This quarterly report represents an FFO surprise of 3.23%. A quarter ago, it was expected that this company would post FFO of $0.30 per share when it actually produced FFO of $0.31, delivering a surprise of 3.33%. NETSTREIT, which belongs to the Zacks REIT and Equity Trust - Other industry, posted revenues of $39.57 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 0.65%. This compares to year-ago revenues of $31.63 million. The company has topped consensus revenue estimate ...

PART I — FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents NETSTREIT Corp.'s unaudited condensed consolidated financial statements for Q2 and H1 2024, including balance sheets, operations, cash flows, and notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets grew to $2.10 billion by June 2024, driven by real estate investments, with liabilities and equity also increasing Condensed Consolidated Balance Sheet Highlights (in thousands) | Balance Sheet Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | **$2,097,986** | **$1,946,236** | | Real estate held for investment, net | $1,659,886 | $1,538,693 | | **Total Liabilities** | **$780,124** | **$672,804** | | Term loans, net | $621,869 | $521,912 | | Revolving credit facility | $98,000 | $80,000 | | **Total Equity** | **$1,317,862** | **$1,273,432** | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net loss increased for Q2 and H1 2024, driven by higher operating expenses, depreciation, impairment, and interest costs Statement of Operations Summary (in thousands) | Metric | Q2 2024 | Q2 2023 | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $39,567 | $31,630 | $77,240 | $61,081 | | Total Operating Expenses | $31,677 | $27,488 | $62,819 | $51,390 | | Interest Expense, net | $(7,604) | $(5,521) | $(13,784) | $(9,465) | | **Net (Loss) Income** | **$(2,306)** | **$(792)** | **$(1,254)** | **$689** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow was $37.0 million, investing used $203.9 million, and financing provided $150.7 million, leading to a net cash decrease Cash Flow Summary for Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $37,018 | $34,395 | | Net cash used in investing activities | $(203,923) | $(226,525) | | Net cash provided by financing activities | $150,702 | $134,727 | | **Net change in cash** | **$(16,203)** | **$(57,403)** | [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Notes detail financial position, including H1 2024 real estate acquisitions, total debt, interest rate hedges, equity offerings, and a Q3 2024 dividend - During the six months ended June 30, 2024, the Company acquired 46 properties for a total purchase price of **$190.8 million**[260](index=260&type=chunk) - As of June 30, 2024, total debt outstanding was **$731.3 million**, consisting of term loans, a revolving credit facility, and a mortgage note[269](index=269&type=chunk) - The Company uses interest rate derivative contracts, designated as cash flow hedges, to manage its exposure to interest rate changes on its variable rate debt. As of June 30, 2024, it held 12 interest rate swaps with a notional value of **$650.0 million**[108](index=108&type=chunk)[285](index=285&type=chunk) - In January 2024, the Company completed a public offering of **11,040,000 shares** at **$18.00 per share**, entering into forward sale agreements for the full amount[4](index=4&type=chunk) - On July 23, 2024, the Board of Directors declared a cash dividend of **$0.21 per share** for the third quarter of 2024[126](index=126&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses business overview, financial results, liquidity, and capital resources, including portfolio growth, operational analysis, and non-GAAP reconciliations [Business Overview and Recent Activities](index=46&type=section&id=Business%20Overview%20and%20Recent%20Activities) The company's portfolio reached 649 properties with 100% occupancy by June 2024, driven by acquisitions, and faced a significant loss from a business email compromise - As of June 30, 2024, the portfolio was **100% occupied** with a weighted average remaining lease term (WALT) of **9.5 