Item 2. Properties
Item 2. Properties.
Our Real Estate Investment Portfolio
As of December 31, 2024, we had a portfolio of 2,104 properties, inclusive of 150 properties that secure our investments in mortgage loans receivable, that was diversified by tenant, concept, industry and geography and had annualized base rent of $460.6 million. Our 413 tenants operate 592 different concepts in 16 industries across 49 states. None of our tenants represented more than 4.2% of our portfolio at December 31, 2024 and our top ten largest tenants represented 17.6% of our annualized base rent as of that date.
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Diversification by Tenant
As of December 31, 2024, our top ten tenants included ten different concepts. The following table details information about our tenants and the related concepts they operate as of December 31, 2024 (dollars in thousands):
Tenant (1)
Concept Number of
Properties (2)
Annualized
Base Rent % of
Annualized
Base Rent
EquipmentShare.com Inc. EquipmentShare 59 $ 19,210 4.2 %
CNP Holdings, LLC Chicken N Pickle 8 8,492 1.9 %
BW Ultimate Parent, LLC YesWay 13 7,472 1.6 %
Busy Bees US Holdings Limited Various 32 7,215 1.6 %
Undefeated Tribe Operating Company, LLC Crunch Fitness 12 6,740 1.5 %
Denali Midco 2, LLC Super Star Car Wash 20 6,627 1.4 %
Pops Mart Holdings, LLC and Pops Mart Fuels, LLC Various 26 6,601 1.4 %
New Potato Creek Holdings, LLC Tidal Wave Auto Spa 16 6,546 1.4 %
Mdsfest, Inc. Festival Foods 7 6,104 1.3 %
Alimentation Couche Tard Inc. Circle K 40 6,000 1.3 %
Top 10 Subtotal 233 81,007 17.6 %
Other 1,864 379,564 82.4 %
Total 2,097 $ 460,571 100.0 %
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(1) Represents tenant, guarantor or parent company.
(2) Excludes seven vacant properties.
As of December 31, 2024, our five largest tenants, who contributed 10.7% of our annualized base rent, had a rent coverage ratio of 6.4x while our ten largest tenants, who contributed 17.6% of our annualized base rent, had a rent coverage ratio of 5.2x.
As of December 31, 2024, 96.6% of our leases (based on annualized base rent) were triple-net, where the tenant is typically responsible for all improvements and is contractually obligated to pay all operating expenses, such as maintenance, insurance, utility and tax expense, related to the leased property. Due to the triple-net structure of our leases, we do not expect to incur significant capital expenditures relating to our triple-net leased properties, and the potential impact of inflation on our operating expenses is reduced.
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Diversification by Concept
Our tenants operate their businesses across 592 concepts (i.e., generally brands). The following table provides information about the top ten concepts in our portfolio as of December 31, 2024 (dollars in thousands):
Concept Type of
Business Annualized
Base Rent % of
Annualized
Base Rent Number of
Properties (1)
Building
(Sq. Ft.) (1)
EquipmentShare Service $ 19,210 4.2 % 59 1,132,619
Crunch Fitness Experience 13,645 3.0 % 26 1,013,523
Chicken N Pickle Experience 8,492 1.9 % 8 279,483
YesWay Service 7,472 1.6 % 13 75,429
Captain D's Service 6,762 1.5 % 87 225,956
Super Star Car Wash Service 6,627 1.4 % 20 98,234
Pops Mart Service 6,601 1.4 % 26 130,893
Tidal Wave Auto Spa Service 6,546 1.4 % 16 58,154
Festival Foods Retail 6,104 1.3 % 7 520,475
Red Robin Gourmet Burgers & Brews Service 5,984 1.3 % 28 188,041
Top 10 Subtotal 87,443 19.0 % 290 3,722,807
Other 373,128 81.0 % 1,807 18,637,908
Total $ 460,571 100.0 % 2,097 22,360,715
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(1) Excludes seven vacant properties.
