Oct 28, 2026 earnings call — Raised AFFO guidance and investment outlook
Raised 2026 AFFO per share guidance to between $5.23 and $5.29, increasing the midpoint by $0.03.
Revenue $0.5B (est $0.5B) · EPS $0.61 (est $0.70)
Key quotes
"Year to date, we have completed approximately $1.6 billion of investments at a weighted average initial cash cap rate of 7.5%."
"Our AFFO growth also continues to be supported by the strength of our rent escalations. Providing a meaningful source of earnings growth independent of transaction activity."
"Our liquidity position also remained strong. Ending the third quarter at $2.6 billion including almost full availability on our $2 billion credit facility."
Analyst Q&A 12
2027 growth outlook and Vegas loan
Q (Brad Heffern · RBC): Analyst asked if mid single-digit AFFO growth and double-digit returns for 2027 are still reasonable given higher rates and cost of capital. He also asked whether the Las Vegas construction loan maturing mid-2027 could return capital or stay in place.
A: Management said higher interest rates are a headwind and make transaction markets uncertain, but they expect factors like indexed rent increases and raised capital to help offset that. They noted the Vegas loan could be resolved in the second half of 2027, the developer controls refinancing, and the loan coupon ratchets up to 8% in January which could be advantageous to keep it.
"Higher financing costs, meaning more interest expense and maybe tighter spreads too, and it probably brings some uncertainty around the transaction markets." — Jason Fox (CEO)
build-to-suit pricing and spreads
Q (John Kim · BMO): Analyst asked whether pricing power seen in sale-leasebacks also applies to build-to-suit deals, and asked where management sees investment spreads given higher cost of capital and cap rate moves. He also asked about refinancing headwinds and earnings impact for 2027.
A: Management said build-to-suits share some complexity with sale-leasebacks and can have forward pricing power in a rising rate environment, though they have not added many recently. On spreads, they said accretion depends on the cheaper prior capital used to fund new deals and their pre-raised equity and other funding options; on refinancing, they highlighted one big Eurobond maturity in April as the primary 2027 refinancing risk but think it is manageable.
"we have 1 Eurobond €500 million maturing in April." — Toni Ann Sanzone (CFO)
Q4 acquisitions and rent abatement impact
Q (Greg McGinniss · Scotiabank): Analyst asked whether the Q4 pipeline deals are already pricing at high-7% cap rates and whether that level could be a quarterly minimum. He also asked how to model the Nord Anglia rent abatement impact on Q4.
A: Management said cap rates have moved from low-mid 7s in H1 to mid-high 7s for recent and pipeline deals and they hope to push higher if rates stay elevated. They said the Nord Anglia deal has 4 months of free rent on one property, about $3.5 million, mostly in Q4, and that rent abatements plus seasonality could reduce Q4 AFFO by $0.02 to $0.03.
"we have 4 months of free rent there on just the 1 property." — Toni Ann Sanzone (CFO)
rent abatements trend
Q (Smedes Rose · Citi): Analyst asked if giving free rent on renewals is typical and whether that might continue into 2027. He also asked where cap rates are changing fastest across sectors.
A: Management said rent abatements are not atypical but are used infrequently; they are one of several negotiation tools and not expected to become a trend. They added that sale-leasebacks, especially sub-investment-grade industrial, have shown the most pricing adjustment so far, while investment-grade retail cap rates may adjust more slowly because more capital chases those assets.
"it is not atypical, but it is not something that we do particularly often." — Brooks G. Gordon
tenant credit watch list and rent loss
Q (Jason Wayne · Barclays): Analyst noted the company has been conservative on rent loss and asked for an update on the tenant credit watch list and any changes in tenant credit trends.
A: Management said overall credit risk has improved and several companies have come off the watch list, with Helwig coming off completely in Q4. They highlighted Cornerstone and Hertz as larger watch items at about 60 basis points each, noted Hertz occupies key airport sites, and said they would not expect lease impacts even if a tenant restructures.
"I mean, several companies have come off our watch list Helwig comes off completely in Q4, as Toni mentioned." — Brooks G. Gordon
pace of cap rate changes and 8% scenarios
Q (Michael Goldsmith · UBS): Analyst asked how quickly cap rates might move into high-7s or 8% and whether that would return market conditions to normal. He also asked if discussions are happening at 8% cap rates and about Q3 deals slipping into Q4.
