Agree Realty (ADC) 21 Feb 202019 Q4 Earnings call transcript

Good morning and welcome to the Agree Realty Fourth Quarter and Full Year 2019 Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Joey Agree, President and CEO. Please go ahead, Joey.

Thank you, operator. thank and joining call. full and Realty's for everyone quarter fourth year morning you us for Agree Good XXXX earnings

me Clay is this Chief Joining Officer. Financial Thelen, our morning

for in to begin, shortly. I a seen call like we But net a perspective. recent first, our foot speak think space. activities get XX,XXX we have full quarter Before to and with moment start record to this lease I'd recent and the morning's to most important I'll it's digress year accomplishments

retailer and our of built risk Recent bankruptcies served negative to perspective investment upon headlines affirm averse the has is retail universe. thesis, which a

but Over is and world. and the away dynamically per The in from balance several quarters, of growth estate and changing retail last only sheets constant retail refocus toward market fundamentals, through I've also tried retailer an real positioning investors world the to omnichannel not is disruption. emphasize earnings going today course share

need lack capitalized flexible prolong the be operators clear. can the facing reality Today's sheets, adept, but is rates The A market share poorly balance becoming price ability distribution, today's and sponsorship strong and insurmountable private given are liquidity and equity headwinds. invest and Leveraged critical. to nearly abundantly are interest inevitable, in retail the to retailers consumer challenges of lower nimble. strong e-commerce these

the and prominent that retailers strongest one brightest on them. in world. focused we been in been have retailers has the Of among omnichannel strategy the investment headlines Our location have this recently,

the is Northern IKEA investment with which It draw is and Ohio. hallmark as store is as signalized Michigan. well Ford for shares preeminent of State flagship customers intersection bottoms-up strategy. regional state. type underwriting, corridors this township the location retail in Road, most Store in a across the in trafficked located of site disciplined our the Canton the state is of Van Art highly The on store only the one of Our the Michigan's is and

I Van additional listeners aggressive today we undertook which in a company that to to of subsequently growth Art his opportunities the Van's their and growth. selling embarked Art Lee, We rapid would of strategy. the development on prior passed on since TH number remind participate family has this store to

estate term The we backyard. of and know see value video themselves. everyone is real in its in the and site in own YouTube our it long to I We success. we very drone Canton our and well confident are visit extremely encourage our channel

a XXXX, year publicly to for of another our on growth Moving which traded our anniversary as company XXth record and company. marked

accomplished nearly quality, we a XXX them, basis year, the significantly grade portfolio we basis During in several XXX exposure investment our XXXX. by on is top among This notable increase points. milestones, of point increasing improved

leading of to an portfolio As of of XX% these base year-end, leased retailers. our rents industry leading consisted annualized

In We over retailers to portfolio properties to and points while across National tenant sector. XXX XXX of roster, Sunbelt We top number while retail Depot, leading Rentals. XXXX, XX our our rents, in a to top base our X.X% Tire adding basis Sherwin-Williams, of tenant exceeded during and our by Home exposure added properties, reduced including annualized XXX undertaking Battery distinct XX further year diversification. states the

of pre-forward to outstanding our times, several We balance our the recurring settlement inclusive strategic debt with further year X.X with the industry-leading net of solidified and of EBITDA settlement markets ending sheet capital times transactions, X.X forward.

growing in to to to and growing are with in dynamically surpassed day fantastic our to we a their I'd billion company. who members me every and value. commitment, our out moment lastly thank take amaze enterprise have proud day And team $X like day

year, members. Throughout we milestones, support and have growing has company, the last diligence. our to completed team, add of acquisitions, areas members human XX campus course due In finance, our asset which we now management, to also including in addition accounting, continued state-of-the-art resource talented team team to of these all our the

Our collaborative meeting state-of-the-art and campus includes spaces. the unique technology auditorium, and Center, locker AB Wellness rooms integrated

created motivate best-in-class our to and a accommodate best-in-class work have We environment team.

past in invested we a During through record than properties year, representing these XXX lease XXX this properties. million. net quality volume were of high million more $XXX $XXX originated acquisition platform, our of acquisition retail total

a annualized another focus from leading record rent While acquisition record acquired is base operators. on standards being evidenced grade continued we XX.X% achieved underwriting of investment and year again best-in-class rigorous of volume, retailers our derived yet by

external several ahead. in three our We closed positioned XX capital out sheet growth in executing XXXX balance transactions with fourth across while growth year markets and fortified investing us properties strategic quarter, our the platforms, for strong a that

quarter, fourth the was of $XXX which sourced acquisition million than we our through $XXX million invested During platform. more

operating auto X.X% were improvement. The in quarter with fourth annualized quarter quality cap properties grade and acquired rate fourth had derived a to the term and XX XX during rents acquired retail our Consistent the tenants weighted including of on XX throughout focus are nearly off-price, retailers XX% store, The tire Dollar a year, are auto years. rating. during acquired at of and convenience that the carry properties investment base an stores home almost of XX leased credit service, average from sectors, average lease parts, weighted

retailers omnichannel that We the construct in sector-leading with of for world are portfolio retail success well-positioned to net continue today. a leased

