NNN - Earnings call transcript Q4 2024 | National Retail Properties, Inc.

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Operator

Greetings. Welcome to the NNN REIT Inc. Fourth Quarter 2024 Earnings Call. [Operator Instructions]

Please note, this conference is being recorded.

the to turn Horn, host, now CEO. will conference your over Steve I

may You begin.

Stephen Horn

morning, to and Quarter Good Holly. Thanks, welcome Call. XXXX NNN Earnings Fourth REIT's

Joining Officer, Chief incoming the Vincent me and CFO, Habicht; our Financial Chao. today is Kevin current

of than lower NNN reflect at our yield, cap a this the rate for FFO rate strong for over points million XX.X% release a term. alongside The volume. dispositions XX% in core occupancy asset As at outlined acquisition achievements basis strategic the several These expertise press team defensive income-producing year well the acquisition delivered executed and in position best-in-class XX $XXX morning's including and assets us NNN, near growth were of sales. our XXXX, concluded dedication while with

particularly future. the Key remained XX.X a maintaining for shareholders. footprint strategically positioning unchanged, team of dividend risk capital core light XX value below for our debt and delivering for the average of sector-leading annual of markets XXXX, consecutive our with philosophy maturity Despite proud our executive highlights, overall the I'm theme years maintaining increases, a year long-term average weighted year, for

our focuses our annual acquisition approach, share and disposition top-tier drives bottom-up sheet our to to as increase mid-single ensuring continuing balance digits as achieve the management, on the objectives. in track At simplest, ratio. FFO its This our years. dividend approach disciplined strategy a maintaining we per while investment payout growth over stay well multiple strategy

I an investment public to forward quarter. NNN. He January Chao and continue grow look joins team. Finance, to expertise at the to the would welcome Relations. to Before NNN and Vincent second like Investor CFO experience assumes with Vincent conditions the start extensive market role I company executive updates, officially partnership our we Capital Markets, Corporate the as into diving in in of and brings early banking operational the formally

commitment DNA is over an and of has over fabric years including His leaving NNN. of integral cash excellence the contributed to him. values XX the X been has thing challenge, Through our passion work that evident, but instilled long After to every continue us indelible who and to legacy the of now Kevin's leadership of in very right of CEOs has will the principles just is not those mark to work it that doing to service, is the consistently woven he to in for the the had his and part completed, of an ethic, not standards billion paid, $X Kevin. departure. guide And work culture deeply has after success His shaped into alongside dedicated NNN. only the but dividends privilege

and of the gratitude on analysts heartfelt the Kevin, that With company, behalf investor that, the acknowledge undoubtedly and be community, to entire the we missed. want will Board, our express you

these record to This you you As forward calls. of you move the we best. we wish chapter -- we life, when of phone kind forward the nothing is move next as but wish

these detail home a forward the with making tenants NNN As related move significant and acquisitions upcoming more robust Frisch's XXXX. assets lot we the the first remarks. to to of on are progress activities anticipate provide of during quarter and quarter We strong Kevin maintains another the Badcock will a position. furnitures. concerning

highlights. fourth the quarter Regarding financial

specific challenges X,XXX with they due single-tenant X to perform Our properties tenants. to the portfolio continue well. freestanding comprises to decreased Occupancy now exceptionally XX.X% and

team I about as the is year report tenants activities remains the and However, increasing we portfolio this of average above the today, level good feel the long-term in rate anticipate the progresses roughly XX% plus minus. leasing our the I And because generating as currently. remaining

we capital quarter, duration $XXX this of the initial the In new invested XX XX% quarter relationship average cap basically X.X%, in of lease Over achieved acquisitions, XX deployed our rate years. million during an was of properties, terms to partners. business allocated

these for to projected purchasing X.X%, the higher Additionally, assessment reflecting would deal model acquisitions risk-adjusted may leases optimal opposed preference yields. don't acquisition our align on sale-leaseback be existing they our despite They of with the the long-term offer shorter-term returns.

for cap. elevated start the a I compressed the identified $XXX defensive spread mentioned at with nonperforming earlier, strategic as acquisition more was disposition nearly rate previous years. activity sold Disposition leading compared year to sales. to the cap several At year, this million of a assets team of between and and X.X%

this the of as we overall portfolio move However, strength management portfolio the proactive enhances forward.

competition over bit go heightened identify acquisition X.X%. few XXXX cap decade the pipeline find pricing our I push the XXXX in market in objective. I'm And current this to will rate further our achieve back quarter deal execute the tighter The said, due of ahead the quarter flow. higher our to with You need in acquisition initial than slightly than the pricing That next ability to in risk-adjusted to be year annual team's I to right meet as margins an to the for a little quarters, an to compress volumes. as fourth confident look high and players a expect deals coming

XXXX detail the final numbers color and call me time on With quarterly Kevin over the turn to to provide for and guidance. our more that, let

Kevin B. Habicht

Thanks. Great. you, Thank Steve.

forward-looking statements usual, to revisions were laws. reflect in these made. a statements may certain going forward-looking the after to we results that statement not forward-looking matters may considered we As statements, differ be make company's statements changes release actual securities from I'm and statements to cautionary federal be with future to significantly under The discussed may start will these that the

results and time company's and release. risks in the to cause filings differ disclosed the could actual press from greater expectations that this Factors from with time morning's SEC materially in detail in are to

