Jonathan Pong
Thank you, Sumit. As fostering meaningful relationships this quarter are our ethos as a company, and we are grateful for the long-standing support of all of our stakeholders. Before diving into our first quarter financial metrics, I wanted to highlight two announcements we made in April that we believe are testament to the trust our investors and lenders place in a durability of the franchise.
In early April, we successfully close on a $600 million 10-year unsecured bond offering, which priced at 5.34% semiannual yield to maturity. We are grateful for the sponsorship from a very high-quality group of fixed income investors who participated in transaction, which was well subscribed amidst the volatile and uncertain economic backdrop. Last week, we announced the recast and expansion of our multicurrency unsecured credit facility to a total size of $5.38 billion, which compares to our prior facility of $4.25 billion. The facility consists of a $4 billion revolving credit facility for realty income, bifurcated equally into $2 billion tranches, which initially mature in 2027 and 2029, respectively.
Based on our current A3/A minus, credit ratings borrowings will accrue interest at 72.5 basis points over SOFR. In addition, including the recast of $1.38 billion unsecured facility for our US core fund, which, as Sumit mentioned, is in its initial marketing phase.
The facility for the fund will be comprised of a $1 billion unsecured revolving line of credit with an initial maturity date in 2029, and a $380 million delayed draw three-year unsecured term loan. Establishing a robust source of liquidity for the fund provides meaningful debt capacity to pursue investment opportunities in the second half of the year.
From a balance sheet standpoint, we are well positioned to remain active capital allocators with ample liquidity and modest leverage as we finish the quarter with net debt to annualized pro forma adjusted EBITDA of 5.4x. Our fixed charge coverage ratio of 4.7x remains consistent with the 4.5 to 4.7x range delivered over the last two years. Our exposure to variable rate debt remains limited, representing just over 6% of our outstanding debt principal at quarter end.
As we look towards the balance of the year, we consider our long-term and permanent capital needs manageable and our liquidity and access to diverse sources of capital to be strong. We are confident in our ability to lean into opportunities should this period of economic uncertainty continue.
I would now like to hand it back to Sumit to complete our prepared remarks.
Sumit Roy
Thank you, Jonathan. In closing, we remain focused on methodically executing our strategy, supported by a resilient portfolio, a strong balance sheet, and a talented team across the globe. As the monthly dividend company, we have consistently returned capital to our shareholders throughout our history, underscoring our commitment to delivering predictable, reliable income streams. We are continuing to thoughtfully grow our business and create durable long-term value for our shareholders.
I would now like to open it up for questions. Operator?
Operator
(Operator Instructions) Smedes Rose, Citigroup.
Smedes Rose
Hi, thank you. I guess I want to ask you about the activity that you were able to execute in the first quarter. It looks like the bulk of it was in Europe. I'm just wondering if you could maybe talk a little bit about what you're seeing in Europe at this point? And maybe how that contrasts with opportunities available in the US?
Sumit Roy
Great question. Thanks, Smedes. So what's very compelling about Europe for us is, obviously, the investments we were able to make, 65% of the total volume came from Europe. We are targeting retail parks in the UK, as well as in Ireland that made up the bulk of the portfolio. And what was very compelling to us about that particular set of transactions was the fact that the rents that we were underwriting were well below what would be deemed as market rents.
And we were getting these assets at replacement -- at well below replacement cost. And the fact that we are controlling a very wide swath of retail footprint is already starting to manifest itself in calls that we are getting from very large retail operators like Little and a few others that are very interested in helping us reposition some of these retail parks and give them a presence to continue to allow them to grow as is their stated objective in these markets.
And this backdrop is obviously very favorable for investment purposes for us. And that was the reason why we had the bulk of the investments coming in from Europe. Having said that, we saw plenty of opportunities here in the US. As you probably heard me mentioned, we source about $22 billion worth of product and more than 60% of it was here in the US.
But when you look at some of the credit that we were being asked to underwrite on the higher-yielding side of the curve, we just couldn't get comfortable with the downside risk, the tail risks, if you will, on some of those credits. But we are seeing plenty of opportunities it's finding the right risk-adjusted opportunity that's compelling us to invest more in Europe today. And you should kind of expect that to be the run rate for the first half of this year.
Smedes Rose
Okay. And can I just ask you one more thing? You noted that the rent recapture was 103.9%, -- but on the same store, the same list of clients. I guess, the re-leasing was down about 50 basis points, but it was offset by other items. Is there anything going on there in your negotiations with re-leasing to the same tenants that was driving that down a little bit? Or is that normal or --?
