NNN REIT Inc (NNN) 2022 Q4 法說會逐字稿

Good morning, everybody, and welcome to National Retail Properties 2022 Year-End Earnings Call. (Operator Instructions) Please note, this conference is being recorded.

I will now turn the conference over to your host, Mr. Steve Horn, President and CEO of National Retail Properties. Sir, over to you.

Thank you, Jenny. Good morning, and welcome to National Retail Properties' Fourth Quarter 2022 Earnings Call. Joining me on the call is Chief Financial Officer, Kevin Habicht.

As this morning's press release reflects NNN's performance in 2022 produced 9.8% FFO growth along with an all-time high in acquisitions of nearly $850 million. In addition, the year concluded with high occupancy of 99.4% and an impressive rent collection of 99.7% all driven by our best-in-class team here at NNN. The end of the year surge positions the company well headed into the uncertainty of 2023.

A few highlights of 2022 that I'm proud of what NNN accomplished. One, 33rd consecutive annual dividend increase, released its inaugural corporate responsibilities and sustainability report, position the Board of Directors for the foreseeable future, and one of only 13 REITs included in the 2023 Bloomberg Gender Equality Index.

While there is a change at the helm in 2022, the building blocks to realize long-term value at below average risk for our shareholders remaining the most simplistic form. Continue to execute our strategy using a bottom-up approach, continue to increase our annual dividend maintaining top-tier payout ratio, focused on growing FFO per share in the mid-single digits over multiple years. We do this by setting our acquisition, disposition activity and our balance sheet management to achieve that objective.

As I stated earlier, NNN is in solid footing as we were a month into 2023. First, at year-end, NNN had $166 million drawn on our $1.1 billion line of credit after finishing the year at all-time high acquisitions. We have the option of keeping leverage neutral to use a reasonable amount of availability of the credit facility, the roughly $180 million of free cash flow plus $110 million of dispositions to execute our 2023 strategy. Using those 3 sources, as I mentioned, leaves NNN with a manageable equity requirements for the year.

Secondly, NNN's long-standing strategy of being selective while deploying capital and opportunistically raising capital over the years will not change for 2023. The sizable fourth quarter, which I'll cover shortly, allows NNN to continue being opportunistic with acquisitions as the price discovery continues.

The cap rates have been out slowly increasing, evidenced by our fourth quarter initial cap rate 30 to 40 basis points higher than our third quarter, and we're still seeing further expansion in the first quarter of 2023.

Shifting to the highlights of the fourth quarter. Financial results. Our portfolio of 3,411 freestanding single-tenant properties continue to perform exceedingly well, and we expect that trend to continue, maintain high occupancy levels of 99.4% for 2 consecutive quarters, which remains above our long-term average of 98% plus or minus a fraction. We also planted 99.6% rents for the fourth quarter.

The recent headlines of certain retailers, Bed Bath , Party City , Regal, Red Lobster, et cetera, that are assumed or have filed bankruptcy in the near term have minimal effect on NNN. NNN's exposure is limited, if not zero, in some cases.

Turning to acquisitions. During the quarter, we invested just north of $260 million in 69 new properties at an initial cash cap rate of 6.6% and with an average lease duration of 16 years. In terms you typically don't associate NNN with deviate. While we deviated from our historical trend this past quarter, typically, we source the majority of our deals from our relationships and don't target investment-grade deals.

But during the quarter, NNN was in position to be opportunistic. As you noticed in the press release, our exposure to drug stores increased from 1.3% to 2.6% year-over-year. Over the years, NNN passed on drug store portfolios because we viewed the opportunities is not the best risk-adjusted return to deploy capital at that given time, market pricing real estate metrics, lease for. This particular portfolio was in line with our underwriting standards, the real estate and the lease form. But more importantly, the transaction is an excellent real estate play, well-performing assets, excellent locations for the long run.

Currently, we are well into the price discovery period of the bid-ask spread has continued to adjust and we continue to maintain our thoughtful and disciplined (inaudible) approach. NNN continues to emphasize acquisition volume through sale leaseback transaction. Our 2022 average lease duration was slightly over 16 years with our stable relationship tenants with our long-duration net lease and more land more friendly than the 10/31 market.

During the quarter, we sold 5 properties at [5.9] cap plus 2 (inaudible) assets, raising $16 million of proceeds. For the year, we raised $65 million of proceeds from the sale of 17 properties at a 5.9% cap plus 16 (inaudible) assets. Although Job one is always a release vacancies, we will continue to sell nonperforming assets, if we do not see a clear path to generating rental income within a reasonable time frame.

