Slide 1: Investor Presentation October 2023
Investor Presentation October 2023 1
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements concerning our bus
Slide 3: Investment Highlights & Business Update
Investment Highlights & Business Update High Credit Quality & Diverse Net Lease Portfolio ✓ Focused on growing portfolio with high quality tenants that 83% 87% offer strong credit profiles and provide consistent performance Investment Grade (IG) and Necessity, Discount, and through various economic
Slide 4: Portfolio Overview
Portfolio Overview High-Quality, Diversified Portfolio Consisting of 68.6% Investment Grade Tenants Across 45 States Key Portfolio Stats Top 10 Tenants by % of ABR Investments1 547 States 45 BBB 8.2% Portfolio Square Feet (in millions) 10.0 Tenants 85 BBB 8.2% Retail Sectors 26 % Occupancy2 100% BBB
Slide 5: Portfolio Diversification In Defensive Retail Sectors
Portfolio Diversification In Defensive Retail Sectors Nationally Diversified Portfolio Primarily Comprised of Recession Resilient Retail Tenants 53.8% 19.1% Top Industries Necessity Discount 1 Drug Stores & 15.7% Pharmacies: 2 Grocery: 15.5% 87.0% 3 14.0% of ABR 13.0% Dollar Stores: 12.4% Necessity
Slide 6: Consistent Investment Approach
Consistent Investment Approach Disciplined and Deliberate Portfolio Construction Investment Philosophy Portfolio Strategy Current Metrics Defensive Tenancy in Necessity-Based and Primarily 87.0% E-commerce-Resistant Retail Industries1 83.3% Resilient, Cycle-Tested Investment Grade Credit (68.6% Inve
Slide 7: Acquisition Strategy – Bell Curve Investing
Acquisition Strategy – Bell Curve Investing Acquisition Strategy is Focused on Inefficiently Priced Assets Where Risk Adjusted Returns are Higher Efficiently Priced Inefficiently Priced Assets Assets TYPICAL TRANSACTION TYPICAL TRANSACTION - Well marketed transaction - Not highly marketed - Straight
Slide 8: Stringent Three-Part Underwriting Process
Stringent Three-Part Underwriting Process Our Three-Pronged Approach Results in Superior Downside Protection A B C Level of Underwriting Emphasis Tenant Credit Underwriting Real Estate Valuation • Evaluate corporate level Unit-Level financials Profitability • Review underlying key real • Assess busi
Slide 9: Strong Tenant Credit Underwriting
Strong Tenant Credit Underwriting Credit-Focused Underwriting Approach Drives Stable Revenue and Long-Term Return on Investment Investment Grade Investment Grade Sub-IG (rated) & (rated) Profile (unrated) Sub-IG Profile (unrated) • Validated financial strength and • Well-capitalized retailers • IG-c
Slide 10: Real Estate Valuation
Real Estate Valuation Real Estate Closely Follows Credit as a Top Priority: We Utilize a Ground-Up Framework Rooted in Real Estate Fundamentals to Underpin Valuation and Further Quantify the Upside Potential of an Investment Market-Level Considerations Property-Level Considerations • Vacancy analysi
Slide 11: Unit-Level Profitability
Unit-Level Profitability Assess Unit-Level Financial Performance to Focus on Properties with Strong Rent Coverage and Higher Variability in Operating Costs 1 2 3 Obtain Financial Info Perform Financial Analysis Assess Investment Merits • Provides clarity into • Analyze store demand • Determine wheth
Slide 12: History of Sourcing Investments at Attractive Yields
History of Sourcing Investments at Attractive Yields Consistently Invested at Above-Market Yields Despite Focus on High-Quality Tenants 3Q’20 – 3Q’23 3Q’20 – 2Q’23 Volume $(000)s $1,499 $4,799 $1,847 $884 $2,789 Investment Grade % 67.2% 67.8% NA 53.5% NA Investment Grade Profile1 % 13.7% NA NA NA NA
Slide 13: Net Investment Activity
Investment Activity Summary Details $160,000 $150,538 Net Investment Activity ($000s) $135,848 $140,000 $129,616 $122,459 $120,000 $112,708 $111,261 $103,912 $100,000 $91,349 $80,000 $60,000 $40,000 $20,000 $0 Investments1 4Q'21 4Q'21 1Q'22 1Q'22 2Q'22 2Q'22 3Q'22 3Q'22 4Q'22 4Q'22 1Q'23 1Q'23 2Q'23
