What I mean, the rate of increase is definitely slowing down. But now as we sit here at the beginning of May, the cap rate increases are starting to plateau some. As I mentioned during the February call, we were seeing cap rates steadily increase. With regard to the acquisition pricing environment, the last quarter of initial cap rate of 7% is approximately 40 basis points wider than the fourth quarter of 2022. NNN prides itself on maintaining the relationship business model, which we do repeat programmatic business. That is a result of the calling effort of our NNN acquisitions department. Almost all of our acquisitions this past quarter were sale-leaseback transactions. We acquired 43 new properties in the quarter for approximately $155 million, the initial cap rate of 7% with an average lease duration of 19 years. We’ll continue to be prudent in our underwriting, and NNN is afforded the luxury to continue to be selective. So the portfolio has stood the test of time through GFC and COVID.
Remember, as I stated earlier, the average occupancy from NNN since 2003 is 98%. So I expect when the time comes to release the assets, we’ll have superior recovery rate in a timely manner. We’ve been getting a lot of inbound interest on the assets because of the quality of real estate. One of the recent filings of Bed Bath & Beyond, which NNN currently owns three of their assets with an average rent of $13 per square foot. There were some large names that filed bankruptcy, and our portfolio is still performing at high levels. I’m sure we’ll cover more of the credit watch list in the Q&A, but I just want to get a little bit more color. In addition, 91% of our leases that were up for renewal during the quarter exercised an extension. At the quarter-end, NNN only had 20 vacant assets, which is one less than the year-end, which is a product of our leasing department enjoying a high level of interest by a number of strong national and regional tenants in our vacancies. As I stated earlier, occupancy ended at 99.4% for the quarter, which is above our long-term average of 98%. Our portfolio of 3,449 freestanding, single-tenant retail properties continue to perform exceedingly well. Turning to the highlights of the first quarter financial results. Therefore, the change is making NNN even more consistent within our sector. In addition, our website and emails use the NNN REIT brand. The reality is NNN is what we are called with our circle of investors, peers, clients every day.
We felt it was time to take advantage of the NNN brand. But before we continue with the operational performance, I want to address the name change, which I’m excited about.įirst, as I stated in the press release, the change does not signal a strategy shift with acquisitions, balance sheet management with deliberate and consistent NNN. In addition, our portfolio retained a high occupancy of 99.4%, which I attribute to the upfront due diligence on property acquisitions and the continuous portfolio management that NNN does every day.
Joining me on this call is Chief Financial Officer, Kevin Habicht.Īs this morning’s press release reflects NNN’s performance in the first quarter produced 3.9% core FFO growth along with acquisitions, slightly over $155 million with a 7% initial cash yield. Good morning, and welcome to the inaugural NNN REIT First Quarter 2023 Earnings Call. I will now turn the conference over to your host, Mr. Please note, this conference is being recorded. At this time all participants are in a listen-only mode, and a question-and-answer session will follow the formal presentation. Greetings, and welcome to the NNN REIT First Quarter 2023 Earnings Call. ( NYSE: NNN) Q1 2023 Results Conference Call 10:30 AM ET
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