Global Net Lease, Inc. (NYSE:GNL) Q3 2023 Earnings Call Transcript

Global Net Lease, Inc. (NYSE:GNL) Q3 2023 Earnings Call Transcript November 8, 2023

Operator: Good afternoon, and welcome to the Global Net Lease Third Quarter 2023 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Jordyn Schoenfeld, Associate at Global Net Lease. Please go ahead.

Jordyn Schoenfeld: Thank you. Good afternoon, everyone, and thank you for joining us for GNL’s third quarter 2023 earnings call. Joining me today on the call are Mike Weil be Jim Nelson, GNL’s Co-Chief Executive Officers; and Chris Masterson, GNL’s Chief Financial Officer. The following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. We refer all of you to our SEC filings, including the Form 10-K for the year ended December 31, 2022, filed on February 23, 2023, and all other filings with the SEC after that date for a more detailed discussion of the risk factors that could cause these differences.

Any forward-looking statements provided during this conference call are only made as of the date of this call. As stated in our SEC filings, GNL disclaims any intent or obligation to update or revise these forward-looking statements except as required by law. Any statements referring to the future value of an investment in GNL, including any adjustments giving effect to the recently completed merger with The Necessity Retail REIT Incorporated defined as RTL and the subsequent internalization of both GNL and RTL’s advisory and property management as well as any projections about any potential success following the merger and internalization are also forward-looking statements. There are a number of risks associated with the merger internalization, including, but not limited to, our ability to integrate the operations of RTL and the other entities acquiring the merger and internalization.

We may not realize the anticipated synergies and other benefits of the merger or the internalization or do so within our anticipated time frame. Also, during today’s call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company’s financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available in our earnings release and supplement, which are posted to our website. Please also refer to our earnings release for more information about what we consider to be implied investment grade tenants, a term we will use throughout today’s call.

I will now turn the call over to our Co-CEO, Mike Weil. Mike?

Mike Weil: Thanks, Jordan, and good afternoon, everyone. Welcome to our first earnings call, following the merger with The Necessity Retail REIT, and corresponding internalization transaction. We recognize how vital our shareholders are to our continued success and we appreciate the great conviction our investors demonstrated in support of the merger and internalization. The success of the merger and internalization has created the third largest, publicly-traded net lease REIT with a global presence, based on gross asset value as well as corporate governance inline with our internalized peers. The foundation of our global presence is a diversified portfolio of high-quality tenants, which gives us the flexibility to focus on attractive opportunities in multiple markets that will contribute to long-term shareholder value.

Our recently completed merger and internalization creates the path for GNL to trade up to our net lease peer multiples. We believe we are clearly undervalued on an AFFO multiple basis, compared to the other internalized REITs even though the quality of our rental income and investment grade worthy tenants, are substantially higher than the average in our industry. We closed the merger and the internalization transaction on September 12th. Accordingly, the third quarter financial results reflect 73 days of standalone pre-merger GNL and only 19 days of post-merger internalized GNL and RTL results. The company is currently on-track to achieve the $75 million of annualized cost savings we anticipated in conjunction with the merger and internalization.

To this point, based on 19 days of lower-than-expected G&A expenses, GNL has exceeded the projected synergies by $2 million, capturing $56 million of annualized synergies and we remain on track to capture the $75 million worth of total synergies with a projected 6% G&A operating expense, by Q3 2024. In addition, GNL reduced its quarterly dividend per share from $0.40 pre-merger to $0.354, as part of the merger reducing the amount of cash needed to fund the dividend by approximately $42 million on an annualized per share basis as of September 30th, 2023. Together without the assumption any incremental acquisitions or external growth, GNL expects to reduce payout ratio and continue to execute on its current business plan in leasing, renewals, and strategic disposition initiatives.

Our leading portfolio of over 1300 properties spans nearly 67 million square feet and we had a gross assets value of $9.2 billion at quarter end. The diverse makeup of our net lease portfolio is unmatched, whether measured by geography, asset type, tenant or industry, which positions GNL well to navigate external macro challenges, as we move ahead. The portfolio is over 96% leased with a weighted-average remaining lease term of 6.9 years. Geographically, 81% of our straight-line rent is earned in North America, while 19% comes from Europe. Additionally, the portfolio includes contractual rent increases, with an average annual rental increase of 1.3%. The portfolio also features a stable tenant base with an industry-leading 58% receiving an investment grade or implied investment grade credit rating.