Sumit Roy
No. It's -- obviously, if you look at the last few quarters, the renewals have been far superior with existing clients, so this is a bit of a one-off. But we tend to look at this in totality. We give you the breakup, so you can see that the vast majority of the renewals does come from existing clients.
But I would chalk this off to a one-off, but I believe it was still 99.7%. And the vast majority of the renewals was well north of 100%, but we did have, I want to say, three theater assets, three- or four-tier assets that dragged it a little bit below the 100% mark, but still a very favorable outcome.
Operator
Brad Heffern, RBC Capital Markets.
Brad Heffern
Yeah. Assume that you're 35% of the way to the guidance for the year on investments in the first quarter is typically one of the lighter quarters too. You obviously have the guidance unchanged. I'm curious, is that just reflective of the level of uncertainty right now? Or was the first quarter just particularly full to how the pipeline looks?
Sumit Roy
That's a great question, Brad. Look, I think we are very cautiously optimistic. What we didn't want to do was try to extrapolate what we have achieved in the first quarter for the remainder of the year. There is a fair amount of uncertainty. There is a lot of transactions in the market as our sourcing volumes would suggest, but it is finding the right deals for us.
And given the exogenous factors of a potentially higher interest rate environment for longer and allowing for some of the geopolitical trade-driven conditions to play out, we just wanted to be a bit more cautious. So that -- we want to be very deliberate. We want to be very focused on making sure that if we are going to use equity that we use it in a very appropriate fashion. And so that's the primary reason why we chose to leave the volume numbers unchanged.
Brad Heffern
Okay. Got it. And then on the tariff impact, you talked through some of the sectors that you thought would be well inflated. I'm curious, is there anything in the portfolio that you would call out as potentially actually seeing an impact?
Sumit Roy
No. No different than what we had highlighted, I believe it was in February when we were expecting some of these things to play out. I've gone through a list of clients that we felt like were more exposed to what would happen if tariffs were introduced.
We feel like that's fully reflected in the numbers that we've shared with you with regards to our guidance, with regards to our bad debt expense. We feel very confident. And I think Zips is a perfect example of a situation where we got a 100% renewal, and we had a recapture rate of 94.3%, which was slightly better than what we had forecasted out at the beginning of the year.
So look, we feel like we did a good job of underwriting what the potential impact of some of these exogenous factors were into our portfolio. And so we don't expect anything new at this stage.
Operator
Ryan Caviola, Green Street Advisors.
Ryan Caviola
Thanks for taking my question. Just on the U.S. Core Plus Fund throughout this sort of economic volatility, do you -- this uncertainty, as keeping other private buyers out or competition on the sidelines, and it's helpful with realty income size and scale? Or how does the product fund work in an environment like this?
Sumit Roy
Ryan, thank you. That's actually a very good question. Under normal circumstances, I would say that the backdrop that we are all experiencing today wouldn't be a conducive to raising private capital. But this is where I think we set ourselves apart. I don't know of any other company within our sector that can do what we are doing.
And based on all of the conversations that we are having with these potential investors, we feel very optimistic about meeting the objectives that we have for raising capital at a point in time, where for most others, I would say even on the private side who have a history of raising private capital, this would be a difficult environment to raise capital. But look, we feel very optimistic.
We look forward to sharing with you the results later this year. And so far, so good is how I would play it. With respect to -- and I don't know if that's what you were asking, Ryan, private investors investing in our domain, we've seen a plethora of them coming in and wanting to create a net lease sleeve to their investments. But they also tend to use higher leverage. And one could make the argument that our product lends itself to higher leverage in the private domain.
But given the cost of debt and given the elevated interest rate environment, that will continue to impede their ability to make investments in our space. Our investment profile tends to be core, core plus, and so in order for them to generate the kind of returns that they usually try to generate on their equity, this is not a conducive environment for them to invest. So I think for a variety of reasons, it really does lend itself to what we bring to the table, our history, our reputation, and we are very hopeful of having a successful raise by the end of the year.
Brad Heffern
Great. That's it for me. Appreciate it.
Operator
Handel St. Juste, Mizuho.
Haendel St. Juste
Hi, guys. Good afternoon. A couple of quick ones for me. First, I wanted to talk about the balance sheet here a bit and your liquidity. You settled a lot of ATM in the quarter, I think, $631 million. $69 million, I think, is remaining. So curious how you're thinking about the various funding sources available to you here and the capital required to meet your full year acquisition guide? Thanks.
