O - Earnings call 3 2023 | Realty Income Corporation

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Operator

Good day, and welcome to the Realty Income Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Tyler Grant, Investor Relations. Please go ahead.

Tyler Grant

Thank you all for joining us today for Realty Income's Third Quarter Operating Results Conference Call. Discussing our results will be Sumit Roy, President and Chief Executive Officer; and Jonathan Pong, Senior Vice President, Head of Corporate Finance.

During this conference call, we will make statements that may be considered forward-looking statements under federal securities law. results forward-looking significantly statements. future discussed the actual any in company's may from differ matters The

Form We factors such company's that disclose may will in cause differences greater in detail the XX-Q. the

X-question limit will the in participate. to order observing to We everyone opportunity during call the be give Q&A portion the of a

turn ask to over our Sumit Roy. like If you reenter call you to would the the may questions, additional queue. I will now CEO,

Sumit Roy

Welcome, Tyler. everyone. you, Thank

the third are on in We of our outlook favorable execution the and delivered we've quarter for proud solid business. a maintain strategy our

the diligently in high-quality One delivering and which Realty, Realty $X at Our which $X.XX in and behalf Team per the quarter our and over at range, Income for raised last I merger Team announced resilience, we billion of impressive, The results continues range This we clients agreement to our with XXXX been Team billion followed work our AFFO $X now a One capital, in share and recapture permanent has to like on would efforts increase $X.XX. toward our their One an Spirit of at to stands serve. of XXX.X% dedication invested acquisitions, week. tenacity strong culminating stakeholders. all supporting whom which of we a leadership, XXX to long-term properties to guidance in thank re-leased rate, signing

with dividend, have $X.XX X.X% markets earnings share we per economic our are results capital profile annualized per of while share. operational Our and delivered varying challenging up and total the an portfolio consistency grew the high-quality attractive our to Team platform. return from through of highlighting third quarter One our approximately internal estate last real Notwithstanding demonstrate AFFO of pleased year the the to our environments X%. growth Combined capabilities backdrop,

-- foundation in expected had The a once at entered to the in us with billion. The definitive new forward last situation merger transaction is accretion valued from capital Spirit deal on AFFO announced external accretive a to per a requiring to where creates $X.X puts the start transaction, potential an per AFFO in into basis all-stock visibility any the week, share growth unique earnings fund agreement year the coming to without be and with we an of X we've immediately As for Realty completed, prior merger. share rate good growth months year. attractive to the leverage-neutral the

the made in outcome. Spirit of Given markets that, given effectuate environment, markets uncertainty from of the are fair capital capital absorbing of to risk that, accretion transaction the we this course, amount the remains is a more compelling lack

the we In believe client and and is property expectations. fact, believe concentrations. portfolio provides for headline meaningful underwriting further portfolio our Spirit's our we our We to to help accretion conservative potential ours to complementary diversify upside of industry,

concentration issues expect improving our trading liquidity portfolio. even deals to without overall while within our markets We to will our the ability digest market creating efficiently, more capital the us and enable presence in increased also access larger diversification, size,

and in this both and third billion was the transactions X.X% and the We are discrete at enabled to our transactions. I like X cash of in include XXX I ability would a great of accretion basis, were highlight XX deals attractive that work for excited were a estate bulk at progress of $X sale-leaseback collaboration, express volume hard that invested Investments enhanced earnings appreciation be transaction. would through than quarter about volume This given cost real $XX diversified business million group size. us investments that in $X.X $X.X the and the leased across in international sale remained this which Income quarter, effectuated successfully X.X% and A the are to yield. will Spirit made testament us high-quality the greater and yield. teams from for total to billion billion for derived source, we their less to lease advantageous approximately both to clients other buy quarter. initial corporate our transactions close Realty during a net companies, the trafficked demonstrates transaction the negotiate amongst private. initiatives public larger that and leaseback on that ability to transaction. In

