Netstreit Corp (NTST) 2023 Q2 法說會逐字稿

Greetings. Welcome to the NETSTREIT Corp. second-quarter 2023 earnings call. (Operator Instructions) Please note that this conference is being recorded. At this time, I'll turn the conference over to Amy An with Investor Relations. You may now begin.

問候。歡迎參加 NETSTREIT Corp. 2023 年第二季度財報電話會議。 （操作員說明）請注意，本次會議正在錄製中。這次，我將把會議交給投資者關係部門的 Amy An。你現在可以開始了。

We thank you for joining us for NETSTREIT's second-quarter 2023 earnings conference call. In addition to the press release distributed yesterday after market close, we posted a supplemental package and an updated investor presentation. Both can be found in the Investor Relations section of the company's website at www.netstreit.com.

我們感謝您參加 NETSTREIT 2023 年第二季度收益電話會議。除了昨天收盤後發布的新聞稿外，我們還發布了補充資料和更新的投資者介紹。兩者均可在公司網站 www.netstreit.com 的投資者關係部分找到。

On today's call, management's remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. For more information about these risk factors, we encourage you to review our Form 10-K for the year ended December 31, 2022, and our other SEC filings.

在今天的電話會議上，管理層的言論和對您問題的回答可能包含1995 年《私人證券訴訟改革法案》中定義的前瞻性陳述。前瞻性陳述涉及受風險和不確定性影響的事項，這些風險和不確定性可能導致實際結果與實際結果有所不同。今天討論的那些。有關這些風險因素的更多信息，我們鼓勵您查看我們截至 2022 年 12 月 31 日的年度 10-K 表格以及我們向 SEC 提交的其他文件。

All forward-looking statements are made as of the date hereof and NETSTREIT assumes no obligation to update any forward-looking statements in the future. In addition, certain financial information presented on this call includes non-GAAP financial measures. Please refer to our earnings release and supplemental package for definitions of our non-GAAP measures, reconciliation to the most comparable GAAP measure, and an explanation of why we believe such non-GAAP financial measures are useful to investors.

所有前瞻性陳述均截至本協議發布之日作出，NETSTREIT 不承擔將來更新任何前瞻性陳述的義務。此外，本次電話會議中提供的某些財務信息包括非公認會計準則財務指標。請參閱我們的收益發布和補充資料，了解我們的非公認會計準則衡量標準的定義、與最具可比性的公認會計準則衡量標準的調節，以及為什麼我們認為此類非公認會計準則財務衡量標準對投資者有用的解釋。

Today's conference call is hosted by NETSTREIT's Chief Executive Officer, Mark Manheimer; and Chief Financial Officer, Dan Donlan. We will make some prepared remarks and then we will open the call for your questions.

今天的電話會議由 NETSTREIT 首席執行官 Mark Manheimer 主持；和首席財務官丹·唐蘭。我們將發表一些準備好的評論，然後我們將開始電話詢問您的問題。

Now, I'll turn the call over to Mark. Mark?

現在，我將把電話轉給馬克。標記？

Good morning, everyone, and thank you for joining our call today. As detailed in our quarterly disclosure, we reported another solid quarter of investment activity with continued improvement in many of our key portfolio metrics. In addition, we recently completed a number of capital markets transactions that enhanced our balance sheet and strengthened our liquidity position, which Dan will cover in his section.

大家早上好，感謝您今天加入我們的電話會議。正如我們在季度披露中詳細介紹的那樣，我們報告了又一個穩健的季度投資活動，我們的許多關鍵投資組合指標持續改善。此外，我們最近完成了一些資本市場交易，這些交易改善了我們的資產負債表並增強了我們的流動性狀況，丹將在他的部分中介紹這些內容。

All in all, our portfolio continues to perform at a high level, and our opportunities for external growth continue to increase in both size and quality, which has us highly optimistic about our ability to compound earnings and achieve attractive total returns for shareholders.

總而言之，我們的投資組合繼續保持高水平表現，外部增長的機會在規模和質量上不斷增加，這使我們對複合收益和為股東實現有吸引力的總回報的能力高度樂觀。

Starting with the portfolio, as of quarter end, we had 531 investments that were leased to 87 tenants that operate within 25 retail industries across 45 states. With 82% of our portfolio as measured by ABR being leased to tenants with investment-grade ratings and investment-grade profiles, and 87% coming from and necessity-based discount or service-oriented retailers, we have not deviated from our focus on high-quality tenants and defensive retail categories. Our occupancy remained stable at 100%, and our weighted average remaining lease term of 9.4 years was unchanged quarter over quarter.

從投資組合開始，截至季度末，我們有 531 項投資，已出租給 87 個租戶，這些租戶在 45 個州的 25 個零售行業內運營。根據ABR 衡量，我們的投資組合中有82% 出租給具有投資級評級和投資級概況的租戶，其中87% 來自以必需品為基礎的折扣或服務導向型零售商，因此我們並沒有偏離對高端住宅的關注。 -優質租戶和防禦性零售類別。我們的入住率穩定在 100%，加權平均剩餘租賃期為 9.4 年，環比保持不變。

In terms of near-term lease expiration risk based on our strong tenant relationships and the visibility we have into the performance of our properties, we are highly confident in the renewal prospects for the 2.5% of ABR that expires between now and the end of 2025. Coupled with the strong balance sheet and ample financial resources of our high-quality tenant base, we continue to believe our in-place cash flow stream should prove highly durable in any economic environment.

