NNN REIT Q3 2025 Earnings Report

NNN REIT EPS Results

• Actual EPS: $0.86
• Consensus EPS: $0.86
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A

NNN REIT Revenue Results

• Actual Revenue: $230.16 million
• Expected Revenue: $228.45 million
• Beat/Miss: Beat by +$1.71 million
• YoY Revenue Growth: N/A

NNN REIT Announcement Details

• Quarter: Q3 2025
• Date: 11/4/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, November 4, 2025
• Conference Call Time: 10:30AM ET

NNN REIT (NYSE:NNN) (NYSE: NNN), formally known as National Retail Properties, is a publicly traded real estate investment trust focused on acquiring, owning and managing a diversified portfolio of retail properties across the United States. As a net-lease REIT, the company enters into long-term, triple-net leases with national and regional tenants, shifting most property-related expenses, including maintenance, taxes and insurance, to its lessees. This structure provides NNN REIT with predictable cash flows and a stable income stream rooted in essential retail uses such as convenience stores, dollar stores, drug stores and quick-service restaurants.

Founded in 1984 and headquartered in Orlando, Florida, NNN REIT has steadily grown its footprint through disciplined acquisitions and selective lease underwriting. The company completed its initial public offering in the mid-1990s and has since pursued an investment strategy centered on single-tenant properties, favoring assets with established operators and favorable demographic catchments. By focusing on necessity-based retail, NNN REIT aims to mitigate volatility associated with broader economic cycles and consumer spending patterns.

Today, NNN REIT’s portfolio encompasses over 3,000 properties situated in nearly every U.S. state. Its tenant roster spans a mix of investment-grade credits and regional brands, reflecting a diversified industry exposure that ranges from fuel and convenience operations to value-oriented general merchandise and specialty service outlets. The company’s geographical reach and tenant mix are continually evaluated to maintain a balance between growth opportunities and risk management.

Leadership at NNN REIT includes President and Chief Executive Officer Michael A. Cushing, who oversees corporate strategy, acquisitions and operational execution, along with a senior management team experienced in real estate finance and asset management. Through a disciplined approach to portfolio expansion, lease structuring and capital allocation, NNN REIT aims to deliver long-term value for its shareholders while supporting the growth of essential retail services nationwide.

NNN REIT Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: NNN raised full-year guidance to Core FFO $3.36–$3.40 and AFFO $3.41–$3.45 and increased 2025 acquisition guidance to a midpoint of $900M, signaling management confidence in near-term earnings and growth.
• Positive Sentiment: Strong operating execution in Q3 — closed 20 transactions (57 assets) for $283M and YTD invested $750M, while achieving a 92% renewal rate with renewals/leasing averaging ~108%/124% of prior rents, showing robust demand and pricing power.
• Neutral Sentiment: Proactive credit and asset remediation — At Home exited bankruptcy with all NNN leases affirmed, and management has resolved or expects to resolve most furniture and restaurant-related vacancies (occupancy fell to 97.5% at 9/30 but is expected to exceed 98% by year-end); company says the full financial impact has already been recognized.
• Positive Sentiment: Balance sheet flexibility — NNN reports $1.4B of total liquidity (including full capacity on a $1.2B revolver), no floating-rate debt, ~10.7 years weighted debt maturity and modest leverage (~5.6x), which supports the elevated acquisition plan and upcoming refinancing options.
• Negative Sentiment: Competitive/market headwinds — management noted increased private-capital competition and tighter spreads (acquisition cap rates ~7.3–7.4%), which could compress future accretion if cost of capital doesn’t improve.

Presentation

[Operator]

Hey everyone, welcome to the NNN REIT Third Quarter 2025 Earnings. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Steve Horn. The floor is yours.

[Steve Horn, President and CEO at NNN REIT]

Hey, thanks Kelly. Hey, good morning. Thank you for joining NNN's Third Quarter 2025 Earnings call. I'm joined today by our Chief Financial Officer, Vin Chao. NNN's disciplined growth strategy, proven operations, and commitment to deploying shareholder money and sufficiently accretive acquisition continues. Our focus remains on delivering long-term value, navigating market challenges, and capitalizing on opportunities that drive sustainable growth. As detailed in this morning's press release, NNN delivered strong performance in the third quarter. The team did an outstanding job closing 20 deals containing 57 assets for $283 million, while maintaining balance sheet flexibility with $1.4 billion in total availability and the industry-leading average debt maturity of nearly 11 years. Based on our consistent performance, we are raising our 2025 guidance for Core FFO per share to a range of $3.36-$3.40, reflecting the strength and discipline of our multi-year growth strategy.

