Financial Data and Key Metrics Changes - In Q3 2025, the company reported an AFFO per share of $0.48, representing a 12% increase compared to Q3 2024 [13] - Total AFFO for the quarter was $96.2 million, up 24% from the same period in 2024 [13] - The company increased its 2025 AFFO per share guidance to a range of $1.87 to $1.89 and established initial 2026 guidance of $1.98 to $2.04, implying a growth rate of 6% to 8% [7][19] Business Line Data and Key Metrics Changes - The company executed $370 million in investments during the quarter, with a weighted average initial cash yield of 8% and a strong average gap yield of 10% [5][11] - Same-store rent growth was reported at 1.6%, an increase from 1.4% in the previous quarter, with overall portfolio rent coverage increasing to 3.6 times [6][9] - The percentage of annual base rent (ABR) under one times rent coverage declined by 120 basis points [9] Market Data and Key Metrics Changes - The company ended the quarter with investments in 2,266 properties leased to over 400 tenants, maintaining a weighted average lease term of approximately 14 years [8] - The company sold seven properties for $11.5 million in net proceeds, executed at a 6.6% weighted average cash yield [10] Company Strategy and Development Direction - The company continues to focus on middle-market sale-leasebacks with growing operators, highlighting a balanced investment sourcing strategy [5] - The company aims to maintain a well-capitalized balance sheet with low leverage and significant liquidity to support growth and tenant relationships [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the investment market and capital markets, noting that the interest rate environment is more stable, contributing to lower cap rates [23][46] - The company anticipates modest cap rate compression in the coming quarters, driven by a stable interest rate environment [7][28] Other Important Information - The company successfully executed a $400 million 10-year unsecured bond offering with a 5.4% coupon, improving its weighted average debt maturity by approximately 18% to 4.5 years [16] - Cash G&A expenses were approximately $6.7 million for the quarter, consistent with the guidance range for the full year [14] Q&A Session Summary Question: Expectations for cap rates going forward - Management indicated that lower cap rates are expected due to a stable interest rate environment and a strong pipeline of sale-leaseback opportunities [23] Question: New industrial assets and future expectations - The company has been investing in industrial outdoor storage sites and expects to continue this trend, focusing on granular, fungible assets [25] Question: Cap rate expectations and guidance - Management confirmed that cap rate assumptions are similar to the previous year, with expectations for a modest downtick [35] Question: Credit loss assumptions for 2026 - Management stated that credit loss assumptions for 2026 are consistent with previous years, based on a deep dive into the portfolio [74] Question: Update on tenant credit watch list - The watch list currently sits at 1.2 times coverage, down 40 basis points quarter over quarter [68] Question: Differences in yields between retail and industrial properties - Management noted that there is no significant differentiation in cap rates across property types, with expectations for compression across the entire opportunity set [85]

Financial Data and Key Metrics Changes - The company reported an AFFO per share of $0.46, representing a 7% increase compared to Q2 2024 [18] - Total AFFO for the quarter was $93 million, up 21% from the same period in 2024 [18] - General and administrative expenses increased to $10.7 million from $8.7 million year-over-year, primarily due to increased compensation expenses [19] - The company declared a cash dividend of $0.30, resulting in an AFFO payout ratio of 65% [19] - Income-producing gross assets reached $6.6 billion at quarter end [20] Business Line Data and Key Metrics Changes - The company invested $334 million in the second quarter at a weighted average cash yield of 7.9% [11] - The investment activity was broad-based across most top industries, with a weighted average initial lease term of 19.5 years and a weighted average annual rent escalation of 2.2% [11] - Same store rent growth was reported at 1.4% with an occupancy rate of 99.6% [14] Market Data and Key Metrics Changes - The company closed $642 million of investments in the first half of the year and increased its full-year investment guidance range to $1 billion to $1.2 billion [8] - The weighted average lease term remained at 14 years, with 4.9% of annual base rent expiring over the next five years [8] Company Strategy and Development Direction - The company focuses on middle market sale leasebacks with growing operators in targeted industries, emphasizing the importance of recurring business with its tenant base [6] - The company expects investment cap rates to trend lower in 2025 due to anticipated competition as capital markets normalize [7] - The company aims to maintain a well-capitalized balance sheet with low leverage and significant liquidity to support external growth [22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the operating environment, noting strong tenant credit trends and healthy same store rent performance [6] - The company remains optimistic about its investment pipeline and the overall performance of its portfolio [24] - Management indicated that while competition may increase, the company continues to have ample opportunities and a strong capital position [36] Other Important Information - The company sold 23 properties for $46.2 million in net proceeds during the quarter, highlighting the importance of owning liquid properties [16] - The company has a weighted average unit level coverage ratio of 3.4 times, indicating strong profitability and cash flow generation by its tenants [9] Q&A Session Summary Question: What is preventing the company from leaning more into acquisitions? - The company is leaning strongly into acquisitions but maintains conservative guidance due to limited visibility on the pipeline [26][28] Question: Can you provide an update on occupancy and the quantum of assets in the vacancy bucket? - The company has nine properties out of 2,190 that are vacant, with an average property value of $3 million [29][30] Question: What are the expectations for competition impacting cap rates? - The company expects competition to eventually impact the transaction market, but currently has a strong opportunity set [36][37] Question: Can you elaborate on the acquisition of the Whistle car washes portfolio? - The company managed its car wash exposure while acquiring well-established sites with strong lease coverage [54][56] Question: How does the company view the credit side of its portfolio? - The company sees stability in cash flows and no major concerns emerging from its operators [64] Question: What are the characteristics the company looks for in convenience store investments? - The company seeks well-positioned convenience stores with strong inside store sales and stable corporate credit [102][103]