NNN - Earnings call transcript Q4 2020 | National Retail Properties, Inc.

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Operator

Good morning, ladies and gentlemen, and welcome to the National Retail Properties’ Fourth Quarter and Year End 2020 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Jay Whitehurst. Sir, the floor is yours.

Jay Whitehurst

Thank you, Matthew. to earnings Retail call. welcome and fourth and year-end XXXX morning, the Properties’ National quarter Good

Chief Horn. Joining is Officer, our our on Chief Officer, me the Financial Kevin call Habicht; this morning Operating Steve and

how to be Before discussing this Retail talented the shareholder offer dedication of this collegiality, the Properties all XXXX, prouder for sincere to could at work, in past once perseverance, each professionalism, tirelessly I gratitude flexibility, crazy worked past my associates to again and year, value details of other want not National their this I during team hard year. and create support

of in plan. pandemic, business to the two us U.S. a the stock REITs, X% year, strong consecutive capital for people debt $XXX XXXX years, per XXXX And As line XX.X% XX relationships balance word acquisition only with solidified bank $XXX in consistent and our stages up to pandemic rent number set raising relationship our less drawn conservative which we committed feet National and XXXX million of powder, rent associate the our of record quarter rents I’ve and long-term community of the wellbeing, is year best tenant single-tenant due fourth advance for Reaching for and enabled in consistent, early flexibility the matched future million philosophy well-priced put our supporting business, year the XXXX, investment Properties the with long-term base remained associates before, common position said involvement. dividend appointment growth our a activities and describe And maintains enhancing our focus as XX-year collecting of our Properties leadership our share the National multi-year the of tenants, a Steve with veteran cash of programs Chief increasing XXst of was of to the began team by during retail pandemic of liquidity consistent that us us track and the the employee culture, consistent as public deferral consecutive dividend our perhaps in million include engagement, consistently Horn, with than for our credit. by although other $XXX for and Retail Retail to all on agreements in for to due on relationships. company collaborative nothing consistency Operating community end and of executive of consistent Raising the annual spread in dry lastly, sheet with XX.X% disrupted the companies. early Officer. our which and to Highlights properties, in

our details turn to Let and XXXX. about some me now quarter fourth

our continued of of during rent As quarter rents. positive fourth resulting collections to trend XX.X% highlighted the quarter above, in collections

average properties X,XXX numbers Notwithstanding by retail For single-tenant broadly of diversified under of XXXX. year tenants. exceed we retail portfolio occupancy year. rent of like zero model, to multi-year XX.X%, also a annual the Consistent of our we months. only pandemic, due continues of of These impact year rent approximately do the XXXX; for the the the in to year and of rents for due collection collected have January XXXX, for we and just not the for reporting XX% XX% monthly month rate with the business long-term the ended an our X.X% and rents rent fourth of practice a which the rents collected other are I’d grade of real with collections estate favorably XX%. than that less we and to in the retail long-term reported very our investment companies compare forgave collections quarter anticipate companies forgave with highlight similar percentage entire higher significantly the with

the were expiring In this investment an years. regional renewal with our of large, lease or the continued tenant high XX% improvement statistic tenants lease impressive validates and well-located expertise renewed weather incentive our and six the the business our Approximately, to at national real management our of lease material are also wherewithal high dollars A XXXX. of reminder typically of in Our disruptions rate operators financial demand estate current sites. significant average scale, renewal by opinion, with well-capitalized, expiring for without XXX% that term tenants in the environment. leases rent approximately over and

largely properties are of city majority States, United somewhat urban the markets, than been centers. pandemic have southern Additionally, half located suburban by the less in our in the which of the impacted

pleased in the fourth We’re quarter, And our initially our back than of businesses more had bouncing acquisition our well. many mode returned tenants as are we as tenants see to quickly that ramped to relationship anticipated. growth activities up we

invested million initial new single-tenant an and of XX we retail yield X.X% properties at $XXX lease of an cash average years. at During the in quarter, duration fourth XX

of leasebacks million through For under properties of with relationship an the years. business and XX a of duration in invested we X.X% An $XXX the model with at lease XXXX, cash a is of tenants. sale our just new on year over yield achieve our weighted XX long important durations strategic total our we average focus average initial advantage lease

