UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form | ||
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
OR
For the transition period from _____ to _____
Commission File Number 001-39443
(Exact name of registrant as specified in its charter) | ||||||||
| (State or other jurisdiction of | (I.R.S. Employer | |||||||||||||
| incorporation or organization) | Identification No.) | |||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
( | ||||||||||||||
| (Registrant’s telephone number, including area code) | ||||||||||||||
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| ☒ | Accelerated filer | ☐ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of the issuer’s common stock, par value $0.01, outstanding as of April 14, 2026 was 97,260,607 .
NETSTREIT CORP. AND SUBSIDIARIES
TABLE OF CONTENTS
| Page | ||||||||
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
NETSTREIT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
| March 31, 2026 | December 31, 2025 | ||||||||||
| Assets | |||||||||||
| Real estate, at cost: | |||||||||||
| Land | $ | $ | |||||||||
| Buildings and improvements | |||||||||||
| Total real estate, at cost | |||||||||||
| Less accumulated depreciation | ( | ( | |||||||||
| Property under development | |||||||||||
| Real estate held for investment, net | |||||||||||
| Assets held for sale | |||||||||||
| Mortgage loans receivable, net | |||||||||||
| Cash, cash equivalents, and restricted cash | |||||||||||
| Lease intangible assets, net | |||||||||||
| Other assets, net | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and equity | |||||||||||
| Liabilities: | |||||||||||
| Term loans, net | $ | $ | |||||||||
| Revolving credit facility | |||||||||||
| Mortgage note payable, net | |||||||||||
| Lease intangible liabilities, net | |||||||||||
| Liabilities related to assets held for sale | |||||||||||
| Accounts payable, accrued expenses, and other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 13) | |||||||||||
| Equity: | |||||||||||
| Stockholders’ equity | |||||||||||
Common stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Distributions in excess of retained earnings | ( | ( | |||||||||
| Accumulated other comprehensive income (loss) | ( | ||||||||||
| Total stockholders’ equity | |||||||||||
| Noncontrolling interests | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
NETSTREIT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(In thousands, except share and per share data)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenues | |||||||||||
| Rental revenue (including reimbursable) | $ | $ | |||||||||
| Interest income on loans receivable | |||||||||||
| Other revenue | |||||||||||
| Total revenues | |||||||||||
| Operating expenses | |||||||||||
| Property | |||||||||||
| General and administrative | |||||||||||
| Depreciation and amortization | |||||||||||
| Provisions for impairment | |||||||||||
| Transaction costs, net | ( | ||||||||||
| Total operating expenses | |||||||||||
| Other (expense) income | |||||||||||
| Interest expense, net | ( | ( | |||||||||
| Gain on sales of real estate, net | |||||||||||
| Loss on debt extinguishment | ( | ||||||||||
| Other income (expense), net | ( | ||||||||||
| Total other expense, net | ( | ( | |||||||||
| Net income before income taxes | |||||||||||
| Income tax expense | ( | ( | |||||||||
| Net income | |||||||||||
| Net income attributable to noncontrolling interests | |||||||||||
| Net income attributable to common stockholders | $ | $ | |||||||||
| Amounts available to common stockholders per common share: | |||||||||||
| Basic | $ | $ | |||||||||
| Diluted | $ | $ | |||||||||
| Weighted average common shares: | |||||||||||
| Basic | |||||||||||
| Diluted | |||||||||||
| Other comprehensive income (loss): | |||||||||||
| Net income | $ | $ | |||||||||
| Change in value on derivatives, net | ( | ||||||||||
| Total comprehensive income (loss) | $ | $ | ( | ||||||||
| Comprehensive income (loss) attributable to noncontrolling interests | ( | ||||||||||
| Comprehensive income (loss) attributable to common stockholders | $ | $ | ( | ||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
NETSTREIT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except share data)
(Unaudited)
| Common stock | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Par Value | Additional Paid-in Capital | Distributions in Excess of Retained Earnings | Accumulated Other Comprehensive Income | Total Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock in public offerings, net of issuance costs | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| OP Units converted to common stock | — | — | — | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Dividends and distributions declared on common stock and OP Units | — | — | — | ( | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Dividends declared on restricted stock, net | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock for tax withholding obligations | ( | ( | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation, net | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Common stock | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares | Par Value | Additional Paid-in Capital | Distributions in Excess of Retained Earnings | Accumulated Other Comprehensive Income | Total Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
| Dividends and distributions declared on common stock and OP Units | — | — | — | ( | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Dividends declared on restricted stock, net | — | — | — | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Vesting of restricted stock units | ( | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Repurchase of common stock for tax withholding obligations | ( | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation, net | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
NETSTREIT CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Amortization of deferred financing costs | |||||||||||
| Amortization of above/below-market assumed debt | |||||||||||
| Noncash revenue adjustments | ( | ( | |||||||||
| Amortization of deferred losses (gains) on interest rate swaps | |||||||||||
| Stock-based compensation expense | |||||||||||
| Gain on sales of real estate, net | ( | ( | |||||||||
| Provisions for impairment | |||||||||||
| Loss on debt extinguishment | |||||||||||
| Changes in assets and liabilities, net of assets acquired and liabilities assumed: | |||||||||||
| Other assets, net | ( | ( | |||||||||
| Accounts payable, accrued expenses, and other liabilities | |||||||||||
| Lease incentive payments | ( | ||||||||||
| Net cash provided by operating activities | |||||||||||
| Cash flows from investing activities | |||||||||||
| Acquisitions of real estate | ( | ( | |||||||||
| Real estate development and improvements | ( | ( | |||||||||
| Investment in mortgage loans receivable | ( | ( | |||||||||
| Earnest money deposits | ( | ||||||||||
| Purchase of computer equipment and other corporate assets | ( | ||||||||||
| Proceeds from sale of real estate | |||||||||||
| Principal collections on mortgage loans receivable | |||||||||||
Proceeds from sale of mortgage loans receivable | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Issuance of common stock in public offerings, net | |||||||||||
| Payment of common stock dividends | ( | ( | |||||||||
| Payment of OP unit distributions | ( | ( | |||||||||
| Payment of restricted stock dividends | ( | ( | |||||||||
| Principal payments on mortgages payable | ( | ( | |||||||||
| Proceeds under revolving credit facility | |||||||||||
| Repayments under revolving credit facility | ( | ( | |||||||||
| Proceeds from term loans | |||||||||||
| Principal payments on term loans | ( | ||||||||||
| Repurchase of common stock for tax withholding obligations | ( | ( | |||||||||
| Payment of deferred offering costs | ( | ( | |||||||||
| Payment of deferred financing costs | ( | ||||||||||
| Net cash provided by financing activities | |||||||||||
| Net change in cash, cash equivalents, and restricted cash | ( | ( | |||||||||
| Cash, cash equivalents, and restricted cash at beginning of the period | |||||||||||
| Cash, cash equivalents, and restricted cash at end of the period | $ | $ | |||||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid for interest, net of amounts capitalized | $ | $ | |||||||||
| Supplemental disclosures of non-cash investing and financing activities: | |||||||||||
| Dividends declared and unpaid, net | $ | $ | |||||||||
| Deferred offering costs included in accounts payable, accrued expenses, and other liabilities | $ | $ | |||||||||
| Accrued loan origination fees on mortgage loans receivable | $ | $ | |||||||||
| Cash flow hedge change in fair value | $ | $ | ( | ||||||||
| Assumption of tenant allowances, other liabilities, and settlement of receivables in acquisitions of real estate | $ | $ | |||||||||
| Accrued capital expenditures and real estate development and improvement costs | $ | $ | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
NETSTREIT CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 – Organization and Description of Business
NETSTREIT Corp. (the “Company”) was incorporated on October 11, 2019 as a Maryland corporation and commenced operations on December 23, 2019. The Company conducts its operations through NETSTREIT, L.P., a Delaware limited partnership (the “Operating Partnership”). NETSTREIT GP, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company, is the sole general partner of the Operating Partnership.
The Company elected to be treated as and to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning with its short taxable year ended December 31, 2019. Additionally, the Operating Partnership formed NETSTREIT Management TRS, LLC (“NETSTREIT TRS”), which together with the Company jointly elected to be treated as a taxable REIT subsidiary under Section 856(a) of the Internal Revenue Code of 1986, as amended, (the “Code”) for U.S. federal income tax purposes.
The Company is structured as an umbrella partnership real estate investment trust (commonly referred to as an “UPREIT”) and is an internally managed real estate company that acquires, owns, and manages a diversified portfolio of single-tenant commercial retail properties, subject to long-term net leases with high-credit-quality tenants across the United States. The Company also invests in property developments and mortgage loans secured by real estate. As of March 31, 2026, the Company owned or had investments in 808 properties located in 46 states.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The accompanying condensed consolidated financial statements include the accounts of the Company and subsidiaries in which the Company has a controlling financial interest. All intercompany accounts and transactions have been eliminated in consolidation and the Company’s net income is reduced by the portion of net income attributable to noncontrolling interests.
Interim Unaudited Financial Information
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s most significant assumptions and estimates relate to the useful lives of real estate assets, lease accounting, real estate impairment assessments, and allocation of fair value of purchase consideration. These estimates are based on historical experience and other assumptions which management believes are reasonable under the circumstances. The Company evaluates its estimates on an ongoing basis and makes revisions to these estimates and related disclosures as experience develops or new information becomes known. Actual results could differ from those estimates.
7
Provisions for Impairment
Long-Lived Assets
Fair value measurement of an asset group occurs when events or changes in circumstances related to an asset indicate that the carrying amount of the asset is no longer recoverable. An example of an event or changed circumstance is a reduction in the expected holding period of a property. If indicators are present, the Company will prepare a projection of the undiscounted future cash flows of the property, excluding interest charges, and determine if the carrying amount of the asset group is recoverable. When a carrying amount is not recoverable, an impairment loss is recognized to the extent that the carrying amount of the asset group exceeds its fair market value. The Company estimates fair value using data such as operating income, estimated capitalization rates or multiples, leasing prospects, local market information, and discount rates, and with regard to assets held for sale, based on the estimated or negotiated selling price, less estimated costs of disposal. Based on these unobservable inputs, the Company determined that its valuations of impaired real estate and intangible assets fall within Level 3 of the fair value hierarchy under Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement (“ASC 820”). The Company recorded provisions for impairment on long-lived assets of $1.5 million and $3.6 million during the three months ended March 31, 2026 and 2025, respectively.
Mortgage Loans Receivable, Net
The Company classifies mortgage loans receivable as held for sale when it has made the decision to sell a loan. The Company records provisions for impairment on mortgage loans receivable when classified as held for sale if the amortized cost basis exceeds fair value. Fair value is determined based on Level 3 inputs within the fair value hierarchy under ASC 820, which includes the expected selling price of the loan, current market conditions, investor yield requirements, and other relevant factors. The Company recorded non-credit related provisions for impairment of $0.6 million on one mortgage loan receivable that was disposed of at a discount during the three months ended March 31, 2026. No provisions for impairment on mortgage loans receivable were recorded during the three months ended March 31, 2025.
Cash, Cash Equivalents, and Restricted Cash
The Company considers all cash balances, money market accounts, and highly liquid investments with original maturities of three months or less to be cash and cash equivalents. Restricted cash includes cash restricted for property tenant improvements and cash proceeds from the sale of assets held by qualified intermediaries in anticipation of the acquisition of replacement properties in tax-free exchanges under Section 1031 of the Code. Restricted cash is included in cash, cash equivalents, and restricted cash in the condensed consolidated balance sheets. The Company had $0.1
The Company’s bank balances as of March 31, 2026 and December 31, 2025 included certain amounts over the Federal Deposit Insurance Corporation limits.
Fair Value Measurements
The Company estimates fair value of financial and nonfinancial assets and liabilities based on the framework established in the fair value accounting guidance, ASC 820. Fair value measurements are utilized in the accounting of the Company’s assets acquired and liabilities assumed in an asset acquisition and also affect the Company’s accounting for certain of its financial assets and liabilities. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The hierarchy described below prioritizes inputs to the valuation techniques used in measuring the fair value of assets and liabilities. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring the most observable inputs to be used when available. The hierarchy is broken down into three levels based on the reliability of inputs as follows:
Level 1 — Quoted prices in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3 — Unobservable inputs for the asset or liability.
8
Concentrations of Credit Risk
During the three months ended March 31, 2026 and 2025, there were no tenants or borrowers with rental revenue or interest income on loans receivable that exceeded 10% of total revenues.
Other financial instruments that potentially subject the Company to significant concentrations of credit risk consist of cash held at various financial institutions, access to the Company’s credit facilities, and amounts due or payable under derivative contracts. These credit risk exposures are spread among a diversified group of investment grade financial institutions.
Segment Reporting
ASC Topic 280, Segment Reporting, establishes standards for the manner in which companies report information about operating segments. The Company is an internally managed real estate company that acquires, owns, invests in, and manages a diversified portfolio of single-tenant commercial retail properties, subject to long-term net leases with high-credit-quality tenants across the United States. The Company primarily engages in leasing activities that generate revenues and incur operating expenses in addition to investing in property developments and mortgage loans secured by real estate. The Company aggregates these investments for reporting purposes and operates in one reportable segment.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires disclosure, in the notes to the financial statements, of specified information about certain costs and expenses and a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. The Company is currently evaluating the potential impact of the guidance and potential additional disclosures required.
In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements (“ASU 2025-09”). ASU 2025-09 expands eligibility of risk components for hedge designation, clarifies the presentation and disclosure requirements for hedging relationships, and simplifies the assessment of hedge effectiveness. ASU 2025-09 is effective for annual periods beginning after December 15, 2026, including interim periods within those fiscal years. The Company is currently evaluating the potential impact of the guidance and potential additional disclosures required.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements (“ASU 2025-11”). ASU 2025-11 is intended to clarify and improve certain aspects of interim financial reporting, including the requirements for interim disclosures and the application of recognition and measurement guidance in interim periods. ASU 2025-11 is effective for interim reporting periods within annual reporting periods beginning after December 15, 2026. The Company is currently evaluating the potential impact of the guidance and potential additional disclosures required.
Note 3 – Leases
Tenant Leases
The Company acquires, owns, and manages single-tenant commercial retail net lease properties, the majority of which have long-term triple-net leases where the tenant is generally responsible for all improvements and contractually obligated to pay all operating costs (such as real estate taxes, utilities, and repairs and maintenance costs). As of March 31, 2026, exclusive of mortgage loans receivable, the Company’s WALT was 10.2 years.
9
The Company’s property leases have been classified as operating leases, with approximately half having scheduled rent increases throughout the lease term. The Company’s leases typically provide the tenant one or more multi-year renewal options to extend their leases, subject to generally the same terms and conditions, including rent increases, consistent with the initial lease term.
