Greetings, and welcome to the Spirit Realty Capital First Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and then zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Pierre Revol. Please go ahead, sir. Thank you, operator, and thank you everyone for joining us for Spirit's First Quarter 2022 Earnings Call. Presenting at today's call will be President and Chief Executive Officer, Jackson Hsieh, and Chief Financial Officer, Michael Hughes. Ken Heimlich, Chief Investment Officer, will be available for Q&A. Before we get started, I would like to remind everyone that this presentation contains forward-looking statements. Although we believe these forward-looking statements are based upon reasonable assumptions, they are subject to known and unknown risks and uncertainties that can cause actual results to differ materially from those currently anticipated due to a number of factors. I'd refer you to the safe harbor statement in our most recent filing with the SEC for a detailed discussion of the risk factors relating to these forward-looking statements. This presentation also contains certain non-GAAP measures. Reconciliation of non-GAAP financial measures to most directly comparable GAAP measures are included in the exhibits furnished to the SEC under Form 8-K, which include our earnings release, supplemental information, and investor presentation. These materials are also available on the investor relations page of our website. For our prepared remarks, I'm now pleased to introduce Mr. Jackson Hsieh. Jackson. Thank you, Pierre, and good morning, everyone. As I've stated in the past, Spirit has great tenants, a pristine balance sheet, and a fully integrated asset management and acquisition platform that is producing results. Our underwriting approach focused on industry relevance, in-depth credit analysis, and real estate fundamentals allows us to pursue a wider opportunity set, which we believe generates more value for our stockholders. If you look on page 13 of our investor presentation, you'll see that our strategy is being validated with many of our recently acquired tenants going public, being acquired, receiving credit upgrades, or recapitalizing their balance sheets. Our intensive underwriting capabilities have consistently allowed us to identify opportunities that are underappreciated or mispriced in the market, resulting in strong yields and asset value accretion over time. The most recent example of this success is Main Event. During the first quarter, we added three Main Event, raising them to our number seven tenant. Just a few weeks ago, Dave & Buster's, our number 72 tenant, announced plans to acquire Main Event, with Main Event's CEO assuming leadership of the combined entity. We view Main Event's absorption into a strong public tenant as a significant credit upgrade that will result in further cap rate compression for one of our largest tenants, making this merger yet another example of our ability to identify and underwrite strong operators in relevant industries that will continue to improve. During the quarter, we deployed $511.4 million in investment capital at a weighted average cash capitalization rate of 6.42%, including the acquisition of 41 properties across 29 transactions. Approximately 62% of this transaction volume was relationship driven, and 72% of the acquired rents were from publicly listed tenants. We expanded our relationships with our top 20 tenants, including Life Time, BJ's Wholesale Club, and Main Event. We also continued to increase our industrial exposure, which accounted for 37% of our first quarter acquisition volume with a mix of 66% distribution, 29% manufacturing, and 5% flex. Our industrial exposure now stands at 19.8%, a 120 basis point increase over last quarter. As you can see on page 14 of our investor presentation, since the spin-off, we added $4.3 billion of assets comprised of 54% retail, 33% industrial, 9% other, and 4% office. Our retained portfolio largely included public retail tenants that fit our strategy. At quarter end, our ABR was $623.3 million, surpassing one of the key milestones identified at our 2019 investor day of reaching our pre-spin-off rent of $600 million. Given the strong performance of our tenants, coupled with the strength of our real estate and leases, we have seen increased demand for our properties. To capitalize on that demand, we are increasing our disposition guidance from $100 million to a range of $200 million-$300 million. We expect these dispositions will generate attractive returns and be accretive to our AFFO per share growth while reducing exposure to office flat leases and certain tenant concentrations. The increased disposition plan, combined with our outstanding forward equity and upsized credit facility, places us in a very strong liquidity position to achieve our acquisition guidance and benefit from the impact of capital market disruptions on undercapitalized market participants. One disruption we're paying close attention to is the impact of higher borrowing spreads for asset-backed debt, which is negatively impacting private net lease acquirers, IRRs, and ability to push aggressive pricing. This dynamic helps Spirit in two important ways. First, it heightens the importance of relationships and certainty of execution, which aids us as a trusted, well-capitalized counterpart that follows through on our commitments. Second, it allows us to be more competitive on opportunities as risk is being more fairly priced today than just a few months ago. Based on what we're seeing today, I anticipate that in the back half of the year, we will be able to find investment opportunities 25-50 basis points higher than where they have priced over the last few quarters. Finally, before I turn the call over to Mike, I want to highlight our ESG accomplishments as laid out in our first sustainability report. Our 89-member team is making meaningful impacts to the community through our Women's Leadership Council, DEI, Think Green, Young Professionals, and Spirit One committees. Most recently, our employees supported the humanitarian relief efforts in the Ukraine, donating $25,000 in total to UNICEF, World Central Kitchen, and Doctors Without Borders, which Spirit matched dollar for dollar. Our company has developed a great culture that attracts and retains