STORE Capital Corporation (NYSE:STOR) Q2 2020 Earnings Conference Call - Final Transcript

Aug 05, 2020 • 12:00 pm ET

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STORE Capital Corporation (NYSE:STOR) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Yes, thank you. We will now begin the question-and-answer session. [Operator instructions] And the first question comes from Sheila McGrath with Evercore.

Analyst
Sheila McGrath

I guess -- good morning, Chris, I was wondering if you could touch on the 8.7% yield on investment in the quarter. It did appear to factor in elevated risk in the capital markets. Should we expect these elevated investment yields to continue in the near-term or revert back to the high sevens?

Executive
Christopher H. Volk

Hi Sheila, it's Chris. And Mary and I will answer this together. But first of all, from a volume perspective, we did really not that much volume. So it was about one-third of the volume we normally would have done, and we did it in a time of exceptional market disruptions. So whenever you have exceptional market disruption, the market -- the capital market becomes a little bit less robust. And so our tenants are able to get very attractive opportunities and seize on them, on transactions. And likewise, we're able to participate in that and get some good opportunities as well. So we are really encouraged by that. What's been really interesting for us is in this marketplace, we've seen that the demand for investment-grade COVID-insensitive real estate has been really high because there's a lot of money out there on the sidelines chasing deals and looking for yields, especially in a 60-basis-point -- 50-basis-point, 10-year treasury market. So you people can really reach after those kinds of deals. You're seeing actually a widening in spreads between the kind of investment-grade COVID-insensitive stuff and then the middle market stuff, and we were able to seize on that and make some attractive bias, both for our shareholders and for our tenants this quarter.

Executive
Mary Fedewa

Yeah, Sheila, it's Mary. I'll just add that most of these deals were already in our pipeline. They were with existing customers deals that needed to get done on their side. And also that these were underwritten in light of COVID, so they were in industries that are COVID resistant and they are very carefully underwritten from that perspective.

Analyst
Sheila McGrath

Okay, great. And one follow-up, did you get anything in return for the negotiations on short-term deferrals, just lease extension? Or just give us some insight there.

Executive
Mary Fedewa

Yes, yes, you bet. This is Mary. For sure, most of our notes have interest -- our interest-bearing notes, and the majority of our deferrals were in the form of note. And if we did lease mods, we might grab some percentage rents, some rent escalations. In a few cases, we would do some lease extensions, but any lease extension was a multiple of the months that we were able to negotiate.

Analyst
Sheila McGrath

Okay, thank you.

Executive
Mary Fedewa

Welcome.

Operator
Operator

Thank you. And the next question comes from Frank Lee with BMO.

Analyst
Frank Lee

Hi. Good morning, just want to touch on future acquisitions. How should we think about funding for those? And are you still comfortable with sort of matched funding additional acquisitions with ATM and dispositions?

Executive
Christopher H. Volk

The ATM market has been