Realty Income Corporation

All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a questions and answers session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, press the pound key. I would now like to hand the call over to Jean Hasselwander, Investor Relations at Realty Income.

Thank you all for joining us today for Realty Income's second quarter operating results conference call. Discussing our results will be Sumit Roy, President and Chief Executive Officer, and Chris B. Kelly, Executive Vice President, Chief Financial Officer, and Treasurer. During this conference call, we will make certain statements that may be considered forward-looking statements under federal securities law. the company's actual future results may differ significantly from the matters discussed in any forward-looking statements. We will disclose in greater detail the factors that may cause such differences in the company's form 10Q. We will be observing a two-question limit during the Q&A portion of the call in order to give everyone the opportunity to participate. If you would like to ask additional questions, you may re-enter the queue. I will now turn the call over to our CEO, Sumit Roy.

Thanks, Julie. Welcome, everyone. Building enduring relationships is inherent to our purpose as an organization. And I would like to thank all of our stakeholders for their continued support. I would like to express my appreciation to all of my Realty Income colleagues who continue to relentlessly pursue our growth initiatives while in the sustained remote work environment. We are pleased with the momentum across all facets of our business, which is reflected in our revised 2021 AFO per share guidance of $3.53 to $3.59. Our increased guidance range represents an improvement of 2.7% at the midpoint compared to our prior range, as well as an improvement of 5% at the midpoint versus last year, and is a function of several tailwinds to our business. First, an increase to our 2021 acquisition volume guidance to approximately $4.5 billion. Second, the continued improvement in rent collections from our theater clients. Third, our well-priced capital markets activity since the start of June, which further positioned our balance sheet for continued growth. Fourth, our active asset management activities, which resulted in occupancy of 98.5% at quarter end, and rent recapture rates in excess of 104% on lease expirations during the quarter. Fifth, the overall quality of our portfolio, which has been curated, refined and underwritten over our 52-year history, continues to perform throughout a variety of environments. We'll discuss each of these elements in greater detail shortly. Year to date, we have added approximately $2.2 billion of high quality real estate to our portfolio, including $1.1 billion of new acquisitions in the second quarter. We continue to expand our platform as our size and scale remain key competitive advantages that translate directly into shareholder value. This quarter, we sourced more than $20 billion of acquisition opportunities, ultimately selecting and closing on less than 6%. On a total revenue basis, Approximately 54% of the acquisitions made during the quarter are leased to investment grade rated clients, which brings up total investment grade client exposure to approximately 50%. The weighted average remaining lease term of the assets added to our portfolio during the quarter was 11.5 years. The largest industry represented in our second quarter acquisitions was UK grocery stores, and 711 remains our largest client. We remain well diversified as our portfolio consists of over 6,700 assets leased to approximately 630 clients who operate in 58 separate industries located in all 50 US states, Puerto Rico and the UK. And during the quarter, we continue to generate healthy investment spreads of approximately 172 basis points while acquiring, in our view, the highest quality product in the marketplace. The quality of our acquisitions is evident throughout the entire lifecycle of our portfolio as we have consistently demonstrated favorable recapture rates on expiring leases while maintaining a healthy occupancy level throughout a variety of economic cycles. During the quarter, we released 58 units recapturing 104.7% of expiring rent. Since our listing in 1994, we have executed over 3,700 releases or sales on expiring leases recapturing over 100% of rent on these released contracts. And occupancy at quarter end was 98.5% based on property count. Our international investment activities continue to support our growth outlook, and our UK portfolio has now grown to over $2.7 billion. This quarter, the UK accounted for over 50% of the $1.1 billion of total acquisitions for me. Year to date, we've added approximately $1 billion in high quality real estate in the UK across 41 properties. And of the more than $21 billion in acquisitions opportunities that we sourced, approximately 31% is related to international markets. As we continue to expand our international platform, we will look for additional geographies that offer opportunities similar to that of the UK. We seek to acquire real estate markets where opportunities are abundant, There is considerable demand for sale-leaseback transactions from industry-leading operators, and the local real estate can generate long-term IRRs in excess of our long-term cost of capital. At this time, I'll pass it over to Christy, who will further discuss results from the quarter.