Yahoo Finance

Peter Mavoides

Given the ongoing nature of the bankruptcy, it is premature for us to discuss our expectations around our leases on these 3 properties. I would note that this credit event is consistent with the assumptions supporting our guidance range.
On the investment side, during the fourth quarter, we invested $333 million through 37 separate transactions at a weighted average cash yield of 8%, in line with our trailing 4-quarter average. Our investment activity in the quarter was broad-based across most of our top industries with no notable departures from our investment strategy. These investments had a weighted average initial lease term of 17.7 years and a weighted average annual rent escalation of 2%, generating an average GAAP yield of 9.2%. Our investments this quarter had a weighted average unit level rent coverage of 3.4x and the average investment per property was $3.3 million. All of the investments this quarter were sale-leaseback transactions where we are providing capital to an expanding operator.
Looking ahead, our investment pipeline remains solid, reflecting M&A and new unit expansion across a variety of targeted industries. As noted earlier, the current investment climate is characterized by attractive cap rates that have modestly compressed. Our pipeline reflects this trend with pricing in mid- to high 7% range and strong contractual escalations, which is supportive of our long-term growth trajectory.
From a tenant concentration perspective, our largest tenant represents 4.2% of ABR at quarter end and our top 10 tenants now account for just 17.6% of ABR. Tenant diversity is an important risk mitigation tool and a differentiator for us and is a direct benefit of our focus on middle market operators, which offer an expansive opportunity set.
Dispositions in the fourth -- dispositions picked up in the fourth quarter as we opportunistically monetized a number of investments at accretive pricing. We sold 24 properties this quarter for $60.4 million in net proceeds. This represented an average of approximately $2.5 million per property, highlighting the importance of owning fungible liquid properties, which allows us to proactively manage portfolio risks. The dispositions this quarter were executed at a 7.0 weighted average cash yield with approximately 70% of disposition volume in the carwash sector, allowing us to pare this industry exposure to 14.2% of ABR, down from above our soft ceiling of 15% last quarter.
Over the near term, we expect our disposition with our trailing 8-quarter average, driven by opportunistic asset sales and ongoing portfolio management activity.
With that, I'd like to turn the call over to Mark Patten, our CFO, who will take you through the financials and balance sheet for the fourth quarter.

