O - Earnings call transcript Q1 2024 | Realty Income Corporation

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Operator

Good day, and welcome to the Realty Income Q1 2024 Earnings Conference Call. [Operator Instructions]

Please note, this event is being recorded. I would like now to turn the conference over to Mr. Steve Bakke, Senior Vice President of Corporate Finance. Please go ahead.

Steve Bakke

joining Conference for Call. for Quarter Income's all Results Operating you us Realty today First Thank Financial Discussing President Officer; Chief and results Chief and our will Executive and be Jonathan Sumit Roy, Officer Treasurer. Pong,

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

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

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

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

Sumit Roy

Steve. Welcome, you, everyone. Thank

disciplined global continue of investors growth the consistency results proposition and our one. operating demonstrate and illustrate Our of start thoughtful, for to our the platform. a simple to XXXX value We acquisition is believe on our focus

positive environment. market to of operational generate regardless demonstrated Our consistent ability returns economic and volatility

return we XX%, X.X%, assuming Our X% is share key from To approximately of XXXX summarize yield value which growth our midpoint several quarter, AFFO the of of to of dividend anticipated operational the a the guidance close projected would proposition. an highlight per comprises profile validation takeaways. results approximately

investments we by optionality diversification. First, as the different a Diversification to risk-adjusted we returns. believe model of relationships. estate grow see multitude products We real where our with have and business regions sector client in geography, real asset superior types in is estate in unique

centers. in at yield. and X.X% retail, was cash an yield invested approximately this quarter, weighted first at average initial across industrial Over an average Europe property invested volume of of we weighted million representing the X U.K. During half $XXX types: the X.X% initial and data million cash $XXX

was the all volume, initial invested of in million at Of cash but U.S. weighted average yield $XXX was the quarter. which development committed during X.X% was takeouts. U.S. the $XX volume modest in invested previously Investment million a

we bias discrete allocate during testament To This million, our elaborate, volume breadth geographies transactions further transactions consider to is the XX diversity of consisted to platform. volume X speaks with quarter's a $XX capital. over of investment international which towards of the quarter to the our

ultimate proven growth region real outcome as decades operating investment the as a world's public as an estate vertical company. Our risk any our the with to ensure resilient leading consistent focus X almost serve new to and X is of decades over or which return partner have to and a investments, profile companies the company matches

durability credit which the all XX us in events Europe, portfolio X% during U.K. Second, finished renewed key consistent re-leased occupancy and solid than average in flow. the the approximately our of of with recapture that the At XX.X% of X,XXX interest X helps other no we And leasing the tenants rent. with we list disruptive Western all delivered leases highlight individual credit over and rate portfolio Consequently, is with could of states, quarter potential that prior consists clients end, portfolio, and total today another our all strong XXX on would our more health of we our projections. countries of representing rent, from our or our annualized rent remains and of with across the quarter. list operational the quarter We of the comprise X.X% cash with which in portfolio historical our the which of quarter on XXX.X% insulate line total of metrics. client quarter annualized diversification watch impact

Spirit I above markets, need investment represent disposition markets to and program, fund a would us volatility around After business affords significant investment capital we access spread merger without first note a posted capital sheet also generated the the balance our flexibility our equity major to external advantage being meet capacity by Finally, continues guidance. will and year to annualized which closed competitive capital. organic significant of our tap nominal over for of is investment our of plans any cash basis later. the quarter, points. this or in points to additional basis XXX the capacity available without first the debt January, is XXX finance to excludes in free $XXX growth spread This which in also discuss approximately spite to our historical us provides current required well investments I flow into our million. for In

investment because unsecured of of debt. our hurdle which year our with all clear, is capital, This minimum only of our of solid industries, driver capital, value weighted seek who return risk their significantly cost significant capital. have the to primary has our cost is in long-term first In capital of across To our believe on volume investment what our cash real respective of respect which be -- opportunities investment XX-year considers our focus to long-term model are estate, to remain the The being acquiring establishes of to high-quality based WACC meaningfully oriented drives virtue we exceed This and flow, a exceeded by activity. cost decisions nominal cost source we these long-term our year aggregate on residual these average operators portion transactions. cases, of stock equity risk. underwriting reduces spreads nondiluted funded free first long-term nominal for our lower leased outside leaders

growth to hurdle market depth to conservative a believe a remains more through rent addition, in rent investment result. longer-term Sellers with uneven. have be even will economic and Many sidelined rate amplified contractual leases domestic X uncertain the activity transact In of reluctant data compressed reach of sellers breadth last resilient remain our coverage which rates, as cycles. metrics estate remain is escalators transaction and inflation-related potential meaningful by this prioritizing the in opportunities interest increasingly environment, given real we that variety the mixed summary, In over we are months. our of

remain in optimistic experienced more becomes that the the as second we in half prior market will clearer. of outlook economic opportunities However, the provide year as the cycles,

Turning to portfolio operations.

