R.J. Milligan: Great. Thanks. That’s it from me.
John Albright: Great. Thanks R.J.
Operator: Thank you. And one moment as we move on to our next question. And our next question comes from the line of Anthony Hau with Truth Securities. Your line is open. Please go ahead.
Anthony Hau: Good morning guys thanks for your question. So in 2023, you guys are doing all the right things, right? Completely numerous initiatives to close the valuation gap. But the market is not rewarding for those actions, right? So what other leverage can you pull to close the gap this year while reducing leverage? And like how do you balance between leverage buying back stock and growing that like equity float?
John Albright: Yes. I mean look, if the stock continues to trade at these massive discounts to NAV and high implied cap rates and high dividend yield, clearly, we’ll look to buy more stock because we’re going to be accreting NAV and really getting shareholders a strong total return basically synopsis. And so if you look at kind of where we’re trading versus the comps, which you know it better than we do, we’re trying to kind of give a value proposition to shareholders to say why would you take a higher basis risk and lower implied cap rate when you could have the same exposure to IG at much higher cap rate lower valuation, higher dividend yield. So the value proposition is there. We’ll try our best to communicate it, but the market has not taken it and then we’ll look to buy back more shares and sell down assets to keep the leverage neutral.
So it’s pretty easy. It’s not rocket science. We’ve been through this many times and feel like we have good opportunities out there. And so we’ll just kind of keep working through it.
Anthony Hau: So I feel like that’s like a cash 22, right? Because I think 1 of the main reasons why investors are not rewarding those actions because the liquidity of the stock is – is pretty limited, right, compared to your other triple net. So how do you balance between like buying back stock and like keeping that liquidity for investors?
John Albright: Yes. I mean we can’t really — we can’t basically give investors everything. I mean investors obviously want everything. But look, we were able to buy what, almost 1 million shares with — on our buyback. And as you know, the buyback programs are very problematic. I mean we have – we can’t basically buyback at certain times of days – we can’t buyback with certain percentage of volume in the – as shares are trading. And we certainly are price sensitive. So even with all those parameters, we were able to buy 1 million shares relatively easy. So investors can buy the shares. They just basically just — they just probably have a hard fast rule that, hey, if you’re trading below certain amount of shares per day, we can’t touch you kind of thing.
So – but you can buy the shares. I mean, we’ve demonstrated that. So it’s for more of the value investors seem to kind of latch on which more long-term holding sort of investors seem to understand the value proposition.
Anthony Hau: Okay. Thank you.
John Albright: Thank you.
Operator: Thank you. And one moment as we move on to our next question. Our next question comes from the line of John Massocca with B. Riley. Your line is open. Please go ahead.
John Massocca: Good morning.
John Albright: Good morning.
John Massocca: So question on the disposition guidance. I mean, should we assume that some repayment of some of these mortgage investments is in that guidance today? And maybe just kind of roughly, what are you kind of expecting to get repaid this year?
Matthew Partridge: Yes. Good question, John. Good morning. There’s a limited amount of repayment related to the $24 million loan that we were intuited in the fourth quarter starting really in the third quarter. But we’re talking, call it, 10% over the balance of the back half of 2024, so not a meaningful amount. We think that will probably ramp up when we get into and hopefully into a different interest rate environment and a more efficient transaction environment.
John Massocca: Okay. And I guess, maybe what are kind of the variables in the external world that could change that kind of view – or could cause that to be different than guidance? I mean, essentially, as we think about kind of an uncertain rate world, does that impact that? Or is it all just based on execution in terms of selling down the assets in that collateral pool?
Matthew Partridge: Yes, I think it’s both. I mean for that specific collateral pool, I think it’s a more active transaction environment with pricing that the borrower deems to be appropriate. But then on the other two loans, those are development loans where once the tenant gets open and operating, I think it’s either a refinancing opportunity for the borrower. So obviously, the interest rate environment would have an influence on that or it’s, again, an efficient transaction market, where they feel like they can sell it at the appropriate price.
John Massocca: And then maybe bigger picture on kind of guidance, the investments and dispositions at the midpoint obviously kind of balance each other out. Is there any expectation in your mind of a difference in timing between deploying capital and kind of capital recycling? The course of the year?
Matthew Partridge: I mean certainly, there will be. We’re assuming that all sort of balances itself out over the years. Sometimes we sell ahead of buying and sometimes we buy ahead of selling. — but guidance assumes it’s a relatively balanced approach.
John Massocca: Okay. And then the balance sheet, the revolver is a little bit over the amount you have swapped, but it kind of seems like it matches the amount on the loan pool. Is it kind of fair to assume that’s free floating at least over the kind of intermediate term? .
