NETSTREIT Corp Fourth Quarter 2025 Earnings Call - Record deal activity at a 7.5% yield, Fitch BBB- narrows cost of capital and funds a dividend bump

Conference Operator: Greetings, and welcome to the NETSTREIT Corp. Fourth Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. Should anyone require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Matt Miller, Head of Capital Markets and Investor Relations. Thank you. You may begin.

Matt Miller, Head of Capital Markets and Investor Relations, NETSTREIT: Good morning, and thank you for joining us for NETSTREIT’s Fourth Quarter 2025 Earnings Conference Call. On today’s call, management’s remarks and responses to your questions may contain statements considered forward-looking under federal securities law. These statements address matters subject to risks and uncertainties that may cause actual results to differ from those discussed today. For more information on these factors, we encourage you to review our Form 10-K for the year ended December 31, 2025, and other SEC filings. All forward-looking statements are made as of today, February 11, 2025, and NETSTREIT assumes no obligation to update them in the future. In addition, certain financial information presented on this call includes non-GAAP financial measures.

Please refer to our earnings release and supplemental package for definitions, reconciliations to the most comparable GAAP measures, and an explanation of their usefulness to investors, which can be found in the Investor Relations section of the company’s website at netstreit.com. Today’s call is hosted by NETSTREIT’s CEO, Mark Manheimer, and CFO, Dan Donlan. They will make some prepared remarks, followed by a Q&A session. With that, I’ll turn the call over to Mark.

Mark Manheimer, CEO, NETSTREIT: Thank you, Matt, and thank you all for joining us this morning on our fourth quarter 2025 earnings call. I first want to congratulate the team on an outstanding 2025. We are efficiently running on all cylinders as we have the right people in place in each role across the entire organization to expand upon our success. We are well equipped from a balance sheet and cultural perspective at NETSTREIT to source the best opportunities, thoroughly underwrite them, and close them efficiently, while also maintaining rigorous monitoring and asset management to get ahead of future risks. We had a strong quarter of accelerated transaction activity as we completed $245.4 million of gross investments, our highest quarter on record, at a blended cash yield of 7.5%, with 15 years of weighted average lease term.

For the full year, we completed a record $657.1 million of gross investments at a 7.5% blended cash yield, with 13.9 years of weighted average lease term. When considering how modest our investment goals were to start the year, this record level investment activity is even more impressive as it demonstrates our team’s ability to rapidly adapt to fluctuations in both our cost of capital and the overall net lease marketplace. In addition, we accomplished this record activity while maintaining our focus on diversification, as evidenced by our record level of dispositions, which were completed 60 basis points inside our blended cash yield on investments. Additionally, our diversification efforts led to 15 new tenants joining our roster in the fourth quarter alone, and with 31 new tenants being added for the full year.

From an earnings perspective, our attractive investment activity helped us reach the high end of our upwardly revised AFFO per share guidance range. Looking ahead to this year, the team continues to find well-priced, high-quality investment opportunities with heightened levels of activity within the grocery, fitness, convenience store, and quick service restaurant industries. As previously announced, we achieved an investment-grade rating of BBB- from Fitch Ratings, which has greatly improved our access to debt and allows for tighter spreads. Coupled with our growing pipeline of opportunities, improving cost of capital, and our low dividend payout ratio, all of which have accelerated our growth prospects, we are increasing our quarterly dividend by 2.3% to $0.22 per share.

Our balance sheet remains in excellent, excellent condition, with pro forma leverage of 3.8 times, $100 million of undrawn term loan capital as of today, $373.1 million of unsettled forward equity at year-end, and no major debt maturities until 2028. Turning to the portfolio, we ended the quarter with investments in 758 properties that were leased to 129 tenants operating in 28 industries across 45 states. From a credit perspective, 58.3% of our total ABR is leased to Investment Grade or Investment Grade Profile tenants. Our weighted average lease term remaining for the portfolio was 10.1 years, with just 2.4% of ABR expiring through 2027. The portfolio weighted average unit level coverage is a very healthy 3.8 times.

