Realty Income Corp (O) 2019 Q1 法說會逐字稿

Good day, and welcome to the Realty Income First Quarter 2019 Operating Results Conference Call.

Today's conference is being recorded.

At this time, I would like to turn the conference over to Andrew Crum, Senior Associate, Realty Income.

Please go ahead, sir.

Thank you all for joining us today for Realty Income's First Quarter 2019 Operating Results Conference Call.

Discussing our results will be Sumit Roy, President and Chief Executive Officer; and Paul Meurer, Chief Financial Officer and Treasurer.

During this conference call, we will make certain statements that may be considered forward-looking statements under federal securities law.

The company's actual future results may differ significantly from the matters discussed in any forward-looking statements.

We will disclose in greater detail the factors that may cause such differences in the company's Form 10-Q.

(Operator Instructions)

I will now turn the call over to our CEO, Sumit Roy.

Thanks, Andrew.

Welcome to our call today.

We are pleased to begin 2019 with another successful quarter.

During the quarter, we invested approximately $520 million in high-quality real estate at investment spreads well above our historical average, and we continue to see ample transaction flow that meets our investment parameters.

Subsequent to quarter end, we announced our international expansion through a GBP 429 million sale-leaseback transaction in the U.K. with Sainsbury’s under long-term triple net leases.

This represents a natural evolution of our company's strategy, and we will continue to grow our international platform as we are well positioned to capitalize on a significant addressable market in the U.K. and Mainland Europe.

From a strategic standpoint, we believe there is a dearth of large institutional buyers pursuing the quality of single-tenant net lease asset in Europe that we intend to invest in.

Given our portable size, scale and cost of capital advantages, we believe we have a unique ability to execute sizable portfolio transactions with best-in-class operators.

This transaction was relationship-driven and was completed on an off-market negotiated basis.

We look forward to further developing relationships with other industry leaders like Sainsbury’s as we expand our international platform.

Concurrent with the announcement of our sale-leaseback transaction with Sainsbury’s, we increased our 2019 AFFO per share guidance to a range of $3.28 to $3.33 from a prior range of $3.25 to $3.31.

And we increased our 2019 acquisition guidance to a range of $2 billion to $2.5 billion.

Our portfolio continues to be diversified by tenant, industry, geography and, to a certain extent, property type, which contributes to the stability of our cash flow.

At quarter end, our properties were leased to 261 commercial tenants in 48 different industries located in 49 states and Puerto Rico.

82% of our rental revenue is from our traditional retail properties.

The largest component outside of retail is industrial properties at nearly 12% of rental revenue.

Walgreens remains our largest tenant at 6.1% of rental revenue.

Convenience store remains our largest industry at 12.2% of rental revenue.

Within our overall retail portfolio, approximately 95% of our rent comes from tenants with a service, nondiscretionary and/or low price point component to their business.

We believe these characteristics allow our tenants to compete more effectively with e-commerce and operate in a variety of economic environments.

These factors have been particularly relevant in today's retail climate, where the vast majority of recent U.S. retail bankruptcies have been in industries that do not possess these characteristics.

We continue to have excellent credit quality in the portfolio, with over half of our annualized rental revenue generated from investment-grade tenants.

The weighted average rent coverage ratio for our retail properties is 2.8x on a 4-wall basis, while the median is 2.6x.

Our watch list at 1.6% of rent is relatively consistent with our levels of the first (sic) [last] few years.

Occupancy, based on the number of properties, was 98.3%, a decrease of 30 basis points versus the year ago period.

We expect occupancy to be approximately 98% in 2019.

During the quarter, we re-leased 71 properties, recapturing approximately 105% of the expiring rent.

Since our listing in 1994, we have re-leased or sold over 2,900 properties with leases expiring, recapturing over 100% of rent on those properties that were re-leased.

Our same-store rental revenue increased 1.5% during the quarter.

Our projected run rate for 2019 continues to be circa 1%.

Approximately 86% of our leases have contractual rent increases.

Let me hand it over to Paul to provide additional detail on our financial results.

Paul?

Thanks, Sumit.

I will provide highlights for a few items in our financial results for the quarter, starting with the income statement.

Effective in the first quarter, we adopted the new lease accounting guidance.

And as a result, we are now consolidating tenant reimbursement revenue within rental revenue in our income statement.

To aid financial statement users, we will continue to separately disclose the component of revenue attributable to reimbursable tenant expenses in both our 10-Q and in our financial supplement.

