Realty Income Corporation (O) Earnings Call Transcript & Summary

We appreciate everyone being with us today as we go over Realty Income’s results from operations for the second quarter of 2020. Presenting our figures will be Sumit Roy, our President and Chief Executive Officer, along with Jonathan Pong, Senior Vice President and Head of Capital Markets and Finance. On this call, certain remarks we make could qualify as forward-looking statements according to federal securities law. The company’s actual results in the future might vary materially from what any forward-looking statements describe. A more detailed account of the factors that could lead to those differences will be provided in the company’s Form 10-Q. For the Q&A portion of the call, we will be observing a limit of two questions per person when it is time, so that everyone has a chance to take part. Should you wish to pose more questions, you are welcome to re-enter the queue. At this point I’ll hand the call over to Sumit Roy, our CEO.

Thank you, Andrew. I want to begin by sharing how thankful I am for my coworkers, whose resilience and commitment to staying highly productive despite the ongoing pandemic keep propelling our company forward. We function as a single team, and every employee has adopted that mindset through strong communication and teamwork while operating from home. In addition, we feel for the people and companies affected by COVID-19, and we keep working alongside our clients to find outcomes that benefit both sides. Our results for Q2 once again show how steady and resilient our business is, with AFFO per share of $0.86 and portfolio occupancy of 98.5% at quarter's end. Over the quarter, we put more than $154 million into high-quality real estate, among which $58 million went into international investments in the UK, taking us to $640 million invested so far this year. Our net debt-to-EBITDA ratio at quarter end to date of 5.1 times leaves us favorably positioned moving ahead, with considerable financial flexibility. Although uncertainty persists because of the COVID-19 pandemic, our company — which mainly concentrates on owning real estate leased to essential retail and industrial tenants — keeps delivering solid performance. Rent collection, after reaching a low point of 84.9% in May, has improved consistently. And through July 31, we have gathered 86.5% of contractual rent for the second quarter. From investment-grade-rated tenants, we have gathered 99.1% of contractual rent for the second quarter, which further confirms that the significance of a high-quality real estate portfolio results in large, well capitalized clients. Although prioritizing investment-grade-rated tenants has not historically been our main goal, in times of economic uncertainty, high-grade credit tenants usually supply more dependable income streams, as the last few months have demonstrated. For July, we have gathered 91.5% of contractual rent, marking the second straight month of better rent collection and the strongest monthly rent collection since the pandemic started. Rent still outstanding remains concentrated mostly in the theater, health and fitness and restaurant sectors, since these sectors make up roughly 81% of uncollected rent during the second quarter. Crucially, we still anticipate gathering the great majority of uncollected rent as we keep evaluating and negotiating rent deferral agreements individually; in our financial supplement we disclosed the percentage of contractual rent collected by industry. Our top four industries: convenience stores, drug stores, dollar stores and grocery stores, all sell essential goods and account for about 37% of rental revenue; and we have received nearly all of the contractual rent owed to us by tenants in these industries for the second quarter. Other industries, such as theaters, health and fitness and restaurants, have struggled because of store closures and social distancing guidelines, yet we take encouragement from better rent collection in recent months; we stay constructive about the long-term viability of these industries, especially considering our partnership with the leading operators in each of these verticals. Hollywood's output quality has driven much of how the theater business performs, and the U.S. box office hit a record peak only a few years back, in 2018. On top of that, our read of the studios' economic business model still points to the theater distribution channel staying appealing down the road; likewise, we anticipate that the essential nature and inexpensive offerings of the quick service restaurant and health and fitness sectors will underpin their ability to keep paying rent, especially as operations restart in select parts of the country. While we keep steering our portfolio toward creating value over the long term, we see the scope and expertise of our asset management and real estate operations department — the biggest department within our company — as a major edge against our rivals. Turning now to what we invested during the first quarter. During 2020's second quarter, roughly $154 million went into 32 properties across 15 states plus the United Kingdom, at a weighted average initial cash cap rate of 6.3% and a weighted average lease term of 11.8 years. Measured by total revenue, about 41% of acquisitions in the quarter came from tenants rated investment-grade. Retail tenants accounted for 100% of revenues; these assets are leased to 14 separate tenants spanning eight industries; we completed six discrete transactions in the second quarter, and sale-leaseback transactions made up roughly 9% of second quarter investment volume. Out of the $154 million invested that quarter, $96 million went domestically into 30 properties at a weighted average initial cash cap rate of 6.5% and a weighted average lease term of 12.8 years. Internationally during the quarter, $58 million went into two properties situated in the UK at a weighted average initial cash cap rate of 6.1% and a weighted average lease term of 9.9 years. So far this year, we've put $640 million into 94 properties across 25 states in the United Kingdom at a weighted average initial cash cap rate of 6.1% and a weighted average initial lease term of 13.6 years; by revenue, 37% of total acquisitions come from investment-grade-rated tenants, 97% of revenues come from retail and 3% come from industrial assets. These assets are leased to 29 separate tenants across 17 industries. We've closed 23 independent transactions so far this year, and sale-leaseback transactions accounted for roughly 22% of year-to-date investment volume. Out of the $640 million invested so far this year, $416 million went domestically into 88 properties at a weighted average initial cash cap rate of 6.5% and a weighted average lease term of 14.3 years. So far this year, roughly $224 million went internationally into six properties situated in the UK at a weighted average initial cash cap rate of 5.3% and a weighted average lease term of 11.8 years. Deal flow stays robust, with roughly $14.5 billion sourced during the second quarter. Out of the $14.5 billion we sourced in the quarter, domestic opportunities accounted for $9 billion, while international opportunities made up $5.5 billion. Investment-grade opportunities made up 65% of the volume sourced for the second quarter. Portfolios represented 55% of the opportunities sourced during the second quarter, and one-off assets were 45%, or roughly $6.5 billion. On a year-to-date basis, potential transaction opportunities we sourced came to approximately $32.6 billion. Within these opportunities, domestic ones totaled $19.3 billion and international ones totaled $13.3 billion. Investment-grade opportunities accounted for 49% of the volume sourced year-to-date. Out of the $32.6 billion sourced year-to-date, portfolios were 56% and one-off assets were 44%. Of the $154 million in total acquisitions closed during the second quarter, 41% were one-off transactions. Our investment spreads relative to our weighted average cost of capital averaged approximately 131 basis points during the quarter. By investment spreads, we mean initial cash yield minus our nominal first year weighted average cost of capital. Going forward, our investment pipeline remains robust, and strong financial flexibility leaves us well positioned. As a result, we are reinstating 2020 acquisition guidance with a range of $1.25 billion to $1.75 billion. Turning to dispositions. In the quarter, we sold 12 properties, generating net proceeds of $7.4 million, and we realized an unlevered IRR of 6.1%.

