Greetings, and welcome to the NETSTREIT's Q3 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Amy An, Director of Investor Relations. Thank you. You may begin. We thank you for joining us for NETSTREIT's Q3 2023 Earnings Conference call. In addition to the press release distributed yesterday after market close, we posted a supplemental package and an updated investor presentation. Both can be found in the investor relations section of the company's website at www.netstreit.com. On today's call, management's remarks and answers to your questions may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address matters that are subject to risks and uncertainties that may cause actual results to differ from those discussed today. For more information about these risk factors, we encourage you to review our Form 10-K for the year ended December 31, 2022, and our other SEC filings. All forward-looking statements are made as of the date hereof, and NETSTREIT assumes no obligation to update any forward-looking statements in the future. In addition, certain financial information presented on this call includes non-GAAP financial measures. Please refer to our earnings release and supplemental package for definitions of our non-GAAP measures, reconciliations to the most comparable GAAP measure, and an explanation of why we believe such non-GAAP financial measures are useful to investors. Today's Conference Call is hosted by NETSTREIT's Chief Executive Officer, Mark Manheimer, and Chief Financial Officer, Dan Donlan. They will make some prepared remarks, and then we will open the call for your questions. Now, I'll turn the call over to Mark. Mark? Good morning, everyone, and thank you for joining us today for our Q3 conference call. With the recent changes in the capital markets and subsequently the property markets, I want to begin with how NETSTREIT is positioned for what we foresee as an increasingly challenging landscape for the consumer and by extension, certain retailers. We will also discuss where we see opportunities and how we plan to operate in this environment. The challenges we expect to occur for many retailers center around a consumer that is unlikely to spend at the same level that they have in years past, especially when it comes to purchases by lower-income consumers on more discretionary-type items. While a small handful of our tenants have a diversified product mix that includes some exposure to discretionary items that may come under some pressure, the portfolio is built around necessity retailers, off-price value merchants, and resilient service providers. We believe this defensive industry focus, coupled with our tenants' strong balance sheets and ready access to capital, position our portfolio to deliver predictable cash flow generation over the long term. While there may be some headline risk associated with top-line performance and gross margin pressures for some of our investment-grade tenants, we do not see these pressures threatening their ability to meet their financial obligations, including paying rent. We continue to be vigilant in monitoring our portfolio, and where we have seen risk, we have actively recycled and redeployed capital into less challenged assets at generally higher, higher going-in cash yields. Turning to credit, our watch list consists of just one tenant, Big Lots, which now represents 1.9% of ABR, versus 2.4% last quarter. While we may look to further decrease this exposure over the coming quarters, we do want to highlight that the 9 infill assets that we now own have solid demographics, below-market rents, and excellent foot traffic. More specifically, our remaining locations have an average 5-mile population density of over 100,000 people and an average household income of approximately $80,000, which is attractive for most retailers when looking for expansion markets. Additionally, we believe our average rent per sq ft of $6.90 is well below market. Lastly, when using Placer.ai to track store-level foot traffic, our Big Lots rank in the top 75th percentile of the entire chain on average. Again, while we may continue decreasing our exposure to Big Lots, we do not believe that there is long-term economic risk to these assets, given the positive underlying fundamentals of the Real Estate, which is a testament to how we have underwritten our portfolio since inception. The other area of risk that we see developing across the retail space resides in tenants that have a high exposure to floating rate debt and/or low-cost debt that is maturing soon. Given the financial transparency we receive from our tenants each quarter, we are able to quantify our tenants' exposure to the aforementioned. Specifically, less than 9% of our tenancy, as measured by ABR, has debt coming due between now and year-end 2025, and the majority of this concentration, or 7.5%, is with Walgreens, who has exceptional access to capital. With that in mind, based on our limited exposure to retailers that are reliant on discretionary spend from low-income consumers, our tenant base having little to no refinance risk over the next few years, and only 2.3% of our ABR expiring through 2025 year-end, we continue to expect our portfolio to generate consistent cash