Sila Realty Trust, Inc. (SILA) Earnings Call Transcript & Summary

Good morning, and welcome to the Second Quarter 2024 Sila Realty Trust Earnings Conference Call and Webcast. [Operator Instructions] I'll now turn the conference over to your host, Miles Callahan, Senior Vice President of Capital Markets and Investor Relations for Sila. You may begin.

Good morning, and thank you for joining us today to discuss Sila Realty Trust's financial results for the second quarter of 2024. Yesterday, we issued our earnings release for the second quarter of 2024. The earnings release, as well as our earnings supplement, are available on the Investors section of our website at investors.silarealtytrust.com. Joining today's call with me are Michael Seton, President and Chief Executive Officer; Kay Neely, Executive Vice President and Chief Financial Officer; and Chris Flouhouse, Executive Vice President and Chief Investment Officer. We'll begin with prepared remarks and then open up the call for any questions. Before we begin, I'd like to remind you that today's comments will include forward-looking statements under federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts, such as statements about expected financial performance, are also forward-looking statements. Actual results may differ materially from those contemplated by such forward-looking statements. A discussion of the factors that could cause a material difference in our results compared to those forward-looking statements is contained in our SEC filings. Please note that on today's call, we'll be referring to non-GAAP measures. You can find the reconciliation of these historical non-GAAP measures to the most directly comparable GAAP measures in our second quarter earnings release and in our earnings supplement, both of which can be found on the Investors section of our website and in the Form 8-K we filed with the SEC yesterday. With that, I'll now turn the call over to our President and Chief Executive Officer, Michael Seton.

