NETSTREIT Reports Fourth Quarter and Full Year 2023 Financial and Operating Results
– Net income of
– Completed
– Reaffirms 2024 AFFO Per Share Guidance of
– Completed Forward Equity Offering in
“We're proud of our strong execution and performance in 2023, completing
FOURTH QUARTER AND FULL YEAR 2023 HIGHLIGHTS
The following table summarizes the Company's select financial results1 for the three months and year ended
|
Three Months Ended |
|||||||
|
2023 |
|
2022 |
|
% Change |
|||
|
(Unaudited) |
|||||||
Net Income per Diluted Share |
$ |
0.03 |
|
$ |
0.05 |
|
(40 |
)% |
Funds from Operations per Diluted Share |
$ |
0.30 |
|
$ |
0.26 |
|
15 |
% |
Core Funds from Operations per Diluted Share |
$ |
0.30 |
|
$ |
0.28 |
|
7 |
% |
Adjusted Funds from Operations per Diluted Share |
$ |
0.31 |
|
$ |
0.29 |
|
7 |
% |
|
Year Ended |
|||||||
|
2023 |
|
2022 |
|
% Change |
|||
|
(Unaudited) |
|||||||
Net Income per Diluted Share |
$ |
0.11 |
|
$ |
0.16 |
|
(31 |
)% |
Funds from Operations per Diluted Share |
$ |
1.18 |
|
$ |
1.08 |
|
9 |
% |
Core Funds from Operations per Diluted Share |
$ |
1.19 |
|
$ |
1.10 |
|
8 |
% |
Adjusted Funds from Operations per Diluted Share |
$ |
1.22 |
|
$ |
1.16 |
|
5 |
% |
1. |
Funds from operations ("FFO"), core funds from operations ("Core FFO"), and adjusted funds from operations ("AFFO") are non-GAAP financial measures. See "Non-GAAP Financial Measures." |
INVESTMENT ACTIVITY
The following tables summarize the Company's investment and disposition activities (dollars in thousands) for the three months and year ended
|
Three Months Ended |
|
Year Ended
|
||||||||
|
Number of Investments |
|
Amount |
|
Number of Investments |
|
Amount |
||||
Investments |
57 |
|
$ |
119,128 |
|
|
196 |
|
$ |
480,519 |
|
Dispositions1 |
6 |
|
|
15,995 |
|
|
22 |
|
|
49,506 |
|
Net Investment Activity |
|
|
$ |
103,133 |
|
|
|
|
$ |
431,013 |
|
|
|
|
|
|
|
|
|
||||
Investment Activity |
|
|
|
|
|
|
|
||||
Cash Yield |
|
|
|
7.2 |
% |
|
|
|
|
7.2 |
% |
% of ABR derived from Investment Grade Tenants |
|
|
|
94.3 |
% |
|
|
|
|
81.4 |
% |
% of ABR derived from Investment Grade Profile Tenants |
|
|
|
4.4 |
% |
|
|
|
|
11.8 |
% |
Weighted Average Lease Term (years) |
|
|
|
10.9 |
|
|
|
|
|
10.7 |
|
|
|
|
|
|
|
|
|
||||
Disposition Activity |
|
|
|
|
|
|
|
||||
Cash Yield1 |
|
|
|
7.2 |
% |
|
|
|
|
6.9 |
% |
Weighted Average Lease Term (years) |
|
|
|
11.2 |
|
|
|
|
|
7.8 |
|
1. Includes mortgage loan payoffs. |
The following table summarizes the Company's on-going development projects and estimated development costs (dollars in thousands) as of
Developments |
Three Months Ended |
|
Amount Funded During the Quarter |
$ |
25,499 |
|
|
|
|
As of |
|
Number of Developments |
|
24 |
Amount Funded to Date |
$ |
41,118 |
Estimated Funding Remaining on Developments |
|
26,642 |
Total Estimated Development Cost |
$ |
67,760 |
PORTFOLIO UPDATE
The following table summarizes the Company's real estate portfolio (weighted by ABR, dollars in thousands) as of
|
As of |
||
Number of Investments |
|
598 |
|
ABR |
