Retail Opportunity Investments Corp.

Welcome to Retail Opportunity Investments 2021 First Quarter Conference Call. Participants are currently enlisted on the node. Following the company's prepared comments, the call will be opened up for questions. Please note that certain matters discussed in this call today constitute forward-looking statements within the meaning of federal securities laws. Although the company believes that the expectations reflected in such forward-looking statements are based upon reasonable assumptions, the company can give no assurance that these expectations will be achieved. Such forward-looking statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from future results expressed or implied by such forward-looking statements and expectations. Information regarding such risks and factors is described in the company's filings with the Securities and Exchange Commission including its most recent annual report on Form 10-K. Participants are encouraged to refer to the company's filings with the SEC regarding such risks and factors, as well as for more information regarding the company's financial and operational results. The company's filings can be found on its website. Now, I would like to introduce Stuart Tant, the company's Chief Executive Officer.

Thank you. Good day, everyone. We appreciate everyone joining us today and hope that you and your families are all doing well. Here with me today is Michael Haynes, our Chief Financial Officer, and Rich Schoble, our Chief Operating Officer. While it's only been a few short months since our last earnings call, we are pleased to report that a lot of encouraging progress is now underway on the West Coast. All businesses up and down the West Coast are now allowed to be open. In terms of our portfolio, we are pleased to report that today over 99% of our tenants are currently open and operating. We only have just a small handful of tenants that have yet to reopen, primarily a few salon, fitness, and restaurant tenants, all of which have indicated that they are preparing to reopen soon. With businesses reopening, customer traffic and shopping activity have also both ramped up. Additionally, with over 99% of our tenants now open, our rent collection is heading towards pre-pandemic levels as well. Notwithstanding that the West Coast only recently began reopening, we still received approximately 92% of our bill-based rent in the first quarter. Since the shutdowns began being lifted, our collection rate has been steadily increasing. As highlighted in our press release, we've already received approximately 93% of our base rent for April, which is ahead of our historic pace during the pandemic. Assuming there are no setbacks regarding the pandemic, we expect our rent collection rate will head towards pre-pandemic levels as we move through the second quarter. In step with tenants reopening, customer activity ramping up, and rent collection steadily increasing, leasing activity is also returning to pre-pandemic levels. while occupancy typically drops in the first quarter following the holiday season. However, given the considerable pent-up demand for space that had been building across our portfolio during the last shutdown, as many businesses were waiting for the rollout of vaccines to begin, we were able to capitalize on that demand and actually achieve positive rent absorption in the first quarter, while also achieving positive rent spreads. Importantly, the new leases that we are signing are with terrific new necessity and service-based tenants, many of which are new businesses entering our markets for the first time, along with a growing number of established businesses seeking to expand their presence in our markets where they have a very strong customer base. Many of these businesses were either unaffected or in some cases positively affected, financially speaking, during the pandemic and are now looking to capitalize on their success by expanding in our core markets. Along with leasing and business activities steadily increasing, we are also seeing municipalities becoming increasingly more engaged and responsive in terms of the permitting process. recognizing the importance of helping businesses and their local economies rebound as the pandemic subsides. We are working hard to make the most of this to speed up the process of getting new tenants up and running. Additionally, it is helping in terms of advancing our pad development initiatives, which we are capitalizing on as well. In fact, the way things are starting to take shape, this could be a strong year in terms of tenant and pad openings. Going forward, assuming there are no setbacks in terms of additional shutdowns again, we are becoming increasingly optimistic that our business could return to full operation in the months ahead. Now, I'll turn the call over to Michael Haynes, our CFO. Mike?

Thanks, Stuart. Starting with our first quarter financial results, GapNet income attributed with common shareholders for the first quarter of 2021 was $7.4 million, equating to $0.06 per diluted share. Funds from operations for the first quarter totaled $31 million, equating to $0.24 per diluted share. Same-center net operating income, which includes all 88 of our shopping centers, totaled $47.2 million for the first quarter of 2021, which is 5.6% below our same-center NOI for the first quarter of last year prior to the pandemic. Notwithstanding the first quarter number, which we anticipated, we continue to expect same-center NOI will be between 0% and 3% growth for the full year. To date, we have received 91.8% of total billed base rent for the first quarter. As Stuart touched on, during a good portion of the first quarter, the West Coast was still under business restriction mandates, so for us to collect nearly 92% of our billed base rent speaks to the strength of our grocery anchor portfolio. With respect to the remaining 8%, which totals approximately $4.1 million, $1.6 million of that we set aside as a bad debt reserve. While our bad debt is still a bit elevated as compared to our historical quarterly bad debt, $1.6 million is a notable improvement over our quarterly bed debt during the height of the pandemic. Going forward, we expect it will trend back down closer to our historical quarterly rate, which prior to the pandemic had consistently averaged well below $1 million. In terms of the remaining $2.5 million of bill-based rent not yet received, we've agreed to defer $1.4 million of that, and in terms of the balance, with all businesses now allowed to be open again, we expect to receive the bulk of it as we move through the second quarter. Turning to our balance sheet, During the first quarter, we continued to utilize free cash flow to pay down debt. Specifically, we paid down $34.2 million of debt during the quarter. Overall, since the pandemic began, we've lowered our total debt by approximately $75 million to date. And with the $34 million paid down in the first quarter, as of March 31st, the outstanding balance under $600 million credit facility was just $14 million. Lastly, in terms of our FFO guidance, we remain on track to achieve FFO between 95 cents and $1.02 for diluted share for 2021. Now I'll turn the call over to Rich Schoble, our COO.