That brings us to 29 properties sold year to date, generating $133.6 million, at a net cash cap rate of 6.2%, and an unlevered IRR of 10.5% was achieved. Our portfolio, when you examine it, is well diversified across tenants, industries, geographies, and property types, which is what supports stable cash flow. At quarter end, about 600 tenants were in our properties, across 50 industries and 49 states, along with Puerto Rico and the UK. Traditional retail makes up 84% of rental revenue. Beyond retail, industrial is the largest category, representing roughly 11% of rental revenue. Walgreens remains our top tenant, at 6% of rental revenue. Convenience stores are still our leading industry, at 12% of rental revenue. Within our retail portfolio overall, around 95% of rent is generated by tenants whose businesses contain a service, non-discretionary, and/or low price point component. Our view remains that these characteristics allow tenants to operate through a range of economic conditions and to compete more effectively against e-commerce. These factors have been particularly important in today's retail climate, where the bulk of recent U.S. retailer bankruptcies have taken place in industries without such characteristics; we continue to feel good about the portfolio's credit quality, as approximately half of annualized rental revenue derives from investment-grade-rated tenants. For our retail properties, the weighted average rent coverage ratio is 2.7 times on a four-wall basis, with a median of 2.5 times. Occupancy by property count was 98.5%, unchanged from the prior quarter. During the quarter, we re-leased 65 properties, recapturing 101.4% of expiring rent. In the first half of 2020, we re-leased 158 properties, recapturing 100.1% of expiring rents. Since our 1994 listing, we've re-leased or sold over 3,300 properties with leases expiring, recapturing more than 100% of rent on those that were re-leased. Same-store rental revenue declined 0.4% for the quarter and 0.2% year-to-date. Our reported same-store growth accounts for deferred rent and unpaid rent we deem collectible over the remaining lease term. The decline in same-store rental revenue is primarily due to write-offs in the restaurant industry, and partly to a methodology change, as we now recognize percentage rent when it accrues rather than when it's paid. Moving to the next item, I'll provide more detail on our quarterly financial results, starting with the income statement. G&A expense as a percentage of rental and other revenue was 4.8% for the quarter. Our year-to-date G&A expense ratio, excluding about $3.5 million of severance related to our former CFO's departure, was 4.6%. We continue to have the lowest G&A ratio among net lease REITs, reflecting our best in class efficiency and the scale advantages of our size. Non-reimbursable property expenses as a percentage of rental and other revenue were 1.4% for both the quarter and year-to-date periods. For the quarter, adjusted funds from operations were $0.86 per share. Additionally, $350 million. That amount includes approximately $60.2 million, equivalent to $0.17 per share on a fully diluted basis, representing deferred and unpaid rent we concluded had been earned during the period and was likely to be collected across the rest of the lease term. Now, turning briefly to the balance sheet: our capital structure has been kept conservative, and we remain part of only a handful of REITs that carry at least two A ratings. During the quarter, we issued $600 million in senior unsecured notes due 2031, with an effective yield to maturity of 3.36%. Subsequently, following the quarter's end, we added a further $315 million at an effective yield to maturity of 2.34%, which brings the blended rate to just below 3% over the entire $950 million of notes. Additionally, we generated approximately $98.1 million of equity during the quarter, primarily through our ATM program. Thus far this year, we have raised over $1.8 billion of attractively priced capital, consisting of about $874 million of equity alongside $950 million of debt; we ended the quarter with low leverage and robust coverage metrics, namely a net debt to adjusted EBITDA ratio of 5.1 times and a fixed charge coverage ratio of 5.4 times. Our liquidity continues to be quite strong, with roughly $400 million of cash on hand plus $2.5 billion accessible through our revolving credit facility as of July 31, which gives us considerable financial flexibility. Turning to what lies ahead, our overall debt maturity schedule looks excellent, featuring a weighted average maturity of a bond of 8.3 years. Furthermore, only $140 million of debt comes due through 2021. In summary, our balance sheet is in superb condition, and we keep carrying low leverage, strong coverage metrics, and plentiful liquidity. In June, we increased the dividend for the 107th occasion in our company's history; we have lifted our dividend every year since the company's listing in 1994, growing it at a compound average annual rate of roughly 4.5%. And we take pride in being one of merely three REITs in the S&P 500 Dividend Aristocrats Index, having raised the dividend each year over the last 25 consecutive years. Moving on, we have always operated the business with an eye toward economic resiliency and generating stable, increasing cash flow across a range of economic environments; and we are still doing so amid the current uncertainty driven by COVID-19. We deliberately assembled a high quality real estate portfolio leased mostly to tenants providing non-discretionary or low price point goods or services, and we concentrated on partnering with large, well-capitalized operators who lead in their respective industries. Our prudent balance sheet management and the strength of our financial position are demonstrated by 2A credit ratings, and our current financial flexibility and liquidity leave us well positioned to capitalize on growing opportunities ahead. And we have reinstated 2020 acquisitions guidance with a range of $1.25 billion to $1.75 billion, including a $350 million component. At this point, I'd like to open the line for questions. Operator?

