– Net income of $0.03 and Adjusted Funds
from Operations ("AFFO") of $0.31 Per Diluted Share for Fourth
Quarter –
– Completed $119.1 Million of Gross
Investment Activity at 7.2% Blended Cash Yield for Fourth Quarter
–
– Reaffirms 2024 AFFO Per Share Guidance of
$1.24 to $1.28 –
– Completed Forward Equity Offering in
January 2024, Raising $190.8 Million of Net Proceeds –
NETSTREIT Corp. (NYSE: NTST) (the “Company”) today
announced financial and operating results for the fourth quarter
and year ended December 31, 2023.
“We're proud of our strong execution and performance in 2023,
completing $481 million of gross investment activity and growing
our 2023 AFFO per diluted share by 5% from prior year. With the
completion of our January forward equity offering, NETSTREIT is
well capitalized to take advantage of attractive investment
opportunities to deliver solid growth in 2024,” said Mark
Manheimer, Chief Executive Officer of NETSTREIT.
FOURTH QUARTER AND FULL YEAR 2023 HIGHLIGHTS
The following table summarizes the Company's select financial
results1 for the three months and year ended December 31, 2023.
Three Months Ended December
31,
2023
2022
% Change
(Unaudited)
Net Income per Diluted Share
$
0.03
$
0.05
(40
)%
Funds from Operations per Diluted
Share
$
0.30
$
0.26
15
%
Core Funds from Operations per Diluted
Share
$
0.30
$
0.28
7
%
Adjusted Funds from Operations per Diluted
Share
$
0.31
$
0.29
7
%
Year Ended December
31,
2023
2022
% Change
(Unaudited)
Net Income per Diluted Share
$
0.11
$
0.16
(31
)%
Funds from Operations per Diluted
Share
$
1.18
$
1.08
9
%
Core Funds from Operations per Diluted
Share
$
1.19
$
1.10
8
%
Adjusted Funds from Operations per Diluted
Share
$
1.22
$
1.16
5
%
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
and year ended December 31, 2023.
Three Months Ended December
31, 2023
Year Ended December 31,
2023
Number of Investments
Amount
Number of Investments
Amount
Investments
57
$
119,128
196
$
480,519
Dispositions1
6
15,995
22
49,506
Net Investment Activity
$
103,133
$
431,013
Investment Activity
Cash Yield
7.2
%
7.2
%
% of ABR derived from Investment Grade
Tenants
94.3
%
81.4
%
% of ABR derived from Investment Grade
Profile Tenants
4.4
%
11.8
%
Weighted Average Lease Term (years)
10.9
10.7
Disposition Activity
Cash Yield1
7.2
%
6.9
%
Weighted Average Lease Term (years)
11.2
7.8
1. Includes mortgage loan payoffs.
The following table summarizes the Company's on-going
development projects and estimated development costs (dollars in
thousands) as of December 31, 2023.
Developments
Three Months Ended December
31, 2023
Amount Funded During the Quarter
$
25,499
As of December 31,
2023
Number of Developments
24
Amount Funded to Date
$
41,118
Estimated Funding Remaining on
Developments
26,642
Total Estimated Development
Cost
$
67,760
PORTFOLIO UPDATE
The following table summarizes the Company's real estate
portfolio (weighted by ABR, dollars in thousands) as of December
31, 2023.
As of December 31,
2023
Number of Investments
598
ABR
$
131,859
States
45
Square Feet
10,624,183
Tenants
85
Industries
26
Occupancy
100.0
%
Weighted Average Lease Term (years)
9.5
Investment Grade %
70.5
%
Investment Grade Profile %
14.1
%
SUBSEQUENT ACTIVITY
In January 2024, the Company entered into forward sale
agreements related to 11,040,000 shares of its common stock at a
public offering price of $18.00 per share. The Company will have
until January 9, 2025 to settle the forward sale agreements. The
following table summarizes the Company's forward equity offering
(dollars in thousands, except per share data).