years**[365](index=365&type=chunk) - In the first half of 2024, acquired **46 properties** for **$190.8 million** and sold **18 properties** for **$32.5 million**[25](index=25&type=chunk)[371](index=371&type=chunk) - The Company was a victim of a criminal scheme involving a business email compromise, resulting in a **$2.8 million loss**, net of insurance recoveries[41](index=41&type=chunk) [Results of Operations](index=48&type=section&id=Results%20of%20Operations) H1 2024 revenues grew 26.4%, but rising operating and interest expenses led to a net loss, reversing H1 2023's net income Comparison of Six Months Ended June 30 (in thousands) | Metric | 2024 | 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $77,240 | $61,081 | +26.4% | | Total Operating Expenses | $62,819 | $51,390 | +22.2% | | Interest Expense, net | $(13,784) | $(9,465) | +45.6% | | **Net (Loss) Income** | **$(1,254)** | **$689** | **-282.0%** | - The increase in net loss was primarily due to higher interest expense, depreciation, provisions for impairment, and a transfer fraud loss, which offset increased rental revenues from portfolio growth[51](index=51&type=chunk) [Liquidity and Capital Resources](index=56&type=section&id=Liquidity%20and%20Capital%20Resources) The company's capital sources include operations, equity sales, and debt facilities, with significant net debt and unsettled forward equity, supporting operations for the next 12 months - As of June 30, 2024, the company had **$98.0 million** outstanding on its **$400.0 million** revolver and **$625.0 million** outstanding across its term loans[53](index=53&type=chunk) - The company had **$222.7 million** of remaining gross proceeds available under its 2023 ATM Program and **$190.4 million** of unsettled forward equity from its January 2024 offering[53](index=53&type=chunk) Contractual Obligations as of June 30, 2024 (in thousands) | Period | Amount | | :--- | :--- | | Remainder of 2024 | $32,855 | | 2025 - 2026 | $596,935 | | 2027 - 2028 | $218,185 | | Thereafter | $2,622 | | **Total** | **$850,597** | [Non-GAAP Financial Measures](index=60&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles key non-GAAP metrics, with H1 2024 Core FFO, AFFO, and EBITDAre showing significant growth over the prior year Reconciliation of Net (Loss) Income to FFO, Core FFO, and AFFO (in thousands) | Metric | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | | Net (loss) income | $(1,254) | $689 | | Adjustments for FFO | $42,418 | $33,193 | | **FFO** | **$41,164** | **$33,882** | | Adjustments for Core FFO | $4,673 | $390 | | **Core FFO** | **$45,837** | **$34,272** | | Adjustments for AFFO | $840 | $1,864 | | **AFFO** | **$46,677** | **$36,136** | Reconciliation of Net (Loss) Income to EBITDAre (in thousands) | Metric | Six Months 2024 | Six Months 2023 | | :--- | :--- | :--- | | Net (loss) income | $(1,254) | $689 | | EBITDA Adjustments | $49,727 | $39,844 | | **EBITDA** | **$48,473** | **$40,533** | | EBITDAre Adjustments | $6,492 | $2,540 | | **EBITDAre** | **$54,965** | **$43,073** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=68&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuation on its floating-rate debt, mitigated by interest rate hedges, with a 1% rate change impacting revolver borrowings - As of June 30, 2024, the company had approximately **$723.0 million** in floating-rate debt outstanding across its term loans and revolver[101](index=101&type=chunk) - The company has hedged its market interest risk for the 2027, 2028, and 2029 Term Loans by using interest rate derivative contracts to convert the variable rate debt to a fixed interest rate[98](index=98&type=chunk) - A sensitivity analysis assuming a **1% adverse change** in interest rates as of June 30, 2024, estimated a market risk exposure of approximately **$0.8 million** related to the revolver[102](index=102&type=chunk) [Item 4. Controls and Procedures](index=70&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls were effective as of June 2024, despite a material weakness from a business email compromise loss, prompting strengthened fund transfer