就近期租約到期風險而言，基於我們強大的租戶關係以及我們對物業績效的了解，我們對從現在到 2025 年底到期的 2.5% ABR 的續約前景充滿信心加上我們優質租戶基礎的強勁資產負債表和充足的財務資源，我們仍然相信我們的現有現金流在任何經濟環境下都應該具有高度持久性。

Turning to capital deployment, we closed on $115 million of net investment activity this quarter, which was primarily funded with the attractively priced equity capital that we raised in August 2022. Tenant quality remained high as 81.3% (sic - see slide 6 & supplemental page 13 - "81.8%") of our second-quarter investments were leased to investment-grade rated and investment-grade profiles.

談到資本部署，我們本季度完成了1.15 億美元的淨投資活動，主要由我們在2022 年8 月籌集的價格有吸引力的股權資本提供資金。租戶質量仍然高達81.3%（原文如此- 參見幻燈片6 和補充頁） 13 - “81.8%”）我們第二季度的投資被出租給投資級評級和投資級配置文件。

Our second-quarter investments had an initial cash yield of 6.8% and a weighted average lease term of 11.6 years. Of note, over half of our second-quarter investment activity involves triparty negotiations whereby the tenant agreed to extend out a large portion of their existing leases with NETSTREIT to 15 years as well as add rent escalation clauses to the new and existing leases that were previously flat.

我們第二季度投資的初始現金收益率為 6.8%，加權平均租賃期限為 11.6 年。值得注意的是，我們第二季度超過一半的投資活動涉及三方談判，租戶同意將其與NETSTREIT 的現有租約的大部分延長至15 年，並在之前簽訂的新租約和現有租約中添加租金上漲條款。平坦的。

These IRR-accretive transactions, which modestly pressured cap rates in the quarter, not only enhanced our portfolio's internal rent growth profile, but also provided us with increased visibility into the desirability of our properties. We believe these collaborative industry relationships will drive additional opportunities for NETSTREIT as we look to become a greater part of the embedded solution for retailers and developers alike.

這些增加 IRR 的交易對本季度的上限利率造成了適度的壓力，不僅增強了我們投資組合的內部租金增長狀況，而且還使我們能夠更好地了解我們的房產的需求。我們相信，這些協作行業關係將為 NETSTREIT 帶來更多機會，因為我們希望成為零售商和開發商等嵌入式解決方案的重要組成部分。

From a pricing perspective, while we believe cap rates have largely leveled off for assets that we pursue, we do expect third-quarter investments to have slightly higher cap rates than this quarter despite there being no change in tenant quality.

從定價角度來看，雖然我們認為我們所追求的資產的資本化率已基本趨於平穩，但我們確實預計第三季度投資的資本化率將略高於本季度，儘管租戶質量沒有變化。

Turning to dispositions, we sold two properties with 4.6 years of remaining lease term in the second quarter for $4.1 million at a 6.7% blended cash yield. In the back half of the year, we expect to see our disposition activity increase relative to the first half as we look to manage certain tenant concentrations. Of note, most of the planned disposition activity is being done to free up investment capacity with the same tenant, albeit at higher yields with better lease terms.

談到處置，我們在第二季度以 410 萬美元的價格出售了兩處剩餘租賃期為 4.6 年的房產，綜合現金收益率為 6.7%。在今年下半年，我們預計我們的處置活動將比上半年有所增加，因為我們希望管理某些租戶集中度。值得注意的是，大部分計劃的處置活動都是為了釋放同一租戶的投資能力，儘管收益率更高，租賃條件更好。

Looking at our investment pipeline, we are seeing increased opportunities for traditional fee-simple acquisitions due to the impact of higher interest rates, a significantly less active 1031 marketplace, and limited competition from highly levered buyers. As we touched on earlier, we are seeing both retailers and developers consider our capital as an alternative financing option, given the unattractive nature of the debt markets and/or the limited availability of financing for both small community and regional banks.

縱觀我們的投資渠道，由於利率上升、1031 市場活躍度顯著降低以及來自高槓桿買家的競爭有限，我們發現傳統的簡單費用收購機會有所增加。正如我們之前提到的，鑑於債務市場缺乏吸引力和/或小型社區和區域銀行的融資能力有限，我們看到零售商和開發商都將我們的資本視為替代融資選擇。

While all of these market dynamics are resulting in more attractive cap rates, we are also seeing an increased willingness by retailers, especially those committed to growing their store count to sign leases with longer lease terms and embedded rent escalations. In addition, while loan origination opportunities remain plentiful, we have become even more selective in the types of loans that we may originate and how we allocate capital to these investments. In short, we are only focusing on those opportunities that can lead to sustainable long-term value from a relationship perspective and/or ultimately fee-simple ownership.

儘管所有這些市場動態都導致了更具吸引力的資本化率，但我們也看到零售商，尤其是那些致力於增加商店數量的零售商，願意簽署更長租期和嵌入式租金上漲的租約。此外，雖然貸款發放機會仍然充足，但我們在可能發放的貸款類型以及如何將資本分配給這些投資方面變得更加挑剔。簡而言之，我們只關注那些能夠從關係角度和/或最終簡單的收費所有權角度帶來可持續長期價值的機會。

In closing, we will continue to take advantage of our size and mine our unique sourcing channels for attractively priced opportunities to drive outsized risk-adjusted returns for shareholders. With $227.7 million of net investment activity closed in the first half of 2023, we remain ahead of pace, which gives us the confidence to increase our 2023 net investment activity guidance to at least $450 million from our prior guidance of $400 million.