flow as we navigate a potentially choppy macro environment. Turning to the portfolio, as of September 30, we had 547 investments that were leased to 85 tenants that operate within 26 retail industries across 45 states. The annualized base rent for our portfolio was $124.3 million, 83.3% of which is leased to tenants with investment-grade ratings or investment-grade profiles. Our occupancy remains at 100%, and our weighted average remaining lease term was 9.3 years. Moving on to external growth. We closed on $117.5 million of investment this quarter at a blended cash yield of 7%. The weighted average lease term remaining on these investments was 10 years, and 97.2% of these investments were leased to Investment Grade or Investment Grade profile tenants. Turning to quarterly disposition activity and loan payoffs, we divested of 6 properties for gross proceeds of $13.5 million at a blended cash yield of 6.9%, continuing to demonstrate our ability to accretively recycle capital while improving the quality and risk profile of our portfolio. All told, we completed $103.9 million of net investment activity in the Q3, which brings our year-to-date net investment activity to $327.9 million. While we are seeing significantly more opportunity for acquisitions in the Q4 at higher cap rates than what we have seen in 2023, we are also seeing plenty of opportunities to sell assets at stubbornly low cap rates to trade buyers and thus plan to ramp up our selling efforts to take advantage of this spread. Before I hand the call off to Dan, I want to provide additional commentary on our strategy and expectations as we finish 2023 and head into 2024. Since our inception and IPO several years ago, we have exercised diligence in creating one of the highest credit quality net lease portfolios in the freestanding retail space by partnering with the strongest retailers in the country. We have had no rent interruptions to date, even through a global pandemic, and have experienced zero vacancies. With the current narrative being dominated by headlines discussing looming recessionary concerns, higher for longer interest rates, and rising delinquencies in consumer credit, we believe the underwriting discipline we have exercised since inception have positioned our portfolio to outperform during a time of heightened macro uncertainty. With that, I'll let Dan go over our Q3 financial results, balance sheet, and 2023 guidance update. Thank you, Mark, and thank you everyone for joining our call today. Turning to our Q3 earnings release yesterday after the market close, we reported net income of $4.2 million, or $0.06 per diluted share. Core FFO totalled $21.2 million for the quarter, or $0.31 per diluted share. AFFO totalled $21.4 million for the quarter, or 31%—$0.31 per diluted share, a 3% increase from the prior year period. Total G&A expense, excluding one-time items, was $5.1 million, which represented 14.9% of total revenues. This compares favorably to last quarter and the prior year quarter, when G&A as a percentage of revenues was 16% and 18.2% respectively. As we look out to next year, our G&A should continue to rationalize relative to our asset base and total revenues, as the company has reached the proper scale to effectively operate our business on a go-forward basis. Moving on to the balance sheet. Total net debt was $567.5 million at quarter end, and our weighted average interest rate was 3.57%. In addition, when including the impact of extension options, which are solely at our discretion, we have no debt maturing until January 2027. Turning to capital markets activities, we raised $126 million of equity through our ATM during the quarter, which was primarily completed on a forward basis. As of quarter end, we had $98.7 million of ATM equity that remained unsettled. As previously announced on July third, we closed a new $250 million senior unsecured term loan with delayed draw option, which has a fully extended maturity date of January 2029. The term loan includes an accordion feature that allows the company to increase the total loan amount to $400 million. At closing, we drew $150 million and plan to draw the remaining $100 million in the Q1 of 2024. We fully hedged the $250 million term loan at an all-in fixed rate of 4.99% through January 2029. At quarter end, our liquidity was $564.6 million, which is comprised of $7.9 million of cash on hand, $358 million available on a revolving credit facility, $98.7 million of available forward equity, and $100 million of remaining available principal on our 2029 term loan. From a leverage perspective and adjusting for the forward equity, our net debt to annualized adjusted EBITDAre was 4.2x at quarter end, which remains comfortably below the low end of our targeted leverage range of 4.5-5.5x. Moving to guidance, we are updating our AFFO per share guidance range to $1.21-$1.23, from $1.20-$1.23, which imputes year-over-year growth of 5% at the midpoint. On the external growth front, we now expect to close around $450 million of net investment activity. Lastly, turning to our dividend. On October twenty-fourth, the board declared a quarterly cash dividend of $0.205 per share. The dividend will be payable on December fifteenth to shareholders of record as of December first. Based on the dividend amount, our AFFO payout ratio for the Q3 was 66%. With that, operator, we will now open the line for questions. Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Todd Thomas with KeyBanc Capital Markets. Please proceed with your question. Hi, thanks. Good morning. Mark, first question, you mentioned that you're seeing attractive capital, you know, still available as you look at recycling capital. What, what's the spread look like today between disposition and acquisition cap rates that you're seeing? Yeah, sure. W e're focused on really trying to find the trade buyer in 10-31 exchanges. So in kind of a, you know, one-off type situations, you know, we're selling assets anywhere from call it a 5 cap to a 7 cap, depending on, you know, lease term and where we think we can redeploy that capital. Always hesitant to give a real concrete number on where we're going to, you know, where we're going to go with dispositions, just because we're relying on other parties to complete the transaction, and that's out of our control. So the mix could really swing that, you know, one way or the other. But for types of assets, we think we're picking up anywhere from, typically 50-100 basis points. Okay. And then, it sounds like you're starting to see, investment yields improve a little bit on new deals that you're looking at. Can you just describe, a little bit more about what you're seeing there in terms of price trends? You know, the sort of 2023 cash yields that you've achieved, and the 7% in the Q3. Yeah, sure. No, absolutely, we are seeing cap rates move up. And so, we at one point, acquiring assets in kind of the low sixes, and that kind of trended up to mid-sixes, end of year, last year and early this year, up into the high sixes and now a 7 cap in the most recent quarter. We would expect the Q4 to be even higher than that. We're certainly not looking to transact, really anything in the sixes. I would expect to see, 20-plus basis points in the Q4. Some of that's really just going to be dragged down by some developments that we had signed up in the past that we're already, you know, funding. I think on new transactions, that are likely to close more in the Q1, we're likely to pick up even another 20-30 basis points beyond that. Okay. And then just last question. I realize, conditions are sort of fluid here, but, I was just wondering if you can provide a little bit of insight around how you're thinking about investments, and dispositions as well. So net investments, heading into 2024, just given the current environment today. Yeah, sure. W ith where we're seeing the acquisition market, while it's getting better, it's really... I don't think we're getting enough spread to go out and raise equity and deploy capital, where we see it today. You know, we do see opportunities like we mentioned, on the disposition and then redeploying through capital recycling and see, some pretty attractive opportunities there. But we'd really need to see, a material improvement in our stock price or see cap rates really move, into the eights, for us to consider turning, you know, turning on the spigot of acquiring assets and raising equity. Okay. All right. Thank you. Our next question comes from Joshua Dennerlein with Bank of America. Please proceed with your question. Hi, this is Farrell Granath on behalf of Josh. Just a quick question about, as you had mentioned, the headlines of pharmacies specifically. I was curious about, with your current acquisitions, are you seeing a change in competition for the assets that you're going after, like the higher credit quality assets? Yeah, I mean, I think we've really kind of seen this most of the year and probably even more so today, where the private buyer is more or less gone. You know, the opportunity standpoint's really never been better in my entire career. That being said, the cost of capital is also a challenge. So, we need to balance that. But really, developers and tenants, trying to grow, even sale-leasebacks, certainly seeing a lot of opportunity there. It's really gone from a full-blown seller market to a full-blown buyer market, with no bids really in the private market other than the occasional 1031 buyer, which we're trying to take advantage of on the disposition market. And so, looking at the overall transaction market is likely down 70%-80%, but competition is down really 90%-95%. Great. Thank you. Our next question comes from Eric Wolfe with Citi. Please proceed with your question. Thanks. Actually, Nick Joseph here for Eric. Just back to sourcing of investments, just curious of your thoughts and kind of the rationale of issuing equity in the mid-16s, given NAV, at least street NAVs in the 19s, and where you've talked about investment spreads and transaction cap rates historically. J ust trying to understand the thought process there and kind of the value creation calculation. Yeah. Hey, Nick, it's Dan Donlan. W hen you think about that price and you include the de minimis net price of that, and you think about where we raised the recent term loan, and then the impact of free cash flow, we got to basically a 100 basis point spread relative to where we saw our pipeline shaping up, into the