previously same-store X.X% contributing rent was growth mentioned, XXX.X% quarter. As recapture the to of our first in rate

in Excluding the following the with negative impact finalized from [ portfolio. our rent ] the same-store last amendments our in growth X.X%, theater lease largely was Sinovel year, up portfolio, line late embedded our contractual portfolio

of real resolved lease advantages have our XXX.X%, who estate of Since company becoming a blended a are the in management the XXXX, scale of now acquisition real we expirations XX and our which public is the among real over and is asset estate our One consisting X,XXX talented and estate the in teams. a functions, we industry. at rate of rent to our competitive asset over underwriting, individuals believe our in quality marketplace of operations testament management operations most recapture

$XX.X During we sold net the quarter, XX million. total of properties for proceeds

active Our a management of a more recycling are initiative. investment efforts function

credit we us active and from in We strategy. long provide on predictive over believe a have acquisition recent years, supported of across industry differentiation the our proprietary analytics benefits our as groups our group, significant our fundamental is collective Our team, analytics the these portfolio harnessed our group asset gathered dispositions the by of operational input we the X of predictive to decision-making of result the have inform a management our underwriting contributions combined history. the platform. data quantum In

further I disposition our So now program. to and color the manage addition using our Jonathan, are active add to to in guide we quarter. data it the to turn acquisition will portfolio program, over proactively will the more who now

Jonathan Pong

you, $X.XX proceeds front, It's to a our X.XX%. billion to in offering, gross the Thank at quiet blended capital January the yield raised been following dollar of on U.S. Sumit. which bond start maturity a approximately year markets

current and acquisition of As forma This investment equity, that's to earnings a our guidance. annualized does EBITDA financing not that target preferred ratio. had introduced with finance growth with adjusted our another in To case require the pro line debt capital continues our at prior we net our and strategy in XXXX be ratio for to call, needs. incremental our X.Xx, end, quarter

the to following guidance forward million settlements. outstanding us program which During $XX annualized available cash previously to us with that equity approximately having the million tap and we raised $XXX markets. and quarter, one through with combined be merger, without the a the the can leaves believe for Sumit outstanding And equity was flow investment disposition when for program future approximately Spirit This $XXX is billion of we of settled available basis. of on million free our our ATM funded $X year referenced, approximately

borrowings maturities, of and $XXX excluding remainder of the year short-term schedule paper modest, cash. and commercial revolver maturity of the debt million with million $XXX remaining Our for of approximately is

still of the capital and As and to with minimal turn flexibility of these I'll XX% our always, exposure the refinance over balance year. ] to maintain well of sheet, look [ for on retaining through to Sumit debt and can keeping remarks. while [ that, debt closing fund debt liquidity significant headroom exposure below us beverage approximately liquidity we billion financial $X liquidity the ] maturities total known it we berate balance believe significant and we available stack With to back identified

Sumit Roy

you, summary, that the start, to is expectations. solid in is off a Thank year with Jonathan. In line

in with February. rate discipline, our the year outlook for tempered current The remain pace our profile in allocation growth first of cap adjust as the gave and will and rates earnings earnings the Our the we quarter consistent we capital long-standing balance reflects environment. selective activity guidance to of remains

standpoint, from us at In capital basis cash flow funding to a exercise an basis. on the in the well levers investing meantime, continue can over points XXX leverage-neutral we particular, recycling, spreads internal allow and free

compelling share we per in one dividend that, it to of up questions. of with our X% With projected is approximately for I S&P approximately believe would estimated rate, annualized opportunities yield the X% open investment why Our growth most XXX. like paired platform the AFFO our offers

Operator

now will the session. begin We question-and-answer

Instructions] [Operator

The first question comes with Crossett from BNP. Nate

Nathan Daniel Crossett

pipeline pipeline pretty like quarter. pricing this so most attractive talk XQ? I about Is it's was there the you yields in look in Europe weighted? I the And could there? Where wondering size, far into if know to what does the note but sample current just anything is

Sumit Roy

question. Thanks, Nate. Good

of data cuts X of in where And space is to sellers over reluctance going. months what in terms play of is function causing around reflective I largely rates you're environment When and the is is what the what at manifesting a we've of it's U.S. in out it's capital confusion here mixed transact the the last our confusion. the seen rate today. this seeing think that this of way cost a will the materialize are

the where today, is and of been in better of therefore, think will play seeing question transact in And And will we in one of here seen is suspect, the U.S. the return around more results. sellers versus consistent, kind be pipeline table lot itself second reason so what has because opportunities geographies. I manifest similar the bring specific very data Europe XX% to much the we the volume more ability potential slant multiple the and in And that's to are suspect why it for Europe much this and us, advantages we current we risk-adjusted real. to your in with quarter, the I you've the happen the a a was

be the But we should is with lot in disconnect the multiple that a but of that I second to see environment year, potential clearer sellers, transactions those rates potential transaction I rate more the actually do for what's in to materialize. happens the a conversations that going do think the reservation potential is catch and price believe team know terms to we where cuts half market I up. the in that becomes But come of with when once the believe will U.S. happen sellers. fruition, will to little start

Nathan Daniel Crossett

ask credit that's recently. helpful. maybe tracking news one Lobster could that been list I side. What's watch and the the specifically tenant we That's And then on Okay. just speak should in because be you could right the now if Red on to

Sumit Roy

Sure.

