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Edited Transcript of SRC earnings conference call or presentation 5-May-20 9:30pm GMT

Q1 2020 Spirit Realty Capital Inc Earnings Call

SCOTTSDALE May 26, 2020 (Thomson StreetEvents) -- Edited Transcript of Spirit Realty Capital Inc earnings conference call or presentation Tuesday, May 5, 2020 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Jackson Hsieh

Spirit Realty Capital, Inc. - President, CEO & Director

* Michael C. Hughes

Spirit Realty Capital, Inc. - Executive VP & CFO

* Pierre Revol

Spirit Realty Capital, Inc. - Senior VP and Head of Strategic Planning & IR

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Conference Call Participants

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* Anthony Paolone

JP Morgan Chase & Co, Research Division - Senior Analyst

* Collin Philip Mings

Raymond James & Associates, Inc., Research Division - Analyst

* Greg Michael McGinniss

Scotiabank Global Banking and Markets, Research Division - Analyst

* Haendel Emmanuel St. Juste

Mizuho Securities USA LLC, Research Division - MD of Americas Research & Senior Equity Research Analyst

* John James Massocca

Ladenburg Thalmann & Co. Inc., Research Division - Associate

* Ki Bin Kim

SunTrust Robinson Humphrey, Inc., Research Division - MD

* Shivani A. Sood

Deutsche Bank AG, Research Division - Research Associate

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Presentation

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Operator [1]

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Good day and welcome to the Spirit Realty Capital First Quarter 2020 Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Pierre Revol, SVP of Strategic Planning and IR. Please go ahead.

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Pierre Revol, Spirit Realty Capital, Inc. - Senior VP and Head of Strategic Planning & IR [2]

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Thank you, operator, and thank you, everyone, for joining us today. Presenting on today's call will be President and Chief Executive Officer, Mr. Jackson Hsieh; Mr. Michael Hughes, CFO; and Ken Heimlich, Head of Asset Management, will be available for Q&A.

Before we get started, I would like to remind everyone that this presentation contains forward-looking statements. Although the company believes these forward-looking statements are based upon reasonable assumptions, they are subject to known and unknown risk and uncertainties that can cause actual results to differ materially from those currently anticipated due to a number of factors. I'd refer you to the safe harbor statement in today's earnings release and supplemental information as well as our most recent filings with the SEC for a detailed discussion of the risk factors relating to these forward-looking statements. This presentation also contains certain non-GAAP measures. Reconciliation of non-GAAP financial measures to most directly comparable GAAP measures are included in today's release and supplemental information furnished to the SEC under Form 8-K. Both today's earnings release and supplemental information are available on the Investor Relations page of the company's website.

With that, I'm now pleased to introduce Mr. Jackson Hsieh. Jackson?

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [3]

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Thanks, Pierre, and good afternoon, everyone. So as a follow-up to our 1-hour and 10-minute pre-release Q1 2020 earnings call back on April 13, we wanted to share just a few comments since that call, and then take a few questions. So just a few comments. Look, today, I'll tell you, I feel better about the health of our portfolio and tenants since our last April 13 update call.

As you've read, we've collected over 70% of contractual rent for the month of April. Nine of our top 10 tenants and 17 of our top 20 tenants paid full April rent. By the way, that was the high end of the range with what we said was what we would collect back in our April 13 call. We've seen continued trend of some of our smaller tenants being able to secure PPP loans from the government. We've seen an increase in terms of properties opened and partially opened currently at 77% versus 72% back on our call on April 13. We've also processed the vast majority of rent deferral requests since our last pre-release call on the 13th. And finally, I'm happy to say we closed another $50 million of term loan financing through our accordion and bringing our cumulative total to $350 million. So with that, operator, we can open it up for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And we will go first to Greg McGinniss, Deutsche Bank.

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Greg Michael McGinniss, Scotiabank Global Banking and Markets, Research Division - Analyst [2]

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In regards to rent collections in May, and most of your tenants are expecting a more difficult month. Are you expecting similarly? And then any thoughts as to what the incremental impact may be, if you presume.

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [3]

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Sure. I think you broke up a little bit just on the connection, but I think you were asking about May. But we're not going to give May and June, so we don't really don't know at this point. I would say we collected 70% so far. Things have improved a lot since we started this process a couple of weeks ago. My guess is that May will be slightly lower than April in terms of rent collection. But a lot of these programs that have been put in place have improved the tenants that we're dealing with as well as some of these openings in various states have also accelerated, so giving us some encouraging signs.

