Yahoo Finance

Ryan Albano

Thanks, John, and thank you all for joining us today. As John mentioned, we have continued laying the necessary groundwork for sustained success in our laddered and long-term build-to-suit strategy. We currently have $227.3 million in build-to-suit developments with attractive initial cash yields in the mid- to high 7% range and straight line yields in the mid-8% to mid-9% range. These build-to-suit projects are all for identified tenants with structures in place to mitigate the traditional development risk associated with construction delays and cost overruns.
First of all, we are leveraging existing and direct relationships to build this pipeline and further deepening relationships that should provide ample opportunity for more projects in the near term. Our development partners need someone that brings surety of execution, deep experience and expertise and a willingness to be creative and help them secure projects and grow their businesses. They have found that in BNL.
On top of our announced and committed pipeline of build-to-suit developments, we are hard at work on more than $700 million of additional projects in active discussions that we hope to provide updates on in the coming months. We are also in the process of expanding our pool of developer relationships and expect to have some exciting news to share on that front in the near future. These transactions take more work and have longer lead times than traditional regular way acquisitions.
However, we believe the corresponding benefits of higher returns, stronger tenant credit, higher quality buildings and better real estate fundamentals along with the ability to derisk our long-term growth profile more than outweigh the additional effort. These projects will drive attractive derisked future AFFO per share growth and reduce our reliance on the regular way transaction market where we continue to be cautious as we have consistently observed a disconnect between pricing expectations and the quality of opportunities.
Turning to our investment activity for 2024. We invested $404.8 million, including $234.3 million in new property acquisitions, $115.3 million in build-to-suit developments, $52.2 million in transitional capital and $3 million in revenue-generating CapEx. The completed acquisitions and revenue-generating CapEx had a weighted average initial cash cap rate of 7.3%, weighted average lease term of 10.8 years, weighted average annual rent increase of 2.4% and a weighted average straight-line yield of 8.1%. Our total investments were weighted approximately 70% to industrial properties and 30% to retail.
Subsequent to year-end, we invested $22.3 million in build-to-suit developments, including obtaining control of the land and initial funding for one previously announced project. We have a total of $200.7 million remaining to be funded for our committed build-to-suit development projects as set forth in our earnings release and supplemental. We also have an additional $103.5 million of acquisitions under control and $5.4 million of commitments to fund revenue-generating CapEx with existing tenants.
During 2024, we sold 58 properties for gross proceeds of $364 million at a weighted average cash cap rate of 7.8% on tenanted properties, substantially completing our clinical health care portfolio simplification strategy. We expect our dispositions for 2025 to be more muted, returning to historical averages in the $50 million to $100 million range except to the extent we choose to opportunistically sell additional assets to fund our growth, as John mentioned earlier.
Now shifting to our in-place portfolio. For 2024, we executed on 7 lease rollovers, addressing near-term lease expirations for 1.6% of our ABR and we're able to achieve a 112% weighted average recapture rate and an average new lease term of over 9 years. With only 1.2% of our ABR set to roll in 2025 and 3% in 2026, we have minimal near-term rollover concerns and are actively engaged with our tenants on those leases.
While our overall operating results remain strong and we are executing on our growth initiatives, we continue to see incremental pockets of credit risk. As the duration of the higher interest rate environment lengthens, we see further strain being placed on consumer-centric industries and entities who lack flexible capital structures. We remain vigilant in our tenant monitoring efforts and maintain great confidence in our portfolio due to its diversified construction, which limits the impact of any potential individual credit events and our proven ability to manage through any such situation that may arise.
Our watch list has remained fairly consistent in consumer-centric tenants as well as some of our remaining clinical-oriented health care properties, including our tenant, Stanislaus Surgical remain in focus. Broadly speaking, the home furnishing space continues to be in focus for us as well, specifically including our tenant at home, which we have highlighted for multiple quarters and represents approximately 1% of ABR.
We are also navigating the recently announced Zips Car Wash bankruptcy. We own 10 of their car wash sites under 3 separate master leases, which account for 62 basis points of our full year ABR. We received rent for January, expect to receive rent throughout the bankruptcy process and are currently negotiating terms of our sites.
Although the initial rejection list includes 7 of our sites, we expect the final result to be more favorable due to the strength of our master lease structure. For any sites that may eventually be rejected, we are in active discussions with multiple other interested parties for potential sales or new leases. We are also acutely focused on managing downside risk associated with our vacant properties, which come with higher property operating expenses than our lease portfolio. We are working towards swift resolutions, whether sale or lease, for these assets to reduce base carrying costs.
With that, I'll turn the call over to Kevin to provide an update on our financial results as well as further details on our initial 2025 guidance.

