NetSTREIT(US:NTST)2023-04-27 21:06Financial Data and Key Metrics Changes - The company reported net income of $0.03, core FFO of $0.28, and AFO of $0.30 per diluted share for Q1 2023 [19] - The AFO payout ratio for the first quarter was 67% based on a declared quarterly cash dividend of $0.20 [20] Business Line Data and Key Metrics Changes - The company completed net investments of $112.7 million, including the acquisition of 20 properties for $67.7 million at a weighted average cash yield of 6.9% [89] - Two senior loan investments secured by 49 properties amounted to $46.1 million at a weighted average cash yield of 9.3% [89] Market Data and Key Metrics Changes - The portfolio was 100% occupied with 488 investments and 83 tenants, contributing $108.9 million of annualized base rent [77] - 95% of first quarter investments were with investment-grade and investment-grade profile tenants [30] Company Strategy and Development Direction - The company aims to scale its portfolio of high-quality tenants while managing its balance sheet and liquidity prudently [102] - The current market conditions have created opportunities for the company to maintain growth strategy momentum despite stress in the regional banking sector [16] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the durable cash flow stream and attractive growth profile, offering compelling total return potential for investors [102] - The company noted that the net lease industry transaction market remains less active than the previous year, but there are healthy opportunities at attractive prices [30] Other Important Information - The company has a total debt of approximately $480 million with a weighted average contractual interest rate of 3.4% [104] - The loan-to-value of the underlying collateral is approximately 60%, with a first lien position and a 3-year term at a weighted average interest rate of 9.3% [17] Q&A Session Summary Question: Can you provide more detail on external growth opportunities? - Management indicated that they are looking to acquire tenants similar to those in their existing portfolio, with some new names in grocery and quick service restaurants [1] Question: What does the interest coverage look like from Speedway? - The company collects all cash flow from a transaction with a cap rate of about 5.6% to 5.7%, with uncapped CPI bumps expected in about 2.5 years [6] Question: How does the company view the appetite for loans versus acquisitions? - Management noted that the transaction market is currently in flux, and they are building relationships with future sellers while seeking strong risk-adjusted returns [21] Question: What is the competition for investment-grade assets? - Management stated that competition has diminished, making it difficult for 1031 buyers to achieve necessary yields [46] Question: How does the company plan to manage its loan portfolio? - The company aims to keep its loan book below 10% of total volume to minimize replacement risk [52]