Thank you, Miles. I'm excited to welcome everyone to Sila Realty Trust's first earnings call as a publicly traded company. We appreciate you taking the time to join us today. For those who may not be as familiar with Sila, I'll begin by providing some background on the company and a flavor for how we approach the business of investing in health care real estate and running Sila Realty Trust. Next, our Chief Investment Officer, Chris Flouhouse, will provide an overview of our portfolio as well as market observations, and Kay Neely, our Chief Financial Officer, will address our financial performance. I'll wrap up with a few closing comments before opening the call to questions. First and foremost, as most of you know, we listed Sila Realty Trust on the New York Stock Exchange on June 13, 2024. We're excited to be publicly traded and for the opportunity to present the merits of our stock to a wide audience of investors. Our decision to go public via a direct listing was motivated in part to give our existing shareholders liquidity optionality. However, with invested assets of approximately $2.2 billion, a proven and successful track record, a robust operating platform scaled for growth, and many years of real estate investment experience, we strongly believe that Sila was more than ready for the public equity markets. Given our strong and flexible balance sheet, we did not need to raise capital through a traditional and typically expensive IPO mechanism. In fact, we believe we've plenty of dry powder to meet our strategic objectives over the next 12 to 24 months. However, being a publicly traded company opens the door wider to capitalize on growth opportunities in the large growing and sustainable health care market. We also believe Sila is uniquely positioned within the REIT universe. As a net lease REIT focused solely on quality health care properties, we believe we offer investors the best of both worlds. Participation in the attractive large market of the defensive health care sector and a triple net lease REIT structure with longer lease terms and a conservative approach for leverage. Now I'd like to spend a few minutes discussing the steps we took to build Sila into the company it is today and what we believe are key differentiators for those new to our story. First, while we may be newly publicly traded, we're not a new company. I co-founded what is now Sila in 2014, as well as a predecessor REIT with a similar strategy in 2010. In 2019, we merged Sila with its predecessor company, which at the time owned solely health care properties to gain size and scale with an eye towards further growth. 2 years later, in 2021, we sold $1.3 billion in non-core assets to focus exclusively on high-quality health care properties, specifically medical outpatient buildings, inpatient rehabilitation facilities and surgical and specialty facility. As of the end of the second quarter of 2024, we had 137 properties with a focus on markets with strong and growing demographics with a portfolio lease rate of approximately 97.5%. Our team has been active acquirers of real estate over the past 14 years, having purchased over $4 billion with the majority of that being health care real estate. As a result, we're tried and tested health care real estate investors focusing on acquiring high-quality health care properties that are critically important to our tenants' operations. We also focused on properties which have health system and large-scale operator affiliations. We especially seek out facilities with branding so that our buildings appeal to the specific client and catchment area that supports our tenants' business objectives. Some of the brands associated with our buildings and tenants are Post Acute Medical, Tenet Healthcare, Baylor Scott & White and Cleveland Clinic to name just a few. By design, our portfolio is highly diversified, both geographically and across various health care types. We've built-in organic growth to our lease stream of income through contractual 2.2% average annual rent escalators on 83.6% of the portfolio, while the remaining 16.4% of our portfolio having base rent increases indexed to the Consumer Price Index, or CPI, as of June 30, 2024. Being active in the market for so many years, we've expanded our channels for sourcing properties