$ |
131,859 |
|
States |
|
45 |
|
Square Feet |
|
10,624,183 |
|
Tenants |
|
85 |
|
Industries |
|
26 |
|
Occupancy |
|
100.0 |
% |
Weighted Average Lease Term (years) |
|
9.5 |
|
Investment Grade % |
|
70.5 |
% |
Investment Grade Profile % |
|
14.1 |
% |
SUBSEQUENT ACTIVITY
In
|
As of |
|
Shares Unsettled |
|
11,040,000 |
Price Per Share (Gross) |
$ |
18.00 |
Net Value of Unsettled Forward Equity |
$ |
190,771 |
CAPITAL MARKETS AND BALANCE SHEET
The following tables summarize the Company's leverage, balance sheet, liquidity, ATM issuances, and settlement of our forward equity offerings (dollars in thousands, except per share data) as of and for
Leverage |
As of |
|
Net Debt / Annualized Adjusted EBITDAre |
5.0x |
|
Adjusted Net Debt / Annualized Adjusted EBITDAre |
4.1x |
|
Proforma Adjusted Net Debt / Annualized Adjusted EBITAre1 |
2.5x |
|
|
|
|
Liquidity |
|
|
Unused Unsecured Revolver Capacity |
$ |
319,850 |
Cash, Cash Equivalents and Restricted Cash |
|
29,929 |
Net Value of Unsettled Forward Equity from 2023 ATM Issuance2 |
|
98,594 |
Remaining Available Principal of 2029 Term Loan3 |
|
100,000 |
Total Liquidity |
$ |
548,373 |
Net Value of Unsettled Forward Equity from |
|
190,771 |
Total Proforma Liquidity |
$ |
739,144 |
|
|
|
ATM Program |
|
|
|
|
4,478,539 |
Weighted Average Price Per Share (Gross) |
$ |
17.27 |
Net Proceeds |
$ |
76,667 |
|
|
|
2023 ATM Program Initial Capacity |
$ |
300,000 |
ATM Capacity Remaining as of |
$ |
222,677 |
|
|
|
Unsettled Forward Equity |
|
|
Shares Unsettled as of |
|
5,983,711 |
Weighted Average Price Per Share (Net) |
$ |
16.48 |
Net Value of Unsettled Forward Equity from 2023 ATM Issuance2 |
$ |
98,594 |
1. |
Adjusted to include the net value of unsettled shares from the |
2. |
Reflects 5,983,711 of unsettled forward equity shares under the ATM program at the |
3. |
All-in fixed rate of 4.99% consists of the fixed rate SOFR swap of 3.74% on |
DIVIDEND
On
2024 GUIDANCE
The Company is reaffirming its initial full year 2024 AFFO per share guidance in the range of
The Company's 2024 guidance is based on a number of assumptions that are subject to change and many of which are outside the Company's control. If actual results vary from these assumptions, the Company's expectations may change. There can be no assurance that the Company will achieve these results.
AFFO is a non-GAAP financial measure. The Company does not provide a reconciliation of such forward-looking non-GAAP measure to the most directly comparable financial measures calculated and presented in accordance with GAAP because to do so would be potentially misleading and not practical given the difficulty of projecting event driven transactional and other non-core operating items in any future period. The magnitude of these items, however, may be significant.
EARNINGS CONFERENCE CALL
A conference call will be held on
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 15 minutes prior to the scheduled start time to register, as well as download and install any necessary audio software.