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Greg Michael McGinniss, Scotiabank Global Banking and Markets, Research Division - Analyst [4]

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Okay. And just a follow-up there. So it's 54% of the deferrals granted were 1 month deferrals. Is that kind of still the key to the...

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [5]

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Yes. When we gave that update back then, I would just describe it as -- I think if you've heard some of these other calls, they've been in the range of 1 to 3 months that generally pay back within a 12-month period. We've tried to keep these deferrals simple and through the lease itself. So I'd say that the average -- and there were a number of them, the last time we've talked about in the 1-month category. And I'd say the average duration is probably just slightly over 2 years to kind of look at the total complexion of it. And we're still dealing with some tenants now. So I don't want to get too specific yet because these are on a one-off case-by-case basis. But let's say like the average -- the rate of average would be at just a little north of 2 months.

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Operator [6]

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And we'll hear next from Anthony Paolone of JP Morgan.

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Anthony Paolone, JP Morgan Chase & Co, Research Division - Senior Analyst [7]

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Just on the fact that it sounds like you've gotten through the majority of these deferrals, as you mentioned, can you just like -- how do you get right around the idea that like you have about 30% of your tenants not pay rent after a few weeks of disruption to their business. But there's a high comfort level that in the next 6 months or 12 months, whether they're going to be able to come up with enough to kind of get that all -- to get these deferrals all paid back, and just walk us through like that walk and how you get to that comfort level.

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [8]

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Yes. I mean, maybe this might be -- if you'd just bear with me, I kind of wanted to read -- this might give you some color because this is real. I won't mention the name of the restaurant group, but on April 17, so few days after we have done our last call, we have gotten a note from one of our restaurant tenants that was regarding April rent payment in full. So this is a restaurant group in Oklahoma, but I'll just give you some feel for sort of what we're seeing. So -- and it's continued to improve. So in this case.

Dear Landlord, we have applied for and received SBA PPP stimulus money for the above captured restaurant. As of now, we are still closed in the states in which we operate. Do not have a definitive plan for reopening for a few more weeks. Enclosing the April rent check for the above captured property, negotiation of the enclosed check acknowledges waiver of any late fees or penalties associated with the payment of this rent. Rent for the month of May will be paid as usual. We are awaiting further guidance from the treasury department regarding the use of the remainder of the stimulus funds. We have also enclosed the previous letters for reference regarding the impact of the COVID-19 virus on our business. We appreciate your understanding and all you're doing. What we are all doing to protect the business interest of all parties, sincerely.

So that was kind of just an example of many examples of sort of a restaurant that got PPP money, was asking for actually several months deferral, and were going to pay April and May, just as they are closed. And I'd give you another example of a fitness tenant that we just spoke to last week. You all know the name of the tenant. They operate in 45 locations, 6 states. They are a high-volume, low-price operator. They're opening 50% of their units this week. They plan to open the other half by the early part of June. And when we talked to them -- and this is -- will give you an idea, this would be 1 of the 3-month deferral kinds of players, 3-month deferral, who went back over 12 months. Basically, they had sort of 3 scenarios in terms of their opening scenarios.

First, all employees would get temperature checks and masks. Phase 1 was on the opening, no group classes, half of the cardio equipment within the original space, so in other words, they'd have to call the equipment in the current space that they operated in, and no child care services. Phase 2, which would be group classes resume, childcare offered. And then Phase III would be back as usual.

Now what was interesting about this operator was they were going to turn on their monthly memberships at the lowest tier price point as an inducement to get customers to come back in, but they had sort of had a very detailed kind of operational check as to how they were planning on rolling out into different states.

I'll give another example of early education operator that we have. It's a big one, 46 schools, they're nationwide. 14 of the schools have been opened since the whole COVID over the last couple of months because of a number of them were either first responder or essential workers. And so they were working out sort of how to operate in this COVID environment on a portion of their portfolio. So there were 40 to 50 kids in the school. This is kind of early education, so under, whatever, 6 years old. So the first thing that we said is on the safety protocols, obviously hand-washing, cleanliness, temperature checks for any parent or child coming into the center. All staff members were wearing masks. They utilized the gym space for education functions as opposed to play. They -- and they said, look, it's challenging to administer social distancing to like 3 year olds, but they basically tried to open up the space within the school. And they were seeing good results.