Q4. So, that's really kind of we focus on earnings growth. We obviously look at implied cap rate as well. I t was probably, marginally dilutive to implied cap rate by 10 basis points or so. T hat's the way we looked at it, and it certainly was accretive to our AFFO per share. Yeah, I guess one of the advantages that you have is that you're smaller, and so you can grow off of that base. H ow do you think about 100 basis points investment spread off of that and kind of taking away some of that advantage versus putting pencils down and waiting for a better opportunity? Yeah, sure. W e'd like to, get back to more normalized spreads, which, I think we've said, before, is in the 150-175 basis point spread. But, we feel like 100 basis points is adequate and, provides some growth. And there are... scaling into the G&A is also, something that we view as helpful. Thanks. And maybe just finally, if you did put pencils down and did no deals, what's in the pipeline today, what would that imply for growth in 2024? Yeah. Hey, Nick, it would basically imply low single digit year-over-year AFFO growth. T he building blocks to that is internal rent growth of about 1%. C redit losses of around 30 basis points. R einvestment of our free cash flow after dividends, let's call it, $32 million of free cash flow after dividends. O bviously, the full year impact to 2023's investments and, leverage in and around the midpoint of our range. What I'd say is, if we, we fixed our $175 million 2024 term loan to, we push it out to 2027. You know, had we not done that, we probably would be looking at more mid-single digit AFFO growth year-over-year. We thought it was prudent, given the environment we were in in May and June, to push out that term loan and swap it to a fixed rate. We're glad we did it. Thanks. That's very helpful. Our next question comes from Greg McGinniss with Scotiabank. Please proceed with your question. Hello, everyone. Thanks for taking the question. O bviously, it takes time for sellers to recognize reality and for cap rates to increase. H ow are you weighing deploying capital today at, you know, these 7, low 7 cap rates versus holding back, potentially collecting some cash, interest income, and investing in a few quarters once cap rates move higher? Based on our math, long-run IRR tends to really appreciate another 25 to 50 basis points of investment yield. Yeah, no, sure. And that's a good question, we're really for the, the Q4, largely done with the acquisitions. You know, the guidance, I think, the slight tweak there really relates to, you know, we've got some properties that we're looking at selling, and we're relying on other buyers to come through. So if they don't come through, then that number might be a little bit higher than, you know, $450 million. If they all come through, then it might be a little bit less, but that's, you know, somewhat out of our control. But yeah, we have some time to deploy the capital from the most recent equity raise, and we do feel like cap rates are likely to be higher early 2024 than where they are today. How much higher they go? A little bit difficult to say, but, we certainly want to reserve some dry powder for early next year. Fair enough. And then year to date, you've had $189,000 of earned development interest, which has been offset by the, near $700,000 of capitalized interest. It's expensed through AFFO. Is it possible for that to current AFFO headwind to turn into a positive or a tailwind into 2024? Yeah. I t should continue to grow. That's really the interest we receive from developers as we're funding their development. So, you should see it start to tick up, over time. I don't think that it's ever going to eclipse the capitalized interest. Were those, part of some of the headwinds on deals that you agreed to, perhaps before cost of capital increased this much? Yeah. Look, I mean, some of the developments that we entered into were in the first and Q2, and, the yields on those, were low sevens, high sixes. I would note that they had much longer lease terms than what has historically been achieved with those retailers, as well as, annual bumps, which has not also been historically recognized as well. Sorry, last follow-up here. Go ahead. Yeah. Yeah. Can appreciate how you guys were able to, to change some of those lease terms that we hadn't seen in the past, which definitely is a positive for those. But, in thinking about, here going forward, have those same retailers been open to further increasing, potential yields on those investments? Yeah, some of the retailers that are, really pressed to grow their store count, they really need institutional capital to come in. They can't rely on the 1031 market like they had in the past through their developer network. So, hard to say exactly where all those negotiations go, as they're ongoing, but I think, if you need institutional capital, most institutions like us like to have annual increases in the leases. I would expect that to continue on the margin. Great. Thank you. Our next question comes from Handel St-Juste with Mizuho. Please proceed with your question. Hi, good morning. This is Ravi Veeraraghavan on the line for Handel St-Juste. Hope you guys are doing well. During the