Moving on to dispositions, we sold 76 properties in 2025, totaling $178.6 million at a 6.9% cash yield, which allowed us to accomplish all of our diversification goals for the year, including bringing all tenants below 5% of ABR. With our diversification efforts now met, we do anticipate selling fewer assets in 2026, with our focus turning more towards opportunistic sales and risk mitigation in order to get ahead of potential risks well before they can impact our AFFO per share. That said, we do expect to improve portfolio diversity through the year, with Walgreens representing less than 2% of ABR by 2026 year end. We are confident in the strength of the portfolio we have constructed and the durability of our in-place rent stream.

More specifically, when analyzing the ABR that expires over the next 4 years, we continue to see a high probability of renewal, given the cohort’s blended rent coverage ratio of 5.1 times and our ongoing dialogue with these tenants. Coupled with our high corporate credit portfolio, properties with in-place rents near market with strong real estate fundamentals and active asset management process. We remain confident that our portfolio can continue to produce the most consistent cash flow generation in the net lease space. In summary, 2025 was a year of record achievements for NETSTREIT, driven by our focus on high quality, necessity-based retail properties and commitment to a well-capitalized balance sheet. We are excited about the momentum we have established in 2026 and our ability to to deliver value to shareholders as one of the fastest AFFO per share growers in the space.

With that, I’ll hand the call to Dan to go over fourth quarter financials and then open up the call for your questions.

Dan Donlan, CFO, NETSTREIT: Thank you, Mark. Looking at our fourth quarter earnings, we reported net income of $1.3 million, or $0.02 per diluted share. Core FFO for the quarter was $26.6 million, or $0.31 per diluted share, and AFFO is $28.2 million, or $0.33 per diluted share, which is a 3.1% increase over last year. For the full year 2025, we reported net income of $0.08 per diluted share, core FFO of $1.23 per diluted share, and AFFO of $1.31 per diluted share, which represented 4% growth over 2024. Turning to the expense front, with the company making 7 net new hires during the year, our total recurring G&A represented 11% of total revenues in 2025, which was unchanged versus 2024.

Looking ahead to 2026, we expect this metric to average below 10% as our G&A continues to rationalize relative to our revenue base. Turning to capital markets activity, we sold 5.8 million shares for $104 million of net proceeds in the quarter via our ATM program. Subsequent to quarter end, we sold an additional 2.6 million shares for $46 million of net proceeds. Looking at the balance sheet, our adjusted net debt, which includes the impact of all forward equity, was $720 million. Our weighted average debt maturity was 3.9 years, and our weighted average interest rate was 4.24%. Including the extension options, which can be exercised at our discretion, we have no material debt maturing until February 2028.

In addition, our total liquidity of $1 billion at year-end consisted of $14 million of cash on hand, $500 million available on our revolving credit facility, $373 million of unsettled forward equity, and $150 million of undrawn term loan capacity. From a leverage perspective, our adjusted net debt to annualized adjusted EBITDARE was 4x at quarter end, which remains comfortably below our targeted leverage range of 4.5x-5.5x. Including an ATM raise subsequent to quarter end, our adjusted net debt to annualized adjusted EBITDARE was 3.8x. Moving on to guidance. We are reaffirming our 2026 AFFO per share guidance range of $1.35-$1.39, which assumes year-over-year growth of 5% at the midpoint.

Additionally, we continue to expect our net investment activity to range between $350-$450 million, and our cash G&A to range between $16-$17 million. In addition, the company’s AFFO per share guidance range includes $0.015-$0.03 per share of estimated dilution due to the impact of the company’s outstanding forward equity, calculated in accordance with the Treasury Stock Method. Lastly, on February fifth, the board declared a quarterly cash dividend of $0.22 per share, which represented a 2.3% increase from the prior quarter dividend of $0.215 per share. The dividend will be payable on March thirty-first to shareholders of record on March sixteenth. With that, operator, we will now open the line for questions.

Conference Operator: Thank you. We’ll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. The first question is from Handel St. Juste from Mizuho Securities. Please go ahead.

Dan Donlan, CFO, NETSTREIT3: Hi there. Good morning. This is Ravi Vaidya on the line for Handel St. Juste. Hope you guys are doing well. I wanted to ask, how are you thinking about balancing tenant credit and yield as part of your capital deployment? Saw that 7-Eleven and Festival are no longer on your top tenant list, but Academy, a lower corporate credit, has entered the list. Is there more of a focus on four wall coverage or lease term as you move forward with your capital deployment? Thanks.