[Steve Horn, President and CEO at NNN REIT]

In addition, we're increasing our 2025 acquisition volume to a midpoint of $900 million, which would be an all-time high for the company. Before we discuss day-to-day operations and market conditions, I want to highlight several important risk management events that demonstrate NNN's proactive approach and resilience. At Home's emergence from bankruptcy in late October eliminated substantially all of its nearly $2 billion of funded debt and secured $500 million in new financing. More importantly, NNN had 100% of its leases affirmed during the restructuring, given the strong property-level performance and low in-place rent. Moving to the vacant assets, by the end of the third quarter, we resolved 23 of the 35 furniture assets, and we have strong interest in the remaining assets. We expect to only have two left to work on by the end of the year. There's still a real possibility of reducing that number to zero.

[Steve Horn, President and CEO at NNN REIT]

This rapid progress reflects both the quality of our real estate and the effectiveness of our disposition and leasing team members. Around the same time we were dealing with the furniture tenant. We proactively took back 64 assets that were previously leased to a restaurant operator by quickly executing an eviction process. This decisive action allows us to reposition the assets for future growth. As we discussed on previous earnings calls, we executed a lease on 28 assets, which provided ample time for the new operator to prepare for openings, commence rental payments, and more importantly, allow us to evaluate the performance. However, an unfortunate legal dispute that does not involve NNN arose between our new tenant and former tenant and is ongoing with no definitive end.

[Steve Horn, President and CEO at NNN REIT]

With that backdrop, during the quarter, NNN and the tenant agreed to part ways due to the continued legal uncertainty, temporarily reducing our occupancy to 97.5% as of September 30th. Out of the 64 properties, 15 have been sold or released, 12 more are slated to be resolved by year-end, and 14 more are expected to be sold during the first quarter. Based on our execution and current visibility since the end of September, we are confident that our occupancy will again exceed 98% by year-end. We have a clear line of sight to resolving more than 75% of the former furniture and restaurant operator assets by the end of the first quarter of 2026. Importantly, NNN has already recognized the full financial impact of these events, positioning us for earnings upside as we release these assets and redeploy the proceeds from the sales without the need for future capital.

[Steve Horn, President and CEO at NNN REIT]

NNN's proactive management, rapid asset resolution reinforces our ability to turn short-term challenges into long-term value creation. We are well-positioned to capture upside as these assets are resolved, further strengthening our portfolios and supporting continued growth. Turning to the operating results, a portfolio of approximately 3,697 free-standing single-tenant properties across all 50 states continued to perform well. I would classify this quarter as a home run on renewals, 92 of the 100 renewed, ahead of our historical renewal rate of 85%. More importantly, rental rates were 108% above prior rents. We also leased seven new properties to new tenants at rates of 124% of previous rents, demonstrating strong demand and execution. Our asset management team and leasing team have done a fantastic job getting deals done at a high level. Our tenant base remains stable. No material concerns at this time.

[Steve Horn, President and CEO at NNN REIT]

Moving to acquisition, during the quarter, we invested $283 million in 57 new assets, an initial cap rate of 7.3%, with an average lease duration of nearly 18 years due to the sale lease-back nature of our deals. The first nine months, we've invested $750 million in 184 properties at a cash cap rate of 7.4%, which has NNN tracking to a record year of acquisition volume. As we move through the year, cap rates for the most part have stabilized, and I don't see any material way either up or down as we head into the fourth quarter and for the deals we are pricing for the first quarter of 2026. As one of the original net lease companies in the public markets, NNN has successfully operated through diverse economic cycles.

[Steve Horn, President and CEO at NNN REIT]

While private capital has increased competition, especially for the large portfolios, our disciplined approach and long-standing tenant relationships enable us to consistently execute and deliver in a highly competitive environment. During the quarter, we sold 23 properties, 11 of which were vacant, generating $41 million in proceeds from redeployment into income-producing properties. Also, the properties we sold were not core assets, and the sales were executed approximately 145 basis points below our invested cash cap rate, demonstrating strong upfront underwriting and value extraction. Our balance sheet is one of the strongest in the sector. Our credit facility has plenty of capacity, as I mentioned earlier, with no balance outstanding, and we maintain the industry best nearly 11 years weighted debt maturity. NNN is well-positioned to fund our remaining 2025 acquisition guidance and beyond. With a robust pipeline, strong financial foundation, and proven leadership, NNN is well-positioned for continued success.

[Steve Horn, President and CEO at NNN REIT]

We are committed to optimizing our portfolio, driving sustainable growth, and enhancing shareholder value. With that, let me turn the call over to Vin for more color and detail on our quarterly numbers and updated guidance.

