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American Finance Trust, Inc (NASDAQ:AFIN)
Q3 2019 Earnings Call
Nov 7, 2019, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning and welcome to the American Finance Trust Third Quarter Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Louisa Quarto, Executive Vice President. Please go ahead.

Louisa Quarto -- Executive Vice President

Thank you, operator. Good morning everyone and thank you for joining us for AFIN's third quarter 2019 earnings call. The call is being webcast in the Investor Relations section of AFIN's website at www.americanfinancetrust.com. The following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize actual results may differ materially from those expressed or implied by the forward-looking statements. We refer all of you to our SEC filings, including the Annual Report Annual Report on Form 10-K for the year ended December 31, 2018, filed on March 7, 2019 and all other filings with the SEC after that date for a more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements or portfolio information provided during this conference call are only made as of the date of this call. As stated in our SEC filings, AFIN disclaims any intent or obligation to update or revise these forward-looking statements or portfolio information except as required by law.

During today's call we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of GAAP net income to the non-GAAP measures can be found in our earnings release supplement and Form 10-Q, all of which posted on our website at www.americanfinancetrust.com.

I'll now turn the call over to our CEO, Mike Weil, Mike?

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

Thanks, Louisa. Good morning to our shareholders and other participants and thank you for joining us. With me today on the call are Katie Kurtz, our Chief Financial Officer and Zach Pomerantz, Senior Vice President of Asset Management. I'll start with an overview of our third quarter results and highlight some of our recent accomplishments. Katie will provide additional financial details and Zach will discuss our portfolio and pipeline, and then we'll take questions.

Before we get started, I would like to welcome to the call, the two analysts who picked up coverage of AFIN in the third quarter. Bryan Maher from B. Riley FBR and Barry Oxford from D.A. Davidson. We're pleased to have your coverage joining Jeremy Metz and Frank Lee from Bank of Montreal.

We're pleased to report another strong quarter for the company. From a real estate perspective, we had an extremely active quarter, closing on $179 million in primarily service retail acquisitions including $143 million dialysis portfolio. These acquisitions increased annualized straight-line rent by approximately $14 million, which will start to be fully realized in the fourth quarter.

Through lease up of the multi-tenant portfolio, we increased portfolio occupancy this quarter by 180 basis points to 95.2%, In capital markets, we completed an $87 million preferred offering at a lower effective yield than the initial offering. Finally, for our shareholders, our common stock continues to trade near 52-week highs. Broadly, we continue to believe in the US retail industry as economic indicators such as the University of Michigan Consumer Sentiment Index remain near 19-year high. highs.

As of September 30, our portfolio consisted of 771 properties now located in 46 states and the District of Columbia. Portfolio occupancy grew to 95.2% on 18.2 million square feet of rentable space. Our leases include average annual escalators of 1.3% and have a weighted average remaining lease term of 8.9 years. We continue to focus on what we define as service retail properties, which we believe are more resistant to competition from e-commerce.

At the same time, we believe the market is recognizing that certain brick and mortar retail is perhaps more resilient than the earlier narrative would like to have us believe. As data from the U.S. Census Bureau illustrates, over the last 10 years, overall retail volume by sales has increased nearly 46% to over $5.3 trillion per year from $3.9 trillion.

During this period, retail sales excluding e-commerce have increased by 30%, meaning e-commerce has helped grow the overall retail pie. The growth of e-commerce has not come exclusively at the expense of traditional retail, but has opened up a new market to reach far more customers. In our view, Amazon is the 21st century equivalent of Sears, Roebuck and Company. We are pioneering a novel method of connecting with customers not only result in growth for your company, but indeed reforms and revitalize a gigantic sector of the economy.

Further, it's no longer accurate to isolate retail into e-commerce sales and sales from physical locations. The retail landscape today is not limited to binary online and offline sales. We believe that the real revolution is the rise of omni-channel retail which seeks to leverage technology and the connectivity of today's consumer to provide a retail experience that seamlessly bridges the gap from website or app to fulfillment local stores and customer service centers.

