Sila Realty Trust - Q2 2024

Transcript

Operator (participant)

Good morning, and welcome to the second quarter 2024 Sila Realty Trust earnings conference call and webcast. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. I will now turn the conference over to your host, Miles Callahan, Senior Vice President of Capital Markets and Investor Relations for Sila. You may begin.

Miles Callahan (SVP of Capital Markets and Investor Relations)

Good morning, and thank you for joining us today to discuss Sila Realty Trust's financial results for the second quarter of 2024. Yesterday, we issued our earnings release for the second quarter of 2024. The earnings release, as well as our earnings supplement, are available on the Investors section of our website at investors.silarealtytrust.com. Joining today's call with me are Michael Seton, President and Chief Executive Officer; Kay Neely, Executive Vice President and Chief Financial Officer; and Chris Flouhouse, Executive Vice President and Chief Investment Officer. We will begin with prepared remarks and then open up the call for any questions. Before we begin, I would like to remind you that today's comments will include forward-looking statements under federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases.

Statements that are not historical facts, such as statements about expected financial performance, are also forward-looking statements. Actual results may differ materially from those contemplated by such forward-looking statements. A discussion of the factors that could cause a material difference in our results compared to those forward-looking statements is contained in our SEC filings. Please note that on today's call, we will be referring to non-GAAP measures. You can find the reconciliation of these historical non-GAAP measures to the most directly comparable GAAP measures in our second quarter earnings release and in our earnings supplement, both of which can be found on the Investors section of our website and in the Form 8-K we filed with the SEC yesterday. With that, I will now turn the call over to our President and Chief Executive Officer, Michael Seton.

Michael Seton (President and CEO)

Thank you, Miles. I'm excited to welcome everyone to Sila Realty Trust's first earnings call as a publicly traded company. We appreciate you taking the time to join us today. For those who may not be as familiar with Sila, I will begin by providing some background on the company and a flavor for how we approach the business of investing in healthcare real estate and running Sila Realty Trust. Next, our Chief Investment Officer, Chris Flouhouse, will provide an overview of our portfolio, as well as market observations, and Kay Neely, our Chief Financial Officer, will address our financial performance. I will wrap up with a few closing comments before opening the call to questions. First and foremost, as most of you know, we listed Sila Realty Trust on the New York Stock Exchange on June 13, 2024.

We are excited to be publicly traded and for the opportunity to present the merits of our stock to a wide audience of investors. Our decision to go public via a direct listing was motivated, in part, to give our existing shareholders liquidity optionality. However, with invested assets of approximately $2.2 billion, a proven and successful track record, a robust operating platform scaled for growth, and many years of real estate investment experience, we strongly believe that Sila was more than ready for the public equity markets. Given our strong and flexible balance sheet, we did not need to raise capital through a traditional and typically expensive IPO mechanism. In fact, we believe we have plenty of dry powder to meet our strategic objectives over the next 12-24 months.

However, being a publicly traded company opens the door wider to capitalize on growth opportunities in the large, growing, and sustainable healthcare market. We also believe Sila is uniquely positioned within the REIT universe. As a net lease REIT focused solely on quality healthcare properties, we believe we offer investors the best of both worlds. Participation in the attractive large market of the defensive healthcare sector, and a triple net lease REIT structure with longer lease terms and a conservative approach to leverage. Now, I would like to spend a few minutes discussing the steps we took to build Sila into the company it is today, and what we believe are key differentiators for those new to our story. First, while we may be newly publicly traded, we are not a new company.

I co-founded what is now Sila in 2014, as well as a predecessor REIT with a similar strategy in 2010. In 2019, we merged Sila with its predecessor company, which at the time owned solely healthcare properties, to gain size and scale with an eye toward further growth. Two years later, in 2021, we sold $1.3 billion in non-core assets to focus exclusively on high-quality healthcare properties, specifically medical outpatient buildings, inpatient rehabilitation facilities, and surgical and specialty facilities. As of the end of the second quarter of 2024, we had 137 properties with a focus on markets with strong and growing demographics, with a portfolio lease rate of approximately 97.5%.