Mark Manheimer, CEO, NETSTREIT: Hey, hey, Ravi, good to hear from you. So, yeah, I mean, I guess specifically as it relates to Academy, I mean, they’re, they’re double B plus, so that’s one notch away from being investment grade. And I think, if you just look at their current ratios, I mean, very low debt levels, you know, 3.3 times fixed charge coverage ratio, more than a $6 billion revenue company. I think if you just took the name off of it, you might, you know, think that they’d be investment grade. I think the fact that they, you know, went public, I don’t know, five, you know, five plus years ago after being, you know, a private equity-backed company.

You know, they’ve really kind of returned to their roots as being, you know, what they were as a kind of a family-run business, when most people really thought of them as an investment grade company. So, I do think that they are a high quality retailer, and we have been very selective in terms of the assets that we’ve acquired. You know, we’ve got a very good relationship directly with the folks down in Katy, Texas. And so, you know, we make sure that we’re buying locations that generate very strong cash flows. But I, you know, I do think that is a potential upgrade at some point in time, so that could, you know, at some point in time, you know, move up into the investment grade bucket.

And then just more broadly, as it relates to Investment Grade, Investment Grade Profile, versus kind of the sub-investment grade, you know, overall, I’d say we are seeing probably the better risk-adjusted returns in the non-rated bucket, where we’re doing our own underwriting of the corporate credit, many of whom don’t have any debt, so there’s no reason for them to have a rating, and I think could be, you know, really safer than some of the investment-grade names out there. And then we’re getting, you know, stronger leases, where we’re getting, you know, master leases, we’re getting, you know, better rent escalations and pure absolute Triple Net leases. So, you know, we feel like the risk-adjusted returns are a little bit stronger there.

But, yeah, as you note in the past, you know, we’ve gone a little bit heavier on the Investment Grade side, where the pricing was condensed. There wasn’t much of a difference. And so, I think it shows the strength of the acquisitions team and the underwriting team to, to be able to go out and source a lot of different types of opportunities and really sort through figuring out where we’re getting the best risk-adjusted returns.

Dan Donlan, CFO, NETSTREIT3: Got it. That’s really helpful color. Maybe you could just talk about the guide. What is your level of confidence towards reaching the upper end of the acquisition rate and the upper end of the AFFO guide, and maybe some thoughts of how 1Q has progressed so far from a capital deployment standpoint? Thanks.

Mark Manheimer, CEO, NETSTREIT: Yeah. I’ll just jump in on the acquisition side. Yeah, I mean, I think you saw the number of acquisitions that we did last year. Certainly feel very comfortable that we can hit the high end of the acquisitions guide, especially in light of the fact that we’re going to be selling significantly fewer properties this year.

Dan Donlan, CFO, NETSTREIT: Yeah, you know, Robbie, anytime we put together guidance, you know, I think we obviously have a bias towards the upper end of the range. You know, as you think about it, there’s really four drivers. It’s net investment activity and the timing thereof, it’s cash G&A, it’s dilution from, you know, Treasury Stock Method, and as well as potential loss rent from credit events. I would say it’s not linear, so, you know, if we come in at the low end of some of those ranges, that doesn’t mean we can’t be at the high end.

It’s kind of a, you know, a mixed bag, in terms of where we can end up, but we certainly feel confident as, as we did last year, you know, that we can reach the upper end of our, of our range.

Dan Donlan, CFO, NETSTREIT3: Thanks so much, guys. Appreciate the color.

Conference Operator: The next question is from Greg McGinnis from Scotiabank. Please go ahead.

Greg McGinnis, Analyst, Scotiabank: Hey, good morning. Mark, with these non-IG investments, you mentioned master leases and stronger rent escalation. Are you also getting property-level PNLs to compensate for the lower or lack of credit?