Depot, As tenants to Tire top previously XXXX. and and Rentals our mentioned, we during welcomed Sunbelt Battery National Home

the and our PetSmart from eliminated fourth we of Concurrently, since top quarter XXXX. list tenant AMC

We our as world. dynamic will our cultivate embrace to continue we portfolio proactively retail omnichannel

the ground properties to this stood at which add rents portfolio now we year, uncovered unique Wawa to Virginia, X.X% in XX/XX. base Notable in and year acquired We lease annualized Brockton, as include of of portfolio. Newport Chick-fil-A assets during first During Columbus, XX Costco lease Cocoa, added this ground opportunities our News, to past several Massachusetts ALDI Florida. a our in Georgia, a in an

leased Wawa, including tenants of is XX% grade Conversely, Sheetz, only AutoZone, to retailers Starbucks. sub-investment and from of is X% is ALDI, tenants rents retailers. grade and leading investment Chick-fil-A, comprised McDonald's Lowe's, lease portfolio unrated and leading ground leased the to Our Depot, Home derives XX% remaining Walmart,

We continue opportunities ground quality to to lease add to and portfolio. execute our assets on high identify

$XX Moving the in construction XX year, were Capital under on to that either million. had projects represent volume a total past than projects year approximately Eight investment during Solutions platforms, completed committed we the of or in development Partner $XX representing of of our development these more PCS completed million. during total capital

of fourth and can and commencement completion quarter, Big we XX for Freight rent the for this Frankfort, Kentucky. anticipate work full we company's quarter former in December and as the at first Kmart continued the landlords Harbor During in the Tools redevelopment Work of year. completed of ALDI Lots

for Hart, the Construction the to quarter end, we Michigan, development is fourth be our anticipated quarter completed two our Tractor first development in to Supply which with first Texas, Maxx continued the adjacent Rent commence quarter projects, commenced in during in expected high well. first new Harlingen, construction of including this immediately year. of this third on a TJ to quarter to year Subsequent Target. in on is as performing

anticipated second Sunbelt project quarter fifth Texas of also Rentals rent with We Converse, our commence the to in with during development XXXX. commenced

full retailers, external to growth to create on retailers all complete seek which estate real service providing The many to we opportunities as three tenant roster. estate built leverage with of top investment are investment across leading our continue capabilities. real platforms of continue relationships focus We solutions our we on the to omnichannel these spectrum

for particularly quarter record While disposition was proceeds we gross investment diversified efforts. strengthened also we our fourth $XX assets and through asset management portfolio approximately The disposition we've as the million. our active portfolio activity, front through seven of strategic sold on

market Notable Minnesota. and LA during I quarter included investment World anticipate the to dispositions divest in off during Maplewood, quarter and conditions move longer to advantage aggressively this Academy take as the Missouri, Sports that Camping we in additional disposition fourth fit a Tyler, in first Fitness of an continue no assets philosophy. Texas year, within an our Belton, activities of

of XX during to representing $XX sold note, the our year-end the X.X% gross approximately XXX million. total year, Walgreens of bringing exposure properties proceeds For reduction sold we over a point year, at the assets Of for basis we four full drive the space disruption the rents, Walgreens downward course We our this anticipate per high in as well XXXX. year. to continue course activities. pharmacy foot of during trajectory disposition the square to The continues our exposure as, continued

addressing Our been on diligently asset any maturities. management lease focused upcoming has team also

As rent base of maturities XXXX their lease at year-end. our annualized a result X.X% efforts, represented of just

nearly Our year portfolio best remains shape in in history. the operating our XX

square extensions options or During we XX,XXX approximately space. of on executed the gross feet leasable new fourth leases, quarter,

new right have space on or full extensions as the our in square have the exercised supply Kmart X the lease Grayling, of XXXX, executed to pleased located XXX,XXX and announce very leases, the recapture Tractor January in vacated portfolio we For to feet we approximately a year on and this box. entire year, we executed of our options Kmart I'm has with Michigan. backfill last

have and decisions to development. we lot granular a estate pad approach a asset future allocation transaction in out Additionally, outlot for This parking a to the testament carved our real analysis. is