controls - Management concluded that disclosure controls and procedures were effective as of June 30, 2024[392](index=392&type=chunk) - During the quarter, the company was the victim of a business email compromise that led to two fraudulent transfers totaling **$3.3 million**, resulting in a **$2.8 million loss**, net of insurance recoveries[393](index=393&type=chunk) - Following the fraud incident, the company strengthened its processes and controls related to fund transfers and vendor information, and reinforced existing policies and procedures[393](index=393&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=71&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material lawsuits, claims, or other legal proceedings - The company is not currently subject to any lawsuits, claims, or other legal proceedings[395](index=395&type=chunk) [Item 1A. Risk Factors](index=71&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K[396](index=396&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=71&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered equity sales reported; employees surrendered 71,000 RSUs valued at $1.2 million for tax withholding in H1 2024 - During the six months ended June 30, 2024, employees surrendered approximately **71,000 RSUs** valued at **$1.2 million** to pay for statutory tax withholding obligations[348](index=348&type=chunk) [Item 6. Exhibits](index=72&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the report, including CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act[400](index=400&type=chunk)

– Increased Quarterly Dividend by 2.4% to $0.21 Per Share – Six Months Ended June 30, NETSTREIT REPORTS SECOND QUARTER 2024 FINANCIAL AND OPERATING RESULTS – 2024 AFFO Per Share Guidance Range of $1.25 to $1.28 Maintained – SECOND QUARTER 2024 HIGHLIGHTS Three Months Ended June 30, – Net loss of $(0.03) and Adjusted Funds from Operations ("AFFO") of $0.32 Per Diluted Share – – Completed $115.7 Million of Gross Investment Activity at 7.5% Blended Cash Yield – Dallas, TX – July 29, 2024 – NETSTREIT Corp. (NYS ...

E4C/E+ via Getty Images NETSTREIT (NYSE:NTST) is worth holding as the Company operates within the resilient property sector and has: Introduction refer to the link provided below to get a better grasp on the development of my take on NTST. Without further ado, let's review its business - enjoy the read! Netstreit: There Are More Attractive Opportunities Given Its Valuation NTST - The Bright Side Of A Coin As of March 2024, NTST owned 628 properties, which is ~3 times less than the smallest of the above enti ...

Netstreit Corp. has, despite its comparatively small size, one of the better, conservative portfolios out there. We keep both aforementioned triple-net REITs at a maximum allocation almost at all times. NTST, along with companies like VICI (VICI) and a few more businesses and REITs, are companies that we put capital into when we can't put it in other REITs due to allocation rules. Not because these companies are bad, but because the other ones are simply higher rated, and sometimes even come with a higher y ...

filo/iStock via Getty Images Investment thesis NETSTREIT Corp. (NYSE:NTST) has mostly solid business and credit metrics, there are also some risks accompanied by a relatively high P/FFO multiple when compared to the leading sector REITs. However, the Company has a coherent investment strategy with a clear growth path, which may make it worth holding and collecting well-covered dividends to support patience. According to the above, I have a neutral view of NTST and believe there are more attractive investmen ...

Disclaimer 2 Source: Company data and balance sheet as of March 31, 2024, unless otherwise noted. Figures represent percentage of ABR unless otherwise noted. 1. Represents tenants with investment grade credit metrics (more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x), but do not carry a published rating from S&P, Fitch, Moody's, or NAIC. 2. Reflects 1,635,600 of unsettled forward equity shares sold from the ATM program during April 2024 at a net settlement price o ...

