Sila Realty Trust, Inc.

I will now turn the conference over to your host, Myles Callahan, Senior Vice President of Capital Markets and Investor Relations for CELA. You may begin.

Good morning, and thank you for joining us today to discuss CELA Realty Trust's financial results for the second quarter of 2024. Yesterday, we issued our earnings release for the second quarter of 2024. The earnings release, as well as our earnings supplement, are available on the investor section of our website at investors.celarealtytrust.com. Joining today's call with me are Michael Seaton, President and Chief Executive Officer, Kay Neely, Executive Vice President and Chief Financial Officer, and Chris Flohaus, Executive Vice President and Chief Investment Officer. We will begin with prepared remarks and then open up the call for any questions. Before we begin, I would like to remind you that today's comments will include forward-looking statements under federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts, such as statements about expected financial performance, are also forward-looking statements. Actual results may differ materially from those contemplated by such forward-looking statements. A discussion of the factors that could cause a material difference in our results compared to those forward-looking statements is contained in our SEC filings. Please note that on today's call, we will be referring to non-GAAP measures. You can find the reconciliation of these historical non-GAAP measures to the most directly comparable GAAP measures in our second quarter range release and in our earnings supplement, both of which can be found on the investor section of our website and in the form 8K we filed with the SEC yesterday. With that, I will now turn the call over to our President and Chief Executive Officer, Michael Seaton.