With that, let me turn the call over to Kevin for more color and detail on our quarterly numbers and updated guidance.

Thanks, Steve. And as usual, I'll start with the cautionary statement that we will make certain statements that could be may be considered to be forward-looking statements under federal securities laws. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements. and we may not release revisions to these forward-looking statements to reflect changes after the statements were made. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's filings with the SEC and in this morning's press release.

With that out of the way, yes, headlines from this morning's press release report quarterly Core FFO results of $0.80 per share for the fourth quarter of 2022. That's up $0.05 or 6.7% over year ago results of $0.75 per share and full year 2022 Core FFO results were $3.14 per share, which is a strong 9.8% increase over year ago results. Today, we also reported that AFFO per share was $0.81 per share for the fourth quarter, and that's up $0.04 per share or 5.2% over 4Q 2021 results. As usual, we did footnote fourth quarter AFFO included $681,000 of deferred rent repayment in our accrued rental income adjustment for the fourth quarter without which would have produced AFFO of $0.80 per share for the quarter. Likewise, the full year of 2022 AFFO included $5.4 million of deferred rent repayments in our accrued rental income adjustment without which would have produced AFFO of $3.18 per share for the full year and that represents an 8.9% increase over the similarly adjusted $2.92 per share results in 2021.

The scheduled deferred rent repayments and they continue to taper out materially in 2023, as you can see in the details that we provided on Page 13 of the press release but the headline growth of 9.8% Core FFO per share in 2022 is a very good result for us and notably above our historic mid-single-digit growth rate.

Admittedly, we did have some tailwinds in 2022, which added something probably in the $0.09 to $0.10 per share range for the annual results. These tailwinds, which we've talked about in prior calls, included some of the refinancing we did in 2021, most notably redeeming our 5.2% preferred which probably added $0.03 a share. We also -- there was a $3.3 million increase in our cash basis, deferred rent repayments in 2022. We did resume full rent from Chuck E. Cheese in 2022, that added about $3.3 million of rent at the beginning of the year. And we did have one less executive position, which generated some G&A savings in '22. Of course, layered on top of all of that, we entered 2022 with $171 million of cash on the balance sheet, which created some notable accretion once that got invested but a good year.

But let me move on. Our AFFO dividend payout ratio for the full year 2022 was approximately 67%, and that created about $188 million of free cash flow after the payment of all expenses and dividends for the full year. As we think about it, this free cash flow funded over 40% of the equity needed to fund our 2022 acquisitions.

Occupancy was 99.4% at quarter end. That's flat with the prior quarter and up 40 basis points for the year. G&A expense came in at $10.8 million for the quarter, and that's up from $9.9 million year ago levels but more importantly, probably for the full year, G&A expense was $41.7 million, and that's down 6.6% from 2021, and it represented approximately 5.4% of total revenues and site note 5.6% of NOI.

We ended the quarter ended the year with $772 million of annual base rent in place for all leases as of December 31, 2022.

Today, we also introduced 2023 guidance with a Core FFO per share guidance range of $3.14 to $3.20 per share and an AFFO guidance range of $3.19 to $3.25 per share. Core FFO guidance suggests about 1% growth to the midpoint in 2023. The more modest growth in 2023 guidance reflects the high bar of last year's 9.8% growth that was created and the lack of tailwinds that were helpful in 2022 that I just outlined. And one particular headwind in 2023, I'll mention in a moment. All of this is coupled with the slow repricing of cap rates on new acquisitions that we're all dealing with. But it's coming along, price discovery, like I said, continues to move along.

The supporting assumptions for our 2023 guidance are on Page 7 of today's press release and include $500 million to $600 million of acquisitions, 100 to 200 -- sorry, $100 million to $120 million of disposition and G&A expense of $43 million to $45 million. We modeled acquisitions at -- running at 30% in the first half of 2023 and 70% in the second half of 2023, a little more back-end weighted than our more typical kind of 40-60 assumption.

As we typically do, we have assumed 100 basis points of rent loss in our guidance, and that's a general assumption, despite the fact that we usually experience less than half of that amount of rent loss.

The one headline -- sorry, headwind of note in 2023 is the scheduled $5.8 million slowdown in the cash basis deferred rent repayment. And again, that's detailed on Page 13 in the press release.

