AFIN - Earnings call transcript Q4 2020 | Necessity Retail REIT, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to American Finance Trust Fourth Quarter and Year-end 2020 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would like now to turn the conference over to Louisa Quarto. ahead. go Please

Louisa Quarto

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

Executive factors to today me results Weil, Kurtz, information The on the on with Financial during December call filings contains statements that which Officer; XX, SEC Annual Joining filings, to year discuss forward-looking the Any forward-looking on risks conference this Katie risk date these and statements, the are made the Michael Officer. and following the Chief Chief XXXX, the are subject XX-K implied the materialize, differences. by of more actual ended one forward-looking cause of our as SEC and provided or including of those XXXX, these expressed or February filed to from could uncertainties. Report refer or are may discussion a results Form after We other uncertainties call only the for of that differ all statements. you all call. XX, for detailed this materially date, more Should risks of

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

directly turn our call accordance or I'll measures of with our is financial be we for today's investment-grade prepared during Weil. in to implied comparable can call, what for be in CEO, more we measures we financial the to our now discuss tenants. information available measure these believe discuss isolation performance. Mike? will release. not Also the in substitute our company's Reconciliation will to a We GAAP financial earnings about investment-grade considered over useful implied consider Mike refer Please should the earnings which measures, tenants. These release in most to evaluating as non-GAAP GAAP. be results

Michael Weil

full to quarter grew AFFO, challenges pandemic that identified successfully asset reported reflect year several increased leasing, Yesterday, presented markets by on the per our Thanks, We proactive for into all last capital joining today. in carried were in us the the Despite acquisitions, dividend fourth we Louisa. Good Year. strong our management significant morning portfolio, momentum we've and and we before transactions capital February deliver coverage and COVID-XX. results structure. and New thank you activity significant share we improvements objectives resulted increased that long-term completed to the able that

a in we rent percentages our Drews. veterans offering work lower year be rent together. adviser dividend new adjusted as of an deeper before on not to team center started. significant success. and Foster of finally rate original rent COVID the our quarter to calculated metric deferrals the Stephanie that we It's We've clear, at has a quarter. than negotiated XX% second quarters proactively collection our a experience, third To second collection other XX% important have relationships in the and growth; to navigate to series would preferred with of our in and Don barometer based the from management increased fourth the all Rent quarter tenants, believe or add XX% to built has become expected consecutive collection We shopping amendments. are receive for on prior bringing leasing strengthened last launched and industry Our by produced we stock

expiration collection rent. rent rate also agreements paying Our tenants deferral high reflects resumed of have where full the

constructed the investment-grade our to collection target implied way retail subject we've success is portfolio. due properties, necessity or We with tenants. to long-term rent Our leases, investment-grade

weighted based aggregate throughout XXXX XXXX, of this $XXX leased tenants, acquisitions a necessity met completing acquisitions. ultimately years cash that contract properties of at at weighted our acquired average remaining to acquire are a of Over retail purchase average cap with to closing. rate continued lease million of properties of cap weighted and average XX.X X.X% standard an a X.X%, price. term We rate We high XX% on XXX

have New forward the Year. acquisition we for growing a ahead, pipeline Looking

and As of year-end, NPC we million from of a thoroughly $XXX XXX acquisitions comprised Wendy's XX.X% straight-line cash X.X% weighted lease with which International, billion guarantors has of properties impact our the of Pizza term own and average increased forward X.X $X to have under years. from weighted $XXX At of avoid any of year-over-year occupancy prefer number our because and franchisee average a properties as Annualized was we cap of weighted of average XX, franchisees well, in portfolio our to rent acquisitions XX.X remaining leases, do have any of credit. portfolio portfolios. to rent our million at other of contract International. square of tenants XX% of million large XX February properties a and XX% of the a or contractual across on portfolio rate tenant rent, include Though, leasing NPC to $XX.X not X.X%. X.X% held leased averaging portfolio year. X.X% implied per a investment-grade X.X% the feet. that top rate bankruptcy at on straight-line Year-over-year, cap we leases corporate efforts. increases investment-grade allowed Based grew us is REIT We a Hut underwrite million

headquarters rent. of one the is investment-grade single-tenant this in increased implied to XX% straight-line serves from on comes single-tenant of investment-grade Sanofi. from two all XX% traditional single-tenant based components XX.X remaining with in retail, average power U.S. distinct, The portfolio assets has rent Year-over-year or multi-tenant properties of years which based single-tenant acquisition XX% property XX% X.X% single-tenant and XX% overall rent our on portfolio for have Since portfolio. as but composition year office, XXX the of was XX tenants. XXXX, has which our XX% portfolio Our activity primarily been end the lease term. retail, our and portfolio distribution service in weighted portfolio XX% straight-line Occupancy at of straight-line centers. complementary is the