Mark Manheimer, CEO, NETSTREIT: Yeah, I mean, I think, you know, in most cases we are. Each transaction is a little bit different. And, you know, and again, you know, just because, you know, S&P or Moody’s or Fitch doesn’t say that somebody’s an Investment Grade, they can still have an investment-grade balance sheet and then, and strong operations generating a lot of cash flow. But yeah, I mean, I think in general, you have a little bit more leverage. A lot of these are sale-leasebacks, where we’re dealing directly with the tenant, not buying the assets from other landlords. So it makes it a lot easier to have that negotiation.

It is very important for us to, you know, to really understand, not just so much at the corporate level, but also at the unit level, that we’re getting, you know, productive stores that, you know, the tenant’s committed to long term.

Greg McGinnis, Analyst, Scotiabank: Mm-hmm. Okay, thanks. And Dan, on the guidance, are you able to kind of give us some, maybe some guidelines or your thoughts around the equity issuance that you’re kind of building in there and on the treasury solution as well?

Dan Donlan, CFO, NETSTREIT: Yeah, you know, look, I think where we sit today at 3.8 times pro forma leverage, and you think about, you know, we have $100 million of undrawn term loan capital today. We have over $400 million of unsettled forward equity that we can draw upon, you know, over $40 million of free cash flow. You know, we certainly don’t need to raise any equity. At the moment, we can afford to be patient. I think what I’d tell you is we sort of have a de minimis amount of equity baked into the model at this point in time. So, you know, nothing that we can’t handle as we sit here today.

Greg McGinnis, Analyst, Scotiabank: So, can we assume that with a, you know, slightly higher or I don’t know how much higher you guys feel it needs to be stock price, then you kind of open up a lot of opportunity on the acquisition side and growth?

Dan Donlan, CFO, NETSTREIT: Yeah, I think what I would say is, just from a leverage perspective, you know, our targeted range is 4.5-5.5 times. I think we can easily operate within that range, raise no additional equity. I think our preference is to obviously, you know, be over-equitized. And to the degree that our stock price, you know, stays where it is or moves higher, I think we’re comfortable raising equity as we sit here today, and our spreads are 160-170 basis points over. You know, I think that’s certainly above the, you know, industry average over the last 20 years. But at the same time, you know, it’s early in the year, and, we’re not necessarily in... We can be patient.

So, you know, I think to the degree that the pipeline continues to increase and we feel good about our cost of equity, we could certainly raise it, but it’s still early on in the year.

Greg McGinnis, Analyst, Scotiabank: Great. Thank you.

Conference Operator: The next question is from John Kilichowski from Wells Fargo. Please go ahead.

John Kilichowski, Analyst, Wells Fargo: Hi, good morning, team. First one, just kind of going back to that last question. I’m curious, you know, if there’s no real, you know, extra need for equity here. I guess as far as the acquisition guide is concerned, you know, how much of that is dictated by capital needs versus just what the opportunity set is out there on the market? Because it’s good to hear there’s nothing that you need, but I’m curious, like, you know, how far above and beyond you can go, given where leverage is and given the equity capacity you’ve built up.

Mark Manheimer, CEO, NETSTREIT: Yeah, and I think with the guide, I mean, we, you know, we want to have some optionality in there. You know, I think the team is able to source significantly more than what we’ve done in the past. And so, yeah, I mean, I think it’s really, you know, you know, cost of capital constraints. You know, if it’s, if our cost of capital gets meaningfully more attractive, we can certainly, you know, ramp up acquisitions, you know, quite a bit.

John Kilichowski, Analyst, Wells Fargo: And then maybe just one for me on the IG side. You know, you’ve seen a little bit of drift downwards in that IG, IG profile exposure over the past couple of quarters. Is there anything to note there strategically? I understand there’s just better risk-adjusted returns in that space that you’re seeing right now, but I’m curious, what’s been that move? Are you just— Is there a target subsectors that sit outside of that box that you like more? You like the unit-level coverage. Just curious what, what’s making that move?

Mark Manheimer, CEO, NETSTREIT: Yeah, I mean, it’s really just the pricing of the opportunities. You know, you know, we’re seeing a lot of great opportunities really, really on both sides. It’s just, you know, you know, we feel like the pricing has been more attractive, and really kind of our efficient frontier of, you know, what our portfolio allocation looks like right now. It’s kind of really more... It’s, it’s not really, it’s a byproduct of what we’re doing, which is, you know, 30%-40% Investment Grade, Investment Grade Profile, tenants, you know, right now. But that can certainly change if we see the market dynamics change. And then, you know, I think things that don’t jump off the page are really, you know, the quality of the leases.

