Modiv Inc.

Good day and welcome to the Modiv's second quarter 2022 earnings conference call and webcast. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. On today's call, management will provide prepared remarks and then they will open up the call for your questions. To ask a question, Analyst may press star, then 1 on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the key and to withdraw your question, please press star, then 2. Participants may also ask a question by emailing ir at modif.com. Please note, this event is being recorded. I would now like to turn the conference over to Megan McGrath, Investor Relations for Motiv. Please go ahead, ma'am.

Thank you, Operator, and thank you all for joining us today to discuss Motiv's second quarter 2022 financial results. We issued our earnings release and investor supplement before market opened this morning. These documents are available in the Investor Relations section of our website at Motiv.com. I'm here today with Aaron Haffaker, Chief Executive Officer of Motiv, and Ray Puccini, Chief Financial Officer. On today's call, management will provide prepared remarks, and then we will open up the call for your questions. Participants may also ask a question by emailing ir at motive.com. Before we begin, I would like to remind you that today's comments will include forward-looking statements under federal securities law. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts such as statements about our expected acquisitions or dispositions, are also forward-looking statements. Our actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of the factors that could cause our results to differ materially from these forward-looking statements are contained in our SEC filings, including our reports on Form 10-Q. With that, I would now like to turn the call over to Erin Haffaker, Motive's Chief Executive Officer. Erin, please go ahead.

Thank you, Megan. Hello, everyone, and thank you for joining our second quarter earnings call. Joining me today is Ray Puccini, our CFO, who will cover our financial results in detail following my opening remarks. Then I will close with a few more thoughts on the market before we open the line for Q&A. First, some highlights from the quarter. We grew our second quarter adjusted funds from operations by 18% to $3.6 million this while our total revenues grew by 14% to $10.4 million, driven by growth in our portfolio. We maintained a lean and disciplined cost structure and remained laser focused on our goal of transforming and growing our portfolio while driving attractive long-term shareholder returns. We approached the second quarter with patience and discipline. On last quarter's earnings call, we mentioned a disruption in the real estate transaction markets characterized by delays and deal cancellations as buyers and sellers adjusted to the extreme volatility in interest rates and inflation. From a deal perspective, it's been a slow summer, with both buyers and sellers pausing in the marketplace to find an equilibrium. Since we are not encumbered by specific acquisition targets or liquidity concerns requiring us to buy or sell properties, we were patient, remained committed to our investment discipline, and paced our transaction activity until we found opportunities in the latter part of the quarter. Early in the second quarter, we completed one acquisition, Lindsay Precast, for $56 million at an 8.5% weighted average cap rate, which we outlined for you on last quarter's call. We also completed the disposition of one office property during the quarter, MCOR, for $6.5 million at a 7.8% cap rate. Following the close of the quarter, when we felt the market had achieved a more balanced posture, we completed two additional acquisitions in the industrial manufacturing space and have signed an agreement for another office property disposition, our property Williams-Sonoma, which we expect to close later this month. Year-to-date, we have made great progress executing on our long-term strategy to exit non-core office properties and shift into industrial and select retail assets. The Motive team has completed $162 million in acquisitions at an 8.2% blended weighted average cap rate and has completed four office dispositions for total proceeds of $47 million, excluding the anticipated Williams-Sonoma disposition. I am proud of the progress we continue to make on the strategic repositioning of our portfolio, even during these volatile times. We continue to punch above our weight and remain heads down on execution. We remain focused on diversifying our assets, increasing our vaults, growing our portfolio, and generating long-term earnings power for our shareholders. We have made significant headway on these goals in a short amount of time, and we know that these results will, over time, resonate with the investment community and eventually be reflected in our share price. I want to take a moment to discuss our three most recent acquisitions, Lindsay Precast, Producto, and Volteer. and how they are a great representation of the type of property Motives is focused on. All three of these companies are involved in industrial manufacturing. Lindsay, as previously mentioned on our last call, is an industry-leading precast concrete manufacturer and steel fabricator. Producto, with its two locations in upstate New York, is a precision manufacturer for the medical, semiconductor, aerospace, and defense markets. And Voltaire, with locations in Ohio, South Carolina, Texas, and Utah, manufactures commercial highway products such as guardrails and barriers. When we evaluate opportunities in the industrial manufacturing space, we focus on mission-critical properties where value is being created on-site. We look for manufactured products where demand is consistent and relatively defensive in nature, such as infrastructure and components. Another key factor is that the property location is vital to the manufacturing business, and a positive economic contributor to the local community, all contributing to the sticky nature of the property and the long-term value of the real estate. We believe there is and will continue to be a trend toward reshoring of manufacturing in the U.S., especially following the supply disruptions witnessed from the global pandemic and recent armed conflicts. Additionally, we believe this subsector of industrial assets is far more resilient to speculative overbuilding, thereby metering the supply that comes online. As a result, we believe it is reasonable to expect to see continued opportunities in industrial manufacturing that are valuable and accretive. Finally, some thoughts on the markets as we continue to navigate uncertain economic times. While we do not have a crystal ball into the economy, we are more convicted than ever in our decision to continue to transform our portfolio with a focus on longer leases and sustainable long-term industries that can perform throughout economic cycles. We believe that the market will continue to seek clarity from the Fed as we make our way through the summer and into the fall. We anticipate that the overall deal volume is likely to pick back up in September, allowing cap rates and funding rates to level off as volatility recedes. We are continually evaluating a robust pipeline of small and large acquisition opportunities that we believe will create meaningful long-term value for our shareholders. In fact, though we are reaffirming our 2022 AFFO guidance for the year, We do believe we will exceed the $50 million acquisition target we announced last quarter, potentially by as much as $25 million of late fourth quarter acquisitions. In summary, in the second quarter, Motive continued to execute on our strategy during a meaningfully volatile period of time in the markets. Our patience and strong work ethic have allowed us to deliver on our long-term strategic plan while also driving adjusted funds from operation growth for our shareholders. I have the utmost confidence in our experienced management team who have successfully navigated multiple economic cycles in the past and continue to find attractive opportunities that meet our strategic goals. I will now turn the call over to Ray Pacini for his remarks.