AFIN - Earnings call transcript Q1 2021 | Necessity Retail REIT, Inc.

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Operator

Good morning and welcome to the American Finance Trust First Quarter 2021 Earnings Call.

As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] I would now like to turn the conference over to Louisa Quarto, Executive Vice President. Please go ahead.

Louisa Quarto

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

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

use can Please should to revise investment These available Mike? about call for any today's for directly call. Mike now useful A as in over today's performance. or the these what our earnings as As information will to comparable is release throughout I'll our SEC measure term our considered grade filings, update AFIN be substitute the also in we GAAP. will to discuss to of statements Weil, financial most required reconciliation we call, with consider we a evaluating be a CEO. financial implied company's results measures accordance which refer in our forward-looking or stated believe obligation measures in turn to disclaims tenant or we be by earnings release. more GAAP measures prepared law. in during the these except intent not Also, isolation financial non-GAAP

Michael Weil

Good you Louisa. and thank joining for morning today. us Thanks

quarter results grade assets leased that best-in-class of our grade implied investment which on first net Our resilience to is highlight predominantly necessity-based and focused tenants. the investment retail are portfolio

resilience constructed the be intentionally cash the on $XX NOI the I'm portfolio Cash pleased AFFO million up $XX.X to never per over per portfolio share potential quarter first AFFO and in million, anticipated e-commerce, was withstand context, up XXXX. tested AFIN's share, of downturns or to fronts was increased quarters. last global that in demonstrating $X.XX four pre-pandemic our NOI, including in from designed year. metrics returning and strength economy While pandemic. for to is number quarter has last surpassed resistant portfolio being to by a and In its occupancy, that a quarter, the first $X.XX from first we

time at of XX.X%, at occupancy one end perspective, is year increased portfolio and of to our weighted XX.X% from balance a end the average same pipeline leasing debt last and our at XX.X% from end quarter XX.X%, was weighted prior the average rate points X.X% XX sheet years. we at maturity From basis quarter. to by the interest by X.X the up at of year. quarter occupancy increase and XX.X% the Multi-tenant an Our last first the XXXX XX.X% end lowered year

our of was improved rent the in collected which the XX% cash rent over the cash Our portion quarter the collected collection nearly in near total quarter the pre-pandemic collection is significant all rent XX% quarter. the Contributing continues first from future. due, up to our straight-line portfolio. reflective consistent improve of collection payable portfolio fourth rent rent. multi-tenant in Collecting of We is of of we in rent experience and a of a in across with to the rent increase level represents XX% anticipate our approximately

XX, COVID fourth rent third multi-tenant we Consistent quarter The XX.X% are the percentages original started XX% we quarters, would rent The numerator in the first XX% nearly includes rent first denominator. receive was tenants the collected from during cash quarter. the March of have rent and quarter. in and in multi-tenant due, rent the prior deferred from As in of quarter. of we XXXX, collection expected collection our the the rent improvement payments using collection XXX% collected top single-tenant XX portfolio calculated the with quarter to the all during before rent rent compliments received XXX% as nearly collected of cash up and

$XX deals. team Excluding the increasing rent combined tenants. remain tenants and great and due an we XX% aggressive during in by grown million square first straight-line underwriters to grade of top leased our our seen XX% increased third-party efforts XX portfolio-wide. grade brokers, leasing investment rated year uptick by grade we've in from of original from high-quality management collected our single-tenant impact led our the and activity, rent $XXX executed comes robust billion investment activity we implied the of cash forward XX to XX% currently a pipeline implied driven of Don including and and to rated rent XXX,XXX a ago, Despite of leases disciplined leasing leading our portfolio tenants assets investment portfolio quarter. is by Foster, Among investment or portfolio straight-line significantly our deferred Jason to approach total Stephanie by annualized is properties Year-over-year Through feet XX.X% the of a Slear, $X the we've and rent the XX.X% million. Drews. asset Occupancy up payments, grade

such and Annualized over of remaining segment our we increased to and foot are totals have Of term. of balance XX rent the this remaining weighted are $XX lease to average nature combined a of average expanded a rent very acquisitions focused XX% acquisition expiring listed is be average single-tenant remaining more cap of average pipeline retail believe necessity-based portfolio weighted as the X.X% on XX.X on and near-term to XXXX. percentage AFIN's our XX.X XX% necessity disciplined weighted since to assets for take of targeted that XX% the acquisitions We long have only and and We approach resistant acquisitions a and with escalators. straight-line at Occupancy continue quarter square straight-line We in contractual a e-commerce. the property efforts with Retail portfolio returns. rent we single retail and office X% XX% assets comprises superior within of million seven service terms lease portion to has rent X.X% based of in which the with rent. our believe million from properties that next portfolio, service has term lease tenants lease leases and properties. grow single-tenant risk XX.X of are single-tenant consisting years distribution XX% adjusted portfolio retail the closed that of XX% opportunistic four minimal with in years on provide first the we single-tenant expirations XX% There and rate across portfolio years. increases. in annual