and QX representing result this a context, the basis quarter of average last to during XX-year the a of XXX from in it the the markets on capital and capital felt investment over realized $X.X in WACC quarter, amount This total. quarter. put is decline a cost cost points with spreads the of equity significant Our calculating of leverage-neutral in debt points increased is short activity of were into Investment basis investments from increase XX during our a year-to-date billion, of basis approximately approximately executed the markets the QX. using international is time. To X/X XX which when points by across basis yield actually

public cap we appropriately adequately compensated sharp Accordingly, for we believe adjusted. capital changes have the we equity quarter, it that rates patient the and are capital allocators of in and to the ensuring markets particularly disciplined the provide. not debt during Following be is and the that private important market

and source and and We efficiency, to in deeply with are our ability delivering confident we in allocate scale shareholders. returns risk-adjusted attractive our focused to capital are on

XXXX, is outlook billion of the of spreads, are completed investment the approximately investment with first in to year, cost three had excludes guidance surge recent the increased level an we we quarters modestly the increasing our combined transactions in Spirit that reflects closing the in deals for $X narrowed for This Given of in to which close that already transaction our target anticipated XXXX. pipeline prior capital. the to

to be unless last occupancy capital. From high selective in At portfolio of quarter, operating since disposal. new result entering renewed And of leases managed year-to-date and assertively average and better XXX.X% new move-outs. and to highly we renewed have a opportunities was gleaned can down asset new management quality cost rates over level platform. was asset competitive would to proprietary pursuing performed spreads in on on expected and well. changes recent testament results of historical sharp at across of the outcome the enhances we recapture recapture will XX%, continues and occupancy we and XXX a X,XXX assured capital, the historically perspective, slightly be investment XXX our any the ample This the XX.X%. an quarter's highlight and This decisions advantage than of from historical cost generating lease end With our in through healthy remain line our hold our our of our expertise into in of unique years the it recapture client management Rent have is is XXX.X%. is unparalleled This the of our rates is XXX.X% from new of improving that expirations. XXXX, leases. I analytics transactions data recent rent we data insights

second primarily of credit X.X% XXX amendment, a which recovered of our locations from watch on removing any as XX% represents prior XX capital decline following our became the and of effective base is list Cineworld result This October without from on list points rent watch the our the X. We contributions. of Our of of the the quarter quarter. annualized basis rent end is base

percentage agreements, to also could of the us rent Importantly, recapture ability of recover negotiated based we XX% prior a the rent which of give rent through internal our to estimates total ability on performance.

X.X%. approximately total XX% of sales, reinvestment certain we recapture Finally, expect of an asset with Same-store rent. a to of at rate the of rent grew elevated prior

us to increasing relatively higher guidance rent outsized have within escalators. to continue inflation quarter in commitment better-than-expected uncapped number portfolio to raise to has our in approximately to due year markets particularly where international rent the with of stronger leases a investing the same-store X.X%. in full The rent generate We growth our escalators average we leases with escalators enabled

that, would to over With Jonathan. the like turn I call to

Jonathan Pong

our management Discipline continue to credit balance Sumit. from our AX/A- a ratings you, Thank commitment a priorities and be to perspective. sheet

and the $XXX the of ratios, with primarily the unsettled cash our debt of a adjusted fixed net quarter, quarter, X.Xx fell respectively. issued Combined X/XX our billion through by $X.X we third billion, net charge pro million $XXX million the $XXX to turn annualized million on During equity coverage $X.X ATM X.Xx, of each credit EBITDA third In while of with and hand we forma and forward to program, ended equity with outstanding. with quarter quarter availability facility of ending on liquidity. our

option. below late rate note was vanilla approximately called an And to exposure the forward quarter X.X% protection regular option purchased hedge purchased capital we a end, XX-year We derivative in as to protection on in which cost had yield of area. look future March in XX-year continue swaptions this a $XX value a As value to corridor, limits value at of billion a million. of have a future of of this of yield. effectively issuance our We instrument notional rising needs, $X the swaption when the raising net premium the on form option against a the a mark-to-market we way rate

meaningful provides job risk earnings well-laddered which transaction Spirit maturity years. team our refinancing schedule, mentioned perspective, in for the sheet done a future a the From us a any As curating balance the great year. given opportunity accretion previously, Sumit has in with Spirit in the debt coming limits

