W. P. Carey Inc. (WPC) Earnings Call Transcript & Summary

Hello, everybody, and thanks for being with us today on this 2024 fourth quarter earnings call. Prior to starting, I want to note that certain remarks on this call are not historical facts and could be considered forward-looking statements. Factors that might lead actual results to vary materially from W. P. Carey's expectations appear in our SEC filings. A replay of this conference call will be accessible online in the Investor Relations area of our site at wpcarey.com, and it will stay archived there for roughly 1 year; you can also locate copies of our investor presentations and other related materials there. With that said, I'll turn the call over to our Chief Executive Officer, Jason Fox.

Thanks, Peter, and good morning to all of you. For W. P. Carey, 2024 marked a decisive turning point, as we completed our exit from the office sector and set a fresh baseline for AFFO that lays the groundwork for growth going forward; we likewise finished the year with robust fourth quarter investment volume, and the entire benefit of that will carry into our 2025 earnings. Looking toward the coming year, we see W. P. Carey as a compelling investment opportunity. We're expecting AFFO to grow around the mid-3% mark, based on cautious projections for how much we'll invest and how tenants will perform, given the unknowns tied to inflation, interest rates, and what the new administration could mean for markets. Add in our dividend yield, which is over 6%, and that points to a total return in the neighborhood of 10%. This morning I'll quickly walk through what we've been investing in lately and how solid our balance sheet remains, though the main focus of my comments will be the deal landscape and our ability to continue funding fresh investments without selling equity. I'll touch on tenant credit as well. Our CFO, Toni Sanzone, is going to walk everyone through the results and guidance, and we also have Brooks Gordon, who leads Asset Management, on hand for questions. Let's start with investments. During Q4, we closed deals totaling just north of $840 million — a quarterly record for us — and that pushed our full-year figure to roughly $1.6 billion, putting us in the upper portion of the range we'd guided. With 10-year treasury yields falling over the autumn, initial cash cap rates for what we bought in Q4 landed in the mid-to-low 7s, while the full-year average came in at 7.5%. We continue to lock in highly favorable rent escalation terms, which came in around the mid-2% on average and climbed as high as the 3% mark on select transactions. As a result, for the whole of 2024, the average yields on new investments across the lease terms remained higher than 9%, which produced strong returns compared to what we currently pay for capital—and even stronger ones, since the money we put to work came from cash we had built up earlier in the year instead of from issuing new equity. Through ABR, our 2024 investments contributed more than $100 million, on leases with a weighted average lease term of 17 years. North America accounted for approximately three-quarters of the volume we invested, with the U.S. making up the large majority of that; Europe represented one-quarter. While warehouse and industrial took up about 60%, a significant share also went toward U.S. retail. In the U.S., retail is still the biggest segment. When it comes to the net lease sector, we've completed retail transactions before, mostly in Europe though some in the U.S. as well. The key point is that we see putting more money into American retail as something that works alongside our core warehouse and industrial strategy, not as a replacement for it. Being able to tap debt capital at attractive pricing continues to give us an edge, which strengthens our capacity to close acquisitions in a way that adds value — and in our view, the market hasn't fully recognized this yet. The combination we have across U.S. assets. Because we carry debt denominated in both dollars and euros, the average interest rate we pay sits among the lowest in the entire net lease sector. Our plan is to keep financing a portion of our capital structure through long-term euro bonds, which right now carry pricing in the high 3% range. Pair that with U.S. bonds priced in the mid-5s, and we get an appealing funding source for net lease transactions, cap rates sitting in the 7s, and average yields above 9%. Over on the equity side, plenty of highly attractive capital sources are within reach — self-storage operating properties being the main one, though there are also other noncore assets priced attractively that we'd anticipate selling at cap rates substantially