NetSTREIT Corp.

Greetings. Welcome to NetStreetCorp third quarter 2021 earnings call. At this time, all participants are in a 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 zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Amy Ann, Investor Relations. Thank you. You may begin.

We thank you for joining us for NetStreet's third quarter 2021 earnings conference call. In addition to the press release distributed yesterday after market closed, we posted a supplemental package and an updated investor presentation. Both can be found in the investor relations section of the company's website at www.netstreet.com. On today's call, management's remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risk and uncertainties that may cause actual results to differ from those discussed today. For more information about these risk factors, we encourage you to review our Form 10-K for the year ended December 31st, 2020 and other SEC filings. All forward-looking statements are made as of the date hereof and NetStreet assumes no obligation to update any forward-looking statements in the future. In addition, Certain financial information presented on this call includes non-GAAP financial measures. Please refer to our earnings release and supplemental package for definitions, GAAP reconciliations, and an explanation of why we believe such non-GAAP financial measures are useful to investors. Today's conference call is hosted by NetStreet's Chief Executive Officer, Mark Manheimer, and Chief Financial Officer, Andy Blocker. They will make some prepared remarks, and then we will open the call for your questions. But before I turn the call over to Mark, I want to take a moment to make an ESG announcement. As many of you are aware, there has been more push for companies to provide disclosures related to environmental, social, and governance in recent years. We are putting together a webpage to showcase our company's commitment to environmental stewardship, social responsibility, as well as good governance. We expect to put out a press release announcing the launch of our ESG webpage in the coming weeks, and we welcome you all to visit our website. Now I'll turn the call over to Mark to discuss our third quarter activity. Mark?

Good morning, everyone, and welcome to NetStreet's third quarter 2021 earnings conference call. I will begin with a review of our investment activity and portfolio metrics for the quarter, and Andy will then provide further detail on our results and balance sheet. For the third quarter, we were consistent with our publicly stated strategic growth plans. We believe that growing our portfolio with high quality tenants while further diversifying our tenant base and geographical and industry mix is critical to generating the best risk adjusted returns for our shareholders. As of quarter end, NetStreet has one of the highest credit quality portfolios in the net lease space. And we'll endeavor to continue to create a best in class portfolio as we grow into next year and beyond. In the third quarter, we completed gross acquisition volume of $90 million and an additional $4 million of development spending. The $90 million of acquisitions for this quarter were at an initial cash capitalization rate of 6.2% inclusive of all closing costs and had a weighted average remaining lease term of 12.4 years. Nearly 90% of our third quarter acquisitions were with investment grade rated tenants or tenants with investment grade profiles. Similar to the past few quarters, our financial results for the quarter were impacted by the timing of acquisitions, many of which closed near quarter end. As we grow our portfolio, we expect the quarter-to-quarter timing of acquisitions to have a diminished impact on our quarterly financial results. But we will not sacrifice the quality of assets that we add to our portfolio or our due diligence and underwriting criteria, which remain paramount. Also in the quarter, we provided approximately $4 million of development funding which included two new development projects with total costs expected to be $5.4 million. With a total of five development projects in the pipeline, we anticipate that we will begin to collect rent from four of these projects by the end of the first half of 2022. Finally, in the quarter, we sold four assets for $19 million at a weighted average cash capitalization rate of 6.3%. With these dispositions, we've decreased our casual dining exposure to less than 1%, decreased exposure to bank branches, and we no longer have exposure to RV sales. The continued curating of our portfolio will remain an integral part of the NetStreet strategy, but this quarter we executed a few more dispositions than what is typical, reflecting attractive opportunities to cull assets that didn't meet our long-term investment objectives at attractive pricing. As a result of our acquisition and disposition activity during the third quarter, our exposure to Walgreens was 7.5% of our total portfolio ABR, up from 2.5% in the previous quarter. Northern Tool and Equipment, which made up 1.4% of our portfolio ABR, entered our top 20 tenant list. While 7-11 remains our top tenant, our ABR exposure to 7-11 was 8.2%, down from 9.3%. We will continue to see the 7-11 exposure decrease over time as we continue to grow our portfolio. Moving on to our quarter end portfolio metrics, our portfolio contained 290 properties comprised of 5.5 million square feet in 40 states with a diversified tenant roster of 60 tenants in 22 industries. Total ABR, our primary earnings driver, increased to $59.8 million with a weighted average lease term of 10 years. At quarter end, we were 100% occupied with no lease expirations until 2023 and less than 1% of ABR expiring before 2025. Based on ABR, our tenancy is 70.5% investment grade with an additional 14.5% classified as investment grade profile. Subsequent to quarter end through October 28th, the company completed over $90 million of acquisitions, including closing costs, and no additional dispositions, bringing our year-to-date net acquisition volume to $354 million. As a result, we are raising our 2021 net acquisitions guidance to at least $400 million. We continue to source attractive opportunities that meet our target criteria. We are reviewing a wide range of opportunities, including investments in stabilized properties, blend and extend opportunities, that lease back transactions and development projects. While quarterly acquisitions volumes may vary quarter to quarter, we will stay true to our strategic focus on high quality tenants with great access to capital and attractive real estate fundamentals. While we continue to enhance the overall diversification of our portfolio, We continue to believe that this is the best way to produce sector-leading earnings growth with very limited tenant credit risk in the coming years. I'll now turn the call over to Andy to discuss the balance sheet and our capital markets activities. Andy?

