Financial Data and Key Metrics Changes - The company achieved a 5.7% growth in AFFO for 2025, which is among the best in the net lease industry, reflecting strong performance and record investment activity [3][12] - AFFO per share for Q4 was $1.27, a 5% increase year-over-year, while the full year AFFO totaled $4.97 per share [12][14] - The total return for shareholders was 25% for the year, placing the company in the top tier of publicly traded REITs [3] Business Line Data and Key Metrics Changes - The company allocated 68% of its investment volume to warehouse and industrial sectors, with retail accounting for 22% [6] - The average cash cap rate for investments was 7.6%, translating into an average yield just above 9% over long-term leases averaging 17 years [5][12] - Contractual same-store rent growth averaged 2.4% for both Q4 and the full year, with CPI-linked rent escalations averaging 2.6% [14][15] Market Data and Key Metrics Changes - 26% of the investment volume was in Europe, while 74% was in North America, predominantly in the U.S. [6] - The company expects cap rates to be incrementally lower in 2026, anticipating going-in cap rates in the mid- to low-7% range [10][41] Company Strategy and Development Direction - The company aims to continue generating higher investment volumes, with an initial investment volume guidance range of $1.25 billion to $1.75 billion for 2026 [10][19] - The Carey Tenant Solutions platform is expected to enhance the company's capabilities in build-to-suit and redevelopment projects, with a focus on increasing the volume of such projects [9][52] - The company is targeting to increase retail investments to 25%-30% of annual deal volume, focusing on tenant credit and lease structure [33] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining high levels of investment activity and delivering attractive AFFO growth in 2026, supported by strong funding positions and a sizable investment pipeline [8][29] - The company is taking a conservative approach to rent loss estimates, projecting $10-$15 million for 2026, while not seeing any material changes in credit quality across the portfolio [17][87] - The company anticipates portfolio occupancy to remain over 98% through a combination of releasing and dispositions [17] Other Important Information - The company successfully refinanced its euro-denominated term loan, locking in an attractive all-in rate below 3% [7] - The company ended the year with liquidity totaling $2.2 billion, including cash on hand and unsettled forward equity [27] - The quarterly dividend was increased by 4.5% year-over-year to $0.92 per share, supported by a payout ratio of approximately 73% [27] Q&A Session Summary Question: Expansion in U.S. retail and targeted categories - Management confirmed that retail accounted for about 22% of deal volume in 2025, with plans to increase this to 25%-30% [33] Question: Industrial asset types and competition - Management indicated that industrial remains a core part of the business, focusing on manufacturing and logistics, with expectations of cap rate tightening [40][41] Question: Development risks associated with Carey Tenant Solutions - Management explained that development risks are mitigated through fixed-price contracts and guaranteed rent start dates [52][53] Question: Credit loss estimates and portfolio management - Management stated that the $10-$15 million range for credit loss is a conservative estimate with no specific concerns in the portfolio at the moment [87] Question: Debt refinancing and overall debt composition - Management confirmed that they have flexibility in refinancing upcoming bonds and will likely replace them with unsecured debt in the same currencies [88][93]

Financial Data and Key Metrics Changes - For Q4 2025, the company reported net income of $1.3 million, or $0.02 per diluted share, with core FFO of $26.6 million, or $0.31 per diluted share, and AFFO of $28.2 million, or $0.33 per diluted share, reflecting a 3.1% increase over the previous year [13] - For the full year 2025, net income was $0.08 per diluted share, core FFO was $1.23 per diluted share, and AFFO was $1.31 per diluted share, representing a 4% growth over 2024 [13] - The company achieved a pro forma leverage of 3.8 times and maintained a strong balance sheet with $1 billion in total liquidity at year-end [9][16] Business Line Data and Key Metrics Changes - The company completed $245.4 million of gross investments in Q4 2025, the highest quarter on record, with a blended cash yield of 7.5% and a weighted average lease term of 15 years [5] - For the full year, gross investments reached a record $657.1 million at a 7.5% blended cash yield, with a weighted average lease term of 13.9 years [6] - The company added 15 new tenants in Q4 and 31 new tenants for the full year, demonstrating a focus on diversification [7] Market Data and Key Metrics Changes - The company ended the quarter with investments in 758 properties leased to 129 tenants across 28 industries in 45 states, with 58.3% of total ABR leased to investment-grade or investment-grade profile tenants [9] - The weighted average lease term remaining for the portfolio was 10.1 years, with only 2.4% of ABR expiring through 2027 [9] Company Strategy and Development Direction - The company plans to focus on opportunistic sales and risk mitigation in 2026, expecting to sell fewer assets compared to 2025 [10] - The company aims to maintain a diversified portfolio, with Walgreens representing less than 2% of ABR by the end of 2026 [10] - The company is targeting net investment activity between $350 million and $450 million for 2026, with a continued focus on grocery, fitness, convenience stores, and quick-service restaurants [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to