Our team has been active acquirers of real estate over the past 14 years, having purchased over $4 billion, with the majority of that being healthcare real estate. As a result, we are tried and tested healthcare real estate investors, focusing on acquiring high-quality healthcare properties that are critically important to our tenants' operations. We also focus on properties which have health system and large-scale operator affiliations. We especially seek out facilities with branding, so that our buildings appeal to the specific client and catchment area that supports our tenants' business objectives. Some of the brands associated with our buildings and tenants are Post Acute Medical, Tenet Healthcare, Baylor Scott & White, and Cleveland Clinic, to name just a few. By design, our portfolio is highly diversified, both geographically and across various healthcare types.

We have built-in organic growth to our lease stream of income through contractual 2.2% average annual rent escalators on 83.6% of the portfolio, while the remaining 16.4% of our portfolio, having base rent increases indexed to the Consumer Price Index, or CPI, as of June 30, 2024. Being active in the market for so many years, we have expanded our channels for sourcing properties to acquire through both on and off-market partners, and have historically enjoyed seeing strong deal flow. In an overall real estate transaction market that is currently seeing significantly reduced volume due to the higher interest rate environment and dislocation in the capital and banking markets, we continue to see interesting opportunities, and we have the capital to take action. That being said, we remain disciplined and focused in deploying capital, as we have always been.

We stick to the mantra that you can only invest a dollar one time, so make it count, and that's exactly what we try to do. We have found that what many would perceive as our best defense, low leverage and a flexible balance sheet, is actually our greatest offensive tool, as it offers us the liquidity and speed with which to execute on opportunities while our competitors may be forced to sit on the sidelines. I'm extremely proud of what our company has achieved to date in terms of acquisitions. This year alone, through July, we have purchased eight properties for over $163 million, including our most recent $28.3 million acquisition of a leading inpatient rehabilitation facility in Fort Smith, Arkansas.

While continuing to seek out additional acquisition opportunities for the remainder of 2024, we will be thoughtful and disciplined with any acquisition to ensure it meets our strict criteria for building a portfolio and company that is built to last. With our current size, every accretive acquisition can have a meaningful impact on our financial results. I would like to reiterate what I stated earlier, that our company is built to scale. From a personnel and an expense perspective, we can add meaningful assets to the company with minimal additional cost to run the company. I'm very proud of our experienced leadership team, which has strong real estate, financial, and operating expertise. Kay Neely, our Chief Financial Officer, has been with our company for over eight years, and CFO for the past six years, and previously had an extensive career in public accounting with a Big Four audit firm.

Chris Flouhouse, our Chief Investment Officer, who joined us recently after a distinguished 25-year banking career, brings a strong background in corporate finance, real estate M&A, and REIT advisory experience. We are supported by almost 50 other employees involved in all facets of our business, from acquisitions, investment management, research and tenant credit, in-house property management, and all finance, accounting, and reporting, and capital markets functions. Our board of directors is represented by individuals with diverse perspectives that bring a personal commitment to strong corporate governance with the highest integrity. As a publicly traded company, we will put shareholders first with an eye towards transparency, just as we always have. We have been an SEC registrant for over 10 years. For years, we have provided shareholders with comprehensive disclosures, financial reporting, and transparent communication, and that simply will not change. Now let me address some recent portfolio activity.

As previously reported in an 8-K in June 2023, and discussed in our subsequent period filings, the sponsor of a tenant at 17 of our properties, GenesisCare, filed for Chapter 11 bankruptcy. The 17 properties were leased to GenesisCare under a master lease. This lease was not rejected, and GenesisCare paid us full rent throughout the bankruptcy process. Subsequent to GenesisCare's emergence from bankruptcy in February 2024, we entered into an amended master lease covering seven of the 17 properties, all located in Florida. Six of the 10 properties that were severed from the lease were leased to new tenants who acquired the operations at each of the properties. Sila now has four unleased GenesisCare-related assets remaining and is in final negotiations for leasing one of those properties and is in different active stages of selling the other three....