XXXX year-ago fourth for also that that, on quarter of year With $X.XX the rental report for XXXX, $X.XX quarterly for income morning's footnote in were of adjust X core results to share the accrued from with headlines was Okay. that's this release which fourth you once flat share compared flat incremental results press noted press we results. FFO per AFFO the quarter, release. results the the ago results per

year, per respectively, core AFFO line at put guidance a and $X.XX increase in AFFO and the increase $X.XX and expectations results These in our top of the previous per our share. FFO and range. share, were for a and in X.X% us results that results XXXX For share were per with FFO generally share core X.X% per

$X.X G&A by expense that to franchise income income. lease $X.X of million, law full Results that historical the is million the tax fourth in lease to the reduced fourth year, we throughout refund $X.X fee fourth termination and for the for total full state of year for last quarter included NOI. year, due above the as quarter and a revenues $X.X X.X% year year full a XXXX XXXX was million in tax G&A noted XXXX, million X.X% were above termination of $XX.X Also, and norms represents well quarter, for Tennessee include the of fee which did in to change of million and million total our retroactive $XX.X and

in end, due about X for quarter quarter's at moment. the as we talked tenants to basis failing a about which, quarter last XX.X% call. was anticipated, on which Occupancy XX points more

that XX.X%. flow, $XXX of the Our for payout all take with XX, year-end. the of dispositions year as That cash $XXX.X would XXXX, was which of would free AFFO quarter base rent December into payment for in after -- of dividends. the all that's resulted and in approximately through place million expenses million annual acquisitions all We leases XXXX dividend and account completed and ended ratio the

quarter. which yes, on update quick X So last discussed troubled first, a tenants, our we

-- sell we've them. in had half our given And during First, have stores leased the out in that all they at of we annual the their X.X% completed of leases Prior fourth leases, of had They paid properties produced good properties, liquidation. would million the quarter, just on the we've which effort start to possession the roughly plans or rejected these those sales. us in was working the Prior to going paid XX a fourth got leases $X.X base fourth beginning ABR mid-fourth Furniture, We've fourth the rent, the quarter. of was and Badcock quarter, to on lease us of what would rejecting quarter. been of that normally and to Badcock quarter. business

for release of with So long-term of by able those releasing. no recovery, vacancy were again, X our properties year-end, we our to TIs XX% roughly at rent average

cap were able using prior Badcock to of a generating on Additionally, produce would dispositions. sell properties, rate we properties net $XX.X on those proceeds rent which these million, X.X% X

more XX% fourth we rate. was quarter's up. than in previously sale cap invested generating stores rent result these So the This X.X% on at paying assuming Badcock would acquisition those proceeds

recovery of outcome those XX X If the the you the X re-leased rent. is and sold rent the on properties prior approximately of combine XXX% stores properties,

these minimizing of as our for call a while of Badcocks, the not stores. first hold downtime terms as off well good up may XX% or Now to we very all are economic for of averages former outcome this batch start it, Badcock

Next.

quarter decades. concept tenant us around rent quarter the Second for the owned of last the annual onus quarter. which X.X% rent paid big our paid the that's us boy Frisch's at We million. a year been They no represented hamburger or in Midwest fourth base the and several beginning half $XX.X in they Frisch's, fourth on, third XX properties of rent only

case, not file recall, you tenant the this in As did bankruptcy. may for

eviction stores all had the properties, as up store a were some properties Of XX off for had process had also stores possession willing those time-intensive of back a year-end, we we've large rent. to percentage operator. stores, possession base stores, group the go XX rent of of leasing potential stores. for on another we to in that XX of more We've So the for prior of to process these and through order XX re-leased and trade speed those to evictions. through of we restaurant Because process initiated read sales getting on

approximately other to million get X% break terms rent, not not XXXX. a re-lease. we of will other XX We're above articulate of fixed at will looking this store stores and have lease these to produce we May So That annual X, base number $X.X rent point. of as Frisch's also a sales time, commences but we're --

all full stores. of in possession of have Frisch's mode properties are soon and re-leasing batch former the on will that We

Badcock, with these Bigger prior them XX% rent usual; TIs. sold typical of just reviewed, recovery get point more of improve b, rent and consistent no versus key optimistic leased a, to, really hopefully remain than property vacancy, I we resolutions vacant and the picture the quickly combined early Frisch's upon our or with

share per quarter importantly, updates believe first and by provide all on in the X% results We tenant. settles be with But impacted further should the rents XXXX, than original dust results. say, from getting versus we most will less the when prior this we were

settles. So results a line when on very impact dust modest the bottom

core Okay. guidance per $X.XX with share. share switching initiated Today, FFO and a we range a $X.XX per range With gears. to our of $X.XX that, of to XXXX AFFO guidance $X.XX XXXX at

the press the we of $XXX due guidance million Hopefully, underlying expense million Page X FFO opportunity dispositions. have of Badcock as some the to million G&A guidance of $XX property expenses Frisch's which to higher the million in it $XX usual $XXX $XXX release you the million, key have and $XX to assumptions reimbursement as and drift higher of to to on of vacancy. will $XX and done net that million, acquisitions, of includes $XX million than to year gives details is we past. progresses million the

in our and liquidity good Moving position billion on outstanding no into to very the We line, XXXX. with the ended we're $X.X so bank as leverage roll we balance year amounts sheet.

