John Albright: I’ll let Matt kind of discuss some of that. But in general, on the liquidation that company, Mountain Express was teed up to be sold. There is a standoff between the private equity and the lenders and private equity has basically decided to just liquidate the company. So kind of a startling change, but we’ve had multiple parties that had followed that process that have come to us interested in these properties. So we’re actively in discussion on getting those sold. On the watch list, clearly, as you know, Wes, we’ve been very active on starting the sale process over a year ago and focusing on a lot of credits that could be an issue and we’re continuing that process. But I’ll let Matt discuss a little bit more granular.
Matthew Partridge: Yes. Just to expand on that, if you look at what we sold in the third quarter, a lot of its franchise restaurant operators where — while we’re not trying to get to that 100% publicly traded or publicly rated route that John referenced earlier, we are focused on investing in tenants that have clear transparency when it comes to their financials. And so there are other tenants within our portfolio, a small amount that we’ll look to exit opportunistically if the market gives us appropriate pricing.
Wesley Golladay: Okay. And then just one final one for you, Matt, on the balance sheet. It looks like interest expense did pop for the balance of the year. Do you expect to be at the lower pricing grid at the start of next year?
Matthew Partridge: Yes. So we’re — we’ll see how dispositions materialize through the end of the year, but the goal is to reduce leverage to a point that we slide back into a lower spread on our — on all of our debt by year-end.
Wesley Golladay: Great. Thanks for the time, everyone.
Matthew Partridge: Thanks a lot.
John Albright: Thank you.
Operator: Thank you. One moment for questions. Our next question comes from RJ Milligan with Raymond James. You may proceed.
RJ Milligan: Hey, good morning Two quick follow-ups. Matt, I think you said $150,000 a quarter for the tenant bankruptcy. I’m just curious how much you got in the third quarter for modeling purposes?
Matthew Partridge: For modeling purposes, we got most of it in the third quarter.
RJ Milligan: Okay. And then with the Kohl’s roll down, what’s the effective cap rate on the acquisitions in the quarter?
Matthew Partridge: Yes. The effective cap rate once the roll-down happens is a 7.5% cash cap rate.
RJ Milligan: Okay. And then, John, just more broadly, you guys are the first net lease REIT to report here and provide some commentary. I’m just curious, you mentioned that you’re seeing more opportunities out there, but what are you seeing in terms of pricing and then the competitive buyer pool out there just given where the cost of capital has trended?
John Albright: Yes. I would say there’s still — the market’s very tepid in the standoff between buyers and sellers. So we’re clearly only looking for situations where people need to sell, and so kind of trying to be patient there. But not a lot of transactions are happening for sure. We think that there’s going to be more properties coming on the market that we’ve heard about people looking to see what kind of liquidity is out there. And so with the debt market super challenged, that is obviously going to be another factor in creating some opportunities we hope, and we’re seeing some of that, but it’s not super interesting right now. We’re kind of waiting to see when the wildebeest try to cross the river.
RJ Milligan: Are you seeing a meaningful difference in cap rates from investment grade versus non-investment grade? Has that spread widened or tightened? What are you seeing in terms of —
John Albright: Yes, definitely, everyone wants the investment grade for sure. And so the investment grade is not moving the non-investment grade has certainly moved. Yes, it’s widened quite a bit.
RJ Milligan: Okay. Thanks guys. Appreciate it.
John Albright: Yeah, thanks.
Matthew Partridge: Thanks, RJ.
Operator: Thank you. And this concludes today’s conference call. Thank you for participating. You may now disconnect.
