Stag Industrial, Inc.

Greetings and welcome to the Stagg Industrial Fourth Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief 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. It is now my pleasure to introduce your host, Steve Zarros, Associate Capital Markets and Investor Relations. Thank you, Steve. You may begin.

Thank you. Welcome to Stagg Industrial's conference call covering the fourth quarter 2022 results. In addition to the press release distributed yesterday, we have posted an unaudited quarterly supplemental information package 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 and 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. Stagg 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 Mike Chase, our Chief Investment Officer, who is available to answer questions specific to his area of focus. I'll now turn the call over to Bill.

Thank you, Steve. Good morning, everybody, and welcome to the fourth quarter earnings call for Stagg Industrial. We are pleased to have you join us and look forward to telling you about the fourth quarter and full year 2022 results. The fourth quarter results provided a fitting conclusion to another strong year for Stagg. Thank you to our tremendous team for their hard work and dedication. This year featured many successes, including a record level of same-store growth, opportunistic investments in a volatile transaction market, and operational efficiencies that resulted in impressive cash flow growth. The economy continues to digest and react to multiple drivers of volatility. Rising interest rates, geopolitical unrest, labor force variables, including levels of employment and wage growth, have resulted in various potential recessionary outcomes. Against this macro backdrop, we see persistently strong demand for industrial real estate. The secular tailwinds specific to industrial real estate remain intact. Near and on-shoring e-commerce, supply chain reconfiguration, and inventory-level rebuilds will drive robust market rent growth for the foreseeable future. DAG's portfolio is well-positioned to build on last year's success and will produce attractive internal growth in 2023. For the year, cash same-store NOI growth was 5%, continuing the trend of setting new record levels of internal growth. This growth is sustainable, supported by our average annual rental escalators of 2.5% across the portfolio. There's upward pressure on this number. Leases signed over the past 12 months have averaged annual rental increases of 3%, with certain markets bearing increases of 4% and above. Cash leasing spreads will accelerate in 2023. As of today, we have addressed 61.5% of the new and renewal leasing we expect to commence in 2023, achieving cash leasing spreads of 31.6%. The average annual rental escalator on our 2023 leasing activity achieved to date is 3.4%. This encompasses 8.4 million square feet of leasing out of the 13.7 million square feet projected in 2023, further demonstrating the strength and positioning of our portfolio. We have one 715,000 square foot development in process in Greer, South Carolina. This two-building project is progressing on schedule and is expected to outperform our underwriting. We have funded 42 of the $68 million project and have seen strong pre-leasing activity to date. On the external growth front, The acquisition market ended the year quietly as sellers are seeking price stability and this dynamic has continued into the first part of this year. Given this market uncertainty, we are introducing 2023 acquisition and disposition volume with wider than normal ranges. Our base case assumes modest success in identifying and acquiring attractive opportunities in the back half of 2023. We expect acquisition volume between $300 and $700 million and disposition volume between $50 and $200 million. No incremental capital is needed to operate at the midpoint of our net acquisition guidance while maintaining our guided leverage range. Expected cash capitalization rates reflect an expansion of approximately 100 basis points from levels we achieved in the first half of 2022. With that, I will turn it over to Matt, who will cover our remaining results and guidance for 2023.