You know, we don’t really want to go out and buy what are effectively shopping center leases, where you have, you know, co-tenancy, use restrictions, you know, and a lot of things, you know, landlord responsibilities that we don’t really wanna be taking on and taking on the cost of. And so, you know, we’re not as dogmatic about whether something is just Investment Grade or Investment Grade or not Investment Grade. We’re really just kind of focused on the right risk-adjusted returns.

John Kilichowski, Analyst, Wells Fargo: Thank you.

Conference Operator: The next question is from Michael Goldsmith, from UBS. Please go ahead.

Michael Goldsmith, Analyst, UBS: Good morning. Thanks a lot for taking my questions. As portfolio diversification is presumably more complete, you know, how would you characterize the shift in strategy from here? I think you talked a little bit about being more opportunistic. Is there a way to think about, like, shifting from defense to offense? Just trying to get a sense of how your actions this year and in the future may change from kind of what kind of transpired in the last year or so.

Mark Manheimer, CEO, NETSTREIT: Yeah, sure. I mean, I think, you know, coming out of the gates, you know, back in 2020, you know, with a smaller portfolio, anytime that we saw a really great opportunity that had some size to it, it really kind of moved the concentrations around, you know, quite a bit, you know, with a smaller portfolio. And so really just with the market reaction of, you know, some of the tenants, even though we felt like they were good assets and, you know, continued to think that they were good assets, they’re gonna continue to pay rent and continue to renew their leases, you know, had an impact on our multiples.

So we became a little bit more aggressive on addressing some of the concentrations to bring them down, which was kind of a longer-term plan, but we, you know, expedited that into a shorter- or medium-term plan. I think, you know, as we look forward today, I would just expect us to not have to, you know, sell down as much. It’s gonna. It would take a lot more for us to buy to really start to run into any type of concentration concerns. On a go-forward basis, I think under 5% is where all tenants are today. I’d be surprised to see anybody move up above that threshold. In fact, I think you’re gonna see the diversity of the portfolio just continue to improve over time.

Michael Goldsmith, Analyst, UBS: Thanks for that. And as a follow-up, the sub-1x coverage trough, it picked up sequentially by 50 basis points. So what’s driving that? Is that something that you’re monitoring? Just trying to get a little more color there.

Mark Manheimer, CEO, NETSTREIT: Yeah, yeah, sure. So, yeah, I mean, it is something that we monitor. I mean, we’re monitoring everything on that histogram. I think that’s gonna move around a little bit quarter to quarter. So, we try not to overreact to any moves there. But that relates to some assets that, you know, we feel like, you know, are fine, you know, that are, you know, the rent per square foot is below market for each of those assets, and we’ve got some lease terms. So, we’ll continue to monitor that. If we don’t see improvement over the next, you know, several quarters, then we may look to monetize the assets or do something there. But, yeah, it’s certainly nothing of concern here in the short or medium term.

Michael Goldsmith, Analyst, UBS: Thank you very much. Good luck in 2026.

Mark Manheimer, CEO, NETSTREIT: Thanks, Michael.

Michael Goldsmith, Analyst, UBS: Thanks.

Conference Operator: The next question is from Smedes Rose, from Citi. Please go ahead.

John Kilichowski, Analyst, Wells Fargo: Thanks. It’s Nick Joseph here with Smedes. Maybe just following up on that last question. I think in the opening remarks, you talked about opportunistic sales, and really just risk mitigation. So as you look at the portfolio today, you know, is that a comment more on industries, or is that, you know, tenant or property specific?

Mark Manheimer, CEO, NETSTREIT: Yeah, no, I think, you know, last year we sold a lot of, a lot of properties, and so that was really addressing some of the concentrations, trying to bring those down. I think we’re more or less done with, you know, what needs to get accomplished there. We hit the goal that we set out at the beginning of the year, and so when we think about dispositions now, you know, we’ve got some relationships where people will come to us with, you know, very aggressive cap rates on some, on some assets that we own, and we feel like, okay, they’re valuing those assets more than we are, and so we can take that capital and redeploy it accretively and improve the quality of the portfolio. So anytime we can do that, we’re gonna...

