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Image source: The Motley Fool. Wednesday, Aug. 5, 2026 at 10:30 a.m. ET Chief Executive Officer - Stephen A. Horn Jr. Chief Financial Officer - Vincent H. Chao Operator: Greetings. Welcome to the NNN REIT Inc. Second Quarter 26 Earnings Call. At this time, all participants are in a listen only mode. A Q&A session will follow the formal presentation. If anyone should require operator assistance during the conference, Please note this conference is being recorded. I will now turn the conference over to your host, Steve Horn, CEO at NNN Reinc. You may begin. Stephen A. Horn Jr.: Thanks, Ali. Good morning, and welcome to NNN's second quarter 26 earnings call. On the call today with me is Chief Financial Officer, Vincent H. Chao. As this morning's press release reflects, NNN's performance in 2026 continues to produce strong results including high occupancy, impressive rent collections with under 5 basis points of uncollected rent. And solid acquisitions driven by our deep tenant relationships. Well positioned to continue enhancing shareholder value as we move into the second half of the year and beyond. In July, we announced just over a 3% increase in our common stock dividend, payable August 14. Marking 2026 as our 37th consecutive year of annual dividend increases. That places NNN among 70 US public companies and just 3 REITs to achieve that track record. Given our continued consistent performance of the portfolio, and the acquisition pipeline, we are updating our 2026 guidance for AFFO per share to a range of $3.55 to $3.59. Our second guidance increase of the year. This reflects our discipline of long standing multiyear strategy for consistent per share growth. As far as the portfolio performance, 3.77 thousand freestanding single-tenant properties continue to do exceedingly well during the second quarter. Occupancy is up 50 basis points from the first quarter to 99.1 which is an increase of 110 basis points from last year. We see positive momentum across our tenant base. Highlighted by 2 significant M&A transactions announced in mid July involving tenants in the portfolio. Mavis Tire announced the agreement to acquire Pep Boys for approximately $700 million of cash further strengthening its position as 1 of the nation's leading automotive service providers. Additionally, Big Brand Tire announced an agreement to acquire Bell Tire. Combination creates a network of more than 350 stores with over $1.5 billion in annual revenue. Acquisitions for the quarter, we invested just north of $290 million in 89 new properties at an initial cash cap rate 7.3%. More importantly, an average lease duration of just shy of 18 years. The product mix is primarily auto service, discount retail, and early childhood education. With a median purchase price of $2.1 million. An average of 3.2 million. During the first half of 26, we invested $430 million in 130 new properties at an initial cash cap rate of 7.4%. Average lease to duration just over 18 years. Cap rates have been fairly stable over the past 6 quarters, reflecting competitive investment environment. But looking ahead, we believe modest cap rate compression is possible during the second half of the year, supported by the composition of our active acquisition pipeline. And the portfolios that are currently in the market today. Our investment approach remains unchanged. We continue to apply disciplined underwriting standards and focus on originating direct sale leaseback transactions with relationship tenants. Where we can negotiate favorable economics and structure investments utilizing our landlord friendly long term duration triple net lease. This strategy continues to provide the most attractive risk adjusted opportunities than broadly marketed assets. Including 31 driven transactions. Given the visibility provided by our pipeline and our ongoing discussions with transaction partners, we are increasing the midpoint of our 2026 acquisition guidance to $750 million from $600 million We expect most of the acquisition volume to be sourced through direct original sale leaseback transactions reinforcing our emphasis on proprietary deal flow disciplined capital deployment and long term value creation. As far as dispositions, during the quarter, we sold 26 properties including 19 vacant assets, generating approximately $37 million in proceeds for reinvestment. The income producing assets were primarily non core properties that were sold at cap rates approximately 170 basis points below our acquisition cap rate. Demonstrating continued demand for well located net lease assets. As we have previously discussed, we expect to be more active on the disposition front throughout 2026 as we continue to optimize portfolio quality and enhance long term shareholder value. While our strategy remains focused on acquiring durable, income producing real estate, disciplined capital recycling is an important component of our investment process. And with that backdrop, we are lifting disposition range to a midpoint of $140 million Active portfolio management is essential to maintain a high quality portfolio that is positioned to generate stable and growing cash flows. We believe selectively recycling capital from non core assets into higher conviction investment opportunities. Will strengthen the portfolio and improve its long term earnings cash flow profile. As far as the balance sheet, I do not want to take all of his thunder, but the balance sheet remains among the strongest in the net lease sector and continues to provide significant financial flexibility. We ended the quarter with a weighted average debt maturity of approximately 10.1 years. Which is nearly double the nearest net lease peer and we also maintain $1.4 billion of liquidity. This conservative capital structure positions us well to fund the remainder of 2026 pipeline while maintaining ample capacity for future growth. Having a robust acquisition pipeline a strong balance sheet, experienced management team, we remain confident in our outlook. We are committed to our self funded growth strategy disciplined capital allocation, and maintaining the financial flexibility that has long differentiated our platform. Believe this approach will continue to support sustainable earnings growth and long term value creation for our shareholders. We are focused on finishing 2026 strong positioning NNN for continued success over the years ahead. With that, I will pass it over to Vincent. He can go through our quarterly numbers in detail. And updated guidance. Vincent H. Chao: Thanks, Steve. Let's start with our customary cautionary statements. During this call, we will make certain statements that may be considered forward looking statements under federal securities law. Company's actual future results may differ significantly from the matters discussed in these forward looking statements and we may not release revisions to these forward looking statements to reflect changes after the statements were made. Factors and risks that could cause actual results to differ from expectations are disclosed in greater detail in the company's filings with the SEC and in this morning's press release. Turning to results. This morning, we reported AFFO of $0.90 per share and core FFO of $0.89 per share up 5.9% and 6.0% respectively over the prior year. Results were ahead of our internal projections, with the upside driven primarily by lower than expected bad debt, which totaled about 2 basis points of quarterly ABR. Our NOI margin of 96.6% in the second quarter was up 70 basis points versus last quarter as we further drove portfolio occupancy above our long run average. Thereby reducing net real estate expenses. G&A as a percentage of total revenue was 5.8% while our cash G&A margin was 4.4%. Annualized base rent grew by over 7% year over year to $959 million. On the back of our strong acquisition volumes. Free cash flow after dividend was about $56 million in the second. Turning to the tenant credit. Our watch list of near term credit concerns remains immaterial at this time. Which has led to better than budgeted credit loss year to date. That said, our portfolio management team remains focused on identifying and proactively mitigating potential future credit risks through asset sales, targeted lease terminations, and leasing. A capital markets perspective, during the quarter, we exercised an accordion option on our term loan issuing an additional $100 million to bring total term loan size to $500 million. Of this total, $400 million has been swapped to an attractive all in fixed rate of 4.1%. In addition, we lowered the spread in our term loan and revolver by 5 basis points. In light of our improving cost of equity, we were active on the ATM in the second quarter, selling roughly 6 million common shares on a forward basis at just under $46 per share. We also settled 1.7 million forward shares generating net proceeds of about $73 million which were used to pay down our revolver. From modeling perspective, these shares were settled on 6/30 and therefore are not included in the in the reported weighted average share count. As of June 30, we had roughly $272 million of unsettled forward equity, which combined with our $215 million of expected free cash flow and $140 million of expected dispositions for the year, provides us with ample liquidity with which to execute our strategic objectives for 2026 and beyond. Regarding the balance sheet, at the end of the quarter, we had no encumbered assets, $4 billion of available liquidity, just 2.5% of our debt tied to floating rates. Net debt-to-EBITDA of 5.7x was unchanged from last quarter but including the impact of unsettled forward equity, pro forma net debt-to-EBITDA was 5.2x down from 5.6x last quarter. Our sector leading debt duration of 10.1 years was well matched with our lease duration also 10.1 years. On July 15, we announced the $0.62 quarterly dividend which is a 3.3% increase in the quarterly rate and represented our 37th consecutive annual dividend increase. An achievement that we are extremely proud of and 1 that reflects the sustainability of our growth model. The new dividend rate equates to a 5.3% annualized dividend yield and a healthy 69% AFFO payout ratio. Lastly, I will end my comments with some additional color regarding our updated 2026 guidance. As disclosed in our earnings release, we are raising both core FFO and AFFO per share guidance for 2026 by $0.01 at the respective midpoints. Updated AFFO per share guidance of $3.55 to $3.59, implies about 3.8% year over year growth at the midpoint and acceleration from the 2.7% growth in 2025. The primary drivers of our improved earnings outlook are better than planned second quarter performance, a $150 million increase in expected acquisition volume, and a $500 thousand decrease in expected net real estate expenses resulting from a faster than planned reduction in vacancy. We also raised the midpoint of our annual disposition guidance by $10 million and from a credit loss perspective, we are leaving our second half assumptions unchanged given the year to date outperformance versus plan, we now expect full year bad debt to be about 40 basis points, down from 60 basis points, as of last quarter. More details regarding line item guidance can be found on page 3 of our earnings release. While our guidance reflects our near term outlook, over the longer term, we continue to target sustainable mid single digit growth driven by disciplined capital allocation proactive portfolio management, and a largely self funded growth model supported by our conservatively managed balance sheet. With that, I will turn the call over to Holly for questions. Operator: Certainly. At this time, we will be conducting a Q&A session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. Before pressing the star keys. Once again, that is 1 to ask a question. 