– Net loss of $(0.01) and Adjusted Funds
from Operations ("AFFO") of $0.30 Per Diluted Share –
– Completed $119 Million of Investment
Activity –
– Extended Maturity of Existing $175 Million
Term Loan to 20271 –
– Subsequent to Quarter End, Closed on New
$250 Million Term Loan Due 20291 –
– Increased 2023 AFFO Per Share Guidance
Midpoint and Raised Net Investment Guidance to At Least $450
Million –
– Increased Quarterly Dividend by 2.5% to
$0.205 Per Share –
NETSTREIT Corp. (NYSE: NTST) (the “Company”), today
announced financial and operating results for the second quarter
ended June 30, 2023.
“NETSTREIT had a strong second quarter completing $115 million
in net investment activity at a blended cash yield of 6.8%. Our
defensive net lease portfolio is benefiting from our focus on the
highest credit quality U.S. retailers, which continue to provide us
with ample investment opportunities via a variety of sourcing
channels,” said Mark Manheimer, Chief Executive Officer of
NETSTREIT. “In addition, we recently completed several debt
transactions, which allowed us to substantially increase our
liquidity profile, extend our nearest term debt maturity to 2027,
and fix the interest rate on all our term loan facilities. With an
improved balance sheet and a strong investment pipeline, we are
increasing our 2023 AFFO per share guidance midpoint and our 2023
net investment activity guidance. Lastly, our board of directors
has approved a 2.5% increase in our quarterly dividend to $0.205
per share.”
SECOND QUARTER 2023 HIGHLIGHTS
The following table summarizes the Company's select financial
results2 for the three and six months ended June 30, 2023.
Three Months Ended June
30,
2023
2022
% Change
Net (Loss) Income per Diluted Share
$
(0.01
)
$
0.04
(125
)%
Funds from Operations per Diluted
Share
$
0.28
$
0.26
8
%
Core Funds from Operations per Diluted
Share
$
0.29
$
0.26
12
%
Adjusted Funds from Operations per Diluted
Share
$
0.30
$
0.28
7
%
Six Months Ended June
30,
2023
2022
% Change
Net Income per Diluted Share
$
0.01
$
0.08
(88
)%
Funds from Operations per Diluted
Share
$
0.56
$
0.54
4
%
Core Funds from Operations per Diluted
Share
$
0.57
$
0.54
6
%
Adjusted Funds from Operations per Diluted
Share
$
0.60
$
0.57
5
%
1.
Includes the exercise of all extension
options, which are at the Company's discretion.
2.
Non-GAAP financial measure. See "Non-GAAP
Financial Measures."
INVESTMENT ACTIVITY
The following table summarizes the Company's investment and
disposition activities (dollars in thousands) for the three and six
months ended June 30, 2023.
Three Months Ended June
30, 2023
Six Months Ended June
30, 2023
Number of Investments
Amount
Number of Investments
Amount
Investments
45
$
119,017
116
$
247,632
Dispositions
2
4,060
10
19,967
Net Investment Activity
$
114,957
$
227,665
Investment Activity
Cash Yield
6.8
%
7.3
%
% of ABR derived from Investment Grade
Tenants
77.0
%
77.7
%
% of ABR derived from Investment Grade
Profile Tenants
4.3
%
11.0
%
Weighted Average Lease Term (years)
11.6
10.8
Disposition Activity
Cash Yield
6.7
%
6.8
%
Weighted Average Lease Term (years)
4.2
5.3
The following tables summarize the Company's on-going
development projects and estimated development costs (dollars in
thousands) as of June 30, 2023.
Developments
Three Months Ended June
30, 2023
Amount Funded During the Quarter1
$
13,706
As of June 30, 2023
Number of Developments
17
Amount Funded to Date1
$
20,112
Estimated Funding Remaining on
Developments1
20,692
Total Estimated Development
Cost
$
40,804
1.
Excludes interest earning
developments.
PORTFOLIO UPDATE
The following table summarizes the Company's real estate
portfolio (weighted by ABR, dollars in thousands) as of June 30,
2023.
As of June 30, 2023
Number of Investments
531
ABR
$
116,898
States
45
Square Feet
9,509,179
Tenants
87
Industries
25
Occupancy
100.0
%
Weighted Average Lease Term (years)
9.4
Investment Grade %
67.7
%
Investment Grade Profile %
14.1
%
CAPITAL MARKETS AND BALANCE SHEET
The following table summarizes the Company's leverage, balance
sheet, liquidity, ATM issuances, and settlement of our forward
equity offerings (dollars in thousands, except per share data) as
of and for June 30, 2023.