Kay will discuss the impact of this on second quarter results. Also impacting second quarter results was the closure of operations at the company's sole property leased to Steward Health Care, which filed for bankruptcy in May 2024. Sila is in the process of selling this asset. I will now turn the call over to Chris to discuss the positioning of Sila's portfolio and the healthcare real estate environment.

Chris Flouhouse (EVP and CIO)

Thank you, Michael. Sila's portfolio is well diversified across 137 properties, with an emphasis in the Smile States across the Southern U.S., where populations and demand for healthcare are growing. In fact, approximately 65% of our portfolio is located within the Smile States. Our top five markets by ABR are Dallas, Oklahoma City, San Antonio, Akron, and Tucson. At the end of the second quarter, we owned assets in 64 markets across the United States, providing meaningful geographic diversification. Our portfolio consists of approximately 5.3 million rentable sq ft, a 97.5% weighted average lease rate, and 8.2 years weighted average remaining lease term, or WAL, with only 21% annualized base rent maturing within five years.

Our tenant credit profile is balanced and consists of 36.4% investment grade rated tenant, guarantor, or affiliate, 28.1% rated tenant, guarantor, or affiliate, and 35.5% non-rated. As of June 30th, using ABR, our portfolio was comprised of 37.4% medical outpatient buildings, 28.6% inpatient rehabilitation facilities, and 34% surgical and specialty facilities. Our top ten tenants comprise 62% of our ABR, though no single tenant accounts for more than 16% of our revenue. Furthermore, our largest tenant, Post Acute Medical, is mitigated through our ownership of 15 individual assets, of which we receive regular financial reporting of property operating performance. Due to our stringent underwriting standards and focus on the most advantageous risk-adjusted returns for our shareholders, we strive to acquire properties that exhibit high and increasing rent coverage ratios.

As of June 30th, 2024, the 68% of ABR of our portfolio that provides financial reporting to us maintained a 4.64x EBITDARM coverage ratio. Of the 32% that do not report, approximately one-third is related to investment grade rated tenants or guarantors. Moving on to the market environment, medical outpatient buildings are demonstrating strong fundamentals with increasing patient volumes. We're seeing high-quality MOB opportunities, in large part because so much of the industry's attention has been focused on senior housing, leaving MOBs out of the conversation. We have both the focus and expertise in MOB transactions to take advantage of these opportunities. In the inpatient rehabilitation market, countrywide demand continues to grow for on- and off-campus post-acute care facilities that provide a lower cost environment than general acute care hospitals.

We are focused on newer facilities, leased to best-in-class operators, as exemplified by our most recent acquisition in Fort Smith, Arkansas. We also take a keen eye on the outpatient behavioral health market, where we've seen greater interest and demand, but remain diligent to ensure that any property acquisition has a strong and proven operator who can achieve appropriate levels of profitable margin for its business. In surgical and specialty hospitals, health systems are looking to grow revenue, which could mean larger facilities for additional beds and perhaps more monetizations than we've seen in the past. Across all of our asset categories, we're seeing supply being constrained and don't anticipate any meaningful inventory growth around the corner. This sets up for an environment that supports the occupancy and rents of our facilities.

We also take a proactive approach to asset management and actively evaluate our portfolio to ensure we are optimizing returns for our shareholders. We are in various active stages of selling our one Steward Health Care property, the Stoughton healthcare facility, and three GenesisCare properties. In addition, we are in the process of releasing another GenesisCare asset to high-quality credit tenant. Moving on to our second quarter activity, we acquired a $10.8 million medical outpatient building in Reading, Pennsylvania. The 30,000 sq ft facility was constructed in 2020 and serves as an outpatient treatment center for former patients of the adjacent inpatient behavioral facility and other patients that only require outpatient care.

This purpose-built facility is fully leased to Reading Behavioral Health Care, a joint venture between Acadia Healthcare, the largest provider of behavioral healthcare services in the U.S., and Tower Health, a regional healthcare system headquartered in West Reading, Pennsylvania. Subsequent to quarter end, on July 25th, we closed on a $28.3 million inpatient rehabilitation facility in Fort Smith, Arkansas. This market-leading facility is 100% leased to a joint venture between Mercy Hospital of Fort Smith, an affiliate of Mercy Health of Missouri, which carries an investment grade rating, and Lifepoint Health.