rent as Oak. Although, September, and a and and to convenience tenant tenant. leased to issues comprised the with we and XX long-term to a operator $X lease to of mean out turn and surrender and early are potential to primarily XXXX, we immediately over escalations XXX% required able included and approximately open operator of and great leased rent, through net HIFZA on to investment-grade properties our with durations. XX Phillips proactively leased the BP, properties the our commenced or of properties investment-grade Imperial Imperial negotiated a straight-line no very store operation back extensive pay After banners. feature and situation new landlord to operation. or rent began at under this more of remaining took free White the aggressive payments and proactive a property AFIN. their XX Trading. aggressive this previously These Because implied has portfolio doesn't primarily or leases two Oak. reached In legal portfolio where against of White at longer a the A was to prior tenant replacement is leases. of management identified example In properties the operating network negotiations there's XX-year no is tenants, other the for this into Reliance which leases, than rental and past former due the short management action properties leased we Reliance positive that making XX negotiations the few all Conoco annual the XX network, maintenance a is single-tenant operators known period successful stronger million were new responsibilities We in rent gas tenants

remaining was tenants combined intent and with rent. XX.X%, term. their Executed have possession are we weighted which to These we our annual year-end expected at portfolio leases $X.X feet in who new six nearly X.X occupied add take executed space multi-tenant years XXX,XXX leasing million letters pipeline XX.X% of occupancy of of includes where leases expect of Our new pipeline with square new for lease XXXX. to from average is

nearly result A example leases the $XXX,XXX the on we It's built and extended leases with store. fourth any of Plaza is Centennial is with relationships pipeline XX,XXX also pipeline challenges how new negotiations of before We're strong new to especially from of our continued anchor that tenants, great first late-stage of another comparable at annual will Goods. illustrating One of feet properties, feet of quarter with square of significant we've January feet quarter XXXX, a executed for XX,XXX when will add with at is for relationship, and and leasing efforts. square tenant level $XXX,XXX proactive pleased to for opened impact XX-year the new leases a in new Based our XXX,XXX base management with once this leasing This recently combined in have our of at that I'm four from in one and rent add Sporting further they pipeline of a leases COVID. the light our such tenant signed proactive a the DICK'S in rewarding annual XXXX, posed occupancy signed during Centrum long-term the lease commenced. commenced we portfolio. the leases sign of of the as performance that Fortune through occupancy our the XXX the continued one square rent. concept our In

For and the that management. where lease-up speaks this of to fact quality space, approach XX,XXX us our The especially concept the selected portfolio our of to one square illustrates DICK'S relationship retail located. the aggressive now, properties center feet for to of it's store depth our of

to will time. adjusted bring at increases We Stephanie they EBITDA. years multi-tenant to portfolio bring Our into will delivering Foster, grew team, these report these and million recently Combined, step focused the driving EBITDA XX for XX previously centers over roles Year-over-year, proud we're management leasing with managed year opportune two to shopping in with segment Don NOI tenants mixed-use NOI on XXXX XXXX. advisers adjusted to to are be AFIN strengthened the addition to accretive along of relationships $XXX building increased they as $XXX and from asset increased million. proactively this $XXX retail and full and revenue, XXXX of team of initiatives Revenue focus our to an and million the key $XXX annual X.X% who for to their with experience million X.X% portfolio, the lifestyle believe having experience. enhancements. our projects Drews

$X.XX paid per quarter-over-quarter per increase For XXXX. the X.X% the third was in of interest up collection and an operating reported of the rent the The quarter less share in improvements from the quarter the per to completed. as multi-tenant to the refinancings by XXXX, fourth share continued increase in portfolio, the $X.XX supported see $X.XX in AFFO we AFFO driven per where share, in quarter, equal we year throughout fourth was by share tenants and

multiple the replacing challenges maturities existing year-over-year, been in options We One began our of we to as loans. the balance on COVID. Only for despite execute to has to to early most large, of plans. of for manage terms accomplishments accretive X.X% our projects provide improving of several rate ahead to XXXX the to from I'm that weighted our loan of that ability average will able continue improved related XXXX evaluate lowered significant our uninterrupted and complex our interest quarters efforts, result refinancings were significantly and proud working runway X.X% and a sheet and