Leverage
As of June 30, 2023
Net Debt / Annualized Adjusted
EBITDAre
4.6x
Liquidity
Unused Unsecured Revolver Capacity
$
294,000
Cash, Cash Equivalents and Restricted
Cash
13,140
Total Liquidity
$
307,140
Plus: Maximum Available Principal of 2029
Term Loan
250,000
Total Proforma Liquidity
$
557,140
Forward Equity
Shares Outstanding as of June 30, 2023
—
Shares Settled During Quarter
4,763,320
Weighted Average Price Per Share
$
20.20
Net Proceeds Received
$
91,116
ATM Program
Shares Issued During Quarter
1,364,815
Weighted Average Price Per Share
$
17.53
Net Proceeds
$
23,420
ATM Capacity
$
250,000
Aggregate Gross ATM Sales through June 30,
2023
$
122,697
ATM Capacity Remaining as of June 30,
2023
$
127,303
DEBT ACTIVITY
On June 15, 2023, the Company closed on the amendment and
restatement of its existing $175.0 million senior unsecured term
loan to extend the maturity to January 2026 from December 2024,
with a one-year extension option to further extend the maturity to
January 2027, at the Company's discretion.
SUBSEQUENT DEBT ACTIVITY
Subsequent to quarter end, the Company closed a new three-year
$250.0 million sustainability-linked senior unsecured term loan
facility with a delayed draw option (the "Term Loan"). The Term
Loan initially matures in July 2026 and includes two one-year
options and one six-month option to extend the maturity to January
2029 (5.5-year term) at the Company's discretion, and an accordion
feature that allow the Company to increase the aggregate
availability under the Term Loan to $400.0 million. At close on
July 3, 2023, the initial amount drawn on the Term Loan was $150.0
million.
The following table summarizes the terms of the Term Loan
(dollars in thousands).
2029 Term Loan
Fully Extended Maturity Date
January 2029
Initial Principal Drawn
$
150,000
Maximum Available Principal
$
250,000
Full Capacity if Accordion Exercised
$
400,000
All-In Fixed Interest Rate1
4.99%
1.
All-in fixed rate consists of the fixed
rate SOFR swap of 3.64%, plus a credit spread adjustment of 0.10%
and a borrowing spread of 1.15%.
DIVIDEND
On July 24, 2023, the Company’s Board of Directors declared a
quarterly cash dividend of $0.205 per share for the third quarter
of 2023. On an annualized basis, the dividend of $0.82 per share of
common stock represents an increase of $0.02 per share over the
previous annualized dividend. The dividend will be paid on
September 15, 2023 to shareholders of record on September 1,
2023.
2023 GUIDANCE
The Company is updating its full year 2023 AFFO per share
guidance range to $1.20 to $1.23 from the prior range of $1.17 to
$1.23. The Company is also increasing its 2023 net investment
activity guidance to at least $450.0 million, from $400.0 million
as previously announced.
Certain of the forward-looking financial measures above are
provided on a non-GAAP basis. The Company does not provide a
reconciliation of such forward-looking measures 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 Thursday, July 27, 2023 at
11:00 AM ET. During the conference call the Company’s officers will
review second 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 fifteen minutes
prior to the scheduled start time to register, as well as download
and install any necessary audio software. A replay of the webcast
will be available for 90 days on the Company’s website shortly
after the call.
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 August 3, 2023, 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
13739741.
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 and 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, and trends in our business, including
trends in the market for single-tenant, retail commercial real
estate. 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, 2022 filed with
the Securities and Exchange Commission (the “SEC”) on February 23,
2023 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
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share and
per share data)
(Unaudited)
June 30,
December 31,
2023
2022
Assets
Real estate, at cost:
Land
$
424,821
$
401,146
Buildings and improvements
1,005,884
907,084
Total real estate, at cost
1,430,705
1,308,230
Less accumulated depreciation
(80,527
)
(62,526
)
Property under development
24,192
16,796
Real estate held for investment, net
1,374,370
1,262,500
Assets held for sale
37,915
23,208
Mortgage loans receivables, net
107,758
46,378
Cash, cash equivalents and restricted
cash
13,140
70,543
Lease intangible assets, net
158,067
151,006
Other assets, net
56,508
52,057
Total assets
$
1,747,758
$
1,605,692
Liabilities and equity
Liabilities:
Term loans, net
$
372,686
$
373,296
Revolving credit facility
106,000
