Welcome to Retail Opportunity Investments third quarter 2024 conference call. Participants are currently in a listen-only mode. Following the company's prepared remarks, the call will be open for questions. Now, I would like to introduce Lauren Silveira, the company's Chief Accounting Officer. Thank you. Please note that certain matters which we will discuss on today's call are forward-looking statements within the meaning of federal securities laws. These forward-looking statements involve risks and other factors which can cause actual results to differ significantly from future results that are expressed or implied by such forward-looking statements. Participants should refer to the company's filings with the SEC, including our most recent annual report on Form 10-K, to learn more about these risks and other factors. In addition, we will be discussing certain non-GAAP financial results on today's call. Reconciliation of these non-GAAP financial results to GAAP results can be found in the company's quarterly supplemental, which is posted on our website. Now, I'll turn the call over to Stuart Tanz, the company's Chief Executive Officer. Stuart? Thank you, Lauren, and good morning, everyone. Here with Lauren and me today is Michael Haines, our Chief Financial Officer, and Rich Schoebel, our Chief Operating Officer. Before we begin, over the past several months, we've received a number of questions regarding speculation in the market. As a matter of company policy, we do not comment on market rumors or speculation and will not do so today. What we will say is that the company carefully evaluates all opportunities to enhance value with the objective of taking actions that the company firmly believes are in the best interests of all stakeholders. Turning to the company's performance, we are pleased to report that the fundamentals of our grocery-anchored shopping centers and the grocery-anchored sector, as well as the fundamentals of our protected supply-constrained markets, all remain rock solid and continue to be long-standing core drivers of our business. Perhaps the best evidence of this is our portfolio lease rate, which has been above 96% for the past 10 years, and today stands at a strong 97.1%. Our ability to consistently maintain a high portfolio lease rate is underscored by the strong, longstanding demand for space, which continues to come from a growing wide range of diverse tenants. Capitalizing on the demand, through the first nine months of 2024, we've already leased well over 1.2 million sq ft of space, including over 450,000 sq ft in the third quarter alone. Additionally, we continue to capitalize on the demand to enhance tenancies at every opportunity, as well as to drive rents higher. In fact, we are currently on track to post our 12th consecutive year of achieving solid rent growth on both new and renewed leases. Along with enhancing the value of our portfolio through our leasing initiatives, we continue to implement our investment program that is aimed at enhancing the long-term value of our portfolio through disposing certain fully valued properties while acquiring exceptional grocery-anchored shopping centers. During the third quarter, we sold two properties, one located in San Diego and the other located up in Seattle. While both properties were stable assets, we felt the growth prospects going forward were limited, and now is the appropriate time to sell each property and capitalize on the value that we created. In terms of acquisitions, as we previously reported back in the second quarter, we acquired a terrific dual grocery-anchored shopping center that is situated in one of the most sought-after affluent communities in the San Diego market. Truly irreplaceable real estate. In terms of the economics, we sold the two properties for a total of $69 million, equating to a blended exit cap rate in the low-6% range. Both properties were sold to private 1031 buyers in separate transactions. With respect to the acquisition, which we sourced through a long-standing off-market relationship, the purchase price was $70 million, equating to a going-in cap rate in the high-6% range, which we've already started to increase through quickly leasing available space at the center. Going forward, we expect to grow the yield notably over the next several years through re-leasing below-market space, as well as enhancing the in-line tenant mix. In addition to these transactions, we are currently exploring selling an additional property here in the fourth quarter and have also identified a couple of potential off-market acquisition opportunities that, if we decide to move forward with, we would look to close quickly, possibly before year-end, given that we know both properties very well. Now, I'll turn the call over to Michael Haines to take you through our financial results for the third quarter. Mike? Thanks, Stuart. GAAP net income attributable to the common shareholders totaled $32.1 million for the third quarter of 2024, equating to $0.25 per diluted share. Included in GAAP net income is $26.7 million of gain on sales from the two properties that we sold during the third quarter. On a same-center cash basis, net operating income for the third quarter was down slightly, as we anticipated, by about 2% as compared to same-center NOI from