Property Investments - As of March 31, 2024, the company owned or had investments in 628 single-tenant retail net leased properties, generating an annualized base rent (ABR) of $140.3 million, with 71% from investment grade credit rated tenants[136]. - The company acquired 28 properties for a total purchase price of $95.2 million during the three months ended March 31, 2024, with a weighted average lease term (WALT) of approximately 10.6 years[142]. - The company had 13 property developments under construction as of March 31, 2024, with $11.0 million invested in property developments during the same period[143]. Financial Performance - Total revenues for the three months ended March 31, 2024, increased by $8.2 million to $37.7 million compared to $29.5 million for the same period in 2023, attributed to an increase in operating leases and properties securing mortgage loans[148]. - Total operating expenses rose by $7.2 million to $31.1 million for the three months ended March 31, 2024, primarily due to increased depreciation, amortization, and provisions for impairment[149]. - Net income decreased by $0.4 million to $1.1 million for the three months ended March 31, 2024, from $1.5 million in the same period in 2023, primarily due to increased provisions for impairment and interest expense[155]. - The Company reported a net income of $1,052,000 for the three months ended March 31, 2024, compared to $1,481,000 for the same period in 2023, representing a decrease of approximately 28.9%[178]. - Funds From Operations (FFO) for the first quarter of 2024 was $21,179,000, an increase of 27.4% from $16,684,000 in the first quarter of 2023[178]. - Core FFO for the same period was $22,450,000, up 34.4% from $16,685,000 in the prior year[178]. - Adjusted Funds From Operations (AFFO) increased to $22,863,000 in Q1 2024, compared to $17,419,000 in Q1 2023, marking a growth of 31.3%[178]. - EBITDA for the first quarter of 2024 was reported at $24,734,000, compared to $20,146,000 in the same quarter of 2023, reflecting a rise of 22.5%[183]. - The Company’s Adjusted EBITDAre for Q1 2024 was $31,676,000, with an annualized figure of $126,704,000[184]. Debt and Financing - The company entered into a $300.0 million at-the-market equity program on October 25, 2023, with $222.7 million in remaining gross proceeds available for future issuances as of March 31, 2024[138]. - As of March 31, 2024, the principal amount of total debt was $708,322,000, resulting in a Net Debt of $685,988,000 after accounting for cash and equivalents[187]. - Adjusted Net Debt stood at $395,080,000 after excluding the value of unsettled forward equity, which amounted to $290,908,000[187]. - The company hedged the entire $250.0 million of the 2029 Term Loan at a fixed interest rate of 4.99% through January 2029[140]. - Interest expense increased by $2.3 million to $6.2 million for the three months ended March 31, 2024, compared to $3.9 million for the same period in 2023[153]. - The company anticipates funding its long-term capital needs through cash from operations, borrowings under the Revolver, and issuances of common stock[158]. - The company reported total indebtedness of approximately $175.0 million under the 2027 Term Loan, $200.0 million under the 2028 Term Loan, and $250.0 million under the 2029 Term Loan, all of which are floating rate debt[193]. - Average daily outstanding borrowings on the Revolver for the three months ended March 31, 2024, were $59.6 million[193]. - The company entered into interest rate derivative contracts to hedge market interest risk associated with its term loans, converting variable rate debt to fixed rates[194]. - The estimated market risk exposure from a 1% adverse change in interest rates as of March 31, 2024, was approximately $0.6 million[195]. Cash Flow - Net cash provided by operating activities decreased by $3.1 million to $11.7 million for the three months ended March 31, 2024, compared to $14.8 million in the same period in 2023[163]. - Net cash used in investing activities decreased by $5.2 million to $97.2 million for the three months ended March 31, 2024, compared to $102.4 million in the same period in 2023[164]. - Net cash provided by financing activities increased by $54.3 million to $78.0 million for the three months ended March 31, 2024, compared to $23.7 million in the same period in 2023, primarily due to a $100.0 million draw on the 2029 Term Loan[165]. Operating Metrics - For the three months ended March 31, 2024, the Property-Level NOI was $31,087,000, an increase from $24,538,000 in the same period of 2023, representing a growth of approximately 26.5%[191]. - The Property-Level Cash NOI for the same period was $30,450,000, up from $24,014,000 in 2023, indicating a year-over-year increase of about 27.0%[192]. - Total Cash NOI - Estimated Run Rate for the three months ended March 31, 2024, was $34,403,000, reflecting a significant increase from the previous year[192]. - General and administrative expenses for the three months ended March 31, 2024, were $5,707,000, compared to $4,909,000 in the same period of 2023[191]. - Depreciation and amortization expenses increased to $17,541,000 in Q1 2024 from $14,949,000 in Q1 2023[191]. - Provisions for impairment were reported at $3,662,000 for the three months ended March 31, 2024, with no provisions in the same period of the previous year[191]. - Provisions for impairment recorded were $3.7 million on 12 properties for the three months ended March 31, 2024, compared to no provisions in the same period in 2023[156]. Economic Environment - The average inflation rate for the three months ended March 31, 2024, was 3.5%, down from 5.0% for the prior year period, indicating a potential easing economic environment[146]. - The Company intends to make sufficient distributions during 2024 to qualify for a full dividends paid deduction as a REIT[166]. - The Company’s taxable REIT subsidiary may be subject to U.S. federal, state, and local income taxes on its taxable income, which could impact overall financial performance[168].

