Peter Coughenour
Thank you, Joey.
Starting with the balance sheet. We had a very active year in the capital markets, raising approximately $1.1 billion of forward equity, upsizing our revolving credit facility to $1.25 billion and completed a $450 million bond offering. We also entered into $200 million of forward starting swaps during the year, effectively fixing the base rate for contemplated 10-year unsecured debt issuance at approximately 3.7%. Combined with our outstanding forward equity of $920 million, this provides us with $1.1 billion of hedge capital to fund investment activity in 2025.
During the fourth quarter, we sold $5.8 million shares of forward equity via our ATM program and an overnight offering in October for anticipated net proceeds of approximately $423 million. We also settled 3.7 million shares of forward equity proceeds of over $228 million. As of year end, we had approximately 12.9 million shares of outstanding forward equity, which as mentioned ,are anticipated to raise net proceeds of $920 million upon settlement. We are contractually obligated to settle 12.7 million of those shares in 2025.
Additionally, as discussed on past calls, we recast and expanded our revolving credit facility in August. The facility was increased from $1 billion to $1.25 billion, and includes an accordion option that allows us to request additional lender commitments up to a total of $2 billion. We also extended the term of the facility to 2029, including extension options and reduced our borrowing costs by 5 basis points based on our current credit ratings and leverage ratio.
As of December 31, we have over $2 billion of liquidity, including $1.1 billion of availability on our revolving credit facility, the previously mentioned outstanding forward equity and cash on hand. Pro forma for the settlement of our outstanding forward equity, net debt to recurring EBITDA was approximately 3.3 times, which marks the lowest level in two years. Excluding the impact of unsettled forward equity, our net debt to recurring EBITDA was 4.9 times. Our total debt to enterprise value was approximately 27%, while our fixed charge coverage ratio, which includes principal amortization and the preferred dividend is very healthy at 4.4 times.
Our floating rate exposure remains minimal, with $158 million outstanding on the revolver at year end. And as Joey mentioned, we have no material debt maturities until 2028. We are in excellent position to execute our investment guidance this year without having to raise any additional equity capital. The strength of our fortress balance sheet was further validated by the credit rating upgrade we received in July. S&P upgraded our issuer rating to BBB+ s from BBB with a stable outlook, which is a testament to the prudent and disciplined manner in which we continue to grow the company.
Moving to earnings. Core FFO per share was $1.02 for the fourth quarter and $4.08 for full year 2024, representing 3.5% and 3.7% year-over-year increases, respectively. AFFO per share was $1.4 for the fourth quarter, representing a 4.7% year-over-year increase. For the full year, AFFO per share was $4.14, which reflects the high end of our guidance range and 4.6% year-over-year growth.
As Joey mentioned, we issued initial AFFO per share guidance of $4.26 to $4.30 for full year 2025, representinstg approximately 3.5% year-over-year growth at the midpoint. We provide parameters on several other inputs in our earnings release, including investment and disposition volume, general and administrative expenses, non-reimbursable real estate expenses, as well as income tax and other tax expenses.
In addition to those parameters, our earnings guidance for 2025 includes anticipated treasury stock method dilution related to our outstanding forward equity. As a reminder, if ADC stock trades above the net price or outstanding forward equity offering, the dilutive impact of unsettled shares must be included in our share count in accordance with the Treasury Stock Method. Provided that our stock continues to trade near current levels, we anticipate that Treasury Stock Method dilution will have an impact of roughly 0.1p to 0.2p on full year 2025 AFFO per share. That said, the impact could be higher if our stock price moved materially above current levels.
Our consistent and reliable earnings growth continues to support a growing and well-covered dividend. During the fourth quarter, we declared monthly cash dividends of $0.253 per common share for each of October, November and December. The monthly dividend equates to an annualized dividend of almost $3.04 per share and represents a 2.4% year-over-year increase. Our dividend is very well covered with a payout ratio of 73% of AFFO per share for the fourth quarter.
With that, I'd like to turn the call back over to Joey.
Joey Agree
Thank you, Peter. Operator, at this time, let's open it up for questions.
Operator
(Operator Instructions)
Ki Bin Kim, Truist Securities.
Ki Bin Kim
Thank you. Good morning.
Hey, Joey, you provided a interesting case study on one of your ground lease renewals in your presentation. I was just curious, I'm sure that's not indicative of their whole ground lease portfolio. But typically, when these ground leases come due, I guess, is it more of a typical lease renewal where you get a little of a bump and that (inaudible) was a more of a one-off example? Or do you think there's significant mark-to-market upside?
Joey Agree
Morning, Ki Bin.