All lease-related income is reported as a single line item, rental revenue (including reimbursable), in the condensed consolidated statements of operations and comprehensive income (loss) and is presented net of any reserves, write-offs, or recoveries for uncollectible amounts.
Fixed lease income includes stated amounts per the lease contract, which include base rent, fixed common area maintenance charges, and straight-line lease adjustments.
Variable lease income primarily includes recoveries from tenants, which represent amounts that tenants are contractually obligated to reimburse the Company for, specific to their portion of actual recoverable costs incurred. Variable lease income also includes percentage rent, which represents amounts billable to tenants based on their actual sales volume in excess of levels specified in the lease contract.
The following table provides a disaggregation of lease income recognized under ASC Topic 842, Leases (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Rental revenue | |||||||||||
Fixed lease income (1) | $ | $ | |||||||||
Variable lease income (2) | |||||||||||
| Other rental revenue: | |||||||||||
| Above/below market lease amortization, net | |||||||||||
| Lease incentives | ( | ( | |||||||||
| Rental revenue (including reimbursable) | $ | $ | |||||||||
(1) Fixed lease income includes contractual rents under lease agreements with tenants recognized on a straight-line basis over the lease term.
(2) Variable lease income primarily includes tenant reimbursements for real estate taxes, insurance, common area maintenance, and reserves for uncollectible amounts. There were no material reserves, write-offs, or recoveries of uncollectible amounts during the periods indicated above.
Scheduled future minimum base rental payments (excluding base rental payments from properties classified as held for sale and straight-line rent adjustments for all properties) due to be received under the remaining noncancellable term of the operating leases in place as of March 31, 2026 are as follows (in thousands):
| Future Minimum Base Rental Receipts | |||||
| Remainder of 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
Future minimum rentals exclude amounts that may be received from tenants for reimbursements of operating costs and property taxes. In addition, the future minimum rents do not include any contingent rents based on a percentage of the lessees’ gross sales or lease escalations based on future changes in the Consumer Price Index or other stipulated reference rate.
Note 4 – Real Estate Investments
As of March 31, 2026, the Company owned or had investments in 808 properties. The gross real estate investment portfolio, including properties under development and mortgage loans receivable, totaled approximately $3.0 billion and consisted of the gross acquisition cost of land, buildings, improvements, lease intangible assets and liabilities, mortgage loans receivable, and property development costs. The investment portfolio is geographically dispersed throughout 46 states with gross real estate investments in Texas and Illinois representing 17.5 % and 8.1 %, respectively, of the total gross real estate investment of the Company’s investment portfolio.
10
The Company’s gross investment portfolio is summarized below (dollars in thousands):
| Number of Investments | Amount of Investment | ||||||||||||||||||||||
| March 31, 2026 | December 31, 2025 | March 31, 2026 | December 31, 2025 | ||||||||||||||||||||
Properties held for investment (1) | $ | $ | |||||||||||||||||||||
Properties held for sale | |||||||||||||||||||||||
| Mortgage loans receivable | |||||||||||||||||||||||
Properties under development (2) | |||||||||||||||||||||||
Total gross investment | $ | $ | |||||||||||||||||||||
(1) Includes one
(2) Rent has not commenced for properties under development.
Acquisitions
The Company’s acquisitions during the three months ended March 31, 2026 and 2025 were all accounted for as asset acquisitions. An allocation of the purchase price and acquisition costs paid for the completed acquisitions during the period is as follows (dollars in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Number of properties acquired | |||||||||||
| Purchase price allocation: | |||||||||||
| Land | $ | $ | |||||||||
| Buildings | |||||||||||
| Site improvements | |||||||||||
| Tenant improvements | |||||||||||
| In-place lease intangible assets | |||||||||||
Assets held for sale | |||||||||||
Total (1) | $ | $ | |||||||||
Dispositions
The Company’s property dispositions during the three months ended March 31, 2026 and 2025 are summarized below (dollars in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Number of properties sold | |||||||||||
| Sales price, net of disposal costs | $ | $ | |||||||||
| Gain on sales of real estate, net | $ | $ | |||||||||
11
Development
The Company’s investment in property developments during the three months ended March 31, 2026 and 2025 is summarized below (dollars in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Number of developments acquired | |||||||||||
| Purchase price of acquired developments | $ | $ | |||||||||
Total investment in properties under development (1) | $ | $ | |||||||||
Number of developments completed (2) | |||||||||||
Amounts placed into service (3) | $ | $ | |||||||||
(1) During the three months ended March 31, 2026 and 2025, the Company capitalized $0.1
(2) For the one development completed during the three months ended March 31, 2025, rent commenced in the second quarter of 2025.
(3) Amounts reclassified from property under development to land, buildings and improvements, and other assets (leasing commissions) in the accompanying condensed consolidated balance sheets.
As of March 31, 2026, the Company had four property developments under construction, which are expected to be substantially completed with rent commencing at various points throughout 2026 and into the first quarter of 2027. The purchase price, including acquisition costs, and subsequent development are included in property under development in the accompanying condensed consolidated balance sheets as of March 31, 2026.
Investment in Mortgage Loans Receivable
The Company’s mortgage loans receivable portfolio is summarized below (dollars in thousands):
| Loan Type | Monthly Payment (1) | Number of Secured Properties | Effective Interest Rate (2) | Stated Interest Rate | Maturity Date | March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||||||
Mortgage (3) (4) | I/O | 8/31/2027 | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Mortgage (4) (5) | I/O | 3/10/2026 | ||||||||||||||||||||||||||||||||||||||||||
Mortgage (4) (6) | I/O | 4/10/2026 | ||||||||||||||||||||||||||||||||||||||||||
Mortgage (3) (4) (6) | I/O | 6/10/2026 | ||||||||||||||||||||||||||||||||||||||||||
| Mortgage | None (7) | 5/1/2026 | ||||||||||||||||||||||||||||||||||||||||||
Mortgage (3) (4) | I/O | 9/30/2026 | ||||||||||||||||||||||||||||||||||||||||||
Mortgage (3) (4) | I/O | 7/24/2026 | ||||||||||||||||||||||||||||||||||||||||||
| Mortgage | P+I | 9/19/2027 | ||||||||||||||||||||||||||||||||||||||||||
| Mortgage | I/O | 9/30/2029 | ||||||||||||||||||||||||||||||||||||||||||
| Mortgage | I/O | 12/23/2029 | ||||||||||||||||||||||||||||||||||||||||||
| Mortgage | I/O | 12/23/2029 | ||||||||||||||||||||||||||||||||||||||||||
Mortgage (3) (4) | I/O | 3/12/2026 | ||||||||||||||||||||||||||||||||||||||||||
Mortgage (3) (8) | None (7) | 1/30/2027 | ||||||||||||||||||||||||||||||||||||||||||
Mortgage (9) | I/O | 5/18/2027 | ||||||||||||||||||||||||||||||||||||||||||
Mortgage (3) | I/O | 12/5/2026 | ||||||||||||||||||||||||||||||||||||||||||
Mortgage (3) (4) (10) | I/O | 9/2/2027 | ||||||||||||||||||||||||||||||||||||||||||
| Total | ||||||||||||||||||||||||||||||||||||||||||||
| Unamortized loan origination costs and fees, net | ||||||||||||||||||||||||||||||||||||||||||||
| Unamortized discount | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Total mortgage loans receivable, net | $ | $ | ||||||||||||||||||||||||||||||||||||||||||
(1) I/O: Interest Only; P+I: Principal and Interest.
(2) Includes amortization of discount, loan origination costs and fees, as applicable.
(3) The Company has the right, subject to certain terms and conditions, to acquire all or a portion of the underlying collateralized properties.
(4) Loans require monthly payments of interest only with principal payments occurring as borrower disposes of underlying properties, limited to the Company’s allocated investment by property. Any remaining principal balance will be repaid at or before the maturity date.
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(5) The mortgage loan was scheduled to mature on March 10, 2026, however, the Company executed an amendment in April 2026 that extended the maturity date to June 1, 2026.
(6) The stated interest rate is variable up to 15.0 % and is calculated based on contractual rent for existing collateralized properties subject to the loan agreement.
(7) Payments of both interest and principal are due at maturity.
(8) The collateralized properties are in process developments with varying maturity dates dependent upon initial funding. Maturity dates range from April 16, 2026 to January 30, 2027.
(9) Loan was disposed during the three months ended March 31, 2026.
(10) The collateralized properties are in process developments with varying maturity dates dependent upon initial funding. Maturity dates range from August 13, 2027 to September 2, 2027.
Note 5 – Intangible Assets and Liabilities
Intangible assets and liabilities consisted of the following (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||||||||||||||
| In-place leases | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Above-market leases | ( | ( | |||||||||||||||||||||||||||||||||
| Lease incentives | ( | ( | |||||||||||||||||||||||||||||||||
| Total intangible assets | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||||||||||||||
| Below-market leases | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
The remaining weighted average amortization period for the Company’s intangible assets and liabilities by category were as follows:
Years Remaining as of | |||||||||||
| March 31, 2026 | December 31, 2025 | ||||||||||
| In-place leases | |||||||||||
| Above-market leases | |||||||||||
| Below-market leases | |||||||||||
| Lease incentives | |||||||||||
The Company records amortization of in-place lease assets to amortization expense, and records net amortization of above-market and below-market lease intangibles as well as amortization of lease incentives to rental revenue. The following amounts in the accompanying condensed consolidated statements of operations and comprehensive income (loss) related to the amortization of intangible assets and liabilities for all property and ground leases (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Amortization: | |||||||||||
| Amortization of in-place leases | $ | $ | |||||||||
| Net adjustment to rental revenue: | |||||||||||
| Above-market lease assets | ( | ( | |||||||||
| Below-market lease liabilities | |||||||||||
| Lease incentives | ( | ( | |||||||||
| $ | ( | $ | |||||||||
13
The following table provides the projected amortization of in-place lease assets to amortization expense and the net amortization of above-market, below-market, and lease incentive lease intangible assets and liabilities to rental revenue as of March 31, 2026, for the next five years and thereafter (in thousands):
Remainder of 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | |||||||||||||||||||||||||||||||||||
| In-place leases | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Above-market lease assets | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Below-market lease liabilities | |||||||||||||||||||||||||||||||||||||||||
| Lease incentives | ( | ( | ( | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||
| Net adjustment to rental revenue | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||||||||||||||
Note 6 – Debt
Debt consists of the following (in thousands):
| Amounts Outstanding as of | ||||||||||||||||||||||||||||||||||||||
| Contractual Maturity Date | Fully Extended Maturity Date (1) | Interest Rate (2) | Hedged Interest Rate (3) | March 31, 2026 | December 31, 2025 | |||||||||||||||||||||||||||||||||
| Debt: | ||||||||||||||||||||||||||||||||||||||
| 2028 Term Loan | February 11, 2028 | — | $ | $ | ||||||||||||||||||||||||||||||||||
| 2029 Term Loan | July 3, 2026 | January 3, 2029 | ||||||||||||||||||||||||||||||||||||
| 2030 Term Loan A | January 15, 2029 | January 15, 2030 | ||||||||||||||||||||||||||||||||||||
| 2030 Term Loan B | January 15, 2029 | January 15, 2030 | ||||||||||||||||||||||||||||||||||||
| 2031 Term Loan | March 25, 2031 | — | ||||||||||||||||||||||||||||||||||||
| 2032 Term Loan | September 24, 2032 | — | ||||||||||||||||||||||||||||||||||||
| Revolver | January 15, 2029 | January 15, 2030 | — | |||||||||||||||||||||||||||||||||||
| Mortgage Note | November 1, 2027 | — | — | |||||||||||||||||||||||||||||||||||
| Total debt | ||||||||||||||||||||||||||||||||||||||
| Unamortized discount and debt issuance costs | ( | ( | ||||||||||||||||||||||||||||||||||||
Unamortized deferred financing costs, net (4) | ( | ( | ||||||||||||||||||||||||||||||||||||
| Total debt, net | $ | $ | ||||||||||||||||||||||||||||||||||||
(1) Date represents the fully extended maturity date available to the Company, subject to certain conditions, under each related debt instrument.
(2) Represents the stated interest rate within the respective debt agreement as of March 31, 2026. The term loans and Revolver bear a floating interest rate (SOFR) plus the applicable margin as described further in “Note 6 – Debt”.
(3) Represents the weighted-average hedged fixed rate plus the applicable margin as of March 31, 2026, as described further in “Note 6 – Debt” and “Note 7 – Derivative Financial Instruments.”
(4) The Company records deferred financing costs associated with the Revolver and loan commitment fees associated with the 2032 Term Loan in other assets, net in the condensed consolidated balance sheets. The Company reclassified the net amount of loan commitment fees associated with the 2029 Term Loan from other assets, net to debt issuance costs upon the $100.0 million draw under the 2029 Term Loan. The Company partially reclassified the net allocated amount of loan commitment fees associated with the 2032 Term Loan from other assets, net to debt issuance costs upon the $50.0 million draw under the 2032 Term Loan.
PNC Term Loan Agreement
On September 25, 2025, the Company entered into a Term Loan Agreement, by and among the Operating Partnership, the Company, the several institutions party thereto, as lenders, and PNC Bank, National Association, as Administrative Agent (the “PNC Term Loan Agreement”), related to a senior unsecured term loan facility consisting of (i) a $200.0 million senior unsecured term loan (the “2031 Term Loan”) and (ii) a $250.0 million senior unsecured term loan (the “2032 Term Loan”, and together with the 2031 Term Loan, the “PNC Term Loans”). All $200.0 million of the 2031 Term Loan was funded on September 25, 2025. Of the $250.0 million capacity of the 2032 Term Loan commitments, $100.0 million in term loans were funded on September 25, 2025, $50.0 million in term loans were funded on January 2, 2026, and the remaining $100.0 million is available as a delayed draw term loan commitment until September 25, 2026. Subject to the terms of the PNC Term Loan Agreement, the PNC Term Loans may be increased to an amount of up to $600.0 million at the Company’s request.
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The 2031 Term Loan matures on March 25, 2031 and is repayable at the Company’s option in whole or in part without premium or penalty. The 2032 Term Loan matures on September 24, 2032 and is repayable at the Company’s option in whole or in part, subject to a prepayment premium equal to (i) 2.0 % of any amount repaid during the first year of the term, and (ii) 1.0 % of any amount repaid during the second year of the term.
