Agree Realty (ADC) 24 Jul 242024 Q2 Earnings call transcript

Good morning, and welcome to Agree Realty's Second Quarter 2024 Conference Call. [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Reuben Treatman, Senior Director of Corporate Finance. Please go ahead, Reuben.

Thank you. thank XXXX joining Earnings and Realty's for everyone, Quarter Second Call. morning, you us for Agree Good

Before turning me the to the discuss call language. over to results cautionary the Joey for quarter, let first through our run and Peter

will guidance. Please that certain federal laws, may call, to related under statements including forward-looking make statements note considered our this that securities during we be updated XXXX

release statements Please significantly for results the risks, matters on earnings forward-looking may see statements. any forward-looking reasons. of differ report from underlying our uncertainties including for actual a filings, number Our in a annual various SEC our and yesterday's discussed our discussion latest of XX-K Form

In of most directly operations net SEC financial AFFO, Joey. be addition, filings. I'll core the and including over FFO, our measures turn our non-GAAP to to call financial GAAP and operations funds found measures, release, recurring to EBITDA. or in historical or earnings debt the we non-GAAP Reconciliations from adjusted can measures discuss financial comparable core funds now from website

profiles. Reuben, has last our into for visibility the this closed say as pleased into discipline acquisition high-quality turned I'm very I half On warranted. we've return joining report mentioned transactions strong year all and that thank morning. to of had visibility And market. am our us call, a Thanks, I at our that proven you first to the improved similar pleased

produce unique external attractive continue proprietary growth to identify three investment we team's Our all to flow. across efforts and deal And opportunities continue platforms.

approximately our equity capital the fortress supported unsecured debt bolstered and market that investment $XXX our during of activity by mentioned, was million As balance sheet with capital. transactions quarter

billion. stand will our to additional balance revolving dry at will $X.X and commitment us on to recurring we the to execute X.Xx addition, equity, billion, proforma unparalleled enable with powder remainder outstanding EBITDA, XXXX. At strategy liquidity our our total end, with which us to net providing continue received sheet for quarter In forward of we the of for to proforma credit provide us execute This our debt pipeline. into year fortress as facility expand $X.XX optionality

half Given $XXX environment, our am previously. have we our guidance high-quality aggregate I and increased an year, that the we sheet balance a have $XXX first investment $XXX of and position, number the million robust liquidity acquisition continued conservative. million announce of from million rapidly during pleased nearly to activity prove our changing to approximately incredibly to With could pipeline.

the of acquisition it into prudent think [indiscernible] our quarter I given activity is capital. fourth in lack cost the However, and rapid of change

stringent We capital allocators standards. will maintain our continue be disciplined underwriting and to

$X.XX we Given our guidance our liquidity provide this the the to raised profile, AFFO the midpoint, portfolio range share for and of have a $X.XX more of balance year-over-year At details sheet these year. momentarily. a numbers represents strong will X.X% positioning Peter performance, inputs on to per growth. of

X our to external Turning platforms. growth

the acquisition including sectors, in quarter, and parts, lease includes leading $XXX our home and improvement, X leased million. are of the platforms. growth XX The for net to properties During off-price, external retailers, assets XX the across $XXX properties acquired second grocery. million crafts high-quality invested auto operating approximately second we during approximately quarter This retail novelties

cost, of transaction relationship with and of to pipeline at different to our structures, transactions leasebacks sale shorter-term XX% developers. extends, repeat sellers tenants, and dynamic and emblematic are new purchased distressed opportunities and replacement of include a as high-performing current stores unique blend several variety well both completed Our approach date as sourcing

Investment-grade a Lobby investment-grade acquired term X.X%, as fragmented do and and year, a that retailers net spanning and acquired. retailers increase of million first across properties in call cap not the last X nearly imply our retail we've not this the rent market. million XX Hobby disjointed of our originated weighted-average accounted be percentage to base invested had such Note XXX lease properties Approximately for nonrated from year-over-year shadow and XX-basis-point acquisition a $XXX we half retail the including continue $XXX years. of companies. are XX in annualized of We investment and lease activities weighted-average highly The ratings the Through XX% states rate sectors. first of a to over plan.

also we committed commenced the total, either million completed representing $XXX committed capital or representing we of of During the of of June projects half projects, the $XX million inclusive completed first $XX total DFP X under cost capital and of approximately through and million projects have and with X XX $XX during the incurred quarter, development XX. million. In development DFP construction year,

at at of proceeds continues pipeline Our disposed platforms discuss further levels can upcoming we for in and to both grow to last quite significantly, excited attractive assets we these quarter, to redeploy we where opportunistically Similar are spreads. off calls.

