O - Earnings call transcript Q4 2024 | Realty Income Corporation

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Operator

Good day, and welcome to the Realty Income Fourth Quarter 2024 Earnings Conference Call.

[Operator Instructions]

Please note, today's event is being recorded. I would now like to turn the conference over to Kelsey Mueller, Vice President, Investor Relations. ahead. go Please

Kelsey Mueller

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

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

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

portion call, limit. During of the a observing will X-question Q&A the we be

If you the reenter would may like to questions, you additional queue. ask

I call Sumit to will CEO, turn our over the now Roy.

Sumit Roy

of AFFO consecutive growth our in a dividend our you, return and marking XXXX, of X.X% year yield per our no held in XX.X% share with everyone. with company, to to has reliable and our XX% remain as for Kelsey. as for Income negative Thank averaged Welcome, our XXth approximately we of to stock operational deliver resulted history Over This, In annual of growth. combined return commitment total our returns true the XXXX, who posting return X.X% operational investors shareholders. a year. year achieved our total Realty a public steady, XX-year

key X believe For ongoing through success. we themes that we today's move will call, define our long-term

returns. record and of track First, results proven our

for our over avenues provides new our our And Second, to to continuing opportunities value growth generate core confidence in platform shareholders. further to time. our drive third, the in business enter

first theme, our our Moving proven track to record.

platform able by deliver in our are variety macroeconomic save against to that built. public underscored XX-year share a One company have one. results year we XXXX backdrops, a every as history testament per a of to AFFO increases positive the Our is

point yield. at initial X.X% the disciplined strategy, weighted investing average year, billion allocation cash historical in resulting We our investments points. in basis priced spread with XXX remain capital attractively funded XXX $X.X exceeding a capital, Throughout investment basis we of these average our a

fourth Turning quarter. of to the details the

differentiated advantages $X.XX, In We growth continue initial or company's AFFO competitive $X.X fourth results. per the X.X% representing we strong delivered a straight yield and line CPI of opportunities invested average X%. the high-quality quarter yield of weighted business Our to growth share billion quarter, model unique of support a X.X% cash at assuming X%. into

XX% annualized was income approximately investments, these the cash of generated Within investment-grade clients. from

considerations of discrete sourcing average of transactions a billion range the average $XX cash these and together XX million, total transactions investment and our weighted being unparalleled weighted transactions highlights $XXX invested depth of over size yield our with X and XX% X.X% including over In with represented acquisition The one we We approximately volume. at which $X.X U.S., term lease completed of nearly of the breadth years. platform. initial XX million,

total, And approximately by and of operations funds term at these approximately X of dividend million XXX cost average capital, investments over weighted we basis $XXX a $XXX in short-term an in In weighted invested completed average weighted average lease spread X.X% yield payments. years. from initial Europe, adjusted supported a of our at were million points cash after

to operations. Turning

have deliver our enhanced decision-making we of results. fourth team as have and quarter have with combined leveraging portfolio another strengthened and stable By of returns. the proprietary we further great our returns. continue We proven saw paired with cycles, economic deliver through possess, XX,XXX we portfolio and diversified of experienced predictive the analytic tools, amount data with reflected internal our capabilities to year our over that in a built believe have properties us various asset resilient high-quality proven clients management This,

the quarter in XX.X% occupancy with quarter. ended with the prior We line portfolio

renewals Since recapture have a Our new XXX XXX.X%, approximately $XX rent expiring million cash annualized leases rate. generating we in at lease successfully XXXX, XXX% was resolved rate recapture rent. on over X,XXX

to platform, opportunities. and We strategy, which analytics on expand predictive important ongoing component of capital analysis through the in identify develop drive the an optimize to and to increasingly and our assess dispositions our is our acquisitions regularly we strategy recycling continue growth portfolio

assets sources strategically $XX the growth. related that long-term value appropriate, enhance million was but total properties. $XXX capital, net organic reinvest the not portfolio, million proceeds in properties only sold unlock us quarter, fourth of vacant Dispositions in To which of quality for end, of higher-quality our of to to allowing we XX when fuel to

For supporting an year, sale in properties expect program, net recycling had XXX proceeds to we the $XXX increasingly the of continue of XXXX. we from full capital which active million