And what the school has been doing, this operator, they've been staying in contact with all the parents in their various schools at least 2 to 3 times a week with just online parents, how to help children at home. The plan was is that 15 of the schools were opening exactly this week, 7 in the Dallas area. And they're kind of going on a rolling program. But we're really focused right now on sort of the summer camp, but they're cautiously optimistic about people going back to work and students coming in.

To give you another example, a casual dining operator, and then I want to talk about PPP as well. So this is an operator that operates in a state where at the time we had this conversation had only experienced 20 deaths from COVID in the entire state. He had to -- he basically -- and this was a portfolio. His plan was to not open until actually, July, believe it or not. And he sort of said, he had furloughed all his employees, including himself. They were getting $600 a week, as you know, from the Fed and about $500 per week from the state. He said for a number of the employees, that was more than they would make if you actually asked them to come back in. So his idea was between the PPP money that he received, which was about $5 million, he would open kind of late June, kind of in that July time frame. He would either try to figure out how to utilize the full portion of the PPP towards employment or would -- look, the rules are changing on these programs. Or he would look at that as a 1% loan to pay back over 2 years. He was thinking about kind of dealing with tables, and maybe -- this didn't include the 25% kind of opening capacity that a lot of states are employing. But his point was he didn't really want to open and be kind of half utilized. Otherwise, he thought that was kind of a dumb idea.

So I think the takeaway here is -- the reason I gave you this example is some of these programs are really helping these tenants. A lot of them are trying to figure out how to open. We're seeing a number of units opening. I mean, At Home, for instance, its opening half of their stores this week, that's May 1. Mister Car Wash is opening their stores in Texas. So we're seeing things improve in our C-stores. As I look now, our c-stores are seeing increased travel over the last couple of weeks. And as you know, the margins are pretty good. So as I said even though states are different, and we have a high proportion of states where there are reopenings, we're seeing signs that are encouraging. It's the best way to put it. I don't think it's -- we're out of the woods yet, but it's a whole lot better than, say, a couple of weeks ago. So that's a long way of answering that question, but I wanted to give you some color on it.

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Anthony Paolone, JP Morgan Chase & Co, Research Division - Senior Analyst [9]

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Absolutely. That's great. My follow-up would just be on the dividend. Any additional comments or color on how you and the Board are thinking about the dividend over the balance of the year?

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [10]

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Yes. So I got to be careful not to disclose much. We're have a Board meeting end of this week, so I don't want to get ahead of our Board. But if you listened to my comments last time and you sort of just couple the fact that I think things are better, I'll just leave it at that because dividends are going to be a Board discussion. But I'm more encouraged now than I was a couple of weeks ago just by kind of what's happening with these stimulus programs and how operators -- they're not only just trying to open. They're trying to open the right way. And it's -- these examples I give you are kind of across the portfolio, where we have very sophisticated operators. And it's been quite helpful for us all to learn best practices because we're trying to share that information from what we learned with our additional tenants.

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Operator [11]

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And we'll hear next from Shivani Sood of Deutsche Bank.

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Shivani A. Sood, Deutsche Bank AG, Research Division - Research Associate [12]

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Apologies if I missed this earlier, but can you give us a sense for what percentage of your tenants might be able to access the PPP or the Main Street Lending Program?

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [13]

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Yes. It's hard to give a percentage because, Shivani, half of our tenants are public companies. Half of the rent payers are public, so obviously, that's -- if people got that money, they're probably giving it back just given the backlash. And roughly, I think it's 27%, in that range, are private equity slash -- private equity tenants. I'm aware of some of the private equity tenants getting PPP proceeds, but it hasn't been substantial, just given the feedback that I got from some of them. And then a number of the small companies, like I just mentioned like that restaurant operator got PPP money. The gym operator got some money. The -- unfortunately, like early education, it's kind of a bubble. But they don't get -- they're not eligible for PPP proceeds right now. But it's -- actually -- and the gym operator got -- had too many employees are excluded.

So like the PPP money really works well for like for the restaurant operators, QSRs and casual dining. There are some corporates that have gotten PPP money as well. But tenants that -- like the schools, where there's a lot of employees, they don't qualify right now. And if you have too many gyms, that's a problem because the designation on the SBA doesn't allow them that flexibility like with the restaurant chains given the designation.