There's definitely a significant mark-to-market upside there. The case study that you're referring to, the tenant had no remaining options, initially offered to extend and effectively a five-year option at a flat rental rate. We had inbounds north of either 180,000 starting year one and the tenant was about 105, I believe. We told the tenant, if you want to stay, you're going to sign a new 15-year ground lease with options, marketing that to market, and that's the reference the upside that you're talking about. That's indicative of a naked lease with no options in the ground lease space.
Now, that isn't a regular occurrence for us, but it's one of the -- it's an example, it's a prime example of the upside if and when we were required to retain control of the building.
Ki Bin Kim
And on your forward equity, you have about $900 million of forward equity out there. I think when you look at it versus history, you pay a little bit higher than what you've had. So I was just curious, high level, how do you balance on the forward equity you have out there? Because you are paying the dividend on it, interest expense, but is it still a cash drag on or is it that you see a larger acquisition opportunities coming up sooner?
Joey Agree
For the question of the expense of the forward equity, the interesting construct or factor was for equity is we actually do pay the dividend. Historically, when rates were at zero or very low, you weren't earning any interest/ Today, the forward equity would be with rates being higher, effectively, the interest net out the dividend, maybe to that to net of the last 10, 15 basis points inclusive fees.
So. there's really no cash read before the Fed lowered rates most recent and the Fed lowered rates, there's actually a positive spread to the forward equity that the interest expense were that we are narrowing versus relative to the dividend that we're paying. And so, there really is a de minimis if any expense to carrying that forward equity today, which is very different than historically.
In other areas of the Treasury Method of dilution, which we talked about in the prepared remarks, about the accounting methodology, but not cash. In terms of how much forward equity, it's really a function of sources and uses. And then, where do we think our macro -- the macro overlays upon that. And so, you'll see us and you have seen us historically carry ample forward equity to source or to utilize for investment activities. Obviously, was up approximately $920 million in forward equity were locked and loaded here, and we're prepared to execute on our guidance or above for 2025.
Ki Bin Kim
Thank you.
Operator
Smedes Rose, Citigroup.
Smedes Rose
Hi, good morning. Thanks.
I just wanted to ask you sort of if anything, you can see kind of a continued slight downward bias in your acquisition cap rates. But offsetting that, we see continued upward movement in the 10-year, which I think it's now at about 46. So, just want to look forward, do you think seller expectations even for higher quality buckets of assets that you decided to build or you need to change? And maybe could you share what you're seeing thus far in the first quarter?
Joey Agree
It's a great question, Smedes.
I think part of the problem this morning's like today where you have a 10 basis points like the last kind of looked in the 10-year treasury reacting to CPI before it came out. So, we have 45 or 60 days swings with 10% move in the base rate for effectively the world, the 10-year US Treasury, which has become normalized in everybody's minds, that includes net lease sellers. And so, the 10-year vacillating between 425 and 475, I'm just using broad ranges here, doesn't really seem to impact sellers' expectations of pricing. Now, we've been very careful and very prudent in how we will continue to be and how we deploy capital at appropriate spreads, and frankly, how we gauge asset level pricing in this environment.
That said, we're not going to come out of the gates and below $1 billion in acquisitions in the first quarter in this volatile environment. We'll be disciplined, we'll continue to manage those uses of capital. But the volatility certainly doesn't help reset pricing expectations in such a large fragmented and frankly predominantly individually-owned space.
What we are seeing is individual cases of distressed, usually non-asset level distress in their assets, potentially, where there were partnerships need proceeds, for individuals need proceeds from the sale or disposition of their net lease assets. But again, the volatility here really doesn't serve anybody that's have stabilized pricing.
Smedes Rose
Okay. Thank you.
And I just wanted to ask, you mentioned in the past about continuing to take share within the market and it sounds like that's still the case. And I'm just wondering, I mean, there's a lot of discussion around potentially changing the regulatory banks for -- I'm sorry, the regulatory regime, and I guess, for local regional banks. And is there anything there that might make them more competitive that you have on your radar or do you think it's just kind of from -- you'll continue to compete in a similar environment?
Peter Coughenour
No, I don't see any regulatory issues that may open up the capacity for banks to lend, but you have a multi-pronged problem as a merchant developer today.
One, obviously, the liquidity of construction financing, the availability of debt financing is you're alluding to, the higher the higher construct, the rates on construction loans to lower loan to cost side construction loans, and then effectively from merchant builders in our space. The ability to have some the ability and where they're going to be able to transact at the end of day upon completion.