below where the proceeds could be put back to work in fresh investments. Beyond that, selling these assets will make our portfolio simpler still, cutting down considerably on the noncore operating assets we hold, and give us strong confidence in our ability to keep completing accretive net lease investments during a period when, in our view, our equity is undervalued. Now let's look at the deal environment. As I noted at the start, a range of uncertainties confronts markets right now — where interest rates are headed, inflation, and what the new administration might do. During the early portion of 2025, 10-year treasury rates jumped sharply. That could widen bid-ask spreads and put a damper on deal activity, though a rapid shift is possible should 10-year treasury yields keep declining and settle down. Bigger scale M&A in 2025 could open up sale leaseback opportunities as well, and looking at the medium or longer term, onshoring or nearshoring might deliver a tailwind for our investment activity and portfolio alike. The first quarter probably won't be as busy as the fourth, yet we keep uncovering appealing chances to deploy capital. More than $300 million of identified transactions sit in our pipeline at present, with most expected to close during this quarter, and roughly $100 million in capital projects are slated for completion within the year. Our initial guidance on investment volume reflects a more cautious stance, though, because visibility is limited this early in the year and uncertainty hangs over the transaction environment. If things become clearer regarding transaction activity later in the year, we would look to raise our outlook. We also feel quite confident that we can finance deal volume—even above the upper limit of the range we initially provided—without selling equity. Despite that cautious stance, to say it again: we view roughly 3.5% growth in estimated AFFO per share as a solid place to begin the year. Before I hand things over to Toni, who will go further into the assumptions behind our guidance, I want to share an update on the large tenants whose credit we are monitoring. At present, that means the 3 tenants named on earlier calls — True Value, Hellweg and Hearthside — which together now account for 4.5% of ABR. I'll walk through the specifics, but to sum things up: we've reached a settlement regarding True Value that ought to eliminate a significant source of investor uncertainty, whereas Hellweg and Hearthside remain basically the same as far as credit goes compared with the prior quarter. Since the last time we held an earnings call, Do It Best has closed on buying True Value and is paid up on rent across every one of our properties — that's 8 warehouses plus 1 paint manufacturing facility. We've worked out a deal with Do it Best, pending final paperwork, that covers a number of key items. Do it Best is keeping 6 facilities at the rents they currently pay, under leases whose weighted average lease term comes to 7 years, with ABR of $14.1 million. Rent on the other 3 assets will be paid through June of 2025, and at that point they'll be emptied out. We're actively putting them on the market and anticipate completing sales in the back half of the year. If those sales close on schedule, we'd anticipate only a minimal effect on 2025 AFFO, and that's already baked into our guidance. And finally, because Do It Best's credit is so strong, we no longer see it as a credit risk concern. The Hellweg picture has barely shifted since the prior quarter; they're still current on rent and still working through their turnaround plan aimed at cutting costs and managing liquidity, and they've managed to extend their debt maturities out to 2027. They keep confronting substantial operational headwinds stemming from weaker German consumer spending, something we're watching carefully — that includes ongoing conversations with Hellweg's management team and going over its financials as we get them. We're likewise continuing to act in ways meant to get ahead of any possible rent disruption. Given the particular interest we've gotten, we feel confident that other operators want our stores and that rents would broadly match what's being paid now, though that would involve some downtime in CapEx. We're additionally looking at a number of dispositions that might chip away at Hellweg's share of our ABR this year. Last, regarding Hearthside, our position hasn't changed — we don't anticipate any rent disruption. Hearthside aims to come out of bankruptcy in the earlier part of this year, and once that happens, we'll look at removing it from our credit watch list. I'll stop here and pass things to Toni for our results and guidance.