NETSTREIT REPORTS FIRST QUARTER 2024 FINANCIAL AND OPERATING RESULTS – Net income of $0.01 and Adjusted Funds from Operations ("AFFO") of $0.31 Per Diluted Share for First Quarter – – Completed $129.2 Million of Gross Investment Activity at 7.5% Blended Cash Yield for First Quarter – – Increasing Low End of 2024 AFFO Per Share Guidance to a New Range of $1.25 to $1.28 – – Completed $198.7 Million Forward Equity Offering in January 2024 – – $30.8 Million of Forward Equity Sales through ATM Year to Date – Dal ...

[PART I](index=5&type=section&id=PART%20I) [Item 1. Business](index=5&type=section&id=Item%201.%20Business) NETSTREIT Corp. is a REIT managing 598 single-tenant retail properties, generating $131.9 million ABR with 100% occupancy and a 9.5-year WALT Portfolio Overview as of December 31, 2023 | Metric | Value | | :--- | :--- | | Properties Owned/Invested In | 598 | | Tenants | 85 | | Retail Sectors | 26 | | States | 45 | | Annualized Base Rent (ABR) | $131.9 million | | Occupancy (exclusive of mortgage loans) | 100% | | Weighted Average Remaining Lease Term (WALT) | 9.5 years | | ABR from Investment Grade Tenants | ~71% | | ABR from Investment Grade Profile Tenants | ~14% | - The company's investment strategy is multi-faceted, including acquiring stabilized leases, blend-and-extend transactions, mortgage loans, build-to-suit projects, and sale-leaseback transactions to build its portfolio opportunistically[31](index=31&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk) - In 2023, the company entered into a new **$250.0 million** sustainability-linked senior unsecured term loan (2029 Term Loan) and amended its **$175.0 million** term loan (2027 Term Loan) It also established a new **$300.0 million** ATM program, raising approximately **$76.5 million** in net proceeds by year-end[19](index=19&type=chunk)[20](index=20&type=chunk)[23](index=23&type=chunk) - The underwriting and portfolio management process is a three-part strategy focusing on: (1) Tenant Credit Underwriting, (2) Real Estate Valuation, and (3) Unit-Level Profitability analysis[35](index=35&type=chunk)[37](index=37&type=chunk) - As of December 31, 2023, the company had **28 full-time employees** The workforce was approximately **64% male** and **36% female**, with **29% being ethnically diverse**[55](index=55&type=chunk)[56](index=56&type=chunk) [Item 1A. Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces multiple risks, primarily related to global economic conditions, commercial real estate ownership, and financing - Macro-economic conditions, such as high inflation and interest rates, have increased acquisition costs and reduced the availability of attractive financing, potentially slowing the company's historical growth rate[59](index=59&type=chunk)[61](index=61&type=chunk) - The business is highly dependent on tenants' financial stability A downturn in a key tenant's business, such as **Dollar General (10.9% of ABR)**, **CVS (7.8%)**, or **Walgreens (6.9%)**, could materially and adversely affect the company[63](index=63&type=chunk)[69](index=69&type=chunk) - The portfolio has significant geographic concentrations, with substantial holdings in **Illinois (8.6% of ABR)**, **Texas (7.6%)**, and **Wisconsin (7.2%)**, making the company susceptible to adverse developments in these markets[68](index=68&type=chunk) - The company relies on external capital to fund growth due to the REIT requirement to distribute at least **90%** of taxable income Inability to access capital on favorable terms could hinder acquisitions and operations[88](index=88&type=chunk) - Failure to qualify as a REIT would result in severe tax consequences, including being subject to corporate income tax and the inability to deduct dividends paid to stockholders, which would substantially reduce funds available for distribution[93](index=93&type=chunk) - Cybersecurity risks, including data breaches from internal systems or third-party vendors, could lead to operational disruptions, financial loss, and reputational harm[79](index=79&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) [Item 1B. Unresolved Staff Comments](index=28&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[137](index=137&type=chunk) [Item 1C. Cybersecurity](index=28&type=section&id=Item%201C.