NetSTREIT Corp.

Ladies and gentlemen, greetings and welcome to the NetStreetCorp fourth quarter 2022 earnings conference call. At this time, all participant lines are in the 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 you to Randy Hogg, Capital Markets. Please go ahead.

We thank you for joining us for NetStreet's fourth quarter and full year 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 risks 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 end of December 31, 2022, 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 relief 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 Interim Chief Financial Officer, Lori Whitman. 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 year-end 2022 earnings conference call. We are pleased to share with you strong results NetStreet achieved in 2022, despite an increasingly difficult macroeconomic backdrop. High inflation, rising interest rates, and prevailing recession concerns did not prevent us from executing our growth strategy. Before I go any further, I would like to say how proud I am of our team's commitment, determination, and ability to be nimble and creative during such macroeconomic volatility. Despite this backdrop, we have had a very active year, locking in significant portions of our capital structure by accessing the capital markets in a prudent manner when markets were supportive. In 2022, we raised over $1 billion of capital, providing the means for us to continue to grow through acquisitions and developments that meet our quality and return thresholds, which gives us confidence as we look ahead to 2023. Lori will discuss our capital raising activity in more detail later on the call. During the quarter, we completed approximately $104.1 million of gross investments, bringing the year-end total to $507 million. Investments in the quarter, including one completed development, had an average yield of 6.9%. Excluding development, acquisitions completed in the quarter had an initial cash cap rate of 7% and had a weighted average remaining lease term of 11.2 years. Notably, over 97% of these acquisitions were with investment grade and investment grade profile tenants. Importantly, our growth supported our ability to deliver best-in-class AFFO per share growth of 23.4% during 2022. As we previously indicated, investment activity was lighter in the fourth quarter than earlier in the year. as we took a more prudent approach to capital deployment due to the disconnect between capital markets and property markets created by the rapid rise in interest rates in 2022. We have and will continue to be disciplined on asset pricing and capital raising as our team continues to demonstrate its exceptional ability to find acquisitions from a variety of sources at cap rates above those found in the broader market without compromising on credit and real estate quality. It is important to highlight that we have proven that we can be very nimble and creative in sourcing opportunities through non-traditional channels. For example, we are looking at providing capital to tenants, developers, and other landlords in ways that take advantage of market dislocations resulting in outsized risk-adjusted returns. While the overall number of transactions industry-wide is likely to be significantly lower in 2023, similar to the back half of 2022, we are also seeing less competition. and see a vacuum where other types of typically low-yielding capital providers have historically operated. While our main focus remains on well-priced, high-quality acquisitions, we will also on occasion step in as a senior secured lender. Loans will be backed by high-quality investment-grade properties at safe LTVs and at yields considerably higher than the cap rates required to acquire the assets. This multi-pronged approach has led to a very strong pipeline of opportunities at very attractive risk-adjusted returns. and our discipline, creativity, and excellence in execution make us confident that we can continue to create meaningful shareholder value for the foreseeable future. Further, we feel extremely confident in the stability of our portfolio. We have maintained proper risk management guardrails, including a stringent underwriting process and continuous credit monitoring. This has enabled us to curate a base of high-quality properties leased to strong credit tenants in stable industries best positioned to perform through any cycle. We demonstrated the success of this strategy and diligent execution through COVID when our portfolio outperformed all publicly traded net lease companies, resulting in 100% rent collections from the time that we went public at the height of the pandemic. This rate of collection still continues today. At year end 2022, our portfolio is comprised of 427 leases with 80 tenants contributing approximately $99 million of annualized base rent. The portfolio had a weighted average lease term remaining of 9.5 years, with approximately 80% of ABR represented by tenants with investment grade ratings or investment grade profiles. The portfolio is 100% occupied. A key part of our execution is selling assets where the risk adjusted value no longer meets our criteria. And in 2022, we accretively sold seven properties for over $25 million. Turning to our lease expiration schedule, we have no lease expirations in 2023 and only 0.3% of total ABR expires in 2024. As we look to 2023 and beyond, I want to reaffirm our commitment to our growth strategy as we continue to focus on execution and scaling our high-quality, best-in-class portfolio. We are seeing no shortage of opportunities and believe we will continue to prove our team's ability to source the best risk-adjusted pricing of net lease assets in any market environment as we have over the past three years. Before closing my remarks, I wanted to provide a brief update on our CFO search. We have continued to progress in our search for a permanent CFO. We have a number of strong candidates and are focused on finding the right person. With that, I'll turn the call over to Lori to go over our fourth quarter financial results and 2023 guidance.