talent. Notably, we have had no voluntary departures this year, several promotions, and a few former Spirit employees recently rejoined. As I've said before, we have one of the best teams in place, functioning at a very high level and well equipped to move quickly to uncover the best risk-adjusted return opportunities. With that, I'll pass the call over to Mike. Mike? Thanks, Jackson. Good morning. We had a very strong start to the year. Our annualized base rent increased by $35.2 million compared to last quarter, with $30.3 million driven by net acquisitions and $4.9 million driven by organic rent growth. We originated $112.7 million loan this quarter and recognized interest income of $319 thousand. We expect to increase to a little over $500 thousand next quarter. Also during the quarter, we received $875 thousand of rent from the new theater leases, of which $275 thousand was recognized as base cash rent and is reflected in our ABR, with the remaining $600 thousand recognized as contingent or variable rent. Our cash interest expense increased by $1 million from last quarter to $24.2 million, and cash G&A increased by $1.1 million. The G&A increase was driven by internal promotions and new hires, predominantly in our acquisitions, asset management, credit, and closing departments, as well as employer taxes on bonus payments and stock reinvesting that occurs during the first quarter. For the year, we expect cash G&A will be approximately $40-$43 million. For the second quarter in a row, we had virtually no lost rent, and our deferred rent receivable balance declined by $2.3 million to $13 million. Our occupancy remains at 99.8%, with forward same-store sales of 2.1% and a portfolio WALT to 10.4 years. Due to the strong portfolio performance coupled with accretive acquisitions, our AFFO per share increased to $0.88 compared to $0.85 last quarter. Turning to the balance sheet, in January, we completed a follow-on offering, entering into forward contracts to issue 9.4 million shares of common stock. During the quarter, we issued 6.6 million shares to settle certain forward contracts, generating net proceeds of $299.8 million. As of quarter end, we have unsold forward contracts for 3.1 million shares, leverage of 5.2x or 5x inclusive of our remaining forward equity contracts outstanding, and a fixed charge coverage ratio of 5.8x. In March, we closed on a $1.2 billion revolving credit facility, amending our previous $800 million facility, which includes an accordion feature to increase capacity to $1.7 billion and matures in 2026. Notably, our pricing grid improved meaningfully to 77.5 basis points over an adjusted SOFR rate vs 90 basis points over one month LIBOR. Our facility fee tightened by 5 basis points. We ended the quarter with total corporate liquidity of $846.6 million, including unused line capacity, cash, and outstanding forward equity. Turning to guidance, given first quarter capital deployment results and the visibility we have into the second quarter, we are increasing our acquisition guidance to approximately $1.5 billion. As Jackson mentioned, we are also increasing our disposition guidance to $200 million-$300 million to take advantage of the strong demand we are seeing for our assets. Finally, we are maintaining our AFFO per share range of $3.52-$3.58. Again, we've had a very strong start to the year, and with our low leverage, increased disposition plan, expanded line of credit, and outstanding forward equity, we are in a great position to execute on our strategy. With that, I will turn the call over to the operator to open it up for Q&A. Operator? Thank you, sir. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you would like to ask a question, please press star and then one on your telephone keypad. A confirmation tone will indicate you are now in the question queue. You may press star and then two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question is from Nate Crossett from Berenberg. Please go ahead. Hey, good morning, guys. The question on the guidance, I guess, you know, per share was maintained. Is it just a function of higher dispo offsetting, you know, higher acquisition volumes? I just wanna make sure there's nothing else in there that's, I guess, preventing the guidance from being raised. Maybe you can just comment on what you're seeing in terms of pricing and what your outlook is. I know you mentioned that the leverage buyers have pulled back a little bit, so I appreciate your comments there. Yeah. Then I'll start with the guidance question. You know, first of all, I think it's good to point out that, you know, we did come out with the year with pretty robust guidance, you know, at 9.2% FFO per share growth at the midpoint. You know, so I think we, you know, put forward a pretty good number there. Just, you know, near the highest in the space. We put that guidance out in January. Obviously, the interest rate environment was a little different. Keep in mind that was actually we raised guidance in January. The first time we put out this guidance was back in 2019, if you remember. Interest rates have certainly gone up. You know, the curve is higher. You know, we are borrowing money to fund acquisitions. That's not really the dispositions that are affecting guidance. Those are gonna be accretive. It's really just the forward curve that we're looking at in our model has certainly peeled off some of the other good things that we've done on operations on, you know, capital deployment. I'd say probably the impact is about $0.04 to our forecast on the rise in rates. Said another way, we would be increasing guidance had, you know, the Fed not gotten so aggressive. You know, we're happy we can maintain a very aggressive guide where we are, but it's just really just interest rates in the back half of the year that we're seeing that's just, you know, keeping our numbers where they are. Nate, I'll get your question. Yeah, my comments on the cap rates rising. You know, I think if you sort of look around between rate hikes and what's going on in Ukraine with the Russian crisis, has had a pretty profound impact in the fixed income market. If you look at mortgage CMBS, SASB loans, triple A CMBS, all that stuff has gapped out meaningfully since the beginning of the year as compared to, you know, year-end