John Massocca : Both on the our market here. So I just have one question. Obviously, there was a same-store decline in , which was kind of explained, but there was also a same-store decline in your QSR portfolio. I’m just kind of wondering what was driving that. Is that some of the credit issues certain franchise operators had earlier this year or something else that’s kind of idiosyncratic?
Sumit Roy : No, no. It’s — look, the overall same-store decline was largely a function of what Christie touched on to explain why our AFFO per share was flat. It was basically — if you look at the reversals we took in the first quarter of ’22 versus the reversals that we took in 2023 first quarter, there was a net $9 million reversal that was very positive in the first quarter of 2022 that we didn’t have we had to compare against in this quarter. And when you look at same-store calculation, obviously, that’s what drove that very benign same-store growth number. Absent that, if you were looking at just the core portfolio, our growth would have been 1.5%. The specifics around QSR is more driven by a couple of concepts that are not doing very well.
Boston market continues to be in the news. It’s a very small portion of our overall allocation, I think, basis points at this point. But that is what drags the same-store sales numbers same-store growth numbers for that particular industry. So it’s very specific to a couple of names. But overall, like I said, we were around at 1.5%, had it not been for these reversals in the first quarter of last year. .
John Massocca : Okay. And maybe what’s the overall view on kind of the franchise restaurant base that kind of rough turn of the year, but have things stabilized at all given kind of the continued strength of the consumer? Or just kind of when you talk to tenants when you look at new deals, what’s the outlook there for that specific tenant industry? .
Sumit Roy : Yes. It’s what you would expect, John, Casual dining is depending on the concepts, some concepts continue to post very good results. Like Outback, I saw the results not too long ago. They had positive same-store growth. I think Chile has had a similar story. But then you look at other concepts, they’re not doing as well. Thankfully, the two that I mentioned are our two largest exposures. But we do have some smaller concepts. And it’s a smaller concept that if they don’t have the balance sheet wherewithal to increase prices or pass through some of the costs, et cetera. they’re going to struggle. And again, it’s not — none of this is a big part of our portfolio and all of which there are areas that we are focused on. It’s already part of our watch list. But that’s where I expect to see some level of disruption, but nothing new is expected based on what we see today.
Operator: And our next question comes from Linda Tsai with Jefferies.
Linda Tsai : Just a quick one. Just a broader question on the overall market. When you look at the amount of dry powder available on the sidelines to deploy towards net lease, which industries are you seeing the most demand?
Sumit Roy : That’s an interesting one, Linda. If we just look at it and I look back, I think it’s convenience stores and grocery. Those are the industries that we we’re able to do the most deals in and — but that’s a selective selection bias that we have. Those are the industries we like. And so I can’t answer that across the board. But what I will tell you is, yes, you’re right, there’s a lot of capital, but that cost of capital is not uniform. That’s one of our biggest advantages that we have a cost of capital that continues to be incredibly competitive and lower than almost everyone. So in some ways, we find ourselves in a very favorable position to take advantage of what we are seeing in the market. But we are very focused on areas of interest to us.
Operator: And ladies and gentlemen, this concludes our question-and-answer session. I’d like to turn it back over to the management team for any closing remarks.
Sumit Roy : Thank you all for your attendance today. We look forward to meeting with many of you at the upcoming NAREIT conference in June. Thank you. .
Operator: Thank you. Ladies and gentlemen, this concludes today’s conference call. We thank you all for attending today’s presentation. You may now disconnect your lines, and have a wonderful day.
