Financial Data and Key Metrics Changes - The company reported net income of $1.7 million or $0.02 per diluted share for the first quarter of 2025 [12] - Core FFO for the quarter was $24.6 million or $0.30 per diluted share, and AFFO was $26.2 million or $0.32 per diluted share, representing a 3.2% increase over the previous year [12] - Total recurring G&A increased by 5% year over year to $5.1 million, but represented 11% of total revenues compared to 13% in the prior year [12] Business Line Data and Key Metrics Changes - The company completed $90.7 million of gross investments at a blended cash yield of 7.7% during the quarter [4] - The weighted average lease term for these investments was 9.2 years, with 66% of ABR from investment grade and investment grade profile tenants [5] - The top five tenant concentration declined by 70 basis points to 28.2% of ABR, with the top tenant Dollar General reduced by 50 basis points to 8.1% of ABR [6] Market Data and Key Metrics Changes - The company ended the quarter with investments in 695 properties leased to 101 tenants across 26 industries in 45 states [5] - 71% of total ABR is leased to investment grade or investment grade profile tenants, with a weighted average lease term remaining of 9.7 years [6] Company Strategy and Development Direction - The company aims to reduce tenant concentrations and diversify its portfolio while maintaining a low leverage balance sheet [4] - The management is prepared to accelerate investment activity if there is a sustained improvement in the cost of equity [5] - The focus remains on necessity, discount, and service-oriented industries, which account for 88% of ABR, to weather economic downturns [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving diversification goals and noted strong demand for properties despite economic uncertainties [8] - The company has maintained zero credit losses during COVID and continues to perform well despite negative headlines in the industry [9] - Management remains cautious about growth, emphasizing that they will not sacrifice the balance sheet for growth [11] Other Important Information - The company declared a quarterly cash dividend of $0.21 per share, payable on June 16, with an AFFO payout ratio of 66% for the first quarter [16] - Adjusted net debt was reported at $724 million, with a weighted average interest rate of 4.57% [14] Q&A Session Summary Question: Update on appetite for pharmacy and dollar stores - Management expects to reduce exposures to Dollar General and Walgreens below 5% by year-end, with strong interest from institutional buyers [18][19] Question: Expectations for ratings upgrade - Preliminary discussions for a ratings upgrade are planned for the latter half of the year, with potential savings of at least 30 basis points on debt [21][24] Question: Clarification on net investment activity - Management indicated that they would not increase acquisitions unless there is a change in equity price, maintaining a capital recycling strategy [27][28] Question: Update on Big Lots asset in Maryland - There is significant interest from retailers, and management is negotiating attractive LOIs while waiting for market dynamics to play out [34][35] Question: Impact of Walgreens take-private on risk profile - Management believes the take-private will not change the risk profile of Walgreens assets, as the focus will be on retail operations [37] Question: Expectations for portfolio changes and cap rates - Dispositions are expected to occur at mid to high 6% cap rates, while acquisitions will likely remain above 7.5% [45][46] Question: New store opening appetite - Tenants are still in growth mode, but uncertainty due to tariffs is causing some hesitation in decision-making [72][75] Question: Impact of tariffs on tenants - Tariffs have created confusion but are not expected to significantly impact tenant credit quality [103] Question: New tenant relationships in acquisitions - The company added three new tenants in the quarter, indicating ongoing diversification efforts [107]