Our stands next and debt debt maturity years is average our at weighted November XX.X at XXXX year-end. maturity

XXXX. our with Life to Net $XXX million, at book million funded acquisitions cash of debt $XXX year-end, free the encumbered mortgages. of X.Xx And coverage as market are XX. Capital we points at by our none flow coverage year footprint, of a debt-to-EBITDA assets proceeds. charge that's gross disposition basis reminder, X.Xx and Net XX% our properties was plus fixed for $XXX of December was XXXX Maintaining from XX.X% million Interest XXX about before. down was

risk equity new with balance that the allocate free whether us it confuse produced equity issuance So what flow, or capital, means equity results adequately, we on per property growing activity by while over long we're and ensuring cash is share the proceeds term, heart at is and controlling returns not achievement. believe disposition through sufficient equity of working sound are getting a Valuing maintaining remain to helps appropriately underwriting to us to sheet. focused which we on

on And for for me be In bittersweet earlier. call. my quarterly very Steve, your will words thanks to it's earnings I kind last closing, say

XXX investment been capital institution. of well I've over good NNN well is and on in think shape opportunities in navigating approach this I and is them. grained to its very markets

So the and NNN. in we've capable Thanks I known worked of tolerate call many and leave you Steve years very the of who rest issues. of capable to and the and -- here for hands many on many my you at been this to with -- I've so gracious then team

been included at markets long-term relationships and And past and my boundary journey be and time have pleasant I has of the questions. in made cherish my in will number times relationships opportunity life especially for as any These have here nothing touch. enjoyable some thankful a this I fallen With more memories and month, colleagues REIT the satisfying. I've much to in places the investor said lines being Holly, open It's capital that to the in and ride, that, we my and world. it will community great stay to welcome up NNN. a but of can

Operator

today question is Heffern first Your Instructions] with for Brad RBC. [Operator from

Brad Heffern

and Hope you, Knowing up well. saving a suspect it, I been as you've retirement. you great to Kevin. Congratulations, Vincent for have welcome

you growth surprised this guidance, AFFO you're lease to Or on this X% is that Is the the from bridge can the any number? a offset Frisch's, there's of the Badcock preserve tax that, would of? that some just and also last thinking that XQ impact deliver sort For year, of give of not color little I'm benefit? that growth just given there elevated sort termination to I'm able

Kevin B. Habicht

Yes, not in particular.

you or better-than-expected Frisch's kind We quickly, somewhat and are as in re-leasing resolving of particularly know, great say, outcomes value, of having, I That's is that process. would timing Badcock. more all our happening

-- but there's guidance so termination on. give always are major -- other been they're and difficult fees no to that's we And -- And to very big guidance items always speak lease yes, A helpful. of. so they're don't give

-- Timing solid a had XXXX. that's primarily to critical. else solid 'XX will we But half the And during nothing of year. really that that the of plays the to is out accrues so acquisitions, fourth And acquisitions. really of speak out play And way second that to yes, note. benefit quarter

a up all push those results kind to things add so And help bit. of along little

Brad Heffern

this the that released on then is Frisch's, then right on but regularly upside? the would $X.X for that the And to that does million maybe at it. you Got Okay. to is for rent, that away? you didn't requires prior that compare how give a level purpose, the realize set where And rent those something Or percentage expect stores?

Kevin B. Habicht

Yes. Yes.

potential think on kind what we said, we would fair willing will, get a benefit prior I up quarter, million, way, the of you hadn't I had XX% us back prior produce base a again, take the We annual So call XX We it, for question. the in these the rent And quarter. rent. Yes, percentage roughly got will just the to to and and of -- sales, this stores store like fourth we stores. $X.X re-leased were speed was the rent notable pain, the that if in to on fourth process. we of those

again with So quick very TI. no it's

equation. the saw part And material that so in of we -- value that

achieve there. that. think we normal because And something on do is XX% that can so see there we're able And recovery spaces. sales, north had re-leasing we how we'll rent But prior our better vacant optimistic upside we much be store than we'll to of

Operator

Ginter Green Street. Your from [ is with next ] question Spenser

Spenser Allaway

being deals the the just deals. relates of and one-off outside in activity I'm you're terms doing curious that anything guys have it portfolio on as what of relationship you been XQ, to XQ mix then transaction seeing from just or of versus

Stephen Horn

Yes. not of marketed been -- was our just mining. why there a deals, portfolios we've I which little for much XX% deal. flow outside mean notable, the transactions quarter It's the get has was through relationships, of large-scale relationship that's did in as the one pretty market. deal the fourth direct been slow, bit which a our been

what right kind of the quarter $XXX But million looking it's deal seeing is $XX call million $XXX million pretty million, would to I First good now. $XX range. We're doubles that deal. not

kind entertainment potential is family but there the early X portfolio space to Now now. large right in we're coming of aware that say pricing of, out the little a that it's on

Spenser Allaway

Okay. then yes, Kevin, congratulations. And

last Has changed just of in you. underwritten you. miss for terms since 'XX. for One just We the losses anything of will last amount credit quarter being one

Kevin B. Habicht

materially. not Yes,

the was this we've category. guidance, don't the rent XX and closer sort on been assumed last loss. our year, basis experience in the I into in typically might we've Brad, have question to We of added level. of more this comments that XXX from points for So Historically,

