Bill Lenehan: Yes, we triangulate different methods. We typically look at the inverse of the multiple adjusted for some cost to raise money. Unfortunately, raising money has some minor costs associated with it, even if you use the ATM. So that would be a good way to look at it. Gut check that with cap rate would be probably even better.
Anthony Paolone: Okay, and then in terms of, you know, thinking about the balance sheet capacity up in the high-5s right now, any appetite to push a bit above that or you really need to wait and see where cap rates settle?
Bill Lenehan: I would say it’s a different analysis than when your borrowing on your revolver was 3% or 2%. Now borrowing on your revolver is expensive, and so unless you have some crystal ball that says rates are going to dramatically decline in the future, and frankly if we had that crystal ball, we wouldn’t be buying buildings for a living, we’d be trading derivatives. Is that borrowing on your revolver to buy buildings isn’t the sort of artificially accretive game plan that REITs had in the past. So I think the way to look at it is cost to equity.
Gerald Morgan: And I would just add, I think we have been pretty consistent, Tony, that we want to keep our leverage below 6 times. And that doesn’t mean that it can’t go up periodically above 6 times for good reasons. I think what Bill’s highlighting is right now I’m not sure there’s good reasons to go above 6 times of leverage.
Anthony Paolone: Okay, got it. And then if I can get one last one in here just to follow up on Rob’s questions. And you mentioned just no real difference between restaurant, returns and some of the other product types. There’s a lot of discussion around GLP-1 drugs and restaurants. Like, if they’re about the same, like do you find it still worth taking the tail risk there or how do you think about that if at all at this point?
Gerald Morgan: Yes, you know, I’m certainly not an expert on the GLP-1 drugs, but we’ve been doing our homework on the implications. You know, our current view is that the semi-agulic drugs may lead to some minor behavioral changes, might have some minor effect on our tenants businesses. But that’s why we have conservatism in our underwriting model. You know, I don’t think it’s a major concern. You know, we’re buying buildings with very long-term leases. It allows our tenants to adapt their business, if there is some sort of behavioral shift. And I think we’re going to own these buildings for decades. So we want to look long-term and not be a knee-jerk in our reactions based upon, what’s sort of trending. So we’re not dismissive.
I think it’s a great question. We really put our head down on this issue. We’ve actually brought in experts to advise us on this. And at the current moment, even sort of adjusting for what will certainly be a lower cost, probably consumable versus injectable, probably with lower side effects in the future, we don’t think it’s a major concern. But we’re monitoring.
Anthony Paolone: Great. Thank you.
Bill Lenehan: Thanks.
Operator: Thank you. Our next question comes from Jim Kammert from Evercore. Jim, please go ahead.
Jim Kammert: Good morning. Thank you. I was noodling on your medical retail deck you put out this week, and I was just curious, as a general rule, obviously, emergency rooms, urgent care, higher per square foot investments and rents, but how much of that improvements in those types of assets would Four Corners be paying for versus the tenant? I just want to understand how that’s split if possible?
Bill Lenehan: Yes, it’s a mixed bag. I would say we reject the basic premise that some market participants, you know, hang their hat on, which is the tenant should be able to get out the entirety of their construction costs in the sale lease back, that, that’s sort of a rule that some people follow that we don’t. But I would reiterate what you said, which is that these are real costs. So this is — these are improved buildings. They are expensive to improve. It’s something that we watch closely. I would say the higher construction costs come back to us as rents. And we have a demonstrated track record of being very rent sensitive. Our model is 25% to 30% rent-related factors, and it’s something that we’re in particular focused on in medical.
