8-K
NETSTREIT Corp. (NTST)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 24, 2022
NETSTREIT Corp.
(Exact Name of Registrant as Specified in its Charter)
| Maryland | 001-39443 | 84-3356606 | |
|---|---|---|---|
| (State or Other Jurisdiction<br><br>of Incorporation) | (Commission<br><br>File Number) | (IRS Employer<br><br>Identification No.) | |
| 2021 McKinney Avenue<br><br>Suite 1150<br><br>Dallas, Texas | 75201 | ||
| (Address of Principal Executive Offices) | (Zip Code) |
972-200-7100
(Registrant’s telephone number, including area code)
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock,<br><br>$0.01 par value per share | NTST | The New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On February 24, 2022, NETSTREIT Corp. (the “Company”) issued a press release announcing its financial results for the fourth quarter and full year ended December 31, 2021. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated by reference herein.
The information contained in Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (“Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 7.01. Regulation FD Disclosure.
On February 24, 2022, the Company furnished supplemental financial information for the fourth quarter and full year ended December 31, 2021. Also on February 24, 2022, the Company furnished an updated investor presentation. The supplemental financial information and investor presentation are attached hereto as Exhibits 99.2 and 99.3, respectively, and incorporated by reference herein. The supplemental information and investor presentation also are available on the “Investors / Events & Presentations” page of the Company’s website at www.netstreit.com. The information found on, or otherwise accessible through, the Company’s website is not incorporated by reference herein.
The information contained in Exhibits 99.2 and 99.3 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
| (d) | Exhibits. | |
|---|---|---|
| Exhibit No. | Description | |
| 99.1 | Press release dated February 24, 2022 | |
| 99.2 | Fourth quarter 2021 supplemental financial information | |
| 99.3 | Fourth quarter 2021 investor presentation | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NETSTREIT Corp. | |
|---|---|
| February 24, 2022 | /s/ ANDREW BLOCHER |
| Date | Andrew Blocher |
| Chief Financial Officer, Treasurer and Secretary | |
| (Principal Executive Officer) |
Document
NETSTREIT REPORTS FOURTH QUARTER AND FULL YEAR 2021 FINANCIAL AND OPERATING RESULTS
– Reports Net Income of $0.05 and $0.08 and Adjusted Funds from Operations (“AFFO”) of $0.27 and $0.94 per diluted share, for the Fourth Quarter and Full Year 2021, respectively –
– Completed $413.7 Million of Net Acquisitions in 2021 –
– Subsequent to Year End, Completed Forward Common Stock Offering of 10,350,000 Shares –
Dallas TX – February 24, 2022 – NETSTREIT (NYSE: NTST) (the “Company”), today announced financial and operating results for the fourth quarter and full year ended December 31, 2021.
“We are extremely proud of our accomplishments in 2021. We grew our portfolio to 327 properties, increased our annual base rent by more than 70% from the previous year, to $71.2 million, and increased our combined investment grade and investment grade profile to 81.6% of the portfolio,” said Mark Manheimer, Chief Executive Officer of NETSTREIT. “Further, over the past 12 months, we have completed over $500 million of equity issuances to both maintain our strong balance sheet and fuel accretive growth. We continue to see vast opportunities in the market and are optimistic for continued expansion in 2022.”
FOURTH QUARTER AND FULL YEAR 2021 HIGHLIGHTS
•Reported net income per diluted share of $0.05, Core Funds from Operations (“Core FFO”)1 per diluted share of $0.252 and AFFO per diluted share of $0.272 for the fourth quarter of 2021
•Reported net income per diluted share of $0.08, Core FFO per diluted share of $0.873 and AFFO per diluted share of $0.943 for the full year 2021
PORTFOLIO UPDATE
As of December 31, 2021, the NETSTREIT portfolio was comprised of 327 leases with 67 total tenants, contributing $71.2 million of annualized base rent4, with a weighted-average remaining lease term of 9.9 years, of which 65.2% were leased to investment grade rated tenants and 16.4% were leased to tenants with investment grade profiles5. The portfolio was 100.0% occupied as of December 31, 2021. During the year, the Company increased its ABR over 70% from $41.8 million to $71.2 million, and increased its combined investment grade and investment grade profile percentage from 78.0% to 81.6%. The Company added 15 new tenants and three new states to its portfolio during the year.
INVESTMENT ACTIVITY
During the quarter ended December 31, 2021, the Company had total net investment activity of $159.8 million, which includes acquisitions of $150.5 million and ongoing development funding of $9.3 million. The Company completed $150.5 million of acquisitions in 32 properties at an initial cash capitalization rate of 6.5%. Acquisitions completed during the quarter had a weighted-average remaining lease term of 10.4 years, with 39.5% occupied by investment grade rated tenants and 18.4% occupied by tenants with investment grade profiles. The Company provided $9.3 million of ongoing development funding including funding to support five new developments for two investment grade tenants and three tenants with investment grade profiles, with estimated total project costs of $23.0 million. The Company had no dispositions in the fourth quarter.
During the year ended December 31, 2021, the Company completed $445.6 million of acquisitions in 124 properties at an initial cash capitalization rate, including acquisitions costs, of 6.5%. Acquisitions completed during the year had a weighted-average remaining lease term of 10.3 years, with 60.4% of properties occupied by investment grade rated tenants and 21.6% occupied by tenants with investment grade profiles. The Company provided $18.8 million of total development funding in 2021 for 10 projects during the year, with nine of the projects for investment grade tenants or tenants with investment grade profiles. During the same period, the Company sold nine properties for total proceeds of $31.9 million, at a cash capitalization rate of 6.5%.
BALANCE SHEET AND LIQUIDITY
During the year ended 2021, the Company completed the following equity issuances:
•In April, the Company issued 10,915,688 shares of common stock in a public offering at a price of $18.65 per share, resulting in gross proceeds of approximately $203.6 million
•In November, the Company issued 3,852,436 of common stock at a weighted average price of $23.36 per share for gross proceeds of approximately $90.0 million. Almost all of the ATM activity was the result of a reverse inquiry by a REIT dedicated investor.
At quarter end, total debt outstanding was $239.0 million, with a weighted average term of 2.7 years and a contractual interest rate, including the impact of the fixed rate swap, of 1.35% (excluding the impact of deferred fee amortization). The Company’s net debt to annualized adjusted EBITDA ratio was 4.2x, and the ending cash balance was $7.6 million.
SUBSEQUENT ACTIVITY
In January, the Company completed its forward offering of 10,350,000 shares of common stock, which includes the full exercise of underwriters' option to purchase additional shares, at a price to the public of $22.25 per share. The Company will have until January 10, 2023 to settle its forward sales agreement. As of the date of this press release, the Company has not settled on any shares from the forward offering.
DIVIDEND
On February 22, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share for the first quarter of 2022, which will be paid on March 30, 2022 to shareholders of record on March 15, 2022.
2022 OUTLOOK
On January 5, 2022, the Company announced its full year 2022 AFFO per share guidance in the range of $1.13 to $1.17 per share. This AFFO guidance is based on the following assumptions:
•The Company expects acquisition activity, including completed developments and net of dispositions, to be at least $480.0 million in 2022
•The Company expects cash G&A to be in the range of $14.5 million to $15.0 million (inclusive of transaction costs), and expects non-cash compensation expense to be in the range of $5.0 million to $5.5 million
•The Company expects cash interest expense to be in the range of $5.0 million to $5.5 million, with approximately $0.6 million of additional non-cash deferred financing fee amortization
•Full year 2022 diluted weighted average shares outstanding, which includes the impact of OP units, are expected to be in the range of 52.0 million to 54.0 million shares
EARNINGS WEBCAST AND CONFERENCE CALL
A conference call will be held on Friday, February 25, 2022 at 10:00 AM ET. During the conference call the Company’s officers will review fourth quarter performance, discuss recent events, and conduct a question and answer period.
The webcast will be accessible on the “Investor Relations” section of the Company’s website at www.NETSTREIT.com. To listen to the live webcast, please go to the site at least fifteen minutes prior to the scheduled start time to register, as well as download and install any necessary audio software. A replay of the webcast will be available for 90 days on the Company’s website shortly after the call.
The conference call can also be accessed by dialing 1-877-451-6152 for domestic callers or 1-201-389-0879 for international callers. A dial-in replay will be available starting shortly after the call until March 4, 2022, which can be accessed by dialing 1-844-512-2921 for domestic callers or 1-412-317-6671 for international callers. The passcode for this dial-in replay is 13725918.
SUPPLEMENTAL PACKAGE
The Company’s supplemental package will be available prior to the conference call in the Investor Relations section of the Company’s website at www.investors.netstreit.com.
About NETSTREIT
NETSTREIT is an internally managed real estate investment trust (REIT) based in Dallas, Texas that specializes in acquiring single-tenant net lease retail properties nationwide. The growing portfolio consists of high-quality properties leased to e-commerce resistant tenants with healthy balance sheets. Led by a management team of seasoned commercial real estate executives, NETSTREIT’s strategy is to create the highest quality net lease retail portfolio in the country with the goal of generating consistent cash flows and dividends for its investors.
Investor Relations
ir@netstreit.com
972-597-4825
(1) Non-GAAP financial measure. See "Non-GAAP Financial Measures".
(2) Per share amounts include weighted average common shares of 41,859,168 and weighted average operating partnership units of 1,125,712 for the three-months ended December 31, 2021.
(3) Per share amounts include weighted average common shares of 36,999,459 and weighted average operating partnership units of 1,377,335 for the twelve-months ended December 31, 2021.
(4) Annualized base rent, or ABR, is calculated by multiplying (i) cash rental payments (a) for the month ended December 31, 2021 (or, if applicable, the next full month's cash rent contractually due in the case of rent abatements, rent deferrals, recently acquired properties and properties with contractual rent increases, other than properties under development) for leases in place as of December 31, 2021, plus (b) for properties under development, the first full month's permanent cash rent contractually due after the development period by (ii) 12).
(5) Unrated tenants with more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x.
NON-GAAP FINANCIAL MEASURES
This press release contains non-GAAP financial measures, including FFO, Core FFO, AFFO, EBITDA, EBITDAre, Adjusted EBITDAre, NOI, and Cash NOI. A reconciliation from net income available to common shareholders to each non-GAAP financial measure, and definitions of each non-GAAP measure, are included below.
FORWARD LOOKING STATEMENTS
This press release 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 business and growth strategies, investment, financing and leasing activities and trends in our business, including trends in the market for single-tenant, retail commercial real estate. Words such as “expects,” “anticipates,” “intends,” “plans,” “likely,” “will,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this press release may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. For a further discussion of these and other factors that could impact future results, performance or transactions, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (the “SEC”) on March 4, 2021 and other reports filed with the SEC from time to time. Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release. New risks and uncertainties may arise over time and it is not possible for us to predict those events or how they may affect us. Many of the risks identified herein and in our periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from the novel coronavirus (COVID-19). We expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law.
