Alec Feygin

Alec Feygin inquired about Kimco's Family Dollar investment, the number of Family Dollar locations in their portfolio, and the real estate characteristics Kimco targets for similar future deals.

Answer

Dave Jamieson, COO, and Conor Flynn, CEO, stated Kimco has five Family Dollar locations. They clarified that the recent investment was a loan backed by the real estate holdings and distribution centers of the acquiring consortium, with underwriting focused on the value of the owned real estate rather than directly targeting more Family Dollar locations.

Alec Feygin inquired about Kimco's Family Dollar investment, the number of Family Dollar locations in their portfolio, and the real estate characteristics Kimco targets for similar future deals.

Answer

Dave Jamieson, COO, and Conor Flynn, CEO, stated Kimco has five Family Dollar locations. They clarified that the recent investment was a loan backed by the real estate holdings and distribution centers of the acquiring consortium, with underwriting focused on the value of the owned real estate rather than directly targeting more Family Dollar locations.

Alec Feygin from Baird asked about CareTrust's future debt issuance plans following its new investment-grade rating, specifically regarding a potential private placement or term loan. He also inquired about the company's strategy for establishing relationships with new operators.

Answer

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.

Alec Feygin from Baird asked for specifics on the potential NOI upside from the Holiday transition and requested details on the asset mix (IL, AL, campus) and operator types (new vs. existing) in the current acquisition pipeline.

Answer

CEO Rick Matros declined to quantify future NOI upside, stating it would be speculative but that the company expects improvement over time. CIO Talya Nevo-Hacohen described the pipeline assets as institutional quality and noted they involve a mix of trusted existing operators and new groups with whom Sabra is establishing relationships.

Alec Feygin from Baird asked for specifics on the NOI upside from the Holiday transition and requested more details on the acquisition pipeline's asset mix (IL, AL, campus) and whether it involved new or existing operators.

Answer

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.

Alec Feygin from Baird asked for specifics on the NOI upside from the Holiday transition and requested details on the acquisition pipeline's asset mix (IL, AL, campus) and operator relationships (new vs. existing).

Answer

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, newer builds and noted that the transactions involve both existing trusted operators and new relationships.

Alec Feygin from Baird asked for more detail on the operators involved in the $200 million of awarded deals and the potential shadow pipeline. He also inquired about the steady decline in occupancy in the behavioral health segment and re-leasing prospects.

Answer

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.

Alec Feygin of Robert W. Baird & Co. asked about the outlook for specialty and behavioral coverage and the size of the cash-basis tenant pool.

Answer

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.

Alec Feygin from Robert W. Baird & Co. inquired about which asset types currently offer the best risk-adjusted returns in the pipeline. He also asked about the remaining upside from the Avamere percentage rent and if other tenants have similar lease structures.

Answer

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.

Alec Feygin of Baird asked which segments within the US senior housing space present the best opportunities today and how the operating metrics of Omega's senior housing portfolio compare to its skilled nursing facility (SNF) portfolio.

Answer

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.

Alec Feygin asked what level of U.K. exposure Omega is comfortable with and whether the company has a plan to hedge its growing U.K. cash flows.

Answer

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.

Alec Feygin of Baird inquired about the composition of the investment pipeline, specifically the mix between direct real estate acquisitions and lending, and asked for an update on the 15 assets currently held for sale.

Answer

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.

Alec Feygin of Baird inquired about current deal flow trends and whether the competitive landscape for acquisitions has been changing. He also asked what has been a stronger filter for rejecting deals in 2025: credit criteria or real estate quality.

Answer

President, CEO & Director William Lenehan described deal flow as consistent, with pricing being acceptable but not highly attractive, leading to a selective approach. He clarified that the primary governor on acquisition volume has been ensuring pricing is accretive for shareholders, rather than a lack of assets meeting the company's quality criteria.

Alec Feygin of Baird inquired about the current state of deal flow and the competitive landscape. He also asked whether credit or real estate criteria had been the stronger filter in rejecting potential deals so far in 2025.

Answer

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.

Alec Feygin asked about the scalability of G&A in 2025 as the team grows and inquired about the size of the acquisition pipeline where sellers have not yet agreed to FCPT's pricing.

Answer

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.

Alec Feygin asked if KRG is actively targeting specific tenants to backfill anchor vacancies to improve traffic and merchandising mix, and what types of tenants are showing the most demand.

Answer

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.

Alec Feygin of Robert W. Baird & Co. asked for an update on the C-store tenant situation, specifically if the company had regained the space and what assumptions were embedded in guidance.

Answer

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.

Alec Feygin from Robert W. Baird & Co. asked about the property categories being prioritized for acquisition, the nature of new tenant relationships added in the quarter, and the specific credit loss figure for 2024.

Answer

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.

Alec Feygin asked whether any lease termination income is assumed in the 2025 guidance and if the non-reimbursed property expense guidance accounts for the future leasing of recently vacated assets.

Answer

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.

Alec Feygin asked about the funding plan for upcoming acquisitions, questioning the runway for the asset recycling program and whether the company plans to issue a term loan to reduce its credit line balance.

Answer

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.