NetSTREIT(NTST) - 2025 Q2 - Quarterly Results

Executive Summary NETSTREIT reported strong Q2 2025 performance with increased AFFO, significant gross investments, and a raised quarterly dividend, leading to an upward revision of 2025 guidance Second Quarter 2025 Performance Overview NETSTREIT reported Q2 2025 net income of $0.04 and Adjusted Funds from Operations (AFFO) of $0.33 per diluted share, completed $117.1 million in gross investments, and raised $46.1 million in common equity, leading to increased 2025 guidance and a dividend raise - Net Income per Diluted Share for Q2 2025: $0.04[1] - Adjusted Funds from Operations (AFFO) per Diluted Share for Q2 2025: $0.33[1] - Completed $117.1 million of gross investment activity at a 7.8% blended cash yield[1] - Raised $46.1 million of common equity via the At-The-Market (ATM) program[1] - Increased 2025 AFFO Per Share Guidance to $1.29 to $1.31[1] - Increased 2025 Net Investment Guidance to $125.0 million to $175.0 million[1] - Increased Quarterly Dividend by 2.4% to $0.215 Per Share[1] CEO Commentary CEO Mark Manheimer highlighted strong execution in net investments, completing $117.1 million in investments and $60.4 million in dispositions, while leveraging improved cost of capital to strengthen the balance sheet and increase 2025 guidance - Strong execution on net investment front, completing $117.1 million of investments at a 7.8% cash yield and $60.4 million of dispositions at a 6.5% cash yield[3] - Strengthened the balance sheet by raising $46.1 million of equity via the ATM program, leveraging an improved cost of capital[3] - Increased 2025 guidance for both net investment activity and AFFO per share, driven by a strong performing portfolio and a decision to re-emphasize external growth[3] Financial Highlights NETSTREIT demonstrated significant financial improvement in Q2 2025, with positive net income and growth in FFO and AFFO per diluted share compared to the prior year Key Financial Metrics (Q2 2025 vs Q2 2024) For Q2 2025, Net Income per diluted share improved significantly from a loss of $(0.03) to a gain of $0.04, FFO per diluted share increased by 14.8% to $0.31, and AFFO per diluted share grew by 3.1% to $0.33 Three Months Ended June 30, 2025 vs 2024 | Metric | 2025 | 2024 | % Change | | :--------------------------------- | :----- | :----- | :------- | | Net Income (Loss) per Diluted Share | $0.04 | $(0.03) | NA | | Funds from Operations per Diluted Share | $0.31 | $0.27 | 14.8 % | | Core Funds from Operations per Diluted Share | $0.31 | $0.31 | — % | | Adjusted Funds from Operations per Diluted Share | $0.33 | $0.32 | 3.1 % | Six Months Ended June 30, 2025 vs 2024 | Metric | 2025 | 2024 | % Change | | :--------------------------------- | :----- | :----- | :------- | | Net Income (Loss) per Diluted Share | $0.06 | $(0.02) | NA | | Funds from Operations per Diluted Share | $0.60 | $0.55 | 9.1 % | | Core Funds from Operations per Diluted Share | $0.61 | $0.62 | NA | | Adjusted Funds from Operations per Diluted Share | $0.65 | $0.63 | 3.2 % | Operational Performance NETSTREIT executed substantial investment and disposition activities in Q2 2025, maintaining a highly occupied portfolio with a strong tenant base and ongoing development projects Investment and Disposition Activity In Q2 2025, NETSTREIT completed 32 investments totaling $117.1 million at a 7.8% cash yield, with dispositions of 20 properties for $60.4 million, resulting in $49.4 million in net investment activity for the quarter Investment, Disposition, and Loan Repayment Activities (Three Months Ended June 30, 2025) | Activity | Number of Investments | Amount ($ thousands) | Cash Yield % | | :----------------------- | :-------------------- | :------------------- | :----------- | | Investments | 32 | 117,063 | 7.8 % | | Less Dispositions | 20 | 60,391 | 6.5 % | | Less Loan Repayments | 2 | 7,318 | 9.3 % | | Net Investment Activity | | 49,354 | | Investment, Disposition, and Loan Repayment Activities (Six Months Ended June 30, 2025) | Activity | Number of Investments | Amount ($ thousands) | Cash Yield % | | :----------------------- | :-------------------- | :------------------- | :----------- | | Investments | 57 | 207,743 | 7.7 % | | Less Dispositions | 36 | 100,684 | 6.8 % | | Less Loan Repayments | 3 | 12,016 | 9.1 % | | Net Investment Activity | | 95,043 | | - For Q2 2025 investments, 18.0% of ABR was derived from Investment Grade Tenants and 7.7% from Investment Grade Profile Tenants, with a weighted average lease term of 15.7 years[6] Development Projects As of June 30, 2025, NETSTREIT had 2 ongoing development projects, with $1.4 million funded during Q2 2025, bringing the total funded to date to $1.7 million against an estimated total cost of $6.3 million Development Projects as of June 30, 2025 (dollars in thousands) | Metric | Amount ($ thousands) | | :---------------------------------- | :------- | | Number