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Shivani A. Sood, Deutsche Bank AG, Research Division - Research Associate [14]

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Got it. That's helpful color. And then just -- you guys have ample liquidity at this level, which is definitely key. Just curious what you would want to see in terms of broader environment before maybe repaying the revolver borrowings that are being held on the balance sheet. Just sort of what would give you confidence that the worst of this is behind us?

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [15]

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Yes. So I mean, I guess when you just look at the revolver balance as of the close of Q1, you'll see it was sort of around $500 million. That was probably a little bit more my bias idea that -- especially in early March, a little bit concerned about what was going on in the financial system. I mean maybe it wasn't warranted, but I've had some experience in that area and seen some bad things back in 2008. So we had drawn a little bit more pricing. We've got the full amount on a revolver going into the end of Q1. We paid those revolver proceeds substantially down. So I think with this new $50 million term loan, if you can see it, I mentioned it, we closed another $50 million incremental amount on the accordion for -- which is now a $350 million term loan. We'll pay down the remaining proceeds of the outstanding revolver. So I think, Mike, I think there's very little out on it right now at this point, right?

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Michael C. Hughes, Spirit Realty Capital, Inc. - Executive VP & CFO [16]

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Yes, it's 0.

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [17]

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Yes, we were just being abundantly cautious.

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Operator [18]

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(Operator Instructions) And we'll go next to Haendel St. Juste of Mizuho.

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Haendel Emmanuel St. Juste, Mizuho Securities USA LLC, Research Division - MD of Americas Research & Senior Equity Research Analyst [19]

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So sorry about this if you mentioned already. I jumped on a little bit late, was on another call. But are you guys -- can you give any color of you providing longer-term deferrals beyond, say, 1 to 3 months, more in the 6- to 12-month term? And if you are, are you charging interest? And is that something you'd be looking as a deferral or is that more of a loan?

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [20]

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Well, yes. So right now, we're pretty -- the majority of what we're doing is through the lease. So we're not creating separate notes and things like that. We actually think for an operational view, having the deferral within a lease gives us more rights as a landlord as opposed to structuring a note. So that's the way it's originally made.

I can only think of one instance where we're considering having a discussion around an interest payment, and that's just because of the nature of how long it might go. But for the really large majority of them, they're pretty straight down the middle, 1 to 3 months rental for a payback in 12 months, either starting later this year or beginning of next year.

In the movie segments, and I don't want to give you too much detail because we're not 100% done in that group, but I'd say we've got some different size of it. It's not a one-size-fits-all for movies because the tenant health of those operators are very different. And so depending on -- what kind of drives our deferral is sort of the comprehensive package of their liquidity, what was happening in the business before, what we think the ramp time is for them to get back to normal. So -- but the movies will have -- I would say, some will be 3 months, some will be a little bit longer. They're all slightly different. But yes, we don't have any of this kind of interest. I mean, there's 1 that's -- we might have an interest, but I don't think we can end up doing that. Just for us, we'd rather just keep it simple on the lease.

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Haendel Emmanuel St. Juste, Mizuho Securities USA LLC, Research Division - MD of Americas Research & Senior Equity Research Analyst [21]

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Got it. And also in the category, I'm sorry if I missed it, but did you talk much about the 30% rent not received in April, what conversations you're having with that, what type of recovery -- or how we should be thinking about that recovery from perhaps a proportional or -- time line?

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [22]

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Look, I think the large majority, we think we're going to get paid back. I mean, that's -- and that sort of fixed on that 1 to 3 months deferral range. And like I said, some of these might -- there's some upside to some of this because as these companies open, a lot of tenants -- actually, what's surprising is if they get PPP money, they don't want to mess it up. They just want to get current, try to figure out how to get their business up and running again. So I would just sort of characterize that 30% that couldn't get paid in that 1 to 3 months with the weighted average being just slightly north of 2 months rent deferral. That would pay back kind of within 12 months of either later this year or beginning of calendar year 2021.

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Operator [23]

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And we'll go next to Collin Mings of Raymond James.

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Collin Philip Mings, Raymond James & Associates, Inc., Research Division - Analyst [24]

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In context of your relatively more optimistic tone, Jackson, can you just maybe talk a little bit more about what you want to see to reaccelerate the acquisition activity? I think you noted on the April call, in particular, the potential for some opportunistic acquisitions. So just maybe just update us on your thinking there.