So in don't for in we've have it really loss of baked other credit in exposure have to feels any the this enough we terms that real tenants like think horizon got we immediate loss. for credit year. We

B, and Frisch's that A does basis beyond points. is any obviously that basis XX Badcock and points from and above XX pain

that put one Let's way. it folks If are reason.

other So we on that in for the we're like not moment front. pointing say, tenant good credit. yes, to And concerns I think are notable at investors any shape

Operator

UBS. for is Michael from Your next today with Goldsmith question

Michael Goldsmith

I'll Congratulations, timing and a Frisch's of guidance for to And Kevin, us and ask rate baked career. the you on leasing recovery what as you've the kind related for XXXX? wonderful your going into through President, Badcocks walk a away to of

Kevin B. Habicht

in work my process in Yes. sufficiently -- I say. usual because a it's in should elusive And way, I'll progress, be

fourth X over historically, normal the and was going it's is unfolding XX remain that Frisch's years, on that The it's first both a on continues I and and of releasing that the quarter, only details speak. of we more as as typical quarter. re-leasing thing so of I that effort. mean it in kind quickly give don't have you in along evidenced into -- I months, Badcock something And or the we lot say kind can than

it's as just ground in the us going economic terms say it's better of as speak. said, timing in and than on normal to it's only put outcomes. stake tough to I very as for Like hard a current we that well But

Michael Goldsmith

rate. and of Just XX that that. you're anything right, something so in assume giving on X guess, historical rest -- to XX% in the the we recovery not baking -- is, should the I months kind that, you're you're better else than clarify of baking to But beyond

Kevin B. Habicht

Yes. No, we're get can and we some down. got the has if drift year all our state until throughout the a hopefully, shakes But we've we and in number of to these in flux that see we'll of of the upon hopper a there's opportunity pinned out. But the deals improve higher, how guidance process working, things.

Michael Goldsmith

like long-term because basis And perspective could then basis to baking just XXX bake the the reserve historically, for for you've typically of just you to year. put points what's terms than it. lower you you're some -- XX Got points but that reducing X it, you're on Maybe for of what points. just in you compares basis what context average and large events what that some the XX went through now on in provide XXXX, seen or credit what you

I'm trying So to just understand...

Kevin B. Habicht

basis fair -- that Yes, simultaneously unusual was which XXX a away, tenants absent Yes, points. a question. X was going which highly

runs of kind our to the credit typically historically, the in range. points of XX so basis kind And loss XX

that respects outside there is in we basis XX need really XXX of assumption some part some on our biggest concern guidance. so X credit that the our way we've that of And of got resolved points don't and in down our

historical said, the conservatism And tenant points, maybe And over a of our frankly credit. so cleared you lengths, that hope the like basis averages. if I in weaker in having to given will, we there's out XX our degree

Michael Goldsmith

Congrats again.

Operator

Your for Fargo. today John question is from with next Kilichowski Wells

John Kilichowski

Maybe elevated here this time how sounds flow Maybe just deal transaction know looks of also Kevin. deal you but if like point flow, Congrats competition. elevated talk about talked and start, end? about What you back the to there's or to your maybe just talk I room competition, at again, versus the kind end it then last go do above changes this is that that when market we year? And that that, acquisition how manifest low they're you could the are in push near the that? high think or looking if high who returns to elevated guide for? about maybe could

Stephen Horn

a Yes, question, John. good that's

far days. historically, beaten our year, market. we've years, transaction visibility guide As from as over the many our the the just XX for guide only is

last usually a I in so The good So have that confident start as a start lower quarter is I'm far pricing want year. the the we markets first as market. year. came we guide when into What we're on didn't we compared it deal of to for was the to elevated that Last end. equity know flow the year, year, conservative, to is access we issue, more capital the market

set acquisitions. So the expectations end fund for flow to our we use the cash the year to lower on free primarily

XX-plus As been the it have years. market. competitive a just It's of far years. that at have as long. always Kevin a us There's doing changed. only around been names XX-plus that few competition, been It's I've this doing has

private of higher more market money acquisitions importantly, little they ours. return as bit their But a than higher. money deployed the significantly as some Now into there's bit, coming amount expectations is have a little back are into far the to but

are deal on to going what elephant we the call go flow So would base of they after deals hits.

deal came from our we So And again, don't around a world. good avoid in playing our really our flow field. they to in have really that moat of XX% competition relationship play

deals our no, the our see. But call on And far we there's not good that have as I here the competitors activity, done did feel is pipeline, today the as overall, what's team evaluating. in no what sitting

I acquisition doing the guys right So are until know our then, thing.

John Kilichowski

maybe the where of pressure wash how we jump can car and levels. those QSR provided. analogy. space some appreciate you heard within know coverage Great. the are particularly But we've to trending they're maybe if if And I rent could in anecdotally? the color of any on portfolio, I kind not give

Stephen Horn

a job indirectly Yes. in the investor carwash does space. let's teams. ourselves management just an We I mean with NNN address view as meeting fabulous the company.

their with meet we when teams all started our the I Mr. initially #X leasebacks carwash business the back doing we institutionalize XXXX plan. So that game Carwash, with argue could sale here in we tenant. management

fair we experience, of zips, and that's and kind So have industry. amount the the headline X a of we have carwash recent in

