Joey Agree: Yes. So just to reiterate, we have no stores on the closing list that have less than three years of term. That is obviously subject to Dollar Trees change. They’ll be responsible for all rent and net. There’s corporate guarantees behind all of these leases. Ironically, the weighted average lease term of the approximately 15 stores that will be closed is approaching 8 years — 7.5, 8 years. So they’re on the hook there. And then we’ve had inbounds for over half. We’re going to start discussions. Obviously, they’ve got a lot of going through a Dollar Tree right now, whether they’re going to sub-lease or whether they’ll want to pay a termination fee here. And then we’ll enter into direct leases, but you can imagine the retail partners inclusive of other dollar stores, auto parts operators, low price point operators that are looking at those opportunities.
But I think we’re very pleased. We’re very pleased that with the outcome, given the store closure announcement there, it will have nothing expiring within three years. And again, these are average a hundred thousand dollars in rent per store with a weighted average lease term approaching eight years.
Rob Stevenson: Okay. And then last one for me, can you talk a little bit about the market out there for vacant sites, given the financing environment, so if there’s a, like your vacant Bed Bath Beyond or whether or not there’s movie theaters, et cetera, are there people out there actively buying these for redevelopment play at this point? Or is, the financing, not allowing them to do that. Is that an opportunity for you guys to use capital on some of the better located, vacant retailers to do.
Joey Agree: Oh, the Kmart days. It’s a broad question. First, the lack of financing given the regional bank credit crunch here has made development a very difficult proposition with loan to cost at 60% to 65%, as opposed to getting 90%, 95% that’s one plus obviously the elevated interest rates. To the movie theaters, I mean, those are teardowns, right? If you’re a movie theater owner here, there’s too many screens in this country. Those are teardowns and redevelopments. That’s not really within our sandbox. The Bed Bath and Beyond opportunity. I’ll tell you, well, first there’s an insatiable appetite for highly or well-located boxes that are marketable size. So if you have a 20,000 to 25,000 square foot junior box, the replacement cost on vertical alone is $160 per square foot.
And so those numbers don’t pencil to build. And so what we see is significant interest in any existing boxes that are well-located from a whole host of tenants. I mean, 90% of the tenants in our portfolio are looking to grow today. It’s just the cost structures and the ability to execute that growth. The Bed Bath and Beyond case, and I’ll give a little bit more detail on it. It’s fairly unique. It’s out in front of a mall in Memphis, Tennessee. It’s perpendicular to the road and isn’t maximizing the frontage. We’ve written white papers about this and the migration to freestanding formats is driving a really an insatiable demand for pad sites from C store users, from chicken users or chicken sellers, chicken restaurant, chicken-based restaurants, I’ll call them.
A lot of chicken going around. Car washes, we all know square foot Bed, Bath and Beyond, box creators are continuing to thousand square foot box today is, isn’t very marketable. There aren’t many users for 45,000 feet. We had an offer to take the box in the mid-single digits from a user. And then we looked at it and said, wait a second. The highest and best use here is to take the box down and create freestanding pad sites along a major retail corridor. It will be my first redevelopment of a freestanding box, which includes a total teardown and conversion to pad sites in my career. And we’re going to have a significant, very significant lift here upon completion of that redevelopment. And we think there are other opportunities in the portfolio and both outside the portfolio to continue to really take advantage of the migration and the really the expansion of the freestanding operators.
Operator: Thank you. The next question comes from Alec Feygin from Baird. Please go ahead.
Alec Feygin: First one is what are the plans, if any, to issue debt? And is there anything of the sort assumed in guidance?
Peter Coughenour: Thanks, Alec. This is Peter. I think first, just in terms of our funding plans for the year, as we said in the prepared remarks, we can execute on that $600 million acquisition guide on a leverage neutral basis without needing to raise any external capital. And so we’re in a great position for the remainder of the year. We have plenty of flexibility in terms of how and when we access the capital markets. In terms of debt funding plans for the year, again, we can be flexible. We do have $150 million of forward starting swaps in place, which have hedged a future 10-year unsecured debt issuance at an effective base rate of just under 4%. And so we’ll look to be opportunistic in terms of accessing the debt markets. But we have over a year to use those swaps and can afford to be nimble and flexible in terms of how and when we come to the market.
Alec Feygin: That’s helpful. Thank you. Second one for me is kind of on the pipeline of potential developer takeouts. And is that, are those conversations increasing or decreasing? I know, Joey, you talked about this merchant developer or retailer kind of bind right now. But just curious if those conversations have been increasing.
Joey Agree: Increasing. We built out that team. We’ve launched an ARC module for that team. We’ve added to that team in terms of team members. They are increasing their daily multiple times per day, trying to piece together projects that can work. And so it’s really just sifting through the returns that work for the developer and/or retailer, the rents per square foot, they’re the output and figuring out the duration premium and/or term or credit premium that we’re going to require relative to where a standard acquisition.
Alec Feygin: Got it. And one last one for me, is the company having any more direct conversations with retailers about expansion? So not through the developers, but directly. I know you mentioned you’re about to go meet with some retailers, but any more color on that?