Prior to the date the Company obtained an Investment Grade Rating (as defined in the PNC Term Loan Agreement), interest rates were based on the Company’s consolidated total leverage ratio and were determined by (A) in the case of the 2031 Term Loan, either (i) SOFR, plus a margin ranging from 1.15 % to 1.60 %, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the PNC Term Loan Agreement), plus a margin ranging from 0.15 % to 0.60 %, based on the Company’s consolidated total leverage ratio; and (B) in the case of the 2032 Term Loan, either (i) SOFR, plus a margin ranging from 1.50 % to 2.20 %, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the PNC Term Loan Agreement), plus a margin ranging from 0.50 % to 1.20 %, based on the Company’s consolidated total leverage ratio.
After the date the Company obtained an Investment Grade Rating, interest rates are based on the Company’s credit rating, and are determined by (A) in the case of the 2031 Term Loan, either (i) SOFR, plus a margin ranging from 0.80 % to 1.60 %, based on the Company’s credit rating and consolidated total leverage ratio, or (ii) a Base Rate, plus a margin ranging from 0.00 % to 0.60 %, based on the Company’s credit rating and consolidated total leverage ratio and (B) in the case of the 2032 Term Loan, either (i) SOFR, plus a margin ranging from 1.15 % to 2.20 %, based on the Company’s credit rating and consolidated total leverage ratio, or (ii) a Base Rate, plus a margin ranging from 0.15 % to 1.20 %, based on the Company’s credit rating and consolidated total leverage ratio.
Additionally, the Company will incur a ticking fee based on the total undrawn amount under the 2032 Term Loan. The ticking fee of 0.20 % per annum will accrue from December 25, 2025 until September 25, 2026.
The Company has fully hedged the 2031 Term Loan with an all-in fixed interest rate of 4.39 % and has partially hedged $200.0 million of the 2032 Term Loan at an all-in fixed interest rate of 4.67 %. The remaining $50.0 million of the 2032 Term Loan is currently unhedged. Interest is payable monthly or at the end of the applicable interest period in arrears on any outstanding borrowings. The interest rate hedges are further described in “Note 7 – Derivative Financial Instruments.”
In connection with the entry into the PNC Term Loan Agreement, the Company incurred approximately $3.7 million of debt issuance costs, which were allocated between the 2031 Term Loan and 2032 Term Loan in the amounts of $2.2 million and $1.5 million, respectively. Additionally, the Company incurred $2.1 million of loan commitment fees associated with the 2032 Term Loan, which were initially capitalized to other assets, net in the condensed consolidated balance sheets. Of the $2.1 million of loan commitment fees, $0.7 million was reclassified to debt issuance costs upon the $50.0 million draw under the 2032 Term Loan. The deferred financing costs and capitalized loan commitment fees are amortized over the term of the loans, and are included in interest expense, net in the Company’s condensed consolidated statements of operations and comprehensive income (loss).
Truist Credit Agreement
On July 3, 2023, the Company entered into a Credit Agreement, by and among the Operating Partnership, the Company, the financial institutions party thereto, as lenders, and Truist Bank, as Administrative Agent (the “Truist Credit Agreement”), related to a $250.0 million sustainability-linked senior unsecured term loan (the “2029 Term Loan”), which may, subject to the terms of the Truist Credit Agreement, be increased to an amount of up to $400.0 million at the Company’s request. On January 15, 2025, the Truist Credit Agreement was amended to remove certain financial covenants and provide for revised, improved pricing when the Company meets certain investment grade rating and leverage targets. On September 25, 2025, the Truist Credit Agreement was further amended to, among other things, remove the SOFR credit spread adjustment from the 2029 Term Loan.
The 2029 Term Loan contains a 12-month delayed draw feature and $150.0 million was drawn on July 3, 2023. The Company drew an additional $100.0 million under the 2029 Term Loan on March 1, 2024. The 2029 Term Loan is prepayable at the Company’s option in whole or in part without premium or penalty. The 2029 Term Loan matures on July 3, 2026, subject to two one-year extension options and one six-month extension option with a final, extended maturity date of January 3, 2029. The extension options are at the Company’s election and are subject to certain conditions.
Prior to the date the Company obtained an Investment Grade Rating (as defined in the Truist Credit Agreement), interest accrued at either (i) SOFR, plus a margin ranging from 1.15 % to 1.60 % or (ii) Base Rate (as defined in the Truist Credit Agreement), plus a margin ranging from 0.15 % to 0.60 %, in each case based on the Company’s consolidated total leverage ratio. After the date the Company obtained an Investment Grade Rating, interest accrues at either (i) SOFR, plus a margin ranging from 0.80 % to 1.60 % or (ii) Base Rate, plus a margin ranging from 0.00 % to 0.60 %, in each case based on the Company’s credit rating.
15
The 2029 Term Loan also contains sustainability-linked pricing component pursuant to which the Company will receive interest rate reductions up to 0.025 % based on its performance against a sustainability performance target focused on the portion of the Company’s annualized based rent attributable to tenants with commitments or quantifiable targets for reduced GHG emission in accordance with the standards of the Science Based Targets initiative (“SBTi”).
The Company has fully hedged the 2029 Term Loan at an all-in fixed interest rate of 4.69 % through January 2029. Interest is payable monthly or at the end of the applicable interest period in arrears on any outstanding borrowings. The interest rate hedges are further described in “Note 7 – Derivative Financial Instruments.”
In connection with the entry into the 2029 Term Loan, the Company incurred $1.4 million of debt issuance costs. Additionally, the Company incurred $0.9 million of loan commitment fees associated with the 2029 Term Loan, which were capitalized to other assets, net in the condensed consolidated balance sheets and subsequently reclassified to debt issuance costs upon the $100.0 million draw under the 2029 Term Loan. Deferred financing costs are amortized over the term of the loan and are included in interest expense, net in the Company’s condensed consolidated statements of operations and comprehensive income (loss).
PNC Credit Agreement
On August 11, 2022, the Company entered into a Credit Agreement, by and among the Operating Partnership, the Company, the several institutions party thereto, as lenders, and PNC Bank, National Association, as Administrative Agent (the “PNC Credit Agreement”), related to sustainability-linked senior unsecured credit facility consisting of (i) a $200.0 million senior unsecured term loan (the “2028 Term Loan”) and (ii) a $400.0 million senior unsecured revolving credit facility (the “Revolver”).
On January 15, 2025, the Company amended and restated the existing PNC Credit Agreement to provide for: the existing $200.0 million 2028 Term Loan; an upsized $500.0 million Revolver (increased from $400.0 million); and a new $175.0 million senior unsecured term loan (the “2030 Term Loan B”, and together with the 2028 Term Loan and the Revolver, the “PNC Credit Facility”). On September 25, 2025, the PNC Credit Agreement was further amended to, among other things, remove the SOFR credit spread adjustment from the PNC Credit Facility. The borrowing capacity under the PNC Credit Facility may be increased in an amount of up to $1.4 billion in the aggregate, subject to certain conditions.
The 2028 Term Loan matures on February 11, 2028. The 2030 Term Loan B and the upsized Revolver initially mature on January 15, 2029 and include, at the Company’s election, a -year option to extend the maturity to January 15, 2030, subject to certain conditions. Borrowings under the PNC Credit Facility are repayable at the Company’s option in whole or in part without premium or penalty. Borrowings under the Revolver may be repaid and reborrowed from time to time prior to the maturity date.
Prior to the date the Company obtained an Investment Grade Rating (as defined in the PNC Credit Agreement), interest rates were based on the Company’s consolidated total leverage ratio and were determined by (A) in the case of the 2028 Term Loan and the 2030 Term Loan B, either (i) SOFR, plus a margin ranging from 1.15 % to 1.60 %, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the PNC Credit Agreement), plus a margin ranging from 0.15 % to 0.60 %, based on the Company’s consolidated total leverage ratio; and (B) in the case of the Revolver either (i) SOFR, plus a margin ranging from 1.00 % to 1.45 %, based on the Company’s consolidated total leverage ratio, or (ii) a Base Rate (as defined in the PNC Credit Agreement), plus a margin ranging from 0.00 % to 0.45 %, based on the Company’s consolidated total leverage ratio.
After the date the Company obtained an Investment Grade Rating, interest rates are based on the Company’s credit rating, and are determined by (A) in the case of the 2028 Term Loan and the 2030 Term Loan B, either (i) SOFR, plus a margin ranging from 0.80 % to 1.60 %, based on the Company’s credit rating and consolidated total leverage ratio, or (ii) a Base Rate, plus a margin ranging from 0.00 % to 0.60 %, based on the Company’s credit rating and consolidated total leverage ratio and (B) in the case of the Revolver either (i) SOFR, plus a margin ranging from 0.725 % to 1.40 %, based on the Company’s credit rating and consolidated total leverage ratio, or (ii) a Base Rate, plus a margin ranging from 0.00 % to 0.40 %, based on the Company’s credit rating and consolidated total leverage ratio.
Additionally, the Company will incur a facility fee based on the total commitment amount of $500.0 million under the Revolver. Prior to the date the Company obtained an Investment Grade Rating, the applicable facility fee ranged from 0.15 % to 0.30 % based on the Company’s consolidated total leverage ratio. After the date the Company obtained an Investment Grade Rating, the applicable facility fee ranges from 0.125 % to 0.30 % based on the Company’s credit rating.
16
The PNC Credit Facility also contains a sustainability-linked pricing component pursuant to which the Company will receive interest rate reductions up to 0.025 % based on its performance against a sustainability performance target focused on the portion of the Company’s annualized base rent attributable to tenants with commitments or quantifiable targets for reduced greenhouse gas emission in accordance with the standards of the SBTi.
The Company has fully hedged the 2028 Term Loan with an all-in fixed interest rate of 3.58 %, and the 2030 Term Loan B with an all-in fixed interest rate of 4.82 %. Interest is payable monthly or at the end of the applicable interest period in arrears on any outstanding borrowings. The interest rate hedges are further described in “Note 7 – Derivative Financial Instruments.”
In connection with the entry into the PNC Credit Agreement, the Company incurred approximately $3.8 million of deferred financing costs, which were allocated between the Revolver and 2028 Term Loan in the amounts of $2.4 million and $1.3 million, respectively. In connection with the first amendment to the PNC Credit Agreement, the Company incurred approximately $5.1 million of deferred financing costs, which were allocated between the Revolver and 2030 Term Loan B in the amounts of $3.7 million and $1.4 million, respectively. Additionally, $0.5 million of unamortized deferred financing costs associated with the Company’s previous revolving credit facility were reclassified to the Revolver. Deferred financing costs are amortized over the remaining terms of each respective borrowing and are included in interest expense, net in the Company’s condensed consolidated statements of operations and comprehensive income (loss).
Wells Fargo Credit Agreement
In December 2019, the Company entered into a Credit Agreement, by and among the Operating Partnership, the Company, the several institutions party thereto, as lenders, and Wells Fargo Bank, National Association, as Administrative Agent, which was subsequently amended and restated on June 15, 2023 (as amended, the “Wells Fargo Credit Agreement”), governing a $175.0 million senior unsecured term loan that was scheduled to mature on January 15, 2026, subject to a one-year extension option at the Company’s election (subject to certain conditions) (the “2027 Term Loan”).
On January 15, 2025, the Company amended and restated the Wells Fargo Credit Agreement to extend the maturity date of the 2027 Term Loan to January 15, 2029, subject to a -year extension option at the Company’s election (subject to certain conditions) (as amended, the “2030 Term Loan A”). On September 25, 2025, the Wells Fargo Credit Agreement was further amended to, among other things, remove the SOFR credit spread adjustment from the 2030 Term Loan A. The 2030 Term Loan A is repayable at the Company’s option in whole or in part without premium or penalty.
Prior to the date the Company obtained an Investment Grade Rating (as defined in the Wells Fargo Credit Agreement), interest accrued at either (i) SOFR, plus a margin ranging from 1.15 % to 1.60 % or (ii) Base Rate (as defined in the Wells Fargo Credit Agreement), plus a margin ranging from 0.15 % to 0.60 %, in each case based on the Company’s consolidated total leverage ratio. After the date the Company obtained an Investment Grade Rating, interest accrues at either (i) SOFR, plus a margin ranging from 0.80 % to 1.60 % or (ii) Base Rate, plus a margin ranging from 0.00 % to 0.60 %, in each case based on the Company’s credit rating.
The Company has fully hedged the 2030 Term Loan A with an all-in fixed interest rate of 3.35 %. Interest is payable monthly or at the end of the applicable interest period in arrears on any outstanding borrowings. The interest rate hedges are described in “Note 7 – Derivative Financial Instruments.”
In connection with the 2030 Term Loan A, the Company incurred $1.1 million of deferred financing costs. Deferred financing costs are amortized over the term of the loan and are included in interest expense, net in the Company’s condensed consolidated statements of operations and comprehensive income (loss).
Reduced Margins on Debt
As of December 30, 2025, as a result of receiving an investment grade credit rating, the interest rates on the Company’s term loans and revolving credit facility, including the revolving credit facility fee, are now determined by the Company’s credit rating and consolidated total leverage ratio.
17
Mortgage Note Payable
As of March 31, 2026, the Company had total gross mortgage indebtedness of $8.0 million, which was collateralized by related real estate and a tenant’s lease with an aggregate net book value of $11.5 million. The Company incurred debt issuance costs of less than $0.1 million and recorded a debt discount of $0.6 million, both of which are recorded as a reduction of the principal balance in mortgage note payable, net in the Company’s condensed consolidated balance sheets. The mortgage note matures on November 1, 2027, but may be repaid in full beginning August 2027.
Debt Maturities
Payments on the 2028 Term Loan, 2029 Term Loan, 2030 Term Loan A, 2030 Term Loan B, 2031 Term Loan, and 2032 Term Loan are interest-only through maturity. As of March 31, 2026, scheduled debt maturities, including balloon payments, are as follows (in thousands):
| Scheduled Principal Payment | Balloon Payment (1) | Total | ||||||||||||||||||
Remainder of 2026 | $ | $ | $ | |||||||||||||||||
| 2027 | ||||||||||||||||||||
| 2028 | ||||||||||||||||||||
| 2029 | ||||||||||||||||||||
| 2030 | ||||||||||||||||||||
Thereafter | ||||||||||||||||||||
| Total | $ | $ | $ | |||||||||||||||||
(1) Does not assume the exercise of any extension options available to the Company.
Interest Expense
The following table is a summary of the components of interest expense related to the Company’s borrowings (in thousands):
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
Revolving credit facilities (1) | $ | $ | ||||||||||||
Term loans (2) | ||||||||||||||
| Mortgage note payable | ||||||||||||||
| Non-cash: | ||||||||||||||
| Amortization of deferred financing costs | ||||||||||||||
| Amortization of debt discount and debt issuance costs, net | ||||||||||||||
Amortization of deferred losses on interest rate swaps | ||||||||||||||
| Capitalized interest | ( | ( | ||||||||||||
| Total interest expense, net | $ | $ | ||||||||||||
(1) Includes facility fees of approximately $0.3 million and $0.2 million for the three months ended March 31, 2026 and 2025, respectively.