X.X%. assets, XX quarter, the sold sub-investment-grade nonrated operators, or Wash, cap $XX were of to weighted and generally During million Collisions. properties leased rate total gross dispositions average Gerber opportunistic for These Car of a recycling capital proceeds with almost we including select of Mister noncore

including capabilities, Our decision our prudent. to additions bolster was asset and executive investments management IT

the leasable we on quarter, of gross executed management approximately area On the in Supercenter extensions new options front, leases, XXX,XXX square Kimball, or including Walmart during feet Tennessee. the asset

portion articularly Bath tenant allowance restaurant the Tennessee. we leading parcel ground former in with service quarter's a anticipated the improvement last quick Beyond executed I the during chicken with which for guys Memphis, quarter, on Additionally, & one of a operator, Bed no called lease a of call,

remaining multiple the quarter. this to of intent We and lease for are parcels will negotiating letters move

the Bed real to As anticipate recapturing we estate. & further Beyond value-add highlighting over of XXX% rent, former discussed, identify previously Bath ability and underwrite our

As a efforts, now X.X% lease rents. our of team's at management just base result of XXXX maturities stand our asset annualized

period XX.X% Given end. the record ticked progress achieved up at company year-to-date, to our occupancy a

that, can open questions. Peter, we then for XXXX now up over focused it on I'll With are to the We pending and maturities. call any hand

Thank you, Starting balance sheet. with Joey. the

As In million, a very May, million offering we our of extends and years, capital. senior capital terminated $XXX the the to and our of In $XXX Joey XXXX. the The upon termination completed million maturities in staggers $XXX notes active over unsecured related a bond weighted-average connection effective maturity of had mentioned, million swap $X quarter debt excluding facility. offering, reducing revolving comprised further public we X.XXX% with unsecured receiving markets, we nearly agreements in due approximately X interest rate. offering credit raising our

$XXX proceeds of X.X the we During over forward program, of our via million. sold approximately shares million ATM equity raising quarter, net

The X.X settlement. time reduced June facility approximately points to be includes ratings request be sheet over billion The we $X including settled anticipated $X.XX up an billion with balance will anticipated we XX, strengthened million our agreements, on allow cost shares to the net accordion our term ratio of closing. key $X borrow XXXX, our lender strong by a to support credit credit extended our million had to to to and will of upon of option from based facility from our total X and leverage extension at are billion. us additional sale to raise banking basis remaining existing partners. the with under be options that commitments $XXX further commitments facility will Recently, of of to revolving proceeds forward As which increase

on more provide markets cash and our us $XX than credit proforma of capital expanded previously than million the transactions of billion the $X.XX equity mentioned for revolving Our $X.X outstanding closing more hand. liquidity, with total billion of facility, forward

As was of quarter end, down of proforma settlement recurring our X/XX X.Xx, EBITDA approximately which is for equity, turn of last forward a outstanding to the from debt net quarter.

recurring impact equity, forward unsettled net Excluding X.Xx. was debt the of to our EBITDA

enterprise our ratio fixed-charge value amortization principal the at while XX%, was X.Xx. to healthy approximately coverage dividend which preferred debt total includes is very and Our

end million reminder, as We exposure until floating we material had XXXX. have $XX quarter only our balance. via rate And maturities of a debt revolver no at

We our any are leverage stay very range capital. positioned stated on and additional our well without within execute well to pipeline

Moving to earnings.

share a increased the increase. for was per X.X% for the FFO to quarter representing second year-over-year quarter Core share, year-over-year AFFO $X.XX. second X.X% per $X.XX

national ground operators. as retail the of termination XXX% is on agreed results We without structure. quarter the lease intent from the long-term the acquiring for this via both on approximately already base the in and company due We've properties rent of and identifying been executed to A indicative has the view letter outcome one demand real focus of investment second and with institution. recognition the Our our both from on taken high-quality significant ownership The termination for for pay estate great a remaining interest any drivers. term of there termination. lease fees of million leases due ground the $X financial primary tenant to buildings of the include incremental of a of

year midpoint represents to have guidance XX XXXX updated guide. earnings full per general and tax administrative AFFO X.X% an increase our our $X.XX we mentioned, of points Joey other from nonreimbursable real growth, expenses, income inputs As increased are share The to in acquisition basis our tax volume, expenses $X.XX. disposition expenses. parameters estate initial and release, and including and several other There plus range

prior dilutive the net in these is outstanding was stock forward second minimal of included impact share diluted price offers. to quarter. The our reminder, trades a related to if As aggregate ADC count within equity treasury above stock our offerings settlement the

