Alec Feygin • Robert W. Baird & Co. Incorporated

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CFO Bill Wagner responded that a bond offering would likely wait until the company receives investment-grade ratings from all agencies and noted that equity is currently a very attractive funding source. CEO Dave Sedgwick stated that CareTrust is actively developing a bench of new operators and that future investments will include a combination of new and existing partners.

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CEO Rick Matros declined to quantify the NOI upside, stating it would require a 'crystal ball' to predict accurately. CIO Talya Nevo-Hacohen described the pipeline assets as institutional quality and newer vintage, involving transactions with both trusted existing operators and groups with whom Sabra is establishing new relationships.

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EVP Talya Nevo-Hacohen confirmed the deals involve a mix of new and existing operators that Sabra wants to grow with but declined to detail the shadow pipeline until deals close. CEO Rick Matros explained that behavioral health is a dynamic business with low breakeven points and short stays, making occupancy more volatile than in senior housing. He noted the recent drop was seasonal post-holidays and that strong coverage of 3.77x means it is not a concern.

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CEO Rick Matros expects specialty coverage to remain stable around its current strong levels. CFO Michael Costa stated that the most challenged cash-basis tenants represent less than 5% of NOI and confirmed some were included in recent dispositions.

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EVP & CIO Talya Nevo-Hacohen identified newer, high-quality, well-performing senior housing assets as offering the best risk-adjusted returns, with some SNFs also fitting that profile. CFO Michael Costa confirmed that no other tenants have meaningful percentage rent structures. He noted there is still upside from Avamere as their operations improve, and CEO Rick Matros added they have a multi-year window to decide on resetting it to a fixed rent.

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President Matthew Gorman responded that opportunities are asset-specific rather than segment-specific, with Omega targeting deals that can generate low-to-mid-teen IRRs. He stated that key metrics like occupancy and rent coverage for the senior housing portfolio are materially in line with the SNF portfolio, although operating margins are typically higher in senior housing.

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President Matthew Gorman responded that there is no specific target for U.K. exposure, as they view it as a compelling market with strong fundamentals and will evaluate opportunities as they arise. An executive added that hedging U.K. cash flows is something being discussed internally, especially given the current currency exchange rates, but no definitive decisions have been made.

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COO Daniel J. Booth stated that the portfolio will remain heavily weighted towards fee simple real estate acquisitions, though they are active in various loan types, often with existing operators. CEO C. Pickett added that of the 15 assets held for sale, half are expected to be sold in Q4 and the rest early next year.

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President, CEO & Director William Lenehan stated that deal flow has been consistent and that the primary governor on acquisition volume is pricing, not credit or real estate quality. He explained that while FCPT is finding sufficient volume of quality assets, the pricing must be accretive for shareholders, which moderates the pace of investment.

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CEO William Lenehan highlighted the company's low absolute G&A and efficient growth model, which relies on developing young talent. Regarding the pipeline, he stated they do not provide guidance but noted there is an 'enormous amount' of potential deals they could pursue if they were willing to lower their pricing standards, which they are not, as it would not be accretive.

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President and COO Tom McGowan confirmed they proactively target specific tenants for each center, with grocery being a primary driver, along with value retailers like HomeSense and TJX concepts, and fitness operators. Chairman and CEO John Kite underscored the depth of demand by noting KRG signed 22 anchor deals with 19 different tenants in 2024.

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CEO Sumit Roy confirmed that Realty Income has recovered most, if not all, of the space from the C-store tenant. He added that the company is already in the process of re-leasing the locations to other established operators, having held parallel discussions in anticipation of this outcome.

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CEO Mark Manheimer identified convenience stores, quick-service restaurants, auto service/collision, grocery, and farm supply as key areas of opportunity. He confirmed the new tenants fall within these categories. Manheimer also clarified that the average annual credit loss of 4 basis points since inception all occurred in 2024.

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CFO Kevin Habicht confirmed that a general assumption for lease termination fees, around the historical average of $3 million, is included in guidance, but it is not published due to its unpredictability. He also stated that the elevated non-reimbursed expense guidance of $15-16 million already factors in the costs associated with the vacant properties, which should decrease as they are re-leased or sold throughout the year.

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CEO Jeffrey Busch stated that the primary funding plan involves dispositions and equity rather than debt, although leverage might temporarily exceed their target. He noted asset recycling isn't a permanent solution but that the market adjusts, allowing for higher cap rate acquisitions if interest rates remain elevated. CFO Robert Kiernan added that a term loan is not currently planned but will be evaluated in the first half of the following year.

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