[Vin Chao, CFO at NNN REIT]

Hey, thank you, Steve. Let's start with our customary cautionary statements. During this call, we will make certain statements that may be considered forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we may not release revisions to these forward-looking statements to reflect changes after the statements are made. Factors and risks that could cause actual results to differ from expectations are disclosed in greater detail in the company's filings with the SEC and in this morning's press release. Now on to results. This morning, we reported Core FFO of $0.85 per share and AFFO of $0.86 per share for the third quarter of 2025, up 1.2% and 2.4% respectively over the prior year periods. Annualized base rent was $912 million at the end of the quarter, an increase of over 7% year-over-year.

[Vin Chao, CFO at NNN REIT]

Our NOI margin was 98% for the quarter, while G&A as a percentage of total revenues and as a percentage of NOI was about 5%. Cash G&A was 3.6% of total revenues. AFFO per share for the quarter was slightly ahead of our expectations, driven primarily by lower-than-planned bad debt and higher interest income on our cash balances. Free cash flow after dividend was about $48 million in the third quarter. Lease termination fees totaled $669,000 in the quarter, or less than $0.005 per share. This line item has begun to normalize following the proactive monetization of the largest of our non-paying tenants. From a watchlist perspective, there have been no material changes since last quarter, and while we remain vigilant regarding potential issues, we do not currently view any of our watchlist tenants as near-term concerns.

[Vin Chao, CFO at NNN REIT]

At Home, which remains on the watchlist, successfully exited bankruptcy with a significantly de-risked capital structure, reducing total debt by $1.5 billion through the bankruptcy process. As expected, At Home assumed all of our properties, reflecting the strength of our underwriting and the high quality of our real estate. Turning to the balance sheet, our Baa1 balance sheet remains in great shape. At the end of the quarter, we had no floating-rate debt, no encumbered assets, and $1.4 billion of liquidity, including full capacity on our $1.2 billion revolver and almost $160 million of cash. Our leverage ticked down modestly to 5.6x from 5.7x last quarter, and our debt duration remained the highest in the net lease space at 10.7 years. As previously announced, on July 1st, we issued $500 million of 4.6% five-year unsecured notes.

[Vin Chao, CFO at NNN REIT]

Additionally, during the quarter, we issued 1.7 million shares, primarily through our ATM, as part of our overall capital plan for the year. In total, we raised $72 million in gross proceeds at a weighted average price of $42.89 per share. Looking forward, we have a $400 million 4% coupon bond maturing later this month. With our July bond offering, we have pre-funded a portion of this pending maturity, and our fortified balance sheet provides us with multiple options to refinance the balance. As I've stated on prior calls, our balance sheet is a source of strength, and we will look for ways to utilize this competitive advantage to support growth while protecting downside risk. On October 14th, we announced a $0.60 quarterly dividend payable on November 14th, which equates to an attractive 5.6% annualized dividend yield and a healthy 70% AFFO payout ratio.

[Vin Chao, CFO at NNN REIT]

Notably, since going public in 1984, NNN has paid over $5 billion in total dividends. I will conclude my opening remarks with some additional comments regarding our updated outlook. We are raising Core FFO per share guidance to a new range of $3.36-$3.40 and AFFO per share to $3.41-$3.45. Increases reflect our year-to-date outperformance versus plan, as well as our updated assumptions over the balance of the year. We now expect to complete $850 million-$950 million of acquisitions, up $250 million from a prior forecast. We expect fourth-quarter acquisitions will be weighted towards the back half of the quarter. At the $900 million midpoint, our updated guidance represents a record level of annual investment volume for the company. We are also increasing our disposition outlook by $50 million to a new range of $170 million-$200 million.

[Vin Chao, CFO at NNN REIT]

As a reminder, we typically fund our investments with a leverage-neutral 60/40 mix of equity and debt. From a credit loss perspective, we are now including 25 basis points of bad debt in our full-year outlook, including about 20 basis points booked year-to-date. This is down from our prior 60 basis points projection, given our limited losses thus far, the successful resolution of the At Home bankruptcy, and the collection of pre-petition rent from At Home. Lastly, there were no notable run-rate adjustments to call out in the third quarter. With that, I'll turn the call back over to the operator for questions.

[Operator]

Certainly. The floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality. Please hold just a moment while we poll for any questions. Your first question is coming from Jana Galan with Bank of America. Please pose your question. Your line is live.

[Dan Byun, Analyst at Bank of America]

Morning. This is Dan Byon for Jana. My first question is, could we get a little bit more color around the outsized interest income, as well as just what caused the increase at the low end of the range?