Thanks, Mark. And once again, thank you all for your time with us this morning. Let me begin with our results for the third quarter 2021. Yesterday in our press release, we reported net income of 7 cents, core FFO of 22 cents, and AFFO of 24 cents per diluted share for the third quarter. As Mark noted, our third quarter results were affected by the timing of acquisition closings in the quarter, as well as the full weighted average share impact of the equity offering completed in the second quarter. Moving on to our balance sheet, as of September 30th, we had $28 million in cash and total debt outstanding of $192 million, of which $175 million is from our fully hedged term loan with the remainder from our revolving line of credit. We have no debt maturities until the maturity of our revolver in December 2023, which is subject to a one-year extension option, which would match the December 2024 maturity of our $175 million term loan. Our net debt to annualized adjusted EBITDA ratio was 3.5 times the quarter end, below our 4.5 to 5.5 time long-term target. Finally, with respect to the balance sheet, In early September, we filed our universal shelf registration with the SEC, giving us broader and more efficient access to multiple capital sources. In addition, we put a $250 million ATM program in place. Based largely on the timing of gaining access to the ATM, we did not issue any shares under that program in the third quarter, but subject to market conditions, expect the ATM to be a valuable tool to fund a portion of our acquisition volumes going forward. With respect to dividends, earlier this week, the Board declared a 20-cent regular quarterly cash dividend to be payable on December 15th to shareholders of Rector as of December 1st, reflecting an annualized dividend rate of 80 cents per share. Finally, with regards to guidance, we're adjusting our full year 2021 AFFO guidance to a range of 93 to 95 cents per share, primarily due to higher dispositions completed in the third quarter and the timing of acquisitions as discussed. We're increasing our 2021 net acquisitions to at least $400 million, reflecting strong access to deals that meet our investment criteria. It's important to note that the increase in 2021 acquisition guidance this late in the year is expected to have a very limited impact on 2021 financial results, but should support a solid foundation for earnings growth in 2022 and beyond. We continue to expect cap rates consistent with our most recent activity. We now expect cash G&A to be at the top end of the previously provided range of $11 to $12 million. As previously disclosed, we're pulling forward some incremental internal control expense as a result of our upcoming large accelerated filer status and to ensure compliance from a SOX perspective. As always, our cash G&A includes recurring transaction costs, which are listed in our financial statements as a separate line item. Non-cash compensation expense is expected to be at the midpoint of the previously provided range of $3 to $4 million. We expect our cash interest expense, including unused line of credit facility fees, to be at the lower end of the previously provided range of $3 to $3.5 million, and an additional $600,000 of non-cash deferred financing fee amortization. We expect to incur taxes near the top end of the previously provided range of $200,000 to $300,000. And lastly, we expect fully diluted weighted average shares outstanding to be in the range of 38 to 39 million shares for the year. Also, for planning purposes, as we look to 2022, we signed a lease for our new office space with an expected move-in date sometime during the first quarter of 2022, which will result in an increase to 2022 GNA. To wrap up, we're very pleased with our strong third quarter activity. We're well positioned with sufficient capital and a consistent pipeline of attractive opportunities for growth. As always, we want to acknowledge our entire team for their hard work and contributions to our excellent results so far this year. This concludes our prepared remarks. We'll now open the line for questions. Operator?