最後，我們將繼續利用我們的規模優勢，挖掘我們獨特的採購渠道，尋找價格有吸引力的機會，為股東帶來超額的風險調整回報。 2023 年上半年完成的淨投資活動為 2.277 億美元，我們仍然保持領先地位，這使我們有信心將 2023 年淨投資活動指導從之前的 4 億美元指導提高到至少 4.5 億美元。

With that, I'll hand the call over to Dan to go over our second-quarter financial results.

接下來，我將把電話轉交給丹，讓他審查我們第二季度的財務業績。

Thank you, Mark, and good morning, everyone. Turning to our second-quarter earnings, we reported a net loss of $792,000 or $0.01 per diluted share. Core FFO totaled $17.6 million for the quarter, or $0.29 per diluted share, a 12% increase from the prior-year period. AFFO totaled $18.7 million for the quarter or $0.3 per diluted share, a 7% increase from the prior period.

謝謝你，馬克，大家早上好。談到我們第二季度的收益，我們報告淨虧損為 792,000 美元，即稀釋後每股虧損 0.01 美元。本季度核心 FFO 總額為 1,760 萬美元，或稀釋後每股 0.29 美元，比去年同期增長 12%。本季度 AFFO 總額為 1,870 萬美元，攤薄後每股收益為 0.3 美元，較上一季度增長 7%。

Turning to G&A, total G&A expense, excluding one-time items, increased 4% year over year to $5.1 million (sic - see earnings release - "$5.26 million"), which was primarily due to a higher employee count. However, with total G&A representing 16% of total revenues in the second quarter versus 21.5% the year prior, we saw a considerable improvement in this ratio. Similarly, on a quarter-over-quarter basis, our cash G&A declined 1.6%. As we look out to the balance of the year and beyond, our G&A should continue to rationalize relative to our asset base and total revenues as the company has reached the proper scale to effectively operate our business on a go-forward basis.

說到一般管理費用，不包括一次性項目的一般管理費用總額同比增長 4%，達到 510 萬美元（原文如此 - 參見收益發布 - “526 萬美元”），這主要是由於員工數量增加。然而，由於第二季度總管理費用佔總收入的 16%，而去年同期為 21.5%，我們看到這一比例有了相當大的改善。同樣，我們的現金 G&A 環比下降 1.6%。當我們展望今年及以後的情況時，我們的一般管理費用應繼續相對於我們的資產基礎和總收入進行合理化，因為公司已經達到了適當的規模，可以在未來的基礎上有效地運營我們的業務。

Turning to the balance sheet, we had total debt outstanding of $489.4 million at quarter end with a weighted average contractual interest rate, including the impact of fixed rate swaps of 3.49%. During the quarter, we amended and restated our $175 million senior unsecured term loan to extend maturity to January 2027 from December 2024. All details are in our supplemental.

轉向資產負債表，截至季度末，我們的未償債務總額為 4.894 億美元，加權平均合同利率包括 3.49% 的固定利率互換的影響。在本季度，我們修改並重述了 1.75 億美元的高級無擔保定期貸款，將到期日從 2024 年 12 月延長至 2027 年 1 月。所有詳細信息均在我們的補充材料中。

Please note that we fully hedged this term loan using a combination of forward-starting swaps that resulted in an all-in fixed rate of 1.37% through November 2023, which then adjusted 3.12% through December 2024 for the final adjustment thereafter to 3.65% through the fully extended maturity of January 2027. Additionally, and subsequent to quarter end, we closed on a new $250 million senior unsecured term loan with delayed draw option, which has a fully extended maturity date of January 2029. The term loan includes accordion feature that allows the company to increase the total loan amount to $400 million.

請注意，我們使用遠期啟動掉期組合完全對沖了該定期貸款，導致截至 2023 年 11 月的總固定利率為 1.37%，然後到 2024 年 12 月調整為 3.12%，此後最終調整為 3.65%。完全延長到期日至2027 年1 月。此外，在季度末之後，我們完成了一項新的2.5 億美元高級無抵押定期貸款，並具有延遲提款選項，該貸款的到期日完全延長至2029 年1 月。該定期貸款包括手風琴功能，允許公司將貸款總額增加至 4 億美元。

At closing on July 3, we drew down $150 million and plan to draw the remaining $100 million in the first quarter of 2024. We fully hedged the $200 million term loan at an all-in fixed interest rate of 4.99% through January 2029.

截至7 月3 日收盤，我們提取了1.5 億美元，併計劃在2024 年第一季度提取剩餘的1 億美元。截至2029 年1 月，我們以4.99% 的固定利率對2 億美元定期貸款進行了完全對沖。

As a result of these debt transactions, we no longer have any debt maturing until 2027, and our only exposure to variable rate debt is via our revolving line of credit, which has not been outstanding as of today. We'd like to thank our banking partners for executing these transactions during what remains a tight lending environment. We also note that demand for both term loans far exceeded the principal balances raised, which we believe speaks to our ready access to efficiently priced capital.