And so, what our developer funding platform continues to do and continues to take share is bridge that gap. With $2 billion in liquidity and a $1.25 billion credit facility and the forward equity position we have, we have visibility into our cost of capital and we're able to provide solutions for retailers and developers to bring projects to fruition that can still pencil. And you combine it with rising construction costs and tariffs on aluminum and steel and all these other things that are going to continue to challenge construction costs in this country. It's a tremendous solution and that continues to gain share, like you said.
Smedes Rose
Okay. Thank you very much.
Operator
Ronald Kamdem, Morgan Stanley.
Hey, good morning. This is [Jenny] on for Ron. Thanks for taking my question.
I think for us with 6% to 8.2% of IG tenant exposure, like almost reaching all-time high, how does this compare to your long-term expectations? Like, do you anticipate this percentage to increase in the near term based on your acquisition strategy? Thanks.
Joey Agree
So, we always talk about investment grade percentage being a really a proxy for us or an output of our investment strategy. And so, 68.2%, as you mentioned, is near an all-time high, at the same time, we're huge fans of unrated retailers. Again, we delivered improved credit ratings such as Hobby Lobby, Chick-fil-A, Publix, all the elements of those transactions materialize will be there if the pricing makes sense.
And so, that investment grade exposure was -- I would tell you almost artificially ticked up by institutions loading up on Walgreens and other credit check the proverbial IG boxed that can go away quickly if you're not prudent with your capital allocation and don't see trends with consumer and retail sectors. We're going to focus on the biggest and best retailers in the country, the vast majority of those have investment grade exposure, but there are some sub-investment grade exposure that we're big fans of, Burlington being one that comes to mind, that's a great relationship for.
So again, that's really an output of our investment strategy, focusing on our sandbox retailers of the 30 plus minus biggest invest in the country.
That makes sense. Thanks.
I think the second I want to ask about the transaction volume, like considering the current environment, do you see that transaction volume kind of slow down in the first quarter or do you see that as kind of trending in line with your expectations. And what are the upside or downside to your $1.2 billion investment pipeline this year. Thank you.
Joey Agree
The first quarter is effectively locked and loaded. We've had, as I mentioned in the prepared remarks, again, subject to diligence and closing of a very strong January. Right now, we're sourcing for the second quarter. In terms of forward visibility, everyday changes, every executive order, every piece of data that comes out on the environment. And so, look, the most exciting part about this business to me is that get any given day, any given hour, a new and exciting opportunity can pop up that inures to our pipeline. But we think first quarter is right where we wanted, we're very pleased with it. And second quarter, were focused on right now,
Okay. Thanks so much.
Operator
Michael Goldsmith, UBS.
Michael Goldsmith
Good morning. Thanks for taking my question.
The auto parts category stepped up as a percentage to the portfolio ABR by 70 basis points and we know you're very thoughtful about what enters your portfolio. So, what is the thesis for auto part to and why auto parts now?
Joey Agree
So, specific to that transaction was a portfolio transaction from an institutional seller of over 40 assets for a lease to [naphtha genuine]. That's our first material exposure or semi material exposure to [naphtha genuine]. Obviously, our exposure to O'Reilly and AutoZone is more significant and you can see that in our top tenants.
We've talked about auto-parts, O'Reilly had a good print lags. We've talked about auto parts and the construct of average age of cars on the road at 12.7 years of record, still lack of financeability of cars today, just given the interest rate environment. We're going to see now with aluminum and steel. I mean, Ford came out, Bill Ford came out and said these tariffs could destroy the auto industry. Cars today are getting older for record, every record -- a record every day and they need more parts. And so, we continue to love these sales, significantly in the auto parts sector.
The second piece is the underlying real estate, not only the credit in the business model. These are generally 6,000 to 7,000 square foot rectangles that are paying $11 to $12 per square foot with vinyl floors are concrete floors, no TI or TIA or landlords work amortized into the rental rates or multipurpose boxes. And if that tenant were ever to leave, we've filed bankruptcy and that exercise an option. You have a highly marketable rectangle below replacement cost. And so, it fits right within our wheelhouse, it's top three favorite sector of ours. That's it.
Michael Goldsmith
Got it. Thanks, Joey.
And my follow-up question is just on the expected transaction cadence for the year -- last year, transaction market, it was much slower to start the year and picked up as we move through 2024. You commented that you've had a very strong January, so does that mean the balance through the year should be maybe continue to be back half loaded in terms of acquisitions, but should be more balanced this year relative to last year? And then also should should help support some of the earnings growth this year? Thanks.
Joey Agree
I have no idea, to be frank. I don't know it's going to happen tomorrow, let alone third or fourth quarter of this year. We just started building second quarter. Our average transaction cycle is now down to approximately 66, 67 days on the acquisitions front. We're in a volatile environment, I'm not going to make predictions. That's why we're in the hedge position with the 10-year swap to 3,7 , the $920 million of forward equity.