January 2024 Forward Equity
Offering
As of February 14,
2024
Shares Unsettled
11,040,000
Price Per Share (Gross)
$
18.00
Net Value of Unsettled Forward Equity
$
190,771
CAPITAL MARKETS AND BALANCE SHEET
The following tables summarize 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 December 31, 2023.
Leverage
As of December 31,
2023
Net Debt / Annualized Adjusted
EBITDAre
5.0x
Adjusted Net Debt / Annualized Adjusted
EBITDAre
4.1x
Proforma Adjusted Net Debt / Annualized
Adjusted EBITAre1
2.5x
Liquidity
Unused Unsecured Revolver Capacity
$
319,850
Cash, Cash Equivalents and Restricted
Cash
29,929
Net Value of Unsettled Forward Equity from
2023 ATM Issuance2
98,594
Remaining Available Principal of 2029 Term
Loan3
100,000
Total Liquidity
$
548,373
Net Value of Unsettled Forward Equity from
January 2024 Follow-On
190,771
Total Proforma Liquidity
$
739,144
ATM Program
Shares Issued During Quarter
4,478,539
Weighted Average Price Per Share
(Gross)
$
17.27
Net Proceeds
$
76,667
2023 ATM Program Initial Capacity
$
300,000
ATM Capacity Remaining as of December 31,
2023
$
222,677
Unsettled Forward Equity
Shares Unsettled as of December 31,
2023
5,983,711
Weighted Average Price Per Share (Net)
$
16.48
Net Value of Unsettled Forward Equity from
2023 ATM Issuance2
$
98,594
1.
Adjusted to include the net value of unsettled shares from the
January 2024 follow-on offering.
2.
Reflects 5,983,711 of unsettled forward equity shares under the
ATM program at the December 31, 2023 available net settlement price
of $16.48.
3.
All-in fixed rate of 4.99% consists of the fixed rate SOFR swap
of 3.74% on $250.0 million of notional value, plus a credit spread
adjustment of 0.10% and a borrowing spread of 1.15%.
DIVIDEND
On February 13, 2024, the Company’s Board of Directors declared
a quarterly cash dividend of $0.205 per share for the first 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 March
28, 2024 to shareholders of record on March 15, 2024.
2024 GUIDANCE
The Company is reaffirming its initial full year 2024 AFFO per
share guidance in the 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 Thursday, February 15, 2024 at
12:00 PM ET. During the conference call the Company’s officers will
review fourth quarter and full year 2023 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 February 22, 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 13743515.
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, 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
CONSOLIDATED BALANCE
SHEETS
(in thousands, except share and
per share data)
(Unaudited)
December 31,
2023
2022
Assets
Real estate, at cost:
Land
$
460,896
$
401,146
Buildings and improvements
1,149,809
907,084
Total real estate, at cost
1,610,705
1,308,230
Less accumulated depreciation
(101,210
)
(62,526
)
Property under development
29,198
16,796
Real estate held for investment, net
1,538,693
1,262,500
Assets held for sale
52,451
23,208
Mortgage loans receivable, net
114,472
46,378
Cash, cash equivalents and restricted
cash
29,929
70,543
Lease intangible assets, net
161,354
151,006
Other assets, net
49,337
52,057
Total assets
$
1,946,236
$
1,605,692
Liabilities and equity
Liabilities:
Term loans, net
$
521,912
$
373,296
Revolving credit facility
80,000
113,000
Mortgage note payable, net
7,883
7,896
Lease intangible liabilities, net
25,353
30,131
Liabilities related to assets held for
sale
1,158
406
Accounts payable, accrued expenses and
other liabilities
36,498
22,540
Total liabilities
672,804
547,269
Commitments and contingencies
Equity:
Stockholders’ equity
Common stock, $0.01 par value, 400,000,000
shares authorized; 73,207,080 and 58,031,879 shares issued and
outstanding as of December 31, 2023 and 2022, respectively
732