1 moment, while we poll for questions. Your first question for today is from Ronald Kamdem with Morgan Stanley. Ronald Kamdem: Great. Maybe we could start with the acquisitions Obviously, the guide raise in the quarter. If you could talk a little bit about just what kind of activity that you are seeing and did see sort of cap rates, I think down 20 basis points from the cap rates in the first quarter. So we would love to hear some of what you are seeing on the trend and the competition as well. in addition to the volumes. Thanks. Stephen A. Horn Jr.: Yes. I mean, just us lifting the acquisition volume from the original guide, you know, shows there is plenty of activity out there for us. We are seeing a lot of opportunities You know, the summertime things slow down a little bit, but going into the summer, and had a had a great second quarter because we were able to stack the pipeline, And then the remainder of the year, we have a good pipeline. there is a fair amount of activity. You know, hopefully, we can end up on the higher side. Of our guidance. But, you know, we do not want to count our chickens until they are hatched. But yeah. No. Robust pipeline, and there is a few portfolios out in the market currently. That could have a good, you know, second half of the year. As far as competition, it is the usual suspects. Know, the other public REITs. We are not running into much of the private money out there. That could change the second half of the year. But competition's always robust in the net lease sector. I am not seeing to go up or down the remainder of the year. That being said, knowing what is in my pipeline, that is why we are kind of speculating that there will be a little cap rate compression the second half of the year. Ronald Kamdem: Got it. that is helpful. And I think you hit my second question is just on the portfolio health and sort of asset management. Seems like the bad debt has been trending. You know, well below your, you know, expectations or even historical this year. So at this sort of juncture, what other sort of industries, what are you guys sort of watching out for And is it is it fair to say at 99 plus percent occupancy is the best shape the portfolio has been in? Thanks. Vincent H. Chao: I am going to let Steve handle that historical perspective he has more of it than I do. But from my perspective, yes, it is the best shape the portfolio has been in, you know, since I have been here. But as far as watch list tenants as I mentioned in my prepared remarks, we do not really have any material tenants that are on the watch list you know, from a near term perspective. You know, we do talk about some that, you know, have historically had some been on the watch list for a long time like AMC. Again, that is more of a movie theater thing and quite honestly the movie theater business has been doing quite well this year. Box office is up pretty strongly, and I think AMC just recently got a credit upgrade from S&P. And so you know, at least in the near term, things are fairly calm on that front. From a line of trade perspective. there is really, we have never really had you know, specific focus on line of trade, movie theater being maybe 1 exception. But overall, it is more idiosyncratic in terms of how we think about the watch list opposed to, you know, specific lines of training. Gets again, as I often say, there is winners and losers in every line of trade. Yeah. Stephen A. Horn Jr.: As far as the portfolio, how healthy-- historically, our portfolio is in great shape. Currently, given the size of the portfolio, know, we do deal with retailers. So retailers do come and go throughout the years. But that is why we focus really hard on the asset level financial performance, and real estate quality. But, yeah, I mean, overall, the portfolio today is as good as it is ever been. But, you know, no major retailers in our top are giving us any heartburn. But more importantly, the asset level financial performance seems to be pretty robust the last, you know, 18 months. Thanks so much. Operator: Your next question is from Jana Galan with Bank of America. Analyst: Thank you. Good morning, and congrats on the quarter. Can you walk us through how you are thinking about your marginal cost of capital as you accelerate acquisitions? And then following up on the higher dispositions, are those mostly vacant or opportunistically low cap rates, or what is targeted for disposition. Stephen A. Horn Jr.: I will let Vincent talk about the, you know, the weighted average cost of capital how we are looking at, then I will follow-up and talk about the dispositions. Vincent H. Chao: Yeah. Hey, Jana. How are you doing? Look. As far as the cost of capital, I mean, we have seen an improvement on our cost of equity, which was nice to see. And so we were active on the ATM during the quarter. And so I think we are in good shape from a liquidity perspective. From a cost of capital. You know, our debt cost of capital is, you know, 1, we always think about things on a long term basis. So, you know, thinking a 10 year debt, know, cost of equity, you know, we have a an absolute hurdle that we think about. Sort of in the 8%-plus range, is sort of a long term view. And then, you know, from an earnings accretion perspective, dilution perspective, you know, we look at the AFFO yield. And so if you take our typical 60/40, you know, we blend probably around 6.7% today. So that is a plus or minus. Stephen A. Horn Jr.: As far as the dispositions, yeah. The majority of the dispositions this past quarter were the vacant assets, 19 of them were vacant. However, the income producing ones was from active portfolio management discussing with the retailer that they were not, you know, stellar performers and that they retailer was probably gonna not renew the lease. That being said, the 5.6% cap rate that we sold that was a pretty tight bandwidth. But the portfolio is stronger, and it was primarily you know, restaurants were, you know, more than 50% of the income producing and the remainder was primarily convenience stores. Vincent H. Chao: Thank you. Operator: Your next question for today is from Brad Heffern with RBC Capital Markets. Brad Heffern: Hey, everybody. Thanks for the questions. Just following up on AMC. The yields on the debt have improved a lot. As you said, it was upgraded by S&P Do you see theaters trade at all right now? And might there be an opportunity to reduce exposure there just given, you know, it seems like the credit profile has improved? Stephen A. Horn Jr.: Yeah. We sold, if you recall, we sold 1 actually in the first quarter. So we are we are always looking to reduce our exposure. On the movie theaters that are performing that well. They have not rebounded completely to pre COVID numbers. We are not seeing them personally. You know, many of them on the market, But, yeah, we are always going through every industry, not just movie theaters. Looking at our exposure and the real estate risk associated with those certain tenants. But, yes, I am I am looking actively to reduce our movie theater exposure as we move forward. Brad Heffern: Okay. Got it. And then on the guidance, the FFO guidance, all the underlying assumptions look like they moved in a positive direction, you know, from acquisition volumes to know, taxes to everything. So what was the offset that kept the high end of the guidance from increasing along with the low end? Vincent H. Chao: Reality is, Brad, I mean, felt like given where we are in the year, we want to narrow the range. But we did feel a 1p increase at the midpoint was appropriate. And so that is just kind of how the numbers shook out. But, you know, there is no nothing really preventing the high end from going up per se. Know, specifically. Okay? Analyst: Thanks. Stephen A. Horn Jr.: Thanks. Operator: Your next question is from Smedes Rose with Citi. Smedes Rose: Hi. Thanks. You mentioned, M&A activity, that took place across the quarter. And I was just wondering know, when you have seen this in the past, is there any do you have any sort of concerns around potential closings just as maybe, you know, competing stores overlap? And just sort of on that, there were some headline news you know, earlier in the year around 11 looking to close some stores and leaning into a slightly different format. I am just wondering if you have heard anything relative to your portfolio on that front. Stephen A. Horn Jr.: No. In 2020 as far as 11, in 2025, we did a full, you know, a big renegotiation with 7-11. That renewed a lot of their leases basically, all of them at the end of the day. Yeah. 11 is moving into, quote, these larger format store. But our 7 Elevens, are very low cost basis. You know, we are we are kinda more of that $3 million to $4 million range. In the 7-Elevens. And, you know, now they are building, you know, $10 million. I do not wanna own a $10 million 7-11. I wanna maintain that $3 million to $5 million range. So I am not concerned about our 7-11 portfolio. As far as, you know, m and a, we have long term leases. with it, so they cannot just-- they can close them, but they have got to pay us rent, and then we will manage the portfolio as we move forward throughout the length of the lease. Vincent H. Chao: And 1 thing I will just add to that, Smedes, is that on the on the renegotiations that Steve just mentioned on 7-11, you know, these were you know, they could have just taken an option, a 5-year option, but we did renegotiate I think it was 15-year leases with them. So, I mean, they are they wanted to stay in where they are at in our portfolio. Very good. Smedes Rose: Okay. Thank you. Appreciate it. Operator: Your next question is from Michael Goldsmith with UBS. Michael Goldsmith: Good morning. Thanks for taking my question. Just on the dispositions, I know you touched on a little bit on some were vacant, some was active portfolio management. Can you talk a little bit about more specifically, what restaurants you were selling? And then also, are there more dispositions to be coming in the future quarters? Stephen A. Horn Jr.: Yes. Good question. As far as the dispositions, we listed our midpoint a little bit signaling that we are going to have more dispositions and, yeah, as I have said before, I got back in the first quarter call. I said 20 to 26 would be elevated. As far as the restaurants we disposed, off the top of my head, 1 Ruby Tuesday. So we disposed of, and a Bob Evans in particular. Were just lower performing assets and the management team contacted our portfolio manager and decided to work a deal out. And, you know, those things were, you know, in the high 5s. That sold. So it was a good deal for the tenant and good deal for us. Vincent H. Chao: Thanks, Vincent. Michael Goldsmith: And as a follow-up, it looks like you increased your exposure to early childhood education. that is a category some of the other triple net leads have played in. So can you give a little bit more color on those acquisitions? Maybe the opportunity set that you are seeing? And then any sort of you know, has there been any cap rate compression in that space specifically? Thanks. Stephen A. Horn Jr.: As far as we have for the last 15 years, we have seen our fair share of volume opportunities in the early childhood segment. And this year, we did a little bit more than we have historically. We have played in that space We are very knowledgeable. And but when we see the right opportunity as far as the initial cap rate and the real estate metrics