XXXX, an $XX to redeployed $XX into capital had XX properties fourth for and over of business. quarter year the also raising our million of dispositions, selling be million active we properties for sold We XX

cash and more details in XXXX line million in Our balance $XXX drawn of capital equity Kevin balance raised the ATM. we remains our year our on credit. will sheet We provide bank of million on ended million the $XXX strong. via zero $XXX with the of

when approached returning the introduce mode, the whether long-term culture, XXXX, with XXXX there Consistent that conservative guidance the take of in and they to pleased we’re turmoil choppiness will As focus as with we occur. we opportunities all pandemic reflected enter press well relationship be our if yet present well taking his portfolio our review to remarks. guidance into ahead. themselves this account, for release. advantage our is we’re or And our the further details economy of right the a not continues may positioned and growth mindset, perform although to Kevin to may guidance tenants behind in additional in us, and our and economy are in

of to to long-term Looking single-tenant drivers to Retail these properties and should ahead core far to retail leased strategic adhere retail properties. remains National focus to including single-tenant us you on of superior the other the attributes opportunities attributes XXXX acquire Properties’ first, fast. success, universe real are net a The of expect and properties to property estate consistent beyond, continue types of the

growing a generates Second, a portfolio of broadly leases. retail cash properties long-term from flow single-tenant diversified that stable

noted resistant are services As consumer customer tenants necessities. provide and regional our large, and primarily national above, that e-commerce trade in operators of lines

balance sheet high provides our fortress annual the capability like to a to and a dividend able turbulence quality of Third, increases. to that that long with Fourth, consecutive continue withstand investments. economic us history relationship-oriented us in results model be positions acquisition

management lease individual real higher to estate. allow lease Fifth, active that maximizing Our each asset investment focuses longer property. of documents, proprietary superior tenant value and quality on the duration yields, obtain better us an relationships

core years but company. level in recycle institutional consistently Our of knowledge continue growth details deliver to on our commitment of that, Kevin strategic including the and dispositions. well commitment more to commitment thoughtful, out on and or least And of REIT capital almost estate tenure averages ESG, invaluable. supportive me of at as the last And least five numbers, been have the team executive post-pandemic culture, company is quarterly execute enables to turn guidance. leadership have and two expertise a we backbone to call disciplined let with three XXXX not us deep a FFO at for with Almost The to our get believe which is multi-year true on and per most more. through the That of for in over that years world, these a our the great been with of real as team a us half and to drivers XX as to quarters success. the share basis. averages, decades We people our our year-end will we deep outperform for associates our portfolio approximately, culture

Kevin Habicht

million with company’s in from release the to cautionary that usual me we detail make the that greater we may $X.XX XXXX, as statement report results in from Jay. recognition was statements. was quarterly headlines from forward-looking differ fourth And press the the higher these securities noted reflect these forward-looking these revisions share time the press Thanks, cash statements not $X rent fourth results deferred per is per start risks law. in $X.XX and may of the up in third quarter and to considered morning’s were statements under disclosed quarter. per repaid discussed to AFFO we out million release. SEC be significantly from per write-offs included actual future AFFO. matters to in $X.XX repayment time certain the calculating and was may of and will statements to than FFO let that’s morning’s $X.XX to changes fourth factors be forward-looking release core federal the the share recognize share third after that filings actual quarter company’s cause connection could that, share materially tenants receivables, press with the in made. With are $X.XX. expectations additionally, $X.XX results differ statements fourth $X.XX with per this this from which for of in preceding in The $X.X release, of or quarter, certain results quarter’s quarter’s the preceding include rent reclassifying that basis, in for share the

noted, revenues the for the noted, XX.X% was XX quarter the expense occupancy G&A prior Jay fourth up quarter-end, of quarter points month the improve and quarter fourth and X.X% the X.X% of rent which we fairly collections fourth flat XXXX’s quarter. January full then of throughout from XXXX. As approximately was for fourth for basis collections XX.X% XXXX, G&A for reported year at is for quarter. today, with the continued to as the XX% Jay levels. rent