I also want to highlight the strong asset management capabilities we demonstrated, while continuing to succeed with leasing and renewal activity. In particular, our third quarter leasing and renewal activity included 1.8 million square feet across the entire portfolio. Leasing spreads on renewals were 5% higher than the expiring rent. Our largest segment is industrial and distribution with 218 properties that span over 33.6 million square feet and contributed $229 million to annualized straight-line rent. 93% of the leases in this portfolio include favorable rent escalations, with an average annual rental increase of 1.6%, positioning the portfolio to benefit from annual rental income while having eight year weighted-average lease term. Our single-tenant retail segment is the largest by property count with 886 properties that span over 7.9 million square feet and contributed $153 million to annualized straight-line rent.

The single-tenant retail segment comprises 69% investment grade or implied investment grade rated tenants, and features an 8.4-year weighted-average lease term. The multi-tenant suburban retail segment includes 109 properties that span over 16.4 million square feet and contributed $199 million in annualized straight-line rent. The portfolio has a weighted-average remaining lease term of 5.1 years and includes 21% of grocery anchored centers, which are 91.3% leased. This segment is predominantly comprised of triple net leases, with incremental lease-up potential and attractive leasing spreads. With 61% of the straight-line rent in this line rent in this portfolio coming from the Sunbelt markets, which continue to grow and have favorable demographic tailwinds.

Our smallest segment, single-tenant office includes 91 properties that span 8.9 million square feet, contributed $146 million to annualized straight-line rent, and has a 5.1 year weighted average lease term. One of the metrics that differentiates the single-tenant office portfolio is that it consists of 71% mission critical facilities, which we define as headquarters, lab or R&D facilities, and features 70% investment grade or implied investment grade tenants, which we believe provides rent stability and low level of default risk. Given G&L’s successful track record of lease renewals, the single-tenant office segment also includes limited near-term lease maturities, minimizing the risk of vacancy. An additional hallmark of our total portfolio strategy is the mitigation of concentration risk.

Our top-10 tenants collectively account for only 21% of annual straight-line rent with our largest tenant accounting for only 3.1% of our total portfolio. This high-quality tenant roster provides a highly predictable base of rental income on which to build our future as our tenants provide stability and durability to our business. Our leasing results continue to illustrate the quality of our assets driving leasing rates higher even in the current environment. The single-tenant segment completed eight new leases and renewals and showcased a positive 7% renewal leasing spread, demonstrating the strong renewal demand for our mission critical assets while adding $5 million to net straight-line rent. The multi-tenant segment completed 92 new leases and renewals resulting in a positive 4.1% renewal spread consistent with the high demand we’re experiencing at our suburban shopping centers, which increased net straight-line rent by $11.8 million.

Our executed leases at the end of the third quarter 2023, combined with our leasing pipeline as of November 1st, 2023, will raise occupancy in our multi-tenant portfolio to 92.9%, up from 89.5% of actual occupancy at the end of June 30th, 2023 at RTL. Turning to the balance sheet, although only 18% of our debt is variable, the volatile interest rate environment we’re currently experiencing does temporarily impact the portion of our debt that is not fixed or swapped. Prior to the 100-basis point increase in the 10-year treasury rate since September, we secured a $500 million increase to our credit facility through our accordion bringing the facility to $1.95 billion. Additionally, prior to the completion of the merger, RTL completed a $260 million commercial mortgage-backed security loan encumbered by 29 multi-tenant properties that we assumed as part of the merger.

The loan has a 10-year term and is interest only at an attractive rate of 6.45%. We’re pleased to be able to achieve this by utilizing ASFR swap lock of 3.54% that RTL put in place prior to closing the loan before the merger. This CMBS loan contributes to our increased weighted average debt maturity while lowering our cost of capital and further increasing the percentage of fixed rate to over 82%. These transactions have further enhanced our balance sheet flexibility. We’ll continue to focus on opportunities that will help us achieve our financial goals, which include reducing net debt to adjusted EBITDA and organically increasing NOI through lease up and contractual embedded rent growth. This will also be accomplished in the near term through strategic dispositions and the continued success of our asset management platforms leasing and renewal activity.

The strategic dispositions will be intended to de-lever our balance sheets as we intend to use the proceeds to pay down additional variable rate debt that currently has a blended average rate of 7.2%. GNL will continue to evaluate the market for accretive acquisitions, but we believe current risk adjusted returns need to improve for the company to be more active. We’ll continue reviewing and monitoring our portfolio for strategic dispositions that can create incremental proceeds to help us accomplish our near-term financial goals. Our global portfolio will continue to deliver value, allowing us to take advantage of opportunities in the U.S. or Europe and transact on assets that are mispriced or that require expertise in more than one asset class.

