Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the Necessity Retail REIT Fourth Quarter and Year End 2022 Earnings Call. At this time, all participants are in a listen only mode. A brief question-and-answer session will follow the formal presentation [Operator Instructions].

As a reminder, this conference is being recorded.

I would now like to turn the conference over to Curtis Parker, Senior Vice President. sir. ahead, go Please

Curtis Parker

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

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

call statements of as this forward-looking are call. during Any this of provided conference made only the date

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

turn over will Mike Weil. I call our to the Mike? CEO, now

Michael Weil

all Thanks, morning, great today. XXXX. signing joining and us with Good completing Curtis. tenants. were thank accretive year successfully you acquisitions dispositions had strategic extremely for RTL a and We new active We in while renewal and leases at

are positive in RTL segments Our these that strong efforts results and have you with execution is I'm evident the portfolio in effect occupancy our drove starting of whole. a both to higher today. to The for as share pleased excellent

is and sheet RTL's committed As shareholders. we creating we're to stronger value XXXX, continue for begin fortifying ever. our well portfolio We're our to positioned than balance

This the to growth X.X% to total a our portfolio when by compared to AFFO quarter and billion from $X.X increased million results Occupancy reflected of and is a multi-tenant increased of in XXXX. to to XXXX and year our increased as team shopping the exposure office an X.X% the acquired to X% less fourth XX.X%. up available compared we tenant XX.X% The centers growth power open-air our by year, of of extremely portfolio occupancy assets the our in leasing centers by to strong portfolio translated cap attractive that XX% renewing at total During space quarter XXXX to $XXX full with than in total grocery-anchored to to contributed supports at of $X.XX per occupancy XX.X% increase same a portfolio. across And segment leasing tenants portfolio we're share XX.X%. X%. existing XX% successful rate, growing AFFO year-over-year importantly, leases and to in single reduced

over the completed to reducing of fourth XXX,XXX prior by adjusted million $X.X we representing third did on $XX.X net ratio $XXX leases our in XXXX, million Executed end and million EBITDA retail square rent. net our This on through straight debt totaled annualized As with our dispositions XX multi-tenant in at times over rent XXX,XXX acquisitions. annualized the over lease renewals, XXXX over includes from successfully $X.X X.X as large we the feet nearly debt square our XX quarter for straight leases new of by XXX,XXX during we portfolio of feet the properties, communicated, in focus combined line with times to X.X X.X to lowering sharpening previously line times quarter. feet square million XXXX

the end, spread payable previous renewals a the rent of rent quarter under terms the and X.X% the of the the had of positive As renewal. lease between

Our leasing the of and leases over nearly including as January $X.X consisted of XXXX, fourth pipeline million executed XX, annualized the after XXX,XXX end of feet square line straight rent. quarter in

we of million totaling pipeline, our rent. square in multi-tenant to XX rise straight for new and straight million renewed square signed end $XX feet in million The X.X annualized renewals During segment of XXX,XXX plus lease With leases had $X.X This leasing executed annualized and leases in over leases in XXXX, positive line portfolio, multi-tenant our rent million would lease square over and X.X%. consists XXX quarter spread occupancy feet. XX.X%. the and over totaling full feet year as line of a new our renewals X.X

the definitive be letters would intent As leases, executed assuming level multi-tenant our signed and lead all it's occupancy ever of been. the of highest to at leases commence

X.X occupancy at the quarter. Annualized of properties feet. with remaining At from million year grew square to occupancy our lease XX.X%, term XX.X third billion rent seven to years $XXX.X XX% line and $X.X end, years, our XX% end of weighted increased of portfolio and comprised up of average the was executed million straight portfolio year-over-year a of XX.X% X,XXX portfolio

more an implied these part of due and are approximately based announced or to grade of in single investment different and anchor over continued average. line quarter our straight two their stores These our our line Albertsons report between grade recently XX% XXX Kroger our of that portfolio merger Columbia states across on investment the tenant As [antitrust] uncertain industries any rent, with grade XX.X% representing under than portfolio branded percentage of per our and face portfolio through single Based high the tenants XX the tenants growth our don't potential or actual I'm rent their include dependable we stores. contractual space. or no rated. rated single to there of proposed of that straight or XX.X% the tenants XX properties based leasing actual implied concerns. no or XX.X% of increases, by District fate on pleased leases leases actual and which provide increased across representing in portfolio remains The are rent. long implied own and end, XXX in operate believe of than assets and portfolio cash own X% for on our We tenants tenant of state the up year is time of companies investment as available term flows, rental more cash in we necessity response industry X% and multi-tenant nature that

