The Necessity Retail REIT, Inc.

Greetings and welcome to the Necessity Retail REIT first quarter 2022 conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I'd now like to turn the conference over to your host, Luisa Corto. Executive Vice President, please go ahead.

Thank you, Operator. Good morning, everyone, and thank you for joining us. This call is being webcast in the Investor Relations section of RTL's website at www.necessityretailrete.com. Joining me today on the call to discuss the results are Michael Weil, Chief Executive Officer, and Jason Doyle, Chief Financial Officer. Following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statement. We refer all of you to our SEC filings, including the annual report on Form 10-K for the year ended December 31st, 2021, filed on February 24th, 2022, and all other filings with the SEC after that date for a more detailed discussion of the risk factors that could cause these differences or otherwise impact our business. Any forward-looking statements provided during this conference call are only made as of the date of the call. As stated in our SEC filings, RTL disclaims any intent or obligation to update or revise these forward-looking statements except as required by law. Also, during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. Reconciliation of these measures to the most directly comparable gap measure is available in our earnings release, which is posted on our website at www.necessityretailrate.com. Please also refer to our earnings release for more information about what we consider to be implied investment grade tenants, a term we will use throughout today's call. I'll now turn the call over to Mike Weil. Mike?

thanks Louisa good morning and thank you all for joining us today the first quarter illustrated the effectiveness of our growth strategy as we closed on over 800 million dollars of open-air anchored grocery anchored and power centers and completed the sale of an office property lease to Santa Fe in New Jersey both transactions were part of the series of transformational transactions we announced in December including closing subsequent to the end of the quarter We've now acquired all but two of the shopping centers and expect to close these this month. Our first quarter transactions were immediately accretive to AFFO per share as we anticipated. AFFO per share grew over 9% to 24 cents per share compared to the fourth quarter of 2021. These acquisitions only partially benefited our first quarter results as closings occurred at different dates throughout the quarter. We've created a pure play retail REIT, reducing exposure to office assets to less than 1% of our portfolio. We added diversification by reducing the concentration of straight line rent derived from top 10 tenants from 38.6% in the fourth quarter of 2021 to 29% this quarter. Finally, we've grown the percentage of our straight line rent from Sunbelt states by almost 18% to 57.1% from less than 40%. In addition to AFFO per share, our first quarter results reflect not only the impact of our first quarter acquisitions, but also the leasing and acquisition activity we completed last year, as well as the careful management of our balance sheet. Jason will provide additional detail, but I want to mention a few highlights. First quarter revenue increased by nearly 20% year over year to $94.9 million, and cash NOI grew by over 16% to $73.6 million. Importantly, our first quarter results only partially include the benefit of the acquisitions completed last quarter, which represents about 60% of the total $1.3 billion portfolio of acquisitions as measured by purchase price. As previously noted, the multi-tenant acquisitions completed in the first quarter closed at different dates, notably in February and March for the CIM assets, and therefore only proportionally contributed to our results. The multi-tenant acquisitions completed in the first quarter contributed $8.3 million of actual NOI. Upon closing the last of the 81 property portfolio acquisition, we anticipate that the CIM portfolio will add over $113 million of annualized straight line rent. Finally, the disposition of the Santa Fe buildings occurred at the very beginning of the quarter and thus didn't meaningfully contribute to first quarter NOI. At quarter end, our $4.7 billion portfolio was comprised of 1,029 properties with portfolio occupancy of 91.4% and a weighted average remaining lease term of 7.4 years. Annualized straight-line rent increased 21% year-over-year to $346 million, and our portfolio grew 33% to 26.2 million square feet. Our single-tenant assets are 53.9% investment-grade rated, and 38.1% of anchor tenants in our multi-tenant portfolio are investment-grade or implied investment-grade rated. Based on straight-line rent, 64.4% of leases across the portfolio include contractual rent increases, which translate to an annual portfolio-wide rent increase that averages 1% per year and also includes leases that have increases based on the consumer price index. We own properties in 47 states and the District of Columbia, and our tenants operate across 40 different industries with no single state or single industry representing more than 10% of our portfolio based on straight-line rent. As of April 15th, and including