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Diversification by Industry
Our tenants' business concepts are diversified across various industries. The following table summarizes those industries as of December 31, 2024 (dollars in thousands except per sq. ft amounts):
Tenant Industry Type of
Business Annualized
Base Rent % of
Annualized
Base Rent Number of
Properties (1)
Building
(Sq. Ft.) (1)
Rent Per
Sq. Ft. (2)
Car Washes Service $ 65,352 14.2 % 195 993,402 $ 64.32
Medical / Dental Service 54,162 11.8 % 233 1,955,274 26.35
Early Childhood Education Service 54,093 11.7 % 230 2,459,190 21.50
Quick Service Service 42,115 9.1 % 428 1,135,522 37.07
Automotive Service Service 36,035 7.8 % 265 1,956,478 18.16
Casual Dining Service 34,695 7.5 % 145 1,006,976 31.93
Convenience Stores Service 29,867 6.5 % 169 699,890 38.38
Equipment Rental and Sales Service 24,723 5.4 % 86 1,675,003 14.76
Other Services Service 12,360 2.7 % 59 763,088 16.29
Pet Care Services Service 6,953 1.5 % 39 335,760 20.15
Family Dining Service 6,666 1.5 % 29 221,953 30.03
Service Subtotal 367,021 79.7 % 1,878 13,202,536 26.92
Entertainment Experience 36,122 7.8 % 62 2,247,463 15.21
Health and Fitness Experience 21,670 4.7 % 46 1,788,976 10.78
Movie Theatres Experience 4,404 1.0 % 6 293,206 15.02
Experience Subtotal 62,196 13.5 % 114 4,329,645 13.38
Grocery Retail 13,677 3.0 % 40 1,604,320 8.53
Home Furnishings Retail 1,530 0.3 % 3 176,809 8.65
Retail Subtotal 15,207 3.3 % 43 1,781,129 8.54
Other Industrial Industrial 12,181 2.6 % 39 1,790,388 6.49
Building Materials Industrial 3,966 0.9 % 23 1,257,017 3.16
Industrial Subtotal 16,147 3.5 % 62 3,047,405 5.11
Total/Weighted Average $ 460,571 100.0 % 2,097 22,360,715 $ 19.88
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(1) Excludes seven vacant properties.
(2) Excludes properties with no annualized base rent and properties under construction.
As of December 31, 2024, our tenants operating service-oriented businesses had a weighted average rent coverage ratio of 3.5x, our tenants operating experience-based businesses had a weighted average rent coverage ratio of 2.7x, our tenants operating retail businesses had a weighted average rent coverage ratio of 4.1x and our tenants operating other types of businesses had a weighted average rent coverage ratio of 8.8x.
Diversification by Geography
Our 2,104 properties locations are located in 49 states. The following table details the geographical locations of our properties as of December 31, 2024 (dollars in thousands):
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State Annualized Base Rent % of Annualized Base Rent Number of Properties Building (Sq. Ft.)
Texas $ 58,094 12.6 % 232 2,688,743
Georgia 33,687 7.3 % 159 1,170,288
Florida 29,609 6.4 % 102 1,009,063
Ohio 26,224 5.7 % 141 1,558,468
Wisconsin 23,063 5.0 % 89 1,203,062
North Carolina 18,040 3.9 % 86 823,149
Arizona 15,975 3.5 % 65 687,393
Oklahoma 15,603 3.4 % 70 961,748
Missouri 15,174 3.3 % 72 900,451
Illinois 13,925 3.0 % 63 603,709
South Carolina 12,663 2.7 % 66 542,546
Indiana 12,092 2.6 % 64 652,790
Michigan 12,062 2.6 % 62 1,135,416
Minnesota 11,099 2.4 % 44 628,174
New Jersey 10,728 2.3 % 31 429,474
Alabama 10,383 2.3 % 57 548,645
New York 9,528 2.1 % 61 390,778
Virginia 9,496 2.1 % 30 367,074
Arkansas 9,474 2.1 % 62 509,900
Tennessee 8,989 2.0 % 52 361,919
Pennsylvania 8,039 1.7 % 42 419,149
Mississippi 7,975 1.7 % 59 371,968
New Mexico 7,653 1.7 % 29 194,880
Colorado 7,465 1.6 % 30 353,655
Connecticut 7,174 1.6 % 23 579,458
Kentucky 6,410 1.4 % 48 310,474
Massachusetts 6,255 1.4 % 32 439,465
California 5,679 1.2 % 19 149,755
Louisiana 5,651 1.2 % 29 172,990
Iowa 5,650 1.2 % 32 363,483
Nevada 5,155 1.1 % 15 114,488
Kansas 4,683 1.0 % 18 201,900
Utah 4,426 1.0 % 5 321,256
