AFIN - Earnings call transcript Q3 2018 | Necessity Retail REIT, Inc.

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Operator

Good morning and welcome to the American Finance Trust Third Quarter 2018 Earnings Call Conference Call and Webcast. [Operator Instructions]. I would now like to turn the conference over to Louisa Quarto, Executive Vice President. Please go ahead.

Louisa Quarto

Thank you, Operator. thank earnings joining call. and third for everyone XXXX quarter morning you us for AFIN's Good This Investor AFIN's Relations is section call being of website webcast at in the www.americanfinancetrust.com.

metrics ratings investment XXXX. September risk ratings actual rating. determined the using an are whether detailed grade as or analytical grade information Also investment ratings during or of forward the pursuant to in risk Securities of results all the not the Kurtz, statements subject XXXX. looking of investment which Katie Financial discussion and we and the include not Management cause tenant cause Officer nature materially Senior a more investment are these discuss the Safe of Implied today the our looking The both to Executive Pomerantz, is of parent term to call numerous the for the tenant you factors has differences. Chief those call these historical a results risk the are that Zachary factors assumptions will are use compares President, Harbor me regardless guarantee grade Weil, These include statements. the Chief of which filings Litigation investment of Private which with made under lease. on ratings the Moody's Joining forward of parent provisions being facts. the certain actual non-rated grade We to statements and quarter's Vice differ the AFIN's are includes and implied of actual refer guarantor The Reform assumptions ratings tenants discussion XX, Michael Implied SEC could Officer, company will obligation tool grade looking company proprietary to of are could certain Act They of lease to rating. Asset rating forward that the or from today

sectors. also in tenant tenant traditional of or of banking, retail possession retail, retail, in XX, footage more XX,XXX define services the single to fitness anchor retail and properties retail tenant a includes tenants as the We sporting retail divided the properties gas grocery, the and restaurant, property. represents single square in tenants a convenience respective previously occupying retail of use and goods rentable has retail tenant indicated. Occupancy We to tenant the home as improvement, square We anchor Traditional presentation. date sectors. retail today's auto as Executed XXXX taken defined. and as total include as specialty feet by leased feet leased define terms in pharmacy, of multi-tenant occupancy service percentage tenant square September retail, service which furniture the discount the occupancy auto

executed all as looking tenant only call yet as parties space this both take possession forward of provided to conference XXXX Any date by as well call. September has of are the the such As date. as XX, of this of made leases where during statements the of

results I'll Form GAAP turn prepared earnings GAAP. comparable directly XX-Q. the of most A or to release obligation or in non-GAAP or isolation these to accordance substitute These which is available not with we measures required useful the measures our in reconciliation in for call looking Also financial except expressively be call intent considered over performance. any CEO. statements financial update now evaluating as today's as disclaims should discuss AFIN law. Mike measures and the be in believe will a these SEC our during in we revise stated can As to financial our Weil, measure our forward company's by recent

Michael Weil

for the XX.X% start I'll additional quarter with joining We over to to comments U.S. about and call. well-diversified I'm acquisition We everyone portfolio. of the financial across service end years our Louisa. year remaining X.X up to high strong our multi-tenant weighted going per XXX and properties The properties that we up I'm X.X% and assets years AFIN us report a average and leases a today's up on to is retail has turn of of opportunistically portfolio Finance American of and of Katie portfolio rent single growth Zach X.X driven executed appreciate the escalators. real term Trust. our the last XX.X% strategy, on in located and quarter to then include provide tenant listed portfolio of lease made multi-tenant quarter. estate own earnings rent contractual sold the you, primarily for it level space our from happy continued lease details. the quarter average the Thank occupancy Nasdaq, by stock steadily At some on for

service such as on remains or and at stores convenience gas retail which likely branches. a twice week focus retail pharmacies, Our restaurants you visit once least bank means and properties personally

