Spirit Realty Capital, Inc.

Greetings, welcome to the Spirit Realty Capital third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. A 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. Please note this conference is being recorded. I will now turn the conference over to your host, Pierre Revol, Senior Vice President of Corporate Finance and Investor Relations. Thank you. You may begin.

Thank you, operator, and thank you, everyone, for joining us for SPIR's third quarter 2021 earnings call. Presenting in today's call will be President and Chief Executive Officer, Mr. Jackson Shea, and Chief Financial Officer, Mr. Michael Hughes. Ken Heimlich, Chief Investment Officer, will be available for Q&A. Before we get started, I would like to remind everyone that this presentation contains forward-looking statements. Although the company believes these forward-looking statements are based upon reasonable assumptions, they are subject to known and unknown risks and uncertainties that can cause actual results to differ materially from those currently anticipated due to a number of factors. I'd refer you to the Safe Harbor Statement in yesterday's earnings release and supplemental information, as well as the most recent filings with the SEC for a detailed discussion of the risk factors relating to these forward-looking statements. This presentation also contains certain non-GAAP measures. Reconciliation of non-GAAP financial measures to most directly comparable GAAP measures are included in yesterday's release and supplemental information furnished to the SEC under Form 8K. Yesterday's earnings release and supplemental information are available on the investor relations page of the company's website. For our prepared remarks, I'm now pleased to introduce Mr. Jackson Shea. Jackson?

Thank you, Pierre, and good morning. As you saw last night, we reported another solid quarter. Our portfolio continues to perform exceptionally well, with occupancy remaining at 99.7%. Lost rent declined to only 0.1%, and unreimbursed property costs decreased to 1.4%, a quarter-over-quarter improvement of 80 and 50 basis points, respectively. It's important to note that our lost rent was primarily generated by only one of our 312 tenants that operates 10 of our properties, several of which we are close to finalizing agreements to sell or re-let to strong national tenants. We collected 99% of our rent during the third quarter, with fourth quarter collections projected to approach 100%. We're very pleased with the health of our tenant base which continues to only get better. As I mentioned in our last call, we look for tenants that operate in mission-critical facilities within durable industries and where the real estate characteristics are strong. In addition, using our research and underwriting capabilities, we seek to identify tenants that we believe have an upward-sloping credit trajectory, or what we call credits on the move, And we continue to see many of our tenants experience improvements in their business models, profitability, and balance sheets. For example, in the last month, our number one tenant, Lifetime Fitness, successfully completed their initial public offering with a market capitalization of $3.4 billion and received a credit rating upgrade from Moody's. As you know, we were an earlier mover on lifetime during the pandemic, and we're proud of their continued growth and success. The quality of our asset base is the strongest it has ever been, but this is not by accident. Since I became CEO, we were deliberately and methodically removed structural impediments and reconstructed Spirit's portfolio, spinning and selling off $3.8 billion of assets and acquiring $3.5 billion of assets. This reconstruction has doubled our exposure to the industrial sector, doubled our exposure to investment-grade rated tenants, and increased our exposure to publicly listed tenants from 37 percent to 54 percent. In addition, our portfolio is now one of the most diversified across industries, asset types, and top tenant concentration within the net lease sector. Our portfolio? is extremely well positioned today, and we believe its performance over the last 18 months speaks volumes. On the acquisition front, we deployed $294 million in acquisition and revenue-producing capital with a weighted average cash cap rate of 7.27%, a weighted average lease term of 18.4 years, and weighted average rent escalators of 1.9%. Upcorp represented the lion's share of this activity, while the other nine transactions were heavily weighted towards retail transactions. Looking into the fourth quarter, we feel very good about our pipeline and expect more transaction activity than in the third quarter. With that, I'll turn the call over to Mike.