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NETSTREIT Reports Second Quarter 2021 Financial and Operating Results

July 29, 2021

– Completed $107.7 Million of Net Investment Activity –

– Reaffirms Full Year 2021 AFFO Guidance in Range of $0.95 - $0.99 Per Share –

– During the Quarter, Raised Gross Proceeds of $203.6 Million through Follow On Offering –

DALLAS--(BUSINESS WIRE)-- NETSTREIT (NYSE: NTST) (the “Company”), today announced financial and operating results for the second quarter ended June 30, 2021.

“During the second quarter, we again generated strong results while benefiting from our strategic focus. Our portfolio remains 100% occupied, and through July, we have collected 100% of rents for eleven straight months. Importantly, we accomplished a significant milestone during the second quarter, completing a $200-plus million follow-on common equity offering and demonstrating our access to well-priced capital. With more than $200 million of high quality acquisitions completed in the first half of the year, and significant capacity on our balance sheet, we will continue to take advantage of attractive opportunities to deploy capital. As we look to the balance of the year, we believe NETSTREIT’s unique focus on the highest quality net lease assets and our demonstrated sourcing methodologies, positions us well to continue to grow in 2021, and beyond,” said Mark Manheimer, Chief Executive Officer of NETSTREIT.

SECOND QUARTER 2021 HIGHLIGHTS

  • Reported net loss per share of $(0.07), Core Funds from Operations (“Core FFO”) per share of $0.181 and AFFO per share of $0.201 (see non-GAAP reconciliation attached)
  • The Company collected 100% of the second quarter rent payments and for the month of July 2021, resulting in eleven consecutive months of 100% rent collections

PORTFOLIO UPDATE

As of June 30, 2021, the NETSTREIT portfolio was comprised of 267 leases2, contributing $55.3 million of annualized base rent3, with a weighted-average remaining lease term of 9.9 years, of which 69.9% were investment grade rated tenants and 13.5% were tenants with investment grade profiles (unrated tenants with more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x). The portfolio was 100.0% occupied as of June 30, 2021.

INVESTMENT ACTIVITY

During the quarter ended June 30, 2021, the Company had total net investment activity of $107.7 million. The Company acquired 35 properties for approximately $116.7 million at an initial cash capitalization rate of 6.5%, inclusive of closing costs. A majority of the acquisitions closed late in the last month of the quarter resulting in the Company owning the assets for an average of approximately 19 days. Acquisitions completed during the quarter had a weighted-average remaining lease term of 9.7 years, and 72.8% of the properties are occupied by investment grade rated tenants and 20.5% occupied by tenants with investment grade profiles. The Company also provided $4.0 million of development funding in the second quarter, including funding to support two new developments for tenants with investment grade profiles.

The Company completed five dispositions for $13.0 million in total contractual sales proceeds, which equated to a 6.7% cash capitalization rate.

The transaction activity decreased total tenant count from 60 to 59 tenants, and decreased the portfolio’s exposure to casual dining. The geographic and industry exposure remained unchanged at 39 states and 23 industries.

BALANCE SHEET AND LIQUIDITY

In April, the Company completed a follow on offering of 10,915,688 shares of common stock, which includes the full exercise of the underwriters’ option to purchase additional shares, at a price to the public of $18.65 per share. Gross proceeds to the Company from the offering, before deducting underwriting discounts and commissions and other offering expenses, were approximately $203.6 million. Proceeds from the offering were used to repay certain borrowings under the revolving credit facility, fund acquisitions of properties, and for general corporate purposes.

At quarter end, total debt outstanding was $175 million, with a weighted average term of 3.5 years and a quarter end contractual interest rate, including the impact of the fixed rate swap, of 1.36% (excluding the impact of deferred fee amortization). All of the Company’s debt was at a fixed rate and the Company’s net debt to annualized adjusted EBITDA ratio was 2.1x. Additionally, the ending cash balance was $88 million, and the Company had an unused revolving line of credit with $250 million of capacity.

DIVIDEND

On July 27, 2021, the Company’s Board of Directors declared a quarterly cash dividend of $0.20 per share for the third quarter of 2021, which will be paid on September 15, 2021 to shareholders of record on September 1, 2021.