to acquire through both on and off-market partners and have historically enjoyed seeing strong deal flow. And in overall, real estate transaction market that is currently seeing significantly reduced volume due to the higher interest rate environment and dislocation in the capital and banking markets, we continue to see interesting opportunities and we've the capital to take action. That being said, we remain disciplined and focused in deploying capital as we've always been. We stick to the mantra that you can only invest a dollar onetime, so make it count and that's exactly what we try to do. We've found that what many would perceive as our best defense, low leverage and a flexible balance sheet is actually our greatest offensive tool as it offers us the liquidity and speed with which to execute on opportunities while our competitors may be forced to sit on the sidelines. I'm extremely proud of what our company has achieved to date in terms of acquisitions. This year alone through July, we've purchased 8 properties for over $163 million, including our most recent $28.3 million acquisition of a leading inpatient rehabilitation facility in Fort Smith, Arkansas. While continuing to seek out additional acquisition opportunities for the remainder of 2024, we'll be thoughtful and disciplined with any acquisition to ensure it meets our strict criteria for building a portfolio in company that is built to last. With our current size, every accretive acquisition can have a meaningful impact on our financial results. I'd like to reiterate what I stated earlier that our company is built to scale. From a personnel and an expense perspective, we can add meaningful assets to the company with minimal additional costs to run the company. I'm very proud of our experienced leadership team, which has strong real estate, financial and operating expertise. Kay Neely, our Chief Financial Officer, has been with our company for over 8 years and CFO for the past 6 years and previously had an extensive career in public accounting with a Big 4 audit firm. Chris Flouhouse, our Chief Investment Officer, who joined us recently after a distinguished 25-year banking career brings a strong background in corporate finance, real estate M&A and REIT advisory experience. We're supported by almost 50 other employees involved in all facets of our business from acquisitions, investment management, research and tenant credit, in-house property management and all finance, accounting and reporting and capital markets functions. Our Board of Directors is represented by individuals with diverse perspectives that bring a personal commitment to strong corporate governance with the highest integrity. As a publicly traded company, we'll put shareholders first with an eye towards transparency, just as we always have. We've been an SEC registrant for over 10 years. For years, we've provided shareholders with comprehensive disclosures, financial reporting and transparent communication and that simply will not change. Now let me address some recent portfolio activity. As previously reported in an 8-K in June 2023 and discussed in our subsequent period filings, the sponsor of a tenant at 17 of our properties, GenesisCare, filed for Chapter 11 bankruptcy. The 17 properties were leased to GenesisCare under a master lease. This lease was not rejected, and GenesisCare paid us full rent throughout the bankruptcy process. Subsequent to GenesisCare's emergence from bankruptcy in February 2024, we entered into an amended master lease covering 7 of the 17 properties all located in Florida. 6 of the 10 properties that were severed from the lease were leased to new tenants who acquired the operations at each of the properties. Sila now has 4 unleased GenesisCare related assets remaining and is in final negotiations for leasing 1 of those properties and is in different active stages of selling the other 3. Kay will discuss the impact of this on second quarter results. Also impacting second quarter results was the closure of operations at the company's sole property leased to Steward Health Care, which filed for bankruptcy in May of 2024. Sila is in the process of selling this asset. I'll now turn the call over to Chris to discuss the positioning of Sila's portfolio and the health care real estate environment.

