Strategic Performance Drivers

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• Performance was driven by high occupancy of 99.1% and strong rent collections with under 5 basis points of uncollected rent.

• Management attributed the acquisition success to deep tenant relationships, focusing on direct sale-leaseback transactions to negotiate favorable economics over broadly marketed assets.

• The portfolio benefited from significant tenant M&A activity, specifically in the automotive service sector, which management believes strengthens the credit profile of the tenant base.

• Operational outperformance was supported by lower-than-expected bad debt, totaling approximately 2 basis points of quarterly ABR.

• Strategic positioning remains focused on durable, freestanding single-tenant properties with an emphasis on auto service, discount retail, and early childhood education.

• Management highlighted a disciplined capital recycling strategy, selling noncore assets at cap rates 170 basis points below acquisition rates to optimize portfolio quality.

Outlook and Strategic Assumptions

• Updated 2026 AFFO guidance to $3.55 to $3.59 per share assumes accelerated year-over-year growth of 3.8% at the midpoint.

• Management increased the 2026 acquisition guidance midpoint to $750 million, citing a robust pipeline and potential for modest cap rate compression in the second half of the year.

• Full-year bad debt expectations were lowered to 40 basis points from 60 basis points due to year-to-date outperformance versus the original plan.

• The company plans to address a $350 million debt maturity in December 2026, likely through a long-term debt offering or utilizing $272 million in unsettled forward equity.

• Strategic focus for the remainder of the year includes identifying approximately half a dozen new relationship tenants to backfill volume from consolidated existing tenants.

Risk Factors and Structural Dynamics

• Management is actively seeking to reduce exposure to the movie theater industry, specifically targeting assets that have not rebounded to pre-COVID performance levels.

• The company maintains a sector-leading weighted average debt maturity of 10.1 years, providing a significant buffer against near-term interest rate volatility.

• A shift in 7-Eleven's strategy toward larger formats was addressed; management noted their portfolio consists of lower-cost, smaller-format stores with recently renegotiated 15-year leases.

• The exercise of a $200 million term loan accordion brought the total facility to $500 million, with $400 million swapped to a fixed rate of 4.1%.