Our G&A expense as a percentage of revenue excluding reimbursement was 4.5% for the quarter, below our G&A expenses in the year ago quarter from both a margin basis and a dollar basis.

We continue to have the lowest G&A ratio in the net lease REIT sector and expect our G&A margin to remain below 5% in 2019.

Our non-reimbursable property expenses as a percentage of revenue excluding reimbursements was 1.3% for the quarter, which also remains ahead of our full year expectation in the 1.5% to 1.75% range.

Adjusted funds from operations or AFFO or the actual cash we have available for distribution as dividend was $0.82 per share for the quarter, which represents a 3.8% increase.

Briefly turning to the balance sheet.

We have continued to maintain our conservative capital structure, and of course, we remain one of only a few REITs with at least AA ratings.

During the first quarter, we issued $2.2 million of common equity through our dividend reinvestment and stock purchase plan.

Note that we entered 2019 with a very low leverage after issuing almost $540 million of common equity in the fourth quarter of 2018.

We finished this quarter with a debt-to-EBITDA ratio of 5.5x, and we ended the quarter with approximately $2.2 billion available on our credit line.

Our fixed charge coverage ratio increased from 4.4x to 4.5x.

The weighted average maturity of our bonds is approximately 8.5 years, which closely tracks our weighted average remaining lease term.

And our overall debt maturity schedule remains in excellent shape with only $19 million of debt coming due the remainder of 2019.

And our maturity schedule is well laddered thereafter with just over $300 million of debt maturing in both 2020 and 2021.

In summary, our balance sheet is in great shape, and we continue to have low leverage, strong coverage ratios and excellent liquidity.

Now let me turn the call back over to Sumit.

Thanks, Paul.

I'll now move to our investment activity during the quarter.

During the first quarter of 2019, we invested approximately $520 million in 105 properties located in 25 states at an average initial cash cap rate of 6.7% and with a weighted average lease term of 17 years.

On a revenue basis, approximately 31% of total acquisitions are from investment-grade tenants.

98.7% of the revenues are generated from retail.

These assets are leased to 25 different tenants in 14 industries.

Some of the most significant industries represented are health and fitness, automotive services and grocery stores.

We closed 25 discrete transactions in the first quarter.

Transaction flow continues to remain healthy as we sourced approximately $11.7 billion in the first quarter.

Investment-grade opportunities represented 31% of the volume sourced for the first quarter.

Of the opportunities sourced during the first quarter, 53% were portfolios and 47% or approximately $5.4 billion were one-off assets.

Of the $519 million in acquisitions closed in the first quarter, 42% of the volume were one-off transactions.

As to pricing, cap rates have essentially remained unchanged in the first quarter.

Investment-grade properties are trading from around 5% to high 6% cap rate range, and non-investment-grade properties are trading from high 5% to low 8% cap rate range.

Our investment spreads relative to our weighted average cost of capital were healthy, averaging approximately 261 basis points in the first quarter, which were well above our historical average spread.

We define investment spreads as initial cash yield less our nominal first year weighted average cost of capital.

Our domestic investment pipeline remains robust, and we continue to see a steady flow of opportunities that meet our investment parameters.

We remain the only publicly traded net lease company that have the size, scale and cost of capital to pursue large corporate sale-leaseback transactions on a negotiated basis.

During the first quarter, approximately 50% of our acquisitions were sale-leaseback transactions, and we continue to identify strong corporate partners for future sale-leaseback transactions.

As previously mentioned, due to the strength in our current domestic investment pipeline as well as our international expansion, we have raised 2019 acquisition guidance to a range of $2 billion to $2.5 billion.

Our disposition program remains active.

During the quarter, we sold 18 properties for net proceeds of $21.4 million at a net cash cap rate of 9.5% and realized an unlevered IRR of 5.4%.

The low IRR on our disposition activity during the quarter was primarily driven by one sale of vacant property previously leased to a sporting goods retailer.

Absent this disposition, our IRR on dispositions during the quarter was 7.2%.

We continue to improve the quality of our portfolio through the sale of nonstrategic assets, recycling the sale proceeds into properties that better fit our investment parameters.

We continue to anticipate between $75 million and $100 million of dispositions in 2019.

In March, we increased the dividend for the 101st time in our company's history.

Our current annualized dividend represents a 3% increase over the year ago period and equates to a payout ratio of 82.1% based on the midpoint of 2019 AFFO guidance.

We have increased our dividend every year since the company's listing in 1994, growing the dividend at a compound average annual rate of 4.6%.