past have rate a progress interest we'll experienced from fixed during locked of to rate the to year, do expect now the long X.X we interest again in to from center in our acquired delever of in We've times environment. times successfully the through our reducing after end, We strategic risk upside fourth EBITDA XX.X% and assets which an and initiative maturity net X.X times had the rates by quarter-over-quarter recorded average with debt ratio term the shopping demonstrated today's open-air is year same the we on recently potential. low multiple historically environment complete. efforts that X.X continued to minimizes at significant debt quarter, and leasing rising proactively At X.X exposure properties sale adjusted last weighted ability years rate deleveraging acquisition that that

disposition these net be and our $XX to we As over million to is pipeline million debt-to-EBITDA portion year to lower repay we assets, of from dispositions approximately debt a sell used ratio. of All last sold mentioned, proceeds of XXXX, have we or in and a expected the $XXX properties.

at maturities. assets. desirable in The Northern California. right space the select up It forward, In Moving at balance including XXXX remains XXXX the sheet, the and of combination price. our value. its maximize will of on the property but property a considering of proper sales maturities do our the at leasing to sell meantime, focused We're to on specific remain focused majority so relates and we're time available we this highly intention strategic the the one property, XXXX and refinancing to

we year holds built last the in by the an acquisitions, be outstanding forward ability have and As had America the believe where when properties. sell shops. activity RTL. any an we we've add leasing that We year same throughout be measure continuing in we when properties we has We foundation for and momentum the to we continued past, dispositions to growth and laid demonstrated to disciplined look true significant at

in I'll turn Jason? it to greater take Jason through detail. the us Doyle numbers over to

Jason Doyle

Mike. Thanks,

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

For FFO was of million AFFO to $X.XX Fourth or or XXXX. XXXX, the quarter compared of $X.XX was compared per year million of X% increases $XXX AFFO million and respectively. per our in million XXXX, share to fourth grew $XX.X million share quarter compared per $XX.X XXXX. to million per $X.XX $XX.X fourth for XX.X% or the share and $XXX in Full $X.XX share $XX.X fourth quarter to to XX.X% XX% of quarter the

components notes ended always, of cash equivalents, quarter be of $X.X on Liquidity, availability X.X%. interest million. debt net $XXX cash December under and cash earnings at stood $XXX.X release. debt facility of $X.X The of net at to $XXX average GAAP a facility, equivalents as undrawn can measured income is a XXXX. of $XX.X include debt, which XX, mortgage with plus our million credit of on credit and reconciliation As outstanding the million billion rate million non-GAAP cash senior and our drawn net in our found We fourth measures billion weighted of our

With that, I'll closing some Mike turn the call to for back remarks.

Michael Weil

aspect every in Thanks, had Jason. XXXX a successful our We business. very of in year

simultaneously the Our years results, been for positioned benefits portfolio, $X.X team along. add RTL to leasing acquisitions, has our our we've especially strong pipeline continue forward we through with the to pipeline across asset their We to to product and million appropriate, dispositions to our country year executing can occupancy into come. have we management straight be rent. The beyond. increase all company continue move year to million and to see a in and strategically the seen work and look with our discipline The completed across XXXX and strategy on of where in transactions plan demonstrated our and a a of multi-tenant line leading great our is over had XX.X% disposition expected to and build enhanced ended the quarter further continuing in to an XXXX $XX forward we to past. as expect We owner necessity sell which of XXXX, reduce assets of retail leverage fourth

Operator, the questions, for let's line open please.

