• Net Income: $1.7 million or $0.02 per diluted share.
• Core FFO: $24.6 million or $0.30 per diluted share.
• AFFO: $26.2 million or $0.32 per diluted share, a 3.2% increase over last year.
• Gross Investments: $90.7 million at a blended cash yield of 7.7%.
• Disposition Proceeds: $40.3 million across 16 properties at a 7.3% blended cash yield.
• Properties: Investments in 695 properties leased to 101 tenants across 45 states.
• Investment Grade Tenants: 71% of total ABR leased to investment grade or investment grade profile tenants.
• Weighted Average Lease Term: 9.7 years.
• G&A Expenses: Total recurring G&A increased 5% year-over-year to $5.1 million.
• Debt Financing: Closed on $275 million of additional financing commitments, including a $175 million senior unsecured term loan.
• Weighted Average Interest Rate: 4.57%.
• Total Liquidity: $584 million at quarter end.
• Leverage: Adjusted net debt to annualized adjusted EBITDAre was 4.7 times.
• AFFO Guidance: Increased to a range of $1.28 to $1.30 per share.
• Dividend: Quarterly cash dividend of $0.21 per share, with an AFFO payout ratio of 66% for the first quarter.

• Warning! GuruFocus has detected 9 Warning Signs with NTST.

Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Netstreit Corp (NYSE:NTST) completed $90.7 million of gross investments at a blended cash yield of 7.7%, with a weighted average lease term of 9.2 years.
• The company has successfully reduced its top five tenant concentration by 70 basis points to 28.2% of ABR, including a 50 basis point reduction in its top tenant, Dollar General.
• 71% of Netstreit Corp (NYSE:NTST)'s total ABR is leased to investment grade or investment grade profile tenants, indicating strong credit quality.
• The company reported zero credit losses during COVID and has maintained best-in-class performance since going public.
• Netstreit Corp (NYSE:NTST) increased the low end of its AFFO per share guidance, reflecting confidence in its financial performance and stability.

Negative Points

• The investment pace remains more measured compared to prior years due to a focus on maintaining a low leverage balance sheet.
• Recurring G&A expenses increased by 5% year-over-year, primarily due to increased staffing and further investment in the team.
• The company is facing challenges in the transaction market, with no significant change since April 2, indicating potential stagnation.
• Netstreit Corp (NYSE:NTST) has a 75 basis points assumption for unknown rent loss in its guidance, reflecting macroeconomic uncertainties.
• The company is cautious about its cost of capital, which is currently limiting its ability to accelerate investment activities.

Q & A Highlights

Q: Can you provide an update on the appetite for pharmacy and Dollar stores, and your timeline for reducing exposure to Dollar General, CVS, and Walgreens? A: We aim to reduce all tenant exposures below 5% by October 31, 2025, with Walgreens targeted below 3%. There is strong interest from institutions and 1031 buyers for Dollar Stores, and we expect to continue progress in reducing exposure to Dollar General and Family Dollar. We also plan to sell some pharmacy properties before the next earnings call.

Q: What are your expectations regarding a potential ratings upgrade and the associated debt savings? A: We plan to approach rating agencies in the latter half of this year. Achieving an investment-grade credit rating could result in about 30 basis points of savings across our term loans and credit facility.

Q: Could you clarify your net investment activity and any changes in the transaction market since April 2? A: We would not increase acquisitions without an improvement in our equity price. The transaction market has not changed significantly since April 2, and we continue to see many opportunities, particularly in convenience stores, quick service restaurants, and auto service sectors.

Q: What is the status of the Big Lots asset in Maryland, and is it included in your guidance? A: We have received interest from several retailers and are negotiating attractive LOIs. We expect a better outcome by taking our time. This asset is not included in our 2025 guidance.

Q: How does the Walgreens take-private transaction affect the risk profile of those assets? A: The transaction does not change the risk profile. Sycamore's focus on retail operations and a lower leverage approach is positive. We expect Walgreens to remain a going concern, and our locations are performing well.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.