Yahoo Finance Netstreit Corp (NTST) Q1 2024 Earnings Call Transcript Highlights: Strategic Insights and ...
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- NTST
Net Income: $1 million, or $0.01 per diluted share.
Core FFO: $22.5 million, or $0.30 per diluted share.
AFFO: $22.9 million, or $0.31 per diluted share, a 3.3% increase over last year.
Gross Investment Activity: Over $129 million at a blended cash yield of 7.5%.
Disposition Activity: Sold 12 properties for $21.6 million at a 6.8% cash yield.
Portfolio ABR: $140.3 million from 628 investments.
Lease Expirations: Renewed one lease expiring in 2024 for a 12.5% rent increase.
Adjusted Net Debt: $395.1 million with a weighted average interest rate of 4.36%.
Liquidity: $638.1 million, including cash and credit facilities.
Dividend: Quarterly cash dividend declared at $0.205 per share, payable on June 14.
AFFO Payout Ratio: 66% for the first quarter.
2024 AFFO Guidance: Increased to a range of $1.25 to $1.28 per share.
Release Date: April 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: How should we interpret the first quarter activity in terms of capital deployment going forward? A: Mark Manheimer, President and CEO, explained that the pace of capital deployment is expected to remain similar to previous quarters. The focus will continue on investment-grade and healthy non-investment grade tenants, with potential opportunities in sale-leaseback transactions. Daniel Donlan, CFO, added that with sufficient capital raised for the year, the company can afford to be patient and opportunistic, adapting to market conditions.
Q: Can you discuss the expected cap rates and spreads for the near future? A: Mark Manheimer noted that cap rates in the second quarter are expected to be similar to the first quarter, with acquisitions featuring longer lease terms and better rental increases. Daniel Donlan mentioned that the company's forward equity and credit facilities cover near-term capital needs, allowing flexibility in funding strategies.
Q: What is the status of Big Lots as a tenant, and what are your plans for properties leased to them? A: Mark Manheimer stated that while Big Lots has closed several stores, none were leased from Netstreit, and the company continues to monitor the tenant's performance closely. The remaining properties are considered strong due to their attractive locations and below-market rents, providing a safety net for potential re-leasing.
Q: How are you addressing the challenges in the current higher interest rate environment? A: Mark Manheimer acknowledged the market's adjustment to a potential "higher for longer" interest rate scenario. He highlighted that this has increased the number of investment opportunities, as many competitors remain sidelined, allowing Netstreit to be selective and negotiate favorable terms.
Q: Are there any changes in the types of properties or industries you are targeting for acquisitions? A: Mark Manheimer indicated that while the focus remains similar, the company is looking to diversify by adding new tenants and exploring different industries where cap rates have become more attractive. This includes potential increases in sale-leaseback transactions and development funding.
Q: What are your expectations for disposition pricing and buyer activity in the current market? A: Mark Manheimer observed that while cap rates on dispositions have slightly increased, the market for buyers has become more challenging, leading to longer sales processes and more negotiation. However, the company is prepared to manage these conditions effectively without incurring significant costs.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