Thank you, Michael. Sila's portfolio is well diversified across 137 properties with an emphasis in the Smile states across the Southern U.S., where populations and demand for health care are growing. In fact, approximately 65% of our portfolio is located within the Smile states. Our top 5 markets by ABR are Dallas, Oklahoma City, San Antonio, Akron and Tucson. At the end of the second quarter, we owned assets in 64 markets across the United States, providing meaningful geographic diversification. Our portfolio consists of approximately 5.3 million rentable square feet, a 97.5% weighted average lease rate and 8.2 years weighted average remaining lease term, or WALT with only 21% annualized base rent maturing within 5 years. Our tenant credit profile is balanced and consists of 36.4% investment-grade rated tenant, guarantor or affiliate, 28.1% rated tenant guarantor or affiliate and 35.5% nonrated. As of June 30, using ABR, our portfolio was comprised of 37.4% medical outpatient buildings, 28.6% inpatient rehabilitation facilities and 34% surgical and specialty facilities. Our top 10 tenants comprise 62% of our ABR, though no single tenant accounts for more than 16% of our revenue. Furthermore, our largest tenant, Post Acute Medical is mitigated through our ownership of 15 individual assets of which we receive regular financial reporting of property operating performance. Due to our stringent underwriting standards and focus on the most advantageous risk-adjusted returns for our shareholders, we strive to acquire properties that exhibit high and increasing rent coverage ratios. As of June 30, 2024, the 68% of ABR of our portfolio that provides financial reporting to us maintained a 4.64x EBITDARM coverage ratio. Of the 32% that do not report, approximately 1/3 is related to investment-grade rated tenants or guarantors. Moving on to the market environment, medical outpatient buildings are demonstrating strong fundamentals with increasing patient volumes. We're seeing high-quality MOB opportunities in large part because so much of the industry's attention has been focused on senior housing, leaving MOBs out of the conversation. We've both the focus and expertise in MOB transactions to take advantage of these opportunities. In the inpatient rehabilitation market, countrywide demand continues to grow for on- and off-campus post-cute care facilities that will provide a lower cost environment than general acute care hospitals. We're focused on newer facilities leased to best-in-class operators, as exemplified by our most recent acquisition in Fort Smith, Arkansas. We also take a keen eye on the outpatient behavioral health market, where we see greater interest and demand, but remain diligent to ensure that any property acquisition has a strong and proven operator who can achieve appropriate levels of profitable margin for its business. In surgical and specialty hospitals, health systems are looking to grow revenue, which could mean larger facilities for additional beds and perhaps more monetizations than we've seen in the past. Across all of our asset categories, we're seeing supply being constrained and don't anticipate any meaningful inventory growth around the corner. This sets up for an environment that supports the occupancy and rents of our facilities. We also take a proactive approach to asset management and actively evaluate our portfolio to ensure we're optimizing returns for our shareholders. We're in various active stages of selling our 1 Steward Health Care property, the Stoughton Healthcare Facility and 3 GenesisCare properties. In addition, we're in the process of re-leasing another GenesisCare asset to high-quality credit tenant. Moving on to our second quarter activity, we acquired a $10.8 million medical outpatient building in Reading, Pennsylvania. The 30,000 square foot facility was construct in 2020 and serves as an outpatient treatment center for former patients of the adjacent inpatient behavioral facility and other patients that only require outpatient care. This purpose-built facility is fully leased to Reading Behavioral Health Care, a joint venture between Acadia Healthcare, the largest provider of behavioral health care services in the U.S. and Tower Health, a regional health care system headquartered in West Reading, Pennsylvania. Subsequent to quarter end, on July 25, we closed on a $28.3 million inpatient rehabilitation facility in Fort Smith, Arkansas. This market-leading facility is 100% leased to a joint venture between Mercy Hospital of Fort Smith, an affiliate of Mercy Health in Missouri, which carries an investment-grade rating and Lifepoint Health. We're pleased to add these facilities to our portfolio as we believe they exemplify our commitment to sourcing and acquiring what we believe are accretive opportunities critical to our tenants' operations and the communities they serve. As previously mentioned, we're actively seeking additional opportunities that we believe will be accretive to our portfolio, but we'll remain diligent as it relates to capital deployment. I'll now turn the call over to Kay for the financial report. Kay?