Deferred financing, discount, and debt issuance costs are amortized over the remaining terms of each respective borrowing and are included in interest expense, net in the Company’s condensed consolidated statements of operations and comprehensive income (loss).
The Company was in compliance with all of its debt covenants as of March 31, 2026 and expects to be in compliance for the twelve month period ending December 31, 2026.
18
Note 7 – Derivative Financial Instruments
The Company uses interest rate derivative contracts to manage its exposure to changes in interest rates on its variable rate debt. These derivatives are considered cash flow hedges and are recorded on a gross basis at fair value. Assessments of hedge effectiveness are performed quarterly using either a qualitative or quantitative approach. The Company recognizes the entire change in the fair value in Accumulated Other Comprehensive Income (“AOCI”), and the change is reflected as cash flow hedge changes in fair value in the supplemental disclosures of non-cash investing and financing activities in the condensed consolidated statements of cash flows.
Amounts will subsequently be reclassified to earnings when the hedged item affects earnings. The Company does not enter into derivative contracts for speculative or trading purposes and does not have derivative netting arrangements.
The Company is exposed to credit risk in the event of non-performance by its derivative counterparties. The Company evaluates counterparty credit risk through monitoring the creditworthiness of counterparties, which includes review of debt ratings and financial performance. To mitigate credit risk, the Company enters into agreements with counterparties it considers credit-worthy, such as large financial institutions with favorable credit ratings.
The following table summarizes the terms and fair values of the Company’s interest rate derivative contracts that were designated as cash flow hedges of interest rate risk (dollars in thousands):
Number of Instruments | Aggregate Notional Value | Fair Value of Asset (Liability)(2) | ||||||||||||||||||||||||||||||||||||||||||||||||
Associated Debt Instrument | March 31, 2026 | December 31, 2025 | Hedge Fixed Rate(1) | Maturity Dates | March 31, 2026 | December 31, 2025 | March 31, 2026 | December 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||
2028 Term Loan | February 11, 2028 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||
2029 Term Loan | January 3, 2029 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
2030 Term Loan A | January 23, 2027 | |||||||||||||||||||||||||||||||||||||||||||||||||
2030 Term Loan B | January 2, 2030 | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| 2031 Term Loan | March 1, 2031 | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2032 Term Loan | September 1, 2032 | |||||||||||||||||||||||||||||||||||||||||||||||||
Total | $ | $ | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||||||
(1) Represents the weighted-average hedge fixed rate of the derivative contracts for each associated debt instrument and excludes the associated applicable margin as described in “Note 6 – Debt.”
(2) Derivative contracts in asset positions are included within other assets, net and derivative contracts in liability positions are included within accounts payable, accrued expenses, and other liabilities in the condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025.
The following table presents the effect of the Company’s interest rate swaps in the condensed consolidated statements of operations and comprehensive income (loss) (in thousands):
| Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion) | Location of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion) | ||||||||||||||||||||||||||||||
| Derivatives in Cash Flow Hedging Relationships | Three Months Ended March 31, | Three Months Ended March 31, | ||||||||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
| Interest Rate Products | $ | $ | ( | Interest expense, net | $ | $ | ||||||||||||||||||||||||||
The Company did not exclude any amounts from the assessment of hedge effectiveness for the three months ended March 31, 2026 and 2025. During the next twelve months, the Company estimates that an additional $1.6
19
Note 8 – Fair Value Measurements
GAAP establishes a hierarchy of valuation techniques based on the observability of inputs used in measuring financial instruments at fair value. GAAP establishes market-based or observable inputs as the preferred source of values, followed by valuation models using management assumptions in the absence of market inputs.
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety.
Financial Assets and Liabilities
Companies are required to disclose the estimated fair values of all financial instruments, even if those instruments are not carried at fair value. The fair values of financial instruments are based on estimates that reflect market conditions and perceived risks as of March 31, 2026 and December 31, 2025. These estimates require management’s judgment and may not be indicative of the future fair values of the assets and liabilities.
The carrying values of the Company’s cash, cash equivalents, and restricted cash (including money market accounts), other assets, and accounts payable, accrued expenses, and other liabilities approximate their fair values due to the short-term nature of these instruments. Additionally, the Company believes that the following financial instruments have carrying values that approximate their fair values as of March 31, 2026:
•Borrowings under the Company’s Revolver (as defined in “Note 6 – Debt”) approximate fair value based on their nature, terms, and variable interest rates.
•Carrying values of the Company’s mortgage loans receivable approximate fair value based on a number of factors, including either their short-term nature, the availability of market quotes for comparable instruments, and a discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates, and credit spreads.
•Carrying value of the Company’s mortgage note payable approximates fair value based on a discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates, and credit spreads.
The table below presents the carrying values and estimated fair values of certain financial assets and liabilities, aggregated by their level in the fair value hierarchy within which those measurements fall (in thousands):
| Fair Value Hierarchy Level | ||||||||||||||||||||||||||||||||
| Description | Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||
| March 31, 2026 | ||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Derivative assets | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Term loans (1) | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||
| Derivative assets | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Term loans (1) | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
(1) Recorded at carrying value in the condensed consolidated balance sheets which represents amortized cost, net of unamortized debt issuance and discount costs.
The estimated fair values of the Company’s term loans (each as defined in “Note 6 – Debt”) are derived based primarily on unobservable market inputs such as interest rates and discounted cash flow analysis using estimates of the amount and timing of future cash flows, market rates, and credit spreads (Level 3 inputs).
20
The Company’s derivative assets and liabilities are measured at fair value on a recurring basis. The estimated fair values are determined using widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves.
To comply with the provisions of ASC 820, the Company incorporates credit valuation adjustments to appropriately reflect both its own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair value of its derivative contracts for the effect of nonperformance risk, the Company has considered the impact of netting and any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with its derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by itself and its counterparties. However, as of March 31, 2026, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of its derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
Nonfinancial Assets and Liabilities
Certain nonfinancial assets and liabilities are measured at fair value on a non-recurring basis and are subject to fair value adjustments only under certain circumstances, such as when an impairment write-down occurs. Depending on impairment triggering events, impairments are typically recorded for properties sold, in the process of being sold, vacant, in bankruptcy, or experiencing difficulties with collection of rent.
The following table summarizes the provisions for impairment on real estate investments during the periods indicated below (dollars in thousands):
| Three Months Ended March 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
| Carrying value prior to impairment | $ | $ | ||||||||||||
| Less: total provisions for impairment | ( | ( | ||||||||||||
| Carrying value after impairment | $ | $ | ||||||||||||
Number of properties: (1) | ||||||||||||||
| Classified as held for sale | ||||||||||||||
| Disposed within the period | ||||||||||||||
| Classified as held for investment | ||||||||||||||
(1) Includes the number of properties that were either (i) impaired during the respective period and remained as held for sale as of period-end, (ii) impaired and disposed during the respective period, or (iii) impaired during the respective period and remained as held for investment at period-end.
21
Note 9 – Supplemental Detail for Certain Components of the Condensed Consolidated Balance Sheets
Other assets, net consists of the following (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Accounts receivable, net | $ | $ | |||||||||
| Deferred rent receivable | |||||||||||
| Prepaid assets | |||||||||||
| Earnest money deposits | |||||||||||
| Fair value of interest rate swaps | |||||||||||
| Deferred offering costs | |||||||||||
| Deferred financing costs, net | |||||||||||
| Leasehold improvements and other corporate assets, net | |||||||||||
| Interest receivable | |||||||||||
| Other assets, net | |||||||||||
| $ | $ | ||||||||||
Accounts payable, accrued expenses, and other liabilities consists of the following (in thousands):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Accrued expenses | $ | $ | |||||||||
| Accrued bonus | |||||||||||
| Prepaid rent | |||||||||||
| Operating lease liability | |||||||||||
| Accrued interest | |||||||||||
| Deferred rent | |||||||||||
| Accounts payable | |||||||||||
| Fair value of interest rate swaps | |||||||||||
Tenant improvement allowances | |||||||||||
| Other liabilities | |||||||||||
| $ | $ | ||||||||||
Note 10 – Shareholders’ Equity
ATM Programs
On October 25, 2023, the Company entered into a $300.0 million at-the-market equity program (the “2023 ATM Program”) through which, from time to time, it may sell shares of its common stock in registered transactions.
During 2024, the Company entered into forward sale agreements with respect to an aggregate 1,743,100 shares of its common stock under the 2023 ATM Program at a weighted-average price of $17.67 per share. The Company may physically settle the forward sale agreements (by the delivery of shares of common stock) and receive proceeds from the sale of those shares on one or more forward settlement dates, which shall occur no later than December 31, 2026.
On August 12, 2024, the Company entered into a $300.0 million at-the-market equity program (the “2024 ATM Program”) through which, from time to time, it may sell shares of its common stock in registered transactions. Effective August 12, 2024, in connection with the establishment of the new at-the-market offering program, the 2023 ATM Program was terminated. As a result of the termination, the Company will not offer or sell any additional shares of common stock under the 2023 ATM Program. As context requires, the 2024 ATM Program and the 2023 ATM Program are referred to herein as the “ATM Programs.”
22
During the three months ended March 31, 2026, the Company entered into forward sale agreements with respect to an aggregate 3,956,031 shares of its common stock under the 2024 ATM Program at a weighted-average price of $18.81 per share. The Company may physically settle the forward sale agreements (by the delivery of shares of common stock) and receive proceeds from the sale of those shares on one or more forward settlement dates, which shall occur no later than the stated maturity dates ranging from January 2027 to March 2027.
During 2025, the Company entered into forward sale agreements with respect to an aggregate 9,068,486 shares of its common stock under the 2024 ATM Program at a weighted-average price of $17.75 per share. The Company may physically settle the forward sale agreements (by the delivery of shares of common stock) and receive proceeds from the sale of those shares on one or more forward settlement dates, which shall occur no later than the stated maturity dates ranging from September 2026 to November 2026.
The following table presents information about the ATM Programs (in thousands):
As of March 31, 2026 | ||||||||||||||||||||||||||||||||||||||
| Program Name | Date Established | Date Terminated | Maximum Sales Authorization | Value of Gross Proceeds Settled(1) | Value of Gross Proceeds of Unsettled Forward Equity | Value of Gross Proceeds Available for Issuance(2) | ||||||||||||||||||||||||||||||||
2023 ATM Program(3) | October 2023 | August 2024 | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
2024 ATM Program(4) | August 2024 | — | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
(1) Represents gross proceeds received from shares of common stock issued by the Company under the ATM Programs, including settlements of forward sale agreements.
(2) Represents gross proceeds available for future issuances of shares of common stock under the ATM Programs.
(3) As of March 31, 2026, 1,743,100 shares remain unsettled under the forward sale agreements at a weighted-average available net settlement price of $17.15 .
(4) As of March 31, 2026, 10,726,818 shares remain unsettled under the forward sale agreements at a weighted-average available net settlement price of $18.12 .
February 2026 Follow-On Offering
In February 2026, the Company completed a registered public offering of 12,627,000 shares of its common stock at a public offering price of $19.00 per share, including the full exercise of the underwriters’ option to purchase additional shares. In connection with the offering, the Company entered into forward sale agreements for 12,627,000 shares of its common stock. The Company did not initially receive any proceeds from the sale of shares of common stock by the forward purchasers.
As of March 31, 2026, 12,627,000 shares remain unsettled under the February 2026 forward sale agreements. The Company expects to physically settle the forward sale agreements (by delivery of shares of common stock) and receive proceeds from the sale of those shares upon one or more forward settlement dates, which shall occur no later than February 12, 2027.
January 2024 Follow-On Offering
In January 2024, the Company completed a registered public offering of 11,040,000 shares of its common stock at a public offering price of $18.00 per share. In connection with the offering, the Company entered into forward sale agreements for 11,040,000 shares of its common stock. The Company did not initially receive any proceeds from the sale of shares of common stock by the forward purchasers.
On February 6, 2026, the Company physically settled 4,000,000 shares of common stock at a weighted-average price of $16.98 per share in accordance with the forward sale agreements. The Company received net proceeds from the settlement of $67.8 million, net of underwriting discounts and offering costs of $4.2 million. The Company contributed the net proceeds to the Operating Partnership in exchange for 4,000,000 OP Units (as defined below).
As of March 31, 2026, 4,840,000 shares remain unsettled under the January 2024 forward sale agreements. The Company expects to physically settle the forward sale agreements (by delivery of shares of common stock) and receive proceeds from the sale of those shares upon one or more forward settlement dates, which shall occur no later than December 31, 2026.
23
The following table presents information about the Company’s January 2024, July 2025, and February 2026 follow-on offerings (in thousands, except share data):
| As of March 31, 2026 | ||||||||||||||||||||||||||
| Follow-On Offering | Shares Sold | Shares Settled | Shares Unsettled | Value of Gross Proceeds of Unsettled Forward Equity | ||||||||||||||||||||||
| January 2024 | $ | |||||||||||||||||||||||||
| July 2025 | $ | |||||||||||||||||||||||||
| February 2026 | $ | |||||||||||||||||||||||||
Surrendered Shares on Vested Stock Unit Awards
During the three months ended March 31, 2026 and 2025, portions of restricted stock unit awards (“RSUs”) granted to certain of the Company’s officers, directors, and employees vested. The vesting of these awards, granted pursuant to the NETSTREIT Corp. Amended and Restated 2019 Omnibus Incentive Plan (the “Omnibus Incentive Plan”), resulted in federal and state income tax liabilities for the recipients. During the three months ended March 31, 2026 and 2025, as permitted by the terms of the Omnibus Incentive Plan and the award grants, certain executive officers and employees elected to surrender approximately 83 thousand and 40 thousand RSUs valued at approximately $1.7 million and $0.6 million, respectively, solely to pay the associated statutory withholding tax. The surrendered RSUs are included in the row entitled “repurchase of common stock for tax withholding obligations” in the condensed consolidated statements of cash flows and condensed consolidated statements of changes in equity.