But Our car wash performing Carwash year-over-year shut the X. the most car QSR things is compressed. highly margins concerned of washes the It's They're went exposure, rent got there's doing things car other the of down actually, flat no north overall, currently. X.X% comfortable we're to trying labor our that that with We're absorb of quarter. for Mr. where But side washes we've coverage just seeing QSR sales in part, kind do X.X% up. of to of their the tenants stabilized. car the been and QSR, still on for And that I'm wash in most or we fourth issues kind they're when well. range, selective part. the we it with kind and we're

Operator

with of Your is Farrell next Granath America. from question Bank

Farrell Granath

verticals? Frisch's Farrell both your both life. to Granath. next and assets. and Badcock wanted about of seeing inbounds, demand for Are chapters for you and lot is I also that receiving seeing congratulations a to you're want the But I This to industry the type of in Kevin your they say within are ask Vincent,

Stephen Horn

Badcock. on ton on a a and fair Frisch's seeing of amount interest the We're the

to but a well we're Badcock, his and portfolio it's some the Kevin first. As easier in doing the in really sell with addressed and good ones go assets they remarks,

has some work So do through process. move our to we team as the

back casual not getting it's fair restaurant yes, And As car of lot and far of There's industries, a washes. auto interest as a amount car Again, there's dining, wash QSR. interest. only you're to service.

little I So X.X. the re-lease. they use. across of reality But foot a X,XXX users X.X a XX,XXX, for to that square is a wide well-located, a on a There's lot X,XXX, challenging small be makes it would boxes tenants boxes were if corner. range like foot that lot it's XX,XXX those. concerned the restaurant, There's more hard because that of

Farrell Granath

I and I there's bit on some XX commentary harping of And the the credit it to are near-term loss little certain also concern with no tenants do you But been that's Okay. watch that associated of credit that I the we've also a there that? made know a a ABR know wanted basis reduction. guidance. list? assumed percentage comment about factor was And still in you points, raising a on in maintain is

Stephen Horn

Yes. Those rise that perpetually around lot thoughts this well, about but always, who level me be loss year. might a credit worried I'm influence what for the know of our to none tenants

of been landlords candid, but And so -- still really on but has Badcock talked much at of ability to yes, we leveraged. is found, concerns rent their no be their that business really but course, better; the over the that one about us have are XXXX. and I fundamentals are and as issuers list, b, getting in about seem that to we've perpetual been We don't talk And quite we've about to capital have the AMC, thought they're kept need has near-term names to happy. very they better, past the home anymore, a, so years. Frisch's pay point about and watching very and has

so points handle And the feel on exposures; paying generally think whatever basis that larger we there's comfortably should list. list, imminent they ones rent. remain I b, have are of But risk of on them. not we -- number of exposure and and the that they're XX the like not kind so at A, a don't

Operator

next for Your question today is from with Rose Citi. Smedes

Bennett Rose

to up. I follow just wanted

mean, at that might that Is is or an that coming. -- might area depending, to but come something a it to you? be if portfolio larger you see You mentioned of market price entertainment in a there guess, that -- I assets price family exposure you you reasonable interested were would increasing your to a reasonable is to that that at be I

Stephen Horn

it's Yes, real importantly, our we and something make make economics but if price everything Yes, at the being in sense, something fits it's making the estate sense, philosophy, it. important. look do more underwriting would sure fundamentals

guide Now the $X.X as on people kind proven had of year, -- with to little would do And we the like, Badcock releasing I'd actually, get question confident the gets of the get little of that guidance it. I bit billion, answer think out probably with there's our that's the bit If speed, tighter. yes, million, efforts. I on on trying kind at our coming $XXX acquisitions. do do little know, with box are more more a you the overly million, and a to conservative we Frisch's underwriting aggressive But out and start is, have this $XXX the a and

Bennett Rose

I I guess, just a mean, I It expect -- things you the slight like wanted talked imply, course you debt this spreads you and year, are picture, compressing the how kind of given at cap for are to of you've of the maybe ask bias of of or thinking that a Or spread kind investing so does point? how this your the elevated over Right. some sort bit little about sort given costs? of in sounds downward of about. big you too. rates kind

Stephen Horn

that's do XX, them our the to But at having result I'm as down, and want is far drive looking Kevin, it? as deals as going the to XX spreads, rates, of margin, yes, points. just far is seeing a you a answer at So as go win them But cap to competition down. basis

Kevin B. Habicht

XX-XX around -- think debt long-term us is way X.X%. equity typical XX-year and roughly we Yes. I And debt. debt today for our our mean the

at X.X%. equation. capital So that the think equity our And we've that's, we've decisions we're about -- call it, allocation burdened internally kinds when the making of then these equities, way about investment historically XX% of we

creates average we Xs. low don't hurdle of our in spread a need that So above hurdle, capital but the to weighted cost

we're consider so operating And kind as long that sufficient allow like range, mid-X% in low we're returns allocation as of on to feel investment. producing shareholders making to to or and capital returns equity we to

Bennett Rose

sorry, that for your ask so, you Okay. they're is about? We've at of your to ones was I all Denny's. sort wondering, some own or... just which I you -- I watch that seen And And just one. appreciate up showing is And I -- on ones headlines it. around wanted just talking quick on which screen and list negative just one

Kevin B. Habicht

will Yes. are the rents per us that we I and those stores critical own very price the is which some Denny's. attractive. on We at, own again, for stores pound say, therefore, is those

and so are by of And Denny's. some them of franchisees operated --

sometimes it's for when particularly you're so And kind yes, yes, been Denny's looking hard has the whether headlines to that's us the of applicable not. But -- -- or struggling to particularly to at chain too feel on We've watching our a while, a that levels while. get anxious and Don't rents me our wrong. are about. but we're that for been locations appreciate the we locations not at like

Stephen Horn

Yes, real quick speed.