the third quarter of last year, driven by lease recapture income, which was notably higher in the third quarter of last year as a result of recapturing spaces that had considerable term remaining on the leases, all of which we have since re-leased and at significantly higher rents on average. In terms of the first nine months of 2024, same-center NOI increased by 1.5% as compared to the first nine months of last year. With respect to funds from operations, for the third quarter, FFO totaled $33.2 million, equating to $0.25 per diluted share. The two property sales, particularly the larger sale, which occurred early in the third quarter, impacted FFO, along with higher interest expense as compared to a year ago. In terms of FFO for the full year, given that through the first nine months, FFO totaled $0.78 per diluted share, we currently expect to finish 2024 with FFO per diluted share for the year in the $3 to $5 range. With respect to same center NOI growth, we continue to expect that it will be in the 1%-2% range on a year-over-year basis. As we commented on our last call, our ongoing anchor re-leasing activity and the associated downtime between leases has muted same center NOI growth this year. As we complete the anchor re-leasing, looking ahead at next year, as new anchors take occupancy, together with targeted re-leasing opportunities in 2025, we expect same center NOI growth will be in line with our historical average, potentially stronger. Lastly, turning to our balance sheet, specifically as it relates to the $250 million of senior notes that mature in December, we are closely monitoring the market and are in a position to move forward expeditiously with refinancing the bonds. Now I'll turn the call over to Rich Schoebel, our COO, to discuss property operations. Rich? Thanks, Mike. To expand on Stuart's comments regarding tenant demand and just how strong it is, a trend that started a few years ago of prospective tenants submitting standing offers to lease space whenever it may come available, and prospective tenants being willing to sign leases before the space is actually available, continues to gain momentum across our portfolio and markets today. Additionally, like-for-like tenants are increasingly jumping at the chance to lease space that fits their infrastructure needs and are proactively seeking out such opportunities. All in all, demand across our grocery anchor portfolio continues to be strong and continues to come from a broad range of necessity, service, and destination tenants. Turning to our leasing results, during the third quarter, we leased over 450,000 sq ft of space, both of which involved renewing long-standing valued tenants. And year -to- date, we have thus far leased over 1.2 million sq ft, with over three-fourths of that being renewal activity. The bulk of our renewal activity continues to center around anchor tenants, many of which continue to renew well ahead of their scheduled maturities. In fact, of the six anchor leases that we renewed during the third quarter, all six were not scheduled to mature until next year. Furthermore, at the beginning of 2024, we had 22 anchor leases scheduled to mature next year in 2025, totaling 708,000 sq ft. Based on our early renewal and re-leasing initiatives, we now have only 10 anchor leases scheduled to mature next year, totaling just 317,000 sq ft. And based on our discussions to date with these tenants, we currently expect that all 10 will renew. With respect to re-leasing rent growth, as Stuart indicated, we continue to have good success at driving rents higher. Specifically, during the third quarter, we achieved a 14% cash increase on new leasing activity on a same space comparative basis and a 7% increase on our renewal activity. In terms of Rite Aid, as recently reported, they are now moving forward as a private company with new leadership. With respect to the 11 Rite Aid stores in our portfolio, all 11 leases have been extended for another five years on average, maintaining the previous in-place base rents. As part of extending the leases, some additional TIs were provided on our part to be put towards their repositioning initiatives, which is reflected in our third quarter leasing statistics table. In terms of the four Rite Aid stores that we recaptured, the new tenants that we signed to replace Rite Aid are already underway with their respective build-out plans, and these new tenants' base rent is over 20% higher on average from what Rite Aid had been paying before. Lastly, we continue to have good success with getting new tenants open and operating. At the beginning of 2024, newly signed tenants representing about $7 million of incremental base rent on a cash basis had not yet opened their businesses and commenced paying rent. Of that $7 million, year- to- date, approximately $4.6 million of that are now open and paying rent, including $1.4 million that opened during the third quarter. While $4.6 million of incremental rent has opened, given our strong leasing activity, new leases that we have signed year- to- date have added $5.9 million of additional incremental rent, including $2.4 million from new leases that we have signed during the third quarter. Taking all this activity into account, as of September 30th, total incremental rent from new leases that