and the right management team, then that is when we will lean in and do it. So as far as our risk adjusted return, we feel pretty good at the tenants that we are doing business with within that segment. Yeah. Vincent H. Chao: And just a little on this quarter, we did do you know, a small portfolio deal with a new relationship tenant very strong management team, low levered balance sheet, attractive fungible real estate, you know, in that, you know, 1- to 2-acre land size, you know, nice sized building. And know, high rent coverage to start. So you know, we feel very good about the with that. Michael Goldsmith: Thank you very much. Good luck in the back half. Thanks. Operator: Your next question for today is from Spenser Bowes Glimcher with Green Street. Spenser Glimcher: Thank you. Sorry if I missed this, but just going back to the acquisition pipeline, you mentioned a few portfolios out in the market. Just curious if these would be new tenants, you would land 1 or 2 of these payer deals? Stephen A. Horn Jr.: Yeah. The portfolios we are currently evaluating would be new tenants. For us if we ended up being awarded the deal. Spenser Glimcher: K. Great. And then just on the relationship driven deals, which of your tenant segments are looking to grow the most aggressively right now? Is it still largely in the auto space, or is there any update there? Stephen A. Horn Jr.: Yeah. it is primarily the auto space, convenience stores, We are seeing some opportunities. You know, where we are not seeing opportunities currently for NNN, is the limited service restaurants. We are not seeing much M&A or growth in that sector. And, of course, you know, movie theaters, we are not seeing any growth either. But, yeah, really, it is kind of auto service and convenience stores. So seem to be and then also, you know, the early childhood education seems to be where a lot of the opportunities lie currently. Spenser Glimcher: Okay. Great. Thanks. that is all for me. Operator: Your next question is from Rob Stevenson with Huntington. Rob Stevenson: Good morning. Vincent, back to the sort of guidance question, any other major levers other than transaction volume that pushes you to the bottom of the range versus the top of the range at this point of the year? Vincent H. Chao: I mean, the biggest drivers hey, Rob. How are doing? Welcome back. Yeah. Biggest drivers really are they are kinda always the same. I mean, bad debt is the big swing factor, and so things are pretty calm right now. But if that you know, ticked higher, you know, that could move us a little lower, although I think we have a pretty healthy cushion in our back half assumptions. Timing and volume of acquisitions is definitely a big driver. And then, I guess, to some degree, timing of our capital markets activities. We do have a $350 million debt maturity in the in the back you know, in December of this year. And so, you know, how we deal with that and timing of when we deal with that could influence the numbers a bit. Rob Stevenson: what is the best source of debt for you today, and where's pricing if you wanted to do something? Vincent H. Chao: To, to fix that. Yeah. Look, I think we look at all and we are evaluating a lot of different options, and we do have, you know, plenty of liquidity to deal with it on the line credit. We have the 272 million of forward equity that we could draw down on. But, you know, in all likelihood, we are thinking about you know, some kind of debt offering later in the year. 10 year debt today, you know, you know, it moves around way more rapidly than ever before, but I would say we are probably in mid 5 to 5.6% on a 10 year debt. And if we wanna do something shorter, you know, we could we could be know, inside of 5%. But, you know, just given what we have done in the last couple of bond offering and with the term loan, I am I am probably thinking more of a longer term issuance. Rob Stevenson: Okay. that is helpful. And then last 1 for me. Steve, you guys have sold 35 vacant assets year to date. You know, in terms of what is still vacant in the portfolio, is the majority of that likely to be sales going forward, or is there a significant retenanting operation that is happening and that will start to, you know, modestly impact earnings going forward, how should we be thinking about the remaining vacancy in the portfolio and how you guys are sort of addressing that in the near term? Stephen A. Horn Jr.: Yeah. Good question. Yeah. We for the most part have gone through what the vacant assets that we wanna sell. And right now, we are currently working on releasing the not the remainder, but the vast majority of should be releasing. And it varies this stage with you know, some might come online in the fourth quarter. Some might come online in the third quarter next year because it takes a while for the permitting and negotiations to get them released. But, yeah, we are the most part, I think our vacant asset sales will be limited moving forward. Rob Stevenson: Okay. Thanks, guys. Appreciate the time. Thanks. Operator: Your next question for today is from Wesley Golladay with Baird. Wes Golladay: Hey, good morning, everyone. I just want to go back to the comment about cap rate compression. Is that primarily due to mix or competition? Stephen A. Horn Jr.: Both, but what I what we are buying is what we have in our current portfolio, we do not go up and down the risk curve. So our composition is pretty much what we have in our current portfolio. But the cap rate compression, it is modest. But it was really kinda on some deals that to win them with our current tenants. You know, had to go a little bit lower than we have had the last first half of the year. Really the last 6 quarters. Our bandwidth is pretty tight, Wesley. When we do acquisitions throughout the quarter, we are not completely barbelling it, doing the high cap rate and the low cap rate. Or the high risk deal and the low risk deal and combine it. Ours are pretty narrowed. Wes Golladay: Okay. And then you did mention a few new tenants that you are looking at, and I know that is a big part of the, you know, the growth engine for the out years. Are you finding a lot more tennis this year relative to last year? Stephen A. Horn Jr.: I do not I do not know if it is a lot more, but exactly right. it is for the out years. You know, 1 of the mandates we give our acquisition team is, you know, go find a half a dozen new tenants going forward because, you know, case in point, the M&A activity that happened you know, big brands buying Bell Tire. Bell Tire, we did a fair amount of deals with over the years. You know, it is always that kind of that $15 million to $20 million range. Well, that is gonna dry up. So the new relationships for the out years have to backfill it. So that is a conscious effort that our guys and gals are always looking at. Wes Golladay: Alright. And just 1 last 1. I apologize for this. But when a company is acquired, is there any chance you can retain the relationship, or they just typically go find another source going forward?? Stephen A. Horn Jr.: No. We do everything we can to maintain that relationship. Usually, the target gives good words for NNN. That we have done business with. But a lot of times, the new acquirer, the consolidator has a cheaper form of capital than NNN is willing to provide them. So they do business elsewhere. Or they bring in their own relationships, and we do everything we can to break it. Alright. Thanks for the time. Vincent H. Chao: For the time. Operator: Your next question is from Omotayo Okusanya with Deutsche Bank. Omotayo Okusanya: Yes. Good morning, everyone. Congrats on the quarter and the solid outlook. I wanted to focus a little bit more on the disposition and the guidance raise, on that front. Obviously, you are getting great cap rates on this stuff, you know, well inside where you are acquiring assets. And you know, clearly a win for you. But I am still trying to understand how that pricing is coming about and why the buyer is kind of comfortable paying those prices, especially when you were talking about again, some of these assets being underperformers, some of them being nonstrategic. Just trying to understand how that is how that pipeline is existing against that kind of backdrop. Stephen A. Horn Jr.: Yep. No. it is a good question. I mean, we have 3.7 thousand assets, so we have a lot of great real estate. And when we are doing dispositions, it usually kinda falls in a couple different categories. Know, 1's our defensive sale where our relationships will kinda give us the wink, nod. They might not renew in the out years or they are changing markets. So they give us plenty of opportunity where there is lease term or we can maximize the proceeds for that asset. Secondly, there is sometimes there is individuals that like the real estate a lot more than we do or they have other opportunities that we do not know or cannot do. So they overpay for the asset. And then also in that is the 1.03 thousand buyer Will always overpay NNN for an asset as opposed to paying taxes to the government. So they do the 1.03 thousand exchange. So we are willing to part ways, and that is where we are getting a lot of our low cap rates. And then the other piece is within dispositions is the vacant assets, which obviously your recovery rate's a little bit lower But we have had a good recovery rate recently because of the inflation. And we have been in business for a long time. That the cost basis is fairly low in a lot of those assets. So we have had decent recovery rates that way. Omotayo Okusanya: that is helpful. And then for the increase in the acquisition guidance, could you kind of help us in regards to back half of 2026 and kind of what weighted average when, you know, you kind of think some of those deals could happen just help us for modeling purposes? Vincent H. Chao: Hey, Tayo. How are you doing? In terms of our guidance for the back half, I mean, we typically take a pretty conservative approach. So, you know, when we are dealing with the deals that we are in on the you know, our live deals, you know, we have decent visibility over the next 90 days. We can kinda plan those out. Beyond that, we tend to be a little bit more conservative on more speculative deal activity, so we push those out usually towards you know, tail end of the quarters. So but I would say there is nothing really, you know, overly skewing know, the average for the back half. I mean, I think, you know, mid quarter or mid half convention for the back half is fair. To start. Omotayo Okusanya: Great. Alright. We look forward to you guys raising the high end of guidance and getting the stock back to $50. Stephen A. Horn Jr.: that is 2. Operator: As a reminder, if you would like to ask a question, please press 1. Your next question is from John Massocca with B. Riley. John Massocca: Riley. Good morning. Kind of a blue sky 1. Even we are kind of in the back half of the call here. How are you kind of thinking about leverage given it is not just unique to NNN, but kind of in an environment where your cost of equity capital has become a little decoupled from your cost of debt capital. So, like, does that create an opportunity to maybe you know, lean more on that equity capital rather than going to the debt market, especially given you have kind of a successive series of maturities here over the next couple of years. Just kinda curious your philosophy on that, given maybe where we are and the interest rate cycle and is it kind of the decoupling of not just you, but kind of a lot of REIT equity valuations from interest rates? Vincent H. Chao: Yeah. I mean, I think that the way we think about it is we look at our