Thank you, Chris. I'll now speak to our second quarter results and since this is our first earnings call, I'll also provide insight into our year-to-date results. Our GAAP net income for the second quarter was $4.6 million or $0.08 per diluted share compared to $3.9 million or $0.07 per diluted share in the second quarter of 2023. Our GAAP net income for the first half of 2024 was $19.6 million or $0.34 per diluted share compared to $18.1 million or $0.32 per diluted share for the first half of 2023. Our cash NOI was $39.9 million in the second quarter of 2024 as compared to $42.4 million in the second quarter of 2023, or a 5.8% decrease. This decrease is primarily due to a decrease in same-store cash NOI of $1.2 million and a decrease in non-same store cash NOI of $1.2 million. The decrease in same-store cash NOI is primarily related to 4 vacant properties formerly leased to GenesisCare and the closure of operations at our only property leased to Steward Health Care, which Michael spoke to previously, resulting in $1.7 million in lower cash NOI compared to the same period in 2023. This was partially offset by second quarter 2024 increases at our other same-store properties of 2.3% or approximately $760,000 when compared to the second quarter of 2023 as a result of annual rent escalations. The decrease in non-same store cash NOI is the result of cash NOI loss from dispositions exceeding cash NOI gained from acquisitions relating to the timing of redeployment of proceeds from dispositions. Cash NOI was $86.8 million for the first half of 2024 as compared to $88 million for the first half of 2023 or 1.3% decrease. This decrease is the result of the net effect of an increase in same-store cash NOI of $1.6 million and a decrease of non-same store cash NOI of $2.8 million. The increase in same-store cash NOI is primarily the result of receiving a $2 million onetime payment from GenesisCare as consideration for the removal of 10 of the properties from the master lease during the first half of 2024. This offset a decrease of $1.8 million in cash NOI in the first half of 2024 related to the 4 vacant properties formerly leased to GenesisCare and the closure of operations at the only property leased to Steward compared to the same period in 2023. Additionally, there was a 2.1% increase or $1.4 million in other same-store property cash NOI in the first half of 2024 when compared to the same period in 2023 as a result of annual rent escalations. The decrease in non-same store cash NOI is the result of cash NOI loss from dispositions exceeding cash NOI gained from acquisitions related to the timing of redeployment of proceeds from dispositions. During the first half of 2024, Sila invested $135.7 million to purchase 7 real estate properties in 3 separate transactions compared to an investment of $9.9 million for 1 property in the same period in 2023. AFFO decreased 2.3% to $30.8 million or $0.54 per diluted share during the second quarter of 2024 compared to $31.6 million or $0.55 per diluted share during the second quarter of 2023. In addition to the cash NOI items just discussed, AFFO includes income received from investments in money market accounts, in which we invested the $185 million in net cash proceeds that we received after the repayment of outstanding variable rate debt from the sale of a significant asset in December 2023 until we redeployed the funds. The second quarter of 2024 AFFO also includes a decrease in interest expense compared to the second quarter of 2023. AFFO for the first half of 2024 increased 5% to $69.1 million or $1.20 per diluted share compared to $65.8 million or $1.15 per diluted share for the first half of 2023. In addition to the year-to-date cash NOI items previously discussed, AFFO includes income received from investments in money market funds as well as a decrease in interest expense from the same period of 2023. As of the quarter end, we were conservatively leveraged with total net debt of $438 million, which equated to 3.1x EBITDAre. We had cash, cash equivalents and availability under our credit facility of approximately $587 million, providing us with substantial liquidity to make acquisitions, which we believe enhance the value of our portfolio for the benefit of our shareholders. At quarter end, our outstanding debt was 100% fixed through interest rate swaps, a testament to the conservative balance sheet management, which we've always undertaken. Going forward, we believe a leverage ratio of approximately 4 to 5x net debt-to-EBITDAre is an appropriate level for the company, which is generally lower than the peers in our space, though at times we may run lower or we may run higher. In the beginning of the year, we were successful in recasting and amending our $250 million term loan with a new up to 5-year term loan when taking into account extension options exercisable by the company at an attractive borrowing spread over SOFR, equal to the prior spread of the refinanced term loan. The syndication of this recast was approximately 18% oversubscribed, providing testament to our lenders' confidence in Sila. Now that Sila is publicly traded, we expect to have more options to access debt capital than the traditional bank markets. I'll now speak about our approach to our dividend. We currently pay our dividend monthly and understand the importance of the durability of the payment to our shareholders. We maintain a conservative payout ratio to provide confidence in the stability of our dividend. Our most recent quarter payout ratio was 75% of AFFO. On July 16, our Board of Directors authorized a monthly dividend of $0.13 per share of common stock payable on August 15 to stockholders of record at the close of business on July 31. This distribution represents an annualized aggregate dividend of $1.60 per share. As Michael mentioned at the beginning of the call, we successfully listed Sila on the New York Stock Exchange under the ticker symbol SILA on June 13 of this year. On the date of the listing, we launched a modified Dutch Auction tender offer for the purchase of up to $50 million in value of our outstanding common stock at a price range between $22.60 per share on the low end and $24 per share on the high end, subject to the tendering parties election. We established the tender price range at levels that we believed to be highly accretive to the intrinsic value of our company. We received sufficient tendered shares at the low end of the range or $22.60, allowing the company to successfully purchase approximately 2.2 million shares, reducing the outstanding share count of the company by approximately 3.9% to 55 million shares. Now I'll turn the call back to Michael for his closing remarks.