Slide 14: Disposition Activity
Disposition Activity Summary Details $18,000 $15,907 $16,000 $13,543 $14,000 Disposition Activity $12,294 $12,000 $10,328 ($000s) $10,000 $8,000 $6,000 $4,060 $4,000 $2,364 $1,685 $2,000 $- $0 4Q'21 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 3Q'23 Dispositions 4Q'21 1Q'22 2Q'22 3Q'22 4Q'22 1Q'23 2Q'23 3Q'2
Slide 15: Active Asset Management
Active Asset Management Continuously Track Property Performance to Stratify Portfolio and Ensure a Secure Rental Stream Strategic Recycling Active Monitoring Leverage 1031 exchange Periodically review all transfers where possible to properties for changes in access deep, non- performance, credit, an
Slide 16: Conservative Balance Sheet with Improved Liquidity
Conservative Balance Sheet with Improved Liquidity Balance Sheet Positioned for Growth Given Strong Liquidity Profile and Low Leverage Position Abundant Liquidity to Support Growth: Debt Maturity Schedule – Pro Forma2,3 $564.6 million in total PF liquidity1 $600 $500 Access to Debt: Secured new 5.5-
Slide 17: Portfolio Highlights Relative to Peers
Portfolio Highlights Relative to Peers NTST’s Stable & Predictable Cash Flow Profile Drives Superior Risk-Adjusted Returns Investment Grade %1 Portfolio Composition2 69% 69% 100% 61% 87% Service Discount Necessity 83% 80% 4% 62% 60% 33% 54% 40% 5% 100% 17% 79% 7% 20% 18% 1 16% 2% 31% 55% 3% 19% 38%
Slide 18: Multiple and Earnings Growth Comparison
Multiple and Earnings Growth Comparison Relative Valuation and Growth Remains Favorable 2023E AFFO per Share Growth1 2023E AFFO per Share Multiple2 7.0% 13.8x 12.8x 12.5x 12.4x 12.1x 11.5x 11.0x 10.2x 4.5% 9.2x 3.0% 2.8% 2.3% 1.9% 1.9% 1.0% (0.6%) 2024E AFFO per Share Growth3 2024E AFFO per Share Mu
Slide 19: Case Studies
Case Studies 19
Slide 20: Case Study: Loan Strategy
Case Study: Loan Strategy Investment Stats: Close Date: March 2023 Loan Amount: $46.1 million Interest Rate: 9.3% Location: Multiple – Southeast Term at Close: 3 years Parent Credit Rating: A / Baa2 Investment Highlights • Loan provided the borrower funding to acquire a 49 property Speedway portfoli
Slide 21: Case Study: Breakup Strategy
Case Study: Breakup Strategy Investment Stats: Close Date: July 2020 STATS: INVESTMENT INVETMENT STATS: Purchase Price: $17.0 million Cash Cap Rate: 6.6% Location: Tupelo, MS Term at Close: 12 years Credit Rating: AA / Aa2 Investment Highlights • Acquisition of one Walmart Supercenter and one Sam’s
Slide 22: Case Study: Blend & Extend
Case Study: Blend & Extend Investment Stats: Close Date: March 2021 INVESTMENT STATS: Purchase Price: $6.2 million Post-B&E Cash Cap Rate: 6.9% Location: Olympia, WA Term at Close of B&E: 10.5 Years Credit Rating: BBB / Baa1 Investment Highlights • NTST negotiated a new 10-year lease with only a 7.4
Slide 23: Commitment to ESG
Commitment to ESG 23
Slide 24: Governance
Governance We are committed to acting with honesty and integrity and conducting all corporate opportunities in an ethical manner. Governance Highlights Board Independence and Diversity No poison pill or differential Annual Director voting stock structure to Elections chill shareholder participation
Slide 25: Social Responsibility
Social Responsibility Human capital management is the cornerstone of our ESG and corporate strategy. We believe in the value of a diverse workforce and inclusive culture. Workforce Diversity Benefits 401K Plan Leave 100% company match of up to a Ten weeks of paid maternity leave 3% contribution, and
Slide 26: Environmental Responsibility
Environmental Responsibility We are committed to fulfilling our responsibility as an outstanding corporate citizen. Corporate Sustainability Initiatives from Tenants Greenhouse Gas Emissions ✓ 18 of our top 20 tenants have corporate sustainability ✓ We completed scope 1 and 2 greenhouse gas initiati