of Developments | 2 | | Amount Funded During the Quarter | $1,408 | | Amount Funded to Date | $1,726 | | Estimated Funding Remaining on Developments | $4,599 | | Total Estimated Development Cost | $6,325 | Portfolio Statistics As of June 30, 2025, NETSTREIT's portfolio comprised 705 investments across 45 states, totaling 12.8 million square feet, maintaining a 99.9% occupancy rate and a weighted average lease term of 9.8 years Real Estate Portfolio as of June 30, 2025 (weighted by ABR, dollars in thousands) | Metric | Value | | :-------------------------------- | :------------ | | Number of Investments | 705 | | ABR | $172,889 thousand | | States | 45 | | Square Feet | 12,787,231 | | Tenants | 106 | | Industries | 27 | | Occupancy | 99.9 % | | Weighted Average Lease Term (years) | 9.8 | | Investment Grade % | 52.2 % | | Investment Grade Profile % | 16.5 % | Capital Markets and Balance Sheet NETSTREIT maintained a healthy balance sheet with manageable leverage and robust liquidity, actively utilizing equity programs to support its capital structure Leverage and Liquidity As of June 30, 2025, NETSTREIT's Net Debt to Annualized Adjusted EBITDAre was 5.9x and Adjusted Net Debt to Annualized Adjusted EBITDAre was 4.6x, with total liquidity standing at $594.2 million Leverage as of June 30, 2025 | Metric | Value | | :--------------------------------- | :---- | | Net Debt / Annualized Adjusted EBITDAre | 5.9x | | Adjusted Net Debt / Annualized Adjusted EBITDAre | 4.6x | Liquidity as of June 30, 2025 (dollars in thousands) | Metric | Amount ($ thousands) | | :-------------------------------- | :------- | | Unused Unsecured Revolver Capacity | $372,850 | | Cash, Cash Equivalents and Restricted Cash | $19,740 | | Net Value of Unsettled Forward Equity | $201,621 | | Total Liquidity | $594,211 | Equity Programs During Q2 2025, NETSTREIT sold 2.8 million shares under its ATM program and settled 1.1 million forward equity shares, with 11.8 million shares unsettled as of quarter-end, representing a net value of $201.6 million ATM Program Activity (as of June 30, 2025) | Metric | Value | | :-------------------------------- | :------------ | | Shares Sold During Quarter | 2,842,815 shares | | Weighted Average Price Per Share (Gross) | $16.36 | | ATM Capacity Remaining | $250,866 thousand | Forward Equity Settlement Activity (as of June 30, 2025) | Metric | Value | | :-------------------------------- | :------------ | | Shares Settled During Quarter | 1,105,299 shares | | Weighted Average Price Per Share (Gross) | $16.37 | | Net Value of Settled Forward Equity | $17,927 thousand | - As of June 30, 2025, 11,820,647 shares remained unsettled under forward equity contracts, with a net value of $201,621 thousand at a weighted average gross price of $17.80 per share[12] - Subsequent to quarter-end, 107,400 shares were sold on a forward basis under the ATM Program at a weighted average gross price of $16.94[14] Shareholder Returns and Outlook NETSTREIT declared an increased quarterly dividend and raised its 2025 AFFO per share and net investment guidance, reflecting confidence in future performance Dividend Declaration NETSTREIT's Board of Directors declared a quarterly cash dividend of $0.215 per share for Q3 2025, payable on September 15, 2025, representing an annualized increase of $0.02 per share (2.4%) - Quarterly cash dividend declared for Q3 2025: $0.215 per share[15] - Annualized dividend of $0.86 per share, representing an increase of $0.02 per share (2.4%) over the prior year annualized dividend[15] - Dividend payable on September 15, 2025, to shareholders of record on September 2, 2025[15] 2025 Guidance Update NETSTREIT increased its 2025 AFFO per share guidance range to $1.29-$1.31 and its net investment activity guidance to $125.0-$175.0 million, with cash G&A now expected to be $15.0-$15.5 million Updated 2025 Guidance | Metric | Previous Guidance | New Guidance | Change | | :-------------------------------- | :---------------- | :--------------- | :----- | | AFFO per share | $1.28 to $1.30 | $1.29 to $1.31 | Increased | | Net investment activity | $75.0 million to $125.0 million | $125.0 million to $175.0 million | Increased | | Cash G&A | | $15.0 million to $15.5 million | New range | - The guidance is based on assumptions subject to change and outside the Company's control, with no assurance of achieving these results[17] - AFFO is a non-GAAP financial measure, and a reconciliation to GAAP is not provided for forward-looking measures due to practical difficulties in projecting event-driven items[18] Company Information NETSTREIT Corp. is a Dallas-based REIT specializing in high-quality, e-commerce resistant net lease retail properties, committed to consistent cash flows and investor communication About NETSTREIT Corp. NETSTREIT Corp. is an internally managed REIT based in Dallas, Texas, specializing in acquiring