The even square of the good desirable our XX.X% XX, of million where people and X.X high-quality the XX.X% multi-tenant increase pandemic. centers from An are March multi-tenant executed XXXX. through want year foot as quarter course property communities, to XX.X% portfolio XX portfolio estate of real last in ago, Our has occupancy a shop. in

are also Shelby tenant. almost increase and anchor pipeline expected of two and the quarter, leases this leases first XX,XXX-square-foot $XXX,XXX of million investment Montecito. new quarter. executed, new resulted square time, annual uptick in in that We've commences. tenants portfolio existing grocery as this in at including from an to rent to strong an if XX,XXX in three were leases building rent that work and the executed and incremental The mentioned, add of delivered result new an new at rent tenants, As our that are executed shops our team's leasing pipeline, total feet Factory XX.X%. a over the the definitive grade Coat annual occupancy results demand and quality were net hard leasing agreements eight locations real would $X.X XX-year include estate Crossing in will and robust We're Burlington Among

time, debt year debt at last in XXXX our to or have At our in loans sheet, to than maturity by later of interest only and lower rate average XX% several has transactions increased matures balance weighted we near-term capital our they year-over-year minimal our the X.X maturities interest the decreased XX% average structure debt of Moving debt refinancing to same rates our after significant the XX% closing X.X%. replaced. weighted years. has

We rates. excellent the quarter all multi-tenant opportunities rates and capital nearly is leasing rent fixed sheet debt Finally, collection enhance environment low the XX.X% portfolio. balance rate, AFIN of improve first monitor of and from markets in interest strong historically an full measures, had in locking to structure. and our for to our in our constantly

metrics, a year-over-year share. and AFFO As in performance balance including reported our sheet result, per we improvements

nationwide support shareholders. will a that expect and of return which COVID-XX normalcy the our our will AFIN for to rollout We accrue the ongoing vaccines to tenants, benefits

Jason Before to like I'd earnings to welcome over, Doyle turning our it calls.

missing board results? stepped was his last officially As and excited into and financial the he's beat. that Jason, CFO to without for month. new our Officer us appointed mentioned Jason Chief We're AFIN please a already you last through on February Financial Jason we quarter, take role became in have will know

Jason Doyle

I'm to Thanks Mike. here. happy be very And

up the in quarter to $X.X The the of for increase $X.X we stockholders XXXX, reported million attributable revenue million the X.X% quarter NOI was GAAP XXXX loss a common of quarter million over net of million first First increase to quarter $XX.X a $X.X a first in in from quarter compared $XX.X in the net X.X% and million fourth a million, was the the loss XXXX. we the million $XX.X of $XX quarter increase fourth million, quarter, XXXX. first $XX.X from company's first and recorded was the NOI of from $XX.X million, XXXX.

million for compared XXXX, first per same the the of period per share attributable was or common stockholders in $X.XX FFO For share to quarter $X.XX XXXX. our to $XX.X

AFFO was share, or the per quarter compared of $XX.X in XXXX. per million $X.XX $X.XX quarter first First to share

undrawn sheet income at interest on we X.X% value gross of million quarter components always, drawn the debt of reconciliation credit and as cash and the found a our a our credit a form balance rate our outstanding credit comments cash average with based March net our our be is cash ended include $XXX.X to debt under $XXX.X drawn The non-GAAP equivalents net asset that, availability Liquidity, of secured Mike measures first The to I'll which represents cash GAAP balance weighted earnings our and XX.X%. Building net facility, under rate of Mike's floating supplement our and XXst to facility the back XX-Q. billion release, of and some net $X.X of in amount measured and debt $X.X million. $XX.X of billion As on debt million, of remarks. can on stood facility, majority With plus at cash closing for call turn availability. equivalents borrowing debt.

