Essential Properties Realty Trust, Inc.

Good morning, ladies and gentlemen, and welcome to Essential Properties Realty Trust's first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A brief 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. This conference is being recorded, and a replay of the call will be available two hours after completion of the call for the next two weeks. The dial-in details for the replay can be found in today's press release. Additionally, there will be an audio webcast available on Essential Properties' website at www.essentialproperties.com, an archive of which will be available for 90 days. It is now my pleasure to turn the call over to Dan Donlan, Senior Vice President and Head of Capital Markets at Essential Properties. Thank you. You may begin.

Thank you, operator, and good morning, everyone. We appreciate you joining us today for Essential Properties' first quarter 2021 conference call. Here with me today to discuss our first quarter are Pete Mavote, our president and CEO, Greg Seibert, our COO, and Mark Patton, our CFO. During this conference call, we will make certain statements that may be considered forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we may not release revisions to those forward-looking statements to reflect changes after the statements were made. Factors and risk that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the company's filings with the SEC and in yesterday's earnings press release. With that, Pete, please go ahead.

Thank you, Dan, and thank you to everyone who is joining us today for your interest in essential properties. The first quarter was solid for us on all fronts. In terms of the portfolio, our portfolio demonstrated great stability and durability as our tenants largely put the impacts of COVID-19 behind them and emerged from the pandemic as stronger operators. While the pandemic continues to affect businesses, these burdens are now more manageable, with the vast majority of our tenants no longer needing support from us in the form of deferred rents. Additionally, the fourth quarter and into the first quarter, we largely completed the repositioning of properties formerly leased to tenants that needed to restructure as a result of the pandemic. In terms of investments, our industry relationships, which were strengthened during the pandemic, are driving investment activity as tenants continue to turn to us as a capital partner of choice for the real estate capital needs. As a result, The record level of activity that we experienced in the fourth quarter continued into the first quarter with another strong performance on the investment front. During the quarter, we invested $198 million into 74 properties at a 7.0% initial cash yield with over 16 years of lease term. More importantly, 81% of these deals were repeat slash relationship transactions and 85% were direct sale leasebacks on our lease form. In terms of the capital markets, the capital markets remained attractive for us, and we continued to operate well within our desired leverage range. Specifically, we finished the quarter with net debt to annualized adjusted EBITDA RE of 5.1 times. However, when taking into account our follow-on equity offerings subsequent to quarter's end, our pro forma leverage declines to 4.1 times, which provides ample capacity to continue our external growth strategy. Looking out to the balance of the year, we anticipate our new vintage portfolio to remain highly occupied, our focused and robust pipeline to generate accretive and attractive investment opportunities, and the capital markets to offer multiple sources of well-priced capital. Based on these assumptions, we are reiterating our 2021 AFFO per share guidance of $1.22 to $1.26. We believe our projected double-digit increase in AFFO per share, combined with our well-covered dividend and our commitment to prudently managing our balance sheet and portfolio risks, offer an investor a compelling total return opportunity. To dig in with more specificity, we ended the quarter with investments in 1,240 properties that were 99.1% leased to 259 tenants operating in 17 industries. Our weighted average lease term stood at 14.3 years at quarter end, with only 4.2% of our ABR expiring over the next five years. Our weighted average unit level coverage ratio was three times, which was a slight improvement over last quarter's 2.9 times. As we have previously mentioned, our traditional credit statistics, which focuses on implied credit rating and unit level coverage, remain skewed as these metrics have been negatively impacted by the pandemic-related shutdowns last year, yet they do not pick up the benefits of favorable loan programs and rent deferrals. Nonetheless, it is encouraging to see this upward trend. Our pipeline remains strong, and we look forward to continuing to add properties and tenants to our portfolio, predominantly through direct sale leasebacks with growing middle market operators in our targeted industries. While our balance sheet remains fully supportive of our external growth strategy, we will continue to stay way ahead of our capital needs in order to maintain optimal financial flexibility. With that, I'll turn the call over to Greg, our COO.