One of our core strengths is sourcing and diligently closing acquisitions that are accretive to our portfolio by a multitude of measures. During the quarter, we closed on 69 acquisitions for a total of $179 million, led by a portfolio of 50 dialysis properties. The dialysis portfolio was acquired for $143 million at a 7.7% weighted average cap rate, immediately adding $10 million of annualized cash rent and over $11 million of annualized straight-line rent, including 1.3% average annual rent escalators. 42 of the dialysis properties representing 88% of the annualized straight-line rent are guaranteed by DaVita or Fresenius, both of which are industry-leading publicly traded companies with a combined market cap of over $30 billion. Our relationships within the marketplace as well as our ability to close swiftly and with certainty allowed us to achieve a 100-plus basis point discount to recent comparable deals in the market for Jones Lang LaSalle research. We have a forward pipeline of approximately $58 million that we anticipate closing before year end. Altogether, this brings our total closed plus pipeline acquisitions for the year to $419 million at a cash cap rate of 7.2% and a weighted average cap rate of 7.9%.

An important element in AFIN strategy is an ongoing program of strategic dispositions. As we've discussed on prior calls, we have continually been able to sell SunTrust properties at cap rates that are roughly 200 basis points lower than the cap rates we are paying for assets with similar credit and lease durations. Identifying opportunities to capture a spread like with the aforementioned SunTrust properties is a valuable component of our portfolio management strategy.

We are pleased that in the third quarter we completed the sale of two SunTrust properties for $7 million, resulting in net proceeds of $3 million. Subsequent to quarter end and through October 15, 2019, we've sold three properties for $10.8 million and we're also under contract or LOI to sell four more occupied SunTrust properties by the end of the year for approximately $10.9 million at a 5.7% weighted average cash cap rate.

Our 738 property single-tenant portfolio, which makes up about two-thirds of our annualized straight-line rent, has no lease expirations for the remainder of this year or next with approximately 4% expiring through 2022 and less than 10% expiring through 2025. Occupancy across the single-tenant portfolio increased to 99.3% with 1.3% average annual rent escalators.

Further, we are confident in the credit quality of our leases. 82% of our top 10 tenants portfoliowide and 75% of our single-tenant portfolio are leased to investment grade or implied investment grade tenants. Please refer to our earnings release for more information about what we consider to be implied investment grade tenants. The 69 properties acquired during the quarter added approximately $14 million to AFIN's annual annualized straight-line rent. But the full effect wasn't realized as the dialysis properties closed on the last day of the quarter. We expect to receive the full Cash NOI benefit in Q4.

Our multi-tenant portfolio continues to meaningfully contribute to our service retail focus as we lease space to experiential and e-commerce defensive tenants. This was a particularly great quarter for leasing as occupancy rose from 85.1% to 89.1%. Approximately 1.6% of the increase was through new long-term leases while the other 2.4% came through seasonal leasing activity that we expect to be in place for parts of the third and fourth quarter.

Our 33 property, 7.2 million square foot multi-tenant portfolio currently has an executed occupancy of 90.2% with a 1.3% average annual rent escalator and a weighted average remaining lease term of 4.9 years. Across the multi-tenant portfolio with almost $89 million in annual straight-line rents approximately 7% of leases expire within the next two years and only 4% of leases expire in 2022.

Our asset management team remains focused on renewing our minimal upcoming lease maturities and has found sustained success in their efforts as Zach will further discuss. From an execution standpoint, in addition to acquisitions and dispositions, the third quarter was also successful in the capital markets and financing departments. We completed an add-on offering of our Series A preferred stock, raising $87 million at a lower effective yield than the initial offering. Demand for this offering exceeded our expectations with the book being oversubscribed. Total liquidity at the end of the quarter was $255 million, which is available to fund our current pipeline and future acquisitions.

