Spirit Realty Capital, Inc.

Second-quarter AFFO per share was $0.91, up $0.02 from last quarter. Occupancy was 99.8%, and ABR increased by $5.5 million to $694.6 million, with industrial now 26% of the portfolio. Cash G&A was $10.1 million, down from $10.6 million last quarter, and cash G&A margin was 5.3%, about 30 basis points below full-year 2022. The company closed the quarter with $1.6 billion of liquidity and leverage of 5.3x, flat versus Q1. Guidance was raised to AFFO per share of $3.56 to $3.62, disposition guidance to approximately $400 million, and capital deployment guidance was maintained at $700 million to $900 million.

Jackson Hsieh said Spirit is on track with its 2023 plan: using free cash flow, dispositions, and existing debt to deploy capital without issuing new equity, while demonstrating portfolio strength through steady operating performance. He emphasized that acquisition volumes are improving, especially in sale-leasebacks, and that the company is seeing attractive opportunities at cap rates that have moved up from a year ago. His tone was confident and disciplined, but still selective, repeatedly saying the company will wait for the right opportunities rather than force growth.

Michael Hughes highlighted the quarter’s operating performance and balance-sheet strength, pointing to AFFO per share of $0.91, occupancy of 99.8%, cash G&A of $10.1 million, and liquidity of $1.6 billion. He said leverage remained 5.3x and noted some marginal improvement in cost of capital, but not enough to justify issuing new long-term capital yet. He also said the guidance increase reflects better spreads and the timing of dispositions and acquisitions, with the midpoint of AFFO guidance implying roughly flat quarters in the back half after adjusting for lease termination income.

Analysts focused on whether acquisition cap rates are still moving higher, the growing WALT on acquisitions, and whether the full-year investment guidance is conservative given the stronger pipeline. Management said cap rates look generally stable, while volumes of opportunities are rising across the board, especially where companies need liquidity. Questions also centered on tenant health, At Home, Party City, and a reserve tied to a non-movie tenant; management said watch list trends remain stable, At Home has more liquidity after recent debt transactions, Party City is expected to emerge from bankruptcy in Q3, and the reserve was unrelated to movie theaters.