Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries NETSTREIT Reports First Quarter 2024 Financial and Operating Results By: NETSTREIT Corp. via Business Wire April 29, 2024 at 16:05 PM EDT – Net income of $0.01 and Adjusted Funds from Operations ("AFFO") of $0.31 Per Diluted Share for First Quarter – – Completed $129.2 Million of Gross Investment Activity at 7.5% Blended Cash Yield for First Quarter – – Increasing Low End of 2024 AFFO Per Share Guidance to a New Range of $1.25 to $1.28 – – Completed $198.7 Million Forward Equity Offering in January 2024 – – $30.8 Million of Forward Equity Sales through ATM Year to Date – NETSTREIT Corp. (NYSE: NTST) (the “Company”) today announced financial and operating results for the first quarter ended March 31, 2024. “I'm proud to report NETSTREIT's strong start to the year. We raised a combined $229.5 million from our January follow-on offering and our ATM program year to date, and have completed $129.2 million in gross investment activity at a blended cash yield of 7.5% during the quarter. With our 2024 capital needs already addressed, NETSTREIT is primed to continue to take advantage of an increasingly attractive acquisitions market,” said Mark Manheimer, Chief Executive Officer of NETSTREIT. FIRST QUARTER 2024 HIGHLIGHTS The following table summarizes the Company's select financial results1 for the three months ended March 31, 2024. Three Months Ended March 31, 2024 2023 % Change (Unaudited) Net Income per Diluted Share $ 0.01 $ 0.03 (67 )% Funds from Operations per Diluted Share $ 0.28 $ 0.28 — % Core Funds from Operations per Diluted Share $ 0.30 $ 0.28 7 % Adjusted Funds from Operations per Diluted Share $ 0.31 $ 0.30 3 % 1. Funds from operations ("FFO"), core funds from operations ("Core FFO"), and adjusted funds from operations ("AFFO") are non-GAAP financial measures. See "Non-GAAP Financial Measures." INVESTMENT ACTIVITY The following tables summarize the Company's investment and disposition activities (dollars in thousands) for the three months ended March 31, 2024. Three Months Ended March 31, 2024 Number of Investments Amount Investments 42 $ 129,207 Dispositions 12 21,600 Net Investment Activity $ 107,607 Investment Activity Cash Yield 7.5 % % of ABR derived from Investment Grade Tenants 84.8 % % of ABR derived from Investment Grade Profile Tenants — % Weighted Average Lease Term (years) 11.5 Disposition Activity Cash Yield 6.8 % Weighted Average Lease Term (years) 10.3 The following table summarizes the Company's on-going development projects and estimated development costs (dollars in thousands) as of March 31, 2024. Developments Three Months Ended March 31, 2024 Amount Funded During the Quarter $ 10,936 As of March 31, 2024 Number of Developments 16 Amount Funded to Date $ 27,780 Estimated Funding Remaining on Developments 19,357 Total Estimated Development Cost $ 47,137 PORTFOLIO UPDATE The following table summarizes the Company's real estate portfolio (weighted by ABR, dollars in thousands) as of March 31, 2024. As of March 31, 2024 Number of Investments 628 ABR $ 140,314 States 45 Square Feet 11,322,746 Tenants 88 Industries 26 Occupancy 100.0 % Weighted Average Lease Term (years) 9.2 Investment Grade % 71.1 % Investment Grade Profile % 13.3 % CAPITAL MARKETS AND BALANCE SHEET The following tables summarize the Company's leverage, balance sheet, liquidity and ATM sales (dollars in thousands, except per share data) as of and for the three months ended March 31, 2024. Leverage As of March 31, 2024 Net Debt / Annualized Adjusted EBITDAre 5.4x Adjusted Net Debt / Annualized Adjusted EBITDAre 3.1x Proforma Adjusted Net Debt / Annualized Adjusted EBITAre1 2.9x Liquidity Unused Unsecured Revolver Capacity $ 324,850 Cash, Cash Equivalents and Restricted Cash 22,334 Net Value of Unsettled Forward Equity 290,908 Total Liquidity $ 638,092 Net Value of Unsettled Forward Equity from April ATM Activity 28,746 Total Proforma Liquidity1 $ 666,838 January 2024 Forward Equity Offering As of March 31, 2024 Shares Unsettled 11,040,000 Price Per Share (Gross) $ 18.00 Net Value of Unsettled Forward Equity $ 190,467 ATM Program Shares Unsettled 107,500 Weighted Average Price Per Share (Gross) $ 18.29 Net Value of Unsettled Forward Equity $ 1,948 2023 ATM Program Initial Capacity $ 300,000 ATM Capacity Remaining as of March 31, 2024 $ 220,710 Unsettled Forward Equity Shares Unsettled as of March 31, 2024 17,131,211 Weighted Average Price Per Share (Net) $ 16.98 Net Value of Unsettled Forward Equity $ 290,908 1. See Subsequent Activity. These proforma calculations include the net value of unsettled shares from the April 2024 ATM activity. SUBSEQUENT ACTIVITY In April 2024, the Company sold 1,635,600 shares of its common stock through its at-the-market ("ATM") sales program (the "ATM Program"). The shares were sold on a forward basis at a weighted average price of $17.63 per share. The following table summarizes the Company's April ATM activity (dollars in thousands, except per share data). April 2024 ATM Activity As of April 29, 2024 Shares Unsettled 1,635,600 Price Per Share (Gross) $ 17.63 Net Value of Unsettled Forward Equity $ 28,746 DIVIDEND On April 23, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.205 per share for the second quarter of 2024. On an annualized basis, the dividend of $0.82 per share of common stock represents an increase of $0.02 per share over the prior year annualized dividend. The dividend will be paid on June 14, 2024 to shareholders of record on June 3, 2024. 2024 GUIDANCE The Company is increasing the low end of its 2024 AFFO per share guidance to a new range of $1.25 to $1.28 from its previously announced range of $1.24 to $1.28. The Company also expects cash G&A to be in the range of $13.5 million to $14.5 million (exclusive of transaction costs and severance payments). The Company's 2024 guidance is based on a number of assumptions that are subject to change and many of which are outside the Company's control. If actual results vary from these assumptions, the Company's expectations may change. There can be no assurance that the Company will achieve these results. AFFO is a non-GAAP financial measure. The Company does not provide a reconciliation of such forward-looking non-GAAP measure to the most directly comparable financial measures calculated and presented in accordance with GAAP because to do so would be potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items in any future period. The magnitude of these items, however, may be significant. EARNINGS CONFERENCE CALL A conference call will be held on Tuesday, April 30, 2024 at 11:00 AM ET. During the conference call the Company’s officers will review first quarter performance, discuss recent events, and conduct a question and answer period. The webcast will be accessible on the “Investor Relations” section of the Company’s website at www.NETSTREIT.com. To listen to the live webcast, please go to the site at least 15 minutes prior to the scheduled start time to register, as well as download and install any necessary audio software. The conference call can also be accessed by dialing 1-877-451-6152 for domestic callers or 1-201-389-0879 for international callers. A dial-in replay will be available starting shortly after the call until May 7, 2024, which can be accessed by dialing 1-844-512-2921 for domestic callers or 1-412-317-6671 for international callers. The passcode for this dial-in replay is 13745165. SUPPLEMENTAL PACKAGE The Company’s supplemental package will be available prior to the conference call in the Investor Relations section of the Company’s website at www.investors.netstreit.com. About NETSTREIT Corp. NETSTREIT Corp. is an internally managed real estate investment trust (REIT) based in Dallas, Texas that specializes in acquiring single-tenant net lease retail properties nationwide. The growing portfolio consists of high-quality properties leased to e-commerce resistant tenants with healthy balance sheets. Led by a management team of seasoned commercial real estate executives, NETSTREIT’s strategy is to create the highest quality net lease retail portfolio in the country with the goal of generating consistent cash flows and dividends for its investors. NON-GAAP FINANCIAL MEASURES This press release contains non-GAAP financial measures, including FFO, Core FFO, AFFO, EBITDA, EBITDAre, Adjusted EBITDAre, Annualized Adjusted EBITDAre, Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI Estimated Run Rate, Total Property-Level Cash NOI Estimated Run Rate, Net Debt and Adjusted Net Debt. A reconciliation of each non-GAAP financial measure to the most comparable GAAP measure, and definitions of each non-GAAP measure, are included below. FORWARD LOOKING STATEMENTS This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements concerning our business and growth strategies, investment, financing and leasing activities, including estimated development costs, trends in our business, including trends in the market for single-tenant, retail commercial real estate and our 2024 guidance. Words such as “expects,” “anticipates,” “intends,” “plans,” “likely,” “will,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this press release may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. For a further discussion of these and other factors that could impact future results, performance or transactions, see the information under the heading “Risk Factors” in our Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on February 14, 2024 and other reports filed with the SEC from time to time. Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release. New risks and uncertainties may arise over time and it is not possible for us to predict those events or how they may affect us. Many of the risks identified herein and in our periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from macroeconomic conditions, including inflation, interest rates and instability in the banking system. We expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law. NETSTREIT CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (Unaudited) March 31, 2024 December 31, 2023 Assets Real estate, at cost: Land $ 472,330 $ 460,896 Buildings and improvements 1,209,333 1,149,809 Total real estate, at cost 1,681,663 1,610,705 Less accumulated depreciation (110,632 ) (101,210 ) Property under development 21,800 29,198 Real estate held for investment, net 1,592,831 1,538,693 Assets held for sale 58,856 52,451 Mortgage loans receivable, net 124,617 114,472 Cash, cash equivalents and restricted cash 22,334 29,929 Lease intangible assets, net 165,507 161,354 Other assets, net 61,402 49,337 Total assets $ 2,025,547 $ 1,946,236 Liabilities and equity Liabilities: Term loans, net $ 621,500 $ 521,912 Revolving credit facility 75,000 80,000 Mortgage note payable, net 7,876 7,883 Lease intangible liabilities, net 24,639 25,353 Liabilities related to assets held for sale 1,110 1,158 Accounts payable, accrued expenses and other liabilities 26,265 36,498 Total liabilities 756,390 672,804 Commitments and contingencies Equity: Stockholders’ equity Common stock, $0.01 par value, 400,000,000 shares authorized; 73,328,411 and 73,207,080 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 733 732 Additional paid-in capital 1,368,312 1,367,505 Distributions in excess of retained earnings (126,270 ) (112,276 ) Accumulated other comprehensive income 18,020 8,943 Total stockholders’ equity 1,260,795 1,264,904 Noncontrolling interests 8,362 8,528 Total equity 1,269,157 1,273,432 Total liabilities and equity $ 2,025,547 $ 1,946,236 NETSTREIT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Revenues Rental revenue (including reimbursable) $ 35,189 $ 28,474 Interest income on loans receivable 2,484 978 Total revenues 37,673 29,452 Operating expenses Property 4,102 3,936 General and administrative 5,707 4,909 Depreciation and amortization 17,541 14,949 Provisions for impairment 3,662 — Transaction costs 129 109 Total operating expenses 31,141 23,903 Other (expense) income Interest expense, net (6,180 ) (3,944 ) Gain (loss) on sales of real estate, net 997 (319 ) Other (expense) income, net (1) (280 ) 152 Total other (expense) income, net (5,463 ) (4,111 ) Net income before income taxes 1,069 1,438 Income tax (expense) benefit (17 ) 43 Net income 1,052 1,481 Net income attributable to noncontrolling interests 7 9 Net income attributable to common stockholders $ 1,045 $ 1,472 Amounts available to common stockholders per common share: Basic $ 0.01 $ 0.03 Diluted $ 0.01 $ 0.03 Weighted average common shares: Basic 73,248,804 58,155,738 Diluted 74,565,790 58,883,386 (1) Includes a non-recurring other loss of $414,000. NETSTREIT CORP. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO FFO, CORE FFO AND ADJUSTED FFO (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Net income $ 1,052 $ 1,481 Depreciation and amortization of real estate 17,462 14,884 Provisions for impairment 3,662 — (Gain) loss on sales of real estate, net (997 ) 319 FFO 21,179 16,684 Adjustments: Non-recurring executive transition costs, severance and related charges 857 13 Non-recurring other loss (gain), net 414 (12 ) Core FFO 22,450 16,685 Adjustments: Straight-line rent adjustments (542 ) (311 ) Amortization of deferred financing costs 558 308 Amortization of above/below-market assumed debt 29 29 Amortization of loan origination costs and discounts 39 28 Amortization of lease-related intangibles (95 ) (213 ) Earned development interest 332 — Capitalized interest expense (353 ) (134 ) Non-cash interest expense (979 ) — Non-cash compensation expense 1,424 1,027 AFFO $ 22,863 $ 17,419 Weighted average common shares outstanding, basic 73,248,804 58,155,738 Operating partnership units outstanding 478,524 511,402 Unvested restricted stock units 168,556 175,859 Unsettled shares under open forward equity contracts 669,906 40,387 Weighted average common shares outstanding, diluted 74,565,790 58,883,386 FFO per common share, diluted $ 0.28 $ 0.28 Core FFO per common share, diluted $ 0.30 $ 0.28 AFFO per common share, diluted $ 0.31 $ 0.30 NETSTREIT CORP. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO EBITDA, EBITDAre AND ADJUSTED EBITDAre (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Net income $ 1,052 $ 1,481 Depreciation and amortization of real estate 17,462 14,884 Amortization of lease-related intangibles (95 ) (213 ) Non-real estate depreciation and amortization 79 65 Interest expense, net 6,180 3,944 Income tax expense (benefit) 17 (43 ) Amortization of loan origination costs 39 28 EBITDA 24,734 20,146 Adjustments: Provisions for impairments 3,662 — (Gain) loss on sales of real estate, net (997 ) 319 EBITDAre 27,399 20,465 Adjustments: Straight-line rent adjustments (542 ) (311 ) Non-recurring executive transition costs, severance and related charges 857 13 Non-recurring other loss (gain), net 414 (12 ) Other non-recurring expenses, net 158 — Non-cash compensation expense 1,424 1,027 Adjustment for construction in process (1) 497 157 Adjustment for intraquarter investment activities (2) 1,469 1,862 Adjusted EBITDAre $ 31,676 $ 23,201 Annualized Adjusted EBITDAre (3) $ 126,704 Net Debt As of March 31, 2024 Principal amount of total debt $ 708,322 Less: Cash, cash equivalents and restricted cash (22,334 ) Net Debt 685,988 Less: Value of unsettled forward equity (4) (290,908 ) Adjusted Net Debt $ 395,080 Less: Net value of unsettled April 2024 ATM activity (5) (28,746 ) Proforma adjusted net debt(5) $ 366,334 Leverage Net debt / Annualized Adjusted EBITDAre 5.4 x Adjusted Net Debt / Annualized Adjusted EBITDAre 3.1 x Proforma Adjusted Net Debt / Annualized Adjusted EBITDAre 2.9 x (1) Adjustment reflects the estimated cash yield on developments in process as of March 31, 2024. (2) Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments and interest earning loan activity completed during the three months ended March 31, 2024 and 2023 had occurred on January 1, 2024 and 2023, respectively. (3) We calculate Annualized Adjusted EBITDAre by multiplying Adjusted EBITDAre by four. (4) Reflects 17,131,211 of unsettled forward equity shares, at the March 31, 2024 available weighted average net settlement price of $16.98 per share. (5) Reflects 1,635,600 of unsettled forward equity shares sold through the ATM Program during April 2024 at a net settlement price of $17.58 per share. NETSTREIT CORP. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO NOI AND CASH NOI (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Net income $ 1,052 $ 1,481 General and administrative 5,707 4,909 Depreciation and amortization 17,541 14,949 Provisions for impairment 3,662 — Transaction costs 129 109 Interest expense, net 6,180 3,944 (Gain) loss on sales of real estate, net (997 ) 319 Income tax expense (benefit) 17 (43 ) Interest income on mortgage loans receivable (2,484 ) (978 ) Other expense (income), net 280 (152 ) Property-Level NOI 31,087 24,538 Straight-line rent adjustments (542 ) (311 ) Amortization of lease-related intangibles (95 ) (213 ) Property-Level Cash NOI $ 30,450 $ 24,014 Adjustment for intraquarter acquisitions, dispositions and interest earning development (1) 1,358 Property-Level Cash NOI Estimated Run Rate 31,808 Interest income on mortgage loans receivable 2,484 Adjustments for intraquarter mortgage loan activity (2) 111 Total Cash NOI - Estimated Run Rate $ 34,403 (1) Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments completed during the three months ended March 31, 2024, had occurred on January 1, 2024. (2) Adjustment assumes all loan activity completed during the three months ended March 31, 2024, had occurred on January 1, 2024. NON-GAAP FINANCIAL MEASURES FFO, Core FFO and AFFO The National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has promulgated a widely accepted non-GAAP financial measure of operating performance known as FFO. Our FFO is net income in accordance with GAAP, excluding gains (or losses) resulting from dispositions of properties, plus depreciation and amortization and impairment charges on depreciable real property. Core FFO is a non-GAAP financial measure defined as FFO adjusted to remove the effect of unusual and non-recurring items that are not expected to impact our operating performance or operations on an ongoing basis. These include non-recurring executive transition costs, severance and related charges, other loss (gain), net, and loss on debt extinguishments and other related costs. AFFO is a non-GAAP financial measure defined as Core FFO adjusted for GAAP net income related to non-cash revenues and expenses, such as straight-line rent, amortization of above- and below-market lease-related intangibles, amortization of lease incentives, capitalized interest expense, earned development interest, non-cash interest expense, non-cash compensation expense, amortization of deferred financing costs, amortization of above/below-market assumed debt, and amortization of loan origination costs. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. In fact, real estate values historically have risen or fallen with market conditions. FFO is intended to be a standard supplemental measure of operating performance that excludes historical cost depreciation and valuation adjustments from net income. We consider FFO to be useful in evaluating potential property acquisitions and measuring operating performance. We further consider FFO, Core FFO and AFFO to be useful in determining funds available for payment of distributions. FFO, Core FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. You should not consider FFO, Core FFO and AFFO to be alternatives to net income as a reliable measure of our operating performance nor should you consider FFO, Core FFO and AFFO to be alternatives to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity. FFO, Core FFO and AFFO do not measure whether cash flow is sufficient to fund our cash needs, including principal amortization, capital improvements and distributions to stockholders. FFO, Core FFO and AFFO do not represent cash flows from operating, investing or financing activities as defined by GAAP. Further, FFO, Core FFO and AFFO as disclosed by other REITs might not be comparable to our calculations of FFO, Core FFO and AFFO. EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre We compute EBITDA as earnings before interest expense, income tax expense, and depreciation and amortization. In 2017, NAREIT issued a white paper recommending that companies that report EBITDA also report EBITDAre. We compute EBITDAre in accordance with the definition adopted by NAREIT. NAREIT defines EBITDAre as EBITDA (as defined above) excluding gains (or losses) from the sales of depreciable property and impairment charges on depreciable real property. Adjusted EBITDAre is a non-GAAP financial measure defined as EBITDAre further adjusted to exclude straight-line rent, non-cash compensation expense, non-recurring executive transition costs, severance and related charges, loss on debt extinguishment and other related costs, other loss (gain), net, other non-recurring expenses (income), lease termination fees, adjustment for construction in process, and adjustment for intraquarter activities. Beginning in the quarter ended June 30, 2023, we modified our definition of Adjusted EBITDAre to include adjustments for construction in process and intraquarter investment activities. Prior periods have been recast to reflect this new definition. Annualized Adjusted EBITDAre is Adjusted EBITDAre multiplied by four. We present EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre as they are measures commonly used in our industry. We believe that these measures are useful to investors and analysts because they provide supplemental information concerning our operating performance, exclusive of certain non-cash items and other costs. We use EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre as measures of our operating performance and not as measures of liquidity. EBITDA, EBITDAre, Adjusted EBITDAre and Annualized Adjusted EBITDAre do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities and they are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. Additionally, our computation of EBITDA, EBITDAre, Adjusted EBITDAre and Annualized Adjusted EBITDAre may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs. Net Debt, Adjusted Net Debt, and Proforma Adjusted Net Debt We calculate our Net Debt as our principal amount of total debt outstanding excluding deferred financing costs, net discounts and debt issuance costs less cash, cash equivalents and restricted cash available for future investment. We believe excluding cash, cash equivalents and restricted cash available for future investment from our principal amount, all of which could be used to repay debt, provides an estimate on the net contractual amount of borrowed capital to be repaid. We believe these adjustments are additional beneficial disclosures to investors and analysis. We further adjust Net Debt by the net value of unsettled forward equity as of period end to derive Adjusted Net Debt. Proforma Adjusted Net Debt is Adjusted Net Debt shown on a proforma basis to include the net value of proforma equity issued after the period end as if it was outstanding as of period end. Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate are non-GAAP financial measures which we use to assess our operating results. We compute Property-Level NOI as net income (computed in accordance with GAAP), excluding general and administrative expenses, interest expense (or income), income tax expense, transaction costs, depreciation and amortization, gains (or losses) on sales of depreciable property, real estate impairment losses, interest income on mortgage loans receivable, loss on debt extinguishment, lease termination fees, and other expense (income), net. We further adjust Property-Level NOI for non-cash revenue components of straight-line rent and amortization of lease-intangibles to derive Property-Level Cash NOI. We further adjust Property-Level Cash NOI for intraquarter acquisitions, dispositions and completed developments to derive Property-Level Cash NOI - Estimated Run Rate. We further adjust Property-Level Cash NOI - Estimated Run Rate for interest income on mortgage loans receivable and intraquarter mortgage loan activity to derive Total Cash NOI - Estimated Run Rate. We believe Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate provide useful and relevant information because they reflect only those income and expense items that are incurred at the property level and present such items on an unlevered basis. Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate are not measurements of financial performance under GAAP, and may not be comparable to similarly titled measures of other companies. You should not consider our NOI and Cash NOI as alternatives to net income or cash flows from operating activities determined in accordance with GAAP. OTHER DEFINITIONS ABR is annualized base rent as of March 31, 2024, for all leases that commenced and annualized cash interest on mortgage loans receivable in place as of that date. Cash Yield is the annualized base rent contractually due from acquired properties, interest income from mortgage loans receivable, and completed developments, divided by the gross investment amount, or gross proceeds in the case of dispositions. Investments are lease agreements in place at owned properties, properties that have leases associated with mortgage loans receivable, developments where rent commenced, or in the case of master lease arrangements each property under the master lease is counted as a separate lease. Investment Grade are investments, or investments that are subsidiaries of a parent entity, with a credit rating of BBB- (S&P/Fitch), Baa3 (Moody's) or NAIC2 (National Association or Insurance Commissioners) or higher. Investment Grade Profile are investments with investment grade credit metrics (more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x), but do not carry a published rating from S&P, Fitch, Moody's, or NAIC. Occupancy is expressed as a percentage, and is the number of economically occupied properties divided by the total number of properties owned, excluding mortgage loans receivable and properties under development. Weighted Average Lease Term is weighted by the annualized base rent, excluding lease extension options and investments associated with mortgage loans receivable. View source version on businesswire.com: https://www.businesswire.com/news/home/20240429789081/en/Contacts Investor Relations ir@netstreit.com 972-597-4825 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
NETSTREIT Reports First Quarter 2024 Financial and Operating Results By: NETSTREIT Corp. via Business Wire April 29, 2024 at 16:05 PM EDT – Net income of $0.01 and Adjusted Funds from Operations ("AFFO") of $0.31 Per Diluted Share for First Quarter – – Completed $129.2 Million of Gross Investment Activity at 7.5% Blended Cash Yield for First Quarter – – Increasing Low End of 2024 AFFO Per Share Guidance to a New Range of $1.25 to $1.28 – – Completed $198.7 Million Forward Equity Offering in January 2024 – – $30.8 Million of Forward Equity Sales through ATM Year to Date – NETSTREIT Corp. (NYSE: NTST) (the “Company”) today announced financial and operating results for the first quarter ended March 31, 2024. “I'm proud to report NETSTREIT's strong start to the year. We raised a combined $229.5 million from our January follow-on offering and our ATM program year to date, and have completed $129.2 million in gross investment activity at a blended cash yield of 7.5% during the quarter. With our 2024 capital needs already addressed, NETSTREIT is primed to continue to take advantage of an increasingly attractive acquisitions market,” said Mark Manheimer, Chief Executive Officer of NETSTREIT. FIRST QUARTER 2024 HIGHLIGHTS The following table summarizes the Company's select financial results1 for the three months ended March 31, 2024. Three Months Ended March 31, 2024 2023 % Change (Unaudited) Net Income per Diluted Share $ 0.01 $ 0.03 (67 )% Funds from Operations per Diluted Share $ 0.28 $ 0.28 — % Core Funds from Operations per Diluted Share $ 0.30 $ 0.28 7 % Adjusted Funds from Operations per Diluted Share $ 0.31 $ 0.30 3 % 1. Funds from operations ("FFO"), core funds from operations ("Core FFO"), and adjusted funds from operations ("AFFO") are non-GAAP financial measures. See "Non-GAAP Financial Measures." INVESTMENT ACTIVITY The following tables summarize the Company's investment and disposition activities (dollars in thousands) for the three months ended March 31, 2024. Three Months Ended March 31, 2024 Number of Investments Amount Investments 42 $ 129,207 Dispositions 12 21,600 Net Investment Activity $ 107,607 Investment Activity Cash Yield 7.5 % % of ABR derived from Investment Grade Tenants 84.8 % % of ABR derived from Investment Grade Profile Tenants — % Weighted Average Lease Term (years) 11.5 Disposition Activity Cash Yield 6.8 % Weighted Average Lease Term (years) 10.3 The following table summarizes the Company's on-going development projects and estimated development costs (dollars in thousands) as of March 31, 2024. Developments Three Months Ended March 31, 2024 Amount Funded During the Quarter $ 10,936 As of March 31, 2024 Number of Developments 16 Amount Funded to Date $ 27,780 Estimated Funding Remaining on Developments 19,357 Total Estimated Development Cost $ 47,137 PORTFOLIO UPDATE The following table summarizes the Company's real estate portfolio (weighted by ABR, dollars in thousands) as of March 31, 2024. As of March 31, 2024 Number of Investments 628 ABR $ 140,314 States 45 Square Feet 11,322,746 Tenants 88 Industries 26 Occupancy 100.0 % Weighted Average Lease Term (years) 9.2 Investment Grade % 71.1 % Investment Grade Profile % 13.3 % CAPITAL MARKETS