So, I think that we’ve got wind at our back, and we’re pushing forward. And we will continue to execute and deliver results that meet or exceed the market’s expectations.
Operator: Ladies and gentlemen, we take our last question from the line of Mitch Germain with Citizens JMP.
Mitchell Germain: I’m trying to understand the situation with Klaussner, I think I’m saying the right?
Michael Weil: Yes, you are.
Mitchell Germain: Okay, great. So, it seems like some of the issues that they were experiencing began middle part of last year. Were they on your watch list? Or is this something that — is this kind of aligned with what you expected? Or did the situation get worse than you anticipated?
Michael Weil: No. This was — we were very aware this was something that we were monitoring. We were in talks with them. It was a manufacturing industrial-type facility. So, I think that it’s — when you take into account the situation, I think that we’ve managed to have a good outcome. They’re taking, as we said in the call, two of the buildings, they released back at the exact same rate. Two of the properties are already under contract to sell. And most importantly, Mitch, as you know, being an industrial tenant, their rent per square foot was very low. So, although it had a kind of a headline impact on occupancy, it really had very de minimis impact on earnings, and we’re going to see both recover in the second quarter. So, I’m very pleased.
And again, I do think that the strength of our asset management platform and team being able to re-lease the two properties, sell two properties that quickly, I think, is validation that we were not caught flat-footed. Nobody ever likes to see bankruptcy. But if I can switch the page on a little bit, I do want to highlight back in 2019, again, looking at our asset management performance, we saw the Family Dollar Tree merger and frankly, didn’t think that it made a whole lot of sense. We own Family Dollar stores, and we sold them in 2019 at a very attractive 720 cap rate. So, avoiding essentially this repositioning that they’re going to be undertaking in 2024 and 2025. So, the focus on the portfolio on a daily basis is really important. And we never want to be caught flat-footed.
I don’t want to say we’re perfect, but being able to proactively manage this 1,300 property portfolio is really beneficial in the short term and long term.
Mitchell Germain: Great. That’s super helpful. And I know that we mentioned [indiscernible] and you mentioned Family Dollar. And I guess, is there any other Klaussner or other situations that exist in the portfolio that kind of we need to be aware of, i.e. your — is there something on your watch list that might be more actionable versus something that you’re just kind of looking for potentially?
Chris Masterson: Yes. So, the short answer is no. And the longer answer is we have a very close hold on this portfolio. And we’ve taken all that into consideration when we gave guidance for 2024 that we’re very confident in achieving, both on an earnings per share basis and a lowering of net debt to EBITDA. So, there can be things that happen in the portfolio, but I don’t anticipate anything material. And I think that we’re — as I said earlier, I’m really excited. I don’t remember being this excited talking about first quarter results and thinking about the remainder of the year for how we’re positioned and what’s to come. And I’m very pleased with our execution. I maybe shouldn’t say it that way. I hope you all are pleased with our execution in the first quarter because I think it shows the path and these results in the first quarter don’t take into account the things that we finished in the first quarter that are going to have a positive impact on not only the second quarter but the remainder of 2024.
So, this is really a momentum that I feel is positive. Velocity that I think is incredibly valuable, and a business plan that we’re going to be able to execute on because of how well we know our portfolio and all of the aspects of it, including refinancing debt, lowering interest rates, lowering net debt to EBITDA. So, we’re just going to keep pushing forward in this consistent way.
Mitchell Germain: Great. Last one from me, and thanks for everyone’s time. Just, Chris, just confirming that hedge, the rate hedge, that goes right to the bottom line. Is that the way to model it? Or is there some sort of accounting intricacies that we need to be aware of?
Chris Masterson: It goes right to the bottom line.
Operator: Ladies and gentlemen, this concludes our question-and-answer session. I would now hand the conference over to the management for closing comments.
Michael Weil: Great. Thank you, operator. Well, I think I’ve said a lot in the Q&A and in my prepared comments. So, I appreciate everybody taking the time we’re very excited about directionally where GNL is headed. And we think that we’re — we’ve done the work. We’re showing the results, and we look forward to seeing you at conferences taking any calls that you may have and continuing the conversation, we believe that this is a terrific company and portfolio, and we look forward to seeing the response of this work. So, thank you all very much.
Operator: Thank you. The conference of Global Net Lease has now concluded. Thank you for your participation. You may now disconnect your lines.