2021 OUTLOOK

The Company is maintaining its full year 2021 AFFO per share guidance in the range of $0.95 to $0.99 per share. This AFFO guidance is based on the following assumptions:

  • For full year 2021, the Company expects net acquisition activity, inclusive of dispositions, to be at least $360 million
  • The Company expects cash G&A to be in the range of $11.0 to $12.0 million, which includes recurring transaction costs, as well as additional non-cash compensation expense of $3.0 to $4.0 million
  • The Company expects cash interest expense, including unused line of credit facility fees, of $3.0 to $3.5 million, and an additional $0.6 million of non-cash deferred financing fee amortization
  • The Company expects to incur taxes in the range of $0.2 to $0.3 million which will be reported as “income taxes” in the Company’s financial statements for 2021
  • Full year 2021 diluted weighted average shares outstanding, which includes the impact of OP units, are expected to be in the range of 38 to 39 million shares

EARNINGS WEBCAST AND CONFERENCE CALL

A conference call will be held on Friday, July 30, 2021 at 10:00 AM ET. During the conference call the Company’s officers will review second quarter performance, discuss recent events, and conduct a question and answer period.

The webcast will be accessible on the “Investor Relations” section of the Company’s website at www.NETSTREIT.com. To listen to the live webcast, please go to the site at least fifteen minutes prior to the scheduled start time to register, as well as download and install any necessary audio software. A replay of the webcast will be available for 90 days on the Company’s website shortly after the call.

The conference call can also be accessed by dialing 1-877-451-6152 for domestic callers or 1-201-389-0879 for international callers. A dial-in replay will be available starting shortly after the call until August 6, 2021, which can be accessed by dialing 1-844-512-2921 for domestic callers or 1-412-317-6671 for international callers. The passcode for this dial-in replay is 13721126.

SUPPLEMENTAL PACKAGE

The Company’s supplemental package will be available prior to the conference call in the Investor Relations section of the Company’s website at www.investors.netstreit.com.

About NETSTREIT

NETSTREIT is an internally managed Real Estate Investment Trust (REIT) based in Dallas, Texas that specializes in acquiring single-tenant net lease retail properties nationwide. The growing portfolio consists of high-quality properties leased to e-commerce resistant tenants with healthy balance sheets. Led by a management team of seasoned commercial real estate executives, NETSTREIT’s strategy is to create the highest quality net lease retail portfolio in the country with the goal of generating consistent cash flows and dividends for its investors.

(1)

Per share amounts include weighted average common shares of 38,018,588, weighted average operating partnership units of 1,438,969 and weighted average effect of dilutive unvested restricted stock units of 332,781 for the three-months ended June 30, 2021.

(2)

Leases are individual properties with a distinct lease agreement in place, development activities where a lease is expected at a future date, or in the case of master lease arrangements each property under the master lease is counted as a separate lease.

(3)

Annualized base rent, or ABR, is calculated by multiplying (i) cash rental payments (a) for the month ended June 30, 2021 (or, if applicable, the next full month's cash rent contractually due in the case of rent abatements, rent deferrals, recently acquired properties and properties with contractual rent increases, other than properties under development) for leases in place as of June 30, 2021, plus (b) for properties under development, the first full month's permanent cash rent contractually due after the development period by (ii) 12.

NON-GAAP FINANCIAL MEASURES

This press release contains non-GAAP financial measures, including FFO, Core FFO, AFFO, EBITDA, EBITDAre, Adjusted EBITDAre, NOI, and Cash NOI. A reconciliation from net loss available to common shareholders to each non-GAAP financial measure, and definitions of each non-GAAP measure, are included below.

FORWARD LOOKING STATEMENTS

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements include, without limitation, statements concerning our business and growth strategies, investment, financing and leasing activities and trends in our business, including trends in the market for single-tenant, retail commercial real estate. Words such as “expects,” “anticipates,” “intends,” “plans,” “likely,” “will,” “believes,” “seeks,” “estimates,” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the results of operations or plans expressed or implied by such forward-looking statements. Although we believe that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore such statements included in this press release may not prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by us or any other person that the results or conditions described in such statements or our objectives and plans will be achieved. For a further discussion of these and other factors that could impact future results, performance or transactions, see the information under the heading “Risk Factors” in our Form 10-K filed with the Securities and Exchange Commission (the “SEC”) and other reports filed with the SEC from time to time. Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this press release. New risks and uncertainties may arise over time and it is not possible for us to predict those events or how they may affect us. Many of the risks identified herein and in our periodic reports have been and will continue to be heightened as a result of the ongoing and numerous adverse effects arising from the novel coronavirus (COVID-19). We expressly disclaim any obligation or undertaking to update or revise any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based, except to the extent otherwise required by law.

