Retail Opportunity Investments Corp.

Ladies and gentlemen, welcome to the Retail Opportunity Investments 2021 fourth quarter and year-end conference call. Participants are currently in a listen-only mode. Following the company's prepared comments, the call will be opened for questions. To ask a question during this time, you may do so by pressing star 1 on your touch-tone telephone. Please note that certain matters discussed in this call today constitute forward-looking statements within the meaning of federal security laws. Although the company believes that the expectations reflected in such forward-looking statements are best upon reasonable assumptions, the company can give no assurance that these expectations will be achieved. Such forward-looking statements may 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 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 Tans, the company's chief executive officer. You may begin.

Thank you and good day, everyone. Here with me today is Michael Haynes, our chief financial officer, and Rich Schoble, our chief operating officer. We are pleased to report that during 2021, we successfully achieved a number of strategic objectives, capitalizing on the strength and appeal of our grocery-anchored portfolio, as well as our West Coast expertise. Notwithstanding a second year of uncertainty in the marketplace as COVID cases ebbed and flowed, our portfolio and lease rate remained rock solid. In fact, we steadily increased our portfolio lease rate as we moved through the year, finishing 2021 just shy of the record high lease rate that we achieved prior to the pandemic starting. Additionally, demand for space across our portfolio remained consistently strong throughout the year. we leased over 1.4 million square feet in total, which, like our strong portfolio lease rate, was close to setting a new record for the company in terms of overall annual leasing activity. With respect to releasing rent spreads, for the ninth consecutive year, we achieved double-digit rent growth on same-space new leases signed during the year, including a 27% increase on new leases signed during the fourth quarter. With respect to renewal activity, this past year proved to be our most active today, setting a new record for the company in terms of the number of renewals executed during the year, while also achieving rent increases on renewals, which, like new leases, was the ninth year in a row of achieving rent growth. Turning to our investment program, when the pandemic started in early 2020, we suspended our acquisition and disposition activity, as there was considerable uncertainty in the marketplace, uncertainty that lingered well into 2021. During this time, we continued to be actively engaged, closely monitoring the market, as well as maintaining an open dialogue with key relationships in each of our core markets up and down the West Coast. As a result of staying engaged and ready, once the market began to become active again in the second half of 2021, we were well-positioned to move forward and pick up right where we left off, both with completing our exit of the Sacramento market, selling our last two properties, and redeploying the capital into new acquisitions. Specifically, we acquired four grocery-anchored shopping centers totaling $122 million, three of which we acquired in the fourth quarter. Two of the shopping centers we actually owned and operated during our Pan-Pacific days. Needless to say, we know the properties extremely well. In fact, a number of the necessity-based tenants at the center today are those that we brought to the properties back over 15 years ago. The other two acquisitions we sourced through longstanding relationships. One of the properties we sourced through an existing tenant that we've known for years. While they hadn't contemplated selling, we reached out to them and started a dialogue, which then led us to buying the center. Importantly, these new acquisitions are an excellent fit with our existing portfolio. They are situated in our core markets, one being located in the San Diego market, one in the heart of Silicon Valley, and two are located up in the Seattle market. Within each of these markets, the properties are well established in the heart of affluent communities and all four shopping centers featuring strong grocery operators that are longstanding existing tenants of ours. In terms of pricing, The overall blended yield on the $122 million of acquisitions is approximately 6% going in. We already have a number of new tenants lined up to take available space, and we also have our sights set on a number of re-tenanting opportunities, which we hope to bring to fruition over the next 12 to 24 months that will increase our yield as well. Additionally, looking out further, we expect to drive cash flow higher over time as certain anchor leases roll that are currently well below today's market rents. While working to advance our investment program, we're also working to enhance our balance sheet. During 2021, we raised $139 million of capital through a combination of property dispositions and issuing equity through our ATMs. We utilize the capital along with cash flow from operations to fund acquisitions and to reduce debt. Lastly, in light of our performance, the board has raised our quarterly cash dividend to 13 cents a share, representing an 18% increase over our prior quarterly dividend. Now I'll turn the call over to Michael Haynes, our CFO, to take you through our financial results for 2021, as well as our guidance for 2022. Mike?

Thanks, Stuart. GAAP net income attributable to common shareholders for the year ended 2021 totaled $53.5 million, equating to $0.44 per diluted share. For the fourth quarter, net income totaled $8.5 million, equating to $0.07 per diluted share. In terms of funds from operations, FFO in 2021 totaled $127.9 million, equating to $1 per diluted share, which was towards the higher end of the guidance range that we established at the outset of 2021. FFO for the fourth quarter totaled $32.6 million, or $0.25 per diluted share. Same-center net operating income increased by 3% in 2021 on a cash basis as compared to 2020, which was at the top of our guidance range. Additionally, same-center NOA increased by 5.6% during the fourth quarter, With respect to bad debt, for the year, bad debt totaled $2.8 million, equating to about 1% of total rental revenue, which was close to being back down in line with our annual bad debt prior to the pandemic. Turning to our balance sheet, as Stuart touched on, during 2021, we raised $139.3 million of capital. $69.7 million of that came from property dispositions, while $69.6 million came from issuing approximately 3.8 million common shares through our ATM, including issuing approximately 1.3 million shares in the fourth quarter. We used a portion of the proceeds to reduce our debt by roughly 49 million during 2021. At year end, the company had approximately 1.3 billion of total principal debt outstanding, all of which was effectively fixed rate, so we have no floating rate exposure as we start 2022. Additionally, approximately 94% of our debt is unsecured. We currently have just $85 million of secured debt in total outstanding, which encumbers only four of our 89 shopping centers. And about $23 million of the $85 million matures this year. The remaining $62 million of secured debt matures in 2024 and 2025. With respect to our $600 million unsecured revolver, at year end, we had nothing outstanding on our credit facility. In terms of financial ratios, specifically the company's net debt to annualized EBITDA ratio, A year ago, the ratio was 7.5 times for the fourth quarter of 2020, which we lowered to 7.3 times in the first quarter of 2021, and we lowered it again to 6.9 times in the second quarter, and then down to 6.6 times for the third quarter. For the fourth quarter of 2021, the ratio of net debt to annualized EBITDA was seven times. The increase from Q3 was largely attributable to the timing between selling properties in the third quarter and acquiring new properties during the fourth quarter, which temporarily impacted annualized EBITDA. We currently expect the race to be back in the sixes again starting here in the first quarter, and our goal is to keep it in the mid-six range going forward. Looking ahead, we are starting out 2022 with an FFO guidance range of $1.02 to $1.08 per diluted share. In terms of the key underlying drivers, the low end of the range assumes that we acquire 100 million of shopping centers during the year and sell 50 million of properties, while the high end of the range assumes that we acquire 300 million and sell 30 million. We intend to finance the acquisitions through a blend of property dispositions, additional equity, and credit line borrowings. Our guidance is based on keeping our financial ratios intact. In terms of our existing portfolio, the low end of the range assumes that the same center NOI increases by 2% for the year, while the high end assumes a 4% increase. Lastly, in terms of bad debt, to be conservative, the low end of the range assumes bad debt of $4 million for the year, while the high end assumes $2 million of bad debt, which is consistent with our historical annual bad debt before the pandemic. For perspective, our actual bad debt for 2019 was roughly $2 million. Now I'll turn the call over to Rich Schoble, our COO. Rich?