Thank you, Kay. I'd like to take a moment to thank my colleagues at Sila Realty Trust who have been the backbone of building our company and who continue to move the company forward. On behalf of my leadership partners and our Board of Directors, let me express our greatest appreciation to all who have contributed to Sila's success and we appreciate everyone on this call joining us today to hear more about our company. We look forward to establishing long-lasting and productive relationships with the investor and analyst communities. That concludes our prepared remarks. Operator, please begin the Q&A.

[Operator Instructions] Our first question will come from Nate Crossett with BNP Paribas.

Yes, a bunch of questions. First is, I don't think you guys gave formal guidance. So maybe you could just talk us through some of the main guideposts we should be thinking about for the back half of this year? Like what -- how should we be thinking about acquisition volumes, the cap rates you're looking at for acquisitions, G&A disposed? I think it'd be helpful to give us kind of some parameters there.

Sure, Nate. This is Michael Seton. Thank you for joining the call and it's great to reconnect again. Let me kind of help you -- help sketch it out for you. From an acquisition perspective, it's our strategy to overall as a base case, grow our balance sheet by approximately 10% to 15% per year. From a cap rate perspective, and that's giving us the runway that Kay spoke to earlier as well with respect to that kind of 12 to 24 months of, I'll call it, available liquidity that we've today. With respect to acquisition cap rates, we're seeing in the marketplace today, and evidenced by recent acquisitions, generally speaking, cap rates in the range of 7% to 8%. So that's for the higher quality institutional type assets that we own. And I think that's a pretty good sketch of what we'll see in the coming months. In terms of overall kind of to break down, we don't give guidance -- we didn't give guidance, but in terms of breaking down the current quarter to give you a picture, we reported our NOI this quarter, and that's pretty close to what a good run rate will be. We had certain onetime revenue and expense items in this quarter, but particularly as we go forward and we seek to sell, and we're in different stages as mentioned in terms of the strategy around selling our currently vacant assets, we'll be relieved of those kind of carry costs associated with that. So kind of to get a picture of a run rate, looking at the current quarter, the NOI is reflective of that. Obviously, you'd layer in, we spoke about our contractual rental rate increases. So as we look forward, you could apply kind of our base contractual rental increase to that annualized figure, but that gives you kind of a picture of the NOI going forward. So hopefully, that's helpful as a run rate. What that doesn't take into effect though, I'll tell you, is our most recent acquisition of Fort Smith. We made an acquisition of an inpatient rehab facility for $28.3 million in July, most recently. That was, of course, after the quarter end. So that's not in that NOI figure. Going down from there, I'll kind of take you all the way down, that's NOI. We've interest expense and, of course, G&A. And just to give you a picture of that as well, to sketch it out, G&A for this quarter, we separated out our listing expenses. Of course, we had our listing June 13, so occurred in this quarter, that is separated out in our income statement. G&A for this quarter is reflective of a run rate. So again, can be multiplied by 4. With respect to interest expense for the year, it's pretty close. So again, taking the current interest expense, multiplying that by 4 for this year. Going forward, meaning in terms of next year, if you look at our financial statements, we do have some hedges burning off or expiring, I should say at the end of this year. They're very low interest rate. That swapped rate is 0.93% on $250 million that does expire this year. We'll seek to most likely re-hedge that at the appropriate time. That's tied to a term loan that we've got. And rates are obviously, it feels like coming the right direction in terms of that. We've waited intentionally, obviously, for the Fed to act or the market to perceive those rates coming down. So we'll act opportunistically with respect to the timing of that. And we've in place all of our counterparty ISDA agreements and the like to be able to execute at a moment's notice on that. So just also on the interest expense side, let me give you kind of a picture, broad brush. Again, our -- that $250 million that expires this year is hedged at a swap rate of 0.93%. You take into account, obviously, our margin borrowing, which is tied to leverage related to that debt, which currently is 1.25%. So that's additive. So again, it's approximately 2.1%, all-in cost related to that $250 million. If we were to do a new 3- or 4-year swap today, roughly speaking, that base rate would be approximately in the neighborhood of about 3% or slightly over, roughly speaking. So 3% to 3.15%, then we layer in our 1.25% currently applied leverage borrowing rate. So we get into our all-in cost there. So we'll see an adjustment we anticipate in our interest expense next year relative to this year, but we're fully anticipating that. And again, we'll act opportunistically to take advantage of where we see an opportunity in the market. I hope that helped.

Yes, yes, that's -- yes, yes, that's all helpful. I was going to ask as like an addition to that, so part of the investment strategy, would you guys consider adding buybacks potentially to that, just given the cap rate is on your stock and the fact that your leverage is incredibly low? Like, would you use that to maybe blend your acquisition cap rates higher by maybe buying back stock as well?

We would. And we -- as you know, we just did a Dutch tender and completed that. And that was successful in terms of the buyback. And we're pleased that the buyback occurred at the lower end of that range, although we would have been happy at any point in that range. We do consider a share buyback to be good use of our capital, provided that the stock price, obviously, which we're executing, is what we view to be a sufficient discount to our intrinsic value. We think that is there today. We obviously just completed our listing, came off of the Dutch tender. And I think we'll continue to monitor that and discuss with the Board, which you're suggesting and balancing, of course, with the acquisition opportunity, but we would certainly consider that, yes.

Okay. That's helpful. Maybe one on just tenant credit. Is there anything on the watch list that we should be tracking just outside of the news flow of Steward and Genesis? And is there any kind of bad debt assumption you guys have for the back half of this year that's not Genesis or Steward?