We're proud to be 1 of only 5 REITs in the S&P High Yield Dividend Aristocrats index.

To wrap it up, we completed another strong quarter.

Our portfolio continues to perform well.

Our investment pipeline remains robust, and we're excited about the company's next chapter as we continue to pursue new opportunities for growth, both domestically and internationally.

At this time, I would like to open it up for questions.

Operator?

(Operator Instructions) We will now take our first question from Christine McElroy of Citi.

So given that ATM issuance was pretty light in Q1 relative to your normal pace, wondering if you were in a quiet period given the timing of the Sainsbury deal.

And would you expect it to pick up again now that the deal has been announced?

And maybe have you issued any equity post the announcement?

Good question, Christy, and you're spot on.

Because of the nature of the transaction with regards to Sainsbury's, we were in a blackout period.

And so that was the primary reason.

The second and equally important reason was in the fourth quarter, we had over-equitized our balance sheet in anticipation of this particular transaction.

So even at the end of the quarter, if you look at where the balance sheet is, it's 5.5x debt-to-EBITDA with a north of 4.6x coverage on a fixed-charge basis, it leaves the balance sheet in a very good stat.

So with regards to capital raising, all avenues are open to us, and we will propitiously choose the best available avenue going forward.

But those were the primary reasons.

Okay.

And then just looking at the occupancy rate, it ticked down a bit.

Any main drivers of that, that we should be thinking about?

And maybe comment on sort of what the outlook looks like for the rest of the year.

I think you said 80% -- or I'm sorry, 98%.

But I wasn't sure if that was sort of a year-end number or an average number.

Yes.

Again, good question.

This too was anticipated, which is why if you look at what we guided The Street and which is what's reflected in our earnings guidance, we had guided The Street to a 98% occupancy number.

We had 101 leases expiring in the first quarter, which was disproportionately high.

And for the remaining 3 quarters, we've got 158 leases expiring.

So we anticipated that the 98.8% was going to come down.

And we've always shared with the market that we believe our frictional occupancy is right around that 2% zip code.

And so having an occupancy number at 98% is what we forecast and is what we believe we're going to be running our business at.

Okay.

And then if I could, just one last quick one.

Paul, I thought I heard you mention that you'll continue to disclose the revenue component breakout in the Q also.

I'm just curious, will that be in the footnotes or in the MD&A?

So you can see it right now, by the way, in the supplement so that you have it immediately, at the bottom of the..,

Right, right.

No.

We have it in the supplement, yes.

I'm just curious about what the -- in terms of the Q, what the SEC and FASB had guided to you in terms of allowing that in the Q.

It will be in our MD&A.

Our next question comes from Nick Yulico of Scotiabank.

I guess I was just wondering in terms of -- when you look at the retail industry in the U.S. Has your thinking evolved on drugstore exposure given what seems like a little bit tougher operating environment more, are there any other industries where you might be making more or less of a capital investment based on some changes in the retail environment?

Good question, Nick.

This is a question that we often get asked based on our exposure to the drugstore industry.

It continues to be our second largest industry exposure.

And it's primarily driven by 2 operators: Walgreens and CVS.

And if you look at Walgreens, for instance, they're generating north of $5 billion in free cash flow.

If you look at CVS, it's one of the best operators out there in the drugstore industry.

We are very positive with the drugstore business.

Is it going through some changes?

Absolutely.

But we believe that, by and large, these 2 operators are very well positioned to take advantage of these changes that we see unfolding before our eyes, some of which the answers are not very clear.

What does the drugstore layout of the future look like today?

It's not very clear.

But what is clear is both CVS as well as Walgreens have made it part of their strategy to figure out how to optimize their stores.

If you look at the pharmacy same-store sales growth, they continue to comp positive, both for CVS as well as for Walgreens.

And what they're trying to figure out is what to do with the remaining 2/3 of the footprint.

And there are experiments underway as to how to optimize that.

On the retail side, on the front end, is it -- should they be focusing more on beauty products?

And that has a much higher margin, and that continues to be a subsegment that continues to do well.

And the rest of the footprint, they are trying to figure out how to provide services.

That was one of the genesis, stated reasons as to why CVS and Aetna merged, is how do we provide health care services both for acute as well as chronic illnesses using the footprint that is already available.

Another thesis that they had is being closer to the consumer, they believe, will be the best way to lower the cost of delivering health care.

And not all of that has played out, but they're certainly experimenting with different formats, et cetera.

