Anthony Paolone: Okay. And then, I guess, on the credit side, you talked about — it sounds like there’s nothing else really on your watch list at this point. And so just trying to understand like if that was just for top 25 or the entire portfolio because it just seems like you had a bit of a string here of credit matters. And so I didn’t know if that was coincidental or if there’s just other stuff that you’re watching. So maybe a little bit more depth there would be helpful.
Toni Sanzone: Sure. Yes, we — sorry, I wanted to just maybe just address that in the context of rent collections. And we have about — I would say about 90 basis points of what I call uncollected rent in the first quarter from cash basis tenants that we did not recognize in AFFO. The majority of that we do expect to collect. So we don’t really view that as sort of a credit issue or long-term bad debt expense. It’s really more timing from our perspective. So again, we don’t really foresee needing full 70 basis points that I’ve outlined here. But I think it’s still kind of early in the year and want to kind of remain conservative.
Brooks Gordon: Yes. And then from a credit watch perspective, just to clarify, Jason mentioned Hearthside, specifically, there are other tenants on our credit watch list relative to prior quarter, it’s up somewhat. It’s around 5% of ABR. Prior quarter, it’s around 4.5%. And really, the delta is the addition of the Hearthside. A few tenants actually came off the list as well. One was that retailer, Joann, which has emerged from bankruptcy with a much stronger balance sheet. And so they’ve come off up our credit watch list. But that’s sort of the range of credit watch by ABR right now.
Anthony Paolone: Okay. And if I could just sneak one last one in. Just — you talked about, I think mid-7s in the pipeline for the rest of the year. There was an article about the Columbus deal that put it in the 6s. And so just wondering if that was right or if there’s just enough higher-yielding stuff to get to that mid-7s that you’re looking at to offset that?
Jason Fox: Yes, that’s right. Our target is still in the mid-7s, maybe higher if rates stay where they are, and we see some cap rate expansion. But we do invest across a wide range of yields with some deals above that target, even well into the 8s. Others, especially deals with higher quality real estate with strong rent bumps and maybe below market rents, we might get a little tighter on those and they could even fall a little bit below the low end of that range. And yes, HanesBrands deal falls into that category. It’s Class A, newly built modern DC, below market rents. Importantly, it also has 3% annual rent increases, which I think that always needs to be factored in when comparing kind of going in cap rates with other deals that we do or with some of our peers.
But it’s a well-located asset, Rickenbacker National Airport, which is one of the stronger industrial markets in the country. But yes, it will be a range of cap rates and we still would expect to be in that mid, even high 7s for the rest of the year.
Operator: Our next question comes from Greg McGinniss with Scotiabank.
Greg McGinniss: Jason, just on that cap rate color that you just gave mid- to high 7s, how does that look from a U.S. versus Europe standpoint?
Jason Fox: Yes. It’s — I mean, it’s a good question. In the U.S., we started to see cap rates stabilize at the beginning of the year now that interest rates become a little bit more volatile and looking more like the Fed is going to kind of push rate cuts into the back half of the year, if at all if that matter. So there could be a little bit of room for cap rate expansion in the U.S. I think the big difference right now is the changes that we’ve seen in Europe. It’s been very dynamic over there. For the better part of the last 12 to 18 months, I think the transaction markets are relatively frozen over there. Rates had spiked, which we’ve seen that now reverse course. And I mentioned earlier that our cost to borrow in euros is now back to what I would call historical averages relative to where we can borrow in the U.S., about 150 basis point spread.
So yes, I think that what we’ve seen is that we can get a little bit more aggressive or tighter on cap rates in Europe and what we’ve been looking at and maybe relative to the U.S. And for that reason, we’ve seen more activity over there. It’s been about 70% of our year-to-date deal volume has been in Europe and our pipeline is probably 50-50. But the cap rates, they do range. I mean range by country, property type deal. Germany, for instance, is probably at the tighter end of the range that we’re targeting and countries like Italy might be on the higher end of the range. And again, it’s always important to include or factor in the rent increases when we’re talking about cap rates. When we are doing cap rates — initial cap rates in the 7s with bumps that have been averaging around 3% for us, that puts average yields over the life of the lease well into the 9s and that’s a pretty interesting yield relative to cost of capital right now.
Greg McGinniss: Right. Okay. I guess, for the Europe, obviously, there’s got a lot of liquid to be right now and more dispositions for more cash. For the Europe acquisitions, should we expect that you’ll be issuing your denominated debt still, given that cost of debt there?
Jason Fox: Yes. I mean, look, I think that if we were to issue bonds today and you do want to emphasize that we have a lot of flexibility given our liquidity and we don’t need to do anything in the capital markets for some time. But if we were to issue bonds today, we’d probably lean towards issuing in euros based on the quotes we’ve been getting in each market and observing how different bond deal executions have gone. But we do have flexibility. It’s one of the benefits of having diversification and the ability to issue bonds in different markets as we can see where we can get back to execution. And so we’ll continue to evaluate that.
Greg McGinniss: Okay. And then given the tenant issues announced last quarter plus some issues you’ve had potentially with Hearthside or Casino and previously Joann, have you adjusted how you’re underwriting acquisitions or evaluating ongoing tenant risk?