 

NETSTREIT CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

(Unaudited)

 

 

June 30,

 

December 31

 

2021

 

 

2020

 

Assets

 

 

 

Real estate, at cost:

 

 

 

Land

$

233,068

 

 

 

$

189,373

 

 

Buildings and improvements

479,858

 

 

 

358,360

 

 

Total real estate, at cost

712,926

 

 

 

547,733

 

 

Less accumulated depreciation

(18,652

)

 

 

(10,111

)

 

Property under development

5,316

 

 

 

 

 

Real estate held for investment, net

699,590

 

 

 

537,622

 

 

Assets held for sale

16,700

 

 

 

14,802

 

 

Cash, cash equivalents and restricted cash

88,140

 

 

 

92,643

 

 

Lease intangible assets, net

99,620

 

 

 

75,024

 

 

Other assets, net

8,964

 

 

 

5,724

 

 

Total assets

$

913,014

 

 

 

$

725,815

 

 

Liabilities and equity

 

 

 

Liabilities:

 

 

 

Term loan, net

$

174,217

 

 

 

$

174,105

 

 

Lease intangible liabilities, net

22,186

 

 

 

16,930

 

 

Liabilities related to assets held for sale

402

 

 

 

399

 

 

Accounts payable, accrued expenses and other liabilities

6,733

 

 

 

6,308

 

 

Total liabilities

203,538

 

 

 

197,742

 

 

Commitments and contingencies

 

 

 

Equity:

 

 

 

Stockholders’ equity

 

 

 

Common stock, $0.01 par value, 400,000,000 shares authorized; 39,525,978 and 28,203,545 shares issued and outstanding, respectively

395

 

 

 

282

 

 

Additional paid-in capital

704,269

 

 

 

501,045

 

 

Distributions in excess of retained earnings

(23,140

)

 

 

(7,464

)

 

Accumulated other comprehensive income

2,181

 

 

 

235

 

 

Total stockholders’ equity

683,705

 

 

 

494,098

 

 

Noncontrolling interests

25,771

 

 

 

33,975

 

 

Total equity

709,476

 

 

 

528,073

 

 

Total liabilities and equity

$

913,014

 

 

 

$

725,815

 

 

 

NETSTREIT CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(in thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenues

 

 

 

 

 

 

 

Rental revenue (including reimbursable)

$

13,798

 

 

 

$

7,117

 

 

 

$

25,730

 

 

 

$

12,625

 

 

Operating expenses

 

 

 

 

 

 

 

Property

1,315

 

 

 

434

 

 

 

2,265

 

 

 

719

 

 

General and administrative

3,991

 

 

 

1,846

 

 

 

7,127

 

 

 

3,732

 

 

Depreciation and amortization

7,075

 

 

 

3,116

 

 

 

13,004

 

 

 

5,462

 

 

Provisions for impairment

3,469

 

 

 

1,410

 

 

 

3,539

 

 

 

1,410

 

 

Transaction costs

181

 

 

 

634

 

 

 

332

 

 

 

1,728

 

 

Total operating expenses

16,031

 

 

 

7,440

 

 

 

26,267

 

 

 

13,051

 

 

Other (expense) income

 

 

 

 

 

 

 

Interest expense, net

(894

)

 

 

(1,098

)

 

 

(1,799

)

 

 

(2,797

)

 

Gain on sales of real estate, net

497

 

 

 

1,016

 

 

 

497

 

 

 

1,016

 

 

Gain on forfeited earnest money deposit

 

 

 

 

 

 

 

 

 

250

 

 

Total other (expense) income, net

(397

)

 

 

(82

)

 

 

(1,302

)

 

 

(1,531

)

 

Net loss before income tax expense

(2,630

)

 

 

(405

)

 

 

(1,839

)

 

 

(1,957

)

 

Income tax expense

 

 

 

 

 

 

(50

)

 

 

 

 

Net loss

(2,630

)

 

 

(405

)

 

 

(1,889

)

 

 

(1,957

)

 

Net loss attributable to noncontrolling interests

(94

)

 

 

(111

)

 

 

(54

)

 

 

(536

)

 

Preferred stock dividends

 

 