second range stock half guidance a Under $X.XX our updated the scenario, treasury XXXX anticipate stock on contemplates meaningful assuming again, to the per of stock have will our of dilution that year and near dilution stock an price, we continues treasury full roughly that AFFO in year method share. impact method trade However, current levels. assumes more stable

our growing May, $X.XX ability representing increased and drive our dividend dividend We flow share, to we is higher share the dividends month-over-month for cash reinvestment. to from the This cash a In annualized an earnings growth ratio at us X% remains of almost June monthly July. periods increase. amount continues retain The dividend X.X% dividend subsequently second significant growth XX% well-covered payout declared and than year. cash as per annualized comparable monthly monthly for last consecutive to to April, of and of for comes the consistent each enabling dividend. $X.XX a Our $X AFFO per quarter, represents support

calls, is on XXXX dividend $XXX for free an cash mentioned the prior after As flow approximately on annualized basis. million

of debt-to-EBITDA balance the pipeline. investment of back With net liquidity with I'd X.Xx To to us to flexibility our to and call sheet Joey. conclude, well-positioned proforma robust like fund billion our that, over $X.X roughly tremendous turn affords

operator, questions. we Peter. time, you, it this up for Thank can At open

Stanley. [Operator Instructions] from from Kamdem line Morgan So our first the question of comes Ronald

turn. rate Great. second some give you half comments just starting pipeline of guidance implies the and raising quarter seeing in the the acceleration what Maybe of on Congrats an and guidance. in sort can acquisition, year. cap with on the the Maybe the you're

tell as going Ron. been, look, fairly rapid stock price Obviously, of a with ascent Sure, on. you, this in mentioned, I'll crazy our market. has here lot a a I stuff dynamic of

And think, sourcing started as most for so QX sourcing importantly, I And QX well. we ceased yesterday. yesterday

now XX turning here been it's an QX and And weeks watch clenched to sit let's of we so give I'm is of the to time letter intent about with improved given teeth rates transaction negotiate months the a to for creep intent, XX price days stock capital, excited average call of there's the of it flounder jaws and and you. basic execution it, to while of gritted line couple What XX close, another here again, higher. letter cost

cap were an and certainly high the we on so with cost portfolio. we see additive But into capital, material horizon. transactions the lean macro don't to And quality that rate yet improved can any of changes

cap just getting And on flat, it Is any cap any trends, rate better? the rate, commentary?

subject out QX, built that in yesterday. would pipeline For QX, rates is going anticipate there. effectively Like said, QX, closing to we to see I what's we're I already. similar to cap started diligence

comment debt pressure. from my on any of anything of on may that and Are the front? maybe assumptions, if to seen tenants change hearing be bad have And second one any Great. you the you you under sort sign that can watch the list is, sort consumer just low-end

Dollar the I on reflected at look consumer And bad the performance. you household under think We and really assumptions. the income, the and has $XXX,XXX tranches $XX,XXX The median pressure let low-end $XXX,XXX. the in pressure, in undoubtedly. see that's $XX,XXX, I'll X debt I comment if think definitely, consumer on General then Peter been over

overall market getting If $XXX,XXX at just due to market. their they're seems being XXX(k) be elevated core trade customer, the Walmart certainly with down. the and you that their portfolios look strong, Over to $XXX,XXX, environment and

continues And the struggle. so consumer low-end to

You see restaurant the it in prints.

seeing household that's median Walmart's the You Go the reflective to ahead but Dollar it the prints. And fairly see Peter. again, we're the strong, $XXX,XXX in trade down But income there. date. middle-of-the-road performance in General is there, effect

from of of we're assuming we're guidance again, loss. contemplating range. our credit approximately basis what loss fully Ron, guidance, And loss perspective, in credit in loaded in terms points still credit a XX that's

rent of credit that any loss. not form roughly experienced included we've in basis is us So contractually is Year-to-date, XX receiving XX points points. obligated of basis

And in our keep [indiscernible] our continues so prudent basis it the to XX while basis guidance for the thought historical XX points average. is being. that to portfolio with roughly in line points time We

Our next from comes from Rose the question of Smedes line Citi.

acceleration to a in I ask the just the pipeline. more wanted little about

You of front. macro change lot a said the not on

stabilize your and But think very is you So sort I what mean, then proactive of calling part? last or on by just that organic really described, in I more. driven a if active is it transaction you helping bit the it of is any maybe quarter there's XD kind outbound seems to like little well? wondering sort maybe environment of starting was out as activity the I is pickup

stabilization agree to transact. help I to the and obviously that But change be Smedes, that you. said, range-bound, which willingness that on the change tomorrow. does could dime. We that Yes, in But treasury, see a liquidity the with sellers' seems XX-year market can some in stabilization