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the queue. You may press star 2 if you would like to remove your line from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Nate Crossett with Barenburg Capital Markets. Please proceed.

Hey, guys. Good morning. It's Eric on for Nate. I appreciate the color on the pipeline. Do you mind kind of expanding on that in terms of the total deals and the total deal size. Were there any portfolios as part of the volume in the quarter or any large deals during the quarter?

Yeah, sure. So during the third quarter, we did do one larger transaction that was a Walgreens transaction. It actually involved us helping the seller defuse their debt on that portfolio and as well as getting a lease extension with Walgreens, extending all those properties out to 15 years. But I think the rest of the assets that we acquired in the portfolio, you know, were more granular and look similar to what we've been buying in the past.

Perfect. Thank you. And then I know you increased your guidance in terms of acquisitions going into the end of the year, but can you kind of talk about what's the size of the pipeline right now? And then kind of how should we think about acquisitions headed into 2022?

Yeah, no, sure. So, yeah, I mean, we did increase guidance. You know, we were able to close $91 million of acquisitions this quarter prior to this call. So obviously a little bit better on timing than we've done in the past two quarters. So that's certainly encouraging. But I think, you know, the guidance pushed up to at least $400 million should give you a pretty good indication of what we have a pretty high level of confidence closing for the rest of the year. And then as we look forward on acquisitions, I do think that you will see us do a little bit more of a relationship and repeat business with some tenants and sellers that we've worked with in the past, a little bit more on the blend and extend side, as well as the development side, which is where we think we can pick up a little bit more alpha for the beta that we're taking.

Okay, perfect. And then maybe could you just touch on competition and pricing? Are you seeing any changes in the last couple of months? Any increase in competition? And I know that pricing kind of came down a little bit, but should that be the norm kind of going forward or how should we think about that?

Yeah, sure. I mean, I think there has been a lot of capital that's really come in across all asset classes. So, you know, I wouldn't say that we're completely immune to that. But I don't think there's really been one really tangible competitor that's come in and really changed things. Too much for us. I think the cap rate that we closed on this quarter a little bit lower than when we've done in the past, but I think that's got a little bit more to do with the quality of the assets and a little bit more lease term. Looking back to this time last year, I think third quarter of last year, we were at a 6.5 cap, so now we're at a 6.2% cap rate. We've got a little bit more term and maybe a little bit higher quality assets that we closed on this quarter. Looking at what we're seeing so far, for the fourth quarter, I would expect the cap rate to inch back up a little bit. Okay, perfect.

And then last one for me, can you kind of give us some color on how the GNA will look for in the end of 2021 and maybe into 2022? I know you kind of already built out most of the infrastructure, you moved offices. So can you kind of give us your thoughts on how that may ramp going forward?

Yeah, Eric, thanks. Yeah, for the end of 2021, and we do have some seasonal expenses that we're dealing with and, you know, a couple of expenses that are one time in nature. You know, we think on a pure run rate basis off of a third quarter and consistent with the guidance that we provided. You know, GNA, you know, including taxes, right, probably going to go up, you know, probably $600,000, $700,000, largely attributable to three items. One is, you know, the year-end audit. We're not able to kind of straight line the audit fees, so You know, as the audit is closing out the year and they've got, you know, the deeper dive with respect to year end, those fees actually hit in the fourth quarter. Two, as we've been talking about, is SOX compliance, right? You know, we're going to be a large accelerator filer starting with 2022. You know, we're in really, really great shape there, but, you know, getting the right folks in to help us, you know, with the documentation and testing of all our controls, you know, is a part of that as well. And then third, to a much smaller extent, is hiring on the margin. We talk about the $100,000 per $100 million of G&A. That's really a personnel type of thing. We've got a couple of acquisition folks that we're searching for right now. We've got an AP supervisor that we're recruiting for right now. Based on the timing, it should have a de minimis impact. Then when you start thinking about 2022, we are not in our new office. We're building out our new office. that'll be an increased expense. And we'll go through the details of that when we provide, you know, the details of our guidance in February for 2022. All right.

Thanks, guys.

Take care.

Thanks.

Our next question is from Kai Big Kim with Truist Securities. Please proceed.

Thanks. Just to follow up on that last question, You mentioned G&A should be $600,000 to $700,000 higher in 4Q. How much of that is one-time versus recurring?