Mark Patten

Thanks, Pete, and good morning, everyone. As Pete detailed, we had a good fourth quarter highlighted by a strong level of investments at an 8% initial cash cap rate. Among the headlines from the quarter was our AFFO per share of $0.45, an increase of 7% versus Q4 of 2023. On a nominal basis, our AFFO totaled $81.8 million for the quarter, which is up $14.8 million over the same period in 2023, an increase of 22%. This AFFO performance was in line with our expectations as reflected in our guidance range provided last quarter.
Total G&A in Q4 2024 was $8.5 million versus $7.3 million for the same period in 2023 with the majority of the increase relating to increased compensation expense as we continue to invest in our team. Importantly, our recurring cash G&A as a percentage of total revenue was 4.8% for the quarter, which compares favorably to the 5.2% in the same period a year ago. Our total G&A and recurring cash G&A were modestly favorable to our expectations for the quarter.
Our recurring cash G&A as a percentage of total revenue was 5.4% for the full year, and we continue to expect that on an annual basis, our cash G&A as a percentage of total revenue will decline as our platform generates operating leverage over a scaling asset base, enabling us to manage a larger portfolio and invest at higher levels.
We declared a cash dividend of $0.295 in the fourth quarter, which represents an AFFO payout ratio of 66%. Our retained free cash flow after dividends continues to build reaching $30.6 million in the fourth quarter, equating to over $120 million per [anima] on a run rate basis. We continue to view our retained free cash flow as an attractive source of capital to support our investment program, representing upwards of approximately 10% of our annual capital needs.
Turning to our balance sheet. With the net investment activity in Q4 2024, our income-producing gross assets reached $6 billion at quarter end. The increasing scale of our income-producing portfolio continues to build, improving our credit profile. On the capital markets front, we remained active on our ATM program in the quarter, completing the sale of approximately $79 million of stock all on a forward basis at an average price of $32.01 per share.
We settled $325 million of forward equity with a portion of the proceeds utilized to repay our revolving credit facility balance. Our balance of unsettled forward equity totaled $381 million at quarter end, which we plan on utilizing to continue funding our investment program while maintaining flexibility by keeping capacity available on our revolver.
Similar to last quarter, our share price remained well above the weighted average price of our unsettled forward equity of $29.03 at quarter end. As a result, under the treasury stock method, the potential dilution from these forward shares is included in our diluted share count. For the fourth quarter, our diluted share count of 182.3 million included an adjustment for 3.2 million shares from our unsettled forward equity related to this treasury stock calculation. This represented a headwind of approximately $0.01 to AFFO per share in the quarter,and $0.02 for the full year.
Our pro forma net debt to annualized adjusted EBITDAre, as adjusted for our unsettled forward equity, was 3.8x at quarter end. We remain committed to maintaining a well-capitalized balance sheet with low leverage and significant liquidity to continue to fuel our external growth. We further bolstered our liquidity at quarter end with the previously announced closing of our amended $2.3 billion senior unsecured credit facility. The facility amendment yielded a number of strategic accomplishments for the company, including an upsized revolver commitment of $1 billion, improvements to the rate structure and our financial covenants and an extended maturity date to February 2030. We'd like to thank our entire bank group for their full participation and continued support in another successful financing, supporting the growth of our business.
Lastly, as we noted in the earnings press release, we've updated our 2025 AFFO per share guidance range to $1.85 to $1.89, implying over 7% growth at the midpoint. Importantly, this guidance range requires minimal equity issuance, which we believe is a testament to our front-footed approach to capital raising.
With that, I'll turn the call back over to Pete.

Peter Mavoides

Thanks, Mark. In summary, we are very pleased with our fourth quarter and full year results and remain optimistic about the prospects for the business.
Operator, please open the call for questions.

Question and Answer Session

Operator

(Operator Instructions)
Haendel St. Juste with Mizuho.

Haendel St. Juste

My first question, Pete, is on tenant credit. I was hoping you could talk a bit more about the Zips bankruptcy here and the carwash segment more broadly. Rents in the carwash segment have run up quite a bit and cap rates compressed the last couple of years. So I'm curious if 15% is still a level of exposure you're comfortable maintaining, or could we see that drift down more over time? And specifically with Zips, I'm hoping you could add some color on how you envision that playing out. It seems like the risk of your ABR this year could be far lower than the 20 basis point exposure you have.

Peter Mavoides

Yes. Sure. There's a lot embedded in that, Haendel, I don't know a good place to start. I would -- it's too early on Zips. Obviously, we're in negotiation with them in bankruptcy. Certainly, we feel like we're in a really good position having pared our exposure down to three properties and 20 basis points of ABR and as you look at our historical recoveries at $0.70 to $0.80 on the dollar. But it's an ongoing discussion.
More broadly, we have strong conviction in the carwash space. We've been investing in that space for quite some time, and really the first bankruptcy we've seen. It's not one that we didn't see coming, obviously, as we turned our exposure. And we have strong coverage across the portfolio. One of the benefits of our platform is having deep industry expertise with 200 -- almost 200 car washes across 54 operators and then ongoing financial reporting where we can see the operators that are adding value, growing sales, improving EBITDA margins and operators that are not and take corrective action as we manage the portfolio.
So carwash will continue to be one of our leading industries. It's been a great industry. We get great risk-adjusted returns and we're pretty comfortable with our position as we think about Zips going through its bankruptcy.

Haendel St. Juste

Appreciate that. And if I could add a follow-up to that question about Zips. Curious if you're able to share if they paid January and February rent.

Peter Mavoides

We're not able to share that. We don't. But we did make comments on the call where we're 100% collection -- collected. So that should give you a hint.