last year. For instance, like triple A CMBS spreads for like a 75% LTV loan are probably 180 basis points wider today than where they were at the end of last year. If you look at larger financings, like so I'm saying larger like over $1.5 billion in secured lending right now, I mean, that is really probably you start paying pretty meaningful premiums over SOFR to get financings in that kind of range. All that said is there's a lot of pressure on people that are looking to finance in the mortgage market today, commercial mortgage market. Like 5% plus is like the new normal for people that wanna borrow there. I think what that's doing is it's having obviously a reduction in potential bidders. I think some people are just sitting it out right now to see where prices settle. What we're seeing is, you know, some deals are coming back around that didn't perform. Of course, the way we fund ourselves using bank term loans and unsecured bonds, well, unsecured bonds are not that great right now, as you know. There is some opportunity in the bank market that has not largely widened across the board like all these other fixed income opportunities where we could borrow. Bottom line is that in my mind is having a real impact on pricing too, I think. If I were just to do a rough guess, probably had a 5%-10% impact in prices today. When we look at our pipeline, which I can address it later, but you know, we're sort of factoring that into our strategy as it relates to investment in the back half of this year. Okay. That's very helpful. I'll leave it there. Thank you. Thank you. The next question we have is from Greg McGinniss from Scotiabank. Hey, good morning. Jackson, I guess I will give you that opportunity to talk a bit more about the investment pipeline and what you guys are seeing and maybe why there's a potential expectation for a bit of a slowdown vs the strong, you know, $511 million you were able to achieve in Q1. Okay, thanks. I'll take that. I guess, you know, what I'd maybe have you think about is if you go back to our last quarterly call, you know, we talked about this concept of there were portfolio premiums out there, like hard to compete because financing was so aggressive, and it's just putting a lot of pressure on cap rates for us. We made a pivot, as you know, in the fourth quarter of 2021. We said, "Hey, we're gonna start buying granularly. We're gonna focus on 30 transactions, small to control cap rate," that we thought we'd have a better chance of kind of accomplishing what we wanted to accomplish, and that largely flipped, as you can see, is what we saw in the first quarter of this year. You know, high number of transactions, $500 million. You know, if you look on our 10-Q in Note 6 on where we have purchase or capital commitments outstanding, you know, there's $300 million sitting there. You know, you do the math, you know, half of our expected pipeline is already spoken for because it's all granular, very small, and probably largely looks the same as what we just did in the first quarter. What we're seeing in our pipeline going forward, you know, in the third and fourth quarter is probably pricing near 7%. That's our target. When we look at investment, you know, performance in the year, you know, we don't kind of look at it on a quarter by quarter basis. We target an annual kind of production. We talked about 6.5%, earlier in the year. I think it's gonna be higher, you know, when we get all said and done for this year. It'll be closer to somewhere in the 6.5%-7% range for the entire $1.5 billion. So I think that's one of the benefits of kind of doing what we did was we raised capital efficiently earlier this year, equity, obviously. We've got it match funded for the pipeline that we got committed. Between our $100 million of free cash flow, $140 million of unused equity, plus our dispositions that we've got targeted. I mean, we're largely trying to basically say we can fund ourselves the rest of the year without going back to the equity markets. Now you didn't ask, but it'll probably come up. On dispositions, we made a decision as the quarter progressed through the first quarter, that we wanted to be able to self-fund ourselves. When we put that guidance out there of $200 million-$300 million, you should expect that we have a lot more property for sale. We are being very opportunistic and very price-driven. Like a five cap asset is the equivalent of us issuing stock at $55 a share. You know, we're not gonna sell all those assets. We're very price conscious. But there's, you know, there's good property being marketed right now, but in the home improvement, industrial, restaurant, grocery area, and, you know, we'll see where we get, you know. It's not portfolio sales, it's one-off. You know, there's still 1031 buyers out there. There's still people buying all equity. That was kind of the logic there. Okay. Thank you. Oh, sorry, one last thing on your question. Again, forgot to mention. I think, I wouldn't be surprised in the third and fourth quarter if you saw, the number of transactions that we closed start to look more similar to what we did, like, in previous quarters. I mean, we're really focusing on more yield, so that probably means maybe there's a larger transaction in there or two, maybe not as many. Really focused on good credit, really high risk-adjusted returns. That's kind of what we're focused on. We obviously know how to do it. We've done that in the past. Right. Seems fair. Thanks, Jackson. Mike, in regards to the $520 million on the line of credit, potential capacity there for another $1.2 billion, do you anticipate raising unsecured notes or maybe something in the bank market as mentioned in the prior answer? If so, what rate feels achievable? Yeah, I mean, we'll see. I mean, right now is the bond market's still a bit disrupted, so, I mean, I wouldn't go out and issue bonds today. You know, that market, I mean, if you look at it can move up and down pretty quickly, so it's too early to tell. I think if the bond market's, you know, more favorable, we'd look at that. If the bank market's more favorable, we'll look at that. Nice thing about being an investment-grade issuer is we have options for different pockets of capital. You know, as we get a little later in the year, we do have a nice sized revolver now, so