deferred that rent owed it was on over represented million past the the which the clear, regular of today’s eight those XXXX. the XXXX is collections that indications So, rent very I we steady that collections deferred fourth deferred due for periods, good disclosure those included of of of have previously XXX% not majority improvement collection on the on $X.X our rent. the next amounts results and couple of does for rent a previously as repayment the fourth rent front meaning also the are original of rent in repayment percentages collected, on to months. years. timing incremental for we early collection due these website, quarter, page approximately respective rent mentioned, well, quarter of the we as anticipated the as rent XX have some rents. which be supplemental, we’ve of include was over deferred in In the seen deferred, previously deferred noted and is of suggest

fourth These our we of of X.X% on, rent tenants of lease Moving was pay the remaining their on going it about recognized $XX all the had substantially quarter, that our to not at approximately a estimation cash probable. result payments. being annual basis end of as base were a million [ph]or

was which in balances the quarter. off million $X.XX per tenants, required outstanding and for totaling million the approximately to of of $X $X classification all rent accrued fourth million write us rent this receivable So, quarter, receivables or for these fourth $X share balances

FFO been would non-cash So, have write-off, results better. notably without this

these cash accounting usual these pursuing are However, balance not as of ongoing be please write-off, reflected our receivables know we basis this XX. GAAP tenants approximately rent on Rent $XX Again, with that December receivables from payments sheet. totaled despite will the and million receivables vigor.

million. with These now million Now, at levels of first, rent of million XX. reserve much $XXX,XXX over are our or on receivables $X line was receivable XXth sheet. general include levels. flat receivables that a XX% rent receivables in rent to very September And pre-pandemic of fairly our to December balance $X $X.X with

accrued million which what excluded the previously deferred had results. collection earnings, if subsequent from excluded did and the FFO, deferred income related quarter, million reduce $XX decreased Secondly, a rental million the This both the December rent, know general rental and core fourth repayment. of $X.X of receivable. have GAAP had XX. pandemic rent collected reserve receivables In $X.X of or we been a the deferral would to at previously FFO income would accrued and is accrued slightly XX% We AFFO rent, we

We reduction consists tenants December we’ll And to our the during while leases Ruby from Tuesday have none annual rejected bankruptcy base know Chuck-E-Cheese rent quarter. XX% months fourth than And XX currently in less X% of for of primarily bankruptcy. exited today. XX rent our agreed of coming bankruptcy. that a XXXX, we were ending and

per As share. per Jay core XXXX noted share today, guidance of FFO to we $X.XX initiated $X.XX

of guidance to tenant real expense noted press $XX of Some million, $XX X of of are $XX estate then $XXX acquisition million. and $XXX volume assumptions half the second $XX million expenses, $XX of million, million skewed reimbursements include first supporting today’s half net to to million release G&A that XXXX million, page $XX million on this of $XX $XXX million million of between disposition to and probably volume and

have there compared many improved variable forward going be throughout materially into would previous XXXX. this we assumed in uncertainty years, collections our While XXXX, rent continued some to

said, tenants, that’s million base And of – of of what rent basis of million paying of consistent rent XX% in recent of Our months. in as assumed with in due $XXX our our approximately guidance. they’ve $XX We’ve been I our cash pay the total XX% basis these XXXX million represent cash tenants $XXX XX/XX/XXXX. as relatively annual

X% of fourth hand our Additionally, of amounts is or this rent We vacancy approach. as $XX assumption, and of better rent. quarter we’ve than million the not. We’ve us top rent rent fourth which rent, at issuance that loss bank not with any its to XXXX. by from like made million $XXX on $XX many share. or did pandemic, it cash more estimate this too facility. particular given be XX in quarter annual over outstanding did assumed loss of no base down in million remainder to equates the guidance. of – guidance ended draw on feels about meaning than on those probably known as equity of this bank first not of tenant credit but in not years our on a concerns the us million past you $XX our our this, conservative seemed for $XXX companies prudent those be are million could face actual And just line raised loss have surprised We per $XX in and with the conservative

a April it’s Our XXXX, next debt maturity is coupon. in with $XXX million X.X%

in So, very good liquidity we’re position.

is very Our X.X%. press XX.X shape covenant now weighted debt maturity with years of interest XX weighted page release. a average good outlined average rate Financial of compliance the in on remains as

times encumbered was profile For net was debt XXXX. couple times, was the our totalling fourth X.X $XX.X to to properties are and our net EBITDA charge quarter only balance A sheet, of numbers, strong. coverage book of XX.X%, times gross leverage X.X five fixed the debt million. interest by assets X.X mortgages for remains only plus X,XXX very of

sustained offensive incremental shift improvement tenant collection with XXXX off a to to posture. left levels rent seems to which to allows in us health, where continue more gaining, XXXX So, be and