[Steve Horn, President and CEO at NNN REIT]

Yes. For interest income, really, we did do the debt offering on July 1st, and so we were sitting on a fairly high cash balance. And interest rates on that, we were deploying that into money markets and other short-term interest-bearing deposits, and rates were a little bit better than we had projected, so that was driving interest income. As far as the low end of the AFFO guidance, I mean, we did outperform for the quarter, and I think the upside is really fueled by the acquisition volume that we've had so far, as well as what we expected to balance the year, offset by a couple of things. And so I want to point this out. I think I saw a couple of notes suggesting the flow through wasn't as much as expected.

[Steve Horn, President and CEO at NNN REIT]

But if you look at our G&A guidance for the year, sort of the implied fourth quarter is a little bit higher than we had in the third quarter. So that's just naturally the timing of G&A expenses, and so there's a little bit of higher G&A in the fourth quarter than the third quarter. And as we deploy that cash into acquisitions, we will see interest income come down as well. So those are two things that are sort of a little bit of a headwind for the fourth quarter.

[Dan Byun, Analyst at Bank of America]

Got it. Thank you. And just to follow up on the acquisition volume, just could we get a bit more on the rationale behind using equity to fund this? Given the current stock price, in your presentation, you showed that your cost of capital is around 7.3%. Year-to-date, it's around 7.4% cap rates. If we can get a little bit more on kind of just the investment spread and the rationale behind that.

[Steve Horn, President and CEO at NNN REIT]

Yeah. Look, I mean, I think when we think about how we deploy capital, we're looking to issue or fund it 60/40 equity and debt. And as far as the WACC, I think what we put in the debt, really, we don't try to change that too often. That's probably higher than on a long-term debt perspective. That's higher than we would be issuing today. And so if we think about where we could issue today and the potential for using a little bit shorter-term debt, just given how long our debt duration is, we probably could be in the mid-sixes, maybe slightly higher than that on an all-in WACC. And so at that level, we can still fund 60/40 and be accretive on our acquisitions.

[Dan Byun, Analyst at Bank of America]

Got it. Thank you.

[Steve Horn, President and CEO at NNN REIT]

We're certainly not looking to lever up to drive growth.

[Dan Byun, Analyst at Bank of America]

Got it. Thank you.

[Operator]

Your next question is coming from Brad Heffern with RBC Capital Markets. Please pose your question. Your line is live.

[Brad Heffern, Analyst at RBC Capital Markets]

Yeah. Morning, everyone. Maybe as a follow-on to that last question, I mean, NNN's never really been a volume story historically, and it doesn't seem like spreads are uniquely attractive right now. So I guess I'm just wondering why we're seeing record volumes. Is it a pull from your relationship tenants, or is there something that I'm missing on the cost of capital side that makes it more attractive than normal?

[Steve Horn, President and CEO at NNN REIT]

No. Again, Vin touched base on the cost of capital. Yeah. But our relationships are in the market. And we had the ability to do a little bit more elevated volume in the third quarter. And yeah, basically, the tenants are kind of pushing us to do a little bit of the deals. And it's still accretive, maybe not as historically as accretive. But yeah, it's good deals, good real estate, and we can service the tenant base.

[Brad Heffern, Analyst at RBC Capital Markets]

Okay. Got it. And then there's been a decent amount of talk on your peers' calls this quarter about increased competition. Obviously, you're seeing very high volume. So I'm curious, are you seeing that, and is it impacting pricing at all?

[Steve Horn, President and CEO at NNN REIT]

I mean, we've always operated in a highly competitive market. Since I've been with the company, you had private REITs, non-traded REITs always in the market, and it's a highly competitive space. The difference is now you're having more financial institution brand names that people recognize in the space. So that being said, the larger portfolios, we're seeing increased competition, and they're using leverage to lower the cap rates. The good news is NNN doesn't need to do that ridiculously high volume, so we don't need the big portfolios, and the $15 million-$20 million dollar deals, we're not seeing that much competition outside of our ordinary competitors. We did five deals this past quarter under $5 million. So we're still finding our fair share.

[Brad Heffern, Analyst at RBC Capital Markets]

Okay. Thank you.

[Operator]

Your next question is coming from Michael Goldsmith with UBS. Please pose your question. Your line is live.

[Michael Goldsmith, Analyst at UBS]

Good morning. Thanks a lot for taking my question. You provided an update on At Home, and it seems like the Frisch's Big Boy situation. But are you seeing any other credit issues within your portfolio, and what are your bad debt assumptions now, maybe compared to where they were earlier in the year?

[Steve Horn, President and CEO at NNN REIT]

I'll take the first half of that. Currently, our overall portfolio, just based on the bad debt that we mentioned earlier, is in really good shape. And we are getting to solution on the restaurant and the furniture tenants here in short order in the next four months. And I'll let Vin talk about the bad debt assumptions.