With that, Katie will you take us through the financial results?

Katie Kurtz -- Chief Financial Officer, Treasurer and Secretary

Thanks, Mike. We ended the third quarter with net debt of $1.6 billion at a weighted average interest rate of 4.5%. The components of our net debt include $318 million drawn on the credit facility, $1.3 billion of secured mortgage debt, and cash and cash equivalents of $76.8 million. Liquidity, which we measure as undrawn availability under our credit facility plus cash and cash equivalents, stood at $255.4 million at September 30, 2019.

As Mike touched on, we raised gross proceeds of $87 million in our add-on offering of our Series A preferred stock in September, and another $23.8 million of gross proceeds in our Series A preferred ATM program throughout the quarter. This results in a cumulative growth rate of $31.6 million through the Series A preferred ATM program since its inception earlier this year. In addition, we activated our common ATM program in the third quarter, raising gross proceeds of $6.1 million. The company's net debt to gross asset value or total assets plus accumulated depreciation and amortization was 39.5% compared to 39.4% at June 30, 2019. And our net debt to annualized adjusted EBITDA was 7.8 times at September 30, 2019 down from 7.9 times at June 30.

We reported our third quarter revenue of $72.9 million as compared to $74.9 million for the third quarter, 2018. Our FFO attributable to common stockholders was $25 million for the third quarter 2019 as compared to $7.9 million in the third quarter of 2018. Keep in mind that certain one-time items from our listing on the NASDAQ in July 2018 affected the third quarter of 2018 FFO. Please see our September 30, 2018, 10-Q for more details.

AFFO attributable to common stockholders was $23.4 million or $0.22 per share for the third quarter 2019 as compared to $24.9 million or $0.24 per share in the third quarter 2018. Year-to-date AFFO is higher in 2019 then at the same point in 2018. And as Mike mentioned, we expect the fourth quarter to benefit from the full impact of the real estate acquisitions that occurred at the end of the third quarter. As always, a reconciliation of GAAP net income to non-GAAP measures can be found in our earnings release supplement and Form 10-Q, all of which are posted on our website at www.americanfinancetrust.com. We declared common dividends of $29.2 million during the third quarter of 2019.

I'll pass it over to Zach to discuss our real estate acquisitions, dispositions and leasing activity in greater detail.

Zach Pomerantz -- Senior Vice President of Asset Management

Thanks, Katie. As mentioned earlier, we acquired $179 million of primarily service retail properties during the quarter. The 69 properties we acquired have a weighted average remaining lease term of 9.8 years and total about 587,000 rentable square feet. These properties were acquired at an attractive weighted average cash cap rate of 7.2% and a weighted average cap rate of 7.7%.

In addition to the dialysis portfolio, Mike discussed earlier, we also acquired three car washes that are leased Mister Car Wash and implied Baa1 credit with 20-year lease terms as well as 13 properties leased to Dollar general and two one-off properties leased to Caliber Collision and Checkers.

Our multi-tenant occupancy stands at 89.1% at the end of the quarter. This is a significant improvement over last quarter where occupancy was 85.1% and over the same quarter in 2018 where occupancy in the multi-tenant portfolio was 86.7%. This 390 basis point increase in the multi-tenant occupancy increased AFIN's overall occupancy of 95.2% from 93.4% last quarter. Approximately 1.6% of the increase in multi-tenant occupancy came from new leases signed with long-term tenants at seven different multi-tenant properties. The other 2.4% increase came from short-term seasonal tenants that are expected to be in place during parts of the third and fourth quarters.

In addition to these, we have another, approximately 82,000 square feet of leases that have been executed, but not delivered as of the end of the third quarter. During the quarter, we were able to bring in and sign up two new anchor tenants on executed LOIs at San Pedro Crossing in San Antonio. The two tenants are well respected brands and are expected to bring in over $900,000 of annual base rents of the property and occupy over 70,000 square feet for at least 10 years. At San Pedro Crossing like we discussed in prior quarters when we signed significant anchor tenant leases at other properties such as Prairie Town Center, the negotiation of long duration leases with quality tenants frequently includes the payment by AFIN of certain costs related to building out space to meet a new tenant needs. These tenant improvements have an impact on our total capital expenditure, but are made in the pursuit of enhancing revenue.