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [25]

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Yes. I think it's probably twofold. Like I said, like we're encouraged by what we're seeing just in terms of getting deeper discussions with these tenants. We offer another strategy. We look at property tax payments. It's a pretty important part of what our team looks at. And I'd say we're like over 90% in compliance through the end of April. Now taxes, without getting too detailed, some are annual, some are paid twice a year for the different parts of our portfolio. So it's not straight-line across the quarters, but it's roughly kind of first quarter is bigger in terms of tax payments through the portfolio. Fourth quarter is larger. Second and third are smaller. But through the first quarter, we're like over 90%. And so we're monitoring that very closely. Just -- we look at that as part of the overall package of deferrals.

So what I would tell you to answer your question, there's 2 things. I want to make sure I continue to see positive signs. I've got a call with the gym operator that I spoke to last week, and we'll see how it's going. And we'll continue to have these discussions as to how it's rolling out. That's going to tell us whether or not they're going to kind of get back up to speed, I'll call it, post the deferral period. And then I think if we start seeing that positive sign, and that -- and then coupled with -- we're trying to find out, understand what is the right price for acquisitions in the market today.

I can tell you that it's not a freefall out there. Transactions are still pricing. The 1031 market is still stabilized and doing what it does. If you were trying to sell a movie theater now that might be a little difficult, to be honest with you. But things that are normal, things like industrial properties that we bought like in the first quarter, we haven't seen gigantic changes in pricing, to be honest with you.

So I think we'd like to see 2 things. A little bit more price discovery of where the market area is, coupled with continued positive feedback. You should suspect that all these tenants that we're agreeing to deferrals, we'll check all of them every week just to see how it's operating because that's going to give us the confidence that the deferral we put in place is good and they'll get current, and obviously that's what we all want to see in this portfolio, all of us.

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Operator [26]

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We'll go next to John Massocca of Ladenburg Thalmann.

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John James Massocca, Ladenburg Thalmann & Co. Inc., Research Division - Associate [27]

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Sorry if I missed this earlier in the call. But I guess, if you look at the 30% non -- the 30% of kind of cash rent that wasn't paid, I mean, how much of that might you characterize as being kind of more opportunistic nonpayers? And have you seen that number maybe trend better as there's been a little more pushback from landlords on payment or even kind of economic outlook has improved? Just to give any color given how that's kind of trended as well over maybe the course of April and how you see it going into May.

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [28]

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Yes. Let's say like I would characterize -- look, there's -- we have 30% of our portfolio that's actually still closed. So I mean, they all kind of exactly -- you should suspect that a large portion of that, the majority of that base is in that deferral universe. I'd say that the conversations with tenants has improved over the last couple of weeks. In early April, people were really quite scared and they were just not doing anything and not acting normally and trying to understand what was available for government programs and other kinds of issues. But the country is opening now. So whether or not people like it or not, it's kind of happening. So those that can pay, I think, will pay because they don't want to be fighting with landlords.

Now that being said, we've had to send out some notices that are not as pleasant. And so -- and that's getting some people to pay rent that should pay rent. And there might be a handful of others where we'll have to kind of pick you up to the next debt kind of level. But I'd say, generally, people are -- things are getting better. Like I said, 7% of our rents are -- 7% more of our rents on the properties are now open versus 2 weeks ago. So you're starting to see people kind of open up. They don't want to be messing around with landlords. They want to get their operations up and running. So I think that's part of what you're seeing here.

I think one other thing, just -- and not to kind of drill the thing, you guys know the difference. But we own freestanding retail properties, and I don't want to say, we don't care. But we don't have responsibility for adjacent occupancy or tenancy. We only care about, obviously, the contract between us and the tenant that's operating. And that's a big one. That's what they're focused on. So if you look at a large majority of what we own, it is truly freestanding. It's not really involved with another landlord, mall or strip center, what have you.

So it's very much -- this was a profitable operation for them, and that's why we gave those coverage stats when we gave the update a couple of weeks ago. Like 2.5x average coverage of tenants looking for rental growth in terms of unit coverage. They were largely operating profitably. So their focus is trying to get back profitable, not fighting with landlords. I can tell you that. That's generally our experience. Now I think it's different with other kinds of retail landlords, especially if the whole property is quarantined. I think it's a different issue. So that's just one note that I think is a really important one, and I expect to see faster recovery from rent stabilization within our portfolio. Not just ours, but other triple net companies as well.

