NetSTREIT(US:NTST)2021-07-30 19:13Financial Data and Key Metrics Changes - The company reported a net loss of $0.07 per diluted share, with core FFO of $0.18 and AFFO of $0.20 for Q2 2021 [11] - Total ABR increased to $55.3 million, up from $34.5 million, reflecting strong portfolio growth [10] - The net debt to annualized adjusted EBITDA ratio was 2.1x, well below the long-term target of 4.5x to 5.5x [12] Business Line Data and Key Metrics Changes - The company achieved acquisition and development volume of approximately $121 million, the largest quarterly volume since the IPO [5] - Approximately 93% of acquisitions were with investment-grade rated tenants or those with investment-grade profiles [6] - The portfolio consists of 267 leases across 5.2 million square feet, with a 100% occupancy rate [8] Market Data and Key Metrics Changes - The company decreased casual dining exposure from 1.9% to 1.2% through asset dispositions [7] - The weighted average remaining lease term for the portfolio is 9.9 years, with no lease expirations until 2023 [8] Company Strategy and Development Direction - The company focuses on strategic growth with high-quality tenants and seeks opportunities with the best risk-adjusted returns [5] - Plans to maintain a target of at least $360 million in net acquisitions for the full year 2021, up from an original guidance of $320 million [13] - The company aims to enhance portfolio diversification while maintaining a focus on investment-grade tenants [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute on external growth strategies, citing a strong pipeline of opportunities [9] - The competitive landscape for high-quality assets remains challenging, but the company is leveraging relationships to maintain cap rates [19] - Management indicated that while there is increased competition, they are still able to source attractive deals [43] Other Important Information - The company declared a regular quarterly cash dividend of $0.20, reflecting an annualized rate of $0.80 per share [12] - The company is preparing for compliance as it transitions to a large accelerated filer status beginning in 2022 [13] Q&A Session Summary Question: Activity in Q3 and pipeline size - Management noted an increase in repeat business and a growing pipeline, maintaining similar cap rates as previous quarters [18] Question: 711 concentration increase - Management acknowledged the increase in 711 concentration but emphasized the quality of the acquisition and plans to manage tenant concentrations over time [22] Question: External growth strategy - Management indicated a steady increase in acquisitions over time, focusing on quality rather than rapid growth [25] Question: ATM usage and shelf eligibility - Management discussed the potential for an ATM program with the upcoming shelf eligibility, providing greater capital options [29] Question: Development yields compared to acquisitions - Management stated that development yields are slightly higher than current acquisitions, with a focus on securing leases before proceeding [31] Question: Best Buy exposure - Management expressed caution regarding further acquisitions with Best Buy, focusing on high-quality locations [32] Question: Sourcing investment opportunities - Management confirmed a limited universe of potential tenants but remains confident in sourcing high-quality assets [36] Question: Development traction and future potential - Management indicated a gradual increase in development activities, aiming for a larger share of future acquisitions [37] Question: Acquisition guidance rationale - Management prefers to under-promise and over-deliver, setting a minimum acquisition target to ensure confidence in achieving it [39]