that gives us time. You know, I think one thing you should expect from this team, as you've seen, I think time again, is we're pretty optimistic about when we issue to get good pricing. We'll pick our spot and we'll pick the right, you know, the right avenue to go to maximize our cost of capital. Still too early to tell, but you know, I think there'll be options to choose throughout the year. All right. Thank you. Thank you. Thank you. The next question we have is from Michael Goldsmith from UBS. Good morning. Thanks a lot for taking my question. You acquire in a lot of different markets with varying cap rates. Given rising interest rates and steady cap rates, are you seeing fewer bidders in kind of the lower cap rate products given the smaller spread? Given that smaller spread, how do you think of acquisition allocation going forward? Look, I mean, I can tell you, we have some experience just in our disposition effort because these are high-quality properties that we have in the market. I would say that it's certainly from what we can tell right now, like, I'm not sure sellers have really kind of woken up to this is the real deal. Like, if you're, you know, our bread and butter is like a single B-rated credit, you know, $500 million of revenues, preferably public. That stuff got really aggressive in the back half of last year. I like, I can tell you right now, for us to do stuff in that zone, it's a higher cap rate. I'm not sure everyone has sort of come to that realization yet, so it always takes time between buyers and sellers. You know, some of the things that we're putting out there are really high quality, and it'll be interesting to see if we can demonstrate, you know, low cap rates for what I'll call trophy-like properties in some of the areas that we're looking at. I think the number of bidders, I would say, I think for larger transactions, larger being portfolio, I mean, I feel like those got really sought after last year. The fact that some of these deals are coming back around, and they're coming around to people like us that can just stroke a check and then figure out how to finance it later, I think that's probably gonna help companies like ourselves right now. I don't know if that's a trend for the rest of the year or not, but I think there's some price discovery happening out there in the market today. If you talk to brokers, they'll probably tell you that if they're being honest. That's helpful. I don't know if we fully explored, you know, the detailed view of the acquisition pipeline, but can you provide a little bit more color on that? Just kind of within that, you know, you do play in the light warehouse space, you know. Clearly, Amazon's comments are not completely comparable to what you're doing, but in the same sort of arena, like, are you seeing any changes in tenant demand and acquisitions in the industrial space that you look at? I mean, I don't think we're changing what I'll call our lines of trade that we invest in. You know, we like golf courses. Haven't been able to find any, unfortunately, that suit us. We like industrial light manufacturing. You know, we like certain retail, non-discretionary service retail type opportunities, like auto service is still a big focus. You know, you'll probably see us slow down in car washes for the time being, but there are other things that we see that are interesting for us. You know, we did an interesting deal and that was related to a defense sector player. That was interesting. We'd like to do more in that area for, they make, you know, fuel tanks, inflatable bladders for military use. Obviously, people need that kind of stuff right now. You know, there are things that we feel like we can execute on, especially given how strong our current pipeline is. It's very identified. What we've instructed our teams to do is, "Hey, we want yield. We wanna get paid for risk." Yeah, I'd say not huge changes to the mix of business, but just more, you know, more driven towards yield is what we're focused on right now. Thank you very much. Sure. Thank you. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one now. The next question we have is from Anthony Paolone from JP Morgan. Thank you. I guess, Mike, you talked about some of the financing options and what's available to you, but just trying to understand, you have an 85-15 split right now, fixed-floating. Do you want that to be, you know, less on the floating side? Or how do you think about that just longer term? Yeah. I mean, we're comfortable with that split today. I think it could rise even more. If we term something out, say in the bank market, for example, you can always swap that to fixed. But you know, for now, I think you know, having the floating component be the revolver, having that grow is, in the short term, not a concern for us today. Okay. Just, you now have a multicurrency line. Can you just talk about just, you know, your geographic buy box and how to read that? Yeah. I mean, look, one thing we've always said is we have a wide opportunity set, and we play in a wide sandbox. We look at everything. I think when I think about the company over the next four or five years, and when you put a new revolver in place, it's really the idea is that's for the next four or five years of growth for the company. You wanna set that up to handle whatever opportunities arise. We're not actively pursuing international today. We need to be a bigger company, and if we find the right opportunity, I would not take international off the table in the future. You know, when you're doing it's a free option to put that in there, and it was just good to go ahead and just, you know, gear it to be able to handle that kind of capacity should an opportunity arise in the future. Okay. Got it. Then, just last one I had. You know, you're ramping up the dispositions, and it sounds like there is an opportunity to, you know, sell things in the fives perhaps. Does that give you any appetite to revisit the stock and at these levels from a buyback point of view? You know, Anthony, I'd say on the buyback, we've done that before. I mean, we'll at least look at it, but probably not. I mean, I think we have better. I don't know. If you look at that, there's a table we put in, the team put in titled Underwriting Value. You know, it goes through