Haendel St. Juste

Okay. Fair enough. And then second question is, I guess, on the commentary regarding the increased competition you're seeing. I was hoping you could expound on that a bit. Where are you seeing the competition in specific industries? Do you think it's sustainable? And what do you think it means for your ability to transact the portfolio of the sale-leasebacks and cap rates, which I think you mentioned you expect to see compression.

Peter Mavoides

Max, why don't you tackle that question?
Max Jenkins Executive VP & Head of Investments

Max Jenkins

Sure. Thanks, Pete. We've -- over the last couple of quarters, we've seen some increased competition both from our peers, and there's been a couple of new entrants into the marketplace. But it -- the only effect to that would just be a slightly modest compression in cap rates. But otherwise, transaction environment remains favorable to us.
We focus on servicing relationships and providing growth capital to middle-market operators across the country. And there's an ample opportunity set for us to continue to invest and realize those attractive risk-adjusted returns. So we're happy with where the pipeline sits, and it will support the strong earnings that's implied in our guidance.

Peter Mavoides

Thanks, Max. Yes, I would say, as we've said, kind of the caps in the [9.2] GAAP yields we saw in last year were kind of as we said all throughout the year, kind of felt like the high water mark. And we expect to be more in the mid- to high 7s as we think about this year.

Operator

Caitlin Burrows with Goldman Sachs.

Caitlin Burrows

I guess maybe just kind of expanding on that. Wondering if you could give any more discussion on just like how interest rate volatility has impacted your business recently, maybe on the positive side or more negative side. I mean, if you look at the interest rate moves of 4Q alone, it was like pretty significant. So wondering to what extent you felt that and, I guess, anything that's happened subsequent to the quarter end.

Peter Mavoides

Yes. Listen, Caitlin, we have what is a 60- to 90-day transaction cycle. So any -- if we're closing the deal today, we probably priced it anywhere from 60 to 120 days ago and we're making 20-year investments. And so the week-over-week and even month-over-month volatility doesn't come into our pricing. And then you think about how we've positioned the balance sheet, we're raising capital well in advance of deploying it such that, that capital is priced in. And so we try to insulate ourselves from those volatile moves and are much -- moved much more slowly.
And to Max's commentary in the fourth quarter, when people were looking at a [3.7] year, they were getting more aggressive bidding. And then you turn the calendar and you have a 4.7, they're blowing out of deals. And we deliberately try to be more consistent and more predictable to that with our counterparties, which is why we think we get premium returns for how we deploy our capital. So overall, I think we expect downward pressure on cap rates as we've consistently said. We saw more of that in the fourth quarter, and it's abating a little bit here in the first quarter. But we'll see where the market goes.

Caitlin Burrows

Got it. And then maybe just on the dispositions in the fourth quarter. Wondering if you could talk a little bit more about what made you decide to move forward with that deal in particular, or maybe it was a couple of deals. And as we think about it, how do you think about it from like portfolio management versus like source of capital going forward?

Peter Mavoides

Yes. From a source of capital, it's not necessarily accretive to where we're pricing new capital. Certainly at a 7 cap, it's more portfolio management, risk management. The fourth quarter was really lightening up on our carwash exposure, bringing that down from or soft ceiling of 15%, which you see we did. I think 65% or 70% of our dispositions in the fourth quarter were in the carwash space. So it was mostly portfolio management industry exposure. As we said on the call, we expect the disposition activity to moderate and be more consistent with our 8 quarter average as we think about this year.

Operator

Rich Hightower with Barclays.

Richard Hightower

Maybe just to stick to the capital side of the equation, Mark. I think you mentioned minimal equity issuance needed overall this year to hit your investment targets. But maybe just talk about what might be needed. And I know that you also -- you guys also just said the dispositions obviously will decrease maybe relative to what we saw in the fourth quarter. But just help us piece together any sort of remaining equity capital needs to hit the full year guidance. And then obviously, we started thinking about 2026 at some point, and maybe just to hear your thoughts on that as well.

Mark Patten

You got it. Well, I'll probably leave 2026 out until we actually provide guidance on 2026. So let me --

Richard Hightower

I had to try, Mark.