single-tenant net lease retail properties nationwide, focusing on e-commerce resistant tenants with strong balance sheets - NETSTREIT Corp. is an internally managed real estate investment trust (REIT) based in Dallas, Texas[23] - Specializes in acquiring single-tenant net lease retail properties nationwide[23] - Portfolio consists of high-quality properties leased to e-commerce resistant tenants with healthy balance sheets[23] - Strategy aims to create the highest quality net lease retail portfolio to generate consistent cash flows and dividends for its investors[23] Investor Communications NETSTREIT will host an earnings conference call on July 24, 2025, at 11:00 AM ET to discuss Q2 2025 performance, with a webcast and supplemental package available on the company's investor relations website - An earnings conference call will be held on Thursday, July 24, 2025, at 11:00 AM ET to review Q2 2025 performance and discuss recent events[19] - The webcast will be accessible on the 'Investor Relations' section of the Company's website at www.NETSTREIT.com[20](index=20&type=chunk) - A supplemental package will be available prior to the conference call in the Investor Relations section of www.investors.netstreit.com[22](index=22&type=chunk) Condensed Consolidated Financial Statements NETSTREIT's Q2 2025 financial statements show increased total assets and revenues, a shift from net loss to net income, and changes in liabilities and equity Balance Sheets As of June 30, 2025, total assets increased to $2.31 billion from $2.26 billion, with real estate held for investment rising to $1.87 billion, while total liabilities grew to $988.2 million and total equity slightly decreased to $1.32 billion Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (thousands) | December 31, 2024 (thousands) | | :------------------------------------ | :-------------- | :---------------- | | Assets: | | | | Real estate held for investment, net | $1,871,583 | $1,834,361 | | Assets held for sale | $57,795 | $48,637 | | Mortgage loans receivable, net | $152,779 | $139,409 | | Cash, cash equivalents, and restricted cash | $19,740 | $14,320 | | Total assets | $2,311,714 | $2,259,346 | | Liabilities: | | | | Term loans, net | $795,976 | $622,608 | | Revolving credit facility | $127,000 | $239,000 | | Total liabilities | $988,169 | $921,214 | | Equity: | | | | Total stockholders' equity | $1,316,616 | $1,330,971 | | Total equity | $1,323,545 | $1,338,132 | Statements of Operations For Q2 2025, total revenues increased to $48.3 million from $39.6 million, resulting in net income attributable to common stockholders of $3.3 million, a significant improvement from a net loss of $(2.3) million in the prior year Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 (thousands) | Three Months Ended June 30, 2024 (thousands) | Six Months Ended June 30, 2025 (thousands) | Six Months Ended June 30, 2024 (thousands) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Rental revenue (including reimbursable) | $45,158 | $36,864 | $87,748 | $72,053 | | Total revenues | $48,286 | $39,567 | $94,196 | $77,240 | | Total operating expenses | $35,960 | $31,677 | $70,518 | $62,819 | | Net income (loss) attributable to common stockholders | $3,272 | $(2,291) | $4,963 | $(1,246) | | Basic EPS | $0.04 | $(0.03) | $0.06 | $(0.02) | | Diluted EPS | $0.04 | $(0.03) | $0.06 | $(0.02) | Non-GAAP Financial Measures and Reconciliations This section provides detailed reconciliations and definitions for key non-GAAP financial metrics like FFO, AFFO, EBITDAre, and NOI, crucial for assessing operational performance FFO, Core FFO, and AFFO For Q2 2025, FFO increased to $25.6 million (diluted FFO per share $0.31) and AFFO increased to $27.5 million (diluted AFFO per share $0.33), with detailed reconciliations provided from net income to these non-GAAP measures FFO, Core FFO, and AFFO Reconciliation (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 (thousands) | Three Months Ended June 30, 2024 (thousands) | Six Months Ended June 30, 2025 (thousands) | Six Months Ended June 30, 2024 (thousands) | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $3,289 | $(2,306) | $4,989 | $(1,254) | | FFO | $25,611 | $19,987 | $49,702 | $41,164 | | Core FFO | $25,614 | $23,389 | $50,184 | $45,837 | | AFFO | $27,460 | $23,817 | $53,707 | $46,677 | | FFO per common share, diluted | $0.31 | $0.27 | $0.60 | $0.55 | | Core FFO per common share, diluted | $0.31 | $0.31 | $0.61 | $0.62 | | AFFO per common share, diluted | $0.33 | $0.32 | $0.65 | $0.63 | EBITDA, EBITDAre, and Adjusted EBITDAre For Q2 2025, EBITDA was $37.5 million, EBITDAre was $38.4 million, and Adjusted EBITDAre was $38.8 million, with Annualized Adjusted EBITDAre at $155.3 million, providing supplemental information on operating performance EBITDA, EBITDAre, Adjusted EBITDAre (Three Months Ended June 30, 2025, in thousands) | Metric | Amount (thousands) | | :-------------------------------------------------- | :------- | | Net income | $3,289 | | EBITDA | $37,467 | | EBITDAre | $38,356 | | Adjusted EBITDAre | $38,825 | | Annualized Adjusted EBITDAre | $155,300 | Property-Level NOI and Cash NOI For Q2 2025, Property-Level NOI was $40.4 million and Property-Level Cash NOI was $39.3 million, with an estimated run rate of $39.4 million, used to assess property-level operating results on an unlevered basis Property-Level NOI, Property-Level Cash NOI (Three Months Ended June 30, 2025, in thousands) | Metric | 2025 (thousands) | 2024 (thousands) | | :-------------------------------------- | :------- | :------- | | Net income (loss) | $3,289 | $(2,306) | | Property-Level NOI | $40,445 | $32,866 | | Property-Level Cash NOI | $39,256 | $32,230 | | Property-Level Cash NOI - Estimated Run Rate | $39,415 | | Non-GAAP Definitions This section provides detailed definitions for various non-GAAP financial measures used by NETSTREIT, including FFO, Core FFO, AFFO, EBITDA, EBITDAre, Adjusted EBITDAre, Annualized Adjusted EBITDAre, Net Debt, Adjusted Net Debt, Property-Level NOI, Property-Level Cash NOI, and Property-Level Cash NOI - Estimated Run Rate - FFO, Core FFO, and AFFO are non-GAAP measures used to evaluate operating performance and funds available for distributions, excluding historical cost depreciation and certain non-recurring items[41][42][43] - EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre are industry-common measures providing supplemental information on operating performance, exclusive of certain non-cash items and other costs[47][48][49] - Net Debt and Adjusted Net Debt are calculated to estimate the net contractual amount of borrowed capital to be repaid, adjusting for cash and unsettled forward equity[53][54] - Property-Level NOI, Property-Level Cash NOI, and Property-Level Cash NOI - Estimated Run Rate assess property-level operating results on an unlevered basis[55] - All non-GAAP measures are supplemental and should not be considered alternatives to GAAP net income or cash flows[45][50][56] Other Definitions This section clarifies key operational terms such as ABR, Cash Yield, Investment Grade, and Occupancy, essential for understanding NETSTREIT's portfolio and performance metrics Operational Definitions This section defines key operational terms used in the report, such as Annualized Base Rent (ABR), Cash Yield, Investments, Investment Grade, Investment Grade Profile, Occupancy, and Weighted Average Lease Term - ABR: Annualized base rent for all leases that commenced and annualized cash interest for all executed mortgage loans as of June 30, 2025[57] - Cash Yield: The annualized base rent contractually due from acquired properties and completed developments, and interest income from mortgage loans receivable, divided by the gross investment amount, gross proceeds in the case of dispositions, or loan repayment amount[57] - Investments: Lease agreements in place at owned properties, properties that have leases associated with mortgage loans receivable, developments where rent commenced, interest earning developments, or in the case of master lease arrangements each property under the master lease is counted as a separate lease[58] - Investment Grade: Investments, or investments that are subsidiaries of a parent entity, with a credit rating of BBB- (S&P/Fitch), Baa3 (Moody's) or NAIC2 (National Association or Insurance Commissioners) or higher[59] - Investment Grade Profile: Investments 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[59] - Occupancy: Expressed as a percentage, and is the number of leased investments divided by the total number of investments owned, excluding properties under development[60] - Weighted Average Lease Term: Weighted by the annualized base rent, excluding lease extension options and investments associated with mortgage loans receivable[60] Disclaimers This section outlines the forward-looking nature of statements within the report, highlighting inherent risks and uncertainties that could cause actual results to differ materially Forward-Looking Statements The press release contains forward-looking statements regarding business strategies, investment activities, and 2025 guidance, which involve known and unknown risks and uncertainties, and the company disclaims any obligation to update these statements - The press release contains forward-looking statements concerning business and growth strategies, investment, financing and leasing activities, and 2025 guidance[26] - Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different[26] - Risks are heightened by ongoing and numerous adverse effects arising from macroeconomic conditions, including inflation, interest rates, and instability in the banking system[26] - The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement, except to the extent otherwise required by law[26]