Kevin Fennell

Thank you, Ryan. During the quarter, we generated adjusted funds from operations of $70.5 million or $0.36 per share, a flat per share result year-over-year. For the year, we generated $282 million or $1.43 per share, a result that benefited from timely transaction activity early in the year with respect to redeploying the first portion of our health care disposition proceeds.
Additional positive contributions for the year came from lower G&A and interest expenses, with core G&A totaling $7.5 million for the quarter and $29.3 million for the year, reflecting our continued focus on controllable expenses as well as savings from personnel departures and reduced BNL insurance premiums. Bad debt is 67 basis points and just under $3 million of carrying costs associated with vacant properties partially offset some of those gains.
With respect to the balance sheet, we maintained our strong and flexible financial position with pro forma leverage of 4.9x net debt and more than $900 million available on our revolving credit facility, providing us ample capacity as we evaluate incremental investment opportunities.
Regarding our dividend, our Board of Directors maintained our $0.29 dividend per common share in OP unit payable to holders of record as of March 31, 2025, on or before April 15, 2025. Our dividend remains well covered and continues to represent an attractive dividend yield relative to many of our peers.
Finally, details of our 2025 guidance and key assumptions were included in our earnings release last night and include: Adjusted funds from operations of $1.45 and to $1.49 per diluted share, investment volume between $400 million and $600 million, disposition volume between $50 million and $100 million, and finally, core G&A between $30 million and $31 million.
Given the front-end incidence of tenant events with Zips and Stanislaus, we are including 125 basis points of bad debt within our 2025 guidance, and we'll revisit this assumption throughout the year. It's also worth noting that our per share results for the year are particularly sensitive to the timing, amount and mix of investment and disposition activity as well as capital markets activities that may occur during the year.
Please reference last night's earnings release for additional details. And with that, we will now open the call up for questions.

Question and Answer Session

Operator

(Operator Instructions) Anthony Paolone, JPMorgan.

Anthony Paolone

Great. I guess, first question, I just want to clarify and make sure I understand. Your $400 million to $600 million of investment guidance, is that money out the door? Or is that deals that actually contribute net rents?

John Moragne

Yes, that's money out the door. So it would be a mix of both regular way deals that will contribute net rent today as well as investments that we're making in our build-to-suit program.

Anthony Paolone

Okay. So how much of that should we think about is actually kind of contributing to earnings during the year versus -- because it sounds like a lot of this is based on a growing build-to-suit pipeline where we won't actually see the income until the out years?

John Moragne

Yes. So it will be a balance and wanting to see what happens with the deal flow that we got in front of us. But this is always an and equation for us, not an or, as evidenced by the $103.5 million of regular way deals that we have under control that should close by the end of the first quarter or soon after the end of the first quarter.
So we're going to have a decent amount deployed into current earning assets fairly quickly into the year, and there's a handful of other things that we're currently contemplating in underwriting. So it will be a mix, but we'll do as much as we can to make sure you all are able to model out what's going to be rent paying this year versus stuff that will come online later in the year.

Anthony Paolone

Okay. Remind me like, for instance, before build-to-suits in the supplemental, the $200-some-odd million, do you earn anything while you're extending the capital during this process? Or is that just -- it's on you and you have to carry that?

John Moragne

Yes, there's a capitalized interest component to that. It's added to the basis. So it's part of the equation that we use for determining rent at the back end of this and then we get the benefit over time and we capitalize that interest. Basically, if there's a revolver balance, we use the revolver rate. And then to the extent it exceeds the revolver balance, we use our weighted average cost of debt.

Anthony Paolone

Okay. But there's no -- there's not like a current pay by the future tenant to kind of like fund the finance?

John Moragne

Correct.

Anthony Paolone

Okay. And then just last question on the credit side, you mentioned 125 basis points in guidance for the year. If I look at Page 9 of the supplemental and just look at sort of the uncollectible, that kind of averaged for 2024 about 100, 125 basis points as well. So am I looking at that right that there's not a whole h*** of a lot of difference there in terms of how you're thinking about '25 versus '24? And is that kind of the right way to think about what we should take off of your 2% to think about long-term organic growth?