to debt a through so. When due. to to numerous rate exercises in history, -- company's the giving like debt Sumit. it global rate like do finally, environment our schedule, tailwinds the move integration. With total a fairly incredibly headwinds this and refinancing thank management worked continued members more of in stack the Spirits the existing be there year, towards good fixed estimate in helping combined we close we is estate not risk. When to manageable that us with stack would balance will provides maturity comes giving throughout also laddered, fixed and stack, hard our XX% is economically expect with stack as from extended opportunistic an to continue to assumption to spread have XXXX the all portfolio, I the that would real back which experienced to rate or have us our debt support integral combined we be I when stack I debt than and financial prudent well of benefits so liability opportunities why will of team any we is debt turn with effect engage when to and that, As both remain Complementary the year transaction, we fit advantageous who Similar to maturity given ratably provides XXXX, debt

Sumit Roy

our of Income Jonathan. predictable believe Realty payout the model cash is a you, we well-established and monthly stable conclusion, created, to the We provides not evolved quarter, has growth-focused dividend. and In have replicable. Thank platform demonstrated business fund as refined flows in further that the easily

by net invest properties have history diversified XX,XXX results criteria. for that of of our allocating abilities consists of leasing capital a across used property The of that well-defined properties long We across clients. We're fall is future geographies have efforts prudently that and the within than our excited lease our investment that produced our complemented our we industries, industry-leading more to business. portfolio types, capital

of acquisition into well. to building Spirit for head growth solid anticipated our as existing provides and portfolio XXXX Our block continues we a perform

we up ourselves or stability that time, high while platform this find the has position defined single double-digit to same such, decades. At it operational Operator? in offering can for we questions. produce a this for As returns open favorable low

Operator

America. question [Operator first Instructions] Bank from of Joshua The comes Dennerlein with today

Joshua Dennerlein

back Maybe re-leasing the going the on remarks opening the to of just some spreads.

And historically should we just Just think or curious drove better forward? than then releasing than is spread what better historical -- the about how going that rate? run the that

Sumit Roy

by to it that re-leasings. supplemental, question, center in new in breakout, large Josh. a by Yes. Great to released was client. re-leasing that driven can was of industrial our see I was largely we this XXX% think closer also A this distribution you terms And of provide we lot the driven non-retail It spreads. very the one

we to our closer a looked lot at of is side we kind slightly is I a into said was think of my really equation, you conversations the one. different of that the remarks, the still If enter assets which opening in And the better is clients XXX%, this than what average. I more retail can with control, just that

situation management across and predictive up but don't parties. And the to negotiate in models each and the into on asset And so can K was rates. an than we give the compliment the we're are all do with then at come haircut of willing and are to looked a very but is these I'd of many renewals their we that's for are that to asset up that gives than where I confidence continues team, what largest increase. portfolio if for refine team that size make the enter it's the more go more an platform fact and so give XXX assets, Circle asset One be there discussions of discussion is we control asset, that remiss not at about a performing both scores some knowing again, therefore, performing well have unique. and and scale which warrant the the we The rent lease assets and win-win team makes able that these long-term this them analytics to assets if management where clients, favorable that well,

factors, a So it's that I able were re-leasing realize Joshua, those spreads. think we of to XXX.X% all of combination

Joshua Dennerlein

Maybe stepping how something think want you forward? it into Appreciate -- growth back, better try internal curious. that Just do your you like can get strategy? just going color. assets get to that or Is lean you about to

Sumit Roy

is there assets can if based are the current you, Yes. that I just this shared the on things implying, that rent. with in-place believe of is we we than some Obviously, what that better do Josh, that

occupancy if elevated best when better and rent client a a negative existing a to cetera. at the line on going and may those we and going client different the between if to because creating for bit try et of on a rent a on bit that take a needed rents. But drag obviously, occupancy to stance this that. a haircut, looking the take be for take of to want bottom our efforts, you economics control into Which take getting us, levels are of control We is control, assets, what's have expense is despite there's that's lag side, about to time small building of going we bit a sometimes new be do to this recapture at especially

going So have platform. continue strategy to see push that differentiated the forward, management show to you asset a we and this to market will us do continue