Moving to business theme. core time. our driving to our remain We second over in our confident in ability growth continue

current of the on As approximately Based we spreads industries to attractive a property investment deal we look scope pipeline, to year. visibility of geographies. XXXX, see across forecast and investment in billion for the volume broad we pipeline and investment types, $X opportunities an

positioned capital in on are increase based marketplace. to deployment well the We see transactions we

following we AFFO range share at assumptions. per year, in growth expect X.X% of the midpoint. outlook the representing This $X.XX, incorporates the $X.XX For to the

year, tenant. robust M&A move on $X.XX tenant industries. of for opportunity an stronger well clients large real well given clients in out through side, forecast positioned rent the AFFO we as points provision items acquired a negative majority XX out part of into size knowing from these an as transactions, basis impact These this are our value as those cycle of from which potential estate the our impacts underperforming underwrote represent properties The to in and also scale. stem we to office deals effect of of but On loss maximize result a a includes

average. with retail Given favorable with level real historical recapture and anticipate a across releasing we our outcomes to the estate, industrial at strong market dynamics expectation rent consistent

fees, not assume current in do we our XXXX XXXX, in forecast. recognized benefit $XX repeats in representing termination to we $X.XX XXXX Additionally, that nonrecurring AFFO lease million a

to Turning theme. third our

our including is XXXX, the Carrefour. with Throughout sale-leaseback we our strengthened global platform X-Eleven, with X.X% long-standing our top We growth leading end, well the further names closed To repeat pursue that lease a world's transaction million Morrisons multiple companies. annualized to clients net partnerships page. is fourth our avenues real and the and now business solidified position partner of in Our rent. $XXX X-Eleven, trusted top client through at positioned as estate to of quarter, we a within which

absorb a attractive marks valuations. allow sale and X-Eleven that transaction our in X one This sale-leaseback to This transactions high-quality close leasebacks, transactions and history, us size, our large of ago. our at deal began to showcases decade underwrite scale source, while partnership relationship-driven almost ability with approach

avenue Another capital our investment private opportunities. future expand is opportunity recently growth initiative, an further to our to platform for leverage proven announced our

with strategic portfolio to our on fund position, we long-term progress and through stability forward financial updates discipline as look We move continue growth. Overall, to sharing provide diversified Realty year. and the the business believe Income's we

would to detail. in With like more turn results to our discuss financial Jonathan I that, it over to

Jonathan Pong

team and consistently we'll across We year the remain Thanks, was business. the operating -- generate all solid results. platform that continue making our of in execution unique our investments confident of to Sumit. we strong are another areas XXXX

and net the well with X.Xx. ample to are sheet to From adjusted forma leverage a EBITDA capital of annualized with remain year modest allocators positioned active liquidity we balance we as finish pro debt standpoint,

of unused $X.X Our consistent end, billion fixed XXXX. our and remains ratio $X.XX million we cash, of delivered quarter held coverage X.X% on charge X.Xx capacity range X.X% to and of billion of unsettled $XXX liquidity, line credit. equity At the revolving with XXXX forward in including

principal limited, exposure February X.X% only of at Our year-end. to debt representing outstanding our remains debt

cash the balance the sheet flow platform our contributes of our of and increases our record stability dividend. remains our strength monthly to to of consistency of long track and The

of one Index We Dividend XX are S&P our consecutive having in the XXX for proud Aristocrats XX for companies to dividend increased years. remain

most effect is grateful a dividend dividend support for our our the payment, the take income-oriented XXXX over consecutive a current million listing, remain our of and increase XXXth the since over year long-standing dividend Our shareholders. and ago increase March dividend increase recent monthly X.X% for declared our representing This monthly period. monthly the increase X.X% and we $XXX will

who also the almost uniquely professionals dedicate themselves and commitment XXX our view, platform dividends. years Income and without market globally unique to ecosystem our The these partnerships features to of flow come. the combination and income-oriented of the diversification nature makes lower the both cash at in results remiss earnings and real scale investments our the and drive growing in In talent, We'd estate depth this to investment leverage be capital of cycles positions economic our and protecting broader throughout volatility industry acknowledging large. Realty the in to experience of

To program. common our for stock utilize in any Board cash neutral, press fund clear, up flow $X our on earnings activity in to proceeds mentioned repurchase for a program to repurchase or intend value. we as asset any be to from leverage to stock free be As dispositions we intend release, authorized billion activity the

remain of an for to source, underwrite seems opportunity present our opportunities, While close in in the capital. and manner at confident we ability It available our on itself. to deploy us to tool have appropriate this cost to spreads should accretive agile high-quality investment capital

complete I'll to Sumit now our like to to hand back remarks. prepared

Sumit Roy

partner the we company highlights our over quarter. of to proven our to our sheet. record continue the closing, and aspire be companies portfolio, leading stability and results, team years our relationships In demonstrated during real many Jonathan. by our We have experienced a value you, members the performance the the track built Thank fourth talented supported XXXX to balance to add strong and as estate of world's

with to the offers. do and a the value are are operators encouraging, what they the to pipeline remains opportunities our forward, testament Looking partner who best our at active company

open Operator? the now questions. for call to would I like

Operator

[Operator question Granat Instructions] ] [ And BOA. today's Farrell with comes from first