Pleasant, we recall, years; the Kentucky; retain Grayling. were last not well Michigan in to three may initial several sold stores Mount our from chose you As Bradford, public that Kmart offering as as

or We retailers. stores all have retenant three redeveloped best-in-class now with

turnaround these team. retain to asset decision quick our by the has by confirmed been management Our assets

across consisted As growing retail of of XX December portfolio states. XX, our rapidly properties XXX

again, sectors, industry-leading more retailers, more in XX% with base of coming of primarily comprised are rents than grade tenants from XX retail operating annualized than tenants. investment Our

average fully Our has XX XX.X% years. portfolio weighted remains lease and in a of occupied effectively term

with is Our our pipeline and XXXX pleased am into heading date. I very to progress robust

million high are that path. continuing in unique acquisition review guidance As transactions, teams indicated to while also of our expanding to initial $XXX aggregate we to capabilities by our strong cross $XXX our opportunities million, quality confident

want forward intensely highest ahead. clear I'd stakeholders support retail constantly seeking like in in to remain I for that said, the year focused forAgree be our country. their constructing we of loyal quality another look a to the Realty. moment I year and upon upcoming take the to record thank to building again momentum our during portfolio to With that all improve on

after answer patience, for questions Thank you financial fourth the happy all any and your our quarter for results year. discusses Clay full to

you, morning everyone. Joey. Good Thank

quickly Please may be make begin considered during under that securities call, will certain law. through running language. by I'll statements the we note this cautionary federal forward-looking that

any statements. from the actual Our may differ results in discussed matters forward-looking significantly

funds non-GAAP operations funds adjusted most core including the measures GAAP financial financial operations debt net earnings from non-GAAP measures release. Reconciliations discuss in of or measures we found and recurring from EBITDA. FFO, core or directly to be comparable addition, AFFO to our can In these

Core fourth $X.XX for increases quarter per of $X.XX for the respectively. X.X% share XXXX, and full representing the and year year-over-year FFO XX.X% per was share

fourth year, year-over-year for share increases. and Additionally, per AFFO $X.XX and full was $X.XX X.X% the per XX.X% share quarter for the representing

X.X% was total a X.X% excluding expense General $XX.X revenue below-market of intangibles, and of lease XXXX expenses and year-over-year administrative G&A reduction. amortization point basis for totaled million. above the noncash or representing XX

XXXX, points. expenses, approximately percentage an contract we XX will G&A of For a expect as additional revenues, basis that

Income credit for full expense the $XXX,XXX, XXXX tax of first of quarter. the tax the in $XXX,XXX realized one-time year inclusive totaled

of be by dilution related required and For to expense anticipate basis, to total quarterly in per equity full-year our a FFO tax AFFO the per million. under offerings. XXXX, share GAAP and we to share On forward income range million impacted $X.X core $X were

per from XX-month our was Treasury FFO quarter these The included deal impact to within count to period. to dilutive for offerings the aggregate event for AFFO settlement, price the core offerings. diluted to roughly trades both $X.XX share be above and and stock $X.XX that the stock is fourth in our related prior share the the

our As fund another XXXX to capital activities for and markets capital had beyond. company our than continued settling raising Joey of million $XXX mentioned, growth year more position active and of we or

In cash addition generated our $XXX and we to flow capital after during raised, activity the million free through dividend nearly also disposition year.

facility facility entered $XX of an with million a facility $X.X extend increase $XX an revolving facility million and request our we to $XXX into to million XXXX. XXXX loans is lender includes December, options up allows that The to us revolving our The $XXX to amendment comprised mature credit and a loans. unsecured to facility of unsecured maturity million. in credit January credit will credit billion. revolving In and date accordion credit term total commitments to term the The to option January additional facility

of was offering In million. in December, originally forward the share entirety we X.X the proceeds commenced million net receiving XXXX, that settled equity $XXX April approximately of

ATM our quarter, an During forward $XX.XX price also the fourth program with common agreements shares into million entered stock an sale we at of connection average additional sell to gross per in X share. of

we other $XXX credit approximately on capacity outstanding proceeds XX, our proceeds At forward the offerings. expenses to settlement, To $XX forwards additional adjustments. deducting million unsecured Upon and anticipated fees, the any of ATM million. raise of December not received million date, are after had facility, reflecting have net ATM $XXX from we revolving

our sheet balance excellent remains continue to position in anticipated Our to fuel growth.