Our would the for because QX, QX QX coaster call, X%. sourced at saw mentioned as pick of we the in peaking transaction the to when roller we up back transactions time going treasury generally QX are the line, during volume, in

given to a QX, that like And And a environment here, for pull-through I'm time line. stabilization I again, the quarter, QX. generally excited tough through that be assuming see I pulls some And transaction next we'll think assumption. to so said, which normalized can again,

Okay.

there where thinking But for how I continuing maybe you is ask And shares then price just so about some on is issue XXXX? to now. wanted I the methodology. lower And Okay. relatively or are up here you potentially XX% the stock the you in modest are realized you issued the as quarter, during to impacts gear just ATM dilution about

no balance incremental sheet Our liquidity, offering a we we billion proforma X.Xx fortress. $X.X is levered million is look executing on bond to how proforma a the with position, material unsecured balance in a We'll obviously on debt $XXX This options here. terms a balance sheet from is we prior with of great the certainly need deploy capital, at from in loaded of we'll If your see question sheet and look terms locked in alternative any for perspective again, are uses. But angle. maturities.

of Your next Bank question America. comes Dennerlein from Joshua with

This is Granath with Josh. the in market now just Farrell acquisition also specifically I pipeline, of you're to increased wanted ask competition the what seeing? the behalf on about

$X transactions, create degree million those relationship the remains given generally in those in come are on where seems We're transactions. can point changes focused buyers The XXXX extremely generally of sidelined. $X to value. sidelined. space to we It material price in real transactions individual competition No market. our Institutional the competition muted our purchasers are and levered lower really CMBS LTVs. nature The the market a back with million

competition so limited. And extremely is

was to Great. list. that any And recently watch fallen names you're have off the back also been in curious added anything there if just keeping? that or going I are

have don't list. as I they in think [indiscernible] was the we with material don't in been that can the well. the see news there these have Obviously, tenants yesterday. a cons and Nothing any of. fairly watch newer consistent the But challenges we have We been cons news restaurant that It's sell. cons

which has these on back. in spaces management on in been Bed of team the is the excited remarks. And these we're Tennessee back Bath case consistent spaces discussed some and really top of to get get we're a of Beyond, watch prepared former to the And it we frankly, top so asset which list, here, Memphis, redo I &

comes of from next from Citizens question Our Germain line the JMP. Mitch

in model, you're CVS nuances that obviously other. Joey, Warren What are making exposure of versus Walgreens the I'm versus at when brand? like you to in look other and bet on confidence store you that one a gives trimming that the curious the and

suburban deck We've things. our question. I'm million slide frankly, rationalized. in compare over century $XX to is and high-performing $XX suburban and the limited pharmacies a today are both hesitant performance. flowing talked but a be Walgreens What years, or I'll with that X Great competition, ground with basis XXst suburban going there's and about, century the that's omnichannel dissatisfaction model compare, A looking a for a world. store we're lease theaters of pharmacies, pharmacy in to sense a XXst are movie away business in extensively over neither generally doing the X they're theaters. Movie just makes million, to

very we're focused so individual the the And performance. residual store estate fundamentals, values and the on real

any Obviously, over XXXX not to incremental from will see You investments negligible us a Walgreens. in make we've gone today XX% reason. for in

pharmacy CBS. only interested we're in The is

I our your is we're $XX or a that from square are and infungible. foot $XXX,XXX pharmacy, prototypical unique a likely square looking paying transactions kitty-corner CBS foot is that peaked think, suburban box Walgreens per But for in here. most exposure year catty-corner XX,XXX a

of that curious white seems obviously, last the to wrote, assets. the emphasis and competition there Great. still of I'm about be And becoming C-stores. obviously portfolio. I types Obviously, week of appreciate greater a paper They're with a you those lot

of So growing you developer business? is through in relationships, are corporate? it getting success that How kind

All X platforms.

platform. well front, We as large-format as are with developer specifically C the the very funding development active C-stores, stores, on

with We're generally and in the is Michigan tell Michigan. Third, cap located an thing of I I'll you consumption, entering And the consumer to C-store the here. now the sheets the The regionally. into understanding space. familiar here just that for not space they're off-premises C-store Trip perception is with launch entering, people's would come Quick not Michigan about rates. C-store is Maverick based paper an breakfast interesting primarily on white with coffee, and food where just large-format due C-store. The entry go tell with you, beverage the large-format acquisitions sells with familiar and of

soda, a service becoming the grab restaurant. And so place learning historically the C-store becoming quick quickly something wawa, as of Sheetz, What bag expand and these a go chips, them, to consumers becoming end, what C-stores, number front pharmacy, a regional through those which accustomed grabbed the across is we of to C-store are things. they country. they're a operators, of in The QuikTrip, any

