Retail Opportunity Investments Corp.

Welcome to Retail Opportunity Investment's 2021 Third Quarter Conference Call. Participants are currently in a listen-only mode. Following the company's prepared comments, the call will be open now 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 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 our moderator, Stuart Thames, the company's Chief Executive Officer.

Thank you. Good morning, everyone. Here with me today is Michael Haynes, our Chief Financial Officer, and Rich Schoval, our Chief Operating Officer. Building on the strong momentum that we generated during the second quarter as the West Coast fully reopened again, we continue to steadily advance our business as we progress through the third quarter. Capitalizing on the strong demand for space, we increased our portfolio lease rate to over 97% again. where it had been for six consecutive years prior to the pandemic. Additionally, during the third quarter, we again achieved solid rent growth, extending our consecutive streak to 39 quarters in a row of achieving positive releasing rent spreads on both new and renewed leases. Worth highlighting is the fact that we successfully achieved rent growth every quarter during the pandemic. which speaks to the strength of our grocery-anchored portfolio and our diverse tenant base, as well as the acumen of our team. Along with continuing to achieve solid leasing results, we are also enhancing our portfolio through our investment program. We are again pursuing acquisition opportunities and are pleased to report that we have already lined up thus far four terrific grocery-anchored shopping center acquisitions, which together total about $123 million. Specifically, during the third quarter, we acquired an excellent grocery-anchored shopping center located in Silicon Valley. The property is ideally situated at the entrance to a highly desirable, affluent, master-planned residential community with an average household income of over $237,000. The shopping center is anchored by New Season Supermarket, which is a strong regional operator akin to Whole Foods and is a perfect fit for the surrounding community. Additionally, at the start of the fourth quarter, we acquired another well-established grocery-anchored shopping center located in Southern California, just north of San Diego. The center is anchored by Albertsons and CVS. Beyond these two acquisitions, we also have two additional grocery-anchored shopping centers currently under contract in separate transactions that together total about $62 million. Both properties are located in the Seattle market and both feature strong national supermarket operators. What's important to note is that all of these new acquisitions fit and complement our existing portfolio extremely well. All four shopping centers are in our core markets where we have a strong, well-established presence. Like our existing portfolio, these new acquisitions feature very strong supermarket operators, all of which are longtime tenants of ours and all have performed exceptionally well throughout the pandemic. In terms of pricing, the overall blended yield on the $123 million of acquisitions is approximately 6% going in, with the opportunity to increase that yield notably during the next 12 to 24 months. Safe to say that we are excited about these new acquisitions as they will undoubtedly enhance our presence within our key core markets. as well as provide compelling new growth opportunities going forward. Lastly, turning to dispositions, we are pleased to report that during the third quarter, we completed our exit of the Sacramento market, selling our last two properties for approximately $44 million in total, generating a gain of about $13 million. Taking into account our second quarter disposition, we have sold 70 million of properties in total this year. Now I'll turn the call over to Michael Haynes, our CFO, to take you through the details. Mike?

Thanks, Stuart. For the three months ended September 30, 2021, the company had total revenues of $71.4 million, as compared to $69.8 million in total revenues from a year ago. The increase is largely attributable to our rent collection rate returning to being in line with our historical pre-pandemic norms, resulting in lower bad debt, which was less than 1% of total revenues in the third quarter, again, in line with our historical rent rate. With respect to net income for the third quarter of 2021, gap net income attributable to common shareholders was 21.1 million, equating to 17 cents per diluted share. And for the first nine months of 2021, gap net income was 45 million or 38 cents per diluted share. Included in net income is the gain on sale from property dispositions. As Stuart noted, with selling the two remaining Sacramento properties, the company reported a $12.9 million gain in the third quarter. For the first nine months, We reported a total of $22.3 million in gains, which includes the property sale that we completed in the second quarter. In terms of funds from operations, for the third quarter of 2021, FFO increased to $32.6 million, equating to $0.25 per diluted share, which brings our FFO for the first nine months to $0.74 per diluted share. Same-center net operating income for the third quarter increased 4% on a cash basis as compared to a year ago, and for the first nine months of 2021, same-center NOI increased by 2.2%. With respect to capital raising initiatives, in addition to the $70 million raised through property dispositions, thus far in 2021, we have raised just over $46 million of equity through our ATM program, which includes $11.2 million that we raised at the beginning of the third quarter. Between the ATM issuance and the property sales, we raised approximately $116 million of equity proceeds in total year-to-date. We are utilizing the majority of these proceeds together with cash flow from operations to fund our shopping center acquisitions. Turning to our balance sheet, we continue to have nothing outstanding on our $600 million unsecured credit facility. Looking ahead, we expect our credit line balance will remain minimal, if not zero, for the remainder of 2021. With our credit line at zero, the company's outstanding debt today is entirely fixed rate. And in terms of debt maturities, nothing is maturing this year. And in 2022, we only have two small mortgages maturing, totaling about $23 million. Our goal is to pay these mortgages off with cash flow from operations and possibly some additional equity issuance proceeds, depending upon market conditions. With respect to our financial ratios, interest coverage for the third quarter was a solid 3.3 times. Additionally, the company's net debt to EBITDA ratio was 6.6 times for the third quarter. In terms of FFO guidance, we continue to expect FFO for the full year of 2021 to be between $0.98 and $1.02 per diluted share. The key factors that will drive where we finish the year in that range are the timing of closing the pending acquisitions, as well as the timing of new lease commencements, possibly offset by raising additional equity through our ATM, again, depending upon market conditions. Our goal is to be well-positioned in terms of our balance sheet as we look towards 2022. Now I'll turn it over to Rich Shoveler, our COO. Rich?