由於這些債務交易，我們在 2027 年之前不再有任何債務到期，而我們對可變利率債務的唯一敞口是通過我們的循環信貸額度，截至今天尚未償還。我們要感謝我們的銀行合作夥伴在貸款環境仍然緊張的情況下執行這些交易。我們還注意到，對這兩項定期貸款的需求遠遠超過了籌集的本金餘額，我們認為這說明我們隨時可以獲得有效定價的資本。

At quarter end, our liquidity was $307 million, which includes $13 million of cash on hand and $294 million available on our revolving credit facility. However, when including the closing of our $250 million term loan in July, our pro forma liquidity increases to $557 million which provides us with ample dry powder to meet our increased net investment target for 2023.

截至季度末，我們的流動資金為 3.07 億美元，其中包括 1300 萬美元的手頭現金和 2.94 億美元的循環信貸額度。然而，如果包括 7 月份結束的 2.5 億美元定期貸款，我們的預計流動性將增加至 5.57 億美元，這為我們提供了充足的干粉來滿足 2023 年增加的淨投資目標。

From a leverage perspective, our net debt to annualized adjusted EBITDAre was 4.6 times at quarter end, which remains well within our targeted leverage range of 4.5 to 5.5 times.

從槓桿角度來看，季度末我們的淨債務與年化調整後 EBITDA 的比值為 4.6 倍，仍然在我們 4.5 至 5.5 倍的目標槓桿範圍內。

Turning to the dividend, on July 24, the Board declared a quarterly cash dividend of $0.205 per share, which represents a 2.5% increase versus the prior period and is our first increase in the company's dividend since our IPO. The dividend will be payable on September 15 to shareholders of record as of September 1. Based on this new dividend amount, our AFFO payout ratio for the second quarter was 68%, which we believe bodes well for future dividend increases.

談到股息，7月24日，董事會宣布季度現金股息為每股0.205美元，較上期增加2.5%，是我們自IPO以來首次增加公司股息。股息將於 9 月 15 日向截至 9 月 1 日登記在冊的股東支付。根據這一新股息金額，我們第二季度的 AFFO 支付率為 68%，我們認為這對未來股息增長來說是個好兆頭。

Lastly, echoing Mark's sentiment, we have all the components in place to execute on our external growth plans and to provide the best risk-adjusted returns to our shareholders. Therefore, we are updating our 2023 AFFO per share guidance to $1.20 to $1.23 and increasing the midpoint by $0.015.

最後，與馬克的觀點相呼應，我們擁有執行外部增長計劃並為股東提供最佳風險調整回報的所有組件。因此，我們將 2023 年 AFFO 每股指導值更新為 1.20 美元至 1.23 美元，並將中點增加 0.015 美元。

With that, I will now open the line for questions. Operator?

現在，我將開通提問熱線。操作員？

(Operator Instructions) Wes Golladay, Baird.

（操作員說明）Wes Golladay，Baird。

Yeah. Good morning, everyone. You mentioned you're building in higher escalators or some new deal. Is this something you've tried for in the past? Or is this something new that the tenants are more open to?

是的。大家，早安。你提到你正在建造更高的自動扶梯或一些新的交易。這是你過去嘗試過的事情嗎？或者這是租戶更願意接受的新事物？

Yeah. Now, this is something that tenants are more open to, I think, out of necessity, just with a 1031 market that's not nearly as active as it was call it 18 months ago. We've been able to negotiate those. But yeah, any time that we're at the table negotiating directly with the tenant, we're trying to push for better escalators. And it's always a challenge with more of an investment grade than investment-grade profile type focus where the leases tend to be flatter.

是的。現在，我認為，出於必要，租戶對此更加開放，只是 1031 市場並不像 18 個月前所說的那麼活躍。我們已經能夠就這些問題進行談判。但是，是的，每當我們與租戶直接談判時，我們都會努力推動更好的自動扶梯。這始終是一個挑戰，更多的是投資級別而不是投資級別的概況類型焦點，後者的租賃往往更平坦。

Okay. And then maybe your comment on dispositions, I want to make sure I understood it correctly. It sounds like you said you're going to do some, I guess, maybe asset management, maybe get rid of the cycle, some of the bad or, I guess, more riskier tenants. But then you also said you're going to sell some of the same tenant and go buy them. How should we look at the mix of what you do around the disposition front?

好的。然後也許你對處置的評論，我想確保我理解正確。聽起來你說你會做一些事情，我猜，也許是資產管理，也許是擺脫循環，一些不好的，或者我猜，風險更高的租戶。但後來你也說你要賣掉一些同一個租戶並去購買它們。我們應該如何看待您在處置方面所做的工作組合？

Yeah. So I think overall, similar to what we've done in the past, and that's -- we'll look at potential credit risks; we'll look at concentrations that can get a little bit higher with a smaller portfolio. And then as it relates to the second part of your question, that was kind of more directly related to tenants where we see a lot of opportunity with getting very attractive new leases and then cycling out of some of the shorter-term leases where we can sell those assets at or below the cap rates that we're acquiring assets at.