We are pleased to add these facilities to our portfolio, as we believe they exemplify our commitment to sourcing and acquiring what we believe are creative opportunities, critical to our tenants' operations and the communities they serve. ... As previously mentioned, we're actively seeking additional opportunities that we believe will be accretive to our portfolio, but we will remain diligent as it relates to capital deployment. I'll now turn the call over to Kay for the financial report. Kay?

Kay Neely (EVP and CFO)

Thank you, Chris. I will now speak to our second quarter results, and since this is our first earnings call, I will also provide insight into our year-to-date results. Our GAAP net income for the second quarter was $4.6 million, or $0.08 per diluted share, compared to $3.9 million, or $0.07 per diluted share in the second quarter of 2023. Our GAAP net income for the first half of 2024 was $19.6 million, or $0.34 per diluted share, compared to $18.1 million, or $0.32 per diluted share for the first half of 2023. Our cash NOI was $39.9 million in the second quarter of 2024, as compared to $42.4 million in the second quarter of 2023, or a 5.8% decrease.

This decrease is primarily due to a decrease in same-store cash NOI of $1.2 million and a decrease in non-same-store cash NOI of $1.2 million. The decrease in same-store cash NOI is primarily related to four vacant properties formerly leased to GenesisCare and the closure of operations at our only property leased to Steward Health Care, which Michael spoke to previously, resulting in $1.7 million in lower cash NOI compared to the same period in 2023. This was partially offset by second quarter 2024 increases at our other same-store properties of 2.3%, or approximately $760,000 when compared to the second quarter of 2023 as a result of annual rent escalations.

The decrease in non-same-store cash NOI is the result of cash NOI loss from dispositions exceeding cash NOI gained from acquisitions relating to the timing of redeployment of proceeds from dispositions. Cash NOI was $86.8 million for the first half of 2024, as compared to $88 million for the first half of 2023, or 1.3% decrease. This decrease is the result of the net effect of an increase in same-store cash NOI of $1.6 million and a decrease of non-same-store cash NOI of $2.8 million. The increase in same-store cash NOI is primarily the result of receiving a $2 million one-time payment from GenesisCare as consideration for the removal of 10 of the properties from the master lease during the first half of 2024.

This offset a decrease of $1.8 million in cash NOI in the first half of 2024, related to the four vacant properties formerly leased to GenesisCare and the closure of operations at the only property leased to Steward compared to the same period in 2023. Additionally, there was a 2.1% increase, or $1.4 million, in other same-store property cash NOI in the first half of 2024, when compared to the same period in 2023, as a result of annual rent escalations. The decrease in non-same-store cash NOI is the result of cash NOI loss from dispositions exceeding cash NOI gained from acquisitions related to the timing of redeployment of proceeds from dispositions.

During the first half of 2024, Sila invested $135.7 million to purchase seven real estate properties in three separate transactions, compared to an investment of $9.9 million for one property in the same period in 2023. AFFO decreased 2.3% to $30.8 million, or $0.54 per diluted share during the second quarter of 2024, compared to $31.6 million, or $0.55 per diluted share during the second quarter of 2023.

In addition to the cash NOI items just discussed, AFFO includes income received from investments in money market accounts, in which we invested the $185 million in net cash proceeds that we received after the repayment of outstanding variable rate debt from the sale of a significant asset in December 2023, until we redeployed the funds. The second quarter of 2024 AFFO also includes a decrease in interest expense compared to the second quarter of 2023. AFFO for the first half of 2024 increased 5% to $69.1 million, or $1.20 per diluted share, compared to $65.8 million, or $1.15 per diluted share for the first half of 2023.

In addition to the year-to-date cash NOI items previously discussed, AFFO includes income received from investments in money market funds, as well as a decrease in interest expense from the same period of 2023. As of the quarter end, we were conservatively leveraged with total net debt of $438 million, which equated to 3.1x EBITDARE. We had cash, cash equivalents, and availability under our credit facility of approximately $587 million, providing us with substantial liquidity to make acquisitions, which we believe enhance the value of our portfolio for the benefit of our shareholders. At quarter end, our outstanding debt was 100% fixed through interest rate swaps, a testament to the conservative balance sheet management which we have always undertaken.