Dividends
During the three months ended March 31, 2026, the Company declared and paid the following common stock dividends (in thousands, except per share data):
| Three Months Ended March 31, 2026 | ||||||||||||||||||||||||||
| Declaration Date | Dividend Per Share | Record Date | Total Amount | Payment Date | ||||||||||||||||||||||
| February 5, 2026 | $ | March 16, 2026 | $ | March 31, 2026 | ||||||||||||||||||||||
During the three months ended March 31, 2025, the Company declared and paid the following common stock dividends (in thousands, except per share data):
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||
| Declaration Date | Dividend Per Share | Record Date | Total Amount | Payment Date | ||||||||||||||||||||||
| February 21, 2025 | $ | March 14, 2025 | $ | March 31, 2025 | ||||||||||||||||||||||
Noncontrolling Interests
NETSTREIT GP, LLC, a wholly owned subsidiary of the Company, is the sole general partner of the Operating Partnership and holds a 1.0 % general partner interest in the Operating Partnership. The Company contributes net proceeds from issuing shares of common stock to the Operating Partnership in exchange for common units of limited partnership interest in the Operating Partnership (the “OP Units”) equal to the number of shares of common stock issued.
As of March 31, 2026, the Company held 97,253,523 OP Units and external parties (the “Noncontrolling OP Unit Holders”) held 402,178 OP Units, representing 99.6 % and 0.4 %, respectively, of OP Units. As of December 31, 2025, the Company held 97,070,533 OP Units and Noncontrolling OP Unit Holders held 412,143 OP Units, representing 99.6 % and 0.4 %, respectively, of OP Units. The OP Units held by Noncontrolling OP Unit Holders are presented as noncontrolling interests in the Company’s condensed consolidated financial statements.
The holders of OP Units are entitled to receive an equal distribution for each OP Unit held as of each record date. During the three months ended March 31, 2026 and 2025, the Operating Partnership paid distributions of $0.1
24
OP Units may be redeemed for cash or, at the Company’s election, exchanged for shares of the Company’s common stock on a one -for-one basis. During the three months ended March 31, 2026, Noncontrolling OP Unit Holders redeemed 9,965 OP Units for shares of common stock on a one
Note 11 – Stock-Based Compensation
Under the Omnibus Incentive Plan, 4,294,976 shares of common stock are reserved for issuance and, as of March 31, 2026, 3,134,013 shares of common stock were available for future issuance under the Omnibus Incentive Plan. The Omnibus Incentive Plan provides for the grant of stock options, stock appreciation rights, restricted shares, RSUs, LTIP Units (as defined below), dividend equivalent rights, and other share-based, share-related, or cash-based awards, including performance-based awards, to employees, directors, and consultants, with each grant evidenced by an award agreement providing the terms of the award. The Omnibus Incentive Plan is administered by the Compensation Committee of the Board of Directors.
As of March 31, 2026, the only stock-based compensation granted by the Company were RSUs and LTIP Units. The total amount of stock-based compensation costs recognized in general and administrative expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss) was $1.7 million and $1.4 million for the three months ended March 31, 2026 and 2025, respectively. All awards of unvested RSUs and LTIP Units are expected to fully vest within the next five years .
The following table summarizes RSU and LTIP Unit activity for the period indicated below:
| Restricted Stock Units | LTIP Units | ||||||||||||||||||||||||||||||||||||||||||||||
Service-Based | Performance | Service-Based | Performance | ||||||||||||||||||||||||||||||||||||||||||||
| Units | Weighted Average Grant Date Fair Value per Unit | Units | Weighted Average Grant Date Fair Value per Unit | Units | Weighted Average Grant Date Fair Value per Unit | Units(1) | Weighted Average Grant Date Fair Value per Unit | ||||||||||||||||||||||||||||||||||||||||
| Unvested grants outstanding as of December 31, 2025 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Granted during the period | |||||||||||||||||||||||||||||||||||||||||||||||
| Forfeited during the period | ( | ||||||||||||||||||||||||||||||||||||||||||||||
| Vested during the period | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
Unvested grants outstanding as of March 31, 2026 | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
(1) The number of Performance LTIP Units disclosed is based on the target level of awards being achieved, with the ultimate number earned subject to the achievement of specified performance metrics over a three-year performance period, ranging from 0 % to 200 % of target. The actual number of Performance LTIP Units issued on the grant date assumes maximum performance is achieved.
Service-Based RSUs
Pursuant to the Omnibus Incentive Plan, the Company has made service-based RSU grants to certain employees and non-employee directors. The vesting terms of these grants are specific to the individual grant and vest in equal annual installments within the next to five years .
For the three months ended March 31, 2026 and 2025, the Company recognized $0.9 million and $0.8 million, respectively, in stock-based compensation expense associated with service-based RSUs. As of March 31, 2026 and December 31, 2025, the remaining unamortized stock-based compensation expense totaled $5.0 million and $3.9 million, respectively, and as of March 31, 2026, these awards are expected to be recognized over a remaining weighted average period of 2.1 years. Stock-based compensation expense is recognized on a straight-line basis over the total requisite service period for the entire award.
The grant date fair value of unvested service-based RSUs is the per share price of the Company’s stock on the date of grant.
25
Performance-Based RSUs (total shareholder return)
Pursuant to the Omnibus Incentive Plan, the Company has made performance-based RSU grants to certain employees. These grants are subject to the participant’s continued service over a three-year period with 40 % of the award based on the Company’s total shareholder return (“TSR”) as compared to the TSR of identified peer companies and 60 % of the award based on total absolute TSR over the cumulative three-year period. The performance period of these grants runs through December 31, 2026 and December 31, 2027. Grant date fair value of the performance-based share awards was calculated using the Monte Carlo simulation model, which incorporated stock price volatility of the Company and each of the Company’s peers and other variables over the performance period. Stock-based compensation expense associated with unvested performance-based share awards is recognized on a straight-line basis over the minimum required service period of three years .
For the three months ended March 31, 2026 and 2025, the Company recognized $0.5 2.3 million and $2.8 million, respectively, and as of March 31, 2026, these awards are expected to be recognized over a remaining weighted average period of 1.5 years.
LTIP Units
On February 11, 2026, the Company entered into the Second Amended and Restated Agreement of Limited Partnership of the Operating Partnership to, among other things, designate and set forth the terms of a new class of units of limited partnership interest in the Operating Partnership (the “LTIP Units”), including Basic LTIP Units, which have service-based vesting conditions (“Basic LTIP Units”), and Performance LTIP Units, which have performance-based vesting conditions (“Performance LTIP Units”). Each LTIP Unit awarded is deemed equivalent to an award of one share of stock under the Omnibus Incentive Plan, reducing the availability for other equity awards on a one -for-one basis. LTIP Units are automatically converted into OP Units upon satisfaction of the applicable vesting conditions, which are determined at the time of issuance. Following the second anniversary of the grant date of the applicable LTIP Unit, each OP Unit issued upon conversion of an LTIP Unit is redeemable for cash equal to the then-current market value of one share of the Company’s common stock or, at the election of the Company, one share of the Company’s common stock. From their applicable grant dates, unvested Basic LTIP Units are entitled to receive the same distributions as OP Units, and unvested Performance LTIP Units are entitled to receive 10 % of distributions made on OP Units and catch-up distributions are made upon vesting.
Basic LTIP Units
Pursuant to the Omnibus Incentive Plan, the Company has granted Basic LTIP Units to certain employees. The awards vest in equal annual installments over three years on each anniversary of the grant date, subject to continued service to the Company and certain exceptions.
For the three months ended March 31, 2026, the Company recognized $0.1 million in stock-based compensation expense associated with Basic LTIP Units. As of March 31, 2026, the remaining unamortized stock-based compensation expense totaled $2.4 million, and as of March 31, 2026, these awards are expected to be recognized over a remaining weighted average period of 2.9 years. Stock-based compensation expense is recognized on a straight-line basis over the total requisite service period for the entire award.
The grant date fair value of Basic LTIP Units is calculated as the per share price of the Company’s common stock on the date of grant.
Performance LTIP Units
Pursuant to the Omnibus Incentive Plan, the Company has granted Performance LTIP Units to the Company’s executives and senior management team. These grants are subject to the participant’s continued service over a three-year period with 40 % of the award based on the Company’s growth rate of Adjusted FFO (“AFFO”) per diluted share over a three-year performance period, and 60 % of the award based on the Company’s TSR as compared to the TSR of identified peer companies over the cumulative three-year period. The payout schedule can produce vesting percentages ranging from 0 % to 200 % of target. The actual number of Performance LTIP Units issued on the grant date assumes maximum performance is achieved. The performance period of these grants runs through December 31, 2028.
26
The grant date fair value of the AFFO component is the per share price of the Company’s stock on the date of grant. The grant date fair value of the TSR component was calculated using the Monte Carlo simulation model, which incorporated stock price volatility of the Company and each of the Company’s peers and other variables over the performance period. Significant inputs for the current period calculation were expected volatility of the Company of 22.4 % and expected volatility of the Company’s peers, ranging from 17.6 % to 38.8 %, with an average volatility of 22.3 %, and a risk-free interest rate of 3.5 %. The fair value per share on the grant date specific to the target TSR relative to the Company’s peers was $21.34 .
For the three months ended March 31, 2026, the Company recognized $0.1 million in stock-based compensation expense associated with Performance LTIP Units. As of March 31, 2026, the remaining unamortized stock-based compensation expense totaled $2.4 million, and as of March 31, 2026, these awards are expected to be recognized over a remaining weighted average period of 2.8 years. Stock-based compensation expense associated with unvested Performance LTIP Units is recognized on a straight-line basis over the minimum required service period of three years .
Alignment of Interest Program
Under the Alignment of Interest Program (the “Program”), the Company allows employees to elect to receive a portion of their annual bonus in RSUs in the first quarter of the following year, that vest from to four years based on the terms of the grant agreement. Stock-based compensation expense is recognized on a straight-line basis over the total requisite service period for the entire award, which begins in the period the bonus relates to. The Program is deemed to be a liability-classified award (accounted for as an equity-classified award as the service date precedes the grant date and the award would otherwise be classified as equity on grant date), which will be fair-valued and accrued over the applicable service period. The total estimated fair value of the elections made for 2026 under the Program was approximately $1.0 million as of March 31, 2026. The award will be remeasured to fair value each reporting period until the unvested RSUs are granted. For the three months ended March 31, 2026 and 2025, the Company recognized less than $0.1 million of stock-based compensation expense associated with these awards. Previous awards under the Program that have been granted are included within service-based RSUs above.
Note 12 – Earnings Per Share
Net income per common share has been computed pursuant to the guidance in the ASC Topic 260, Earnings per Share. Basic earnings per share is computed by dividing net income attributable to common stockholders by the weighted-average number of common shares outstanding for the period. The guidance requires the classification of the Company’s unvested LTIP Units, which contain rights to receive non-forfeitable dividends or dividend equivalents, as participating securities requiring the two-class method of computing earnings per share. Diluted earnings per share is similarly calculated; however, the denominator is increased to reflect the potential dilutive effect of the Company’s outstanding unvested RSUs, LTIP Units, and unsettled shares under open forward equity contracts, determined using the treasury stock method, as well as OP Units, determined using the if-converted method. The Company has noncontrolling interests in the form of OP Units which are convertible into common stock and represent potentially dilutive securities, as the OP Units may be redeemed for cash or, at the Company’s election, exchanged for shares of the Company’s common stock on a one -for-one basis.
27
The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted net income per common share for the periods indicated below (in thousands, except share data and per share data):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Numerator: | |||||||||||
| Net income | $ | $ | |||||||||
| Less: net income attributable to noncontrolling interest | ( | ( | |||||||||
Less: net income allocated to unvested LTIP Units | ( | ||||||||||
| Net income attributable to common shares, basic | |||||||||||
| Net income attributable to noncontrolling interest | |||||||||||
| Net income attributable to common shares, diluted | $ | $ | |||||||||
| Denominator: | |||||||||||
| Weighted average common shares outstanding, basic | |||||||||||
| Effect of dilutive shares for diluted net income per common share: | |||||||||||
| OP Units | |||||||||||
Unvested RSUs and LTIP Units | |||||||||||
| Unsettled shares under open forward equity contracts | |||||||||||
| Weighted average common shares outstanding, diluted | |||||||||||
| Net income available to common stockholders per common share, basic | $ | $ | |||||||||
| Net income available to common stockholders per common share, diluted | $ | $ | |||||||||
The three months ended March 31, 2026 exclude the impact of 125,605 unvested RSUs and LTIP Units and 10,199 unsettled shares under open forward equity contracts, as the effect would have been antidilutive.
The three months ended March 31, 2025 exclude the impact of 417,052 unvested RSUs and 1,886,795 unsettled shares under open forward equity contracts, as the effect would have been antidilutive.
As of March 31, 2026 and December 31, 2025, there were 402,178 and 412,143 of OP Units outstanding, respectively.
Note 13 – Commitments and Contingencies
Litigation and Regulatory Matters
In the ordinary course of business, the Company may, from time to time, be subject to litigation, claims, and regulatory matters. There are none currently outstanding that the Company believes could have, individually or in the aggregate, a material adverse effect on its business, financial condition or results of operations, liquidity, or cash flows.
Environmental Matters
The Company is subject to environmental regulations related to the ownership of real estate. The cost of complying with the environmental regulations was not material to the Company’s results of operations for any of the periods presented. The Company is not aware of any environmental condition on any of its properties that is likely to have a material adverse effect on the condensed consolidated financial statements when the fair value of such liability can be reasonably estimated and is required to be recognized.
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Commitments
In the normal course of business, the Company enters into various types of commitments to purchase real estate properties, fund development projects, or extend funds under mortgage loans receivable. These commitments are generally subject to the Company’s customary due diligence process and, accordingly, a number of specific conditions must be met before the Company is obligated to purchase or extend funding. As of March 31, 2026, the Company had commitments to fund property developments, extend funds under mortgage loans receivable, and fund tenant improvement allowances totaling $22.3 million, $6.4 million, and $8.3 million, respectively. Commitments to fund property developments are expected to occur over the next nine months , commitments to fund mortgage loans receivable are expected to occur over the next 18 months, and commitments to fund tenant improvement allowances are expected to occur over the next two years .
In August 2021, the Company entered into a lease agreement related to its corporate office space, which is classified as an operating lease. The Company began operating out of the office in February 2022. The lease has a remaining noncancellable term of 6.3 years that expires on July 31, 2032 and is renewable at the Company’s option for two additional periods of five years . Annual rent expense, excluding operating expenses, is approximately $0.5 million during the initial term.
As of March 31, 2026, the Company did not have any other material commitments for re-leasing costs, recurring capital expenditures, non-recurring building improvements, or similar types of costs.
Note 14 – Subsequent Events
The Company has evaluated all events that occurred subsequent to March 31, 2026 through the date on which these condensed consolidated financial statements were issued to determine whether any of these events required disclosure in the financial statements.
2032 Term Loan Draw
Subject to the terms of the PNC Term Loan Agreement, the Company drew an additional $50.0 million under the 2032 Term Loan on April 1, 2026, bringing the total outstanding principal amount to $200.0 million. The Company has $50.0 million remaining under the PNC Term Loan Agreement delayed draw term loan commitment.