是的。所以我認為總的來說，與我們過去所做的類似，我們將研究潛在的信用風險；我們將研究通過較小的投資組合可以提高一點的集中度。然後，由於它與您問題的第二部分相關，這與租戶更直接相關，我們看到有很多機會獲得非常有吸引力的新租約，然後退出一些短期租約，我們可以以或低於我們收購資產的上限利率出售這些資產。

Got it. And maybe just one final one, can you maybe talk about your tenant watch list now? I know you have a pretty high exposure to the IG or IG-like assets, but just maybe the balance of the portfolio.

知道了。也許只是最後一件事，您現在可以談談您的租戶觀察名單嗎？我知道您對 IG 或類 IG 資產的敞口相當高，但也許只是投資組合的餘額。

Yeah, sure. So I mean, we credit score every single asset in the portfolio, and that's held up to be very strong. There are a couple of assets with one particular tenant that we may look to sell out of during the quarter. So I think you may see some exposure reduce where there might be a little bit of risk. But I'm feeling really good about the portfolio.

好，當然。所以我的意思是，我們對投資組合中的每一項資產進行信用評分，這被認為是非常強勁的。我們可能會在本季度出售一些擁有特定租戶的資產。所以我認為你可能會看到一些風險暴露減少。但我對這個投資組合感覺非常好。

Great. Thanks for the time.

偉大的。謝謝你的時間。

Eric Wolfe, Citi.

埃里克·沃爾夫，花旗銀行。

Thanks. It's actually a Nick Joseph here with Eric. Maybe just on cap rates, it sounds like 3Q may be trending a bit higher than what you saw in 2Q at 6.8%. So I was hoping you could quantify that.

謝謝。實際上是尼克·約瑟夫和埃里克在一起。也許僅就資本化率而言，聽起來第三季度的趨勢可能比第二季度的 6.8% 略高。所以我希望你能量化這一點。

Yeah, sure. I mean, I wouldn't expect to see a really big move. I mean, when you look at the fee-simple acquisitions that we've done really since fourth quarter of last year, it's been pretty flat kind of your 6.8%, 6.9% up to maybe 7% cap rates. I think we're likely to be at the high end of that in the third quarter.

好，當然。我的意思是，我沒想到會看到真正的大動作。我的意思是，當你看看我們自去年第四季度以來所做的簡單費用收購時，你會發現，你的上限利率相當平穩，為 6.8%、6.9%，最高可達 7%。我認為我們可能會在第三季度達到最高點。

Thanks. And when you're at 6.9% or 7%, does active sufficient kind of spread versus history in terms of investment spreads?

謝謝。當你處於 6.9% 或 7% 的水平時，就投資利差而言，活躍的利差與歷史相比是否足夠？

Yeah. Hey, Nick, it's Dan Donlan. It does. At these levels, we can definitely sufficiently raise accretive equity. And I think the magnitude of what we raised that capital is just ultimately dependent on the sizing and pricing of the investment opportunities we see ahead of us.

是的。嘿，尼克，我是丹·唐蘭。確實如此。在這個水平上，我們絕對可以充分提高增值股權。我認為我們籌集的資金的規模最終取決於我們看到的投資機會的規模和定價。

Thanks. And maybe just on that, when you talk about accretive equity, how are you thinking about that relative to investment spread? Or is it -- it seems like in the second quarter, it's a bit below where street NAV is. So how do you triangulate between that when making the decision?

謝謝。也許就這一點，當您談論增值股權時，您如何看待相對於投資利差的問題？或者是 - 看起來在第二季度，它有點低於街道資產淨值。那麼，在做出決定時，您如何權衡兩者之間的關係呢？

Yeah. I mean, look, we look at next 12 months AFFO yield, we look at run rate AFFO yield, and we look at implied cap rate when we think about raising equity. But as Mark alluded to, in the quarter, we did have $90 million of well-priced capital from the August 2022 raise. And so we definitely achieved a nice spread, call it 30, 40 basis points relative to our all-in equity that we pulled down this quarter.

是的。我的意思是，當我們考慮籌集股本時，我們會關注未來 12 個月的 AFFO 收益率，我們會關注運行率 AFFO 收益率，還會關注隱含資本化率。但正如馬克提到的，在本季度，我們確實從 2022 年 8 月的融資中獲得了 9000 萬美元的價格合理的資本。因此，我們確實取得了不錯的利差，相對於我們本季度拉低的總股本，可以稱之為 30、40 個基點。

So going forward, if spot cost equity continues to be favorable, so I think if you think about where we just raised the debt at 5%, we're looking at investment spreads kind of around 130, 120 basis points.

因此，展望未來，如果現貨成本權益繼續有利，那麼我認為，如果你考慮一下我們剛剛將債務提高到 5%，我們會看到投資利差約為 130、120 個基點。

Thank you very much.

非常感謝。

Todd Thomas, KeyBanc Capital Markets.

托德·托馬斯 (Todd Thomas)，KeyBanc 資本市場。

Yeah. Hi. Thanks. I just wanted to follow up a little bit on that discussion. Just around the investments that were completed in the quarter being funded with attractively priced equity that was, you know, sort of agreed to or issued on a forward basis, almost one year ago. Your cost of capital is higher than it was last year. So I'm just curious how that might impact how you think about investments heading into 2024 as you work through sort of your dry powder during the balance of the year.