AND BALANCE SHEET The following tables summarize the Company's leverage, balance sheet, liquidity and ATM sales (dollars in thousands, except per share data) as of and for the three months ended March 31, 2024. Leverage As of March 31, 2024 Net Debt / Annualized Adjusted EBITDAre 5.4x Adjusted Net Debt / Annualized Adjusted EBITDAre 3.1x Proforma Adjusted Net Debt / Annualized Adjusted EBITAre1 2.9x Liquidity Unused Unsecured Revolver Capacity $ 324,850 Cash, Cash Equivalents and Restricted Cash 22,334 Net Value of Unsettled Forward Equity 290,908 Total Liquidity $ 638,092 Net Value of Unsettled Forward Equity from April ATM Activity 28,746 Total Proforma Liquidity1 $ 666,838 January 2024 Forward Equity Offering As of March 31, 2024 Shares Unsettled 11,040,000 Price Per Share (Gross) $ 18.00 Net Value of Unsettled Forward Equity $ 190,467 ATM Program Shares Unsettled 107,500 Weighted Average Price Per Share (Gross) $ 18.29 Net Value of Unsettled Forward Equity $ 1,948 2023 ATM Program Initial Capacity $ 300,000 ATM Capacity Remaining as of March 31, 2024 $ 220,710 Unsettled Forward Equity Shares Unsettled as of March 31, 2024 17,131,211 Weighted Average Price Per Share (Net) $ 16.98 Net Value of Unsettled Forward Equity $ 290,908 1. See Subsequent Activity. These proforma calculations include the net value of unsettled shares from the April 2024 ATM activity. SUBSEQUENT ACTIVITY In April 2024, the Company sold 1,635,600 shares of its common stock through its at-the-market ("ATM") sales program (the "ATM Program"). The shares were sold on a forward basis at a weighted average price of $17.63 per share. The following table summarizes the Company's April ATM activity (dollars in thousands, except per share data). April 2024 ATM Activity As of April 29, 2024 Shares Unsettled 1,635,600 Price Per Share (Gross) $ 17.63 Net Value of Unsettled Forward Equity $ 28,746 DIVIDEND On April 23, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.205 per share for the second quarter of 2024. On an annualized basis, the dividend of $0.82 per share of common stock represents an increase of $0.02 per share over the prior year annualized dividend. The dividend will be paid on June 14, 2024 to shareholders of record on June 3, 2024. 2024 GUIDANCE The Company is increasing the low end of its 2024 AFFO per share guidance to a new range of $1.25 to $1.28 from its previously announced range of $1.24 to $1.28. The Company also expects cash G&A to be in the range of $13.5 million to $14.5 million (exclusive of transaction costs and severance payments). The Company's 2024 guidance is based on a number of assumptions that are subject to change and many of which are outside the Company's control. If actual results vary from these assumptions, the Company's expectations may change. There can be no assurance that the Company will achieve these results. AFFO is a non-GAAP financial measure. The Company does not provide a reconciliation of such forward-looking non-GAAP measure to the most directly comparable financial measures calculated and presented in accordance with GAAP because to do so would be potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items in any future period. The magnitude of these items, however, may be significant. EARNINGS CONFERENCE CALL A conference call will be held on Tuesday, April 30, 2024 at 11:00 AM ET. During the conference call the Company’s officers will review first quarter performance, discuss recent events, and conduct a question and answer period. The webcast will be accessible on the “Investor Relations” section of the Company’s website at www.NETSTREIT.com. To listen to the live webcast, please go to the site at least 15 minutes prior to the scheduled start time to register, as well as download and install any necessary audio software. The conference call can also be accessed by dialing 1-877-451-6152 for domestic callers or 1-201-389-0879 for international callers. A dial-in replay will be available starting shortly after the call until May 7, 2024, which can be accessed by dialing 1-844-512-2921 for domestic callers or 1-412-317-6671 for international callers. The passcode for this dial-in replay is 13745165. SUPPLEMENTAL PACKAGE The Company’s supplemental package will be available prior to the conference call in the Investor Relations section of the Company’s website at www.investors.netstreit.com. About NETSTREIT Corp. NETSTREIT Corp. is an internally managed real estate investment trust (REIT) based in Dallas, Texas that specializes in acquiring single-tenant net lease retail properties nationwide. The growing portfolio consists of high-quality properties leased to e-commerce resistant tenants with healthy balance sheets. Led by a management team of seasoned commercial real estate executives, NETSTREIT’s strategy is to create the highest quality net lease retail portfolio in the country with the goal of generating consistent cash flows and dividends for its investors. NON-GAAP FINANCIAL MEASURES This press release contains non-GAAP financial measures, including FFO, Core FFO, AFFO, EBITDA, EBITDAre, Adjusted EBITDAre, Annualized Adjusted EBITDAre, Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI Estimated Run Rate, Total Property-Level Cash NOI Estimated Run Rate, Net Debt and Adjusted Net Debt. A reconciliation of each non-GAAP financial measure to the most comparable GAAP measure, and definitions of each non-GAAP measure, are included below. FORWARD LOOKING STATEMENTS This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements concerning our business and growth strategies, investment, financing and leasing activities, including estimated development costs, trends in our business, including trends in the market for single-tenant, retail commercial real estate and our 2024 guidance. Words such as “expects,” “anticipates,” “intends,” “plans,” “likely,” “will,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this press release may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. For a further discussion of these and other factors that could impact future results, performance or transactions, see the information under the heading “Risk Factors” in our Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on February 14, 2024 and other reports filed with the SEC from time to time. Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release. New risks and uncertainties may arise over time and it is not possible for us to predict those events or how they may affect us. Many of the risks identified herein and in our periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from macroeconomic conditions, including inflation, interest rates and instability in the banking system. We expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law. NETSTREIT CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (Unaudited) March 31, 2024 December 31, 2023 Assets Real estate, at cost: Land $ 472,330 $ 460,896 Buildings and improvements 1,209,333 1,149,809 Total real estate, at cost 1,681,663 1,610,705 Less accumulated depreciation (110,632 ) (101,210 ) Property under development 21,800 29,198 Real estate held for investment, net 1,592,831 1,538,693 Assets held for sale 58,856 52,451 Mortgage loans receivable, net 124,617 114,472 Cash, cash equivalents and restricted cash 22,334 29,929 Lease intangible assets, net 165,507 161,354 Other assets, net 61,402 49,337 Total assets $ 2,025,547 $ 1,946,236 Liabilities and equity Liabilities: Term loans, net $ 621,500 $ 521,912 Revolving credit facility 75,000 80,000 Mortgage note payable, net 7,876 7,883 Lease intangible liabilities, net 24,639 25,353 Liabilities related to assets held for sale 1,110 1,158 Accounts payable, accrued expenses and other liabilities 26,265 36,498 Total liabilities 756,390 672,804 Commitments and contingencies Equity: Stockholders’ equity Common stock, $0.01 par value, 400,000,000 shares authorized; 73,328,411 and 73,207,080 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 733 732 Additional paid-in capital 1,368,312 1,367,505 Distributions in excess of retained earnings (126,270 ) (112,276 ) Accumulated other comprehensive income 18,020 8,943 Total stockholders’ equity 1,260,795 1,264,904 Noncontrolling interests 8,362 8,528 Total equity 1,269,157 1,273,432 Total liabilities and equity $ 2,025,547 $ 1,946,236 NETSTREIT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Revenues Rental revenue (including reimbursable) $ 35,189 $ 28,474 Interest income on loans receivable 2,484 978 Total revenues 37,673 29,452 Operating expenses Property 4,102 3,936 General and administrative 5,707 4,909 Depreciation and amortization 17,541 14,949 Provisions for impairment 3,662 — Transaction costs 129 109 Total operating expenses 31,141 23,903 Other (expense) income Interest expense, net (6,180 ) (3,944 ) Gain (loss) on sales of real estate, net 997 (319 ) Other (expense) income, net (1) (280 ) 152 Total other (expense) income, net (5,463 ) (4,111 ) Net income before income taxes 1,069 1,438 Income tax (expense) benefit (17 ) 43 Net income 1,052 1,481 Net income attributable to noncontrolling interests 7 9 Net income attributable to common stockholders $ 1,045 $ 1,472 Amounts available to common stockholders per common share: Basic $ 0.01 $ 0.03 Diluted $ 0.01 $ 0.03 Weighted average common shares: Basic 73,248,804 58,155,738 Diluted 74,565,790 58,883,386 (1) Includes a non-recurring other loss of $414,000. NETSTREIT CORP. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO FFO, CORE FFO AND ADJUSTED FFO (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Net income $ 1,052 $ 1,481 Depreciation and amortization of real estate 17,462 14,884 Provisions for impairment 3,662 — (Gain) loss on sales of real estate, net (997 ) 319 FFO 21,179 16,684 Adjustments: Non-recurring executive transition costs, severance and related charges 857 13 Non-recurring other loss (gain), net 414 (12 ) Core FFO 22,450 16,685 Adjustments: Straight-line rent adjustments (542 ) (311 ) Amortization of deferred financing costs 558 308 Amortization of above/below-market assumed debt 29 29 Amortization of loan origination costs and discounts 39 28 Amortization of lease-related intangibles (95 ) (213 ) Earned development interest 332 — Capitalized interest expense (353 ) (134 ) Non-cash interest expense (979 ) — Non-cash compensation expense 1,424 1,027 AFFO $ 22,863 $ 17,419 Weighted average common shares outstanding, basic 73,248,804 58,155,738 Operating partnership units outstanding 478,524 511,402 Unvested restricted stock units 168,556 175,859 Unsettled shares under open forward equity contracts 669,906 40,387 Weighted average common shares outstanding, diluted 74,565,790 58,883,386 FFO per common share, diluted $ 0.28 $ 0.28 Core FFO per common share, diluted $ 0.30 $ 0.28 AFFO per common share, diluted $ 0.31 $ 0.30 NETSTREIT CORP. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO EBITDA, EBITDAre AND ADJUSTED EBITDAre (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Net income $ 1,052 $ 1,481 Depreciation and amortization of real estate 17,462 14,884 Amortization of lease-related intangibles (95 ) (213 ) Non-real estate depreciation and amortization 79 65 Interest expense, net 6,180 3,944 Income tax expense (benefit) 17 (43 ) Amortization of loan origination costs 39 28 EBITDA 24,734 20,146 Adjustments: Provisions for impairments 3,662 — (Gain) loss on sales of real estate, net (997 ) 319 EBITDAre 27,399 20,465 Adjustments: Straight-line rent adjustments (542 ) (311 ) Non-recurring executive transition costs, severance and related charges 857 13 Non-recurring other loss (gain), net 414 (12 ) Other non-recurring expenses, net 158 — Non-cash compensation expense 1,424 1,027 Adjustment for construction in process (1) 497 157 Adjustment for intraquarter investment activities (2) 1,469 1,862 Adjusted EBITDAre $ 31,676 $ 23,201 Annualized Adjusted EBITDAre (3) $ 126,704 Net Debt As of March 31, 2024 Principal amount of total debt $ 708,322 Less: Cash, cash equivalents and restricted cash (22,334 ) Net Debt 685,988 Less: Value of unsettled forward equity (4) (290,908 ) Adjusted Net Debt $ 395,080 Less: Net value of unsettled April 2024 ATM activity (5) (28,746 ) Proforma adjusted net debt(5) $ 366,334 Leverage Net debt / Annualized Adjusted EBITDAre 5.4 x Adjusted Net Debt / Annualized Adjusted EBITDAre 3.1 x Proforma Adjusted Net Debt / Annualized Adjusted EBITDAre 2.9 x (1) Adjustment reflects the estimated cash yield on developments in process as of March 31, 2024. (2) Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments and interest earning loan activity completed during the three months ended March 31, 2024 and 2023 had occurred on January 1, 2024 and 2023, respectively. (3) We calculate Annualized Adjusted EBITDAre by multiplying Adjusted EBITDAre by four. (4) Reflects 17,131,211 of unsettled forward equity shares, at the March 31, 2024 available weighted average net settlement price of $16.98 per share. (5) Reflects 1,635,600 of unsettled forward equity shares sold through the ATM Program during April 2024 at a net settlement price of $17.58 per share. NETSTREIT CORP. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO NOI AND CASH NOI (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Net income $ 1,052 $ 1,481 General and administrative 5,707 4,909 Depreciation and amortization 17,541 14,949 Provisions for impairment 3,662 — Transaction costs 129 109 Interest expense, net 6,180 3,944 (Gain) loss on sales of real estate, net (997 ) 319 Income tax expense (benefit) 17 (43 ) Interest income on mortgage loans receivable (2,484 ) (978 ) Other expense (income), net 280 (152 ) Property-Level NOI 31,087 24,538 Straight-line rent adjustments (542 ) (311 ) Amortization of lease-related intangibles (95 ) (213 ) Property-Level Cash NOI $ 30,450 $ 24,014 Adjustment for intraquarter acquisitions, dispositions and interest earning development (1) 1,358 Property-Level Cash NOI Estimated Run Rate 31,808 Interest income on mortgage loans receivable 2,484 Adjustments for intraquarter mortgage loan activity (2) 111 Total Cash NOI - Estimated Run Rate $ 34,403 (1) Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments completed during the three months ended March 31, 2024, had occurred on January 1, 2024. (2) Adjustment assumes all loan activity completed during the three months ended March 31, 2024, had occurred on January 1, 2024. NON-GAAP FINANCIAL MEASURES FFO, Core FFO and AFFO The National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has promulgated a widely accepted non-GAAP financial measure of operating performance known as FFO. Our FFO is net income in accordance with GAAP, excluding gains (or losses) resulting from dispositions of properties, plus depreciation and amortization and impairment charges on depreciable real property. Core FFO is a non-GAAP financial measure defined as FFO adjusted to remove the effect of unusual and non-recurring items that are not expected to impact our operating performance or operations on an ongoing basis. These include non-recurring executive transition costs, severance and related charges, other loss (gain), net, and loss on debt extinguishments and other related costs. AFFO is a non-GAAP financial measure defined as Core FFO adjusted for GAAP net income related to non-cash revenues and expenses, such as straight-line rent, amortization of above- and below-market lease-related intangibles, amortization of lease incentives, capitalized interest expense, earned development interest, non-cash interest expense, non-cash compensation expense, amortization of deferred financing costs, amortization of above/below-market assumed debt, and amortization of loan origination costs. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. In fact, real estate values historically have risen or fallen with market conditions. FFO is intended to be a standard supplemental measure of operating performance that excludes historical cost depreciation and valuation adjustments from net income. We consider FFO to be useful in evaluating potential property acquisitions and measuring operating performance. We further consider FFO, Core FFO and AFFO to be useful in determining funds available for payment of distributions. FFO, Core FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. You should not consider FFO, Core FFO and AFFO to be alternatives to net income as a reliable measure of our operating performance nor should you consider FFO, Core FFO and AFFO to be alternatives to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity. FFO, Core FFO and AFFO do not measure whether cash flow is sufficient to fund our cash needs, including principal amortization, capital improvements and distributions to stockholders. FFO, Core FFO and AFFO do not represent cash flows from operating, investing or financing activities as defined by GAAP. Further, FFO, Core FFO and AFFO as disclosed by other REITs might not be comparable to our calculations of FFO, Core FFO and AFFO. EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre We compute EBITDA as earnings before interest expense, income tax expense, and depreciation and amortization. In 2017, NAREIT issued a white paper recommending that companies that report EBITDA also report EBITDAre. We compute EBITDAre in accordance with the definition adopted by NAREIT. NAREIT defines EBITDAre as EBITDA (as defined above) excluding gains (or losses) from the sales of depreciable property and impairment charges on depreciable real property. Adjusted EBITDAre is a non-GAAP financial measure defined as EBITDAre further adjusted to exclude straight-line rent, non-cash compensation expense, non-recurring executive transition costs, severance and related charges, loss on debt extinguishment and other related costs, other loss (gain), net, other non-recurring expenses (income), lease termination fees, adjustment for construction in process, and adjustment for intraquarter activities. Beginning in the quarter ended June 30, 2023, we modified our definition of Adjusted EBITDAre to include adjustments for construction in process and intraquarter investment activities. Prior periods have been recast to reflect this new definition. Annualized Adjusted EBITDAre is Adjusted EBITDAre multiplied by four. We present EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre as they are measures commonly used in our industry. We believe that these measures are useful to investors and analysts because they provide supplemental information concerning our operating performance, exclusive of certain non-cash items and other costs. We use EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre as measures of our operating performance and not as measures of liquidity. EBITDA, EBITDAre, Adjusted EBITDAre and Annualized Adjusted EBITDAre do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities and they are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. Additionally, our computation of EBITDA, EBITDAre, Adjusted EBITDAre and Annualized Adjusted EBITDAre may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs. Net Debt, Adjusted Net Debt, and Proforma Adjusted Net Debt We calculate our Net Debt as our principal amount of total debt outstanding excluding deferred financing costs, net discounts and debt issuance costs less cash, cash equivalents and restricted cash available for future investment. We believe excluding cash, cash equivalents and restricted cash available for future investment from our principal amount, all of which could be used to repay debt, provides an estimate on the net contractual amount of borrowed capital to be repaid. We believe these adjustments are additional beneficial disclosures to investors and analysis. We further adjust Net Debt by the net value of unsettled forward equity as of period end to derive Adjusted Net Debt. Proforma Adjusted Net Debt is Adjusted Net Debt shown on a proforma basis to include the net value of proforma equity issued after the period end as if it was outstanding as of period end. Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate are non-GAAP financial measures which we use to assess our operating results. We compute Property-Level NOI as net income (computed in accordance with GAAP), excluding general and administrative expenses, interest expense (or income), income tax expense, transaction costs, depreciation and amortization, gains (or losses) on sales of depreciable property, real estate impairment losses, interest income on mortgage loans receivable, loss on debt extinguishment, lease termination fees, and other expense (income), net. We further adjust Property-Level NOI for non-cash revenue components of straight-line rent and amortization of lease-intangibles to derive Property-Level Cash NOI. We further adjust Property-Level Cash NOI for intraquarter acquisitions, dispositions and completed developments to derive Property-Level Cash NOI - Estimated Run Rate. We further adjust Property-Level Cash NOI - Estimated Run Rate for interest income on mortgage loans receivable and intraquarter mortgage loan activity to derive Total Cash NOI - Estimated Run Rate. We believe Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate provide useful and relevant information because they reflect only those income and expense items that are incurred at the property level and present such items on an unlevered basis. Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate are not measurements of financial performance under GAAP, and may not be comparable to similarly titled measures of other companies. You should not consider our NOI and Cash NOI as alternatives to net income or cash flows from operating activities determined in accordance with GAAP. OTHER DEFINITIONS ABR is annualized base rent as of March 31, 2024, for all leases that commenced and annualized cash interest on mortgage loans receivable in place as of that date. Cash Yield is the annualized base rent contractually due from acquired properties, interest income from mortgage loans receivable, and completed developments, divided by the gross investment amount, or gross proceeds in the case of dispositions. Investments are lease agreements in place at owned properties, properties that have leases associated with mortgage loans receivable, developments where rent commenced, or in the case of master lease arrangements each property under the master lease is counted as a separate lease. Investment Grade are investments, or investments that are subsidiaries of a parent entity, with a credit rating of BBB- (S&P/Fitch), Baa3 (Moody's) or NAIC2 (National Association or Insurance Commissioners) or higher. Investment Grade Profile are investments with investment grade credit metrics (more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x), but do not carry a published rating from S&P, Fitch, Moody's, or NAIC. Occupancy is expressed as a percentage, and is the number of economically occupied properties divided by the total number of properties owned, excluding mortgage loans receivable and properties under development. Weighted Average Lease Term is weighted by the annualized base rent, excluding lease extension options and investments associated with mortgage loans receivable. View source version on businesswire.com: https://www.businesswire.com/news/home/20240429789081/en/Contacts Investor Relations ir@netstreit.com 972-597-4825
– Net income of $0.01 and Adjusted Funds from Operations ("AFFO") of $0.31 Per Diluted Share for First Quarter – – Completed $129.2 Million of Gross Investment Activity at 7.5% Blended Cash Yield for First Quarter – – Increasing Low End of 2024 AFFO Per Share Guidance to a New Range of $1.25 to $1.28 – – Completed $198.7 Million Forward Equity Offering in January 2024 – – $30.8 Million of Forward Equity Sales through ATM Year to Date –
NETSTREIT Corp. (NYSE: NTST) (the “Company”) today announced financial and operating results for the first quarter ended March 31, 2024. “I'm proud to report NETSTREIT's strong start to the year. We raised a combined $229.5 million from our January follow-on offering and our ATM program year to date, and have completed $129.2 million in gross investment activity at a blended cash yield of 7.5% during the quarter. With our 2024 capital needs already addressed, NETSTREIT is primed to continue to take advantage of an increasingly attractive acquisitions market,” said Mark Manheimer, Chief Executive Officer of NETSTREIT. FIRST QUARTER 2024 HIGHLIGHTS The following table summarizes the Company's select financial results1 for the three months ended March 31, 2024. Three Months Ended March 31, 2024 2023 % Change (Unaudited) Net Income per Diluted Share $ 0.01 $ 0.03 (67 )% Funds from Operations per Diluted Share $ 0.28 $ 0.28 — % Core Funds from Operations per Diluted Share $ 0.30 $ 0.28 7 % Adjusted Funds from Operations per Diluted Share $ 0.31 $ 0.30 3 % 1. Funds from operations ("FFO"), core funds from operations ("Core FFO"), and adjusted funds from operations ("AFFO") are non-GAAP financial measures. See "Non-GAAP Financial Measures." INVESTMENT ACTIVITY The following tables summarize the Company's investment and disposition activities (dollars in thousands) for the three months ended March 31, 2024. Three Months Ended March 31, 2024 Number of Investments Amount Investments 42 $ 129,207 Dispositions 12 21,600 Net Investment Activity $ 107,607 Investment Activity Cash Yield 7.5 % % of ABR derived from Investment Grade Tenants 84.8 % % of ABR derived from Investment Grade Profile Tenants — % Weighted Average Lease Term (years) 11.5 Disposition Activity Cash Yield 6.8 % Weighted Average Lease Term (years) 10.3 The following table summarizes the Company's on-going development projects and estimated development costs (dollars in thousands) as of March 31, 2024. Developments Three Months Ended March 31, 2024 Amount Funded During the Quarter $ 10,936 As of March 31, 2024 Number of Developments 16 Amount Funded to Date $ 27,780 Estimated Funding Remaining on Developments 19,357 Total Estimated Development Cost $ 47,137 PORTFOLIO UPDATE The following table summarizes the Company's real estate portfolio (weighted by ABR, dollars in thousands) as of March 31, 2024. As of March 31, 2024 Number of Investments 628 ABR $ 140,314 States 45 Square Feet 11,322,746 Tenants 88 Industries 26 Occupancy 100.0 % Weighted Average Lease Term (years) 9.2 Investment Grade % 71.1 % Investment Grade Profile % 13.3 % CAPITAL MARKETS AND BALANCE SHEET The following tables summarize the Company's leverage, balance sheet, liquidity and ATM sales (dollars in thousands, except per share data) as of and for the three months ended March 31, 2024. Leverage As of March 31, 2024 Net Debt / Annualized Adjusted EBITDAre 5.4x Adjusted Net Debt / Annualized Adjusted EBITDAre 3.1x Proforma Adjusted Net Debt / Annualized Adjusted EBITAre1 2.9x Liquidity Unused Unsecured Revolver Capacity $ 324,850 Cash, Cash Equivalents and Restricted Cash 22,334 Net Value of Unsettled Forward Equity 290,908 Total Liquidity $ 638,092 Net Value of Unsettled Forward Equity from April ATM Activity 28,746 Total Proforma Liquidity1 $ 666,838 January 2024 Forward Equity Offering As of March 31, 2024 Shares Unsettled 11,040,000 Price Per Share (Gross) $ 18.00 Net Value of Unsettled Forward Equity $ 190,467 ATM Program Shares Unsettled 107,500 Weighted Average Price Per Share (Gross) $ 18.29 Net Value of Unsettled Forward Equity $ 1,948 2023 ATM Program Initial Capacity $ 300,000 ATM Capacity Remaining as of March 31, 2024 $ 220,710 Unsettled Forward Equity Shares Unsettled as of March 31, 2024 17,131,211 Weighted Average Price Per Share (Net) $ 16.98 Net Value of Unsettled Forward Equity $ 290,908 1. See Subsequent Activity. These proforma calculations include the net value of unsettled shares from the April 2024 ATM activity. SUBSEQUENT ACTIVITY In April 2024, the Company sold 1,635,600 shares of its common stock through its at-the-market ("ATM") sales program (the "ATM Program"). The shares were sold on a forward basis at a weighted average price of $17.63 per share. The following table summarizes the Company's April ATM activity (dollars in thousands, except per share data). April 2024 ATM Activity As of April 29, 2024 Shares Unsettled 1,635,600 Price Per Share (Gross) $ 17.63 Net Value of Unsettled Forward Equity $ 28,746 DIVIDEND On April 23, 2024, the Company’s Board of Directors declared a quarterly cash dividend of $0.205 per share for the second quarter of 2024. On an annualized basis, the dividend of $0.82 per share of common stock represents an increase of $0.02 per share over the prior year annualized dividend. The dividend will be paid on June 14, 2024 to shareholders of record on June 3, 2024. 