Denny's in most the bought for XXXX. part, Our were

Operator

with Ronald Morgan from Stanley. Your is question next Kamdem

Ronald Kamdem

and Vin. Kevin Congrats,

still go you to comfortable CFO quick thought January is it of us of the here to year, going the give the ones. Just went out debt. XX is early just basis are And the -- X two points to to a year. Is historical bankruptcies or I'm you about because basis just is guidance put you happening. comfort transition One, going versus you number whether because able obviously, bad better? XXX what on for is XXX Just I'm points XX%. points sense be it the out got like sort it was the this got what this through? just with debated basis with literally It's historical. Or trying wondering in like

Kevin B. Habicht

kind XX% that kind of used XX% Yes. It's not ever range. Well, basis of historically, we've XXX than to points. really more

deadwood And some the elsewhere, already. are particular the acute and out to, it. that, concerns credit of lastly have term, just have so don't will, on In of cleared accounted top we most of that about. concerns for near then yes, to And XX your that's that But -- is points. layered part of basis outside any if tenants you immediate point, were

made us so to of all And comfortable that. those do things

how And we so that's got there.

Ronald Kamdem

about that? rents is could then And do boxes releasing follow-up of is Can sort the the just faster plans about you number happening number the for or you What this is -- coming on probably issue? the And on the X Great. expected. talk year. my one? then One you I which think And due you you question, talked mark-to-market are is quick than where a think X-parter. debt just

Kevin B. Habicht

Yes.

-- us maturity just X.X%. of I'll debt first, today not speak until In around XX-year terms Debt is is November. debt with the we for think

ahead to to activity. we And not or But if a that that bit that lock where deciding have wanted we markets of historically, transaction a some we so flexibility to. And given debt. refinance capital interest on in could guidance time in the way, good some of of actually rate execute we've obviously, along of risk always hedge

much So I that. specific have than don't more

Frisch's close look As I the to initial Badcock, of on if which XX% was the you it spreads relates of typical our to round is the number. and the Badcock mean kind portion re-leasing, lease re-leasing at

layer you the sale was well in at those of disposition our Badcock, of above you reinvest if acquisition and cap kind rate. that at kind mid-X% But proceeds

combined and up the for Badcock. above disposition the You end sold rent well with release XXX%

And so that's going very, very well.

our to but don't up we the likely As first well. XX% early I is expect indication of going hold the said, levels, that Badcock at very exposure for those

encouraged And we're that. so about

will On We annual more same. bit and to the of the I -- little pain upside took potential more we rent think rent, first willing of base it we're in the take we'll on percentage batch, rent Frisch's, capture be big -- there. from a

could were that went store of been. company we'll equal We our sales we the best that think have kind number. and out the we those so previously, locations XX% And can know historical back we they get that given run what maybe know to -- better or they than to weren't business, of the at

that. optimistic the go timing can we we're our so XX% than we will us, that at the think end faster remain about of typical But improve recovery. for and day, we upon optimistic And

Operator

Hightower next for at is Barclays. today from Rich Your question

Richard Hightower

And that. again, the have call mention that Obviously Badcock the ground and mix what then a want I've re-leasing the must on go but congrats that on to maybe I to -- guys on is one into of space the Kevin, got of retailer covered this, missed And looks morning, occupying space or REITs in after to that like? on follow-up particular, the that incoming the tenant and congrats I did career a great back lot you but set. this in Vin

Stephen Horn

of them the on we aspect And recapture those the assets Yes. mix. tenants. re-leasing we far didn't then other retailer as rate. furniture No, Kevin home the There's then re-leasing, mention we're is proceeds the a X.X% as sold a sales actually and at couple the redeploying assumption, making the

Kevin B. Habicht

variety a it's seen from of the We've yes, on -- variety uses. of kind medical But from Badcock, coming space. interest a of it's kind

feet. And real yes, for of so it's a box mixture is XX,XXX some [ square ] uses a pulpery hardware. It's it. That

foot from Our rent Badcock. square $X was a

And on so a we and with sufficiently think it's we efforts. up re-leasing there reasonable end the can outcome fungible,

Richard Hightower

Great. notes Okay. ] I'm in put to make to pulpery sure [ going my here.

Stephen Horn

big Pulpery seller. [ ] It's Yes. a

Richard Hightower

is post-COVID for its maybe perhaps just as Carwash Dave portfolios those less then that Mister differentiating follow-up you Camping location about the no the about average Wash, guys quick separate some the is of kind anything Buster's a list tenant all call fact a if your generally in the top there immediate than locations & have But kind World, I And of And values of list. equity worries companies. makes I Car But of look which the through and so watch the are worried coming of just category. business in those on articulated of appreciate particular I far. that think maybe you high at own companies the off scroll I in as

Stephen Horn

as did of property the the earlier Car Well, frame, our on level mentioned coverage primarily at the call, Wash, Mister cost basis long time in the I've and assets, Mister is in exposure. X XXXX, low, extremely time we north a XXXX ago. in Car Wash And those rent but is

with assets lot Car Wash true very of entrants So washes Mister there's where operator in money the because Unlike private comfortable car wash a equity car is a of those followed.

maximizing So they deals. have in to they so proceeds, put didn't the were equity any

that say, long run. a they portfolio of long to World, time, with we've substitution years, we the and or we've in operate want would culled have Camping with business management over the assets ensure dispositions done that I the the to for them

& of same kind them and level. long asset And been it's full for a the with Buster's. is business Dave business time. -- So doing We've that with at

cost So has up. holding our been base

Operator

is from next Rob Stevenson question Your from Janney.