Tenants continue to repay these rent deferrals on time, but what is owed is slowing notably. As usual, we don't give guidance on any of our capital markets assumptions regarding our capital markets activity except for the general assumption is that we intend to behave in a fairly leverage-neutral manner over the long run.

We're hopeful we can move our guidance higher through 2023 as we've done in most years. But for now, this is where we feel comfortable.

Quick side note on our AFFO guidance. Page 13, details the slowdown we faced on the accrual basis, deferred rent repayments which has weighed on our headline AFFO growth in recent quarters. With these repayments largely completed, our 2023 AFFO per share guidance is back to its usual relationship with our Core FFO, meaning the annual AFFO is normally a few pennies more than Core FFO, and that's reflected in our guidance today.

Let me switch over to the balance sheet. We maintain a good leverage and liquidity profile with over $900 million of bank line availability. Fourth quarter was fairly quiet in terms of capital market activity. We did issue a $121 million of equity in the fourth quarter, executing trades and the $45-plus per share level. If you think about our funding of last year's $848 million of acquisitions, equity issuance funded $250 million of that, operating cash flow after dividends funded $188 million and property dispositions funded $65 million. Sum of those 3 being $504 million, and that's about 60% of our total acquisitions funded with those equity sources.

After a few years of nearly no usage, we did begin to use our bank line a bit in 2022, largely because we can. Our weighted average debt maturity is now a little over 13 years, which seems to be among the longest in the industry. Our next debt maturity is $350 million with a 3.9% coupon in mid-2024, and all of our debt outstanding is fixed rate with the exception of the $166 million on our bank line, which represents about 4% of our total debt outstanding.

A couple of stats -- net book to gross -- sorry, net debt to gross book assets was 40.4%. Net debt-to-EBITDA was 5.4x, interest coverage and fixed charge coverage for us is 4.7x.

So we're in very good shape to navigate the elevated capital market uncertainties and continue to grow per share results, which in our minds is the primary measure of success. The sector's acquisition volume growth focus over the past 2 years has downshifted in recent months as the marketplace seeks to adjust to the new environment and appears to be getting a little more disciplined on price, which we think is a better environment.

I've gone on long enough. Let me add, Jenny, with that, we will open it up to any questions.

(Operator Instructions) Your first question is coming from Brad Heffern of RBC Capital Markets.

You spoke a bit about the drugstore deal. I'm curious if you're seeing a narrower spread between investment grade and sub-investment grade deals that might push you up the credit quality spectrum or if that deal was just a one-off?

Yes, our strategy isn't going to change in 2023. It was a one-off deal. We were in a great position, balance sheet and a lot of our competitors already had significant exposure to the drugstore sector where NNN since we kind of laid low for a decade essentially of the drugstore. And then this deal really because it was above average lease term that the company was willing to do is that's why we jumped in and the economics were good. We don't get into specific economics on deals but the drugstore deal was above our average. Average is 6.6% cap rate for the quarter.

Okay. Got it. And Kevin, on the watch list, you mentioned a few tenants where you have a small or no exposure, but I'm interested to get your thoughts on AMC, given that the debt is obviously yielding 30% or so?

Yes. I mean that's been perpetually on our list for the last couple of years as well, a lot of folks, I guess, at this point. But yes, still current on rent, the liquidity to pay rent feels like they have a little bit more runway left. We'll see if they have the ability to continue to raise some more capital here in the coming quarters. But I don't have a lot of news to share on that front. They represent 2.8% of our total -- total rent and ABR.

Your next question is coming from Spenser Allaway of Green Street.

Just going back to the acquisition guidance. I know you guys mentioned you're waiting to see how that bid-ask spread continues to adjust. But -- just curious how much of that conservatism on guidance is reflective of your current tenant base not wanting to grow right now versus maybe conservatism on new prospective tenants?

Yes. Spenser, yes, we're always conservative in what we see in the pipeline. That being said, our pipeline is fairly robust as we sit here early February for 2023. Comfortable with our first quarter numbers if everybody behaves appropriately and deals close. Our development pipeline for 2023, to answer your question, it feels like our current relationships are growing, but our development pipeline is as robust as it's been in 5 years. So very comfortable with that. Where we're seeing the slowdown, there hasn't been as much M&A with our relationships of picking up 3, 5 unit operators across the board. But no, we feel comfortable that they're still growing. And our acquisition guidance, as you always know, we pick it up through the year as time goes, we don't want to get above our skis at this time.