examples of different tenants that we've acquired, where they were upgraded or and there was an M&A or refinancing or recap, you know, really solid real estate, solid industries. I mean, 20%. It's 20% of our ABR, but the real story is it's a third of the $4.3 billion that's been acquired by this team since we all got here. I mean, I think we make more money for shareholders doing that than just a one-time, you know, buy stock back. You know, we've done that before. This is a great time to be investing, honestly, right now for companies like ourselves. There's a couple of other people, private, that have a lot of money too, that have access to unique capital. I mean, we're supposed to be investing now, in my opinion. That's what we're supposed to do. If you wanna buy back stock, you can always do that, but I think that doesn't really create long-term sustained value. I'd rather lay the chips down in credits that 'cause you're actually getting paid for risk now, appropriately. Yeah, I'd rather continue to unearth those unique credit opportunities, which we time and time again do. We have a good track record of it. I think it's underappreciated, to be honest with you. We're just gonna keep doing it until we find something else to do. Okay. I appreciate the answer. Thank you. The next question we have is from Rob Stevenson from Janney. Good morning, guys. Jackson, you talked about the upgrades and recaps and specifically Main Event being bought by Dave & Buster's. How much does that change the value of a Main Event asset in the market? I mean, obviously, WALT and location, other factors are important here. Is there tangible value creation that you can point to, let's say, 25 basis points or whatever from a cap rate perspective from some sort of combination like this? I'm gonna let Ken take that, but I would tell you one thing is, I mean, today it's really hard 'cause we're in this really unusual period in the world right now, just in terms of what's going on in the markets. Ken, you should talk about the liquidity profile of what happens, like to a Main Event or- Sure. companies that can do that. I'd start out by saying the mere fact that you've gone from a private tenant to a large, well-known, publicly traded tenant. Right off the bat, yes, we believe if we were in a situation where we wanted to dispose of any of our Main Event, you know, you would see cap rate compression today vs where it would have been prior to the transaction that was announced. Is it, you know, 25, 50, 75 basis points? You know, don't know. Like Jackson said, there is still some price discovery going on. There's no question in our mind that yes, that transaction would result in cap rate compression for Main Event assets. Okay. Then you guys talked about demand and pricing as, you know, the key driver in the increased disposition guidance. How much of this is also the attractiveness of dispositions of the funding cost given the rise in interest rates? If the ten-year was still, you know, 1.50, would you still be increasing the dispositions, or given the impact on the market and asset pricing, et cetera, would that be different? Is part of this also a desire to cycle out of certain assets and tenants as well? I tell you what, like, from my personal standpoint, it's an interesting question you ask. If there were no change to our cost of capital, i.e., if rates were still low, one of the things that was kind of interesting for me as it relates to our pipeline process, acquisition pipeline process, is I think sometimes we can get a little bit isolated from the market. I mean, we're constantly buying, we're constantly you know, doing things. We're not really selling. You know, one thing that really struck me last year was, you know, go back to the third quarter. You know, it was kind of light with the exception of ClubCorp. The reason why was we were just getting blown away by bidders coming over the top. You know, you'd start to get into a process, you think you have something, someone knocks you out by 5%-10%. Just, we're just not even close to that price. I felt like, you know what? We need to be kind of buying and selling, and maybe we're selling in smaller amounts just so we kind of have a good feel for where the buyer market really is. I'd say if there were no change in the Treasury, we'd still be selling. It'd just be a lot less. We'd still just to kind of be in the flow to understand market dynamics. I would say when we ramped it up, it was really just I just wanted not to be beholden to go back to the equity markets. I didn't know when we started this, it would be where we are today. I'm glad we started this exercise in pretty robustly. Candidly, I wish I did it in the fourth quarter, but at least we started. I think you'll see us always selling premium assets. I think you're always gonna see us to a small degree, 'cause I kind of wanna know where the market really is. It's one thing when you're buying and competing. It's another when you're actually selling, sort of a better feel for things. Okay. You said that you had more. You'd be putting out more than $200 million-$300 million out there. Yeah. I mean, if you get good pricing, are you comfortable going up to $300 million-$500 million of dispositions, depending on what the redeployment opportunities are for you? Yeah, for sure. I mean, it would inform us on how we attack the third and fourth quarter. Like I said, we've kind of already funded the front half of our $1.5 billion. Like I said, we have free cash flow, the unused $140 million of equity we raised, plus these dispositions. If we sold more, we end up buying more. I mean, as you know, in terms of kind of increasing that spread. Okay. Very helpful. Thanks, guys. Sure. The next question we have is from Ki Bin Kim from Truist. Please go ahead. Oh, thanks. Good morning. If I take a step back and think about how your company has progressed over the years, you know, you guys have done a lot of right things, and your earnings are up, your leverage looks fine. You know, yet your stock price just continues to trade at a pretty big discount. I know that's something you always highlight. Then I combine that with, you know, your past, Jackson, of doing kind of smart, creative M&A spin-offs type of transactions. You know, just given the current situation and how