Going forward, we believe a leverage ratio of approximately four to five times net debt to EBITDARE is an appropriate level for the company, which is generally lower than the peers in our space, though at times we may run lower or we may run higher. In the beginning of the year, we were successful in recasting and amending our $250 million term loan with a new up to five-year term loan, when taking into account extension options exercisable by the company at an attractive borrowing spread over SOFR, equal to the prior spread of the refinanced term loan. The syndication of this recast was approximately 18% oversubscribed, providing testament to our lenders' confidence in Sila. Now that Sila is publicly traded, we expect to have more options to access debt capital than the traditional bank markets.

I will now speak about our approach to our dividend. We currently pay our dividend monthly and understand the importance of the durability of the payment to our shareholders. We maintain a conservative payout ratio to provide confidence in the stability of our dividend. Our most recent quarter payout ratio was 75% of AFFO. On July 16, our board of directors authorized a monthly dividend of $0.13 per share of common stock, payable on August 15 to stockholders of record at the close of business on July 31st. This distribution represents an annualized aggregate dividend of $1.60 per share. As Michael mentioned at the beginning of the call, we successfully listed Sila on the New York Stock Exchange under the ticker symbol S-I-L-A on June 13 of this year.

On the date of the listing, we launched a modified Dutch auction tender offer for the purchase of up to $50 million in value of our outstanding common stock at a price range between $22.60 per share on the low end, and $24 per share on the high end, subject to the tendering party's election. We established the tender price range at levels that we believed to be highly accretive to the intrinsic value of our company. We received sufficient tendered shares at the low end of the range, or $22.60, allowing the company to successfully purchase approximately 2.2 million shares, reducing the outstanding share count of the company by approximately 3.9% to 55 million shares. Now I'll turn the call back to Michael for his closing remarks.

Michael Seton (President and CEO)

Thank you, Kay. I would like to take a moment to thank my colleagues at Sila Realty Trust, who have been the backbone of building our company and who continue to move the company forward. On behalf of my leadership partners and our board of directors, let me express our greatest appreciation to all who have contributed to Sila's success, and we appreciate everyone on this call joining us today to hear more about our company. We look forward to establishing long-lasting and productive relationships with the investor and analyst communities. That concludes our prepared remarks. Operator, please begin the Q&A.

Operator (participant)

Thank you. At this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue by pressing star two. Once again, that is star one to ask a question, and our first question will come from Nate Crossett with BNP Paribas. Please go ahead.

Nate Crossett (Real Estate Analyst)

Hey, good morning, everybody. Yeah, a bunch of questions. First is, I don't think you guys gave formal guidance, so maybe you could just talk us through some of the main guideposts we should be thinking about for the back half of this year. Like, what how should we be thinking about acquisition volumes, the cap rates you're looking at for acquisitions, GNA, dispose? I think it'd be helpful to give us kind of some parameters there.

Michael Seton (President and CEO)

Sure, Nate, this is Michael Seton. Thank you for joining the call, and it's great to reconnect again. Let me kind of help you sketch it out for you. From an acquisition perspective, it's our strategy to, overall, as a base case, grow our balance sheet by approximately 10%-15% per year. From a cap rate perspective, and that's giving us the runway that Kay spoke to earlier as well, with respect to that kind of 12-24 months of, I'll call it available liquidity that we have today. With respect to acquisition cap rates, we are seeing in the marketplace today, and evidenced by recent acquisitions, generally speaking, cap rates in the range of 7%-8%. So that's for the higher quality institutional-type assets that we own.

I think that's a pretty good sketch of what we'll see in the coming months. In terms of overall, kind of to break down, we don't give guidance, we didn't give guidance, but in terms of breaking down the current quarter to give you a picture, we reported our NOI this quarter, and that's pretty close to what a good run rate will be. We had certain one-time revenue and expense items in this quarter, but particularly as we go forward and we seek to sell, and we're in different stages, as mentioned, in terms of the strategy around selling our currently vacant assets, we'll be relieved of those kind of carry costs associated with that.