Kevin Fennell

Tony, it's Kevin. I think if you're looking at '24, the guide last year was 75 basis points for the year, but was excluding what we were expecting in the form of Green Valley. So that total number for '24 includes that hospital for last year. So 125 this year will be an incremental 50 versus last year.

Operator

Eric Borden, BMO.

Eric Borden

Just going back to the developments. I was hoping you could talk about -- a little bit about the funding side. So you have about $200 million of current funding obligations for this year. You have about 2.5 -- $50 million to $100 million of dispositions and you don't plan to issue equity. So the remainder, can we assume that's just put on the revolver?

John Moragne

Yes. So the $227 million we've got, there's a bunch of that's going to get funded into 2026 as well. So it's not all for this year, and we'll schedule that out, but you can see it if you look at our schedule in terms of when the stabilization dates are as well as in terms of overall project commitments. So we've got a handful of those that will be 2026 stabilization so they'll be continued to fund throughout the first half of 2026. But generally speaking, our goal will be funding these things on the revolver and then with incremental disposition proceeds.

Eric Borden

Okay. That's helpful. And same goes for the incremental $500 million that you're currently evaluating?

John Moragne

Yes. So our goal for the year is to add an additional $500 million of new build-to-suit commitments. We've got active discussions going on about $700 million or so right now. So we feel pretty good about what we're looking at from a ladder and build-to-suit pipeline going into '26 into '27. We'll continue to fund that and controlling it in our own way.
So whether it's revolver balance, retained earnings or accretive dispositions, that's the focus. We're not intending on raising any equity capital this year or for the foreseeable future until that stock price changes.

Eric Borden

Okay. That's helpful. And then just how are you thinking about leverage, just given the lag effect between the timing of the NOI coming online and the use of revolver? How high are you willing to let leverage creep today in order to get that benefit down the road?

John Moragne

Yes. I mean we introduced the pro forma leverage component last year after getting the rating agencies comfortable with it. The future cash flows associated with our build-to-suit programs are ones that are very much creditworthy, and so it's something that we can take into account and how we think about long-term leverage. We'll ladder this out and look at where it takes us on an absolute basis as well as pro forma. There's also the consideration there in terms of where the revolver utilization lands that we have to keep in mind.
You've heard Kevin say this for a long time. We've got religion on staying inside 6x on a sustained basis. On an absolute basis, we could exceed that for a period of time with a clear view to coming back inside of it. Our efficiency -- efficient spot is really at 5.5x. But we'll play around with that.
We've got some chunkier things that we're evaluating that would come online in '26 and '27, that would provide some substantial relief from that standpoint. But you have to balance out the longer-term view with the revolver utilization and then we'll make up the difference with some accretive dispositions.

Eric Borden

Okay. That's helpful. And just one last one for me. Just on the acquisitions, the $100 million of assets under control. Just curious what has changed over the last 90 days since we last spoke, just given that, if I remember correctly, 3Q, you didn't like the product that was on the market or just didn't fit what BNL was looking for. So I'm just curious to what has changed over the last 90 days? And what's currently, in terms of asset mix, under control today?

John Moragne

Yes. So still heavily weighted towards industrial. As Ryan said, it's about 70-30, and that's been consistent for us for at least 5 or 6 years at this point. So that's probably a pretty good barometer for what we're going to be doing going forward.
Some of this stuff, there's actually one deal, a fairly chunky deal, it's a part of it that we were looking at over the summer, and it was just a spot where we weren't able to get to the right gap rate in terms of where we thought it should price versus where the seller was, and we eventually got to the right spot. It just took a long time to get there.
So our view in terms of taking a fairly disciplined, prudent approach to how we're evaluating this market because we still continue to be very cautious, as you heard Ryan say during his prepared remarks, hasn't changed. We are excited to have $103.5 million to kick off the year. We're looking for more opportunities, but it's incredibly competitive out there right now. So you're fighting (inaudible) for every deal that you can get.

Operator

Upal Rana, KeyBanc Capital Markets.

Upal Rana

I just want to return to the Zips Car Wash bankruptcy. Could you give us a sense of what you expect to occur here as it relates to timing or possible outcomes there?