As we years. the endeavor the to our long-term, give will up any open And we will focus with succeed best NNN that, on opportunity the continue to it in Matthew, to for coming questions. remains

Operator

Instructions] [Operator from coming first [Citi]. Your McConnell question is Katy

live. is line Your

Katy McConnell

of to context Great. liquidity how you’re capital in Good year? about color better at on today acquisition you some arrived stands XXXX morning, pre-COVID the allocation guidance, just provide how where Thanks. priorities and you everyone. thinking Can more this just volumes understand

Jay Whitehurst

during as I the level over bit of is little it of you pipeline. doing this or those for three repeat But relationship tenants few the our dozen vast Steve, slowed give to our so work with the the high we’ve majority tenants through business And a know, you relationship turn with I’ll programmatic growth Jay. acquisitions that little sourced pandemic. and down then over tenants done are Katy. last years. can Sure, the bit a their

for our us because settled was it see growth though doing of kind out, to returning wait now slow it customers were and made are the our things customers down mode. how it, so easy And to to same

the $XXX It of prove – a in tenants feels but to growth is relationship to like $XXX like to more feels may XXXX may this a kind It little it may a are be it projection million be for conservative. us it optimistic, little of accurate. So, be mode. our back million

And number it’s the so this is the lower a had in than years ballpark. that acquired before we but few in certainly pandemic.

about in talked those business with best the all repeat hearing by We doing for driven deals market in customers. Steve, to primarily add have from And tenants. so want for what look comes relationship and return that found our open relationship all pipeline we opening them? factors the would, our risk was time, it with the those but that do adjusted from you’re the my with about historically you I comments, a folks anything talking

Steve Horn

notice is looking this quarter, may tenants, businesses store as that kind in Katy, shot far as growth. meaning Hey be the to fourth other Steve. doing a been struggling. the acquire kind activity approach our of M&A, new rifle M&A more we’d They’ve of

definitely hearing again. more our is portfolios investment we’re up pricing on could the that in out robust capitalize we engine them noticed also, So, certain starting from for tenants with they currently. where growth industries, brokers, bankers, coming the

the Now, as them the for far no $XXX the smaller in find number million, as our far movie of wheelhouse and kind much is that there, And $XXX a throwing can health but fitness, bit our market as as we’re we family market, market we current really theaters, there’s for meaning million and smaller little out entertainment. relationships. feel us, with

Katy McConnell

properties of versus might some prior we type how quarter the pricing the acquired lower on about think your touch just you for can then pipeline? And of contributed to the should then XXXX during rate deals? have And Thanks. that cap great. the Okay,

Steve Horn

Yes. continue we’re in finally, I And QSR food the XXXX deal franchisee of kind thinking fast up. rates deal sixes been pipeline, with quarter Fourth a was rate. to cap years. remain mid dialogue many came of primarily for think have low. very we cap that the

what the the these range types were happy – lower – the of but with it’s it’s we of happy so trade the lower And very do, end at that with properties of very and end the low operator, at rates were cap estate. real we

on Remember XXX one right typical lease, a our so over rate. the of it little to us And don’t yield. line cap and straight basis it’s long-term a And don’t X% like we don’t in a and add stretch if lease a deals. points over the it does XX-year time We long-term in you conversations, that our reporting rent initial these the seemed it to give lease we half compelling the more talk additional in XX-year straight-line bumps you yield doing XX-year but our – that much build in in document.

Katy McConnell

got Okay, everyone. it. Thanks,

Steve Horn

Thank you.

Operator

Your [Raymond from next Milligan James]. coming RJ question is

Your line is live.

