NetSTREIT(US:NTST)2024-02-15 23:21Financial Data and Key Metrics Changes - For the full year 2023, the company reported net income of $0.11 per diluted share, core FFO of $1.19 per diluted share, and AFFO of $1.22 per diluted share, representing a 5% growth year-over-year [10] - Total net debt was $583.4 million at quarter end, with a weighted average interest rate of 4.3% [11] - The company reaffirmed its 2024 AFFO per share guidance range of $1.24 to $1.28 [13] Business Line Data and Key Metrics Changes - The investment-grade tenancy reached a record high of 70.5%, with nearly all fourth quarter investments leased to investment-grade tenants [5] - The company has identified and acquired multiple high-performing Winn-Dixie locations, indicating a focus on high-quality real estate [6] - The occupancy rate remains at 100%, with a weighted average remaining lease term of 9.5 years [8] Market Data and Key Metrics Changes - The company experienced a 70% decline in transaction volumes compared to previous years, yet managed to acquire high-quality net lease assets at favorable pricing [4] - The ABR grew 33% to $131.9 million at the end of 2023 from $99.2 million the previous year [34] Company Strategy and Development Direction - The company plans to execute its 2024 growth plans without the need for additional equity issuance, supported by existing liquidity [12][68] - There is a focus on selling assets that generate the lowest foot traffic and recycling capital into higher-quality investments [7][32] - The company aims to maintain a disciplined underwriting approach while exploring opportunities in the dollar store and grocery sectors [5][34] Management's Comments on Operating Environment and Future Outlook - Management noted that the competition has significantly decreased, with transaction volumes down over 70% [23][66] - The company is cautious about providing concrete guidance on net investments due to fluctuating cap rates, expecting a potential increase of around 20 basis points [51] - Management expressed confidence in the stability of cash flow due to high credit quality and minimal lease expiration risk [8] Other Important Information - The company raised $191 million in net proceeds from a forward equity offering, taking advantage of a supportive issuance window [29][30] - The total G&A expense for the quarter was $4.8 million, down 5.5% sequentially, representing 13% of total revenues [36] Q&A Session Summary Question: What is the messaging on acquisitions and capital deployment? - Management expects a similar pace of acquisitions as last year, with $430 million in net acquisitions [15] Question: How much credit loss is embedded in guidance? - Credit loss ranges from a minimal amount at the high end to over 100 basis points at the low end [18] Question: What is the company's strategy regarding Walgreens exposure? - Management sees no near-term risk associated with Walgreens, with no leases maturing until August 2028 [43] Question: How is the competition landscape affecting acquisitions? - Competition has decreased significantly, allowing cap rates to migrate upwards [66] Question: What type of tenants are in the held for sale category? - The held for sale category includes a mix of tenants, with some in convenience stores and paint supplies [55] Question: How much of the growth is driven by internal versus external factors? - Most growth is driven by external factors and a reduction in cash G&A, with internal growth being less than 1% [59]