NETSTREIT CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(Unaudited)
| December 31, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| Assets | ||||
| Real estate, at cost: | ||||
| Land | $ | 299,935 | $ | 189,373 |
| Buildings and improvements | 626,457 | 358,360 | ||
| Total real estate, at cost | 926,392 | 547,733 | ||
| Less accumulated depreciation | (30,669) | (10,111) | ||
| Property under development | 17,896 | — | ||
| Real estate held for investment, net | 913,619 | 537,622 | ||
| Assets held for sale | 2,096 | 14,802 | ||
| Cash, cash equivalents and restricted cash | 7,603 | 92,643 | ||
| Lease intangible assets, net | 124,772 | 75,024 | ||
| Other assets, net | 20,351 | 5,724 | ||
| Total assets | $ | 1,068,441 | $ | 725,815 |
| Liabilities and equity | ||||
| Liabilities: | ||||
| Term loan, net | $ | 174,330 | $ | 174,105 |
| Revolving credit facility | 64,000 | — | ||
| Lease intangible liabilities, net | 23,316 | 16,930 | ||
| Liabilities related to assets held for sale | — | 399 | ||
| Accounts payable, accrued expenses and other liabilities | 16,980 | 6,308 | ||
| Total liabilities | 278,626 | 197,742 | ||
| Commitments and contingencies | ||||
| Equity: | ||||
| Stockholders’ equity | ||||
| Common stock, $0.01 par value, 400,000,000 shares authorized; 44,223,050 and 28,203,545 shares issued and outstanding as of December 31, 2021 and 2020, respectively | 442 | 282 | ||
| Additional paid-in capital | 809,724 | 501,045 | ||
| Distributions in excess of retained earnings | (35,119) | (7,464) | ||
| Accumulated other comprehensive income | 4,123 | 235 | ||
| Total stockholders’ equity | 779,170 | 494,098 | ||
| Noncontrolling interests | 10,645 | 33,975 | ||
| Total equity | 789,815 | 528,073 | ||
| Total liabilities and equity | $ | 1,068,441 | $ | 725,815 |
NETSTREIT CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(in thousands, except share and per share data)
(Unaudited)
| Successor | Predecessor | |||||||
|---|---|---|---|---|---|---|---|---|
| Year Ended December 31, | For the Period from <br>December 23 to December 31, | For the Period from <br>January 1 to December 22, | ||||||
| 2021 | 2020 | 2019 | ||||||
| Revenues | ||||||||
| Rental revenue (including reimbursable) | $ | 59,140 | $ | 33,727 | $ | 513 | $ | 19,805 |
| Operating expenses | ||||||||
| Property | 5,803 | 2,569 | 52 | 1,113 | ||||
| General and administrative | 14,810 | 11,340 | 49 | 3,555 | ||||
| Depreciation and amortization | 30,807 | 15,459 | 195 | 10,422 | ||||
| Provisions for impairment | 3,539 | 2,690 | — | 7,186 | ||||
| Transaction costs | 700 | 3,169 | 2 | 535 | ||||
| Total operating expenses | 55,659 | 35,227 | 298 | 22,811 | ||||
| Other income (expense) | ||||||||
| Interest expense, net | (3,700) | (4,741) | (173) | (10,712) | ||||
| Gain on sales of real estate, net | 2,997 | 6,213 | — | 5,646 | ||||
| Gain on forfeited earnest money deposit | — | 250 | — | — | ||||
| Other income (expense), net | 431 | (10) | — | — | ||||
| Total other income (expense), net | (272) | 1,712 | (173) | (5,066) | ||||
| Net income (loss) before income tax expense | 3,209 | 212 | 42 | (8,072) | ||||
| Income tax expense | (59) | — | — | — | ||||
| Net income (loss) | 3,150 | 212 | 42 | (8,072) | ||||
| Net income (loss) attributable to noncontrolling interests | 104 | (518) | 14 | — | ||||
| Preferred stock dividends | — | 42 | — | — | ||||
| Net income (loss) attributable to common stockholders | $ | 3,046 | $ | 688 | $ | 28 | $ | (8,072) |
| Amounts available to common stockholders per common share: | ||||||||
| Basic | $ | 0.08 | $ | 0.04 | $ | — | N/A | |
| Diluted | $ | 0.08 | $ | 0.01 | $ | — | N/A | |
| Weighted average common shares: | ||||||||
| Basic | 36,999,459 | 17,322,182 | 8,860,760 | N/A | ||||
| Diluted | 38,672,565 | 21,157,996 | 8,860,760 | N/A | ||||
| Other comprehensive income (loss): | ||||||||
| Net income (loss) | $ | 3,150 | $ | 212 | $ | 42 | $ | (8,072) |
| Change in value on derivatives, net | 4,057 | 253 | — | 55 | ||||
| Total comprehensive income (loss) | $ | 7,207 | $ | 465 | $ | 42 | $ | (8,017) |
| Comprehensive income (loss) attributable to noncontrolling interests | 273 | (500) | 14 | — | ||||
| Comprehensive income (loss) attributable to common stockholders | $ | 6,934 | $ | 965 | $ | 28 | $ | (8,017) |
NETSTREIT CORP. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO FFO, CORE FFO AND ADJUSTED FFO
(in thousands, except share and per share data)
(Unaudited)
| Successor | ||||
|---|---|---|---|---|
| Year Ended December 31, | ||||
| 2021 | 2020 | |||
| Net income | $ | 3,150 | $ | 212 |
| Depreciation and amortization of real estate | 30,491 | 15,154 | ||
| Provisions for impairment | 3,539 | 2,690 | ||
| Gain on sales of real estate, net | (2,997) | (6,213) | ||
| FFO | 34,183 | 11,843 | ||
| Adjustments: | ||||
| Gain on forfeited earnest money deposit | — | (250) | ||
| 144A and IPO transaction costs (1) | — | 2,170 | ||
| Gain on insurance proceeds | (438) | — | ||
| Core FFO | 33,745 | 13,763 | ||
| Adjustments: | ||||
| Straight-line rental revenue | (1,082) | (1,688) | ||
| Amortization of deferred financing costs | 627 | 621 | ||
| Amortization of above/below market lease intangibles | (808) | (504) | ||
| Amortization of lease incentives | 122 | — | ||
| Capitalized interest expense | (78) | — | ||
| Non-cash compensation expense | 3,703 | 2,452 | ||
| AFFO | $ | 36,229 | $ | 14,644 |
| Weighted average common shares outstanding, basic | 36,999,459 | 17,322,182 | ||
| Weighted average operating partnership units outstanding | 1,377,335 | 3,807,022 | ||
| Weighted average dilutive securities | 295,771 | 28,792 | ||
| Weighted average common shares outstanding, diluted | 38,672,565 | 21,157,996 | ||
| FFO per common share, diluted | $ | 0.88 | $ | 0.56 |
| Core FFO per common share, diluted | $ | 0.87 | $ | 0.65 |
| AFFO per common share, diluted | $ | 0.94 | $ | 0.69 |
NETSTREIT CORP. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA, EBITDAre AND ADJUSTED EBITDAre
(in thousands, except share and per share data)
(Unaudited)
| Successor | ||||
|---|---|---|---|---|
| Year Ended December 31, | ||||
| 2021 | 2020 | |||
| Net income | $ | 3,150 | $ | 212 |
| Depreciation and amortization of real estate | 30,491 | 15,154 | ||
| Amortization of above/below market lease intangibles | (808) | (504) | ||
| Amortization of lease incentives | 122 | — | ||
| Non-real estate depreciation and amortization | 316 | 305 | ||
| Interest expense, net | 3,700 | 4,741 | ||
| Income tax expense | 59 | — | ||
| EBITDA | 37,030 | 19,908 | ||
| Adjustments: | ||||
| Provisions for impairment | 3,539 | 2,690 | ||
| Gain on sales of real estate, net | (2,997) | (6,213) | ||
| EBITDAre | 37,572 | 16,385 | ||
| Adjustments: | ||||
| Straight-line rental revenue | (1,082) | (1,688) | ||
| Gain on forfeited earnest money deposit | — | (250) | ||
| 144A and IPO transaction costs (1) | — | 2,170 | ||
| Gain on insurance proceeds | (438) | — | ||
| Non-cash compensation expense | 3,703 | 2,452 | ||
| Adjusted EBITDAre | $ | 39,755 | $ | 19,069 |
NETSTREIT CORP. AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO NOI AND CASH NOI
(in thousands, except share and per share data)
(Unaudited)
| Successor | ||||
|---|---|---|---|---|
| Year Ended December 31, | ||||
| 2021 | 2020 | |||
| Net income | $ | 3,150 | $ | 212 |
| General and administrative | 14,810 | 11,340 | ||
| Depreciation and amortization | 30,807 | 15,459 | ||
| Provisions for impairment | 3,539 | 2,690 | ||
| Transaction costs | 700 | 3,169 | ||
| Interest expense, net | 3,700 | 4,741 | ||
| Gain on sales of real estate, net | (2,997) | (6,213) | ||
| Gain on forfeited earnest money deposit | — | (250) | ||
| Income tax expense | 59 | — | ||
| Other income (expense), net | (431) | 10 | ||
| NOI | 53,337 | 31,158 | ||
| Straight-line rental revenue | (1,082) | (1,688) | ||
| Amortization of above/below market lease intangibles | (808) | (504) | ||
| Amortization of lease incentives | 122 | — | ||
| Cash NOI | $ | 51,569 | $ | 28,966 |
NON-GAAP FINANCIAL MEASURES
FFO, Core FFO and AFFO
FFO is a non-GAAP financial measure defined by NAREIT as net income (computed in accordance with GAAP), excluding real estate-related expenses including, but not limited to, gains (losses) from sales, impairment adjustments, and depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Our calculation of FFO is consistent with FFO as defined by NAREIT.
Core FFO is a non-GAAP financial measure defined as FFO adjusted for gains from forfeited earnest money deposits, non-recurring public company costs, and gains on insurance proceeds. We believe the presentation of Core FFO provides investors with a metric to assist in their evaluation of our operating performance across multiple periods because it removes the effect of unusual and non-recurring items that are not expected to impact our operating performance on an ongoing basis.
AFFO is a non-GAAP financial measure defined as Core FFO adjusted for GAAP net income related to non-cash revenues and expenses, such as straight-line rent, amortization of above- and below-market lease-related intangibles, amortization of lease incentives, capitalized interest expense, non-cash compensation expense, and amortization of deferred financing costs.
Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. In fact, real estate values historically have risen or fallen with market conditions. FFO is intended to be a standard supplemental measure of operating performance that excludes historical cost depreciation and valuation adjustments from net income. We consider FFO to be useful in evaluating potential property acquisitions and measuring operating performance. We further consider Core FFO and AFFO to be useful in determining funds available for payment of distributions. FFO, Core FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. You should not consider FFO, Core FFO and AFFO to be alternatives to net income as a reliable measure of our operating performance; nor should you consider FFO, Core FFO and AFFO to be alternatives to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity.
FFO, Core FFO and AFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization, capital improvements and distributions to stockholders. FFO, Core FFO and AFFO do not represent cash flows from operating, investing or financing activities as defined by GAAP. Further, FFO, Core FFO and AFFO as disclosed by other REITs might not be comparable to our calculations of FFO, Core FFO and AFFO.
EBITDA, EBITDAre and Adjusted EBITDAre
We compute EBITDA as earnings before interest, income taxes and depreciation and amortization. In 2017, NAREIT issued a white paper recommending that companies that report EBITDA also report EBITDAre. We compute EBITDAre in accordance with the definition adopted by NAREIT. NAREIT defines EBITDAre as EBITDA (as defined above) excluding gains (or losses) from the sales of depreciable property and real estate impairment losses.
Adjusted EBITDAre is a non-GAAP financial measure defined as EBITDAre further adjusted to exclude straight-line rent, gains from forfeited earnest money deposits, non-recurring public company costs, representing consulting fees that we incurred in preparing to become a public company, gains on insurance proceeds, and non-cash compensation expense.
We present EBITDA, EBITDAre and Adjusted EBITDAre as they are measures commonly used in our industry. We believe that these measures are useful to investors and analysts because they provide supplemental information concerning our operating performance, exclusive of certain non-cash items and other costs. We use EBITDA, EBITDAre and Adjusted EBITDAre as measures of our operating performance and not as measures of liquidity.
EBITDA, EBITDAre and Adjusted EBITDAre do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities and they are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. Additionally, our computation of EBITDA, EBITDAre and Adjusted EBITDAre may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs.