haven't yet commenced stood at approximately $8.2 million. Now I'll turn the call back over to Stuart. Thanks, Rich. As we move forward, wrapping up 2024, we expect to have an active and productive fourth quarter. On the leasing front, we are on track thus far to have another successful quarter. We are steadily moving towards completing the anchor re-leasing initiative that we commenced earlier in the year, the largest being the re-leasing of the Kohl's space at Fallbrook. Once the re-leasing is complete, we expect that our anchor space will again be at 100% leased, as it has been for the previous seven years in a row, and we expect that will bring our overall portfolio lease rate to around 98% again. Additionally, we expect that our anchor re-leasing initiative will add over $2 million of additional incremental long-term annual revenue. Looking ahead at 2025, as Rich commented, we currently expect all of our anchor leases that are scheduled to mature next year will renew. Several of those have no further renewal options and are notably below market. In addition to leasing, as Mike noted, we will be refinancing the $250 million of maturing bonds, which we expect to do in the coming weeks. Lastly, as I touched on earlier, we are currently looking at several interesting opportunities to continue advancing our investment capital recycling initiatives. From our perspective, selling certain fully valued properties with limited growth going forward, while at the same time acquiring, through off-market sources, irreplaceable assets like our recent acquisition, no doubt enhances the long-term strength and appeal of our overall portfolio, as well as our ability to continue growing cash flow and building value well into the future. Before taking questions, as I stated at the beginning of the call, as a matter of company policy, we do not comment on market rumors or speculation. We ask that you please refrain from questions along those lines. With that, operator, please open up the call for your questions. Thank you. If you would like to ask a question, please press star one one on your telephone. You will then hear an automated message advising your hand is raised. If you would like to remove yourself from the queue, please press star one one again. We also ask that you wait for your name and company to be announced before you proceed with your question. One moment while we compile the Q&A roster, and our first question for the day will be coming from Dori Kessen of Wells Fargo Securities. Your line is open. Good morning, Dori. Morning. You mentioned refinancing your bonds in the next few weeks. Do you still expect to include the term loan with that? And then just on pricing, I think you previously mentioned, expect like in the high fives. Is that still appropriate? Yeah. Hi, Dori. It's Mike. Yeah, we would expect to include the term loan as part of the whole refinancing initiative on the bonds. That's our goal. And you know, the 10-year's bouncing around a little bit, but we expect to price somewhere probably in the mid-5.5% range. Okay. And then you've talked about your same store NOI returning to a 3%-4% growth rate. Would you call that a 2026 expectation, just taking into account store openings in mid-2025, which I would assume would put your 2025 growth closer to the, I don't know, 2%-2.5% range? That's I don't know if it's necessarily a 2026 event. I would expect 2025 to be notably higher than this year's simply because some of those anchors are going to be in the pipeline earlier in the year, as I expect. Sure, I'll be counting on that, but I would expect 2025 to be obviously higher than 2024. We're just coming off of a high measure from last year, so 2025 versus 2024 should be returning to normal. Okay. Thank you very much. Thank you. One moment for our next question, and our next question will be coming from Juan Sanabria of BMO Capital Markets. Good morning, Juan. Good morning. Maybe just as the first question, just curious on what drove the higher G&A expected outlays for the year? It's basically, Juan, it's comp related. The performance-based share is based on what you think the measurements you're going to achieve. You have to adjust that every quarter based on expectations, and this quarter we had to adjust that up a little bit. Okay. And then just on the transactions market, you talked a little bit about some of the cap rates for the most recent transactions, but hoping you could give us a sense of where the assets that you may sell and buy in the fourth quarter or early into 2025 are being valued, or if you could comment in general on where you see asset values from a cap rate perspective in your West Coast. Sure. Okay. Yeah, I mean, look, I think as we all know, the acquisition market has ebbed and flowed as it relates to the 10-year. We saw some pickup in activity over the last quarter, cap rates dropping 25-50 basis points. Now that the 10-year's moved up a bit, I'm expecting the market potentially to slow down a touch, but continue with the momentum that we saw over the last quarter in terms of more activity. From a cap rate perspective, you're looking on the West Coast for high-quality, grocery-anchored assets. What we see, what's trading more recently would be in the high 5%, low 6%. So we continue to hope that we can sell