Jonathan Pong
Hey. When you look at our guidance of $4 billion on the investment front, you're right. We do have $265 million of outstanding forward equity. We do have about $650 million on a run rate basis of free cash flow, which, of course, is equity like in nature.
And so -- and then debt to finance that remaining, call it, $2.6 billion and to take care of about $1.3 billion of refis that we have for the rest of the year, that's about $2.2 billion of debt that we'll raise. And obviously, given the sponsorship that we've been lucky enough to received from the fixed income investor base, we feel very confident across currencies that we can do that. So the missing element, of course, is the new public equity that we would have to raise to fill that gap.
And so if you do that math, you look at $750 million to $800 million of new equity that we might have to raise for the balance of the year. However, that doesn't take into account any disposition activity that we might do. So we feel very good about where the balance sheet is and sources and uses of cash from here on feels very, very reasonable and modest in terms of what we need to go out and get from the public markets.
Haendel St. Juste
Got it. That's helpful color, John. So one more. Maybe on the other investment in the quarter, looks like alone on the development project yield around 10% term just under four years. So maybe some color on who or what you're lending to, perhaps, the risk profile, and then your appetite for perhaps doing more of this type of activity in the near term? Thanks.
Sumit Roy
Good question, Handel. Yes, this was an opportunistic loan that we've provided to a private global developer in the data center space. This is a data center park that's being developed in Virginia. The ultimate client that we have is one of the large hyperscalers with very high investment-grade rating. And our hope is that this will lead to the ultimate ownership or a path to ownership of these assets.
And so we are very excited about this relationship. Again, it speaks to who we are, our size and scale, and the willingness of these very well-established, highly reputable private developers to work with us directly.
Operator
Ronald Kamdem, Morgan Stanley.
Ronald Kamdem
Hey. Just two quick ones. If you could just comment a little bit more on the cap rates in the quarter, and more importantly, just what you see for trends going forward as we go into this uncertain environment?
Sumit Roy
Sure, Ron. So the cap rate that we were able to establish even absent this loan was just slightly north of 7%. I think you should expect cap rates to be in that ZIP code. And it's largely being driven by a fair amount of the uncertainty that exists at least in the near term.
Once we have a settling out of what's actually going to impact future capital raising and what does the environment look like from an interest rate environment perspective, you can start to feel -- you can start to see some pressure potentially on the cap rates. But right now, we were expecting to see that at the beginning of the year, to be very honest, and we have not. And so it's a bit of a wait and see.
And as the market becomes clearer around, like I said, where these policies are going to land, I think the cap rate environment is going to be a lot clearer. Having said all of that, this is actually benefiting us in some ways. Our cost of capital has improved throughout the year. And so the fact that cap rates are going to remain in the ZIP code that I've just mentioned, it allows us to create these outsized spreads, which obviously is a benefit.
And it doesn't come without risk, which is why here in the US, we chose not to pursue certain transactions. But I do think that it will help create more opportunities going forward. And we look forward to seeing how things settle out.
Ronald Kamdem
Great. And then my second question was just, strategically, as you're thinking about sort of increasing the rent escalators of the entire portfolio, can you talk about some of those other buckets like gaming, like Europe, and like the data centers and just the updated thinking there about getting the overall rent escalators in the portfolio up? Thanks.
Sumit Roy
Yeah. Again, a great question, Ron. Look, I think the way we are trying to address rent escalators is two-fold.
One is the organic rent increases that we are targeting. And you're exactly right. There are certain asset types, i.e., industrial and data centers that tend to have more inherent rent escalators.
But the second is the strategy that I was trying to highlight that we are deploying in Europe, where we are buying assets that we feel has rent that's well below market rent. And we feel like we can capture that mark-to-market on the rents come renewal times.
And so if you see what we've done in Europe for the first quarter, I think the walt was just right around years. And it is with an intent to capture that upside that we are inheriting or that we are underwriting is another way that we want to grow the top line without necessarily having to rely just on pure investments to drive growth.
Operator
Greg McGinniss, Scotiabank.
Greg McGinniss
Hey, good afternoon out there. I just want to dig into the retail parks a bit. Sumit, you mentioned that those were acquired with below-market rents. And I'm curious what the yield would be once those are at market. And then how much have you invested in retail parks to date? And do you see a ceiling to that investment?
Sumit Roy
To anything in life, Greg, there's going to be ceilings. But I'll tell you, this is something that the team has done a phenomenal job on. And we decided to go after retail parks, because we started to see what the sum of the parts analysis was. We were targeting grocery. We were targeting home improvements like B&Q -- and we were essentially getting the rest of the parks for next to nothing. That's how it started.