Robert Stevenson

off that the you little of about you expenses Frisch's, guys revenue bit are getting with that talked talk you course a from hit about the but can today over of burn and any Badcock Kevin, might elevation 'XX? material

Kevin B. Habicht

fair yes, Yes, question. Yes.

million expense would the triple is $XX million to to in I XXXX for what most of property noticed $XX think guidance, higher million you end in kind $X number probably as our net $X So normal of million years. than of

can attribute you Frisch's. all that pretty related of so Badcock And and much to

Yes. you as fade roll yes, So into should XXXX, that away.

Robert Stevenson

about helpful. standpoint? assets material you development That's you expecting leasing from of from expecting in guys XXXX money portfolio -- any the Badcock are a redevelopment to anything the CapEx. in Frisch's Okay. or else talked then the Are any a And without or put in put you to amount

Kevin B. Habicht

always We X X That's decision not the rule. OTIs best to for be we an some there but consider will rent property generally. or is It decision. it, you make lower know that make. That's predisposition off or absolute trade we'll our economic the

number be size. put large may it So of shouldn't a some we in, NNN scheme but the in

-- -- yes, little don't going think little And from be much I waver a we're to more so maintenance that. repairs a might there bit. the too bit But and

we're that time the in the rather in consider it. in Some we that. and expenses will, equation, to what flow we're from think terms not a alternatives CapEx. TIs. will But TI we'll And of on property lot yes, through trigger of inclined But fits of are, there's of time, rent to get whole may than what you pull going to if some it if in the value

Stephen Horn

significant. no sit in there's deals we here right now, pipeline require that any But as the

Robert Stevenson

Steve, then major Convenience Kent you guys acquisitions that fourth stores, concentrations the Okay. quarter other any And than the did? in

Stephen Horn

color. was one. did That opportunity was M&A Kwik financed did of we years an the them. XXXX. with was in the you which the did primary we back first in And Few deal fairly little just little bit they we later, a quarter we did goes Florida, XXXX, sale-leaseback closed It XXXX, as -- Kent give far then that. And in and as we then a XXXX substantial have fourth a bit kind relationship of or

we've long a time. maintained just it's relationship So for that a

And then rolled we just our first XX. over the the That top build-to-suit Car quarter. the the Wash other one was into pipeline some completed in in was Super fourth Start that that had stuff year

Robert Stevenson

last Kevin my Okay. here. And then away one one present for you, is going

or You known talked either XXXX fees. term materiality? any in lumpiness of about the thus received far, of known Anything

Kevin B. Habicht

Yes. I mean, not kind of on. that we are any giving guidance

about not historically -- We've so front. guidance that the on we of we we're which a is don't. Historically, any fee historically historically for generate income. million But year lease us, that's $X out not. so putting answer And termination

course So wildcard I of expect the the the It's a is that why amount there to be as -- for we bit year, which the don't of over some. a just and give timing guidance. it's

Operator

Feygin Your Baird. Alec from next with question is

Alec Feygin

to work with work and on to Congrats that you. Kevin. also Congrats, in front? income, on Vin. guidance go is was to you a last anything pleasure termination to off Kind It assumed the there excited the congrats with question

Kevin B. Habicht

that assumption like for that's publish I term, because, end we normal we've say, is in year. know candid, going million $X assumptions for never there lease I and general is made ourselves. where don't But us that a guidance. precisely say, We for always in to some Yes. have up we a to be like

stake to out that the And and a so and kind go number. put public on of reluctant in ground

Alec Feygin

additional Fair. assets? of guide And vacated the expense assume then does the nonreimbursed leasing recently

Kevin B. Habicht

nonreimbursed half front I expenses tenant's second the I throughout obligation. hit to property property will be $XX bit probably think just million. mean, the of some talking the million less Yes. loaded it's That, in -- of little Yes. there, more a expenses leased a those up, the should steady become that from as as the had you're year. fairly about expenses loaded $XX some half guidance we I But going things little memory. get and then but

So re-leased. around getting that's resolved, but -- or loaded sold into properties that these -- thoughts our all

Operator

from Linda Jefferies. is question next with Your Tsai

Linda Yu Tsai

to you there think room charge lower? range? that missed come Do increase onetime to there's some G&A G&A in have for going Kevin, Congratulations, Vin, lot retirement from of your benefit and And cost a The embedded last a fans is to Kevin, in too. also guidance, a but on will be and then, that you guidance year. congrats highlighted you're in control. you

Stephen Horn

Yes.