as of our enterprise Joey coverage Total our EBITDA XX, net was debt debt while mentioned, was settlement X.X stood fixed forward for a our to recurring principal record amortization, to value recurring includes approximately is charge As net XX%, approximately the of times, debt to ratio, pro X.X X.X December company approximately of EBITDA which times. at times. forma equity,

on since increase. a of X XXXX, the This was IPO our record X.X% paid cash XX, company XXXrd $X.XXX representing stockholders The dividend on January XXXX. in to per year-over-year share of consecutive dividend company's a December

share, $X.XX of For XXXX, the a increase. full X.X% year dividends year-over-year declared company the per

quarter FFO fourth XX% share. per were conservative AFFO for Our of the payout and XX% a core and ratios

per year of to growing the FFO, payout These payout of reflect ratios core XX% a well XXXX, For basis, full very and on AFFO were ratios share covered XX% our dividend. and respectively. a continue

I'd that Joey. to call turn like With to back over the

Thank you, Clay.

I'm are in We're to on and operator, open position year. execute. excellent conclude, XXXX questions. this during for focused will we very time, this continuing At pleased our we To up record it past with performance for

from go Instructions] question McElroy Citi. ahead. comes Christy Please [Operator Our first with

spread up of conditions your but on in and also topic of between What talked in past, context the about on this the today. a reverse? valued that investment grade talked your could narrower regard the trading market about in yesterday to taking it Joey, calls of are non-investment peers dispositions, being we've Just, and you comment where to assets grade in one cause advantage as came

I'll First, good quite honest. be Christy. morning,

that grade, grade We or were calculation. cap operate, seen minimal them in we we've really are you, haven't to run with In seen, are high-quality necessarily business in spread retailers shadow you risk through typically world compression assets. I'd investment that investment doing we tell which Moody's contract. rate the a The either if

playing that So in really yield typical I'd tell you, high not we're pool.

really is the sold buyers Our during with pare such buckets. the One franchise sold Walgreens, divestments Taco during fourth typically well the fourth into Bell franchise restaurants and couple as quarter we disposition a restaurants XXXX activity as our we just the we World three and/or of as as falls then the the which well as Walgreens comfortable discussed, our aren't in Academy Sports and or real and we Ypsilanti, Michigan exposure where the assets estate to back Camping want operator. quarter,

as be year mechanics we Okay more about and the should of then of just, equity? of of terms the you think Should forwards, settlement of Clay, you versus once, forward once, the at ATM - we prior where in the did at the the the settlement think settlement that how well? priors all forward should the ATM of the forward sort we about ratably through or more would of to all expect sort

about No uses capital the settle different Settlement can we through will to have of tranches ultimately on thinking or forwards, timing no change settle until our whole. previous we in settlement. December in and terms be of dependent in than and and thinking

terms just do be you that - that this year, of we But perspective? how modeling to in a how how through from should should thinking expect about we

how and and our really we Well, our the subject as balance manage sheet. upon pipeline be dependent I pipeline will think and it materializes

of a number there's So factors there.

ATM with end investment to we - one any or ratably most XXXX or at I it match or fund think forward, chunk things one settle just in as the about did of activity. gives settled discretion the us the good total interesting of that forward

ammo there for any is say So us. I wouldn't

I and it'll market dependent be our upon pipeline. conditions really think

comes Kim Please Our next SunTrust. question Bin go Ki with from ahead.

makes specific about talk that pipeline pricing that you quality can does years? you sense. for look versus specific that the in couple the pipeline is at that So basket for big everyone your know at, like type of their says you're How that pipeline XXXX? make you looking deals kind past I of sense of the but of

in guidance of it's $XXX aggregation. of price our to is million and quality, transactions tell to you, pipeline also one-off was as robust, for very in million have comprised initial million $XXX the Last entering there high was the highest year our by indicated average I'd acquisition, some opportunities transaction our year, point discrete the invest other unique XXX per over in retailers $X.X us quality typical world.

QX. for into very about so, And QX pipeline we're our excited building and

of visibility, QX, point, of been would several last quality into tell We emblematic high very quarters. what the for the beginning about of executing you, XX days this we have I and having XX it always to at but visibility we've is talk

bigger you're or looking of it Any at more is portfolio kind one-off? deals still

it look do wouldn't bigger necessarily obviously on. I anticipate deals, call we bigger will relative not portfolio at, but and executing portfolio, we that's

So I industry portfolios leaders. would call of it sized smaller to medium single credit

just last and Okay question.