Unknown Analyst

in want does And of apply about expectations cap cost And just how your rates to trend? and rates forward. cap your seeing to ask are going line current today? of your how you that capital sight, I

Sumit Roy

that on assume cap pipeline Good question, that are we around rates that Farrell. in the averaged where to would have, going I the right currently we be XXXX. based

Unknown Analyst

capital thinking also recycling your end Okay. How any share. see were much And curious at 'XX, about that. other guidance. acquisitions how have I terms little of a funding the capital you Or I'm you're going able you color give if would to know in of of you to forward? recycling,

Sumit Roy

on little to give visibility complete can early year purposes, modeling in similar it you to guidance a we XXXX. be what It's Yes. achieved in and that front. will But the for assume,

Operator

next from with our comes Fargo. Kilichowski John question And Wells today

William John Kilichowski

And capital? repurchase on equity -- attractive shares any little start contemplated those could we other where you options for for curious, program. if your more where threshold the share a the are I'm Maybe your what's becomes repurchases guide? a than

Sumit Roy

John, today. is function we this seeing what a the in are of So market

fundamentals If months, you look the at October, X Fed necessarily our months, being were got not tool backdrop, at feel we we $XX. what's in high our X represented since with is we happened the markets, in down almost last Literally, to that $XX $XX. -- is XX-week rates. the within should this in that where of a to have. like In And reduction capital business we started the the

we the buy it's that And to But this of the back, end that Now we clear we to we has want and investors. if to of that we have day, -- given like sanctioned. we are do that will and cash then to best which economic the the in is it next are market. leverage-neutral to to an be we a In to felt use is choose to one years, have see At I hope experiencing, continue X free the what on this decision just Board volatility but stock that our operations only we basis expectation lean we one have the buybacks disposition that level flow needed we us. on the will volatility for is is that and to option believe is proceeds don't do. from event, tool, available our the the needed super

William John Kilichowski

far function as little year want to curious picking if And of a the the last debt your year, market last portfolio just as up making could then here from you're just the were range. more looking on say or part closer for numbers provision maybe I to bit to you XX Got XX I be the a at tenant of bps. something for little is concerned. your and at guide. a cautious your you more want these if seeing I'm from the it. in if year bps are the credit tenants bad health expense to The overall jump starting conservatism nonreimbursable that's from is

Jonathan Pong

the a X.X% property we your for with rate, John, taking have is unreimbursed guidance That first new associated X.X% that is do properties. expenses. for albeit run there some for assumption have question, to we do carry closer to costs

so obviously the can And we offload with we quickly some unknown vacancies. how associated of

close Now debt of relates expense, bad debt percentage in to points a finish we basis as to did it terms the for bad expense XXXX, XX of revenue. as

underwrote the $XX So remarks, primarily majority that of And an transactions. There's of is a surprises. prior of a there uptick we these in that. any handful mentioned prepared part as X Sumit that aren't bit million really comprise as of M&A tenants his tenants a are

conservatism. So a bit little of

to in recapture. expect do be short-term overall, some nothing of properties these concerned get disruption. to But about we could cases, There to overly well our these just from it's perspective. think I the think be quite back on I many

Operator

question from And Greg at McGinniss our next Scotiabank. comes

Greg McGinniss

market, transaction thinking you from for year? debt you today, investments how where the about The stand versus of versus split U.S. are between Europe the kind

Sumit Roy

It's -- more willing we when of the market's what year where transactions. That where clearly, Yes. and the tell, U.K. cost was come for in capital sellers Greg. Europe changed That's environment to quickly last quarters But opportunities did the the were the to and to market. early we of changed. There majority the too saw

the transactions risk able of We were at were between and at about Our and we international to the ended for cost to year acceptable inheriting. had us we capital XX:XX the split that improved, U.S. spreads transact were

generate we have, you I the do XXXX. it to terms keep is of guidance we'll little back to in goes a tell will again to what able pipeline we to in where split were very were of And we ago, the the platform early. business confidence vis-a-vis what I today, kind where that year months a that we and pipeline out X And sitting there. it that model probably gives here literally that by up we want anybody with have out given is But billion end to about that's generate on us else quickly is the the acquisition testament a caveat for were to it front. saying able come that a how talking differentiated $X