And it was at yields that was well north of 8%, even 9%. A couple of factors contributed to that. One was that these assets were being held by institutional investors who are going through a natural capital recycling or their investment time horizon had -- was coming to an end that created these opportunities for us.
Since our initial investment, which I would say was around three years ago. Fast forward today, we have seen a massive cap rate compression. And now, these same assets are trading in the mid-6s. So there's at least been a 250, 300 basis points of compression from when we initially started buying these assets. And the rents that we were underwriting to are also based on our initial analysis, anywhere between 5% to 6% below what the current market rents are.
The other dynamic that we are starting to see is our ability, because we control so much of this retail space, our ability to go to some of these retailers, brand-new retailers, IKEA, I already talked about a little, et cetera, these are names that are coming to us and saying, in order for us to execute on our growth plans, we would like to be in these locations that you now control.
And we are having holistic conversations on, not only forming these relationships with these growing retailers but potentially creating a value uplift by having them in our retail parks. And so along with that -- I mean, I'm so excited I can keep going. We also have repositioning opportunities with extra land that we have inherited through this strategy.
And so these are ways that we are trying to create growth, top line growth, by executing on the strategy that we embarked upon three years ago. And it has been super, super successful. I would say in the UK, we are in the middle innings; seventh, eighth inning of -- well, not eighth, but seventh inning of a nine-inning investment cycle in retail parks.
But in the rest of Europe, and we're thinking Western Europe for this similar strategy, it's still early days. The only other country where we own retail park is Ireland, where we just did a large portfolio. And again, it has similar dynamics. And it's accelerating our relationship with some of these very retailers who want to grow and want to grow in the locations that we now control. And so the value uplift is tremendous.
Greg McGinniss
Okay. Thanks. And as a follow-up, can you just remind us on the potential vacancy risk that you take when acquiring these assets, as well as the CapEx needs they may have?
Sumit Roy
Yes. That's a great question. So what we have underwritten is a certain amount of vacancy that comes with, not all parts, but a couple of parks that we -- I would say it's 1% to 2% in that ZIP code of vacancy if you were to look at all of our retail parks. And that's where you're starting to see when we are renewing either with the existing client or re-leasing to a new client, we are seeing a tremendous amount of uplift.
Case in point. Last quarter, the first quarter of 2025, we had a positive 7% recapture rate on these vacancies that we have backfilled. And the CapEx involved is not substantially different from what we have been spending here in the US, and I think in my prepared remarks, I shared that with you. So we feel very good about the strategy that we've implemented in the UK and now in Ireland.
And it's the flow-through is tremendous. We were doing the analysis. It has a very similar flow through to a net lease investment circa in the 95%, 96% ZIP code, and that's essentially our EBITDA margin.
Operator
Michael Goldsmith, UBS.
Michael Goldsmith
Hey, good afternoon. Thank you, all for taking the questions. First question, Sumit, in your prepared remarks, you made a comment about some opportunities that you look in the US that you passed because of the tail risk in -- so I was just curious, could you roll that up just to talk about your underwriting process? Or is that more just to compare the US versus Europe and just the opportunities for your market?
Sumit Roy
It was a combination of both those points, Michael. Obviously, when we are underwriting a particular lease term, you're taking into account the credit exposure to that particular lease and the ability of that operator to pay the rent for the duration of the lease. And if you come to a conclusion that that duration is going to get disrupted, that in and of itself, is not a disqualifier as long as we have a very high level of confidence that we are going to be able to backfill that position.
But that is not inherent to net lease investing in our opinion. Any disruptions that we underwrite to create a timing delay in recapturing the value and a disruption in the value creation process. And that's really, whether it's here in Europe -- I mean, you're in the US or in Europe, we are trying to figure out what is the total expected return profile for any investment that we are making. And we are pursuing the ones that yield the best outcomes, which in our case, we are finding them to be in Europe.
Michael Goldsmith
Got it. Thanks for that. And as my follow-up, the occupancy 20 basis points, it sounds like you also sold some vacant properties, which include you had decreased exposure to the Dollar and Dollar General increases, CBS in the quarter. So can you just kind of walk through some of the moving pieces of the dispositions and the occupancy stepping down slightly during the period?
Sumit Roy
Yes. Look, this is very expected. If you see what we had shared, Michael, about where we would come out on occupancy, we had mentioned in the mid 98% ZIP code, that is still our expectation. We did have some outsized vacancies in the first quarter, which we have largely resolved.