 

6

 

 

 

 

 

 

6

 

 

Net loss attributable to common shareholders

$

(2,536

)

 

 

$

(300

)

 

 

$

(1,835

)

 

 

$

(1,427

)

 

Amounts available to common shareholders per common share:

 

 

 

 

 

 

 

Basic

$

(0.07

)

 

 

$

(0.03

)

 

 

$

(0.06

)

 

 

$

(0.13

)

 

Diluted

$

(0.07

)

 

 

$

(0.03

)

 

 

$

(0.06

)

 

 

$

(0.13

)

 

Weighted average common shares:

 

 

 

 

 

 

 

Basic

38,018,588

 

 

 

11,797,645

 

 

 

33,236,262

 

 

 

11,105,709

 

 

Diluted

38,018,588

 

 

 

11,797,645

 

 

 

33,236,262

 

 

 

11,105,709

 

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

Net loss

$

(2,630

)

 

 

$

(405

)

 

 

$

(1,889

)

 

 

$

(1,957

)

 

Change in value on derivatives, net

(265

)

 

 

 

 

 

2,058

 

 

 

 

 

Total comprehensive (loss) income

$

(2,895

)

 

 

$

(405

)

 

 

$

169

 

 

 

$

(1,957

)

 

Comprehensive (loss) income attributable to noncontrolling interests

(106

)

 

 

(111

)

 

 

58

 

 

 

(536

)

 

Comprehensive (loss) income attributable to common shareholders

$

(2,789

)

 

 

$

(294

)

 

 

$

111

 

 

 

$

(1,421

)

 

 

NETSTREIT CORP. AND SUBSIDIARIES

RECONCILIATION OF NET LOSS TO FFO, CORE FFO AND ADJUSTED FFO

(in thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

(Unaudited)

 

(Unaudited)

Net loss

$

(2,630

)

 

 

$

(405

)

 

 

$

(1,889

)

 

 

$

(1,957

)

 

Depreciation and amortization of real estate

6,997

 

 

 

3,040

 

 

 

12,849

 

 

 

5,311

 

 

Provision for impairment

3,469

 

 

 

1,410

 

 

 

3,539

 

 

 

1,410

 

 

Gain on sale of real estate, net

(497

)

 

 

(1,016

)

 

 

(497

)

 

 

(1,016

)

 

FFO

7,339

 

 

 

3,029

 

 

 

14,002

 

 

 

3,748

 

 

Adjustments:

 

 

 

 

 

 

 

Gain on forfeited earnest money deposit

 

 

 

 

 

 

 

 

 

(250

)

 

144A and IPO transaction costs(1)

 

 

 

570

 

 

 

 

 

 

1,279

 

 

Core FFO

7,339

 

 

 

3,599

 

 

 

14,002

 

 

 

4,777

 

 

Adjustments:

 

 

 

 

 

 

 

Straight-line rental revenue

(222

)

 

 

(877

)

 

 

(463

)

 

 

(1,030

)

 

Amortization of deferred financing costs

157

 

 

 

155

 

 

 

314

 

 

 

307

 

 

Amortization of above/below market lease intangibles

(237

)

 

 

(130

)

 

 

(427

)

 

 

(122

)

 

Amortization of lease incentives

3

 

 

 

 

 

 

3

 

 

 

 

 

Capitalized interest expense

(15

)

 

 

 

 

 

(15

)

 

 

 

 

Non-cash compensation expense

1,041

 

 

 

 

 

 

1,598

 

 

 

 

 

AFFO

$

8,066

 

 

 

$

2,747

 

 

 

$

15,012

 

 

 

$

3,932

 

 

 

Weighted average common shares outstanding, basic

38,018,588

 

 

 

11,797,645

 

 

 

33,236,262

 

 

 

11,105,709

 

 

Weighted average operating partnership units outstanding

1,438,969

 

 

 

4,449,019

 

 

 

1,527,160

 

 

 

4,449,019

 

 

Weighted average dilutive securities

332,781

 

 

 

 

 

 

210,370

 

 

 

 

 

Weighted average common shares outstanding, diluted

39,790,338

 

 

 

16,246,664

 

 

 

34,973,792

 

 

 

15,554,728

 

 

 

 

 

 

 

 

 

 

FFO per common share, diluted

$

0.18

 

 

 

$

0.19

 

 

 

$

0.40

 

 

 

