NETSTREIT (NYSE:NTST) reported third-quarter 2026 net income of $8.5 million, or $0.08 per diluted share, as the net-lease real estate investment trust increased its investment volume while maintaining its full-year adjusted funds from operations outlook.
Core funds from operations totaled $36.6 million, or $0.34 per diluted share, while adjusted funds from operations, or AFFO, reached $37.5 million, or $0.35 per diluted share. AFFO per share increased 6.1% from the prior-year quarter, according to CFO Dan Donlan.
The company maintained its 2026 AFFO-per-share guidance range of $1.37 to $1.39 and raised its outlook for net investment activity to at least $800 million, compared with its previous range of $700 million to $800 million.
Investment Activity Rises as Market Pricing Shifts
NETSTREIT completed $273.1 million of gross investments during the third quarter at a blended cash yield of 7.4% and a weighted average lease term of 13 years. About 44% of annualized base rent from those investments came from investment-grade or investment-grade-profile tenants.
Year-to-date gross investments totaled $811 million, also at a 7.4% blended cash yield, exceeding the $657.1 million of investments completed during all of 2025. The company also completed $39.5 million of dispositions at a 7.2% cash yield and received $28.2 million of loan repayments in the quarter.
CEO Mark Manheimer said the company expects to remain selective as financing costs affect transaction markets. He said smaller private buyers that historically relied on higher leverage and bank borrowing have become less competitive, while larger institutions have less available capital.
“The supply and demand is shifting,” Manheimer said during the question-and-answer session. “We are seeing it happen real time. Cap rates need to move up unless interest rates move down and everybody’s equity price gets a lot better really fast.”
Management said it does not expect to alter its investment criteria or enter new property verticals to pursue higher yields. Instead, the company is focused on its core necessity-based, service-oriented and deep-discount retail categories. Manheimer said deals in the current pipeline generally resemble prior investments, with somewhat more investment-grade-profile credit represented in the current opportunity set.
The company expects fourth-quarter acquisitions to be weighted toward the back end of the period as it gives sellers more time to adjust pricing expectations. Manheimer said NETSTREIT revisited pricing on 10 transactions late in the third quarter and achieved an average improvement of about 30 basis points on those deals. Those changes lifted the quarter’s overall investment yield from 7.3% to 7.4%, he said.
Portfolio Occupancy and Coverage Remain Strong
At quarter-end, NETSTREIT owned 913 investments producing $246.3 million of annualized base rent. The portfolio was leased to 158 tenants across 28 industries and 46 states.
Occupancy was 99.9%, with one vacant asset, and the weighted average remaining lease term was 10.1 years. Investment-grade and investment-grade-profile tenants accounted for more than 58% of annualized base rent.
The company also cited improving diversification and unit-level rent coverage. Its 10 largest tenants represented 29.2% of annualized base rent, down from 37.9% a year earlier. Unit-level coverage improved to 3.9 times, while assets with coverage below 1.5 times represented 3.4% of annualized base rent. Assets with coverage below one times represented 0.2% of annualized base rent.
Manheimer said the company was not seeing material tenant-credit concerns, with only “one or two assets” being monitored among the 913 assets in the portfolio. He attributed some improvement in weaker coverage categories to asset sales, while describing coverage in the existing portfolio as generally stable.
Management said it plans to continue targeted sales, including in pharmacy and dollar-store categories, to manage asset risk, lease maturities and tenant concentration. The company may also consider additional convenience-store sales if buyers offer attractive pricing, Manheimer said.
Liquidity, Debt Capacity and Equity Settlement
NETSTREIT ended the quarter with approximately $1.3 billion in liquidity, including about $42 million in cash, $500 million of revolver availability, $312 million of unsettled forward equity and $400 million of undrawn delayed-draw term-loan capacity.
The company secured $550 million in additional financing commitments and said it has no material debt maturities until 2029, including extension options. During the quarter, NETSTREIT repaid a $200 million term loan due in February 2028 using draws on term loans due in 2031 and 2032, transferring related swaps to the new borrowings.
It also established a new $400 million, seven-year delayed-draw term loan due in September 2033. The facility remained undrawn at the time of the call, and management expects to draw on it during 2027 to fund investment activity and term out revolver borrowings.
Adjusted net debt, including the impact of forward equity, was $853.7 million. Adjusted net debt to annualized adjusted EBITDAre stood at 3.7 times, below the company’s stated leverage comfort zone of 4.5 times to 5.5 times. The weighted average interest rate was 4.26%, and the weighted average debt maturity was four years.
Donlan said the company sees roughly $550 million of net investment capacity over the next five quarters before reaching five times leverage, the midpoint of its comfort zone. Based on that capacity, he said NETSTREIT sees a path to mid-single-digit AFFO growth in 2027 without issuing additional equity through year-end 2027.
However, Donlan said new equity issuance would require investment spreads above 100 basis points. Management estimated current spreads at roughly 60 to 70 basis points.
During the third quarter, NETSTREIT raised $21 million in net proceeds through its at-the-market program and settled 24 million forward shares for nearly $420 million in net proceeds. Donlan said the settlement increased the company’s share count sooner than previously anticipated but improved its position with rating agencies, increased public float and allowed it to delay drawing on its delayed-draw term loan.
The board declared a quarterly cash dividend of $0.225 per share on Oct. 15. The dividend is scheduled to be paid Dec. 15 to shareholders of record as of Dec. 1.
About NETSTREIT (NYSE:NTST)
NETSTREIT Corp. is a real estate investment trust focused on owning and managing outpatient healthcare properties in the United States. The company invests primarily in facilities that provide essential medical services, including physician offices, ambulatory care centers and other outpatient healthcare locations.
NETSTREIT generally leases its properties to healthcare providers under long-term, triple-net lease agreements. Under these arrangements, tenants typically assume responsibility for property taxes, insurance and maintenance expenses.
