Financial Data and Key Metrics Changes - For Q1 2025, the company reported an AFFO per share of $0.30, reflecting strong rent collections of approximately 99.5% and operational efficiencies [21][20] - The debt to annualized adjusted EBITDAre ratio finished the quarter at 5.7 times, indicating a prudent leverage approach [22] - The company reaffirmed its AFFO per share guidance for 2025 within the range of $1.20 to $1.26 [9][24] Business Line Data and Key Metrics Changes - The company acquired approximately $49.2 million in properties at an average cap rate of 7.9% during Q1 2025, with a weighted average lease term of about 12 years [4] - The company plans to acquire between $125 million and $145 million in properties during 2025, while also increasing property sales to between $20 million and $40 million [6][8] Market Data and Key Metrics Changes - The company has diversified its acquisitions across nine industries, 13 tenants, and 13 states, with investment-grade tenants accounting for approximately 29% of the annualized base rent from these acquisitions [4] - The occupancy rate at the end of Q1 2025 slightly decreased to over 96%, but is expected to return to normalized levels as replacements are filled [19] Company Strategy and Development Direction - The company is focusing on acquiring properties at historically elevated cap rates while managing its acquisition pace due to current share price and cost of capital challenges [6][9] - The strategy includes selling non-core assets and properties with shorter lease terms to replace them with longer-term leases that fit the acquisition model [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns over the current share price, which does not reflect the portfolio's value, and indicated a cautious approach to acquisitions until liquidity improves [30][33] - The management team is optimistic about the ability to quickly re-tenant properties and maximize value, demonstrating resilience in the portfolio [58] Other Important Information - The company plans to expand the detailed disclosure of its tenancies from the top 20 to the top 40 in future investor presentations [20] - The company has appointed new executives, including Randall Starr as CFO and Sean Fucamaro as Chief Accounting Officer, to strengthen its leadership team [10][11] Q&A Session Summary Question: Can you provide more details on the credit loss guidance of 2% to 3%? - Management confirmed that the guidance includes assumptions for seven vacant properties and additional vacancy expenses to reach the 2% to 3% range [27][28] Question: What is the company's strategy regarding equity issuance in the future? - Management indicated dissatisfaction with the current share price and emphasized maintaining liquidity while waiting for a potential rebound before considering equity issuance [30] Question: Have you seen benefits from properties having direct frontage? - Management affirmed that properties with direct frontage have facilitated quicker transactions and interest from buyers, contributing to efficient asset management [36][38] Question: What characteristics of properties are being targeted for recycling? - Management highlighted that shorter lease term assets are being considered for sale, with a focus on replacing them with longer-term, higher-cap rate assets [39][41] Question: How does the company plan to manage its cost of capital moving forward? - Management stated that if the current situation persists, they may explore M&A opportunities while continuing to make prudent decisions regarding the portfolio [59]

Financial Data and Key Metrics Changes - The company reported core FFO of $0.86 per share and AFFO of $0.87 per share for Q1 2025, each up 3.6% year-over-year, while annualized base rent increased over 5% year-over-year [13][14] - The NOI margin was 95.9% for the quarter, and G&A as a percentage of total revenues was 5.6% [14][17] - Free cash flow after dividends was approximately $55 million for the quarter [14] Business Line Data and Key Metrics Changes - The company successfully resolved 15 out of 35 vacant furniture stores through leasing or sale, with significant interest in the remaining properties [3] - For restaurant assets, the company gained full possession and has leased or sold 38 properties, with strong interest in the remaining 31 [3][4] - Overall leasing activity was strong with 25 renewals and eight new leases completed, achieving a blended rent recapture rate of 98% [15] Market Data and Key Metrics Changes - Occupancy at the end of the quarter was 97.7%, slightly below the long-term average of approximately 98% due to the eviction process [4][15] - The company experienced limited to no credit losses within the portfolio during the first quarter, indicating strong portfolio stability [5][12] Company Strategy and Development Direction - The company continues to prioritize acquiring well-located properties with strong national and regional tenants, supported by a robust balance sheet [9][10] - The acquisition strategy remains focused on sale-leaseback transactions, with a guidance of $500 to $600 million for 2025 [6][20] - The company is actively managing its assets to prepare for future uncertainties while maintaining a disciplined underwriting approach [5][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's ability to deliver excellent performance despite current macroeconomic uncertainties [5][12] - The company anticipates some cap rate pressure in 2025 compared to the previous year, but expects to maintain a strong acquisition pace [6][20] - Management highlighted the importance of their experienced team and strong processes in navigating