STORE Capital Corporation

Good day and welcome to the Store Capital First Quarter 2021 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 touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Lisa Mueller of Investor Relations. Please go ahead.

Thank you, Operator, and thank you all for joining us today to discuss Store Capital's first quarter 2021 financial results. This morning, we issued our earnings release and quarterly investor presentation, which includes supplemental information for today's call. These documents are available in the Investor Relations section of our website at ir.storecapital.com under News and Results, Quarterly Results. On today's call, management will provide prepared remarks, and then we will open up the call for your questions. In order to maximize participation while keeping our call to an hour, we will be observing a two-question limit during the Q&A portion of the call. Participants can then reenter the queue if you have follow-up questions. Before we begin, I would like to remind you that today's comments will include forward-looking statements under the federal securities laws. Forward-looking statements are identified by words such as will, be, intend, believe, expect, anticipate, or other comparable words and phrases. Statements that are not historical facts, such as statements about our expected acquisitions, dispositions, or our AFFO per share guidance for 2021, are also forward-looking statements. Our actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of the factors that could cause our results to differ materially from these forward-looking statements are contained in our SEC filings, including our reports on Form 10-K and 10-K. With that, I would now like to turn the call over to Mary Fedewa, STOR's Chief Executive Officer. Mary, please go ahead.

Thank you, Lisa. Good morning, everyone, and thank you for joining us today. Before discussing our first quarter results, I would like to express how grateful I am for the opportunity to be the CEO of SOAR. I also want to personally thank Chris Volk for all his encouragement and support over the past 20 years that we have been working together. Fortunately, Chris and I will have the opportunity to continue to collaborate and work closely in his new role as chairman. I would also like to thank our entire board of directors for their confidence and support. With me today are Kathy Long, our Chief Financial Officer, Craig Barnett, our Executive Vice President of Underwriting and Portfolio Management, and Tyler Mertz, our Executive Vice President of Acquisitions. Many of you have already met Craig and Tyler at our Investor Days and other meetings. They have both been with STOR since our inception and were also part of prior platforms. They will be participating in our earnings calls going forward, and you will see more of them and other strong leaders here at the store at upcoming investor and industry conferences and non-deal roadshows. Turning now to the business at hand. While 2020 was an extraordinary year that tested and proved the resiliency of our customers, our team, and our business model, we are enthusiastically moving forward, and 2021 is off to a very good start. During the quarter, we invested $271 million at an attractive-rated average cap rate of 7.8%, with annual lease escalations of 1.9%. Consistent with our strategy, first quarter acquisitions were granular and diverse, with an average transaction size of $11 million across approximately 20 different industries. We added 11 new customers and closed the quarter with more than 520 customer relationships. We continue to originate long-term leases with our weighted average lease term for the quarter at 18 years, and we have virtually no near-term lease expirations. Our occupancy continues to be high at 99.6%, with only 11 vacant properties at the end of the quarter. As you know, our disciplined approach to real estate acquisition focuses on certain table stakes to ensure superior lease contracts. All of our first quarter investments were made at or below replacement costs and at attractive yields and gross returns of nearly 10% when you add the going in cap rate to our annual lease escalations. This results in continued nice spreads as our debt costs remain at historic lows. We also received master leases on multi-unit transactions and unit level financial reporting on all acquisitions in the quarter. Overall, our customers entered the new year in strong financial health and are focused on growing their businesses. Across the board, we are seeing re-energized confidence among our customers and prospects and a growing pipeline of attractive investment opportunities. We have been extremely pleased with how well our business model, which was designed with margins of safety, has performed through an unprecedented economic shutdown. These margins of safety include a highly diversified and granular portfolio, a disciplined and selective approach to underwriting, close relationships with our customers, a compelling customer value proposition, and a strong balance sheet and financing flexibility. As a result, we believe STOR is at an important inflection point of opportunity. My top priority is to lead our team and to leverage the platform we have built to continue to scale the company through the next phase of growth and success. Today, Storr has a nearly $10 billion real estate portfolio and a team of more than 100 outstanding and talented professionals. Developing our dynamic and industry-leading team has been one of the highlights of my career at Storr. As we continue to serve our large market of national and regional customers in vital industries, and deliver attractive industry-leading returns to our shareholders, one of my highest priorities as CEO is building the next generation of leaders. I look forward to the opportunity ahead. And now I would like to turn the call over to Craig.