You talked about Family Dollar and Dollar General. Yes, there were a couple of Family Dollar assets that we did sell vacant. But I'll also share with you that we have 38 Dollar Generals that came up for renewals and we captured over 10% on those renewals.
We had about five Dollar Tree, Family Dollar renewals there, too. It was over 18.3% or 4%. So these businesses are continuing to hold on to their assets and are continuing to perform very well, especially with the backdrop that we are all experiencing. Family Dollar is a bit of a question mark. We'll see how it all settles out. But in terms of Dollar General, Dollar Tree, those are going to continue to do well, in my opinion.
Operator
Rich Hightower, Barclays.
Richard Hightower
Hey. Good afternoon, guys. Just a couple for me. I guess, sticking to the theme of underwriting for a second -- as far as the -- maybe the less creditworthy or higher-yielding opportunities that you had foregone in the first quarter and maybe that's kind of the strategy you're sticking to, I mean, could you help us understand, is it more related to the industry vertical of those assets?
Is it the capital structure of the entity itself. Are the sponsor-backed private equity style deals? Just maybe fill out the picture a little more in that sense, if you don't mind?
Sumit Roy
Sure. Look, it's not any one of those things in isolation, Rich. When you're looking at -- for instance, if you're going to look at something in a very discretionary business like entertainment, given the backdrop that one is experiencing, given that discretionary spending may be impacted by higher inflation, higher tariffs, et cetera, it's -- and recognizing that a particular operator within the entertainment sector may have a balance sheet that can't sustain a disruption to the top line, that's what will keep us on the sidelines. That is one of the main reasons why we try to look for certain characteristics, especially on the retail side, that we've highlighted, nondiscretionary low price point service orientation to their business.
And then we go to the next level, which says, okay, which particular sectors fall within these areas? That doesn't mean we won't look at an entertainment opportunity if we are getting paid for it. But if your total return is an 8% and you expect something to happen to this credit in the next four to five years, it's not really 8%. Your expected return is probably going to be in the low single digits in a good situation.
So those types of assets, we've stayed away from. Even on the industrial side, when we are underwriting a particular industrial asset, and we feel like it is very specifically being used for that particular client. And the client's business does not have the safety, the room of safety that one looks for, we are going to stay away from those very specialized build in secondary potentially even tertiary markets.
And we saw a lot of those that we could get higher yields on. But it's a fool's errand in my opinion, where if we all we are focused on is in today's yield and not underwriting to what the expected outcome is, it's not going to result in a good overall return thesis.
So on the private equity side, there are very good operators that actually come in and improve the operations of the business. We tend to stay away from operators who are pure financial operators, where they lever the business, and they run it very efficiently. They try to extract all of the cash flows. Those are the types of situations that we try to stay away from. But we have private equity operators who actually come in and are very focused on the operations of the business.
And those we are far more comfortable with. So it's a variety of factors, really.
Richard Hightower
Okay. That's helpful color. And to shift gears for one second, not to put anybody on the spot, but I was hoping for an update on Realty Income's investment in plenty -- the, I guess, indoor farming business you announced a couple of years ago, I did notice that they are going through a restructuring. I'm just wondering how much capital is at risk from your balance sheet perspective? And what's the outlook there?
Sumit Roy
Yeah. And Rich, you're not putting us on the spot. It's a perfectly legitimate question. Look, we feel that Plenty is going to emerge. They are and they will emerge a much stronger company. They had a particular location here in Compton that they walked away from. They needed to go through a bankruptcy process in order to be able to do that.
And the main reason for that was that particular asset had -- they were producing leafy greens, which just couldn't get to the margins that they were expecting to get to. Our asset, if you might recall, Rich, has been created to produce strawberries. And today, 2 out of the 12 days are in operation, and the goal here is to get the remaining 10 days in operation.
They already have a takeout agreement with Driscoll. And part of the process of going through a bankruptcy process was to, again, end up with favorable terms, et cetera, and emerge a much stronger operator, which is what we expect. And we believe that they've also been able to attract a fair amount of private capital from some of their existing investors, i.e., SoftBank and a couple of others that want to see this particular business succeed. And so we feel like once they emerge, they're going to be a solid going concern.
Having said all of that, let's assume the downside scenario that they don't emerge, which by the way, is not our expectation based on the relationship that we have with them and how they're keeping us in the loop on exactly how the process is unfolding. But if that were to happen, we control a very good piece of land. We have the ability to convert this, albeit with some level of capital spend into a distribution center. It sits right next to an Amazon site.