[Vin Chao, CFO at NNN REIT]

Yeah. Hey, Michael. As far as bad debt goes, as I mentioned in my prepared remarks here, we have assumed for the full year now 25 basis points of bad debt. That is down from our prior expectation of 60 basis points. And that's largely a function of At Home resolving with no issues and assuming all of our leases. We've also had pretty limited bad debt so far this year, roughly 20 basis points booked year-to-date. And then what's helping fourth quarter a little bit here is we aren't actually getting prepaid rent from At Home. So we'll have no credit loss from At Home by the end of the year.

[Michael Goldsmith, Analyst at UBS]

Got it. And as a follow-up, can you just kind of walk through the occupancy path going forward? I think you kind of laid out some sort of kind of the plan of disposing of some assets. But can you just kind of walk through the trajectory and where it should be kind of by the end of the year and the setup as you enter in 2026? Thanks.

[Steve Horn, President and CEO at NNN REIT]

Yeah. I mean, it's kind of what I touched base on my prepared remarks. For the most part, it's the restaurant operator, and 15 have been sold. So we have 12 more that will be resolved by the year-end, which will help with our occupancy. And we have 14 more that are under contract or under advanced negotiations that potentially could be resolved a little bit in the end of the year. But if not, for the most part, it will be resolved in the fourth quarter. And kind of what we talked about with our renewals being at 92% this past quarter, that helps with the occupancy on a go-forward basis. And we don't see any other tenants in the portfolio that are calling us that there's issues.

[Vin Chao, CFO at NNN REIT]

Yeah. One other thing on that, Michael. Steve mentioned the former restaurant tenant, but on the former furniture tenant, we do have a line of sight on 10 additional resolutions by the end of the year. So that's another 10 vacancies that we're targeting to be out of the completed by year-end.

[Michael Goldsmith, Analyst at UBS]

Thank you very much. Good luck in the fourth quarter.

[Vin Chao, CFO at NNN REIT]

Thanks.

[Operator]

Your next question is coming from John Kilichowski with Wells Fargo. Please pose your question. Your line is live.

[John Kilichowski, Analyst at Wells Fargo]

Hi. Good morning out there. Just the first one for me would be back on the cost of capital question. I'm just trying to think about 2026 here. And Vin, I think you gave some helpful color on that your cost of debt might be a little bit tighter, and therefore there's some spread here, but it's inside of 100 basis points. I'm curious, at what point would your stock need to trade or where would your AFFO yields or your cap need to be where the spread, you would say, is insufficient and therefore equity is no longer a consideration?

[Vin Chao, CFO at NNN REIT]

Yeah. Look, I think the way we think about if we're thinking about 2026, right, we've stated repeatedly that we can self-fund about $550 million without really hitting the equity markets. And so that part is sort of addressed upfront. And then beyond that, we would require some additional equity if we wanted to maintain leverage neutrality. Part of the solution could be to lean into dispositions a bit more. We do have higher vacancies than usual, and so that is a potential source of capital that can offset some of the equity needs or stock needs, I should say. But as far as when the stock price or where the stock price would be to say, "Hey, we're just cutting off equity," I mean, I think that is a hard question without knowing exactly what we're talking about buying.

[Vin Chao, CFO at NNN REIT]

But I think the reality is we certainly don't want to be sufficiently less than where we're at today. I think it's a case-by-case situation when we're dealing with a deal in front of us. It's hard to kind of talk theoretically.

[John Kilichowski, Analyst at Wells Fargo]

Okay. Thank you. And then the second one would just be on sort of one-time fees, any termination fees, anything else that you've received this year that you would expect to roll off next year and to be somewhat of a headwind? I know I think historically you've talked about maybe a $3 million being a run-rate number. Is that a reasonable expectation for next year? And what would that mean as far as DSEL from this year?

[Vin Chao, CFO at NNN REIT]

Yeah. Well, I think we had booked about $11 million year-to-date. So I think $3 million is probably more consistent with historical levels. And you saw that our volume, or at least termination volume in the quarter, did normalize down to about $670,000. So we are starting to see some normalization, as I mentioned, in the last quarter, I think. We had a number of very large rent-paying tenants that we've been working our way through, and that was driving the outsize of the termination fees. So. Call it $11 million to $3 million, we'd be at $8 million headwind. But I will point out, though, if you look at our real estate expense net, that's going to be the offset, maybe not 100%, but we do expect to be around $17.5 million of real estate expense net this year. That's largely because of the vacancies.

[Vin Chao, CFO at NNN REIT]

As those vacancies are addressed and we kind of outlined visibility on 20+. By the end of the year to be resolved, that real estate expense net will come down to our historical levels, which is closer to $12 million or so. So that'll be a natural offset to some of those termination headwinds.

[John Kilichowski, Analyst at Wells Fargo]

Got it. Thank you.