RJ Milligan

good on increase G&A morning, A guys. in to guidance, Hey, Kevin, XXXX? couple for the what’s the questions of contributing

Kevin Habicht

particular. in Nothing

there’s, mean, nothing So increase. general just I notable,

RJ Milligan

so back you million $XXX in of guidance, that, annualize say G&A. out in the AFFO; reduce million a if fourth by the you deferral that paybacks run Okay. then to a and of at the looking get $X rate quarter, you increase

$XXX of is with about a the million acquisition about $XXX get or rate there? the $XXX activity. acquisition And You activity I’m million guidance bridge million what’s difference just to excluding to to trying run main million $XXX of

Kevin Habicht

million rent. my et of followed the And $XXX you about and roughly that of reserves deferral our that mean, you detail start I G&A, the basis about back supplemental end that. way mean, talked of on the then tenants out, our you cetera, other look rent. you million at we’ve through million, of look it And XX of I our on property step these million, guidance up comments at I then for gives $XX at – parts repayment $XX FFO. the where alluded then base for we if with rent I cash page the $XXX the to million if all in expenses, And that’s core annual we our $XX is,

to which per fourth I’m – got XXXX. And quarter FFO and sure between talk the so delta I about our to math. the exactly, $X.XX I’m core is but for is estimate that the for sorry, that’s gets we the AFFO. your question. about – really answer the – share That maybe, it you not offline,

RJ Milligan

what’s that about quarter. talk assumption in basis XX% bucket mentioned with – tenants Okay. assumption? cash you’ve so, you fourth in making in can up and line a saw are you that that’s there that what the the the relatively in What

Kevin Habicht

is particular bulk for really The bucket that tenants. Yes. of

Frisch’s, it’s So, Chuck-E-Cheese, MAMC. like Ruby Tuesday,

that’s XX% on bucket So, kind plus probably base rent cash of calculation. of annual that basis an

driving what’s that. that’s so And

the are guidance experienced we So, where, probably we’ll say. what we’re And stay retail seen, do can across I say, XX%, and think historical, But I to than we better board see purposes, ticking we’ve been the you’ve if experiencing, positive, in assume in to for recent months. flat that’s world. I would will fairly going trends they’re

RJ Milligan

using the for the in bucket, that’s Chuck-E-Cheese, so rent for Chuck-E-Cheese. example, And reduced that already for

Kevin Habicht

Yes.

one So the we we change I in is a where probably as did my – yes, noted that make comments. tenant

the of So, quarter we the XXXX lease fourth the full to by rent XXXX year the amended and for XX%. reduce

heard. tenant that’s that of the but any I – note where So really only

RJ Milligan

leases. reduced XX%. have XX% I’m and that, you if the on I to given the were trying rent has guess it’s from conservative to not bankruptcy get probably been assumption rejected Chuck-E-Cheese, Chuck-E-Cheese’s just just any that assuming emerged that they that given

Kevin Habicht

yes. Yes,

number my bucket. average So, XX% so yes, an for that whole is

So yes, some worse better performers it’s got it. performers some and good, in

think paying our might example, others, that quite some XX%. be level theaters some of for not you might yes, So

So that’s big in an ad the bucket.

RJ Milligan

additional, of tenant, what built no that, on million $XX number? rent but then And specific that into additional loss of an there’s to $XX just million top that

Kevin Habicht

that’s annual not happen. loss year, the we that’s assume, rent if X% of $XXX million, That’s cash in things base where Correct. a that. basis because vacancy, other would will, or normal you just rent,

it And environment, so this in X%. made we

So...

RJ Milligan

sort Katy’s on dependent and questions the to back million volume growth, it relationship is on is you really to the up Got what the throughout of $XXX and to on their acquisitions be – the follow of year. the And million do cadence expect then tenants that it. just $XXX

Jay Whitehurst

RJ, loaded little a we every – back-end loaded do the pretty bit. back-end guidance guidance we’ve in year as much the

kind of the I XX%, half. think of it’s year, XX% half first second

come, the enough see And be you never ahead we’re able just far can really precisely. so that’s operators, to to what are it but we’re rich able who that them thinking. down instances, pin it. have and mentioned, with very know in to growth expand dealing large It’s We some a to for Steve it’s mode And in their as wherewithal do be the target bit of environment business. a to

And so us. we result sale for think that ultimately in will leasebacks

RJ Milligan

Great. guys. That’s Thanks, it from me.

Operator

you. Thank

coming Your [RBC from Golladay Wes question next Capital Markets]. is

live. is line Your

Jay Whitehurst

Wes?

Wes Golladay

me? Can Yes. you hear Hello?

Jay Whitehurst

Yes.

