AFIN - Earnings call transcript Q1 2019 | Necessity Retail REIT, Inc.

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Operator

Good morning, and welcome to the American Finance Trust, Inc First Quarter Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Louisa Quarto. Please go ahead.

Louisa Quarto

Thank you, operator. thank Earnings joining Call. and First 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. risks forward-looking are information statements, following contains subject The to and uncertainties. which one materialize, results uncertainties expressed implied may risks statements. forward-looking those actual by from more the these materially Should or or or of differ filed XXXX, the We cause report on annual all refer including year December with after filings, ended the the all X, that discussion of a that SEC you the on XX, filings other date could XXXX XX-K risk differences. factors and more to for March of our SEC these Form detailed for date provided this portfolio forward-looking are of or Any the conference this during statements call. only information call of made as

disclaims portfolio as information, revise or filings, in to obligation stated or except or SEC our these As statements law. any intent forward-looking by AFIN required update

non-GAAP of release Reconciliation can be earnings be call the non-GAAP measures CEO, of Weil. the the Form which our our we Mike substitute During measures, GAAP. we results supplement financial at posted for call, be our is not measures should financial and will can net XX-Q, our in GAAP now turn believe or on found income all company's website which I to accordance in financial considered www.americanfinancetrust.com. will over as today's with in to isolation a evaluating in performance. discuss prepared useful These

Mike Weil

management I'll Katy financial of and of sold Senior ongoing the Vice American we're acquisition the to I'm plan. out Louisa. and Pomerantz, Financial are and assets. our Asset our a having take We then Chief for portfolio, the steadily us. will Management. and Katie Officer; best-in-class will Trust to Thanks, joining and With me we'll details and everyone, call our and asset continuation discuss executed pleased provide Finance today our on pipeline start Good our morning, opportunistically XXXX success all leasing you for questions. overview provide Zach thank Zach building results greater an on President, and in report detail, discuss additional strong business strategy Kurtz,

direct a on quarter-over-quarter $XX.X in per-share an basis. increase to to representing million, X% a $X.XX AFFO recorded growth from result, a As we $X.XX

banks During The productive first and stock is the the time also listed accessed first quarter, completed investors with under new the a and were listing company company able trades phased to completed AFIN new our we to introduce conversations listed has symbol, preferred where of when institutions. a for series on many markets stock of we led stock offering. NASDAQ we the as a to preferred AFINP, common and capital and as

optimizing at In focus markets, on occupancy addition to multi-tenant to awareness capital remains the portfolio of properties. driving our our and in continuing AFIN expand our

the case As behaviors stores. categories service aspect of research properties. support Recent lead growing demographic experience estate. in Z from this brick-and-mortar to previously the ICSC, generation shopping to the of and real Council they continue most discussed, we product of International better purchases Centers, retail suggests concentrate Shopping physical for in communal on stores The key the retail make acquiring offer

acquisitions properties retail position based Fresenius, quarter, our in changes be is types included service XX% of bank were retail twice million, these over from acquired retail This a on ICSC's acquisitions the embrace $XXX which Mountain these for resistant include pleased as focused convenience or was accounted Examples on reflected XX% important which portfolio our the as current once Express Zach fits detail convenience visit We domestic this and $XXX million the environment. focus the This we ongoing service and purchase stores in to first criteria activity. the price. very with first quarter at we consider branches. and AFIN portfolio retail these but exceeded e-commerce will a properties further property on to of first service We're of to of and properties. focus occupancy level competition with in of acquisitions, to to retail our provide continued where Pizza properties gas Our retail occupancy restaurants, quarter. the service on personally more Hut our least pharmacies, within types of consumers occupying at week. drive stores. end Tenants we're of

ability We of continue this our we and confident and with our of remain in efforts portfolio, leasing space. level multi-tenant acquisitions sustain the to in leasing available