Thank you, Myles. I'm excited to welcome everyone to Cielo Realty Trust's first earnings call as a publicly traded company. We appreciate you taking the time to join us today. For those who may not be as familiar with Cielo, I will begin by providing some background on the company and a flavor for how we approach the business of investing in healthcare real estate and running Cielo Realty Trust. Next, our Chief Investment Officer, Chris Flohaus, will provide an overview of our portfolio as well as market observations, and Kay Neely, our Chief Financial Officer, will address our financial performance. I will wrap up with a few closing comments before opening the call to questions. First and foremost, as most of you know, we listed Cielo Realty Trust on the New York Stock Exchange on June 13, 2024. We are excited to be publicly traded and for the opportunity to present the merits of our stock to a wide audience of investors. Our decision to go public via a direct listing was motivated in part to give our existing shareholders liquidity optionality. However, with invested assets of approximately $2.2 billion, a proven and successful track record, a robust operating platform scaled for growth, and many years of real estate investment experience, we strongly believe that CELA was more than ready for the public equity markets. Given our strong and flexible balance sheet, we did not need to raise capital through a traditional and typically expensive IPO mechanism. In fact, we believe we have plenty of dry powder to meet our strategic objectives over the next 12 to 24 months. However, being a publicly traded company opens the door wider to capitalize on growth opportunities in the large growing and sustainable healthcare market. We also believe CELA is uniquely positioned within the REIT universe. As a net lease REIT focused solely on quality healthcare properties, we believe we offer investors the best of both worlds. Participation in the attractive large market of the defensive healthcare sector and a triple net lease REIT structure with longer lease terms and a conservative approach to leverage. Now I would like to spend a few minutes discussing the steps we took to build CELA into the company it is today and what we believe are key differentiators for those new to our story. First, while we may be newly publicly traded, we are not a new company. I co-founded what is now CELA in 2014 as well as a predecessor REIT with a similar strategy in 2010. In 2019, We merged CELA with its predecessor company, which at the time owned solely healthcare properties to gain size and scale with an eye toward further growth. Two years later, in 2021, we sold $1.3 billion in non-core assets to focus exclusively on high-quality healthcare properties, specifically medical outpatient buildings, inpatient rehabilitation facilities, and surgical and specialty facilities. As of the end of the second quarter 2024, we had 137 properties with a focus on markets with strong and growing demographics with a portfolio lease rate of approximately 97.5%. Our team has been active acquirers of real estate over the past 14 years, having purchased over $4 billion with the majority of that being healthcare real estate. As a result, we are tried and tested healthcare real estate investors focusing on acquiring high-quality healthcare properties that are critically important to our tenants' operations. We also focus on properties which have health system and large-scale operator affiliations. We especially seek out facilities with branding so that our buildings appeal to the specific client and catchment area that supports our tenants' business objectives. Some of the brands associated with our buildings and tenants are Post Acute Medical, Tennant Healthcare, Baylor Scott & White, and Cleveland Clinic, to name just a few. By design, our portfolio is highly diversified, both geographically and across various healthcare types. We have built in organic growth to our lease stream of income through contractual 2.2% average annual rent escalators on 83.6% of the portfolio, while the remaining 16.4% of our portfolio having base rent increases indexed to the Consumer Price Index, or CPI, as of June 30, 2024. Being active in the market for so many years, we have expanded our channels for sourcing properties to acquire through both on and off market partners and have historically enjoyed seeing strong deal flow. In an overall real estate transaction market that is currently seeing significantly reduced volume due to the higher interest rate environment and dislocation in the capital and banking markets, we continue to see interesting opportunities and we have the capital to take action. That being said, we remain disciplined and focused in deploying capital as we have always been. We stick to the mantra. that you can only invest a dollar one time, so make it count. And that's exactly what we try to do. We have found that what many would perceive as our best defense, low leverage, and a flexible balance sheet is actually our greatest offensive tool, as it offers us the liquidity and speed with which to execute on opportunities while our competitors may be forced to sit on the sidelines. I'm extremely proud of what our company has achieved to date in terms of acquisitions. This year alone through July, we have purchased eight properties for over $163 million, including our most recent $28.3 million acquisition of a leading inpatient rehabilitation facility in Fort Smith, Arkansas. While continuing to seek out additional acquisition opportunities for the remainder of 2024, We will be thoughtful and disciplined with any acquisition to ensure it meets our strict criteria for building a portfolio in company that is built to last. With our current size, every accretive acquisition can have a meaningful impact on our financial results. I would like to reiterate what I stated earlier, that our company is built to scale. From a personnel and an expense perspective, we can add meaningful assets to the company with minimal additional cost to run the company. I'm very proud of our experienced leadership team, which has strong real estate, financial, and operating expertise. Kay Neely, our chief financial officer, has been with our company for over eight years and CFO for the past six years, and previously had an extensive career in public accounting with a big four audit firm. Chris Flohaus, our chief investment officer, who joined us recently after a distinguished 25-year banking career, brings a strong background in corporate finance, real estate M&A, and REIT advisory experience. We are supported by almost 50 other employees involved in all facets of our business, from acquisitions, investment management, research and tenant credit, in-house property management, and all finance, accounting, and reporting in capital markets functions. Our board of directors is represented by individuals with diverse perspectives that bring a personal commitment to strong corporate governance with the highest integrity. As a publicly traded company, we will put shareholders first with an eye towards transparency, just as we always have. We have been an SEC registrant for over 10 years. For years, we have provided shareholders with comprehensive disclosures, financial reporting, and transparent communication, and that simply will not change. Now let me address some recent portfolio activity. As previously reported in an 8 in June 2023 and discussed in our subsequent period filing, the sponsor of a tenant at 17 of our properties, Genesis Care, filed for Chapter 11 bankruptcy. The 17 properties were leased to Genesis Care under a master lease. This lease was not rejected and Genesis Care paid us full rent throughout the bankruptcy process. Subsequent to Genesis Care's emergence from bankruptcy in February, 2024, we entered into an amended master lease covering seven of the 17 properties all located in Florida. Six of the 10 properties that were severed from the lease were leased to new tenants who acquired the operations at each of the properties. Stila now has four unleased GenesisCare-related assets remaining and is in final negotiations for leasing one of those properties and is in different active stages of selling the other three. Kay will discuss the impact of this on second quarter results. Also impacting second quarter results was the closure of operations at the company's sole property lease to Stewart Healthcare, which filed for bankruptcy in May of 2024. CELA is in the process of selling this asset. I will now turn the call over to Chris to discuss the positioning of CELA's portfolio and the healthcare real estate environment.