Mark Manheimer: Yes. I mean nothing on the watch list. You have a combined video to give you a little bit more color than that. I mean we are focused on the product mix product mix of our tenants how discretionary that product mix is and who their customer is. And if they’re kind of on the lower income type consumer, that’s really where we’re seeing pressure. The consumer overall is healthy. And so you see a lot of those government numbers come out that look pretty healthy, but it’s kind of been a tale of two cities where the kind of middle and upper consumer is doing well, but the lower end consumer is certainly struggling. And you see that with some tenants having trouble passing on inflationary costs on to the consumers. I mean, Walgreens has been topical.
That’s why you’ve really seen their gross margins kind of come in from kind of 22%, 23% to 18-plus percent. So that’s really impacting their cash flow, and so we’re really making sure that we’re getting out ahead of those types of risks, and then looking at the balance sheet of our tenants. Fortunately, there’s really not much in there that is of concern. But when a lot of these tenants have to refinance their debt, it’s going to be a lot more expensive than it was if they finance themselves a few years ago. And even just the ability to access debt has been is likely to be more challenged for some of these tenants. So that’s — those are the things that we’re focused on, but yes, nothing really is popping up that rises to the level of getting on our watch list at this point.
Farrell Granath: Okay. And I was also curious, is there anything in the market that you’re waiting to see? Or what’s maybe leading to some hesitancy on providing a net investment guidance?
Mark Manheimer : Yes. I mean, I think there’s been a lot of volatility in the markets over the past couple of years, obviously. And we really wanted to see cap rates move up. Obviously, we’re making some progress there. We really wanted to — early in the year, we really didn’t think it made a lot of sense to come out with a number and then potentially change it one or two times over the year. But I think just overall, for acquisitions, which we haven’t given guidance on that, but I think a good way to think about that is if the environment persists in a similar manner, you can expect us to deploy capital at a similar quantum that we did last year.
Farrell Granath: Okay. Thank you so much.
Operator: Thank you. Our next question is from the line of Todd Thomas with KeyBanc Capital Markets. Please go ahead.
Antara Nag-Chaudhuri : Hi. Good morning. This is Antara Nag-Chaudhuri on for Todd Thomas. Apologies if you discussed this already, but could you discuss your current investment pipeline and where it stands just thinking about 2Q and 3Q volumes?
Mark Manheimer : Yes, sure. I mean, I think the volumes will probably continue to be spread fairly evenly over the year if market conditions continue to be similar. And so I don’t think you’ll see much of a change in yield or — or how much we deploy in the second quarter, third quarter, probably a little bit too far out for us to figure out, but you may see a couple of chunky deals that are in the sale leaseback category and some that we’re developing a little bit more or funding development for a little bit more than we have in the past.
Antara Nag-Chaudhuri : Okay. Got it. And on disposition pricing, are you still able to achieve a sub-7 cap rate? Or are disposition cap rates trending higher?
Mark Manheimer : They’re trending higher a little bit on the margin. And I think depending on what we sell, it’s going to drive that a little bit. But cap rates have moved up a little bit. I think really the issue has been on the disposition side and us getting kind of figuring out how we want to approach dispositions is there just aren’t as many buyers. And so that helps us on the acquisition side where we’re not really competing with anybody for acquiring the properties that we want to acquire. But then on the disposition side, it takes a little bit longer and the buyers have been a little bit flakier than they’ve been in the past. So that’s something that we’re just making sure that we’re staying on top of costs and not incurring a bunch of debt deal costs. But cap rates have moved up a little bit on dispositions. But I think what we’re looking at potentially selling in this quarter very likely could be below 7%.
Antara Nag-Chaudhuri : Okay. Got it. Thank you.
Operator: Thank you. As there are no further questions, I now hand the conference over to Mark Manheimer for his closing comments. Mark?
Mark Manheimer : Well, thank you, everyone, for joining. I really appreciate the support, and have a great day.
Operator: Thank you. The conference of NETSTREIT Corp has now concluded. Thank you for your participation. You may now disconnect your lines.