And we believe these are the 2 operators that will continue to do well and will figure it out eventually.

Okay.

That's helpful.

And then I guess just in terms of any subsectors within retail where you're -- you would like to have less exposure.

Yes.

Look, casual dining continues to be an area that we focus on.

It used to represent a very large portion of our portfolio 10 years ago.

And today, it's right around 4%, sub-4%.

And the ones that we are exposed to, by and large, we are very happy with.

But that is an area that we continue to be very cautious and an area that we continue to focus on very closely.

Anything that falls in the discretionary bucket of retail, from furniture stores to other types of discretionary product like sporting goods, et cetera, those are, again, industries that we are very, very cautious in looking at and certainly trying to invest in.

And then there are certain other asset types that are much more either demographically driven such as childcare centers.

We like the childcare business.

But the format of the 1980s, which worked and have been cash flow positive for us and we've gone full cycle, the demographics have shifted in the neighborhoods where some of these concepts seemed to have worked 20 years ago but don't seem to work today.

Those are assets that we have on our watch list and are looking to dispose off and at very good total return profiles.

A similar story with regards to the format are the kiosk C-stores.

We love the C-store business, but we like the 3,000-plus square foot convenience store business.

And the ones that have these kiosks that essentially sell lottery tickets and tobacco products are ones that we are actively trying to dispose off.

So that's the area that I would say that we are either trying to minimize our exposure to or not invest in at all.

Just one last question, if I may.

On the leasing activity page in the supplement you have, where you give the recapture rate, could you give a little bit more detail on the 4 leases where you had essentially about a 30% markdown in rents?

And it says it was without vacancies.

So I guess I'm just wondering why, if you had a tenant, why you re-leased it at the lower rent.

Well, those are the ones where the tenant decided not to stay.

And for us, you're always looking at those assets and trying to come up with the economic scenario of selling those assets vacant or re-leasing it.

And it is not atypical, if you go back and look at our supplemental, to have assets that have -- even with 0 vacancy lease rates that are sub-100%.

So the fact that this was right around 70% doesn't really drive the overall profile.

We still came out at 105% recapture rate.

And as you can see, it's largely driven by leases with tenants that choose to exercise the existing options.

And for us, that's really the crux of what we are trying to underwrite, is to make sure that the retail product continues to be of relevance to the existing tenant because they exercise those options.

Those options tend to have growth in them, and that is the best way for us to recapture a positive spread with, almost always, $0 of additional investment.

But in situations where we have had vacancy or even with no vacancy, when you're trying to attract new tenants, sometimes, taking a 30% drop in recapture rate proves out -- or at least to our analysis, proves it to be a much better economic outcome than trying to sell those assets vacant.

And that's the story behind that.

Our next question will come from Rob Stevenson of Janney.

Just a follow-up on Nick's question.

So there's roughly 100 vacant assets in the portfolio.

I mean what's the sort of mix between what you guys expect to re-tenant versus marked for sale?

It's being roughly -- if you look at it, historically speaking, 80% of every lease that comes up for renewal gets exercised by the existing tenant.

I would say 10% to 15% of the remaining leases, we end up leasing to new tenants; and 5% to 10%, we end up selling.

More recently, that mix has shifted.

We are tending to dispose off assets, vacant assets, because we feel like the economic recapture rate is superior to going down the path of re-leasing it, and for Nick's question, re-leasing it at levels that don't make a lot of sense.

And in some cases, we are holding on to vacant assets, and this is where some of our active asset management comes into play because we believe we can reposition those assets and actually recapture well north of the expiring rent.

But that does take time, and -- which is why we have said that our frictional vacancy rate is right around that 2% because we are more than happy holding onto these assets and repositioning them and potentially holding them for 18 months to 2 years because we believe that the economic outcome in those scenarios is superior to either re-tenanting it as is or selling it vacant.

Okay.

And then what's your thoughts on adding casinos or hotel assets in the portfolio?

Good question.

There are players in our space that are dedicated to pursuing casinos.

We feel like they're very well suited to pursue that strategy.

We obviously monitor the asset type, but we really don't have a thesis at this point as to whether we can do anything about entering into that front.

And the hotels as well?

Yes.

I would put both of them in the same bucket.

Our next question will come from Collin Mings of Raymond James.

Last week, you provided a lot of detail on the opportunity to grow in Europe.

Just as you evaluate where you want to take your international platform, where could Canada fit in?

Are you evaluating any opportunities there as well?

We've always looked at Canada.