this loan to the amount a refinancing the for in at daunting average is our requires debt an million secure at before $XXX secured the structure. an X.X interest debt Combined, the new remarkable. we primarily year-end essentially weighted transactions interest of third lower these of buildings interest-only AFIN's than maturing rates three overall currently extended average size on early as weighted $XXX in third that is quarter, it points $X interest completion. supported financing, XXX years were pandemic fixed basis two of of last this the at market We bottom-ticked and size X.XX%, A our the extended at me, debt quarter the replaced. a on years completed XXXX. the swap debt X.X loan maturity, significantly, it's is which and was X.XX% the most million maturity million able expense, when by diligence, in to in loans prior the extended This lower at for of by months only months serve of property completed The decrease fourth had CMBS effective X.X XXX as compared compared the and loan loan from success this replaced its and depths refinancing. year we and refinancing to US four quarter rate we excuse – a was a of in remaining pandemic five-year term two quarter maturity and existing years years New This to Jersey of of which a in time headquarters X.X that Sanofi. existing First

high forward that our value in on million at dividend duration opportunities leases the than to tenants We will stock in the remains of continue from help necessity-based cumulative see from AFIN offering. the below lease weighted offering our successfully will allotment high-quality significantly acquisitions with through overall tenants the net pleased increases, proceeds and actual portfolio. rate closed in while Series capitalize per our as term investment-grade acquisition with we C or Finally, share lower long the over X.X fourth as A investment We're we has the effective priced offering. portfolio and shareholder a perpetual we drive Series high-quality Series preferred position a concentration shares years. average $XX the of that of compelling a in offering a pipeline. on over quarter, We reflected us and believe believe marketplace, grow peers, prior The a AFFO portfolio valuation gross the a the offering, including proceeds C, that implied raised opportunity, option. The proceeds and X.XXX%

I'd the we address X-K Katie, like week. this Before to it to earlier filed over I turn

traded simultaneously of of Katie Katie her in appointment as and related upon we're him an well work AFIN's departure. effective board thank the AR of REIT, hard billion Jason to Global. Doyle, a As We down to you've the of Her with affiliate as CFO, Global previously net her AFIN's with Lease, XXXX Accounting $X resignation years AR her disputes I'd AFIN. endeavors. Katie's any will wish of on publicly seen, CFO be excited is CFO. new the Jason Net future over Officer new as served stepping since not for Chief bring like or disagreements management extremely Global been as company. announced to Jason's and lease

join we're more ask Katie us bench of detail. deep transition Global testament team. to financial have premier the that, is at AFIN the Our talent successful eager AR With walk and through a to in I'll Jason this results to

Katie Kurtz

Thanks, thank for Mike the and kind words. you

million year million, year $X.XX in million or XXXX. in million, XXXX a For increase Full the FFO was a XXXX net net XXXX. year total $XX.X company's $X.XX ended $XXX.X GAAP $X.X reported per XXXX. versus $XX.X compared million the December And XX, increase X.X% $XXX.X share in Fourth to share in X.X% $XX.X was we revenue of million, million full million NOI of fourth $XX.X XXXX million from $XX was The quarter the a loss prior a increase was XXXX. X.X% year. compared quarter $XXX recorded to the over or loss revenue for $XXX.X we million, per

compared the our per per AFFO million XXXX, or was $XX.X to million per was million $X.XX year stockholders $XX $X.XX quarter of AFFO quarter or million million or to Fourth attributable or quarter For share, $X.XX XXXX. share share. per fourth $X.XX was per AFFO FFO XXXX of compared common in share $XX.X or $XXX.X $XX.X share. $X.XX to Full fourth

at billion weighted with a found of of of $X.X ended fourth non-GAAP Liquidity, as our of billion, on our and includes, can availability value plus was cash equivalents, release. adjusted in plus gross of to of December Mike XX.X% net at end net drawn assets debt net With remarks. turn EBITDA mortgage net debt compared times back $XXX.X facility to cash X.X%. closing our December cash and GAAP the the The accumulated facility, and total call depreciation amortization respectively outstanding measured that, credit credit always, the for debt interest net rate to XX.X% $XXX.X and As on $X.X at company's reconciliation and is $XXX.X cash annualized XXXX. asset XX, X.X million of X.X some at equivalents components measures a to XXXX. which debt average was the and stood to million. earnings debt million income XX, times We The quarter XXXX, our under I'll or be undrawn

Michael Weil

successfully Thanks, continuing XXXX strategy beyond. to Katie. we on as laid year. dividend execute our We and productive coverage in plans very and and previously growing forward challenging had year look increasing in and our delivered We've we out on navigated such the portfolio XXXX a a to