As many of you have requested, we wanted to provide you with some detail on the operation of our portfolio capital expenses. Year-to-date of $9.2 million in total capex we consider a $5.3 million or 57% of expenditures to be revenue enhancing. Non-revenue enhancing capex or maintenance at $3.9 million year-to-date. As a percentage of cash NOI, maintenance is 2% of AFIN's total portfolio cash NOI. Additional details can be found in the MD&A section of our 10-Q for this quarter.

Our forward-looking acquisition pipeline as of October 15 consists primarily of service retail properties including locations leased to IMTAA, an operator of gas and convenience stores, DaVita and Mister Car Wash as well as traditional retail leased to Dollar General. We also have 26 Advance Auto properties in our pipeline for about $28 million. The total purchase price of the pipeline assuming we complete all of them is approximately $58 million with a weighted average cash cap rate of 7.2%, a weighted average cap rate of 7.4% and a weighted average remaining lease term of 12 years.

For the year, we have 213 properties either closed or on the pipeline at a cash cap rate of 7.2%, a weighted average cap rate of 7.9% and a weighted average remaining lease term of 12.7 years 12.7 years. We're excited about the opportunities we are currently seeing in the market and look forward to expanding our portfolio.

Mike, I'll turn it back to you.

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

Thanks, Zach. Before we take questions, I want to take a minute to discuss what we think of as quality of earnings, which we think is a real differentiator between us and some of our peers. We believe that the strength of our leases which are overwhelmingly triple-net, long in duration and inclusive of contractual rent increases, combined with the strong credit quality of the tenants is unique in the net lease REIT space. For example, our top 10 tenants make up 41% of our annualized straight-line rent and occupy almost 6.6 million square feet of our portfolio. Of the top 10 tenants 82% are either actual or implied investment grade credits, 66% of these tenants are service retail businesses and the leases have an average remaining lease term of 11.5 years and include 1.5% average annual rent increases.

We believe that these facts differentiate AFIN from our peer group. We continued the execution of our unique strategy with our activity in the third quarter. Our successful $87 million preferred add on provided us with an opportunity to swiftly close on the $143 million dialysis transaction on the last day of the quarter, which will reflect in our performance going forward. We've increased our annualized straight-line rent and occupancy without meaningfully increasing our debt. We look forward to continuing to execute on our strategy in the final quarter of 2019.

With that, let's open up the line for questions.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Today's first question comes from Jeremy Metz of BMO. Please go ahead.

Jeremy Metz -- BMO -- Analyst

Hey, good morning. I am with Frank Lee here. First question, just wanted to touch on the capital expenditures, obviously, you definitely appreciate the added disclosure around that in the queue today and you talked about here earlier in your opening remarks. In terms of the shopping center space, a big portion of that is TIs and tenant allowances, you did mention the bucket for revenue enhancing capex, so I'm wondering if maybe you could just touch on that a little bit on what exactly is the criteria there to put it in that bucket and are tenant allowances are part of that or separate from that?

Zach Pomerantz -- Senior Vice President of Asset Management

Good morning, Jeremy and Frank . This is Zach. And yes, to your point, we've made a bunch of times and you have brought and we [Phonetic] wanted to provide that type of additional transparency and we look, obviously, to provide as much information as we can. Yeah, with regards to the capital monies, when it comes to revenue enhancing that is money spent for new leases to bring rent in the door and to improve the NOI of our properties and that could be for -- related to their tenant improvement allowance or it's a certain base building work we have to do to put that tenant in place.

Jeremy Metz -- BMO -- Analyst

So, any sort of larger -- sorry, go on.