consists escalators, future. tenants. line XX.X XX% years in single term investment provides of tenant almost grade We annual to property as home to XX% facilities. locations industrial assets X.X% weighted the Retail retail, derived the AFIN auto Our portfolio or and makes traditional a implied our of $XX.X single of single is million all tenant of and with the grade of solid across includes rent investment as such foundation discount portfolio of retail improvement a XX% XXX rent these for of remaining portfolio more up single grow Occupancy portfolio the from average distribution while strength well the tenant types lease believe XX.X% square is and tenant stores. foot as retail portfolio average straight continue

builds tenant rent Our defensive [ph] net centers. experiential concepts portfolio The shoppers multi-tenant store XX% drive and lease to compliments single our to from upon of the The of designed is nicely balance portfolio. and portfolio coming multi-tenant in properties. the e-commerce

occupancy and average X.X rent annual executed portfolio Our of an escalators. million square XX.X% a lease of remaining X.X has average with XX X.X% years property weighted multi-tenant term foot

a discuss. the quality with we recent real the of and we're will faced portfolio the tenants portfolio. that growing AFIN's value over upcoming acquisition, and the bankruptcies believe tenant leases Zach quick pleased excited to it about additions overview We're estate high quarter activity. to as few Zach long duration multi-tenant third portfolio Although shareholder I'll turn drive to we disposition continue a credit for leasing continue will and

Zachary Pomerantz

these our further of credit geographic XX.X single weighted model. lease into Thanks, education tenant on tech term diversity. have Mike. properties years our million medical [ph] and a retail, property We $XXX quarter, average properties perfectly the remaining during net and of closed lease fits office and XX enhance These acquisitions service

XXX,XXX feet. quarter XX representing seven leases the leases renewed for total square square During our XX,XXX new almost commence feet a were of almost and amended

executed multi-tenant the at XX.X% end occupancy Our of quarter. at the stands

During anchor Toys“R”Us we one tenants our stabilized the quarter vacated sold two their spaces. and Elder-Beerman of fully each and centers

multi-tenant pipeline XX location. We and renewals forward lease for including a the feet have former a leases Elder-Beerman XXX,XXX square new new for a

excited able We chain at specializing to a tenant have are find decor and replacement great home in products. been very to home a retail

we to low. the monitoring basis space a lease capital able of for a determined replacement there Due while look keeping Ohio commitment strength was to the and of health the negotiate in back that While timely at of attractively terms were a location our we proactively getting home high tenants. probability the Elder-Beerman on

disposition side sale to as a Westlake XXX%. the in where on XX% lease and Texas. NOI This in crossing of up Humble, increased a closed On the we we center had is September by owner property

properties in vacant it AFIN's value we portfolio of representing fully X.X% of property the tenant the as we the stabilized asset and in oriented properties I'll you. maximized service retail. As felt quarter. it single There was we sold those are back tenant of had the four to of proceeds Similarly the portfolio sell invest single XX third SunTrust Mike quarter. a opportune time to turn an remaining from these end and

Michael Weil

Thanks, Zach. third of maintaining front pipeline very the million active We of were a $XXX acquisitions tenant on single over while assets. quarter the in

properties term improve by service to continue retail portfolio We oriented long leases. AFIN's with acquiring

difference we're pipeline simultaneously average where of in average bottom not capturing currently acquisition real average reducing we're extending an rate. GAAP we're rates to as flow We of cap term lease redeploy to SunTrust have We of occupied remaining properties have estate years. into SunTrust nine is our sales work and X.X% and executing but cap eight at at straight We're only of current a with transactions These rate X.X% line contract sell SunTrust can cap seller which the lease the XX example. over term. opportunistic these a under a described properties a buying By cash on these our our great the the AFIN exposure from doing to proceeds our weighted lease years with duration.

million over us commitments million evidence in other and for under lending AFIN October to that walk increase Synovus And a for to AFIN up this Bank. remarks. million call we then to through the has of flexibility announced of had the group in our facility the credit The as Bank of $XX acquisitions the add corporate available $XXX to XXXX. September uses and XX, Finally Compass expansion and $XXX to which I'll further and facility detail some Katie follow with the is community expansion confidence closing more results the of affords in operating turn future banking With I'll acquisitions.