Michael Weil

Thanks, had strategy. growth very look Jason. to productive our forward and quarter to We a continuing execute on

the our sheet, weighted single-tenant has longer yet constructed our a results February which optimize and XXXX. and remaining to multi-tenant strength rent complete lower loan term. of it Despite to returning to balance interest we've and price maintained Year-over-year, at continue properties. to our focused prepandemic We weighted collection, necessity essentially rate assets, features was our of on trading return in portfolio of portfolio the average now retail stock average intentionally improved levels and

a given truly yield, healthy valuation. reason dividend and company compelling our represents we believe this For current our

go tenants further we'll continue activity joining AFIN. to across today. of forward to for maintain continuing us please the We your deliberate for US. the we've a for to Going benefits Thank AFIN our high-quality to accretive normalcy growing Operator, portfolio forward our a anticipate steady very to today operational continued type year from to rollout look questions. forward, our I look highlighted anticipate acquisitions. ahead. the successful approach We vaccine to through and look forward you strong return accretive and and

Operator

Thank you.

B. now We Please Our [Operator the question-and-answer ahead. comes begin will of first session. Instructions] Securities. Maher Bryan question go Riley from

Bryan Maher

a you the couple welcome anticipated quite first, sure, had so the have quarters. morning, Michael. just side not year of successes Good the buy all would of congratulations And most Jason. over And I'm ago. past have that on guys

kudos. So

Jason Doyle

Thanks, Bryan.

Bryan Maher

I have. question First

approach kind surprised On multi-tenant to you of the the two occupancy they're pleasantly think about the a executed this were where can they're I believe that. of that spearhead little talk portfolio, and over you or go you Can veterans that two? occupancy to type see uptick the that tenants taking bit next we industry last there. had year and in you added announced the quarter pursuing

Michael Weil

our that and retail fact Drews who with you in. coming Foster their has up the Don you. and Jason they're Slear, been platform. retailers. heads have change industry been Thank Stephanie impact direct working three on They're said, Yeah. they're significant. plugged with now with quarters relationships us the very up national as have of They The veterans biggest besides very many closely

think the time-wise, missed their or response-wise, that, all results day house the the focus more nothing in is that I in every be better done gets potentially day. be can - can cracks the so

brokers be. the percentage brokerage those in vacancy group of were was of be. One a needed them the to whatever that the We a to asked great little a whatever work was assigned brokers different just there do the direction it Many we maybe more make a case representing to that job doing portfolio. may third-party it of gets needed bit may stale the we of the changes. sometimes But were in needed first evaluate things both that bring

unchanged. for So in question who most multi-tenant really the The portfolio. us exciting that's been change is the

We continue anchor to centers. are look tenants at power -- these again typically in

decor immediate it's of our the impact hobby, They or rest to whether the tenants. home and the the have discount community grocer fit the whether those So, in centers it's apparel, specialty beautifully.

anchor to really we're range. think multi-tenant in should timeframe I the occupancy low be if portfolio make we will talking So, going do announcements the we're I I occupancy get anticipate anticipate And four-quarter continue portfolio. this see to next that that it a to prior we ours talked positive to into cetera mid-XX% able other NOI. is smaller focus because and we've real of renewals It's better tenants also very tenants traffic. such of because valuable term of in-line makes as higher of and long both And obviously a it's et much occupancy rents driver

Don, Stephanie Jason are the impact portfolio. really and on So a having positive

Bryan Maher

your the Bank are those Great. a holding happy Truist to there? kind for there there branches Is assets maturity those And then and as is or relates it to you of kind thoughts clipping coupons? new just any market of

Michael Weil

very the doing Their know would of great I very and don't with job a tenant. yes happy all they're has seamlessly first think merger we Bryan, that I are -- We in they're Truist. market. gone important a

which straight-line As today certainly urgent opportunistically rent, sell idea we portfolio all operating. I'm thought They will at in is and high deposit in branches. in have we give sit need to our not million that any deposits of open And per in neighborhood of X% an about to we very we $XXX the average you metric. dark Truist further, just again but location a don't They dispose. are

probably And lease have to will is, But I remaining Truist at we're portfolio. happy years continue -- we know important will we term network. answer closely, we but that XX-plus we're moment. opportunistically the my -- of So watch don't believe branches the these average to and we entire continue look it at very to short be the

Bryan Maher

in last point Are a just you there? there any comfortable this wish it's of spots a pretty of and asset little portfolio me. with soft everything that tenant in Great the or had at whether you type a you might are less for