Hello, and I appreciate you fielding my question. Regarding the acquisition opportunities you're considering, what I'd like to understand is how deep the pool of prospective buyers looks right now when it comes to competitive dynamics. Also, how does the current situation stack up against where things stood before COVID? Would you say the buyers are predominantly publicly traded entities, or privately held ones, and does that pattern shift when the deals involve bigger portfolios?

Shivani, that's an excellent question. The best way to frame my response is this: when it comes to top-tier essential retail assets, the battle for those properties is still extremely intense. In fact, that intensity is pushing cap rates tighter than what we witnessed prior to the pandemic. So when you look at how many possible purchasers are out there, interest in that category of assets is still very robust. What I'd note is that fewer publicly listed net lease firms seem to be active in this arena now. That observation applies broadly, much like it did before COVID hit. That said, based on what came out during the latest second quarter earnings release, my expectation is that this will shift. Still, at minimum throughout the second quarter and in deals we've chased more lately, publicly traded buyers have been fewer in number. On the global front, though, buyer counts have stayed quite high, and more often than not we find ourselves bidding against private institutional players. There have even been situations where we chose to step back from deals that fit our strategy perfectly, simply because the pricing became extraordinarily aggressive. So overall, across every type of asset we're going after, competitive pressure remains elevated, and my sense is that a growing share of public net lease acquirers will exit this arena before long.