John Moragne

Yes. So Ryan talked about this during his remarks. We've got 10 assets, about 62 basis points tied up in them. These are assets that we bought back in like 2017, 2018. So we've had them for a long time.
The initial list rejected 7 of them, but kind of completely ignored our master lease structure. So we took a pretty strong stance going back into the bankruptcy that, that was not something we were going to stand for. So we're having active discussions with them right now. It's hard to know exactly where it will go just because bankruptcies always are a little bit of a wildcard, but we feel pretty confident that we're going to end up in a decent position on the other side of this.
Our understanding, and don't hold me to this, is that they're looking to exit bankruptcy as soon as March or April here, depending on how the negotiations go and what they're trying to accomplish. But bankruptcies always can go sideways at some point. So we're working hard to make sure that we preserve as much value as possible in our sites, and we'll be sure to keep everyone updated.

Upal Rana

Okay. Great. And then is there a possibility that you'd be interested in selling those (inaudible) release?

John Moragne

Yes. So one of the great things about bankruptcies hitting the news is you get a whole lot of inbound. We've had a lot of folks reach out to us that are interested in buying these assets, buying some of the assets, leasing these assets. So in terms of the opportunity set that's in front of us, that's part of the reason why we have as much confidence as we do.
And if we can find a good resolution to this with Zips themselves and come out the other side feeling good about what that resolution is, then that's great. But if not, we've got a pretty good backstop in our ability to sell these assets or to release to somebody else if that's the way that we need to go.

Upal Rana

Okay. Great. That was helpful. And then given the lighter investment activity in 4Q, was that a result of -- and that kind of resulted in the company finishing at the low end of the year '24 investment guidance. Was that timing related? Or was that related to something else?

John Moragne

It's just more of the competitive environment. We have, over the last couple of years, sort of post the pie eating contest of '21 and '22, have really made sure to take a disciplined approach to this, and we're not just going out and doing deals for the sake of doing deals. And if that means that you put up a bogey for the fourth quarter of the year, then that's okay. We're not afraid of doing that. We want to make sure that we're making the right decisions for the right reasons when we're investing capital.
As I mentioned, some of it was timing. A deal that we looked at the summer didn't come together, but it came together now. So it's under control, and we're looking forward to closing it.

Operator

Jay Kornreich, Wedbush Securities.

Jay Kornreich

Going back to the $700 million of build-to-suit developments and conversation, which seems like you're experiencing enhanced interest from prospective tenants to work with you despite some uncertainty with interest rates and just the economy. I'm just curious if you can comment further, is what's driving up that interest from these potential build-to-suit development tenants? And if you're experiencing any changes to cap rates or lease terms in the negotiation versus last year?

John Moragne

Yes. So I'll take the returns first. We're continuing to see sort of upfront cap rates in that mid-7 cap zone, but on these longer, larger industrial build-to-suits. We're talking 12-, 15-, 20-year lease terms, 2.5% to 3.5% rent bump. So our straight-line yields on these are solidly mid 8s to high 8s, sometimes low 9s. So really, really attractive places for us to be allocating capital.
In terms of the interest here, it's part of an overall. You would hope this is a renaissance of American manufacturing where you've got people nearshoring, onshoring. The specialized builds that we're doing, whether it's they need it in an absolutely mission-critical location or they need to consolidate multiple sites that are causing inefficiencies in their distribution networks, or they have to build out something that's going to be a part of a manufacturing supply line for them.
Folks are looking at this as a long-term investment. JLL actually came out with a report this week that talked about how the build-to-suit pipeline, as a portion of the overall development pipeline, has returned to pre-pandemic levels, where it now is a full 30% of development that's occurring.
So we're very excited to continue to participate in it. You heard Ryan. We are also expanding our relationships. And so that's part of the reason why we're starting to see as many additional deals as we are. It's not just individual deals with individual developers.
There are a handful of things that we're seeing right now where on individual deals, multiple developers are presenting it to us. So our name is getting out there. We're finding a lot of people to work with, and we're really excited to see this start laddering out into the future years.

Jay Kornreich

I appreciate that. And then just one more. Within the $75 million at the midpoint of disposition to outline the guidance, how much of that is part of the final tranche of the health care dispositions versus just additional pruning of the overall portfolio?

John Moragne

It's a little above. There's absolutely some additional clinical assets that are a part of what we're expecting to be in that guidance range. And there's also some general pruning that we'll do. The wild card there in terms of what might change from a guidance standpoint was if we opportunistically choose to sell an asset on an accretive basis to fund growth.