So line the item have we way we've executive a that. for separate retirements, handled

line And item. so involved -- whatever will that cost in with Kevin be is

So at it's XXXX in where to actual mind G&A answer I thing question, G&A. in not in is on number your up keep came one guess the to $XX.X we million.

will, to that that, take would you need so $X.X And if it to normalize you million that add, million. up really to $XX

guide next compared to to million would I so million, $XX -- our million guide, $XX year to XXXX And kind think the $XX it. way of about

number. it's as So a of there's materially. percent inflationary not a kind that of increase revenue, again, in But moving a general

Linda Yu Tsai

expansion one. store other plans days? one stores how just thoughts on about these their thinking then are And dollar Any

Stephen Horn

regularly it it's developers. don't on don't model. expansion the and/or Linda, the Dollar lease Steve. But has just we over primarily It been nothing the one the dollar big But was of and do estate. the corporate business always business. years, We stores, call the to groups net yes, the real for with with much store do they've

So I insight much don't have for there. you

Operator

Your today for from with next Massocca John B. question is Riley.

John Massocca

questions for you over our thank years. taking of many, all many the Kevin,

stands expirations. expiring? Anything rents lease Just the recovery on maybe kind of of on XXXX guess outlook I expecting looking And the rate for a out? kind little you're typical that color for notable

Kevin B. Habicht

Yes.

to I typically. play out think

and I heavy a in little they're of performers. lease year, we're this pretty solid in terms expirations convenience think bit stores

relative expecting not outcome to norms. adverse historical we're So

yes, my So but nothing in -- note mind. of

John Massocca

then been being guess those kind beyond How of investment transaction more typically given being pipeline I the the in LOI maybe active bigger M&A volumes focused And kind much partners of have the on outlook is maybe space PSA robust of and broadly? space, portion relationship picture, M&A tenants. Okay. contingent on the of the and tenant

Stephen Horn

our I market large grow. when of kind need was then would market to business slowing back felt M&A go side pre-XXXX, still driven relationship by sophisticated of our kind things. -- the of the M&A down, lot tenants And of a was yet but Outside the say let's of post-COVID

they of lot from development self. kind So a did of

kind leaning in. of So were we

million. If build couple years our to of it our $XXX of you historically, $XXX see ramped was recall, ago, where a deal where million, up to kind split-funded

dependent I'm picking but the bit But and not does bit seeing relationships. it's M&A the a auto M&A, the is the XXXX part market guide of in little that what services, little side of things definitely of a is on up our the M&A store in convenience include

John Massocca

percentage released XXXX versus would a assets, it that Frisch's Okay. of a bit, but that any we reason And on kind in touched terms Or your former of is the you be leases or get there started? about earnings little think assets Frisch's the XXXX rent potentially impacts XXXX? should then, something as event

Kevin B. Habicht

the fact beyond -- the first May so that there's that. rent on X, batch until start those Well, that doesn't

to So in the close it X, first half, X. call

some starting so batch And that should and as new the for up year next yes, -- in percentage obviously, things restaurant to but in stores. second of rents year ramp-up of this full you half get running. related year, operators get And

Operator

with [Operator final from Omotayo Instructions] is Bank. for Deutsche question Your Okusanya today

Omotayo Okusanya

member Club, member the of also be in Best club. Fan a a and the of of retirement missed. you will Also fan luck Vin Kevin

to million also the So for aboard million and Vin, year the the Again, outlook. welcome disposition $XXX is NNN. My question at outlook acquisitions. $XXX around

categories little on you're the in industries looking of of that you more retail that lighten maybe impact versus invested looking of And kind attractive tariffs more world up less suddenly to the sales get Just perspective, from categories to? or terms attracted you're a kind acquisition of an of any also curious if on? bit to in become that that side,

Stephen Horn

look estate Yes, that away, site back. Because market. line the important long our the philosophy. the as we end than the at if as fundamentals market We isn't of tenant real in are goes as rent the real category, estate day, you with who's the operating know more at get

starting stores we to very more service QSR sectors. dig QSR foot And are because things, very real current the square see we're side I X,XXX X.X fungible because XXXX relationship on we side. the little but really up acres, our our like -- of will being convenience that to So so in box where a auto activity I which focused, and similar estate the see is portfolio, bit

and stores in percolating So services convenience I'm QSRs more looking up auto for XXXX.

dispositions, more relationship Markets terms. as -- that's where change, don't XX-, pick As we end and that's that's so always work the value really over a of behavior changes, hard of retailers good a lease. even industry, XX-year it's the leases I far our consumer renew why these at retailer, assets if the And with XX% performing is. think

we to look prune in retailer a weeding assets the sell. where As us the the each assists and bit, million year start which that range ones out of $XXX little determining portfolio underperforming to kind

XXXX COVID not ] care say it's sales a year, medical of would [ market. disposed we category. those was urgent particular the of a the sector on their and kind So targeted and I last took of, kind into sold we of bumped advantage

sector. the particular a of get not like. to there's would assets individual aren't the that year, of to this I'm looking levels But more performing tenant up out this

Operator

CEO, the We now I of have to for and Horn, remarks. closing call over turn end reached Steve the will the question-and-answer session,

Stephen Horn

joining person you appreciate and one upcoming guys last, Good us, the Yes, see Kevin, the today. time season. Thanks I for in we'll you taking conference in bye.

Kevin B. Habicht

Thank right. you. time. All Good you. Thank

Operator

disconnect may conference, your this time. Thank Thank you at lines today's you and for you your all. This participation. concludes

National Retail Properties (NNN) 11 Feb 252024 Q4 Earnings call transcript