Stag Industrial, Inc.

And welcome to the Stagg Industrial first quarter 2023 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. Please go ahead.

Thank you. Welcome to Stagg Industrial's conference call covering the first quarter 2023 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 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. DAG 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, and Steve Kimble, EVP of Real Estate Operations, who are available to answer questions specific to their areas of focus. I will now turn the call over to Bill.

Thank you, Steve. Good morning, everybody, and welcome to the first quarter earnings call for Stagg Industrial. We are pleased to have you join us and look forward to telling you about the first quarter 2023 results. Before we get started, I want to welcome Steve Kimball to the call. Steve joined us about a month ago and brings with him many years of experience in the industrial sector. Steve's primary role will be to maintain our focus on same store operations and help us unlock further value in our portfolio. Steve will also oversee growing our development platform over time. Our first quarter results clearly reflect this neck between the strength of our portfolio and the persisting volatility seen in the capital markets. The industrial market continues to benefit from strong demand driven by multiple secular tailwinds. E-commerce and supply chain reconfiguration have been consistent demand drivers with a diversified mix of industries vying for space across our portfolio. We are experiencing healthy demand from food and beverage tenants, the automobile sector, and third-party logistics providers. The uncertainty in the economy is naturally having some impact on industrial fundamentals, currently isolated to leasing of big box spaces. Large tenants are rationalizing their real estate footprint and commitment to large blocks of spaces. This dynamic is not impacting our portfolio as our average lease size is approximately 150,000 square feet. We have discussed the benefits expected to accrue to industrial demand due to the projected near and on-shoring of manufacturing operations from overseas at a high level. Recently, we have been able to provide real-life examples of this incremental demand driver. We have seen very strong demand in our markets bordering Mexico, particularly El Paso, which is our ninth-largest market, consisting of 2.5% of our portfolio ABR. The near-shoring in Mexico has provided significant incremental demand in the market, resulting in vacancy rates close to zero. We have had three leases roll in El Paso in the past three months, resulting in almost no downtime and 59% cash releasing spreads. With respect to on-shoring, projects announced include the $3.5 billion Honda electric vehicle plant in Columbus, Ohio, and the $2.5 billion solar panel manufacturing plant in Georgia. Market prognosticators have identified states like Georgia, Michigan, and the Carolinas as the likely dominant states for electrical vehicle and battery manufacturing. What is important to note is that these instances of onshoring are occurring in non-coastal, non-gateway markets. They are landing in markets where STAG has traditionally had a footprint, and we expect to benefit as this trend takes shape. Our current 2023 leasing results have surpassed our initial expectation. As of this week, we have leased 10 million square feet or 78% of the new and renewal leasing we expect to commence in 2023, achieving cash leasing spreads of 30.6%. The progress in lease volume addresses in line with the historical cadence at this time in previous years. Based on this execution, we expect our cash releasing spreads to be closer to 30% for the year. The foundation of sustainable cash same-store growth is the average contractual annual rent escalation embedded in the portfolio, which continues to increase. Our average rental escalators in the portfolio are north of 2.5%. There's upward pressure on that number as the average annual rental escalator on our 2023 leasing activity achieved to date is 3.4%. Approximately 28% of those leases have rental escalators of 4% or higher. On the development front, Our 715,000 square foot development in Greer, South Carolina is proceeding on schedule with expected delivery in early July. We expect the two building project to outperform our original underwriting. We have funded $54 million of the $68 million project and have seen strong leasing interest from tenants in the market to date. Not surprisingly, the acquisition market remains quiet with the market searching for price equilibrium. Nevertheless, we have identified several interesting opportunities. We closed on one building subsequent to quarter end and currently have another building under contract. Both opportunities have remaining lease terms less than two years and are in high-velocity industrial markets with strong mark-to-market opportunities. On the disposition side, we sold two buildings this quarter. One building was a non-core asset, and the second was a facility sold to the current tenant. In the aggregate, these transactions resulted in proceeds of $37 million, reflecting a 5.2 cash cap rate. With that, I will turn it over to Matt, who will cover our remaining results and updates to guidance.