have ABR Tractor You of to Supply about and Sunbelt Rentals. X% leased

Just I being don't is more I a well, wondering those bit tenants of part talk Manhattan, live why know feel those could honest, was those. maybe very more that owning because in comfortable it about you of and companies really I but little you if

team this are dominant in we investment very honesty a sub really Sure. we leading And been their well as your business, living farm lease a a Tractor traded fall don't with spend Tractor country. lot I successful but market company, they the they company, two executive of believe, estate there a rural very position. Supply. of Well, performance, into grade core a so really times, their so their everybody conservative team, our bucket Manhattan. leverage, real adjusted as and see time their I first fantastic Supply appreciate have listed is as all, unrated with relationship a in They publicly retailer can about are have in

very Interestingly, have in Supply has and Tractor bought also this platform. launched e-commerce successfully

company world. it's in so omnichannel company, unique very real think And a we very winner and conservative an a

are rental of is large few that companies are It's owned as Rentals by equipment smaller well investment as Sunbelt this country. United as well grade only in Sunbelt there two Ashtead Rentals the in Sunbelt consist Rentals, operator that There's a country. Group. the Rentals. the

at If that this very, versus relative goes larger the to equipment equipment, is it Europe. equipment in from very low Western small ownership and rental you to all look country

equipment Sunbelt of for lot advantage taking ownership. is this so that capacity big than Group, owned rather fragmentation a grade, this a there again Ashtead by lack And investment is country. and country in opportunity rental rental of of the that Rentals in

They power all of I users, types different oil from equipment goes renters should to and and to of service gas pump. and say, that general

And here. number we've think a a of and fifth omnichannel XXst business balance a a them, world starting great of ours, partner so, we makes a century great that our sheet in acquired model again, obviously for project them, sense really

Our Mings comes James. question from Raymond next go Collin with Please ahead.

course because Can it provide caution mentioned that your with relates on private along not those then And the back question impacted them? your be concept? led bit were just is private deals recent that You or me of maybe you you where raised just flags shifted just it whether can original to as any there notable are any going just that little where other thesis obviously examples changes equity do more? elaborate other maybe First you've a on lines, remarks equity, on to prepared can to additional from you what Art you Van. expand but

is Hills. Van family three from So straight part, knew here it Art to and Van pre-eminent about the tell based Woodward Art we Michigan our build-to-suit and Van Van, backyard. site the a miles the our reverse retail with down Bloomfield you, bought with with head I I'll that's this in proceeded Art the a from in property was - really the head I IKEA first really it the office unique in transaction office was company question. directly really opportunity. Art appreciate personally, is

of look this encourage to piece I video. for our estate really real people the drone Again in and YouTube site at themselves see

and head the Ford are we servicing Northern literally retail with Road to only is IKEA Indiana. Michigan, a head Northern dominant Ohio corridor,

keep Prior has in entered Art Van terms TH equation, Michigan. dominant to Lee, had in transaction TH does, Southeast the actually transaction it with not with had that Once store decided accessories and home sold still only we that Art transaction. market Canton with proceeded Lee position flagship We and purchase a of - furniture the the did contract second in a under proceed and agreement Van. and to

the combination proven anticipated that very unique traffic So IKEA was the of our and very being we on with heads store and performance transaction. signal a the and with real that location the of obviously residuals, comfortable prudent, up were estate,

horizons. been real today, in In if total terms now, pounding can invest of have And to like, our you private price critical almost estate, of misalignment this distribution world just is every as e-commerce for compression, truly ability balance the a single several see on prepared years I've of to withstand equity ownership in in we I margin a a mentioned bottom-line remarks, to invest that component omnichannel retail in sector. sheet an in investment

world a changing so continue is equity in cases have private will fast to sponsorship and we ownership. we limited the equity private dynamically This where avoid and

to top balance continue retailers sheets of the to the strongest will best and in in space We restaurant and look off we'll the the to those assets invest franchise divest including world. continue

there for grow, latest to bit with and just acquisition since PCS differentiator are hasn't a your that backlog platform curious of discussed little end Again, really front. from So really of gears a then human of year, It front, on kind to you a the the to your term front, activity? switch to sounds wasn't leased just a relationships the mix you've capital become pace development enhance with And just really couple on the chance thoughts as last committing avoiding why like kind you've deals your and that a of development situations wanted you increasingly selective expands, long where deals guys to this versus on regards of continue I but you previously and of had one-off relationship. kept peers?

activity. have significantly you we we human to first remarks, the off, development had prepared we Yes, have scaled noticed in my not regards in scaled, may have - capital

However, we effectively remainder every company, this in excuse the department scaled this country me. in of -

same they do for we're not who And where with at are generally initial cost, a turnkeys us. merchant to return are turnkey going return for on time, the or for a an That developers sense compete retailers, industry-leading on today performing doesn't cost. with unlevered for retailer make X%

