So if you have a large format vacant box today, and I’ll say large format being anything over 40,000 feet, you’re going to most likely have challenges. If it’s a smaller box, again, in reference to our 3 Rite Aids, if we were to get those back, we’re going to have significant demand. And so a lot of it is related to the adaptive reuse of the box. Redeveloping larger boxes, cutting them up today with the cost challenges is very challenging. That’s not something that we want to endeavor on. And so again, we’re focused on those smaller assets that have the high-quality tenancy in place, but also the residual that we can get our arms around.
Robert Stevenson: And to be clear, the grocery box, you’re looking to sell that? Or are you in the process of trying to re-tenant that?
Joel Agree: That will most likely be a disposition.
Operator: Next question comes from [indiscernible] with Baird.
Unidentified Analyst: The first one is, does ADC specifically target investment-grade tenants? And what is the competition like for those deals right now relative to the beginning of the year?
Joel Agree: We’ve always said that’s really an output. Our rating — our investment-grade rating is really an output focusing on the 30 to 35 best retailers in the country. We have a number of retailers that we’re actively targeting in or working with Hobby lobby, Publix, Alta in the portfolio today and in the future that don’t carry — Chick-fil-A being another one that we actively target and work with. So that’s really an output for us. What was the second question?
Unidentified Analyst: It’s on the competition for those investment-grade type…
Joel Agree: Very little today. At the price points we’re competing at, it’s with the rare 1031 or private buyer, which has slowed down dramatically. And so there’s very little competition except sellers’ expectations themselves in this environment.
Unidentified Analyst: Helpful. On the 2 development deals you guys signed this quarter, was that in the later half of the quarter or closer to the beginning?
Joel Agree: Peter, do you have that off hand?
Peter Coughenour: I don’t have the timing for those 2 specific projects off hand. No.
Joel Agree: Yes, we can get back to you, on the specific timing.
Operator: The next question comes from Ronald Kamdem with Morgan Stanley.
Ronald Kamdem: Just two quick ones. So 1 on the pipeline. I think you talked about over 7 coming through. Just curious, does this pipeline look any different from what it did early in the year, whether in terms of size or tenant mix? Just trying to figure out how that pipeline has shifted, if at all?
Joel Agree: Tenant mix is the same as you’ve seen throughout the year and will continue to be similar as we’ve executed in years past. Size, again, is really at our election, subject to where we think the appropriate risk-adjusted spreads are. So we have a number of assets that are currently — under our properties that are currently under control. We’ll make decisions. We’re nonrefundable on purchase agreements, we have letters of intent executed given the rapid rise in the 10-year and the relative cost of capital, we’ll make decisions in the upcoming weeks on whether or not we want to pursue those acquisitions to close or we want to be patient and remain disciplined capital allocators.
Ronald Kamdem: Great. And then on the ground leases acquired during the quarter as well as the portfolio. Maybe can you talk about are those cap rates behaving any differently from sort of the rest of the market? And what opportunities — or how are you seeing opportunities shake out on the ground lease front?
Joel Agree: Really, really no differentiated behavior than the rest of the market. I’d tell you, right now, our Q4 pipeline has — and that could change based upon the election of what we proceed with as well as what we source. Our Q4 pipeline has a material component of ground leases. But it’s been pretty consistent throughout the year, call it, that 8 plus or minus percent, but no true differentiated trends that you can see there versus standard or typical net leases.
Operator: The next question comes from Linda Tsai with Jefferies.
Linda Tsai: What percent of your deals have been sale leasebacks year-to-date? And would you expect that to grow as a percentage headed into next year?
Joel Agree: Linda. So this year, approximately 25% of our transactions have been sale leaseback. That’s in comparison to historic couple of past years here, that was about 10%. We’re always working with retailers on potential sale leaseback transactions. We did a couple of new — worked with a couple of new retailers this quarter on sale-leaseback transactions, most notably in the farm and rural supply space. We’ll continue to evaluate that market. We’re engaged in active dialogue. And again, it comes down to cap rate and risk-adjusted returns for us.
Linda Tsai: And then how do you think about the retailer environment right now? I think people thought you might have been in a recession by now, but clearly, that hasn’t happened. And so do you feel better about the overall consumer environment now versus, say, a quarter ago?
Joel Agree: It’s been a long 90 days. It’s tough to remember a quarter ago. Look, I think we have talk of hard landings again. I think we’re looking at a consumer that is really trifurcated and not bifurcated. I think we’re seeing pressure on that consumer with multiple different data points. And so it’s a unique — this is a unique and one-of-a-kind environment that we’ve never been through in history. There’s — I’m not going to pontificate or guess in the probability of a hard landing or soft landing or no landing at all. But I do think we’re going to watch the consumer. But I think most importantly, again, this is not a discretionary based portfolio. It’s not an experiential-based portfolio. This is a portfolio that consists primarily of core brick-and-mortar goods and services with the largest retailers in the country.