NOI and Cash NOI
NOI and Cash NOI are non-GAAP financial measures which we use to assess our operating results. We compute NOI as net income (loss) (computed in accordance with GAAP), excluding general and administrative expenses, interest expense (or income), income tax expense, depreciation and amortization, gains (or losses) on sales of depreciable property, gain from forfeited earnest money deposits, real estate impairment losses, and other income (or expense). We further adjust NOI for non-cash revenue components of straight-line rent and amortization of lease intangibles and lease incentives to derive Cash NOI. We believe NOI and Cash NOI provide useful and relevant information because they reflect only those income and expense items that are incurred at the property level and present such items on an unlevered basis.
NOI and Cash NOI are not measurements of financial performance under GAAP, and our NOI and Cash NOI may not be comparable to similarly titled measures of other companies. You should not consider our NOI and Cash NOI as alternatives to net income or cash flows from operating activities determined in accordance with GAAP.
(1) These expenses represent a subset of transaction costs as presented on the consolidated statements of operations and comprehensive income (loss).
11
a4q21formattedsupplement
Fourth Quarter and Full Year 2021 Supplemental Financial Information
Table of Contents 2 03 Corporate Overview 04 Earnings Release 08 Quarterly Highlights 09 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) 10 Funds from Operations and Adjusted Funds from Operations 11 EBITDAre, Adjusted EBITDAre, NOI and Cash NOI 12 Consolidated Balance Sheets 13 Debt, Capitalization, and Financial Ratios 14 Investment Activity 15 Portfolio Information 19 Lease Expiration Schedule 20 Non-GAAP Measures and Definitions 23 Forward Looking and Cautionary Statements
Corporate Overview 3 2021 McKinney Avenue Suite 1150 Dallas, Texas, 75201 Phone: (972) 579 – 4825 Website: www.netstreit.com Corporate Headquarters Transfer Agent Computershare PO Box 505000 Louisville, Kentucky 40233 Phone: (866) 637 – 9460 Website: www.computershare.com Corporate Profile NETSTREIT Corp. (NYSE: NTST) is an internally managed real estate investment trust (REIT) based in Dallas, Texas that specializes in acquiring single-tenant net lease retail properties nationwide. The growing portfolio consists of high-quality properties leased to e-commerce resistant tenants with healthy balance sheets. Led by a management team of seasoned commercial real estate executives, NETSTREIT’s strategy is to create the highest quality net lease retail portfolio in the country in order to generate consistent cash flows and dividends for its investors. Mark Manheimer, Chief Executive Officer Andy Blocher, Chief Financial Officer Jeff Fuge, Senior Vice President of Acquisitions Randy Haugh, Senior Vice President of Finance Kirk Klatt, Senior Vice President of Real Estate Trish McBratney, SVP, Chief Accounting Officer Chad Shafer, Senior Vice President of Underwriting Management Team Todd Minnis – Chair Matthew Troxell – Lead Independent Michael Christodolou Heidi Everett Mark Manheimer Lori Wittman Robin Zeigler Board of Directors
Earnings Release 4 NETSTREIT REPORTS FOURTH QUARTER AND FULL YEAR 2021 FINANCIAL AND OPERATING RESULTS – Reports Net Income of $0.05 and $0.08 and Adjusted Funds from Operations (“AFFO”) of $0.27 and $0.94 per diluted share, for the Fourth Quarter and Full Year 2021, respectively – – Completed $413.7 Million of Net Acquisitions in 2021 – – Subsequent to Year End, Completed Forward Common Stock Offering of 10,350,000 Shares – Dallas TX – February 24, 2022 – NETSTREIT (NYSE: NTST) (the “Company”), today announced financial and operating results for the fourth quarter and full year ended December 31, 2021. “We are extremely proud of our accomplishments in 2021. We grew our portfolio to 327 properties, increased our annual base rent by more than 70% from the previous year, to $71.2 million, and increased our combined investment grade and investment grade profile to 81.6% of the portfolio,” said Mark Manheimer, Chief Executive Officer of NETSTREIT. “Further, over the past 12 months, we have completed over $500 million of equity issuances to both maintain our strong balance sheet and fuel accretive growth. We continue to see vast opportunities in the market and are optimistic for continued expansion in 2022.” FOURTH QUARTER AND FULL YEAR 2021 HIGHLIGHTS • Reported net income per diluted share of $0.05, Core Funds from Operations (“Core FFO”)1 per diluted share of $0.252 and AFFO per diluted share of $0.272 for the fourth quarter of 2021 • Reported net income per diluted share of $0.08, Core FFO per diluted share of $0.873 and AFFO per diluted share of $0.943 for the full year 2021 PORTFOLIO UPDATE As of December 31, 2021, the NETSTREIT portfolio was comprised of 327 leases with 67 total tenants, contributing $71.2 million of annualized base rent4, with a weighted-average remaining lease term of 9.9 years, of which 65.2% were leased to investment grade rated tenants and 16.4% were leased to tenants with investment grade profiles5. The portfolio was 100.0% occupied as of December 31, 2021. During the year, the Company increased its ABR over 70% from $41.8 million to $71.2 million, and increased its combined investment grade and investment grade profile percentage from 78.0% to 81.6%. The Company added 15 new tenants and three new states to its portfolio during the year. INVESTMENT ACTIVITY During the quarter ended December 31, 2021, the Company had total net investment activity of $159.8 million, which includes acquisitions of $150.5 million and ongoing development funding of $9.3 million. The Company completed $150.5 million of acquisitions in 32 properties at an initial cash capitalization rate of 6.5%. Acquisitions completed during the quarter had a weighted-average remaining lease term of 10.4 years, with 39.5% occupied by investment grade rated tenants and 18.4% occupied by tenants with investment grade profiles. The Company provided $9.3 million of ongoing development funding including funding to support five new developments for two investment grade tenants and three tenants with investment grade profiles, with estimated total project costs of $23.0 million. The Company had no dispositions in the fourth quarter. During the year ended December 31, 2021, the Company completed $445.6 million of acquisitions in 124 properties at an initial cash capitalization rate, including acquisitions costs, of 6.5%. Acquisitions completed during the year had a weighted-average remaining lease term of 10.3 years, with 60.4% of properties occupied by investment grade
Earnings Release 5 rated tenants and 21.6% occupied by tenants with investment grade profiles. The Company provided $18.8 million of total development funding for 10 projects during the year, with nine of the projects for investment grade tenants or tenants with investment grade profiles. During the same period, the Company sold nine properties for total proceeds of $31.9 million, at a cash capitalization rate of 6.5%. BALANCE SHEET AND LIQUIDITY During the year ended 2021, the Company completed the following equity issuances: • In April, the Company issued 10,915,688 shares of common stock in a public offering at a price of $18.65 per share, resulting in gross proceeds of approximately $203.6 million • In November, the Company issued 3,852,436 of common stock at a weighted average price of $23.36 per share for gross proceeds of approximately $90.0 million. Almost all of the ATM activity was the result of a reverse inquiry by a REIT dedicated investor. At quarter end, total debt outstanding was $239.0 million, with a weighted average term of 2.7 years and a contractual interest rate, including the impact of the fixed rate swap, of 1.35% (excluding the impact of deferred fee amortization). The Company’s net debt to annualized adjusted EBITDA ratio was 4.2x, and the ending cash balance was $7.6 million. SUBSEQUENT ACTIVITY In January, the Company completed its forward offering of 10,350,000 shares of common stock, which includes the full exercise of underwriters’ option to purchase additional shares, at a price to the public of $22.25 per share. The Company will have until January 10, 2023 to settle its forward sales agreement. As of the date of this press release, the Company has not settled on any shares from the forward offering. DIVIDEND On February 22, 2022, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share for the first quarter of 2022, which will be paid on March 30, 2022 to shareholders of record on March 15, 2022. 2022 OUTLOOK On January 5, 2022, the Company announced its full year 2022 AFFO per share guidance in the range of $1.13 to $1.17 per share. This AFFO guidance is based on the following assumptions: • The Company expects acquisition activity, including completed developments and net of dispositions, to be at least $480.0 million in 2022 • The Company expects cash G&A to be in the range of $14.5 million to $15.0 million (inclusive of transaction costs), and expects non-cash compensation expense to be in the range of $5.0 million to $5.5 million • The Company expects cash interest expense to be in the range of $5.0 million to $5.5 million, with approximately $0.6 million of additional non-cash deferred financing fee amortization • Full year 2022 diluted weighted average shares outstanding, which includes the impact of OP units, are expected to be in the range of 52.0 million to 54.0 million shares
Earnings Release 6 EARNINGS WEBCAST AND CONFERENCE CALL A conference call will be held on Friday, February 25, 2022 at 10:00 AM ET. During the conference call the Company’s officers will review fourth quarter performance, discuss recent events, and conduct a question and answer period. The webcast will be accessible on the “Investor Relations” section of the Company’s website at www.NETSTREIT.com. To listen to the live webcast, please go to the site at least fifteen minutes prior to the scheduled start time to register, as well as download and install any necessary audio software. A replay of the webcast will be available for 90 days on the Company’s website shortly after the call. The conference call can also be accessed by dialing 1-877-451-6152 for domestic callers or 1-201-389-0879 for international callers. A dial-in replay will be available starting shortly after the call until March 4, 2022, which can be accessed by dialing 1-844-512-2921 for domestic callers or 1-412-317-6671 for international callers. The passcode for this dial-in replay is 13725918. SUPPLEMENTAL PACKAGE The Company’s supplemental package will be available prior to the conference call in the Investor Relations section of the Company’s website at www.investors.netstreit.com. About NETSTREIT NETSTREIT is an internally managed real estate investment trust (REIT) based in Dallas, Texas that specializes in acquiring single-tenant net lease retail properties nationwide. The growing portfolio consists of high-quality properties leased to e-commerce resistant tenants with healthy balance sheets. Led by a management team of seasoned commercial real estate executives, NETSTREIT’s strategy is to create the highest quality net lease retail portfolio in the country with the goal of generating consistent cash flows and dividends for its investors. Investor Relations ir@netstreit.com 972-597-4825 (1) Non-GAAP financial measure. See "Non-GAAP Financial Measures". (2) Per share amounts include weighted average common shares of 41,859,168 and weighted average operating partnership units of 1,125,712 for the three-months ended December 31, 2021. (3) Per share amounts include weighted average common shares of 36,999,459 and weighted average operating partnership units of 1,377,335 for the twelve-months ended December 31, 2021. (4) Annualized base rent, or ABR, is calculated by multiplying (i) cash rental payments (a) for the month ended December 31, 2021 (or, if applicable, the next full month's cash rent contractually due in the case of rent abatements, rent deferrals, recently acquired properties and properties with contractual rent increases, other than properties under development) for leases in place as of December 31, 2021, plus (b) for properties under development, the first full month's permanent cash rent contractually due after the development period by (ii) 12). (5) Unrated tenants with more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x.
Earnings Release 7 NON-GAAP FINANCIAL MEASURES This press release contains non-GAAP financial measures, including FFO, Core FFO, AFFO, EBITDA, EBITDAre, Adjusted EBITDAre, NOI, and Cash NOI. A reconciliation from net income available to common shareholders to each non-GAAP financial measure, and definitions of each non-GAAP measure, are included below. FORWARD LOOKING STATEMENTS This press release 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 business and growth strategies, investment, financing and leasing activities and trends in our business, including trends in the market for single-tenant, retail commercial real estate. Words such as “expects,” “anticipates,” “intends,” “plans,” “likely,” “will,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this press release may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. For a further discussion of these and other factors that could impact future results, performance or transactions, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission (the “SEC”) on March 4, 2021 and other reports filed with the SEC from time to time. Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release. New risks and uncertainties may arise over time and it is not possible for us to predict those events or how they may affect us. Many of the risks identified herein and in our periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from the novel coronavirus (COVID-19). We expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law.