And them so grow. it's very interesting to to watch continue

I states new think announced expand Wawa operators Wawa. across alone Florida flock X has the country it and regionalized it. We to in then and the with saw watch consumers

have track the of Florida. Now history they in race

the led in large confidence these the Wawa's be way, to and upon Florida Wawa you, of we states success state but my has has initial brand. other going consumers food their their region operator. core and format a the of and So from I'd given and beverage, outside way to really led Florida tell are C-stores inferior really developer entry, were perspective, the continue for that an attractive in to

quarter. the on Congrats

question comes the line from Markets. from Capital next Our of Borden BMO Eric

off your are does Just your on take shops. to and given just eventually your or on to this view to high your for top portfolio? from coffee Could two willing current you? building exposure And become that sector you QSR paper, presence a C-stores? C-stores exposure highlighted they growing change they're potentially one taking and white how How share you the the comment are QSRs

don't at at I is just top our I portfolio. wrong, believe. We X.X%, XX, of Wawa are the a overall I XX, our I'm believe X.X%, C-store approximately in #X X% Peter, believe, correct me C-stores tenant under if largest, have approximately

significant There from lots I them denominator to too sector underlying to we have portfolio, X-Eleven portfolio perspective, is let's in there for C-stores. the XX% from, them overall grow. X% add the X.X%. above of continue of jump taking as mean just to continues it, be would at room to about a us Sorry, very call our a

pursue to transactions. Many aggressively ground will on those continue we them of leases. So are

And them growth strong sectors We think and have XX growing C-stores off-price, are for that to highest X next I very to probably relationships retail going space. be the overall additional amongst are years. in the relationships and in

In divested in our terms very equity and entered Burger We quickly markets the the the and for private paying of off QSR, Kings purchasers XXXX were other them. X in portfolio. when things negligible caps it's

Peter, have exposure we think I QSR our what? is --

similar today ground looking if a exposure. C-store or roughly to are do restaurant basis. If and It's our on we're quick so we service we type any acquiring own or restaurant, lease X% a of to

And they're QSRs. two, One, Gadget and if real all into Wendy are the you raise coverage leases rent #X and Chick-fil-A and came levered believe up real have post to Brands And are Inspector drive sheets ground Popeyes down stayed the enough King prices sale away the is the disposable, from style, buildings to estate. the Burger don't But of terms and drive we to Yum! balance like cost EBITDA franchisees. all equity, space, in or unable recall. I of the leaseback private franchisees this and the divesting because then franchisees those #X, and the estate, we fast

of, to QSR we're but see So of fans we lease. restaurant-based a in convenience, in selling it. you the on here an big food us ground it. apps like We in significant space investments not make ancillary will product eat don't for is the Food like terms any

there How That's availability prepared just real helpful. your the expirations. there limited are renew of early is, we question retail on that move-outs your second tenants should my this estate. touched And Are looking part the you our XXXX have bit And for for potential to radar? conversations remarks given the 'XX with a are it to little as lease in and tenants on the 'XX? relates

you minimum required. start third majority or think, lease the in lease There's Those it's of renew end I that's the option fourth quarter expiration. a notification them frankly, the this will notification of this exchange. of something quarter Generally, exercising unless year. of don't a in XX-day of confident generally be vast not year, early if The XX We're notifications, give tenants the, options.

the same from store store we or At that patient. be if see be we conversations the we we'll corporate data COO, so that any is that you of it will our And today. and it. the material in by no on definitely be Nicole on conversations, dynamics, either should level team asset of level of time, vulnerabilities our are radar market top receive, aware front out as led Witteveen, And management move the of

question Your Heffern Bradley next comes Capital from RBC Markets. with

say in Think thinking category. cap this something for there you what metal have Or the allocator the the that XXXX, nothing disciplined you were from Would own You rates you your that capital deck, Slide in that's for the slide XX. to the pedal WACC quarter changes? would the moderate is that fourth calculation assuming put and view? and quarter pedal the second would to metal

Brad. question, Great

mention could at XX look in spot million do XX approximately the it's say, cost Peter, down that the of you XX I If remarks guidance our $XXX days. in prepared prove capital, in fair basis to days, conservative. points the last,

have optionality call cost mid-Xs it our or which the lighter full either spread, metal pedal the the to, sheet to one, we'll spread, and green. the to it, the cash and We keep XXX-basis-point XXX-basis-point of maintain is capital to given put our balance

transactions, also basis. at portfolio. look our look that basis on make on larger at Now of we'll qualitative those We'll context sense in case-by-case a if a

clock ARC. And optionality. started I think the mentioned given sourcing we I our yesterday, earlier, here for as interesting full thing in maintained quarter, is fourth

left source XX for tells XXXX. So days to have we us, ARC

brings. are those We excited days, it about XX what

Our see sheet and cost us full how going And flexibility of balance we're affords that capital to now. materializes.

