Spirit Realty Capital, Inc.

And welcome to the Spirit Realty Capital 4th Quarter 2022 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please limit yourself to one question and one follow-up. Please note this event is being recorded. I would now like to turn the conference over to Pierre Revol, Senior Vice President of Corporate Finance and Investor Relations. Please go ahead.

Thank you, Operator, and thanks, everyone, for joining us for SPIRIT's fourth quarter 2022 earnings call. Presenting today's call will be President and Chief Executive Officer Jackson Shea and Chief Financial Officer Michael Hughes. In addition, our Chief Investment Officer, Ken Heimlich, will be available for Q&A. Before we start, I want to remind everyone that this presentation contains forward-looking statements. Although we believe these forward-looking statements are based on 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 several factors. I refer you to the safe harbor statement in our most recent filings with the SEC for a detailed discussion of the risk factors relating to these forward-looking statements. This presentation also contains specific non-GAAP measures. Reconciliation of non-GAAP financial measures to most directly comparable GAAP measures are included in the exhibits furnished to the SEC under Form 8 , which include our earnings release and supplemental investor presentation. These materials are also available on the investor relations page of our website. For prepared remarks, I am now pleased to introduce Jackson Shea. Jackson. Thanks, Pierre, and good morning.

We're pleased to report strong results for 2022, which exceeded the targets we announced in 2019. We achieved AFFO per share of $3.56, surpassing the midpoint of our 2019 Investor Day range by 14 cents. We also increased our total ABR to $681 million. while increasing our industrial exposure to 23%, with both hurdles exceeding our investor day targets. Furthermore, we maintain high occupancy, low lost rent, and stable unreimbursed property costs across our portfolio of 2,115 properties. These results reflect our prudent underwriting approach and well diversified portfolio, leased to sophisticated operators in durable industries. During the quarter, we invested $312.4 million in 24 properties at a 7.27% cash capitalization rate. 88.4% of these investments were in industrial assets, including distribution, light manufacturing, and industrial outdoor storage, with 90.2% of the investments originated through sale-leaseback transactions. We also invested $38.5 million in development and revenue-producing capital expenditures, almost half of which was related to our $67 million investment in a $125 million cutting-edge facility for SunOpta, a leading plant-based food manufacturer. This facility opened for operations in December. Our disposition program also produced great results in the fourth quarter. We sold 21 occupied properties for $110.2 million at a 6.22% weighted average cash capitalization rate, representing a positive 93 basis point spread for a capital deployment cap rate and resulting in a $33.3 million gain. The occupied mix included 42% retail and 47% medical, and only 4% of the sold properties were leased to investment-grade tenants. For the year, we sold $278 million of leased assets at a weighted average cash capitalization rate of 5.47%. representing a 118 basis point spread to our capital deployment cap rate and generating a $94.2 million gain. Only 24% of the sold properties were leased to investment grade tenants. Our capital recycling program, which started early in 2022, has been very successful. It has allowed us to further reshape the portfolio and accretively redeploy capital into asset classes and industries that we find attractive today. We expect continued success with dispositions this year. In total, through acquisitions and dispositions, Spirit has successfully completed more than 150 transactions in 2022, which is a testament to our people and the robust processes we have established. As I previously discussed, The majority of our fourth quarter acquisitions were in industrial assets, which continues to be a strategic focus for us. Given our growing exposure, we have featured notable achievements in this sector in our supplemental investor presentation. On page 13, we spotlight the sales of Shiloh, Sunny Delight, BE Aerospace, and Mac Paper Properties. These were industrial properties that we purchased and later sold, realizing a 85% gain and capturing 312 basis points of cap rate compression since we acquired these assets. On page 14, we highlight the fourth quarter acquisition of a manufacturing facility leased to Wei Interglobal, a top RV appliance manufacturer and supplier. In November, shortly after we closed on our sale leaseback, Way Interglobal was acquired by LCI Industries, a much larger public company and a major credit upgrade for Spirit. On the same page, we feature the development of the 270,000 square foot state-of-the-art Sunopta facility, illustrating how Spirit can partner with industrial tenants to build mission critical facilities. Finally, on page 15, we highlight select industrial acquisitions completed in the fourth quarter, including one distribution and two industrial outdoor storage facilities. We find these investments appealing because they are mission-critical assets leased to strong operators with low in-place rents, and while the acquisition yields are very attractive for us today, we anticipate that these facilities, just like the industrial dispositions, featured on page 13 will appreciate in value over time. One of our earlier investments within the industrial sector was the 129 million sale leaseback transaction for a distribution center and two manufacturing facilities leased to Party City that we completed in 2019. We highlighted this investment at our investor day and have provided an update on page 16 of the supplemental investor presentation. What's important to note is that despite Party City's ongoing bankruptcy, we expect a positive outcome for Spirit, given Party City's dominant position in the party goods sector and our assets' high quality and mission-critical nature. Eighty-five percent of our investment is in the 900,000 square foot distribution center in Chester, New York, which is located in Orange County. This property serves as Party City's primary distribution center, running at full capacity and handling over 45,000 SKUs for clients across the globe. Given its critical role in the company's operations, this facility epitomizes the concept of mission critical. In addition, market rents for distribution centers in Orange County stand at $11 per square foot and are projected to increase by 6% this year. This is significantly higher than our current rental rate of $8.05 per square foot, which grows contractually at 2% per year. Our investment in this facility is well below replacement cost, and should we ever have the opportunity to re-let the asset, there is significant upside in this property due to the high tenant demand for distribution centers, the lack of others of this size, and the difficulty of doing ground-up development in this market. The two other facilities are smaller in terms of investment, but also have great stories. The Eden Prairie site is a manufacturing facility responsible for production of 60% of the world's Mylar balloons. This building is in a strong sub-market and is vital to the Enneagram business, the manufacturing arm of Party City. Like Chester, It is an example of a mission-critical asset. The Las Lunas facility is a high-quality asset in an excellent location. Notably, it has already been subleased to Cupertino Electric at the same rental rate that Party City was paying, showing the versatility and quality of the light manufacturing assets we pursue. As a reminder, our approach to underwriting is based on analyzing industry durations. and our tenant's position within it, examining tenant creditworthiness, and evaluating the real estate's residual value underpinning the facility. While it is important to get all three right when you enter into a sale leaseback, we know that credits can change to the positive or negative for a variety of reasons. So the industry and real estate are paramount. In the case of Party City, the credit deteriorated. but we remain confident in the industry and Party City's position as the dominant party goods supplier and manufacturer and believe the real estate is extremely valuable. We therefore expect a positive outcome for Spirit's investment and believe this will be a good proof of concept for our underwriting approach. As we think about the current year, we remain committed to taking actions that will create the most value for shareholders. We have set forth a fully financed capital deployment plan, utilizing free cash flow, asset dispositions, and in-place debt to produce positive investment spreads in a volatile capital markets environment. Our focus for the upcoming year is to showcase our portfolio strength and highlight our platform's effectiveness, which we expect to result in steady cash flows and dividends for our shareholders. With that, I'll turn it over to Mike to discuss the quarter and our 2023 guidance.