NNN REIT Q3 2025 slides: core FFO grows 1.2% as portfolio expansion continues

Introduction & Market Context

NNN REIT Inc. (NYSE:NNN), a leading single-tenant net lease real estate investment trust, presented its third quarter 2025 investor update on November 4, highlighting steady growth amid market volatility. The company reported core FFO of $0.85 per share, representing a 1.2% year-over-year increase, while adjusted FFO reached $0.86 per share, up 2.4% from the prior year.

Despite beating earnings expectations with an EPS of $0.51 against a forecast of $0.48, NNN’s stock experienced mixed market reaction, initially rising 1.27% in pre-market trading before closing down 2.27% at $40.89.

Quarterly Performance Highlights

NNN REIT’s third quarter results demonstrated the company’s ability to execute its disciplined acquisition strategy while maintaining strong operational performance. Key highlights from the quarter include:

• Core FFO and AFFO per diluted share grew by 1.2% and 2.4% year-over-year to $0.85 and $0.86 respectively
• Annual base rent increased by 7.2% over the prior year to $912 million
• Closed on $283.0 million of investments at a 7.3% initial cash cap rate with a 17.8-year weighted average lease term
• Year-to-date investments reached $748.0 million through September 30, 2025
• Sold 23 properties for $41.3 million, including $22.3 million of income-producing properties at a 5.9% weighted average cap rate

As shown in the following quarterly highlights summary:

The company also raised $71.7 million in gross proceeds from the issuance of 1,670,737 common shares at an average price of $42.89 and issued $500 million of 4.600% senior unsecured notes due 2031.

Strategic Positioning

NNN REIT’s presentation emphasized its consistent and simple strategy focused on single-tenant, net-leased properties. This approach has resulted in higher occupancy rates and less volatility compared to industry averages. As of Q3 2025, NNN maintained a 97.5% occupancy rate, significantly outperforming the industry average of 91.4%.

The following chart illustrates NNN’s consistent occupancy advantage over time:

"NNN’s proactive management and rapid asset resolution reinforces our ability to turn short-term challenges into long-term value creation," said CEO Steve Horn during the earnings call, addressing the temporary dip in occupancy from the company’s historical average of 98.3%.

The company’s portfolio diversification strategy has been a key factor in maintaining high occupancy rates and stable cash flows. NNN’s properties span all 50 states with over 400 tenants across more than 35 lines of trade.

The geographic distribution of NNN’s portfolio is illustrated in this nationwide map:

Balance Sheet Strength

NNN REIT has maintained a conservative balance sheet with $13.0 billion in total capital, comprised of 38% gross debt and 62% equity. The company’s debt profile features a weighted average maturity of 10.7 years and a weighted average effective interest rate of 4.2%.

The following chart details NNN’s capital structure:

CFO Vincent Chao highlighted this strength during the earnings call, stating, "Our balance sheet is a source of strength, and we will look for ways to utilize this competitive advantage to support growth while protecting downside risk."

NNN’s debt maturities are well-laddered, with no significant concentration in any single year, providing financial flexibility and reducing refinancing risk. The company maintains strong coverage ratios, with both interest coverage and fixed-charge coverage at 4.1x.

Long-term Track Record

A standout achievement highlighted in NNN’s presentation is its 36-year track record of consecutive annual dividend increases, the third-longest among all public REITs. The company’s most recent quarterly dividend of $0.60 per share represents a 3.4% increase year-over-year and translates to an annualized dividend yield of 5.6% based on the September 30, 2025 stock price.

The following chart illustrates NNN’s consistent dividend growth history:

This dividend growth has contributed to NNN’s long-term outperformance compared to various market indices. Over the 30-year period ending September 30, 2025, NNN delivered a 10.9% annual total return, outperforming the NAREIT Equity REIT Index (9.4%) and nearly matching the S&P 500 Index (10.5%).

The comprehensive performance comparison across multiple timeframes is shown below:

Forward Outlook

Looking ahead, NNN REIT has raised its 2025 Core FFO guidance to a range of $3.36 to $3.40 per share, reflecting management’s confidence in the company’s growth trajectory. The company also increased its acquisition volume guidance to $850-$950 million for the full year.

Management expects occupancy to exceed 98% by year-end, addressing the temporary reduction to 97.5% as of September 30. This optimism is supported by NNN’s track record of resolving vacant properties efficiently and its disciplined acquisition approach.

Potential challenges include increased competition in the net lease market, potential credit issues within the portfolio, and macroeconomic pressures that could impact future acquisition strategies. However, NNN’s conservative balance sheet with no floating rate debt, no encumbered assets, and $1.4 billion of available liquidity positions the company well to navigate these challenges.

NNN REIT’s Q3 2025 presentation reinforces its reputation as a steady performer in the net lease REIT sector, with its disciplined strategy continuing to deliver consistent results for investors despite short-term market volatility.

Full presentation:

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