XX, March XX is of growing portfolio Columbia. consisted District We states our and properties of best-in-class of in our the our portfolio among XXX peers. steadily believe As located

the less Our significantly less expirations our than which XX% net portfolio, makes lease about X/X the lease year rent, and peers than single-tenant straight-line next This the years. no X than in next are up of in expecting. is next X less has XX% our years, over

sits what capture key include portfolio feet constructed for annual from almost of term increase the Another space. portfolio-wide earnings leases last on to investment-grade the X.X we're top tenants. of years, leases. on for future. assets escalators portfolio, the is average quarter remaining implied steady investment-grade our and or of to Across square investment-grade million and are foreseeable lease consider X.X of tenants years short, growth portfolio passage weighted implied In Please a an have of XX XX% leased X quality be of our release XX% of months. refer at rentable credit Portfolio despite XX.X% stable is average to tenants. our with pleased information metric we rent X.X% our XX occupancy more the our to about single-tenant AFIN's

high-credit backstop of to and any AFIN impact set each the make surprises we quarter With acquisitions of apart. the tenants the minimize to quality continue

of time of Our our listing acquisitions the leased XX% at is tenants, and XX% XXX year-to-date from across escalators. property come remaining of a the single-tenant have XX% XX% service sector. up retail last with over retail Occupancy portfolio annual rent years year. acquisitions years and to XX.X term X.X% average average X single-tenant service the is the of portfolio XX.X% last lease from weighted

by accretive our to on deals, evidenced to are believe attractive pipeline As between that our SunTrust investment we pending cap we to continue focused I of rates opportunities call, On what portfolio. find BB&T, with of year-to-date forward respect portfolio what impact reiterate and we're and SunTrust our and this our last the growing of we align our acquisitions the and including segment with long-duration leases. strong discussed want merger objectives, discussed positive our and

SunTrust of don't BB&T's originally. the improve portfolio these SunTrust, are AFIN's year the associated with reduction leases expirations largest positive current associated rent mature rating. rent. X.X% year, the close of of an the the leased entitled to to AFIN potential SunTrust's as leases on at quarter, with XXXX an to is until the another currently term SunTrust December on escalators, our this based there overall As properties before XXX tenant down to anticipated of with average with of XXXX, leases merger, guarantee XX.X% could to These all to duration rating XX under AX end monitor corporate us payments merger. XXX credit the lease to We'll AFIN. occupied all company over from some in initiatives XXXX. for On but owns BaaX include these from receive this term, regardless proposed currently contractually prior from to from lease and the corporate the any contract properties of lease a no to expiring X.X% be of leases average, remains to We're properties December properties sell straight-line The is of continue annual rent X the and the continue XXX the expect to full down of which years, we merger SunTrust branches, will potentially end which remaining to credit bring

we focus Our meaningfully and seek our With to tenants, retail space experiential traffic to of types we of tenants the drive to to traditional from multi-tenant rent lease and properties. centers. coming all-day e-commerce-defensive portfolio XX% to retail as create these foot continues service contribute

occupancy months after XX than expirations multi-tenant rent, our than multi-tenant only our we portfolio annual average million escalators. years X X.X our an expiration touch our near-term year weighted less average million rent on X.X as Our the in executed future, a with less million the the expirations XX X.X% X% have the and XX% over in lease square of how lease compared SNL annual and $XXX $X the to years me With of property, lease term in million foot Allow XX% lease based term XX/XX/XX. on of $XX.X of remaining lease with entire data portfolio some portfolio, the in to expiring has in peer peers. leases remaining average of portfolios expire X% next Across more straight-line than of that. between and schedule

on found management in has asset sustained occupancy efforts. remains success our as Our minimal our renewing team maturities executed rate, upcoming lease focused evidenced by their and,

The leases duration been XX million. gross first gross million. strategy, the weighted for and approximately proceeds SunTrust to part able at are to only X occupied redeployment service our Before and in contract of of well branches of Through an we sell a disposition redeploy to the cap because for a X.X%. also rate additional single-tenant sold to branches increase total particularly into that $XX dispositions price under a an real not SunTrust portion for approximately $X.X and definitive remaining proceeds branches properties million. weighted $XX an I sold the from of for X.X%, we've properties, were cover leased including X had tenant in have discussed first total increase We've and properties of Katie reduce rate Zach, important of strategic retail entered concentration able being we X improve I The portfolio $XX.X turn sold leased place SunTrust been cap sold that proceeds portfolio, occupied were the our aggregate the initiative. quarter it into are quarter, million. occupancy, average to agreements our estate In of Five at properties, sell amount acquisitions. lease to average were the SunTrust new sold our to were over and sold were over as sales want X our through SunTrust also previously of in strategy, dispositions

a Our provides weighted rate cash acquisition XXX accretive for cap a X.X%, spread that growth. average point portfolio basis pipeline opportunities of has AFIN

the optimize of the AFIN will the feet. quarter, the continue X.X% and to seek assets leased of properties have Finally, portfolio of strategic formerly less remaining representing be by we only to SunTrust, of as square seller we were than to as vacant that portfolio grow end company. X the a

Let financial me provide it some additional over Katie on to detail now to hand our results.