overall leverage and we try to balance that. We are you know, shooting for something plus or minus 5.5x is where we are shooting for, and we are comfortable going a little bit higher than that for a temporary period of time. But generally speaking, we try to we try to manage right around 5.5. And so, you know, that is gonna kinda dictate the mix between equity and debt more so than the cost of equity and debt. But, you know, because we, you know, we can do things on a forward basis, you know, that gives us a really powerful tool to be able to issue equity, know, when the price is right, and, know, decide when to draw it down as we need to manage the overall leverage level. So you know, I do not know that we just sit here and say, you know, the cost of equity is much better. I mean, to some degree depending on how high the cost of equity or how much improves, we could use that to delever. But we are roughly 13.8x multiple You know, it is it is great, but we think it can be a lot better. John Massocca: Okay. And then splitting hairs a little bit, but any thoughts on kind of swapping out the remainder of the term loan you know, what would kinda drive you to do that? What kind of, you know, made it attractive to it floating for a period of time? I know we are talking a very small percentage of the overall debt stack, but maybe kind of also within that, what is your kind of view on a little bit more floating rate debt in the debt stack going forward? Vincent H. Chao: Yeah. I mean, we have a 100 million out of 500. So whatever we do on that last piece is not gonna really move the needle on the total, for the full 500. So I think our decision to leave the last $100 million floating was more driven by the fact that there is been so much volatility around, you know, rates just given a lot of the macro and geopolitical news that is been out there. And so we are just waiting for things to settle down a bit before we lock in that last piece. And I think the same goes for how we are thinking about a potential offering in the in the back half of the year on the debt side. You know, we are actively looking at, you know, hedging opportunities. And so, again, it is a little volatile right now, but as things settle down, we are looking for opportunities to lock rate. John Massocca: I appreciate that color. that is it for me. Thank you. Operator: We have reached the end of the Q&A session, and I will now turn call over to Steve for closing remarks. Stephen A. Horn Jr.: Hello, guys. Thanks for taking the time and joining the call. And it in a really good shape here. We are looking forward to closing out 26 strong. Solid pipeline, and I look forward to running into you guys in the halls of the conference season coming up. Thank you. Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. Before you buy stock in NNN REIT, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and NNN REIT wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $403,337!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,946!* Now, it’s worth noting Stock Advisor’s total average return is 958% — a market-crushing outperformance compared to 214% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 12, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends NNN REIT. The Motley Fool has a disclosure policy. NNN REIT (NNN) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in NNN REIT, Inc.? Here are five stocks we like better. NNN REIT raised its 2026 outlook for the second time this year, increasing AFFO-per-share guidance to $3.55–$3.59 and lifting the midpoint of acquisition guidance to $750 million. Lower-than-expected bad debt and stronger operating performance supported the upgrade. Second-quarter AFFO rose 5.9% year over year to $0.90 per share, while occupancy improved to 99.1%. NNN invested more than $290 million in 89 properties and maintained strong rent collections and portfolio performance. The company increased its quarterly dividend 3.3% to $0.62 per share, marking its 37th consecutive annual increase. NNN ended the quarter with $1.4 billion in liquidity and continued shifting dispositions toward vacant-property sales and re-leasing efforts. 3 'Boring' Dividend Stocks With Tasty Technical Setups NNN REIT (NYSE:NNN) raised its 2026 outlook after reporting second-quarter growth in adjusted funds from operations, higher occupancy and increased acquisition activity, while management said its portfolio remains in strong condition with limited near-term tenant credit concerns. The company reported second-quarter adjusted funds from operations, or AFFO, of $0.90 per share, up 5.9% from a year earlier. Core FFO was $0.89 per share, up 6.0% year over year. Chief Financial Officer Vin Chao said results exceeded the company’s internal projections, primarily because bad debt was lower than expected at roughly two basis points of quarterly annualized base rent. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Annualized base rent rose more than 7% from the prior year to $959 million, supported by acquisition volume. NNN’s net operating income margin was 96.6%, up 70 basis points from the first quarter as occupancy increased and net real estate expenses declined. Free cash flow after dividends was about $56 million during the quarter. NNN increased its 2026 AFFO-per-share guidance to a range of $3.55 to $3.59, representing its second guidance increase of the year. At the midpoint, the updated outlook implies approximately 3.8% year-over-year growth, compared with 2.7% growth in 2025, according to Chao. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High The company also raised the midpoint of its annual acquisition guidance to $750 million from $600 million. Chao said the stronger earnings outlook reflects better-than-expected second-quarter performance, an additional $150 million of expected acquisition volume and a $500,000 reduction in expected net real estate expenses due to faster-than-planned vacancy reductions. NNN lowered its full-year bad-debt expectation to about 40 basis points from 60 basis points previously, while keeping its second-half credit-loss assumptions unchanged. The company also increased the midpoint of its annual disposition guidance by $10 million to $140 million. → No Hangover: Revisiting Microsoft One Week After Earnings Chao said the updated guidance range was narrowed as the year progresses rather than expanded fully at the high end. He identified bad debt, the timing and volume of acquisitions, and the timing of capital-markets activity as key factors that could influence full-year results. During the second quarter, NNN invested just over $290 million in 89 properties at an initial cash capitalization rate of 7.3%. The acquisitions had an average lease duration of nearly 18 years and were concentrated in auto service, discount retail and early childhood education. The median purchase price was $2.1 million, while the average was $3.2 million. For the first half of 2026, the company invested $430 million in 130 properties at an initial cash cap rate of 7.4% and an average lease duration of more than 18 years. Chief Executive Officer Steve Horn said cap rates have remained relatively stable over the past six quarters, although the company expects modest compression in the second half due to the makeup of its active pipeline and portfolios currently on the market. Horn said most expected acquisitions are anticipated to come through direct, originated sale-leaseback transactions with relationship tenants. He described the company’s pipeline as robust, though he said NNN does not intend to assume potential transactions will close before they are completed. The portfolio contained 3,774 freestanding, single-tenant properties at quarter-end. Occupancy increased 50 basis points from the first quarter to 99.1%, up 110 basis points from a year earlier. Rent collections were also strong, with less than five basis points of uncollected rent, Horn said. Management said it sees particular acquisition opportunities in auto service, convenience stores and early childhood education, while limited-service restaurants and movie theaters have provided fewer growth opportunities. NNN completed a small early childhood education portfolio acquisition during the quarter involving a new relationship tenant that Chao described as having a strong management team, low leverage, attractive real estate and high initial rent coverage. Horn said tenant mergers and acquisitions could affect future deal activity with individual tenants. He cited Mavis Tire’s announced agreement to acquire Pep Boys and Big Brand Tire’s agreement to acquire Belle Tire, which would create a network of more than 530 stores with over $1.5 billion in annual revenue. While acquired companies may no longer require NNN’s capital after a transaction, the company continues to seek new tenant relationships to support future growth, he said. NNN sold 26 properties during the second quarter for approximately $37 million in proceeds, including 19 vacant assets. Income-producing properties sold during the quarter were primarily non-core assets and were disposed of at cap rates roughly 170 basis points below the company’s acquisition cap rate, according to Horn. Management said the income-producing dispositions included lower-performing Ruby Tuesday and Bob Evans locations. Horn said sales can involve defensive portfolio management where tenants indicate they may not renew, as well as sales to buyers that place greater value on specific properties, including 1031 exchange buyers. Through the first half, the company sold 35 vacant properties. Horn said NNN has largely completed the sale of vacant properties it wanted to dispose of and expects the majority of remaining vacant assets to be re-leased. Some re-leasing activity may begin contributing in the fourth quarter, while other properties could take until the third quarter of 2027 because of permitting and lease negotiations, he said. NNN also said it remains focused on reducing movie theater exposure where properties have not fully recovered to pre-pandemic performance. Chao noted that the movie theater business has performed well this year, with stronger box-office activity and a recent S&P credit upgrade for AMC. NNN ended the quarter with $1.4 billion of available liquidity, no encumbered assets and 2.5% of debt tied to floating rates. Net debt to EBITDA was 5.7 times, unchanged from the prior quarter, while pro forma net debt to EBITDA including unsettled forward equity was 5.4 times. During the quarter, the company increased its term loan by $200 million to $500 million. It swapped $400 million of that loan to a 4.1% all-in fixed rate and lowered spreads on its term loan and revolving credit facility by five basis points. NNN also sold roughly 6 million common shares on a forward basis at just under $46 per share and had approximately $272 million of unsettled forward equity as of June 30. The company declared a quarterly dividend of $0.62 per share, a 3.3% increase that marked its 37th consecutive annual dividend increase. Chao said the dividend equates to a 5.3% annualized yield and a 69% AFFO payout ratio. NNN REIT (NYSE: NNN), formally known as National Retail Properties, is a publicly traded real estate investment trust focused on acquiring, owning and managing a diversified portfolio of retail properties across the United States. As a net-lease REIT, the company enters into long-term, triple-net leases with national and regional tenants, shifting most property-related expenses, including maintenance, taxes and insurance, to its lessees. This structure provides NNN REIT with predictable cash flows and a stable income stream rooted in essential retail uses such as convenience stores, dollar stores, drug stores and quick-service restaurants. Founded in 1984 and headquartered in Orlando, Florida, NNN REIT has steadily grown its footprint through disciplined acquisitions and selective lease underwriting. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "NNN REIT Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