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
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
NON-GAAP FINANCIAL MEASURES
This press release contains non-GAAP financial measures, including FFO, Core FFO, AFFO, EBITDA, EBITDAre, Adjusted EBITDAre, Annualized Adjusted EBITDAre, Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI Estimated
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, including estimated development costs, trends in our business, including trends in the market for single-tenant, retail commercial real estate and our 2024 guidance. 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 Form 10-K for the year ended
CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) (Unaudited) |
|||||||
|
|
||||||
|
2023 |
|
2022 |
||||
Assets |
|
|
|
||||
Real estate, at cost: |
|
|
|
||||
Land |
$ |
460,896 |
|
|
$ |
401,146 |
|
Buildings and improvements |
|
1,149,809 |
|
|
|
907,084 |
|
Total real estate, at cost |
|
1,610,705 |
|
|
|
1,308,230 |
|
Less accumulated depreciation |
|
(101,210 |
) |
|
|
(62,526 |
) |
Property under development |
|
29,198 |
|
|
|
16,796 |
|
Real estate held for investment, net |
|
1,538,693 |
|
|
|
1,262,500 |
|
Assets held for sale |
|
52,451 |
|
|
|
23,208 |
|
Mortgage loans receivable, net |
|
114,472 |
|
|
|
46,378 |
|
Cash, cash equivalents and restricted cash |
|
29,929 |
|
|
|
70,543 |
|
Lease intangible assets, net |
|
161,354 |
|
|
|
151,006 |
|
Other assets, net |
|
49,337 |
|
|
|
52,057 |
|
Total assets |
$ |
1,946,236 |
|
|
$ |
1,605,692 |
|
Liabilities and equity |
|
|
|
||||
Liabilities: |
|
|
|
||||
Term loans, net |
$ |
521,912 |
|
|
$ |
373,296 |
|
Revolving credit facility |
|
80,000 |
|
|
|
113,000 |
|
Mortgage note payable, net |
|
7,883 |
|
|
|
7,896 |
|
Lease intangible liabilities, net |
|
25,353 |
|
|
|
30,131 |
|
Liabilities related to assets held for sale |
|
1,158 |
|
|
|
406 |
|
Accounts payable, accrued expenses and other liabilities |
|
36,498 |
|
|
|
22,540 |
|
Total liabilities |
|
672,804 |
|
|
|
547,269 |
|
Commitments and contingencies |
|
|
|
||||
Equity: |
|
|
|
||||
Stockholders’ equity |
|
|
|
||||
Common stock, |
|
732 |
|
|
|
580 |
|
Additional paid-in capital |
|
1,367,505 |
|
|
|
1,091,514 |
|
Distributions in excess of retained earnings |
|
(112,276 |
) |
|
|
(66,937 |
) |
Accumulated other comprehensive income |
|
8,943 |
|
|
|
23,673 |
|
Total stockholders’ equity |
|
1,264,904 |
|
|
|
1,048,830 |
|
Noncontrolling interests |
|
8,528 |
|
|
|
9,593 |
|
Total equity |
|
1,273,432 |
|
|
|
1,058,423 |
|
Total liabilities and equity |
$ |
1,946,236 |
|
|
$ |
1,605,692 |
|
CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data) (Unaudited) |
|||||||||||
|
Year Ended |
||||||||||
|
2023 |
|
2022 |
|
2021 |
||||||
Revenues |
|
|
|
|
|
||||||
Rental revenue (including reimbursable) |
$ |
123,967 |
|
|
$ |
93,934 |
|
|
$ |
59,140 |
|
Interest income on loans receivable |
|
7,388 |
|
|
|
2,345 |
|
|
|
— |
|
Other revenue |
|
550 |
|
|
|
— |
|
|
|
— |
|
Total revenues |
|
131,905 |
|
|
|
96,279 |
|
|
|
59,140 |
|
Operating expenses |
|
|
|
|
|
||||||
Property |
|
16,413 |
|
|
|
11,695 |
|
|
|
5,803 |
|
General and administrative |
|
20,176 |
|
|
|
19,053 |
|
|
|
14,810 |
|
Depreciation and amortization |
|
63,677 |
|
|
|
50,075 |
|
|
|
30,807 |
|
Provisions for impairment |
|
7,083 |
|
|
|
1,114 |
|
|
|
3,539 |
|
Transaction costs |
|
456 |
|
|
|
839 |
|
|
|
700 |
|
Total operating expenses |
|
107,805 |
|
|
|
82,776 |
|
|
|
55,659 |
|
Other income (expense) |
|
|
|
|
|
||||||
Interest expense, net |
|
(19,058 |
) |
|
|
(9,181 |
) |
|
|
(3,700 |
) |
Gain on sales of real estate, net |
|
1,175 |
|
|
|
4,148 |
|
|
|
2,997 |
|
Loss on debt extinguishment |
|
(128 |
) |
|
|
— |
|
|
|
— |
|
Other income, net |
|
752 |
|
|
|
131 |
|
|
|
431 |
|
Total other income (expense), net |
|
(17,259 |
) |
|
|
(4,902 |
) |
|
|
(272 |
) |
Net income before income taxes |