[Operator]

Your next question is coming from Spenser Glimcher with Green Street. Please pose your question. Your line is live.

[Spenser Glimcher, Analyst at Green Street]

Thank you. In regards to the higher acquisition volume, despite the lower spreads you're seeing today, do you think that the increased competition is impeding your ability to push cap rates with existing tenants? Because I would think with the long-standing relationships here, you have some leverage just given surety of close and just familiarity with your team. So do you think that the alternative capital sources are kind of swinging the pricing power pendulum more to tenants than we've seen historically?

[Steve Horn, President and CEO at NNN REIT]

Yeah. I mean, our relationship tenants are very sophisticated tenants and understand what the market is. So we're not stealing properties from our tenants. Yes, we may get five, 10 basis points for certainty of closing, saving money on the transaction cost because our documents are in place. But I don't think it's the increased competition. Because what I stated, we're always operating in a highly competitive market. Just the names come and go.

[Spenser Glimcher, Analyst at Green Street]

Okay. Yeah. Thank you. And then I think you mentioned you did deals with seven new tenants. And sorry if I missed this, but can you just provide some color on what industries or segments these are in? And have you got a sense from these newer tenants what their growth pipelines look like in the next 12-24 months? Just trying to get a sense if these are higher growth tenants in the near term.

[Steve Horn, President and CEO at NNN REIT]

Yeah. The seven new tenants were just vacancies that we re-leased, and primarily in the convenience store, QSR, auto service sector. But no, I don't have a grasp to give you a good number about their growth trajectory over the next 12 months. However, there's high demand for our vacant assets. So I feel like our tenants are trying to grow, and we're actually getting some new tenants in the portfolio.

[Spenser Glimcher, Analyst at Green Street]

Okay. Great. Thank you.

[Operator]

Your next question is coming from Smedes Rose with Citi. Please pose your question. Your line is live. Your line is live. Smedes, your line is live. Please ask your question.

[Steve Horn, President and CEO at NNN REIT]

We'll come back to Smedes.

[Operator]

Okay. You got it. Your next question is Rich Hightower with Barclays. Please pose your question. Your line is live.

[Richard Hightower, Analyst at Barclays]

Great. Thank you. Good morning. I guess really quickly on the At Home rent, have you guys disclosed the, I guess, the amount of pre-petition rent that you've gotten from them or that you expect in 4Q?

[Vin Chao, CFO at NNN REIT]

Yeah. Rich, at this point, we haven't disclosed the dollar amount, but at this point, we have collected all of June rent from At Home.

[Richard Hightower, Analyst at Barclays]

Okay. Great. And then I guess maybe bigger picture, just. It seems like renewal spreads have been pretty good, maybe relative to history. I mean, do you expect that trend to continue maybe just with sort of the supply-demand tightness in retail generally? I mean, what are you kind of seeing on that front?

[Steve Horn, President and CEO at NNN REIT]

As we move forward, I'm not expecting it to be below our historical norms, given the conversations we're having for the 2026 renewals. But, do I think, is it sustainable on the releasing to have 125%? Probably not. It'll be closer to kind of our 100% renewal probably for 2026 or releasing, and the renewals I kind of expect to fall between that 85%-95% range.

[Richard Hightower, Analyst at Barclays]

Okay. Wonderful. Thanks, guys.

[Operator]

Your next question is coming from Wes Golladay with Baird. Please pose your question. Your line is live.

[Wes Golladay, Analyst at Baird]

Hey, yeah. Good morning, everyone. I just want to look at the acquisition guidance. It looks like it's implying about $100 million-$200 million for the fourth quarter, which is typically a big quarter for you guys. So just curious if you pulled any deals forward into 3Q, or are you just being conservative here?

[Steve Horn, President and CEO at NNN REIT]

I think it's a little bit of a combination, Wes, that we pulled a little bit of the deal volume into the third quarter, and as Vin mentioned, that we have some deals that are slated to close probably back half of the fourth quarter, so you do want to be a little conservative if they did slide to the first quarter.

[Wes Golladay, Analyst at Baird]

Okay. Thank you.

[Operator]

Your next question is coming from Ronald Kamdem with Morgan Stanley. Please pose your question. Your line is live.

[Operator]

Hey, good morning. This is Jenny on for Ron. Hope you guys are doing well. Just want to follow up on the At Home portfolio. Just curious, are you looking to hold those assets or if you have any plan to kind of dispose them? Thank you.

[Steve Horn, President and CEO at NNN REIT]

Yeah. I mean, given the position that At Home is in currently, it was a balance sheet issue, and they've solved that issue. Their credit profile going forward is pretty solid. But more importantly, it's a testament to the real estate quality and the in-place rent being so low on those assets that they're good real estate and financially they're performing. So there's no knee-jerk reaction to sell those assets. Now, if somebody comes and offers us a really good deal, yeah, absolutely, we would sell that at the right price.

