Realty Income closed over $1 billion in assets last year and you recently increased 2012 acquisition guidance to $650 million. Is this demand correlated to investor demand for your products?
I don't think the two are necessarily correlated but similar factors may be it work involved in the demand for income and a greater pipeline of sale-leaseback opportunities. Investors are certainly seeking reliable income for their portfolios right now. There are two reasons for this demand. The first is the very low interest rate environment we are in with income oriented investors bearing the brunt of the government's monetary policy stimulus to get the economy moving. The second factor is the overall increase in the number of income oriented investors as more and more baby boomers retire. The primary driver behind the increase in our acquisitions as of late I think is threefold. First, our acquisitions team has been very successful recently in developing additional relationships with corporations and other institutions that have come to view a sale-leaseback transaction as a viable and useful form of capital. Secondly, the recent financial crisis has convinced many corporations of the need to develop additional sources of capital so more companies are looking at sale-leaseback transactions to achieve this. Once again, the low interest rate environment also makes this an attractive time to enter the market to access this permanent form of capital.
How would you define the "margin of safety" in your overall portfolio?
Margin of safety can be achieved in a net lease portfolio in several ways. The first, particularly when buying retail properties, is to make sure the profit the retailer is making in the store you own is significantly higher than the rent they are paying to you. Even if the retailer's sales decline your property is still likely to be the one they view necessary to their business. This has been a primary driver of our underwriting for many years now. The second, is to not overpay for your property. One way to measure this is to keep you purchase relatively close to the replacement cost for the property. In the event you property goes vacant you have a better opportunity to replicate the rent you were receiving in the open market. Finally, working with higher credit tenants can add to your margin of safety. In recent years more of our acquisitions have fallen into this category.