$

0.24

 

 

Core FFO per common share, diluted

$

0.18

 

 

 

$

0.22

 

 

 

$

0.40

 

 

 

$

0.31

 

 

AFFO per common share, diluted

$

0.20

 

 

 

$

0.17

 

 

 

$

0.43

 

 

 

$

0.25

 

 

 

RECONCILIATION OF NET LOSS TO EBITDA, EBITDAre AND ADJUSTED EBITDAre

(in thousands)

(Unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

(Unaudited)

 

(Unaudited)

Net loss

$

(2,630

)

 

 

$

(405

)

 

 

$

(1,889

)

 

 

$

(1,957

)

 

Depreciation and amortization of real estate

6,997

 

 

 

3,040

 

 

 

12,849

 

 

 

5,311

 

 

Amortization of above/below market lease intangibles

(237

)

 

 

(130

)

 

 

(427

)

 

 

(122

)

 

Amortization of lease incentives

3

 

 

 

 

 

 

3

 

 

 

 

 

Non-real estate depreciation and amortization

78

 

 

 

76

 

 

 

155

 

 

 

151

 

 

Interest expense, net

894

 

 

 

1,098

 

 

 

1,799

 

 

 

2,797

 

 

Income tax expense

 

 

 

 

 

 

50

 

 

 

 

 

EBITDA

5,105

 

 

 

3,679

 

 

 

12,540

 

 

 

6,180

 

 

Adjustments:

 

 

 

 

 

 

 

Provision for impairments

3,469

 

 

 

1,410

 

 

 

3,539

 

 

 

1,410

 

 

Gain on sale of real estate, net

(497

)

 

 

(1,016

)

 

 

(497

)

 

 

(1,016

)

 

EBITDAre

8,077

 

 

 

4,073

 

 

 

15,582

 

 

 

6,574

 

 

Adjustments:

 

 

 

 

 

 

 

Straight-line rental revenue

(222

)

 

 

(877

)

 

 

(463

)

 

 

(1,030

)

 

Gain on forfeited earnest money deposit

 

 

 

 

 

 

 

 

 

(250

)

 

144A and IPO transaction costs(1)

 

 

 

570

 

 

 

 

 

 

1,279

 

 

Non-cash compensation expense

1,041

 

 

 

 

 

 

1,598

 

 

 

 

 

Adjusted EBITDAre

$

8,896

 

 

 

$

3,766

 

 

 

$

16,717

 

 

 

$

6,573

 

 

 

RECONCILIATION OF NET LOSS TO NOI AND CASH NOI

(in thousands)

(Unaudited)

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

 

 

 

 

 

 

 

 

 

 

(Unaudited)

 

(Unaudited)

Net loss

$

(2,630

)

 

 

$

(405

)

 

 

$

(1,889

)

 

 

$

(1,957

)

 

General and administrative

3,991

 

 

 

1,846

 

 

 

7,127

 

 

 

3,732

 

 

Depreciation and amortization

7,075

 

 

 

3,116

 

 

 

13,004

 

 

 

5,462

 

 

Provisions for impairment

3,469

 

 

 

1,410

 

 

 

3,539

 

 

 

1,410

 

 

Transaction costs

181

 

 

 

634

 

 

 

332

 

 

 

1,728

 

 

Interest expense, net

894

 

 

 

1,098

 

 

 

1,799

 

 

 

2,797

 

 

Gain on sales of real estate, net

(497

)

 

 

(1,016

)

 

 

(497

)

 

 

(1,016

)

 

Income tax expense

 

 

 

 

 

 

50

 

 

 

 

 

Gain on forfeited earnest money deposit

 

 

 

 

 

 

 

 

 

(250

)

 

NOI

12,483

 

 

 

6,683

 

 

 

23,465

 

 

 

11,906

 

 

Straight-line rental revenue

(222

)

 

 

(877

)

 

 

(463

)

 

 

(1,030

)

 

Amortization of above/below market lease intangibles

(237

)

 

 

(130

)

 

 

(427

)

 

 

(122

)

 

Amortization of lease incentives

3

 

 

 

 

 

 

3

 

 

 

 

 

Cash NOI

$

12,027

 

 

 

$

5,676

 

 

 

$

22,578

 

 

 

$

10,754

 

 

NON-GAAP FINANCIAL MEASURES

FFO, Core FFO and AFFO

FFO is a non-GAAP financial measure defined by NAREIT as net income (computed in accordance with GAAP), excluding real estate-related expenses including, but not limited to, gains (losses) from sales, impairment adjustments, and depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. Our calculation of FFO is consistent with FFO as defined by NAREIT.