[Steve Horn, President and CEO at NNN REIT]

That makes sense. Just switching gears to kind of refinancing plan. Have you thought about your debt maturity in 2026 yet? And what's your approach given the current rate environment? Thanks.

[Vin Chao, CFO at NNN REIT]

I think you said 2026. I think it would have been 2025, but yes.

[Vin Chao, CFO at NNN REIT]

Yeah, I said 2026.

[Vin Chao, CFO at NNN REIT]

Yeah. As far as the November maturity, we are looking at a variety of options. As I mentioned, we have some flexibility on how we deal with it. Certainly, we could run it on a line for some period of time. We have plenty of capacity, full capacity in our revolver. That's one option. Obviously, we could hit the bond market. We are looking at even considering some bank debt as well. We've got a maturity hole in 2029 that fits, and given the size of what we expect we'll need by the end of the year here, that fits a bit more in line with a bank loan as opposed to a bond deal, so a couple of different options we're weighing, but we certainly are. We've got lots of options as well.

[Vin Chao, CFO at NNN REIT]

Okay. That's helpful. Thanks.

[Operator]

Your next question is coming from Linda Tsai with Jefferies. Please pose your question. Your line is live.

[Linda Tsai, Analyst at Jefferies]

Hi. If your cost of equity stays the same, would the mix of disposed and free cash flow and debt usage look similar for 2026 acquisitions?

[Vin Chao, CFO at NNN REIT]

Yeah. I think if our cost of equity stayed where it's at, it certainly makes it a little bit more challenging. So I mean, depending on what we're sourcing on the acquisition side, we'll be part of the equation. But I think from a disposition perspective, yes, if the equity is where it's at today, dispositions could be an alternative form of equity to help fund deals. So yeah, I mean, I think free cash flow is what it is. So it's not like I can increase that or decrease it. So I mean, that'll be around $200 million or so. But I think that's a good point, though, and we're talking about the spread. I know that that's what folks are focused on in terms of earnings and whatnot.

[Vin Chao, CFO at NNN REIT]

But from a cash flow perspective, even if the spread's a little tighter than we'd like it to be, we are still getting a good cash flow spread on that if we think about the dividend yield. And so that generates more free cash flow, which then generates additional internal capacity.

[Linda Tsai, Analyst at Jefferies]

And then on Steve's comments that tenants are pushing you to do more deals, can you give us some color on who these tenants are? And would these be the same types of tenants that would push you to do higher acquisition volume in 2026?

[Steve Horn, President and CEO at NNN REIT]

No. I mean, when I say push, there's opportunities to do deals with that and that, and we passed on a lot, and we did a little elevated number this year, but historically speaking, we kind of did that $750 million range, so midpoint at $900 million is not a big jump in acquisition volume per se. It's just elevated a little bit, but primarily, it was kind of the auto services, auto parts of our portfolio that are being active of doing some new development and small M&A.

[Linda Tsai, Analyst at Jefferies]

Does that continue in 2026?

[Steve Horn, President and CEO at NNN REIT]

In 2026, we only have line of sight in our industry 60-90 days. And the first quarter is starting to, we're pricing deals in the first quarter right now. I can't speak to second or third quarter if they continue.

[Linda Tsai, Analyst at Jefferies]

One final follow-up. Just on the idea of tenants not calling you with any credit issues, what is the line of sight for that type of situation?

[Steve Horn, President and CEO at NNN REIT]

Usually, I mean, it could be 12 months. It's amazing how retailers have the tenacity to keep paying rent when things are going—are being challenged. Just per se, when you take a public company that's traded on the stock exchange, just because their stock is getting hit doesn't mean they can't pay rent. They're just not as profitable. So we usually have a line of sight of 12+ months. Just like when we were talking about Frisch's. I mean, we were talking about Frisch's 12, 18 months because they knew that challenges were coming, and we started trying to work with them. But yeah, so right now, as far as 2026, we're not hearing any rumblings.

[Linda Tsai, Analyst at Jefferies]

Thank you.

[Operator]

Your next question is coming from Jim Kammert with Evercore ISI. Please pose your question. Your line is live.

[Jim Kammert, Analyst at Evercore ISI]

Hi. Good morning. Thank you. Actually, just on that last point, Steve, this Frisch's is kind of interesting. You said the tenant had a dispute with his former landlord, or I missed that entirely, and I'm trying to understand also what rent would have been collected by NNN in the third quarter that you would theoretically then lose, correct, in the fourth quarter?