Mark Patten

No problem at all. I appreciate it, Rich. Yes. So listen, I think the -- some of the building blocks as you think about it, and I mentioned one other thing in my remarks about our growing free cash flow. So if you think about that, that's a pretty significant component of our investment ambition for -- in addition, Pete even mentioned, even if we use our eight quarter average on dispositions, that probably delivers a decent amount of capital for that. And we've got $380 million of unsettled (inaudible). We've got $1 billion. So from our standpoint, the underlying assumption is that our equity issuance and guidance is really sort of you could deploy that -- you could achieve that with normal kind of ATM activity.
So I'll say it a different way, and what I mentioned in my remarks is we like to be front-footed on capital raising or equitizing our growth ambitions. So as I think about it, it makes us very -- puts us in a position of being very opportunistic. So if we actually wanted to do something in terms of a bigger offering execution or otherwise, we could do that, and it would just be -- it would be all the more positive to our expectations. But what I would say, as you look at our liquidity, we're sitting at 3.8x leverage. If you run out, say, the liquidity we have to get to 4.6x, which is somewhere right around sort of our -- probably our historical, you're pretty much approaching $1 billion, at least 3.5 quarters of investment --

Richard Hightower

Okay. Got it. Sorry. I think, Mark, you were breaking up there on my end, but I think I caught most of that. And I guess just to -- so that was sources. Just to check in on uses for a second. What's the best way we should be modeling the timing of acquisition volume kind of throughout the year at this point?

Peter Mavoides

Rob?

Robert Salisbury

Rich, I think from a cadence standpoint, historically the fourth quarter has been a little bit larger for us in years past. But a ratable over the course of the year would probably be a reasonable assumption for right now. Obviously, where our pipeline sits today, we don't have visibility beyond 60 to 90 days here. But just speaking to our historical --

Operator

Smedes Rose with Citi.

Unidentified Participant

This is [Mattie Fardis] on for Smedes. Do you have any feedback you're getting around consumer behavior from tenants that you're able to share given the current inflationary environment?

Peter Mavoides

Yes. Listen, our feedback is going to be delayed, right? We're receiving unit-level financials at our sites on a 1-quarter lag. And so we're typically seeing inflation and cost pressures come through on to 90- to 180-day lag. And if anything, what we're seeing is those factors abating in the current numbers. But it's, I would say, the data and input you hear on the news is much more current.

Unidentified Participant

Great. And then your ABR exposure to tenants under 1 times coverage ticked up slightly sequentially. Is there anything there to be concerned about?

Peter Mavoides

No. There's -- that bucket ebbs and flows and particularly is influenced by sites that we're developing with our partners and putting capital to work before those sites are actually producing positive ABR. So -- and certainly, the uptick is de minimis in our view and nothing to be concerned about. And I would say, if there were credit issues, and they would be built into guidance and they are built into guidance and I think bumping the bottom end of the range, this quarter should give you a sense of we're thinking at this point.

Operator

Eric Borden with BMO Capital Markets.

Eric Borden

Just noticed that Circle K popped into the top 10 tenant list. I just wanted to -- wondering if you could talk about the potential opportunity to acquire more there, and then more broadly speaking, the appetite to add more C-stores to the portfolio.

Peter Mavoides

A.J., why don't you tackle that?

A. Peil

Sure. So Circle K has been in the top 10 in previous quarters. It was really sequencing or just the rental escalation that put it back in. We're very happy with that tenant. (inaudible) a great credit. And I think C-stores across the board is an area that we've continued to grow over the years ratably, and we're really happy with the community store space.

Eric Borden

Okay. And then we just noticed that occupancy slightly moderated 20 bps quarter-over-quarter. I was wondering if you could have a comment there. And then if you could talk about your current watch list outside of Zips. What you guys have built into guidance for bad debt?

Peter Mavoides

All right. Well, that one is jumping around the room. On occupancy, I wouldn't read too much into going from 3 vacant properties to 7. That's certainly naturally ebbs and flows in the portfolio. We did -- went through our releasing stats on the call, which I think are positive. So those 7 properties will be brought back online and run through our releasing stats, and certainly any specific assumptions around those sites would be built into guidance. In terms of bad debt, Rob, why don't you tackle that?