580
Additional paid-in capital
1,367,505
1,091,514
Distributions in excess of retained
earnings
(112,276
)
(66,937
)
Accumulated other comprehensive income
8,943
23,673
Total stockholders’ equity
1,264,904
1,048,830
Noncontrolling interests
8,528
9,593
Total equity
1,273,432
1,058,423
Total liabilities and equity
$
1,946,236
$
1,605,692
NETSTREIT CORP. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(in thousands, except share and
per share data)
(Unaudited)
Year Ended December
31,
2023
2022
2021
Revenues
Rental revenue (including
reimbursable)
$
123,967
$
93,934
$
59,140
Interest income on loans receivable
7,388
2,345
—
Other revenue
550
—
—
Total revenues
131,905
96,279
59,140
Operating expenses
Property
16,413
11,695
5,803
General and administrative
20,176
19,053
14,810
Depreciation and amortization
63,677
50,075
30,807
Provisions for impairment
7,083
1,114
3,539
Transaction costs
456
839
700
Total operating expenses
107,805
82,776
55,659
Other income (expense)
Interest expense, net
(19,058
)
(9,181
)
(3,700
)
Gain on sales of real estate, net
1,175
4,148
2,997
Loss on debt extinguishment
(128
)
—
—
Other income, net
752
131
431
Total other income (expense), net
(17,259
)
(4,902
)
(272
)
Net income before income taxes
6,841
8,601
3,209
Income tax benefit (expense)
49
(396
)
(59
)
Net income
6,890
8,205
3,150
Net income attributable to noncontrolling
interests
53
88
104
Net income attributable to common
stockholders
$
6,837
$
8,117
$
3,046
Amounts available to common stockholders
per common share:
Basic
$
0.11
$
0.16
$
0.08
Diluted
$
0.11
$
0.16
$
0.08
Weighted average common shares:
Basic
63,922,973
49,517,977
36,999,459
Diluted
64,665,439
50,431,822
38,672,565
NETSTREIT CORP. AND
SUBSIDIARIES
RECONCILIATION OF NET INCOME
TO FFO, CORE FFO AND ADJUSTED FFO
(in thousands, except share and
per share data)
(Unaudited)
Year Ended December
31,
2023
2022
Net income
$
6,890
$
8,205
Depreciation and amortization of real
estate
63,379
49,498
Provisions for impairment
7,083
1,114
Gain on sales of real estate, net
(1,175
)
(4,148
)
FFO
76,177
54,669
Adjustments:
Non-recurring executive transition costs,
severance and related charges
362
848
Loss on debt extinguishment and other
related costs
223
—
Gain on insurance proceeds
(78
)
(126
)
Core FFO
76,684
55,391
Adjustments:
Straight-line rent adjustments
(1,163
)
(1,286
)
Amortization of deferred financing
costs
1,730
862
Amortization of above/below-market assumed
debt
114
29
Amortization of loan origination costs
163
88
Amortization of lease-related
intangibles
(611
)
(889
)
Earned development interest
515
—
Capitalized interest expense
(1,060
)
(452
)
Non-cash interest expense
(2,124
)
—
Non-cash compensation expense
4,822
4,774
AFFO
$
79,070
$
58,517
Weighted average common shares
outstanding, basic
63,922,973
49,517,977
Weighted average operating partnership
units outstanding
501,751
526,859
Weighted average dilutive securities
165,420
248,602
Weighted average unsettled shares under
forwards
75,295
138,384
Weighted average common shares
outstanding, diluted
64,665,439
50,431,822
FFO per common share, diluted
$
1.18
$
1.08
Core FFO per common share, diluted
$
1.19
$
1.10
AFFO per common share, diluted
$
1.22
$
1.16
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 December
31,
2023
2022
Net income
$
1,962
$
2,810
Depreciation and amortization of real
estate
17,000
13,797
Amortization of lease-related
intangibles
(93
)
(246
)
Non-real estate depreciation and
amortization
78
141
Interest expense, net
5,646
3,473
Income tax expense
10
41
Amortization of loan origination costs
80
28
EBITDA
24,683
20,044
Adjustments:
Provisions for impairment
2,709
—
Gain on sales of real estate, net
(506
)
(1,986
)
EBITDAre
26,886
18,058
Adjustments:
Straight-line rent adjustments
(456
)
(142
)
Non-recurring executive transition costs,
severance and related charges
86
848
Gain on insurance proceeds
(31
)
(90
)
Non-cash compensation expense
1,264
1,128
Adjustment for construction in process
(1)
719
315
Adjustment for intraquarter investment
activities (2)
820
1,334
Adjusted EBITDAre
$
29,288
$
21,451
Annualized Adjusted EBITDAre (3)
$
117,152
Net Debt
As of December 31,
2023
Principal amount of total debt
$
613,361
Less: Cash, cash equivalents and
restricted cash
(29,929
)
Net Debt
583,432
Less: Net value of unsettled forward
equity from 2023 ATM issuance (4)
(98,594
)
Adjusted Net Debt
$
484,838
Less: Net value of unsettled forward
equity from January 2024 offering (5)
(190,771
)
Proforma Adjusted Net Debt
$
294,067
Leverage
Net debt / Annualized Adjusted
EBITDAre
5.0 x
Adjusted Net Debt / Annualized Adjusted
EBITDAre
4.1 x
Proforma Adjusted Net Debt / Annualized
Adjusted EBITDAre
2.5 x
(1)
Adjustment reflects the estimated
cash yield on developments in process as of December 31, 2023.
(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 December 31, 2023 and 2022 had occurred on
October 1, 2023 and 2022, respectively.
(3)
We calculate Annualized Adjusted
EBITDAre by multiplying Adjusted EBITDAre by four.
(4)
There were 5,983,711 of unsettled
forward equity shares under the ATM program at the December 31,
2023 available net settlement price of $16.48.
(5)
Reflects 11,040,000 of unsettled
shares from the January 2024 offering.
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 December
31,
Year Ended December
31,
2023
2022
2023
2022
Net income
$
1,962
$
2,810
$
6,890
$
8,205
General and administrative
4,876
5,444
20,176
19,053
Depreciation and amortization
17,078
13,938
63,677
50,075
Provisions for impairment
2,709
—
7,083
1,114
Transaction costs
189
135
456
839
Interest expense, net
5,646
3,473
19,058
9,181
Gain on sales of real estate, net
(506
)
(1,986
)
(1,175
)
(4,148
)
Income tax expense
10
41
(49
)
396
Loss on debt extinguishment
—
—
128
—
Interest income on mortgage loans
receivable
(2,243
)
(674
)
(7,388
)
(2,345
)
Lease termination fees
—
—
(550
)
—
Other income, net
(166
)
(95
)
(752
)
(131
)
Property-Level NOI
29,555
23,086
107,554
82,239
Straight-line rent adjustments
(456
)
(142
)
(1,163
)
(1,286
)
Amortization of lease-related
intangibles
(93
)
(246
)
(611
)
(889
)
Property-Level Cash NOI
$
29,006
$
22,698
$
105,780
$
80,064
Adjustment for intraquarter acquisitions,
dispositions and completed development (1)
705
Property-Level Cash NOI Estimated Run
Rate
29,711
Interest income on mortgage loans
receivable
2,243
Adjustments for intraquarter mortgage loan
activity (2)
115
Total Cash NOI - Estimated Run Rate
$
32,069
(1)
Adjustment assumes all re-leasing
activity, investments in and dispositions of real estate, including
developments completed during the three months ended December 31,
2023, had occurred on October 1, 2023.
(2)
Adjustment assumes all loan activity
completed during the three months ended December 31, 2023, had
occurred on October 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 include 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, 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, gain on insurance proceeds, 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 and 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.
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
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 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
December 31, 2023, 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/20240214553143/en/
Investor Relations ir@netstreit.com 972-597-4825
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