NNN REIT NYSE: NNN reported first-quarter 2026 results that management described as a “strong quarter,” supported by steady portfolio operations, continued acquisition activity, and balance sheet flexibility. President and CEO Stephen Horn Jr. said the company’s “disciplined, efficient, and self-funded growth strategy continues to deliver results,” and the company raised its full-year 2026 adjusted funds from operations (AFFO) guidance following the quarter.
Acquisitions, dispositions, and portfolio operations
Horn said NNN closed 15 transactions comprising 41 properties for a total investment of $145 million, with an initial cash yield of 7.5% and a weighted-average lease term of 19 years. He emphasized the company’s focus on sale-leaseback transactions that can provide “accretive risk-adjusted returns, long duration, predictable cash flows.”
On the operating side, Horn said the portfolio—approximately 3,700 freestanding single-tenant properties across all 50 states—continued to perform well. During the quarter, the REIT renewed 36 of 43 lease expirations, consistent with its historical renewal rate of about 85%, at rental rates 2% above prior levels. The company also leased seven properties to new tenants at rent rates about 10% above previous levels.
Occupancy increased sequentially by 30 basis points to 98.6%, which Horn said is now above the company’s long-term average. He attributed the improvement to leasing and disposition efforts, including repositioning vacant assets and, in some cases, securing “high-quality investment-grade tenants.” Horn said 53 assets remained vacant, with “active solutions underway,” and he expects occupancy to continue trending upward in the near term.
NNN also sold 25 properties during the quarter, including 16 vacant assets, generating $36 million in proceeds. Horn said occupied dispositions were “primarily non-core” and were executed at cap rates about 30 basis points below the acquisition cap rate. Management reiterated that it expects to take a more proactive approach to asset sales in 2026 to optimize portfolio quality over the long term.
First-quarter financial results and drivers
Chief Financial Officer Vincent Chao said NNN reported core FFO of $0.86 per share and AFFO of $0.87 per share, each flat year over year. Chao pointed to lease termination fees as a key driver of the year-over-year comparison: NNN recorded $739,000 of lease termination fees in the quarter versus $8.2 million a year ago, which he said represented a $0.04 headwind. Excluding that change, Chao said AFFO per share growth would have been 4.8%.
Chao said results were modestly ahead of internal projections, primarily due to lower-than-expected bad debt and net real estate expense. Bad debt represented about 15 basis points of quarterly annual base rent (ABR), better than the company’s 75 basis point assumption. NNN’s NOI margin was 95.9% for the quarter, reflecting the triple-net lease structure, while G&A as a percentage of total revenue was 5.9% and cash G&A margin was 4.2%, both in line with expectations.
Annualized base rent grew 7% year over year to $935 million, driven by acquisition activity. Chao also said free cash flow after dividends was about $52 million in the first quarter.
Credit outlook and tenant commentary
Management said it was not seeing significant near-term credit issues, while maintaining a focus on proactive monitoring. Chao said the company “always watch[es] tenants” and maintains a watch list, citing AMC as an example. He said NNN sold one AMC property during the quarter and generated an “economic gain of over 6% on the sales” for the quarter’s occupied dispositions, supported by low cost basis.
Asked about consumer spending trends, Chao said there was no broad-strokes takeaway from tenant conversations or public disclosures, noting that 61% of NNN’s tenants are public companies. He added that performance differences were more tenant-specific, though continued consumer pressure would be expected to affect more cyclical businesses.
On 7‑Eleven store-closure headlines, Horn said NNN “never did quote business with 7‑Eleven” historically, but that the retailer acquired regional operators NNN worked with. Horn said the company completed a “significant renewal” with 7‑Eleven in 2025, its average lease term with the tenant is about 8.5 years, and “none of our stores are on the closure list.” He also said NNN’s average cost basis in its 7‑Eleven portfolio is about $2.2 million.
Horn also provided updates on two previously discussed situations. He said all Badcock locations were “accounted for and cleaned up” with “near, you know, 100% recovery.” For Frisch’s, Horn said the assets are included among the 53 vacant properties, with leasing efforts underway and “a tremendous amount of interest” in the properties.
Capital markets, leverage, and dividend
Chao said the company drew the full $300 million available on its delayed-draw term loan during the quarter, swapping the rate to a fixed all-in rate of 4.1%. NNN also sold roughly 1.7 million common shares on a forward basis through its ATM program at just under $45 per share and did not settle any forward equity, leaving expected future net proceeds of $74 million as of March 31.
At quarter-end, NNN had $1.2 billion of liquidity, $80 million drawn on its credit facility, no encumbered assets, and just 1.6% of debt tied to floating rates. Chao said pro forma net debt to EBITDA, including unsettled forward equity, was 5.6x, unchanged from last quarter. Debt duration was 10.5 years, which he said remains the highest in the net lease space and is “well matched” with lease duration of 10.1 years.
NNN’s next debt maturity is a $350 million unsecured note due in December. Chao said the company has options to address the maturity, including an accordion feature to expand its existing term loan by $200 million, and noted that investment-grade credit spreads had “recently revisited historical lows” after briefly widening following the Iran conflict.
On April 15, the company announced a quarterly dividend of $0.60, representing 3.4% year-over-year growth. Chao said the dividend equates to a 5.7% annualized dividend yield and a 66.9% AFFO payout ratio. Horn noted NNN has increased its dividend for 36 consecutive years.
Guidance raised; acquisition outlook remains range-bound
Management raised 2026 guidance, citing first-quarter performance and investment pipeline visibility. Horn said the company increased its 2026 AFFO per share guidance to $3.53 to $3.59. Chao said the midpoint of both AFFO and core FFO guidance increased by $0.01, to ranges of $3.53 to $3.59 for AFFO per share and $3.48 to $3.54 for core FFO per share. He said the midpoint of the AFFO range implies 3.5% year-over-year growth, up from 2.7% last year.
Chao said line-item guidance remained unchanged, though he highlighted that the company was tracking to the low end of its $14 million to $15 million range for net real estate expenses and toward the high end of its $550 million to $650 million acquisition guidance based on near-term pipeline visibility. He said NNN expected about $212 million of free cash flow and $130 million of dispositions for the year.
In response to questions about why acquisition guidance was not increased despite incremental funding capacity, Horn said the company has a “very robust pipeline,” but emphasized a conservative approach: “You don’t wanna count them until they’re done.” Chao added that the $74 million of forward equity proceeds could translate to roughly $125 million of additional capacity at the company’s typical 60/40 equity/debt mix.
On market pricing, Horn said first-quarter cap rates were largely consistent with recent quarters, and he expects some modest compression early in the second quarter. He characterized the compression as relatively broad across the opportunity set, including auto service and convenience store sectors, and described it as “minimal,” in the range of 15 to 25 basis points.
About NNN REIT NYSE: NNN
NNN REIT 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.
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