Core FFO is a non-GAAP financial measure defined as FFO adjusted for gains from forfeited earnest money deposits and non-recurring public company costs. We believe the presentation of Core FFO provides investors with a metric to assist in their evaluation of our operating performance across multiple periods because it removes the effect of unusual and non-recurring items that are not expected to impact our operating performance on an ongoing basis.

AFFO is a non-GAAP financial measure defined as Core FFO adjusted for GAAP net income related to non-cash revenues and expenses, such as straight-line rent, amortization of above- and below-market lease-related intangibles, amortization of lease incentives, capitalized interest expense, non-cash compensation expense, and amortization of deferred financing costs.

Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. In fact, real estate values historically have risen or fallen with market conditions. FFO is intended to be a standard supplemental measure of operating performance that excludes historical cost depreciation and valuation adjustments from net income. We consider FFO to be useful in evaluating potential property acquisitions and measuring operating performance. We further consider Core FFO and AFFO to be useful in determining funds available for payment of distributions. FFO, Core FFO and AFFO do not represent net income or cash flows from operations as defined by GAAP. You should not consider FFO, Core FFO and AFFO to be alternatives to net income as a reliable measure of our operating performance; nor should you consider FFO, Core FFO and AFFO to be alternatives to cash flows from operating, investing or financing activities (as defined by GAAP) as measures of liquidity.

FFO, Core FFO and AFFO do not measure whether cash flow is sufficient to fund all of our cash needs, including principal amortization, capital improvements and distributions to stockholders. FFO, Core FFO and AFFO do not represent cash flows from operating, investing or financing activities as defined by GAAP. Further, FFO, Core FFO and AFFO as disclosed by other REITs might not be comparable to our calculations of FFO, Core FFO and AFFO.

EBITDA, EBITDAre and Adjusted EBITDAre

We compute EBITDA as earnings before interest, income taxes and depreciation and amortization. In 2017, NAREIT issued a white paper recommending that companies that report EBITDA also report EBITDAre. We compute EBITDAre in accordance with the definition adopted by NAREIT. NAREIT defines EBITDAre as EBITDA (as defined above) excluding gains (or losses) from the sales of depreciable property and real estate impairment losses.

Adjusted EBITDAre is a non-GAAP financial measure defined as EBITDAre further adjusted to exclude straight-line rent, gains from forfeited earnest money deposits, non-recurring public company costs, representing consulting fees that we have incurred in preparing to become a public company and non-cash compensation expense.

We present EBITDA, EBITDAre and Adjusted EBITDAre as they are measures commonly used in our industry. We believe that these measures are useful to investors and analysts because they provide supplemental information concerning our operating performance, exclusive of certain non-cash items and other costs. We use EBITDA, EBITDAre and Adjusted EBITDAre as measures of our operating performance and not as measures of liquidity.

EBITDA, EBITDAre and Adjusted EBITDAre do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities and they are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. Additionally, our computation of EBITDA, EBITDAre and Adjusted EBITDAre may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs.

NOI and Cash NOI

NOI and Cash NOI are non-GAAP financial measures which we use to assess our operating results. We compute NOI as net income (loss) (computed in accordance with GAAP), excluding general and administrative expenses, interest expense (or income), income tax expense, depreciation and amortization, gains (or losses) on sales of depreciable property, gain from forfeited earnest money deposits and real estate impairment losses. We further adjust NOI for non-cash revenue components of straight-line rent and amortization of lease intangibles and lease incentives to derive Cash NOI. We believe NOI and Cash NOI provide useful and relevant information because they reflect only those income and expense items that are incurred at the property level and present such items on an unlevered basis.

NOI and Cash NOI are not measurements of financial performance under GAAP, and our NOI and Cash NOI may not be comparable to similarly titled measures of other companies. You should not consider our NOI and Cash NOI as alternatives to net income or cash flows from operating activities determined in accordance with GAAP.

(1)

These expenses represent a subset of transaction costs as presented on the condensed consolidated statements of operations and comprehensive (loss) income.

 

Investor Relations
ir@netstreit.com
972-597-4825

Source: NETSTREIT

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