Operator

Michael Gorman, BTIG.

Michael Gorman

Just a couple of quick ones, actually. On the Zips Car Wash, are you able to share what the coverage is under the master lease for all 10 sites?

John Moragne

Yes. It was close to two, I want to say, right before bankruptcy.

Michael Gorman

Okay. Great. And then John, maybe on the build-to-suit pipeline. As you think about the opportunity set there and the competitive nature there, I understand you're getting more inbound, which is great. Are you seeing any change on the competitive side here?
We've been hearing in other sectors that financing for development is still really tough. So I'm curious if you're experiencing a different close rate as you think about underwriting these projects? Or how much more competition you're seeing on the build-to-suit side of things?

John Moragne

Yes. So the conversion time is long on these. Getting a site fully entitled and ready to go, getting the design build stuff done, working through the economics and then working through sometimes the dog and pony show in terms of being selected, either individually for funding or as a partner to the developer and the developer being selected.
It's a long process. The competition is difficult at times on certain assets. It's not as difficult as we would say if we were to compare the build-to-suit process with say, mid-market down the middle of the fairway industrial deal right now. And in both cases, what we're seeing is a big increase in the amount of the private buyers that are participating in it. I think it's a little bit more frothy in terms of the competition on regular way deals where we're seeing 15 to 20 or more offers and people participating in late round bids on some of these deals.
So it's getting incredibly competitive on regular way deals, less so on the build-to-suit, but certainly more than it was in the past. Now the nice thing is because of our industrial focus, the size of the build-to-suits that we're looking at is so large, there's only a handful or more of folks out there that are going to be looking at something like that. For others that are doing build-to-suits in the retail restaurant space where it's in that $2 million to $5 million range, they're not looking at biting off $100 million or more, and we're able to do that on a pretty consistent basis. So the pool of folks there is a little bit smaller, but it's still competitive.

Michael Gorman

That's helpful. And is there any kind of rule of thumb or general sense for how much maybe kind of plant and equipment that the tenants are putting into these facilities on top of the investment that you're making? I'm just trying to get a sense for kind of the tenant's financial commitment once these facilities are open and operating.

John Moragne

Yes. It depends on the facility. So it's a little hard one to answer. If you think about just a regular box for a distribution logistics facility, where there is going to be much in there besides racking, relative to the cost of the build, it may be relatively immaterial. But if you think about something like our UNFI build in Sarasota, they were putting in tens of millions of dollars of additional investments. So it's a significant amount of investment from the tenant in addition to what we're doing.

Michael Gorman

Okay. Great. And then just last one for me. And I'm sorry if I missed this. When you think about '25 or even going forward, any additional appetite for transitional capital here, just given some of the disjointed nature of the transaction markets right now and opportunity set there and also appetite from your side to put more money to work in that type of investment?

John Moragne

Yes. And we're certainly always open to it. I think the place where we would be most open to it is on a direct relationship basis where we're helping someone that we have an existing relationship with, grow their business and solve the problem. On a new basis, if we've got alternative areas to allocate capital, whether it's regular way deals or in build-to-suits that don't come with the complexity, that transitional capital comes from, we likely would allocate it somewhere else. But if one of our tried and true long-term partners came to us and said, hey, we need to help here. We'll be more than willing to entertain it.

Operator

Michael Goldsmith, UBS.

Michael Goldsmith

Clearly, the portfolio has been evolving. So historical bad debt expectations may not be fully comparable. So is the 125 basis points of reserve this year indicative of what you should expect in a normal year going forward? Or is it elevated based on the visibility into those incremental pockets of credit risk that you talked about earlier in the conference?

John Moragne

Yes, I'd say our hope certainly is that it's not indicative of what it's going to be in the future. We have a lot of faith in this portfolio. We've spent a huge amount of time and effort building it up, and we feel good about it. But I think you answered it yourself with, there's a couple of incremental pockets of credit risk that we know about early in the year. Obviously, there's a big difference if something hits late in the year, it doesn't have that huge of an impact.
We saw that last year, where there was definitely some things that we knew were going to come, but they didn't hit until the late third, fourth quarter. And so the impact to 2024 was fairly minimized. But with Zips and a couple of other things including Stanislaus being on the front end of the year, it certainly hits a little bit harder because of the length and duration of it.
So that's really the main driver behind the 125 this year. We'll have to evaluate where we are at the end of the year, but our hope is that, that would be something less next year, but wait and see.