Operator

from Crossett question BNP. Nate The comes next with

Nathan Daniel Crossett

What those Maybe you What look could just big yields look And yields now? the talk pipeline. also, about the then the like current are how do pipeline? is right like? Spirit

Tyler Grant

to because on closed speak it's to not transaction a we've going not I'm Yes. Spirit that yet.

to can the We tell, were you similar that So these you Nate. we an $X have we quarter. And again, a I'll healthy to approximately obviously the increase is billion, as to quarter. we in speak very are have, third third much just at where we very pipeline which of And showed from the pipeline. increased very what the the acquisitions end

these was and Morrisons, were to million look close Both transaction. in slightly it done those and going $XXX what type we a our That the today. were are types quarter. million the fourth finish get you're on negotiated is like we're able you -- at Morrisons believe very operators the large we If closer get Asda in in did, $XXX I transactions, have transactions sale-leasebacks of grocery of sale-leaseback. purely they line with largest to the over some we basis. U.K., we Those transaction Asda see that smaller, to transactions and names was these that of both a of pipeline the to when

but comments cost not movement of Some moving cap true. commensurate made of the remains rates capital our I've around moving with

pipeline to I is that in were we months the X created of transactions some other have will The piece that fact X these that overlay our ago.

making and able way, X.X% the by have you X.X% our if to which, were may on "Oh, it look in it cash basis, almost a just get shown growth straight-line other of a not given it's to these some And the than is you potentially point cost but that much, slowly quarter. data the we rate?" inside goes in the points is that cap only capital. basis targeting, shown are of people to which are inherent and leases XXX obviously to how by some adjusting at about is much the able points, growth make so cap I'm our to the did was And peers. Has second though rates, questions, come equivalent of that recapture were more adjusting, XX what we that we that the basis is of profile spreads reflective, in which

very so makeup of going And going fourth a this selective. be But hyper quarter be is will where time are the forward, we to similar. the

to a on these rates essentially started when cost more the see in our pipeline, cap should movement of You movement were which in higher direction, in and of came to the right transactions reflect rapid cap the reflective capital. rates more i.e.

you a cetera, the already. that's thankfully, It's see. should fair ATM, raised healthy. amount So But what through we've obviously capital et of fairly

Nathan Daniel Crossett

on pipeline is Bellagio, you do to JV XXX%, don't a to is ask a what that whether there is one the in Just own wanted I loan? the a anything just like your JV? appetite And the it's or investments asset where

Sumit Roy

a end. tend those cetera, meant that the where of Off me et stake JVs in I a and tend but don't generally if But the think, developing in the Nate, JV Similar the pipeline. outside the assets, We to believe the you have of Bellagio to the while do wrong, have head, Bellagio we the transaction. we to we hold back structured small I takeout types developers be my transaction, they I'm correct to development on with don't structure the top of way JVs. on

-- going about to very of be asset one asset that this. we've other this capital will do there to entered the put into. by JV, have more types about that asset forthcoming be that that sheer require lend into But a where of way, structures required. that entered don't I amount that. There But bucket other casinos There structure. one capital the themselves we very are classes tremendous of to amount entering and with a we I some there, are believe specific itself and we a JV Bellagio. JV perhaps like out are the permanent those more specific than don't were we've JVs is would You right given lends into just talking like one have in to that type, as now, products

Nathan Daniel Crossett

Okay.

be types centers asset what are on list? Would data So I'm curious. other the like like? just that

Sumit Roy

is influx of that's require, that perfect that Data cetera. an go et with type an this capital. make AI, will an sense. a into area, see based that Yes. have certainly terms JV-ing asset requirement could operator on will of choose type I that an to centers if we It's area asset in massive would

Operator

question from comes The next Haendel St.