We’ll take advantage of those situations. And then it’s just general risk mitigation. I think you can kind of look at, you know, the histogram to get some idea of, you know, the things that we’re thinking about. And, you know, if we start to see degradation of performance, either at the corporate or unit level, those will likely be more likely to be disposed of in the future. But it’s, you know, when you think about the quantum of what we’ll be selling, it’ll be significantly less than what we did last year.

John Kilichowski, Analyst, Wells Fargo: Thanks. And then I know there’s not a high percentage of rent expiring this year, but what are the expectations for kind of the new rent versus the expiring rent?

Mark Manheimer, CEO, NETSTREIT: Yeah, I mean, I think in most cases, they’re just gonna renew the lease. And then I think there’s one property where the rent’s about $160,000, where we do not expect the lease to get renewed. But we’re in conversations with a convenience store operator that would be interested in taking that over as a ground lease, either to ground lease it or to just sell it. We’re gonna kind of figure out where we’re getting the better outcome.

Dan Donlan, CFO, NETSTREIT2: Thanks.

Conference Operator: The next question is from Jay Kornreich from Cantor Fitzgerald. Please go ahead.

Jay Kornreich, Analyst, Cantor Fitzgerald: Hey, good morning, guys. Following up on the deal spreads you outlined at currently 160-170 basis points. Can you maybe just describe the competitive landscape for net lease assets currently? I mean, it looks like cap rates held up at 7, 7.5% in 4Q. So just curious if you anticipate, you know, elevated competition to compress rates in 2026, or perhaps that’s why you like these non-rated tenant investments, that they face less competition and have better yields. So just curious of your thoughts on that as the year goes on.

Mark Manheimer, CEO, NETSTREIT: Yeah, and, you know, we’ve certainly, you know, read a lot about competition coming into the space and, you know, are aware of some groups, you know, stepping in and buying some, some larger portfolios. But, you know, they’re really not chasing the smaller opportunities. You know, we’re averaging, you know, $3.5-$4 million per property. It’s a little bit too cumbersome for a lot of those larger shops with smaller teams to go out and compete there. So we just haven’t really seen them very much. You know, and so the competition has not changed at all. We’re typically competing with the seller’s expectations in most cases, and occasionally a 1031 buyer. But for the most part, you know, the competition has not had an impact on pricing at all.

We’ve seen a very tight band of where the 10-year is trading. I think it was, you know, you know, a little less than 4.2%, before we got on the call. So, you know, it’s really kind of bounced around 4, low 4s and maybe a little bit under 4 here and there. But, that tight band has really, allowed prices to get very sticky. And so, we expect at least through, you know, first quarter and even some of what we’ve acquired, or looking to acquire in the, in the second quarter, that’s in our pipeline, to see very similar cap rates to what we saw, throughout 2025.

Jay Kornreich, Analyst, Cantor Fitzgerald: Okay, appreciate that. And then just one follow-up. You received your first rating as Investment Grade from from Fitch in December. So can you just outline, you know, what the cost of capital improvements are you expect from that? And any update to timing or impact from further ratings from Moody’s or S&P?

Mark Manheimer, CEO, NETSTREIT: Sure. Look, as you can see in the disclosure, you know, most of our term loans priced down 25-20 basis points. So it kind of resulted in basically $2 million of annual interest rate savings. You know, we feel good about the rating that we received. To the degree that we got an upgrade in that rating, it’d be another probably 10 basis points of upside across the term loan stack. As we sit here today, you know, we don’t really have a need to go out and raise long-term debt until probably mid-2027. So we’re not necessarily in a rush to get another rating.

You know, certainly we’ll be talking and speaking with the agencies, you know, throughout this year and into next year, just to maintain dialogue.

Jay Kornreich, Analyst, Cantor Fitzgerald: Okay, thanks very much.

Conference Operator: The next question is from Wes Golladay, from Baird. Please go ahead.

