William John Kilichowski • Wells Fargo

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An executive, likely CIO Vikas Gupta, explained the dispositions were a mix of executing on assets held for sale and opportunistically selling a portfolio at an attractive price to redeploy capital accretively. CIO Vikas Gupta noted that the current pipeline is healthier and slightly more weighted towards the U.S., a change from the recent past. He reiterated that underwriting standards have not changed despite the Medicaid overhang.

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An executive, likely CIO Vikas Gupta, noted no significant change in the competitive environment, with less competition in the U.K. due to capital scarcity, and stated that acquisition yields remain around 10%. CFO Bob Stephenson confirmed the strategy is to pre-fund the 2026 maturity with equity while the cost is favorable, similar to 2024's approach, but they will remain opportunistic and could pivot to the bond market if conditions change.

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CEO Stephen Horn explained that the portfolio is largely tariff-resistant and the sale-leaseback model provides a natural filter for tenant quality. He also confirmed that the higher guidance for net real estate expenses ($15M-$16M vs. a historical $13M) reflects the carrying costs from recent vacancies, which is already embedded in the full-year outlook.

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CEO William Lenehan attributed the yield compression primarily to the high percentage of lower-cap-rate Quick Service Restaurant (QSR) acquisitions in the quarter, not increased competition. Regarding growth, he explained that the type of acquisition, such as more efficient sale-leasebacks versus individual deals, largely determines quarterly volume. Lenehan emphasized that FCPT prioritizes asset quality and disciplined capital raising over hitting volume targets, acting decisively when market conditions and cost of capital align.

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CEO William Lenehan attributed their sourcing success to focusing on smaller, individual deals rather than large, competitive portfolios, and leveraging their reputation for execution certainty. He noted that their persistence on deals, sometimes for years, has paid off. On the policy front, he stated they have not yet seen a material impact on their tenants' labor situations but are monitoring it.

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CEO William Lenehan acknowledged that some sellers were motivated to close deals ahead of the current pre-election period but stated that predicting further market impact is too difficult. Regarding consumer behavior, Lenehan noted that FCPT's necessity-based tenants are seeing stability and performing well, though he suggested the election has been a temporary distraction for consumers recently.

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Head of Asset Management Brooks Gordon emphasized the regional focus of U.S. assets. CFO ToniAnn Sanzone clarified that about one-third of the credit loss reserve is for identified losses, including Hellweg downtime, with the remaining two-thirds being a general buffer. She noted the rent write-down was not notable and related to a minor tenant vacancy.

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CEO Mark Manheimer stated they have multiple letters of intent for the Big Lots asset but are being patient to achieve a better outcome, and confirmed no income from it is in 2025 guidance. He views the Walgreens take-private positively, noting the new entity's focus on retail and expected low leverage should be beneficial.

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CEO Shankh Mitra detailed how their proprietary platform, analyzing over 10 million U.S. micro-markets, drastically reduces the transaction timeline from a typical 5-10 months to as little as 45-60 days. He emphasized this 'velocity to market' makes Welltower a preferred counterparty for sellers, creating a powerful network effect that drives growth.

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Shankh Mitra (CEO & CIO) emphasized that Welltower is not focused on maintaining a specific investment volume but on creating per-share value. He noted that with 94% of Q3 deals being bilateral, the main competition is their own discipline regarding their cost of capital, which they view as higher than the market might perceive.

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CIO A.J. Peil explained the increase was due to idiosyncratic, operator-level events, not a thematic issue. He pointed to offsetting positive trends, such as the watchlist being down 50 bps and the single-B and lower credit bucket being down 420 bps, suggesting the overall credit profile is improving. CEO Peter Mavoides added that credit loss assumptions are baked into guidance and portfolio performance is consistent with those expectations. CFO Mark Patten noted the combined under-1.5x coverage bucket actually dropped 90 bps.

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CEO Peter Mavoides credited the favorable terms to a less crowded middle-market sale-leaseback space. He clarified that the high rent coverage was an output of the quarter's industry mix (e.g., medical, equipment rental) rather than a specific negotiating achievement. He explained that shifts in the top 10 list are a natural result of portfolio diversity and continued investment with growing partners, not a strategic repositioning.

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CEO Joey Agree asserted that tariffs would not alter their investment strategy, as they will continue to focus on best-in-class, necessity-based retailers who he believes will ultimately benefit. CFO Peter Coughenour confirmed it was too early to change the bad debt outlook, stating the current guidance of 50 basis points of credit loss for the year already includes an allowance for the Big Lots vacancies. Agree emphasized this 50 bps figure is a fully loaded number with no carve-outs.