%20Cybersecurity) The company implements an information security program, overseen by its IT Manager and Chief Accounting Officer, with Board audit committee oversight - The company has implemented information security processes to identify, assess, and manage material risks from cybersecurity threats[138](index=138&type=chunk) - Cybersecurity oversight is managed by the IT Manager and Chief Accounting Officer, with ultimate oversight responsibility falling to the Board's audit committee[139](index=139&type=chunk)[144](index=144&type=chunk) - The company utilizes third-party service providers for functions like cybersecurity monitoring and has processes to manage risks associated with these vendors[141](index=141&type=chunk)[142](index=142&type=chunk) [Item 2. Properties](index=29&type=section&id=Item%202.%20Properties) NETSTREIT's portfolio consists of 598 single-tenant retail properties, 100% occupied, diversified across 85 tenants and 26 sectors Portfolio Summary (as of Dec 31, 2023) | Metric | Value | | :--- | :--- | | Properties | 598 | | Square Feet | 10.6 million | | Occupancy | 100% | | Annualized Base Rent (ABR) | $131.9 million | | WALT | 9.5 years | | Investment Grade Tenants (by ABR) | ~71% | | Investment Grade Profile Tenants (by ABR) | ~14% | [Tenant and Industry Diversification](index=31&type=section&id=Tenant%20and%20Industry%20Diversification) Top 5 Tenants by % of ABR | Tenant | % of ABR | | :--- | :--- | | Dollar General Corporation | 10.9% | | CVS Health Corporation | 7.8% | | Walgreen Co. | 6.9% | | Dollar Tree / Family Dollar | 5.0% | | Home Depot U.S.A, Inc. | 4.7% | Top 5 Industries by % of ABR | Tenant Industry | % of ABR | | :--- | :--- | | Dollar Stores | 15.8% | | Grocery | 15.4% | | Drug Stores & Pharmacies | 14.6% | | Home Improvement | 11.6% | | Convenience Stores | 7.3% | - Defensive retail industries, defined as necessity-based, service-oriented, and discount-focused, account for **87.7%** of the portfolio's ABR[153](index=153&type=chunk)[154](index=154&type=chunk) [Geographic Diversification and Lease Expirations](index=33&type=section&id=Geographic%20Diversification%20and%20Lease%20Expirations) Top 5 States by % of ABR | State | % of ABR | | :--- | :--- | | Illinois | 8.6% | | Texas | 7.6% | | Wisconsin | 7.2% | | New York | 6.5% | | North Carolina | 5.9% | - The portfolio has a well-staggered lease expiration schedule, with no single year before 2033 accounting for more than **9.5%** of total ABR expirations[156](index=156&type=chunk) [Item 3. Legal Proceedings](index=34&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently subject to any material lawsuits, claims, or other legal proceedings - The company states it is not currently subject to any lawsuits, claims, or other legal proceedings[159](index=159&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[160](index=160&type=chunk) [PART II](index=35&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=35&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on NYSE under "NTST", with regular quarterly dividends, totaling $0.810 per share in 2023 - As of February 12, 2024, there were **73,221,810 shares** of common stock outstanding[161](index=161&type=chunk) Dividends Per Share | Year | Dividend Per Share | | :--- | :--- | | 2023 | $0.810 | | 2022 | $0.800 | Total Stockholder Return Performance (from 8/13/2020 to 12/31/2023) | Index | 12/31/2023 Value (assuming $100 initial investment) | | :--- | :--- | | NETSTREIT Corp. | $115.61 | | S&P 500 | $149.14 | | NAREIT US EQUITY REIT Index | $125.23 | [Item 6. Reserved](index=36&type=section&id=Item%206.