Slide 27: Financial Information and Non-GAAP Reconciliations
Financial Information and Non-GAAP Reconciliations 27
Slide 28: Consolidated Statements of Operations
Consolidated Statements of Operations (unaudited, dollars in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 REVENUES Rental revenue (including reimbursable) $ 31,167 $ 24,339 $ 89,347 $ 67,309 Interest income on loans receivable
Slide 29: Funds From Operations and Adjusted Funds From Operations
Funds From Operations and Adjusted Funds From Operations (unaudited, dollars in thousands, except per share data) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 GAAP Reconciliation: Net income $ 4,239 $ 1,419 $ 4,928 $ 5,395 Depreciation and amortization of real
Slide 30: EBITDAre and Adjusted EBITDAre
EBITDAre and Adjusted EBITDAre (unaudited, dollars in thousands) Three Months Ended September 30, 2023 2022 GAAP Reconciliation: Net income $ 4,239 $ 1,419 Depreciation and amortization of real estate 15,726 13,241 Amortization of lease-related intangibles (121) (313) Non-real estate depreciation an
Slide 31: Net Operating Income
Net Operating Income (unaudited, dollars in thousands) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 GAAP Reconciliation: Net income $ 4,239 $ 1,419 $ 4,928 $ 5,395 General and administrative 5,133 4,552 15,299 13,608 Depreciation and amortization 15,804 13,407
Slide 32: Consolidated Balance Sheets
Consolidated Balance Sheets (unaudited, dollars in thousands, except per share data) September 30, 2023 December 31, ASSETS Real estate, at cost: Land $ 449,718 $ 401,146 Buildings and improvements 1,081,427 907,084 Total real estate, at cost 1,531,145 1,308,230 Less accumulated depreciation (90,890
Slide 33: Debt, Capitalization, and Financial Ratios
Debt, Capitalization, and Financial Ratios (unaudited, dollars in thousands) As of September 30, 2023 Fully Extended Debt Summary Maturity Principal Balance Interest Rate(1) Remaining Capacity Available Term (years) Unsecured revolver(2) August 11, 2027 $ 42,000 6.42% $ 358,000 3.9 Unsecured term lo
Slide 34: Debt, Capitalization, and Financial Ratios (cont'd)
Debt, Capitalization, and Financial Ratios (cont’d) (unaudited, dollars in thousands) Net Debt September 30, 2023 Principal amount of total debt $ 575,399 Less: Cash, cash equivalents and restricted cash (7,934) Net debt $ 567,465 Less: Value of outstanding forward equity(1) (98,671) Net debt adjust
Slide 35: Non-GAAP Measures and Definitions
Non-GAAP Measures and Definitions FFO, Core FFO, and AFFO FFO means funds from operations. It is a non-GAAP measure defined by NAREIT as net income (computed in accordance with GAAP). Our FFO is net income in accordance with GAAP, excluding gains (or losses) resulting from dispositions of properties
Slide 36: Non-GAAP Measures and Definitions (cont'd)
Non-GAAP Measures and Definitions (cont’d) EBITDAre is the NAREIT definition of EBITDA (as defined above), but it is further adjusted to follow the definition included in a white paper issued in 2017 by NAREIT, which recommended that companies that report EBITDA also report EBITDAre. We compute EBIT
Slide 37: Non-GAAP Measures and Definitions (cont'd)
Non-GAAP Measures and Definitions (cont’d) Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run Rate Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated Run Rate, and Total Cash NOI - Estimated Run
Slide 38: Non-GAAP Measures and Definitions (cont'd)
Non-GAAP Measures and Definitions (cont’d) The defensive sub-categories as we define them are as follows: (1) Necessity, which are retailers that are considered essential by consumers and include sectors such as drug stores, grocers and home improvement, (2) Discount, which are retailers that offer
Slide 39: Investor Relations
Investor Relations ir@netstreit.com 972-597-4825 39