2024 GUIDANCE The Company is increasing the low end of its 2024 AFFO per share guidance to a new range of $1.25 to $1.28 from its previously announced range of $1.24 to $1.28. The Company also expects cash G&A to be in the range of $13.5 million to $14.5 million (exclusive of transaction costs and severance payments). The Company's 2024 guidance is based on a number of assumptions that are subject to change and many of which are outside the Company's control. If actual results vary from these assumptions, the Company's expectations may change. There can be no assurance that the Company will achieve these results. AFFO is a non-GAAP financial measure. The Company does not provide a reconciliation of such forward-looking non-GAAP measure to the most directly comparable financial measures calculated and presented in accordance with GAAP because to do so would be potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items in any future period. The magnitude of these items, however, may be significant. EARNINGS CONFERENCE CALL A conference call will be held on Tuesday, April 30, 2024 at 11:00 AM ET. During the conference call the Company’s officers will review first quarter performance, discuss recent events, and conduct a question and answer period. The webcast will be accessible on the “Investor Relations” section of the Company’s website at www.NETSTREIT.com. To listen to the live webcast, please go to the site at least 15 minutes prior to the scheduled start time to register, as well as download and install any necessary audio software. The conference call can also be accessed by dialing 1-877-451-6152 for domestic callers or 1-201-389-0879 for international callers. A dial-in replay will be available starting shortly after the call until May 7, 2024, which can be accessed by dialing 1-844-512-2921 for domestic callers or 1-412-317-6671 for international callers. The passcode for this dial-in replay is 13745165. SUPPLEMENTAL PACKAGE The Company’s supplemental package will be available prior to the conference call in the Investor Relations section of the Company’s website at www.investors.netstreit.com. About NETSTREIT Corp. NETSTREIT Corp. is an internally managed real estate investment trust (REIT) based in Dallas, Texas that specializes in acquiring single-tenant net lease retail properties nationwide. The growing portfolio consists of high-quality properties leased to e-commerce resistant tenants with healthy balance sheets. Led by a management team of seasoned commercial real estate executives, NETSTREIT’s strategy is to create the highest quality net lease retail portfolio in the country with the goal of generating consistent cash flows and dividends for its investors. NON-GAAP FINANCIAL MEASURES This press release contains non-GAAP financial measures, including FFO, Core FFO, AFFO, EBITDA, EBITDAre, Adjusted EBITDAre, Annualized Adjusted EBITDAre, Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI Estimated Run Rate, Total Property-Level Cash NOI Estimated Run Rate, Net Debt and Adjusted Net Debt. A reconciliation of each non-GAAP financial measure to the most comparable GAAP measure, and definitions of each non-GAAP measure, are included below. FORWARD LOOKING STATEMENTS This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements concerning our business and growth strategies, investment, financing and leasing activities, including estimated development costs, trends in our business, including trends in the market for single-tenant, retail commercial real estate and our 2024 guidance. Words such as “expects,” “anticipates,” “intends,” “plans,” “likely,” “will,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this press release may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. For a further discussion of these and other factors that could impact future results, performance or transactions, see the information under the heading “Risk Factors” in our Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on February 14, 2024 and other reports filed with the SEC from time to time. Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release. New risks and uncertainties may arise over time and it is not possible for us to predict those events or how they may affect us. Many of the risks identified herein and in our periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from macroeconomic conditions, including inflation, interest rates and instability in the banking system. We expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law. NETSTREIT CORP. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (Unaudited) March 31, 2024 December 31, 2023 Assets Real estate, at cost: Land $ 472,330 $ 460,896 Buildings and improvements 1,209,333 1,149,809 Total real estate, at cost 1,681,663 1,610,705 Less accumulated depreciation (110,632 ) (101,210 ) Property under development 21,800 29,198 Real estate held for investment, net 1,592,831 1,538,693 Assets held for sale 58,856 52,451 Mortgage loans receivable, net 124,617 114,472 Cash, cash equivalents and restricted cash 22,334 29,929 Lease intangible assets, net 165,507 161,354 Other assets, net 61,402 49,337 Total assets $ 2,025,547 $ 1,946,236 Liabilities and equity Liabilities: Term loans, net $ 621,500 $ 521,912 Revolving credit facility 75,000 80,000 Mortgage note payable, net 7,876 7,883 Lease intangible liabilities, net 24,639 25,353 Liabilities related to assets held for sale 1,110 1,158 Accounts payable, accrued expenses and other liabilities 26,265 36,498 Total liabilities 756,390 672,804 Commitments and contingencies Equity: Stockholders’ equity Common stock, $0.01 par value, 400,000,000 shares authorized; 73,328,411 and 73,207,080 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively 733 732 Additional paid-in capital 1,368,312 1,367,505 Distributions in excess of retained earnings (126,270 ) (112,276 ) Accumulated other comprehensive income 18,020 8,943 Total stockholders’ equity 1,260,795 1,264,904 Noncontrolling interests 8,362 8,528 Total equity 1,269,157 1,273,432 Total liabilities and equity $ 2,025,547 $ 1,946,236 NETSTREIT CORP. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Revenues Rental revenue (including reimbursable) $ 35,189 $ 28,474 Interest income on loans receivable 2,484 978 Total revenues 37,673 29,452 Operating expenses Property 4,102 3,936 General and administrative 5,707 4,909 Depreciation and amortization 17,541 14,949 Provisions for impairment 3,662 — Transaction costs 129 109 Total operating expenses 31,141 23,903 Other (expense) income Interest expense, net (6,180 ) (3,944 ) Gain (loss) on sales of real estate, net 997 (319 ) Other (expense) income, net (1) (280 ) 152 Total other (expense) income, net (5,463 ) (4,111 ) Net income before income taxes 1,069 1,438 Income tax (expense) benefit (17 ) 43 Net income 1,052 1,481 Net income attributable to noncontrolling interests 7 9 Net income attributable to common stockholders $ 1,045 $ 1,472 Amounts available to common stockholders per common share: Basic $ 0.01 $ 0.03 Diluted $ 0.01 $ 0.03 Weighted average common shares: Basic 73,248,804 58,155,738 Diluted 74,565,790 58,883,386 (1) Includes a non-recurring other loss of $414,000. NETSTREIT CORP. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO FFO, CORE FFO AND ADJUSTED FFO (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Net income $ 1,052 $ 1,481 Depreciation and amortization of real estate 17,462 14,884 Provisions for impairment 3,662 — (Gain) loss on sales of real estate, net (997 ) 319 FFO 21,179 16,684 Adjustments: Non-recurring executive transition costs, severance and related charges 857 13 Non-recurring other loss (gain), net 414 (12 ) Core FFO 22,450 16,685 Adjustments: Straight-line rent adjustments (542 ) (311 ) Amortization of deferred financing costs 558 308 Amortization of above/below-market assumed debt 29 29 Amortization of loan origination costs and discounts 39 28 Amortization of lease-related intangibles (95 ) (213 ) Earned development interest 332 — Capitalized interest expense (353 ) (134 ) Non-cash interest expense (979 ) — Non-cash compensation expense 1,424 1,027 AFFO $ 22,863 $ 17,419 Weighted average common shares outstanding, basic 73,248,804 58,155,738 Operating partnership units outstanding 478,524 511,402 Unvested restricted stock units 168,556 175,859 Unsettled shares under open forward equity contracts 669,906 40,387 Weighted average common shares outstanding, diluted 74,565,790 58,883,386 FFO per common share, diluted $ 0.28 $ 0.28 Core FFO per common share, diluted $ 0.30 $ 0.28 AFFO per common share, diluted $ 0.31 $ 0.30 NETSTREIT CORP. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO EBITDA, EBITDAre AND ADJUSTED EBITDAre (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Net income $ 1,052 $ 1,481 Depreciation and amortization of real estate 17,462 14,884 Amortization of lease-related intangibles (95 ) (213 ) Non-real estate depreciation and amortization 79 65 Interest expense, net 6,180 3,944 Income tax expense (benefit) 17 (43 ) Amortization of loan origination costs 39 28 EBITDA 24,734 20,146 Adjustments: Provisions for impairments 3,662 — (Gain) loss on sales of real estate, net (997 ) 319 EBITDAre 27,399 20,465 Adjustments: Straight-line rent adjustments (542 ) (311 ) Non-recurring executive transition costs, severance and related charges 857 13 Non-recurring other loss (gain), net 414 (12 ) Other non-recurring expenses, net 158 — Non-cash compensation expense 1,424 1,027 Adjustment for construction in process (1) 497 157 Adjustment for intraquarter investment activities (2) 1,469 1,862 Adjusted EBITDAre $ 31,676 $ 23,201 Annualized Adjusted EBITDAre (3) $ 126,704 Net Debt As of March 31, 2024 Principal amount of total debt $ 708,322 Less: Cash, cash equivalents and restricted cash (22,334 ) Net Debt 685,988 Less: Value of unsettled forward equity (4) (290,908 ) Adjusted Net Debt $ 395,080 Less: Net value of unsettled April 2024 ATM activity (5) (28,746 ) Proforma adjusted net debt(5) $ 366,334 Leverage Net debt / Annualized Adjusted EBITDAre 5.4 x Adjusted Net Debt / Annualized Adjusted EBITDAre 3.1 x Proforma Adjusted Net Debt / Annualized Adjusted EBITDAre 2.9 x (1) Adjustment reflects the estimated cash yield on developments in process as of March 31, 2024. (2) Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments and interest earning loan activity completed during the three months ended March 31, 2024 and 2023 had occurred on January 1, 2024 and 2023, respectively. (3) We calculate Annualized Adjusted EBITDAre by multiplying Adjusted EBITDAre by four. (4) Reflects 17,131,211 of unsettled forward equity shares, at the March 31, 2024 available weighted average net settlement price of $16.98 per share. (5) Reflects 1,635,600 of unsettled forward equity shares sold through the ATM Program during April 2024 at a net settlement price of $17.58 per share. NETSTREIT CORP. AND SUBSIDIARIES RECONCILIATION OF NET INCOME TO NOI AND CASH NOI (in thousands, except share and per share data) (Unaudited) Three Months Ended March 31, 2024 2023 Net income $ 1,052 $ 1,481 General and administrative 5,707 4,909 Depreciation and amortization 17,541 