It already the pipeline have, end able to It's we the credit going visibility certainly be ZIP Thus, to a we cap have. question similar combination have we I the won't answer the think but was this today. of up And in disproportionate and be XXXX. visibility we already where year that we around will that of what that investments it XXXX. be we But makeup, the are part for rates parcel will a and code. achieved to have that's in a

Greg McGinniss

Continental out kind and excites further of one moved in right the there Europe, your Okay. as into investments built give And in the countries on terms about Amsterdam in which team you've of some could into of what opportunities kind you info just us you progress now? you've

Sumit Roy

It question, continued great a of very in the year, our we U.K. is load And has establishment because the why G&A That's right team part Amsterdam. That this well are a of today. Greg. continuing last to as mature the remains out it platform. around been is our reason where X.X the Yes. both that build goal years, is for in as is

the team, to is is that team to scale continue to allow the place. in going And us what's permanent once

entered we been into there are So new fully hasn't that in geographies geographies, terms that have disclosed. no of new

the same as quarter we a majority already investments was we were we was that Spain had that quarter. market in. the we the entrenched had go identified to was the market a of a invested last Poland think But into. second the wanted that and few country in The where we one -- lot U.K. fourth what in fourth that I the

it's Portugal. expand and countries Ireland, of we Germany already obviously But that in, established are Spain, the allowed we focused. are we've outside were CAT included But the and to in our France, same Italy, Those loan Poland. that that, countries geographies U.K., it the footprint us the that

Operator

from comes with today Street. [ Taboo question Next Ryan ] Green

Unknown Analyst

versus the capital view net quarter assets expanding real appetite fund lease assets? are With recognizing are during your how REITs the property this gauge other on space competition other that fourth that private REITs announcements alter arena private estate you and into those does in different in do for that sectors,

Sumit Roy

company. we transparent talk investor doing in Ryan, base this ourselves to a to of to try pride some in Look, anything. is we what the that's ways, prior very We that reaffirmation strategy a the quarter being to our this we a to which announcement the private the was of that into do chose the is tap And sources. during last extension business, market signal to natural to is announced.

maturing that developed. have within process our launched to of tools with we that a the data really place. bring along the leverage that core+ believe just entry has investors platform get room We and private over I circa we've this a last that It's into for look, the that place perfect is we point And space. believe open. a people have arena marketing we've years. in XX XXX been a we

the of are space who this the out. come affirmation operators super excited we laid business. that are other And that have very We about strategy the really into to of particular choosing this is area operators, successful fact an

place in what of like get So we always keep a abreast terms is like do, into our diversifying our sources not allow massive to but us of is available we We'll good. we of talked that we are about, We'll to -- to feel which quantum of us capital. feel capital. just not progressing that of would you equity move share how execute some such of continue this for we've the area, capital

good. And so so far,

Operator

from Morgan today Stanley. with Kamdem our Ronald And next question comes

Ronald Kamdem

X ones me. quick for Just

Just going back to the pipeline.

larger you it Just sort there? looking sort maybe if the wondering pretty of on any is and And of if sort Or deals verticals of like activity the centers all is granular? in what comment the there's can and gaming there? data

Sumit Roy

Ronald. question, Great

the we and transaction, opportunities, currently of have very above. have define don't we pipeline. happy in very transactions pretty large to and fairway mill So right XXX the and a the pipeline run we a large very built robust are down of type These look, that we are have,

your out. In terms attached of obviously think take the over gaming data you it types, mentioned its very and has But plays by we'll very episodic. Look, asset a gaming of couple you of There's nature, that a finish all of lot backyard to own is, centers. in interest of mentioned know, ran, that, ongoing. conversations I'll that gaming long you have as how We a do very getting in see fuse things terms line. the we first.

create walk with. and And saying all coming out a to away very from want developers partner with incredibly the and we of we who The exposed about, to most large hyperscalers markets up It's interesting We've want excited that certain sign relationship data are we're we the going are Microsoft are developments, center to space at some et who willing is operators leases we Which cetera. to? same what about but news for? to are be one importantly, want very are that we space. that deliberate seen a very to other time, long-term the we

terms track terms diligent the borrowed deliver about confident their we And process. of of discussions are not have just ultimately in make those we and work underwriting their institute ones record continue and in of types having the that track deciding forward are to with. are our to as terms who ones actual records, very but to an are track to things feel very become competency, want in record ability we of us important we that Those their and that product, the their that very in the

same. who physical discussions real no the leases? is it are at is it's learned in space located? is it developed And that Because estate, that of obviously, What end it through center lease all, we've being for? we've multiple the the where How true And had. of kind the the -- data

AI terms the of we services, to cloud invest be want which that selective to a lot with will in but believe ones in data we do and whom. demand So to have continue hyper drive of we for centers,