assets as we've done over the last several quarters, and again, in that high 5%, low 6% range, and continue to buy off market transactions at 6% or higher, you know, towards that mid-6% range, so that we're churning this, the capital, as you would say, creatively. Thank you very much. Thank you. One moment for the next question, and our next question will be coming from Craig Mailman of Citi. Your line is open. Good morning, Craig. Hey, good morning, guys. Just on the acquisition market, you know, I think more recently, when we were with you guys, you had mentioned some OP unit deals potentially coming back into the mix. Is that still on the table at all, or should we just consider, you know, you guys need to sell kind of 50-75 basis points inside to continue to buy on the capital recycling? ... Well, we continue to pursue on the acquisition front, two things. Obviously, with the relationships we have on the West Coast, we continue to pursue OP transactions, as well as straight purchases. But, you know, as we look forward into the fourth quarter and into 2025, we do think that we've identified more opportunities to buy assets, and as we continue to build the pipeline, we will continue to sell assets so that it's not having any impact in terms of raising any equity, or our balance sheet. Okay, and then just on Fallbrook, any update on when that lease could be signed? Sure. Yeah. We continue to work on finalizing the lease with the prospective tenant, which is a national longtime tenant of ours. Our goal is to have this process completed and the lease executed before the end of the year. Great. Thank you. Thank you. One moment for the next question, and our next question will be coming from Todd Thomas of KeyBanc Capital Markets. Your line is open. Morning, Todd. Good morning, Todd. Hi. Hi, thanks. Good morning. Stuart, you know, I'm not, I'm not asking about the speculation itself, but the stock reacted to that and has held at higher levels. It's up almost 16% on the year. And so whether, you know, your AFFO yield or implied cap rate, your cost of capital has improved quite a bit. You talked about, you know, seeing some potential acquisitions. I'm just curious, you know, when is the right time to perhaps be in the market to raise equity capital, maybe use the ATM to take advantage of your improved cost of capital and put some of that capital to work? Yeah, I mean, look, the focus has been the balance sheet, with debt coming due, in terms of making sure that we continue to focus on those metrics, as we move through the balance of the year and into early next year, Todd. So I don't think we're going to be looking to the equity markets, in terms of raising capital. It's the focus now is really on churning our capital and focusing on keeping our balance sheet in check, and more importantly, continuing to work on the metrics around going back to the market, when the time is right, to refinance the debt that's coming due. Okay. And Michael, you know, was there any consideration to entering into new swap agreements or, you know, refinancing the $450 million of combined December and January maturities over the last several weeks? You know, the yield curves bounced quite a bit off the bottom. Just curious on the decision to hold off and the timing around all of that. We allowed the swaps to mature in August, kind of coincident with the expectation of timing a new refinancing. You know, obviously the goal is to do both the 2024's and the term loan. To enter into a swap now would just kind of muddy that up a little bit, because we're expecting the goal is to go back to the bond market in the near term. It didn't make sense to do a swap currently. Okay, and just one more, if I could. So bad debt, you're at $1.6 million for the year. The $3 million for the full year in the revised guidance implies a considerable, you know, pickup in the fourth quarter. Is there anything that you're eyeing specifically that might hit in the last quarter of the year, where, you know, we're almost through October? I'm just curious if you can comment on that and the general health of the tenant base today. I think the tenant base is pretty healthy. We're just being continuing to be cautiously conservative on the bad debt guidance. Nothing in particular. Okay. All right. Thank you. Thank you. One moment for the next question, and our next question will be coming from Nicholas Denmon of Baird. Your line is open. Good morning, Nick. Hey, uh- Oh, this is actually Wes. Hey, good morning, everyone. Oh, Wes. Hey, Hey, Wes. Yeah, I guess this whole auto dial-in just picked up Nick for you. Okay, quick question for you on Fallbrook. You said you're looking to have a lease signed there, and when can you have that tenant opened? And are you still looking at a pretty big box split there? Yeah, there's still. Well, the box doesn't need to be split, but significant work needs to be done to the box to accommodate the needs of the tenant. And so we would expect that that would be completed next year, and the tenant opening either very late next year or the first part of 2026. Okay. And then you have that comment about, you know, tenants are eyeing space before a tenant actually moves out. Would you look to increase your recaptures, and was that mainly an anchor comment? No, I mean, we