We believe our global and increased diversification will prove to be annual will speak to the mission critical nature of the properties that we own, where the weighted average remaining lease term is seven years. Now that GNL is an internally managed REIT, we expect to trade more in line with our internalized net lease peers on an AFFO multiple basis given the diversification, quality of income, and superior investment grade worthy tenants in our portfolio. I’ll turn the call over to Chris to walk through the financial results in more detail. Chris?

Chris Masterson: Thanks, Mike. Before getting into the details, a reminder that the third quarter results reflect only 19 days of the combined GNL and RTL portfolios. Our cost savings internalized management structure, and many non-recurring expenses related to the merger. Outside of the last couple weeks prior to the completion of the merger and internalization transaction, results for the three and nine-month period ended September 30th, 2023, reflect the legacy GNL results and the external management structure. That said, for the third quarter 2023, the recorded revenue of $118.2 million and a net loss attributable to common stockholders of 142.5 million. Core FFO was $31.5 million or $0.24 per share, and AFFO was $46.9 million or $0.36 per share.

Typically, we would provide year-over-year comparison, however, that would not be meaningful this quarter given only 19 days of the quarter reflect combined results of GNL and RTL as an internalized company. We intend to provide formal 2024 guidance around the time of our upcoming 10-K, which will provide investors with increased transparency regarding our financial goals and projections. As expected, FFO in the third quarters was impacted by many 1 item related to the merger and internalization transaction, including $14.6 million of settlement costs, $10.4 million of equity-based compensation, and $43.8 million of transaction costs that are added back to AFFO. As always, a reconciliation of GAAP net income to the non-GAAP measures can be found in our earnings release, which is posted on our website.

Given the timing of the transaction, some balance sheet metrics also do not fully reflect the benefit of the merger. Specifically, our net debt to adjusted EBITDA ratio this quarter does not reflect the full-quarter benefit of adjusted EBITDA from RTL and the internalization, but our total debt reflects the full impact of the transaction making this ratio not meaningful for the quarter. Moving forward, this net debt to adjusted EBITDA ratio will be part of the fourth quarter disclosure, and we anticipated to be approximately 7.6 times. We ended the quarter with net debt of $5.2 billion at a weighted average interest rate of 4.7% and have liquidity of $319.4 million including $133.4 million of cash and cash equivalents and $186 million of availability under the company’s revolving credit facility.

The weighted-average debt maturity at the end of the third quarter 2023 was 3.4 years with minimal debt maturity due in 2024. Our debt comprises $1 billion in senior notes, $1.6 billion on the multi-currency revolving credit facility, and $2.7 billion of outstanding gross mortgage debt. Our debt was 82% fixed rate, which includes floating rate debt with in place interest rate swaps. And our interest coverage ratio was 2.5 times. As of September 30th, 2023, we had approximately 230.8 million common shares outstanding. On a weighted-average basis, there are approximately 130.8 million shares outstanding, which is calculated based on the 73 days standalone pre-merger GNL and 19 days of post-merger GNL. As always, I’m available to answer any questions you may have on this quarter after the call.

I will now turn the call back to Mike for some closing remarks.

Mike Weil: Thanks Chris. We remain excited about the future of the internalized global net lease. We are on a strong growth trajectory with nearly 100% retention rate of GNL’s newly-hired employees, combined with our competitive advantage of owning one of the largest most diversified global net lease portfolios in the country. And the fact that almost one-third of the portfolio’s NOI is derived from industrial and distribution properties leased to creditworthy tenants with long-term leases. Now that GNL is an internally managed REIT, we believe we will close the trading gap relative to our peers, given the quality of our portfolio and the attractiveness of our creditworthy tenants. This will allow us to unlock significant value in the coming quarters for all shareholders as we continue our work to become the preeminent net lease company in the future.

Lastly, I want to mention that there is a lot of valuable data in the publicly-filed investor deck. And we want to ensure that the deck is being utilized to gain a better understanding of GNL’s exciting growth prospects. And of course, management is available for any follow-ups. Operator, please open the line for questions.

See also Top 11 Extreme Value Stocks To Buy and Top 20 Drug Companies in the US by Revenue.

Q&A Session

Operator: Thank you. [Operator Instructions]. And our first question comes from Bryan Maher from B. Riley. Bryan, please go ahead.

