Netstreit Corp. ((NTST)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for NETSTREIT Corp. conveyed a generally positive sentiment, underscored by increased guidance, robust investment performance, and an improved cost of capital. While the outlook remains optimistic, the company exercised caution due to anticipated credit losses and a projected decrease in cash yield in upcoming quarters.
Increased AFFO Guidance
NETSTREIT has raised its Adjusted Funds From Operations (AFFO) per share guidance midpoint by $0.01, establishing a new range of $1.29 to $1.31. This adjustment reflects the company’s confidence in its financial performance and strategic direction.
Record Investment Activity
The company achieved a milestone with $117.1 million in gross investments at a blended cash yield of 7.8%. These investments come with a weighted average lease term of 15.7 years, highlighting NETSTREIT’s commitment to long-term growth and stability.
Strong Portfolio Performance
NETSTREIT ended the quarter with investments in 705 properties leased to 106 tenants across 27 industries. Notably, 68.7% of the total Annualized Base Rent (ABR) is leased to investment-grade or investment-grade profile tenants, showcasing the strength and resilience of its portfolio.
Improved Cost of Capital
The company successfully raised over $46 million through the ATM, which has improved its cost of capital. This financial maneuver enables NETSTREIT to pursue further acquisitions and expand its investment portfolio.
Increased Dividend
A quarterly cash dividend of $0.215 per share was declared, marking a 2.4% increase over the previous quarter. This increase reflects NETSTREIT’s commitment to returning value to its shareholders.
Credit Loss Assumptions
The guidance includes an assumption of approximately 25 basis points of unknown rent loss, indicating a cautious approach to potential credit risks in the market.
G&A Expense Increase
General and administrative expenses increased year-over-year to $5.4 million. However, as a percentage of total revenues, these expenses saw a slight decrease, reflecting efficient cost management.
Expected Decrease in Cash Yield
While the company achieved a record cash yield of 7.8%, it anticipates a slight decrease to a range of 7.4% to 7.5% in the future. This expectation is based on the blending of investment opportunities.
Forward-Looking Guidance
NETSTREIT’s updated guidance indicates improved performance and strategic growth, with the AFFO per share guidance midpoint raised to a range of $1.29 to $1.31. The net investment guidance was also increased by $50 million at the midpoint, setting a new range of $125 million to $175 million. Despite a projected decrease in cash yield, the company remains optimistic about future investment opportunities.
In summary, NETSTREIT Corp.’s earnings call reflects a positive outlook with strategic growth and improved financial metrics. The company is poised for continued success, supported by strong investment activity, an enhanced portfolio, and prudent financial management. However, caution regarding credit losses and cash yield adjustments remains a consideration for future quarters.