%20Reserved) This item is reserved [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2023, revenues increased 37% to $131.9 million, but net income decreased to $6.9 million due to higher interest and impairment expenses - During 2023, the company acquired **103 properties** for **$345.1 million**, invested **$81.0 million** in property developments, and sold **19 properties** for **$40.3 million**[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk) - The company invested **$72.3 million** in fully collateralized mortgage loans receivable with interest rates ranging from **6.89% to 10.25%**[180](index=180&type=chunk) [Results of Operations](index=38&type=section&id=Results%20of%20Operations) Comparison of Operating Results (Years Ended Dec 31, in thousands) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Total revenues | $131,905 | $96,279 | | Total operating expenses | $107,805 | $82,776 | | Interest expense, net | ($19,058) | ($9,181) | | Net income | $6,890 | $8,205 | - Revenue increased by **$35.6 million (37.0%)** in 2023 compared to 2022, primarily due to the growth in the number of operating leases and properties securing mortgage loans[183](index=183&type=chunk) - Total operating expenses increased by **$25.0 million**, driven by higher depreciation and amortization (**$13.6 million** increase), property expenses (**$4.7 million** increase), and provisions for impairment (**$6.0 million** increase)[184](index=184&type=chunk)[190](index=190&type=chunk) - Net income decreased by **$1.3 million**, primarily due to higher interest expense, depreciation, and impairment charges, which offset the significant revenue growth from portfolio expansion[191](index=191&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) - As of December 31, 2023, the company had **$525.0 million** outstanding under its term loans and **$80.0 million** outstanding under its **$400.0 million** revolver[192](index=192&type=chunk) Historical Cash Flow Summary (Years Ended Dec 31, in thousands) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $80,155 | $50,647 | | Net cash used in investing activities | ($451,953) | ($468,361) | | Net cash provided by financing activities | $331,184 | $480,654 | - As of December 31, 2023, the company had commitments to fund **$35.7 million** for properties under development and **$13.7 million** for mortgage notes receivable, expected to be funded over the next 12 months[198](index=198&type=chunk) [Non-GAAP Financial Measures](index=44&type=section&id=Non-GAAP%20Financial%20Measures) Reconciliation of Net Income to AFFO (Years Ended Dec 31, in thousands) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Net income | $6,890 | $8,205 | | FFO | $76,177 | $54,669 | | Core FFO | $76,684 | $55,391 | | AFFO | $79,070 | $58,517 | Reconciliation of Net Income to EBITDAre (Years Ended Dec 31, in thousands) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Net income | $6,890 | $8,205 | | EBITDA | $89,128 | $67,056 | | EBITDAre | $95,036 | $64,022 | - As of December 31, 2023, the company's Adjusted Net Debt was **$484.8 million**, resulting in an Adjusted Net Debt to Annualized Adjusted EBITDAre ratio of **4.1x**[228](index=228&type=chunk)[231](index=231&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=49&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate fluctuations on variable-rate debt, mitigated by derivative contracts - The company's principal market risk exposure is related to interest rate fluctuations on its floating-rate debt, which totaled **$605.0 million** as of December 31, 2023 (excluding the mortgage note)[236](index=236&type=chunk) - The company has hedged its interest rate risk associated with the 2027, 2028, and 2029 Term Loans by entering into interest rate derivative contracts that convert the variable-rate debt to a fixed interest rate[237](index=237&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=50&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2023, with an unqualified opinion from KPMG LLP - The independent auditor, KPMG LLP, issued an unqualified opinion on the consolidated financial statements and the effectiveness of the company's internal control over financial reporting as of December 31, 