I really did wining due to the capital markets this year, to be honest. And so, that war chests is going to allow us to be decisive at times where we see there's opportunities, but we can be patient, and we think there's volatility and underlying pricing should move. But right now, honestly, all we have is visibility into Q1.
Michael Goldsmith
Thank you very much.
Operator
Rob Stevenson, Janney Capital.
Rob Stevenson
Good morning.
Joey, can you give an update on Big Lots and how things looked to be playing out there? I think last quarter you had a new tenant revenue for the Manassas, Virginia location. And where are you with Grand Rapids and the other locations these days?
Joey Agree
Yes. The Big Lots bankruptcy continues to extend on, obviously, Nexus. The original purchase or about a bankruptcy failed the week they were supposed to close. And so, now they're going through another lease option period. This is a multi-month bankruptcy process.
Manassas, we have taken the rent from $8.55 five per square foot to $16 per square foot. That lease is signed and has yet to commence rent. We are working in Cedar Park, Texas, on one of the other ones where we have a high quality tenant they would like to purchase that lease, but needs approvals that would take that rent from $5 per square foot to $8 per square foot.
We have seen significant interest in the asset use specified here in Michigan, and we're awaiting the results. Frankly, of the lead of these lease options, which continued to be delayed based upon just the bankruptcy, which is kind of runs circles.
Rob Stevenson
Okay. That's helpful.
And then where is the sale leaseback market sitting today with either your major tenants and others that you want to do business with? Are they looking to do stuff this year? Is it likely that there's going to be a decrease in volumes there? How would you sort of view that, given your recent conversations with current and perspective tenants?
Joey Agree
So, I mentioned in the prepared remarks we've closed a sale leaseback with another relationship tenants, subject to (inaudible) in confidentiality as a third transaction with that tenant. We've closed already in Q1 with a sale leaseback with another relationship tenant.
Part of the year progresses, it's really going to be what it was, what the C-suite with the CFO, how they want to capitalize their balance sheet. Generally, these are unsecured issuers who are looking at the unsecured market where they can issue, they're looking at sale leaseback market where they can price. We've had a number of discussions on sale leasebacks, a deep constructure partnerships for retailers that are developing new real estate on their balance sheet.
Has a lot of interesting conversations happening on. I'll leave it at that. We'll see where they transpire. This morning's print probably with the CPI, at 3% program could change that, frankly, or make it more, frankly, the market more active. And so, they're always comparing cost of capital or comparing our cost of capital to a transaction, I would expect additional sale leaseback activity that are through.
Rob Stevenson
Okay. Thank you.
Operator
Spenser Allaway, Green Street.
Spenser Allaway
Thank you.
And maybe just one on your development segment, just curious if there's been any change in regards to retailers demand to build (inaudible), just given the macro and political backdrop demands. And then as it relates to that, has there been any talk about here around labor shortages and how topical is that right now in your discussion as it relates to development space.
Joey Agree
Our discussions that I've been with, when I say, 5 plus retailers myself from the past 60 days, it all revolves around retailers. And these are the largest retailers in the country wanting to get new stores built and how they do it, whether that's Walmart or a Lowe's or Tractor Supply, O'Reilly, Auto Zone, 7/11, Speedway, these tenants all want to grow.
But given the constraints I talked about earlier in the Q&A, there are challenges for their growth. Our three-prong platform and our multi(inaudible) capabilities, plus our balance sheet can be a solution. And so, as I just mentioned on the previous answer, there's a lot of different solutions being discussed. I think we have unique opportunities here, given our capabilities in the organic development front, plus our cost of capital and balance sheet to bridge the gap that's out there today. It potentially be that solution, but it's all subject to the newbuild individual transaction level.
And then, Spenser, the one common theme that we hear from large retailers today is as opposed to 10 years ago when brick and mortar is dead, today, the store is the hub, not one piece of an omnichannel solution. It is the hub of the omnichannel solution. All retailers today have realized that e-commerce is a significant part of their omnichannel platform. That's basically all of them outside of off price, that they can not send good, skilled people to their home for free and had them return for free 40% via UPS or FedEx. That model doesn't work. And so, driving traffic to the store, and if you don't have a store in that MSA is critical.
So, this is the greatest desire to expand that I've seen for retailers since before the Great Financial Crisis. The challenge is how they do so in this liquidity constrained, elevated construction cost environment. And that's where I think, again, our unique capabilities can come into play, and retailers I mentioned in the prepared remarks, fully appreciate that today because there's no public company in our space with our development capabilities. And there's no private company in our space with the costs or cost of capital and liquidity and balance sheet that we have. So it's us, and us alone, that can provide some of these solutions.