for again, I visibility transactions say, spread think we going prove we're to or to That's to $XXX able to could dig going discipline. next and up. push that that more we're subject So conservative into quarter, And have XXX-basis-point it. million maintain we'll much could the be the

go Okay. were think slow broader a be react you public for it change they then rates cost names? will as will to cap to of to it. go in And the up? the Got do of And down capital kind

on never world domestic I not always seem bet I've wrong. The rates that had just discipline try of they here. in macro, be forum. my I a obviously. and from my maintain these perspective either to the career, to and we're avoid cap craziness in a money going on seen calls peaked. given said, way They out always predicting That put money, Predictions any is to live in peak, If my we it. our something volatility a there geopolitical, today, from from like the

And so moving could agility I maintain flexibility rates cap we're I to here. and our be but going wouldn't wrong. up, materially anticipate

question Baird. next [indiscernible] from the of from comes line Our

by How TAM Feygin. relative cost much Alec of transactable It's has the increased year? your current the the of beginning equity to

the a of nothing coaster. here. we We mindset we year, Frankly, been a on approximately were shift the prior beginning has Look, were guidance, capital initiatives roller defensive has say, I year. somewhat here, At ties been by articulated the talked here. on a of to dramatic of we've it's million. Since out do into Again, to, scenario that for and then, a the of executed a that of This our slowdown. frankly, weighing scenarios. for do-nothing We the $XXX hesitancy about here. number questions cost on the almost guidance, guidance, as with or initial prepare an guidance followed inaugural decreased internal should acquisition deployed XX% Street, materially our the

these a So I'm see a and And fruits anticipate never changes changes. through We we or now the of buckled these types down. their team for go of to the market-based is proud team, roller easy strategic that I maintained of maintained. extremely But discipline. of coaster our it's been a It efforts. the they've of discipline we labor. We up types ramped company the year.

you questions asked what format? And also it. things versus kind like of exposure been white have is recent C-store for us enjoyed smaller already, your current can second a paper, just regular if me. tell large reading few a the format but percentage Got of most of one I the your

ones gas odd small we and We all some format don't that a believe about had small again, the for We It's back call them in believe format. gum C-store, harkening reason. maybe format state and cigarettes, Historically, don't We cooler. just two my C-stores or of comment large C-stores, the one in have that. sold to weren't with auto didn't base, an Michigan. stations, we familiar

local and C-stores to articulates. in The where in C-stores small That don't in gold sitting beverage. expanded fuel. and the offer liquid format is some in believe the Now right EBITDA. is not as X-Eleven food now. paper is margin drive food and in operators margin coffee, The white me is beverage, front margin We of

And small-format lease do absent so ground we or unique invest in circumstances. not some a C-stores

comes from Markets. the Capital Upal of Our question Rana line from next KeyBanc

Joey, September Great. cut your even maybe being of strategy leading a that would this impact that to possibility after cut point. assuming rate at one? the get we How or with up high

cut today. a the market into short-term Look, think I rate I are mean priced most is now. here we approaching likely August already

approaching. that's anticipate I So would already

You it priced XX-plus percent can see in the today. at probability

no our So that I would here. tell strategy impact overall on you has

Got it.

on follow-up. as retailers of Okay. broadly. then What's your just the state current a opinion And

may obviously, but two state maybe of want names, these companies you closing We current And your to own to either view get of restructuring, and market stores. your a what continue you the to want these lot hear filing, more on don't be of hearing. the get cents. I just just

them The survive, COVID, And in the a legacy balance sixth We normal cycle. fade strategies. are to and focused in see access or during to by It's free. retailers players, inning going something labor, by in the retail The sandbox, continue our omnichannel which transition This was fully on with strong bolstered price frankly, a or in COVID averted to we're to IPOs, we fulfillment an capital Darwinism go we're in large anticipated. that sheets in a inning, to away. back was, max world and of we're invest post-COVID that the the in retail. will to money is cheap were world. fifth where capitalism back and That in to business frankly

income for went talked we In their now the fine of consumer food lies. they they new store to time, and for just And And growing threat proposition that's Dollar of servicing have that where because sheet, obviously America essentials how demand They $XX,XXX a going about them. food balance sheet. goods, They business. primarily they median execution, a General had security of would General, today provider have about time At consumers. all for health about so their a it's a is probably basis, balance the household are value if the huge macroeconomic rural guys. out now, irrespective of difficult national it's inclusive about here is or same challenged. be an count, overall on more a have of it's Dollar be

with is the And turnaround the a to so we're world going We're that's -- go consultant, thing. a yesterday conversation strong the good where die a back we're busy world and retailers. with again And who the back That's in world, weak had off. to capitalism. I in a working survive very will