A: Management said timing depends on stability in long-term yields and if rates settle (example given around 5%) then real estate pricing could settle in the high 7s; sale-leasebacks adjust fastest. They noted the current pipeline averages mid- to high-7s, some deals can reach 8% depending on specifics, and they raised capital that allows measured investment through 2027 without new equity.
"we do think the types of deals that we target in particular sale leasebacks, pricing there will adjust fastest, and maybe other areas of retail, for instance, may take you know, a little bit longer." — Jason Fox (CEO)
Europe activity and Nord Anglia purchase
Q (Jana Galan · BofA): Analyst asked if transaction activity and negotiation willingness differ between Europe and the U.S., and asked why the company bought an education asset from Nord Anglia and thoughts on education sector growth.
A: Management said Europe mirrors U.S. dynamics with similar volatility and pockets of activity; about 30% of deal volume year-to-date has been in Europe and most are sale-leasebacks. They said the bought asset is one of Nord Anglia's schools, they know the tenant well, like the operator and site-level coverage, and view follow-on deals with tenants favorably.
"The asset we bought is 1 of the schools run by Nord Anglia." — Jason Fox (CEO)
disposition guidance and capital sources
Q (James Feldman · Wells Fargo): Analyst asked why disposition guidance changed and whether deals are falling out or pricing is unsuitable. He then asked how large the company's buying power could be from its listed capital sources before raising equity.
A: Management said the wide disposition range reflected retained flexibility and they have narrowed it as the year progressed, not because deals dropped out. They listed capital sources: $540 million of unsettled forward equity, about $300 million annual free cash flow, expected proceeds from normal dispositions, a potential $150 million to $200 million Lineage stake unlock, and undrawn revolver capacity, saying they can invest through 2027 without raising equity.
"Yeah. I mean, we have you know, call it, $540 million of unsettled forward equity." — Jason Fox (CEO)
competition and bonus depreciation effects
Q (Anthony Paolone · JPMorgan): Analyst asked if 2027 headwinds look comparable to 2026, and whether competition from PE/asset managers has increased and if bonus depreciation is changing pricing dynamics.
A: Management said deal activity and spreads will drive outcomes and portfolio rent bumps will help offset rising interest expense; details will be provided with 2027 guidance. On competition, they said private equity competitors are not more active than before but often underwrite higher leverage, and bonus depreciation can drive aggressive pricing in certain property types like car washes and c-stores though it does not affect most of their large sale-leaseback deals.
"Private equity funds do tend to underwrite the higher leverage." — Jason Fox (CEO)
importance of dispositions and education concentration
Q (Spenser Allaway · Greg Street Advisors): Analyst asked how important pruning the portfolio is through dispositions even when prices are higher, and followed up on the Nord Anglia thesis and acceptable concentration in education assets.
A: Management said they have navigated strategic dispositions across cycles and can use situational sales (tenant buybacks or special opportunities) that are less tied to interest-rate-driven markets. They noted most portfolio pruning is done, future pruning will be marginal and opportunistic, and their education exposure is mostly Nord Anglia schools done case-by-case; they are not pursuing a broad education expansion.
"many of ours are not your kinda true investment sales." — Brooks G. Gordon
escalators and lease bumps focus
Q (James Kammert · Evercore): Analyst asked whether the company is focused on pushing escalators higher in lease negotiations, especially for sale-leasebacks.
A: Management said escalators are an important part of sale-leaseback economics alongside the going-in cap rate, and they focus on driving internal growth through bumps. They stated they often negotiate CPI or fixed increases, noting fixed increases average mid- to high-2s and CPI terms depend on region and deal specifics.
"When you think about the economics of a sale leaseback, there is the going in cap rate, which is obviously very important." — Jason Fox (CEO)
Lineage stake sale timing and cost
Q (Greg McGinniss · Scotiabank): Analyst asked whether management will sell the Lineage shares right when they unlock and how that cost of equity compares to their forwards.
A: Management said they will not necessarily sell immediately on unlock and will avoid selling into poor market conditions; they expect to liquidate over a quarter or two and reinvest proceeds into core net lease. They also said the cost is slightly more expensive than some forwards but the sale would provide accretive capital at many price levels.
"I would not say that the day that they are available to trade we are gonna hit the sell button." — Jason Fox (CEO)