Robert Salisbury

Yes. So our guidance range includes a wide range of assumptions, including for credit. We haven't quantified the specific (inaudible) mentioned in the past. But maybe just as a frame of reference, we have said that historically, our portfolio has experienced about 30 basis points. So when we construct our guidance range, we go through a combination of top-down and a bottom-up process, where we identify individual tenant as well as bake in a general reserve. And so typically, that results in an assumption that's well in excess of that 30 basis points number, if that's helpful.

Eric Borden

I'm sorry, I think you're breaking up a little bit. I don't know if I heard the last bit of your question. I'll take it offline, though.

Peter Mavoides

Great. We appreciate that. Thanks. Sorry for breaking up.

Operator

Michael Goldsmith with UBS.

Michael Goldsmith

First question, on the carwash industry again. Given what you have visibility into, is the pressure on this group broad-based? Or is it more focused on a narrow range of operators within the Zips filing, where it's been noted that they've seen roughly 900 new car wash sites open every year for the past 5 years. So just trying to understand if this is industry-wide or is this just kind of specific operator, it (inaudible) to just kind of specific operators.

Peter Mavoides

Yes. We certainly think it's a specific operator trend. Obviously, there is new competition in the carwash space, and we're monitoring that and trying to deploy our capital with guys who do it right and guys who do it well. Across our overall portfolio, sales are flat and EBITDA is roughly flat with margins in excess of 50% and coverage in the mid-2s. So we certainly feel good with our exposure. And we monitor it on a quarterly basis and take corrective action where we see sites that aren't working. But I don't think there's something systemic to the entire carwash space that gives us concern.

Michael Goldsmith

I appreciate that. And then as a follow up, keep up the good work with the acquisition guidance. But you did guide to $1 billion at the midpoint this year, down from $1.2 million last year. Is that a reflection of lack of visibility into the transaction market or some other factors that would potentially lead to a more challenging year this year? Because it did sound like you were relatively optimistic at the start of the call.

Peter Mavoides

Yes. I think it's really a conservatism and the recognition that 2024 was a great year for buying assets at super high cap rates. And we were aggressively looking to take advantage of the dislocation in the capital markets that was allowing us to deploy capital at historically wide spreads and historically wide rates. And we expect in 2025 a normalization of the capital markets, and a resumption of competition will drive cap rates down and thus making us a little less acquisitive.
But it's early in the year, right? And the 10-year remains volatile, as we discussed earlier in the call, and we'll see where things shake out. But obviously, there's not a huge difference between where we ended up last year and the midpoint of our guidance. So we'll continue to transact, continue to service our relationships and see what the year brings.

Operator

John Alichowski with Wells Fargo.

Unidentified Participant

This is Cheryl on behalf of John. I was just wondering what were the drivers for the plus $0.01 raise on the low end of AFFO guide? And how have you seen acquisitions trend year-to-date? What does the pipeline look like? And have you seen any cap rate compression recently?

Peter Mavoides

Yes. As we said in our prepared remarks, the pipeline is full, albeit with modest cap rate compression. So as I said, we do expect to transact in the mid- to high 7s, which is down from an 8. The range of guidance is driven by a bunch of assumptions both around investments, around credit experience and around the cost of capital. Obviously, I think the cost of capital is not going to be a huge driver given where we're positioned currently and the price of that capital. But it's really cap rates and credit experience and performance of the portfolio.

Unidentified Participant

And then just one last one. We see that the credit coverage picked up in the 1.5 to 1.99x category. What kind of assets drove the pickup in that bucket?

Peter Mavoides

It's going to be broad-based across the portfolio. I don't think there's anything specific to industries or tenants that's going to kind of drive the increase in that bucket.

Operator

Farrell Granath with Bank of America.

