Financial Data and Key Metrics Changes - The company generated total revenues of $71.7 million, a 6.5% decrease from the previous quarter, primarily due to tenant defaults [14][15] - Adjusted funds from operations (AFFO) for the first quarter were $55.3 million, or $1.94 per share, representing a 13% decrease compared to the fourth quarter of 2024 [15][16] - The balance sheet remained solid with $2.6 billion in gross assets, nearly $2.2 billion of which are unencumbered [15][16] Business Line Data and Key Metrics Changes - The company executed two new leases totaling 211,000 square feet, including a significant lease for a 205,000 square foot property in Michigan with Berry Green [13][14] - Year to date, the company acquired a $7.8 million industrial facility in Maryland and sold a cultivation facility in Michigan for $9 million [5][13] Market Data and Key Metrics Changes - The U.S. cannabis sales are forecasted to grow by 7% to $33.5 billion in 2025, with a projected compounded annual growth rate of 7.2% from 2024 to 2029, reaching $44.4 billion by 2029 [11][12] - The company is facing competition from the illicit market, price compression, and market maturity, which may impact investor sentiment and operator performance [12] Company Strategy and Development Direction - The company is focused on optimizing occupancy across its portfolio and strengthening tenant credit profiles [5][8] - A strategic initiative was announced to refresh a portion of the tenant base to position the company for sustainable growth [8][9] - The company is actively pursuing legal remedies for nonpaying tenants and is encouraged by the progress made in retenanting properties [10][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing uncertainty in the macroeconomic environment and its impact on economic forecasts and business planning [5][8] - There is confidence in the strength of the business and the opportunities ahead, with expectations of a recovery in the tenant base within 18 to 36 months [29][60] Other Important Information - The company repurchased $20 million of its common stock and retired nearly $9 million of debt at a discount [7][16] - The company issued $10 million of preferred equity to enhance its capital structure [7][16] Q&A Session Summary Question: Is the 205,000 square feet leased in Michigan a PharmaCann facility? - Yes, it is a PharmaCann facility, and the company is proud of retenanting it quickly with a high-quality tenant [19][20] Question: How did the recent large block leasing transactions come together? - The sourcing of tenants comes from various channels, leveraging strong relationships and networking in the industry [21][23] Question: Are there concerns about other tenants' operations since the announcement of the tenant refresh program? - The company is monitoring all tenants and is confident in managing the portfolio, although the macro environment remains challenging [28][29] Question: How much of the security deposits were applied to revenue in the quarter? - $5.8 million of security deposits were applied for the quarter, which will not be available in subsequent quarters [38] Question: What is the status of properties waiting for rent commencement due to approvals? - The company does not believe this changes their view on the markets, as delays in approvals are standard across industries [40][41] Question: How does the company ensure compliance when taking possession of properties? - The company utilizes management service agreements to facilitate transitions and ensure compliance with regulations [47][48] Question: What opportunities for investment are being evaluated with the available liquidity? - The company is focused on identifying opportunities that provide accretive returns based on their cost of capital and has a pipeline of unique opportunities within the cannabis industry [59][60]