Michael Goldsmith

Yes. And then as a follow-up. Following the reclassification of the different property types, retail has jumped quite a bit. So just kind of curious about where the focus going forward within retail is going to be? In sectors that is particularly attractive and you're looking to expand there, anything that is maybe less relevant and you're looking to use -- to fund some of your further investment. Just trying to get a sense of what that could look like over time.

John Moragne

Yes. I think the main driver behind the sort of reclassification of our asset types into primarily industrial and then retail, with retail including restaurants and medtail assets is just to give a very clear picture of folks of who we are and where we're headed. We are an industrial-focused diversified net lease REIT. You should expect to see us probably in that 70:30 range in terms of industrial and retail. That's what we've been doing for the last five or six years.
The particular sort of subcategories or asset types will change over time. If you look at industrial, an area that we spend a lot of time on and a lot of investment in the last few years has been food production-related distribution. We've got a bunch of that in the hopper right now as well. So that's been something that we've been leaning into a lot more heavily. But I think that 70:30 break is where you should expect to see us fairly consistently into the future.

Operator

Spenser Allaway, Green Street.

Spenser Allaway

As it relates to the disposition guidance, can you just remind us what's in that bucket currently and how you would describe the composition and depth of the buyer pool just based on what you're looking to divest today?

John Moragne

Yes. So within the guidance, it's still a little bit of the clinical health care stuff, some of the stragglers there. There's a handful of other things that we will be looking at. Certainly, we'd be open to pruning the office portfolio to the extent that we're able to. And then a handful of things over the year that we may pursue on an opportunistic accretive basis.
The pool of buyers depends on the asset. Some of the larger stuff, you're going to need bigger pockets of capital. It's not necessarily a good fit for the 1031 market. Smaller assets maybe more on the 1031 market, that still needs to rebound a bit from where it was before. So it can range from small individual high net worth regional buyer to large institutional stuff.
So these are not anything that we're looking at selling on a portfolio basis other than sort of related buildings with existing -- with the same tenant. So I don't expect there to be any large portfolio transactions similar to what you've seen from us last year.

Spenser Allaway

Okay. And then as it relates to retenanting vacant spaces, can you just remind us on your stance on providing CapEx or TIs as it relates to that retenanting efforts? Or are you inclined to provide that? Or do you tend to avoid that?

John Moragne

We're open to it. It totally depends on the economics and what we're talking about in terms of lease length, what's the return, the tenant, you name it. It's not something that we avoid. We're real estate managers at heart. This is what we do.
So part of that is managing real estate and finding the right outcome for each of our individual assets. And sometimes that means selling it. Sometimes it means putting a little extra money to get somebody in the door. And sometimes you get lucky, you don't have to do either of those things and you can get a new tenant that comes right in. So we'll take each one in turn. And if it means that we've got to roll our sleeves and get in there a little bit, we're okay doing that.

Spenser Allaway

Okay. That makes sense. And then one more just on tenant health, if I can. So I appreciate the color you provided on the watch list and the bad debt expectations for '25. But probably, can you just talk about rent coverage in general. So any notable changes across industries or segments of the portfolio? And can you just remind us what the portfolio average is?

John Moragne

So we only disclose it related to our restaurants. It's been pretty consistent quarter-over-quarter. We're still sitting at 3.3x on a rent coverage basis. We evaluate it on other asset types within the portfolio, and it's been pretty consistent. The stuff that we've been concerned with watch list wise, some of the handful of things in home furnishing, some of the stuff in clinical, the individual ones that we've mentioned by name hasn't really changed. It's been pretty consistent quarter-over-quarter for a little bit here.

Operator

Caitlin Burrows, Goldman Sachs.

Caitlin Burrows

Maybe just starting on the build-to-suit side. I was wondering if you could talk a little bit about the sourcing. It seems like in the past, they had kind of been one-off deals that came together for kind of one reason or another, which works. I was wondering if there's any change to how you're sourcing deals today and how that's evolving.

John Moragne

Yes. So a couple of things there. One, as we've done more of these, our name has gotten out there. So there's a little bit of organic marketing that's happening that we're getting the benefit of. Two, we're getting some referrals.
Developers that we've worked with are very happy to refer us on to their friends when they've got capital needs. And the third is we've expanded our team. So (inaudible), who had it up and (inaudible), who we brought on at the end of the year, both have pretty deep relationships throughout the development community from their years operating in this space. And so all 3 of those things together have put us in a great spot to start seeing a lot more of the active pipeline that's out there.