Farrell Granath

I wanted to ask about your dispositions that you spoke about, that there may be a slowing, but there was a key focus on the reduction in carwashes. Is there any other industry that would be a focus going into 2025? Or would it be just the rebalancing of the portfolio?

Peter Mavoides

Yes. So we have the soft ceiling for any given industry of 15%. And so when we crest that, we look to pair that exposure and create the ability to continue to invest within -- in those industries really to be able to service our relationships. Beyond that, I think most of the disposition activity is going to be property level and tenant risk based, where we see risks either at a tenant level or an individual asset level and really moving those risks out of the portfolio and nothing really systemic to hang out on there.

Farrell Granath

Okay. And also, sorry to bring -- go back to the bad debt and credit assumptions. I just wanted to understand, compared to your initial guide on the 20 basis points of exposure for Zips, was that initially included into the bad credit assumption? Or is there an additional assumption that is may be baked in now into new guide of that additional 20 basis points?

Peter Mavoides

Yes. So you got to think about what happens in a credit event. You have a tenant file for bankruptcy and then a lease stops paying and then you take your assets and you reposition those assets and you have a recovery on those assets. So really when you're building in a credit assumption, you're going to have the downtime of the assets and then the recovery of experience of those assets assuming a specific downtime, whether it's 30, 60, 180 days, depending upon the asset, the market.
Our credit assumption in guidance goes through all our tenants and all our assets and make specific assumptions around what we think is going to happen based upon our experience and our visibility into the unit-level performance of those sites, and then on top of that, has an unknown assumption to -- on top of that to account for things that we don't know, that we can't see. And so without speaking specifically to Zips, I would say our credit loss assumptions for the year has not changed materially in the 90 days since we initially provided guidance.

Operator

Daniel Guglielmo Capital One Securities, Inc.

Daniel Guglielmo

I appreciate the U.S. map on Page 9 of the supplement. And there weren't many major changes in diversification by state quarter-to-quarter. But I know you all have a large forward pipeline of deals. So thinking about that map 1 year from now, are there certain states or regions where you'd expect material changes?

Peter Mavoides

We often say geography's an output of where our tenant relationships bring us, such that I would expect our geographical diversification to grow ratably. And I would not anticipate a materially different Page 9 12 months from now.

Daniel Guglielmo

Okay. Great. And then as a follow-up to that, we look through kind of the U.S. wage data. And it looks like some of the Southern cities have had some like reacceleration in wage growth, Atlanta, Miami, Dallas, Houston. And you mentioned it's kind of where your partners take you. Have you been getting more inbound from partners and tenants trying to kind of expand in those parts of the country?

Peter Mavoides

Yes. I mean, our relationships are bringing us into those markets. And given that we're heavy in those markets currently, I would say, our inbound demand for capital has been proportionately similar to our geographic diversity.

Operator

Jay Kornreich Wedbush Securities Inc.

Jay Kornreich

Just going back to industry allocations, beyond lowering car exposure -- carwash exposure below 15%. It looks like you've increased the exposure to casual dining 80 basis points to 7.5%. And that's an industry that's faced some headwinds lately. So just curious if you can provide any thoughts around your conviction to increasing exposure there, and if there's any other smaller industry exposures you have that you'd like to see increase going forward.

Peter Mavoides

Yes. I would say -- and generally, I have said expect our pie to grow ratably. And much like the geographic discussion I just had, our industry diversification is driven by our relationships and where we have deep relationships, and they are the ones that bring us the opportunities. Certainly, some industries are -- there's more opportunities than others given where they are in consolidation like carwashes, early childhood and automotive service. And other industries like the restaurants are more consolidated.
In general, we have a strong conviction around casual dining, which is why it's 7.5% of our ABR. And that conviction is really more driven by the fungibility of the real estate and our recoveries experience around that real estate and our credit loss experience around casual dining credit events that gives us that confidence. And so we continue to invest there. We've been -- I've been investing in restaurants for 20-plus years in the specific casual dining space, and it remains a core investment industry for us.