|
6,841 |
|
|
|
8,601 |
|
|
|
3,209 |
|
Income tax benefit (expense) |
|
49 |
|
|
|
(396 |
) |
|
|
(59 |
) |
Net income |
|
6,890 |
|
|
|
8,205 |
|
|
|
3,150 |
|
Net income attributable to noncontrolling interests |
|
53 |
|
|
|
88 |
|
|
|
104 |
|
Net income attributable to common stockholders |
$ |
6,837 |
|
|
$ |
8,117 |
|
|
$ |
3,046 |
|
Amounts available to common stockholders per common share: |
|
|
|
|
|
||||||
Basic |
$ |
0.11 |
|
|
$ |
0.16 |
|
|
$ |
0.08 |
|
Diluted |
$ |
0.11 |
|
|
$ |
0.16 |
|
|
$ |
0.08 |
|
Weighted average common shares: |
|
|
|
|
|
||||||
Basic |
|
63,922,973 |
|
|
|
49,517,977 |
|
|
|
36,999,459 |
|
Diluted |
|
64,665,439 |
|
|
|
50,431,822 |
|
|
|
38,672,565 |
|
RECONCILIATION OF NET INCOME TO FFO, CORE FFO AND ADJUSTED FFO (in thousands, except share and per share data) (Unaudited) |
|||||||
|
Year Ended |
||||||
|
2023 |
|
2022 |
||||
Net income |
$ |
6,890 |
|
|
$ |
8,205 |
|
Depreciation and amortization of real estate |
|
63,379 |
|
|
|
49,498 |
|
Provisions for impairment |
|
7,083 |
|
|
|
1,114 |
|
Gain on sales of real estate, net |
|
(1,175 |
) |
|
|
(4,148 |
) |
FFO |
|
76,177 |
|
|
|
54,669 |
|
Adjustments: |
|
|
|
||||
Non-recurring executive transition costs, severance and related charges |
|
362 |
|
|
|
848 |
|
Loss on debt extinguishment and other related costs |
|
223 |
|
|
|
— |
|
Gain on insurance proceeds |
|
(78 |
) |
|
|
(126 |
) |
Core FFO |
|
76,684 |
|
|
|
55,391 |
|
Adjustments: |
|
|
|
||||
Straight-line rent adjustments |
|
(1,163 |
) |
|
|
(1,286 |
) |
Amortization of deferred financing costs |
|
1,730 |
|
|
|
862 |
|
Amortization of above/below-market assumed debt |
|
114 |
|
|
|
29 |
|
Amortization of loan origination costs |
|
163 |
|
|
|
88 |
|
Amortization of lease-related intangibles |
|
(611 |
) |
|
|
(889 |
) |
Earned development interest |
|
515 |
|
|
|
— |
|
Capitalized interest expense |
|
(1,060 |
) |
|
|
(452 |
) |
Non-cash interest expense |
|
(2,124 |
) |
|
|
— |
|
Non-cash compensation expense |
|
4,822 |
|
|
|
4,774 |
|
AFFO |
$ |
79,070 |
|
|
$ |
58,517 |
|
|
|
|
|
||||
Weighted average common shares outstanding, basic |
|
63,922,973 |
|
|
|
49,517,977 |
|
Weighted average operating partnership units outstanding |
|
501,751 |
|
|
|
526,859 |
|
Weighted average dilutive securities |
|
165,420 |
|
|
|
248,602 |
|
Weighted average unsettled shares under forwards |
|
75,295 |
|
|
|
138,384 |
|
Weighted average common shares outstanding, diluted |
|
64,665,439 |
|
|
|
50,431,822 |
|
|
|
|
|
||||
FFO per common share, diluted |
$ |
1.18 |
|
|
$ |
1.08 |
|
Core FFO per common share, diluted |
$ |
1.19 |
|
|
$ |
1.10 |
|
AFFO per common share, diluted |
$ |
1.22 |
|
|
$ |
1.16 |
|
RECONCILIATION OF NET INCOME TO EBITDA, EBITDAre AND ADJUSTED EBITDAre (in thousands, except share and per share data) (Unaudited) |
|||||||
|
Three Months Ended |
||||||
|
2023 |
|
2022 |
||||
Net income |
$ |
1,962 |
|
|
$ |
2,810 |
|
Depreciation and amortization of real estate |
|
17,000 |
|
|
|
13,797 |
|
Amortization of lease-related intangibles |
|
(93 |
) |
|
|
(246 |
) |
Non-real estate depreciation and amortization |
|
78 |
|
|
|
141 |
|
Interest expense, net |
|
5,646 |
|
|
|
3,473 |
|
Income tax expense |
|
10 |
|
|
|
41 |
|
Amortization of loan origination costs |
|
80 |
|
|
|
28 |
|
EBITDA |
|
24,683 |
|
|
|
20,044 |
|
Adjustments: |
|
|
|
||||
Provisions for impairment |
|
2,709 |
|
|
|
— |
|
Gain on sales of real estate, net |
|
(506 |
) |
|
|
(1,986 |
) |
EBITDAre |
|
26,886 |
|
|
|
18,058 |
|
Adjustments: |
|
|
|
||||
Straight-line rent adjustments |
|
(456 |
) |
|
|
(142 |
) |
Non-recurring executive transition costs, severance and related charges |
|
86 |
|
|
|
848 |
|
Gain on insurance proceeds |
|
(31 |
) |
|
|
(90 |
) |
Non-cash compensation expense |
|
1,264 |
|
|
|
1,128 |
|
Adjustment for construction in process (1) |
|
719 |
|
|
|
315 |
|
Adjustment for intraquarter investment activities (2) |