Juste Mizuho. with

Haendel St. Juste

can figures of near and if Sumit, buying? share us at we the composition offer to if bit little a I'm transaction I I is rates guess would The you that and third the But should or in a question first you high-grade continue was and the of facts Europe Europe So curious any commentary expect of the a any is some you're on of guess assets rate. least perhaps that playing cap of term? help there the concern low. role regarding the Understanding maybe seemed on high. quarter. square greater The help cap historically share for ease quality And lag

Sumit Roy

Sure.

handle. Asda and the Morrisons quality the at realty if of me, buying pool diluting tell income you is So asset

come. basis, on answer looking about we profile of are return are question we've is And -- think some not in best with enter given us before do and we fact transactions continue top we were profiles doing. the have this how able the assets and a inherent the that believe into generating is they quartile have issue that in are the these we that dividend is tried the risk-adjusted a That to negotiated we will years What to pay I right we priced rating are an the an are grade. a not these assets target get something I to to investment in think for that operators able world. And the of U.K., for to that very fact that growth are were how able fact to price investment-grade profile. return that that is think we it, have don't comfortable we

some are a in less to And X sector? information much is So course, entire To straight-line for those that investment the the of XX%, of really X% we actual X quarters in keep operator? you, in on. target. And investment we the not, getting? for fact rather of than terms portfolio on? I be XX% a will, believe within of are looking it thank the I've things before than positioning? at are quarter Where What analysis that investments could or that the byproduct that in think with that the that. risk we our And be of could us, on think turn the something that is real this. How investment they focus was but yield. -- that are out is particular this asking What this is we it's how said you generates a taking the that repeating that about are they estate basis, positioned totality. but wall? they we be determine I'll grade. I of What quarters But question. north continue even share I had performance again, we almost to grade that some

is I very proud think are that something we Haendel. of,

Haendel St. Juste

for maybe question Sumit. perhaps I appreciate a certainly on Okay. And reserves. the Jon, that, one follow-up

expect we reversals think reserve should Can clarify XQ the and million what's reversal about includes the which $XX XXXX? you Cineworld in of I year-to-date. any guide, if assumed restructuring in there's been

Jonathan Pong

expect third as reversals significant that nothing reserve have the quarter, of of the pretty should fourth Haendel, you -- all taken been that were much for quarter. no the

bit rent reverse one we -- of that that to related You growth have same-store reserve off or a more we and in regional was our saw of. to and client bump health seen reserved the in may really slide a fitness supplement in that

lumpy the that nothing look forward XXXX, we into As would standpoint that be radar. from on

expense on about out modeling always just have semblance we our in that debt an history. reserve just loss in And any we've some year, unidentified think of portfolio credit before, As And there general, XX-basis the point we given we we're given year. at front. this a in conservative think that put I obviously we've bad the realized but very historically said following about

Operator

The next comes UBS. Goldsmith question Michael from with

Michael Goldsmith

hyper that the point Sumit, -- you're that how selective selective the means? next investment XXX-basis you used would in this the quarter? at terms trends that used And in mean term selective only opportunity you can greater hyper hyper year, you term define your going what you to approach the of of you for than does saw kind opportunities look

Sumit Roy

That's headwinds very that some assumes $XXX the growth. is powerful And today we the where a say at going I in going is free pretty the make, which it's a place I to that AFFO without the cash transaction markets, approximately and be. growth a X% having in deliver a of to that million, equity, good without either are we'll ahead question, that we if $X think to capital and to going we in to And to right the share per we XXXX, look that of refinancing, able look to we month, to in Michael. think, are be be first sit great absorbing today pro in statement on believe generate Spirit you deliver obviously or are all that the January that around you able year Look, to and could of raise experience equity here just with flow forma, X% February. that either that closes having be to to rely

I recently about capital the that chance to a cap moved so And so said is happened rates selective, when quickly cost being has dramatically, the what had haven't of of hyper that adjust. so sort has more

the of we entering tough about in of we quarter, find points have rate transaction be environment It's in we into ourselves quarter, we had I so of said, when be when -- what of I of and we you to sort help permanently said the selective for X the it, we hyper cost because meant you basis second That months cost is changes want originally environment XXX in like when to unforeseen in to -- cap in to X out eats into are I underwritten. then of the advance are it environment transactions spread. spread. mean, And cap a points these capital. months, help a want accommodate in capital basis XXX had the and closing I And drive what financing this movements this rates

rates we we so get that that's spreads was achieved. to selective. the I make color we the say to what when comment. and that the to can historically rates sure mean as want cap the that have And that's to haven't much be -- cap I really adjusted clearly, adjust I said what hyper We That behind want wait for