[Steve Horn, President and CEO at NNN REIT]

I'll touch on the first part. The former tenant Frisch's entered into a lawsuit with our new tenant to operate in the markets. And it's tied up in the courts. And we thought we were going to have resolution. Springtime, early spring, but the courts keep delaying the decision. First kicked it out, I believe it was September, then kicked it out until November. And that's when we decided we have to move forward and monetize these assets or re-lease them.

[Vin Chao, CFO at NNN REIT]

And Jim, on your second part of your question, I'm not sure I was following there. You were saying something about collecting some rent and then giving it back later. I wasn't following.

[Jim Kammert, Analyst at Evercore ISI]

No, I'm sorry. I'm saying, did you collect rent from, I guess it was Dolly or whatever was the new tenant? Did you collect rent from them in the third quarter, meaning that obviously if you're taking these assets back, you have a little bit of a headwind, in other words, for fourth quarter?

[Vin Chao, CFO at NNN REIT]

Yeah. I mean, there was an immaterial amount collected early on in the quarter, but nothing. Material at all. And nothing that we would be backing or anything. Yeah.

[Jim Kammert, Analyst at Evercore ISI]

Okay. So that's in your guidance, in other words. Okay.

[Vin Chao, CFO at NNN REIT]

Yeah. Correct.

[Jim Kammert, Analyst at Evercore ISI]

Thank you.

[Operator]

Once again, if there aren't any remaining questions or comments, please press star one at this time to ask a question. Your next question is coming from John Massocca with B. Riley Securities. Please pose your question. Your line is live.

[John Massocca, Analyst at B. Riley Securities]

Good morning. Apologies maybe if I missed this earlier in the call, but the other element of the guidance, right, is the ramp expected in 4Q in disposition activities. And I'm imagining the Dolly situation plays a part in that. But is there anything else factoring into the acceleration in dispositions expected by year-end? And I guess in the context of the former restaurant properties, the furniture properties, the broader market, how should we expect the split in 4Q disposition activity to be between vacant and rent-paying assets?

[Vin Chao, CFO at NNN REIT]

Yeah. I mean, I think you're spot on in terms of the restaurant operator. The decision to kind of move in a different direction there is leading to some additional sales of assets, and so yeah, there will be a higher mix of vacant sales than maybe we've historically had. Exactly what the split is, I can't say for sure, but I think 50%+ might be vacant sales at this point, given our visibility.

[John Massocca, Analyst at B. Riley Securities]

I guess kind of following on that question, beyond what's going on with the former restaurant tenant properties, is some of that increase in disposition activity at all a reaction to maybe where cap rates and capital markets are kind of diverging, or is that just purely kind of working out of the former Frisch's and Badcock assets?

[Steve Horn, President and CEO at NNN REIT]

Yeah. It's the latter part. More so that there's a high level of interest, and we have the opportunity to dispose of the former restaurant assets at good pricing. And then secondly, there's a fair amount of interest if it's QSR, convenience store, for some of those restaurant assets as well.

[John Massocca, Analyst at B. Riley Securities]

So I guess, I mean, I don't know if you don't give guidance on this, but it would be fair to assume kind of cap rate trends from the last two quarters continue into 4Q for occupied sales?

[Steve Horn, President and CEO at NNN REIT]

The occupied sales, yeah, I still think for modeling purposes, 100 basis points inside of where we're deploying capital is probably a better number. Because the tenant mix, we may do some dispositions that are defensive that would be a little bit elevated for proactive portfolio management. Also selling assets at a real low cap rate. But yeah, 100 basis points is what I would model.

[John Massocca, Analyst at B. Riley Securities]

Okay. I appreciate that detail. That's it for me. Thank you.

[Operator]

Once again, if you do have any remaining questions or comments, please press star one at this time. There appear to be no further questions in queue at this time. I would now like to turn the floor back over to Steve Horn for closing remarks.

[Steve Horn, President and CEO at NNN REIT]

No. Thanks for joining us this morning, and we'll see many of you in person in the next few weeks and then in the neighborhood. Enjoy the rest of your day. Thanks.

[Operator]

Thank you, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.

Participants

Executives

• Steve Horn, President and CEO
• Vin Chao, CFO

Analysts

• John Kilichowski, Analyst at Wells Fargo
• Michael Goldsmith, Analyst at UBS
• Analyst at Morgan Stanley
• Jim Kammert, Analyst at Evercore ISI
• Linda Tsai, Analyst at Jefferies
• Wes Golladay, Analyst at Baird
• Richard Hightower, Analyst at Barclays
• Spenser Glimcher, Analyst at Green Street
• Dan Byun, Analyst at Bank of America
• Brad Heffern, Analyst at RBC Capital Markets
• John Massocca, Analyst at B. Riley Securities