Katie Kurtz

At and net interest million billion with cash mortgage is components drawn rate and include debt all fixed drawn total of ended $X.X corporate our $X.X million. were We on credit credit floating. on cash a facility $XXX.X We average debt billion asset at amortization net and and less net $XX.X our that the September compared under adjusted so the XXXX. Mike. company's and amounts quarter debt which as debt end of EBITDA September gross weighted the measure equivalents XX% XXXX. to of $XX.X quarter million Thanks, only leaving of of million interest was net debt mortgage cash quarter our or third at as quarter's facility, debt which X.X%. our Liquidity on The cash depreciation rate total of debt at times as plus was third $XXX.X equivalents million we cash accumulated assets credit undrawn plus reported revenue The for second value availability $XX.X equivalents XX. XX, facility to and cash X.X to annualized outstanding

AFFO listing mainly our quarter was third associated FFO company charges was on and due The in attributable to million $XX.X attributable third quarter $X.X stockholders to with Nasdaq the FFO the in the XXXX. July. the to for decrease shareholders of million in onetime Our was the

income our closing remarks. a GAAP call earnings measures non-GAAP release always be back turn of and for I'll net Form supplement can some to the reconciliation XX-Q. found Mike As in to

Michael Weil

trading shares now October the shares are A of XXXX. to we Class [indiscernible] real meet conversion of XXX% and no After over Class at will the Class tradeable later active the and leaving coverage XX, call our institutional to time head Katie. in and up by XX% including community again shares convert analyst to CLASS the shares Thanks, out picked AFIN We XXth have first will our January analysts. A BX to of this the BMO investors after speak become remain shares than [ph] after BX automatically shares to with estate

with We operate continue the own across and a conservative we United balance XXX sheet to States. properties

a portfolio and is that management strong experienced tenant, by type, geography asset We have base credit tenant highly worthy team. and a diversified

the to company. set of and order in capitalize on opportunities across a We grow continue wide identify, to markets are assess to well-positioned

acquisition acquire model. will proactive fit disciplined to to our investment within identify We our in that remain compelling and assets strategy opportunities

shareholder a in maintain retail properties from on will defensively and order to competition retail service other traditional drive near value. against focus continue relative e-commerce We to term to positioned

continuing lead long team Our the to the stockholders. open Operator, enhance for value for to line effort questions. forward term please looks to our up AFIN

Operator

[Operator Instructions].

Please Our Jeremy go BMO come from from first Metz Markets. question Capital will ahead.

Alex Nelson

on Alex Jeremy. for This Nelson is

there guess level like In the you activity contract expect perspective beyond million I $XXX a pipeline terms that? today? a the the acquisition talk shadow how from again competitive and out of of pipeline it about similar what can is pricing beyond under looks we Should

Michael Weil

us pipeline but it's stage out I hesitation these tell can before same we for you the pipeline continue remains a see come single focus service primarily market at The you've from these basis. of we further publish don't at types see So continuing of LOI very opportunities cap opportunistic. buyer that tenant that to of retail without on rates to signed the a in to a on regular types

to acquisitions that we we're So with what far. in-line published confident we have can provide so continue

Alex Nelson

bring that is multi-tenant square get feet XX% you where negotiations end your of the anchor that the up portfolio occupied. of to with On on side the how you for anchor it range is the the now breakdown the occupancy by on Can occupancy today about side? to occupancy looks Do much will expect the some it small XXX,XXX what to still you versus talk and and uplift leased between is shop the year? where the XX% of is occupancy box about

Michael Weil

break new these the well has half want anchored as going Zach to just They but about we of as into really and asked in-line standpoint second very I'll excited we have I'm to your Yes, the well of talked it occur. are would I clarify Zach tenants but be two ask would from we've we don't that a we're year-end had we target pleased tenant. the the that response in. it come with occupancy still the but fair be as as to multi-tenant been get would pickup obviously pro-forma think that the will XXXX tenants tenants to from opportunities we anchor low when answer number I that by market you a have of I it. the mid-XX% brought believe for backfill in a XX% confident to and XXXX question as we is said be in I'm been that to greatest it