rent. about XX So currently have the Rite ] points [ of that Aid It's watch bankruptcy. basis we still represents our going through ones on list, that

another it very emerging from going and at recapture the But they're name terms in are leases XXX% list X that's is just is our a from to one emerge hopeful very our small list. that will on all currently that soon. We way points rent of bankruptcy. basis be of I of sub-X% expectation on That was other in is our portion our that watch -- said, X are on names represents like Joanne overall watch our given it's that assumed planning bankruptcy portfolio. are is bankruptcy. Every on

not it's bankruptcy -- The ones are to interest Lobster, very mentioned. is the list. very, in on here not Red amount watch a fair it's but of of a a So just that overall you that continue garner currently portion internally, obviously -- small our one

X.XX% XXX a and coverage have XXX It about assets master XXX be cash happen all XXX flow right of leases. We our The lease. across is represents that around of these have of rent. part leases Xx we to

So Lobster before our to around exposure Red I name I into just wanted itself. frame color to some go the

I think of locations. to very That a casual it's Lobster seafood the do. is They pretty have of concept. They unique is story. garner -- Red XX% hard strange a XXX thing

million $X.X at unit. north on of fact just a they that it billion And generate you the unit if basis, that's around $X look right per per revenue, in

through as several ownership. there it changes very an have our terms been of operations in gone changes not So They've is much is a this business line terms in a opinion, as of issue. well been management. hasn't And it's that, several run. issue, top in Obviously,

not. a If have the this you question really look and operator $XXX reasonable at of, manage debt balance million there to sheet, opinion, In of that there this it's balance margins. and They even level come an a sheet is it could Red is in issue out business a is Lobster. basically our of at

But Today, Xx lot XXX of don't our generating I said they're a has whole that, believe EBITDA. coverage. assets having

that we the assets obviously So assets are should best portfolio. tell that you their of in some that have

can this believe should concept survive they've we the should given been and to that out, do establish. footprint this rightsized, be quite if that and operationally a so is well, able And come that

So that's our view.

it. on We are eye keeping close a

collected rents rents As we've of due are XXX% us the May. far as as to concerned, of

and list. on a it our see, it's happen watch but does to So wait be

Operator

Scotiabank. The next question of from McGinniss Greg comes

Greg McGinniss

identifying the disposition Are industries recycling? how about you're to or program in you assets able on details provide talking maybe you're terms volumes active targeted more of for

Sumit Roy

Greg. question, Good Sure.

We So is of what to the achieve because year. of circa million be precise it asset $XXX a function very can't market. are is to of we hoping $XXX this it million around part dispositions

the be first is approximately was We the asset to vacant Obviously, occupied the sales expect asset sales it going XX-XX. disproportionately and quarter, sales. that vacant in

were occupied. $XX $XX I $XX was the of think million million vacant sales, asset million

our downstream. our based allow are to situations an then And on our these to also that to advance intentionally -- being happen we of what more of want it it ahead conversations, to some long-term trends portfolio. not that going real that are of issue. cetera, a proactive lot get watch is client a always we estate there management trying well be of issue is And overall try are we list. in team position et becoming us has a to get in But seeing to driven and get have a by ahead certain is ahead that concluded, sometimes purely do does credit issue of assets asset be on that It's it is not

of the the actual selling. is lines concepts what In we been it have along terms of themselves,

we are Some stores it not drug of overall is are some of automotive strategy. believe There the services. part that

not, strategy Some like of sale is it core the that I expectations is ahead then our our the I some as assets of. the try that were. to are to ahead is want get Cineworld discount that, we store way, to what be would what to of going perhaps going, And the say, by well side said, overall process on

the components year. what get of want are disposed we will make to up this So that try those to

Greg McGinniss

first compares of that $XXX the of entirety to that you for the mean that are how targeting million of Is level kind that as And then year, the a XXXX? $XXX about growth this what program? thinking to And in Okay. that step? million is might you're acquisitions

Sumit Roy

a into we've position based XXXX we Look, us is what our execute in to that's got portfolio on take plan going strength. to of right believe the

all grown We've very M&A very last assets our believe, those have in X X.X, of to business large been, years. been about There deals done the our not strategy. been We M&A. I long-term open have have X core through

of And to back trying function so of to portfolio. is a some largely this core get that

of We rate, in at we are assets being occupied occupied cap actually sold are or and assets. of dispositions I underwritten these we XX% a rate, wasn't cash $XXX number, and know -- $XXX of big at you'll actually what impact million sold cap a million obviously the them circa it some XX%. the we reinvesting have assets, it at but find Look to being sold. But what is X%

strategy implement disposition first to it quarter. is for least actually an accretive the we've able that So been at

us, on XXXX will with. transactions and issue. it's it's on about for executed to we of portfolio this beyond want. we And When not is creating that doing When want be get we leasebacks, leases, that So forward. always the going are an go do we existing what doing consistently we're XXX% program a into sale portfolio not

And that so is more to a culling I think the core bit our about. being we upfront assets be more lot that intentional strategy a something overall not around proactive going are is to

strategy about we good But ability beyond. despite to and continue feel grow very in the XXXX to our