find well-priced, high-quality investment opportunities, with a strong pipeline and improving cost of capital [8] - The company anticipates achieving the upper end of its AFFO per share guidance range for 2026, which is set at $1.35-$1.39, reflecting a year-over-year growth of 5% at the midpoint [17] - Management noted the importance of understanding consumer behavior, particularly in the context of a K-shaped economy, and emphasized the need to be cautious with discretionary spending [80] Other Important Information - The company received an investment-grade rating of BBB- from Fitch Ratings, improving access to debt and allowing for tighter spreads [8] - The board declared a quarterly cash dividend of $0.22 per share, a 2.3% increase from the previous quarter [17] Q&A Session Summary Question: How is the company balancing tenant credit and yield in capital deployment? - Management noted that they are seeing better risk-adjusted returns in the non-rated bucket and are focusing on strong cash flows from selected tenants [20][22] Question: What is the level of confidence in reaching the upper end of the acquisition rate and AFFO guidance? - Management expressed confidence in hitting the high end of the acquisition guide, especially with fewer property sales expected this year [25][27] Question: Are there any guidelines on equity issuance and treasury solutions? - Management indicated that they do not need to raise equity at the moment and have a de minimis amount of equity baked into the model [33] Question: How does the company view the competitive landscape for net lease assets? - Management stated that competition has not significantly impacted pricing, and they continue to see attractive opportunities in their target market [63] Question: What are the expectations for new rent versus expiring rent? - Management expects most leases to be renewed, with only one property anticipated not to be renewed [58] Question: How does the company view troubled tenants or categories in the retail space? - Management indicated that they are monitoring the portfolio closely and do not see significant issues with current tenants, focusing on necessity-based retail [80][82]

Financial Data and Key Metrics Changes - The company reported a net income of $621,000 or $0.01 per diluted share for the third quarter [4] - Core FFO for the quarter was $26.4 million or $0.31 per diluted share, while AFFO was $28 million or $0.33 per diluted share, reflecting a 3.1% increase over the previous year [4] - Total recurring G&A expenses increased year over year to $5.1 million due to normalized staffing levels after restructuring [4] Business Line Data and Key Metrics Changes - The company maintains an industry-leading occupancy rate of 99.9% with no material tenant disruptions [2] - The portfolio generates over 62% of its ABR from tenants with investment grade ratings or profiles, with only 2.7% of ABR expiring through 2027 [2] Market Data and Key Metrics Changes - The company completed a follow-on offering of 12.4 million shares in July, raising $209.7 million in net proceeds [5] - Total liquidity at quarter end was over $1.1 billion, consisting of $53 million in cash, $500 million available on the revolving credit facility, and $150 million of undrawn term loan capacity [5] Company Strategy and Development Direction - The company focuses on accretive investments in high-quality, necessity-based retail properties, emphasizing tenant quality and diversification [3] - The company is increasing its net investment activity range to $350 to $400 million from a prior range of $125 to $175 million for 2025 [5] - The company plans to opportunistically sell some assets to address potential credit issues [9] Management's Comments on Operating Environment and Future Outlook - Management noted softness in the lower and middle-income consumer segments and some noise in private credit markets but remains focused on high-quality investments [3] - The company expects to see a robust opportunity set for acquisitions going forward, driven by improved cost of capital and favorable market conditions [39] - Management anticipates that cap rates may compress slightly, with a potential decrease of 10 basis points expected [10][43] Other Important Information - The company had no credit losses in the quarter, maintaining best-in-class credit loss statistics [2] - The board declared a dividend on October 24, although specific details were not provided in the call [6] Q&A Session Summary Question: Insights on the most attractive opportunity set - Management indicated they are focusing on convenience stores, quick service restaurants, and grocery assets, with expectations for increased dispositions in the future [8] Question: Factors affecting 2025 AFFO per share outlook - Management explained that the timing of investment activities and treasury stock dilution uncertainty impacted the guidance, despite significant activity in the quarter [14] Question: Competition from private equity - Management noted that while private equity is entering the market, their focus on larger transactions does not significantly impact the company's strategy [32] Question: Update on auto parts exposure - Management reassured that recent bankruptcies in the auto parts sector are not expected to impact their tenants significantly [51] Question: Changes in lease structures due to competition - Management stated that there have been no significant changes in lease structures, with institutional capital seeking similar terms as public peers [55] Question: Strategic plans for reducing dollar store exposure - Management confirmed that they have made significant progress in reducing exposure to dollar stores and are being selective with pricing in the pharmacy sector [34]