So kind of to get a picture of a run rate, looking at the current quarter, the NOI is reflective of that. Obviously, you would layer in, we spoke about our contractual rental rate increases. So as we look forward, you could apply kind of our base contractual rental increase, to that annualized figure. But that gives you kind of a picture of the NOI going forward. So hopefully, that's helpful, as a run rate. What that doesn't take into effect, though, I will tell you, is our most recent acquisition of Fort Smith. We made an acquisition, of an inpatient rehab facility for $28.3 million in July, most recently. That was, of course, after the quarter end. So that's not in that NOI figure.

Going down from there, I'll kind of take you all the way down. That's NOI. We have interest expense and, of course, G&A. And just to give you a picture of that as well, to sketch it out, G&A for this quarter, we separated out our listing expenses. Of course, we had our listing June thirteenth, so occurred in this quarter. That is separated out in our income statement. G&A for this quarter is reflective of a run rate, so again, can be multiplied by four. With respect to interest expense for the year, it's, it's pretty close. So again, taking the current interest expense, multiplying that by four for this year. Going forward, meaning in terms of next year, if you look at our financial statements, we do have some hedges burning off, or expiring, I should say, at the end of this year.

They are a very low interest rate. That swapped rate is 0.93% on $250 million. It does expire this year. We will seek to, most likely, rehedge that at the appropriate time. That's tied to a term loan that we've got. And, rates are obviously, it feels like, coming the right direction in terms of that. We've waited intentionally, obviously, for the Fed to act or the market to, to perceive those rates coming down. So we will act opportunistically with respect to the timing of that, and we have in place all of our, counterparty ISDA agreements and the like, to be able to execute at a moment's notice on those, on that. So just also on the interest expense side, let me give you kind of a picture, broad brush.

Again, our-- that is, that $250 million that expires this year is hedged at a swap rate of 0.93%. You take into account, obviously, our margin borrowing, which is tied to leverage related to that debt, which currently is 1.25%. So that's additive. So again, it's approximately 2.1%, all-in costs related to that $250 million. If we were to do a new three- or four-year swap today, roughly speaking, that base rate would be approximately in the neighborhood of about 3% or slightly over, roughly speaking, so 3%-3.15%. Then we layer in our 1.25%, currently applied, leverage borrowing rate, so we get into our all-in cost there.

So we'll see an adjustment, we anticipate, in our interest expense next year relative to this year, but we're fully anticipating that. And again, we'll act opportunistically to take advantage of where we see an opportunity in the market. I hope that helps.

Nate Crossett (Real Estate Analyst)

Yeah, yeah, that's all helpful. I was gonna ask as, like, an addition to that, as so part of the investment strategy, would you guys consider adding buybacks potentially to that, just given, you know, the cap rate is on your stock and the fact that your leverage is incredibly low? Like, would you use that to maybe blend your acquisition cap rates higher by maybe buying back stock as well?

Michael Seton (President and CEO)

We would, and as you know, we just did a Dutch auction and completed that. That was successful in terms of the buyback, and we're pleased that the buyback occurred at the lower end of that range, although we would've been happy at any point in that range. We do consider a share buyback to be good use of our capital, provided that the stock price, obviously, at which we're executing, is at what we view to be a sufficient discount to our intrinsic value. We think that is there today. We obviously just completed our listing, came off of the Dutch auction, and I think we'll continue to monitor that and discuss with the board what you're suggesting and balancing, of course, with the acquisition opportunities.

But, we would certainly consider that, yes.

Nate Crossett (Real Estate Analyst)

Okay, that's helpful. Maybe one on just tenant credit. Is there anything on the watch list that we should be tracking just outside of the news flow of Steward and Genesis? And is there any kind of bad debt assumption you guys have, for the back half of this year that's not Genesis or Steward?

