was -- of share just, a us, and us, per it of

I a so yes, been pause right think that hasn't And generally there. there real is your observation

As I about think seen not on quarters but comments may it in much we growth And acquisition of contest price. a prepared disciplined a be we've I that. focus, asset of that the think optimistic it volume mentioned, But more hope little yet. my recent we're slowing bit, gets I

so the question. your of sentiment fully And understand -- but

is question Massocca. Our John coming next from

Ladenburg with Thalmann. I'm

to kind versus yield at is last inversion or today does know quarter thinking, for maybe at long-term kind volatile, debt maybe recently? of we but outlook back a kind were that given Has given talking back bit. a to it's all flatten this curve mean sheet the when aspect, So NAREIT. going the I'm the the changed just even where little the -- some I of balance from of on change probably outlook I of

next on debt bit our because firming kind up clearly and has flat, offerings a that so XX-year and has a to we And might we is REIT low you previous the firms to see cap in further some sure. of much one's for rates have be But year-to-date. years, curve has, lock clearly cheaper might with be affords extended moment. the or the years, longer the last or work us, view to on -- long they of the mentioned and on the mean like debt, where people getting the And issued at the long kind it time. world, any wanted think going the of years debt levels and quarters. us, bank it's issued in to debt it little that using we you be. debt activity belief the in got but how shape a X of largely materially rates term shorter variety. is -- the Yes. interest help in want about opportunity one's couple of debt be a I'd will in pricing these line, of recent but moved the these X out not to for that just I lean for did shorter us period of very Because we they comes term were movement -- why could those debt alter it what of gotten more did we that it go unused been because for Clear. factor, question, I'll interested of clearly, last duration debt gets rates for which pricing curve to to next that's -- pricing at Are the -- see front if Whether of X X

And that. don't your our but not good I'm have question, around that's to a some -- thoughts so just of answer I

markedly And XX% guidance, confidence hit the outlook. as know to switching end than of kind maybe back Okay. gives the what kind of we of but front of low the year guidance to lower the of of getting in then target disposition the you maybe disposition I kind it's on half here? not

timing kind gives below a know more the lower on. our the team just what A of we're deals issue couple what's is lot us far the happening of XX%. moving got up. of disposition we're what number comfort of with Yes, I on it as was market that level working the a XXXX -- a was as on robust, front but rates working is very still delayed. The interest of dispositions,

it. that's So

the the remain same to to the million that's and for So didn't we $XX why $XXX we guidance, budge year. million

next question coming is Allaway. from Our Spenser

two Green Street, had just again. I follow-ups.

in dynamic? just comment in had you so conversations to this customers? rent regards of to question, how first the their coverage given pressure, that, And you line can then inflationary regarding my with trending, pass kind is through on -- have with So to cost ability guys tenants

-- the having were is coverages been in at of thing I'll They're at though And quite that up It's we've that not property with then slightly. the rent profitability it. what early run, in with market conversations the conversations, very held to to of kind The the tenants they of pass the coverages through the quarter still it's Yes. they healthy But And inflation. in profitable. interesting come our pass the tenants, of through the down the the able our sales, throughout are ability holding same long but having at of But kind still the the the it, not cycle. not rate level. the it. all some are the has are they're is even constant, very inflationary reiterate, where concerned

on rates. as Okay. more far And slightly 'XX cap rates of I than then they've on more you've to seemingly half any are been executing as you've though one going or thus rise That's moved color. can't just perhaps cited. less rates cap where seems maybe It back you comment cap maybe back peers in great have insight to they're executed? deals sourcing, that obviously from what what peers the why but commentary know deals seeing

large it's a sale I think in. we operators. leaseback play function the the market The regional of with

haven't up to are the moved the rates they investment-grade X the expect the points. trended XX ones And cap And floors, ground and the moved forward. going that I X.X, rates had or the investment-grade that north of X, would at historically, were cap I then tenants you when the basis points. those leases in that were were think trading XX X.XX XX, the have up area of net. the triple finding. But but we're long-term deals we And in, They think that a and near the leases market, market thing of other to our play they've basis that XX. you low not is moved little got bit degree

tough our it's were XX, again, a because leases, compare to it's well market, XX-year of our basis have So those if what we function to peers up points. But to XX we moved as market really Spencer. buying

this Yes. Kevin. said, Steve And is as

more most the getting last you're movement where over two. up cap rates think had I year the compressed or

were be the we buying that talking extent rate mentioned, cap Xs. cap as we the to X.X larger rates deals, might about in so than low a in increase And where we've operated, Steve

Our Linda next coming Tsai. from question is

acquisition From XX market Jefferies. offer deals higher that delta investor over for of and In you history improvement deals. relationship-based how auction interest rates any now, a XX, basis With shift Page the deck show your the volume on does reason?

little relationship to there's done much they levels interest of the going haven't forward, the deals. to market, expect a what would I deals negotiated in auction moving. But the right a We historical expect But of our we've rates market I dislocation lot would prior would were. where now, normalize

And to the then of at the factors remind the NAREIT, initiative. tenant XX%. discussed just renewal Could you opportunity you that increase again us rate driving

So a longer -- operating of yes, REIT, lot we're lot in been a peers. seasoned NNN we're than putting in place our space very a now the

to a have at of lot come are we initial So that now starting term. the leases

hopefully, the few ahead future. that. we'll in increased putting of team of in the benefit seeing in getting active portfolio management So place to a start And extremely we're curve years, an start

last at midpoint, one. what the million driving With that? was estate real $X guidance one Just expense down

fewer have vacancies. just really We

number it's And or more net -- we low I quarter, expense $X.X annual near around here tenant is release. properties of the about of kind bottom property of volatile. that's And that's expenses by reimbursement million this million Page $XX so a at we million X, for second exposure for bit. -- what a our and think detailed expenses, Page kind it and property Typically typical number million, that I it in but the too our but think operates X the $X million is on about property think so we're that lack -- thereof. Normal of will the of to believe, way It's notably and -- year. million of influenced the that's and to probably minus $X the $XX for never was range, vacant the as $XX kind way press

Lucas. question next from is Our Chris coming

earlier One Securities. number Capital typically you guidance of related to What's follow-up first on the bad your just a comment the you basis that? debt points. Kevin, quick a XXX on assume in half made

half. XX.X% collected the in first We

this the of sort And it's got know, collected. in XX reported, pursue that XX we'll collection points. basis -- not bad it We're point, but So it's, in call basis that's what prepared point it, revenues. call you to so at of debt respect just that, what necessarily that some

step the that about higher. guys talked you back on competition, or private then, the moved a competitive pullback And Okay. just taking Steve, the when have fact equity peers the all rates

their as the a curious re-entry anything to unstable. of market, not again, a rates, market in Just whether hearing given the pretty little or although into you're about pullback bit is

Just curious from set? you're as what that competitive to hearing

XX XX them second relationship. were and think the transactions In the we I of quarter, Yes. through did

been have of second first the groups didn't came at that have back we out large a market the equity But bluntly, might that heard the quarter in all. market not half super lot in deals of XXXX So private of I XXXX, in participate there. it put the

any be finish you queue. comments questions have [Operator the further to Do closing Instructions] in with? no There appear you to wish

joining in the see Thank you we forward off and us Yes. look then. many season this as you morning, kind Thank person we'll conference of guys of seeing for fall here, and you. to you kicks

conclude ladies you, Thank conference today's does gentlemen. and call. This

may lines this have your wonderful a Thank participation. for disconnect time, You at and you your day.