So on the that's my thinking data space. center

Ronald Kamdem

my then is Or is year? rent as just unique the an we basis of second through? you bad aside, portfolio outsized longer should write-down straight-line quarter and a is the of a continues roll on guidance one there a that this as is normalize Really it of acquired helpful. in really, just that sort a question expecting debt on the bit is to it just a the -- longer sort be roll calendar? -- points. sort XX of but year the sort of Was the -- tail is And to of of as Or you sort

Jonathan Pong

your on right. question, first you're Ron,

quarter, For with was It a there associated straight-line fourth rent X write-down. the the primarily tenants. was

was about it impact. so $X million So or

a reason in And was our is run rate so lower line straight that little bit why the than QX. one

as bit and we'll that trajectory about a now to tenants of are I we the obviously debt get think lot that it And the range As reserve. represent share midpoint X go-forward end towards potential relates a given per late concentrated potential in $X.XX narrow expense, the that it's closer reserves year, right of February. the of these

having think are for get a certainly, would those. we that. that to our just conservatism bring narrow hopefully I expect on down of But outcomes We and information, wide more as we range

Operator

of Smedes from Citi. comes Rose And our next question

Unknown Analyst

This Fares Smedes. for on ] is [ Matti

like of to about XXXX. coming then talk Can debt your in a And maturities? well? plans under due debt your next have $X looks debt just the Just it these the of bit couple years looking to as little side, you billion maybe you address on ahead over maturing

Jonathan Pong

in very maturities been process. any given our year. much staggered an intentionally That's intentional have we Matti,

at look on out give year, due you is to the U.S. so our this a think X.X%, were now, Right billion if unsecured at or when take. all XX-year go coming $X.X we or financing, I basis. this dollar

probably You're then X.X%. in It's around euros X.X%. at in sterling. probably looking X.X% And probably

lot pricing debt, to assume it's dilution average. going XXX for you the dollar on points it dollar convention we so the year Perhaps a on around and headwind of midpoint is because and So half maybe the in $X.XX but of currency that's basis date depend which or maturity is of year refi, assuming XXXX.

frankly, I of think before We've that ability as we and be maturity having go that forward, it We've it a environments. decade seen headwind right the lot recent think in we've absolutely been seen through be to We've a schedule many different us a a the for in currencies to rate seen the interest and cycles. to different tap having options, optionality years. tailwind I that. bite. gives staggered patient the flexibility, X into wait and be

continue to to our maturity that's going risk. we're so manage how And

a to us of day don't [ allows have, ample sources to We $X.XX on out again also a course, and a do billion, pressure and we ] have quarter. feel certain go week deal that that so

Unknown Analyst

Great. And quickly. then back circling guidance just on

and increase, for than higher full It it like looks Can Your you comes bit there? a talk driving little income expense. tax 'XX. that what's some puts about guidance maybe in range takes year the

Jonathan Pong

Sure.

minimized are into So active subject XX%, tax to in the a rate properties the rate as we up we've side, platform you -- this in U.K. that build And at particularly the around NOI we creep run U.K., that to are point. year of and the and European we've do going that XX% income start seeing down an U.K., taxes statutory European had on we up. buy In

in XXXX. run income for that's translating and to So that kind did And XX% globally XX% $XX of really million we taxes rate.

taxes transaction income And look Both investment every at I will on essentially that shows basis. as income we underwriting. emphasize run rate a if well number, quarterly long-term be. underwritten you our short-term we impact of that what would capturing committee, to from tax that always the new the are bring that basis a in as QX for IRR

Operator

next our Brad Markets. Heffern RBC with from Capital And question comes

Brad Heffern

was you relatively assuming was comments the that Sumit, the I'm cap in sale rates. prepared mentioned quarter. leaseback the a X-Eleven in low

So just better could talk and does if those initial private curious potentially trade-off the and with about capital between there the I'm quality assets fit spread you in vehicle?

Sumit Roy

in what you lot Brad. a asked, just There's

one. cap rate. U.S. I'm not X-Eleven's about dominated we know, talk try quarter. of entire billion we But as X.X% that rate. clearly, about what north going to transaction specifically So I'll at $X each through did cap the did, that that to you And was go was which a

make discount where feel And that get XXX the other at this at is particular point I'm going least we trade. these to were confident very we able points portfolio to assets basis to

way, you'll about hits at a in look And just the If you get have look that assets XX-year, XX-year XX transaction and would. of XXXX even you by there. at the number assets that X-Eleven

average range very assets It's You the the is. will That's And from the the obviously, of low these high rate the see mid-Xs. what to Xs pie. range probably in where they trade. cap

