NNN REIT(US:NNN)2020-05-04 20:50Financial Data and Key Metrics Changes - The company reported core FFO results of $0.70 per share for Q1 2020, which is 4.5% higher than the prior year and consistent with projections [18] - The occupancy rate at the end of Q1 2020 was 98.8%, consistent with the long-term average [9] - The AFFO dividend payout ratio for the quarter was 72.4%, consistent with full year 2019 levels [18] - The company ended the quarter with $677.5 million of annual base rent in place [18] - The company withdrew its 2020 earnings guidance due to uncertainty from the COVID-19 pandemic [22] Business Line Data and Key Metrics Changes - The company acquired 21 new properties in Q1 2020, investing slightly over $67 million at an initial cash cap rate of 6.9% [10] - The company sold 14 properties during the quarter, generating proceeds of just over $36 million at a cash cap rate of 4.7% [10] Market Data and Key Metrics Changes - The company received approximately 52% of rents due for April 2020, with 37% of annualized base rent under rent deferral agreements or negotiations [11] - The company expects occupancy rates to fall in Q2 2020 due to the impact of the pandemic [9] Company Strategy and Development Direction - The company emphasized its strong liquidity position, ending Q1 with $217 million cash on hand and no amounts drawn on its $900 million line of credit [5][20] - The company paused acquisitions to conserve cash during the uncertain economic environment [5] - The management team highlighted their experience in navigating economic downturns, having been with the company during the 2008 recession [8] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty about the depth and duration of the economic turmoil caused by COVID-19, leading to the withdrawal of 2020 guidance [4][22] - The company is working with tenants to structure rent deferral programs to help them through the business interruption [9][12] - Management remains hopeful about reaching agreements with tenants who have not paid rent or agreed to deferrals [13] Other Important Information - The company declared its regular quarterly common stock dividend in April 2020, with the board reviewing the dividend policy amid economic turmoil [14] - The company has a strong balance sheet with low leverage metrics, including a debt to gross book assets ratio of 35.3% [21] Q&A Session Summary Question: How does the company plan to balance its dividend track record with potential increased leverage? - The company stated that its dividend policy is based on long-term sustainability rather than short-term results, maintaining a payout ratio that provides a cushion during challenging periods [26][27] Question: What is the anticipated rent collection for May compared to April? - Management indicated that if tenants agreed to rent deferrals in April, it is expected that May rent will also be deferred, and they are taking a long-term view toward tenant relationships [30][31] Question: How is the company handling non-payment of rent and operating expenses? - The majority of tenants are still paying operating expenses, and the company is requiring that expenses be paid even if base rent is deferred [36][37] Question: What is the company's approach to tenants requesting deferrals? - The company is taking a collaborative approach, focusing on short-term rent deferrals without pushing additional burdens onto tenants [31][67] Question: What is the company's outlook on acquisitions moving forward? - The company is in a strong financial position but has paused acquisitions until there is more clarity on the recovery from the pandemic [78] Question: How is the company managing its liquidity and credit lines? - The company has not drawn on its credit line due to sufficient cash reserves and does not see a need to do so at this time [68][69]