Mach Natural Resources LP

Good afternoon and welcome to Monmouth Real Estate Investment Corporation's first quarter 2021 earnings conference call. All participants will be in 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 one on a touch-tone phone. To withdraw your question, please press star 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 today, we have filed an unaudited first quarter supplemental information presentation. This supplemental information presentation, along with our 10-Q, are available on the company's website at mreic.reit. 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 first quarter 2021 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 MAMAS President and Chief Executive Officer, Michael Landy.

Thank you, Becky. Good afternoon, everyone, and thank you for joining us. Before I get into our first quarter results, I want to briefly address recent announcements regarding our strategic alternatives process and matters pertaining to our upcoming annual meeting. On January 14th, 2021, we announced that we would explore strategic alternatives and that we had retained JP Morgan to work with CS Capital Advisors to assist us in that effort. We are undertaking a comprehensive and thorough review of all alternatives available to us, including a possible sale or merger, and our board and management team are fully committed to taking all appropriate actions to ensure we maximize value for our stockholders. In light of favorable current market conditions for our sector, we believe this is an opportune time to be evaluating our strategic options. On December 31st, 2020, we also announced that we were in receipt of notices from two stockholders declaring their intention to nominate candidates to stand for election to our board and submit several non-binding proposals to be voted on at our annual meeting. As previously mentioned, our board will carefully vet all proposed nominations and consider all proposals put forth by our stockholders. Moving forward, We do not intend to disclose further developments unless and until our board approves a specific action or otherwise concludes the review of strategic alternatives. Turning back to our results for the quarter ended December 31st, 2020. During the quarter, we acquired two brand new, highly automated Class A built-to-suit industrial properties containing 1.1 million square feet for $170 million. The first property, located on a substantial 99-acre parcel in the Columbus, Ohio MSA, is leased to FedEx Ground for 15 years. The other property, also located on a very large land parcel of 130 acres, is located in the Atlanta, Georgia MSA and is leased to Home Depot for 20 years. These two acquisitions comprise 229 total acres representing a substantial land-to-building ratio of 9 to 1. This provides us with a large amount of additional land at these two sites, which can be used for future building expansions as well as additional truck courts and parking. These two leases are expected to generate annualized rental income of $10.1 million for a weighted average term of 17.9 years. Further demonstrating our ability to accretively source acquisitions, and bear in mind these acquisitions were sourced well in excess of a year in advance of rent commencement, this equates to a blended cap rate of just under 6%. We financed these acquisitions with a total of $104 million in debt comprised of two fully amortizing mortgage loans at a weighted average fixed interest rate of 3.11%, in terms of 15 and 17 years, respectively. Following last year's 5% growth in our gross leaseable area, at the end of the first quarter, our gross leaseable area increased to approximately 24.5 million square feet, representing a 7% increase over the prior year period and a 5% increase on a sequential basis. As of the quarter end, our portfolio consisted of 121 properties geographically diversified across 31 states with a weighted average lease maturity of 7.5 years, a land-to-building ratio of 5.4 to 1, and a weighted average building age of 9.5 years. We continue to experience strong demand for our properties. This past December, we leased up our previously vacant 55,000 square foot facility in the Hartford, Connecticut MSA to an investment grade tenant for 10.3 years, thereby increasing our occupancy rate to 99.7%. With 82% of Monmouth's rental revenue generated from investment grade tenants and the remaining 18% generated from very strong unrated companies, Our overall occupancy rate and base rent collections have been excellent throughout the COVID-19 pandemic. Our rent collections have averaged 99.8% throughout the pandemic, and we expect future months to be consistent with this trend. During the quarter, we grew our acquisition pipeline to include four new built-to-suit properties containing 1.2 million total square feet, representing $169.3 million in future acquisitions. All four properties are leased to investment-grade tenants. These future acquisitions will have a weighted average lease term of 12.8 years. Subject to our customary due diligence, we anticipate closing each of these transactions upon completion and occupancy, which is currently expected to be during fiscal 2021 in the case of three of the properties and the first half of fiscal 2022 for the remaining one. In connection with one of these four properties, we have entered into a commitment to obtain a 15-year fully amortizing mortgage loan of $35.5 million at a fixed interest rate of 2.62%. We expect to continue to grow our high-quality acquisition pipeline further during fiscal 2021. During the quarter, we raised approximately $1.3 million in equity capital through our dividend reinvestment plan. Of this amount, a total of $1 million in dividends were reinvested representing a 6% participation rate. We also raised $76 million in net proceeds through our preferred stock ATM program with a sale of 3.1 million shares of our six and an eighth Series C preferred stock at a weighted average price of $24.88 per share. our Series C preferred stock becomes redeemable on September 15th of this year. We believe a significant opportunity exists to generate additional earnings growth by replacing some of our Series C preferred equity with lower-cost capital. Subsequent to quarter end, on January 14th, 2021, our Board of Directors approved a 5.9% increase in our quarterly common stock dividend raising it to 18 cents per share from 17 cents per share on a quarterly basis, and from 68 cents per share to 72 cents per share on an annual basis. This increase is the third dividend increase in the past five years, representing a total increase of 20 percent. We are now in our 30th consecutive year of maintaining or increasing our common stock cash dividend. Our dividend track record is among the best in the entire REIT sector. Paying out a consistent and growing dividend over the long term represents, in our opinion, good corporate governance. By distributing our earnings directly to our shareholders, the investor gets to decide how best to reallocate this capital. Turning to the overall U.S. industrial market, our property sector continues to perform exceptionally well As per Cushman and Wakefield's fourth quarter report, net absorption for the fourth quarter represented the strongest single quarter ever recorded with 89.8 million square feet of net absorption. This brought year-to-date net absorption for 2020 to 268.4 million square feet, representing an 11.4% increase over the prior year. Net absorption has been greater than 200 million square feet for seven consecutive years, And given the strong e-commerce demand drivers, this trend is projected to continue in 2021. The U.S. industrial vacancy rate was flat sequentially, but increased 30 basis points year over year to 5.2% currently. Weighted average asking rents increased 4.6% over the prior year period to $6.76 per square foot. New supply totaled 353 million square feet in 2020, representing a 5.7% increase over the prior year. There is currently 360.7 million square feet of new industrial space under construction, with just over 42% of this new construction being pre-leased. Following a record holiday season, increasing amounts of modern industrial space are very much needed in order to serve continued strong demand for online shopping. And now let me turn it over to Rich so he can provide you with more detail on the property level, as well as our progress on the leasing front.