NetSTREIT Corp. (NTST 2.22%), a retail-focused real estate investment trust (REIT) specializing in net-leased properties, announced its second quarter 2025 results on July 23, 2025. The company reported AFFO per diluted share of $0.33, which was well above the analyst consensus estimate of $0.06 (non-GAAP). Net income per diluted share (GAAP) reached $0.04, compared to a $(0.03) loss a year earlier. Revenue was $48.3 million, reflecting a 22.1% year-over-year increase. The quarter saw strong execution on portfolio expansion and an increase in the quarterly dividend. Results exceeded most key expectations (non-GAAP), and the outlook for both AFFO (non-GAAP) and investment activity for the remainder of FY2025 was raised.
| Metric | Q2 2025 Actual | Q2 2025 Estimate | Q2 2024 Actual | Y/Y Change |
|---|---|---|---|---|
| Net Income per Diluted Share (GAAP) | $0.04 | $0.06 | $(0.03) | $0.07 |
| Adjusted Funds from Operations (AFFO) per Diluted Share | $0.33 | $0.32 | 3.1 % | |
| Funds from Operations (FFO) per Diluted Share | $0.31 | $0.27 | 14.8 % | |
| Revenue (GAAP) | $48.3 million | $44.1 million | $39.6 million | 22.1 % |
| Property-Level Cash NOI | $39.3 million | $32.2 million | 22.0 % |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Key Success Factors
NetSTREIT Corp. is a REIT focused on acquiring and managing single-tenant, net-leased retail properties across the United States. In a net lease, tenants cover most property expenses such as taxes, insurance, and maintenance, leaving the landlord with stable rental income. NetSTREIT pursues a strategy centered on high tenant credit quality, long lease terms, and broad diversification across tenants, industries, and states.
Over recent quarters, NetSTREIT has zeroed in on several core areas: maintaining a high proportion of investment-grade tenants, locking in long-term leases, reducing reliance on any single tenant or sector, and keeping leverage within a defined target. These factors matter because they drive regular rental streams and limit risks related to tenant defaults or sector downturns.
Quarter Review: Portfolio Activity, Earnings, and Key Trends
This quarter, AFFO per diluted share came in at $0.33, a 3.1% year-over-year increase and materially above consensus estimates. Net income also turned positive compared to a loss in the same period last year. Total revenues (GAAP) reached $48.3 million, a 22.1% increase year-over-year, fueled mainly by rental growth from new investments and higher interest income on property loans. Funds from Operations (FFO), a key profit metric for REITs that strips out non-cash depreciation, jumped 14.8% year-over-year (non-GAAP).
Gross investment activity totaled $117.1 million, with 32 properties acquired at a blended initial yield (first-year cash return) of 7.8 %. At the same time, NetSTREIT sold 20 properties for $60.4 million at a 6.5% cash yield. Net investment activity, the difference between acquisitions and dispositions, was $49.4 million. The company also advanced its development pipeline, though at a modest scale relative to its stabilized property base.
Occupancy remained at 99.9%, signaling almost no vacancy across more than 700 properties. The weighted average lease term (WALT) across the portfolio was 9.8 years as of June 30, 2025, with new investments carrying leases averaging 15.7 years in length, meaning fresh acquisitions will deliver steady income for well over a decade on average. No tenant represented more than 5% of annualized base rent as of December 31, 2024, and the top five tenants together accounted for approximately 28.2% of ABR as of Q1 2025, helping mitigate risks from concentration. Recent dispositions were also targeted at reducing large-tenant exposures.
Tenant quality trends showed some shifts: over half (52.2%) of portfolio rent came from investment-grade tenants, but only 18.0% of new investment rent was from investment-grade tenants—a decrease from prior quarters. Management explained that high-quality tenants remain highly sought after and attract lower acquisition yields, while higher-risk tenants offer better returns.
Lease Terms, Diversification, and Financial Details
Lease structure and tenant mix are core strengths for NetSTREIT. With a portfolio-wide occupancy rate of 99.9% as of June 30, 2025, and only a small share of leases set to expire in the next several years, the company’s rental streams are well covered for the foreseeable future. This should bolster cash flow predictability for over a decade and lock in higher yields achieved from recent acquisitions. The company's measured approach to both buying and selling was evident in the continued reduction of exposure to larger tenants and sectors with higher risk, such as certain pharmacy and discount store operators.
Diversification remained a highlight. As of June 30, 2025, the portfolio comprised 705 properties in 45 states, with exposure spread across 106 tenants and 27 industries. No one property, sector, or geography accounted for an outsized proportion of overall rent, which is a key factor in providing stability through various economic cycles.
From a capital perspective, leverage increased modestly. Net debt to annualized adjusted EBITDAre, a non-GAAP REIT leverage ratio, was 5.9x—slightly above the stated target range of 4.5x to 5.5x. Adjusted net debt, which reflects the impact of forward equity sales yet to be settled, stood at 4.6 times annualized adjusted EBITDAre, within management’s target. Higher leverage reflected increased debt usage and forward equity, as well as the impact of recent acquisitions. NetSTREIT raised $46.1 million in new equity via its at-the-market (ATM) share program and maintained strong liquidity, with available capacity on its credit facility and cash totaling $594.2 million as of June 30, 2025.
Interest expense rose to $12.638 million from $7.604 million, alongside an increase in debt. General and administrative (G&A) costs also increased to $5.475 million.
Dividend, Guidance, and Outlook
The company raised its quarterly dividend by 2.4% to $0.215 per share (annualized $0.86).
Management raised its full-year AFFO (non-GAAP) guidance, now expecting $1.29 to $1.31 per share for 2025 (up from $1.28 to $1.30). Net investment activity guidance was also increased, with targeted net acquisitions of $125 million to $175 million for 2025 (previously $75 million to $125 million). This reflects the company’s confidence in its investment pipeline and ability to redeploy capital from asset sales into higher-yielding properties. No material changes were made to other operating targets such as leverage ratios or G&A expense forecasts, and management continues to emphasize the importance of external capital market access to support ongoing portfolio expansion.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