Wes Golladay

Okay.

Sorry about to I just Chuck-E-Cheese. want go to back that.

much guess being year? how it how this does I of that And impact – the that abated So, XX% rent bucket? would much is

Jay Whitehurst

into being though. is our that’s $X.X this year. of numbers million – $XXX,XXX it’s None so round baked – kind but a and numbers, month in

Wes Golladay

did kind over then closings Frisch’s last have like what Got with you lease of closed of you. have seen experience part – stores. master a and they’ve, Are any guess, highlighted for I year, have you similar the do that to store And a Chuck-E-Cheese or you you we you Frisch. the few

Jay Whitehurst

Frisch’s? With

Wes Golladay

Yes.

Jay Whitehurst

leases Frisch’s. multiple with amount of

Wes Golladay

Okay.

it’s setup. So, like similar a

the the raising sheet expect the doing guy earnings a creating balance How you’re that’s bit capital, the good. you, things the Okay, is still but I and balance the large drag cash year. of balance of for one cash have And on guess, a year? do a to throughout progress you you’re then little

Kevin Habicht

we hopefully even to question, and We to to really Fair need raise do equity think of a Yes. and getting I equity. want moving do. here, sense is, to more in we are the good to posture any yes, we a our not hit don’t guidance note any as additional issue looking need XXXX offensive probably news acquisition don’t to as things

So, neutral don’t we on the – don’t a equity. to this issue year and – need of we we debt it’s we do guidance give sheet definitely just to don’t point and that a fair raising not keep any or we equity, saying anything not leverage capital but rest won’t, balance but

Steve Horn

about to you’ve deploying. heard as – as just a about us tried you’ve large to divorce capital we, capital raising before, Wes, Wes, heard talk talk us from degree,

feel looks we the trading group, to certainly that capital while price deploy even extent, stock at – and equity to inclined about without to at raise plans, we the we is for issue with that is in be it to that ways But think we’re Steve We good So a go moment. the the very position would any is advantageous. can needing acquisition more acquisitions it. the forward our

Wes Golladay

maybe, bucket. category, Got in maybe a just it. the and more the to bucket? your get be it where mix in looking offensive dispositions of Makes of issues. the sense. maintenance of you And pruning then before disposition then out know dispositions something risk past, I the management portfolio you’ve of offensive some see What had kind or as far as the are you at this will year,

Steve Horn

know, we that. portfolio and that of we side turn year can’t some advantage where us always we it’s or the direction; down every along same XX terms will But XX/XX way. be at maybe, properties, down properties dollars. just range, folks more probably We generate breaks instances, either cap in in predominantly that in terms volume, properties offensive points take give are of of take looking of pruning the the the in it come it on our about Historically, the of each XX% of and dispositions offensive at some basis dollar to want rates

Wes Golladay

Thanks taking the Got question. it. for

Operator

you. Thank

Spenser next Your is [Green question from Street]. Allaway coming

is live. line Your

Spenser Allaway

the bit are then provide color trending Can retail in across Hi, thank a the being shopped you. rates industries? little rates fourth Jay, cap you low. you more how on you mentioned that saw guys just cap what quarter and various remain

Jay Whitehurst

you to that Spenser, turn to Steve what, I’ll about. I’m Sure. tell to talk going over

Steve Horn

robust, a that portfolios, couple single-tenant And of portfolios there NNN doesn’t there the and pretty as fair portfolios. net rates mixed meaning portfolios that terms fair in. having play amount, the cap lease then of amount out those there’s distribution some decided high-fives, QSR of obviously, There’s front out a because on the seven them. are well. to typical amount significant Spenser. a Hey, portfolios the of And mixed so, out in just centers low-sixes short. a fairly lease were in there, small going franchisees were sell. C-store were that were a

But rental we in fair there short-term where significant then always amount club, XXXX market and of is we the BJ’s warehouse and didn’t there. that said, out kind Costco’s, sale leases, the being were play were Some there. leasebacks. market, like the of but a portfolios the and a out of is historically, doing because that

Spenser Allaway

Okay. helpful. one Thank really just you. more. then That’s And

other now, year in new when pandemic discussions have guys a So changed with are you tenants negotiating into all at about the words, leases.

either more or guys an anything placing tenants So, emphasis on that’s in environment? current of of the are light you

Jay Whitehurst

Yes. in wondering haven’t change When done we is amount language lease. of what it started, going volume pandemic the were since started. a But we the significant the to pandemic obviously,

we’ve that lease. we change acquisitions the not done, came long-term have the tenants’ when However, to any found it behavior in our

Spenser Allaway

Okay.

