NNN REIT(US:NNN)2019-05-01 19:13Financial Data and Key Metrics Changes - The first quarter of 2019 reported core FFO results of $0.67 per share, flat compared to the prior year, with 2019 core FFO guidance unchanged at $2.71 to $2.76 per share, implying 3.2% growth to the midpoint [13][15] - The AFFO dividend payout ratio for the quarter was 72.8%, slightly up from 72.4% for the full year 2018 [15] - Occupancy rate remained stable at 98.2%, consistent with the long-term average [4][15] Business Line Data and Key Metrics Changes - The company invested $117 million in 33 new single-tenant retail properties with an initial cash yield of slightly over 7% and an average lease term of over 16 years [6] - Disposed of 17 properties generating over $19 million in proceeds at an average cap rate of 5.9% [6][39] Market Data and Key Metrics Changes - The balance sheet remained strong with no outstanding amounts on the $900 million bank line and $80 million in cash [19] - Net debt to gross book assets was 34.7%, with net debt to EBITDA at 4.8 times, unchanged from year-end 2018 [20] Company Strategy and Development Direction - The company maintains a long-term focus characterized by consistent per share growth on a multi-year basis [9] - The acquisition strategy emphasizes building relationships with retailers and focusing on high-quality, long-term leased properties [47][54] - The company is cautious about international opportunities, preferring to focus on the U.S. market where ample opportunities exist [55] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding tenant disruptions, indicating that the portfolio is expected to remain healthy [34] - The company is actively working on resolving vacancies and has in-house leasing expertise to manage properties effectively [36] - The management believes 2019 will be another solid year of growth in operating results despite challenges in the retail environment [21] Other Important Information - The new lease accounting rules have a modest impact on the company, primarily affecting the presentation of revenues [23][29] - The company has not issued any common equity during the first quarter under its ATM program, relying instead on equity from the dividend reinvestment program [82][84] Q&A Session Summary Question: Update on tenant closures and occupancy disruption expectations - Management feels the portfolio will remain healthy, with ongoing rent payments from tenants in bankruptcy situations [32][34] Question: Cap rate on dispositions - The cap rate on dispositions was approximately 5.9% [39] Question: Composition of acquisitions - The acquisitions were broadly diversified across various relationship tenants, with no significant movement in top tenants [40] Question: Trends in straight-line rents - Management indicated some lumpiness in straight-line rents, expecting it to trend close to zero [42][44] Question: New concepts for investment - The focus remains on building relationships with existing retailers rather than pursuing new concepts aggressively [47] Question: Yield on acquisitions and pricing environment - The cash yield on leases was 7%, with cap rates remaining low for high-quality assets [53] Question: Occupancy changes year-over-year - The decrease in occupancy is attributed to general retail environment challenges, with ongoing efforts to manage vacancies [70][72] Question: Rental rates and market comparisons - The company maintains that its portfolio generally sits close to market rent, with high renewal rates [78]