|
820 |
|
|
|
1,334 |
|
Adjusted EBITDAre |
$ |
29,288 |
|
|
$ |
21,451 |
|
Annualized Adjusted EBITDAre (3) |
$ |
117,152 |
|
|
|
||
|
|
|
|
||||
Net Debt |
As of |
|
|
||||
Principal amount of total debt |
$ |
613,361 |
|
|
|
||
Less: Cash, cash equivalents and restricted cash |
|
(29,929 |
) |
|
|
||
Net Debt |
|
583,432 |
|
|
|
||
Less: Net value of unsettled forward equity from 2023 ATM issuance (4) |
|
(98,594 |
) |
|
|
||
Adjusted Net Debt |
$ |
484,838 |
|
|
|
||
Less: Net value of unsettled forward equity from |
|
(190,771 |
) |
|
|
||
Proforma Adjusted Net Debt |
$ |
294,067 |
|
|
|
||
|
|
|
|
||||
Leverage |
|
|
|
||||
Net debt / Annualized Adjusted EBITDAre |
5.0 x |
|
|
||||
Adjusted Net Debt / Annualized Adjusted EBITDAre |
4.1 x |
|
|
||||
Proforma Adjusted Net Debt / Annualized Adjusted EBITDAre |
2.5 x |
|
|
(1) |
Adjustment reflects the estimated cash yield on developments in process as of |
(2) |
Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments and interest earning loan activity completed during the three months ended |
(3) |
We calculate Annualized Adjusted EBITDAre by multiplying Adjusted EBITDAre by four. |
(4) |
There were 5,983,711 of unsettled forward equity shares under the ATM program at the |
(5) |
Reflects 11,040,000 of unsettled shares from the |
RECONCILIATION OF NET INCOME TO NOI AND CASH NOI (in thousands, except share and per share data) (Unaudited) |
|||||||||||||||
|
Three Months Ended |
|
Year Ended |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Net income |
$ |
1,962 |
|
|
$ |
2,810 |
|
|
$ |
6,890 |
|
|
$ |
8,205 |
|
General and administrative |
|
4,876 |
|
|
|
5,444 |
|
|
|
20,176 |
|
|
|
19,053 |
|
Depreciation and amortization |
|
17,078 |
|
|
|
13,938 |
|
|
|
63,677 |
|
|
|
50,075 |
|
Provisions for impairment |
|
2,709 |
|
|
|
— |
|
|
|
7,083 |
|
|
|
1,114 |
|
Transaction costs |
|
189 |
|
|
|
135 |
|
|
|
456 |
|
|
|
839 |
|
Interest expense, net |
|
5,646 |
|
|
|
3,473 |
|
|
|
19,058 |
|
|
|
9,181 |
|
Gain on sales of real estate, net |
|
(506 |
) |
|
|
(1,986 |
) |
|
|
(1,175 |
) |
|
|
(4,148 |
) |
Income tax expense |
|
10 |
|
|
|
41 |
|
|
|
(49 |
) |
|
|
396 |
|
Loss on debt extinguishment |
|
— |
|
|
|
— |
|
|
|
128 |
|
|
|
— |
|
Interest income on mortgage loans receivable |
|
(2,243 |
) |
|
|
(674 |
) |
|
|
(7,388 |
) |
|
|
(2,345 |
) |
Lease termination fees |
|
— |
|
|
|
— |
|
|
|
(550 |
) |
|
|
— |
|
Other income, net |
|
(166 |
) |
|
|
(95 |
) |
|
|
(752 |
) |
|
|
(131 |
) |
Property-Level NOI |
|
29,555 |
|
|
|
23,086 |
|
|
|
107,554 |
|
|
|
82,239 |
|
Straight-line rent adjustments |
|
(456 |
) |
|
|
(142 |
) |
|
|
(1,163 |
) |
|
|
(1,286 |
) |
Amortization of lease-related intangibles |
|
(93 |
) |
|
|
(246 |
) |
|
|
(611 |
) |
|
|
(889 |
) |
Property-Level Cash NOI |
$ |
29,006 |
|
|
$ |
22,698 |
|
|
$ |
105,780 |
|
|
$ |
80,064 |
|
Adjustment for intraquarter acquisitions, dispositions and completed development (1) |
|
705 |
|
|
|
|
|
|
|
||||||
Property-Level Cash NOI Estimated |
|
29,711 |
|
|
|
|
|
|
|
||||||
Interest income on mortgage loans receivable |
|
2,243 |
|
|
|
|
|
|
|
||||||
Adjustments for intraquarter mortgage loan activity (2) |
|
115 |
|
|
|
|
|
|
|
||||||
Total Cash NOI - Estimated |
$ |
32,069 |
|
|
|
|
|
|
|
(1) |
Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments completed during the three months ended |
(2) |
Adjustment assumes all loan activity completed during the three months ended |
NON-GAAP FINANCIAL MEASURES
FFO, Core FFO and AFFO
Core FFO is a non-GAAP financial measure defined as FFO adjusted to remove the effect of unusual and non-recurring items that are not expected to impact our operating performance or operations on an ongoing basis. These include non-recurring executive transition costs, severance and related charges, gain on insurance proceeds, and loss on debt extinguishments and other related costs.