Appreciate that, Jason, and hello everyone. We wrapped up the year with a strong fourth quarter, posting AFFO per share of $1.21, bringing full-year AFFO to $4.70 per share, with the quarter standing out for record investment volume and organic growth across our portfolio. On the disposition side, we sold 5 properties in Q4, bringing in gross proceeds of $119 million. That brought our total disposition volume for the year to $1.2 billion, driven by office asset sales through our office disposition program as well as the U-Haul purchase option being exercised. Contractual same-store rent growth came in at 2.6% year-over-year for the fourth quarter, and we expect it to stay in the mid-2% range during the first quarter of 2025, then ease to an average in the low to mid-2s across the full year. Comprehensive same-store rent growth reached 2.5% year-over-year in the fourth quarter, reflecting vacancies, leasing, restructurings and rent recoveries. In the fourth quarter, we collected rent from cash basis tenants, which placed us in a net rent recovery position for the quarter, the bulk of which had been anticipated in our 2024 guidance. Right now, when we look at our 2025 AFFO guidance, we've built in somewhere between $15 million and $20 million to account for possible rent losses tied to tenant credit events. That's a bit more conservative than where we usually start the year, and it reflects the broader economic uncertainty we're seeing today. As the year goes on, we'll continue to share updates about tenant credit and adjust our numbers if needed. During the fourth quarter, leasing activity included 11 renewals or extensions, and things stayed on a positive track — we recovered 107% of prior rents overall, with positive re-leasing spreads in warehouse and retail. Re-leasing activity accounted for slightly less than 2% of portfolio ABR and added roughly 5.5 years of incremental weighted average lease term. For Q4, income from other lease-related items came in at only $1.3 million. That brought the full-year figure to $20.3 million, which was right in line with what we had expected. Based on the visibility we currently have, we expect other lease-related income to land somewhere between $20 million and $25 million in 2025, consistent with what we've seen in recent years. Because of the money we put into asset management efforts during 2024, we ended the year with a net lease portfolio containing 1,555 properties. That portfolio generated ABR exceeding $1.3 billion, had a weighted average lease term of 12.3 years, and posted an occupancy rate of 98.6%. As of year-end, our operating property portfolio was made up of 78 self-storage properties, 4 hotels, and 2 student housing assets. In the fourth quarter, operating property NOI dropped to $17.6 million. That decline reflects the fact that 12 self-storage operating properties were converted to net leases, which stems from the transaction with Extra Space that closed in September and that we talked about on our previous earnings call. Our operating asset portfolio, we expect, will generate operating NOI of $70 million to $75 million. This is an annual number, and it excludes any impact from dispositions we anticipate this year — specifically, sales of self-storage operating assets that our guidance assumes will occur primarily during the second half of the year. As soon as we gain clearer visibility into the timing of those asset sales, we will update our operating NOI estimate if that becomes necessary. Since we serve as outside advisors to NLOP, the full year 2024 brought in $6.6 million of asset management fees, along with $4.2 million from other advisory income and reimbursements. Looking ahead to 2025, those line items should total about $8 million, though management fees are projected to decline as NLOP divests more assets, while the reimbursement remains flat at $4 million. During the fourth quarter, nonoperating income was made up of $6.6 million in interest earned on cash deposits, $4.5 million in realized gains from currency hedges, and $2.8 million in dividends tied to our equity stake in Lineage. The figure landed at $13.8 million, which was basically unchanged from the third quarter, as reduced interest income got offset by bigger realized gains on currency hedges. Nonoperating income for the entire year reached $52.2 million. Looking at 2025, our guidance right now presumes nonoperating income will be in the mid-$30 million range. That assumes Lineage keeps its quarterly dividend flat at $2.8 million per quarter, interest income on cash drops to roughly $5 million for the year, and gains on currency hedges rise given how strong the U.S. dollar is at present. Let's now shift to the main factors behind our 2025 guidance. Looking ahead to 2025, our guidance calls for AFFO in the range of $4.82 to $4.92 per share. At the midpoint, that works out to roughly 3.6% growth. This assumes investment volume somewhere between $1 billion and $1.5 billion, with the funding coming mainly from accretive dispositions of noncore properties. Right now, we're modeling total dispositions of $500 million to $1 billion. We expect the vast majority of those to be opportunistic sales of noncore assets, with cap rates averaging in the low to mid-6s, and the proceeds redeployed into net lease assets at initial cap rates in the 7s. Should deal volume come in stronger than our initial assumption, we retain plenty of capacity to divest additional assets on an accretive basis. When it comes to our disposition guidance, the smallest piece should come from net lease dispositions made in the ordinary course, which will be roughly $250 million. For 2025, we expect G&A to land somewhere between $100 million and $103 million, while nonreimbursed property expenses should come in at $49 million to $53 million. On an AFFO basis, tax expense — mostly current foreign taxes tied to European assets — should fall in the $39 million to $43 million range. Now let's turn to the balance sheet and leverage. Successful execution in the debt capital markets kept supporting our investment activity. Throughout 2024, we brought in roughly $1.7 billion in debt capital, with a weighted average coupon of 4.3%, as we issued bonds at pricing that was attractive compared with the yields we got on new investments, and we also benefited from being able to tap the eurobond market. On the whole, the weighted average interest rate on our debt came to 3.2% for 2024, and we expect it to stay at or a bit under that level in 2025, since we keep benefiting from leading euro-denominated debt in our capital structure. We closed out 2024 with total liquidity of about $2.6 billion, because we were essentially undrawn on our $2 billion revolver while holding $640 million in cash. Since then, though, $450 million has gone toward repaying the senior unsecured notes that came due at the beginning of February. Now that our 2025 bond is taken care of, our debt maturity profile stays very manageable, made up of only about $200 million of mortgage debt maturing in 2025. The next bond maturity we face is the euro bond that matures in April of 2026. Thanks to our liquidity, we still have considerable flexibility to enter the bond market whenever we see market conditions as most favorable, even though our guidance at present assumes no debt issuance this year. We also anticipate recasting our 2026 euro term loan during this year, before it matures. As we closed out the fourth quarter, our primary leverage measurements landed right where they'd been throughout all of 2024. The ratio of debt to gross assets came in at 41.6%, placing it at the bottom edge of the mid- to low 40s range we aim for, while net debt to EBITDA ended 2024 at 5.5x, compared with our goal range of mid- to high 5x. Looking ahead to 2025, we anticipate that both of these critical leverage figures will remain comfortably inside our target ranges, particularly given our intention to finance fresh investments by selling assets. With that said, I'll hand the call back to Jason.