Spenser Allaway
Okay, great. Yes, your comments on the financing alternatives and retailer appetite to grow that certainly makes sense. It's labor and labor shortages and immigration policy, obviously, that's at a multiple of hands. And just curious if that has been coming up at all in discussion and if that's going to be potentially deter or delay development, at least as you see it in the pipeline right now.
Joey Agree
No, that has not come up yet, could come up with we see some mass deportations. But the biggest challenge, again, it's just constructability and construction costs.
Spenser Allaway
Okay, thank you.
Operator
John Kilichowski, Wells Fargo.
Hi, this is [Cheryl] on behalf of John.
I just want to understand what things or concerns have emerged in terms of growth plans for some of your tenants and in light of recent bankruptcies and store closures. Are any of your tenants leading to capitalize on these opportunities given a vacant retail space available.
Joey Agree
Surely, it's the lack of space that's available.
We see that in the Party City option where Dollar Tree and (inaudible), I think about 33% of the leases. And so, retailers and we've talked to them and frankly, educated and tell them is if you want new stores, acquiring leases or leases in bankruptcies and effective and efficient means to do so. Now, we're going to put ourselves at a sandwich position.
They're buying a leasehold and subleasing. That's not what we want to do at the end of the day. But ultimately, retailers have to be creative with their growth, given the constraints in the environment today.
That makes sense. And just one quick follow up on your comment that private players don't have liquidity or access to capital. Can you discuss instances as you've seen any private payers exit the market or are you seeing any opportunities arising from private capital not being a little bit to participate in acquisitions? Thank you.
Joey Agree
Definitely across all three platforms by the lack of 1031, the capital in this space to the transaction slowdown across commercial real estate, the lack of private capital due to elevated rates as both at the individual and institutional level.
Again, I can't stress enough the fortress balance sheet, the lifting cost of capital is a massive advantage.
Thank you so much.
Operator
Paul Ridzon, KeyBanc Capital Markets.
Paul Ridzon
Great. Thanks for taking my question.
It.
Could you guys remind us how much bad debt was embedded into guidance and 24 and how much came to realization last year?
And then how much is embedded this year?
Sir, this is Peter.
In terms of our guide for 2025, that includes an assumption for 50 basis points of credit loss.
And that compares to the roughly 35 basis points of credit loss that we incurred in 2024, which is slightly above our longer term average in 2020 for our guide also included an assumption for 50 basis points of credit loss.
I would say that this year, that 50 basis points allows for a worst case scenario, if you will, with Big Lots.
And in addition to that includes an allowance for other potential credit issues that may arise during the year.
Okay, great.
That's helpful.
The other guidance question was, you know, dispositions this year could be a little less than last year.
What are your thoughts there and what kind of types of tenants or industries are you targeting for dispositions this year?
If we roll back the clock approximately 12, 14, 16 months, 15 months, we've talked about a do-nothing scenario when we came out in January with a leverage neutral 500 million scenario, which included approximately 100 million in dispositions, which we hit, which was effectively driven by capital recycling for low yield assets.
In Florida, we saw some Subodh ball transactions in Florida capital flowing into Florida, paying aggressive cap rates, and we took the opportunity to recycle assets there.
Um, throughout the year this year, not dispositions will really focus on non-core assets or frankly though, and values of property more than we do through all for sale, 24 hundred of them for the right price, but it's certainly not.
And as a necessary source of capital, given the 2 billion in liquidity that we entered it, we entered the year with.
Okay, great.
Thank you.
Thank you.
The next question comes from Linda Tsai of Jefferies.
Please go ahead.
And when you look across the landscape of retailers, who are you seeing rent coverages improving or deteriorating on the margin versus a year ago?
Good morning, and we know we don't get rent coverage for most of our tunneling Denmark or O Reilly or TGX is going to provide at the store level.
That's generally situated in the small middle market sale leaseback transaction.
But I think we can look across sectors today and see experiential retail car wash is restaurants.
And this is obviously a really, really that relevant to our portfolio, but we can see the rent coverages.
They're having challenges given the highly levered balance sheets and at the top line degradation of of of operators like Top Golf, the report public to Kelly.
And then what metrics are aspects pushed you to a triple-B and how far you from another rating upgrade?
So triple-B plus we've got upgraded to last year, just honestly, it's just size.
The rating agencies, frankly, are fairly slow.
S and P my opinion was two to three years too late to upgrade us to triple B plus.
So today we sit at BWA one triple B plus.