New Hampshire 3,638 0.8 % 14 279,182
South Dakota 2,727 0.6 % 9 130,153
Maryland 2,411 0.5 % 9 75,410
Oregon 2,320 0.5 % 8 131,957
Washington 2,267 0.5 % 12 94,427
West Virginia 2,045 0.4 % 24 84,684
Nebraska 1,750 0.4 % 11 138,797
Maine 1,147 0.2 % 4 71,000
Vermont 1,006 0.2 % 9 64,622
North Dakota 876 0.2 % 5 72,400
Idaho 659 0.1 % 2 41,146
Rhode Island 473 0.1 % 2 22,865
Delaware 408 0.1 % 1 4,186
Wyoming 289 0.1 % 2 14,001
Alaska 253 0.1 % 2 6,630
Montana 179 0.1 % 1 3,400
Total $ 460,571 100.0 % 2,104 22,400,571
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Lease Expirations
As of December 31, 2024, the weighted average remaining term of our leases was 14.0 years (based on annualized base rent), with only 5.8% of our annualized base rent attributable to leases expiring prior to January 1, 2030. The following table sets forth our lease expirations for leases in place as of December 31, 2024 (dollars in thousands):
Lease Expiration Year (1)
Annualized
Base Rent % of
Annualized
Base Rent Number of
Properties (2)
Weighted
Average Rent
Coverage Ratio (3)
2025 $ 2,535 0.6 % 17 3.0 x
2026 3,476 0.8 % 24 3.2 x
2027 5,741 1.2 % 43 3.5 x
2028 4,378 1.0 % 16 2.6 x
2029 10,479 2.3 % 119 4.9 x
2030 4,129 0.9 % 45 3.8 x
2031 12,401 2.7 % 66 3.0 x
2032 12,835 2.8 % 43 4.1 x
2033 7,984 1.7 % 30 2.7 x
2034 30,100 6.5 % 201 6.4 x
2035 16,260 3.5 % 104 4.1 x
2036 40,300 8.8 % 159 4.1 x
2037 24,005 5.2 % 126 4.1 x
2038 53,264 11.6 % 206 3.6 x
2039 39,941 8.7 % 159 3.6 x
2040 22,551 4.9 % 104 2.3 x
2041 19,399 4.2 % 92 2.9 x
2042 33,408 7.3 % 149 2.7 x
2043 48,689 10.6 % 178 2.5 x
2044 54,227 11.7 % 178 3.3 x
Thereafter 14,469 3.0 % 38 2.9 x
Total/Weighted Average $ 460,571 100.0 % 2,097 3.5 x
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(1) Expiration year of contracts in place as of December 31, 2024, excluding any tenant option renewal periods that have not been exercised.
(2) Excludes seven vacant properties.
(3) Weighted by annualized base rent.
Unit Level Rent Coverage
Generally, we seek to acquire investments with healthy rent coverage ratios, and as of December 31, 2024, the weighted average rent coverage ratio of our portfolio was 3.5x. Our portfolio’s unit-level rent coverage ratios (by annualized base rent and excluding leases that do not report unit-level financial information) as of December 31, 2024 are displayed below:
Unit Level Coverage Ratio % of Total
≥ 2.00x 70.4 %
1.50x to 1.99x 15.1 %
1.00x to 1.49x 10.3 %
< 1.00x 3.1 %
Not reported 1.1 %
100.0 %
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Implied Tenant Credit Ratings
Tenant financial distress is typically caused by consistently poor or deteriorating operating performance, near-term liquidity issues or unexpected liabilities. To assess the probability of tenant insolvency, we utilize Moody’s Analytics RiskCalc, which is a model for predicting private company defaults based on Moody’s Analytics Credit Research Database, which incorporates both market and company-specific risk factors. The following table illustrates the portions of our annualized base rent as of December 31, 2024 attributable to leases with tenants having specified implied credit ratings based on their Moody’s RiskCalc scores:
Credit Rating NR < 1.00x 1.00 to 1.49x 1.50 to 1.99x ≥ 2.00x
CCC+ — % 0.6 % 0.9 % 0.4 % 2.0 %
B- — % 0.4 % 0.1 % 1.1 % 5.4 %
B 0.1 % 0.2 % 1.4 % 2.3 % 8.3 %
B+ — % 0.5 % 2.1 % 2.5 % 12.4 %
BB- — % 0.4 % 1.6 % 2.3 % 9.8 %
BB — % 0.5 % 2.3 % 2.3 % 9.4 %
BB+ 0.2 % 0.1 % 0.1 % 1.7 % 6.3 %
BBB- 0.2 % 0.2 % 1.4 % 0.6 % 6.7 %
BBB — % — % 0.5 % 1.5 % 2.2 %
BBB+ — % 0.1 % — % 0.1 % 2.7 %
A- — % — % — % — % 1.9 %
A — % — % — % — % 0.6 %
A+ — % — % — % — % 0.5 %
AA- — % — % — % — % — %
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NR Not reported