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CEO Joey Agree stated that tariffs do not impact their investment strategy at all, as they will continue to focus on the country's biggest and best necessity-based retailers, who he believes will be long-term winners in a tariff environment. CFO Peter Coughenour addressed bad debt, confirming the full-year guidance includes a 50 basis point assumption for credit loss, which already accounts for the Big Lots situation. He noted that Q1 credit loss was about 30 basis points and they feel good about the current guidance.

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Executive Timothy Dieffenbacher and Co-CEO Randall Starr clarified that the 4% ABR impact from the watch list is split between Q4 2024 and Q1 2025, and the 2-3% bad debt guidance includes a 25-50 basis point buffer for other potential issues. Chairman and Co-CEO Stephen Preston noted that guidance is conservative, assuming resolutions occur late in 2025, so any earlier execution on the 12 assets currently in negotiation would represent potential upside.

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Executive Timothy Dieffenbacher stated the Q4 guidance range is primarily influenced by potential G&A and property cost variability, not acquisition timing. Co-CEO Stephen Preston explained that Q4 cap rates were higher than expected (high 7s) but may moderate to the mid-7s in Q1 2025. Dieffenbacher clarified that the $747,000 in Q3 lease termination fees are not forecasted in guidance and are excluded from AFFO calculations.

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CEO Sumit Roy explained the share repurchase program is a flexible tool for capital allocation during market volatility, intended to be funded by free cash flow and dispositions on a leverage-neutral basis. CFO Jonathan Pong added that the higher bad debt provision is a conservative measure reflecting known issues with a few specific tenants from prior M&A, rather than a broad deterioration in portfolio health.

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CFO John Spaid explained that the earnings impact of a SHOP conversion is deal-specific and depends on the asset's current rent coverage and any transition disruption. CEO Eric Mendelsohn projected that NHI's SHOP exposure could grow to represent 5% to 10% of the total portfolio by the end of 2025 or early 2026.

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Chief Investment Officer Kevin Pascoe explained the incentive strategy was a deliberate choice to regain occupancy in a price-sensitive, mid-market IL portfolio, especially after the previous operator left them in a trough. He noted length of stay is stable but lighter than historical levels, influencing the incentive strategy. President and CEO Eric Mendelsohn added that he is cautiously optimistic about the new administration's impact on CMS, based on the positive regulatory climate under the previous one.

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Co-CEO Clint B. Malin responded that the weighting towards SHOP/RIDEA will increase over time from its current balance. Co-CEO Pamela Shelley-Kessler added that while specific G&A guidance will be provided later, they expect the increased NOI from the initial RIDEA conversions to offset the platform's setup expenses in the first year.

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CFO Austen Helfrich clarified that the dispositions will be heavily weighted toward non-core asset sales. Proceeds will first fund leasing capital, with the remainder used to repay debt, targeting the $250 million notes due in May 2025 and then term loans. He confirmed the higher disposition cap rate guidance reflects the non-core asset mix, not a change in core MOB pricing.

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Interim CFO Austen Helfrich confirmed that proceeds would be used for debt paydown, primarily on the revolver, but stressed a flexible capital allocation approach. He explained the credit loss was a final write-down of an inherited HTA mezzanine loan. Executive Todd Meredith detailed the re-leasing timeline, noting it follows a normal cadence of 4 months to lease execution and about 6 months for build-out, suggesting a late 2025 impact.

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CFO William Wagner explained that while their leverage is low, the choice between their revolver and equity depends on the investment flow, with the lower cost of debt now warranting more consideration. President and CEO David Sedgwick cited recent political commentary from leadership, bipartisan support for Medicaid, and the prior administration's support for the SNF industry as reasons for confidence.

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Executive J. Hutchens stated that the acquisition pipeline is larger than last year, though competition is increasing. He emphasized Ventas's competitive advantages through its OI platform and operator relationships. He also noted that new development is not close to being feasible, requiring 20-50% higher rents to justify costs.

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CFO Michael Costa confirmed the quarter's mid-to-high teens SHOP growth was squarely within expectations. EVP & CIO Talya Nevo-Hacohen noted the investment opportunity remains robust as high debt costs sideline leveraged buyers, allowing Sabra to be competitive and selective. CEO Rick Matros added that the company's improved cost of capital makes it easier to compete but they will remain disciplined and selective, avoiding deals that create noise.

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CEO Gregory Silvers clarified that many of their mortgage financings are structured as an interim step to fee-simple ownership, often with conversion options. On capital allocation, Mr. Silvers explained that issuing equity is currently unattractive given the stock's multiple, and the company can achieve 3-4% FFO growth without it. CIO Gregory Zimmerman added that share buybacks are not compelling on a leverage-neutral basis at current prices.

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