have the you know, there, there's other opportunities out there. Some, you know, we recaptured a couple of pads at the end of last year, which we've released at significantly higher rents this year. And, you know, so there's opportunities sort of embedded throughout the portfolio. You know, the timing of when you can access them, you know, that depends. But we're eyeing opportunities throughout the portfolio in shop space and anchor. Okay, and then one final one on the balance sheet. You know, with the long-term yields starting to rise, would you maybe pivot to a term loan? We've given this some consideration, but I'd have to talk to my banking group about the appetite on the bank side for term loans. I think that's come back a little bit lately. That's always one of the considerations, for sure. ... Okay, thanks everyone. Thank you. Thank you. Thank you. One moment for the next question. And our next question will be coming from the line of Michael Mueller of J.P. Morgan. Your line is open. Yeah. Hi. Hey, good morning. Just curious, what exactly drove the FFO guidance reduction, considering that there wasn't a change in the same-store NOI expectation, and the other adjustments seemed to kind of wash each other out? Yeah. Well, hey, Mike. Aside from interest expense, the one main variable that's always a bit of a challenge in terms of gauging where actual results will shake out versus our budget as we head towards year-end, is property level NOI, which is driven in part by our leasing activity. So if leasing is in line with our fourth quarter budget, we would expect to end up in the middle of our range. Got it. Okay. And just out of curiosity, like, in terms of general question here, when you're looking at your renewal leasing, what portion of your renewal leasing, if we look either for the third quarter or year to date, is tied to, you know, fixed renewals versus just kind of going straight to market? Yeah, it's Rich. I don't have a specific number here in front of me, but, you know, it really varies from quarter- to- quarter, based on the lease that's expiring. There, there's definitely several leases coming up, some anchor leases that don't have any options remaining, where we'll expect to get those leases up to market. But, it's hard to give you a specific percentage because, you know, all the leases are varied. Okay. Appreciate it. Thank you. Thank you. One moment for the next question, and our next question will be coming from the line of Paulina Rojas Schmidt of Green Street. Your line is open. Good morning. Morning. Good morning. What percentage of your assets would you say that fit this description of stable properties with limited growth ahead, that you would be inclined to recycle? It's tough to get... I mean, from a percentage perspective, we've identified probably, right now about five to six assets, that would move to market, sooner than later, as it relates to the profile of its NOI growth. We still have a couple assets that are on the table to sell, that we have had the opportunity to retenant more recently, that aren't grocery anchored. Those are at the top of the list. You know, we were lucky enough, one of them was a Rite Aid that we leased to a national tenant. That should be coming online, within the next three to four months. That's the type of asset we're focused on now selling. As we comb through the portfolios, we do often probably five or six assets, is probably what we're looking at as we look into 2025. That's helpful. And out of curiosity, can you share what retailers have taken the space formerly occupied by Rite Aid? The Rite Aid spaces, Paulina? Yes. Yes, correct. Yeah. So, we have Dollar Tree has taken a piece of one space. We have a swim school, we have a salon suites tenant, and we have a grocer and a auto parts. Okay. Very, very diverse. And my last question is, some restaurants have been recently on the news showing weakness, and I know your concentration to restaurants is mainly in quick service. But how much would you say is local versus national credit? Again, I don't have a specific number here in front of me or a percentage, but, you know, probably, I don't know, Stuart, would you say 50% is local credit for- Yeah. -restaurants? About 15%. Yeah. And sales continue to be quite strong, pulling on the West Coast as it relates to the whole category, in terms of our portfolio. But as you touch on, we haven't had the exposure to the tenants that you're seeing in the headlines. In fact, most of them, we don't have any exposure to. Correct. Okay, thank you very much. Yep. Thank you. And that concludes the Q&A session for today. I would like to turn the call over to Stuart for closing remarks. Please go ahead. In closing, thanks to all of you for joining us today. As always, we appreciate your interest in ROIC. If you have any additional questions, please contact Lauren, Mike, Rich, or me directly. Also, you can find additional information in the company's quarterly supplemental package, which is posted on our website, as well as our 10-Q. Lastly, for those of you who are attending Nareit conference in Las Vegas in a few weeks, we look forward to seeing you there. Thanks again, and have a great day, everyone. This concludes today's conference call. Thank you all for participating. You may now disconnect.