Dan Donlan, CFO, NETSTREIT2: Hey, hey, guys. I believe you mentioned you added 31 tenants this in 2025. When you look at the deal volume in 2026, do you expect to add a lot more relationships like you did last year, or are you just gonna work more with the existing relationships?

Mark Manheimer, CEO, NETSTREIT: Yeah, I mean, it will certainly be a combination. You know, we expect to add new tenants. You know, to be totally frank, those 31 tenants, most of those are, you know, 1 or 2 properties. You know, a couple portfolios in there, sale-leasebacks. But, you know, a lot of those are just kind of, you know, very small investments that kind of, you know, make that number seem maybe a little bit bigger. But I would expect us to be adding, you know, 5, 6 new tenants per quarter would be a good assumption.

Dan Donlan, CFO, NETSTREIT2: Okay. And what about categories? Do you expect to add a lot this year or, or lean into some, a lot more?

Mark Manheimer, CEO, NETSTREIT: I think we’ll be shopping in the same food groups as we’ve been, you know, more recently. So, you know, we’re seeing really good opportunities and, you know, convenience stores continues to be, you know, a big one, grocery, even some fitness selectively, and quick service restaurants has been really good for us as well.

Dan Donlan, CFO, NETSTREIT2: Okay. That’s all for me. Thank you.

Mark Manheimer, CEO, NETSTREIT: Thanks, Wes.

Conference Operator: The next question is from Michael Gorman, from BTIG. Please go ahead.

Michael Gorman, Analyst, BTIG: Yeah, thanks. Just one quick one for me, Dan. Going back to you mentioning not needing to raise long-term debt until kind of mid-2027. Can you just remind us of the roadmap? Would, would that be an unsecured listed? Would you be looking at the unsecured listed market then? Or just kind of what, what the roadmap is to get to the unsecured listed market there? Thanks.

Mark Manheimer, CEO, NETSTREIT: Yes. So, yeah, so you, you actually don’t even need a, an investment-grade credit rating or to access the private placement market. That certainly is preferred. So as we sit here today, if we wanted to go out and access the private placement market efficiently, I think we could. As we think about 2027, it’s a year and a half away. I think it could be a private placement, it could be an unsecured bond, to the degree that we got a second or third rating from one of the rating agencies. I think it just kind of depends on kind of the growth of the company and, you know, where we see, you know, the, the lowest cost to capital from, from the debt side. So, you know, it just kind of remains to be seen, Michael.

Michael Gorman, Analyst, BTIG: Great. Thanks, Dan.

Conference Operator: The next question is from Upal Rana, from KeyBanc Capital Markets. Please go ahead.

Jay Kornreich, Analyst, Cantor Fitzgerald: Great. Thank you. Mark, I want to get your thoughts on the broader retail space and what you’re seeing in terms of any kind of troubled tenants or troubled categories. Now, you’ve had your fair share of headline risks in 2024, but was able to sidestep that last year. So just curious on your thoughts heading into 2026 and how-

Dan Donlan, CFO, NETSTREIT1: ... Yeah, maybe bankruptcies or store closings might impact how you invest or divest this year?

Mark Manheimer, CEO, NETSTREIT: Yeah, sure. I mean, there’s really not anything in our portfolio that, you know, any themes there. I think just more broadly, as you think about the consumer, you know, not new news to anybody, but, you know, the K-shaped economy is real, and the, you know, lower income consumers, you know, felt a lot more pressure, and that’s leaked into, you know, some middle income consumers. So I think you have to be very careful about, you know, understanding who the consumers are of each business, and, you know, whether these are necessity products or, you know, how discretionary they are. And so that cross-section of the lower income consumer, and more discretionary spend, is likely to have a little bit more pressure.

We’ve seen, you know, a handful of casual diners, you know, come under some pressure, whether it be Bahama Breeze, I think, you know, completely shutting their doors, one of the Darden concepts. And, you know, we’ve seen a couple of those types of things, but I think that’s gonna be the theme, is it’s gonna be the lower income consumer at a cross-section of more discretionary spend.

