Stag Industrial, Inc.

Greetings and welcome to Stagg Industrial second quarter 2022 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. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Steve Zass, Associate Capital Markets and Investor Relations. Please go ahead.

Thank you. Welcome to Stagg Industrial's conference call covering the second quarter 2022 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information presentation on the company's website at www.staggindustrial.com under the investor relations section. On today's call, the company's prepared remarks and answers to your questions will contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. Examples of forward-looking statements include forecasts of core FFO, same-store NOI, G&A, acquisition and disposition volumes, retention rates, and other guidance, leasing prospects, rent collections, industry and economic trends, and other matters. We encourage all our listeners to review the more detailed discussion related to these forward-looking statements contained in the company's filings with the SEC and the definitions and reconciliations of non-GAAP measures contained in the supplemental information package available on the company's website. As a reminder, forward-looking statements represent management's estimates as of today. SAG Industrial assumes no obligation to update any forward-looking statements. On today's call, you will hear from Bill Crooker, our Chief Executive Officer, and Matt Spenard, our Chief Financial Officer. Also here with us today is Steve Meche, our Chief Operating Officer, and Mike Chase, our Chief Investment Officer, who are available to answer questions specific to their area of focus. I'll now turn the call over to Bill.

Thank you, Steve. Good morning, everybody, and welcome to the second quarter earnings call for Stagg Industrial. We are pleased to have you join us and look forward to telling you about this quarter's results. As we noted on our last earnings call, the industrial fundamental story is very much intact. We continue to see strong demand across our markets. We believe the short and medium-term secular demand drivers, including e-commerce, supply chain reconfiguration, and increases in inventory levels will continue to be a tailwind for some time. Additionally, near-shoring and on-shoring should provide incremental demand in the medium term. Supply is coming online at a moderate pace, constrained by increased construction costs and supply chain backlogs. Vacancy rates remain low in our markets, and market rents continue to grow at a strong rate. This positive industrial backdrop, coupled with our team's operational excellence, resulted in another strong quarter. Four FFO per share was 56 cents this quarter, a 7.7% increase over the prior year. Our same-store NOI continues to be a big contributor of this growth. The capital markets remain quite volatile. The rapid rise in interest rates has caused the market to enter a period of price discovery that is ongoing. This has caused a general slowdown across the industrial capital markets and for Stagg specifically. Even with this slowdown, our acquisition volume for the second quarter totaled $165.4 million. This consisted of nine buildings with stabilized cash and straight-line cap rates of 5.2% and 5.7% respectively. The acquisitions this quarter are consistent with our investment thesis. Our underwriting model allows us to adjust price to reflect current market conditions, and that is evidenced this quarter. Given the uncertainty in the capital markets, we have widened our acquisition volume range and reduced the midpoint for the back half of the year. We've also increased our cash cap rate guidance by 25 basis points this year. In addition to the acquisition this quarter, we closed on 92 acres of permitted land on two parcels in the Greenville-Spartanburg market of South Carolina for $5.6 million. This speculative development project is strategically located nearly inland port in Greer, Greenville-Spartanburg Airport, and the BMW plant. The project is expected to be completed next year and will consist of two buildings totaling over 700,000 square feet. We remain focused on capital recycling. We had one non-core asset sale during the quarter and closed the sale of a two-property portfolio totaling 1 million square feet subsequent to quarter end. This sale generated $82 million of gross proceeds at a 5.2% cash cap rate. We acquired these assets approximately five years ago at a 6.2% cash cap rate and produced an 11.4% unlevered IRR during our hold period. We are maintaining our disposition guidance range of $200 to $300 million this year and expect our disposition cap rate for the year to be between 4.5% and 5.0%. With that, I will turn it over to Matt who will cover our remaining results for the quarter and provide an update to our 2022 guidance.