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

Go ahead.

Jeremy Metz -- BMO -- Analyst

Just making sure, so any sort of, if you were to do any sort of redevelopment or adding spacing and I think that would be additional to that this is -- it sounds like a lot more of you have some space, you need to lease up, this is you might need to do a little bit of a sort of our growth that worked out [Phonetic] bring a tenant in, but this is sort of in a way another form of tenant allowance as well to drive the NOI, is that the right? It sounds like that.

Zach Pomerantz -- Senior Vice President of Asset Management

Yeah. We don't really do the building extra things [Phonetic] on the site. This is really related to directly to the lease-up. And as far as the maintenance goes that will be more directly related to something standard like a rooftop placement and something of that nature.

Jeremy Metz -- BMO -- Analyst

Perfect. That's helpful. And then, I just want to make sure I was thinking about the straight line correctly the $13.6 million increase from the acquisitions that was identified in the press release. I assume that's in addition to what you have already been booking and the increase to the $2.7 million in 3Q from, call it $1.5 million last quarter. I'm guessing that's related to the increase in the multi-occupancy. Is that the right way to think about it?

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

So, Jeremy, it's Mike. Katie and I are looking at each other as you asked the question just because we want to make sure we're -- you're talking about as far as the pipeline leasing versus the executed leasing in the quarter, correct?

Jeremy Metz -- BMO -- Analyst

Well, I'm looking -- there was a $13 million increase identified from acquisitions for straight line that we need to be thinking about. And then there was...

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

Okay.

Jeremy Metz -- BMO -- Analyst

...multi-tenant leasing, which is from covenant in shopping centers, you've obviously -- you had a 400 basis point increase in physical occupancy, I'm assuming that comes with added straight line as well.

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

That is correct.

Jeremy Metz -- BMO -- Analyst

Got it. And in terms of the funding of the acquisitions going forward, good execution on the preferred, you did a little bit on the ATM. The line of credit, it's got a decent amount drawn at this point, but should we be thinking about common equity becoming a bigger part of the funding story, assuming the stock stays somewhere around these levels are higher?

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

No, I don't think that we should draw any conclusions right now on future equity, preferred or common. We ended the quarter with Katie, $200 million -- what was the availability cash and --?

Katie Kurtz -- Chief Financial Officer, Treasurer and Secretary

We had liquidity of $255 million between cash and availability on our line, Jeremy, at the end of the quarter. So, like we've said in the past, we'll be looking to use the credit facility as well as other forms of financing where we see appropriate and we'll also keep our eye on the capital markets and our stock as well.

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

So, let me just round that went out a little bit. I think we've shown that we are disciplined as it relates to issuance of equity, the Board and management share the view. I think that we've been able to continue to make important acquisitions quarter-over-quarter. And with the pipeline where we are as well as cash on hand and availability, we're in a really good conservative place. I'm very pleased to see the stock trading where it is trading. I hope to see that continue and we're going to -- sorry to keep saying continue, but we're going to continue to make good decisions with a real long-term view of adding critical properties to the portfolio that are accretive.

Jeremy Metz -- BMO -- Analyst

That's all helpful. And I think, Frank had one quick for you as well.

Frank Lee -- BMO -- Analyst

Yeah. Just one on acquisition, seems like the portfolio deal came together fairly quickly. Can you talk about the process in acquiring dialysis portfolio, was it relation driven or off-market and what's the buyer pool like for these types of assets?

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

This acquisition was relationship driven. We have and continue to feel that dialysis is a very strong subset of what we like to buy and when the -- and we can't disclose cap rate on this deal. We have disclosed average cap rate, which is all we're able to do under the terms of the PFA. So, I just want to be conscious of that.

I think that for the amount of the portfolio that is investment grade at 67% and having the two leading dialysis providers in the portfolio, when we came to terms that the seller could live with and that we could live with, we want to get it done and the fact that we got it done in the quarter was a bonus for us. But, of course, we did extensive due diligence on all the properties. And we were still, because of our platform, able to diligence these 50 properties and close and look to receive the full benefit of ownership in the fourth quarter. So, it's pretty exciting for us, Frank.