Jay Kornreich

I appreciate that. And then just one more. In terms of where transaction is coming from, they typically come -- the bulk of them typically comes from existing tenants. And so I guess I'm just curious how sticky or, I guess, loyal do you feel like your existing tenants are to valuing your platform and your relationship and continuing to transact going forward versus as new capital providers coming to the market, really just chasing the best cost of capital they can.

Peter Mavoides

Max?

Max Jenkins

Thanks, Jay. This is Max. I'll take that. I think you can probably look to the repeat business and existing relationship percentages that we post quarter-over-quarter, and it always kind of ebbs around that at 80%, give or take. And so that just kind of tells you that the repeat business continues to drive the majority of our pipeline. But then we're always actively out there sourcing new relationships, and I think the strongest driver for new relationships would be referrals. At the end of the day, all these operators and tenants talk to each other, they're exchanging ideas. And when you continually transact with our tenants over and over and you build that relationship and that relationship continues to expand, and that's always going to be the driving force of our pipeline.

Peter Mavoides

And to the pricing question, I would say these operators, they value execution certainty. And they're not unsophisticated and they certainly are going to do a price check on any capital that they source. But they do place a high reliability -- a high priority on reliability and predictability. And being the incumbent, having docs negotiated, having underwritten the credit in advance certainly gives us an advantage over a new capital coming into that system.

Operator

Greg McGinniss with Scotiabank.

Greg McGinniss

Cash re-leasing spreads were positive for the first time in a while. Was there anything unique about the expirations or anything handled differently from the portfolio management standpoint to help you cross that threshold? And do you expect a similar outcome, or is a similar outcome achievable in 2025?

Peter Mavoides

A.J., do you want to tackle that?

A. Peil

Yes. I don't think there was anything unique to the quarter on the recovery rates. Some of the lease renewals had some larger bumps than usual, which led to some of that positive relet. And if you look at just kind of the breakdown of the number of leases renewed, this particular trailing 12-month period, we had 42 leases renew with larger-than-usual bumps, which led to the total leasing staff being positive. So I think this particular quarter was more just episodic of the fact that we had 42 leases renew, 12 in the trailing 12-month period. But it's really kind of two different buckets. One is just contractual renewals and the other is repositioning assets, whether it's through vacancy or without a vacancy. But I think the stats should be pretty consistent as we move forward.

Greg McGinniss

Okay. And I can understand the -- sorry, go ahead.

Peter Mavoides

Greg, I would just add, listen, as I look at those rates, the recovery rate, I would anticipate those percentages to be relatively consistent, and the ultimate weighted average is really just going to depend on how we're renewing an asset. Is it an asset right in the lease, are we renewing an asset with a vacancy or are we having to take back and repurpose it and with the downtime? So it's really just a factor of we had a bunch of renewals, not a bunch of vacant asset relets.

Greg McGinniss

Okay. That makes sense. And then a follow-up is on the tenant credit. And I recognize that rent coverage remains healthy and will move quarter-to-quarter. But we did see what appears to be kind of a doubling of the CCC+ tenant credit to around 4% from last quarter. Was that due to acquisitions? Or is that tenants dropping down into that bucket? Any color is appreciated.

Peter Mavoides

A.J.?

A. Peil

Yes. It was tenants are up and down within the portfolio. And the thing to remember oftentimes in that particular cohort is it's an implied credit rating, it's something we pay attention to. But what we really look for is if it's migrating down to the CCC+ bucket or even B- bucket, what's the unit level coverage look like? And more than half of that particular bucket is still greater than 2x coverage, which gives us a lot of confidence. And that's really what we're paying attention to, is the marriage of those 2 categories, which is the implied coverage rating as well as the unit level economics.

Peter Mavoides

Yes, Greg. And you can assume we're not deploying a lot of fresh capital into CCC credits.
Operator

Operator

Spenser [Glimcher] with Green Street Advisors.

Unidentified Participant

Just one for me on the acquisition pipeline. So you guys commented that the pipeline remains robust, reflecting continued M&A activity as well as new unit expansion. Are you able to share which industries you're seeing the most activity from in terms of that new unit growth thus far into the year?

Peter Mavoides

Max, what are you seeing there?