The next Michael question from line of comes Goldsmith UBS. the from

into visibility increased the and guidance the algorithm. appreciate We

investment the the as outlook. [indiscernible] community think your approach Now I to

being the acquisition $XXX about million talked guidance You've of conservative.

have like quarter. least up you on mentioned this at may took in call You X and it that the times

get get sense trying of of the understanding better So your to haircut to does on like and reflect setting guidance? think visibility some you of putting of a the then fourth a For quarter reasonable third quarter? at -- how just into that is when mindset the number paper. are what trying that looking for like instance, that piece you Just

flexibility visibility Yes. deploy together. this have to mean to our the packaged all subject cost us Look, capital it capital. gives current we then I of reflects and is

look we're dilution we're that not incorporating you based. are any non-static if from assuming time, At method articulated. our guidance, of the as treasury XX,XXX assumptions in Peter same So feet,

the to to fourth volatility it do this candidate of So race, conservative, quarter going have year we being out go to fourth on assassination, another quarter out when being yesterday. for limb tell not a of a limb go in when talk I'm just and sourcing volatility willing number potentially the I in this the world about some dropping acquisition presidential the we've one had with on everyone, out wild the given there started attempted we're

cycle. normal. basis. because more any forward We our acquisitions. don't normal on fourth be pipeline want want quarter a than we for That is $X.X We That in our have don't that million to is

our And visibility. it's company our guidance, sheet, the balance we management have is then Street. philosophy around, This to message whether so just all don't our a how and conservative we

through. to And through to and philosophy that stick so we're going

acquisition and Now if again, on about stick the to we maintain now warranted. a the I strategic hope we fourth transactions conservative pipeline our underlying qualitatively quarter than to execute and surgical and proves much XXX-basis-point larger, what the I'll call be or step on it, here. spread again, assumptions willingness gas, But

appreciate related the to the quarter. that. to into anything rates are second read basis we you're What the points moving I looking during dispositions And should cap dispositions included Car It XX Wash And my quarter. the and to the of properties we up Gerber, characteristics can recycle? last think similar Mister the question all sequentially. is on

question. This assets and very aggressive of a part noncore program capital on our disposition the appreciate I No, recycling was of basis.

Collisions stuff see, Florida-based So Gerber these the here, money mid-Xs as and that you with can Florida-based in basically overheated. is were

was recycling of so transitioned now given year capital here. first the this of the that is most capital cost And likely program our half

any to that changed. that north assets Our noncore markets wide. of to off has were not do-nothing goal were points in that scenario. recycle the XXX prepared Obviously, basis We enter dispose the of equity and was

focused asset sale all million for [indiscernible]. Not bolstered here, our price. of time here, we on, on So we at for at now capabilities. that I right sale We've anything the type are asset recycling. $XX estate same real not and disposition the executed is of management that is believe, But

comes next Kilichowski of Our Instructions] Wells the John line from question Fargo. from [Operator

the relates these opportunities. or that So specific Or geographies as market to in you up Are it is early on are call, the to mentioned certain idiosyncratic? distress they acquisition picking types. asset

call I don't structure whether death, upon institution distress the static of I overall debt individual. recall we is it's think based divorce in the distress picking an asset-specific XDs, capital or just pretty what saying debt, the and up mean throughout we or market is market. or an entity

here, is And a local There's of in regional a down, developers are level are down, proceeds the I down, level through, distress seen I've X work of wouldn't across take year. to throughout challenged the of challenged. refinancing all distress the in there's of so are LTVs market, advantage distress are we say platforms. banks increase and But think that continue a obviously course I notable

the distress. Understood. it of Maybe Okay. just mention was

So the has change election? you second Have a the sentiment question in seller behavior or following print here. changed CPI either recent around material most how noticed

tell the on press. anything the can't front. that changing hot that's off you election, I on Sentiment

In CPI of a terms this print, the most is space. large recent such and fragmented

the sellers today, correlate Fed, X from then at they're tertiary cap cut and looking thereafter rates for cuts think if it I XX-year waiting the to treasury or X effects.

you, think treasury realization to come X were sellers here stabilized ] with look, guys. And those is semi-stabilized X longer X [ the have tell Reality for ] so X the or that the now I I period. amongst band [ to higher in

move one. that members assumption, And so does not have have what on the does that a that potential not seller If seller we our tell our working working a is team is assumption. or next to