Then, to follow up on that, regarding the investment guidance we've brought back, might a stronger UK market mean that a greater share of those investment volumes gets sourced from the U.S. rather than the UK? Thank you.

Sure. Well, the UK market, and I would add the European market as a whole, keeps serving as a really robust growth engine for us. Roughly $650 million in sale lease back opportunities came up that meet essentially every criterion you would want, apart from pricing. Because we stay disciplined about acquisitions, we made the choice to walk away from pursuing those deals any further. And when you look at where our sourcing stands, out of the $34 billion, $13 billion has come from international markets. That's considerably higher than what we initially expected back when we entered the UK market. So the product continues to be robust across international markets. I'd even point out that here in the U.S., our sourcing figures speak to that as well. There's still an abundance of product, both when it comes to sale lease back situations and in the one-off market. And the fact that we felt quite at ease bringing back our acquisition guidance reflects the pipeline we have right now, the conversations we're having right now with our relationship tenants, and what we're observing when it comes to sourcing.

Thanks very much for that color.

Thank you.

Are you able to pick me up?

A little crackle is coming through, yet you're coming through fine.

You both said there's been some tightening for the high-quality product. Clearly, you two own plenty of it. I'm just curious whether you two are thinking about selling part of it into these appealing prices and perhaps putting that money to work somewhere else.

Our approach to business has been that the products we favor, we'd want to keep them forever, and I'm being somewhat tongue-in-cheek there. But the point is that attempting to time the market and sell when we think cap rates are low and so forth doesn't always work out, and our track record has shown that if we retain assets and keep collaborating with our partners, or those for whom these assets are considered essential, we'll generate value, and we'll generate it with reduced volatility and in comparable nominal terms; and that has more or less turned out to be true, though that doesn't mean we won't, when the opportunity arises, capitalize on the market as we did in the first quarter, when on the consumer electronic side of the business, we chose to sell the assets back to our tenants, with whom we'd been talking about exploring other opportunities; but also seeking to, to possibly assist them in meeting some of their own goals, and we managed to produce 11% unlevered IRR from selling those assets back; but our philosophy is, let's purchase the assets that suit our tenants. Let's enter into very long-term leases with minimal to zero capital put into those assets. And we will generate value, particularly, if it keeps suiting our tenants; and that remains our philosophy.

All right, that answers my question well. Then I have one more about the pipeline — could you share some detail on what portion is retail as opposed to industrial? And on the UK side, you brought up $13 billion of sourcing; I'm just wondering how that breaks down between retail and industrial?

Sure. What I'd say is that retail makes up the clear majority. That isn't to suggest we aren't looking at industrial — right now, Nate, those are the only 2 product types on our radar. But I'd put it at somewhere in the range of 60% to 70% of our sourcing sitting on the retail side of things. The remaining 30% to 40% falls on the industrial side. Obviously, it's no secret that expanding the industrial share of our asset type is something we'd like to do, and it's a real area of focus for us. We've put deliberate effort into building relationships with people who might be able to supply us with this product. That's beginning to bear fruit, and we're now able to produce some transaction flow out of that part of the business. What keeps holding us back somewhat is the reality that our cost of capital isn't quite at the level it was 4 months ago. If that stopped being a limiting factor, both in terms of the product itself and what's on the market, there's an abundance of high-quality product in the industries we're eager to take part in, with operators whose relationships we'd be thrilled to expand. So yes, the breakdown comes to roughly 60% to 70% and 30% to 40%.

All right, thanks everyone.

Hello, and many thanks. Sumit, I'd like to piggyback on what you said regarding the balance sheet and raising capital, as well as your remarks there. Specifically about your interest in completing additional transactions of this kind. Regarding how you fund yourselves, you issued debt not long ago, plus you completed a stock offering at the start of this year, or you simply added a bit more through the ATM, yet your typical approach is to operate with leverage kept at a cautious level. So when you consider pursuing additional transactions, and given what you said about the expense of capital purely from a financing perspective, what ought we to anticipate regarding additional share issuances given your current outlook?

Sure, Christy, that is a solid question. Our view is that reaching the middle point of our forecast is achievable without needing to depend on the stock market — on capital markets. And we would remain inside what we consider cautious, what the agencies that rate us would consider consistent with the grades we currently hold. That said, we are hopeful that as the operating side of the business keeps delivering favorable outcomes and we keep publishing data that helps our cost of equity get better, then when the moment is right, we would gladly keep issuing more equity. However, the key takeaway I want to give you is that this is not something we are required to do. One factor behind why we came into 2011 and carried out that extremely big equity raise was to reach a position where we had built sufficient capacity and had kept our balance sheet under-leveraged as we exited March, so that if we ever needed to draw on debt markets — which appear to have stabilized much earlier than equity markets did — we could draw on that side of things and still remain inside levels that our rating agencies would keep backing for the 2 A ratings; that is the situation we are in.