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, earned development interest, non-cash interest expense, non-cash compensation expense, amortization of deferred financing costs, amortization of above/below-market assumed debt, and amortization of loan origination 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.
EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre
We compute EBITDA as earnings before interest expense, income tax expense, 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 impairment charges on depreciable real property.
Adjusted EBITDAre is a non-GAAP financial measure defined as EBITDAre further adjusted to exclude straight-line rent, non-cash compensation expense, non-recurring executive transition costs, severance and related charges, loss on debt extinguishment and other related costs, gain on insurance proceeds, other non-recurring expenses (income), lease termination fees, adjustment for construction in process, and adjustment for intraquarter activities. Beginning in the quarter ended
Annualized Adjusted EBITDAre is Adjusted EBITDAre multiplied by four.
We present EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized 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, Adjusted EBITDAre, and Annualized Adjusted EBITDAre as measures of our operating performance and not as measures of liquidity.
EBITDA, EBITDAre, Adjusted EBITDAre and Annualized 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, Adjusted EBITDAre and Annualized 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.
Net Debt and Adjusted Net Debt
We calculate our Net Debt as our principal amount of total debt outstanding excluding deferred financing costs, net discounts and debt issuance costs less cash, cash equivalents and restricted cash available for future investment. We believe excluding cash, cash equivalents and restricted cash available for future investment from our principal amount, all of which could be used to repay debt, provides an estimate on the net contractual amount of borrowed capital to be repaid. We believe these adjustments are additional beneficial disclosures to investors and analysis.
We further adjust Net Debt by the net value of unsettled forward equity as of period end to derive Adjusted Net Debt.
Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated
Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated
Property-Level NOI, Property-Level Cash NOI, Property-Level Cash NOI - Estimated
OTHER DEFINITIONS
ABR is annualized base rent as of
Cash Yield is the annualized base rent contractually due from acquired properties, interest income from mortgage loans receivable, and completed developments, divided by the gross investment amount, or gross proceeds in the case of dispositions.
Investments are lease agreements in place at owned properties, properties that have leases associated with mortgage loans receivable, developments where rent commenced, or in the case of master lease arrangements each property under the master lease is counted as a separate lease.
Investment Grade are investments, or investments that are subsidiaries of a parent entity, with a credit rating of BBB- (S&P/Fitch), Baa3 (Moody's) or NAIC2 (National Association or Insurance Commissioners) or higher.
Investment Grade Profile are investments with investment grade credit metrics (more than
Occupancy is expressed as a percentage, and is the number of economically occupied properties divided by the total number of properties owned, excluding mortgage loans receivable and properties under development.
Weighted Average Lease Term is weighted by the annualized base rent, excluding lease extension options and investments associated with mortgage loans receivable.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240214553143/en/
Investor Relations
ir@netstreit.com
972-597-4825
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