quarter, you issued equity, and the stock was at $16.50. Can we consider this a watermark as to when you'd consider issuing equity again? Yeah. Hey, Ravi. Look, where you raise equity is highly dependent upon the opportunities that you see. Right now, the opportunities that we see relative to where our cost of equity is, it's, there's not adequate spread there. So, we're not going to ever put a number on where we would raise capital or not raise capital. It's ultimately going to depend upon the opportunity set, where that's priced, and where we trade relative to that opportunity set. Got it. You ended the quarter with the leverage at 4.2, and inclusive of the forward. What are you willing to let leverage tick up to in order to execute on your capital deployment goals? So, our stated leverage range is 4.5-5.5 times, and I think you should expect us to operate within that range in 2024 and beyond. Obviously, though, we're mindful of the range, and I think you'll probably likely see us stay closer to the midpoint of that range if over time. Got it. Thanks, guys. Thanks. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. Our next question comes from Alex Pigen with Baird. Please proceed with your question. Hey, thank you, guys, for taking my question. Quick question just on disposition. Saw a slight uptick in that. Do you guys plan on continuing to dispose of some properties in, the portfolio, and what's the opportunity set there? Yeah, we do. I would expect the dispositions to ramp up a little bit here in the Q4 and potentially beyond the Q4. We do see a pretty attractive opportunity to not only accretively recycle capital, but also extend out lease terms by replacing those assets with longer lease term assets with better rental increases, and potentially better properties. And we believe we can do that accretively. Got it. Thank you. That's it for me. Thanks. Our next question comes from Linda Tsai with Jefferies. Please proceed with your question. Hi. Last quarter, you didn't have any shares outstanding under your Forward Equity program, but then this quarter, you have about 6 million? Yeah. Yeah, that's correct. Oh, just wondering, what happened during the quarter? Yeah, we sold those shares during the quarter through a forward block. Okay, got it. And then just on Big Lots, are there any updates there on,... I know they're on your watchlist, but just any overall view on, what's happening with them? Yeah, sure. O bviously, they've had less than great run over the past, several quarters. But, they are making some efforts to try to improve their free cash flow, which was neutral last quarter, but that was really driven by cuts to their working capital, and you really can't do that for several quarters in a row. So we're really kind of trying to look to see them improve their operations and get to positive EBITDA after CapEx to start to feel better about their tenant health. But we are expecting to see some improvement in their gross margin here in a month when they announce earnings, so we'll be looking forward to that. Thanks. Our next question comes from Ki Bin Kim with Truist Securities. Please proceed with your question. Thanks. Good morning. If you had to go raise new debt in the bank markets today, what are you getting quoted? Yeah. Hey, Ki Bin. We're, we're getting quoted in the mid fives. But, to be frank, we've already-- we have, $100 million basically of, of unsettled equity. We have $100 million that we've yet to draw down on the existing term loan. There really isn't any need right now to, to pull down any type of-- to, to do any incremental long-term debt issuance, if you can even call term loan debt long-term debt. Okay. In terms of fa-- on drugstores, if you look at the closure plans that have come out recently, any kind of broader common themes that you're seeing, or is it just forward coverage? When you overlay that with your tenant exposures, any kind of impact that you might see longer term? Yeah, we don't think we're going to have any impact with the locations that we have. We've got a very good relationship both with CVS and Walgreens. We do not have any rate date exposure. W e talk to them before we're acquiring assets and really get updates as we see news like this and call them up. F ortunately, they've been very open with us and telling us that the stores that we have are not on any closure list. Yeah, as it relates to the ones that they are closing, some of those are leases that are rolling over where they already have a presence in some of those markets. a lot, they've grown through some mergers over the years, and have multiple stores in the same markets, and then, they feel like they don't really need that number of stores in those markets. And so, there are, obviously some locations that just don't generate positive cash flow, so those are the ones that they've looked to close. Okay, thank you. We have reached the end of our question and answer session. I would now like to turn the floor back over to Mark Manheimer for closing comments. Thanks, everybody, for joining us today. We look forward to seeing you in the next few weeks at the conferences, and appreciate everybody's time. Thanks. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.