Operator

Riley. question first Our Instructions] with B. Bryan [Operator Maher comes from

Bryan Maher

A couple of questions.

occupancy, quite all, the give First occupancy? drive you pleasantly into the rate? surprised. a more color bit of multi-tenant us mid-XXs up then as quarter. doing occupancy well. is on are the how little thinking on you driving further We good of And really on were kind to get Obviously, ability Can about congrats you

Michael Weil

know, you and the appreciate the two question. Well, I as hand-in-hand go

I all, pleased I occupancy really want of to the which XX.X%, see point frankly where tenant First it at be. was is should do to out, single

portfolio center, open-air in that I've for So is very stable that leasing shopping before. the look and predictability. The full continued piece that's of very we spoken as the for about pipeline the

renewals, complete that regular I see this a XX% realistic a is important, mid-XXs the XX%. multi-tenant point consistent update it's that very What occupancy, we to think we and our for of these portfolio when this growth think that lease I in do positive NOI is in renewals. have and to will growth something becoming

come So stores. real know center people lots, more the valuable parking to They've also more busier the shopping retailing cars the in the partners. centers, becomes our more the as the very the they're in the to ultimately us services. of sell And a to and stores that value a landlord more goods landlord the they brings and those estate. to capable because want in their

keep continue naturally But renew, term just at the top market rates. want their they'll locations. there. will to that The the when rent. to allow to community for to So time occupancy, comes us continuously their of rental in ability nationals are is to see we anchor tenants it the the longer the and be that and increase Where with from regional we benefit opportunity have strong

the continues asset a management be So focused team on. very it's very one dynamic to and important that

does the impact portfolio. obviously, for in, layout impact on The positive the just put focused who like is of complementary overall are it already obviously, selective of be center, of We and performance to rents, we the on effective look what we're to is, what industry good CapEx because in particular the tenant types rents. have NOI ability greater the us, the want the tenants what that that more that those deals is, the net to

Bryan Maher

have the you that only given impacted Would lot pressures ZIP A but built-in escalators thought as of tenants you well how inflationary up enter renewals, as we the in into companies be code. maybe somewhere cover to your X%, X%, have that rent not those? that

Michael Weil

their escalators. cetera. higher it's center the overall again, the of negotiation come a will value that of start certainly there. it's to credit the and finish with going We in rating, to cases, there But guarantee, tenant, many we will individual down in And et value their

lot certainly mind new have not of in years as as potential also is escalators did a something looking But quarter. we this it expectation than environment at about we've So talked acquisitions, five that at three or this And we are annual it's a leases. different look we top for we ago. new

Bryan Maher

congrats is? It into down remind And on think getting little bit us leverage what kind segues of your a question. X.X%. next Can leverage X.X%, I you my to from goal

Michael Weil

Before times, the on XXXX, open-air we shopping X.X the we right center is of beginning and at focused X.X, did getting on where are acquisition were to. X.X, we that about back

Bryan Maher

me. maybe then And for last

hard in asset the this market. when of to they hear refinance to lot about potential classes a going to to to a with you going time how are desire your about are continue We owners half go to and in last further year opportunities thinking come conjunction assets across have How are those delever.

Michael Weil

So very that with it's on the important that focus debt EBITDA about being to it. I net lowering balance pragmatic think And opportunities. we're smart we

XXXX, and and of hears to was from continues us. want see it's will the that we be wasn't ways $X.X approach. acquired about acquisition be accretive the Again, XX%. our year. was things during acquiring assets, AFFO all of opportunities. in the of EBITDA, had to to foremost, that There to And pleased it's quarter, I think XX%, this in in about that sees really the NOI the billion Revenue and debt-to-EBITDA course $X.X I it noticeable net we a having lowering First cash market to up always continue year-over-year, that and of XX% that net lower. important debt billion that expect We've up assets, occurred found

like in look manage will with at of the the equity So market. frankly, same that anticipating company with overall accretive delevering. to we am And but positive the discipline goals time, the the continue at to this, have growth, I results to performance portfolio

very shopping we had knows, some in we're could the and grow no to that XXXX in to So But having class, opportunity. will in acquisition year occupancy, asset a give focused NOI. increase which rush being center that who the active us -- continue opportunity have

So of There's on. be a line we're X,XXX and rent. nearly portfolio to straight at lot that going continue very execute through this just $XXX we’ll of grind activities to over million properties, organic disciplined

Operator

comes The JMP with from Mitch next question Securities. Germain

Mitch Germain

how want I volume-wise. sure make didn't to just sold much I notice was

but $XX backed off Is in we $XX, number am number? right -- into that quarter, on am million. I I think that the around or a I

Jason Doyle

correct. That's

Mitch Germain

might that -- operations, leverage. of so whatever a And that free it you combination be, from flow helped cash

I not question. You've begs markets sale. that for why got know great, try and $XX to aren't the another down sell the that guess more. million but ratio I that bring even further

Michael Weil

million We XXXX. will continue on of approach strategic it assets to of about We $XXX disposed very in a way.