We continue assets of optimize single-tenant necessity on and intentionally constructed portfolio and our focused properties. grow to multi-tenant retail

restaurants, sheet necessity-based meaningfully $X though lower rate several average an and drive-thru in for expense refinancings that significant derisked COVID-friendly interest durability weighted Our transactions our impacted completed prior portfolio service been to food refinancing distribution, strategy. decrease remaining venue have that quick underscoring term. debt many important strong supported includes the the increasingly a interest with lanes our these million We balance effective our on quarter. compared fourth quarter and The of

investment-grade continue forward accretive predominantly deliberate our to leases growing our and levels to our our at growth. high-quality maintain with current embedded acquisitions. to high rent We'll properties, long-term portfolio execute tenants sustain through occupancy contractual we'll and investment-grade steady approach and seek maintain implied Going

performance and of opportunities We're near vaccine transactions encouraged we forward sincerely this and them. perform we continue portfolio AFIN's real will the by which abates. benefit return this please pursue news accretive hope we We normal. front capital rollout the development in both only time the actively identify that the COVID have markets estate to of line we questions. by but see all continued and types good we'll the attractive well retail to in will of while I'm financing these continue news and as on I when the for open portfolio confident next a the Operator, crisis speak, to to all future look

Operator

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

Frank Lee

help you talk you're Hi, Can your remarks of that how on initiatives drive multi-tenant on portfolio some leasing everyone. in new good focus occupancy? to will And in approach mentioned and driving are leasing the underway? that Mike initiatives you morning the enhancements. changes key two to managers order dedicated any going about asset

Michael Weil

Yes.

of all Don first -- everything And think in importantly the lifestyle years centers today the I direct for with the etcetera. experience to industry. most in industry of from Stephanie relationships Frank. come national us and thanks have joining is centers their with retailers years from they power

to experience to owner executed place doing open. we've a people with in Sporting will in with that always integral conclusion has with we on able important. is quickly and direct deal concept. always the Good Stephanie the new so with is know. And great they our And was been them people of getting -- able lease be new that their being frankly, like We and landlord business that be them bringing worked the example that DICK'S to

we're taking slash-the-price a not So means. approach by any

opportunity perspective. We from very real is a are of already was and multi-tenant estate we're I what portfolio. We're place, see from deals. in legal And required certainly also in continuation the the both respond able to to to quickly. holding obviously great but But market it's what just the able provide

just of square they're Execution the worth the of are fourth four results pipeline in rent that the the to of XXXXXX will think the and six intent. the feet in again. leases I executed of want highlight talking new generate that some $XXXXXX about quarter, leases And annual new I even letters are

moving a completion the So rent. the That's lease of -- executed We're early that's very $X.X represents or conversations of and in to about that's letter and of very, probability quarter. million not indications. high intent annual we

leases retail -- part portfolio heard once key located. are that commence earnings our me we of they're an and and million calls of valuable these it necessity is be multi-tenant driver. think And prior You They're in about where roughly upside focus. the talk $X.X the adding communities annual to rent, power certainly of will pay potential the centers a will why

first additions and to welcome Don we about positive excited many will team. Stephanie report. quarters news the So are think where We're be this to And very of it. the I have

Frank Lee

my How And we that then, side. assets Okay. question that And have think on be acquisition contract? second I quarters? then, beyond the sectors appreciate pipeline to versus should acquisition does Thanks. focused you year, any is how that industries about on, the under changes color. recent mix the this you'll or look

Michael Wei

again, Thank you Frank.

of years valuable. be that have First of the couple the for think we've sectors really focusing been all, I proven last to

As the we exciting very for through prepared devastating pandemic. today's even that it with of the XXXX see call, was impact to

to which are results financial Our pretty much pre-COVID, tremendous. they where back were is

Now it's very valuable.

have the team Again, presence Oak go I that very REIT of an of option built lease with, them. in we their intentionally prudent us in more aspect. expected And omni-channel they we the say focus. We that be of know -- I details the to -- well as to after considered. to to which again, good throughout don't probably name why what don't and as they We in had a problems on point but great also changes net into to where cautious. this the portfolio. just all they're leave locations. identified really don't problems. to on something focused money be and it job to We It's I'm We are We having And this situation. handled very were. their e-commerce money us we And continued proud like retail be into So like concerns were out have pay has very brick-and-mortar care focused credit me, want to businesses invest the that how actually seen presented to I because a resistant benefit were We've to the off. in that always those of or early and retail wanted drive-thru familiar they to spread tenants problems. are would -- you White the we've necessity retailers sector. their what on with I many of that economy put really always did

landlords took much an counsel. And the XXX Oak we asked Global, for. again, already of a such even active manager. their to our only to approach. with And aggressive approach. comes XX rent value is us recover single-tenant more very properties. asset and give different a they all think went as White And we I have And we a down The in-house And a do. were very properties we And to able AR operator them owed again team terrific So the to to that Imperial. that primarily took great we And took strong. being back the we to all. have platform we think money went I of of they're XX of control not didn't them -- And know re-leased just past-due

it's I us relationships team tenants to equally end years our with the a as at and of great got very come. strong, that the think, for something and the to look multi-tenant forward in Our valuable I year place