Michael Weil

essentially and about I single-tenant individual diversity. portfolio is or of approaching me Rent think matches occupancy. great am comfortable talked geographic the collection XXX% gives exceeds tenant The at The with I XX%. occupancy the really as portfolio matters. Again, portfolio occupancy it's because that we is industry comfort. diversification

paying job COVID pleased think a our period. of they're anything performing. our overall didn't We any shape. course. so tenants and performance with make portfolio financially. through open getting done the the do anything We out good and is tenants. They're have great operating in we're I'm the really they're was to to to do didn't that loans rent the portfolio We support didn't I So They've normal

Bryan Maher

lot, Thanks a Michael.

Michael Weil

Bryan. Thanks

Operator

of from ahead. next comes Our BMO. question Please Lee Frank go

Frank Lee

everyone. Hi, good morning

in want How you the concessions XX,XXX the pipeline. let's feet compare say to to prepandemic square rents have Just do touch currently levels? leasing leases of on and

Michael Weil

the exact any had rent by these excessive vacancies. range are that not means and We TI. we concessions underwritten free both on in are a These

haven't especially what pipeline, a on we careful little disclosed I so I want details Now disclose. the be of to do

to We are some in vacancies. are marketed looking that the leases, had cases, But that the of value three comfortable situations ways talk some several we these goes space. competitive wanting back future were in the at of that in this Again, are In that Stephanie larger same earlier in Don how regarding disclose. question about very we tenants where can and I'm the the bringing. and they deals comment some we the

market be certainly within of that So lets very competitive and course, us expectations.

for interested We parties didn't of the XXX% vacancy, get tenant give but because lease credit a able the at had because take didn't I'll couple and other you term a So our and competing we one they preferred were space, one had we to attractive that rents very they want tenant perspective. But market strong example. want to take were the of space from pretty lose XXX% out. the to to

So drive valuable incredibly individual and markets really again, in focus, is positive intel the will the the the results. activity,

Frank Lee

a And then Great. this seen Okay. any where activity. in we third row is the quarter disposition haven't

about You manage asset or thinking But to talked Truist. strategic how exposure? currently acquisitions are a about other to sales fund you bit help

Michael Weil

of one I have first think think don't we any credit. Well, to I overexposure all, don't -- any significant

I looking So overview at portfolio. rental. revenue and looking of do the NOI have are an approach at we from

we grade seeing rent in And performance it growth, income contractual as investment to stream. metrics seller, tell that continue you valuable the portfolio, no we thin portfolio. to I portfolio. say, are So are positive growing I means the got implied leases, I be will an grade the but would like to out aggressively investment of by we very be as opportunistic to think duration I'd tenants, looking long or

Frank Lee

Okay. were take your have in me. just of by metrics pre-pandemic quickly previous levels, curious that surprised your at you any a were presentation, there to last results how back And in you we to just terms If one you look for slide this returned then compare they where particularly levels? current

Michael Weil

impact we talked Frankly, have quite I what but it's of I bit. feeling full yet, and The that know about most pleased something don't I'm multi-tenant it you with we're occupancy and a that will.

operator are going to this We retail a very very properties. capable is of multi-tenant valuable. And be

this of activity strong. positive leasing So think be be to would early back and up And metrics the -- match I imagine what I'd hopefully and to have I'm new is this me to I level so you and frankly, in retail with the price focus pre-COVID stock that to real the as for come the all tells on is strong seeing looking quality see back love levels, the portfolio. of to to

at So excited very We so that not cap And we're rates ever now acquisitions. all the what I'm like frankly. right industries chasing about we in. important we the is rent multi-tenant. aggressively know. to collection We're continue seeing or as look in we're

how compliments that the hard XXX% So relationships to built to level team be worked at they've almost they've tenants. close and our is with and our

Frank Lee

Great. Mike. Okay. Thank you,

Michael Weil

Thanks, Frank.

Operator

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

Michael Weil

us again for spending today. thank time Well, with Great. some you all

follow-up a and great get back and anybody feel again. available. free the to out. a spring summer into country to reach really look has place forward seeing and we please safe are questions, And healthy If We

again us. all joining you thank So for

Operator

This concludes today's conference call.

day. lines. Thank disconnect have your you participating may for pleasant and You a

Necessity Retail REIT (RTL) 9 May 212021 Q1 Earnings call transcript