We've looked at countries south of the border as well, and we have not been able to pencil the economics.

And the product that is available in these alternative geographies haven't been the ones that we have wanted to pursue based on the economic profile.

But look, I mean one of the main reasons why we wanted to provide all that detail, Collin, was to make sure that you understood the thesis behind why we chose to go into the U.K. and potentially into Mainland Europe.

And it's because the economics do pencil, and in fact, they pencil very well, especially given the current environment, and the product lends itself to what it is that we've been pursuing here in the U.S. And so this is truly the way we think about -- if you're going to change anything or if you're going to introduce any level of new paths for us to pursue, it needs to sort of be along the lines of what we have presented as to why we chose the Sainsbury’s portfolio.

And so this was a long and drawn-out way of answering that, yes, Canada certainly is one of the countries that we have looked at in the past.

And if the right product with the right economic profile comes along, we will absolutely pursue it, but we haven't been able to find one yet.

Okay.

It doesn't sound like there's any bigger push now that you've established an international platform necessarily to go in that direction.

Is that fair?

It's -- now that we've done it, more people are aware of the fact that we are open to doing it.

So I would say that that's not entirely fair, Collin.

We are certainly getting a lot more inbound calls, as was expected, and transactions, perhaps, that we may not have seen because people weren't aware that we were a potential player in the past.

That dynamic has changed, which was completely expected, and the team here is ready to respond to those calls.

So time will tell.

Great.

That's actually a very helpful clarification there.

Just switching to investment activity during the quarter.

There really weren't huge moves in your top tenant roster just on -- as far as the Dollar General property, obviously, that was up somewhat notably.

Maybe just take a second and kind of -- if there's any additional color you can provide there and then talk about just dollar store exposure overall at this point.

Yes.

A lot of it was parts of small portfolios that we acquired.

We continue to like Dollar Tree and Dollar General.

Both of those are operators that's filling a very specific mission in the market, and they are both outstanding operators in our mind.

Dollar Tree has taken a bit longer than any of us had expected to sort of unfold Family Dollar, but that is now well on its way.

And all signs are that those are the 2 operators that we want to continue to partner with.

Having said that, I think our exposure to that business is right around 5.2%.

And will we propitiously grow that piece?

Absolutely.

With the right rents, with the right growth profile, we will absolutely continue to look to grow that.

But we are not going to actively pursue these development-driven Family Dollar, Dollar General, Dollar Tree assets because those tend to not be the type of assets with the right type of leases in terms of the triple-net nature that we like to pursue.

Our next question will come from Karin Ford of MUFG Securities.

I was wondering, Sumit, should we still expect to see you broaden your verticals out in the U.S. this year?

Or do you feel like you have enough on your plate with the international initiative that you announced?

I'm smiling, Karin.

Last week, we came out with something huge, and our hope is that we will continue to explore.

And the timing is what remains uncertain as to whether that's going to be next quarter or next month or maybe even a year from now that we come up with something different.

This international foray is a big step for us.

It does increase the potential market from $4 trillion to potentially $12 trillion now.

And we want to make sure that we do this right on the international front.

But that certainly does not preclude us from continuing to explore some of other paths that we have been exploring over the last 3 months.

And if something does take shape and becomes actionable and we decide to pursue it, we will, again, do something similar to what we did last week and come and share that with you.

But I can't really tell you what the timing on some of those other avenues are going to be.

And I think I have been asked this question before as to why not, and the answer is pretty obvious because some of these avenues that we're pursuing today, we may choose not to after we've done our diligence and all the product doesn't lend itself to those avenues, even if the avenues seem to theoretically make a lot of sense.

So that's how I'd answered that question, Karin.

Understood.

Appreciate that.

Second question is along the same lines.

You've generated very consistent FFO and dividend growth over the years with below-average volatility.

Is one of the goals of the new strategic initiative to push earnings growth higher than it has been historically?

No.

Look, I think our only goal was to continue to look at expanding the potential viable investment set.

The idea here is to not compromise on either our balance sheet strategy or the types of businesses that we are pursuing, with the profile of the businesses that we're pursuing.

I mean those remain intact, Karin.

I think most people who invest in us, they invest in us because of the fact that we have this low-vol, dependable growth business.

And I don't think we are going to compromise on that particular front.

But that does not preclude us from looking at new avenues of growth.

That sort of lends itself to this profile that we've designed for ourselves.

And there is, in certain products, we believe, a mismatch, where the perception may be that it tends to be higher risk or higher volatility.