Okay. Great. And then can you provide some color on cap rate assumptions embedded in your guidance?

Yes. We don't disclose cap rates in our guidance, but given that we were -- we picked up 30, 40 basis points in the fourth quarter. I'm seeing expansion as we sit here today for the first quarter projecting that for the first half of the year. And then the second half of the year, your guess is as good as mine at this point.

Your next question is coming from Josh Dennerlein of Bank of America.

Yes, I just wanted to follow up on the drugstore deal. Just curious, I think in the past, you might have straight away from drug stores just because they didn't really have much rent bumps built in. Just curious if this kind of -- was it different where there were rent bumps? And then was it a marketed or sale leaseback deal?

Josh. So yes, the drugstore deal as I mentioned, was north of our average cap rate deal for the fourth quarter. But this was -- it was a real estate play. It was a sale leaseback. Therefore, it wasn't the developer rent per square foot numbers, so it was very comfortable that the tenant set the rents, they are very market-rent deals. But more importantly, 85% of the properties are on in hard corners, I think 90% had drive-through. So it was really a real estate play. 1.6 acres was the average. So yes, we got the above average lease term that you see in the market for the drugstore deals and more of a landlord-friendly lease than you typically would see. That's why we jumped on this one.

Okay. I appreciate that. And then just looking at your top 20 lines of trade, just kind of saw some themes. It looks like other increased year-over-year. Could you remind us what's in that other category?

Sorry, I'm pitching up to you. In other income, what are you looking at?

Page 15 of the sup, your top 20 lines of trade looks like you list other at 8.1% of the portfolio. It looks like it was up over the course of the year. Just kind of curious if there's any kind of -- what's kind of in that other bucket and if there's any kind of themes of what you're increasing in there?

Yes. I mean nothing notable. I mean I can circle back to you, maybe give you a little more color on that.

Your next question is coming from Ronald Kamdem of Morgan Stanley.

Just going back to the 100 basis points assumptions on the bad debt, obviously, appreciate that historically, you've come in way below that. But just trying to get a sense of, is this year, is your expectation that just based on the watch list based on what you're hearing, could we be closer to that 100 basis points this year versus last year? Just trying to figure out how conservative that assumption is based on what you're already seeing in the portfolio.

We don't have any visibility on any near-term concerns. So yes, so the 100 basis points still feels fine. But I share your sentiment that this seems like a year where retailers may struggle a little bit more. And so it might get more utilized, that reserve might get more utilized than it has in the past. Time will tell. We like the fact that it's -- we're contemplating more than what typically occurs, like I said, this feels like an environment that might be prudent. But there's nothing on the near-term radar that's got us worried about that not being sufficient at the moment, but we'll see how the year unfolds.

Great. And then just looking at the cash flow statement in the K, I think it looks like at least in '22, that was close to $200 million of excess cash after the dividend base. I think you mentioned a similar number earlier in your opening comments. But is that sort of a fair sort of range for '23 as well given the FFO guide? Just to make sure we're not missing anything.

Yes. Good question. Yes. So it was about -- in the way we think about it, it was about $188 million, which is close to the number you're talking about. And it probably be a touch lower in '23 as the rent deferral repayment slowdown, and so that will take a little bit out of that number. So the number in our mind is -- and we would suggest others think about is about $180 million of free cash flow after all expenses, all dividends being available to fund acquisitions.

Got it. And then my last one, if I could sneak it in. Just on cap rates, I guess, I'm surprised they're not rising faster sooner -- more quickly, you guys are well capitalized and can be opportunistic. You had a little bit of a bump in 4Q. But again, maybe asking the question before, why shouldn't we expect cap rates to be up 25, 50 basis points higher in a pretty in a hurry here.

The deals that we started pricing near the end of the fourth quarter that are going to close in the first quarter is where we're seeing that 30 to 40 basis points again and we're starting to see the deals that we're pricing today, which most likely we closed in the second quarter, we're seeing the market accept the higher cap rate. Now when I say the market, that's the sale-leaseback market where they seem to be a little bit more sophisticated and they have access or they do a debt cost, I should say, which they may or may not be able to get, but they're also seeing the pricing significantly higher.

Now the 10/31 market is still fairly robust, that we're not seeing the increase in that market unless you're willing to do 5, 6 years or 10-year leases, then you can get the bump. But yes, 10/31 market is still holding a little sticky. But the sale leaseback market, they're understanding the -- our cost of debt increased and they're accepting the cap rate increase.