I think this is the best balance sheet, frankly, probably at all to read them, if not a top three, we have no material debt maturities until 2028 with a war chest.
You comply.
You combine that with our portfolio diversity from a geographic tenant and sector perspective, the size of our assets and the cash flows related to them and then just the nature of the recession resistance of our portfolio.
And it's pretty difficult to argue against an A. minus credit rating.
So it will come in due course, we don't control the timing with either the rating agencies, but it's really just size at this point and they continue to move that barometer used to be 5 billion, 10 billion and they continue to move that that threshold around.
Thanks.
Thanks, Linda.
Thank you.
The next question comes from less holiday.
Please go ahead.
Hey, good morning, guys.
Can talk about how the sandboxes evolving in maybe the future that you no longer do business with, but then conversely, you know, one-stop shops or interest with yet, and you did do a new deal with Napa.
Yes, we're look, we're always looking at the same box is nothing static or following retailers, consumer trends, sectorial friends from all of those relevant data points.
The evolution of the sandbox, frankly, to get in or out of pretty slow.
I mean, we were we're dealing with the biggest retailers here in the world.
But there are retailers such, as I mentioned in the prepared remarks, Boot Barn, which were a big fan of which we were actively doing a project with them.
But the evolution of the sandbox is there is slow, right?
I mean we are methodically watching the credit profile, consumer trends and all of the relevant data points on either enter or and or exit the sandbox.
The second driver of that is just exposure overall in the portfolio, we want to have a well-balanced portfolio.
We don't think it's appropriate to take tenants up to $0.1 or 9% asset, maybe Wal-Mart or somebody of that ilk.
We want to have a well-balanced portfolio from a from a tenant perspective, a sector perspective as well as Europe.
Okay.
And then a quick question on G&A.
And one of the big parts of the story hasn't been seen have been scaling the G&A the last few years this year and sort of flatlining.
What is driving that increase and how much is due to cash versus non-cash?
I'll let Peter speak to the cash versus non-cash.
Obviously, we started last year with the do-nothing scenario.
We made significant investments once we activated during the second half of last year, both to finalize the year in terms of people and systems.
And then in preparation for 2025, we've onboarded a number of new team members here that will be here for full year 2025 have a few positions that we're hiring for still in 2025.
I think you'll see ultimately that number, that number scale and be driven down.
Our initial guidance, obviously, as you mentioned, is in line there in terms of cash versus non-cash?
Peter, I'll take a Bell West.
It just to clarify, we guide to total G&A as a percent of adjusted revenue, and that includes non-cash G&A.
And to the point of your question, we've seen greater growth in our non-cash G&A expense relative to cash G&A over the last couple of years.
And so when things about the impact to FFO, we're continuing to see cash G&A at scale as a percent of adjusted revenue.
And as we continue to scale the business, we would anticipate that that trend continues.
Yes.
I would note that the scare, the the non-cash G&A is really the driver that is a function of going from a five year restricted time.
But based stock to a three year, which we thought and for in terms of talent management purposes was critical.
We made that change later in 2020, 2020 through 2023.
But we didn't think that the team members fully valued the five year vesting period in three years was more in line with industry standards.
And frankly, we just would just mobility today and in terms of jobs and than we wanted, obviously to retain top talent to our team.
Got it.
Thanks, everyone.
Thanks, Louis.
Thank you.
The next question comes from Mike Bonney at BMO Capital Markets.
Please go ahead.
Hey, good morning.
Just on the 2025 lease expirations of the 41 leases set to expire this year, are there any known move outs or though are any of the 41 on the disposition target list today?
Really no known material move outs.
Most of them will exercise contractual options.
Those are rolling in honestly, as we know weekly, if not daily.
So no known material move outs potentially.
If there was we would have some we're excited about it, see if they exercise their option, that's in Provo, Utah and A-plus piece of real estate since subsequent reporting, we've had some exercise options exercised, including the Wal-Mart Rancho Cordova with a five-year option exercise.
That's a ground lease.
And so that list continues to dwindle subscale into 1231 America.
I would just add in terms of I agree with Joe, there's nothing material in terms of lease role there, but to the extent we've identified anything that would be captured within our credit loss guide for the year as well.
That's helpful.
And then just on capital allocation, I know that liquidities for that you don't need to access the equity markets to acquire any of the 2025 potential acquisitions.
But as you look to replenish the war chest for 2026 and beyond, how are you thinking about, you know, the capital mix?
Yes, I think, Peter, you had mentioned a potential long term debt issuance on.
But yes, any color on that would be appreciated.
We the 10-year swap to the tune of 300 or $200 million excuse me, at 3.7%, um, for any future issuance this year in the unsecured debt markets we mentioned by invested in the income.