Bryan Maher: Thank you, and good afternoon, everyone. Couple of quick questions for me, maybe not so quick. The historical data that you guys provided, the annualized stuff on Slide 14 broken out by segment, that’s pretty helpful from a modeling standpoint. But maybe for Chris, do you suspect we will be able to get that breakout as we see it there on a historical basis to kind of fine tune our models a little bit?

Chris Masterson: We will have to get back to you on that one. We don’t have anything in that regard other than the pro formas that we’ve put out. But we’ll have to get back to you.

Mike Weil: Bryan, it’s Mike, what would be easiest for you?

Bryan Maher: Yeah, it would be interesting to see, and I know this is annualized data, but if we were to take the SLR for each of these segments and divide by the square feet outstanding to kind of see what it is per, it would be interesting to see, unless you guys tell us it’s useless. What the trends have been kind of up to this point in time? When we build our models, we look back at history and see the ups and downs and what impacted those. It would be helpful to see that if it’s not too much trouble.

Mike Weil: Well, Chris and — I will get together and see what we can come up with.

Bryan Maher: And then when we think about those four different sectors, is there meaningful differences in the rent escalators for each?

Mike Weil: When you think of it in terms of the 1.3% annualized that the portfolio averages? No, there’s not. They’re slightly different, but all in that vicinity.

Bryan Maher: And then when we think about asset sales going forward, are there particular sectors or geographies that you’re leaning into more than others?

Mike Weil: It won’t be geography driven. It will be a number of other analysis that we will be looking at, including where we see the deepest buyer pools and where we see the biggest benefit to the overall impact to the go-forward portfolio. So, it could be if there’s an upcoming debt maturity and it’s an asset that we think is valuable for redevelopment or repositioning, there are a lot of factors that will go into maximize the result.

Bryan Maher: And then when I look at Slide 18, how you break out the multi-tenant retail between power anchored and grocery, can you maybe rank Michael where you’re seeing the most and least strength in each of those segments?

Mike Weil: So, all three of those segments, Bryan, have equal strength in the new leasing and renewal, they all are critical to the suburban communities where they’re based, and we just wanted to really highlight the fact that our multi-tenant retail fits clearly in these three very similar buckets. So, it’s really what we don’t have. We wanted to make sure that everybody was clear. There are no strip centers along the side of the highway, these power centers, anchor centers, and grocery centers, the anchors tend to be investment grade, they tend to be national tenants. And many of them have the investment grade or implied investment grade rating. And most importantly, they tend to have net lease leases on these large anchors. So, this is where we have found the greatest value. This is where the community’s shop on a regular basis. And we just wanted to clear up any questions that people might have of how this portfolio looks on a deeper dive.

Bryan Maher: Thanks, And just one last quick one for me. I think, Chris, you said that the net debt to EBITDA, we know it’s useless for the third quarter, but for the fourth quarter, I want to make sure I got this right. Did you say 7.6 times?

Chris Masterson: Yes. 7.6 times is what we’ve been disclosing as the projected amount.

Bryan Maher: And how does that compare to the pre-merger estimate? And Michael, where would you like to see that go over the next 12 months to 18 months?

Chris Masterson: Well, just in terms of the pre-merger that is improvement. So, it would lower the net debt to adjust to EBITDA.

Mike Weil: Yes. So as Chris says, the merger was de-leveraging in target at 7.6 times net debt to EBITDA. So, we think that’s a good start. It’s a little bit hard right now, Bryan, without being in a position to give the guidance that we intend to give when we file the K, but I have continued to say that we are focused and it’s a kind of a midterm goal. I don’t know that it can happen in just a couple of quarters, but we will continue to drive net debt to EBITDA down. We think that we need to be under 6.5 times to really have a conversation about what an investment grade balance sheet would look like. And that is where we continue to focus.

Operator: And our next question comes from Mitch Germain from JMP Securities. Mitch you may proceed.

Mitch Germain : Thank you, and I really appreciated the enhanced disclosures. It was really helpful. There were two acquisitions that or deals that were highlighted in a prior filing. I think it was dated September, right around the closing of the transaction. It seems like both have fallen out. Is that a safe assumption that they’re no longer under contract or, I’d love to just gain some insight. I think one was title car wash and one was a bigger retail portfolio.

Mike Weil: Yes. Hi, Mitch. Thank you for the question. Yes, we made the decision as we were in due diligence that we didn’t want to move forward with those acquisitions. As we said in the commentary before the Q&A, we don’t think that the markets are quite matched up yet with the risk-adjusted returns, the cost of debt, et cetera. And we didn’t see meaningful benefit in moving forward, so we notified the sellers that we would be terminating.

