Good morning everyone and welcome to Generation Income Properties Third Quarter 2022 Earnings Conference Call. All lines are currently in a listen-only mode. Please be aware that today's conference is being recorded. After management's prepared remarks, we will open the floor for your questions. I will now hand over the call to the company's Chief of Staff, Emily Cusmano. Please proceed.

Thank you and good morning everyone. I am joined today by David Sobelman, Chief Executive Officer; and Allison Davies, Chief Financial Officer. David will provide an overview of the company's growth strategy, business and capital markets activities, third quarter highlights and subsequent events to-date, Allison will review our quarterly financial results. Before we begin, I would like to remind you that today's comments will include forward-looking statements under Federal Securities Law. Statements that are not historical facts such as statements about our expected acquisitions or dispositions are considered forward-looking statements. Our actual financial condition and results of operations may vary materially from those contemplated by such forward-looking statements. Discussion of the factors that could cause our results to differ materially from these forward-looking statements are contained in our SEC filings, including a report on form 10-Q. In addition, certain financial information presented on this call includes non-GAAP financial measures. Please refer to our earnings release for definitions, GAAP reconciliations and an explanation of why we believe such non-GAAP financial measures are useful to investors. With that, I will now turn the call over to our Chief Executive Officer David Sobelman.

Thank you, Emily. And good morning everyone. While macroeconomic news is widely prevalent, we're glad to be able to say that we're in a stable position as it relates to our 100% rent collection, our fixed debt rates that are well below today's market interest rates, as well as the high creditworthiness of our tenants. We're happy with the steady performance of our existing portfolio even as market volatility becomes more present on a global scale. During the third quarter, we focused on maximizing internal growth and growing our pipeline in order to better navigate the uncertainty that is prevalent throughout today's market. By positioning ourselves to take advantage of the imbalances within the market, we'll look to opportunistically acquire assets when the time is right. While we are acutely aware and recognize the need for external growth to propel the stock price appreciation over the long term, we remained patient throughout the third quarter. We will not succumb to the pressures to purchase assets when there are tremendous dislocations in the market with assets that are not priced to be commensurate with today's interest rates. History has proven it is never a good long-term decision to make acquisitions when interest rates are higher than most of the cap rates we're seeing being marketed today. We will remain disciplined and make our acquisitions when there is a clear path that the asset or assets will provide long-term benefits to the shareholders of GIPR. As mentioned, we've continued to be diligent about the internal growth of our portfolio and we're happy to report that we're maintaining the contractual increases of base rents that are within 92% of our portfolio's annualized base rent. We have either fixed increases in our rental rates or, what has worked to our shareholders' benefit this year, Consumer Price Index (CPI) increases within the primary lease term. Our net operating income (NOI) has increased within our current portfolio by taking advantage of rent increases from our creditworthy portfolio. These increases in rent have provided us with approximately 3% of annual same-property rent growth over the same period last year and we continue to seek assets that can also provide internal growth to the portfolio for years to come. With that, I'm delighted to turn over the call to our CFO, Allison Davies.

Thank you, David. Last night we issued a press release announcing our financial and operating results for the quarter. Total revenue from operations was $1.5 million during the quarter, which represents a year-over-year increase of 43% driven by the acquisition of properties and an increase in recoverable revenue and rent growth. Operating expenses for the same period were $2 million and $1.3 million respectively. This increase was driven by an increase in G&A, recoverable expenses, depreciation, and compensation costs. Net operating income was $1.2 million as compared to $838,000 during the same period last year, a 44% increase driven primarily from natural rent increases through CPI or contractual rent steps in addition to lower building expenses. We believe that this increase is indicative of our disciplined underwriting focusing on accretive investments and the benefits of an internally managed portfolio. Net loss attributable to common stockholders for the quarter was $639,000 as compared to net income of $456,000 for the same period last year. This is directly related to the increase in expenses mentioned previously, as well as offset by the gain recognized from the sale of a property during the same quarter last year. Core AFFO was $358,000 as compared to $150,000 for the same period last year. The core AFFO increase was directly attributable to an increase in non-cash expenses. GIPR's weighted average remaining lease term is 5.6 years as of September 30, reflecting our short-term lease thesis. We have one lease expiring at the end of 22 and our team has active discussions with alternative tenant prospects. Our balance sheet is also in a good position to withstand the market uncertainty that we're now experiencing. We have a healthy cash balance and our next mortgage debt maturity isn't until 2024. As David mentioned earlier, we've positioned ourselves to act as soon as acquisition opportunities arise. We are keeping in constant contact with the brokerage community, as well as continuing to seek off-market investments, specifically those that are very successful at pre-program. Additionally, our joint venture program remains active and ready to deploy capital when those opportunities arise when the time is right. With that, I'll turn the call back over to David.

Thank you, Allison. We realized this is an uncertain time in the global markets, but we remain steadfast to our principles and believe that we are at the threshold of a greater profile. In short, we will remain patient and disciplined as our work is just beginning. And we're focused on creating generational wealth, as our company name implies. We think we have positioned ourselves well to weather the current economic environment and seize the opportunities that may come as a result. With that, operator, please open the call for questions.

Thank you. We will now begin the question-and-answer session. Our first question comes from Gaurav Mehta with EF Hutton. Please go ahead with your question.

Thanks. Good morning. David, can you maybe provide some more color on the transaction market? I think in your prepared remarks, you said that cap rates seem to be lower than where the interest rates are. Can you provide color on where the CapEx are compared to earlier this year and what your expectations are going forward?

Good morning, Gaurav. It's good to hear from you. Yes, openly marketed cap rates are still below the threshold in which we would transact on a mass scale. However, we are seeing cap rates increase incrementally as time goes on. And our pipeline is, let's say, very robust with assets that are similar to our current portfolio and are getting closer to the cap rates in which we need to transact.

Okay. Second question on your 4Q lease expiration. I think you touched upon that a little bit. In the prepared remarks, I think you said maybe looking for alternative tenants. Can you maybe provide some color on that property and do you expect to release that this year?

Sure. We're in constant communication with that tenant, which is Maersk. We're in constant communication with all of our tenants. However, they haven't given us a written notice as to their termination date and they have disclosed to us that they will be in a holdover rent situation. But we are prepared for them to leave at some time in the first quarter. And we are already in discussions with tenants who are actively looking at our space.

Okay. Lastly, can you provide some color on your decision to lower your dividend distribution in 4Q?

Yes, it's something that we spent a lot of time with, with our board. We wanted to put ourselves in a position to be as successful as possible as soon as possible. And so the board and management made the decision to lower our dividend to still be above market from where our peers are currently paying. However, to put us in a place where we can grow the company faster.

Okay. Thank you. That's all I have.

Thank you. Our next question comes from Michael Diana with Maxim Group. Please proceed with your question.

Hi there. Actually, all my questions have been asked. I was going to ask you about the environment, the lease expiration, and the dividend, which I think you covered well. So thank you.

All right. Thanks, Michael.

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Sobelman for any final comments.

Thanks, everyone. Have a great week and a Happy Thanksgiving.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.