Michael Seton (President and CEO)

In terms of our watch list, let me describe what we do as it relates to the watch list. We have a scaled watch list. So we have a watch list, which is not just, for instance, situations, like the Steward, or GenesisCare, which do fall into, I'll just describe it, as our high, high monitoring watch list.... We have others where it may just be a performing tenant, strong coverage, and maybe a lease is coming up, and we're negotiating that lease. So we call that our watch list as well, because it's got particular focus on that, on that asset. I think you're asking specifically about, those, situations which are more akin to, you know, sort of imminent payment issues or the like. And we have no, material tenants on our high monitoring watch list.

In fact, GenesisCare has dropped off our top 10 tenant list, meaning the remaining GenesisCare entity that continues to lease seven assets from us as part of that what was originally part of that master lease. And Stoughton, of course, is not part of is not a material tenant, but we thought it appropriate as kind of best-in-class disclosure to disclose that tenant. By the way, Stoughton, as a percent of scheduled ABR in June, was only about 1.1%, ongoing.

Nate Crossett (Real Estate Analyst)

Okay. That's helpful. Maybe just the last one, just like on the deal flow pipeline, like, how would you guys characterize, like, the funnel right now? Like, just maybe look... I'm not telling you, give us any numbers here, but, like, just looking into 3Q, like, what are you seeing? Like, how many opportunities are there? How long is it taking you to start to finish? Just, like, helping us size things a bit would be helpful.

Michael Seton (President and CEO)

Sure. We see, comparing it to give you some picture of... We came out of, as you well know, a zero interest rate environment, you know, 2.5 years ago or so, and we saw a very robust market where there was tremendous liquidity in the bank market, in the equity markets, for folks who were buying. So we saw private buyers be very active. We saw REIT buyers, traded REIT buyers, be very active as well. Then, obviously, the brakes were put on to a large degree as the Fed started to raise rates. So we've seen a tremendous drop off in volume overall. We were active last year in terms of acquisitions, acquiring over $150 million of property, even in a market that was, you know, very, very muted.

This year, we've acquired over $163 million of property in what is still a reasonably, I would say, muted market, meaning volume's way down from what we saw, you know, roughly speaking, two and a half years ago. We are seeing opportunities. We will seek out opportunities to close between now and year-end, but we're going to be disciplined. We see opportunities every week. They're prioritized. They, we see opportunities, new opportunities arrive. We'll bid on opportunities. There's not a lot of competition in the market today. I would tell you, we can be very choosy in terms of the opportunities, and we are being very disciplined and choosy in terms of even submitting bids and executing.

One thing that I think we do have a reputation for in the market is, if we're going to submit a bid and pursue an opportunity, we'll follow through on that pricing that we indicate. We saw that earlier in a larger transaction that we executed, of a portfolio of five properties in the first half of this year, and, it was a kind of a, more of a distressed situation of the seller, but the properties were not distressed, and we were picked over other very qualified bidders because we ultimately followed through in a very short order. Because, again, we are a true cash buyer, and then our, our liquidity is available at a moment's notice, essentially three days' notice. So we have tremendous availability under our credit facility of almost $500 million. So we, we remained, I would tell you, poised.

The pipeline is what I would expect in this current market relative to the total market volume, and I do anticipate we will find opportunities between now and year-end. When you ask about, I'll call it, gestation period of real estate, it's long. And what I mean by that is, unfortunately, it's not 30 days or less, but the bidding process through ultimately putting a property under a contract, you know, beginning to end, is certainly no less than 60 days, typically, sort of in a best-case scenario, but can be as far as 120 days. I hope that answers your question.

Nate Crossett (Real Estate Analyst)

No, that's all incredibly helpful. That's it for me for now, but thanks for taking the questions, and congrats on the first public quarter.

Michael Seton (President and CEO)

Thank you very much, Nate.

Operator (participant)

As a reminder, if you would like to ask a question, please signal by pressing star one, and we will pause for a moment to allow more questions to queue. With no further questions, that will conclude our question and answer session. I would now like to turn the conference back to Mr. Michael Seton, President and CEO, for closing comments.

Michael Seton (President and CEO)

Thank you, operator. Once again, thank you to our new investors and longstanding investors, as well as members of the research community. We appreciate your interest in Sila, and we look forward to speaking with you again soon. Have a great day.

Operator (participant)

This will conclude today's conference. Thank you for your participation.