Caitlin Burrows

Got it. And then I think you mentioned that like there could be an announcement about development. I forget exactly how you phrased it. So I was wondering if that might be like a partnership or something else that ends up kind of evolving that sourcing further? Or any comments on that?

John Moragne

Yes, it's both new development opportunities and new relationships, both of which are exciting for us. We've got a policy in place that make sure folks are aware of what's happening in this pipeline, particularly because of the long nature of it and the way that we're laddering it, getting you all an updated schedule. So we have a policy where as soon as we close on the land and execute docs, we issue a press release. So we're hopeful that if a couple of these things go our way, the way that we expect them to in the next couple of months, we'll have some new press releases out there in between earnings.

Caitlin Burrows

Got it. And then maybe just back to funding and I guess the dividend. Could you go through how much of your '25 investments you think will be funded with retained cash? And then like how does the dividend compare to taxable income? And I'm wondering if there's any room for reduction there in order to retain more cash?

Kevin Fennell

So first part of question, we retain around a number of $60 million. And as you think about that in relation to the build-to-suits, the longer these get, the more that starts to multiply itself. So that's definitely a funding component as we think about these projects. And then second on the dividend, I would not say any expectation towards a reduction. It's well covered, certainly is a little bit of an outlier in terms of the yield, but our intention is to make that temporary, but our dividend, well covered and not on the table for reduction.

Operator

Ronald Kamdem, Morgan Stanley.

Ronald Kamdem

Just two quick ones. So on the build-to-suit pipeline, which is really helpful in the supplement. And it sounds like you have another $500 million beyond that, if I understand that correctly. Just could you talk about sort of the economics of that $500 million? Is it sort of similar to what I'm seeing here in the supplement?
Is it industrial? Is the yield the same? Is the rent escalator is the same? Just trying to get a sense of that $500 million economics.

John Moragne

Yes. So the $500 million is our goal for the year. That's the goal that we're setting publicly and working on internally in terms of what we want to add in terms of new additional committed build-to-suits. We've got about $700 million in active discussions, of course, with a long conversion timeline and the world taken weird turns every now and again, there's no guarantee that all of those are going to hit or hit in the way that we're expecting them to. So these are goals that we've set.
We've got the $227 million in hand right now. We want to see another $500 million on top of that this year. And so big goals for the year. The things that we're looking at within that sort of active discussion pipeline are all pretty consistent with what you've seen from us so far. Upfront cash yields in the mid-7s, straight-line yields in the mid-8s to mid-9s, rent bumps in that 2.5% to 3.5% bump, it's primarily industrial, a handful of fairly large facilities that we're working on, but all in the same vein of really attractive economics, solid tenant credit, really attractive new builds in good locations.
So real estate fundamentals hold up strong in addition to the credit. So as I said in my remarks, there's a lot of love in this strategy and the way that we're building it out, I think, is going to be very attractive for investors as they start to see the benefit of that long-term derisked laddered build-to-suit program.

Ronald Kamdem

Great. And then my second one was just on the other assets, right, which includes some of the office and some of the health care. Just obviously, not a (inaudible) seller, but curious if the markets staring to look interesting to start putting some of those on the market?

John Moragne

Yes. So office will take a bit by bit. A lot of those will probably end up holding through the end of the term and collecting rent, good tenants, good credits. So we don't have any real concerns there. Certainly not a spot that we're intending to invest more and on a stand-alone basis.
With the clinical and surgical assets, there's a handful of those that we will actively look to dispose of in 2025 and 2026, and there's also a couple of them that will probably have a long-term home in this portfolio. If we can't get the right value for those assets despite it not being core to where we will invest in the future, we're not going to like that value on fire by just selling it at any price. We'll hold it and continue to reap the benefit of the rent.

Operator

We have no further questions so I'll hand the call back to the management team for any closing comments.

John Moragne

Great. Well, thank you very much. We appreciate the dialogue today, and we're getting into the busy conference season. So we look forward to seeing many of you in person in the coming months. Have a good rest of your day. Thanks all.

Operator

Thank you, everyone, for joining us today. This concludes our call, and you may now disconnect your lines.