By the way, it also has a lot of power that is coming to this site. So could we consider a data center site? Possibly, but those are the things that one would start to look into. The capital at risk is circa $40 million. That's all we've invested and that's all we are planning on investing this asset. But the upside potential remains very, very strong.
Operator
Jana Galan, Bank of America.
Jana Galan
Thank you. Hi, and congrats on a strong start to the year. I'm sorry if I missed it in the supplemental, but can you provide an update of the weighted average in the median EBITDAre to rent ratio on the retail properties? I noticed the format changed a little bit.
Sumit Roy
Yes, Jana. And we'd love to get feedback from you and others on the supplemental. There was a lot of work done. And the idea was to try to make it a lot more user-friendly.
We haven't touched on the design for the last 10, 12 years. And so we try to incorporate a lot of the comments that we received from folks along the way. And this is our attempt at addressing those comments. So would love to get your comments.
Anyway, sorry, I digressed. Coming back to your question, it was 2.9x, is the average rent coverage for our retail assets on the assets that we do get reporting. And it's 2.7x, I believe, is the median rent coverage. So still very strong despite the environment that we find ourselves in.
Jana Galan
Thank you. And then just jumping to the investment loan that you made. Just curious, given the volatility in the capital markets, do you see more of those types of opportunities that you'd like to lean into?
Sumit Roy
Jana, the idea is that if it allows us to form a relationship, which could then result in us ultimately owning these assets, that is the goal. And we believe that credit is a particular way to make headway in terms of forming relationships, as well as finding a path to potentially owning the real estate.
We also find that these investments that we are making, they tend to be over-collateralized, with the actual real estate underpinning the collateral for these investments. They get better returns in terms of yield. And we have some level of protection in terms of the duration.
And so it does help meet a lot of strategic objectives. And the idea -- and I think I've said this before is, yes, where it makes sense for us, we will continue to make credit investments to achieve the objectives that I just laid out.
Operator
Jay Kornreich, Wedbush.
Jay Kornreich
Hi, thanks. Good afternoon. I just wanted to follow up on -- you mentioned the investment volume leaning towards Europe for the first half of the year. And so I'm curious as you look out towards the second half. I guess what are you anticipating to occur which will open up further opportunities in the US? And do you expect opportunities in Europe to decelerate in the second half? Or just potentially have a more robust overall investment pipeline?
Sumit Roy
Yeah. You're trying to unpack my words, Jay. And look, I am very hopeful that given the trend of what is happening to our cost of capital, which is improving, we'll be able to do more here in the US.
I'll tell you that of this volume that we sourced in the first quarter, there was about $2 billion. That the only reason why we chose to pass, was because we were not comfortable with the initial spread that we were making on that volume. The pricing was right for that type of product, the metrics from a real estate perspective, were bang on trade.
The operator that we had exposure to was one that we've got an existing relationship with, but it was just that initial spread that kept us on the sideline. So that's our hope that, as the market stabilizes, our ability to do more here in the US will get enhanced. And I think Europe is on its own track. and we are continuing to be very optimistic in terms of what we can achieve there.
Jay Kornreich
I appreciate that. Thank you. And then maybe just one follow-up now. Looking at Europe, are there any kind of next frontier countries or marketplaces that present a significant investment opportunity for you that you're targeting to potentially expand to next?
Sumit Roy
None that we haven't talked about already. I had mentioned Poland as a country that continues to be of interest. Obviously, it's a NATO country. There's a fair amount of investments. It's the second largest GDP growth country in all of Europe.
With a lot more of capital in-sourcing going on in Europe, again, this is a phenomenon that we have seen play out over the last couple of months, we expect there to be more opportunities. And -- we are -- for the right opportunities, we are very excited about our ability to grow into Poland at some point.
So outside of that, I think we are already in six other countries in -- well, seven now in Europe outside of the UK. And we just want to establish our footprint even more deeper into these geographies. And I do think it will create opportunities for us given this capital in-sourcing that we are starting to see play out.
Operator
Wes Golladay, Baird.
Wesley Golladay
Hey, everyone. Just a quick question on the funds. How are you thinking about the assets that will go into the fund? Do you have a pipeline of deals that you're looking at? Any particular asset type ill you see it with some realty income assets, just your latest thoughts?