Well, I would say, you know, it depends on what you refer to as one-time, right? You know, when you think about the audit fees, that's more of a seasonal nature, right? You know, probably on the SOX compliance, you know, you're probably looking at, you know, $100,000, $200,000, right? you know, just to kind of gear everything up and then hiring on the margin, you know, maybe, you know, call it $100,000, you know, on the high end. So, you know, we are, like we said, you know, we just signed a lease for a new office space that we'll be moving into next year. You know, what that's really all about, we're in a very, what I would consider a suburban location currently. And with the bulk of our hiring occurring during COVID, If all of our employees wanted to come to the office on the same day, we would not have enough space for them. So we are moving, you know, to the uptown market. We think that that's, you know, the type of space that our employees deserve. I think it's going to be very helpful for attracting and retaining our employees, and it's going to be space that, you know, we'll be able to accommodate our growth for the next 10 years, right? Obviously, the issue there is our cash rents will be small as we kind of grow into that space, but all that stuff is straight-lined over time, so... You know, that's kind of it with respect to the G&A. You know, in KeyBin, you know, with respect to, you know, read your note, thought it was very detailed. You know, when you kind of look at, you know, the pieces and the roll forward, you know, I think that that was the biggest piece that may have been missing was the G&A. The other part is, you know, kind of the funding, you know, of the acquisitions, right, the interest expense in order to get that NOI online. And while we didn't utilize the ATM in the third quarter, you know, potential increases in share count, you know, as a result of, you know, utilizing the ATM.

Thank you for answering my second question. Got it. So, yeah, quick question on your balance sheet. Going forward, how should we think about your debt funding strategy?

Yeah, great question. You know, so, you know, as we kind of roll through We kind of think of our assets generally, and if we're going to maintain our four and a half to five and a half times net debt to adjusted EBITDA, we're really talking about funding our assets just round numbers, two-thirds equity, one-third debt. So over time, we think that we're going to be able to get to a size where we're going to be able to go and go to the rating agencies and get a rating. You know, that's probably $2 billion, right? So you're probably looking at least a couple of years away from now. You know, we could potentially look to either accordion or existing credit facility. But what's more likely to happen as we start thinking about, you know, 2022 is likely, you know, our ability to go to the private placement market. And, you know, if we do that, obviously, you know, smart for the company because we're doing a better job of matching the duration, you know, of our liabilities with the duration of our assets, but that comes at a cost. So, you know, to the extent that we did that, I would think that would probably be a second half 2022, you know, type of deal. But, you know, you're talking about a marginal borrowing rate currently on the line of credit of, you know, a point and a half to probably something that looks like, you know, the mid to, you know, call it the mid threes currently. So, you know, that while a smart decision, there is a cost that comes along with that.

Okay. Thank you.

Our next question is from Todd Thomas with KeyBank Capital Markets. Please proceed.

Hi, thanks. Good morning. Mark, you mentioned, you know, for acquisitions going forward, you know, maybe more existing relationships and some blend and extends. Can you just expand on that a little bit and talk about the strategy, the source deals?

Yeah, sure. So, I mean, I think, you know, 60% to 70% of our transactions in the most recent quarter were blend and extends. I think I've always kind of said the more of those we can do, the better. The second time you extend a lease with a tenant, you know, you kind of secure a short-term lease with you know, get it under LOI and then get it extended with a tenant the second and third time you do that, it gets a lot easier. And we're doing that with more and more tenants now. So I think that is going to be a bigger chunk of what we do over time. And then the second big piece of that is really going to be more on the development side, which will involve, of course, having a development agreement with a developer. And that kind of takes some time to hash out, you know, first building those relationships and then second you know, working on a deal. And then when you already kind of have your form in place, it's much easier to expand on those relationships with developers. So we do expect that to become a bigger chunk of what we do in the future. And then we have had some success with some sellers that we've bought some properties from in the past, and they've just kind of come back to us without marketing the assets and just moving a little bit more quickly on some of those sales. So I'm encouraged about what we think that's going to look like in 2022 and seeing a little bit more evidence of that already here in the fourth quarter.

Okay. In terms of the development side, I guess, how big could that development bucket be? Could we see that ramp up more in 2022? What's the potential size for that to grow to in the near term?