And if we're asked to then -- if we decide to pursue that, it is on us to then show to you why we believe that it sort of falls in line with the profile that we've designed for ourselves.

So for us, growth is really an output of this exercise rather than the driver of this exercise.

And that is nuanced but something very, very important to us.

(Operator Instructions) Our next question will come from John Massocca of Ladenburg Thalmann.

So IG-rated -- investment grade-rated assets as a percentage of acquisitions came down or was a little bit low this quarter maybe versus kind of what you've done, say, in the first 9 months of 2018.

Was this a similar situation to 4Q '18, where it was just the mix and there's a lot of assets in there that just simply aren't rated?

Or was there maybe a better risk-adjusted return you felt you were getting by going after sub-investment-grade-rated companies?

Yes.

I would say that a lot of them fell into this non-rated bucket.

And given our conservative nature, we obviously do our own underwriting to figure out what the implied rating would be if they were to be rated.

But we categorized them as sub-investment grade for your purposes.

And so, look, again, people have often said we only pursue investment grade-rated tenants.

That is -- and we compromise on growth and on initial yield, but that has never been what we've done.

Again, this is an output of the strategy that we have put in place, and it just happens to be that a lot of the assets that we closed on in the first quarter have a profile that, again, low-vol, predictable business models that have high drop to breakeven sales if it's a variable cost business.

Or sorry, I said it the opposite way.

And that is very important to us.

But just because we had a 30% investment grade-rated tenants in the first quarter, that really was the output of the types of products that we ended up closing on.

But the industry -- and we've shared that with you.

The industries that they belong to, the tenants that they happen to be, these are tenants that are very high-quality.

And somebody mentioned Life Time Fitness.

That's a business that we really like.

And we have well north of -- the coverage ratios, rent coverage ratios that our overall portfolio has.

And their breakeven and drop to sales is over 40%.

But yet, that's going to fall in the non-investment-grade-rated bucket because it's a private company that doesn't have a rating.

So I wouldn't look anything into that particular number.

It is going to continue to move around.

And a perfect example will be Sainsbury next quarter.

It's a non-rated company.

But if you run the metrics through the S&P credit model, which is what we did, it would be rated investment-grade.

But there again, that's a very large transaction that is going to not have the investment grade.

It won't be part of that investment-grade profile.

Hopefully, that helps.

No, that makes complete sense.

And then can you maybe provide a little color on any tenant credit-driven vacancy in the quarter?

If I heard you right, you had 101 leases expire.

If I kind of look on Page 21 of the supp, that would kind of imply there were around 10 or so assets that were vacant because of -- not because of expiring leases but because of tenant credit.

What drove that?

I know it's not a huge number, but just any color there would be helpful.

Sure.

Happy to address that.

We have 8 Shopko assets, and these were largely second-generation assets for us.

And few of those 10-odd came from the Shopko assets.

And we expect most of them to come back to us.

But it is, I want to say, 17 basis points of rent, so completely immaterial, but those definitely drove some of that 101 vacancies.

Our next question will come from Karin Ford of MUFG Securities.

Just one quick one for Paul.

Any plans to refinance the line balance later on this year with a bond deal?

And are you considering a commercial paper program or forward equity?

Yes.

Well, as Sumit commented earlier, we -- obviously, given the news of Sainsbury's, we felt compelled to not issue new capital in Q1, thinking that, that was material information for a potential equity investor, for example.

In addition, we had raised a fair amount of capital end of last year.

So we sit here today with that $800 million-plus balance, but it is a $3 billion line, so we have plenty of liquidity.

We don't feel compelled per se relative to a need for capital, relative to our acquisition pipeline in the near term or anything of that sort.

And all forms of capital are available to us, so equity, bonds.

Each are really well priced right now.

Bonds are something, let's say, by year-end, we would certainly be considering as part of the mix.

Typically, our mix is going to be 2/3-plus of equity and the remainder, thinking about unsecured bonds.

So we could definitely see that as part of it.

And relative to commercial paper, it's kind of on that list of new ideas that we're looking into and considering.

And it's something, I think, is very possibly part of our future, but you won't see it in the immediate near term.

This concludes the question-and-answer portion of Realty Income's conference call.

I will now turn the call over to Sumit Roy for concluding remarks.

Well, thank you, everyone, for joining us today.

We look forward to seeing everyone in a few weeks at ICSC and the summer at Nareit.

Thank you, everyone.

This concludes today's conference.

Thank you for your participation.

You may now disconnect.