National Retail Properties, Inc. (NYSE:NNN) Q2 2023 Earnings Call Transcript

And so we’ll just keep watching those and deal with them whatever comes up. It’s interesting, as we look back over the years, for tenants that filed bankruptcy on average, they end up assuming 85% of our leases. So the bankruptcy is not the end of the world necessarily. It’s the rejection of the lease that creates the potential for some lost revenue in the short term. But even then, if we get the property back and we re-lease it, we’re able to recoup the vast majority of that rent with the next tenant. And again, we try to do that with little to no incremental TI dollars or CapEx. And so all in all, we think we’re still in pretty good shape on the credit watch rent loss kind of arena.

Ronald Kamdem: And then just last one, just get a pause on the acquisition market, which obviously $324 million in the quarter and so forth. But — so just compared to 3 to 6 months ago, right, is the pipeline building unchanged? Is there more distress, right? Is there more sort of sale-leaseback activities for people needing capital? And then obviously, some cap rate commentary would be helpful. But just trying to get a sense of how things are evolving today versus who were doing this call 3 to 6 months ago.

Stephen Horn: Yes. Based on bump in guidance on acquisition volume, our pipelines are a little stronger today than it was 3 to 6 months ago. The sale-leaseback market is still fairly robust. We’re not seeing the distressed sale leasebacks just because — we don’t want to do business with the company as being distressed and has to do it. As far as the cap rates, we picked up 20 basis points second quarter over the first quarter, and we’re kind of in the range of 10 to 20 basis points third quarter over the second quarter. But definitely, it’s starting to stabilize, not accelerating at the rate they were in the second half of last year. But no, we feel good about our pipeline. We’re getting our fair share of deals. NNN in good shape as far as hitting its results on the acquisitions going forward.

Operator: Thank you. We have no further questions in queue at this time. So I will hand it back to Mr. Horn for any closing comments.

Stephen Horn: As I stated, NNN, we’re in good shape to deliver the remainder of 2023 and position ourselves well in 2024. So thanks for joining us this morning. And as summer winds down, we look forward to seeing many of you in person at the fall conference season. Enjoy the day.

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