Gregory Zimmerman: Yes, I agree. I’d say there’s upward pressure on cap rates. And we still continue to see opportunities in most of our verticals that are actionable and we’ll continue to work on those throughout the year.
Antara Nag-Chaudhuri: Okay. And if I could just follow up back to the theater portfolio and the percentage rent discussion, You mentioned that your theater portfolio is outperforming the overall industry. Does that change the math around box office targets and the Regal percentage rent as we think about how the rest of the year may play out?
Gregory Zimmerman: No, this is Greg Zimmerman. In general, as we say, we have 3% of the screens in the country and we generate 8% of the box office. In our theater portfolio, the vast percentage of our percentage rent is with the regal portfolio and Mark discussed that. We expect to have percentage rent in Q3 and we’re monitoring the box office performance of those individual theaters.
Gregory Silvers: I would say, and Greg you can comment on this is, our Regal portfolio is performing as expected. I mean, again, their market share is as we kind of underwrote it. When we say we’re outperforming, we were outperforming last year, we’re still continuing to outperform. But what’s going to impact the percentage rent is these next three or four months. If you look at the film calendar, it was always heavily weighted to the second half of the year and the summer kind of season. That kind of really kicks off as Greg said kind of in May with the title start — really starting to flow then and the upside-downside is really going to be governed by these next three or four months. We’re hopefully optimistic. Things are tracking as we have projected them. And we’ll just have to see how the titles play out.
Gregory Zimmerman: Yes. And we’ll see, starting this weekend, The Fall Guy opens. And currently, our projections are that we should have at least four films in May that are around $100 million or greater.
Antara Nag-Chaudhuri: Thank you.
Gregory Silvers: Thank you.
Operator: Stand by for our next question. Our next question comes from Ray Zhong with JP Morgan. Ray, please go ahead with your question.
Ray Zhong: Hi, good morning. Thanks for taking my question. I guess my first one is follow up on the remaining spending for the year. I was adding all the things that you guys already teed up for the rest of the year with the actual [indiscernible] printed this quarter. It seems that you guys are roughly already at the low end of the range. You guys mentioned there’s some pressure on the yield. So just curious to know, are the negotiations taking a pause with the rate coming up in the past two months or is continuing at this — right now, just try to [indiscernible] is it more back-end loaders for the remainder [indiscernible] or it could happen any time as well.
Gregory Silvers: Well, I think it’s trying to be measured. Again, as we have limited capital, we’re always trying to balance the needs of a good deal right now versus what we might see in the third quarter. So I think Greg and his team are trying to do a good job of always holding back some degree of capital so that we have opportunities to meet the needs of either our existing tenants or something opportunistically that comes forward, while also balancing some of the things that a question was asked earlier, can we accelerate some of our dispositions to take advantage of that? And Greg and his team are always trying to look at that balance and say, okay, what have we got right now? What you saw this quarter was a really nice mix of, A, we’ve got a new attractions tenant, which is great.
We’ve got a new relationship and a relationship agreement to look at future deals with them. But we also supported existing tenants with the end readies, and we got really what we think are strong deals there. So it’s trying to find that right balance within a world of limited capital and striking that balance for the entire year. Because if we spend everything in the first quarter, while that’s great for earnings, that challenges us to be opportunistic as the year runs through. So, Ray, it’s trying to hit that balance.
Ray Zhong: Got you. That makes sense. And on the capital source side, you guys mentioned the priority is to deal with the vacant theaters for now. Anything you guys are contemplating on the theaters that are well covered and any guess on the cap rate, if ever, that would be helpful. Is there any color on that?
Gregory Silvers: Yes. I mean, the challenge is, as the industry has recovered we really still have not seen a lot of transactions on what we would call very strong theaters. I think that market is getting better. There’s no doubt. Clearly the overhang of the industry is behind us. People are seeing. And if you look at two of our major three operators, they have as good or better balance sheets than they had in 2019. Clearly Regal’s is much better, and Cinemark is just as strong as they retired some of their largest — some of their bonds earlier this quarter. So I think that market is developing, but Greg?
Gregory Zimmerman: I agree, and I wouldn’t be able to hazard a guess on cap rates because, as Greg said, we just haven’t seen any trades of theaters that are cash flowing. Because if it’s a decent theater, people are holding on, betting on the recovery, which obviously is playing out and will continue to play out through the end of the year and into 2025.
Ray Zhong: Got you. That’s it for me. Thank you.
Gregory Silvers: Thank you, Ray.
Operator: Stand by for our next question. Our next question comes from Rob Stevenson with Janney Montgomery Scott. Rob, please go ahead with your question.
Rob Stevenson: Good morning. Greg or Greg, you indicated that Topgolf was going to refresh some more locations in the portfolio. What does that look like in terms of dollar invested on those type of refreshes and what do they do? And are you guys funding that? And if so, what are the expected returns and any changes to the lease term or bumps, etc?
Gregory Silvers: Yes, Rob. I wouldn’t know exactly how much it is because they fund 100% themselves, they figure out which ones they want to refresh. So we don’t — there’s no change to the lease term, and we don’t get a return on it. But we’re happy, obviously, when our tenants are investing in our real estate. What the refresh consists of is, replacing the outfield grass turf, and then also paint and polish on the existing asset, the restrooms, that sort of thing. So again, we’re always thrilled when our tenants are investing in our real estate.