Sumit Roy
Yeah. Wes, I think we had talked about this, but I'll mention it again. Yes, there is a seed portfolio which Realty Income owns 100%. And that's what's going to go to seed the fund. We are not planning to pay down or sell down our interest or being the public shareholders' interest in this seed portfolio, but we are going to use that as a foundation to raise capital that we will then invest in new opportunities.
And over time -- we own 100% of the fund today, and over time, we will dilute ourselves down. But we will continue to be a meaningful owner in the fund. And that's where the alignment comes in. We genuinely think that the private capital is a complementary form of equity.
Today, we have one source of equity. And we've heard our investors loud and clear saying, look, you've got this amazing platform that has the ability to invest a lot of capital. But part of the down side of that is you're constantly in the public market. And so in order to create this alternative, we have decided to go down this path as a complementary form of equity capital that, I believe, we are the only one within our net lease space that can do that. And so I don't really see a major conflict.
I mentioned that the initial yield is something that our public shareholders are very focused on, as they should be, but it is of less importance to our private shareholders as long as we are able to meet the overall return profile that we are underwriting to. And so that in itself creates opportunities for us to continue to leverage our existing platform, and invest capital, and then have a bit of an asset-light model for the public shareholders. Because without having to raise any public equity, we're able to generate permanent fee income that goes to the benefit of our public shareholders. So that's how I see this playing in the future.
Wesley Golladay
Yeah. That makes sense. I guess looking at your European deal, this quarter you got both the high going in yield and then also the big pop later down the road. Could you talk about maybe how you're seeing the unlevered return on that? Or I guess, the stabilized yield on the European assets once you get that mark-to-market?
Sumit Roy
I think that we could get 10.5%, 11% uplift from just the mark-to-market on the cap rate compression, and potentially higher than that on being able to mark-to-market the rent, which will take us time. But as these rents start to roll, as we are able to reposition these assets with more pristine retailers, I think the value is going to potentially go up even more.
And one could make the argument, and I'm getting an indication from Neil, that we might be about 40% below what the valuation is in terms of when it's fully realized and fully repositioned with the right retail set up. That's the kind of value uplift that we could have on the retail parks.
Operator
Linda Tsai, Jefferies.
Linda Yu Tsai
Hi. In terms of driving the top line growth in Europe to recapture mark-to-market, is this a strategy you've had in mine for some time or something you're verbalizing more concretely now?
Sumit Roy
It's always been our strategy, Linda. What we found was what started off is saying, hey, you do the sum of the parts, and we're getting this retail parks at a massive discount to what we would be pursuing these clients on a one-off basis. What started off that way, soon morphed into the more lands we started to control, the kind of conversations that we started to have with the retailers who wanted to grow and wanted to grow in our location basically formulated this strategy that we originally had theoretically, but now are starting to see play out.
We've had situations where retailers like M&S have come in and have identified assets where they want to go and position themselves. And that, in itself, will be an immediate uplift in rent as well as in value just given what M&S represents for these locations. So yes, initially, it started off as, hey, we're getting great assets at well below replacement cost to this is a strategy we want to be much more aggressive on. And now that we do control the sites that we do, we are starting to see these strategies play out.
Linda Yu Tsai
What percentage of your portfolio are retail parks right now? And then what is the TAM?
Sumit Roy
In Europe, which represents about 10%, actually, it's primarily UK and Ireland, it's about 40%. And in dollar value, it's about $12 billion, $13 billion of total investments that we have, of which I would say between the UK and Ireland, it's about $10 million. And we -- I would say about $4 billion is retail parks in terms of our investment, not in terms of the valuation.
Operator
Upal Rana, KeyBanc.
Upal Rana
Sumit, you mentioned possibly being in a position to increase investment volume and given the ongoing market volatility and the advantage of Realty's platform, are you seeing any market dislocations across larger portfolio transactions that you could potentially take advantage of?
Sumit Roy
We're having discussions -- and look, we were able to do one in the fourth quarter of last year. And I do expect that in this environment, this uncertainty continues to play out, more and more people are going to find the sale leaseback product as a positive alternative to the debt markets that's available. And so I think that, that sort of a backdrop could lead to larger transactions. But I just want to be clear Upal, the $4 billion that we've talked about, this is basically our flow business. This does not anticipate any large-scale $500 million, $600 million portfolio transactions.
If those happen, which we hope does, then that's going to be an uplift to our earnings guidance as well as our acquisitions guidance.
Upal Rana
Okay. Great. That was helpful. And then just on it, you mentioned that they were all released and were able to capture 94% of your prior could you remind us of your original expectation with Zips and any details on who you released your locations to or if there will be any downtime there? And then are there any other tenants on your watch list that you want to high or give an update on?