I'm that's the very happy and together projects that Harlingen, then since quarter subsequent project that first have and you I'll fifth to our in other fruition. we've come last, Maxx end, to Texas, that announce was TJ in will ground-up anticipate Maxx, we Converse, for of TJ Rentals been a tell Sunbelt to number we

We're retailers really here and sandbox few announce next, with post ground reviewing of get and working winter. vacant with the the in a activities in next of we'll I'm really in them the our boxes probably, quarter efforts and pleased backfill. to shortly then and quite really focused our our

foot XX capita, We of have a lot that. this press country, to GLA I of lot related in square per a there's think,

sites, boxes I opportunity takeover the former retailers sites. lot personally former there we've been and on of the it's Tier to Shopko is drug focused think for vacant former stores a very and one

top working retailers of some in be and opportunities a today look our are our it those should and And so, number as there with well. we're to interesting at in opportunities pipeline there materializing

ahead. go Please Berenberg. with Crossett Nate from comes question next Our

Art is stores. Bed, think was I closing Bath watch that now? else What on an list there right & Appreciate on article XX the the Beyond color Van. is

about I and how of that think a so maybe Is then on this an update us feel just online you area couple do ultimately an those, furniture just goes have there give or in comments you furniture? general.

joining appreciate Nate. us, Yes, I great question. you

terms in of is those and were you & in we to had, in HomeGoods. there $X.XX Bed, TJ of a a a Bath Maxx adjacent couple dominant estate with paying foot Bed, center Texas the immediately plays. Bath the I'll Beyond's Beyond & So tell real

piece lack We of ceiling & frankly their in of That's of were fantastic Bath in the have We're to estate. never excited, stores. we fans experience a merchandise one big real stacked Beyond the Texas. and Bed, and

are them comfortable of So with those underneath and the they have couple potentially some upside. estate real those very - were in stores even

to In really hearken an speak was of then it had about to months their consumer office XX York consumer used the to on NDR road our New I'll XX and what terms millennials preferences furniture, in buying the we both in in and opportunity repeated we are. preferences Chicago ago back and about and to and

online We talked asked furniture about where space XX, said, and the If an XX it, I we me call they downstairs. I and got furniture, how of the purchase of furniture they of millennials, it and specifically looked furniture? age apparently average anything, to horrified they purchase and it's at group or buy a in looks, purchase lobby our building

we free. for just and take that's obviously, it Now

thousand or up long What I'll and as shipment, that XX per long a just days to and dollars. to several keep longer, to XX then that accessory never Wayfair I and and send more cases see end willing at them back, markets are for to urban you even tell the morphed hundred obviously you and them that's lose as you few online as the can don't support long space will home the from the when TVs that days but tell businesses and care to plasma in you only bottom-line perspective. able as furniture some see is as very similarly $XX will old reminds of house So are $XX we about any show don't dollars sight, your return mattresses an me up as capital they start top-line,

becoming is majority, the of and your furniture, high-end wall Furniture in your with purchaser you sell outside on don't you the bring the this country sit they them. for you, vast keeps Today disposable. successive when TVs house,

vast road where of doesn't on wall. majority the the residences today, we their see house when for the down get the today heading furniture LED we're think the I to sell they and moved TVs similar LCD

changing are and price disruption a significant so quickly. omnichannel today disruption is is preferences very disruption, And there American there consumer

company. avoid Lazy Boy frankly is very, the we've I'll a And in space Michigan But we we're time, so any same There is following space very, And very Boy, mention mortar it's couple the unique going be is space, unique. activities a at winner will to I a that think to millennials, Lazy in that this cult-like a circumstance. continue has this and there. selective of very in has fellow winners investment a with. been very it's space absent and which among a selective brick

It wanted for And flat then the maybe you hires XXXX. quarters. remind anticipating term? the to new you force? G&A sales the the last you for of even like outlook in keep near three roughly Are looks just any us just one size it Can on

So basis as we a as of basis in of year-over-year. anticipate points terms mentioned, We approximately from benefiting percentage another XX points year. G&A XX revenue Clay benefited approximately, this

open we We building are actively and scaling every growing store, organization. new aspect next are actively, with this of our

the this in professional dynamically. but company quarter our just us, going historically activity, people, growing this activities, to both terms in a largest First as non-run their is is generally is development, individually XX% continue and of rate for well team to G&A, pretty as, we're grow over which that's from aberrations top-line, quarterly invest