Quarterly Highlights (unaudited, in thousands, except share, per share data and square feet) 8 (1) Weighted by ABR; excludes lease extension options. (2) Tenants, or tenants that are subsidiaries of a parent entity (with such subsidiary making up at least 50% of the parent company total revenue), with a credit rating of BBB- (S&P), Baa3 (Moody's) or NAIC2 (National Association of Insurance Commissioners) or higher. (3) Tenants with investment grade credit metrics (more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x), but do not carry a published rating from S&P, Moody's, or NAIC. Three Months Ended Financial Results December 31, 2021 September 30, 2021 June 30, 2021 March 31, 2021 December 31, 2020 Net income (loss) $ 2,095 $ 2,944 $ (2,630) $ 741 $ 4,510 Net income (loss) per common share outstanding - diluted $ 0.05 $ 0.07 $ (0.07) $ 0.02 $ 0.15 Funds from Operations (FFO) $ 11,197 $ 8,983 $ 7,339 $ 6,662 $ 5,513 FFO per common share outstanding - diluted $ 0.26 $ 0.22 $ 0.18 $ 0.22 $ 0.18 Core Funds from Operations (Core FFO) $ 10,759 $ 8,983 $ 7,339 $ 6,662 $ 5,513 Core FFO per common share outstanding - diluted $ 0.25 $ 0.22 $ 0.18 $ 0.22 $ 0.18 Adjusted Funds from Operations (AFFO) $ 11,477 $ 9,738 $ 8,066 $ 6,946 $ 5,934 AFFO per common share outstanding - diluted $ 0.27 $ 0.24 $ 0.20 $ 0.23 $ 0.20 Dividends per share $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.20 Weighted average common shares outstanding - diluted 43,308,598 41,333,579 39,790,338 30,052,940 30,021,750 Portfolio Metrics Number of leases 327 290 267 235 203 Square feet 6,420,246 5,452,608 5,154,701 4,438,591 3,733,062 Occupancy 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % Weighted average lease term remaining (years)(1) 9.9 10.0 9.9 10.1 10.5 Investment grade (rated) - % of ABR(2) 65.2 % 70.5 % 69.9 % 69.6 % 70.0 % Investment grade profile (unrated) - % of ABR(3) 16.4 % 14.5 % 13.5 % 11.2 % 8.0 % Combined Investment grade (rated) & Investment grade profile (unrated) - % of ABR 81.6 % 85.0 % 83.4 % 80.8 % 78.0 %
9 Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited, in thousands, except share and per share data) Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 2021 2020 REVENUES Rental revenue (including reimbursable) $ 17,807 $ 11,450 $ 59,140 $ 33,727 OPERATING EXPENSES Property 1,800 1,225 5,803 2,569 General and administrative 3,906 3,500 14,810 11,340 Depreciation and amortization 9,729 5,306 30,807 15,459 Provisions for impairment — 917 3,539 2,690 Transaction costs(1) 236 199 700 3,169 Total operating expenses 15,671 11,147 55,659 35,227 OTHER INCOME (EXPENSE) Interest expense, net(2) (1,007) (926) (3,700) (4,741) Gain on sales of real estate, net 545 5,143 2,997 6,213 Gain on forfeited earnest money deposit — — — 250 Other income (expense), net 431 (10) 431 (10) Total other (expense) income, net (31) 4,207 (272) 1,712 Net income before income tax expense 2,105 4,510 3,209 212 Income tax expense (10) — (59) — Net income 2,095 4,510 3,150 212 Net income attributable to noncontrolling interests 62 281 104 (518) Preferred stock dividends — — — 42 Net income attributable to common shareholders $ 2,033 $ 4,229 $ 3,046 $ 688 Amounts available to common shareholders per common share: Basic $ 0.05 $ 0.15 $ 0.08 $ 0.04 Diluted $ 0.05 $ 0.15 $ 0.08 $ 0.01 Weighted average common shares: Basic 41,859,168 27,897,168 36,999,459 17,322,182 Diluted 43,308,598 30,021,750 38,672,565 21,157,996 OTHER COMPREHENSIVE INCOME (LOSS) Net income $ 2,095 $ 4,510 $ 3,150 $ 212 Change in value on derivatives, net 1,994 381 4,057 253 Total comprehensive income 4,089 4,891 7,207 465 Comprehensive income (loss) attributable to noncontrolling interests 120 35 273 (500) Comprehensive income attributable to common shareholders $ 3,969 $ 4,575 $ 6,934 $ 965 (1) Represents the costs incurred by the Company to facilitate the private offering, formation transactions and the initial public offering, as well as costs associated with abandoned acquisitions and other acquisition related expenses. (2) Interest expense is net of interest income from interest bearing accounts.
Funds From Operations and Adjusted Funds From Operations (unaudited, in thousands, except share and per share data) 10 Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 2021 2020 GAAP Reconciliation: Net income $ 2,095 $ 4,510 $ 3,150 $ 212 Depreciation and amortization of real estate 9,647 5,229 30,491 15,154 Provisions for impairment — 917 3,539 2,690 Gain on sales of real estate, net (545) (5,143) (2,997) (6,213) Funds from Operations (FFO) 11,197 5,513 34,183 11,843 Adjustments: Gain on forfeited earnest money deposit — — — (250) 144A and IPO transaction costs(1) — — — 2,170 Gain on insurance proceeds (438) — (438) — Core Funds from Operations (Core FFO) 10,759 5,513 33,745 13,763 Adjustments: Straight-line rental revenue (376) (271) (1,082) (1,688) Amortization of deferred financing costs 157 157 627 621 Amortization of above/below market lease intangibles (199) (164) (808) (504) Amortization of lease incentives 96 — 122 — Capitalized interest expense (40) — (78) — Non-cash compensation expense 1,080 699 3,703 2,452 Adjusted Funds from Operations (AFFO) $ 11,477 $ 5,934 $ 36,229 $ 14,644 FFO per common share outstanding - diluted $ 0.26 $ 0.18 $ 0.88 $ 0.56 Core FFO per common share outstanding - diluted $ 0.25 $ 0.18 $ 0.87 $ 0.65 AFFO per common share outstanding - diluted $ 0.27 $ 0.20 $ 0.94 $ 0.69 Dividends per share $ 0.20 $ 0.20 $ 0.80 $ 0.30 Dividends per share as a percent of AFFO 74 % 100 % 85 % 43 % Weighted average common shares outstanding, basic 41,859,168 27,897,168 36,999,459 17,322,182 Weighted average operating partnership units outstanding 1,125,712 2,033,718 1,377,335 3,807,022 Weighted average dilutive securities 323,718 90,864 295,771 28,792 Weighted average common shares outstanding, diluted 43,308,598 30,021,750 38,672,565 21,157,996 Series A preferred stock balance(2) $ — $ — $ — $ — Series A perferred stock dividends and redemption premium $ — $ — $ — $ 42 Supplemental Information Deferred rent, net(3) $ 6 $ 3 $ 35 $ (199) Recurring capital expenditures $ 122 $ — $ 508 $ — (1) These expenses represent a subset of Transaction Costs as presented on the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss). (2) The 125 shares of 12% Series A Preferred Stock were fully redeemed on August 18, 2020. (3) Reflects the net amount of base rent that was deferred (negative amount) or collected (positive amount) as a result of COVID related rent relief provided by NETSTREIT.
EBITDAre, Adjusted EBITDAre, NOI and Cash NOI (unaudited, in thousands) 11 (1) These expenses represent a subset of Transaction Costs as presented on the Consolidated Statements of Operations and Comprehensive Income (Loss). (2) The adjustment removes base rent for properties acquired during the period shown and replaces the removed amount with an estimated equivalent ABR for the full period. The adjustment also removes base rent for properties disposed of during the period shown. Three Months Ended December 31, Twelve Months Ended December 31, 2021 2020 2021 2020 GAAP Reconciliation: Net income $ 2,095 $ 4,510 $ 3,150 $ 212 Depreciation and amortization of real estate 9,647 5,229 30,491 15,154 Amortization of above/below market lease intangibles (199) (164) (808) (504) Amortization of lease incentives 96 — 122 — Non-real estate depreciation and amortization 82 77 316 305 Interest expense, net 1,007 926 3,700 4,741 Income tax expense 10 — 59 — EBITDA 12,738 10,578 37,030 19,908 Provisions for impairment — 917 3,539 2,690 Gain on sales of real estate, net (545) (5,143) (2,997) (6,213) EBITDAre 12,193 6,352 37,572 16,385 Straight-line rental revenue (376) (271) (1,082) (1,688) Gain on forfeited earnest money deposit — — — (250) 144A and IPO transaction costs(1) — — — 2,170 Gain on insurance proceeds (438) — (438) — Non-cash compensation expense 1,080 699 3,703 2,452 Adjusted EBITDAre $ 12,459 $ 6,780 $ 39,755 $ 19,069 Adjusted EBITDAre 12,459 Adjustments for intraquarter acquisitions and dispositions(2) 1,334 Annualized Adjusted EBITDAre $ 55,172 231,397 Net debt / Annualized Adjusted EBITDAre 4.2x 4.19410 GAAP Reconciliation: Net income $ 2,095 $ 4,510 $ 3,150 $ 212 General and administrative 3,906 3,500 14,810 11,340 Depreciation and amortization 9,729 5,306 30,807 15,459 Provisions for impairment — 917 3,539 2,690 Transaction costs 236 199 700 3,169 Interest expense, net 1,007 926 3,700 4,741 Gain on sales of real estate, net (545) (5,143) (2,997) (6,213) Gain on forfeited earnest money deposit — — — (250) Income tax expense 10 — 59 — Other income (expense), net (431) 10 (431) 10 NOI 16,007 10,225 53,337 31,158 Straight-line rental revenue (376) (271) (1,082) (1,688) Amortization of above/below market lease intangibles (199) (164) (808) (504) Amortization of lease incentives 96 — 122 — Cash NOI $ 15,528 $ 9,790 $ 51,569 $ 28,966 Adjustments for Intraquarter acquisitions and dispositions(2) $ 1,334 Normalized Cash NOI $ 16,862 Property Operating Expense Coverage Property operating expense reimbursement $ 1,502 $ 1,157 $ 5,019 $ 2,219 Property operating expenses (1,800) (1,225) (5,803) (2,569) Property operating expenses, net $ (298) $ (68) $ (784) $ (350)
Consolidated Balance Sheets (unaudited, in thousands, except share data) 12 December 31, 2021 2020 ASSETS Real estate, at cost: Land $ 299,935 $ 189,373 Buildings and improvements 626,457 358,360 Total real estate, at cost 926,392 547,733 Less accumulated depreciation (30,669) (10,111) Property under development 17,896 — Real estate held for investment, net 913,619 537,622 Assets held for sale 2,096 14,802 Cash, cash equivalents and restricted cash 7,603 92,643 Lease intangible assets, net 124,772 75,024 Other assets, net 20,351 5,724 Total assets $ 1,068,441 $ 725,815 LIABILITIES AND EQUITY Liabilities: Term loan, net $ 174,330 $ 174,105 Revolving credit facility 64,000 — Lease intangible liabilities, net 23,316 16,930 Liabilities related to assets held for sale — 399 Accounts payable, accrued expenses and other liabilities 16,980 6,308 Total liabilities $ 278,626 $ 197,742 Equity: Stockholders’ equity Common stock, $0.01 par value, 400,000,000 shares authorized; 44,223,050 and 28,203,545 shares issued and outstanding as of December 31, 2021 and 2020, respectively $ 442 $ 282 Additional paid-in capital 809,724 501,045 Distributions in excess of retained earnings (35,119) (7,464) Accumulated other comprehensive income 4,123 235 Total stockholders’ equity 779,170 494,098 Noncontrolling interests 10,645 33,975 Total equity 789,815 528,073 Total liabilities and equity $ 1,068,441 $ 725,815
Debt, Capitalization, and Financial Ratios (unaudited, in thousands, except share data) 13 As of December 31, 2021 Debt Summary Maturity Date Principal Balance Interest Rate(1) Rate Type Weighted Average Years to Maturity Unsecured revolver(2)(3) December 23, 2023 $ 64,000 1.31% Floating 2.0 years Unsecured term loan(4) December 23, 2024 175,000 1.36% Fixed 3.0 years Principal amount of total debt 239,000 Deferred financing costs, net(5) (1,466) Carrying value of total debt $ 237,534 Net Debt Balance Principal amount of total debt $ 239,000 Less: Cash, cash equivalents and restricted cash(6) (7,603) Net Debt $ 231,397 Series A preferred stock balance(7) — Net Debt + Preferred Stock $ 231,397 Key Debt Covenant Information Required Actual Consolidated total leverage ratio ≤ 60.0% 23.7% Fixed charge coverage ratio ≥ 1.50x 12.4x Maximum secured indebtedness ≤ 40.0% 0.0% Maximum recourse indebtedness ≤ 10.0% 0.0% Unencumbered leverage ratio ≤ 60.0% 24.2% Unencumbered debt yield ≥ 12.0% 22.0% Unencumbered interest coverage ratio ≥ 2.00x 15.7x Liquidity Balance Unused unsecured revolver capacity $186,000 Cash, cash equivalents and restricted cash(6) 7,603 Total Liquidity $ 193,603 Ending Equity Market Equity Shares/Units Capitalization % of Total Common shares(8) 44,223,050 $ 1,012,708 98.7% OP units(8) 562,784 12,888 1.3 % Preferred stock — — 0.0% Total 44,785,834 $ 1,025,596 100.0% Enterprise Value Balance % of Total Principal amount of total debt $ 239,000 18.9% Equity market capitalization(8) 1,025,596 81.1 % Total enterprise value $ 1,264,596 100.0% (1) Interest rate for floating rate debt, if applicable, is based on the last day of the quarter presented. Rates presented exclude the impact of capitalized loan fee amortization. (2) Unused facility fees are charged at an annual rate of 0.15% of the unused capacity if usage exceeds 50% of the total facility size, or 0.25% of the unused facility if usage does not exceed 50%. The total facility size is $250.0 million. (3) The revolver has a one-year extension option. (4) Effective September 28, 2020 the floating rate underlying the term loan was swapped to an effective fixed rate of 0.21%. The swap terminates on December 23, 2024. (5) Amount reflects a net asset balance of $0.8 million related to the revolver, and a net liability balance of $0.7 million related to the term loan. (6) There was no restricted cash held as of December 31, 2021. (7) The 125 shares of 12% Series A Preferred Stock were fully redeemed on August 18, 2020. (8) Value is based on the December 31, 2021 closing price of $22.90 per share.
