NNN
#<UNK>, hey, it's <UNK>.
That's an excellent question.
When we develop a relationship with a retailer, what we see is that it perpetuates itself over a number of years.
I looked at 2016 and of the 40 relationship retailers that we did business with, 11 of them were new, meaning that we didn't do any business with them in 2015.
So that's kind of a 25% rollover there or addition, I guess, in 2016.
I don't have long-term historical numbers on that, but that feels like a little more than usual.
We typically add a few relationships each year and have a few drop off.
I will also say that 40 ---+ doing business with 40 relationship retailers is the biggest year we've ever had for number of relationship retailers.
And 100% of our dollars invested in the fourth quarter in 2016 were with relationship retailers.
And typically that percentage is more in the two-thirds of dollars invested number.
Our leasing team is working on those right now.
We have 31 SunTrust leases that will not be renewed in April of 2018.
So we've got a little bit more than a year before the current rent stops on those properties.
And the rent on those properties comprises about 0.7% of our overall base rent.
So again, just to keep that in perspective, it's a very nominal amount in the big picture.
Our leasing team is working on the assets and we're off to a very good start.
But it's too early to report any material news yet.
I think also maybe just one other factor is that there's no effect on our 2017 numbers or guidance with respect to those 31 properties.
I perhaps should also add that we are scheduled to sell 10 of the SunTrust properties back to SunTrust at the end of the first quarter of 2017.
That transaction does look like it's on track, and that's a at a 5.65% cap rate.
<UNK>, let's touch on the last point first.
We are primarily focused on small box retail and have built a portfolio that we've got.
But there is room in our portfolio for larger boxes, and we look at those deals all the time.
<UNK> mentioned that what we focus on a great deal is market rent when we're underwriting our acquisitions, and so we would ---+ we will look at big box deals, and you may see us do some of those deals over time.
But they will be thoroughly, selectively underwritten.
Gander did ---+ sporting goods stores are to a large degree apparel stores, and that's been a tough line of trade for folks, and that's what was difficult for Sports Authority and it's been difficult for Gander also.
This winter was not cold enough long enough to generate the customer demand that sporting goods retailers were hoping for.
All of that ---+ and we have very little additional exposure to sporting goods.
I think maybe nothing or next to nothing.
But we will ---+ we'll continue to look at big box deals in any category, depending on the price per ---+ the price, the rent per square foot, and the market rent.
That's what we'll use to evaluate whether it's the right risk adjusted return for us.
The reality is for us, 1031 really has no impact on the acquisition front and it comes into play occasionally on the disposition front, meaning we're selling properties to a 1031 exchange buyer.
That at the margin, that's the only place it might come into play, and it would not impact our desire or interest in [up REITs] or units, et cetera.
I don't think it would impact us in any way there.
<UNK>, especially when you think about it, we specialize in lots and lots of small transactions, $2.7 million average, to try to create an up REIT or issue op units in that small dollar size.
The complexity just isn't worth it given that there's so many opportunities that we evaluate.
Should we talk about this when we know what the policy is.
Yes, we're speculating like everybody else.
I'll be curious, again, what comes out because I don't know anyone's really thought through the first, second and third derivative impacts of some of the things they think about.
You think about taking away interest deductibility ---+ I hope they think that through.
And so that would ---+ that could have ramifications, forget REITs, throughout the financial system.
So I'm not sure how much of this will actually come into play.
At the moment, I think tenants and what we had a little bit around this issue with lease accounting change and would that impact people if they had to keep the leases on the bounce.
To date, it has not changed anyone's economic behavior, some of these changes.
We'll see how the tax policy plays out, but I have a feeling that sale leaseback financing will remain a viable piece of the capital stack for a good variety of retail tenants.
We saw very little disruption in that market.
Again our primary focus is on doing transactions with those 40 relationship retailers and growing that pipeline of business.
But we didn't see deals come unwound.
We didn't see folks pulling the plug on transactions.
Looking forward, I think that there's ---+ it feels, <UNK>, like it's just going to be ---+ 2017's going to be a whole lot like 2016.
That there's going to be good properties out there for sale with willing sellers and competition if you're a buyer.
I will I say too, in one sense I like the choppiness in the capital markets, whether it's equity or the debt markets you're referring to.
Because usually what happens is to the extent that carries on for a period of time, it creates a little more discipline in the marketplace for acquisitions, and that's a better environment for us versus one where capital's widely, widely available at crazy cheap prices.
So we actually like it when things tighten up a bit in the capital markets that forces a little more discipline in the acquisition market.
It's better for us.
Yes, I haven't really priced it out in detail.
I'm guessing high 5%s today.
It got to the low 6%s recently.
I think it might be in the high 5%, 6% range today would be my sense.
Thanks very much.
We appreciate your interest.
We look forward to seeing some of you at the Citi show and best regards.
Cheers.