Common Stock Dividend
On April 16, 2026, the Company’s Board of Directors declared a cash dividend of $0.22 per share for the second quarter of 2026. The dividend will be paid on June 15, 2026 to stockholders of record on June 1, 2026.
Revolver Activity
In April 2026, the Company repaid $57.0 million on the Revolver.
Forward Equity Sales
In April 2026, the Company entered into forward sale agreements with respect to an aggregate 307,984 shares of its common stock under the 2024 ATM Program at a weighted-average price of $19.54 per share. The Company may physically settle the forward sale agreements (by delivery of shares of common stock) and receive proceeds from the sale of those shares on one or more forward settlement dates, which shall occur no later than April 2027.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, 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 Quarterly Report on Form 10-Q 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” Part I, Item 1A. in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission (the “SEC”) on February 10, 2026, and other reports filed with the Securities and Exchange Commission from time to time.
Forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Quarterly Report on Form 10-Q. 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. 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.
Business Overview
We are an internally managed real estate company that acquires, owns, and manages a diversified portfolio of single-tenant commercial retail properties, subject to long-term net leases with high-credit-quality tenants across the United States. We also invest in property developments and mortgage loans secured by real estate. As of March 31, 2026, we owned or had investments in 808 properties diversified by tenant, industry, and geography, comprising 138 different tenants across 28 retail sectors in 46 states. This includes four property developments where rent has not yet commenced. We focus on tenants in industries where we believe a physical location is critical to the generation of sales and profits, with a focus on necessity goods and essential services in the retail sector, including grocers, convenience stores, discount stores, home improvement, quick-service restaurants, general retail, and auto parts, all of which we refer to as defensive retail industries. As of March 31, 2026, our investments generated ABR1 of $214.2 million. Approximately 42% of our ABR is from investment grade2 credit rated tenants and an additional 16% of our ABR is derived from tenants with an investment grade profile3. Our portfolio was 99.9% occupied (excluding four properties under development) and, excluding mortgage loans receivable, had a weighted average remaining lease term (“WALT”) of 10.2 years.
February 2026 Follow-On Offering
In February 2026, we completed a registered public offering of 12,627,000 shares of our common stock at a public offering price of $19.00 per share, including the full exercise of the underwriters’ option to purchase additional shares. In connection with the offering, we entered into forward sale agreements for 12,627,000 shares of our common stock. We did not initially receive any proceeds from the sale of shares of common stock by the forward purchasers.
As of March 31, 2026, 12,627,000 shares remain unsettled under the February 2026 forward sale agreements. We expect to physically settle the forward sale agreements (by delivery of shares of common stock) and receive proceeds from the sale of those shares upon one or more forward settlement dates, which shall occur no later than February 12, 2027.
(1) Annualized base rent (“ABR”) is annualized base rent for all leases that commenced and annualized cash interest for all executed mortgage loans as of March 31, 2026.
(2) We define “investment grade” tenants as tenants, or tenants that are subsidiaries of a parent entity, with a credit rating of BBB- (S&P/Fitch), Baa3 (Moody’s), or NAIC2 (National Association of Insurance Commissioners) or higher.
(3) We define “investment grade profile” tenants as tenants that have investment grade credit metrics (more than $1.0 billion in annual sales and a debt to adjusted EBITDA ratio of less than 2.0x), but do not carry a published rating from S&P, Fitch, Moody’s, or NAIC.
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Settlement of Forward Shares Under the January 2024 Follow-On Offering
In January 2024, we completed a registered public offering of 11,040,000 shares of common stock at a public offering price of $18.00 per share. In connection with the offering, we entered into forward sale agreements for 11,040,000 shares of our common stock. We did not initially receive any proceeds from the sale of shares of common stock by the forward purchasers.
On February 6, 2026, we physically settled 4,000,000 shares of common stock at a weighted-average price of $16.98 per share in accordance with the forward sale agreements. We received net proceeds from the settlement of $67.8 million, net of underwriting discounts and offering costs of $4.2 million.
As of March 31, 2026, 4,840,000 shares remain unsettled under the January 2024 forward sale agreements. We expect to physically settle the forward sale agreements (by delivery of shares of common stock) and receive proceeds from the sale of those shares upon one or more forward settlement dates, which shall occur no later than December 31, 2026.
ATM Program
During the three months ended March 31, 2026, we entered into forward sale agreements with respect to an aggregate 3,956,031 shares of common stock under the existing $300.0 million at-the-market equity program established in August 2024 (the “2024 ATM Program”) at a weighted-average price of $18.81 per share.
As of March 31, 2026, 12,469,918 shares remain unsettled under forward sale agreements associated with our existing $300.0 million at-the-market equity program (the “2023 ATM Program”) and the 2024 ATM Program. We may physically settle the forward sale agreements (by delivery of shares of common stock) and receive proceeds from the sale of those shares on one or more forward settlement dates, which shall occur no later than the stated maturity dates ranging from September 2026 to March 2027. As of March 31, 2026, the remaining availability under the 2024 ATM Program was $49.9 million.
2032 Term Loan Draw
Subject to the terms of the term loan agreement agented by PNC Bank, National Association (the “PNC Term Loan Agreement”), we drew an additional $50.0 million under the $250.0 million senior unsecured term loan (the “2032 Term Loan”) on January 2, 2026, bringing the total outstanding principal amount to $150.0 million. The $150.0 million outstanding under the 2032 Term Loan is hedged with an all-in fixed interest rate of 4.66%. We have $100.0 million remaining under the PNC Term Loan Agreement delayed draw term loan commitment.
Results of Operations
Overall
We continued to grow our assets held for investment during the three months ended March 31, 2026 through the acquisition of properties, property developments, and investment in mortgage loans receivable, with an underwritten weighted-average cash yield of approximately 7.5%. This growth was financed through the $50.0 million draw under the 2032 Term Loan, settlement of shares of common stock through our January 2024 Follow-On Offering in an amount of $67.8 million, the usage of cash balances as a result of borrowings on our senior unsecured revolving credit facility (the “Revolver”), the usage of restricted cash balances as a result of tax-free exchanges under Section 1031 of the Internal Revenue Code of 1986, and cash flows from operations during the three months ended March 31, 2026.
Acquisitions
During the three months ended March 31, 2026, we acquired 56 properties for a total purchase price of $234.0 million, inclusive of $3.0 million of capitalized acquisition costs. The acquisitions were all accounted for as asset acquisitions. These properties are located in 17 states with a WALT of approximately 14.1 years.
Development
As of March 31, 2026, we had four property developments under construction, which are expected to be substantially completed with rent commencing at various points throughout 2026 and early 2027. During the three months ended March 31, 2026, we invested $5.4 million in property developments, including the land acquisition of one new development with an initial purchase price of $2.3 million. The purchase price, including acquisition costs, and subsequent development are included in property under development in the accompanying condensed consolidated balance sheets as of March 31, 2026.
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Dispositions
During the three months ended March 31, 2026, we sold five properties for a total sales price, net of disposal costs, of $10.4 million, recognizing a net gain of $0.1 million.
Investment in Mortgage Loans Receivable
During the three months ended March 31, 2026, we invested an additional $5.1 million in fully collateralized mortgage loans receivable with stated interest rates ranging from 9.50% to 9.75%. In addition, during the three months ended March 31, 2026, we collected $11.2 million in principal on our mortgage loans receivable. We sold one mortgage loan receivable at a discount in an effort to manage tenant exposure, recognizing non-credit related provisions for impairment of $0.6 million for the three months ended March 31, 2026. See discussion of our mortgage loans receivable portfolio included in “Note 4 – Real Estate Investments” of our condensed consolidated financial statements, included in “Item 1 – Financial Statements (unaudited)”.
Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025
The following table sets forth our operating results for the periods indicated (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Revenues | |||||||||||
| Rental revenue (including reimbursable) | $ | 54,027 | $ | 42,590 | |||||||
| Interest income on loans receivable | 3,035 | 3,075 | |||||||||
| Other revenue | — | 245 | |||||||||
| Total revenues | 57,062 | 45,910 | |||||||||
| Operating expenses | |||||||||||
| Property | 5,404 | 4,803 | |||||||||
| General and administrative | 5,755 | 5,169 | |||||||||
| Depreciation and amortization | 24,463 | 20,923 | |||||||||
| Provisions for impairment | 2,062 | 3,616 | |||||||||
| Transaction costs, net | (60) | 47 | |||||||||
| Total operating expenses | 37,624 | 34,558 | |||||||||
| Other (expense) income | |||||||||||
| Interest expense, net | (14,266) | (11,460) | |||||||||
| Gain on sales of real estate, net | 119 | 2,075 | |||||||||
| Loss on debt extinguishment | — | (46) | |||||||||
| Other income (expense), net | 434 | (205) | |||||||||
| Total other expense, net | (13,713) | (9,636) | |||||||||
| Net income before income taxes | 5,725 | 1,716 | |||||||||
| Income tax expense | (14) | (16) | |||||||||
| Net income | $ | 5,711 | $ | 1,700 | |||||||
Revenue. Revenue for the three months ended March 31, 2026 increased by $11.2 million to $57.1 million from $45.9 million for the three months ended March 31, 2025, which is primarily attributed to an increase in the number of our operating leases. The increase includes additional cash rental receipts of $9.5 million, an increase of $1.2 million in straight-line rental revenue, combined net increases of property expense reimbursements of $0.5 million, and a net decrease of $0.3 million in reserves for uncollectible amounts, offset by a decrease in other revenue of $0.2 million related to a lease termination fee during the three months ended March 31, 2025 and other combined net decreases of $0.1 million.
Total operating expenses. Total expenses increased by $3.0 million to $37.6 million for the three months ended March 31, 2026 as compared to $34.6 million for the three months ended March 31, 2025. The increase is primarily attributed to an increase in the number of operating properties, with the most significant increase being depreciation and amortization expense. Total operating expenses include the following:
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•Property expenses. Property expenses increased by $0.6 million to $5.4 million for the three months ended March 31, 2026 from $4.8 million for the three months ended March 31, 2025. The increase is primarily attributed to an increase in the number of operating properties, including combined net increases of reimbursable property expenses of $0.5 million, of which $0.5 million and $0.1 million were related to reimbursable property taxes and reimbursable insurance costs, respectively, partially offset by a decrease of $0.2 million of reimbursable common area maintenance costs, and combined net increases of non-reimbursable property expenses of $0.2 million primarily related to common area maintenance costs and property insurance.
•General and administrative expenses. General and administrative expenses increased by $0.6 million to $5.8 million for the three months ended March 31, 2026 from $5.2 million for the three months ended March 31, 2025. The increase is primarily related to an increase of $0.4 million of payroll expense and an increase of $0.3 million in stock based compensation expense, offset by other combined net decreases of $0.1 million. While our general and administrative expenses will continue to rise in some measure as our portfolio grows, we expect that such expenses as a percentage of our portfolio ABR and total assets will decrease over time due to efficiencies and economies of scale.
•Depreciation and amortization. Depreciation and amortization expense increased by $3.6 million to $24.5 million for the three months ended March 31, 2026 from $20.9 million for the three months ended March 31, 2025. The increase in depreciation and amortization is proportionate to the increase in the size of the portfolio over the comparable period with associated increases primarily in building depreciation expense of $2.1 million, in-place lease amortization expense of $0.8 million, and building improvements depreciation expense of $0.7 million.
•Provisions for impairment. For the three months ended March 31, 2026, we recorded provisions for impairment of $2.1 million on nine properties and one mortgage loan receivable, the majority of which were either previously classified as held-for-sale, newly classified as held-for-sale, or disposed during three months ended March 31, 2026. Of those properties impaired, two properties were held for investment as of March 31, 2026. For the three months ended March 31, 2025, we recorded provisions for impairment of $3.6 million on 13 properties, the majority of which were newly classified as held-for-sale during the three months ended March 31, 2025. Of those properties impaired, one property was held for investment as of March 31, 2025. These disposals relate to management’s continuous assessment of our portfolio in an effort to improve returns and manage risk exposure.
Interest expense. Interest expense increased by $2.8 million to $14.3 million for the three months ended March 31, 2026 from $11.5 million for the three months ended March 31, 2025. The increase is primarily attributed to an increase of $2.2 million of interest incurred on our $200.0 million senior unsecured term loan (the “2031 Term Loan”), an increase of $1.7 million of interest incurred on our 2032 Term Loan, and in increase of $0.3 million in loan fee amortization, most of which is related to the 2031 Term Loan and 2032 Term Loan. The increase was partially offset by $1.2 million of reduced interest incurred on our Revolver, primarily due to a decrease in average borrowings outstanding during the respective periods, and $0.3 million of reduced interest incurred on our $200.0 million senior unsecured term loan (the “2028 Term Loan”), our $250.0 million senior unsecured term loan (the “2029 Term Loan”), our $175.0 million senior unsecured term loan (the “2030 Term Loan A”), and our $175.0 million senior unsecured term loan (the “2030 Term Loan B”), primarily related to the interest rate reduction as a result of receiving a credit rating at the end of 2025.
Gain on sales of real estate, net. Net gain on sales of real estate decreased by $2.0 million to $0.1 million for the three months ended March 31, 2026 from $2.1 million for the three months ended March 31, 2025. For the three months ended March 31, 2026, five properties were sold for a sales price, net of disposal costs, of $10.4 million. For the three months ended March 31, 2025, 16 properties were sold for a sales price, net of disposal costs, of $38.6 million.
Other income (expense), net. Other income (expense), net increased by $0.6 million to $0.4 million of other income, net for the three months ended March 31, 2026 from $0.2 million of other expense, net for the three months ended March 31, 2025. The net increase to income is primarily related to a $0.3 million increase in interest income on bank accounts and a $0.4 million decrease in third-party debt issuance costs that were expensed during the three months ended March 31, 2025 as a result of the January 2025 debt transaction.
Net income. Net income increased by $4.0 million to $5.7 million for the three months ended March 31, 2026 from $1.7 million for the three months ended March 31, 2025. Net income increased primarily due to additional rental revenues, primarily due to the growth in the size of our real estate investment portfolio, and decreased provisions for impairment, partially offset by increases in depreciation expense, interest expense, general and administrative expense, property expense, and a decrease in gain on sales of real estate.