Investment Activity (unaudited, dollars in thousands) 14 (1) Excludes development related transactions. (2) Reflects all expenditures that were capitalized as part of the transaction, including acquisition costs, and any incentives provided to the seller and/or tenant at closing. (3) Calculated by dividing in-place ABR at the time of acquisition by the Gross Investment. (4) Represents all capitalized costs associated with the property, less impairment charges and net of accumulated depreciation. (5) Reflects contractual sales price. (6) The rate only applies to properties that were occupied at the time of the disposition. It is calculated by dividing the in-place ABR at the time of disposition by the contractual sales price. (7) Represents cash paid at close as well as incremental funding to date. Three Months Ended December 31, September 30, June 30, March 31, December 31, 2021 2021 2021 2021 2020 Acquisitions(1): Number of Properties 32 26 35 31 26 Gross Investment(2) $ 150,538 $ 90,128 $ 116,725 $ 88,225 $ 81,246 Cash Capitalization Rate(3) 6.5 % 6.2 % 6.5 % 6.7 % 6.8 % Dispositions: Number of Occupied Properties — 4 5 — 12 Number of Vacant Properties — — — — — Net Book Value(4) $ — $ 16,160 $ 11,821 $ — $ 31,144 Proceeds(5) $ — $ 18,835 $ 13,060 $ — $ 37,362 Cash Capitalization Rate (on occupied properties only)(6) N/A 6.3 % 6.7 % N/A 6.6 % Developments: Industry Location Lease Term Amount Funded to Date(7) Anticipated Rent Commencement Discount Retail Fond Du Lac, WI 10 Years $ 1,812 1Q'2022 Home Improvement Sioux Falls, SD 12 Years $ 3,416 1Q'2022 Arts & Craft Fond Du Lac, WI 10 Years $ 2,503 2Q'2022 Discount Retail Yuma, AZ 10 Years $ 3,207 2Q'2022 Dollar Stores Woodland, AL 10 Years $ 495 2Q'2022 Arts & Craft D'Iberville, MS 15 Years $ 1,027 3Q'2022 Arts & Craft Winder, GA 15 Years $ 1,201 3Q'2022 Arts & Craft Sheboygan, WI 10 Years $ 2,888 4Q'2022 Discount Retail Sheboygan, WI 10 Years $ 1,082 4Q'2022 TBD Sumter, SC TBD $ 1,123 TBD Total $ 18,754
0.0% 25.0% 50.0% 75.0% 100.0% Defensive Industries Tenant Credit Portfolio Information (unaudited, dollars in thousands) 15 (1) Weighted by ABR; excludes lease extension options. (2) Tenants, or tenants that are subsidiaries of a parent entity (with such subsidiary making up at least 50% of the parent company total revenue), with a credit rating of BBB- (S&P), Baa3 (Moody's) or NAIC2 (National Association of Insurance Commissioners) or higher. (3) Tenants with investment grade credit metrics (more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x), but do not carry a published rating from S&P, Moody's, or NAIC. (4) Tenants, or tenants that are subsidiaries of a parent entity (with such subsidiary making up at least 50% of the parent company total revenue), with a credit rating of BB+ (S&P), Ba1 (Moody's) or NAIC3 (National Association of Insurance Commissioners) or lower. Portfolio Metrics December 31, 2021 Number of leases 327 Number of states 41 Square feet 6,420,246 Tenants 67 Industries 23 Occupancy 100.0% Weighted average lease term remaining (years)(1) 9.9 Tenant Quality Number of Leases ABR % of ABR Investment grade (rated)(2) 233 $ 46,443 65.2% Investment grade profile (unrated)(3) 43 11,655 16.4% Sub-investment grade (rated)(4) 17 7,218 10.1% Sub-investment grade profile (unrated) 34 5,895 8.3% Total 327 $ 71,212 100.0% 65.2% Investment Grade 16.4% Investment Grade Profile 10.1% Sub- Investment Grade 8.3% Sub- Investment Grade Profile 50.2% Necessity 19.5% Discount 16.9% Service 13.4% Other
Portfolio Information (cont’d) (unaudited, dollars in thousands) 16 Top 20 Tenants Number of Leases ABR % of ABR Credit rating 18 $ 5,200 7.3% BBB / Baa2 21 4,879 6.9% A / Baa2 12 4,689 6.6% IG Profile 39 3,882 5.5% BBB- / Baa2 37 3,701 5.2% BBB / Baa2 18 3,666 5.1% BBB / Baa2 4 3,578 5.0% BBB+ / Baa1 5 3,288 4.6% AA / Aa2 6 3,150 4.4% BBB+ / A3 2 2,615 3.7% BB- / Ba3 9 2,382 3.3% IG Profile 9 2,282 3.2% IG Profile 20 2,010 2.8% BBB / Baa2 2 1,944 2.7% A / A2 6 1,407 2.0% BBB / Baa1 2 1,268 1.8% BBB / Baa1 3 1,205 1.7% BB+ / Ba2 3 1,198 1.7% BBB / Baa1 4 1,027 1.4% BBB / Baa3 2 1,006 1.4% BBB- / Baa2 Total 222 $ 54,378 76.4%
Portfolio Information (cont’d) (unaudited, dollars in thousands) 17 State Number of Leases ABR % of ABR Texas 33 $ 7,756 10.9% Illinois 19 7,690 10.8% Ohio 28 4,739 6.7% Georgia 18 4,289 6.0% Wisconsin 16 3,466 4.9% New York 13 3,143 4.4% California 10 2,876 4.0% Mississippi 13 2,787 3.9% Indiana 13 2,691 3.8% Virginia 5 2,655 3.7% Pennsylvania 15 2,421 3.4% Florida 15 2,280 3.2% Michigan 7 1,966 2.8% Arizona 5 1,837 2.6% Alabama 13 1,801 2.5% Louisiana 6 1,730 2.4% Washington 3 1,399 2.0% South Carolina 9 1,373 1.9% Kentucky 4 1,366 1.9% New Mexico 4 1,232 1.7% Arkansas 7 1,182 1.7% Tennessee 5 1,165 1.6% Missouri 5 960 1.3% Oklahoma 7 871 1.2% Maryland 4 829 1.2% North Carolina 4 773 1.1% Massachusetts 4 751 1.1% Connecticut 3 680 1.0% Iowa 6 623 0.9% New Jersey 4 574 0.8% Vermont 9 548 0.8% Minnesota 3 451 0.6% West Virginia 3 418 0.6% Kansas 3 410 0.6% Colorado 3 375 0.5% South Dakota 1 331 0.5% Utah 1 234 0.3% Nebraska 1 194 0.3% New Hampshire 3 157 0.2% Idaho 1 99 0.1% North Dakota 1 92 0.1% Total 327 $ 71,212 100.0%
Portfolio Information (cont’d) (unaudited, dollars in thousands) 18 Industry Defensive Category Number of Leases ABR % of ABR Home Improvement Necessity 23 $ 10,325 14.5% Drug Stores & Pharmacies Necessity 36 8,866 12.5% Discount Retail(1) Discount 29 8,141 11.4% Dollar Stores Discount 57 5,711 8.0% Convenience Stores Service 25 5,621 7.9% Auto Parts Necessity 58 5,174 7.3% Arts & Crafts Other 12 4,689 6.6% Grocery Necessity 10 4,206 5.9% General Retail Necessity 5 3,226 4.5% Consumer Electronics Other 6 3,150 4.4% Quick Service Restaurants Service 17 2,777 3.9% Healthcare Necessity 8 1,685 2.4% Farm Supplies Necessity 6 1,407 2.0% Automotive Service Service 13 1,222 1.7% Health and Fitness(1) Service 1 985 1.4% Furniture Stores Other 2 878 1.2% Casual Dining(1) Service 4 755 1.1% Equipment Rental and Leasing Service 5 679 1.0% Apparel Other 4 506 0.7% Banking Necessity 3 457 0.6% Wholesale Warehouse Club Necessity 1 417 0.6% Gift, Novelty, and Souvenir Shops Other 1 200 0.3% Home Furnishings Other 1 134 0.2% Total 327 $ 71,212 100.0% Defensive Category Number of Leases ABR % of ABR Necessity 150 $ 35,764 50.2% Discount 86 13,853 19.5% Service 65 12,038 16.9% Other 26 9,557 13.4% Total 327 $ 71,212 100.0% (1) Discount Retail, Health and Fitness, and Casual Dining industries have one, one, and two properties, respectively, that reside in NETSTREIT’s Taxable REIT Subsidiary entity (“TRS”), representing 0.39%, 1.38%, and 0.48% of ABR, respectively.