Thank you, Toni. With the uncertainty that lies ahead as we move toward 2025, our initial guidance includes a certain amount of conservatism, covering both investments and tenant credit. Even with that uncertainty, we think our position for navigating the markets is a strong one, and we're confident about our capacity to execute during this year; the fourth quarter was very strong for us in terms of deal volume, and we can see a path to continuing to deploy capital during the first quarter. Although investment spreads are a bit tight relative to going in cap rates throughout most of the net lease sector, the spreads to average yields that we're producing, along with the related GAAP cap rates, are still highly attractive. Also, the dilutive headwinds we dealt with in 2024 from office dispositions and the U-Haul purchase option are entirely behind us now. Looking at the balance sheet, we continue to sit on the low side of every leverage target we have. The single bond maturity we have in 2025 is already taken care of, and our liquidity is still extremely high. Above all, we won't have to raise equity to fund deals in 2025. Rather, we'll tap alternative sources of capital via accretive asset sales, mainly by selling noncore operating assets at prices meaningfully inside of where we can reinvest those proceeds, plus net lease assets, which gives us confidence in our ability to keep doing deals and drive AFFO growth this year; that wraps up our prepared remarks, and I'll turn the call back to the operator for questions.

When it comes to tariffs, clearly there's been plenty of headlines and, naturally, plenty of ambiguity. I'm wondering whether you could share your perspective regarding how your portfolio could be impacted by them? And assuming that's shifting in any way, how do you approach fresh investments?

Absolutely, Brad. Sure. I mean, tariffs definitely introduce some level of uncertainty into the market backdrop, and we touched on that briefly. And it's clear they might carry wider economic consequences, particularly for — or possibly for inflation and consequently rates. I mean, we are diversified. That, I believe, is a crucial form of protection inside our portfolio. And perhaps on the positive side, over the medium to long term, should tariffs prove significant and remain in effect, we might encounter some tailwinds arising from onshoring in manufacturing, and perhaps that would help our warehouse and industrial portfolio. Regarding fresh investments, we will keep up the same rigorous approach to underwriting; we consider the downside exposure and protections and the way we structure deals, just as we've always done, and we'll carry on with that. But, on the whole, I think we're going to need to respond to whatever tariffs turn out to be, since they've — it's been somewhat unpredictable.

All right, understood. Then there were 2 additional tenant developments I wanted to ask about that didn't come up in the prepared remarks. Could you share your perspective on the JOANN's distribution center? And regarding Advanced Auto Parts, they're clearly shutting stores. I realize what you hold is distribution centers rather than stores, but it would be great to hear any update on where those stand.

Yes, absolutely. Brooks, would you like to handle that?

Okay. Regarding JOANN's, they've now gone through a second bankruptcy filing within a span of two years, as you're aware, and we hold a single warehouse that represents roughly 20 basis points of ABR. The rent there sits below market, so our expectation is that we can get it leased up again rather efficiently. Having said that, our guidance does not factor in any retenanting assumption, though we are baking in that the company enters liquidation near the midpoint of the year. From a modeling standpoint, we view that as a cautious way to handle it. Turning to Advance Auto, we have ownership of 28 facilities. That's one master lease, accounting for approximately 1.4% of ABR, with 8 years remaining on the term. As a result, there's essentially no impact coming our way in the near term. A handful of warehouses will be shut down. I believe they made an announcement covering 3 of the ones we own, which hands us considerable flexibility to work on those properties while the lease is still active. Those should present solid chances for us to maybe drive rents somewhat higher at those locations, yet no real effects are anticipated or included in our models for the near term.