So current we that they’re we’ll take pushing in some longer negotiate can of environment. lower if rent kind are for, now, have okay, tenants you the saying, don’t term initial

Jay Whitehurst

The in efficient market. pretty for have not this part, properties. No, the the the for compressed really I cap leaseback markets changed rates the mean most essential and, yet. sale

Spenser Allaway

guys. you, Thank Okay.

Operator

you. Thank

question next Jason from Securities]. [Wells Your Belcher is coming Fargo

live. is line Your

Jason Belcher

average What the range you got lease QX. I’m can terms us a Hi, in so? that sectors cap give deal guys were if and other QSR maybe, What were guys of there mentioned other large you Yes. you just you of kind the than wondering rates from buying?

Steve Horn

properties convenience forward, going very food fourth at The what year to up the on quarter, a Jason say hardest going portfolio forward current and top QSR the and we’re our pipeline auto more going type recover did way the be stores types our the world. we of hit sure underwrite in the properties, the meaning trade of types less right be it’s congregate if see what that makeup, for what’s have where lines to and portfolio. we’ll repair fast majority of wait have similar the near rental in we that while would people looking those deal, at or at uses. moment carwash am auto for of did perhaps of to in pandemic, are I businesses for looked the larger equipment post-pandemic in medium has how vast the the the restaurants, selective type appetite to uses, term, and the service you what been type of I we made but uses,

Jason Belcher

what Okay. that’s the else, XXXX, for I’m if and anything just scheduled XXXX theaters if Thanks. buckets just and but deferral touch repayment might assuming in dining, And casual could you rent there? on then largely be into on

Jay Whitehurst

It’s broad section. really a

in So, about deferral think agreements with about XX% if you entered our we XX% of basis. tenant to

I – more guess, those mean I primary list in tenants, talked it’s pretty in it’s particular. basis pretty then broad but about really entertainments, that section, mean, might and be, anything be would what I so cross obviously, concentrated. section a a would it’s guess, restaurants, otherwise, the not in I the be, of cash and family So, we’ve of broad but some those deferrals,

Jason Belcher

Got Thanks a guys. it. That’s lot, helpful.

Operator

you. Thank

Your next from [Jefferies]. question Tsai coming Linda is

Your live. line is

Linda Tsai

Cheese rent first on positive in any in has provide that Chuck to the the year collections of color given reduction, XQ XX% in activity? temporary Hi. XX% similar capital improved on improved raising XQ, theater two rent XX% months from the E. deals,

Kevin Habicht

tenant better mean, disclosure, month, of not Yes. it trade line guess, and the mean, that’s a given might gone I I capital by given that raising don’t, on. I I optimistic I a have we’re we guess out, get

come that but we’re be, that’s be presuming hopeful to think I that’s so going we’re And XXXX. in to might happening not

Jay Whitehurst

back feels it that lines health pandemic casual the us longer entertainment lines like clubs, family dining and back. and are the to us to movie – theater by faster of feels are we’re have, up we our going trade pop those of materially it trade to portfolio take other Linda, to and is make just going that affected the line to that come like

uncertainty fast about much into about is back guidance business, come theater how the is movie so And business bloom. to being we’re our going related cautious movie just more our conservative part the as to of

Linda Tsai

sense. XXXX, loss which X% does quarter. I And And occupancy? occupancy of then conservative, the makes sequentially as rent improved that translate terms you this realize That in to how in view

Jay Whitehurst

a kind that becomes we because in tenant vacant differently. don’t really evict because mean whether of property I it is think door we I our rent Yes. a of minds loss, the X% rent bottom the – or paying same don’t line. not

color have I of actual into that translates much to real don’t any how you So, give vacancy.