Then, as a quick follow-up on what you said regarding theaters — really just two items. First, in your assessment, what portion of theaters and missed rent payments might eventually become vacant space? Second, looking more broadly, you mentioned the economic model — how do you see that model shifting given the recent AMC-Universal agreement and others that might come after it, especially concerning whether theater operators can still afford the rental rates they currently pay?

Yes. Well, let's discuss AMC. Terms with AMC have just been settled by us. During July, they began paying a portion of their rent, which signaled something very encouraging to us; a repayment plan for the deferred rent has also been agreed upon. This repayment period will be extended. On average, it will take 2.7 years to pay back. Still, the fact that an agreement was reached with AMC, and the fact that they began paying us rent for July — those are encouraging indicators. Look, what you're observing is what we're observing too. Our edge lies in being able to call AMC directly and hold a discussion with them. Regarding their arrangement with Universal, what they told us was the fundamental rationale behind it: their belief that during the first 17 days, they capture 75% to 90% of box office revenues; and for blockbusters, 90% of receipts come in within the first three weeks. Thus, they felt significant cannibalization wouldn't occur, because the film will only be marketed as PVOD following the initial two weeks in theaters. Plus, the fact that they receive a portion of PVOD revenues provides an additional income stream that made them more comfortable. However, the core idea was that by entering this kind of arrangement, the economic pie would actually grow for both sides. So, listen, only time will reveal the outcome; we've modeled our own scenarios using what AMC provided. At the corporate level, our view is that this arrangement will leave them at 0% to negative 5% in terms of profitability. So we'll see. Yet they clearly feel sufficiently confident to have signed an agreement with us. They began paying — they've started paying partial rent for July. All of this keeps reinforcing our position that AMC ought to pull through, okay. From what we’ve examined ourselves, Christy, our view is that they’ll be okay through November, even if they have no openings at all; and after that, clearly, if this downturn keeps going and additional cinemas get closed or they can’t open those cinemas, as they told us — August 20th is when they’d like to begin reopening some of their locations — then naturally, there’s a possibility they may return asking for additional, different grants. Still, that’s where things stand right now. This is something we analyze on a month-to-month basis, and that’s mainly why we recorded the $8.5 million write-off in the second quarter; so our belief remains that, from an industry standpoint, the theater business is a sound business, though certainly moving forward, when you look at our entire portfolio, we are reconsidering what percentage of our overall portfolio theaters should represent.

Michael Bilerman here. When I decide to watch that Universal film at home through streaming, you're not getting a cut of those revenues, are you? The industry generates a specific share of income from that, and as the owner of the box, you're left out. Doesn't that eventually erode what a feed or a box you possess is worth? Shouldn't that mean a higher cap rate and reduced rent? Simply because the money that box will bring in isn't what it once was? Setting COVID aside entirely, this ties back to the initial problem with cinemas — PVOD was on the rise. And suddenly we've seen an enormous shift, moving from 75 down to 17 days, which caught everyone off guard.

Yes, and Michael, that could very well end up being true. Looking at it from a theater standpoint, I believe you're correct. That physical box may end up producing reduced profitability for EMC, the parent company. Yet there's another element I'd like us to consider. Look, all of these are components we're putting forward while attempting to crunch numbers and so on. However, when you examine the economics of a theatrical release compared with PVOD, even from the studios' point of view, the numbers won't work out if it's PVOD alone. The bulk of their profits stems from capturing that 55% to 60% of revenue brought in at cinemas. That figure is even greater for major blockbuster titles, which is the direction Hollywood keeps heading; and my sense is this model suits films that may be somewhat less popular, with smaller budgets — how do we keep maximizing income, and maybe PVOD is the superior route to squeeze more out of that category of films the studios are producing. So genuinely, from the discussions we've had, the concept is that this will let the studios boost their profitability, yet it ought to also, at minimum, allow theaters at the corporate level — whether at home or possibly taking part in some upside. And at minimum, as studios get healthier, they can craft better films and deliver large tentpole pictures, which ought to mean improved content for the exhibition business; but that remains a hypothesis. So I understand your worry, Michael. We're monitoring this intently and we'll observe how everything unfolds.

