NetSTREIT Corp.

Greetings and welcome to NetStreetCorp 4th Quarter 2021 Earnings Call. At this time, all participants are on a listen-only mode. Any 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. It is now my pleasure to introduce your host, Amy Ann, Investor Relations. Thank you. You may begin.

We thank you for joining us for NetStreet's fourth quarter and full year 2021 earnings conference call. In addition to the press release distributed yesterday after market closed, we posted a supplemental package and an updated investor presentation. Both can be found in the investor relations section of the company's website at www.netstreet.com. On today's call, management's remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risk and uncertainties that may cause actual results to differ from those discussed today. For more information about these risk factors, we encourage you to review our Form 10-K for the year ended December 31st, 2021, and other SEC filings. All forward-looking statements are made as of the date hereof, and NetStreet assumes no obligation to update any forward-looking statements in the future. In addition, certain financial information presented on this call includes non-GAAP financial measures. Please refer to our earnings release and supplemental package for definitions, gap reconciliations, and an explanation of why we believe such non-gap financial measures are useful to investors. Today's conference call is hosted by NetStreet's Chief Executive Officer, Mark Manheimer, and Chief Financial Officer, Andy Blocker. They will make some prepared remarks, and then we will open the call for your questions. Now, I'll turn the call over to Mark. Mark?

Good morning, everyone, and welcome to NetStreet's year-end 2021 earnings conference call. Before I discuss our activity for the fourth quarter and full year, I'd first like to take a moment to thank NetStreet's employees for their performance during our first full year as a public company. I am pleased with all that we have accomplished in 2021. While we spent most, if not all, of the past year dealing with the disruption of COVID-19, our employees across all aspects of our business performed seamlessly and exceptionally well. We would not have achieved these results without your hard work and significant contributions And for that, I thank you. Today, I am pleased to share that we have moved into our new headquarters in uptown Dallas, and our entire team is finally together full time. Our new space allows us to better collaborate, grow, and best position us to achieve our goals. In addition, I'm looking forward to promoting an environment where we're all proud and enthusiastic to work together to achieve our common goals. One of our objectives for 2021 was to grow our portfolio with high quality assets and to further diversify our portfolio holdings. The team underwrote and closed over $464 million of gross investment activity in 2021. The portfolio ABR grew to over $71 million, up from $42 million at the end of 2020. During the year, we added 15 new tenants to our roster and three new states to our portfolio. We have stated for our portfolio diversification goals, that we want no state or industry to be more than 15% of our total ABR and no tenant to be more than 5%. And we have made significant progress towards those targets. As of year end, our largest state concentration is in Texas at approximately 11%. Our largest industry is home improvement at 15%, and our top tenant, Walgreens, is at slightly over 7%. During 2021, we sold nine properties for total proceeds of $31.9 million at a cash capitalization rate of 6.5%. The dispositions de-risked the portfolio by decreasing our exposure in casual dining and banking and removed RV sales from our holdings. As of December 31st, 2021, our portfolio was comprised of 327 properties in 41 states with an aggregate of 6.4 million square feet. We had 67 tenants, operating in 23 different industries. Our portfolio experienced no vacancies and had 100% rent collections during all of 2021. The weighted average lease term remaining at year end was 9.9 years. Our portfolio has a combined investment grade and investment grade profile tenancy of 81.6%. During the fourth quarter, we completed a record high quarterly net investment activity of $160 million, which includes $151 million of acquisitions and ongoing development funding of over $9 million. Acquisitions completed in the quarter had an initial cash capitalization rate of 6.5% and had a weighted average remaining lease term of 10.4 years. Acquisitions completed in the quarter were with 39.5% investment grade tenants and 18.4% investment grade profile tenants. While the investment grade percentages in the quarter were lower than typical, this was largely driven by acquisition mix. specifically a larger three-property all-or-nothing acquisition in the Lincoln Park part of Chicago. This included a very well-located floor and decor, a strong-performing Olive Garden ground lease, and an L.A. fitness that we currently hold in our TRS. While we are not looking to add fitness to the portfolio, and this is not likely to be a long-term hold, we were comfortable with the exceptional real estate, replaceable rents, and 18 months of rent escrowed at the beginning of our investment. During the fourth quarter, we provided over $9 million in development funding for five new projects, two of which are with investment-grade tenants, and three were with investment-grade profile tenants. We funded 10 development projects in the year with estimated costs of $40.3 million. We have been pleasantly surprised by the amount of interest and partnership opportunities for development, and we believe this can be a growing part of our growth strategy. We had no dispositions during the fourth quarter, and we expect any future disposition activity to be replaced with additional property acquisitions. While we view the curating of our historic portfolio to largely be complete, future asset sales will occur to the extent we see opportunities arise to accretively improve the credit quality and diversification of the portfolio. Or if we see an opportunity to sell a portion of a larger acquisition in order to own the portion we want long-term, at a better risk-adjusted return, similar to the acquisition of the Florin Decor and Olive Garden in Chicago. Our top 20 tenants include companies with strong balance sheets and excellent management teams, and are tenants that we want to grow with. A great example of this is our relationship with Hobby Lobby, which is the third largest tenant in our portfolio. Hobby Lobby is an industry leader in the arts and crafts business that has an excellent corporate financial performance and falls within our investment grade profile category. In addition, they generally operate in prime locations and dense retail corridors. Before I hand the call off to Andy, I want to affirm that as we look to 2022 and beyond, we will continue to focus on execution and growing our best-in-class portfolio with high-quality tenants. We want to continue our innovative approach in sourcing deals and building the right relationships with trusted partners to grow our business for all of our valued stakeholders. As important as our growth and financial performance, however, is our commitment to the principles of ESG. Last year, we enhanced our ESG disclosure significantly, providing detail around each element. And we will continue to provide additional disclosures going forward. With that, I'll turn the call over to Andy to go over our fourth quarter financial results and 2022 guidance.