Dan Donlan, CFO, NETSTREIT1: Okay, great. That, that was helpful. And then, you know, on just doing less dispositions this year, just curious, are you still planning to reduce store account exposure, some of your troubled tenants, or are you comfortable with what you currently own? And maybe you could talk about the appetite for those types of tenants in the transaction market today.

Mark Manheimer, CEO, NETSTREIT: Yeah, sure. I mean, I’m not sure if we have, you know, troubled tenants. I think we had, you know, a couple of tenants that, you know, maybe the, the news flow wasn’t, you know, quite as positive. But that being said, you know, we’re unlikely to be adding to, to the tenants that we were decreasing exposure to. I think they’re likely to, you know, continue to decrease a little bit on the margin. But the portfolio as it sits today, and even with those tenants, we’ve got really strong performing assets.

You know, our relationships with the tenants are really very helpful in making sure that we understand, you know, what that, what that risk looks like, and making sure that we’ve got locations that generate, you know, very strong cash flow, and we’re, we’re very confident in the portfolio.

Dan Donlan, CFO, NETSTREIT1: Okay, great. Thank you.

Conference Operator: The next question is from Yana Galan from Bank of America. Please go ahead.

Yana Galan, Analyst, Bank of America: Hi, thank you for taking the question. Following up on the rent recapture conversation, Mark, I thought your comments on rent coverage of 5.1 times for the near to medium term lease expirations was very interesting. Do most of these tenants still have renewal options available, or can lease recapture in the future be higher than the historical level?

Mark Manheimer, CEO, NETSTREIT: I wish we had a lot of, you know, leases with no options, but, you know, very rarely do we have any, you know, leases that don’t have options left. Our expectation is that, you know, almost all of those locations, or at least the lion’s share of those locations, the tenant’s just gonna hit the option, because they’re generating so much cash flow there.

Yana Galan, Analyst, Bank of America: Thank you. And, maybe for Dan, on the balance sheet, some of your peers, in net lease have implemented, commercial paper programs. Is that something you would look to in the future?

Dan Donlan, CFO, NETSTREIT: Yeah, it’s not something I’ve looked into the near term. I think you have to be, you know, much more sizable than we are today to access that program. So it’s something we would look forward to doing, but I think at our size today, I don’t think that, as well as our credit ratings, I don’t think that market is available to us at the moment.

Yana Galan, Analyst, Bank of America: Thank you.

Conference Operator: The next question is from Dan Guglielmo from Capital One Securities. Please go ahead.

Dan Guglielmo, Analyst, Capital One Securities: Hi, everyone. Thank you for taking my questions. On the net investment guidance, do you think of kind of the higher end of the range as a limit, or would you be willing to push through that if the conditions are right?

Mark Manheimer, CEO, NETSTREIT: Yeah, I mean, certainly, you know, I, you know, I have very few concerns about us being able to source attractive opportunities, so that’s not really a limit, you know, at all. In fact, I think we could do significantly more than the high end of the band there. It’s really gonna come down to, you know, how accretive would it be for us to go down that path. If we’ve got a really strong cost of capital and our stock price is doing really well, then I would expect us to increase that.

Dan Guglielmo, Analyst, Capital One Securities: Okay, I appreciate that. Thank you. And then on the 3Q call, you all had said there was about $100 million of acquisitions the last two days of the quarter. Were there similar kind of investment volumes the last few days of 4Q, or was it more evenly spread?

Dan Donlan, CFO, NETSTREIT: No, it wasn’t as bad as the third quarter, just because, you know, we really started to accelerate our growth when we got the follow on in mid-July. I think our average closing date was, you know, kind of middle December, and we did close about $77 million of transactions in the last three days of the quarter. So it was more back end weighted, similar to third quarter.

Mark Manheimer, CEO, NETSTREIT: Then, just to piggyback on that, I would not expect that in the first quarter, where we were able to close more earlier in the quarter.

Dan Guglielmo, Analyst, Capital One Securities: Great, thanks. Appreciate that color.

Conference Operator: There are no further questions at this time. I would like to turn the floor back over to Mark Manheimer for closing comments.

Mark Manheimer, CEO, NETSTREIT: Well, thanks, everybody, for joining today. We appreciate your interest in the company and look forward to seeing many of you at the upcoming conference season.

Conference Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.