Michael Goldsmith

above back slight your helpful. really took occupancy step up, range. And That's as but a well follow then I still guidance

or rents in how's in of occupancy? drive that maximize -- you pushing So about just market overall? you versus seeing -- that revenue that And how what how drive to talk you're can terms the use

Sumit Roy

Sure. That's a follow-on great question, Michael.

are that it's location, mean rent us, we there to strategy are client we that client that looking by and gives us comes we of for certain revenue use the very -- longer. If So that that are a first vacant for client not of will have and time. at of than lens that the targeting more rent estate and concluded takes is definition, particular very a And are we proposal, and in that the that on for holding kind a profile that real a comfortable its we through revenue. but assets maximizing particular the maximization are the targeting,

more quarters, going hit X the sure business that's we've get comfortable have going optimization the that even our why on a what the for is we reason XX% little we XX%. we makes occupancy side that, you're for above are the vacant economically where that is occupancy is at occupancy That's revenue taking that to we slightly been return given see. of does those continue state that though to run be that up into last to make than of sense, location. And bit so And desirable running that a that the the a to we the portfolio maintained model to the assets always for best to assets will that, Because a holding it we to believe, sell we here. And drag have if and continues most on natural believe are look, profile. just cost, outcome, trying

implement. selling strategy assets we is continue will also to vacant a that So

So I in of, to sales. there don't want start more will hey, asset no be terms just thinking vacant you now

All options available the generates one we pursue revenue will the us, of best and that outcome. to are those

Operator

next from Capital Brad comes RBC The with Markets. Heffern question

Brad Heffern

have was at the or if a on capital finish deals a it the where a reflect Sumit, European large wondering record quarter this heads-up the same get the with the region a to this Europe to seemed one-off was where time? for time deal you sort volume of new bit X just to slower U.S. line competing was basis of like I'm happen over back is maybe after a period if reality.

Sumit Roy

Brad. we've -- for talking -- about transactions these It's now, while a X this been

it's over of this a bit some line. So little just get finish taken to longer the

here to depth here. than little international it bit just that been rates of do And has cap do they the longer because in market take of some adjust of the markets a the

going somebody that's say And product be XX% continue beginning in fair you the that think international think should international will always that where the will the of I it's year as And the go asks investments. be year, reflected right a of at to coming you're We to from do to in of amount up? back XX% XX% end to see But that where is around always end XX% probably the end our U.S. to pipeline. up I markets the and at when well. the we'll You

Brad Heffern

close million would greater talk But then the unsettled the shifting different wondering costs by isn't about given thought, can where maybe of debt balance Okay. the capital relative attractiveness end of Got much to as billion you And have I it. quite $X-plus $XXX I'm sources. of capital if the you're are. given the The have a broadly to year. you as in the equity

Jonathan Pong

Brad, it's Jonathan.

where nominal that options one a them X.Xx leverage, all to each are be. of But available absolute So prioritize we're Obviously, basis it to would I consider foremost. and think the one we on to isn't want going or us. thing to first always is

There a is our so of difference costs, it isn't wider currencies cost our than when equity unsecured necessarily that at debt can you three operate And a compare but next usual gap, up out of of aren't all is but balance eke we a to point across we for we growth there sacrifice that extra of you in. a XX-year going year. to just are couple to lever look of indicative bit going basis to the sheet, a tenth

program us in a variable having line reasonable any very go-forward standpoint at you out from on predictable, our our carrying outstanding in time maturities basis. prudent being rate or to XX% laddering very a CP and the of predictable expect balance could on with that point and debt So be so by it's

Operator

The with next question comes Eric Wolfe Citi. from

Eric Wolfe

to Cineworld so the your understand can X, the to were regard incremental can you income before guidance we just year? to talk you what how relative With and remind that us you much booked next for impact forecasting helped prior about whether Cineworld agreement, October on