Frank Lee -- BMO -- Analyst

Alright. Thank you.

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

Thank you, guys.

Operator

Our next question today comes from Barry Oxford of D.A. Davidson. Please go ahead.

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

Hi, Barry.

Barry Oxford -- D.A. Davidson -- Analyst

Thanks, guys. Great. How are you doing? Great. Thanks, guys. Real quick here, when you look at your 2020 -- I know you're not giving guidance. So, when you look at your 2020 plans in your acquisitions, I imagine you want to kind of keep somewhat the same pace, if you could talk a little bit if the equity capital markets kind of -- we're not to be quite a successful as they are right today. Can you execute on what you want to execute on 2020 or would that throw a slight kind of range in the acquisitions that you have planned for 2020?

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

I always hesitate to answer doomsday scenario questions because, yes, that it's certainly [Speech Overlap].

Barry Oxford -- D.A. Davidson -- Analyst

I was trying to use the word slight.

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

Yeah, I know. So, let's just talk about kind of practical operation of the portfolio. We have strategically recycled capital when we have needed to, if you remember, second quarter we sold two office properties that we didn't think long-term or strategic to the portfolio, giving us an opportunity to reinvest that capital in more service retail. For the last three or four quarters we've strategically disposed of some of the SunTrust branches at very attractive cap rates, redeploying that capital at roughly of 200 basis point spread.

So, I think that we continue to have multiple levers and we as a management team and with a very engaged in strong Board, we'll be able to continue to operate the company, right. The one of the most important things that we can do is make sure we have multiple levers available to us.

So, we're sensitive to where we are on a net debt to EBITDA basis. We were able to -- very slightly, but we were able to reduce it a little bit this quarter over last quarter. So, by no means do we want to just see net debt to EBITDA increasing. We will continue to operate in a conservative manner. I think, it's important for REITs to identify the appropriate acquisitions and make them and I do see in the near future that we can continue to operate that way. There may be a quarter here or there where we are, like every REIT, responding to market conditions, but at the same time, we have enough capacity within the company either through cash on hand or strategic disposition to continue to do what we've done since we listed in July of 2019.

Barry Oxford -- D.A. Davidson -- Analyst

Right. Appreciate those comments. Thanks, guys.

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

Thanks, Barry.

Operator

And our next question today comes from Bryan Maher of B. Riley FBR. Please go ahead.

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

Hi, Bryan.

Bryan Maher -- B. Riley FBR -- Analyst

Hi, guys. Thank you for taking my questions. So, look, just ask another way, it just seems like with your liquidity and basically your run rate of acquisition you're kind of good to go through 2Q 2020 without tapping kind of any markets. Is that correct?

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

I think that's a reasonable conclusion that can be drawn.

Bryan Maher -- B. Riley FBR -- Analyst

Okay. And then when we look at the multi-tenant kind of occupancy ramping up there. Can you give us some samples of the type of tenants going into those spaces?

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

Yes, I just want to add one thing before Zach who just knows this so well. I want to point out because I was really pleased with the results in the quarter and what Zach and his team were able to do. We did intentionally break out long-term leases versus the seasonal Q3, Q4 leases. And I think that's the seasonal is opportunistic for us. We'd be foolish not to take advantage of it. It's without TI, for the most part, and we collect the rent while they are in place. And then we continue to look for a long-term occupancy to replace that. But what I want to point out because there is a difference between the straight line rent that's generated and the square feet.

So, on the long-term leases that Zach was able to get executed in the quarter as compared to the seasonal, 56% of the total new rent generated by the leasing in this quarter is associated with long-term leases. Only 44% of it is with the seasonal leasing. So, we created some long-term value here while creating some short-term benefit that we'll be able to deploy in various manner. So, not that I want to be the one to say we had a good leasing quarter, but I really was pleased, it's a lot of effort and activity Zach and his team and the brokers that work so hard across the country to fill these buildings. This is the momentum that we've been looking for.