Operator

of The comes of Bank Joshua next from question America. Dennerlein

Unknown Analyst

your into perhaps currently the watch on clarify Josh. you know Daryl was made much trending? debt how baked is I I if wondering guidance? of comments how bad behalf debt list. outlook some in at is changed This that has of could you is if bad And on all

Jonathan Pong

Daryl, did earnings million release so in recognized. we on about $X.X the press for disclose was it that QX, the number, debt we bad actually

scenarios. forward-looking As we think downside about and guidance

the in clear that past extremely pretty conservative. been we've think been I we've

time to year, it's end say May, it's major any when go to concerns. think of you that today, -- before here it's not early there's the long sit a I the

about you it's small but certainly watch that think heard and I it's everything not yes, a could front. some some maybe have bunch that scenario things when of if impact, talk list on expected little the a our

And bit cautious did the more cautious always so spirits we I think we've into on, we'll a acquire it's we that year. continue further mix that little assets of until get been a be and really to

as credits coating always And bad the identified some to for debt we're it conservative early expense, I year. think in pretty or especially more there's then even finally, us, that relates on.

Unknown Analyst

the in change given you're thesis or cap can off about seeing about of yield has acquisitions. question acquisitions, straight-up development you second off when get thought And -- rates with process and your you're that coming these Great. thinking that Europe versus the

Sumit Roy

pipeline No, cost that it's the notice and roll matter we've of cap Daryl of therefore, entered we expecting developments you'll into our on vintage timing, current of XX, the to vintage development capital some developments newer are off, It's are a yields cash -- older more the of to reflective up. rate just XX that we start start the that months should that that environment. creep ago. entered into

And in were particular point those more environment some we time. the assets in of at of that obviously reflective were that

cap even cash XXX points, of which points X.X% is -- XXX spread. basis is that what yielded the our development yield, first a is circa But at still quarter in closed basis

to we entering lag today. are bit that is today make overall we -- able $XX it's a the were the the in that not we developments not that into Europe. quite environment that aware that able and certainly X.X% much on I So of to achieve on more yes, is to reflective just there that sure pipeline wanted million development are were a and of the the achieve But you

Operator

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

Brad Heffern

rates, lagged there. felt European has is attractive a these in the appreciate there changed lower has I recognizing stable a despite cost in else cap been market over environment. being bit rates for U.S. the the outlook that's it that that's the debt more But rate obviously time Europe anything the than generating now to of U.S. higher terms the of back really Going cap long like

Sumit Roy

Europe. other, what top trying nodding. Brad, in Mainland lower cost would Yes, not is It's certainly each John. the I U.K. Jonathan the of is debt on lower in of say

capital than and pressures and is they see One, able So why that realize, at to the transact sellers potential yields the had redemption need monetize there big are willing have real the were difference where the they environment need estate, because that what to we willing to they're current are twofold. they more are that capital. cost reflect to we funds of

is ability types And works we for price. second, be benefit somebody that in these recognizing and is our is really going which as really agree and accrue go-to reputation ourselves fact have favor term, requires surety of the have And established on conversations, a our potential these that assets. near the that when sellers which important to the as we of having transactions met. sort we these the the and close, we of to and of does are very close capital on these when to buyer particular

I and it's U.K. think it's Europe, allowing those in us to be X and out. factors the in successful playing is very that's how

to be unfortunately, that operators transact Yes, there if to could ability similar are they're you the pressures. in. they improve waiting more have alternatives, sidelines willing rates then cap to for be U.S., willing environment transact. which have But be to able the lot sort wait, Here, buyers to the for potential any in a might standing get they on have the to that they of don't

think I frame I successful. that's So how are why being we would

of of market. reasons is is other reflection the a us obviously One the very the it's idiosyncratic to and

Brad Heffern

And from it. And us is? might have can Dollar the any Got talk Dollar you on the Tree closures? about Family that Family impact Dollar, what Okay. then remind split you

Sumit Roy

that think don't impact I Look, for disproportionate. be the is going us Yes. to

or X% Family There's to is rest Dollar circa XX% Family about Dollar is owner have. want is X.X%. say I it would of Family to and X% exposed Dollar And I obviously which have Tree they rent, is Dollar Dollar. the that say of about Dollar the of the that of We Tree, about either Tree, dual our the XX%, banners

years, lease will expirations X of years that over the points basis materialize. X next X.X that's So

there named you if the these I these And remain is even on of So closing dark. is resolutions will the that pipeline. team closures part are potentially X already and asset points. will if are basically beyond on our management given assets working and list, our that is Anything some impact basis that of be it even can assure closed

there's rent. going And lines the tell in our potential We these of of there Dollar Dollar just me good episodically, that's on we've a a resolve be are the Family let that we to of the on acute it to to assets. along is more about you fair just that et in some feel that and cetera And locations is collect still some to to substitute pressure ability going pretty these try Family interest lot amount received step of Tree a to leases. find than Dollar us. over about closings, and the news out take

General. populated and to The in more Dollar than urban one areas Family in apparent, or not tends Dollar densely thing be much which dollar I'll add, be areas Tree may

of And so we have more alternative inbound. the -- locations to attractiveness lot that and fact is borne by that's received a those the out retail clients

of get for than leases in and going that, the advance in hey, gives work actual are these lease So particular is us, on expiration. of different some renewed this us not well learning well time to leases advance it these no to

So how it. I frame that's would

Operator

comes next Michael question from UBS. Goldsmith Our with

Unknown Analyst

you you you're of provide about touched bit the just this the cost if opening, the you on This a is your free about thinking are maybe could first -- more is at how context flow some with Catherine color Graton thinking My how within -- cash but spreads? of investment Michael.