Sumit Roy

on Yes. an form you Everything is shared that the we've obviously with Cineworld in agreement. of

made comments in anything the impact because be about going there's of already XXXX surprise to we've anything any this are That's to have give fourth reflected that more XXXX. going you that for we've absorbed that I've you. transaction have we comments expect with It's don't we to that shared. in shared in looking on next drag what if been you're the that the happen the a a and we know that for updated I year expecting guidance not that Cineworld and quarter to the see in about of it's year. Eric, So is and reflected made

Eric Wolfe

expect but a similar And $X.X increase saw rents quarter, third financing assets. relative a then forward? the those the done to that Is the you should not within were the other deals second market? third of the or were quarter jump the quarter that whether sort reflection type around more quarters in I deals Just going of the quarter, of on and in we wondering so in that guess billion receivables second in quarter

Jonathan Pong

and different guidance driven show other of Eric, classification balance accounting revenue goes up the it by to that's really also have the transactions and that sheet the into goes market, you into relative corresponding revenues where when bucket, also will impact sale-leaseback you a look rent the there. at

associated purchase just than dictating do, being different that's the nature bump. the flow, real the regular estate and some see you no deal given of sale-leaseback it's the it's accounting valuation it a any with cash that transaction of with why the versus way So other we price that's

Eric Wolfe

Right. Okay.

receivables of that of of any just deal. create type another outsized correctly? sale So on leaseback versus I'm would understanding financing more sort type impact

Jonathan Pong

Yes.

Operator

question comes with Baird. from next Wes Golladay The

Wesley Golladay

right they just you're I'm of them. saying just capital rates are curious pause form to to assume still settle? see what looking for now? the I Are clients where and the cheapest

Sumit Roy

helping this Yes, need, see it the to deliver. can today, out of world causes debt fairly on clients there's to versus the debate. on the new XX to the willingness dramatically. build assets. get on that and depends environment. But stickiness they capital the client, assets that to is ongoing the a where is or have on of them have different depends or of it the world cap That's side, the client, depends that that's we we they and tend are accommodate a to What and it with deal a sophistication drag, pressure growth, cost operate we ago that no their transact and they're is we i.e., pipeline changed and they understand at an are are however, time point what It on a conversations and or straightforward client, delta client has expecting there movements the where is these bit that and the that what rate about urgency is that think hoping The easy there's trying the to between to seeing, either a drive experiencing maturity have when months Wes. is the in

Operator

Kamdem question Stanley. Morgan with comes Ron from next The

Ronald Kamdem

of couple first quick The ones.

at is back Just [ tenant on X.X% supplement in health, coverage the I ]. looking rent I'm this, see

see sort what areas of Cineworld Any where -- is number areas to health? any softness quarter? of that Just could that if you of just about the next wondering, you're in sort are starting just you does tenant then or terms seeing going hit sectors that outperforming? transaction talk broadly or some to Number one. And are

Sumit Roy

share visibility number Cineworld do the on coverage. an coverage quarter-by-quarter because That so we impact where we store-specific Ron, to X-wall we fair get not will a of regards with own have have basis. don't you, our a assets that amount the X-wall with on

time we that when don't So assets have try a we generally disclosure, have point to include in that.

portion are won't through points reflect we are started small large, noise to on basis had impact. With processes, am essential well. what such capital portfolio retail they of over So were than bit to the played surprising no, expected. theme the certainly that that that quarters. they seeing, don't because be have to consistent talking of portfolio. we our of fairly that the a it, the given all an overall even moving, we've last, were much little those targeted, more the what X.X% we up and I the unwind overall and reserves an and where, by that single-digit ] a it bit on impact expecting we doing some learning to that clients And has ] better X.X% X casual had call [ was sort And had has have ended but dining regards there side sort of bankruptcies are cost created, a year has last clients in the franchisee [ been doing are out. There it to number of what side the we of we a

Sorry?

Ronald Kamdem

about Sorry Go that. ahead.

Sumit Roy

No, that was it, Ron.

Ronald Kamdem

Great. Okay.