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Liquidity and Capital Resources
Our primary capital requirements include funding property acquisitions and developments, investing in mortgage loans receivable, making required debt interest payments, and covering working capital needs, operating expenses, and capital expenditures. Our capital resources primarily consist of cash from operations, sales of equity securities, and available borrowing facilities. As of March 31, 2026, we had total outstanding debt of $1.2 billion, including $200.0 million outstanding principal amount under the 2028 Term Loan, $250.0 million outstanding principal amount under the 2029 Term Loan, $175.0 million outstanding principal amount under the 2030 Term Loan A, $175.0 million outstanding principal amount under the 2030 Term Loan B, $200.0 million outstanding principal amount under the 2031 Term Loan, $150.0 million outstanding principal amount under the 2032 Term Loan, and $88.0 million outstanding on the Revolver. Additionally, as of March 31, 2026, we had $194.4 million and $29.9 million of unsettled forward equity under our 2024 ATM Program and prior at-the-market equity program, respectively. As of March 31, 2026, $49.9 million of shares of our common stock were available for future issuances under the 2024 ATM Program. Lastly, we had $81.7 million, $71.2 million, and $228.4 million of unsettled forward equity under the January 2024, July 2025, and February 2026 follow-on offering forward sale agreements, respectively, as of March 31, 2026. As of March 31, 2026, we had an aggregate of 34,201,865 unsettled shares under forward sale agreements with a weighted-average net settlement price of $17.71.
We believe the availability of proceeds from our debt, proceeds from the settlement of unsettled outstanding forward sale agreements, future issuances of shares of our common stock under our 2024 ATM Program, or subsequent at-the-market sale programs, as well as our cash flows from operations and available borrowing capacity under the Revolver, will be adequate to support our ongoing operations and to fund our debt service requirements, capital expenditures, and working capital requirements for at least the next 12 months. We anticipate funding our long-term capital needs through cash provided from operations, borrowings under our 2032 Term Loan, borrowings under our Revolver, and issuances of common stock.
Contractual Obligations and Commitments
As of March 31, 2026, our contractual debt obligations primarily include the maturity of our 2028 Term Loan with the scheduled principal payment due on February 11, 2028, the maturity of our 2029 Term Loan with the scheduled principal payment due on July 3, 2026, the maturities of our 2030 Term Loan A, 2030 Term Loan B, and Revolver with the scheduled principal payments due on January 15, 2029, the maturity of our 2031 Term Loan with the scheduled principal payment due on March 25, 2031, and the maturity of our 2032 Term Loan with the scheduled principal payment due on September 24, 2032. During the three months ended March 31, 2026, we borrowed $98.0 million and repaid $10.0 million on our Revolver.
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The following table provides information with respect to our commitments as of March 31, 2026 (in thousands):
| Payment Due by Period | ||||||||||||||||||||||||||||||||
| Total | From April 1, 2026 to December 31, 2026 | 2027 - 2028 | 2029 - 2030 | Thereafter | ||||||||||||||||||||||||||||
| Contractual Obligations | ||||||||||||||||||||||||||||||||
| 2028 Term Loan – Principal | $ | 200,000 | $ | — | $ | 200,000 | $ | — | $ | — | ||||||||||||||||||||||
2028 Term Loan – Variable interest (1) | 13,377 | 5,395 | 7,982 | — | — | |||||||||||||||||||||||||||
| 2029 Term Loan – Principal | 250,000 | 250,000 | — | — | — | |||||||||||||||||||||||||||
2029 Term Loan – Variable interest (1) | 3,017 | 3,017 | — | — | — | |||||||||||||||||||||||||||
| 2030 Term Loan A – Principal | 175,000 | — | — | 175,000 | — | |||||||||||||||||||||||||||
2030 Term Loan A – Variable interest (1) | 16,365 | 4,412 | 11,712 | 241 | — | |||||||||||||||||||||||||||
| 2030 Term Loan B – Principal | 175,000 | — | — | 175,000 | — | |||||||||||||||||||||||||||
2030 Term Loan B – Variable interest (1) | 23,591 | 6,360 | 16,884 | 347 | — | |||||||||||||||||||||||||||
| 2031 Term Loan – Principal | 200,000 | — | — | — | 200,000 | |||||||||||||||||||||||||||
2031 Term Loan – Variable interest (1) | 43,728 | 6,611 | 17,549 | 17,549 | 2,019 | |||||||||||||||||||||||||||
| 2032 Term Loan – Principal | 150,000 | — | — | — | 150,000 | |||||||||||||||||||||||||||
2032 Term Loan – Variable interest (1) | 45,308 | 5,263 | 13,972 | 13,972 | 12,101 | |||||||||||||||||||||||||||
Ticking Fee (2) | 98 | 98 | — | — | — | |||||||||||||||||||||||||||
Revolver – Borrowings | 88,000 | — | — | 88,000 | — | |||||||||||||||||||||||||||
Revolver – Variable interest | 11,017 | 2,970 | 7,885 | 162 | — | |||||||||||||||||||||||||||
Facility Fee (3) | 2,794 | 753 | 2,000 | 41 | — | |||||||||||||||||||||||||||
| Mortgage Note – Principal | 7,999 | 134 | 7,865 | — | — | |||||||||||||||||||||||||||
| Mortgage Note – Interest | 591 | 269 | 322 | — | — | |||||||||||||||||||||||||||
| Property development under contract | 22,313 | 10,547 | 11,766 | — | — | |||||||||||||||||||||||||||
| Additional principal under mortgage loans receivable | 6,422 | 5,236 | 1,186 | — | — | |||||||||||||||||||||||||||
| Tenant improvement allowances | 8,254 | 4,165 | 4,089 | — | — | |||||||||||||||||||||||||||
Corporate office lease obligations | 4,473 | 491 | 1,359 | 1,434 | 1,189 | |||||||||||||||||||||||||||
| Total | $ | 1,447,347 | $ | 305,721 | $ | 304,571 | $ | 471,746 | $ | 365,309 | ||||||||||||||||||||||
(1) We have various interest rate derivative contracts to fix the variable base interest rate (SOFR) on our term loans. Accordingly, the projected interest rate obligations for the variable rate term loans are based on the weighted-average hedged fixed rates, plus the applicable margins. See “Note 6 – Debt” and “Note 7 – Derivative Financial Instruments” for further discussion on our debt and interest rate hedges.
(2) We are subject to a ticking fee of 0.20% on the undrawn amount under our 2032 Term Loan.
(3) We are subject to a facility fee of 0.20% on our Revolver.
In August 2021, we entered into a lease agreement related to our corporate office space, which is classified as an operating lease. We began operating out of the office in February 2022. The lease has a remaining noncancellable term of 6.3 years that expires on July 31, 2032 and is renewable at our option for two additional periods of five years. Annual rent expense, excluding operating expenses, is approximately $0.5 million during the initial term.
Additionally, in the normal course of business, we enter into various types of commitments to purchase real estate properties, fund development projects, or extend funds under mortgage loans receivable. These commitments are generally subject to our customary due diligence process and, accordingly, a number of specific conditions must be met before we are obligated to purchase or extend funding. As of March 31, 2026, we had commitments to fund property developments, extend funds under mortgage loans receivable, and commitments to fund tenant improvement allowances totaling $22.3 million, $6.4 million, and $8.3 million, respectively. Commitments to fund property developments are expected to occur over the next nine months, commitments to fund mortgage loans receivable are expected to occur over the next 18 months, and commitments to fund tenant improvement allowances are expected to occur over the next two years.
Debt
See discussion of our debt and interest rate hedges included in “Note 6 – Debt” and “Note 7 – Derivative Financial Instruments” in “Item 1 – Financial Statements (unaudited).”
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Historical Cash Flow Information
Three Months Ended March 31, 2026 Compared with Three Months Ended March 31, 2025
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (In thousands) | (Unaudited) | ||||||||||
| Net cash provided by (used in): | |||||||||||
| Operating activities | $ | 26,312 | $ | 22,091 | |||||||
| Investing activities | (211,692) | (48,308) | |||||||||
| Financing activities | 181,971 | 26,102 | |||||||||
Cash Flows Provided By Operating Activities. Net cash provided by operating activities increased by $4.2 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was largely attributed to the increase in the size of our real estate investment portfolio with an increase in rental receipts of $9.5 million, partially offset by an increase in cash paid for interest of $2.7 million, an increase in operating expenses paid associated with our larger portfolio, and changes in working capital accounts.
Cash Flows Used In Investing Activities. Net cash used in investing activities increased by $163.4 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily due to an increase in acquisitions of real estate of $156.2 million, a decrease in proceeds from the sale of real estate of $28.2 million, and an increase in real estate development and improvements of $2.9 million, partially offset by a decrease in earnest money deposits of $6.5 million, an increase in principal collections on mortgage loans receivable of $6.4 million, an increase in proceeds received from the sale of mortgage loans receivable of $5.6 million, and a decrease in cash invested in mortgage loans receivable of $5.4 million.
Cash Flows Provided By Financing Activities. Net cash provided by financing activities increased by $155.9 million for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase was primarily attributed to a decrease in net repayments of $212.5 million under our Revolver, an increase of $67.8 million of proceeds received from the issuance of common stock under our January 2024 Follow-On Offering, and a decrease in deferred financing costs of $6.3 million, partially offset by a decrease in net term loan proceeds of $125.0 million, an increase in payments of common stock dividends of $4.2 million, and an increase in the repurchase of common stock for tax withholding obligations of $1.1 million.
Income Taxes
We have elected to be treated and qualify as a REIT for U.S. federal income tax purposes. To qualify as a REIT, we must meet certain organizational, income, asset and distribution tests. Accordingly, we will generally not be subject to corporate U.S. federal or state income tax to the extent that we make qualifying distributions of all of our taxable income to our stockholders and provided we satisfy on a continuing basis, through actual investment and operating results, the REIT requirements, including certain asset, income, distribution and share ownership tests. We intend to make sufficient distributions during 2026 to receive a full dividends paid deduction.
We maintain a taxable REIT subsidiary (“TRS”) which may be subject to U.S. federal, state, and local income taxes on its taxable income. In general, our TRS may perform services for our tenants, hold assets that we cannot hold directly, and may engage in any real estate or non-real estate-related business.
We recognize franchise and other state and local tax expenses in general and administrative expenses and federal income tax in income tax expense in the accompanying condensed consolidated statements of operations and comprehensive income (loss).
Recent Accounting Pronouncements
A discussion of recent accounting pronouncements and their possible effects on our condensed consolidated financial statements is included in “Note 2 – Summary of Significant Accounting Policies” in “Item 1 – Financial Statements (unaudited).”
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Critical Accounting Policies and Estimates
Our accounting policies have been established to conform with U.S. generally accepted accounting principles (“GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires us to use judgment in the application of accounting policies, including making estimates and assumptions. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Management believes that we have made these estimates and assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually test and evaluate these estimates and assumptions using our historical knowledge of the business, as well as other factors, to ensure that they are reasonable for reporting purposes. However, actual results may differ from these estimates and assumptions. If our judgment or interpretation of the facts and circumstances relating to the various transactions had been different, it is possible that different accounting policies would have been applied, thus resulting in a different presentation of the financial statements. Additionally, other companies may utilize different estimates that may impact comparability of our results of operations to those of companies in similar businesses. A summary of our critical accounting policies is included in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2025, which is accessible on the SEC’s website at www.sec.gov. There have been no material changes to these policies during the periods covered by this quarterly report.
Non-GAAP Financial Measures
Our reported results are presented in accordance with GAAP. We also disclose the following non-GAAP financial measures: Funds From Operations (“FFO”), Core FFO, Adjusted FFO (“AFFO”), earnings before interest expense, income tax expense, and depreciation and amortization (“EBITDA”), EBITDA further adjusted to exclude gains (or losses) from the sales of depreciable property and real estate impairment losses (“EBITDAre”), Adjusted EBITDAre, Annualized Adjusted EBITDAre, Net Debt, Adjusted Net Debt, property-level net operating income (“Property-Level NOI”), property-level cash net operating income (“Property-Level Cash NOI”), and property-level cash net operating income estimated run rate (“Property-Level Cash NOI Estimated Run Rate”), all of which are detailed below. We believe these non-GAAP financial measures are industry measures used by analysts and investors to compare the operating performance of REITs.
FFO, Core FFO, and AFFO
The National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has promulgated a widely accepted non-GAAP financial measure of operating performance known as FFO. Our FFO is net income in accordance with GAAP, excluding gains (or losses) resulting from dispositions of properties, plus depreciation and amortization and impairment charges on depreciable real property.
Core FFO is a non-GAAP financial measure defined as FFO adjusted to remove the effect of unusual and non-recurring items that are not expected to impact our operating performance or operations on an ongoing basis. These include non-recurring executive transition costs, severance and related charges, other non-recurring losses (gains), debt related transaction costs, and other losses (gains).
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 and earned development interest, non-cash interest expense, non-cash compensation expense, amortization of deferred financing costs, amortization of above/below-market assumed debt, and amortization of loan origination costs.
Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. In fact, real estate values historically have risen or fallen with market conditions. FFO is intended to be a standard supplemental measure of operating performance that excludes historical cost depreciation and valuation adjustments from net income. We consider FFO to be useful in evaluating potential property acquisitions and measuring operating performance.
We further consider FFO, Core FFO, and AFFO to be useful in determining funds available for payment of distributions. FFO, Core FFO, and AFFO do not represent net income or cash flows from operations as defined by GAAP. You should not consider FFO, Core FFO, and AFFO to be alternatives to net income as a reliable measure of our operating performance nor should you consider FFO, Core FFO, and AFFO to be alternatives to cash flows from operating, investing, or financing activities (as defined by GAAP) as measures of liquidity.
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FFO, Core FFO, and AFFO do not measure whether cash flow is sufficient to fund our cash needs, including debt service obligations, 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.
The following table sets forth a reconciliation of FFO, Core FFO, and AFFO for the periods presented to net income before allocation to noncontrolling interests, as computed in accordance with GAAP (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (Unaudited) | |||||||||||
| Net income | $ | 5,711 | $ | 1,700 | |||||||
| Depreciation and amortization of real estate | 24,387 | 20,850 | |||||||||
| Provisions for impairment | 1,488 | 3,616 | |||||||||
| Gain on sales of real estate, net | (119) | (2,075) | |||||||||
| FFO | 31,467 | 24,091 | |||||||||
| Adjustments: | |||||||||||
| Non-recurring executive transition costs, severance, and related charges | — | 76 | |||||||||
| Loss on debt extinguishment and other related costs | — | 403 | |||||||||
| Other loss | 574 | — | |||||||||
| Core FFO | 32,041 | 24,570 | |||||||||
| Adjustments: | |||||||||||
| Straight-line rent adjustments | (2,153) | (954) | |||||||||
| Amortization of deferred financing costs | 971 | 664 | |||||||||
| Amortization of above/below-market assumed debt | 29 | 29 | |||||||||
| Amortization of loan origination costs and discounts | (133) | (77) | |||||||||
| Amortization of lease-related intangibles | 47 | (70) | |||||||||
| Earned development interest | 116 | 43 | |||||||||
| Capitalized interest expense | (88) | (50) | |||||||||
| Non-cash interest expense | 705 | 705 | |||||||||
| Non-cash compensation expense | 1,689 | 1,388 | |||||||||
| AFFO | $ | 33,224 | $ | 26,248 | |||||||
EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre
We compute EBITDA as earnings before interest expense, income tax expense, and depreciation and amortization. In 2017, NAREIT issued a white paper recommending that companies that report EBITDA also report EBITDAre. We compute EBITDAre in accordance with the definition adopted by NAREIT. NAREIT defines EBITDAre as EBITDA (as defined above) excluding gains (or losses) from the sales of depreciable property and impairment charges on depreciable real property.
