NETSTREIT Q3 2025 slides: portfolio resilience amid earnings miss, record investments

Introduction & Market Context

NETSTREIT Corp (NYSE:NTST) recently presented its Q3 2025 investor deck, highlighting portfolio strength and record investment activity despite missing earnings expectations. The retail-focused REIT reported an EPS of $0.01 against the forecasted $0.07 on October 28, with revenue of $43.31 million falling short of the expected $45.71 million. Following the earnings announcement, NTST shares declined 3.53% to close at $19.54.

Despite these disappointing financial results, NETSTREIT’s presentation emphasized its defensive portfolio positioning, strong tenant credit quality, and accelerated investment activity that could drive future growth.

Portfolio Highlights

NETSTREIT’s portfolio maintains exceptional occupancy at 99.9% with a diversified tenant base spread across defensive retail sectors. As of September 30, 2025, the company’s portfolio consisted of 721 properties across 45 states, encompassing 13.2 million square feet with 114 tenants representing 28 retail sectors.

The portfolio overview highlights NETSTREIT’s national footprint with properties strategically located across the United States, particularly concentrated in high-growth Sun Belt states:

A key strength of NETSTREIT’s portfolio is its focus on defensive retail sectors, with 86.8% of annual base rent (ABR) coming from necessity, discount, and service-oriented tenants. The company’s top tenants include well-known national retailers like Dollar General (5.4%), CVS Health (5.2%), and Home Depot (4.1%).

As shown in the following tenant diversification chart, NETSTREIT has deliberately positioned its portfolio in retail categories that have proven resilient through economic cycles:

The company’s tenant credit quality remains strong, with 62.1% of ABR coming from investment grade (46.9%) and investment grade profile (15.2%) tenants. This focus on creditworthy tenants has contributed to NETSTREIT’s minimal credit loss experience—just 4 basis points annually over 5.5 years, significantly outperforming peers who typically experience 25-75 basis points of annual credit loss.

Investment Activity

NETSTREIT reported record investment activity in Q3 2025, closing $203.9 million in acquisitions across 50 properties. This represents the highest quarterly investment volume in the company’s recent history and demonstrates management’s ability to source attractive opportunities despite increased competition.

The following chart illustrates NETSTREIT’s consistent investment activity over the past eight quarters, with the most recent quarter showing significant acceleration:

The company has maintained disciplined underwriting while achieving attractive yields, with a weighted average cash yield of 7.0% since Q3 2020. NETSTREIT’s acquisition strategy focuses on what it calls "inefficiently priced assets" that may involve transaction structuring that limits the buyer pool or have limited financing options.

Simultaneously, NETSTREIT has actively managed its portfolio through strategic dispositions, selling $37.8 million of properties in Q3 2025:

CEO Mark Manheimer stated during the earnings call, "We are currently seeing the most attractive opportunity set that we have seen since going public over five years ago," highlighting management’s confidence in the current acquisition environment despite the earnings miss.

Portfolio Health & Tenant Quality

NETSTREIT’s presentation emphasized the strength of its tenant base, with 91% of ABR having unit-level coverage exceeding 1.5x and 76.7% above 2.0x. The portfolio’s average unit-level coverage stands at an impressive 3.9x, indicating strong tenant profitability at the property level.

The following chart details the company’s portfolio health statistics, showing that 77% of tenants generate over $1 billion in annual revenue:

This focus on financially strong tenants has resulted in exceptional portfolio stability, with only one tenant (Big Lots) experiencing a credit event since the company’s inception. NETSTREIT’s annualized credit loss of 4 basis points over 5.5 years compares favorably to peers who typically experience 25-75 basis points of annual credit loss.

Financial Position

NETSTREIT maintains a conservative balance sheet with substantial liquidity to support future growth. The company reported $1.2 billion in total pro forma liquidity and a leverage ratio of 3.6x (pro forma adjusted net debt to annualized adjusted EBITDAre).

The company’s debt maturity schedule is well-staggered, with no significant maturities until 2028, providing financial flexibility:

During the quarter, NETSTREIT raised $209.7 million through a follow-on offering and an additional $20.6 million through an at-the-market (ATM) program, bolstering its acquisition capacity. The company’s asset base remains over 99% unencumbered, providing additional financial flexibility.

Competitive Positioning

NETSTREIT’s presentation highlighted its favorable positioning relative to peers across several key metrics. The company maintains a higher percentage of investment grade tenants (47% vs. peer average), better unit-level rent coverage (3.9x), and a conservative leverage profile.

The following chart illustrates NETSTREIT’s competitive advantages in these critical metrics:

The company’s valuation analysis suggests potential upside if its implied cap rate were to compress to the peer average of 6.3% from the current 6.75%, which would result in a share price of $20.45 versus the current $18.62 implied value:

Forward Outlook

Despite the Q3 earnings miss, NETSTREIT has increased its 2025 net investment guidance to $350-400 million while maintaining its AFFO per share guidance of $1.29-$1.31. The company expects to continue growing acquisitions in 2026 and is considering pursuing an investment-grade rating by year-end.

CFO Dan Donlan expressed confidence during the earnings call about achieving above-average growth rates in 2026 and beyond, supported by the company’s strong liquidity position and acquisition pipeline.

However, investors should note potential challenges, including increased competition from private equity in the net lease market, potential interest rate fluctuations that could impact investment yields, and economic uncertainties that might affect tenant stability.

NETSTREIT’s quarterly dividend of $0.215 per share results in an attractive yield of 4.52%, providing income-oriented investors with a compelling investment case despite the recent earnings disappointment.

Full presentation:

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