XX, about to XX from went end it, call at XX. I of the XX, year, last believe people, We a,

and grew the we've the we've the same all processes done, And the so of headcount work time, At efficiencies really about portfolio. through XX%. we're of we system instituted rapid the gaining growing growth and we're by

comes go Stevenson with Janney. Please ahead. Rob Our from next question

likely here. think loaded? to some this dispositions I front-end mentioned first to $XX million quarter point completing in you $XX of is Joey, the guidance At million be the

disposition anticipate continue there to or at that X/XX. I that that activity, we'll have another contract. front-end below some we loading think I will them that is for X% it being Walgreens is be under dispose, possible by

other We Sports, there. restaurants Academy where opportunistically market contract then one will additional the have into are term to dispositions, the end Camping that some franchise long under the or we just on that working or are that and feel our residuals to we two is that transactions look interest we the similar are on divest don't XXXX World

But of hope to assets and is. possibly with number I purchasers it fairly the going That's active us you could bottom of hands a be in will We're raise So, aggressive end pretty diligence. through frankly, dispositions, today. guidance QX that be see under even on continue shortly. contract

scrape much doing Is Tractor Sunbelt developments that a the the this box Rentals rehab with the to or then expected Kmart in a and then rebuild plus how and you guys? Maxx TJ and Michigan cost just And new Supply. that you're is

Yes.

Texas, and are Maxx upwards last two a And They - be freestanding Harlingen, years portfolio, we patiently at small in had a patiently So Kmart that TJ of box. Kmart, to for that. waited you, the them recapture with we going then cost Supply not again as and Sunbelt that entire whole scrape waiting million. it's It about a rebuild. I Tractor aggregate thank format tell us as exercise be that's would approximately to will with right retenanting Rentals well of the our for $X former it's

Massocca John go from comes question next Our ahead. with Instructions] Ladenburg Thalmann. [Operator Please

have ultimate like the same kind close bucket mean for sounds to it's and goal kind - pretty zero selling a exposure. it I as is down the or is the of you franchise Walgreens tenants Walgreens of some get to in now to while, it down So you're your where of field zero? probably aggressively, restaurant been

to would we've rationalized were exposure, no, get to hearken it I tell of our XX% they if I Well, you, you years, portfolio. several it's zero. back don't think

some significant have We gains.

square country some sits to the drive suburban the the is square the and this challenge very on top. per Walgreens think in square the through I with rent high XX,XXX XX,XXX foot plus that of foot rectangle pharmacies and foot

hard XX% have interest I'd demise you doing. the - great anywhere between how estate, access, tell you today pool parking, paying either in have of the real visibility, boxes square Dollar are great we rent to and but foot So corners, we those that are tenant retailers morphed, forced no with centers, have those XX,XXX or boxes of pieces strip foot the square small which Walgreens stores XX,XXX generally XX% have are you to we and in backfilling

mid-sixes we year the market Walgreen for us XXXX the the or XX divest return mid-sixes, XX adjusted lower continues typically Walgreens And on to risk a mid-sixes, significant us. for into think, so, to for basis, in approximately make to sense off

baby middle grocery me frankly, the of And drugstore the I is, this disruption. remind environment. stores, stores of of of I and think disruption that the the the anticipate see country The continue to to in the stores in end suffer middle to half sales and The chains today's the boomers. front rely continue in second to more see pharmacy we're going of from really upon have space weak major

some efforts We're traffic with drive see margin into remerchandising items. have going those stores significant higher to to to

all that like. continue do to look continue so the stores And for above off to we'll reasons, dispose those we not

We of are fantastic in have our pieces real stores frankly estate. portfolio that

campus It's in Michigan, Our Arbor, piece Michigan Ann unless sell real estate flagship of the somebody refuse. with not Ann offer the an on we came of in will University Arbor. couldn't we of store best

of we we of that stores hold it, So in today. really to are either there want number compelling like terms very pharmacies, high-performing, we offer. suburban future estate, are super are the But a their critical a real of absent

- with there kind assets bigger perception, picture, a type How some larger mitigate portfolio? a kind kind that are played footprint lot a boxes then in credit obviously historically the But of there of associated is know out to you it's to tenant do have less the assets you harder fungible, do are of of box of of situation. can larger ground risk I less of leased your these granular assets. that is else kind mitigate of you in kind that anything And retail risk? with relet kind

leased frankly The portfolio look, X/XX. at anticipate another at up that ground question. X.X% XX/XX, good ticking Yes, we

of number to a under quarter acquired or to assets has contract have We subsequent purchase end. currently

few I credit. mitigants, there's think first a

box typically operators leading this exposure So is and in that's Depot our big very number the one, country, Home Walmart, basis low lease on Lowe's, ground a with generally. typically

privately grade interest that no generally exposure on the are or have retailers in big sub-investment box retailers equity-backed held we with retailers, so private And spectrum. That's challenging. very

