Release Date: October 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you discuss the transaction market and how the level of deals being sourced compares to historic norms? Also, how is the competition for deals that aren't from relationship tenants? A: Stephen Horn, CEO: The market is seeing more sellers returning, and our acquisition team is sorting through many opportunities. M&A activity has increased, leading to larger average transactions. The market remains highly competitive, with some private money entering, but it doesn't significantly affect us as they aren't targeting smaller deals like we do.
Q: What are you assuming for bad debt in Q4, given the issues with Frisch's and Badcock? A: Kevin Habicht, CFO: We typically assume 100 basis points of rent loss, but Frisch's and Badcock represent 2.1% of our annual base rent. Assuming a worst-case scenario of 200 basis points of rent loss, we would still be within our guidance range. We tend to be conservative with our guidance, so we might still reach the top half of our range.
Q: Are there any plans to increase the bad debt assumption from 100 basis points for 2025? A: Kevin Habicht, CFO: We haven't released 2025 guidance yet, but we might assume more than 100 basis points. We expect to learn more in Q4 about the situations with Badcock and Frisch's, which will inform our assumptions for 2025.
Q: Can you provide details on the nine assets sold during the quarter, including industry and cap rate on occupied assets? A: Stephen Horn, CEO: The cap rate on occupied assets was 4.4%. Out of the nine assets, five were vacant. We sold some urgent care assets and an auto auction part that was not being used, as part of cleaning up the portfolio and solving future potential issues.
Q: Regarding Badcock, does the Franchise Group guarantee help offset any rent losses? A: Kevin Habicht, CFO: Yes, any collections from the Franchise Group guarantee would reduce our rent loss. We intend to pursue this guarantee, and while Badcock is in bankruptcy, they typically pay rent during this process.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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