with look, what And us. it's, stand we to sale with chose to is this our leaseback for. testament again, a work so And They X-Eleven. sixth

about happy portfolio. very are this we particular So

about fine $X.X is for slightly did sheet. in that different for a one. $XX but The about balance billion investments make very this You asked something be question certainly would or been implied would given on I of billion with it just in We answer this a transaction about is would are this the year. I fund worth it being second XXXX. business. better But has know point about transaction a the comfortable profile the return We particular have better don't sourced we you transactions yes. in fund overall The suited business. suited,

why we that that. have were is And to a could business things running, the there is we need complementary. to side. what public the able balance to to walk which to Because the check the being boxes and so up say are excited our where complement platform which certain from, act do we have on public about chose we raise we sheet. is the can that away the we as why take that a what done and initial fund have all almost achieved on fund that That we Xx transactions -- advantage be on side do and to belief able able side supplements spread truly had for built. is business are the we of It capital on that private we've except

Brad Heffern

for maybe then And Jonathan. Yes.

know On that the First mentioned? that it's Or potential portion is office biggest more the And Or of the front? a all, is this surprise headwinds it? a is you move in of in part the the for comments, I broadly, out, the that you the then there potential entire portfolio? talked of on small prepared that portfolio. $X.XX was more about But just office

Jonathan Pong

impact So I concentrated $X.XX wouldn't really asset, but handful, say in It in was $X.XX. there it's more that one was are and the a for the XXXX. range

we in office that asset particular in have see some from in rises been we lot everything have the this injunction has to level time. of not As relates it else, materiality M&A. Keep We at that mind, in this that one this brought portfolio a for come to of tracking do anything

that So happened come a of timing it as in the year. The surprise. didn't late

And show so the that does impact annualized up.

Operator

And Michael of Goldsmith our from comes question UBS. next today

Unknown Analyst

changes this quarter. for Michael. just is My Catherine the [ first, specifics portfolio of Greg couple a This to ] on on

already on a in thoughts but saw centers bit. touched data increased in also quarter. vertical, exposure I industrial your the your You gaming the and about

and investigating the if wondering on just can in industrial the any vertical? you're going seeing that you So forward appetite what sort space for that opportunities provide of further is color

Sumit Roy

for focus to invest truth be continues in. industrial for continue we assets. trade The that of the we is the Industrial to they look team, will a opportunities in participate and to at Yes. can't matter levels always that

have So the developing are is that out. that development, industrial side coming us on we and leasing exposure are for assets that with from we the increasing underway largely who are partners we projects expansions

asset to able the you assets. of participate of value side. a mark-to-market And in on they're industrial come where our that. in are, rents lot way us But and see of what That can a trying coming so are create to current to above industrial surprise our that, when and we rents are that's coming play as management the it a and do lot team buy way the focus doing we the that's on being no should is certainly continue ours attest and

So strategy going -- forward. business that will parcel our to part and of continue be

Unknown Analyst

credit or elevated we Got your retail then it. question, in are period that paying wondering been I'm you this trends That's just elevated as second helpful. very of my any given could you're this tenant in to portfolio the that navigate of of And issues. U.S., monitor attention consumer particularly you period if there sort bankruptcies have as

just wondering about thoughts that. your So

Sumit Roy

macro very a going things That's Yes. lot of sheet, et on. conducive Obviously, a great cetera. question. especially backdrop have The there stretched is retailers who are not for a balance

going And that be are to what businesses have a so certain eye very you a can not the have, situation, impact obviously, depending tariffs of the impact big going like? on look so business type we tariffs exacerbate around or is we're impact. big that. an further retail uncertainty and on to close keeping How To that

the China. goods area of media consumer have tends cetera, stereos On you of lot where et of XX% to that come like a and televisions the from

retailers exposed the to unable Otherwise, absorb are to a And so are they cost, to higher going a that. that, is to be difficult have there that pass good balance better sheet. them it's if if they tariff, through for those

example, it's and the the I'm these to extrapolate very in apparel can XX% -- other China that's of trend, exports all very so U.S., just you electronics general actually is across one. specific Apparel Thankfully, the sectors. a world. on the consumer a XX%. only that big a And but is picking XX%,

not it's that So ones quite eye but as on. going we that are a be exposed to are keeping those are closer to that disproportionately peak acute,

downstream all more That's impact that that It's And of our for of aggressive is this conservatism, those in with more year we uncertainty being to are certainly overly But much clouded leads thematic specific reason are of a you element. the not a us the focusing cautious. will, a lot our be uncertainty. if to portfolio. on on. is

Operator

Kornreich from comes question Next Jay with Wedbush. today

Jay Kornreich

how to anticipate deploy us capital can initially going any fund take after and would -- provide for to as the several with it private size additional you've it updates you months beginning Are to to had assess you the there you it. starting Just form initial back when foresee announcing capital?