Katie Kurtz

and debt weighted stood $XX.X compared with the of debt-to-adjusted or net cash Thanks on floating. Mike. our debt credit as first end, reported embedded equivalents which The business the value debt at at were plan EBITDA the light interest XX%, relatively and mortgage of we portfolio on and debt, our revenue and credit contractual assets cash measure to cash our and $XXX.X and annualized In million facility, to in XXXX. billion plus total under debt and of quarter a expect availability on gross quarter the adjusted EBITDA cash debt million. short rate interest only accumulated of we plus have include to $XXX equivalents, all cash will the March fixed, facility million over billion We company's many we At drawn first time. for first $XXX $XX.X rent $X.X mortgage taking facility equivalents, of as the increases net net credit fourth which March quarter's owned drawn $X.X -- of our The Liquidity, cash less leaving as and undrawn asset X.X%. at account X.Xx was debt decrease our our rate XXXX. of million net at was amounts XX, total depreciation average components time properties, XXXX. quarter of net the into ended We million is amortization outstanding XX,

quarter to reduction XXXX. first in driven the million the attributable $XX.X in was quarter as from expenses was first for compared cash $XX.X the quarter $XX.X primarily estate increase benefit to fourth million quarter XXXX XXXX well portfolio. the a increase $XXX the as a million for quarter during multi-tenant of the NOI, the was as recognizing FFO million $X.X quarter acquired in AFFO acquisitions fourth XXXX $XX.X fourth in of full to real million additional and the Our stockholders in million compared XXXX. first This

and net income all at reconciliation As XX-Q, in always, earnings the found of our are be of non-GAAP our measures a website posted GAAP to supplement on Form www.americanfinancetrust.com. release can which

may joint running FBR the we've capital shares purchase which our the as to share pay use January Net to X.X% we additional the B. lead March on the and intend the financial to quarter general to dividend XXXX. stock shares purposes, The for Stifel, of record as include on initial paid Series which Corp. based preferred X, launched corporate offering, Capital our a book offering On markets properties. A million $XX.X placed stockholders Company partnering company approximately $XX sell from XX-day the managers manager preferred company dividends and perpetual The granted proceeds may successfully XXXX, institutions, $X.XXX of for XXXX, a the including financing and BMO and million offering Riley X.X shares. February front, up XX. during option redeemable cumulative in & million, price. March Markets of we as Nicolaus With of $XX.X offering XXX,XXX to per additional and X, or XX, the were

first and to basis to acquisitions, discuss basis detail. $X.XX pass per-share in X% XXXX. to was greater $X.XX fourth activity real a up For the on on compared to per-share over our Zach quarter it for a dispositions quarter, estate leasing I'll the AFFO

Zachary Pomerantz

we of what on rate retail and of XX quarter. a closed an average at Hut have weighted exclusively we acquired The average average properties portfolios $XXX of rate comprise service square term almost XXX,XXX remaining included million almost feet. X.X% properties. X.X% of cap acquired and leased a We cash believe lease cap weighted the Pizza and Katie. were during Thanks, Mountain properties GAAP attractive Fresenius, These years properties XX.X Express and weighted of rentable

We a also our Supply, we assets. tenant of Tractor like in acquired credit X freestanding mix

properties vacant yet had As over possession March that on are as or we quarter-end, feet of X tenant the XX, square where leases XXX,XXX has totaled to XXXX. of new executed dark take that primarily

tenant quarter. that with Lowe's at years dark, to successfully XX% We slight stands a negotiated the this occupancy of signed location of Fitness the year previously occupancy executed terminate replaced of for this excess the X leased surplus new multi-tenant cost the Home full a Our at out cash-paying significantly property leases, At of after XX-year conversion The the recorded anchor We lease provided quarter term. dip at with the lease we dark rents. of end of remaining tenant was to respectively, X the XX-Hour and in who proceeds new lease. a XX- a with the in economics only termination remaining of and coverage extending