Lease Expiration Schedule (unaudited, dollars in thousands) 19 ABR Expiring Year of Number of ABR as a % of Expiration Leases Expiring Expiring Total Portfolio 2022 — — 0.0% 2023 4 1,004 1.4% 2024 3 442 0.6% 2025 7 2,365 3.3% 2026 12 2,665 3.7% 2027 14 4,070 5.7% 2028 30 4,667 6.6% 2029 38 6,339 8.9% 2030 39 8,815 12.4% 2031 62 11,456 16.1% 2032 21 5,780 8.1% 2033 22 2,807 3.9% 2034 12 3,444 4.8% 2035 22 7,499 10.5% 2036 23 5,436 7.6% 2037 3 549 0.8% 2038 1 255 0.4% 2039 7 1,110 1.6% 2040 2 425 0.6% 2041 3 846 1.2% 2042 1 985 1.4% 2043 1 254 0.4% TOTAL 327 $ 71,212 100.0%
Non-GAAP Measures and Definitions 20 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), excluding real estate-related expenses including, but not limited to, gains (losses) from sales, impairment adjustments, and depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Our calculation of FFO is consistent with FFO as defined by NAREIT. Core FFO means core funds from operations. It is a non-GAAP financial measure defined as FFO adjusted for gains from forfeited earnest money deposits, non-recurring public company costs, and gains from insurance proceeds. We believe the presentation of Core FFO provides investors with a metric to assist in their evaluation of our operating performance across multiple periods because it removes the effect of unusual and non-recurring items that are not expected to impact our operating performance on an ongoing basis. AFFO means adjusted funds from operations. It is a non-GAAP financial measure defined as Core FFO adjusted for GAAP net income related to non-cash revenues and expenses, such as straight-line rental revenue, amortization of above and below-market lease-related intangibles, amortization of lease incentives, capitalized interest expense, non-cash compensation expense, and amortization of deferred financing costs. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. In fact, real estate values historically have risen or fallen with market conditions. FFO is intended to be a standard supplemental measure of operating performance that excludes historical cost depreciation and valuation adjustments from net income. We consider FFO to be useful in evaluating potential property acquisitions and measuring operating performance. We further consider FFO, Core FFO and AFFO to be useful in determining funds available for payment of distributions. FFO, Core FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. You should not consider FFO, Core FFO and AFFO to be alternatives to net income as a reliable measure of our operating performance; nor should you consider FFO, Core FFO and AFFO to be alternatives to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity. FFO, Core FFO and AFFO do not measure whether cash flow is sufficient to fund our cash needs, including principal amortization, capital improvements and distributions to stockholders. FFO, Core FFO and AFFO do not represent cash flows from operating, investing or financing activities as defined by GAAP. Further, FFO, Core FFO and AFFO as disclosed by other REITs might not be comparable to our calculations of FFO, Core FFO and AFFO.
Non-GAAP Measures and Definitions (cont’d) 21 EBITDA, EBITDAre and Adjusted EBITDAre EBITDA is computed by us as earnings before interest, income taxes and depreciation and amortization. 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 accordance with the definition adopted by NAREIT. NAREIT defines EBITDAre as EBITDA (as defined above) excluding gains (or losses) from the sales of depreciable property and real estate impairment losses. Adjusted EBITDAre, as computed by us, is EBITDAre adjusted to exclude straight-line rental revenue, gains from forfeited earnest money deposits, non-recurring public company costs, representing consulting fees that we incurred in preparing to become a public company, gains on insurance proceeds, and non-cash compensation expense. Annualized Adjusted EBITDAre is Adjusted EBITDAre multiplied by four. We present EBITDA, EBITDAre and Adjusted EBITDAre as they are measures commonly used in our industry. We believe that these measures are useful to investors and analysts because they provide supplemental information concerning our operating performance, exclusive of certain non-cash items and other costs. We use EBITDA and EBITDAre as measures of our operating performance and not as measures of liquidity. EBITDA, EBITDAre and Adjusted EBITDAre do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities and they are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. Additionally, our computation of EBITDA and EBITDAre may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs. NOI, Cash NOI, and Normalized Cash NOI NOI means net operating income, and it is computed in accordance with GAAP. It is calculated as net income (loss), excluding general and administrative expenses, interest expense (or income), income tax expense, depreciation and amortization, gains (or losses) on sales of depreciable property, gain from forfeited earnest money deposits, real estate impairment losses, and other income (or expense). Cash NOI is computed by us as GAAP NOI excluding straight-line rental revenue and amortization of above/below-market leases intangibles and lease incentives. Normalized Cash NOI is computed by us as Cash NOI adjusted to remove Cash NOI for properties acquired during the period shown, and then replace the removed amount with an estimated equivalent ABR for the full period. It is further adjusted to remove Cash NOI for properties disposed of during the period shown.
Non-GAAP Measures and Definitions (cont’d) 22 Other Definitions ABR means annualized base rent. ABR is calculated by multiplying (i) cash rental payments (a) for the month ended December 31, 2021 (or, if applicable, the next full month’s cash rent contractually due in the case of rent abatements, rent deferrals, recently acquired properties and properties with contractual rent increases, other than properties under development) for leases in place as of December 31, 2021, plus (b) for properties under development, the first full month’s permanent cash rent contractually due after the development period by (ii) 12. 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 restaurants, which we refer to as defensive retail industries. 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 a low price point and consist of off-price and dollar stores, (3) Service, which consist of retailers that provide services rather than goods, including, tire and auto services and quick service restaurants, and (4) Other, which are retailers that are not considered defensive in terms of being considered necessity, discount or service, as defined by us. Leases are individual properties with a distinct lease agreement in place, development activities where a lease is expected at a future date, or in the case of master lease arrangements each property under the master lease is counted as a separate lease. Net Debt is computed by us as the principal amount of total debt outstanding less cash, cash equivalents, and restricted cash. Occupancy is expressed as a percentage, and it is the number of economically occupied properties divided by the total number of properties owned. Properties under development are excluded from the calculation. OP units means operating partnership units not held by NETSTREIT.
Forward Looking and Cautionary Statements 23 This supplemental report 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 business and growth strategies, investment, financing and leasing activities and trends in our business, including trends in the market for single-tenant, retail commercial real estate, and our financial outlook. Words such as “expects,” “anticipates,” “intends,” “plans,” “likely,” “will,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this supplemental report may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. For a further discussion of these and other factors that could impact future results, performance or transactions, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 4, 2021 and other reports filed with the SEC from time to time. Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this supplemental report. New risks and uncertainties may arise over time and it is not possible for us to predict those events or how they may affect us. Many of the risks identified herein and in our periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from the novel coronavirus (COVID-19). We expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law.
ntstinvestorpresentation
1 Investor Presentation February 2022
Disclaimer 2 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 business and growth strategies, investment, financing and leasing activities and trends in our business, including trends in the market for single-tenant, retail commercial real estate, and our financial outlook. Words such as “expects,” “anticipates,” “intends,” “plans,” “likely,” “will,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this presentation may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. For a further discussion of these and other factors that could impact future results, performance or transactions, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, subsequent Quarterly Reports on Form 10-Q and other reports filed with the SEC from time to time. Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this presentation. New risks and uncertainties may arise over time and it is not possible for us to predict those events or how they may affect us. Many of the risks identified herein and in our periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from the novel coronavirus (COVID-19). We expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law.
Company & Investment Highlights 3 NETSTREIT Is Built on a Foundation of Strength on Both Sides of the Balance Sheet, Led by a Seasoned Leadership Team with an Exceptional Track Record High-Quality, Diversified, and Defensive Net Lease Retail Portfolio Conservative Capitalization to Support Accretive Growth Active Asset Management to Achieve Optimal Portfolio Performance2 Disciplined Underwriters with Dual Focus on Credit AND Real Estate3 Multifaceted Investment Strategy Leveraging Deep Industry Relationships4 1 Durable and Defensive Cash Flows with Demonstrated Resiliency Platform Positioned for Scale5
Durable and Defensive Cash Flows with Demonstrated Resiliency NETSTREIT STRATEGY BY THE NUMBERS1 4 Source: Company data. Portfolio data represents portfolio as of 12/31/2021 unless otherwise noted. 1. Figures represent percentage of ABR unless otherwise noted. 2. Represents tenants with investment grade credit metrics (more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x), but do not carry a published rating from S&P, Moody's, or NAIC. 3. Defensive retail tenancy based on rent from tenants in necessity, discount, or service-oriented industries. Investment Grade Tenancy 65.2% Investment Grade Profile Tenancy2 16.4% Defensive Retail Tenancy3 85.6% Occupancy 100.0% 1 Investment grade tenancy provides defensive, consistent performance through economic cycles ▪ High-quality tenancy creates bond-like leases with high rent collections during times of disruption ▪ 81.6% of portfolio consisted of investment grade tenants, or tenants with an investment grade profile Defensive nature of NETSTREIT portfolio strategy ▪ Focused on defensive industries such as necessity, discount, and service-oriented retailers, with e-commerce resistant strategies Healthy portfolio with strong external growth opportunities ▪ Maintained 100% occupancy through all of 2020 and 2021 ▪ Average quarterly investment activity of $109.1 million since the beginning of 2020 ▪ Continued focus on blend & extend opportunities and development projects
3.4% 3.8% 5.3% 6.3% 11.4% 12.0% 14.6% 19.6% 13.4 14.0 9.9 9.3 9.3 10.4 10.6 9.0 STOR EPRT NTST FCPT ADC SRC NNN O Lease Rollover % ('22-'25) WALT 64% 67% 65% 44% 22% 18% 0% 0% ADC NTST FCPT O SRC NNN STOR EPRT 5 NTST's Stable, Defensive Cash Flow Profile Drives Superior Risk-Adjusted Returns Source: Company Filings as of 12/31/2021. 1. NNN, FCPT, SRC, EPRT, STOR, and O as of 12/31/2021. EPRT and STOR investment grade concentration assumed to be 0%, although it is not disclosed by either company. Lease Rollover Investment Grade %1
7.3% 6.9% 6.6% 5.5% 5.2% 5.1% 5.0% 4.6% 4.4% 3.7% Portfolio Overview 6 Sources: Company data. Portfolio data represents portfolio as of 12/31/2021. 1. Represents tenants with investment grade credit metrics (more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x), but do not carry a published rating from S&P, Moody's, or NAIC. High-quality, diversified portfolio consisting of 65.2% investment grade tenants across 41 states Key Portfolio Stats Properties 327 States 41 Portfolio Square Feet (in millions) 6.4 Tenants 67 Retail Sectors 23 % Occupancy 100% % Investment Grade Tenants (by ABR) 65.2% % Defensive Industry Exposure (by ABR) 86.6% Weighted Average Lease Term Remaining (Years) 9.9 Lease Turnover Through 2025 (by ABR) 5.4% National Footprint Across Attractive Markets Top 10 Tenants by % of ABR Investment Grade Rated BBB / Baa2 BB- / Ba3 Investment Grade Profile1 2 >1% and <3% ABR <1% ABR >5% and <10% ABR >3% and <5% ABR 0% ABR AK HI WA OR MT CA AZ WY NV ID UT CO NM TX OK ND SD NE KS LA AR MO IA MN WI IL IN MI OH KY TN FL MS AL GA SC NC VAWV PA DE NJ NY ME VT NH MA MD CT RI >10% ABR AA / Aa2 BBB / Baa2 IG Profile BBB- / Baa2 BBB / Baa2 A / Baa2 BBB+ / A3 BBB+ / Baa1 Sub-Investment Grade Rated