113,000
Mortgage note payable, net
7,896
7,896
Lease intangible liabilities, net
27,434
30,131
Liabilities related to assets held for
sale
83
406
Accounts payable, accrued expenses and
other liabilities
29,064
22,540
Total liabilities
543,163
547,269
Commitments and contingencies
Equity:
Stockholders’ equity
Common stock, $0.01 par value, 400,000,000
shares authorized; 66,991,597 and 58,031,879 shares issued and
outstanding as of June 30, 2023 and December 31, 2022,
respectively
670
580
Additional paid-in capital
1,260,879
1,091,514
Distributions in excess of retained
earnings
(90,329
)
(66,937
)
Accumulated other comprehensive income
24,082
23,673
Total stockholders’ equity
1,195,302
1,048,830
Noncontrolling interests
9,293
9,593
Total equity
1,204,595
1,058,423
Total liabilities and equity
$
1,747,758
$
1,605,692
NETSTREIT CORP. AND
SUBSIDIARIES
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands, except share and
per share data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenues
Rental revenue (including
reimbursable)
$
29,707
$
22,048
$
58,180
$
42,970
Interest income on loans receivable
1,923
586
2,901
997
Total revenues
31,630
22,634
61,081
43,967
Operating expenses
Property
3,530
2,685
7,467
5,617
General and administrative
5,260
4,865
10,168
9,057
Depreciation and amortization
15,847
11,751
30,795
22,730
Provisions for impairment
2,836
1,114
2,836
1,114
Transaction costs
15
488
124
653
Total operating expenses
27,488
20,903
51,390
39,171
Other income (expense)
Interest expense, net
(5,521
)
(1,522
)
(9,465
)
(2,691
)
Gain on sales of real estate, net
615
1,858
296
2,019
Loss on debt extinguishment
(128
)
—
(128
)
—
Other income
68
36
220
36
Total other (expense) income, net
(4,966
)
372
(9,077
)
(636
)
Net (loss) income before income taxes
(824
)
2,103
614
4,160
Income tax benefit (expense)
32
(93
)
75
(184
)
Net (loss) income
(792
)
2,010
689
3,976
Net (loss) income attributable to
noncontrolling interests
(1
)
23
8
47
Net (loss) income attributable to
common stockholders
$
(791
)
$
1,987
$
681
$
3,929
Amounts available to common stockholders
per common share:
Basic
$
(0.01
)
$
0.04
$
0.01
$
0.08
Diluted
$
(0.01
)
$
0.04
$
0.01
$
0.08
Weighted average common shares:
Basic
61,043,531
48,140,041
59,600,630
46,279,122
Diluted
61,043,531
48,951,833
60,294,734
47,277,468
NETSTREIT CORP. AND
SUBSIDIARIES
RECONCILIATION OF NET INCOME
(LOSS) TO FFO, CORE FFO AND ADJUSTED FFO
(In thousands, except share and
per share data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(Unaudited)
(Unaudited)
Net (loss) income
$
(792
)
$
2,010
$
689
$
3,976
Depreciation and amortization of real
estate
15,769
11,598
30,653
22,460
Provisions for impairment
2,836
1,114
2,836
1,114
Gain on sales of real estate, net
(615
)
(1,858
)
(296
)
(2,019
)
FFO
$
17,198
$
12,864
$
33,882
$
25,531
Adjustments:
Non-recurring executive transition costs,
severance and related charges
201
—
214
—
Loss on debt extinguishment and other
related costs
223
—
223
—
Gain on insurance proceeds
(35
)
(36
)
(47
)
(36
)
Core FFO
$
17,587
$
12,828
$
34,272
$
25,495
Adjustments:
Straight-line rent adjustments
(151
)
(346
)
(462
)
(872
)
Amortization of deferred financing
costs
336
157
615
314
Amortization of above/below-market assumed
debt
29
—
57
—
Amortization of loan origination costs
28
13
56
31
Amortization of lease-related
intangibles
(184
)
(166
)
(397
)
(331
)
Capitalized interest expense
(150
)
(46
)
(284
)
(103
)
Non-cash compensation expense
1,252
1,298
2,279
2,343
AFFO
$
18,747
$
13,738
$
36,136
$
26,877
Weighted average common shares
outstanding, basic
61,043,531
48,140,041
59,600,630
46,279,122
Operating partnership units
outstanding
507,773
527,539
509,588
539,054
Unvested restricted stock units
152,785
235,295
164,322
264,784
Unsettled shares under open forward equity
contracts
—
48,958
20,194
194,508
Weighted average common shares
outstanding, diluted
61,704,089
48,951,833
60,294,734
47,277,468
FFO per common share, diluted
$
0.28
$
0.26
$
0.56
$
0.54
Core FFO per common share, diluted
$
0.29
$
0.26
$
0.57
$
0.54
AFFO per common share, diluted
$
0.30
$
0.28
$
0.60
$
0.57
RECONCILIATION OF NET INCOME
(LOSS) TO EBITDA, EBITDAre AND ADJUSTED EBITDAre
(In thousands)
(Unaudited)
Three Months Ended June
30,
2023
2022
(Unaudited)
Net (loss) income
$
(792
)
$
2,010
Depreciation and amortization of real
estate
15,769
11,598
Amortization of lease-related
intangibles
(184
)
(166
)
Non-real estate depreciation and
amortization
78
153
Interest expense, net
5,521
1,522
Income tax expense (benefit)
(32
)
93
Loss on debt extinguishment
128
—
Amortization of loan origination costs
28
13
EBITDA
20,516
15,223
Adjustments:
Provision for impairments