So Zach details? to some would you provide Alex like

Zachary Pomerantz

of were anchor Well the mean obviously in from lease signed [indiscernible] yes mentioned lot had and excited of in to short about I periods we time. the we've at-home a be the that call earlier side

the something not inline big versus that as box it's of sides we see and interest in-line we're and occupancy leasing. spaces internally the to but we don't continue on to-date tenants out have the it's breakout in do those disclose big two we both that far discussing As we're something box of put market but

Alex Nelson

for one just guess more me. I

properties on acquisitions, more the how cap are? the at the much guys XXX and look the of you that down X.X% dispositions On delta you remaining SunTrust that portfolio between when the with look accretively and with SunTrust pipeline remaining the assets, rate the have the prune transactions into how you

Michael Weil

really around So portfolio. opportunity about occupied with Alex the SunTrust the we're here dispositions excited

we could publicly largest currently continued how that that comfortable think recall Over SunTrust SunTrust looking a expectations. longer to of you be period there's X% the we but tenant with it has solid X% X%, our with these and I very assets. As of X% much been is strategically performance we bank, at a time dispose they're I'd we opportunity be SunTrust selling it could is are identified are in-line in be that range their right at haven't very very think of a great tenant,

the the it urgency the do third is to shortest pool XX year capital do in sold so assets. probably XX you're portfolio SunTrust we've our see renewed a are XX I we quarter feel signed leases So do don't of year, as a and the year additional we for I what when point source what leases want from but potential great and out to company familiar I

to So that the want more there's I equal potentially term maybe we the to sell best communicate set assets value or out to think I just in longest haven't other or portfolio the assets. that

assets. So service , redeployment it's think AFIN, at yielding strategic very good again to higher retail great for and I into opportunity dispositions look a

Operator

Instructions]. [Operator

Michael Weil

you approved tell were a on have deploying just update third requested in future waiting our greater to in we real not to in third program quarter this as closed quarter term that the buyback type other did I'm of evaluate than was long our won't a the quarters. future that are are we rely other to reported did we And XXQ. the have third very XXQ buyback, company's one while we was we shown all there will regarding that as do continue quarter strongly and and capital Alison, questions the of in in couple options comments and going see quarter making and what as the back throughout any I that's share that receive if well be buy share into as estate far the we that to particular questions in feel opportunities into in board the published in of the shares We acquisitions pipeline. we then an

Operator

Ladies this Quarto. session. and gentlemen and will to our to answer like conclude I'd turn time question back At Louisa this Ms.

Louisa Quarto

Thanks, Alison.

conference the year. Before a call through we've whether and be remarks end reference in be replay available at our will for of of February available Please webcast of number call I back website. We presentation, a the investor Relations of next www.americanfinancetrust.com. to closing it after also turn Investor is a website XXX-XXX-XXXX which on one asked his and X filed will our section XXX-XXXXX, the available of of it hour Mike the an dial replay been will the copy

financial encourage XXX-XXX-XXXX, Relations call to your closing who or Mike As advisors questions to our assistance. company general call specific always the at the we about back for for have turn I'll Group remarks. shareholders you Investor over account and

Michael Weil

Louisa. of see increased to future. I'd day the potential our it in our occur to will will Index in price stockholders the stock in be. we of Well should forward RMZ inclusion like that thank company that everyone potential for strength the that in the bring. to institutional focus We and our later inclusions will where growth Thanks, changes the month this us remain ownership I and day share for Great. look joining hope the view the today.

growing a Alison. the strategy. forward Thank the to company to audience. continuing of to look story We the On our of operations AFIN execution the tell and you

Operator

conference We has attending you concluded. presentation. Thank for thank you. now The today's

lines. disconnect now your may You

Necessity Retail REIT (RTL) 11 Nov 182018 Q3 Earnings call transcript