we any stores in basis in of isolated to and that the can at transaction, that it with also how unit about you retailer we box the look then store, Second, productivity other district. on an when that relative are the of assume big compares conversations

understanding and with the We local partners. does also local markets team get fantastic our of on diligence in our ground conjunction the a job

it outlots it. we at example, left in then in day it be a and use. our at And looked give current store had they not square big we foot, say, the paying future the just major the at store, was any a the ever a frontage the that the the outlots from I'll only looking self-storage a parcel, will this one results productive if there left frontage on it to some overall XXX tenant leased store, NOI this parcel largest world the and redevelop box to third, an road, ever highly $XX,XXX they large of generally outlots X has - amount other the box to are had even of we're have a looked feet ability corridor, box if a the recently, if dollars in recapture it's paying year quickly or a and to itself. we few we if alone at feet it which ever if are we'll left at you X on But frontage XXX We're blocking overall looking retail retailer the of

Jefferies. comes Please go question Linda Our from with next Tsai ahead.

about there Joey, lower and cost mattress demise this? concerned other eventual like furniture where you Are the seem categories of emphatic you're stores. pretty

of thick. Kind

overall, are still country, early the retail I this we innings in think of disruption.

aren't you if think binary look across, these outcome. I

find will that gone in additional very store through difficult disappearing. If and the closures that you outside this look country, disruption and a through sector go of sectors consumer it's retailers across to retail electronics has we anticipate.

Consumer Buy's an because Hubert a a last it's investment regional grade electronics, the standing the smaller they see H.H. the fantastic balance last USA sheet, man turnaround, Gregg, the standing. we in City, did now Comp Circuit Joly effectively scaling, had job couple Best and of man

ironic I have general look sectors that Staples, we across still it's as you Sears country. we think have stores across such office even in this Depot you merchants, still Max supplies, look and

a this be, But real lot is we the with management underlying to country. our there to competent believe, of and the I in strongest team necessarily closures goal best most so binary sheet, balance going estate. winner outcome. pick the the think don't And there's is

supplies, or at space, on was not movie the that the theater what not that easily space, that so soft overly on was there. obvious movie purchased again without you, tell sporting interested Internet we can other not quite furniture There And sectors theater space space, hard the going commoditized, experience. are office interested overly to interested, goods I'd we're us, are goods and overly be

we piece but that number is there won't of, another real so I interested opportunity, of kind in, And a sectors of aren't redline, pet compelling one, being unique touch. say that we we won't or absent supplies a we estate

with from Please comes go Lucas One ahead. Our Securities. next question Capital Chris

question gap tenant? fee a to a acquire that on an I the what buying that's lease between is asset you rate guess is, I a to for so Joey, questions a and, of of could similar of give you cap relative position ground ownership rate had sense kind ground a us the as really couple cap me sort you're leases questions on the would

you, they first a ground so out bought morning, don't last quarter, there. good we bought tell deals gas Chick-fil-A during Chris. convenience format have many I'll ground Sheetz that you, turnkey the quarter, acquired off, last lease obviously turnkey previous quarter. leading lease, and Yes, large even tenants store don't we on, have I'll ground the a of well, tell leases we a They

like there inside at rule thumb, don't simply XXX I to leases points but trade for retailers assets. basis the turnkey leases - XXX of so would that but tell a there you, out And kind kind of of That's leases. ground turnkey number typically are have

I or any thoughts rate look credit top concentration, the greatest hold guess top terms tenant movement expansion of - of your cap at has if among either where your years? I about been And then compression last investments the those like couple over in

tenant specific a On basis?

Yes.

fallen, rate think, sheet, interest given one-off It's rates O'Reilly's million really super fantastic high market, flows the to marginal into carry into were seen it Obviously years restaurant we retailers. been at lows, environment, super some historic into - XXXX the the which the would $X and of of the flat. I the Yes, quality ratings look, million, the have balance price transactions lower credit compression then cap all and I don't AutoZone's franchise price flows world, $X consider effectively last super tell in points, you, point. in couple smaller We've that all, high the high-quality. over that market, grade investment the

in in from both repeat We tell were acquire we XX-year to we able operating the to relationships, fragmented and lease full the alone. years acquired They the that I'll you, XX, developers. because leases. having with O'Reilly's our those of said, O'Reilly's QX are, tenant sorry, that space again range eight on

And so very market, even opportunities being out you I'm see the I'm in dig rate though team of magical proud able confident compression big cap there. our a that and to

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

your for time. during with of you earnings. the rest We luck joining this and the morning. the good to thank us Well, everybody forward catching up conferences upcoming look Appreciate

for today’s presentation. has you now Thank concluded. conference attending The

now disconnect. may You