Retail Opportunity Investments Corp.

Welcome to Retail Opportunity Investments 2021 Second Quarter Conference Call. Participants are currently in a listen-only mode. 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 which 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 fillings 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 fillings with the SEC regarding such risks and factors as well for more information regarding the company's financial and operational results. The company's fillings can be found on its website. Now, I would like to introduce Stuart Tantz, the company's Chief Executive Officer.

Stuart Tantz Thank you. Good morning, everyone. Here with me today is Michael Haynes, our Chief Financial Officer, and Rich Schoble, our Chief Operating Officer. We are very pleased to report that we had a highly productive second quarter, advancing each key aspect of our business. We leased over 338,000 square feet of space, which is a new second quarter record for the company. We also achieved double digit rent growth on new leases signed during the quarter. In terms of acquisitions, we are pleased to report that we are once again pursuing opportunities. We currently have lined up two terrific grocery-anchored shopping centers. One is located in Northern California. The center is located at the entrance of an affluent master plan community that has an average household income of over $237,000. The shopping center is the only grocery-anchored center serving the community and features a very strong, growing regional grocer akin to Whole Foods in terms of market niche. and is an excellent fit for the surrounding community. The grocer is an existing longtime tenant of ours, so we know them well. The second property that we have under contract is a well-established shopping center located in Southern California that is anchored by a national supermarket as well as a national drugstore. The two pending acquisitions together total about $61 million with a blended going-in yield in the low 6% range. Importantly, we are acquiring both properties debt-free and without any tenant account receivable issues stemming from the pandemic. Going forward, there are a number of releasing and re-merchandising opportunities such that we believe our team can increase the blended yield to potentially over 7% during the next 12 to 24 months. Along with pursuing acquisitions again, we are also making good progress with dispositions. During the second quarter, we sold one property for $25.8 million. Additionally, we currently have our last two Sacramento properties lined up to sell in separate transactions that together will generate around $45 million in sales proceeds. Once these two sales are completed, we will have fully exited the Sacramento market. Lastly, in terms of enhancing our balance sheet, we recently raised approximately $46 million of common equity through our ATM program. We are utilizing the proceeds together with the proceeds from dispositions to pay down debt and to fund new acquisitions. Now I'll turn the call over to Michael Haynes, our Chief Financial Officer, to take you through the details. Mike?

Thanks, Stuart. With our leasing and investment activity returning in strength, our financial results are notably stepping up as well. For the three months into June 30, 2021, GAAP net income attributable to common stockholders was $16.5 million, or $0.14 per diluted share, as compared to GAAP net income attributable to common stockholders of $4.6 million, or $0.04 per diluted share, for the three months into June 30, 2020. Included in GAAP net income for the second quarter of 2021 was a $9.5 million gain on sale from our property disposition in April. Funds from operations for the second quarter of 2021 was $31.7 million, or $0.25 per diluted share, as compared to $29.2 million in FFO, or $0.23 per diluted share for the second quarter of 2020. Same-center net operating income for the second quarter increased 9.6% as compared to a year ago. And for the first six months of 2021, same-center NOI increased by 1.5%. As the second quarter progressed, our rent collection steadily increased, such that we ended the second quarter having collected approximately 96% of our build-based rent. Looking ahead, we are on track to fully return to our historical collection rate as we move through the third quarter. In terms of bad debt, given that essentially all of our tenants have reopened, we now have much greater clarity and have reversed a number of prior bad debt reserves accordingly, such that for the second quarter, bad debt on a net basis was actually a positive $103,000. Turning to our balance sheet, as Stuart just touched on, we recently utilized our ATM program, raising approximately $46 million of equity. Specifically, during the second quarter, we issued approximately 1.9 million shares of common stock, and we also issued approximately 623,000 shares early in the third quarter. Year-to-date, between the ATM issuance and the property disposition in April, which was unencumbered, we have raised approximately 72 million of equity proceeds. And once we close the final two Sacramento property sales, which are both unencumbered, we will have raised in total approximately 117 million of equity proceeds. We utilized a portion of the proceeds to pay down the $14 million that was outstanding on our credit line at the end of the first quarter. With the pay down, we currently have nothing outstanding on our $600 million unsecured credit facility. And the $14 million pay down, together with the debt pay down of $34 million in the first quarter, brings our total debt reduction for the year to approximately $48 million. Looking ahead at the second half of the year, we have no debt maturing, and with the current cash on our balance sheet, together with the pending dispositions and cash flow from operations, we expect our credit line balance will remain minimal, if not zero. Taking into account our capital raising and debt pay down initiatives, the company's net debt to EBITDA ratio was lowered notably from 7.9 times a year ago at the height of the pandemic to now being below 7, specifically at 6.9 times for the second quarter. In terms of FFO guidance, taking into account our results for the second quarter, together with our ongoing acquisition and disposition activity, as well as the equity issuance, we now expect FFO for the full year 2021 to be between $0.98 and $1.02 per diluted share. The low end of the range assumes that bad debt remains a bit elevated during the second half of the year, whereas the high end of the range assumes bad debt in the second half of the year is more in line with our historical run rate. Furthermore, the high end of the range assumes that we complete a total of 100 million of acquisitions in the second half of the year, including the 61 million currently under contract. The funding of $100 million of acquisitions assumes that we utilize the equity proceeds that we've lined up to date. Additionally, our updated guidance assumes same-center NOI increases between 2% and 4% for the full year. Now I'll turn the call over to Rich Schoble, our COO. Rich?