Mitch Germain : Great. Okay. That’s super helpful. On the asset sales side, obviously, $185 million was done year-to-date. I know there was a $50 million deal done in the quarter. Can you guys just remind me how much of that activity stems to the third quarter, please?

Chris Masterson : I’ll give you yes — eight, nine roughly $15 million in the third quarter.

Mitch Germain : Okay. So, the third quarter dispositions were just that one asset on the West Coast. Is that the way to think about it?

Mike Weil: Mitch, I think you are referring to the vacant property for the $50 million, that one we expect to close in 2024. But that one is under…

Mitch Germain : The press release just says that, it was under contract. Is that correct?

Mike Weil: That is correct. That one is under contract and we expect to close in 2024.

Mitch Germain : Okay. So, then I think Michael answered, but I would say, it was a little bit — I brought it broken up. How much of the $185 million stems to the third quarter, please?

Mike Weil: It is about $15 million, a little less than $15 million.

Mitch Germain : $15 million okay. I apologize.

Mike Weil: And some very active in fourth quarter that we don’t want to, get into right now, as far as the details of it. But we are very confident in the $383 million for 2023.

Mitch Germain : So that includes the other $198 million or so that’s under contract. Is that the way to think about it?

Mike Weil: That is correct.

Mitch Germain : One follow-up on that, though, Michael. Does that include, the under contract include the $50 million office building that’s going to be sold in 2024?

Mike Weil: I think I am confusing things. So, let me just break it down. So, let me just…

Mitch Germain : It sounds like around $200 million total, $150 million, hopefully by year-end, and then other app to build at that other asset in West Coast probably sometime in ’24. Is that right way to think about it?

Chris Masterson: Yes.

Mike Weil: Right. Chris, would you say it any differently? The $50 million will close, it is scheduled to close in 2024. And the majority of everything else will be closed in year end.

Chris Masterson: Yes. That is correct.

Mitch Germain : Okay. That’s super helpful. And last one for me. I want to just get a clarification about the additional synergies that you talked about. So, you originally said $54 million with another $21 million to be realized over a 12 months or 18 months period. And I apologize if I am a little off on that time frame.

Mike Weil: No. That’s exactly right.

Mitch Germain : Okay. Great. So now you are talking about $56 million.

Mike Weil: Yes.

Mitch Germain : Okay. But you are still saying $21 million over time. So, is it $75 million or $77 million? I am just trying to understand, kind of how much is left to be realized. Was $2 million just accelerated from the back end, or, and there is only $19 million left, or is there really $21 million left, which would mean that your synergy are in excess of the $75 million that you guys originally stated.

Mike Weil: Go ahead, Chris.

Chris Masterson: Sure. So, I was going to say, Mitch, the way that you should look at it is, the $56 million that we referenced, that is comparable to the $54 million. So that is effectively from day one. We took our actual results for those 19 days, and we were able to annualize them. And our expenses ended up coming in a little bit lower than we had estimated. So that’s where you are seeing the $54 million, projected to the $56 million now, the separate $21 million that is something that we will be over as we mentioned in the next 12 months, realizing that that relates to some other duplicative costs, whether it’s legal, audit, things like that. And that is not impacted at this point. So, you look at the $56 million and the $21 million.

Mitch Germain : So that was the $77 million?

Mike Weil: Correct. Now $75 million.

Operator: And now we are going to take a question from Todd Thomas from KeyBanc Capital Markets. Todd please go ahead.

Todd Thomas: Just following-up on the synergies from the merger, the $21 million of synergies on that side is that to be achieved on sort of a ratable basis over the next 12 months? Or will that be a little bit more lumpy? Maybe you can just talk about the expected timeline to actually realize those cost savings.

Chris Masterson: Sure. So, I would say that would be something we would realize over time. And as we get towards the third quarter of ’24, effectively we should have all of those synergies in place, where if you were able to annualize the numbers, it would be reflected in there.

Mike Weil: And Todd, it’s not going to be ratable over the next few quarters. Some of it will be and some of it’s lumpy by event.

Todd Thomas: Okay. And then appreciate the color on the synergies and some of the updates here. When you initially announced the merger, you talked about 9% accretion on an AFFO basis. And I was just wondering if you could comment on whether you’re on track to achieve that in the fourth quarter on an annualized basis. I think it was relative to the first quarter. And if there are any additional considerations for us as we look ahead.

