Essential Properties Realty Trust, Inc. (NYSE:EPRT) Q1 2024 Earnings Call Transcript

John Kilichowski: Got it. And focusing on the disposition side, you mentioned the cadence of dispositions was light, but I’m more interested in the 20% realized loss number. How much is castled from dispositions in your guidance sort of forcing your hand there or these are just non-core assets you’re happy to rotate out of?

Peter Mavoides: Yeah, I wouldn’t put too much too much into the 20%. That tends to be — that can be a pretty big delta between where we were book an asset on our balance sheet to where we ultimately sell it and allocate rents. So that number is terribly insightful to anything, really particularly on a $12 million subset. But generally, our disposition activity is focused on getting rid of assets we don’t own on a long-term basis and managing industry — specific industry and tenant concentrations, where we may be overexposed and looking to add. So we will sell off those exposures.

Operator: The next question comes from Spenser Allaway with Green Street Advisors.

Spenser Allaway: Thank you. You mentioned you continue to see a bid ask spread in the market. I’m just curious how big is that spread on average for the deals you’ve looked at? And are there any tenant industries where you’re seeing larger spreads than others?

Peter Mavoides: Yeah, I think that commentary, Spencer, was more around the broader net lease market, a single tenant net lease, which is down 40% to 60% to historical volumes and where you have an in-place cash flowing single tenant net lease asset. The price of capital today is probably above where you put that asset — where you bought that asset, creating that bid ask spread. Where we’re investing in new capital formation sale leasebacks, that bid-ask spread is a lot tighter. And so, in our market where we’re investing, particularly our capital going out was because there isn’t a bid ask spread.

Operator: We have reached the end of the question-and-answer session. I would now like to turn the call back over to Pete Mavoides, for closing comments.

Peter Mavoides: Great. Thanks, Rob, and thank you all for participating in our call today. We appreciate your interest and your questions, and we look forward to seeing you all in the coming months. Have a great day.

Operator: This concludes today’s conference. You may disconnect your lines at this time, and we thank you for your participation.