Spirit Realty Capital, Inc.

Greetings and welcome to the Spirit Realty Capital First Quarter 2022 Earnings Conference Call. At this time, all participants are in 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 and then zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Pierre Rizal. Please go ahead, Phil.

Thank you, Operator, and thank you, everyone, for joining us for SPIRIT's first quarter 2022 earnings call. Presenting on today's call will be President and Chief Executive Officer Jackson Shea and Chief Financial Officer 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 we believe these forward-looking statements are based upon reasonable assumptions, they are subject to known and unknown risk 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 our most recent filing 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 and non-GAAP financial measures to most directly comparable GAAP measures are included in the exhibits furnished to the SEC under Form 8K, which include our earnings release, supplemental information, and investor presentation. These materials are also available on the investor relations page of our website. For our prepared remarks, I'm now pleased to introduce Mr. Jackson Shang. Jackson.

Thank you, Pierre, and good morning, everyone. As I've stated in the past, Spirit has great tenants, a pristine balance sheet, and a fully integrated asset management and acquisition platform that is producing results. Our underwriting approach, focused on industry relevance, in-depth credit analysis, and real estate fundamentals, allows us to pursue a wider opportunity set, which we believe generates more value for our stockholders. If you look on page 13 of our investor presentation, you'll see that our strategy is being validated with many of our recently acquired tenants going public, being acquired, receiving credit upgrades, or recapitalizing their balance sheets. Our intensive underwriting capabilities have consistently allowed us to identify opportunities that are underappreciated or mispriced in the market. resulting in strong yields and asset value accretion over time. The most recent example of this success is Main Event. During the first quarter, we added three main events, raising them to our number seven tenant. Just a few weeks ago, Dave and Busters, our number 72 tenant, announced plans to acquire Main Event, with Main Event's CEO assuming leadership of the combined entity. We view main events absorption into a strong public tenant as a significant credit upgrade that will result in further cap rate compression for one of our largest tenants, making this merger yet another example of our ability to identify and underwrite strong operators in relevant industries that will continue to improve. During the quarter, We deployed $511.4 million in investment capital at a weighted average cash capitalization rate of 6.42%, including the acquisition of 41 properties across 29 transactions. Approximately 62% of this transaction volume was relationship driven, and 72% of the acquired rents were from publicly listed tenants. We expanded our relationships with our top 20 tenants, including Lifetime, BJ's Wholesale, and Main Event. We also continued to increase our industrial exposure, which accounted for 37% of our first quarter acquisition volume, with a mix of 66% distribution, 29% manufacturing, and 5% flex. Our industrial exposure now stands at 19.8%. a 120 basis point increase over the last quarter. As you can see on page 14 of our investor presentation, since the spinoff, we added 4.3 billion of assets, comprised of 54% retail, 33% industrial, 9% other, and 4% office. Our retained portfolio largely included public retail tenants that fit our strategy. At quarter end, our ABR was $623.3 million, surpassing one of the key milestones identified at our 2019 Investor Day of reaching our pre-spinoff rent of $600 million. Given the strong performance of our tenants, coupled with the strength of our real estate and leases, we have seen increased demand for our properties. To capitalize on that demand, we are increasing our disposition guidance from $100 million to a range of 200 to 300 million. We expect these dispositions will generate attractive returns and be accretive to our AFFO per share growth, while reducing exposure to office, flat leases, and certain tenant concentrations. The increased disposition plan, combined with our outstanding forward equity and upsized credit facility, places us in a very strong liquidity position to achieve our acquisition guidance and benefit from the impact of capital market disruptions on undercapitalized market participants. One disruption we're paying close attention to is the impact of higher borrowing spreads for asset-backed debt, which is negatively impacting private net lease acquirers, IRRs, and ability to push aggressive pricing. This dynamic helps spirit in two important ways. First, it heightens the importance of relationships and certainty of execution, which aids us as a trusted, well-capitalized counterpart that follows through on our commitments. Second, it allows us to be more competitive on opportunities as risk is being more fairly priced today than just a few months ago. Based on what we're seeing today, I anticipate that in the back half of the year, we will be able to find investment opportunities 25 to 50 basis points higher than where they have priced over the last few quarters. Finally, before I turn the call over to Mike, I want to highlight our ESG accomplishments as laid out in our first sustainability report. Our 89-member team is making meaningful impacts to the community through our Women's Leadership Council, DEI, Think Green, Young Professionals, and Spirit One Committees. Most recently, our employees supported the humanitarian relief efforts in the Ukraine, donating $25,000 in total to UNICEF, World Central Kitchen, and Doctors Without Borders, which Spirit matched dollar for dollar. Our company has developed a great culture that attracts and retains talent. Notably, we have had no voluntary departures this year, several promotions, and a few former Spirit employees recently rejoined. As I've said before, we have one of the best teams in place, functioning at a very high level, and well-equipped to move quickly to uncover the best risk-adjusted return opportunities. With that, I'll pass the call over to Mike. Mike?