Mike Weil: Yeah, that is what the merger anticipated results are 9% accretion. And that is going to be further addressed in our guidance that we’re going to be giving. We’ve been executing, the synergies have gone very well. So, the thing that is slightly different from the time of the merger is the increase in interest cost with the change in markets. We’re starting to see that come back down. So, I’m not sure that that changed impact will be significant. But that is what we’re looking at right now. And with the end of the third quarter and the 19 days of the merger, as you can imagine, there was there a lot of very important work that needed to be done right up until the close of the quarter and through this period, so that Chris and the accounting team could get everything together for the 10-Q.

And one of the things that we were also very pleased with was as you saw all of the debt from RTL was able to transfer it came over at par, no penalties, no — it didn’t have to be paid off, and reissued. So that was a very important part of what was accomplished in this period.

Todd Thomas: Okay. And then lastly, you mentioned that the long-term target for leverage still in sort of the 6.5 times — maybe sub 6.5 times range on a debt to EBITDA basis. It’s little ways to go from the 7.6 you’ve outlined, that you expect to be at in the fourth quarter. What’s the timeline to ratchet down leverage further and what sort of the roadmap look like to get there? How should we think about that?

Chris Masterson: I am going to ask that you let us address that next quarter with guidance, Todd. It has not yet been disclosed on a timeline basis. And it is an important step for the company and one that we continue to be focused on taking steps to achieve, and we will lay that out.

Operator: [Operator Instructions]. Our next question comes from Barry Oxford from Colliers. Barry you may proceed.

Barry Oxford: When I’m looking at the dispositions, I’m assuming that’s going towards debt, and you mentioned that your variable rate that was around 7.2%. When you look at the cap rates that you might achieve, is that going to be a little bit dilutive or do you think you can come in below the 7.2% with your dispositions and have it be a little bit accretive?

Mike Weil: We expect it to be accretive.

Barry Oxford: Okay. Perfect. And then Mike, on the 92.9% on the multi-tenant, when you look out into ‘24, how much do you think you could push that? Do you think you can push that another percentage, another a 100 basis points? Or do you feel like maybe we’re at the top end of the range that you feel you can get out of that portfolio?

Mike Weil: So, I’ve always thought that we should be optimizing this portfolio to between 94% and 96% occupancy on the multi-tenant, which will drive the overall GNL higher than the 96% that it is today already. There are always moving pieces in a real estate portfolio like this, so it’s obviously challenging to get much above 96%, 97% on a max basis for this type of multi-tenant portfolio. But yes, the markets have been very strong, the interest in the centers. We have a number of national brands that continue to expand their presence in our overall portfolio, enjoying the results of being in our centers. So, I’m very optimistic. I’m really pleased with the work the asset management team continues to do. As they’ve driven this portfolio up, we’re getting close to 10% increase in occupancy in the multi-tenant in a very short time, since we acquired that portfolio.

Barry Oxford: Right. No. You guys have done a done a great job. I was just trying to kind of figure out how much more juice there was left. And you are saying, look, there is probably — you are saying, look, there is probably a little bit more to go here.

Mike Weil: Yes. I am.

Barry Oxford: And then lastly for me, what did you guys like about the CMBS market when you were looking at doing a debt deal?

Mike Weil: It is a very thoughtful question. So, thanks. First of all, 10-year money is a very nice profile, IO, CMBS on this portfolio. And frankly, when we look at where the market has gone since, it is pretty attractive on the debt side. I think this is close to where we are going to see some debt for a while. So, we were very pleased to come in there. We thought the timing worked out very much in our favor. But it was also very strategic for us at time, Barry, because we wanted to make sure that, we had capacity on the line after the closing of the merger. So, it accomplished a couple of things. It was another piece of fixed-rate debt. It extended debt our remaining term on the debt, and it gave us flexibility for the upcoming year as we take different steps.

Operator: And this concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks, please.

Jordyn Schoenfeld: As always, we thank you for spending time and listening to the earnings call. I have an echo on my line. I’m sorry. Jim wanted me to pass the long. He is under the weather. So that’s why we didn’t hear from him today. But, of course, he will be available to join us on future calls, and if you have any questions. We look forward to any follow-ups that there are. And of course, most importantly, we look forward to continuing to execute and seeing the benefits of what we are very excited about. This internalized structure, we were already starting to see the benefits, from savings on the operational side. The team came over with a 100% retention. And we are looking forward to talking to you again with end-of-year results and some guidance. And in the meantime, we will take any follow-ups that you have and thank you again for your time.

Operator: And this concludes the conference. Thank you very much for attending today’s presentation. And you may now disconnect.