it lays things out, you know, does that spark other kind of creative juices in your mind to do something different with Spirit here? Well, I would tell you, Ki Bin, it's a good question. We talk about it at the board quite a bit. You know, it's not just now. We actually talk about strategy and what's the best thing we can do. In some ways, personally, I think there's gonna be some amazing investment opportunities this year. I hope. That's my hope is not a great strategy, but I believe that there will be as the year progresses, just because it's so difficult, given what's going on in the fixed income market. In some ways, you'd hate to, like, just step out of the room when you have that opportunity. We did all this as a company, heavy lifting. Like, one of the things, you know, if you think back to Investor Day, I remember you were there, right? December 2019, we said, "Hey, we're gonna do $3.32-$3.52 in 2022." We said that back in December 2019. Now think about what happened. COVID, lockdowns, market volatility. Guess what? We're doing more than $3.52. That's our guidance at least. We totally did what we said in spite of having a not so great cost of capital. There you go. I hope that people will look at us and say, "Hey, look, you know, look on this." We have this little chart that says strong growth at a reasonable price. There's nine public net lease peers on that page that we put out there. We're number two in 2022 AFFO per share growth. We're number two in the last three-year TSR out of the nine. Our AFFO growth from 2019 to 2022 is number three. Yet if you look at our multiple, we're number nine. We're at the back half. It totally doesn't make sense. In some ways, yeah, you know, should we do something different strategically? Always can do that. Always available. Portfolio is tight and clean. There's this amazing opportunity to make money right now, so you hate to get off that. I don't know. You guys got to write more or do stuff because we know what we're doing. We're performing. But sometimes we're sort of not getting a fair shake right now out there. Appreciate you asking the question, though. To answer your question, yeah, we do look at it all the time. If there weren't this... You know, like right now, like, there's less competition. You can actually really make some money now. Like, why jump off right now? You can always jump off at a premium. Got it. That was my only question. Thank you. Thank you. The next question we have, which is with Haendel St. Juste from Mizuho. Mizuho, please go ahead. Hey. Good morning, guys. I wanna dig in a little bit deeper into the asset recycling spread. Are you essentially looking to arbitrage pricing of larger deals vs small? Conversely, are you also looking to buy ahead of credit improvement, which you have in the past, but also at the same time looking to sell ahead of credit weakness? I mean, you wanna try that one, Ken? I mean. Yeah, yeah. Well, on the dispo, one thing I would say is, I think some folks tend to think of it as either it's an opportunistic or it's a risk mitigant. What I would tell you is they're not mutually exclusive. We have some of the assets that we do have in the dispo plan, we view as both opportunistic and risk mitigant, whether it's a flat lease, a shorter term. You know, it could be there's a lot of different characteristics, but each one of those assets has something about it that we feel it just makes sense to go ahead and put it in a dispo plan. You know, so that's, of course, those dispo we feel are gonna be accretive. When you think about that, are we talking like a 25 basis point spread, 50? Can you give us maybe a ballpark range when we model this out? Well, I mean, it was like, just if it's accretive, let's just say, 150-200 basis points spread right now. What we think- Okay. We can sell at or reinvest it. Yeah, I think that's a fair ratio. Okay. See, that's a lot lower than I thought. Look, if we Thanks for that. Yeah, I mean, look, I went through that last answer with Ki Bin. Look, we're ranked number nine out of nine peers with the weakest equity multiple. We gotta figure out other ways. Portfolio is worth a lot more than that, guys. We're just gonna keep doing, you know, good spreads, and eventually, hopefully, people wake up and see that this is sustainable. One quick one on the balance sheet. I think at the beginning of the year, there were some potential thoughts about taking out the preferred. Is that still in the game plan this year? No, I think we'll have to see. That's gonna be TBD. I mean, certainly we'll have that option come in November. You know, we'll see if that's a good use of capital at that time. Okay. Thanks for the time, everyone. Thanks. Thank you. The next question we have is Joshua Dennerlein from Bank of America. Yeah. Morning, everyone. Jackson- Morning. Just curious what your guidance assumes as far as a cap rate. I believe last quarter, I think you said 6.5%. It sounds like maybe you're speaking to acquiring 7% yield going forward. I mean, look, I think, you know, I think you should assume that we're gonna target trying to end the year overall somewhere in the range of 6.5%-7%. It's just gonna be a function of the weighted average of what we're able to do in the third or fourth quarter. I mean, if you wanna be safe, set 6.75%. That's not a crazy target for the year. Okay. We think we can accomplish that or close to it. Oh, okay. Awesome. Thanks for that color. Just curious on the 2023 expiration. Looks like 3.9% of ABR is rolling. What's your visibility there on renewing those leases or what your expectations are? Sure. Hey, Josh, this is Ken. For 2023, we actually think it's gonna be pretty much what we've historically done. I think you're gonna look at renewal rates in the 90% range, as well as recapture in the mid-90%. For what it's worth, you know, 2022 is interesting. Right now, our recapture is tracking meaningfully higher than our historical average, somewhere in the range of 110%. You know, we've always had a great plan in place of attacking renewals as early as possible, and that's what we're seeing right now in the headlights. Thanks, Ken. Appreciate that. Thank you. Ladies and gentlemen, just a reminder, if you would like to ask a question, please press star and then one now. The next question we have is from