Joey Agree: Yes. Very, very frequently. Whether it’s coming in and stepping in as a solution, or working with retailers on a standard rollout. Those are those are at the big focus for us along with the FB.
Operator: Thank you. The next question comes from Linda Tsai from Jefferies. Please go ahead.
Linda Tsai: Hi, good morning. I know you’re confident about the 600 million in acquisitions this year, but what does the low and high end of AFFO per share guidance baked in for acquisition volume?
Peter Coughenour: So the acquisition, or sorry, the AFFO per share guidance range assumes approximately $600 million of acquisitions. When I think about hitting the low end or the high end of that AFFO per share guidance range, I would look to the other inputs that we guided to in the earnings release. And obviously the more favorable end of those ranges will result in us being closer to the high end of our AFFO per share guide range. At the less favorable end of those ranges, we’d be closer to the low end. But in terms of acquisition volume, we’re assuming approximately $600 million.
Linda Tsai: Thanks. That’s helpful. And the 5.7% to 6% of G&A, I know it’s a little early, but would this be a reasonable run rate to assume as we look out to next year?
Joey Agree: Well, I think, first we’ve continued to scale. So the G&A is a percentage of revenues has continued to scale. I would assume next year you’ll see that that continued scale as well. Obviously, that’s subject to revenue, which is driven by investment volumes, but this company has become much more efficient from a technology standpoint, from a process standpoint. And so you’ll see that number continue to scale. The denominator there I think will be the biggest moving piece, the revenue number, right Peter?
Peter Coughenour: Yes, that’s correct. And Linda, just for some more context, if you look back four years ago, G&A as a percent of revenue was roughly 8%. And so we’ve seen based on our guide this year, roughly 200 basis points of scale just in the last four years and expect that we’ll continue to see scale here going forward.
Linda Tsai: Thanks for that. And those 15 family dollar boxes, what’s the IRR you’ll expect on those as you re-lease those?
Joey Agree: We haven’t got that far yet. There is no resolution. We feel that, as I mentioned, increase for over half of them already. The base case is that Dollar Tree is on the hook for the weighted average lease term of almost eight years for the rent and nets on all of them. But we haven’t looked at disposition yet or whether Dollar Tree will be subleasing themselves or we would take a termination fee and enter into a direct lease with a net new tenant. So this is all pretty fresh, hot off the press. But we’ll be working through that, I would think, this quarter.
Linda Tsai: Thank you. One last question. You emphasized Florida a couple of times. Why is now the right time to sell there? Is it asset or state specific?
Joey Agree: State specific. It just seems that a disproportionate amount of 1031 activity, which is very muted, as we all know, is attracted to the sunshine state. Florida seems to be the new California. It’s international capital. It’s private capital. Some of the stories, frankly, of the buyer profile don’t even really add up. But if they come to the closing table, we’re happy with that. I mean, we had a buyer walk away on a sale, the first time in my career, from a $75,000 nonrefundable deposit the day before closing on a couple million dollar sale in Florida as well. So it’s very interesting. But we’ll, again, continue to look to opportunistically dispose of assets at these cap rates and then recycle it. But Florida seems to be an outlier here of 1031 activity.
Now, I will mention it is fractional. 1031 overall activity is fractional of what it’s been in past years. And so this is opportunistic. They don’t all close. Half of them will terminate. But we’re working prudently through it. And we’ve built out the disposition team under Nicole, and we’re actively pursuing it.
Operator: Thank you. And the next question comes from Haendel St. Juste at Mizuho. Please go ahead.
Haendel St. Juste: Joey, can you talk a little bit about the economics behind backfilling for the Big Lots? I think it was filled within O’Reilly’s. Maybe, some color on the capital that was required, the new lease term, the re-leasing spreads. And I know Linda just asked a question about Dollar stores, but I’m just curious, how different are the in-place rent and box sizes of the Big Lots versus the Dollar stores and anything else that could be relevant or informative there? Thanks.
Joey Agree: Yes. The only thing I can share with you, again, we put the two leases, 110% or 111% of former rents. The both leases, both the Big Lots, sorry, the O’Reilly as well as the Fresenius are long-term leases with escalators. We’re seeing tenants more amenable to escalators. Obviously, given the inflationary environment, I think there’s a misnomer that investment grade operators are flat leases. That is patently false. These leases would prove that wrong. De minimis landlord work, again, this is going to be a hub store, and so we have a few other hub stores, but these are the distribution as well for other commercial locations and body shops as well as a retail storefront. So we’re excited to add that. Obviously, a significant upgrade.
That box, if I recall, was probably 30,000 feet. So it was a larger box. The Dollar stores range from about 8,000 to 10,000 feet generally, and so they’re smaller boxes than the Big Lots. And so the marketability of them is very different, I would just say, from the perspective of tenant pool than a junior box such as the former Big Lots.
