Slide 1: Investor Presentation July 2023
Investor Presentation July 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 82% 87% offer strong credit profiles and provide consistent performance Investment Grade and Necessity, Discount, and through various economic cycle
Slide 4: Portfolio Overview
Portfolio Overview High-Quality, Diversified Portfolio Consisting of 68% Investment Grade Tenants Across 45 States Key Portfolio Stats Top 10 Tenants by % of ABR Investments1 531 States 45 BBB 8.8% Portfolio Square Feet (in millions) 9.5 Tenants 87 BBB 8.1% Retail Sectors 25 % Occupancy2 100% BBB 8.
Slide 5: Portfolio Diversification In Defensive Retail Sectors
Portfolio Diversification In Defensive Retail Sectors Nationally Diversified Portfolio Primarily Comprised of Recession Resilient Retail Tenants 53.0% 18.9% Top Industries Necessity Discount 1 Drug Stores & 16.9% Pharmacies: 2 Grocery: 13.0% 86.8% 3 14.9% of ABR 13.2% Dollar Stores: 11.8% 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 86.8% E-commerce-Resistant Retail Industries1 81.8% Resilient, Cycle-Tested Investment Grade Credit (67.7% 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: Level of Underwriting Emphasis
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 Sub-IG (rated) & Investment Grade Investment Grade Sub-IG Profile (rated) Profile (unrated) (unrated)1 • Validated financial strength and • Well-capitalized retailers • IG-
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 Volume $(000)s from 3Q’20 – 2Q’23 $1,278 $4,096 $1,665 $714 $2,511 Investment Grade % 67.0% 66.9% NA 52.1% NA Investment Grade Profile1 % 13.6% NA NA NA NA IG + IG
Slide 13: Strong External Growth Profile
Strong External Growth Profile Dependable Track Record of Procuring New Investments Cumulative Investments Since 20191 ($ in millions) 478 Completed Investments Investment Activity: 24 44 30 26 31 35 26 32 37 27 26 24 71 45 Avg. Acquisition Activity per Completed Quarter = $115 million $1,608 $1,489
Slide 14: 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 15: 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 $557 million in total PF liquidity1 $600 $500 Access to Debt: $400 $400 Secured
Slide 16: 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 Composition 100% 68% 68% Service Discount Necessity 87% 61% 82% 3% 62% 60% 60% 41% 53% 5% 100% 25% 17% 2 79% 7% 31% 20% 18% 2% 16% 55% 3% 19% 36%
Slide 17: Case Studies
Case Studies 17
Slide 18: 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 19: 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 20: 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 21: Case Study: Sale Leaseback Master Lease
Case Study: Sale Leaseback Master Lease Investment Stats: Close Date: December 2022 Purchase Price: $22.4 million Cash Cap Rate: 7.2% Location: Greenfield, WI Term at Close: 15 years Credit Rating: Investment Grade Profile Investment Highlights • Created a master lease to encompass an existing Festi
Slide 22: Commitment to ESG
Commitment to ESG 22
Slide 23: Corporate Responsibility
Corporate Responsibility NETSTREIT is committed to fulfilling its responsibility as an outstanding corporate citizen The Company’s mission is to be the leader in the net lease industry by practicing and implementing innovative, impactful Environmental, Social and Governance policies with the highest
Slide 24: Corporate Responsibility
Corporate Responsibility NETSTREIT aligns its corporate responsibility efforts to support that of the United Nations Sustainable Development Goals (SDGs) Promote health and well-being in our offices. Company provides insurance Promote sustained, inclusive, full and benefits to our employees and fami
Slide 25: Environmental Responsibility
Environmental Responsibility Our top tenants have corporate sustainability programs that govern their business operations. 18 of our top 20 tenants in our portfolio have ESG commitments ENVIRONMENTAL SOCIAL Eco-Friendly Plastic Usage/ Renewable Water Products/ Waste Community Diversity, Product GHG/
Slide 26: Environmental Responsibility
Environmental Responsibility To showcase our commitment to the reduction of greenhouse gas emissions, we incorporated a sustainability-linked loan feature based on the Science Based Targets initiatives (“SBTi”) to our $600 million credit facility and to our $250 million senior unsecured term loan. S
Slide 27: 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 28: Corporate Governance
Corporate 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 parti
Slide 29: Financial Information and Non-GAAP Reconciliations
Financial Information and Non-GAAP Reconciliations 29
Slide 30: Consolidated Statements of Operations
Consolidated Statements of Operations (unaudited, dollars in thousands, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2023 2022 2023 2022 REVENUES Rental revenue (including reimbursable) $ 29,707 $ 22,048 $ 58,180 $ 42,970 Interest income on loans receivable 1,923 586
Slide 31: 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 GAAP Reconciliation: Net (loss) income $ (792) $ 2,010 $ 689 $ 3,976 Depreciation and amortization of real estat
Slide 32: EBITDAre and Adjusted EBITDAre
EBITDAre and Adjusted EBITDAre (unaudited, dollars in thousands) Three Months Ended June 30, 2023 2022 GAAP Reconciliation: Net (loss) income $ (792) $ 2,010 Depreciation and amortization of real estate 15,769 11,598 Amortization of lease-related intangibles (184) (166) Non-real estate depreciation
Slide 33: NOI and Cash NOI
NOI and Cash NOI(1) (unaudited, dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 GAAP Reconciliation: Net (loss) income $ (792) $ 2,010 $ 689 $ 3,976 General and administrative 5,260 4,865 10,168 9,057 Depreciation and amortization 15,847 11,751 30,795
Slide 34: Consolidated Balance Sheets
Consolidated Balance Sheets (unaudited, dollars in thousands, except per share data) June 30, 2023 June 30, 2022 ASSETS Real estate, at cost: Land $ 424,821 $ 401,146 Buildings and improvements 1,005,884 907,084 Total real estate, at cost 1,430,705 1,308,230 Less accumulated depreciation (80,527) (6
Slide 35: Debt, Capitalization, and Financial Ratios
Debt, Capitalization, and Financial Ratios (unaudited, dollars in thousands) As of June 30, 2023 Fully Extended Debt Summary Maturity Principal Balance Interest Rate(1) Remaining Capacity Available Term (years) Unsecured revolver(2) August 11, 2027 $ 106,000 6.15% $ 294,000 4.1 Unsecured term loan(3
Slide 36: Debt, Capitalization, and Financial Ratios (cont’d)
Debt, Capitalization, and Financial Ratios (cont’d) (unaudited, dollars in thousands) Net Debt June 30, 2023 Principal amount of total debt $ 489,472 Less: Cash, cash equivalents and restricted cash (13,140) Net debt $ 476,332 Net debt / Annualized Adjusted EBITDAre 4.6x Key Debt Covenant Informatio
Slide 37: 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 38: Non-GAAP Measures and Definitions
Non-GAAP Measures and Definitions 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 EBITDAre in a
Slide 39: 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 40: Non-GAAP Measures and Definitions (cont’d)
Non-GAAP Measures and Definitions (cont’d) Defensive Category is considered by us to represent tenants that focus on necessity goods and essential services in the retail sector, including discount stores, grocers, drug stores and pharmacies, home improvement, automotive service and quick-service res
Slide 41: Investor Relations
Investor Relations ir@netstreit.com 972-597-4825 41