Yeah, sure. So I would expect it to grow a little bit. I actually thought it was going to take us a little bit more time to get that up and running as much as we're doing now. But I think with the team in place, I think we're comfortable kind of doing $60, $75 million of development deals per year. And, you know, look, I mean, kind of the way that we look at our acquisitions opportunity set is wherever the opportunity is, if it makes sense to get more aggressive in one vertical, then we're going to do that. so we could potentially bring on more people if we felt like that was going to be a bigger source of what we're doing. I wouldn't anticipate that, you know, certainly for 2022, but, you know, there is a limit to how many of those types of transactions that you can do with the current staff. But I think $60 million, $75 million is kind of a good ceiling for what we can do with the current team in place.

Okay. And then, Andy, you commented a little bit on sort of the debt strategies. Your leverage ticked up a little bit. It looks like you're just under five times on a net debt to adjusted annualized EBITDA after closing for the October acquisitions. You mentioned four and a half to five and a half times as the long-term target. What's the plan to... I guess, permanently finance acquisitions or raise capital and de-lever a little bit as you move forward here. What are your thoughts on equity?

Yeah, I mean, obviously getting the universal shelf in place in September was a huge testament to our business. So we were very pleased with that. It just provides us with a lot more flexibility, including the ATM. you know, and other sources of capital. You know, needless to say, you know, to the extent that we were doing large amounts of capital, I think the market would become very much aware of that. So I'd prefer not to comment on the specifics with the exception of, you know, generally our view is over the long term kind of two-thirds equity, one-third debt.

Okay. All right. Thank you.

Our next question is from Linda Tsai with Jefferies. Please proceed.

Hi, good morning. In terms of your comment that 2021 should support a solid foundation for 2022, do you think 25% to 26% earnings growth in 2022 still seems reasonable in the context of just transaction timing delays continuing?

Yeah, I mean, Linda, so, you know, one, I mean, I don't think that we're going to get into the discussions of, you know, specifics around our AFFO per share growth for 2022 until we provide formal guidance. I do think that, you know, the foundation that Mark and the team have put together on the operational side of the business, you know, is absolutely going to support sector leading growth in a low risk fashion, which is kind of where, you know, where it is that we've been positioning the company. you know, for a period of time. Look, I mean, I get it. Mark and I and Randy and Amy and Trish and everybody read all the notes, right? I totally understand the frustration, you know, associated with timing. And he used to say, as frustrated as you are, we are as well. But, you know, I think that the idea really is less focused, as we talked about last quarter, on the inter-quarter impact of those acquisitions and more focused on building up, you know, the most solid base of ABR that we can in order to support the growth that you're referring to, right? So, you know, look, in an ideal world, we want to have our KKR needed, too. We want to get those deals, and we want to get them on, you know, on the balance sheet as quickly as we can. But in a number of cases, and Mark could even provide a, you know, pretty good example, that we've been dealing with. But in a number of cases, we're doing everything that we can, but these transactions have two parties, and we cannot control the sellers.

Yeah, I mean, I think at the end of the day, Andy is exactly right. I mean, we're going to focus first on the quality of assets that we're adding to the portfolio. We're really proud of what assets we've been able to add. Second, we want to try to get the best possible pricing that we can. which oftentimes means that we're going to have to work through some complexities that others really prefer not to deal with. We mentioned the Walgreens transaction where we're helping a seller with defeasance and getting leases extended with Walgreens. It's not party to our purchase and sale agreement with the seller, so you have multiple parties that you're dealing with there. We did have a chunkier transaction that we expected to close in August of this quarter. It ended up closing in October, but it was really the seller was having trouble getting the changes made to the REA that we needed to get comfortable with in order to move forward with a clean transaction. And so that particular deal cost us a penny a share in the third quarter. So when we're small, one transaction can kind of have a larger impact on one individual quarter, but we're really building this platform for the long term. We understand what happens quarter to quarter, but really the focus is much more on the long-term portfolio that we're building.

Thanks for that additional color. And then on your lease expiration schedule, you have nothing due until 2023, and it's only four leases, and then you've only got one in 2024. Is it possible that you could continue to push out all of these through Blend and Extend?

Yeah, I think each one of those leases is kind of a case-by-case basis. If we feel like we've got a very high level of confidence that either the tenant's going to renew when the expiration comes due, or in the event that they don't renew, that we can replace the rent. You know, we have a little bit less incentive to try to get that extended early. But, yeah, I mean, I think we really just have such little, you know, coming due here in the next couple of years. It probably won't be a big focus, but, you know, if we get approached by the tenant wanting to do something early, we're always happy to have those conversations.