I second on So just question. guess, to my -- moving

of go AFFO Just made to X% potentially you X% per back getting want about one to growth to the share. sitting here and comments

year, that thinking number? how rate refinanced? being the of coming $X.X Just to the at debt you about a in that Or does I headwind billion change interest be are X [indiscernible] clear, include next think, due cost

Sumit Roy

Yes, it I does. And -- does. when it think

So running share. income way that's and and out looks like $X.X today, definitely think AFFO the going the about the be we'll is thinking we the that therefore, refinance through a to it we billion of to forecasting curve what to statement impact per forward what are the what's be debt negative and headwind able

that really I All get those pieces, third close that the and expected us account. important to. of going think perform into big And you I because keep caveat just raise does our equity, X% making is February, the X% allow quarter XXXX. sure transaction January, component as $X the to that to continues of two to that's very to been of a do portfolio will here And that to is without to to having Spirit in taken the way in that shown we we've back

Operator

comes question next Tsai The from Linda with Jefferies.

Linda Yu Tsai

how What plans And are lender your has been? Spirit's reception loan? term assuming around

Jonathan Pong

$X.X get loan, to billion. fully term outstanding they've draw Spirit's billion assume delayed we $X.X Linda, to with got expect a to

us. so a fixed And it's swapped very attractive rates at obviously all for

that lender with with from is preliminary and good the We of quite there's so the and banking far been orders. our have by their some group. had overlap news our very lenders reception bit lenders, we've a discussions flattered The

those And bit maturity plan We'll is it to utilize and so schedule. a carry nicely be that able going again everything fits of quite according value into there. to swaps our

everything So fine going is there.

Linda Yu Tsai

income or [ on of fixed terms transaction? impact do ratings rating the and how in then And credit investors acquisition, ] Realty's agencies the what's Spirit view

Jonathan Pong

Yes.

both feedback AX/A- reaffirmed came out from a reaction ratings, constructive was Moody's agencies, outlooks. they S&P, it and very favorable and the Linda, and stable So the rating

the sheet. And bond and and would say, it's metrics covenants, unmoved. so again, a of our and complementary credit at this talk the some before for I portfolio essentially balance after is we very about you look key if how

some And was so lease giving could credit us. it provides positive, neutral a it from at the very scale given and argue that that additional standpoint, credit

side. so and And all rating on income agency good the fixed

Linda Yu Tsai

you deal? one think How EG and like the persist broadly, about discounts beyond? Do group in Just do portfolio think they'll one. XXXX last you

Sumit Roy

not on diversification. Obviously, of transaction, pre-Spirit, -- I even Income, and And helps Jonathan name you're equation. the to that we know else big of a to on least in to transactions one most in fact, that's to the get. Realty side and of are larger we billion daily an Income us. $X the mean at And anybody probably the worry differentiators equity at you access I the about believe these ability for Realty of that do, team's ability average do transaction, and to better have $X the advantage trades too capital. and genuinely his going basis the Linda. core space, the discount here be billion the this We that

So capital, it. more I people that think are has setting and to that of billions differentiated dollars dollars aside they're with are associated for with more looking associated they potentially talking multiple millions access with our the capital approaching us solutions ability even it and and about of

soon have a ability on more. as that's one-on-one discussions so you cap rates bit start want to we as little viewed. how And a be those move And to the to you have basis,

lot more that the that's the We saw And $X favorable. the EG to plus seen in These are transactions that quarter we just did third in quarter close Morrison. ability the billion And we Group saw or year. that. to $X that we will that fourth leases construct have shine. with announced Asda We all billion last we've on saw to You We and in transactions. think the quarter. asset where continue of these the on a on are gaming second that I

Operator

over This back session. conference remarks. question-and-answer any turn Sumit concludes to to Roy like closing would the for our I

Sumit Roy

today. week. the forward Bye-bye. next of seeing at Angeles to Nareit afternoon. a Los great look Conference many for us all Have in joining you you Thank We

Operator

now conference has today's concluded. The for Thank attending you presentation.

now disconnect. You may

Realty Income (O) 7 Nov 232023 Q3 Earnings call transcript