Your next question is coming from Nick Joseph of Citi.

Maybe just on that last comment, what was kind of as the 10/31 market there and maybe compress some of that bid-ask spread that we're currently seeing?

You say that first part again, Nick, can you? Kind of broke up on me.

Yes. No, it's really kind of the bid-ask spread, particularly on the 10/31 market. How do you see that playing out? What could actually make that start to close and see some more deals come through that channel versus the sale leaseback?

Nick. I mean we're always looking through the 10/31 market but it's such a small portion of our deal flow comes from the 10/31 market that I'm not really dialed in what it's going to take to close that gap. If I had to speculate, the assets that are $15 million to $25 million in the 10/31 market, you're going to see the bid-ask spread close on those because you might require debt to buy them where the $2 million to $5 million, there's so much cash out there still that don't require financing. I don't see those cap rates moving all that much. But (inaudible) want to take the 4.5%, 5% returns.

Yes. No, that makes sense. And then just on your disposition guidance for $100 million to $120 million this year. How are you thinking about pricing for those, particularly maybe relative to where you're thinking acquisition cap rates trend going forward?

So when we look at dispositions, it's kind of -- you got the offensive dispositions that somebody offers us a cap rate that they just love the real estate a lot more. So they will trade significantly below what we're deploying capital at. And then you have some defensive sales because of our relationships that we'll sell because we know they're not going to renew in 5, 7 years from now. So we'll sell those. And those cap rates typically will be where we're deploying money at the time into new 15-, 20-year leases. But the overall, just like this past year, we got [5.9] exit cap, and we were at [6.4] acquisition cap. I would see the same spread going forward or expect the same spread.

The next question is coming from Linda Tsai of Jefferies.

In terms of credit loss being relatively contained, what are you assuming for occupancy at year-end?

We're assuming fairly flat occupancy. I mean it's the 1%, gets fully utilized, I guess, you would suggest maybe there's 100 basis point loss there potentially. But assuming that doesn't happen, we're assuming, like I say, fairly flat occupancy.

And then beyond the drug stores, can you talk about some of the other tenants you invested in during the quarter?

During the quarter, it's kind of representative of what we did all year. Auto service sector for the year was roughly 35% of our deployment of capital. And within the auto service, it was -- the car wash is a big year. And then we did some child daycare services as well.

And then how does the pipeline compare to what you invested in '22 in terms of makeup?

The makeup, again, with the vast majority of our deals coming from our relationships, I think it's fair to say we tend to represent what our current portfolio looks like going forward. That being said, our acquisition officers the back team is continuously looking for the next opportunity. So we'll throw in 1 or 2 lines of trade in there historically that we haven't done. But the vast majority, Linda will look like our current portfolio makes up.

The next question is coming from John Massocca of Ladenburg.

Going back to the acquisition guidance. What's driving the 30-70 split you're seeing in 1H versus 2H? Just trying to understand the kind of broad positivity on the pipeline, but a call for kind of less acquisitions in quarters where you theoretically should have more visibility into transaction flow.

The 30-70 split is to the approach that we're taking this year. We had a robust fourth quarter, and we've made the conscious decision to less the price discovery close to the gap. So we're planning to do a little bit less in the first half of the year close to that 40%, we typically would guide to. Just being a little bit more selective, no need to put the pedal down and go.

Yes. I mean as others, and I think the market is trying to get real estate cap rate world caught up with capital market interest rate world. And so that process has been going on for a few quarters now and have probably got a little ways to go. And so it doesn't seem a real compelling need to want to push the volume pedal very hard.

Okay. And then on the disposition side of things, how should we think about the timing split on those -- I also remember from the prior earnings call, you mentioned there was a notable transaction that might slip to this year. And so is there a potential for dispositions to maybe be front-end loaded in '23?

I mean, for modeling purposes, John, I would just -- the $110 million midpoint just spread that over evenly throughout the year.

Okay. And then one quick one on the balance sheet. How should we think about how you're feeling about longer-term debt, just given where the interest rate curve is today and kind of the attractiveness of stuff in more of a 10-year range versus shorter-term debt and availability in the markets?