Thanks.

Greg McGinniss here, joined by Nick. Sumit, when you set that acquisition guidance, does it include or exclude possible portfolio transactions? And considering how many tenants and leases exist in this less certain climate, how do you view your capacity to underwrite those deals of $200 million and above?

Yeah. So where we stand right now, Nick, I believe we aren't overly thrilled about our equity cost, yet our total cost of capital should still let us keep pursuing transactions that we think tick every box; when it comes to the sectors, we aim to target the operators inside those sectors, the ones we want to be in, plus the type of real estate asset; and none of that has shifted. What made us confident enough to publish those acquisition figures was mainly our pipeline; along with the volume of inbound interest we began receiving across the past two and a half to three months. And the reality that, the swings we witnessed earlier in the quarter, when our stock might shift 8%, 9% within a single day, appear to have become somewhat milder. That gave us the confidence to step forward and state that, given the pipeline we've built, given the conversations we're having, we can reach that $1.25 billion to $1.75 billion acquisition target. And our capacity to complete $200 million portfolio deals hasn't shifted, and the reality that we're currently under leveraged. I think that lets us avoid depending on the most volatile and largest piece of our capital stack, namely equity. We're able to simply rely on the debt portion instead, which appears to have settled down significantly compared with the earlier month. And finance our acquisition. So possessing that flexibility is clearly what gave us confidence to go out with a figure we consider likely to be needed.

All right. So at this point, those portfolio transactions might be part of that guidance figure, then.

Yes, exactly. My apologies — I didn’t address that head-on. You’ve got it right.

All right. Thank you. Changing topics for a moment — if we consider the latest presidential polling and the possibility that 1031 exchanges and the tax plan could be targeted — would eliminating like-kind exchanges meaningfully affect your business, or perhaps the kinds of properties you seek to buy?

"Measurable" isn't the term I'd choose, yet yes, at the edges, should an effect occur, without a doubt. Competition with 1031 purchasers isn't really something we do much of, perhaps in the quick service restaurant segment; occasionally we'll encounter such buyers in a single transaction, yet mostly we purchase portfolios, including deals involving smaller portfolios. And present in that marketplace are all the typical participants who aren't 1031 players. Now turning to the sales side. Vacant properties make up the bulk of what we sell, and in that specific market you won't find 1031 purchasers active. Those who typically operate there are developers or tenants seeking to own their own premises. Thus, the sole place we could encounter them is with occupied properties sold individually. And that isn't a significant portion of our portfolio as a whole.

Great. Thank you.

Sure.

Thanks. Regarding the rent deferrals you’ve given tenants during this year, have any terms shifted since they were first worked out, or has any tenant signaled they’d repay faster than the initial timeline?

Yeah, actually — let me take your first question. I’ll handle the second half first, Spenser, that’s fine. We’ve been putting out our monthly collection data basically every month; and as you may remember, when April rents first came out, we said it stood at 82.9% today. It’s now tracking at 88.4% for me rented, following a comparable pattern. Initially we had 82%. Now it’s 84.9%; likewise for June, we were at 85.7% and now it’s 86.1%; so during each of those months, what occurred was that a number of our tenants came back and paid us. Some of them were on the restaurant side of things. Some were health and fitness operators, and some were data centers that essentially chose to pay us for April, May and June; so that definitely took place where at first we believed we might need to seek deferment agreements with certain of those tenants. And they returned because their businesses reopened sooner than anticipated and/or they felt more comfortable about their liquidity position and chose to pay us. As for the first half of your question, Spenser, about whether we had to change the leases — the overwhelming majority of what we’ve signed, meaning that $14 million in rent out of the total $16 million for which we reached an agreement, was handled without needing to amend the lease itself or the original lease term; and that’s the primary reason we can remain within the accounting rules and treat these as different rents. So we haven’t needed to ask for a longer duration or a payback, and so on. We anticipate being repaid within the original lease term, and as a result we didn’t need to make any lease modification. And the same holds for the remaining $46 million that we’ve been in discussions about. Now, on the margins, there have been certain tenants who asked for a longer payback period extending past the original lease term. And those obviously have been — they aren’t included in the deferred rent agreements, which didn’t lead to a lease amendment. And so — but that’s an extremely, extremely small percentage. The overwhelming majority has been with — without needing to amend the lease itself.