14,949 Provisions for impairment 3,662 — Transaction costs 129 109 Interest expense, net 6,180 3,944 (Gain) loss on sales of real estate, net (997 ) 319 Income tax expense (benefit) 17 (43 ) Interest income on mortgage loans receivable (2,484 ) (978 ) Other expense (income), net 280 (152 ) Property-Level NOI 31,087 24,538 Straight-line rent adjustments (542 ) (311 ) Amortization of lease-related intangibles (95 ) (213 ) Property-Level Cash NOI $ 30,450 $ 24,014 Adjustment for intraquarter acquisitions, dispositions and interest earning development (1) 1,358 Property-Level Cash NOI Estimated Run Rate 31,808 Interest income on mortgage loans receivable 2,484 Adjustments for intraquarter mortgage loan activity (2) 111 Total Cash NOI - Estimated Run Rate $ 34,403 (1) Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments completed during the three months ended March 31, 2024, had occurred on January 1, 2024. (2) Adjustment assumes all loan activity completed during the three months ended March 31, 2024, had occurred on January 1, 2024. NON-GAAP FINANCIAL MEASURES FFO, Core FFO and AFFO The National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has promulgated a widely accepted non-GAAP financial measure of operating performance known as FFO. Our FFO is net income in accordance with GAAP, excluding gains (or losses) resulting from dispositions of properties, plus depreciation and amortization and impairment charges on depreciable real property. Core FFO is a non-GAAP financial measure defined as FFO adjusted to remove the effect of unusual and non-recurring items that are not expected to impact our operating performance or operations on an ongoing basis. These include non-recurring executive transition costs, severance and related charges, other loss (gain), net, and loss on debt extinguishments and other related costs. AFFO is a non-GAAP financial measure defined as Core FFO adjusted for GAAP net income related to non-cash revenues and expenses, such as straight-line rent, amortization of above- and below-market lease-related intangibles, amortization of lease incentives, capitalized interest expense, earned development interest, non-cash interest expense, non-cash compensation expense, amortization of deferred financing costs, amortization of above/below-market assumed debt, and amortization of loan origination costs. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. In fact, real estate values historically have risen or fallen with market conditions. FFO is intended to be a standard supplemental measure of operating performance that excludes historical cost depreciation and valuation adjustments from net income. We consider FFO to be useful in evaluating potential property acquisitions and measuring operating performance. We further consider FFO, Core FFO and AFFO to be useful in determining funds available for payment of distributions. FFO, Core FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. You should not consider FFO, Core FFO and AFFO to be alternatives to net income as a reliable measure of our operating performance nor should you consider FFO, Core FFO and AFFO to be alternatives to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity. FFO, Core FFO and AFFO do not measure whether cash flow is sufficient to fund our cash needs, including principal amortization, capital improvements and distributions to stockholders. FFO, Core FFO and AFFO do not represent cash flows from operating, investing or financing activities as defined by GAAP. Further, FFO, Core FFO and AFFO as disclosed by other REITs might not be comparable to our calculations of FFO, Core FFO and AFFO. EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre We compute EBITDA as earnings before interest expense, income tax expense, and depreciation and amortization. In 2017, NAREIT issued a white paper recommending that companies that report EBITDA also report EBITDAre. We compute EBITDAre in accordance with the definition adopted by NAREIT. NAREIT defines EBITDAre as EBITDA (as defined above) excluding gains (or losses) from the sales of depreciable property and impairment charges on depreciable real property. Adjusted EBITDAre is a non-GAAP financial measure defined as EBITDAre further adjusted to exclude straight-line rent, non-cash compensation expense, non-recurring executive transition costs, severance and related charges, loss on debt extinguishment and other related costs, other loss (gain), net, other non-recurring expenses (income), lease termination fees, adjustment for construction in process, and adjustment for intraquarter activities. Beginning in the quarter ended June 30, 2023, we modified our definition of Adjusted EBITDAre to include adjustments for construction in process and intraquarter investment activities. Prior periods have been recast to reflect this new definition. Annualized Adjusted EBITDAre is Adjusted EBITDAre multiplied by four. We present EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre as they are measures commonly used in our industry. We believe that these measures are useful to investors and analysts because they provide supplemental information concerning our operating performance, exclusive of certain non-cash items and other costs. We use EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre as measures of our operating performance and not as measures of liquidity. EBITDA, EBITDAre, Adjusted EBITDAre and Annualized Adjusted EBITDAre do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities and they are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. Additionally, our computation of EBITDA, EBITDAre, Adjusted EBITDAre and Annualized Adjusted EBITDAre may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs. Net Debt, Adjusted Net Debt, and Proforma Adjusted Net Debt We calculate our Net Debt as our principal amount of total debt outstanding excluding deferred financing costs, net discounts and debt issuance costs less cash, cash equivalents and restricted cash available for future investment. We believe excluding cash, cash equivalents and restricted cash available for future investment from our principal amount, all of which could be used to repay debt, provides an estimate on the net contractual amount of borrowed capital to be repaid. We believe these adjustments are additional beneficial disclosures to investors and analysis. We further adjust Net Debt by the net value of unsettled forward equity as of period end to derive Adjusted Net Debt. Proforma Adjusted Net Debt is Adjusted Net Debt shown on a proforma basis to include the net value of proforma equity issued after the period end as if it was outstanding as of period end. Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate are non-GAAP financial measures which we use to assess our operating results. We compute Property-Level NOI as net income (computed in accordance with GAAP), excluding general and administrative expenses, interest expense (or income), income tax expense, transaction costs, depreciation and amortization, gains (or losses) on sales of depreciable property, real estate impairment losses, interest income on mortgage loans receivable, loss on debt extinguishment, lease termination fees, and other expense (income), net. We further adjust Property-Level NOI for non-cash revenue components of straight-line rent and amortization of lease-intangibles to derive Property-Level Cash NOI. We further adjust Property-Level Cash NOI for intraquarter acquisitions, dispositions and completed developments to derive Property-Level Cash NOI - Estimated Run Rate. We further adjust Property-Level Cash NOI - Estimated Run Rate for interest income on mortgage loans receivable and intraquarter mortgage loan activity to derive Total Cash NOI - Estimated Run Rate. We believe Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate provide useful and relevant information because they reflect only those income and expense items that are incurred at the property level and present such items on an unlevered basis. Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate are not measurements of financial performance under GAAP, and may not be comparable to similarly titled measures of other companies. You should not consider our NOI and Cash NOI as alternatives to net income or cash flows from operating activities determined in accordance with GAAP. OTHER DEFINITIONS ABR is annualized base rent as of March 31, 2024, for all leases that commenced and annualized cash interest on mortgage loans receivable in place as of that date. Cash Yield is the annualized base rent contractually due from acquired properties, interest income from mortgage loans receivable, and completed developments, divided by the gross investment amount, or gross proceeds in the case of dispositions. Investments are lease agreements in place at owned properties, properties that have leases associated with mortgage loans receivable, developments where rent commenced, or in the case of master lease arrangements each property under the master lease is counted as a separate lease. Investment Grade are investments, or investments that are subsidiaries of a parent entity, with a credit rating of BBB- (S&P/Fitch), Baa3 (Moody's) or NAIC2 (National Association or Insurance Commissioners) or higher. Investment Grade Profile are investments with investment grade credit metrics (more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x), but do not carry a published rating from S&P, Fitch, Moody's, or NAIC. Occupancy is expressed as a percentage, and is the number of economically occupied properties divided by the total number of properties owned, excluding mortgage loans receivable and properties under development. Weighted Average Lease Term is weighted by the annualized base rent, excluding lease extension options and investments associated with mortgage loans receivable. View source version on businesswire.com: https://www.businesswire.com/news/home/20240429789081/en/