Regarding the pace of same-store growth, I believe I missed that remark. But were you saying that same-store growth for the portfolio — at least in the net lease portion — will slow down to the low 2s by the end of the year? I just want to confirm I have that correct.

Yes. I'll handle that one. Rich, that's roughly right. My expectation is that the first quarter of 2025 will likely be our strongest figure, in the low to mid-2% range, and then we'll see it come down from there to the low 2s. Now, once again, at this point we are incorporating somewhat elevated inflation readings on the U.S. side. So we'll make adjustments as needed. But I don't believe that will cause any material movement.

Okay. Thank you, Toni — that's really useful. Now, turning to how we're deploying capital: clearly, a major driver of the attractive spread you're able to earn on European investments comes from borrowing costs compared with those in the U.S. And I suppose, broadly speaking, when it comes to the next additional dollar of capital that gets directed toward Europe, how comfortable do you feel about that, given all the things happening around the world right now?

Yeah. Well, Europe is a place where we've had a presence going back a long way — since 1998. I'd say we understand those markets well, we have people on the ground, and our team there is European. So as with anything we pursue, we're extremely thorough when it comes to underwriting and the way we assess markets and, of course, tenant credit and so forth. So there's a rationale behind our long-standing desire to achieve bigger spreads in Europe, and perhaps we're able to do so. At present, we can borrow in euros at roughly 150 basis points tighter than what's available to us in the U.S. And I'd say cap rates sit in comparable ZIP codes across Europe and the U.S. — though naturally, there will be some differences from country to country and case by case. Still, on the whole, we're able to achieve larger spreads there, and we believe we're pricing in whatever added risk people might perceive in that part of the world.

Nice work on the quarter. Jason, I'm just wondering — given the cap rates you're using for those dispositions, it clearly looks like a lot of self-storage is baked into that figure, as Toni mentioned; but I'm wondering, is there anything else sitting in what you'd call the noncore bucket?

Yeah. I mean, at a high level, we discuss our disposition strategy and the way we intend to fund deals. We — I believe the majority of what's in there falls into noncore. Most of it, like you said, consists of operating assets, and within that largest chunk, storage makes up the biggest part, though there's also some student housing, plus, I'd add, an operating hotel that we'd probably sell this year too. Still, self-storage accounts for most of it; our target is to sell, I'd say, a portion of that portfolio, probably during the back half of the year. But broadly speaking, what we expect is that throughout the portfolio we dispose of, we'll produce roughly 100 basis points of favorable spread separating disposition cap rates and reinvestment cap rates; that's more or less our big round figure at the moment. And of course, as the year progresses and we finish some of those dispositions, we're able to give updates, but that's the rough math for you.

You brought up roughly $400 million worth of deals in the pipeline that have been identified, compared with what you're guiding to. From a cadence standpoint, should we continue to assume things will lean toward the back half so they line up with when those sales close?

Yeah. That's a fair question. Our disposition guidance at the midpoint sits at 750 right now, and it's likely somewhat more weighted to the back half, though how much we actually dispose of and when probably depends more on investment volume and how quickly we pace investments. We try to align those as well as we can. So there will be some movement in and out over the course of the year, but the figures Toni walked through are likely the best steer we can offer at this point.

Excellent. One brief item for Toni, then I'd like to squeeze in another if possible. Toni, we picked up on something — is anything unusual showing up in interest expense? Compared with the prior quarter it came down, and clearly you were carrying somewhat more debt ahead of selling — pardon me, ahead of redeeming the bond in February. Absent the K being filed, does that figure contain anything odd?

No. My view is that the proper approach is examining interest expense alongside interest income, netted against each other. On a year-over-year basis, as I mentioned, many of our maturities have already been dealt with. Benchmark rates are coming down relative to where they sat in 2024. So comparing year over year, netted out, net interest income tied to the cash we held across our deposits ought to be roughly flat versus a year ago. Therefore we aren't facing any headwinds as we move into '25, and nothing disruptive or material occurred during the fourth quarter, assuming that's the point you're raising.

I'd like to zoom out a bit here. You mentioned cap rates for Q4, and it sounds like you're expecting a fairly comparable tempo in 2025. That said, with the 10-year still climbing, do you figure sellers will have to adjust what they're asking for, maybe more toward what works for you? Or does it seem more probable that deal activity just decelerates given where things stand right now? I'm just curious what your take is on all that.

