Greg McGinniss: Maybe just touching on your revenue-producing CapEx comments. Is that build-to-suits, or is that just investing in current portfolio with the tenants that are there right now?
Jackson Hsieh: It’s a combination of the two. It’s probably more biased to existing tenants that are looking to either improve the facility or increase the size and square footage of the facility. I think as time goes on, you’ll see us start to highlight this year a tenant has X, Y, Z space, they want to increase the facility by 30%. We’re in an ideal position to provide that financing because we’re sitting there with the lease, they kind of meet our approval actually, in some cases, to deal with the additional space that are on our sites. So it’s kind of a win-win opportunity for us to reprice in some cases, some of the capital that are going in to enhance the overall lease economics. So that will be an interesting part of the story as we talk about that in the coming year.
Greg McGinniss: Okay. If I could just add one quick one here. Just looking at the recent Ann Taylor acquisition. How do you get comfortable with that or other private equity-backed retailers as tenants and historically have been more prone to bankruptcy, and we’re in a currently healthy environment, but looks like it might get more challenging in the near future here. So just curious how you go about evaluating those opportunities.
Jackson Hsieh: Yes. We’re excited about that facility.
Ken Heimlich: Well, Jackson’s mentioned. We look at those opportunities, actually, like we look at any of the opportunities that we come across. It’s a 3-legged stool, the industry, the tenant and the real estate. In this particular situation, we’re very comfortable with the industry. Women’s apparel, it’s not going away. The revenue for that market is higher now than it was in 2019. In the particular customer, the segment that our tenant targets has actually got the expectations are for continued growth. So we’re very comfortable with the industry. For the tenant, obviously, our tenant operates both Ann Taylor and LOFT. Got limitations on how much we can go into the credit, but it’s north of $1 billion of revenue, solid EBITDA, very low leverage.
And one thing that we like about this retailer is they are the very omnichannel competent, substantial portion of the revenue is through e-commerce. So we like that aspect. The third piece is the real estate. These are absolutely mission critical. This is the DC, the main distribution center for both of these brands. Also handles all of the ecommerce fulfillment. You’ve got one in the Columbus, MSA. Great facility below replacement cost, in line rents. All the aspects you would want in the DC, the 36-foot clear heights, things like that. The other facility is just to the west of Indianapolis, the e-fulfillment. Again, this sets a major part of their revenue. So this is mission-critical to them. But we’re thrilled with all aspects, all 3 legs of the stool.
The biggest one being substantially below replacement costs. So we’re very happy with this acquisition.
Jackson Hsieh: I’d just say one thing. We do have a meaningful percentage of private equity-backed tenancy in our company. And we were very positive on Sycamore. They’re very, very high-quality sponsor and just like Helman and Freeman is over at home. These are very, very high quality, very predictable operators of businesses that run business as well and ultimately, sometimes monetized through IPO or merger. So once again, we like that Ann Taylor opportunity.