ORLANDO, Fla., Aug. 5, 2026 /PRNewswire/ -- NNN REIT, Inc. (NYSE: NNN) (the "Company" or "NNN"), a real estate investment trust, today announced financial and operating results for the quarter and six months ended June 30, 2026. Highlights include: Second Quarter 2026 Highlights: Reported net earnings of $0.52 per diluted share Grew Core FFO and AFFO per diluted share by 6.0% and 5.9%, respectively, over prior-year results to $0.89 and $0.90, respectively Increased ABR by 7.3% over prior-year results to $959.1 million Increased portfolio occupancy to 99.1%, an increase of 50 and 110 basis points over the prior quarter and prior year periods, respectively, with a portfolio weighted average remaining lease term of 10.1 years Closed on $291.0 million of investments at an initial cash cap rate of 7.3%, with a weighted average lease term of 17.9 years and $436.4 million of investments at an initial cash cap rate of 7.4% in the six months ended June 30, 2026 Sold 26 properties for $36.7 million, including $9.0 million of income producing properties at a weighted average cap rate of 5.6% Entered into forward sale agreements for 5,999,528 common shares under the Company's at-the-market equity program ("ATM") at a weighted average price per share of $45.91 Issued 1,681,785 common shares, primarily under the ATM, raising net proceeds of $74.0 million Exercised the $200 million incremental term loan option under NNN's senior unsecured term loan facility, increasing the aggregate facility size to $500 million (the "Term Loan") Maintained balance sheet flexibility with a sector-leading weighted average debt maturity of 10.1 years, no encumbered assets, only 2.5% of floating rate exposure and $1.4 billion of total available liquidity Paid a $0.60 quarterly dividend, representing a 5.2% annualized dividend yield and a 67% AFFO payout ratio as of June 30, 2026 Additional Highlights: Announced a 3.3% increase in the quarterly dividend for the third quarter 2026 to $0.62 per share, marking the Company's 37th consecutive annual dividend increase Increased 2026 Core FFO per share guidance to a new range of $3.50 - $3.54 Increased 2026 AFFO per share guidance to a new range of $3.55 - $3.59 Raised 2026 acquisition volume guidance to a new range of $700 - $800 million Published the Company's fourth annual Corporate Sustainability Report Steve Horn, Chief Executive Officer, commented: "NNN delivered a strong first half of the year, driven by resilient portfolio performance, disciplined execution across the organization, and a robust real estate investment pipeline built on longstanding, proven relationships. Given this momentum, we are raising our acquisition volume outlook and 2026 AFFO guidance." FINANCIAL RESULTS PORTFOLIO SNAPSHOT PROPERTY ACQUISITIONS PROPERTY DISPOSITIONS CAPITAL MARKETS ACTIVITY During the quarter ended June 30, 2026, NNN exercised the incremental term loan option and drew down the remaining $200 million on the Term Loan for a total outstanding balance of $500 million. Additionally, the Company amended the pricing grids on the Term Loan and its existing senior unsecured revolving credit facility, (the "Revolving Credit Facility"). Based on NNN's current credit ratings, the applicable SOFR-based margin was lowered to 0.800% from 0.850% for all outstanding Term Loan borrowings and 0.725% from 0.775% for all Revolving Credit Facility borrowings. The Company previously entered into forward starting swaps with a total notional value of $400 million that fix the Secured Overnight Financing Rate ("SOFR") at 3.30%. During the quarter ended June 30, 2026, NNN entered into forward sale agreements for 5,999,528 common shares under the Company's ATM at a weighted average price per share of $45.91. During the quarter ended June 30, 2026, NNN issued 1,681,785 common shares, primarily in settlement of forward sale agreements under the Company's ATM, raising $74.0 million in net proceeds. As of June 30, 2026, NNN had 5,999,528 shares of common stock subject to outstanding forward sale agreements, which upon settlement, are anticipated to raise net proceeds of approximately $272.1 million. Net proceeds include the impact of forward price adjustments through June 30, 2026. BALANCE SHEET AND LIQUIDITY As of June 30, 2026, Gross Debt was $5.1 billion with a weighted average interest rate of 4.2% and a weighted average debt maturity of 10.1 years. The Company ended the quarter with $1.4 billion of total available liquidity, including $1.2 billion of unused line of credit capacity, $272.1 million of outstanding forward equity, and $4.2 million of cash. Net Debt to annualized EBITDAre and fixed charge coverage was 5.7x and 4.1x, respectively, as of June 30, 2026. Including the impact of unsettled forward equity, Pro Forma Net Debt to annualized EBITDAre was 5.4x as of June 30, 2026. DIVIDEND As previously announced on July 15, 2026, the Company's Board of Directors declared a quarterly dividend of $0.62 per share payable on August 14, 2026, to shareholders of record as of July 31, 2026. The new quarterly dividend represents an annualized dividend of $2.48 per share and an annualized dividend yield of 5.3% as of June 30, 2026. The 3.3% increase in the quarterly dividend marks the 37th consecutive annual dividend increase. NNN is one of only three publicly traded real estate investment trusts to have increased its annual dividend for 37 or more consecutive years. 2026 GUIDANCE Guidance is based on current plans and assumptions and is subject to risks and uncertainties more fully described in this press release and the Company's reports filed with the Securities and Exchange Commission (the "Commission"). CONFERENCE CALL INFORMATION The Company will host a conference call on August 5, 2026 at 10:30 a.m. ET to discuss second quarter results. A live webcast of the conference call will be available on the Company's website at www.nnnreit.com or by using the following link. The conference call can also be accessed by dialing 888-506-0062 in the United States ("U.S.") or 973-528-0011 for international callers and entering the participant code 623622 or referencing NNN REIT, Inc. A telephonic replay of the call will be available through Wednesday, August 19, 2026, by dialing 877-481-4010 in the U.S. or 919-882-2331 internationally and entering the code 54164. ABOUT NNN REIT, INC. NNN is a REIT that invests in high-quality properties subject generally to long-term, net leases with minimal ongoing capital expenditures. As of June 30, 2026, the Company owned 3,774 properties across 50 states, the District of Columbia and Puerto Rico, encompassing approximately 40.4 million square feet of gross leasable area, with a weighted average remaining lease term of 10.1 years. For more information on the Company, visit www.nnnreit.com. FORWARD-LOOKING STATEMENTS Statements in this press release that are not strictly historical are "forward-looking" statements. These statements generally are characterized by the use of terms such as "believe," "expect," "intend," "may," "estimated" or other similar words or expressions. Forward-looking statements involve known and unknown risks, which may cause the Company's actual future results to differ materially from expected results. These risks include, among others, general economic conditions, including inflation, local real estate conditions, changes in interest rates, increases in operating costs, the preferences and financial condition of the Company's tenants, the availability of capital, risks related to the Company's status as a real estate investment trust ("REIT"), and the potential impacts of an epidemic or pandemic on the Company's business operations, financial results and financial position on the global economy. Additional information concerning these and other factors that could cause actual results to differ materially from these forward-looking statements is contained from time to time in the Company's Commission filings, including, but not limited to, the Company's (i) Annual Report on Form 10-K for the year ended December 31, 2025 and (ii) Quarterly Report on Form 10-Q for the quarters ended March 31, 2026 and June 30, 2026. Copies of each filing may be obtained from the Company or the Commission. Such forward-looking statements should be regarded solely as reflections of the Company's current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this press release. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made. DEFINITIONS Annualized Base Rent ("ABR") is a non-U.S. generally accepted accounting principles ("GAAP") metric which represents the monthly cash base rent for all leases in place as of the end of the period multiplied by 12. Accordingly, this methodology produces an annualized amount as of a point in time but does not take into consideration future (i) scheduled rent increases, (ii) leasing activity, or (iii) lease expirations. Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate ("EBITDAre") as defined by the National Association of Real Estate Investment Trusts ("Nareit") is a metric established by Nareit and commonly used by real estate companies. The measure is a result of net earnings (computed in accordance with GAAP), plus interest expense, income tax expense, depreciation and amortization, excluding any gains (or including any losses) on disposition of real estate, any impairment charges, net of recoveries and after adjustments for income and losses attributable to noncontrolling interests. Management considers the non-GAAP measure of EBITDAre to be an appropriate measure of the Company's performance and should be considered in addition to, net earnings or loss, as a measure of the Company's operating performance. Funds From Operations ("FFO") is a relative non-GAAP financial measure of operating performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. FFO is defined by the Nareit and is used by the Company as follows: net earnings (computed in accordance with GAAP) plus depreciation and amortization of assets unique to the real estate industry, excluding gains (or including losses), any applicable taxes on the disposition of certain assets and any impairment charges on a depreciable real estate asset, net of recoveries. FFO is generally considered by industry analysts to be the most appropriate measure of performance of real estate companies. FFO does not necessarily represent cash provided by operating activities in accordance with GAAP and should not be considered an alternative to net earnings as an indication of the Company's performance or to cash flow as a measure of liquidity or ability to make distributions. Management considers FFO an appropriate measure of performance of an equity REIT because it primarily excludes the assumption that the value of the real estate assets diminishes predictably over time, and because industry analysts have accepted it as a performance measure. Core Funds From Operations ("Core FFO") is a non-GAAP measure of operating performance that adjusts FFO to eliminate the impact of certain GAAP income and expense amounts that the Company believes are infrequent and unusual in nature and/or not related to its core real estate operations. Exclusion of these items from similar FFO-type metrics is common within the REIT industry, and management believes that presentation of Core FFO provides