Sumit Roy

question. great a That's Sure.

all massive to of And of best grow cash ability investing we a is could buy is we we we advantage. best $XXX the flow. is have when that massive is stock, cash to to a million use free capital cash that we debt, essentially find that variety across accretively. -- what we free invest cash possible our back continue earnings. that areas flow out can figure back We to to when Obviously, post advantage. have raise For our is capital flow, free the buy us, invest that of The free flow use obligations could use of a accretively our accretively could

$XXX obviously particular asset opportunity And of $X able highlighting our platform benefits current best that across what's we opportunity about where to in but and we multiple of the than the massive in free us, hope have, types with obviously of acquisitions, advantage. across million that, and our we being to flow. how But multiple with this given even are that we think able do this a diversification cash way flow. billion think the the earnings cash of this. invest we geographies, guidance. better are cost which is Being continuing find and free is use accretive flow nature nondilutive of fact we this our is is environment, a grow year There to cash finance That's associated the cost have we we given business that's capital. use in this about And for

and two come we up our that driven with long-term move to and think on average way, what our hurdle rate our largely investor take overall us of I growth our the equity for return cost the the that forward. our other is the I the compare profile. long-term the is -- this that that cost cost that to meet a in investments It's of and and long-term exceed cost think, And one debt of XX% And of few have of debt at of WACC, obviously, look And and cost the to we to model. it's by CAPM is the we equity, do effective our XX%, all and XX%. And dividend we what XX% long-term is model that cost equity things weighted. of is of the which deck. hurdle rate by need pages And

So massive as think really us. about we capital that's flow, the how cost how we which about cash we of our advantage a obviously free view and think specifically to

Unknown Analyst

question on second my the And Got is development it. piece.

yields you into we see or do your XXXX? projects progress an development of to as even acceleration through XXXX So expect for

Sumit Roy

are We well, we should more new we that of environment. do. Any -- question I asked think development it should and somebody be capital entering this into, as the of current cost reflective

as of a do bit lot a so a lag they of developments, time. And know, these you have

so what few higher, cash today should And capital. is the continuing much over lower that ] [ ZIP quarters seeing the you're see what is X% next But of to to translate rate in code. cost that trend cap see close current you reflecting

Operator

Paolone from of question Our comes JP Morgan. next Anthony

Anthony Paolone

First of Europe assets? the in about quarter there. bit maybe acquisitions looked multi-tenant lease was question yields was it bumps like the versus maybe relates rent embedded more to you duration side. and net included much a in on little shorter Because How bit are talk a the kinds what that? traditional the Can

Sumit Roy

Yes.

multi-tenanted, lot are define them in multi-tenanted these bit would little here of lot a I freestanding clients talk like that as the X say Tier are on parks basis. or because when them, a So we here about X in of in multi-tenanted of pursuing the parks. U.S. were not retail there's of are U.S. define these say we is think we retail A a we This XX% Tier And a you let's -- confusion how terms what

basis. on to be very to would a flow-through a part. one happen you similar has from find to they these of And contiguous rent freestanding located a basically in units what NOI, each And

to composition to reviews growth looking the getting we've growth anywhere through. the be. could years. assets have are the be tend could of we of And the going the at regular these be at day of the when are We're terms market? is in some leases that are growth the at looking to the the comparing rents what these then we long-term yield. below looking what underwriting we tied flow we profile these leases, in it that We're return are shorter, boxes X We're or in of tenants. inflation, they at initial XX or seen cetera. looking of And these the to at above market these X are between are But et assets, So have larger way they could open more to

assets very well. have these done really And

portfolio retail are of gone able And to the [ strong, very is of through like across are the generate is were And freestanding we that's have a a the process value. of a retail the reflection we've nature would that for similar continue with to that haven't we the ] quarter massive that when And of how of renewal they yet. control one the we because overall with kind duration. different parks. retail clients But to fact conversations that lot parks to can major consolidate locations the that are in now that we very to swaps obviously a wanted some this over seeing are we long starting fact because to U.K. parks control renewals grow come these we we of bought us numbers, XXX.X% they assets where is each our these underwriting the advantage the and stay of

how that's where should point be at are generate And able value And able doing we retail it a in generate. to we the are time parks time told are that we to I starting to think change. are

If circa vacancy have, you X%. you that it's the look at

much growth parks. that if at exist, than also was look generate, are to on more rent actual to traditionally given the able at retail compress free achieved. you we the it's so the able used being that higher concept being concept, are just fact we that much what to that of you we And If control look

So make people very in. to for just And a been traditionally that flow-through this sure the great to is lease has we've been stand-alone involved net realize similar I business that us. investment a that want

question, you Anthony. the glad I'm asked So

Anthony Paolone

my And the credit is follow-up on side. just more then

But You box a thinking that. you as year. time of bunch any relates as it both updated your specific down that spent you're on well as a on with can the credit how give assets about us being AMC, to office bunch this thoughts