Thank you.

Our next question is from Katie McConnell with Citi. Please proceed.

Great. Thank you. So you mentioned that the lower acquisition cap rates were largely driven by the quality of assets you're buying. But can you just expand on that a bit more in terms of what you're targeting? And to what extent are you seeing cap rate compression for the sector overall?

Yeah, sure. And I think we had a little bit more lease term in this quarter than what we've had You know, over the past several quarters, we've really kind of been bouncing around in the mid to high six cap rate range over the past several quarters. And this one, you know, we just had a little bit more term, maybe a little bit more credit quality than previous quarters. I think it was really just had a lot more to do with the mix that we were acquiring. And, you know, looking at what we've closed so far in the fourth quarter and what we think we're going to close in the fourth quarter, I would expect our cap rates to move up closer to what they've been in the past.

Okay, great. And then on the disposition side, would you say the third quarter represented the bulk of dispositions, or are you assuming additional asset sales within the revised net acquisition guidance?

Yeah, good question. So dispositions, we're always looking at potentially looking at selling assets if there's a strategic or opportunistic reason. In the third quarter, we reduced our casual dining exposure. I think we said on previous calls that We wanted to get that exposure below 1% by the end of the year, so we've accomplished that now down to just inside about 0.9% of our ABR. We reduced exposure to banks. That's another area that we've really had highlighted as an area that we would like to reduce exposure over time. Sold off with 7-Eleven, which is our number one tenant, so a little bit more diversification. And then we had one camping world asset that we sold You know, during the quarter, that was really, you know, I think we think of that as a fairly cyclical business. You know, with COVID, that's really been an area where they've been one of the winners with COVID. A lot of people have really kind of turned to RV, you know, buying RVs and renting RVs. So they've done really well during COVID, and we kind of view that as a good opportunity to sell a big box asset at a pretty aggressive cap rate. So we acquired that asset in kind of the high seven cap rate range, you know, a few years ago. and then we're able to sell it at a 675.

And, Katie, it's important to note that's one of the reasons why we provide our acquisition guidance in the form of net acquisitions, right, such that to the extent that we dispose of assets, it's on us to go and, you know, replace them.

Right. Okay.

Thank you.

Thank you.

And our final question is from Lizzie Doiken with Bank of America. Please proceed.

Hi, good morning. Thank you. This is Libby on for Josh Dennerlein. I just wanted to expand on that around dispositions. It just would like to get more color around before that closes quarter, particularly because they close at a higher cap rate. Was it really that big box asset in camping that drove the higher cap rate? I'm just curious to hear more comments around that.

Yeah, sure. And I believe they blend it to a 6.3% cap rate. So generally, that's inside of where we're acquiring assets and certainly will be inside of the cap rate that we will be acquiring assets for for the year. But yeah, so I mean, I kind of viewed it as maybe a pretty aggressive cap rate compared to what we're acquiring assets. It's still accretively you know, recycling capital and then considering what we sold versus what we're buying. We think we're adding, you know, better quality to the portfolio versus what we're selling. But, yeah, I do think that, you know, I would expect dispositions to be considerably lower in the future.

Okay. Thank you. And then my second question is, you know, just around the challenges of labor. As you guys are expanding, how are you grappling with this? Are you facing pressure to any specific industries for your tenants versus others? And what kind of outlook might this have with regards to, like, impact to G&A beyond 2021?

You want to take the G&A part? Yeah, from a tenant perspective, yeah, I mean, it is something that we're paying attention to. There are areas that we really expected to see a little bit more, whether it be in restaurants, but we've actually seen some margin expansion with the restaurant properties that we own. I do think it could have an impact on the development projects that we're looking at moving forward with. Our development agreements with the deals that we have that are live right now, we don't pay for any of the cost overruns, so if those expenses go up, those are borne by the developer. But I do think that could have an impact on future development deals and whether the rents associated with those could end up being a little bit higher, which might make us kind of pause a little bit on some of those transactions.

Got it. That's helpful. Thank you.

We have reached the end of our question and answer session. I would like to turn the conference back over to Mark Manheimer for closing comments.

Well, thank you, everyone, for joining today. You know, we look forward to discussing our progress. For those of you joining, may read in a couple of weeks. Thanks again.

Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.