2023[242](index=242&type=chunk)[249](index=249&type=chunk)[250](index=250&type=chunk) - The auditor identified two Critical Audit Matters: (1) the evaluation of indicators for potential impairment of long-lived asset groups, and (2) the evaluation of the fair value of land and buildings in certain real estate asset acquisitions[253](index=253&type=chunk)[254](index=254&type=chunk)[257](index=257&type=chunk) Consolidated Balance Sheet Highlights (as of Dec 31, in thousands) | (in thousands) | 2023 | 2022 | | :--- | :--- | :--- | | Total real estate held for investment, net | $1,538,693 | $1,262,500 | | Total assets | $1,946,236 | $1,605,692 | | Total liabilities | $672,804 | $547,269 | | Total equity | $1,273,432 | $1,058,423 | Consolidated Statement of Operations Highlights (Year Ended Dec 31, in thousands) | (in thousands) | 2023 | 2022 | 2021 | | :--- | :--- | :--- | :--- | | Total revenues | $131,905 | $96,279 | $59,140 | | Net income | $6,890 | $8,205 | $3,150 | | Diluted EPS | $0.11 | $0.16 | $0.08 | [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=84&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There were no changes in or disagreements with accountants on accounting and financial disclosure - None[420](index=420&type=chunk) [Item 9A. Controls and Procedures](index=84&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - The company's principal executive officer and principal financial officer concluded that disclosure controls and procedures are effective[421](index=421&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023, which was audited by KPMG LLP[424](index=424&type=chunk) [Item 9B. Other Information](index=85&type=section&id=Item%209B.%20Other%20Information) This item is not applicable - Not applicable[426](index=426&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=85&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable - Not applicable[427](index=427&type=chunk) [PART III](index=85&type=section&id=PART%20III) [Item 10. Directors, Executive Officers and Corporate Governance](index=85&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[428](index=428&type=chunk) [Item 11. Executive Compensation](index=85&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[430](index=430&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=85&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference from the 2024 Proxy Statement, with 1,014,906 securities available for future issuance - Information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[431](index=431&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2023) | Plan Category | Securities to be Issued Upon Exercise | Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 587,045 | 1,014,906 | [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=86&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2024 Proxy Statement - Information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[433](index=433&type=chunk) [Item 14. Principal Accountant Fees and Services](index=86&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information on principal accountant fees and services is incorporated by reference from the 2024 Proxy Statement; KPMG LLP is the auditor - Information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[434](index=434&type=chunk) - The company's independent registered public accounting firm is KPMG LLP[434](index=434&type=chunk) [PART IV](index=86&type=section&id=PART%20IV) [Item 15. Exhibit and Financial Statement Schedules](index=86&type=section&id=Item%2015.%20Exhibit%20and%20Financial%20Statement%20Schedules) This section lists all financial statements, schedules, and exhibits filed as part of the Form 10-K - This item lists all documents filed as part of the Form 10-K, including financial statements, schedules (Schedule III - Real Estate and Accumulated Depreciation; Schedule IV - Mortgage Loans on Real Estate), and exhibits[435](index=435&type=chunk) [Item 16. Form 10-K Summary](index=88&type=section&id=Item%2016.%20Form%2010-K%20Summary) No Form 10-K summary is provided - None[440](index=440&type=chunk)