Peter Coughenour: Yes. I think first, RJ, in terms of the unsecured market, I think we could probably price 10-year unsecured debt today in the mid-5s. This is down from call it the 6s we discussed on last quarter’s call, but frankly, still isn’t overly attractive today, given we view our cost of equity to be in a similar range. In terms of the bank debt market and the term loan market, assuming we enter into swaps to fix the rate, I think we could probably price a five-year term loan today in the high-4s. And I view a five-year term loan to be more attractive today than a 10-year bond given the current pricing. All that being said, the good news is we have, as Joey mentioned, $1.5 billion of liquidity, more than $550 million of outstanding forward equity. And so, we don’t need the capital today, either debt capital or equity capital. And we can continue to monitor our options and be opportunistic in terms of any future capital raises.
Operator: Our next question comes from Ki Bin Kim from Truist.
Ki Bin Kim: So within the IG realm that you guys invest in, I’m just curious how the triple net financing option compares to their — to your tenants’ alternative financing options and how that spread may have migrated over the past few months?
Joey Agree: First of all, Ki Bin, it’s great to hear an operator say your name correctly on an earnings call. Apologies for the last one. So, when you say the financing options, are you talking about a seller’s potential financing options relative to sale?
Ki Bin Kim: No, I mean, for financing. I mean, they can tap the unsecured bond market; they can with a bank market. For your IG tenants, I’m just curious how triple net financing compares to those type of traditional debt financing options?
Joey Agree: Well, as Peter mentioned, we think the term loan market is a possible avenue for us. He quoted where we think the 10-year market — unsecured market is today. We’ll continue to be an unsecured borrower. We think that’s the most efficient way for us to continue to borrow capital.
Peter Coughenour: Ki Bin, are you asking in terms of our retailers?
Ki Bin Kim: Yes.
Joey Agree: Well, that’s a very interesting bifurcation today. So some of the most transactions that we have in our pipeline today are with sophisticated retailers, S&P 500 companies that recognize where their relative cost of capital are, where they can issue 10-year paper and say you know what, a sale leaseback makes sense and that’s similar to what I referenced prior. Now, when we compare just to take a step back, IG versus non-IG, first, let’s reframe this as high-quality retailers versus other retailers. Because I continue to remind people I love Chick-fil-A, I love Hobby, I love Publix, I love Aldi. These are not investment grade retailers; they’re privately held, closely held companies that don’t have a rating. The high-quality retailers have options.
They low-quality private equity sponsored retail or has very limited options today. One of those options and the largest option is a sale leaseback on their real estate. And so, we will not be the lender of last resort, or one of the largest creditors to a carwash startup and urgent care. Now, there are four car washes literally expanding in Metro Detroit as we speak that are all private equity sponsored with REIT capital behind them. They own none of their real estate. I can’t figure out where all these new cars that need to be washed are from and how many monthly memberships are required by Metro Detroiters. So I think, in reality, we’re back to the pre-COVID days here. We’re back to the days where the high-quality retailers are going to thrive.