In terms of our watch list, let me describe what we do as it relates to the watch list. We have a scaled watch list. So we've a watch list, which is not just, for instance, situations like the Steward or GenesisCare, which do fall into, I'll just describe it as our high monitoring watch list. We've others where it may just be a performing tenant, strong coverage, and maybe a lease is coming up and we're negotiating that lease. So we call that our watch list as well because it's got a particular focus on that asset. I think you're asking specifically about those situations, which are more akin to sort of imminent payment issues or the like. And we've no material tenants on our high monitoring watch list. And in fact, GenesisCare has dropped off our top 10 tenant list, meaning the remaining GenesisCare entity that continues to lease 7 assets from us as part of that -- what was originally part of that master lease. And Stoughton, of course, is not a part of -- is not a material tenant, but we thought it appropriate as kind of best-in-class disclosure to disclose that tenant. By the way, Stoughton as a percent of scheduled ABR in June was only about 1.1% ongoing.

Okay, that's helpful. Maybe just the last one, just like on the deal flow pipeline, like how would you guys characterize like the funnel right now? Like just maybe looking -- I'm not telling you to give us any numbers here, but like just looking into 3Q, like what are you seeing? Like how many opportunities are there? How long is it taking you to start to finish? Just like helping us size things a bit would be helpful.

Sure. We see just comparing it to give you some picture of we came out of, as you well know, a 0 interest rate environment 2.5 years ago or so. And we saw a very robust market where there was tremendous liquidity in the bank market and the equity markets for folks who were buying. So we saw private buyers be very active. We saw REIT buyers, traded REIT buyers be very active as well. Then obviously, the brakes were put on to a large degree as the Fed started to raise rates. So we've seen a tremendous drop up in volume -- drop off in volume overall. We were active last year in terms of acquisitions, acquiring over $150 million of property even in a market that was very, very muted. This year, we've acquired over $163 million of property in what is still a reasonably, I'd say muted market, meaning volumes way down from what we saw, roughly speaking 2.5 years ago. What we're seeing? Opportunities, it is -- we'll seek out opportunities to close between now and year-end, but we're going to be disciplined. We see opportunities every week. They're prioritized. They -- we see opportunities, new opportunities arrive, we'll bid on opportunities. There's not a lot of competition in the market today. I'd tell you we can be very choosy in terms of the opportunities and we're being very disciplined and choosy in terms of even submitting bids and executing. One thing that I think we do have a reputation for in the market is if we're going to submit a bid and pursue an opportunity, we'll follow through on that pricing that we indicate. We saw that earlier in a larger transaction that we executed of a portfolio of 5 properties in the first half of this year. And it was a kind of a more of a distressed situation of the seller, but the properties were not distressed. And we were picked over other very qualified bidders because we ultimately followed through in a very short order because again, we're a true cash buyer and then our liquidity is available at a moment's notice, essentially 3 days notice. So we've tremendous availability under our credit facility of almost $500 million. So we remained, I'd tell you, poised. The pipeline is what I'd expect in this current market relative to the total market volume. And I do anticipate we'll find opportunities between now and year-end. When you ask about, I'll call it, gestation period of real estate, it's long. And what I mean by that is, unfortunately, it's not 30 days or less, but the bidding process through ultimately putting a property under contract, beginning to end is certainly no less than 60 days typically sort of in a best case scenario, but can be as far as 120 days. I hope that answers your question.

No, that's all incredibly helpful. That's it for me for now. And congrats on the first public quarter.

Thank you very much, Nate.

[Operator Instructions] And with no further questions, that will conclude our question and answer session. I'd now like to turn the conference back to Mr. Michael Seton, President and CEO, for closing comments.

Thank you, operator. Once again, thank you to our new investors and long-standing investors as well as members of the research community. We appreciate your interest in Sila, and we look forward to speaking with you again soon. Have a great day.

And this will conclude today's conference. Thank you for your participation.