Adjusted EBITDAre is a non-GAAP financial measure defined as EBITDAre further adjusted to exclude straight-line rent, non-cash compensation expense, non-recurring executive transition costs, severance and related charges, debt related transaction costs, transaction costs, other non-recurring loss (gain), net, other non-recurring expenses (income) including lease termination fees, as well as adjustments for construction in process and for intraquarter activities. Annualized Adjusted EBITDAre is Adjusted EBITDAre multiplied by four.
We present EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre as they are measures commonly used in our industry. We believe that these measures are useful to investors and analysts because they provide supplemental information concerning our operating performance, exclusive of certain non-cash items and other costs. We use EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre as measures of our operating performance and not as measures of liquidity.
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EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre do not include all items of revenue and expense included in net income, they do not represent cash generated from operating activities and they are not necessarily indicative of cash available to fund cash requirements; accordingly, they should not be considered alternatives to net income as a performance measure or cash flows from operations as a liquidity measure and should be considered in addition to, and not in lieu of, GAAP financial measures. Additionally, our computation of EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre may differ from the methodology for calculating these metrics used by other equity REITs and, therefore, may not be comparable to similarly titled measures reported by other equity REITs.
The following table sets forth a reconciliation of EBITDA and EBITDAre for the periods presented to net income before allocation to noncontrolling interests, as computed in accordance with GAAP (in thousands):
| Three Months Ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| (Unaudited) | |||||||||||
| Net income | $ | 5,711 | $ | 1,700 | |||||||
| Depreciation and amortization of real estate | 24,387 | 20,850 | |||||||||
| Amortization of lease-related intangibles | 47 | (70) | |||||||||
| Non-real estate depreciation and amortization | 76 | 73 | |||||||||
| Interest expense, net | 14,266 | 11,460 | |||||||||
| Income tax expense | 14 | 16 | |||||||||
| Amortization of loan origination costs and discounts | (133) | (77) | |||||||||
| EBITDA | 44,368 | 33,952 | |||||||||
| Adjustments: | |||||||||||
| Provisions for impairment | 1,488 | 3,616 | |||||||||
| Gain on sales of real estate, net | (119) | (2,075) | |||||||||
EBITDAre | $ | 45,737 | $ | 35,493 | |||||||
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The following table sets forth a reconciliation of EBITDA, EBITDAre, Adjusted EBITDAre, and Annualized Adjusted EBITDAre for the period presented to net income before allocation to noncontrolling interests, as computed in accordance with GAAP (in thousands):
| Three Months Ended March 31, 2026 | |||||
| (Unaudited) | |||||
| Net income | $ | 5,711 | |||
| Depreciation and amortization of real estate | 24,387 | ||||
| Amortization of lease-related intangibles | 47 | ||||
| Non-real estate depreciation and amortization | 76 | ||||
| Interest expense, net | 14,266 | ||||
| Income tax expense | 14 | ||||
| Amortization of loan origination costs and discounts | (133) | ||||
| EBITDA | 44,368 | ||||
| Adjustments: | |||||
| Provisions for impairment | 1,488 | ||||
| Gain on sales of real estate, net | (119) | ||||
EBITDAre | 45,737 | ||||
| Adjustments: | |||||
| Straight-line rent adjustments | (2,153) | ||||
| Other loss | 574 | ||||
| Other income, net | (31) | ||||
| Transaction costs, net | (60) | ||||
| Non-cash compensation expense | 1,689 | ||||
Adjustment for construction in process (1) | 208 | ||||
Adjustment for intraquarter investment activities (2) | 2,964 | ||||
Adjusted EBITDAre | $ | 48,928 | |||
Annualized Adjusted EBITDAre (3) | $ | 195,712 | |||
Adjusted Net Debt / Annualized Adjusted EBITDAre | 6.3x | ||||
Adjusted Net Debt / Annualized Adjusted EBITDAre | 3.2x | ||||
Pro Forma Adjusted Net Debt / Annualized Adjusted EBITDAre | 3.2x | ||||
(1) Adjustment reflects the estimated cash yield on developments in process as of March 31, 2026.
(2) Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments completed during the three months ended March 31, 2026, had occurred on January 1, 2026.
(3) We calculate Annualized Adjusted EBITDAre by multiplying Adjusted EBITDAre by four.
Net Debt, Adjusted Net Debt, and Pro Forma Adjusted Net Debt
We calculate Net Debt as the principal amount of our total debt outstanding, excluding deferred financing costs, net discounts, and debt issuance costs, less cash, cash equivalents, and restricted cash available for future investment.
We then adjust Net Debt by the net value of unsettled forward equity as of period end to derive Adjusted Net Debt. Further, we adjust Adjusted Net Debt by the value of any unsettled forward equity and at-the-market sales occurring subsequent to the period to derive Pro Forma Adjusted Net Debt.
We believe excluding cash, cash equivalents, and restricted cash available for future investment from the principal amount of our total debt outstanding, together with the exclusion of the net value of unsettled forward equity as of period end and the net value of unsettled forward equity and at-the-market sales subsequent to the period, all of which could be used to repay debt, provides a useful estimate of the net contractual amount of borrowed capital to be repaid. We believe these adjustments are additional beneficial disclosures to investors and analysts.
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The following table reconciles the principal amount of total debt to Net Debt, Adjusted Net Debt, and Pro Forma Adjusted Net Debt (in thousands):
| As of | |||||
| March 31, 2026 | |||||
| (Unaudited) | |||||
| Principal amount of total debt | $ | 1,245,999 | |||
| Less: Cash, cash equivalents, and restricted cash | (11,058) | ||||
| Net Debt | 1,234,941 | ||||
Less: Net value of unsettled forward equity (1) | (605,622) | ||||
| Adjusted Net Debt | 629,319 | ||||
Less: Subsequent ATM sales (2) | (5,952) | ||||
| Pro Forma Adjusted Net Debt | $ | 623,367 | |||
(1) There were 34,201,865 unsettled shares under forward sale agreements as of March 31, 2026 with a weighted-average net settlement price of $17.71.
(2) There were 307,984 unsettled shares under new forward equity contracts executed subsequent to the period with a weighted-average net settlement price of $19.33.
Property-Level NOI, Property-Level Cash NOI, and Property-Level Cash NOI - Estimated Run Rate
Property-Level NOI, Property-Level Cash NOI, and Property-Level Cash NOI - Estimated Run Rate are non-GAAP financial measures which we use to assess our operating results. We compute Property-Level NOI as net income (computed in accordance with GAAP), excluding general and administrative expenses, interest expense, net, income tax expense, amortization of loan origination costs and discounts, transaction costs, depreciation and amortization, gains (or losses) on sales of depreciable property, real estate impairment losses, interest income on mortgage loans receivable, debt related transaction costs, and other expense (income), net, including lease termination fees. We further adjust Property-Level NOI for non-cash revenue components of straight-line rent and amortization of lease-intangibles to derive Property-Level Cash NOI. We further adjust Property-Level Cash NOI for intraquarter acquisitions, dispositions, and completed development to derive Property-Level Cash NOI - Estimated Run Rate. We believe Property-Level NOI, Property-Level Cash NOI, and Property-Level Cash NOI - Estimated Run Rate 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.
Property-Level NOI, Property-Level Cash NOI, and Property-Level Cash NOI - Estimated Run Rate are not measurements of financial performance under GAAP and may not be comparable to similarly titled measures of other companies. You should not consider our measures as alternatives to net income or cash flows from operating activities determined in accordance with GAAP.
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The following table sets forth a reconciliation of Property-Level NOI, Property-Level Cash NOI, and Property-Level Cash NOI - Estimated Run Rate for the period presented (in thousands):
| Three Months Ended March 31, 2026 | |||||
| (Unaudited) | |||||
| Net income | $ | 5,711 | |||
| General and administrative | 5,755 | ||||
| Depreciation and amortization | 24,463 | ||||
| Provisions for impairment | 2,062 | ||||
| Transaction costs, net | (60) | ||||
| Interest expense, net | 14,266 | ||||
| Gain on sales of real estate, net | (119) | ||||
| Income tax expense | 14 | ||||
| Amortization of loan origination costs and discounts | (133) | ||||
| Interest income on mortgage loans receivable | (3,035) | ||||
| Other income, net | (465) | ||||
| Property-Level NOI | 48,459 | ||||
| Straight-line rent adjustments | (2,153) | ||||
| Amortization of lease-related intangibles | 47 | ||||
| Property-Level Cash NOI | $ | 46,353 | |||
Adjustment for intraquarter acquisitions, dispositions, and completed development (1) | 3,117 | ||||
| Property-Level Cash NOI Estimated Run Rate | $ | 49,470 | |||
(1) Adjustment assumes all re-leasing activity, investments in and dispositions of real estate, including developments completed during the three months ended March 31, 2026, had occurred on January 1, 2026.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our future income, cash flows, and fair value relevant to our financial instruments depend upon prevailing market interest rates. Market risk refers to the risk of loss from adverse changes in market prices and interest rates. Based upon the nature of our operations, the principal market risk to which we are exposed is the risk related to interest rate fluctuations. As of March 31, 2026, we had total indebtedness of $200.0 million under the 2028 Term Loan, $250.0 million under the 2029 Term Loan, $175.0 million under the 2030 Term Loan A, $175.0 million under the 2030 Term Loan B, $200.0 million under the 2031 Term Loan, $150.0 million under the 2032 Term Loan, and $88.0 million under the Revolver, all of which are floating rate debt with a variable interest rate. For the three months ended March 31, 2026, we had average daily outstanding borrowings on our Revolver of $3.0 million.
We have entered into interest rate derivative contracts in order to hedge our market risk associated with our term loans. The 2028 Term Loan, 2029 Term Loan, 2030 Term Loan B, 2031 Term Loan, and 2032 Term Loan have interest rate hedges that coincide with the extended maturity dates of the loans. The 2030 Term Loan A interest rate hedges mature on January 23, 2027. The interest rate derivative contracts convert the variable rate debt on our term loans to a fixed interest rate (as further described in “Note 7 – Derivative Financial Instruments” in our condensed consolidated financial statements).
Additionally, we will occasionally fund acquisitions through the use of our Revolver which, as of March 31, 2026, bore an interest rate determined by either (i) SOFR, plus a margin ranging from 0.725% to 1.40%, based on the Company’s current credit rating and consolidated total leverage ratio, or (ii) a Base Rate (as defined in the PNC Credit Agreement), plus a margin ranging from 0.00% to 0.40%, based on the Company’s current credit rating and consolidated total leverage ratio. Many factors, including governmental monetary and tax policies, domestic and international economic and political considerations, and other factors that are beyond our control contribute to our interest rate risk. Based on the results of our sensitivity analysis and daily outstanding borrowings on the Revolver during 2026, which assumes a 1% adverse change in the interest rate as of March 31, 2026, the estimated market risk exposure was less than $0.1 million.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures.
At the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of its principal executive officer and principal financial officer, of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, the Company’s principal executive officer and principal financial officer concluded that its disclosure controls and procedures were effective as of March 31, 2026 to ensure that information required to be disclosed by us in reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
Changes in Internal Control over Financial Reporting.
During the period covered by this report, there were no changes to the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection with the evaluation described above that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we may be party to various lawsuits, claims, and other legal proceedings that arise in the ordinary course of our business. We are not currently subject to any material lawsuits, claims, or other legal proceedings.
Item 1A. Risk Factors
For a discussion of the most significant factors that may adversely affect us, see the information under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, which is accessible on the SEC’s website at www.sec.gov. There have been no material changes to the risk factors disclosed in the Annual Report. These risk factors may not describe every risk facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Unregistered Sales of Equity Securities
Subject to the satisfaction of certain conditions, holders of OP Units in the Operating Partnership may tender their OP Units for redemption by the Operating Partnership in exchange for cash equal to the market price of shares of our common stock at the time of redemption or, at our election, for shares of common stock on a one-for-one basis. During the three months ended March 31, 2026, we elected to satisfy certain redemption requests by issuing a total of 9,965 shares of common stock in reliance upon an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended.
Company Stock Repurchases
None.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Rule 10b5-1 Trading Arrangements
None of our directors or executive officers (as defined in Rule 16a1(f) under the Exchange Act) adopted or terminated a Rule 10b5-1 trading arrangement or adopted or terminated a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the quarter ended March 31, 2026.
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Item 6. Exhibits
| Exhibit No. | Description | |||||||
| 3.1 | ||||||||
| 3.2 | ||||||||
10.1* | ||||||||
10.2†* | ||||||||
10.3†* | ||||||||
| 31.1* | ||||||||
| 31.2* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
101.INS*** | XBRL Instance Document. | |||||||
| 101.SCH*** | XBRL Taxonomy Extension Schema Document. | |||||||
| 101.CAL*** | XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
| 101.LAB*** | XBRL Taxonomy Extension Label Linkbase Document. | |||||||
| 101.PRE*** | XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
| 101.DEF*** | XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
104*** | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
* | Filed herewith. | |||||||
** | Furnished herewith. | |||||||
| *** | Submitted electronically with the report. | |||||||
† | Management contract or compensatory plan or arrangement. | |||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| NETSTREIT Corp. | ||||||||||||||
| April 20, 2026 | /s/ MARK MANHEIMER | |||||||||||||
| Date | Mark Manheimer | |||||||||||||
| President, Chief Executive Officer, Secretary and Director | ||||||||||||||
| (Principal Executive Officer) | ||||||||||||||
| April 20, 2026 | /s/ DANIEL DONLAN | |||||||||||||
| Date | Daniel Donlan | |||||||||||||
| Chief Financial Officer and Treasurer | ||||||||||||||
| (Principal Financial Officer) | ||||||||||||||
| April 20, 2026 | /s/ SOFIA CHERNYLO | |||||||||||||
| Date | Sofia Chernylo | |||||||||||||
| Senior Vice President and Chief Accounting Officer | ||||||||||||||
| (Principal Accounting Officer) | ||||||||||||||
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