Convenience Stores: Discount Retail: Dollar Stores: Drug Stores & Pharmacies: Home Improvement: Portfolio Diversification In Defensive Retail Sectors Source: Company data. Portfolio data represents portfolio as of 12/31/2021. All figures represent percentage of portfolio ABR. Note: Due to rounding, respective defensive retail sector exposure may not precisely reflect the absolute figures. NETSTREIT offers a national diversified portfolio comprised primarily of defensive retail tenants Top Industries 50.2% Necessity 19.5% Discount 13.4% Other 1 14.5% 2 12.5% 3 11.4% 4 8.0% 5 7.9% 16.9% Service 2 86.6% of ABR Necessity Discount Service 7
Pre-144A (12/23/19) 144A to IPO IPO (8/13/20) Since IPO Current (12/31/21) Properties 93 70 163 164 327 States 28 6 34 7 41 Portfolio Size 1.4M SF 1.6M SF 3.0M SF 2.4M SF 6.4M SF ABR $17.8M $16.7M $34.5M $36.7M $71.2M Acquisition Volume – ~$264M – ~$593M – Acquisition Cap Rate – 6.6% – 6.5% – Disposition Volume – ~$10M – ~$71M – Disposition Cap Rate – 5.8% – 6.6% – Gross Asset Value ~$247M ~$262M ~$509M ~$553M ~$1.06B IG Concentration1 64% 0% 64% +1% 65% IG & IG Profile Concentration1 64% +8% 72% +10% 82% Top 10 Tenant Concentration1 62% (5%) 57% (3%) 54% Top Five Tenants1 NTST Portfolio Transformation 8 NETSTREIT has prudently allocated offering proceeds and recycled capital to grow the scale of its asset base while also improving portfolio quality through further diversification and increased exposure to defensive credit tenancy 2 Source: Company Filings and Company-provided data. 1. Calculated as % of ABR. 6.4% 7.5% 7.9% 8.9% 11.9%Baa2 / BBB Baa2 / BBB Baa1 / BBB+ Baa2 / BBB Baa2 / BBB- 4.9% 5.2% 6.1% 7.9% 12.7%Baa1 / AA- Aa2 / AA Baa2 / BBB IG Profile Baa1 / BBB+ 5.2% 5.5% 6.6% 6.9% 7.3%Baa2 / BBB Baa2 / A Baa2 / BBB- Baa2 / BBB IG Profile
Strong External Growth Profile $74.2 +$150.5 +$102.6 +$81.2 +$89.5 +$120.7 +$94.3 +$159.8 1Q'20 2Q'20 3Q'20 4Q'20 1Q'21 2Q'21 3Q'21 4Q'21 Completed Acquisitions New Quarterly Acquisitions 258 Completed Acquisitions 9 Source: Company data. 1. Includes funding for development projects. ($ in millions) Avg. Acquisition Activity per Completed Quarter = $109.1 million Cumulative Acquisitions Since 20191 Properties Acquired: 24 44 30 26 $224.7 $327.3 $498.1 2 1 $408.6 32 37 $618.8 28 $713.1 $872.9 37
Active Asset Management 10 NETSTREIT continuously tracks property performance and stratifies the portfolio to achieve consistent cash flows and balanced growth for its investors Source: Company data. Portfolio data represents portfolio as of 12/31/2021. Since inception, the Company has disposed of 57 properties totaling approximately $171.2 million, while also acquiring high-quality assets that have enhanced scale and materially improved portfolio performance metrics such as tenant quality, WALT, and geographic diversity Identify properties not meeting strategy and/or risk management criteria (i.e. rent coverage) Periodically review all properties for changes in performance, credit, and local conditions Pursue opportunities that align with objectives Practice disciplined underwriting strategy Leverage 1031 exchange transfers where possible to access deep, non- institutional market for portfolio optimization Strategic Recycling Disciplined Acquisitions Perpetual Stratification Active Monitoring Existing portfolio has been carefully curated 2
Three-Part Underwriting Philosophy 11 NETSTREIT leverages a disciplined, three-pronged approach to underwriting potential acquisitions which positions the Company to benefit from superior downside protection on its investments 3 REAL ESTATE VALUATION UNIT-LEVEL PROFITABILITY• Review underlying key real estate metrics to maximize re-leasing potential • Location analysis • Alternative use analysis • Determine rent coverage (min. 2.0x) and cost variability • Assess relative to corporate stability / real estate merits C B TENANT CREDIT UNDERWRITING • Evaluate corporate level financials • Assess business risks • Determine ownership/sponsorship • For Non-IG tenants, establish NETSTREIT implied credit rating A L e v e l o f U n d e rw ri ti n g E m p h a s is
Tenant Credit Underwriting 12 NETSTREIT employs a credit-focused underwriting strategy for all tenants – the MOST IMPORTANT element of the Company’s underwriting process that drives stable revenue and long-term return on investment Source: Company data. Portfolio data represents portfolio as of 12/31/2021. 1. IG stands for investment grade. Investment Grade (rated) Investment Grade Profile (unrated) Sub-IG (rated) & Sub-IG Profile (unrated)1 Description • Validated financial strength and stability • Professional management with standardized operational practices • Focus on corporate guarantee credit • Lower relative yields • Higher competition for deals • IG-caliber balance sheets without explicit rating • Threshold metrics: • >$1B in Sales • Debt / adjusted EBITDA of 2.0x • Well-capitalized retailers • National footprint with strong brand equity • Focus on real estate quality / unit-level profitability • Higher relative yields • Lower competition for deals Durability • Coverage and credit enhancements required given more susceptible to market disruptions % Of ABR 65.2% 16.4% 18.4% Lease Terms (WALT, Rent Bumps, etc.) Less negotiating leverage More negotiating leverage Most negotiating leverage Representative Tenants 81.6% Total Defensive, consistent performance through economic cycles 3 A
Focus on Investment Grade Tenants 13 Investment grade tenants have outperformed during economic downturns and largely avoided bankruptcy Sources: Capital IQ, Company data, The Deal Pipeline, Bloomberg, SNL Financial 1. Indicates best credit rating held after 1/1/2005 and date when the respective credit rating was assigned. Some credit ratings are pre-2005. Major Net Lease Retail Tenant Bankruptcies (2009 – 2020) Retail Tenant Bankruptcy Filing Date Best Credit Rating Prior to Filing (S&P / Moody’s)1 Investment Grade? Oct-20 B (Jul-12) / B2 (May-12) Mar-20 NR / NR Feb-20 NR / NR Jan-19 BB- (May-01) / B2 (Apr-01) Oct-18 BB+ (Mar-05) / Ba1 (Mar-05) Oct-18 B+ (Sep-15) / B1 (July-15) Sep-17 BB (Mar-04) / B1 (Aug-10) Mar-17 NR / NR Mar-16 B (Mar-06) / B2 (Mar-06) Jan-12 B (Nov-04) / NR Feb-11 NR / NR Mar-09 NR / NR A3
Real Estate Valuation 14 Real Estate closely follows Credit as a top priority: NETSTREIT utilizes a ground-up framework rooted in real estate fundamentals to underpin its valuation and further quantify the upside potential for a transaction Market-Level Considerations Property-Level Considerations • Fungibility of building for alternative uses • Replacement cost • Location analysis • Traffic counts • Nearby uses and traffic drivers, complementary nature thereof • Accessibility and parking capacity • Ingress and egress • Visibility / signage • Vacancy analysis • Marketability of the real estate without current tenant • List of likely replacement tenants • Rent analysis • Replacement rent versus current rent • Demographic analysis • Current demographics plus trends and forecasts • Competitive analysis • Market position versus competing retail corridors B3
Unit-Level Profitability 15 In assessing unit-level financial performance, NETSTREIT focuses on mission-critical properties with strong rent coverage and higher variability in operating costs Obtain Financial Information Perform Financial Analysis 2 Assess Investment Merits 1 3 • Provides clarity into location-specific performance • Analyze store demand dynamics, cost structure and liquidity profile • Determine whether property meets investment criteria • Obtain unit-level financial information from parent company if possible • If financials are not provided, utilize data provided by third party vendors to estimate sales by location • Third party data includes: • Cell phone traffic • Point of sales (POS) data • Triangulate P&L based on available information • Sales (per data vendors) • EBITDAR margin (per financials) • Rent (known quantity) • Account for variability in business model cost structure • Higher proportion of fixed costs = more variability in rent coverage • Determine store ranking within tenant’s broader operating portfolio based on estimated sales Key Unit-Level Investment Criteria Minimum 2.0x Rent Coverage✓ Higher Cost Variability✓ Ranks in Top Half of Tenant’s Store Portfolio ✓ C3
Portfolio Strategy / Investment Philosophy 16 Source: Company data. Portfolio data represents portfolio as of 12/31/2021. 1. Portfolio statistics by percentage of ABR. Current MetricsInvestment Philosophy Portfolio Strategy Defensive Tenancy in Necessity-Based and E-commerce-Resistant Retail Sectors1 86.6%Primarily Resilient, Cycle-Tested Investment Grade Credit Tenants with Durable Cash Flows1 >60% 81.6% (65.2% Investment Grade Credit and 16.4% Investment Grade Profile) Granular Assets in Highly Fragmented, Undercapitalized Market Segment $3.2M Avg. Asset Size $1 to $10M Avg. Asset Size Net Lease Retail Assets with Long Lease Term Benefiting From Contractual Rent Growth >10 Year WALT 9.9 Year WALT Diversification by Sector, Tenant, State1 <15% Sector <50% Top 10 Tenants <15% State 14.5% Sector 54.3% Top 10 Tenants 10.9% State Significant Focus on Fundamental Real Estate Underwriting Attractive cost basis with durable valuation supported by market rents and demos, physical structure and location, and alternative use analyses 4
Growth Strategy: Generating Both Quality & Quantity 17 The Company utilizes a multi-faceted growth strategy to deploy capital in a variety of investment structures in the Net Lease Retail sector, allowing it greater flexibility to build its portfolio from a larger opportunity set Investment Type Description Investment Source Commentary Current Owners Brokerage Network Development Partners Tenant Relationships Private Equity Existing Stabilized Acquire operating properties on the open market • Deepest and most liquid opportunity set • Actively monitored Blend & Extend Acquire single-tenant property with short-term lease • Blend existing rent rate with new rate to extend lease term to at least 10 years Build-to-Suit ("BTS") Fund construction for single-tenant property with long-term lease • Key driver of higher risk-adjusted returns • Collaborate in design and construction of property Reverse Build-to-Suit Acquire a BTS property upon completion • Strong tenant relationship upon acquisition • Long lease terms, higher cap rates, comparable risk Sale- Leaseback Acquire single-tenant property with a simultaneous long-term lease back to the seller • Capitalize on likelihood of increased corporate real estate monetization in light of current disruption 4
Bell Curve Investing – Focusing on the Right Side 18 Inefficiently Priced Assets “Market-Taker” Assets TYPICAL TRANSACTION - Large portfolio ($0.2b to $1.0b+) or outsized buyer pool - Well marketed transaction - Straight-froward transaction - Ability to finance transaction with high loan-to- value debt - Highly competitive, with sophisticated and well capitalized investors TYPICAL TRANSACTION - Smaller deal size ($1m to $20m) or limited buyer pool - Not highly marketed - May involve transaction structuring that limits buyer pool - Limited financing options - Less competitive, 1031 exchangers, family offices, and unsophisticated investors Efficiently Priced Assets 4
Senior Leadership 19 Source: Company data. 1. First Potomac Realty Trust was publicly traded on the NYSE until October 2017. Seasoned leadership team with significant net lease retail and public company experience Mark Manheimer President, CEO & Director Mr. Manheimer leads the overall strategy, acquisitions, underwriting, and asset management for the company Prior experience includes: • EB Arrow; CIO of the Single-Tenant Net Lease Group • Spirit Realty Capital (NYSE: SRC); EVP, Head of Asset Management from 2012 through 2016 • Member of Investment Committee • Led restructuring and extension of the largest tenant’s master lease, as well as subsequent sales of the assets leased to the tenant • Led due diligence in merger that doubled company size • Cole Real Estate Investments; Head of Sale-Leaseback Acquisitions from 2009 through 2012 • Realty Income Corporation (NYSE: O); Director of Underwriting from 2005 through 2009 Prior experience includes: • First Potomac Realty Trust (NYSE: FPO)1; EVP, CFO and Treasurer from 2012 through 2017 • Leading role in FPO’s $1.4 billion sale to Government Properties Income Trust (now Office Properties Income Trust, NASDAQ: OPI) • Provided valuable public company expertise in evaluating and recommending changes to corporate governance initiatives; active role in evaluating Board candidates • Successfully remediated a pre-existing material weakness with respect to financial controls • Federal Realty Investment Trust (NYSE: FRT); SVP, CFO and Treasurer from 2008 through 2012 Andy Blocher CFO, Treasurer & Secretary Mr. Blocher manages liabilities, capital raising, investor relations and financial reporting for the company High-Quality Real Estate Portfolio Conservative Capitalization 5