Zach Pomerantz -- Senior Vice President of Asset Management

Thanks for leaving [Phonetic]. So, a number of the names you had recognized that we've been leased with recently with Bank of America, Crunch Fitness, we did a deal with At Home that we talked about last quarter. We've done deals recently with Five Below and Ulta at the properties properties, as well as doing a number of smaller in-line leases with local operators that could be anything from a [Indecipherable] things that are services to the community that have to fill the rest of those centers.

We talked about how large the large national [Phonetic] that's out and that just to come back to Mike talking about the seasonal leasing, one of the box at San Pedro we've had seasonally leased, while we were negotiating the LOI for that space and when that got signed it gave us the runway to know that we have the box with someone in place until a lease got signed. So, that's a nice little bump there for us as well. And, yeah, those are the type of tenants we've been putting in place.

Bryan Maher -- B. Riley FBR -- Analyst

Great. That's super helpful. And then switching gears for a second to the bank branches and we see that you disposed of a few more at seemingly decent prices, should we assume that that's not an avenue that you would go down to make acquisitions, simply because the cap rates are too low relative to your expectations going forward. I mean, you would reverse arbitrage with what you're already doing. So, we should expect that to continue to decline as an asset class for you and not stay the same or get higher. Correct?

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

That is correct.

Bryan Maher -- B. Riley FBR -- Analyst

And then just lastly for me, as we think about the dividend coverage and we wrote about this in our initiation fees, couple of months ago, should we just assume as we kind of sit here now and I don't want you to speak for the Board for say that the plan would be to continue to grow into that coverage over the next, let's say, 18 to 24 months?

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

Bryan, that is how I view it. I do talk and Katie, of course, we talked to the Board about it regularly. Again, when we have things occur like the dialysis portfolio acquisition on the last day of the quarter where we don't get the recognition of the rental income until the fourth quarter when we have the lease-up in the multi-tenant portfolio, I continue to be confident that we will cover the dividend. It's a high priority for all of us, including the Board, and I'm looking forward to that. And I think the things that we're doing that we're reporting and talking about are the drivers that we need to see to remain confident that we are going to be covering.

Bryan Maher -- B. Riley FBR -- Analyst

Look, for sure, and I think that anybody looking at it on a quarter-to-quarter-to-date this is making mistake. It really should be looked at on a year-to-year basis and are you making forward progress 2019 to 2020 to 2021 that was just my point that there is nothing else you're kind of planning on doing you're doing other than the plan to grow into it with your NOI growth.

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

That is -- I agree with how you've stated that, yes.

Bryan Maher -- B. Riley FBR -- Analyst

Right. Thanks. That's all for me.

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

All right. Thanks, Bryan.

Operator

And ladies and gentlemen, this concludes the question-and-answer session. I'd like to turn the conference back over to Mike Weil for any closing remarks.

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

All right. Rako, thank you. Again, we want to just thank everybody for taking the time and joining us today. We continue to be excited about American Finance Trust and the progress that we're making and we're, again, thankful for your support. Jeremy and Frank, Barry and Bryan, thank you for taking the time to join us today and if you have any follow-up questions, don't hesitate to reach out.

Operator

[Operator Closing Remarks]

Duration: 38 minutes

Call participants:

Louisa Quarto -- Executive Vice President

Mike Weil -- Chief Executive Officer, President and Chairman of the Board of Directors

Katie Kurtz -- Chief Financial Officer, Treasurer and Secretary

Zach Pomerantz -- Senior Vice President of Asset Management

Jeremy Metz -- BMO -- Analyst

Frank Lee -- BMO -- Analyst

Barry Oxford -- D.A. Davidson -- Analyst

Bryan Maher -- B. Riley FBR -- Analyst

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