the line of [audio distortion] from MUFG. Please go ahead. Hey, good morning, guys. Morning. You talked a bit about maybe break down the pricing among the major asset types acquired in the first quarter of the industrial vs the retail and the other. Within the other, I noticed data centers was included there. I'm not sure if this is your first investment in data centers. Maybe you could talk more about what you perceive the opportunity there to be and how much more exposure you might be comfortable getting to there. Thanks. Sure. I mean, that property that was in that category was Southwest Airlines backup logistics center, which is up in McKinney, Texas. You know, it's obviously a mission critical. You gotta have backup data center. Have to have backup logistics center, flight control logistics backup, for major airlines, and they happen to be obviously there's a major hub here in Dallas. So we like that opportunity. We're not really focused on data centers that had a very unique, you know, good location, good market, super sticky, mission critical, we thought at a good price relative to yield, so. Okay. Maybe some color on- In terms of, like, industrial retail split, I'll just give you a kind of a breakdown. We did a lot better on the industrial cap rate this past quarter vs retail, you know, maybe some of that's some of the Life Time and things like that that are part of that first quarter. We were able to outperform on a cap rate basis by 100 basis points on industrial vs retail in the first quarter. Got it. Okay. That's helpful. Maybe, color on, I don't know if you've mentioned anything in second quarter here, anything you have perhaps under contract or that you bought already, any color or comment you're willing to provide on what's already kinda been maybe agreed to here in early second quarter or any color on maybe asset types if that includes any portfolios. Thanks. I feel like the second quarter is gonna look largely similar to the first quarter in rough scale, rough mix, rough cap rate, you know, just, you know, generally. It's pretty much already identified, I can tell you. Right now what we're focused on is really third quarter already. Okay. Fourth quarter. Okay, fair enough. I guess one more, and maybe it's an unfair question to ask, but I'm curious, you know, why 25-50 basis points perhaps is the expectation for the cap rate moving back half year. Maybe that has to do with some of the what you already have or are close to agreeing upon in terms of cap rates under negotiation. But obviously the moving rates has been far more significant. Maybe perhaps help us understand how, you know, your thinking there on the 25-50 basis points. Thanks. I mean, it's just what we're seeing Kendall, right now. I mean, just we have, you know, we're pricing deals every week. We're evaluating deals every week. The things that are coming into our pipeline now are just they're just wider for the same kind of things that we were looking at before. I just think that's just a function of, I think it's a function, as I said earlier, of what's happening in the debt markets. You know, we unfortunately, I mean, I wish we had more luxury just to stop, take a pause. You know, our private equity brethren that do this, family offices, they can stop. You know, they don't have to do stuff. You know, we put these earnings guidance out there, we have to kinda keep investing. Sometimes it's not a bad idea just to slow down a little bit, but we don't have that luxury. What I can tell you is, we're putting that number out there because it's things that we're seeing that we're getting under agreement right now in terms of just like for like things that are wider in cap rate vs last year. Okay. Appreciate that. Wonderful. Okay. Thanks, Jackson. See you guys, I guess, see you in a few weeks in the interview. Sure. Yeah, definitely look forward to it. Thank you. The next question we have is from Ronald Kamdem from Morgan Stanley. Hey, just two quick ones, and we've touched on some of these already, but if I can just go back to the guidance. I think you just sort of mentioned that sort of the interest rate assumptions, you know, obviously have changed with the rate move. I was just wondering if you could sort of help us build back for, you know, what that interest rate assumptions did on the negative side, and what was the positive offsets that got you back to even, if that makes sense. Just trying to get a sense of the two or three moving pieces, both to the good and to the bad that got you back to even. Thanks. Yeah. I mean, you know, when we set our guidance in January, obviously we used the forward curve back then that didn't incorporate, you know, the hawkish Fed stance today. You know, we find in the short term a lot of acquisitions using our revolver that's priced over. So as we look forward with the projected, you know, Fed moves that directly impacts, you know, that borrowing rate. So that would be the negative. And then obviously the positives are we had pretty strong acquisition volume in both the fourth quarter and the first quarter. So remember, what we do in the fourth quarter of 2021, you don't close all that, you know, at the very beginning of the quarter. So some of that earnings does bleed into and affect your growth rate in AFFO in 2022. Of course, we had strong acquisition volume in Q1. That large volume early in the year really has a big impact to your AFFO, much more than, say, what you do in fourth quarter of 2022. That really starts to affect 2023. Finally, we've had really clean operations. You know, we obviously project some lost rent, and we haven't had any. Those are the good guys that are offsetting the higher rates. Great. Makes a ton of sense. If I could just piggyback on the dispositions. I think your comments are really interesting. You know, I think you mentioned that you're gonna be putting on more on the market than just the amount that you put out. I think I heard office in the opening comments. Just trying to get a sense of what is being put on the market. Is it all the office? Is there some industrial? Is there some retail? Just what are you putting out on the market and bidding right now, or is it all the above? Thanks. Look, I think when we came up with this constructed this disposition plan, it included office, not