Yeah. Honestly, forecasting this is tough. My sense is that during Q4, cap rates on transactions dipped somewhat. They landed just under what we averaged across the year. I believe that mirrors a reduced — both the reduced — 10-year back then, during Q4, perhaps in its earlier stretch, we observed it sitting in the mid- to high 3s around that period. On top of that, I think people anticipated that rates would decline further as the Fed kept cutting. That view has shifted somewhat, I'd say. And clearly, what's fresh today is that inflation reading coming in hot. So over the next several weeks or months, we'll find out what effect that has; but yeah, over the long haul, cap rates are definitely going to move in line with long-term interest rates. Near term, though, it introduces some choppiness, likely pushing bid-ask spreads wider to a degree, which could weigh on deal volume. I suspect that partly explains why we put out deal volume guidance in what I'd characterize as a cautious range, since uncertainty exists right now, and it's unclear how that translates into what sellers require and anticipate, and what that means for whether they come to market. Still tough to forecast, clearly, but over the long run, cap rates should definitely follow interest rates, and we'll just have to watch where those head.

Yes. All right. All right. Then for 2024 — I realize you made certain investments in Mexico as well as Canada. I'm just curious whether you're hitting the brakes or reconsidering the way you evaluate putting money into those two nations, since there's quite a bit of uncertainty surrounding possible tariffs.

Yes. Regarding the transactions we completed in those two nations, in Mexico, I believe there was 1 deal; the company was based in the U.S., a major firm, and I believe among the bigger privately held industrial conglomerates. So solid credit. Least important is that it's denominated in U.S. dollars. These were also extremely high-quality properties, with a long-term lease. So sure, there could be some near-term swings, and perhaps in how Mexico is perceived depending on what occurs with tariffs, and I'd say the same might hold for Canada. But since we hold long leases with strong credit, there aren't long-term worries there. We'll continue watching those markets. At times, a bit of dislocation or uncertainty can generate opportunity too. I believe we'll want to ensure we structure them properly so that there's no sort of short-term exposure that would worry us. But on the whole, I don't believe it significantly alters the way we view Mexico or Canada, certainly over the long term.

So if I run a quick calculation based on the disposition guidance you gave versus that $70 million to $75 million of operating property NOI, it looks like roughly 40% to 50% of it gets sold during this year. So I'm curious how you're viewing the remaining portion, and is that something you'll keep winding down in 2026? And by '27 none of it is left, or any other thoughts?

Yes. I'd say perhaps the base case sits at the midpoint of the disposition range, and your calculation is likely correct. But we'll continue assessing our funding requirements as deal volume evolves. And we definitely have room to push further into storage; plus we'd like to observe how the transaction market treats storage. I'd say possibly, if not during this year, then likely the following year, we'll largely exit the operating storage business, perhaps completely. I believe there will be chances to sell, though there may also be chances to convert a portion into net lease too. But at this point, I'd say there's somewhat of a newer range regarding how we think about what we'll do with the storage properties we currently hold.

Understood. Alright. Moving to my second point, returning to those credit-related matters. You addressed quite a bit regarding the particular companies, though perhaps I overlooked it. What does the wider bad debt figure look like, so to speak, within the 2025 guidance? I'm simply attempting to determine if there's any buffer past the entries you referenced, such as True Value and JOANN's and so forth?

Yes. Toni, would you like to handle that guidance figure?

Yeah. I'd say the starting outlook we gave includes a credit loss figure somewhere between $15 million and $20 million. That's roughly 50 basis points wider than the point where we'd normally kick off a year, and honestly it just comes down to the wider economic backdrop. What we actually did was assess risk from the ground up, looking at each tenant individually, and then work out a spread of potential results. We also approached it from the top down, and we deliberately baked in a bit of caution to account for some level of unpredictability. So on the whole, I believe we addressed the bigger tenants. We're not anticipating any near-term trouble with them, though we do again have a wide spectrum of possible outcomes that the $15 million to $20 million band would comfortably absorb across the year.

All right, I just want to confirm — does that $15 million to $20 million figure take in True Value and JOANN's, or would those be separate?

Yes, it covers them. Everything is included in that amount. That applies to each tenant we hold. And, as Jason mentioned regarding how things turned out with True Value, we anticipate very little negative impact there; even so, it takes in all the items we've talked about.

I know just 1.8% of leases are up this year, but could you give us more detail, particularly for warehouse and retail, where recapture rates are stronger in 2025 — or was that last quarter?