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Operator [29]

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And we'll hear next from Ki Bin Kim of SunTrust.

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Ki Bin Kim, SunTrust Robinson Humphrey, Inc., Research Division - MD [30]

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Jackson, what do you think about, just longer term, the tenants that are getting rent deferrals -- if you're a smaller business, do rental deferrals -- I know they help in the near term, but longer term, I mean, do these tenants generally have equity cushions to sustain just higher leverage by just owing more money? Or do you think -- and not just for Spirit, but just the industry overall. Do these deferrals just end up being rent release at the end of the day?

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [31]

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Look, I mean, to be fair, like what we look at is -- and this is sort of -- if we think it's going to go away, we don't characterize it as rent deferral. I mean, we looked at it pretty seriously. So the first thing we decide is, as you know, does a tenant warrant rent deferral. And if it is, then are we going to characterize it as rent that we're going to get back that's probable or rent that is going to be kind of really tough to get back. If it falls in the tough to get back, which is a small exception in our portfolio, we'll tack it on the back of the lease. We're not going to recognize it as income. And we'll start accruing -- we might even potentially start accruing taxes, real estate taxes.

But the large majority of what we are deferring, I would say, fall in the camp of that universe of 2.5x unit coverage. And some of those were higher, some of them were lower. So they don't -- and I think your point is right, they don't have giant liquidity cushions. But they're pretty simple businesses, and if they can open them and they've got some federal assistance, especially like in the restaurant area, I think they have a good chance to come back and be solid again. And the same goes for, I think, the fitness. I mean, I do think people are going to want to get back to the gym. The gym operators have to be smart about how they're creating social distancing and how they're -- I've talked to one of them, like how are they thinking about pricing. Is it more elastic? So they're looking at all those different options to try to get back to a stabilization.

I would say that a tenant given that was having problems before, this is just going to exacerbate it. And our strategy for rent deferral in that situation would literally be probably sticking it on the back end, and we'll start probably accruing real estate taxes. And so you'll see that in 2Q. It's a small portion. It's not a big portion, but I don't know if that helps you.

But I think if we're in a prolonged -- look, if we're in a prolonged economic downturn, we're going to have pressure like everybody else. I mean there's -- whether it's a small tenant or a big tenant, big tenant even investment-grade, they don't have the wherewithal to stay closed for extended periods of time. So I think that -- like I said, I'm encouraged by the fact that the country is opening and that people that feel safe are going out. People that don't feel safe are staying home. And we'll know more as the weeks go. We're going to stay very close to our tenants, and that's going to inform us on a lot of different things. But right now, like I say, it sounds just pretty good.

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Ki Bin Kim, SunTrust Robinson Humphrey, Inc., Research Division - MD [32]

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And I think about half of your tenants, you have unit-level reporting data for. Do you actually -- do you happen to have your tenants' like pro forma look through leverage ratios, just high level, what that looks like?

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [33]

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When the report, we do, I mean we haven't really scrubbed it to that level. I mean, it's part of our investment committee review. If you think about it, I think we described it to you all. We have 3 investment committees a week, Monday, Wednesday and Friday now for tenant rent deferral. And if you look at that distribution on Page 13 on portfolio health, it gives you some idea of like how big these -- from a revenue standpoint, where the percentage of rents fall. Most -- the large majority are over $200 million in total revenue. So they're actually larger tenants than probably what you might think. We have very few small proprietorship-type tenants.

So -- and that's why I think a lot of our tenants were happily -- on the plus side, a lot of them got the PPP. They obviously have local banking relationships. They've figured out how to get it. They weren't asking for where the backroom door was, and that helped a lot. That's what got me much more encouraged about what we're seeing right now. And so we're still early days. I wouldn't say we're spike in the football yet, but it's better than it was a couple of weeks ago, I could say that.

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Operator [34]

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And now I will turn the call back to Jackson Hsieh for any final remarks.

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Jackson Hsieh, Spirit Realty Capital, Inc. - President, CEO & Director [35]

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Okay. Thanks, operator, and for everyone out there. I hope you all stay safe. I'm sure you guys are busy. We're sticking to our meeting, focused on staying close with our tenants, working with them, and watching and seeing how their businesses are opening up. Thank you.

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Operator [36]

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So that does conclude the call. We would like to thank everyone for your participation. You may now disconnect.