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    NTST
    Earnings call· Jun 2026(Q2 FY26)

    NETSTREIT Corp. NTST

    Jul 23, 2026 Source

    Executive summary

    NETSTREIT Q2 FY26 — Strong Investment Momentum and Raised Guidance

    NETSTREIT delivered a strong second quarter, marked by significant investment activity and an increase in full-year guidance for both net investments and AFFO per share. The company successfully deployed capital into high-quality assets, including strategic portfolio deals, while maintaining a conservative balance sheet and achieving 100% occupancy. Management expressed confidence in its sourcing platform and underwriting discipline, though it acknowledged potential cap rate expansion risks from rising interest rates and the need for careful tenant selection in a K-shaped economy.

    Highlights

    5

    • Closed $298.9 million of gross investments at a blended cash yield of 7.4% with a 9.8-year WALT.

    • Increased full-year 2026 net investment activity guidance range to $700 million to $800 million.

    • Raised AFFO per share guidance to $1.37 to $1.39, with Q2 AFFO increasing 6.1% year-over-year.

    • Achieved 100% occupancy with the backfill of a vacancy at a 20%+ rent increase.

    • Maintained industry-leading leverage of 3.2x adjusted net debt to annualized adjusted EBITDA.

    Concerns

    4

    • Implied deceleration in acquisition volume for the back half of the year, despite a healthy market, due to conservatism and capital planning.

    • Potential for cap rate expansion if sustained upward pressure on 5-year and 10-year interest rates continues.

    • Increased TSM dilution from forward equity, expected to peak in Q3 FY26.

    • Lower-end consumers are under pressure, requiring careful underwriting for tenants serving this demographic.

    Guidance & targets

    4
    CategoryTargetConfidence
    Full-year 2026 Net Investment Activity
    $700 million to $800 million
    high materiality
    High
    Full-year 2026 AFFO per share
    $1.37 to $1.39
    high materiality
    High
    Full-year 2026 Cash G&A
    $16.5 million and $17 million
    medium materiality
    High
    Full-year 2026 AFFO per share dilution from forward equity
    $0.05 to $0.08 per share
    medium materiality
    High

    Operational metrics

    16
    Core FFO
    $34.2 million
    Q2 FY26
    AFFO
    $35.5 millionup 6.1% YoY
    Q2 FY26
    Total Recurring G&A
    $5.8 millionup 6.7% YoY
    Q2 FY26

    Mostly resulted from staffing increases over 2025.

    ATM Net Proceeds
    $183 million
    Q2 FY26

    Cost of equity continued to improve throughout the quarter.

    Adjusted Net Debt
    $672.2 million
    Q2 FY26
    Weighted Average Debt Maturity
    3.6 years
    Q2 FY26

    No material debt maturing until February 2028, including extension options.

    Weighted Average Interest Rate
    4.3%
    Q2 FY26
    Total Liquidity
    $1.1 billion
    Q2 FY26

    At quarter end.

    Adjusted Net Debt to Annualized Adjusted EBITDA
    3.2x
    Q2 FY26

    Remains comfortably below targeted leverage range.

    Dividend per share
    $0.225
    Q2 FY26

    Quarterly cash dividend declared on July 16.

    Shares outstanding relative to weighted average share count
    38%
    Q2 FY26

    Expected to normalize closer to 15% as we get out through the course of 2027.

    Investment Grade and Investment-Grade Profile Tenants
    56.5%
    Q2 FY26

    Expected to stick around 30%-35% investment-grade profile, assuming market dynamics continue.

    Unit Level Rent Coverage
    3.8x
    Q2 FY26

    Remains healthy across the portfolio.

    Occupancy Rate
    100%
    Q2 FY26

    Increased with the backfill of the lone vacancy (former Big Lots) with T.J. Maxx at a 20%+ rent increase.

    UPREIT Transaction Stock Price
    $21
    Q2 FY26

    Used for the UPREIT transaction, which was slightly higher than where the stock was trading at the time.

    Credit Rating Target
    —
    early next year

    Company plans to go out to other agencies sometime early next year to open up to public bond markets in 2027.

    Industry KPIs

    7
    MetricValueDetails
    Credit loss ratio—
    Credit and structured investment book—
    Investment volume and initial cash yield$298.9 millionUSD
    Rent recapture rate on renewals re leasing20%+%
    Sourced opportunity volume and selectivity—
    Weighted average lease term on new investments9.8 yearsyears
    Blended acquisition cap rate and spread vs cost7.4%%

    Orderbook & backlog

    2
    Net Investment Activity Pipeline$700 million to $800 millionFY26 guidance

    Increased from $600 million to $700 million

    Reflects full-year target, with good visibility into Q3 but limited into Q4.

    Disposition VolumeTargeted dispositionsQ2 FY26

    Executed at a 6.8% blended cash yield. Expected to be elevated if more portfolio deals are done.

