NetSTREIT Corp.

Greetings and welcome to the NetStreetCorp third 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 N., Investor Relations Manager. Ma'am, you may begin your presentation.

We thank you for joining us for NetStreet's third quarter 2022 earnings conference call. In addition to the press release distributed yesterday after market close, 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, GAAP reconciliations, and an explanation of why we believe such non-GAAP 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 you will open the call for your questions. Now I'll turn the call over to Mark. Mark?

Good morning, everyone, and welcome to our third quarter 2022 earnings conference call. We are pleased to share that NetStreet continued to perform very well in the third quarter, despite high inflation, rising interest rates, and macroeconomic uncertainty. With diligent planning and strong execution, we believe we can continue to create value throughout all stages of this economic cycle. During the quarter, we completed $130 million of net investment activity, closed on both our second forward equity offering of 10.35 million shares and our $600 million sustainability-linked credit facility, locking in attractively priced capital before the latest interest rate hike and heightened market volatility. As stated in last night's earnings release, given the nature of today's environment and anticipated pricing adjustments in net lease assets, Reflecting the disconnect between the current capital markets and property markets, we believe it is prudent to take a more opportunistic approach to capital deployment. While we are pleased with our investment activity to date and are seeing no shortage of opportunities, rising marginal borrowing costs and increased equity costs across the sector make it prudent for us to eliminate our quantitative investment targets. At the same time, the positive investment decisions we have made, the limited operating risk associated with our current tenant lineup, and our ability to lock in significant portions of our capital structure in the third quarter allow us to narrow our AFFO per share guidance range to $1.15 to $1.17 per share, resulting in a small increase in our midpoint of expectations. Given the current economic uncertainty, our portfolio of high-quality assets is best positioned to weather the road ahead. With over 88% of our portfolio in defensive industries and partnering with retailers that have strong access to capital and experienced management teams, We believe our portfolio will continue to perform well during a potential downturn in the retail environment. Due to our diligent underwriting process and continued credit monitoring, we are confident in our tenants' ability to meet their rental obligations. As a reminder, we have collected 100% of our rent since our IPO in 2020 and believe we have put the proper risk management guardrails in place to see this trend continue. Now moving on to our third quarter investment activity. We acquired 26 properties for $131.3 million at a weighted average initial cash capitalization rate of 6.6% and a weighted average lease term of 11.8 years. As part of an acquisition of a Winn-Dixie property, we assumed our first mortgage loan payable of $8.6 million with a fixed rate of 4.5% that matures in November 2027. This acquisition provides strong store sales and profitability, dense infill real estate, and attractive pricing. Also in the quarter, we disposed of a bank property for $1.7 million at a 5.5% cap rate, further reducing our banking exposure. Finally, we provided $4.7 million of funding to support six ongoing development projects. At quarter end, we have invested $17.5 million to date in these projects. As with the previous quarter, we remain comfortable with the performance of our existing development projects, but remain cautious in committing to new developments during a time of increased costs for construction and labor, and heightened economic uncertainty. At quarter end, our portfolio was comprised of 406 properties with 77 tenants contributing approximately $92.7 million of annualized base rent. The portfolio has a weighted average lease term remaining of 9.6 years with approximately 79% of AVR represented by tenants with an investment grade rating or investment grade profile. The portfolio remains 100% occupied. We added two new high-quality grocer tenants, Festival Foods and Dollar Fresh, and a discount retailer, TJ Maxx, in the quarter. During the quarter, Big Lots Credit changed due to their second quarter results, with reported margin pressures, therefore no longer meeting our investment grade profile definition. That being said, we believe the company has a strong balance sheet, and we remain confident in their performance. To conclude, despite the uncertain macro backdrop, we remain confident that our cycle-tested portfolio and experienced team will continue to maximize shareholder value. With that, I'll turn the call over to Andy to go over our third quarter financial results and 2022 guidance.