NetSTREIT Corp.

Greetings and welcome to the NetStreetCorp first quarter 2022 earnings 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Amy Ahn.

We thank you for joining us for NetStreet's first quarter 2022 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 31, 2021, and our 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 our first quarter 2022 earnings conference call. I am pleased to share with everyone our strong start to the year, completing over $135 million in net investment activity during the quarter, including acquisitions, developments where rent has commenced, and our first ever secured mortgage loan with an option to purchase. We acquired 34 properties for $90 million at an initial cash capitalization rate of 6.3%, and a weighted average lease term of 8.2 years. In addition, rent has commenced on two development projects that had total cost of $7.6 million and had a weighted average investment yield of 7.6%. We also provided $5 million of funding to support ongoing development projects and one new development for an investment grade profile tenant. At quarter end, we had nine projects under development representing $37 million of additional investment. During the quarter, we entered into our first-ever convertible mortgage loan agreement with a developer, a $40.4 million secured loan with an 18-month term and an interest rate of 6%. The loan is collateralized by three parcels of land that include a strong-performing Home Depot located in the Portland, Oregon MSA. At funding, the loan to value was approximately 75%. Upon the completion of the developer's plan to redevelop and reposition the assets, and with certain conditions being met, NetStreet will have the right to purchase the Home Depot at an above-market cap rate equal to the current 6% interest rate. Additionally, we are comfortable with the real estate quality as security for our loan. We do not expect to purchase the other two assets that collateralize our loan. Stepping back, we view this transaction as a demonstration of how we can work with real estate owners to find creative transaction solutions while providing a path to fee-simple ownership of high-quality real estate for NetStreet. In this case, we are providing the seller time to achieve their optimal resolution through a short-term loan while we receive an option to purchase the asset we want at an accretive return and achieve a superior interim yield on a well-secured loan. The investment grade and investment grade profile totals for our investment activities in the quarter, including acquisitions, developments where rent commenced, and the mortgage loan receivable, were 56.5% and 21%. Lastly, we disposed of a casual dining restaurant during the quarter for a sales price of $2.4 million, representing a 5.5% cash cap rate. We will continue to opportunistically reduce our exposure to select categories, including casual dining, banking, and health and fitness. At the end of the first quarter, our portfolio was comprised of 361 properties with 71 tenants, contributing $77 million of annualized base rent. The portfolio had a weighted average lease term remaining of 9.6 years with 80.6% of ABR represented by tenants with investment grade ratings or investment grade profiles, and the portfolio remains 100% occupied. New tenants added in the quarter include a Publix grocery store, a Panera Bread, and a Family Fair grocery store. In addition, we added one new state, Nevada, to our portfolio during the quarter. As we look ahead, our pipeline continues to grow as we source opportunities through various channels and work creatively with tenants to unlock value and provide capital while maintaining our portfolio quality and returns. At this time, we believe we are well positioned to achieve our increased investment target for the year. Before I hand the call off to Andy to go over the first quarter financial results, I want to take a moment to remind everyone of the unique characteristics of NetStreet. Since our formation in 2019, we have curated and built our portfolio strategically. Our investment grade percentage remains one of the highest in the net lease space. Our portfolio is largely made up of tenants and defensive industries, and we have no legacy issues with our assets. We have focused on tenants and industries that will perform very well in any economic environment, with a large capital cushion to respond and adapt to various evolutions in the retail space. With rising inflation and interest rates, as well as global uncertainty, we are confident that our portfolio is well-positioned to deliver the most stable cash flows in our space, even as we seek to meet our increased growth expectations for 2022. With that, I'll turn the call over to Andy to go over our first quarter financial results and 2022 guidance.