And so we’ll continue to see that move upwards, you’re right in terms of our Q3 transactions, again, average 70 days to close here. That’s from a letter of intent execution to closing. And those transactions were prefunded with equity and debted honestly, frankly, at different cost structures and different pricing. So we’re going to continue to see cap rates move up. We’ll be patient. It’s difficult or really frankly, impossible for us to tell you what pace they will move up. That’s going to be dependent upon individual sellers plus the macro environment here.
Ki Bin Kim: And if you had to raise new bank debt, so not on the accordion feature, but just if you had to raise new bank debt, what would that rate be?
Peter Coughenour: Assuming that we enter into a swap to fix the rate on a term loan, whether that’s exercising the accordion on the $350 million term loan in July or entering into a net new term loan, the cost today would be in the mid-5s.
Operator: The next question comes from Michael Gorman from BTIG.
Michael Gorman: Joey, I’m just trying to triangulate, obviously, a lot of conversations about the acquisitions market and the capital markets. As we think about your strategy over the next 3 months, given what you’re seeing in the marketplace today, how are you thinking about your ability to finance versus the pricing that is actually flowing through your deal pipeline, right? So we get to the end of the year, will we see the debt to EBITDA move up towards that 5x? Or are you seeing cap rates where you would also be comfortable issuing on the ATM if you can close enough volume?
Joel Agree: Again, it’s really case-specific for us. I would anticipate that debt to EBITDA, we’re sitting at 4.5x, to most likely migrate up nominally. But in terms of issuing capital on the ATM, again, if we saw something that was sizable, notable and it was, frankly, risk-adjusted appropriate that’s possible. But I would tell you, I think most likely here, we exhibit patience and discipline.
Michael Gorman: Okay. And then maybe just on the on the retailer side of the buy box. Are you seeing anything in the underlying macro data or in the financing markets for your tenants that’s shrinking the targeted retailers or leading you to kind of take some of them off of your target list because of the current environment?
Joel Agree: Generally, no, we’re always looking at the retailers within our “sandbox”, evaluating them, both in terms of exposure within our portfolio, but also how they’re performing, inclusive of their balance sheet and any challenges or refinancing headwinds they have there. We really aren’t seeing any challenges. Again, we’re starting with the biggest retailers in the world here generally that have large liquid balance sheet and are primarily investment grade or if you ran them through some risk calc, would spit out investment grade. Some of them, frankly, have no debt. The private or unrated retailers. So we’re not seeing any of that flow through yet. If we see a material slowdown in consumers — again, in the consumer behavior, I would tell you it would probably inure to the benefit of the retailers in our portfolio due to the trade-down effect.
Operator: The next question comes from Rob Stevenson with Janney.
Robert Stevenson: Joey, it looks like you added a few CVSs in the quarter. What has you adding pharmacy given the issues and the store closures going on in that space?
Joel Agree: Well, the store closes are very specific here. I mean if you go through the major pharmacies Rite Aid, obviously, with the bankruptcy; Walgreens, which we’ve called out now for years and reduced to a de minimis piece of our portfolio, it used to be a top tenant for us, going through their challenges; CVS store closures are primarily stores that are high occupancy rates and, frankly, lease expiration. We’re targeting and work jointly with our retail partners for a low basis assets. Those are low rents per square foot, high-performing stores, blend and extends and/or ground leases. At the same time, our pharmacy exposure now is fairly de minimis. I mean it’s down to 4.4% in the aggregate, that’s including the 3 Rite Aids, of the overall portfolio.
When you look at it relative to any peers, or most peers, I would tell you that’s on the very low end. And so we’ve curated now a pharmacy portfolio, which we think has the cost structure to be successful in an omnichannel world and also but in a vertically integrated health care world. And so we work closely with — specifically with the tenants in the pharmacy space, and there’s only 1 that we acquire, to identify high-performing stores and/or opportunities that are, frankly, very different than the $350,000 to $400,000 per year in rent prototypical suburban pharmacy with a competitor across the street.
Robert Stevenson: Okay. That’s helpful. And then given the commentary on asset pricing and given that you have this grocery box that’s soon to be vacated, how much demand is out there in the marketplace to sell vacant assets today? Who’s buying those? I mean you’ve talked about the cap rate inflation on existing performing assets, for nonperforming assets and vacant assets. How is that market? Is that something that’s gone south even faster? How should we be thinking about that?
Joel Agree: It’s really case specific, Rob. If you have a fungible box — the one asset that Peter referenced in the grocery space we took an impairment on was a small format, rural grocery store, acquired several years ago in the grocer’s hometown, it was a very frankly, rare store closure for them and has caused some upheaval in that — frankly, in that community. But they had a second store in the community, which they thought was more viable on a go-forward basis. In terms of asset pricing for vacant box, it’s really all over the board based upon what the — obviously, with the demographics and transactional activity and really that micro submarket looks like, but also the fungibility of that box. And so the adaptive reuse of the box, which we always stress here is we wanted at the end of the day, if and when we were to have a vacancy, to have a fungible box that has a strong demand curve to it on the backside for uses.