Tsai question next the from Our Linda line comes Jefferies. from of

follow-up a C-stores white in on Just paper. your

And deals? main X-Eleven. What And would Sheetz, these like your term like, in cap concepts? look across what competition then look guess these for you question for Wawa, who highlighted I is QuikTrip, different names? like competing rates your consider does You several last these

structures. is are XX structure. term Wawa's of on That's Many lease years. generally to So ground lease them XX preferred is format ground

just that see because purchasers lots the the Buc-ees, all ground I is to apologize Buc-ees structures. in Buc-ees, a you're We is regional of operators. investor can white of about it's if Sheetz generally XXX X-Eleven reflective fans stores. Buc-ees, not a lease on for on exposure way, want vary. didn't that paper. these operation, where there. but we encyclopedia, Cap By where with is our but the rates turnkey similar, it is didn't I very make lot Wawa e-mails, familiar, to generally our include amazing basis. deck them a got There's where in the You white paper only white should

So to We'd apologize those Buc-ees. Cap rates include business do everybody, Buc-ees fans. love we so couldn't I for range. with

down get the lot them. the a with the love Sheetz that Wawa You in or the or fall local street street from of QuikTrip the buyers down

so cap opportunities. X platforms, attention source We rates that across I'd in range. your growth C-store remind that Again, platforms, all Xs. it We everyone, see And trades working stuff. we're to don't pay external Linda, still to the

rare. or So to buy full Wawa, for new very a term us be Sheetz QuikTrip would

years. drugstores where were know I on a in this on have quick do stores, share with Aid you very Walgreens Walgreens But Rite exposure reducing recent gets aggressive thoughts market you question in your and then and And just closing reallocated.

reallocated problem share And as generally, third-party the the haven't the reallocated as but The is of pharmacies, reallocated rates C-stores. Great The front tell of I'll seen of while penetration stores stores is we there. the to shrinkage the the as C-stores, an department generic the there. simultaneously reimbursement end reallocated. Sephoras exited first end for online question. to that somewhat stable, fairly chips, we stayed well has you, world see Pharmacy pharmacy government work been gets fragrance, have floor plus been has on the pressure drinks, The drugs that material. of front the Alphas, right? of the have Those to beauty the candy has online

driven those The the And -- all pharmacy. XX,XXX front feet Now stores also space. operators driven Costco, pharmacy. front-end operate from Walmart, the at is grocery business end the is But EBITDA business pressure. square under never that of has from

card and get I $X anniversary I I year. and believe The there picking our Day, script mentioned, As absent it's pharmacy I and stand on up wife's birthday a a Valentine's and call, go my can't I think, greeting times $X. a my the last to X

cheaper. hit day I lanes for it's again any you're next going going in to If on have more order checkout need convenience run When to the for free. cheaper Amazon. a It's up items, It you're and toothpaste, They new faster. store. convenience shows I

across one you see Amazon. aisles It's multiple pharmacy. It's not competitor. sectors the different going retail specific around to disintermediation you plus the the walk being as disintermediated by So

would successful, right? the and Walgreens not beverage is, merchandising inclusive Cafe. wholesale And so it like of no The back and that takes pharmacy change. Walgreens that is be and have front there's makes with there end a no turning food There off-premises to things challenge this, explored Pharmacies experimented consumption. strategy is man the for from

and service and to machines, the when fountains stations, type the challenges checking and there if and of manage. And employees you stocking out, maintain you you exclusive pharmacy, have people soda have a X are equipment. The coffee cannot FTEs break. you have max Slurpee spills manager, full-time have that X of If they

with Walgreens Alliance Women Ulta And from Walgreens also the to replicate Western has Boots cosmetics in in pharmacy Alliance so could American go from share makeup, don't Europe. for Boots this the with Western underestimated hasn't traditional beauty, Europe. fragrance. dissimilar consumer. that They department experimented our thinking country worked. experience very that that fragrance the stores, and they taken

So better next that say, aisle it's stuff, store, time cheaper, to probably a The stuff the Five walk it's the right? it's I dollar Halloween dollar better cheaper. around the Go has and at around organized the middle Christmas just you The this go to store. junk, cheaper assortment, stuff and buy in where look seasonal, pharmacy, Below, stuff. it's that's a can the

around perimeter, C-store. a of think walk the You

do kind what we we XXXX. and sectors out think in what retailers and makes we of sense how figure So that's here

right. All

over to So there back Reuben call comments. further this I like to are questions no for time. the now at would closing turn

everybody Thank you look you to the Great enjoys you. soon. the seeing Thank forward very rest job, right. We Sasan. hope summer. of I much. All