是的。你好。謝謝。我只是想對這次討論進行一些跟進。就在本季度完成的投資中，這些投資是通過價格有吸引力的股權融資的，你知道，大約一年前，這些股權是同意或遠期發行的。你們的資金成本比去年要高。因此，我很好奇，當您在今年餘下的時間裡進行一些乾粉研究時，這可能會如何影響您對 2024 年投資的看法。

Yeah. Look, I'd just echo what I just said to Nick. Look, we're -- first off, we're at 4.6 times leverage relative to our targeted range of 4.5 to 5.5 times. So thankfully, we have dry powder to deploy. And as we think about our cost to equity, it's a spot cost of equity today, it is accretive. And we'll be judicious with how we raise capital. And I think that you should expect from us going forward.

是的。聽著，我只是重複我剛才對尼克說的話。看，首先，相對於 4.5 至 5.5 倍的目標範圍，我們的槓桿率為 4.6 倍。值得慶幸的是，我們有乾粉可供部署。當我們考慮我們的股本成本時，這是今天的股本成本，它是增值的。我們將謹慎對待籌集資金的方式。我認為您應該對我們的未來充滿期待。

Okay. Are you able to share where you expect leverage to be at year end, just given the increase in net investment activity that you're anticipating? And is there any additional equity capital raising activity or any capital raising activity embedded in the updated guidance?

好的。考慮到您預計的淨投資活動的增加，您能否分享您預計年底槓桿率的水平？更新後的指南中是否有任何額外的股權融資活動或嵌入的任何融資活動？

Yeah. Look, I think you should expect us to manage our leverage within the 4.5 to 5.5 times range, which is consistent with what we provided in our guidance range.

是的。看，我認為您應該期望我們將槓桿率控制在 4.5 至 5.5 倍範圍內，這與我們在指導範圍中提供的一致。

Okay. And then just as we think about moving forward here, clearly you have a sense around the pace of investments and the pipeline that you're working on. Just curious, just in the current environment, if you would expect the pace of investment activity to remain relatively steady from 2023 levels as we begin to think a little bit about 2024?

好的。然後，正如我們考慮在這裡向前推進一樣，顯然您對投資的節奏和正在開發的管道有一定的了解。只是好奇，在當前環境下，當我們開始思考 2024 年時，您是否預計投資活動的步伐將在 2023 年的水平上保持相對穩定？

Yeah. I think a little premature for us to start thinking about what we're going to do in 2024. It's been a pretty volatile market. We need to understand kind of where our cost of capital is and what the market looks like and what our opportunity set is.

是的。我認為我們開始考慮 2024 年要做什麼還為時過早。這是一個相當不穩定的市場。我們需要了解我們的資本成本在哪裡、市場是什麼樣的以及我們的機會集是什麼。

Looking at our opportunity set right now, it's as robust as we've seen. But we really only have visibility going out call it 75, 90 days out. So a little bit difficult to say what the opportunity set looks like in 2024 and what the macro backdrop looks like. But I mean, I think the general idea for the company is to continue to grow.

看看我們現在的機會，它和我們所看到的一樣強勁。但我們實際上只能在 75、90 天后才能看到。因此，很難說 2024 年的機會集是什麼樣子以及宏觀背景是什麼樣子。但我的意思是，我認為公司的總體思路是繼續發展。

All right. Great. All right. Thank you.

好的。偉大的。好的。謝謝。

Ki Bin Kim, Truist Securities

Ki Bin Kim，Truist 證券

Thanks. Good morning. Dan, given the timing of the equity settlement towards the end of the quarter, how should we think about the cadence of earnings going into 3Q? And should there be a little bit of a debt before it comes back?

謝謝。早上好。 Dan，鑑於股權結算的時間臨近季度末，我們應該如何看待進入第三季度的盈利節奏？在收回之前是否應該欠一點債務？

Look, I think the impact to earnings has really come from the term loan that we refinanced. That's going to be moving from 1.37% at the end of November of this year to 3.12%. And so I think that's really -- obviously, that's going to be dilutive as you think about where we are, but I think there's plenty of offsets to that. And I think the idea around swapping the term loan and extending it out was to smooth out earnings growth between 2024 and 2023 and then 2025 versus 2024.

看，我認為對收益的影響實際上來自我們再融資的定期貸款。該比率將從今年 11 月底的 1.37% 升至 3.12%。所以我認為這確實——顯然，當你想到我們所處的位置時，這會被稀釋，但我認為這有很多抵消因素。我認為更換定期貸款並延長期限的想法是為了平滑 2024 年至 2023 年以及 2025 年與 2024 年之間的盈利增長。

And could you just provide any high-level color on Big Lots? I guess, what your plans are for that tenant, if you're looking to sell, and potentially, what kind of recovery ratio, what that looks like?

您能否在 Big Lot 上提供任何高級顏色？我想，如果您想出售，您對該租戶的計劃是什麼，以及潛在的回收率是多少，看起來是什麼樣的？

Yeah, sure. So I mean, I think they did just do a sale leaseback, which is providing them a lot of liquidity for a period of time. And I think there they should be just about done with their promotional activity. I think we might have one more quarter seeing margins kind of in the low 30s, which is lower than they've been historically. And so hopefully, they can kind of start to turn the corner after that.