Sumit Roy
Yes. Upal, just to be clear, we didn't have a single asset that was rejected. All 100% of our assets were -- they basically Zips continue to operate it. where we did have -- the reason why it went from 100% to 94.3% was we did negotiate the rent on some of their assets. And that's where it went from 100% to 94.3%.
We did not end up having to go and find another client to step in as an operator on these assets. And as part of that, we negotiated higher internal growth on an annual basis. We negotiated a longer-term lease on -- in aggregate, and are very hopeful of them now having emerged. I believe they emerged last week with a balance sheet that is more conducive to their operations.
Operator
Anthony Paolone, JPMorgan.
Anthony Paolone
First one is just on bad debt. I think last quarter, you said 75 basis points for the year. And so I was wondering kind of what of that you think you've used thus far have visibility on kind of where it all sits?
Jonathan Pong
Yes. So I would say, overall, we're reiterating that 75 basis points for the full year. I think when you look at the footnote of the income statement, you did see that we recognized a little bit over $6 million of that debt expense in Q1. And so trending a little bit lighter for Q1, but just to stay somewhat conservative, we are taking that original forecast, which includes some unidentified cushion intact.
Anthony Paolone
Okay. And then just on the deal flow. I mean, you kept the $4 billion. The first quarter is obviously a stronger pace that would get you north of $4 billion. Has much changed in terms of the flow and pipeline just in recent weeks or the last couple of months given sort of the macro picture?
Sumit Roy
I wouldn't say anything has changed in recent weeks. We just feel like we don't want to put ourselves in a box where we are extrapolating what we achieved in the first quarter and then find ourselves having to chase deals, which we would never do.
We just feel like there is plenty of uncertainty right now, and it is better for us to when we have the signed contracts in place to come to you and say we are increasing our guidance versus increasing our guidance and then pursuing transactions that we expect will unfold. It's just how we've always done it, Anthony. You've been following us for a very long time and I just think it's prudent.
Operator
Omotayo Okusanya, Deutsche Bank.
Omotayo Okusanya
The retail part, I get everything you guys have said so far about where you be ops on a longer-term basis. But I was curious, like could you just talk a little bit about is there a big difference between retail parks in the UK versus kind of traditional big box retail in the US? Because I think that probably the way most of us are thinking about it. And with big box retail, everyone was worried about (inaudible) media from e-commerce and things of that sort.
So is there anything different about the retail parks in the UK?
Sumit Roy
Yes. I think the biggest difference is the net lease like characteristics of retail parks, Omotayo. If you think about any capital spend that is required, i.e., you want to do striping of the parking lots or lighting or security, et cetera. That CapEx discussion happens upfront in any given year. And all of the retailers that are out there who are on that particular retail park agree to sharing in that cost.
So the flow-through mechanism that we are seeing in the UK is very similar to what we would experience in a single-tenant asset where the -- obviously, the maintenance cost is all borne by the client. The only time it's different is when you have a vacant unit, and you have business rates, et cetera, and that's the leakage.
But that's no different than what you would have when you have a vacant unit or a vacant freestanding asset that we have because our client either the lease expired or there was an event, and we are having to pay the insurance and the taxes as well as the maintenance of that building.
So from that perspective, I think that it is very akin to what we see in the net lease business. That's why you haven't seen much of an impact to our margins. given this strategy. Now if you see you mentioned omnichannel.
A lot of what we've done is over the last two to three years. So all these concepts that we are exposing ourselves to, including grocery, by the way, have already been experiencing the disruption elements of the omnichannel strategy.
I mean the grocers that we have, if you look at the top four, top five grocers, they account for 75% of all Internet-driven grocery expenses. And so these retailers in some ways, have perfected their strategy to embrace omnichannel. Otherwise, they are no longer strong retailers today. And either they are basically surviving on their last leg or they no longer exist. So I don't see that as much of an impact.
What we do see is reconfiguring these sites from more discretionary use to nondiscretionary uses. And that's some of the examples that I was sharing with you which will actually result in a valuation uplift as well as rent recapture uplift. So that's really why we are doing this. So it is different in some ways from what you experience here in the US
Operator
This concludes our question-and-answer session. I would like to turn the conference back over to Sumit Roy for any closing remarks.
Sumit Roy
Thank you all for joining us today. We look forward to speaking soon and seeing you at conferences in the coming weeks. Have a good evening.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
