Mach Natural Resources LP

Good morning and welcome to the Monmouth Real Estate Investment Corporation's third quarter 2020 earnings conference call. 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. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. It is now my pleasure to introduce your host, Ms. Becky Coleridge, Vice President of Investor Relations. Thank you, Ms. Coleridge. You may begin.

Thank you very much, Operator. In addition to the 10Q that we filed with the SEC yesterday, we have filed an unaudited quarterly supplemental information presentation. This supplemental information presentation, along with the 10-Q, are available on the company's website at mreic.re. I would like to remind everyone that certain statements made during this conference call, which are not historical facts, may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The forward-looking statements that we make on this call are based on our current expectations and involve various risks and uncertainties. Although the company believes the expectations reflected in any forward-looking statements are based on reasonable assumptions, the company can provide no assurance that its expectations will be achieved. The risks and uncertainties that could cause actual results to differ materially from expectations are detailed in the company's third quarter 2020 earnings release and filings with the Securities and Exchange Commission. The company disclaims any obligation to update its forward-looking statements. Having said that, I'd like to introduce management with us today. Eugene Landy, Chairman, Michael Landy, President and Chief Executive Officer, Kevin Miller, Chief Financial Officer, and Richard Mulkey, Vice President of Asset Management. It is now my pleasure to turn the call over to Monmouth's President and Chief Executive Officer, Michael Landy.

Thanks, Becky. Good morning, everyone, and thank you for joining us. Monmouth's fiscal third quarter was a very productive one, and I am happy to report our results. During the quarter, we acquired two buildings comprising 356,000 square feet for $60.5 million. These assets are located in the Greensboro, North Carolina and Salt Lake City, Utah MSAs. Both of these brand new built-to-suit properties are leased for 15 years to FedEx. We financed these acquisitions with two 15-year fully amortizing mortgage loans totaling $38.7 million at a weighted average interest rate of 3.12%. This brings our total acquisitions thus far in fiscal 2020 to $160 million, comprising 1.1 million square feet. We have generated 5% growth in our gross leaseable area this year and a 7% increase over the comparable prior year period. We also grew our acquisition pipeline during the quarter to a current total of $218.7 million. Our pipeline consists of four new buildings, all leased to investment grade tenants, totaling 1.5 million square feet, currently under construction. These properties have a weighted average lease term of 16.8 years. Approximately 49% of our 1.5 million square foot pipeline is leased to FedEx Ground for 15 years, 43% is leased to Home Depot for 20 years, and the remaining 8% is leased to Amazon for 10 years. The 120,000 square foot Amazon acquisition is expected to close before the end of this fiscal year, with the remaining 1.4 million square feet leased to FedEx and Home Depot expected to close during fiscal 2021. We are currently working on additional deals and anticipate further growing our acquisition pipeline in the ensuing quarters. Tenant rent collections for Monmouth during the COVID-19 pandemic have been excellent. Broken down monthly, they are as follows. For March, 100%. For April, 99.6%. For May, 97.9%. For June, 99.4%. and for July, 99.6%. For the month of August, we expect total rent collections to be consistent with July at 99.6%. Our resilient occupancy and rent collection results during these challenging times highlights the mission-critical nature of our portfolio and underscores the essential need for our tenants' operations. To date, we have agreed to a total of $438,000 in deferred rent which represents just 31 basis points of our total annual base rent. We are also happy to report that we are now in the early stages of several parking expansion projects for our largest tenant, FedEx. These expansions will result in increased rents and increased lease terms. While it's still early in the process, Rich will have more to share with you on the scope and timing of these parking expansion projects. Our portfolio is nearly fully occupied with the current occupancy rate of 99.4%. This rate was unchanged versus the prior quarter and represents a 50 basis point increase over the same prior year period. MAMA's portfolio is now in its sixth consecutive year of being over 98% occupied. Our weighted average lease term at quarter end was 7.2 years representing our seventh consecutive year of having a weighted average lease term in excess of seven years. Our gross leaseable area now comprises 23.3 million square feet, consisting of 118 properties geographically diversified across 31 states with strategic concentrations around the Gulf, Sunbelt, and East Coast port regions. Approximately 81% of our rental revenue is generated from investment-grade tenants, with the remaining 19% generated from strong, unrated companies. Our weighted average building age is 9.5 years, which represents one of the youngest portfolios in the industrial REIT sector. With regards to the overall market outlook, demand for industrial real estate remains robust, as the COVID-19 pandemic has created a surge in online shopping. E-commerce sales as a percentage of total retail sales have nearly doubled during the quarter from 15% to 27%. While e-commerce should continue to be the biggest catalyst driving industrial space demand, the COVID-19 pandemic has also brought about a reconfiguration of supply chains, which should translate into increased demand for US industrial real estate. There is a current trend towards de-globalization and less reliance on China that should result in increased domestic manufacturing. Additionally, following a multi-decade move towards leaner inventories and just-in-time supply chain strategies, inventory to sales ratios are trending back up due to the pandemic as companies now seek to keep more inventory on hand in order to guard against supply chain disruptions. This trend should also result in increased demand for our property type. As per Cushman and Wakefield's second quarter industrial report, net absorption for the quarter came in at 44 million square feet, bringing the mid-year total to just under 90 million square feet of positive net absorption. The national average vacancy rate increased by 40 basis points during the quarter to 5.3%, most of which is being driven by smaller tenants in older buildings. U.S. industrial asking rents are up 2.1% year over year to $6.58 per square foot at quarter end. Currently, there is 314 million square feet of industrial space under construction, of which approximately two-thirds is speculative space and one-third is built to suit. And now let me turn it over to Rich so he can provide you with more property level detail as well as our progress on the leasing front.