lease extends foot We traffic benefit it AFIN's the pleased provides with center, as at portfolio capital shopping cost associated storefront. outcome this replacing to vacant tenants and the duration a of general are with the manages

sold disposition first of total Sports X quarter $XX.X X and is to Academy used side, $XX.X million, for during properties repay proceeds debt. in million. $XX.X of total place vacant were gross sold properties of Five to for leases sold The gross were related had remaining total properties million. $X.X proceeds X and for leased to was we the On million property which SunTrust proceeds gross the leased approximately of

end bank the of branches, our XXX we comprising on quarter, SLR. SunTrust portfolio the owned of of As based X.X% overall occupied

own are and of be branches, currently which marketing. sold actively X contract the balance SunTrust X We which also under are we of unoccupied to

properties, closed XX service leased and in Huts, XX stores locations, X.X% we Mountain have lease with Combined of rate. and is average a stores term with the for total properties price of closed first including April operator that this almost cap years. closed XX, weighted average cap XX.X Our The acquisition and $XX an fuel convenience to by earlier average at a XX consist X properties stations X.X% XX lease Fresenius the a weighted rate of gas is of we X Marathon million These including and others. the forward-looking entirely weighted of acquisition Express of a Shell, IMTAA, pipeline, either retail weighted the provided Pizza quarter, XXXX pipeline as purchase in or years. have at average XX term pipeline quarter, and properties remaining remaining ExxonMobil,

We we turn I'll are are look back the opportunities expanding portfolio. our to forward the excited currently you. in to Mike, about seeing market and it

Mike Weil

increase year, continue I'm very this believe is of with assets had our well next strategy in month our look at step to questions. we portfolio asset portfolio reported seeing the well multi-tenant the the in as transaction, quarter important we and The New that the I and properties. the as York the the our to careful of for leasing we've We're consistent selection. we in company for offering was adherence growth line positioned tenants conclude, and up remainder Zach. to at you We've Thanks, of as this institutional to forward We our quarter new here To completed for base. financing in pleased activity year. an open NAREIT of the attracting start City. result investor please success AFFO the seen first preferred Operator, many repositioning

Operator

[Operator comes Please first Lee Instructions] Our Frank question with from ahead. BMO. go

FrankLee

morning. Good Hi.

properties we acquired how attracting as And your big grow could tenant You pipeline. a in portfolio? in there this Mountain Yields quarter, number is tenant? What to several appear well. the be this the in are higher see Express and guys of to more you

Mike Weil

very e-commerce-resistant, operator. presence operator. Mountain are We a good you see a with. a credit but convenience we phases is in store won't It most much Southeast. a sale-leaseback they're comfortable portfolio. They're familiar operation. continuing in very so a have Frank, saying is is be in that Express. and to importantly, gas But This we that feel great primarily, would the certainly as have that established the about exposure in, Sure. Mountain Express with an I the convenience operator done overall more They

FrankLee

moving Okay. for Great. And then to on kind future acquisitions. funding of

Given sales should a expect source post to funding forward? going we be so of activity asset far disposition greater XQ,

Mike Weil

be a starters. Frank, buyer, for will net We

can between the XXX based We a published have think few strategically, dispositions very yes, where been our you'll But we recycling in where continue on capital assets points advantage on the basis strategic is an spread have we redeploy capital of the and AFIN nearly execute SunTrust and pipeline. we used a strategic portfolio we'll of sell -- do primarily to Q&A see a it. End that I has, that where

Operator

conference like I'm showing no for I the more back questions. Michael closing to turn to Weil remarks. any would over

Mike Weil

you. will Great. about to the X to with just Thank completed, let XXX-XXXX want do we Please available and second everybody hour just call August and reference conference were be talking our from for XXXX, know I very quarter everybody look results that of the in about the XXXXXXXX. excited number call (XXX) forward replay. to through an We quarter.

Of course, talking reach Thank to look any you. forward free soon. if we and feel to you please have to questions, everybody out,

Operator

for now presentation. The Thank today's concluded. conference is attending you

disconnect. You may now

Louisa Quarto	AR Global Investments, LLC, EVP
Mike Weil	Chief Executive Officer and President
Katie Kurtz	Chief Financial Officer, Treasurer and Secretary
Zachary Pomerantz	Senior Vice President of Asset Management
Frank Lee	BMO Capital Markets

Necessity Retail REIT (RTL) 11 May 192019 Q1 Earnings call transcript