Max Jenkins

Spenser, I think it's pretty ratable to historical trends and there's really nothing that draws a conclusion in both new unit M&A, a lot of add-on follow-on transactions with existing tenants. But the pipeline looks pretty consistent as it has been in the historical periods.

Unidentified Participant

Okay. And then actually maybe one just on the dispositions for 2025. I know you commented that some of this would obviously be driven by opportunistic asset sales. Have there been any assets in this particular bucket that have already been earmarked for sale that you guys think might be a compelling divestment either because of cap rate compression in the industry, good real estate? Or are these just kind of ad hoc from inbounds or as they come up throughout the year?

Peter Mavoides

Yes. It's we're mostly going to sell because we see an asset that we don't like the risk profile. Generally, if our phone rings and someone trying to buy an asset that are not going to be the most competitive, running an auction and finding the most competitive capital is generally how we do it. So we tend not to respond to unsolicited inbounds on our properties. And it's more just deliberate risk management activities that we take, and that's what's driving the volume.

Operator

John Massocca B. Riley Securities, Inc.

John Massocca

On the 2025 investment volume done year-to-date, maybe even on the pipeline that's kind of in PSA or LOI, I mean, are you seeing that cap rate compression in those investments or potential investments? Or is it more just a theoretical view on stuff that's more than 90 days out, given just kind of all the macro factors?

Peter Mavoides

John, we're living it. And particularly, if you think, we negotiated those deals back in November and December where there was a much more constructive [10-year]. And so our current pipeline, I think, is in that mid- to high 7s cap rate that we discussed.

John Massocca

Okay. That's helpful. And then were there any Zips in the 4Q '24 disposition activity?

Peter Mavoides

Was there any what, John?

John Massocca

Zips Car Washes. I mean, there's a big bucket of carwashes in 4Q, and I just was curious if --

Peter Mavoides

No, we unloaded -- and that's the key here, is when -- when it becomes apparent something is going to break, it becomes illiquid and the price to transact becomes pretty steep. And as a sophisticated institutional investor, we're not going to sell individual assets that are imminently going to break. We'll fix them first and then sell them. So there was no Zips Car Wash in the fourth quarter.

John Massocca

Okay. And then the carwash sales in the fourth quarter more generally, I mean, how much of that was driven by individual risk at those assets or with those tenants? And how much was just kind of getting below that 15% number and some breathing room to maybe be aggressive on the investment side again for the remainder of this year?

Peter Mavoides

It's both, right? We want a breathing room, so we're going to look at our portfolio and choose the assets that we don't want to own for the next 20 years.

Operator

Caitlin Burrows Goldman Sachs Group, Inc.
I don't think it's come up so figured I'd ask. Just as you guys think about the leverage and funding going forward, I think you made a point earlier on given where your leverage is today, you obviously have a lot of capacity. But from here, like near term, how are you guys deciding between using equity versus debt?

Mark Patten

Thanks, Caitlin. I guess what I'd say is, as we think about it just generally, the split between debt and equity had historically been about 60%. With our growing free cash flow, that's really turned into more 60% equity, 30% debt, 10% free cash flow. So as we look at it, we would continue to utilize that. We also orient ourselves to where our leverage stands. So that obviously is a point for us as we think about when to deploy, when to access equity, when to utilize debt issuance.
I think from the debt standpoint, as I mentioned, we don't have any near-term demands on liquidity for us to do either. In our case, we could be opportunistic on the equity front, but we can also be opportunistic on the debt front. And hopefully, the tenure will accommodate in some fashion. But for us, we're thinking that the things we have for 2025 really starts with our revolver and then term it out with hopefully an unsecured bond deal.

Operator

Thank you. There are no further questions at this time. I would like to hand the floor back over to Pete Mavoides for any closing remarks.

Peter Mavoides

Great. Well, thank you all for participating in today's call. Obviously, we'll be on the road at various conferences and nondeal roadshows in the next couple of months. And so we look forward to meeting with you all in person. Have a great day. Thanks.

Operator

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.