This is a need a dollar that has a swap in place to access the unsecured markets and in a 10-year Treasury market that's highly volatile.
Thank you very much.
Thank you.
Thank you.
The next question comes from style Granite at Bank of America.
Please go ahead.
Good morning.
Thanks for taking my question.
I was wondering if you could make a few comments on how you're thinking about the hub consumer, specifically the lower end and how that may impact the retail that you continue to see pressure on the low income cohort undoubtably with inflation and exogenously back in the news with goods and services that are necessity-based high end consumer with the looking at there for oh one, K's and looking at their portfolio still feels well and then trade down in the let's call it, the one 50 median household income to Walmart and Walmart continuing to take share.
And so that will continue doing evolve throughout the year, obviously, subject to inflation, subject to macroeconomic factors.
But we see a bifurcated, if not replicated consumer today.
Thank you.
And also in terms of competition in the market, are you seeing any chance here today and going forward compared to last equities?
Our competition continues to dwindle again at the end of by interest rates super cycle with 1031 transactions lagging, obviously, with the transactional market cut by 45% over the past couple of years from historic averages, we are seeing less and less institutional competition, individual competition, tax, motivated competition, DST. motivated competition.
The competition today is with sellers' expectations it themselves and where they think pricing should be in this new world order of 2025 to orient.
And so we encourage brokers all the time sellers all the time to wake up to February of 2025 and stat pretending, it's 2020.
Okay.
Thank you very much.
Thank you.
Thank you for the next question comes from Rich Hightower at Barclays.
Please go ahead.
Good morning, guys.
Thanks for taking the question here.
I guess, Joe, you spent a lot of time this morning talking about DFP. and how it's kind of a unique solution in the marketplace.
And for retailer store growth, what are the gating factors to that becoming within the size of your big multiples of what it what it is today, simply demand on the retailer side?
Is the concentration issue in terms of how the Company allocates capital to maybe spend a little time on that front of mind?
Share, Tom, one thing returns as well as they fit our into our sandbox.
We are not going to deploy capital into development, funding platform or development returns that we can that we can execute and 67 days in the acquisition space.
Daniel speaking, our General Counsel here has done a tremendous job in 2024, compressing our days to close down to that 66, 67.
And her team, um, but again, duration equals risk.
And we need the premium based upon that risk in duration.
And so as we've talked about, if we can churn and burn take a building that the existing structure get in there add onto it, do a renovation, improved site, improve segments and expansion and the tenants going to be paying rent in 120 days rather than the 67 days that can be a tighter spread, call it 50 basis points to a where we can acquire, like kind asset.
If we're going to go through a 12 to 18-month entitlement, permitting and construction process that spread's going to be wider.
And so that's the true gating factor here for us is developers returns on costs where they have projects retailers' expectations for return on cost.
And we sort through hundreds, if not thousands of projects annually to decide which ones we think makes sense even though given given the kind of those brackets.
That's very helpful.
I'm going to ask another question, which I think is best in different ways.
But as we think as we start to think about 2026 funding sources and uses, and I appreciate that it's hard to make predictions, especially about the future.
But just given given the choppiness of the last few months for the obvious reasons on, you know what it, what are the chances in your mind that 2026 to be a do-nothing scenario all over again, blogging really asked me if you guys have hydro capacity to be.
I don't look, I don't think it's going to be a do-nothing scenario in 2026.
I think we are sitting in the pole position right now.
I'm not concerned about again, as I said in the prepared remarks, the penny here or a penny there, I will take potential treasury method dilution versus a pre-funded war chest and the 10-year swap two, three, seven, 10 out of 10 times for potential dilution of a penny or two for accounting methodologies.
Based on what we're sitting on in terms of this portfolio at this balance sheet, inclusive of its maturity schedule is truly unprecedented with a I think, in this space.
And I think it's going to continue to endure value.
And 2026, I wouldn't anticipate will be a do nothing scenario, but it's only February 2025.
So we'll see what executive orders are signed today and throughout the year.
Got it.
Thanks to the comments.
Thank you.
And my last question comes from Haendel St. Juste admonition.
How Please go ahead.
Hey, guys.
Thanks for squeezing me in.
two quick ones from me.
So first, I wanted to follow-up on the earlier comments on the 50 basis points of credit reserve was hoping you could add some color or ballpark and ballpark exposure to that Big Lots, but also to Glenn's Party City Family Dollar.
I guess I'm trying to get a better sense of the categories and tenant specifically in the portfolio watching a bit more closely here.
Thanks.
And it's really it's really the Big Lots scenario as this continues to play out.