all office. It's very select, very specific. It included industrial. It included home improvement. It included grocery. Things that had good walls or had really high real estate value associated with them. I mean, there was a lot of thought. It wasn't just putting things out there. There was a lot of thought given to what brokers worked on what. That's all kind of happening out there. Hopefully next quarter we'll come back and say, "Hey, this is what we did." Obviously with a mind towards looking at that as a potential equity source for us. Great. If I could just ask one more. Just switching back to tenant health. Look, the occupancy is very high, flat, you know, lost rent is negligible. Just can you update us, what are you hearing from tenants in terms of either pain points from supply chains or inflation? You know, just what's the pulse that you're getting from them? Because the numbers look pretty strong, but just trying to get a forward look. Yeah. I'm gonna answer that question, but just give me a minute to cover a point. What people have to understand about this company Spirit is, just go back to 2017, right? We had to spin off and get rid of a lot of properties that we believed needed to get rid of. We got rid of and were successful doing that that were acquired by other management teams. We started with $3.9 billion, right? Post-spin off, good high-quality properties, retail credits. We acquired $4.3 billion since that period. Over 30% were industrial properties. A third of them are related to this kind of unique credit upgrade that occurred within that $4.3 billion. What you end up with, if you look at 2017 to where we are today, we have this little chart on page in the deck. If you look at public tenants as a percentage of our ABR, industrial as a percentage of our ABR, our top 10 concentration, our investment-grade tenancy, unreimbursed property expenses, lost rent, all of that stuff is going positive, like i.e., getting better, and meaningfully better. You can see it. When we come back and talk to you about tenant health, tenant health is great. Our credit watch list right now, those meetings are pretty uneventful, because we've been able to really have so much attention on our investment process. Now to answer your question, Ron, on where we have concerns. Guys, we talk about this every week, you know, with our head of credit. I would say labor has been more manageable from a lot of our tenants. That was a huge issue at the beginning of the, you know, kind of when the reopening started to happen after, you know, the COVID lockdowns. Labor was a major issue. A lot of our tenants have seemed to be able to deal with that. That doesn't come up to be an issue. They've managed around supply chains. Things are surprisingly good. You know, I hate to say it, but that doesn't mean we don't lose sleep. You know, I look at our public tenants, you know. Our public tenants are obviously very sophisticated. That's over 50% of our ABR. You know, we're looking at our private equity portfolio because a lot of those guys are working with floating rate debt in some cases and so we do focus on those tenants. Right now they're all performing. Part of it is because of the industries that they're in, the way the credit was underwritten and the nature of the real estate or the lease structure. The results are not by accident. That's just my point. We feel really good about, you know, whatever kind of curveballs are coming down in terms of the future, recession or whatever, rate changes. Great. Thanks so much. Appreciate that. Thank you. Our final question is from John Massocca from Ladenburg Thalmann. Please go ahead. Good morning. You touched on it a little bit in the last question, but you know, we talk a lot about the impact of rising interest rates on your cost of capital. Maybe as you look out and you underwrite future acquisitions, sorry, is that impacting what kind of transactions or tenants you're willing to do transactions with? Absolutely. It goes into it. I mean, look, we, you know, small tenants get impacted by credit markets and liquidity. Bigger public tenants probably have better ability to access, you know, capital like we can. Like, we can access the bank market, which is very, very advantageous for us right now. You know, if you're a small private company, not so easy, right? Not as much access to liquidity. You'll see stronger operators access the bank market. When we're looking at a sale-leaseback today or looking at a potential investment opportunity, we're looking the same way. Like, do they have access to liquidity? You know, what are their, you know, how are they sourcing, you know, their merchandise or their operations? Do they have the ability to pass on costs to the consumer? You know, all those things go into our calculus as to, you know, is this the right investment to make, and are we being paid appropriately for it? The answer is yes, today. It was harder last year, to be honest with you, so. With regards to your own balance sheet, you kind of mentioned that bank debt looked relatively attractive compared to other options, at least today. I mean, what kind of spread are you seeing maybe in the swaps term loan market vs unsecured debt? Yeah, look, I mean, unsecured debt is so disrupted right now. I'm not even asking for quotes right at this point. I mean, in the bond market, you're seeing, you know, SOFR plus 95. Probably swap that into the, you know, the high thirties today. It's pretty attractive. Okay. That's it for me. Thank you very much. Thank you. Ladies and gentlemen, we have reached the end of our question and answer session. I would like to turn the call back to President and Chief Executive Officer Jackson Hsieh for closing remarks. Please go ahead, sir. Thank you, operator. I'd just like to thank everyone for participating in our call. We're very enthusiastic about the pipeline that we have going into this quarter and opportunities for the rest of the year, and we look forward to seeing everyone at Nareit, hopefully in person. Just wanna once again congratulate, you know, our 89-person team here. They've been doing a great job. Thank you all for participating. Have a good day. Thank you. This concludes today's conference. You may now disconnect your lines at this time. Thank you for your participation.