Linda Tsai

Thanks. Or is And term term QSR just it seller on repeatable engaged the you with? going Do to lease one with you last QSR engaged lease XX-year long. you think so was the one, forward? specific for guessing why awhile was the the that’s

Jay Whitehurst

lease may a leaseback color to – you Steve, long additional in it’s on some is us. but term important very this. have a sale negotiating

the proceeds, of negotiation, one the is terms the that cap at along it and rate so beginning of rest tenants of the and the talk And all the items of the about right with with transaction. we

not important So in unusual, to that feel yes, lightning to we bottle. a something and If negotiate is that particularly just a it does for. that was was me hard like very that it’s a very us

Steve Horn

pretty spot I relationships in our the on, a the to standard that the for for time, us think lightning control it’s And long at not time. want Jay, bottle, asset same relationships. it’s in

if lease to a have in short-term give going sale them options. you they’re a less So, leaseback,

years, years. control opposed for So to XX XX asset the they XX now, or

Linda Tsai

Makes sense. you. Thank

Operator

coming Merrill America Thank you. [Operator Dennerlein of from is Your Joshua Instructions] next Lynch]. question [Bank

Your line is live.

Joshua Dennerlein

guidance. I that about you guess sounds where XX.X%, initial I was now of you basis in like morning touch Good assumes points down your loss Yes. think is at how what Kevin, guide, occupancy, wanted a XX.X%. and you. based to or XXX% to you’re I think guys. just It it I’m mentioned right trying X% about one’s are kind potentially so to think another that for assuming to like that it this is down that assuming XX on

Kevin Habicht

Yes. It’s latter. is that be very be, it’d it well it if not be, rent real vacant in might properties, the but XX%. could I fact mean, loss

it’s run rent current I rate. our But annual base way the yes, off it. of X% that’s think So about

some have vacant already a we run rent So, annual properties base up zero in our show rate. the in portfolio that

current. reduction so yes, And a it’s X% from

Joshua Dennerlein

And across end entire the or low of guidance? Okay. the just range that’s your

Kevin Habicht

yes. across the range. yes, That’s Yes, entire

Joshua Dennerlein

Okay.

That’s picture me. you That’s Thank right. have that super-helpful. Okay. for All you.

Jay Whitehurst

you. Thank

Kevin Habicht

Thank, Josh.

Operator

Thank you.

is Thalmann]. from [Ladenburg John question Massocca next coming Your

live. is line Your

John Massocca

Good morning.

Jay Whitehurst

John. Hey,

John Massocca

rent as renewals expiring of of that’s in-place kind we on are versus renewal versus And the rents rents? regards with think terms trending new kind So, of in kind how renewals X% to historical, mean what of of about guess has the in you been kind I trend rents prior guidance are higher of you trend rent expecting kind and of assumptions versus that where making and XXXX? I to

Jay Whitehurst

John, surprised surprised analysis across the the renewed food convenience rents, years XXX% and do you, pleasantly fast and XX% for Steve’s consistent, plugging two nodding, numbers individual the in guidance of ahead We do for we years. look rate what the stores right, of and – leases time over restaurants the of that’s of on in a number continued XXXX are renewal expiring we properties tell tenants yes. of thorough were XXXX to But majority Steve? the that with we at XXXX, When we I’ll those properties. have been that to are in – a into XXXX, purpose very prior we that of that kind high

in we categories. there, or those tend so at to have renewals above average And

So, of level couple renewal good over types continuing of high of – these property years. types with we pretty these a kind feel about that next of the

John Massocca

to month-to-month forum four I know this type but year. collection times only we you’re not makes Okay. And sense. disclose basis, you then a of That get on a in trying

collection you point? is provide it this on color kind there of And to at January trending any I rent collection? February So, guess can is similar

Kevin Habicht

we mean, I don’t here. have surprises think to note any I

we’ve to have seems So be comments yes, experienced I don’t in recent besides want the it to real months. what any consistent with

Jay Whitehurst

far. feels good it pretty Yes. so

John Massocca

for very me. Okay. Thank much. That’s it you

Operator

There are further queue the at no in this time. Thank questions you.

Jay Whitehurst

All right. day. of of we and you and all future. a in the with the many to conferences coming in look we various thank at speaking good forward Have virtually dialing you near Matthew, appreciate up you

Operator

Thank you, conference conclude today’s ladies and does call. gentlemen, this

at and You wonderful may Thank you time your day. disconnect participation. have your a lines for this

National Retail Properties (NNN) 11 Feb 212020 Q4 Earnings call transcript