Sumit Roy

Yes.

represents AMC gone our of we've of Cineworld. already with X% about rent. through look, So one them

-- And believe, box to to a XX% have, in We equity may We able it that. AMC be markets. than will given movie XXXX bit the some It expectation will that I the to a to releases in the XXXX. of be last that little but year in occurred the 'XX. quality in year going continues last XXXX is be raise disruptions great for year, And maybe of much not XX recognize office. and be 'XX assets. capital supersede be equivalent even is higher less than will the

is confidence on able we've Is that But to our to several going resolutions gives and was it Yes, I the had outcome Tony, can we've a rent is achieve to our of the we still assets achieved of have the Cineworld acceptable restructuring absolutely process? that and us. that our to possible. and put in through history. lot that an bankruptcies possible create BK that history, things perspective, tell very us a in just AMC the goes experience been it's you, that

given Cineworld, north to if the full once better believe full And that Our code. were sales touched the actually of rate XX%. asset last on do on has And had analysis, be it's go going vacant recapture we we that on it's of been year we are that resolutions we not on the that. I the CineWorld. some even to cycle in ZIP finding than

But next it process, trade year they to is AMC believe a a similar believe this story, bad going process, if a through well. to -- not going enough and thing. a that necessarily to they most BK I potentially liquidity go BK to So they're it's be not withstand through comp is as year were have go we of but certainly

it. well Cineworld massive continues have it stronger go the think fairly I even better just for assets to burden will do like be a will we their we again, restructure of BK will process. and some they situation, they believe in that, which debt, I and emerge to allow to we And the the were think through them if

So AMC. that's thoughts on our

Operator

next Haendel from comes Our St. question

of Juste Mizuho.

Haendel St. Juste

few subdued suggesting the the push activity thoughtful up the to bit as and leave prepared the remain your compelling the door half a in a yield gas that of remarks, the in mentioned more capacity you opportunities disciplined growth times back more clearly emerge year. You did about will selective in little and quality, you but

think I'm be how the omit I the and that earnings pace you longer-term some if to willing for even half, right about target curious bit you'd a balancing your more on of investment maybe more that second So guess along. if the opportunities in push versus thoughts growth a came would make

Sumit Roy

the dictate of you're we'll Hi quantum that, sorry, uncertain. for the the to answer half given we look to I year for expect hear investments what seeing which for I the what get And apologize. a or are the today. Haedel, difficult allowing quite think latter not year, if very we we accelerate is, it But I'm a much I able in you. to is, But do asking we in are didn't to to achieve investments, of trying particular acquisitions is are how look, be very market was

we in U.S., for we've going, interest especially And asking years, get look here share product a opinion, tend are that we more are more to to an there of the you're terms that opportunities. do more believe of volume, you in of be especially will the If our the Haendal, over clarity where year, interested achieve is when been the et there little I half in cetera, the rates at last few of than able the second what if pursuing. bit

of that the do. answer to numbers the first for higher We is what certainly it than remainder possible year And the acquisition the be achieved is yes. quarter, is we going U.S. so in the

expect time we we is, opinion, the year. both our want yes. will to to And fairly markets it answer caveat of momentum The the European this optimistic expect and about continue? I the half these feel just Do Do answer But yes. to accelerate? The second is, we that is tell.

Haendel St. Juste

since just follow-up a we're here. it talking on And Europe about

think close to so, or have I or asset minus plus you value there. billion $XX

So the do any or platform? potential large be you thinking to of that I guess enough? ready on if maybe And a Is it change curious mature stand spin-off could or that it its I'm there's think update in? on when of

Sumit Roy

spin is, were if we our question, Haendel. was out, the to you REITs it asking. closer That But in today. intention to not absolutely is that thank But I loaded Yes, number business billion. one U.K. $XX for largest would that a the of be believe, The

I'm shareholders cost form markets a quickly benefit function we their to we the that de relationships consider to of other a as platform our team we the of to did where to ability of leave now the ability as going execute we brought and the of again of our the quarter, We reasons this billion? any that as with benefits feel we have the are up teams precisely happy capital, now to it profiles we facto to and No. was net is design in, Europe about to accrues our benefits that and this grand our are in continue first having regarding the us talked overall the our on very in years all best it. here for allows the that platform mean all like I And $XX return establishing those U.S. we harvest for of company -- of so part Europe. call us taken opportunity ourselves establish. in in that risk-adjusted Europe. And how lease has to that's to grow time investments. And therefore, It's Again, would us X the unlike play

it. So how answer I that's would

Operator

The next of Nick Citi. question Joseph comes from

Nicholas Joseph

the talked side? Given the center the long-term look that you've the of Europe and U.S. investments cost on today weighted opportunities data of and kind do in thoughtfulness on about gaming rates How cap capital. the average in better additional