Sumit Roy

Jay, to we too a keep as opened on progressing, we'll to progress, too early early data you so things of in said, to but We the few initial I so tell far have, good. speed size. literally tell. up how room terms week. last target had meetings, are like We've

Jay Kornreich

more then $XX is of forward funding about equity, for And as one Understood. we this year, you of $XXX have cash. just million think Okay. unsettled million

the billion acquisitions, with intended of showing just guidance So $X for.

curious on the you you to would plan fund how current raise be to thoughts would acquisition equity you at and pipeline levels. if hear Just trading

Jonathan Pong

when million forward of also look around that and of have combination and Yes, at Jay, unsettled think cash mind you in flow. you the cash we $XXX keep I the free do annual

to You sources covers of us do the first $X equity-like that close power. capital have for buying of billion

a year, as We our significant run saw for also becomes program recycle you also that disposition us capital. million tool a a increase last but have in XX rate, to where,

X. a that that through came need, with to of just us in if an certain It's accretive basis model what residual able rate with And average you do assumptions at random confident made when certain isn't number number. in number of year a the weighted our will, And yields billion why and reason left on is. you're achieve cap terms we that that cost our deals feel funding out capital $X being so forecast we a allow into we to

one where a we of we that's even seeing think capital, than current know into deals of little I sensible get targeting a and saying we the even conservative So line, spreads. are on pipeline top a more can you that a cost indexed of that we maybe way that. deals know And

Operator

[ Babin ] comes next Ravi with Mizuho. question today And from our

Unknown Analyst

store or does it you or Can earlier does any are on this countries? bankruptcy at What offer some the reserve the that Or tenants color bps point? categories on store include list? known closures currently your -- are any tenant only reserves? you credit, watch of speculative XX And embedded bankruptcies include mentioned which

Sumit Roy

Okay.

we've since could of The So with I'll names actually in to are as that XX amount of question about know names. went there. has wrong, rent as just fair take the this already your around in there impact say the identified macro talked terms I we've general think year. a the environment fair will losses in going go. well bps definitely uncertainty last reserves, go around the that some what made some the on there's mentioned I've of Jonathan be where that first commentary areas given what volatility that we we amount policies would the of general a is even through the of And those conservatism don't

the that's debt bad expense. commentary So on the

we've happen keeping X.X% but credit mean understanding continue to watch the event. we in In is quarter, it terms we necessarily that on there that eye of list, forward, current of list the close credit is cetera. of already that a and go just watch we will of our list credit a our something talked going list. And the watch particular again, is et credit could as today. what be about modify higher third than uncertainty, is cetera, is where again, doesn't And events watch our because that right to et on are around terms slightly And reflective

names of list could that fourth think the and just we off impacted. In there last credit happen year in fact, businesses on what could get tariff the our quarter, added were watch and on were the front a which based one came few

created. credit watch the this how that's So list has been

Operator

Upal comes Markets. Rana question next Capital KeyBanc with our from And

Upal Rana

basis cap saw by the quarter, on compressed fourth XX points. the Just rates you

the Just competition curious tell compression the does that what there? in market transaction us the what today? drove And about

Sumit Roy

market. Yes. third Upal, an there made comments reduction. some into of I the quarter where reduce was an Fed starting the coming transactions continued a got expectation obviously come around cost on I capital think, think the to of I to look, the going of the of of interest the rates, was of meeting quarter, those rates pushed sellers out to was There settle price, fourth expectation and out. the were all That to done. that There potential allowed higher reservation

basis to day. certainly ] that about overall downward of we a at rate. from XX X.X%, cap X.X% pressure X.X% points the But [ So are the talking had on end the

just to you about is And starting these on and private point there competition, lease predictable side. steady profile delivering benefits competition managers time. second again, the me, that's who incredibly investing. the stability But I of has growth, model think more are asset more large very a this of coming are business made net automation for long of very understand over And of the an periods that

business curated XX of And confident that with is so our to on this and on. lean that's continue we institutionalization everything welcome to feel we very XX% we do built powerful. we years repeat leverage been in space, a of the relationships over platform repeat ability That's to pretty clients.

coming share. the fair but we our of to potential coming like that good we investors thing, these is feel well the all are fact in, space into And are advantage positioned clients so of take these very a are

Upal Rana

appreciate achieve you items AFFO Great. I the there? And that's Okay. But per the helpful. end then you curious impacting in to high That your needs share 'XX. highlighted of to for was what that happen guidance