Key Personnel 20 Source: Company data. 1. First Potomac Realty Trust was publicly traded on the NYSE until October 2017. Experienced team of professionals drive NETSTREIT’s day to day operations Jeff Fuge Senior Vice President, Acquisitions • Joined in December 2019 • Prior experience includes: – Director of Capital Markets at EB Arrow – Senior Vice President at Compass Point Research & Trading – Client Relations Director at Aegis Financial • B.A. in History and minor in Business Administration from the College of Charleston; M.B.A. from George Washington University Chad Shafer Senior Vice President, Credit and Underwriting • Joined in May 2020 • Prior experience includes: – Various roles at JPMorgan Chase & Co., most recently as Executive Director – Wholesale Credit Risk – Other roles include Head of Real Estate Banking Portfolio Management, Head of Key Relationship Group – Credit Risk, Commercial Term Lending, and Credit Manager • B.S. in Finance from Butler University Kirk Klatt Senior Vice President, Real Estate • Joined in December 2019 • Prior experience includes: – Chief Acquisitions Officer, Single-Tenant Net-Lease at EB Arrow – Development Services Manager for Duke Realty Corporation (NYSE: DRE) • B.S. in Civil Engineering from Texas Tech University; M.B.A. from University of Texas at Dallas; licensed real estate salesperson in Texas Trish McBratney Senior Vice President and Chief Accounting Officer • Joined in May 2020 • Prior experience includes: – Chief Accounting Officer of American Bath Group – Chief Accounting and Administrative Officer of Mill Creek Residential Trust – Vice President and Controller of CyrusOne (NASDAQ: CONE) • B.S. in Accounting from Oklahoma State University; Certified Public Accountant Randy Haugh Senior Vice President, Finance • Joined in February 2020 • Prior experience includes: – U.S. Real Estate fund management group at The Carlyle Group (NASDAQ:CG) – Vice President of Finance and Director of Finance at First Potomac Realty Trust (NYSE: FPO)1 • B.S. in Economics and Certificate of Accounting from University of Virginia Amy An Investor Relations Manager • Joined in December 2019 • Prior experience includes: – Investor Relations Manager at EB Arrow – Investor Relations Associate and Real Estate Analyst at Capview Partners • B.S. in Business Administration from the University of Texas at Dallas – Naveen Jindal School of Management High-Quality Real Estate Portfolio Conservative Capitalization 5
Corporate Responsibility 21 ▪ Dedication to reducing the Company’s ecological footprint ▪ Endorsement of renewable resources and encouragement of tenants to practice leading sustainability initiatives ▪ Implementation of energy conservation practices in the office E Environmental Responsibility ▪ Emphasis on creating a culture driven by diversity & inclusion ▪ Commitment to employee well-being & satisfaction in the workplace ▪ Creation of leading employee training and development programs to promote growth S Social Responsibility ▪ Diverse management team & board of directors ▪ Enactment of ideal board features to enhance the Company’s fiduciary responsibility to shareholders ▪ Rigorous risk management procedures to protect shareholder interests G Corporate Governance Areas of Focus 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 ethical standards 5
Corporate Responsibility 22 NETSTREIT aligns its corporate responsibility efforts to support that of the United Nations Sustainable Development Goals (SDGs). 5 Promote health and well-being in our offices. Company provides insurance benefits to our employees and family. Company provides employees with fitness memberships. Ensure inclusive and equitable quality education and promote lifelong learnings opportunities for all. Company provides continuing education for employees and offers paid internship to college students. Ensure women’s full and effective participation and equal opportunities at all levels of decision-making. Over 40% of the board members and employee base are female. Promote sustained, inclusive, full and decent productive employment. Company culture promotes inclusivity and growth. Reduced inequality and empower and promote inclusion of all, irrespective of age, sex, race, religion, or economic status. Company culture promotes and empower inclusivity of all. Company has efforts to recruit in underserved communities.
Environmental Responsibility 23 5 We encourage sustainable practices among our employees and remain committed to make environmentally friendly decisions in our daily operations The new corporate headquarters is LEED v4 O+M: EB Gold Certified, meeting strict guidelines set forth by the Environmental Protection Agency The certification is the most rigorous of the green building program designations. The building achieved LEED certification for implementing practical and measurable strategies and solutions to achieve high performance in sustainable site development, water savings, and energy efficiency, materials selection, and indoor environmental quality The new headquarters also received the National Air Filtration Association Clean Air Award The building management partners with an urban beekeeping company to address declining bee populations and to create ecological awareness of bees
Environmental Responsibility 24 5 Our top tenants have corporate sustainability programs that govern their business operations. 18 of our top 20 tenants in our portfolio have ESG commitments Source: Company data. Portfolio data represents portfolio as of 12/31/2021. Corporate sustainability programs for each tenant is published on their website. ENVIRONMENTAL SOCIAL GHG/CO2 Emission Plastic Usage/ Sustainable Packaging Renewable Energy/Energy Conservation Water Conservation/ Clean Water Eco-Friendly Products/ Sustainably/ Ethically Sourced Products Waste Reduction/ Recycling Agriculture/ Deforestration Community Engagement/ Philanthropy Diversity, Equity and Inclusion Responsible Supply Chain Product Safety & Quality Walgreens ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ 7-Eleven ✓ ✓ ✓ ✓ ✓ ✓ Advance Auto Parts ✓ ✓ ✓ ✓ ✓ ✓ Dollar General ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ CVS ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Lowe's ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Sams/Wal-Mart ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Best Buy ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Floor & Décor ✓ ✓ ✓ ✓ ✓ Big Lots* ✓ ✓ ✓ ✓ ✓ Dollar Tree/ Family Dollar ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Home Depot ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Tractor Supply ✓ ✓ ✓ ✓ ✓ ✓ Ahold Delhaize (Food Lion and Stop & Shop) ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Burlington ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Kroger / Pick 'n Save ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Fresenius ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ Kohl's ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓ ✓
Social Responsibility 25 5 Human Capital Management is the Cornerstone of our ESG and Corporate Strategy. We believe in the value of a diverse workforce and inclusive culture 401K Plan 100% company match of up to a 3% contribution, and 50% of up to the next 2% Insurance Health, dental, and vision insurance costs covered at 90% for employees and 60% for dependents Leave Ten weeks of paid maternity leave at 100% salary as well as four weeks of paid family bonding; Company also provides jury duty, witness leave, and military leave Paid Time Off A minimum of twenty-three PTO days Paid Holidays Twelve days of paid holidays Employee Assistance 24/7 toll-free hotline to access confidential counseling on various physical and mental health needs Continuing Education Reimbursement for certifications, tuition, courses, and seminars for continuing professional education BenefitsWorkforce Diversity Source: Company data. Female, 43% Male, 57% Asian, 13% Black, 9% Hispanic, 9% White, 70%
Corporate Governance 26 5 Source: Company data. We are committed to acting with honesty and integrity and conducting all corporate opportunities in an ethical manner Annual Director Elections Majority Voting Standard For Election of Directors Director Resignation Policy Annual Director and Committee Assessments No poison pill or differential voting stock structure to chill shareholder participation Shareholders’ right to amend the charter and bylaws by simple majority vote Separate non-executive Chair and CEO roles and Lead Independent Director with strong role and significant governance duties Governance Highlights Board Independence and Diversity 71% Independent Directors 60% Diverse Independent Directors 43% Female Directors 4 Fully Independent Committees
Board of Directors Lead Independent Director ▪ Compensation Committee Chair ▪ Investment Committee Chair ▪ Audit Committee Member Background ▪ Formerly AEW Capital Management, Head of AEW Real Estate Securities ▪ Formerly Landmark Land Company, VP Matt Troxell, CFA Independent Director ▪ Audit Committee Chair ▪ Nominating & Corporate Governance Committee Member Background ▪ Big Rock Partners, CFO ▪ Global Medical REIT (NYSE: GMRE) Independent Director and Audit Committee Chair ▪ Formerly Care Capital Properties (NYSE: CCP), CFO ▪ Formerly Ventas (NYSE: VTR), SVP – Capital Markets & Investor Relations Lori Wittman In addition to Mr. Manheimer, the Company’s board is comprised of six additional directors, five of whom are independent, each possessing diverse backgrounds in industry, public company and investment experience 27 Independent Director ▪ Nominating & Corporate Governance Committee Chair ▪ Compensation Committee Member ▪ Investment Committee Member Background ▪ Cedar Realty Trust (NYSE: CDR), EVP and COO ▪ Formerly Federal Realty Investment Trust (NYSE: FRT), COO, Mid-Atlantic Robin Zeigler Chairman of the Board Background ▪ EB Arrow, CEO: Commercial real estate developer & owner ▪ Formerly Cypress Equities Real Estate Investment Management, CIO ▪ Formerly with The Staubach Company Todd Minnis Independent Director ▪ Compensation Committee Member ▪ Nominating & Corporate Governance Committee Member Background ▪ Star Cypress Partners, President and CEO ▪ Formerly The Wentworth Group and Stafford Family Foundation, Vice President ▪ Veteran of the United States Air Force Heidi Everett Independent Director ▪ Audit Committee Member ▪ Investment Committee Member Background ▪ Inwood Capital Management, Manager ▪ Lindsay Corporation (NYSE: LNN), Director, serves on Audit Committee, and Corporate Governance and Nominating Committee ▪ Formerly with Bass Brothers / Taylor & Company Michael Christodolou 5
Company & Investment Highlights 28 NETSTREIT Is A Growth Company With A Defensive Net Lease Retail Strategy High-Quality, Diversified, and Defensive Net Lease Retail Portfolio Conservative Capitalization to Support Accretive Growth Active Asset Management to Achieve Optimal Portfolio Performance Disciplined Underwriters with Dual Focus on Credit AND Real Estate Multifaceted Investment Strategy Leveraging Deep Industry Relationships Durable and Defensive Cash Flows with Demonstrated Resiliency Seasoned Leadership Team with Extensive Track Record Platform Positioned for Scale
Definitions 29 ABR means annualized base rent. ABR is calculated by multiplying (i) cash rental payments (a) for the month ended December 31, 2021 (or, if applicable, the next full month's cash rent contractually due in the case of rent abatements, rent deferrals, recently acquired properties and properties with contractual rent increases, other than properties under development) for leases in place as of December 31, 2021, plus (b) for properties under development, the first full month's permanent cash rent contractually due after the development period by (ii) 12. 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 restaurants, which we refer to as defensive retail industries. 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 a low price point and consist of off-price and dollar stores, (3) Service, which consist of retailers that provide services rather than goods, including, tire and auto services and quick service restaurants, and (4) Other, which are retailers that are not considered defensive in terms of being considered necessity, discount or service, as defined by us. Investment Grade (rated) represents tenants, or tenants that are subsidiaries of a parent entity (with such subsidiary making up at least 50% of the parent company total revenue), with a credit rating of BBB- (S&P), Baa3 (Moody's) or NAIC2 (National Association of Insurance Commissioners) or higher. Investment Grade Profile (unrated) represents tenants with investment grade credit metrics (more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x), but do not carry a published rating from S&P, Moody's, or NAIC. Sub-investment grade (rated) represents tenants or tenants that are subsidiaries of a parent entity (with such subsidiary making up at least 50% of the parent company total revenue), with a credit rating of BB+ (S&P), Ba1 (Moody’s) or NAIC3 (National Association of Insurance Commissioners) or lower.
30 Investor Relations ir@netstreit.com 972-597-4825