investors with a potential metric to assist in their evaluation of the Company's operating performance across multiple periods and in comparison to the operating performance of its peers because it removes the effect of unusual items that are not expected to impact the Company's operating performance on an ongoing basis. Core FFO is used by management in evaluating the performance of the Company's core business operations and is a factor in determining management compensation. Items included in calculating FFO that may be excluded in calculating Core FFO may include items such as transaction related gains, income or expense, impairments on land, retirement and severance costs or other non-core amounts as they occur. Adjusted Funds From Operations ("AFFO") is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO adjusts FFO for certain non-cash items that reduce or increase net earnings in accordance with GAAP. AFFO should not be considered an alternative to net earnings, as an indication of the Company's performance or to cash flow as a measure of liquidity or ability to make distributions. Management considers AFFO a useful supplemental measure of the Company's performance. Total Cash is comprised of cash and cash equivalents and restricted cash and cash held in escrow per GAAP as reported on the balance sheet summary. Gross Assets represents total assets (reported in accordance with GAAP) adjusted to exclude accumulated amortization and depreciation and amortization of direct financing leases. The result provides an estimate of the investments made by the Company. Total Debt is defined by the Company as total debt per GAAP as reported on the balance sheet summary including the line of credit payable, and term loan payable and notes payable, each net of unamortized discount and unamortized debt costs, as applicable. Gross Debt is defined by the Company as Total Debt adjusted to exclude unamortized debt discounts and premiums and unamortized debt costs. Net Debt is defined by the Company as Gross Debt less Total Cash. Pro Forma Net Debt is defined by the Company as Net Debt less anticipated net proceeds from unsettled forward equity. Management considers the non-GAAP measures of Gross Debt, Net Debt and Pro Forma Net Debt each to be a key supplemental measure of the Company's overall liquidity, capital structure and leverage. The Company's computation of FFO, Core FFO, AFFO, EBITDAre, Total Cash, Gross Assets, Gross Debt and Net Debt may differ from the methodology for calculating these non-GAAP financial measures used by other REITs, and therefore, may not be comparable to such other REITs. Reconciliations of net earnings, Total Debt and total assets (all computed in accordance with GAAP) to FFO, Core FFO, AFFO, EBITDAre, Gross Assets, Gross Debt and Net Debt (each of which is a non-GAAP financial measure), as applicable, are included in the financial information accompanying this release. 28,16324,225Real estate8,2668,83818,06518,213Depreciation and amortization71,02568,349141,822132,966Leasing transaction costs21274356204Impairment losses – real estate, net of recoveries8,0674,53518,7476,047Retirement and severance costs3681918022,364101,99593,204207,955184,019Gain on disposition of real estate9,10516,19821,29020,011Earnings from operations151,376149,796298,025293,648Other expenses (revenues):Interest and other income(35)(15)(63)(344)Interest expense53,48749,282106,21397,00553,45249,267106,15096,661Net earnings$97,924$100,529$191,875$196,987Weighted average shares outstanding:Basic189,078,464186,876,693189,055,792186,865,955Diluted189,620,010187,070,288189,635,670187,088,160Net earnings per share:Basic$0.52$0.54$1.01$1.05Diluted$0.52$0.54$1.01$1.05 Credit Facility, Term Loan and Notes Covenants The following is a summary of key financial covenants for the Company's unsecured credit facility, term loan and notes, as defined and calculated per the terms of the agreements and indentures governing such debt, which are included in the Company's filings with the Commission. These calculations, which are not based on U.S. GAAP measurements, are presented to investors to show that as of June 30, 2026, the Company believes it is in compliance with the covenants. View original content to download multimedia:https://www.prnewswire.com/news-releases/nnn-reit-inc-announces-second-quarter-2026-results-302842820.html

This article first appeared on GuruFocus. AFFO per Share: $0.90 for Q2 2026, up 5.9% year over year. Core FFO per Share: $0.89 for Q2 2026, up 6.0% year over year. 2026 AFFO Guidance: Raised to $3.55-$3.59 per share, implying ~3.8% year-over-year growth at the midpoint. NOI Margin: 96.6% in Q2, up 70 basis points from the prior quarter. Annualized Base Rent: $959 million, up over 7% year over year. Occupancy: 99.1%, up 50 basis points from Q1 and 110 basis points year over year. Acquisitions: $290 million invested in 89 new properties in Q2 at a 7.3% initial cash cap rate; $430 million in 130 properties for the first half of 2026 at a 7.4% cap rate. Dispositions: Sold 26 properties in Q2, generating approximately $37 million in proceeds. Free Cash Flow After Dividend: Approximately $56 million in Q2. Bad Debt: Approximately 2 basis points of quarterly ABR in Q2; full-year expectation lowered to ~40 basis points from 60 basis points. G&A as % of Revenue: 5.8% in Q2; cash G&A margin was 4.4%. Dividend: Quarterly dividend increased 3.3% to $0.62, marking the 37th consecutive annual increase; equates to a 5.3% annualized yield and 69% AFFO payout ratio. Net Debt to EBITDA: 5.7 times, unchanged from last quarter; pro forma 5.4 times including unsettled forward equity. Liquidity: $1.4 billion available at quarter end. Warning! GuruFocus has detected 8 Warning Signs with NNN. Is NNN fairly valued? Test your thesis with our free DCF calculator. Release Date: August 05, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. NNN REIT Inc (NYSE:NNN) reported strong second-quarter results with AFFO per share of $0.90, up 5.9% year-over-year, and raised its full-year 2026 AFFO guidance for the second time this year. Portfolio occupancy increased to 99.1%, up 110 basis points year-over-year, reflecting the strongest portfolio health in the company's history. The company announced its 37th consecutive year of annual dividend increases, a track record achieved by only three REITs, with a healthy 69% AFFO payout ratio. Acquisition volume is robust, with $290 million invested in the quarter at a 7.3% cap rate and an average lease duration of nearly 18 years, leading to an increased full-year acquisition guidance midpoint to $750 million. The balance sheet remains a key strength, with a sector-leading weighted average debt maturity of 10.1 years, $1.4 billion in liquidity, and pro forma net debt to EBITDA of 5.4 times. Credit quality is excellent, with bad debt totaling only about 2 basis points of quarterly ABR, leading to a reduction in full-year bad debt expectations to 40 basis points from 60 basis points. The company anticipates modest cap rate compression in the second half of 2026 due to a competitive investment environment, which could pressure acquisition yields. M&A activity among tenants, such as Mavis Tire acquiring Pep Boys and Big Brand Tire acquiring Belle Tire, could lead to reduced future acquisition opportunities from these specific relationships. The company is actively seeking to reduce its exposure to movie theater tenants like AMC, indicating ongoing credit concerns in that specific sector. Limited service restaurants and movie theaters are not seeing growth or M&A activity, limiting investment opportunities in these segments. The company faces a $350 million debt maturity in December 2026, and while it has options, the timing of refinancing could influence earnings, especially given volatile interest rates. While the company is selling assets at attractive cap rates, the majority of dispositions in the quarter were vacant assets, and future vacant asset sales are expected to be limited, potentially reducing a source of capital recycling. Q: Can you walk us through how you're thinking about your marginal cost of capital as you accelerate acquisitions? Following up on the higher dispositions, are those mostly vacant or opportunistically low cap rates, or what is targeted for disposition? A: CEO Stephen Horn and CFO Vincent Chao addressed capital costs and dispositions. Chao noted an improvement in the cost of equity, which allowed for active ATM usage, and stated the company's long-term absolute hurdle rate is in the 8% plus range, with a blended 60/40 debt/equity cost around 6-7%. Horn clarified that the majority of dispositions were vacant assets (19 of 26), while income-producing sales were from proactive portfolio management of underperforming assets, sold at a 5.6% cap rate, roughly 170 basis points below acquisition cap rates. Q: What kind of activity are you seeing on the acquisition front, and what are the trends on cap rates and competition? A: CEO Stephen Horn reported a robust pipeline, leading to an increase in acquisition guidance to $750 million. He noted that cap rates have been stable over the past six quarters but expects modest compression in the second half of the year due to the composition of the pipeline and portfolios currently in the market. Competition remains consistent, primarily from other public REITs, with less private capital competition. Q: On the guidance, all the underlying assumptions look like they moved in a positive direction. What was the offset that kept the high end of the guidance from increasing along with the low end? A: CFO Vincent Chao explained that the decision to narrow the range and raise the midpoint by $0.01 was based on the company's position in the year. He stated there was no specific factor preventing the high end from rising, but the adjustment reflected a conservative approach to guidance management. Q: You mentioned M&A activity across the quarter. Do you have any concerns around potential closings or store overlaps? Also, any updates on 7-Eleven's store closures? A: CEO Stephen Horn expressed no concerns regarding the 7-Eleven portfolio, noting a major renegotiation in 2025 that extended leases to 15-year terms. He highlighted that NNN's 7-Eleven properties have a low cost basis ($3-4 million range), which aligns with the company's strategy. Regarding M&A, Horn stated that long-term leases protect NNN, and the company will manage the portfolio through any tenant changes. Q: Can you talk more specifically about the dispositions, including what restaurants were sold and whether more are coming? A: CEO Stephen Horn confirmed that disposition guidance was raised, signaling more activity. He identified a Ruby Tuesday and a Bob Evans as examples of underperforming restaurant assets sold at high-5% cap rates, which were mutually beneficial deals for both the tenant and NNN. The company expects to remain more active on dispositions throughout 2026. Q: You increased exposure to early childhood education. Can you provide more color on those acquisitions and any cap rate compression in that space? A: CEO Stephen Horn noted that NNN has played in the early childhood segment for 15 years and leaned in more this year when the right opportunities arose. CFO Vincent Chao added that the company completed a small portfolio deal with a new relationship tenant featuring a strong management team, low leverage, and attractive real estate metrics. The company feels good about the risk-adjusted returns in this segment. Q: You mentioned a few portfolios in the market. Would these be new tenants if you landed the deals? A: CEO Stephen Horn confirmed that the portfolios currently being evaluated