    Deals & partnerships

    2
    SpeedwayUPREIT acquisition of 20 properties previously invested in via a first mortgage in early 2023.

    Creative structuring within debt program providing a path to direct fee ownership at cap rates significantly above market. Used a stock price of $21 for the UPREIT transaction.

    VariousTargeted dispositions to recycle proceeds into higher quality, longer duration opportunities.

    Included disposing of one asset that was sub 1x covered and selling some assets from portfolio deals that were not desired long-term.

    Risks & headwinds

    3
    Potential for cap rate expansionOngoing

    Not yet seen, but possible if sustained upward pressure on 5-year and 10-year interest rates continues.

    Mitigation: Maintaining flexibility in investment strategy, not overextending, and focusing on risk-adjusted returns.

    Lower-end consumer is under pressure ('K-shaped economy')Ongoing

    Not quantified, but noted as a real dynamic.

    Mitigation: Focusing on necessity-based products or strong value propositions, ensuring very healthy rent coverages and corporate credit, and buying assets at or below market rents with high rent coverage.

    Dilution from outstanding forward equity calculated by Treasury Stock Method (TSM)Expected to peak in Q3 FY26

    $0.05 to $0.08 per share for FY26

    Mitigation: Expected to normalize closer to 15% of total shares outstanding relative to weighted average share count by 2027.

    What to watch in Q3 FY26

    5

    Net Investment Activity

    H2 FY26
    Current$298.9 million closed in Q2 FY26
    TargetAchieve $700 million to $800 million for full-year FY26

    Why it matters

    Indicates the company's ability to deploy capital accretively and achieve its revised growth targets, especially given implied deceleration.

    Given the aforementioned strength of our balance sheet and continued momentum in our investment pipeline, we are increasing our full year 2026 net investment activity guidance range to $700 million to $800 million.

    Q&A highlights

    5

    Why does the guidance imply a slowdown in acquisitions for the second half, and how is macro volatility affecting deal pricing and timelines?

    Management stated there's some conservatism in the guidance, partly due to not having raised all capital yet. They described the acquisitions market as very healthy with attractive pricing across various avenues (sale leasebacks, portfolios, one-offs). While macro volatility has impacted interest rates, it hasn't yet significantly affected cap rates, but they anticipate it could if rates sustain upward pressure.

    “I don't recall a healthier acquisitions market than what we're seeing right now really across all the different avenues that we look to add properties... So there's really a great opportunity set with very attractive pricing that we're seeing.”

    asked by Haendel St. Juste · answered by Mark Manheimer

    2 min read6 chapters

    Detailed Narrative

    01

    Investment Strategy and Market Dynamics

    NETSTREIT continues to see an elevated number of high-quality investment opportunities at accretive pricing, driving portfolio growth to over $3 billion in assets. The company is actively pursuing portfolio transactions, which historically priced away from them, allowing access to high-quality tenants like Chick-fil-A, Sprouts, and Quick Trip. This strategy is partly enabled by the refinancing needs of prior buyers who used cheap debt in 2021-2022.

    02

    Portfolio Quality and Occupancy

    The portfolio now comprises 859 investments leased to 156 tenants across 28 industries in 46 states, with a weighted average lease term of 10 years. Occupancy reached 100% after successfully backfilling a former Big Lots location with T.J. Maxx, resulting in a rent increase of over 20%. Investment-grade and investment-grade profile tenants represent 56.5% of ABR, and unit-level rent coverage remains healthy at 3.8x.

    03

    Capital Structure and Liquidity

    The company maintains a conservative and flexible capital structure, with adjusted net debt to annualized adjusted EBITDA at an industry-leading 3.2x. Total liquidity stands at $1.1 billion, including $20 million cash, $301 million available on the revolving credit facility, $714 million of unsettled forward equity, and $50 million undrawn term loan capacity. This strong liquidity position is expected to fund accelerated growth through 2027 without compromising leverage targets.

    04

    UPREIT Transaction and Capital Efficiency

    A notable UPREIT acquisition of 20 Speedway properties, previously financed via a first mortgage, demonstrated creative structuring to achieve direct fee ownership at a 6.75% initial cash yield. Management views the UPREIT structure as a highly efficient way to deploy capital, offering tax benefits to sellers and creating sticky shareholders, and expects to pursue more such opportunities when available.

    05

    Tenant and Industry Concentration Management

    While the company is open to good deals, it maintains a soft ceiling of around 15% for industry concentration, potentially disposing of assets if a category approaches 20%. The focus remains on strong risk-adjusted returns, considering tenancy stickiness, mission-critical locations, rent coverage, and real estate fungibility, rather than solely relying on credit ratings.

    06

    Competition and Market Outlook

    Competition from larger private institutions is minimal, with the primary competition coming from 1031 market individuals and small family offices. Rising borrowing costs have made it more difficult for these smaller players to compete, leading to significantly lower overall competition. The company has good visibility into Q3 acquisitions but limited visibility into Q4, allowing for flexibility in response to potential cap rate movements.

    AI-generated summary of the company’s earnings call. Not investment advice.