economic cycles [12][13] Other Important Information - The company ended the first quarter with nearly $1.1 billion available on its $1.2 billion line of credit, reinforcing its self-funding model [8][17] - A quarterly dividend of $0.58 per share was announced, equating to a 5.4% annualized dividend yield [18] Q&A Session Summary Question: Acquisition pace in Q1 was higher than expected; can you expand on that? - Management noted that the elevated acquisition pace was primarily due to timing and relationships, with all but one transaction being sale-leaseback [23][24] Question: Expected pace of acquisitions moving forward? - Management maintained guidance of $500 to $600 million for acquisitions but expressed caution due to macroeconomic uncertainties [26] Question: Tenant appetite for growth amid economic volatility? - Tenants are reevaluating growth plans, with some deals canceled, but overall interest in growth remains [30][31] Question: Impact of tariffs on rent coverages? - Management indicated that 85% of their ABR comes from service and non-discretionary tenants, feeling comfortable about tariff impacts [32][33] Question: Concerns regarding discretionary tenants like Dave & Buster's and Camping World? - Management expressed confidence in both tenants, highlighting strong rent coverage and positive operational performance [56][60] Question: Contribution of less than expected bad debt to Q1 results? - The company reported minimal bad debt, with no notable credit loss year-to-date [63] Question: Outlook on lease termination income? - Lease termination income is unpredictable, but the company has seen elevated amounts recently due to specific tenant negotiations [71][73] Question: Performance outlook for new tenants in former Frisch's locations? - New tenants are performing well during the initial phase, with optimism for continued success [78] Question: Plans for remaining former restaurant properties? - There is interest in converting some properties to other uses, with ongoing negotiations [80]

Financial Data and Key Metrics Changes - In Q4 2024, the company reported AFFO per share of $0.33, in line with guidance, while proforma AFFO per share would have been $0.27 assuming the repayment of fixed-rate notes at the beginning of the quarter [19][20] - The net debt ratio concluded the year at 5.2 times, indicating a prudent approach to leverage and a robust balance sheet [22] Business Line Data and Key Metrics Changes - In Q4 2024, the company acquired properties worth $103.4 million at an average cap rate of 7.93% with a weighted average lease term of 11 years [6] - The portfolio consisted of 307 freestanding properties with an average remaining lease term of over seven years, maintaining strong occupancy at approximately 98% [12] Market Data and Key Metrics Changes - The company is targeting strong credit tenants in essential services, health and wellness, while avoiding casual dining and pharmacy sectors [33] - The exposure to the sit-down fast casual space decreased from 19.3% of ABR at the end of Q3 2024 to approximately 15% at the end of Q4 2024 [16] Company Strategy and Development Direction - The company aims to acquire assets at above-market cap rates, with a planned investment activity of approximately $175 million to $200 million in 2025 [9][24] - The strategy includes addressing tenant health issues and repurposing or selling troubled assets to maximize long-term value for shareholders [13][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in acquiring properties at above-market cap rates despite slight tightening in the marketplace [7][8] - The company anticipates that the majority of properties currently on the watch list will come back online by late 2025 at meaningful recovery rates [15][40] Other Important Information - The company has secured a new $250 million revolving credit facility and a $200 million term loan at favorable terms, enhancing financial flexibility [23] - A quarterly dividend of $0.215 per share has been declared for the first quarter, balancing shareholder returns with reinvestment into growth [27] Q&A Session Summary Question: Can you discuss the acquisition pipeline and cap rate trends? - Management highlighted a robust acquisition pipeline with average cap rates in the high sevens, focusing on strong credit tenants in essential services while avoiding casual dining and pharmacy sectors [32][33] Question: What is the current tenant health and bad debt guidance? - Bad debt expectations are projected to be in the 2% to 3% range for the year, primarily related to tenants on the watch list, with expectations of returning to normalcy by the end of 2025 [39][40] Question: Can you provide details on the timing of asset recovery? - Management is currently in negotiations for 12 assets, expecting a significant portion of lost rent to come back online, with a conservative estimate pushing recovery into late 2025 [44][50] Question: How does the underwriting for new leases compare with the existing portfolio? - Rental increases for new leases remain consistent with historical rates of 1.5% to 2%, with a high percentage of corporate credits among new acquisitions [52][53] Question: Who are the primary sellers of properties currently? - The company is seeing motivated sellers primarily in the private investor market, with many individual sellers facing distress in other parts of their portfolios [56][59] Question: What is the company's approach to leverage and acquisitions? - Management indicated a willingness to maintain leverage around 6 times net debt to EBITDA, monitoring share price fluctuations to guide acquisition activity [63][66]