$XX of million, preparing is a and about more pipeline talked on. disclose that there have to about we're and at looking execute We and

to expectations, discipline. the meet believe. want And have again, I will we So we

in the and quarter improving the view As of you of hasn't disposition acquisition, view the buyer's market take returns and momentum will it's out, great as pointed think our said advantage that from fourth I from a market. that to been the we and

Mitch Germain

for routinely, of of maturities acquisition something the most the about $XXX that? Obviously, not but I guys what's really that address think, debt you Your that can something amount, million. XXXX, for that's, plan unreasonable I an believe, was part

Michael Weil

We've got in your of the of and XXXX. want not I but that just back plans And quarter to in only in we are because I really to the all helpful executed the sight go on questions specific, value don't works. lose want but

even grown that into XXXX. got the increased NOI be assets. occupancy. in need small the to grown We've We've and refinance. So of We've easier XXXX it properties, these the we've NOI at to as refinanced properties the number actually even making

of a line our capacity refinance. have type We net leverage in on

of refinanced, disposed earlier very So be I well my in the assets that do said may comments. be need of, them as to some

issues needs as any a taking see approach. in in 'XX with initiative. very what we're So refinancing be done of don't 'XX to comfortable. proactive We're and this We care

Mitch Germain

tenant like year looks bankruptcy. It share had see anything subsequent you that? in regarding did it's a the Can end. I XX-K, you to

Michael Weil

What is think share difficulty. not financial even have everybody the having I mindset being of -- I a does X% X,XXX of is run same straight going a properties rent, tenant into that can in to you're one that tenant line that occasionally,

talk able relationships Mitch, cases, always either as in really able is position But have again, diversification than tenants we're strong categorize many portfolio. I something resell. as impact to This to to no material it real the will that year. We the better about or be we In would great there's and early with our estate. spoken and re-tenant take very it, a them but seriously, well, quarter I've or think had we nothing on you very on And appreciated I ourselves.

come So have at in significant different diversified I be do it's really and no got we roster. acquisition. XX hate we're very industries. We're I individual to bankruptcy. It's underwriting a good And scale. a that done to see I we any tenant great job And problem. through at think that tenant with have something something going well We've think

Mitch Germain

then, fundamentals And comments. facing to -- we some are I challenges. strong, I last on you've bankruptcy, with but mean you are are that sure, gain I beginning a obviously, appreciate retail Anything your guess, me. for you've I'm those I list? other obviously, insight got one know changed tenants watch have, had some

to the what has kind been any ground? there seeing you're So on change of

Michael Weil

to approach last over a Well, XX credit active we've watch taken list the years. very our

the the in we that acquire, So The management real the is new put slight estate and consistently new look chance real comes all think tenant And have well asset a with there. is to really in for this estate tenants. for potential we located of we again, nothing is with to what that it reuse relationships down us. I

a it's of watch any list but of we've activities, that concern. regular monthly create not So something higher levels where part the remains seen our

Operator

closing like I to At for the turn Michael to Mr. over call this back would time, comments. Weil

Michael Weil

Well, with be thank everybody, you, thanks, the us And right. again, today. for All taking operator. time to

excited proud think that something this something has we're us. that to The I has year me we're at XXXX. very just about really the for company. current do course, of year that I great the on together year, important quarter of end come want is to a very nicely. very been and

ratio $X.XX on $X.XX an payout was AFFO XX%, full Our year per share XXXX was dividend.

to us we it's we've as and again, portfolio the performing, and comfort just grow, something got that that to So even that portfolio, the the the really it continue occupancy in NOI continue further. to great capability AFFO gives drive grow this NOI is

out, everybody And reach for has everybody, thanks, please soon. to we So forward look anyone to if questions, any listening. and Thank talking you.

Operator

you. does This teleconference. conclude Thank today's

you may have for lines at And You a your day. great your disconnect this and thank participation. time,

Necessity Retail REIT (RTL) 23 Feb 232022 Q4 Earnings call transcript