Sumit Roy

first of your for formed. quarter digital question, I JV in say you X% the investments have went the would that we Nick. Thank our towards about Yes,

an this quarter As of that of And won't the in it could first kicked And the be Nick, you County. first second year. recall, then being year, be Loudon [ currently end is ] the it's next phase, Virginia, asset may actually, in. phase maybe the until in gets that is that developed there operational -- Northern

that that center an we other investment side. So are additional in our date. do to a Spain, will that a on are that substantial that have particular as we to that we only we at. looking center seems those make will and We now, have only But that the side of are at we spend opportunities on be been make, interest there the in data that to that well of are we believe really will investment the There but also data at. is looking located, data is be very is side. X That continue right lot hasn't opportunities center the side, looking

stages with multiple the we to optimism few versus our portfolio grow involved a are But We to are percent the real to space. can we now, a out way conversations we operators our JV hopeful part particular in as digital. that it try play of this meaningful continues high And over that in years. in conversations that the the outside multiple of potential right have with are initial of next of in the obviously of with is understand where lot opportunities operators just

Nicholas Joseph

then And gaming just the on side.

Sumit Roy

opportunities, obviously other in opportunities. It long things continue some to slightly very are side, conversations There's of development large potential cities. gaming of made investments. rents development a We've opportunities X our in these On represents interesting. tail we with the including look to and X% of north

having But growth we'll hold yet. of we on be for was how but quite business, gaming were earlier a has of kind continued that into been our transactions. I right But year, hasn't now would conversation actual of some which translate will say an conversations these see put this materialized there that it interesting

see plays out. how So we'll that

Operator

of The Golladay next question comes Wes from Baird.

Wesley Golladay

credit have on that? update give last You year Can levers an the platform. And was when pull. highlighted all us the to you you you created investment

Sumit Roy

sheet the facilitate investment help those existing some in things viewed And if keep continue in the to mind leaseback estate being with Yes, Wes, one to strengthen investments that's have partner lending. a to through channels credit the capital either that want to clients. our is existing that on secured to of world's partner side. sale for opportunities traditional But to side established is or we on part look continue of with credit or balance we the to provide a to more be real that of operators, the we leading clients basis as relationships please dictating

we continuous refinancings part we think us the interim clients advantages natural interest that to rate. are people higher of current credit of good I'm given down. that why the if strategy as one higher talk that we reinvestment about interest exposures much environment hedge go Wes, sure don't to actually the to in headwinds We guess Well, is And here continues rates. because that's is having rates really credit. you what, this about different have of roll the But credit this that we such incur experienced, for that reflective This have believe is this a and risk. we our to perfect to that doing to of And how recognize is at are we our investment. be a lending

of refinancings back should our And able be headwinds be cost yields. are therefore, in will our this capital traditional we'll our good at to, we -- more will sources, of invest it on better. we dissipate. get facing We very capital these that that

to grow hedge a natural whom to leading with headwinds very world's to so continue is want become we credit partly relationship. that a I much our that as faced, line of also And operators defensive think really, mechanism operators, the and real and to but the partner estate are the in we trying to with these

Wesley Golladay

A quick on one. follow-up that

hedge, loans? these SOFR-based So the look would more keep to when about natural you talk you

Sumit Roy

do ourselves try the it given in, where still environment the Yes. lock we are longer element. loans. a rate no becomes floating the We and then expectation get given protected. very have and is expose what interest perfect but it to But is to not to we large, do we rates, by of software-based hedge. But We try well

the it's of loan, [ that Sonia ] it one was the have a We and -- the -- [ it's U.K. in loan floater off Asda was ]

outcome mind to that actually it. got loan inherited and off of other in provided was been it. inherited to imagine, which fixed it was that million to and financing had Spirit the loans, how paid made seller a was every an we also has one underwritten largely, had we way, component we $XX some from keep Spirit But by And XXX% a that that superior we've which, at that

want something? So do -- it's yes, you add to Jonathan,

Jonathan Pong

think because to actually think natural that, almost basis, well significant a nominal a at just Well, Yes. a of a $X.XX coming about got to of when at it $X we've pretty debt to lot on in for staggered, so we billion instance, our decent more billion amount that next we 'XX. hedge, look maturity lines $X.X it's or in schedule, year, billion I add lenders still of but matures

we're much when that you off a and obviously we're cost repaid or have in that lower. rate our better asset coupon hard environment, chances lower corresponding much get could refinancing to our and is it's are replace so liabilities cold And will as of get capital a

hedge So I natural way think element. that's another through to the take

Operator

question next Our of Hemnani Harsh from comes Green Street.