the open-air shopping centers that we closed at the end of April for $277.8 million, our forward acquisition pipeline totaled $532.4 million based on contractual purchase price at an 8.6% weighted average cap rate, and with 5.9 years of average lease term remaining. In addition to the remaining open-air shopping centers, the pipeline includes an additional nine primarily service retail properties that are under contract for a total of almost $18 million. Our robust acquisitions are supplemented by significant leasing activity. For the first quarter, our total leasing activity exceeded 325,000 square feet, including new leases, renewals, executed leases, and pipeline. In the first quarter, we signed leases for over 12,000 square feet of space and annualized straight-line rent of $158,000 in our multi-tenant portfolio. In the first quarter, we also completed 18 lease renewals in the multi-tenant segment of our portfolio, including six with anchor tenants that totaled 150,000 square feet and $2 million of annual base rent. Executed occupancy, which includes leases that have been signed but where the tenant hasn't yet taken possession of the space, is comprised of seven new leases that total 78,000 square feet and $1.2 million of annualized straight-line rent over a weighted average lease term of nine years. Our leasing pipeline includes 16 new leases that total 86,000 square feet and $1.6 million of annualized straight-line rent over a weighted average lease term of 10 years. Before turning to our balance sheet, I wanted to revisit the debt transactions we completed last year in light of the current interest rate environment. In part, through the issuance of unsecured notes while rates were favorable, 84.2% of our debt was fixed rate as of the end of the quarter. We also extended our weighted average debt maturity to 5.3 years from 4.5 years at the end of the first quarter of 2021. With US interest rates on the rise, Locking in favorable rates for such a substantial portion of our debt and for a longer period was a prudent strategic decision. At quarter end, our net debt to gross asset value was 46%. As we discussed previously, our balance sheet has been temporarily utilized to accommodate the acquisition of the open-air portfolio, which we firmly believe is a critical growth opportunity for the company. With the portfolio acquisition substantially complete, We intend to resume our deleveraging initiative through the sale of $250 million of assets that we've identified to hold for sale, potentially providing proceeds to begin to reduce leverage back to previous pre-closed levels. In addition, we've identified 13 assets that have strong leasing potential for which we began to develop a leasing pipeline immediately upon closing. We've demonstrated an ability to successfully de-lever in the past and expect that we'll be able to do the same in the future. We also issued approximately $78.3 million of common stock through a combination of $24.9 million issued through our ATM program at an average price of $9.02 per share and $53.4 million in issuance to affiliates of the CIM group, in connection with the CIM portfolio acquisitions completed during the quarter. We remain confident in the long-term prospects for necessity-based retail real estate, especially in the single-tenant and open-air shopping center space. The shopping centers we've acquired recently are intentionally located in suburban markets with strong demographics and traffic counts. With necessity retail tenants like grocery stores and quick service restaurants, These centers are conveniently located between home and work and are where America shops every day. Well-located and well-positioned retailers as a whole have experienced a renaissance over the last two years as in-store shopping is approaching pre-pandemic levels. You need to look no further than major U.S. retailers' own earning calls for evidence of the importance of physical stores to these brands' long-term strategies. From Walmart, where orders coming into stores have increased eightfold in two years, to Target, where growth in digital sales has been matched by growth in physical stores, the message is that continued growth will come through omnichannel operations and that store counts will continue to increase to meet demand from consumers. Net absorption continues to improve. A recent CBRE research report highlighted that retailers leased almost 100 million square feet more space in 2021 than they vacated. And TJ Maxx and Burlington stores have disclosed plans to open over 100 new stores each this year and to grow their total store accounts by between 30 and 50% over time. The significant momentum we carried into this year has continued to grow in the first quarter. With the addition of the remaining accretive multi-tenant shopping centers, the power of our platform and our relationships with national retailers can fully be harnessed to create opportunities for portfolio growth. We're well positioned to be one of the premier acquirers of high-quality service retail properties. We've already experienced significant year-over-year growth thus far in 2022, and we look forward to the remainder of the year. I'll turn it over to Jason Doyle to take us through the numbers in greater detail. Jason?