would represent new tenant relationships for NNN. CFO Vincent Chao added that the most aggressive growth is occurring in the auto service and convenience store segments, while limited service restaurants and movie theaters are not seeing significant growth opportunities. Q: What are the major levers that could push you to the bottom versus the top of the guidance range? A: CFO Vincent Chao identified bad debt as a significant swing factor, though current conditions are calm with a healthy cushion in back-half assumptions. Timing and volume of acquisitions are also key drivers, along with the timing of capital markets activities, including a $350 million debt maturity in December 2026. Chao noted that a 10-year debt offering would likely price in the mid-5% range. Q: Regarding the remaining vacancy in the portfolio, is the majority likely to be sold or re-tenanted? A: CEO Stephen Horn stated that the company has largely completed selling the vacant assets it intended to dispose of. The vast majority of remaining vacancies will be addressed through re-leasing efforts, with some assets coming online in the fourth quarter and others extending into the third quarter of next year due to permitting and negotiation timelines. Q: Is the cap rate compression you mentioned primarily due to mix or competition? A: CEO Stephen Horn attributed the modest cap rate compression to both factors. He explained that to win deals with existing tenants, NNN had to go slightly lower on cap rates than in the first half of the year. The company maintains a tight bandwidth on acquisitions, avoiding a barbell approach of high-risk and low-risk deals. Q: How are you thinking about leverage given the decoupling of equity and debt capital costs? A: CFO Vincent Chao stated that the company targets leverage around 5.5x net debt to EBITDA and manages the mix between equity and debt based on this target rather than solely on relative costs. The use of forward equity provides flexibility to issue when pricing is favorable and draw down as needed. Chao noted the current 13.8x AFFO multiple has improved and has room to grow. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was driven by high occupancy of 99.1% and strong rent collections with under 5 basis points of uncollected rent. Management attributed the acquisition success to deep tenant relationships, focusing on direct sale-leaseback transactions to negotiate favorable economics over broadly marketed assets. The portfolio benefited from significant tenant M&A activity, specifically in the automotive service sector, which management believes strengthens the credit profile of the tenant base. Operational outperformance was supported by lower-than-expected bad debt, totaling approximately 2 basis points of quarterly ABR. Strategic positioning remains focused on durable, freestanding single-tenant properties with an emphasis on auto service, discount retail, and early childhood education. Management highlighted a disciplined capital recycling strategy, selling noncore assets at cap rates 170 basis points below acquisition rates to optimize portfolio quality. Updated 2026 AFFO guidance to $3.55 to $3.59 per share assumes accelerated year-over-year growth of 3.8% at the midpoint. Management increased the 2026 acquisition guidance midpoint to $750 million, citing a robust pipeline and potential for modest cap rate compression in the second half of the year. Full-year bad debt expectations were lowered to 40 basis points from 60 basis points due to year-to-date outperformance versus the original plan. The company plans to address a $350 million debt maturity in December 2026, likely through a long-term debt offering or utilizing $272 million in unsettled forward equity. Strategic focus for the remainder of the year includes identifying approximately half a dozen new relationship tenants to backfill volume from consolidated existing tenants. Management is actively seeking to reduce exposure to the movie theater industry, specifically targeting assets that have not rebounded to pre-COVID performance levels. The company maintains a sector-leading weighted average debt maturity of 10.1 years, providing a significant buffer against near-term interest rate volatility. A shift in 7-Eleven's strategy toward larger formats was addressed; management noted their portfolio consists of lower-cost, smaller-format stores with recently renegotiated 15-year leases. The exercise of a $200 million term loan accordion brought the total facility to $500 million, with $400 million swapped to a fixed rate of 4.1%. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects modest cap rate compression driven by the specific composition of their active pipeline and the need to win deals with top-tier relationship tenants. Competition remains primarily among other public REITs, with private capital currently less active in their specific target segments. The company has largely completed its planned sales of vacant assets and is now shifting focus toward re-leasing the vast majority of remaining vacancies. Management noted that re-leasing timelines are extended due to permitting and negotiation requirements, with some assets expected to come online in late 2026 or 2027. While tenant consolidations (like Belle Tire and Big Brand Tire) can dry up specific relationship pipelines, they often result in stronger credit for the existing portfolio. To counter potential volume loss from consolidated tenants, the acquisition team is mandated to find approximately six new relationship tenants annually. NNN targets a net debt-to-EBITDA ratio of approximately 5.5x and uses forward equity as a tool to manage leverage when equity prices are favorable. Management indicated they are not currently looking to significantly deleverage despite improved equity costs, preferring to maintain their balanced 5.5x target.

Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide. NNN REIT (NYSE:NNN) reported strong first quarter 2026 results. The company raised its full year 2026 AFFO guidance. NNN REIT extended its annual dividend growth record to 36 consecutive years. Management highlighted active acquisition activity and ongoing asset management work. NNN REIT, a net lease real estate investment trust focused on single tenant retail properties, presents itself as an income focused option for shareholders. The latest update combines solid first quarter 2026 performance with higher full year AFFO guidance, which reflects management’s confidence in the underlying portfolio. For investors who watch dividend consistency closely, the 36 year streak of annual dividend increases is a notable characteristic. These developments come at a time when many income investors pay close attention to balance sheet discipline, occupancy and lease visibility. The combination of raised guidance, continued acquisition activity and active asset management provides readers with updated information to consider alongside yield, tenant quality and personal risk tolerance when assessing NYSE:NNN. Stay updated on the most important news stories for NNN REIT by adding it to your watchlist or portfolio. Alternatively, explore our Community to discover new perspectives on NNN REIT. Is NNN REIT's dividend sustainable? Check out what every dividend investor needs to know in our dividend analysis. For income focused investors, the latest quarter gives more detail on how NNN REIT’s dividend is being supported. The board declared a US$0.60 quarterly dividend, which the company reports equates to a 5.7% annualized yield. That payment sits against raised 2026 AFFO per share guidance of US$3.53 to US$3.59 and Core FFO guidance of US$3.48 to US$3.54. This indicates room between cash flow generation and the current dividend run rate. Revenue of US$240.01 million in Q1 2026 was higher than the US$230.57 million reported a year earlier, while occupancy of 98.6% and a weighted average remaining lease term of 10.1 years give visibility on future rent streams that can help underpin ongoing payouts. The higher AFFO guidance, strong occupancy and 36 year dividend growth streak support the narrative of resilient cash flows from necessity based, e commerce resistant tenants that can fund regular distributions. Ongoing acquisition and disposition activity, along with comments about higher operating costs in the narrative, could pressure margins if competition for assets or tenant stress increases, which would challenge assumptions of steadily growing income. The Q1 details around a 7.5% initial cash yield on new investments and very long lease terms add color on deal economics that are not fully spelled out in the narrative but are important for assessing dividend coverage over time. Knowing what a company is worth starts with understanding its story. Check out one of the top narratives in the Simply Wall St Community for NNN REIT to help decide what it's worth to you. ⚠️ Analysts have flagged that interest payments are not well covered by earnings, which can limit flexibility if financing costs increase or rental growth slows. ⚠️ There has been significant insider selling over the past 3 months, which some investors may view as a signal to look more closely at executive incentives and capital allocation. 🎁 NNN REIT pays a high and historically reliable dividend, currently described as a 5.46% yield, which is supported by high occupancy and long lease terms across a diversified retail portfolio. 🎁 Earnings are forecast in the narrative to grow 5.29% per year, which, if achieved, would help support continued dividend growth on top of the existing 36 year track record. After this update, it is worth watching how dividend coverage trends relative to AFFO and Core FFO, especially as NNN REIT continues to recycle capital through US$145.4 million of acquisitions and US$35.8 million of asset sales in the quarter. Keep an eye on occupancy staying near 98.6%, the initial cash yields and lease lengths on new deals, and any changes to guidance that might signal pressure on cash flows used to fund the dividend. Comparing NNN REIT’s income profile with other net lease peers such as Realty Income, W. P. Carey or Agree Realty can also help put the yield and payout sustainability in context. To ensure you're always in the loop on how the latest news impacts the investment narrative for NNN REIT, head to the community page for NNN REIT to never miss an update on the top community narratives. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include NNN. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Raised 2026 guidance: Management increased AFFO guidance to $3.53–$3.59 per share after a strong Q1, with the midpoint implying roughly 3.5% year‑over‑year growth. Portfolio momentum: Closed 41 properties for $145 million (initial cash yield 7.5%, WALT 19 years), occupancy rose to 98.6% with most lease renewals and new leases at higher rents, and sold 25 properties for $36 million. Strong balance sheet and dividend: $1.2 billion liquidity, drew a $300 million term loan swapped to a 4.1% fixed rate, pro forma net debt/EBITDA ~5.6x and debt duration 10.5 years, while declaring a quarterly dividend of $0.60 (3.4% YoY increase; 66.9% AFFO payout). Interested in NNN REIT, Inc.? Here are five stocks we like better. NNN REIT (NYSE:NNN) reported first-quarter 2026 results that management described as a “strong quarter,” supported by steady portfolio operations, continued acquisition activity, and balance sheet flexibility. President and CEO Stephen Horn Jr. said the company’s “disciplined, efficient, and self-funded growth strategy continues to deliver results,” and the company raised its full-year 2026 adjusted funds from operations (AFFO) guidance following the quarter. Horn said NNN closed 15 transactions comprising 41 properties for a total investment of $145 million, with an initial cash yield of 7.5% and a weighted-average lease term of 19 years. He emphasized the company’s focus on sale-leaseback transactions that can provide “accretive risk-adjusted returns, long duration, predictable cash flows.” → Meta Posted Its Best Sales Growth Since 2021—So Why Did Shares Fall? On the operating side, Horn said the portfolio—approximately 3,700 freestanding single-tenant properties across all 50 states—continued to perform well. During the quarter, the REIT renewed 36 of 43 lease expirations, consistent with its historical renewal rate of about 85%, at rental rates 2% above prior levels. The company also leased seven properties to new tenants at rent rates about 10% above previous levels. Occupancy increased sequentially by 30 basis points to 98.6%, which Horn said is now above the company’s long-term average. He attributed the improvement to leasing and disposition efforts, including repositioning vacant assets and, in some cases, securing “high-quality investment-grade tenants.” Horn said 53 assets remained vacant, with “active solutions underway,” and he expects occupancy to continue trending upward in the near term. → Verizon’s Signal Strength: The Turnaround Call Is Loud and Clear NNN also sold 25 properties during the quarter, including 16 vacant assets, generating $36 million in proceeds. Horn said occupied dispositions were “primarily non-core” and were executed at cap rates about 30 basis points below the acquisition cap rate. Management reiterated that it expects to take a more proactive approach to asset sales in 2026 to optimize portfolio quality over the long term. Chief Financial Officer Vincent Chao said NNN reported core FFO of $0.86 per share and AFFO of $0.87 per share, each flat year over year. Chao pointed to lease termination fees as a key driver of the year-over-year comparison: NNN recorded $739,000 of lease termination fees in the quarter versus $8.2 million a year ago, which he said represented a $0.04 headwind. Excluding that change, Chao said AFFO per share growth would have been 4.8%. → Alphabet’s Earnings Didn’t Just Beat—They Changed the Story Chao said results were modestly ahead of internal projections, primarily due to lower-than-expected bad debt and net real estate expense. Bad debt represented about 15 basis points of quarterly annual base rent (ABR), better than the company’s 75 basis point assumption. NNN’s NOI margin was 95.9% for the quarter, reflecting the triple-net lease structure, while G&A as a percentage of total revenue was 5.9% and cash G&A margin was 4.2%, both in line with expectations. Annualized base rent grew 7% year over year to $935 million, driven by acquisition activity. Chao also said free cash flow after dividends was about $52 million in the first quarter. Management said it was not seeing significant near-term credit issues, while maintaining a focus on proactive monitoring. Chao said the company “always watch[es] tenants” and maintains a watch list, citing AMC as an example. He said NNN sold one AMC property during the quarter and generated an “economic gain of over 6% on the sales” for the quarter’s occupied dispositions, supported by low cost basis. Asked about consumer spending trends, Chao said there was no broad-strokes takeaway from tenant conversations or public disclosures, noting that 61% of NNN’s tenants are public companies. He added that performance differences were more tenant-specific, though continued consumer pressure would be expected to affect more cyclical businesses. On 7‑Eleven store-closure headlines, Horn said NNN “never did quote business with 7‑Eleven” historically, but that the retailer acquired regional operators NNN worked with. Horn said the company completed a “significant renewal” with 7‑Eleven in 2025, its average lease term with the tenant is about 8.5 years, and “none of our stores are on the closure list.” He also said NNN’s average cost basis in its 7‑Eleven portfolio is about $2.2 million. Horn also provided updates on two previously discussed situations. He said all Badcock locations were “accounted for and cleaned up” with “near, you know, 100% recovery.” For Frisch’s, Horn said the assets are included among the 53 vacant properties, with leasing efforts underway and “a tremendous amount of interest” in the properties. Chao said the company drew the full $300 million available on its delayed-draw term loan during the quarter, swapping the rate to a fixed all-in rate of 4.1%. NNN also sold roughly 1.7 million common shares on a forward basis through its ATM program at just under $45 per share and did not settle any forward equity, leaving expected future net proceeds of $74 million as of March 31. At quarter-end, NNN had $1.2 billion of liquidity, $80 million drawn on its credit facility, no encumbered assets, and just 1.6% of debt tied to floating rates. Chao said pro forma net debt to EBITDA, including unsettled forward equity, was 5.6x, unchanged from last quarter. Debt duration was 10.5 years, which he said remains the highest in the net lease space and is “well matched” with lease duration of 10.1 years. NNN’s next debt maturity is a $350 million unsecured note due in December. Chao said the company has options to address the maturity, including an accordion feature to expand its existing term loan by $200 million, and noted that investment-grade credit spreads had “recently revisited historical lows” after briefly widening following the Iran conflict. On April 15, the company announced a quarterly dividend of $0.60, representing 3.4% year-over-year growth. Chao said the dividend equates to a 5.7% annualized dividend yield and a 66.9% AFFO payout ratio. Horn noted NNN has increased its dividend for 36 consecutive years. Management raised 2026 guidance, citing first-quarter performance and investment pipeline visibility. Horn said the company increased its 2026 AFFO per share guidance to $3.53 to $3.59. Chao said the midpoint of both AFFO and core FFO guidance increased by $0.01, to ranges of $3.53 to $3.59 for AFFO per share and $3.48 to $3.54 for core FFO per share. He said the midpoint of the AFFO range implies 3.5% year-over-year growth, up from 2.7% last year. Chao said line-item guidance remained unchanged, though he highlighted that the company was tracking to the low end of its $14 million to $15 million range for net real estate expenses and toward the high end of its $550 million to $650 million acquisition guidance based on near-term pipeline visibility. He said NNN expected about $212 million of free cash flow and $130 million of dispositions for the year. In response to questions about why acquisition guidance was not increased despite incremental funding capacity, Horn said the company has a “very robust pipeline,” but emphasized a conservative approach: “You don’t wanna count them until they’re done.” Chao added that the $74 million of forward equity proceeds could translate to roughly $125 million of additional capacity at the company’s typical 60/40 equity/debt mix. On market pricing, Horn said first-quarter cap rates were largely consistent with recent quarters, and he expects some modest compression early in the second quarter. He characterized the compression as relatively broad across the opportunity set, including auto service and convenience store sectors, and described it as “minimal,” in the range of 15 to 25 basis points. NNN REIT (NYSE: NNN), formally known as National Retail Properties, is a publicly traded real estate investment trust focused on acquiring, owning and managing a diversified portfolio of retail properties across the United States. As a net-lease REIT, the company enters into long-term, triple-net leases with national and regional tenants, shifting most property-related expenses, including maintenance, taxes and insurance, to its lessees. This structure provides NNN REIT with predictable cash flows and a stable income stream rooted in essential retail uses such as convenience stores, dollar stores, drug stores and quick-service restaurants. Founded in 1984 and headquartered in Orlando, Florida, NNN REIT has steadily grown its footprint through disciplined acquisitions and selective lease underwriting. The article "NNN REIT Q1 Earnings Call Highlights" was originally published by MarketBeat.

Performance was driven by a disciplined, self-funded growth strategy focused on accretive acquisitions and high-quality leasing execution. Occupancy increased to 98.6%, surpassing long-term averages due to successful repositioning of vacant assets with investment-grade tenants. Management attributes the 7.5% initial cash yield on new investments to a robust sale-leaseback pipeline where sellers are using transactions for debt refinancing. Portfolio health remains strong with no material credit concerns, supported by a historical lease renewal rate of approximately 85%. Strategic dispositions focused on non-core assets and de-risking, including the sale of an AMC theater and an entertainment property to optimize long-term cash flow. The company maintains a competitive advantage through an industry-leading weighted average debt maturity of nearly 11 years, providing significant balance sheet flexibility. Raised 2026 AFFO per share guidance to $3.53–$3.59, reflecting strong Q1 performance and visibility into the investment pipeline. Management expects modest cap rate compression of 15 to 25 basis points in the second quarter, particularly in auto service and convenience store sectors. Full-year bad debt assumptions were lowered from 75 basis points to 60 basis points based on current outperformance and healthy tenant credit trends. Acquisition volume is trending toward the high end of the $550 million to $650 million guidance range, supported by $1.2 billion in available liquidity. The company plans a more proactive approach to asset sales in 2026 to stay ahead of potential real estate and credit risks. Lease termination fees were a $0.04 headwind compared to the prior year, though management views the current $739 thousand level as a return to normalized trends. The company successfully resolved all Badcock assets with near 100% recovery and is actively working through 53 remaining vacant assets, including Frisch's locations. Management flagged AMC as a watch-list tenant but successfully executed a disposition of one theater for redevelopment at an economic gain. Exposure to 7-Eleven is characterized as stable, with an average lease term of eight and a half years and no stores currently on the tenant's closure list. Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Management is cautious about raising guidance prematurely, stating they do not want to 'get above our skis' until negotiations reach advanced closing stages. The $74 million in unsettled forward equity provides approximately $125 million in additional acquisition capacity when using a 60/40 equity-to-debt mix. Compression is expected to be broad across the opportunity set, specifically 15 to 25 basis points in auto service and convenience stores. The shift is attributed to increased competition in the first half of the year as market participants become more aggressive in deploying capital. Management noted that while the environment is always highly competitive, institutional private capital typically targets large industrial assets rather than the smaller, fragmented retail sites NNN pursues. The company relies on long-standing relationships and its ability to handle smaller, individual transactions to maintain its competitive edge. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here.