2,836
1,114
Gain on sales of real estate, net
(615
)
(1,858
)
EBITDAre
22,737
14,479
Adjustments:
Straight-line rent adjustments
(151
)
(346
)
Loss on debt extinguishment and other
related costs
223
—
Non-recurring executive transition costs,
severance and related charges
201
—
Gain on insurance proceeds
(35
)
(36
)
Other non-recurring expenses
242
—
Non-cash compensation expense
1,252
1,298
Adjustment for construction in
process(1)
334
189
Adjustment for intraquarter investment
activities(2)
817
1,701
Adjusted EBITDAre
$
25,620
$
17,285
Annualized Adjusted EBITDAre(3)
$
102,480
Net debt / Annualized Adjusted
EBITDAre
4.6 x
As of June 30,
2023
Total Debt
$
489,435
Cash, cash equivalents and restricted
cash
(13,140
)
Value of outstanding forward equity(4)
—
Net Debt
$
476,295
(1)
Adjustment reflects the estimated cash
yield on non-interest earning construction in process balances as
of period end.
(2)
Adjustment assumes all re-leasing
activity, investments in and dispositions of real estate, including
interest earning developments and interest earning loan activity
completed during the three months ended June 30, 2023, and June 30,
2022 had occurred on April 1, 2023, and April 1, 2022,
respectively.
(3)
We calculate Annualized Adjusted EBITDAre
by multiplying Adjusted EBITDAre by four.
(4)
There were no unsettled shares under
forward equity contracts as of June 30, 2023.
RECONCILIATION OF NET INCOME
(LOSS) TO NOI AND CASH NOI
(In thousands)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
(Unaudited)
(Unaudited)
Net (loss) income
$
(792
)
$
2,010
$
689
$
3,976
General and administrative
5,260
4,865
10,168
9,057
Depreciation and amortization
15,847
11,751
30,795
22,730
Provisions for impairment
2,836
1,114
2,836
1,114
Transaction costs
15
488
124
653
Interest expense, net
5,521
1,522
9,465
2,691
Gain on sales of real estate, net
(615
)
(1,858
)
(296
)
(2,019
)
Income tax expense (benefit)
(32
)
93
(75
)
184
Loss on debt extinguishment
128
—
128
—
Interest income on mortgage loans
receivable
(1,923
)
(586
)
(2,901
)
(997
)
Other income
(68
)
(36
)
(220
)
(36
)
Property-Level NOI
26,177
19,363
50,713
37,353
Straight-line rent adjustments
(151
)
(346
)
(462
)
(872
)
Amortization of lease-related
intangibles
(184
)
(166
)
(397
)
(331
)
Property-Level Cash NOI
$
25,842
$
18,851
$
49,854
$
36,150
Adjustment for intraquarter acquisitions,
dispositions and interest earning development(1)
687
Property-Level Cash NOI Estimated Run
Rate
26,529
Interest income on mortgage loans
receivable
1,923
Adjustments for intraquarter mortgage loan
activity(2)
130
Total Cash NOI - Estimated Run Rate
$
28,582
(1)
Adjustment assumes all re-leasing
activity, investments in and dispositions of real estate, including
interest earning developments, completed during the three months
ended June 30, 2023, had occurred on April 1, 2023.
(2)
Adjustment assumes all loan activity
completed during the three months ended June 30, 2023, had occurred
on April 1, 2023.
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 have included non-recurring executive
transition costs, severance and related charges, gain on insurance
proceeds, 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, 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, gain on insurance proceeds, other
non-recurring expenses, 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
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 of the net contractual amount of
borrowed capital to be repaid, which we believe is a beneficial
disclosure to investors and analysts. We further adjust Net Debt by
the value of outstanding forward equity as of period end. We
believe these adjustments are additional beneficial disclosures to
investors and analysis.
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, and other income (or expense). 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 interest
earning 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 measures 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
the most recent quarter end for all leases that commenced,
annualized cash interest on mortgage loans receivable, and the cash
yield on amounts funded to date on interest earning construction in
process.
Cash Yield is the annualized base
rent contractually due from acquired properties, interest income
from mortgage loans receivable, completed developments, and
interest earned from construction in process, 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,
interest earning developments, 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20230726189724/en/
Investor Relations ir@netstreit.com 972-597-4825
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