NETSTREIT NYSE: NTST reported second-quarter 2026 results highlighted by accelerated acquisition activity, full occupancy and increased full-year investment guidance, as management described a favorable transaction market for necessity and service-based retail real estate.
President and CEO Mark Manheimer said the company has grown its portfolio to more than $3 billion in assets and continues to see “an elevated number of high-quality opportunities at accretive pricing.” During the quarter, NETSTREIT closed $298.9 million of gross investments at a blended cash yield of 7.4% and a weighted average lease term of 9.8 years.
The investments were concentrated in the company’s core sectors, including quick-service restaurants, grocery, convenience stores, auto service and other essential retail categories. Manheimer said the company also completed targeted dispositions at a 6.8% blended cash yield, using proceeds to recycle into “higher quality, longer duration opportunities” while reducing select tenant and industry concentrations.
Portfolio Reaches Full Occupancy
NETSTREIT ended the quarter with 859 investments leased to 156 tenants across 28 industries in 46 states. The portfolio’s weighted average lease term was 10 years, and investment-grade and investment-grade profile tenants represented 56.5% of annualized base rent. Unit-level rent coverage remained 3.8 times.
Manheimer said occupancy increased to 100% after the company backfilled its lone vacancy, a former Big Lots location, with an A-rated TJ Maxx at a rent increase of more than 20%. While he said vacancies have been “extraordinarily rare” in the portfolio, the leasing result demonstrated the strength of the company’s asset management and underwriting process.
The company also completed an UPREIT acquisition of 20 Speedway properties that it had previously financed through a first mortgage investment in early 2023. Manheimer said the transaction gave NETSTREIT direct fee ownership at cap rates “significantly above market,” with the Speedway assets acquired at a 6.75% initial cash yield. He cited long-term leases, investment-grade credit support, high unit-level rent coverage and a low asset basis as factors supporting the deal.
Second-Quarter Earnings and Balance Sheet
CFO and Treasurer Dan Donlan said NETSTREIT reported net income of $6.3 million, or $0.06 per diluted share, for the second quarter. Core funds from operations were $34.2 million, or $0.33 per diluted share. Adjusted funds from operations were $35.5 million, or $0.35 per diluted share, up 6.1% from the prior-year period.
Total recurring general and administrative expense increased 6.7% year over year to $5.8 million, which Donlan said was primarily due to staffing increases during 2025. Recurring G&A represented 9.5% of total revenues in the quarter, down from 11.3% in the prior-year quarter.
On the capital markets side, Donlan said the company raised $183 million of net proceeds through its at-the-market equity program by selling 9 million shares. At quarter end, adjusted net debt, including the impact of forward equity, was $672.2 million. The company’s weighted average debt maturity was 3.6 years, and its weighted average interest rate was 4.3%.
Donlan said NETSTREIT had no material debt maturities until February 2028, including extension options exercisable at the company’s discretion. Total liquidity at quarter end was $1.1 billion, including approximately $20 million of cash, $301 million available on the revolving credit facility, $714 million of unsettled forward equity and $50 million of undrawn term loan capacity. Adjusted net debt to annualized adjusted EBITDAre was 3.2 times, below the company’s target leverage range of 4.5 times to 5.5 times.
Guidance Raised on Investment Momentum
NETSTREIT increased its full-year 2026 net investment activity guidance to a range of $700 million to $800 million. The company also raised the low end of its AFFO per share outlook, setting a new range of $1.37 to $1.39.
Donlan said the guidance includes estimated dilution of $0.05 to $0.08 per share, or 3.6 million to 5.9 million shares for the year, related to the impact of outstanding forward equity calculated under the treasury stock method. He said cash G&A is expected to range from $16.5 million to $17 million, excluding transaction costs and severance payments.
The company’s board declared a quarterly cash dividend of $0.225 per share, payable Sept. 15 to shareholders of record as of Sept. 1.
Management Sees Strong Acquisition Market
During the question-and-answer portion of the call, Manheimer said the company is seeing what he described as one of the healthiest acquisition markets he can recall, with opportunities across sale-leasebacks, portfolio deals, one-off transactions and blend-and-extend transactions.
Manheimer said macroeconomic and geopolitical volatility has affected interest rates, but the company has not yet seen much impact on cap rates. He added that sustained upward pressure on the five-year and 10-year rates could potentially move cap rates higher.
Management discussed an increase in portfolio transactions, noting that some deals have enabled NETSTREIT to gain exposure to tenants such as Chick-fil-A, Sprouts and Kwik Trip without giving up investment spreads. Manheimer said some portfolios that are broadly marketed still trade at premiums, but smaller portfolio transactions have been available at pricing closer to par.
Asked about what is driving portfolio sales, Manheimer said some owners that bought high-quality properties in 2021 and early 2022 with cheap five-year debt are now facing refinancing at less favorable economics. In some cases, those owners are choosing to sell portfolios to larger institutions rather than refinance.
Manheimer also said competition remains limited from larger private institutions. He identified 1031 buyers, individuals and small family offices as the company’s primary competitors, with higher borrowing costs making it harder for those buyers to compete.
Tenant Quality and Sector Exposure
Analysts asked about the company’s investment-grade exposure, which management said may settle around 30% to 35% for new acquisitions if current market dynamics continue. Manheimer said NETSTREIT focuses on risk-adjusted returns, including tenant credit, rent coverage, tenant commitment to a location and real estate fungibility.
On grocery exposure, Manheimer said the company is monitoring consumer trends and grocery margins, but remains comfortable with its grocery assets because they generate strong sales and high rent coverage. He said the company is careful about selecting operators and assets in that sector.
Manheimer also acknowledged pressure on lower-income consumers, describing the “K-shaped economy” as real. He said NETSTREIT does not have significant exposure to the lower-end consumer and looks for necessity-based products, value propositions, strong rent coverage and corporate credit where that exposure exists.
Addressing category concentration, Manheimer said the company has historically had a soft ceiling around the mid-teens as a percentage of industry exposure, though it may be more flexible for industries it favors. He said exposure near 20% could lead the company to consider dispositions to reduce concentration.
About NETSTREIT (NYSE:NTST)
NetSTREIT Corp. is a real estate investment trust that specializes in the acquisition and management of single‐tenant, net lease retail properties across the United States. The company targets assets leased to investment‐grade or creditworthy tenants under long‐term, triple‐net leases, which generally shift property‐level expenses—such as taxes, insurance and maintenance—to the tenant. This business model is designed to generate predictable, stable income streams and to limit landlord responsibilities.
NetSTREIT’s portfolio encompasses a diversified mix of essential retail and service properties, including quick‐service restaurants, convenience stores, banks, automotive service centers and medical clinics.
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