Having said all that, at the first of the month, I’m not running down the hall and asking if the rent came in. It doesn’t feel that dire, if you will. But we are just watching those and we feel like our exposure generally is fine as it relates to tenant credit and b, that shows up in our kind of rent loss, which like I say, 100 basis points we assume is in a normal year, and we won’t hit that kind of rent loss this year. So that suggests I think things are going okay.
Operator: Our next question is coming from Rob Stevenson with Janie.
Robert Stevenson: Steve, can you sell more of your non-top tier assets and you are doing at similar cap rates. I mean a 6% cap rate is pretty good on the LA Fitness, United Rental, bikes and whatever else you sold during the quarter, and it is well below implied cap rate on the stock recently. So curious why not sell more to finance mid-sevens acquisition, if you could do that reliably and on scale?
Stephen Horn: No, absolutely. That is part of the exercise we go through. We have the luxury of being in business for a long time, 3,500 assets approximately. So we have a lot of the diamonds in that portfolio over the years. But when we look at dispositions, and I agree with you, that 6% cap rate at 5.8% for the year is a phenomenal cap rate compared to what the industry is doing. But no, we have the opportunity. We are running the math. If we sell something at six cap what share price because we do view dispositions, you have defensive – so you are just improving the quality of the portfolio. But we also look at it we are selling a piece of the company. So if we sell to a 6% cap, it is like issuing equity at a certain share price. So it definitely could be a higher disposition in 2024 potentially.
Robert Stevenson: Okay. And in terms of what you have sold, has it been a high concentration of 1031 buyers? Or has it been all over the place in terms of the other side of the transaction on dispositions for you guys year-to-date?
Stephen Horn: Primarily, it is been the 1031 market, and then there has been a couple of what we call owner users or user owners of the asset. But primarily, we sell into the 1031.
Robert Stevenson: Okay. And then, Kevin, a couple of questions for you. The three Bed Bath & Beyonds that you talked about earlier, have they been sold or being marketed for sale? Are you trying to retenant them? And what’s been the sort of tenor on that recently?
Kevin Habicht: Yes. No, plan A for us is to try to re-lease it, and we have got active dialogue on two of the three. And so that feels like it is actually going reasonably well. And so – and our rents there were I think, $13 a square foot, the expiring rent from Bed Bath. And so a manageable kind of rent situation.
Stephen Horn: Yes. Just a little follow-up. Yes, we are expecting slightly better than that recapture on the Fed base with no CapEx.
Robert Stevenson: Okay. So those are likely to be retenanted rather than being sold vacant. And then last one for you, Kevin. Is the $500 million debt offering prefunding the June 24350 maturity? Or is that incremental capital for you guys and you will look to do something on the $350 million next year as you get closer?
Kevin Habicht: Yes. I mean I will be trying to be sufficiently elusive. I mean we don’t give any capital market guidance. And so I view kind of money as somewhat fungible. It does clear off our bank line, which would allow us to effectively take or pay off that maturing debt next June with our bank line or we could do another debt offering in that regard. And so we are – we try to be opportunistic on capital market activities, and we will just see how things play out in the coming months as it relates to that. But I will say, doing that deal in August gives us more optionality, which is something we crave in terms of managing the balance sheet is never to get us in a position we have to do one thing or another. And so it just creates more liquidity. The dollars are fungible. We will see where all land eventually. In the meantime, they are headed towards acquisitions, and we will see the 24 holes.
Robert Stevenson: How was the demand on that deal? Is it – could you have materially upsized that at that pricing if you wanted to and just elected not to? Or is that where the demand was at that point in time for that type of paper?
Kevin Habicht: The demand for that deal was very good. So after we announced pricing of where that we would price we had $2.5 billion of orders at that price. And so it was four to five times oversubscribed. It was a solid execution. We could have done more and maybe in hindsight, one day, we will think maybe we should have, however, that is the largest debt transaction we have ever done. So we did size it up, if you will, relative to where we have operated in the past. And – but yes, it was a really solid execution at that time. I’m not sure that the market is as robust today as it was at that point in time. But anyway, yes, we are really pleased with that outcome.
Operator: Our next question is coming from Linda Tsai with Jefferies.
Linda Tsai: Can you talk about trends in the sale leaseback market and what percentage of the volume this quarter was done with existing relationships and how that compares to last quarter?
Stephen Horn: Hey Linda, this is Steve. It is relatively the same. It is kind of that three quarters for the sale leaseback. And that is reflected in our 16.5-year lease term for the quarter. But the trend as far as percentage, it is the same. And it pretty much – over a 12-month period, it is pretty consistent. Our acquisition guys, they are always out there looking for new relationships to grow the company, but we do lean into our relationships at kind of that 75% level.
Linda Tsai: And then in terms of the acquisition cap rate being up about 100 bps year-over-year, 7.4% this quarter, how close is that to where you might have expected to land versus what you were thinking at the beginning of the year?