Frank Lee

Okay. Thanks you. have. That’s all Mike. Thank

Michael Wei

Thank Frank. Yeah. you,

Operator

Bryan go ahead. Please Our B. Instructions] next Riley from Maher with question Securities. [Operator comes

Bryan Maher

Hi, Michael and morning. Good Katie.

Michael Wei

Hi Bryan.

Bryan Maher

say more skewing Following dialysis, QSRs, out that a in of the little acquisitions bit on your kind relative questioning to there but let's anything of XXXX? drilling bit seeing that towards that little key you're on a to of for you're what you're stores there segments line down used is kind

Bryan Maher

to you'll portfolio. think that in we -- are see assets that the very valuable continue be continuing QSRs I

As of an nature you've of with come kind dialysis position early have estate. the of the necessity know, again, real to the because we operators

of to the great a through These very, opportunities et do with the follow that of call car that tomorrow, going economists are at that to kind moment repair Many it's I've mean make be do of to don't be frame. finally the want we the continue that We type at And light of very do businesses vaccine I I December, after I January of a the vaccines. continue COVID. COVID. in do-it-yourself end And feel tunnel talking as – we types rollout And of I think the the point of that about that, are even but the to that, announcements advanced be to O'Reilly's, DIY to the come cetera. of positive. V-plus-X gone the six see it months I kind as time autos, meaning continue really the scenario

thinking like the I'm to is do, may what masks some still may we and back which far far still future. of normal not I we far So be midyear that but XXXX, as getting the that with not as we routine out too in activities more wear think away, cautious feels that's

see repair I doing think centers you're the going to well. continue to home

we that, would the say continue we've I and So will that in XXXX direction gone from XXXX.

the legacy going continue to we in. logical – a developers portfolio us We're that's shareholders. direction we're One shouldn't to always with hard to food the but with like trading work say but great see of in the news all don't some I that they're We and all, to to then see them. that aren't there, of course, will there we new And going we working – them but we're our out our always names some just their of opportunities. very Chick-fil-A, many right, at benefit love avoid prices looking are what love company having I constantly me. is long-term they're

years. had to we've past view in like So of that disciplined we'll couple opportunities the find and to we'll continue continue have

Bryan Maher

look sit of Do get e-banking you an you think you update what with And do to on rid Great. you thoughts adoption on those? more seen us your over of we've Truist of with COVID, give you then branches? an Can have more? that? Do on any updated tight

Michael Weil

Yeah.

We any the haven't changes to Truist announcements regarding portfolio. made

very level. stores this today talked the rent. straight-line operating. a prior think term we've with we're comfortable And credit. The appropriate They're in portfolio. very remaining I at have As be we about an investment-grade on lease and sit X% They're it on as quarters, to we continue open

to evaluate. continue So Bryan that we'll it's something

tenant the it's think X% consists They're mid-Atlantic well-located have southern these always of investment-grade do and branches extremely operate. your I And drive-thrus. in NOI continues an of markets. great of to that when kind

that So, it is the And a down market. I right I think the plenty it certainly, from to, But just to tenant now, way all it's of happy. there. X% trimmed chose if we're as asset to to having believe very we we where have it said, in was, an great and portfolio opportunity could I take

Bryan Maher

all me. Great. you. for That's Thank

Michael Weil

right. Bryan. All Thanks,

Operator

Mike any would I This concludes question-and-answer Weil like back closing over for session. remarks. turn our to the to conference

Michael Weil

XXXX. again, Great. as and The that that, Well, we're minute It discuss. she's to you Katie's active results going joining thank want NOI, we're just of today. to thank very and and I successful we're Thank I, in forward done to a the And on happy without take protecting excited for part has be company and the leadership, everyone to Doyle, are done. very and portfolio very job us looking valuable her all have team questions any And will a Jason for with forward. the a very pleased you XXXX. for and the Katie operator.

us And our first with We again, – So look to end thanks of first joining forward today. quarter you to for please, safe. results. stay talking

Operator

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

may disconnect. You now

Necessity Retail REIT (RTL) 25 Feb 212020 Q4 Earnings call transcript