Yes. We don't have any real plans to be issuing long-term debt near term and in no small part because as I noted, we really have not used our bank line. So we have the luxury of being able to lean on that in this environment where the rate market is a little rockier. And so we'll see how that plays out as the year progresses. And so we don't have any -- mean we did, like I said, chopped a lot of wood in 2021 on long-term debt. We've pushed our debt maturities, weighted average debt maturity north of 13 years, which like I said, is among the longest out there. So we have the flexibility to not need to issue long-term debt at this point and see where things might normalize a bit and possibly even maybe a year from now where rates might start to tail off a little bit. So we'll see, but no near-term plans that need to make that decision.

The 10-year part of the curve probably makes a lot of sense today for folks, I'm guessing -- where rates have kind of backed up here recently in recent weeks. But we're unlikely issuers in the near term of long-term debt.

Your next question is coming from Wes Golladay of Baird.

I just want to go to the comments about the development pipeline being the most robust in 5 years. It looks like you have about $22 million under construction. I'm curious to know what is the commitment for these projects? And how big could this pipeline get?

Well, historically, pre-COVID, we had about $100 million run rate of a pipeline. So that would be a good ballpark figure to think about. And then it's -- we don't do long-term commitments. It's more once they're ready to buy the land, we'll purchase the land. So it's kind of a 3-month window.

Okay. And then going back to your comments about the tenants you've named. We did see that you lost just one Regal. And then you mentioned I think Bed Bath and Red Lobster at one point, you did have just a few Bed Bath & Beyonds were in of these part of your, I guess, defensive dispositions over the last few years? Or do you still have them?

No. We still have -- it's 3 Bed Baths and we still have them because they're fabulous real estate, and they were not on the initial list of Bed Bath closures. They may be in the future but they're good real estate. So we'll be able to replace that (inaudible). We're very comfortable with that.

And then you're right. The one Regal we had in Chicago land, we're getting good interest with that asset as well.

Got one. And just for Kevin, since you nailed the bottom on rates by issue with a lot of long-term debt, I know that you're having a big, I guess, willingness to have more floating rate debt, I guess, you recall for rates to go lower.

Yes. I wouldn't probably underline Kevin's call for rates to go lower, but boy, that's kind of edgy for me. But -- Yes. No, we just -- like I said, we have the luxury of being able to pivot the shorter-term variable rate debt until the market sort themselves out and reprice a bit. And -- and so we're going to -- that's the way we're going to dig in this environment. But we'll see if rates go lower. They don't have to for our model to work just fine, to be quite honest. But we don't feel any real pressure to be issuing bonds in this market, and we have the luxury of not needing to.

Your next question is coming from Tayo Okusanya from Credit Suisse.

Just kind of given some of the conversations around kind of retailer credit and credit losses and things of that nature. Are you guys doing anything different from an underwriting perspective or even just from a credit monitoring perspective to kind of ensure that if this worst-case scenario happens, you guys at least kind of make it out okay. Is anything changing?

No. I mean the beautiful thing about NNN's business model is, we're real estate first. And while we understand credit is important, who our tenant is, at the end of the day, if you're near market rent, your downside, if you buy a highly desirable real estate and market rent, you can replace that cash flow. And in essence, that's our underwriting. And then you do the relationship. This is kind of where our business model gets a little difficult to understand. There's a self-selection process. When we do a sale leaseback, a tenant doesn't want to sign a 15-, 20-year lease with high rents. They want low rent to ensure they can pay that rent for 15 to 20 years. So there's a self-selection process. So we're very comfortable with our underwriting.

As you saw kind of during the great financial crisis or during the pandemic, we've maintained the rent paying ability of the tenants. So yes, we're not shifting yet.

Got you. And then just a quick follow-up on that. I know most of you guys all track your rent coverage ratios and things of that nature, even if it's not published. You just kind of talk about trend wise, what's happening there with the rent coverage ratios, especially along the different trade lines? Is there any kind of real pressure on coverage in one particular trade line versus another?

No, there's nothing notable changing there yet, recognizing that we get the data on a lag, meaning we don't get real-time data. And so some of it comes quarterly, some of it actually comes annually. And so -- so there's always that lag factor. But so far, we've not seen any [dress] levels that are keeping us up at night in any particular lining.

(Operator Instructions) Okay. We appear to have no more questions in the queue, and that's the end of our question and answer session. I'll now hand back over to Steve for any closing remarks.

Thank you, (inaudible). I appreciate everybody joining the call this morning. We look forward to seeing many of you in person in the upcoming conference season, and we'll catch up then. Thank you.

Thank you, everybody. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.