Harsh Hemnani

income sounds in sale-leaseback ones credit for So locking capital compared not set perpetual period acquisitions versus the needed so towards and conversations of time. finite contrast are How of market look when solution traditional for interest to trying something quarter [indiscernible] iterate redemptions. for that on jump and to a this capital good financing. opportunity a maybe looking more of than based more rate could of down, Is a like It in ago? that the seeing tenant some acquisitions than the for today sources market going provide a capital tenants year from realty you're rather would you hopes traditional that came sale-leaseback

Sumit Roy

opportunities. are sale-leaseback certainly seeing We

quarter, we Harsh. But you're right, of XX% in fact, In what sale-leaseback. was it closed first the

was of If to everything into seeing at lock you compare rates. are figure out year part was The trying to that, before And it did it it of to I not XX-year closer last that. think clients these we to leases necessarily we XX-year, And because XX% year, are not cap is leaseback. XX%. ways sale elevated

to think to an But far I doing available we is client them to brand-new shorter if have going is it's inclined and to we a they're with, be there are if alternative provide a again, to if through credit markets, isn't there is much -- that. to so relationship it that want with clear more there. client restore just of if them the them, our has And desire very not sale-leaseback debt them even compelling we our are part as be be going it which that have higher, I duration, a opportunity don't not and go

credit going there of We to credit the that exists. are not providers out some be like funds pure

things So are much rate going about in I roaring do as there will I as that to back. believe start see that changing sale-leaseback more do to come play sort is stability the out of environment comfortable people get where

our are right disconnect given transact where some it where and now. of capable really between we -- want a We what are with in they transacting is of names And discussions cost capital. to

a So of time. -- matter think but I it's

Operator

of our And from Jefferies. Linda next question comes Tsai

Linda Yu Tsai

Greg's dispositions. earlier Maybe piggybacking off on question

color us give analysis? you that predictive on works? be some more of will help platform to proprietary just analytics how dispose. Your Could the What some inputs the used with to are

Sumit Roy

Linda. Yes. That's secret But is, sauce all right. where the

and to -- get me Let I to want don't pedantic.

that industry. a even is But largely, So high by dictate tries -- the were of XX the predictability variables, leasing the key level a way be identify analytics outcome. or it try And could our by times renewal to it pretty client. predictive which outcome it work the industry variables to at keep and models XX, XX, by

the renewal figure as, able we like the going was what leasing have to was So we we that during was currently predictive the -- activity going where analytic tool be defined look will around pieces maintain we to how our are out created risk a period? to the rent to

Or And be algorithms our all and less? -- But more Or the how each this. you to of where that biggest that does of has own of dictate that's particular portfolio. we is set these in to that's identify of created how industry piece risk its can and risk, as outcome. is are going variables imagine, lie it it by sort going industry go to we define -- we've

the fairly us simple it's algorithms, I think a is et task. years. I of cetera, taken the creation X.X, X mean

me their test So me and that But want these to I've piece. these strangely calibrate back predictability. to that models at to have and don't is we the allowed looking that refine got I us continue it to here. improve minimize models data

ahead think in XX you -- whether is around results you what of true should, platform, for are posting that where And we why the the the trying having that's spreads, of will get of are assets we release the we value think those see I that our that's when see years. profile lies I when in the think been kind terms given we happen some renewal. to we identification re-leasing what assets lease return maximizing of are

what's XX,XXX tools I the to perspective with with it group tools, with in to be I together that different share can't has you how have to think driven. predictive with industries be with When analytics that's be sort of management clients driven. try asset along the discrete different has mean It X,XXX we using the experience stay it And to XX ahead portfolio. it's technology -- done manually. locations credit the view, on-the-ground where is team along was dictating their

a Linda the proud in why chose millions we and this very, And is we X -- investment this of. so that's tool several to that make reason very ago are years

yielded or potential value some that has of old for not of as the very part particular it decisions asset. highest which the and for dictate now use hold every it's be be that, And vacancies, we decision we've parcel may and us prediction best tool may platform. the now disposition, Be of this making. creation use the used also, are and seen it much a being acquisitions, is And to that

hopefully, So but really much get how pretty too didn't tool I expanded the works. that's details, the into

Linda Yu Tsai

terms dispose like. metrics in using of back can you core you to us to referenced of And characteristics color. earlier, just or the give Appreciate that get what then looks some portfolio that

does international to years exposure the fit more versus How that or have X portfolio? You kind of X ago? core

Sumit Roy

Yes.

think quarter, in advantages diversification, mean a had the it what For And thing. diversity find that were played that superseded here find in first I able to in geographical then -- profile I flip having that we the out far the transactions will so U.K. us, we the able is are right? to geographical return U.S. a saw of good you the

have grocery. viewing an like, as In composition an we optimal terms of clearly call it, portfolio, portfolio. the what are portfolio, of the actual and we let's we optimal might

to may along If our answer the we be necessarily portfolio. XX% our creeps into not all. that XX%, a by is not example, with credit, And apparel XX% other And to good you reason brushes again, devise they this to want that's what to like right that's us to areas either. want we the there particular But using portfolio. tool exposed thing. that at not the et portfolio very across subsectors then believe the be broad cetera, to why help XX% And optimal are of overall be Grocery be that's grocery to today. not happens only we the But way, giving the XX% of case. an I'm

businesses. our XX% back, And about think step side. But by this. But over way, I -- characteristics. retail that like That the overarching from how that the service-oriented one more that's, for overarching composition on doesn't geographical price sits the mean top deviate you that the point of of something portfolio, we that. has and sort is on these elements you We businesses. or we of think, retail and think diversification retail nondiscretionary you we If look like that's low won't of

Operator

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

Sumit Roy

the speaking you. Thank and you Thank and you soon we seeing today, at upcoming to all look joining forward conferences. for us

Operator

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

now may You disconnect.

Realty Income (O) 7 May 242024 Q1 Earnings call transcript