好，當然。所以我的意思是，我認為他們只是進行了售後回租，這在一段時間內為他們提供了大量的流動性。我認為他們的促銷活動應該差不多完成了。我認為我們可能還有一個季度的利潤率會在 30 左右，這比歷史上的水平要低。希望在那之後他們能夠開始扭轉局面。

But then turning to the assets that we own, predominantly very low rents, around $7 a foot on average and almost $10 market. So I feel like the real estate, we're pretty well covered with that. But there are buyers out there that are not your typical net lease buyers that are more focused on kind of a value-add type situation. So I think that can be very attractive for those types of buyers, and I wouldn't be too surprised to see us selectively decrease our exposure there.

但轉向我們擁有的資產，主要是非常低的租金，平均每英尺大約 7 美元，市場價格接近 10 美元。所以我覺得房地產方面，我們已經很好地解決了這個問題。但有些買家不是典型的淨租賃買家，他們更關注增值類型的情況。因此，我認為這對於這些類型的買家來說非常有吸引力，如果看到我們有選擇地減少在那裡的曝光度，我不會太驚訝。

Okay. Thank you.

好的。謝謝。

Thank you.

謝謝。

Joshua Dennerlein, Bank of America.

約書亞·登納林，美國銀行。

Hi. This is Farrell Granath on behalf of Josh Dennerlein. I was hoping if you could give a little bit more color on your new term loan, specifically maybe your rationale on the 10-year and the extendibility to the 5.5 years?

你好。我是法雷爾·格拉納特 (Farrell Granath)，代表喬什·丹納林 (Josh Dennerlein)。我希望您能對您的新定期貸款提供更多說明，特別是您對 10 年期貸款和可延期至 5.5 年期貸款的理由嗎？

Yeah. Hey, look, the term loan market is an extremely attractive market right now when you -- relative to the private placement and the unsecured bond market. And certainly, at our size call it $1.7 billion, $1.8 billion of gross assets, it's a tool that we can utilize going forward as we think about debt raises. In a year or beyond on the private placement market or the public unsecured bond market would then become more attractive as we'll get to the proper scale, which is basically $2 billion before you can start to access that market efficiently. So that's why we chose to go with what we did.

是的。嘿，看，相對於私募和無擔保債券市場，定期貸款市場現在是一個極具吸引力的市場。當然，按照我們 17 億美元、18 億美元總資產的規模，這是我們在考慮債務籌集時可以利用的工具。在一年或更長時間內，私募市場或公共無擔保債券市場將變得更具吸引力，因為我們將達到適當的規模，基本上是 20 億美元，然後您才能開始有效地進入該市場。這就是為什麼我們選擇繼續我們所做的事情。

Great. Thank you.

偉大的。謝謝。

Greg McGinniss, Scotiabank.

格雷格·麥金尼斯，豐業銀行。

Hey. Good morning.

嘿。早上好。

Good morning, Greg.

早上好，格雷格。

Let me touch on that term loan again real quick. So what's the thought process on issuing a new term loan versus maybe using the accordion feature on the other term on certain inputs?

讓我很快再次談談定期貸款。那麼，發行新定期貸款與在某些輸入的其他期限上使用手風琴功能的思維過程是什麼？

Yeah. Look, I think we wanted to raise new capital 5.5 years and go out as long as we possibly could. That's really the rationale around doing the 5.5 year.

是的。聽著，我認為我們希望在 5.5 年內籌集新資金，並儘可能長時間地走出去。這確實是 5.5 年的基本原理。

So is the accordion still something that you think about tapping, or no?

那麼，您是否仍然會考慮敲擊手風琴？

For the 5.5? I mean, look, it's a -- I think it all just depends on where the market is, Greg. Thankfully for us, we have basically locked in our long-term debt needs through 2025. So to the degree that the opportunity set in front of us increases and the long-term rates remain pretty unfavorable, it could be something we'd look at. But I think longer term, we'll want to match fund our long-duration leases, with longer duration debt.

對於5.5？我的意思是，聽著，我認為這一切都取決於市場在哪裡，格雷格。值得慶幸的是，我們基本上已經鎖定了 2025 年之前的長期債務需求。因此，如果我們面前的機會增加，而長期利率仍然相當不利，那麼我們可能會考慮這樣做。但我認為從長遠來看，我們將希望為我們的長期租賃提供資金，並與長期債務相匹配。

Okay. Switching gears a bit, could you provide some color on maybe the discussions that you're having with merchant developers and any interesting deal structures or cap rates you're negotiating there?

好的。換個話題，您能否提供一些關於您與商業開發商的討論以及您正在談判的任何有趣的交易結構或上限利率的信息？

Yeah, sure. I mean, I think that is certainly an area that's been under pressure. The community banks and smaller regional banks have much more limited ability to lend them attractive capital like they had in the past, really for the past call, it 10, 15 years. And then with a much shallower 1031 market, they need to rely on institutional capital.

好，當然。我的意思是，我認為這肯定是一個承受壓力的領域。社區銀行和較小的區域銀行像過去一樣向他們提供有吸引力的資本的能力更加有限，實際上對於過去的呼籲，它是 10 年、15 年。然後，由於1031市場淺得多，他們需要依賴機構資本。

So those conversations are ongoing, and it certainly has been a part of what we've done over the past couple of years and a larger chunk of what we've done over the past couple of quarters. And I think that's likely going to continue as long as retailers continue to want to grow and developers have that need for our capital.