Jonathan Pong

landing that Well, on of is really right, every based reserve million $X.XX, a XX we what math the where up share $X expecting count. I it off points down think to represents can comes of basis our we do given the are unrented, that side, end on you

bit in but comes on S&P, obviously to spreads. the our really down how correlated of stock fund also that. down help relief it little where correlated the obviously think XX-year is know I So one to most It We front a the yield that the is. to comes of getting our should XX-year

levels that for just at a stability I and will like We rates an market see back that to market. We finds sellers in hopefully are the going. stabilized there equilibrium our is rate volume think feel stability the there clients our know to that billion. capital, allows us $X the is come of outperform the some cost in frankly, where potential

X one is of expense because those the vacant have property and that significant say to of I also would costs rid ourselves margins. So our reimbursed it's just of on X.X% drivers our X.X% that factors ability to really do of properties guidance carry

Sumit Roy

a But I point stable think that's a more key made you the that backdrop, for us. about point

X% Our code backdrop, generate stable care zip the tenure we is and [indiscernible]. transactions, and is just Upal or source a or at just I stability. X.X% ability transactions a X.XX%, And we to want have don't to if a if at

what showed to that pipeline, we last that can we once do what And backdrop of play think you I a And driving out. of stable. the robust that's generate it is a I all just in drivers. quarter our to one growth, rest it terms is more will that a itself biggest the are hoping we ability for. But of think happens, in bit of The

Operator

[ from ] comes our with And Jason Wen question next today Barclays.

Unknown Analyst

were yields development was spending Development in and down 'XX. year-over-year up

development how the drove developments? what much in for underwriting new year? wondering Just is this included that what And are assumptions guidance

Sumit Roy

of keeps today versus delivered, cap is these yield what much investment that are should going the being It's as XXXX up. go development the reflective vintage rate, development why yields Because in market vintage of early developments it XXXX. function on were that that up. it's when or of getting the was more developments older really on And reason The originated. a what

resetting so fair of a telling going be year most today development -- maybe already volatility. think markets to of function of some just that's were the a ago and that's that of I closing were And a of all there's generated you our the where amount development the

higher yields. So that's for reason the the

do going and because clients they in -- want chosen to somebody stability, tend build-to-suit it's environment, the build-to-suit constitutes or reverse and us, did we with and much to be to this to have they that's have with these cetera, a deep with development. up. very with Again, of that relationship we in this of et terms what primarily XXXX, how businesses be development In that pipeline repeat similar

Jason. hopefully, think be XXXX so would addressed proportion I to the it, I underwrite it is the similar should And And I've satisfactorily. how question yield

Operator

question comes our Feygin with next from And Baird. Alec

Alec Feygin

the talked current But or was that call. what embedded maybe about the for have happens the you to space tenant? assumption that's C-store gotten from To up you on what's the And if back in follow something that in guys XQ have, guidance? space XQ

Sumit Roy

Yes.

legal in of and our So -- and And back. of most midst discussions we of are the we and we to to essentially have all are speak line. happen the not space the but we got already parallel back, we the absolutely, if on established we've to front, the operators, not the C-store midst finish space getting very are continues back, in going what of over with were in having other that space

Operator

Our next Tayo question comes from Deutsche Okusanya with Bank.

Omotayo Okusanya

at Yes. In about it perspective? way? from you Europe general. watch bit the versus in looking Europe Could how then And talk is tenant of little U.S. a regards in credit to that have you're meaningful positive any part list the any that

Sumit Roy

there Copper get assets That's vintage the less Europe some in drive certain there a X -- examples. knowing you we clients given lot was one that and a that from pursued the particular Obviously, location. said I'll discussions another with other that parallel had was to already these give on watch contribution list. Tayo. Homebase wanted wanted clients, that and back intentionally we were is question, and that, great of that we Having Europe,

assets in as particular as an those assets. management, we X clients so those strategy management And active had that pursued asset asset

did the and the north of expiring rents of when been the rent our we well pretty recapture back the did in strategy those resolution rents or get And ability is to has in-place remarkable terms list. on behind and we it. from But intentional that it's we pristine have any Outside names watch be why -- happened that, those very of don't Europe strategies. to we are the

Operator

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

Sumit Roy

upcoming joining conferences. meeting thank forward great for the We Well, all Thank and appreciate Have to a us you. look we in day. today, questions. you the you

Operator

you concluded, The for you. we conference all has Thank and thank now attending presentation. today's

disconnect a now have day. and may lines, your wonderful You

Realty Income (O) 25 Feb 252024 Q4 Earnings call transcript