We have to Party City's in the portfolio that will be thrilled to get back.
one is that a Target anchored shopping center in Davenport, Iowa, and one is in Texas in Port Arthur.
We'd be thrilled to get those back and have tenants lined up and waiting.
We don't own any Jo-Ann's.
I'm not sure, frankly, why why anyone would in today's environment and the net lease structure, probably the worst retail bankruptcy of all-time all the stores we're making money nine months later.
We file again with new project one lease.
We expect them to effectively liquidated at this point, just a nerd, a Hobby Lobby use our favorite.
But that's I mean, that's really the at the couple of movie theaters we're always watching saw the Oscars about I don't know one of the best titles.
So that always concerns me.
one of the best film didn't see any of them.
Besides that, we're in a great place.
Got it.
Got it.
Appreciate that.
I also wanted to ask about what you might be hearing about the potential impact of tariffs, the some of your tenants.
I was looking at some of your tenant categories like home improvement, auto-parts farm supply.
I was curious if you think that that could be more at risk because the number of them I have items that are produced assembled in Mexico, Canada, China.
And so curious now that might be impacting your thinking, maybe your underwriting someone's categories with the nonstop tariff talk, which doesn't appear to be going anywhere is going to affect that effectively all consumer categories and retail categories today and ultimately flow down to the consumer that the bottom line.
So whether it's Bill Ford, talking about cars or any other components that are manufactured and or imported into this country.
The good news is that most retailers that national retailers due to the first Trump presidency and the tariffs on, they really diversify their source, right?
They're sourcing and so coming from.
But now it seems like only Australia, we won't have Tara.
So I'm looking at looking across their global procurement efforts, TGX, for example, which would be a beneficial beneficiary from these tariffs because I think you'll see trade global sourcing office in 16 countries around the globe.
Those efforts that came from the 2020 versus 2016 administration.
And those tariffs hopefully and I think did give, frankly, retailers a the opportunity to diversify their procurement sources and their purchasing that's at ultimately tariffs flow down to the consumer unless retailers want to either margin.
We have the biggest retailers in the country in our portfolio for a reason they have liquidity of the balance sheet to invest in labor to invest in price, which directly can be right related to tariffs from Wal-Mart can choose TGX can choose not to move price in it take share.
Now if I'm a small middle market retail or I'm subject to those tariffs or not, I don't have a multi-billion dollar balance sheet.
I'm going to have to pass that through somehow or find some of some savings in SG&A.
And so it's some look, tariffs will continue to be in the new was the impact of them.
We're going to see what those ours there is.
They work through them and they get resolved, um, but it will it will be it will be the small middle market retailers that suffered the greatest consequences from any from any tariff and from an any tariffs here because it does.
Thanks.
Thank you.
And the last question now from Omnicare and investor.
Please go ahead.
Yes, hello.
File area.
Yes, hey, this is Sam on for Tayo.
I just saw one to ask you guys, if you could give us an update on some of the retail categories experienced headwinds, specifically talking about dollar stores and on pharmacies, what we saw CVS's print this morning, which beat guidance and a strong outlook for 2025.
That's just CVS, specifically.
Pharmacy sector.
Obviously, we've if you look year over year, pharmacy for us is down 10% almost from this without any material, the dispositions year over year.
And so those matters that were in the news will continue to experience some of those headwinds, absent obviously, some macroeconomic changes will continue to invest in what we think are the best retailers in a recession resistant environment, same sticking to our sandbox, so you won't see us move into experiential.
You won't see us ramp our dollar store exposure.
That's is going down every single day.
You won't see us increase our pharmacy exposure.
We're focused on the best and brightest categories, our opinion, whether that's off-price, general merchandise, Wal-Mart tire and auto service, auto parts like we talked about earlier, dominant grocers in this country such as Kroger, all the Wegmans, HEB.
Publix will be focused on the best of the best here.
And we're going to let this we're going to let the really everything else shakeout.
Right.
That makes sense.
And I guess the last question opening message, are you guys seeing anything changed from your watch list became part of our bank credit perspective, sell them?
As I mentioned earlier, we're just continuing to navigate and what's really can't do much to Big Lots bankruptcy with a few big lots that we have Cap Ex lease option.
They continued to go through different hands.
And our portfolio, we feel like is in great shape.
All right.
That's all I've got.
Thanks, guys.
I appreciate your time.
Thank you.
Thank you.
We have no further questions.
I will turn the call back over for closing comments.
Thank you all for joining us this morning.
We look forward to seeing you at upcoming conferences and we appreciate everybody's time.
Thanks again.
Ladies and gentlemen, this concludes your conference call for today.
We thank you for participating, and we ask that you please disconnect your lines.