因此，這些對話正在進行中，這當然是我們過去幾年所做工作的一部分，也是我們過去幾個季度所做工作的很大一部分。我認為只要零售商繼續希望發展並且開發商對我們的資金有這種需求，這種情況就可能會持續下去。

Okay. Thanks. And sorry, so is there any sort of change in cap rate trends there that you can comment on?

好的。謝謝。抱歉，您可以評論資本化率趨勢是否有任何變化？

I mean, I think overall, you've seen over the past -- since the Fed started increasing rates, 525 basis points 16 months ago, you've seen cap rates move up. And I think it's maybe moved up slightly more as it relates to the developers that were at one point in time able to get very aggressive cap rates from the 1031 market that's now essentially gone. But it's nothing more than maybe 150 basis points from the peak.

我的意思是，我認為總體而言，你已經看到了過去的情況——自從美聯儲在 16 個月前開始加息 525 個基點以來，你已經看到上限利率上升。我認為它可能會略有上升，因為它與開發商有關，他們在某個時間點能夠從 1031 市場獲得非常激進的上限利率，但現在基本上已經消失了。但距峰值可能僅 150 個基點。

All right. Thanks, Mark.

好的。謝謝，馬克。

(Operator Instructions) Nate Crossett, BNP.

（操作員說明）Nate Crossett，BNP。

Hey. Good morning. So lease escalation you talked about, I think it might be helpful if you just quantify what it is. Is it zero to 1%? What percent of the tenants are going to be kind of migrated over at lease escalation?

嘿。早上好。所以你談到的租賃升級，我認為如果你量化它是什麼可能會有所幫助。是零到1%嗎？百分之多少的租戶會因租賃升級而遷移？

Yeah. I think those are the retailers that we've worked with that are really trying to grow it and feeling a little bit of the pressure to be in some institutional capital or likely they kind of need to adjust what their lease terms are, whether that be the tenor or the or the lease bumps. And what we've been able to get up to now has been in some cases 1% annually and in some cases, 5% every five versus completely flat in the past.

是的。我認為那些與我們合作過的零售商確實在努力發展它，並且感受到了一些機構資本的壓力，或者他們可能需要調整他們的租賃條款，無論是期限或租賃的波動。到目前為止，我們在某些情況下每年增長 1%，在某些情況下每五年增長 5%，而過去則完全持平。

Okay. That's helpful. I don't know if you guys want to just disclose what you've closed so far in 3Q. Maybe just like what does the pipeline look like in terms of loans versus acquisitions? And then if you can just maybe talk to like the difference in current pricing between doing a loan and straight acquisition.

好的。這很有幫助。我不知道你們是否願意透露第三季度到目前為止已經關閉的內容。也許就像貸款與收購方面的渠道是什麼樣的？然後，如果您可以談談貸款和直接收購之間當前定價的差異。

Yeah, sure. So I mean, we don't usually get into what we've closed so far in the quarter. But that being said, the pipeline is very strong with a lot of opportunity out there. We're not as focused on adding loans to the portfolio. But as I said in the prepared remarks, we could consider adding some loans if that creates a path to some fee ownership of some assets that we really like at attractive pricing.

好，當然。所以我的意思是，我們通常不會討論本季度迄今為止已經結束的事情。但話雖如此，管道非常強大，有很多機會。我們並不專注於向投資組合添加貸款。但正如我在準備好的發言中所說，如果這能以有吸引力的價格為我們真正喜歡的某些資產創造一條收費所有權的途徑，我們可以考慮增加一些貸款。

Okay. And maybe just like a strategy question here. Like investment grade percentage is incredibly high now. Like do you feel like that gives you more leeway to I guess do non-investment grade stuff if the yield -- you can get a little extra yield there. Or what's the thinking on that?

好的。也許就像這裡的策略問題一樣。就像現在的投資等級百分比非常高一樣。你是否覺得這給了你更多的餘地，我想如果收益率高的話，你可以做非投資級的東西——你可以在那裡獲得一點額外的收益。或者說對此有何想法？

No, I mean -- yeah, and we're probably a little bit less dogmatic about whether something's investment grade or investment-grade profile or if it's just a credit that we really like. So we have always added properties to the portfolio that we feel really good about the operator and feel like there's not a lot of risks. So not just looking at whether it's investment grade or not investment grade. But I would expect our investment grade percentages to likely continue similar to what we've done in the past if we're just looking at the forward pipeline.

不，我的意思是——是的，我們對於某件事是投資級還是投資級概況，或者它是否只是我們真正喜歡的信用，可能不太教條。因此，我們總是在投資組合中添加我們對運營商感覺非常好的房產，並且感覺風險並不大。所以不能只看它是否是投資級別。但如果我們只關注未來的管道，我預計我們的投資等級百分比可能會繼續與我們過去所做的類似。

Okay. I'll leave it there. Thank you.

好的。我會把它留在那裡。謝謝。

Thanks.

謝謝。

Thank you. We've reached the end of the question-and-answer session, and I'll turn the call over to Mark Manheimer for closing remarks.

謝謝。問答環節已經結束，我將把電話轉給馬克·曼海默（Mark Manheimer）做總結髮言。

Thanks, everyone, for joining the call today. We appreciate everybody's time.

感謝大家今天加入電話會議。我們感謝大家的時間。

This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

今天的會議到此結束。此時您可以斷開線路，感謝您的參與。