NTST - Earnings call transcript Q3 2020

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Operator

Greetings, and welcome to the NetSTREIT Corp Third Quarter 2020 Earnings Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. President Vice Senior Haugh, of Finance. Randy proceed. Please

Randy Haugh

you earnings conference joining for us XXXX quarter third NetSTREIT's call. Thank for

Act In Securities addition call contain updated defined to close, the at questions presentations press release distributed may company's the and Litigation a the events the of website package in answers section in your of we On XXXX. yesterday as supplemental and remarks presentation forward-looking an today's Reform statements investor www.netstreit.com. investors, Private and management's posted after market to

Forward-looking differ subject that statements to risks may cause matters that address are discussed and actual from uncertainties results today. to those

made For our of up, here NetSTREIT risk prospectus these our the the factors, assumes review XX, and to update no August in you are XXXX, statements and to All more any as information dated future. filings. forward-looking other date we about SEC obligation encourage statements forward-looking

conference financial to package addition, then financial we includes Today's information presented on of are explanation non-GAAP the GAAP and believe supplemental for call investors. They this Chief release your make NetSTREIT’s why such Blocher. refer financial hosted remarks Officer, is Mark open Manheimer; to useful and Chief Executive Financial prepared measures. some non-GAAP for will and we an earnings measures Andy by In will Please and Officer, reconciliations call questions. definitions, certain our call

turn call the over will I Mark. Now, to

Mark Manheimer

today. for us to aligns everyone pleased well inaugural morning with we you is Good family today earnings here NetSTREIT your and call. be thank joining for hope you and you quarterly We this and are

on outlook. begin fourth Then a several commitment will IPO discuss detail to our and growth Andy provide marketing acquisition I months, sheet and and more a brief during overview you While we let results, over efforts our balance quarter word NetSTREIT. with live the close with our will activity external our on our shareholders. of quarterly investors past with me many

the have support for every to and our balance growth. to a long-term open scalable and we transactions XXXX a call then in focused retail net defensive questions. high with cash diversified up portfolio been creating formation We platform and will sheet then, and accretive conservatively capitalized December consistent on since flow lease Leading day quality

While team call this is NetSTREIT's have a surrounded first lease I and within traded a Andy seasoned track a and and ourselves publicly the reach as publicly records traded conference business company, future lengthy where with as net success our today. support have leadership to growth the company. to be public I of team our commitment members a XX couldn't of got our that us success more proud to are and we

our take a moment discuss to me Let history. briefly

internalized rated our valued a certain institutional grade did was approximately predecessor of and feel into exposure consisting XXXA asset forming a XX% which NetSTREIT. estate approximately investment then offering to to transactions, $XXX we net our investors transactions management by lease at tenants Prior to portfolio and fund, reduce that long-term. formation XXXX Our owned million team was of and via private formation down desirable a and sectors we private $XXX raised real In December XXXX, value portfolio capital million tenants. not were January rule from other pulled that

roster IPO future in new our a contains in fund concurrently XXXX. term million then August $XXX an We and debt We XX a of properties diversified million revolver growth. also portfolio raising XXX close of on industries. tenant refinance our and states, tenants to Today, comprising feet our September and outstanding X.X XX a additional in square loan tenant completed XX with single

investment their focus services, of including and generation refer our leases XXX% of what exposure lease automotive we as on high to profits, ADR, seen X.X% sales of of and most industries where grade bond XXXX. in grocers, only including we occupied home XX% years additional leases with before creates essential service is industry quality XXXX. with rent a term quick expirations have goods location Our until an weighted service on the classified XX% and is and is as necessity expiring discount lease underrated pharmacies, to high what quality and high tendency in times critical drugstores, and and XX.X quality with we're restaurants. These XXXX, physical disruption, our operate defensive. This is improvement, stores, like Based recently collections no with our X.X% tendency average tenants

take COVID-XX strategy sheet cannot and designed our contemplated. pandemic certainly even strength was stability the portfolio we having credit the pandemic, for long-term balance we predicted for While on before

threats believed as e-commerce strength in flows scenario. sheet, be to long have reinvest we anticipate and we and that that cannot. with evolve, on also continue fundable businesses to retail to basis protected other attractive pressures, landscape. both can With that changing acquiring in will adapt we and in retail well able with from balance have can focused to in other have its be continue and capital uses, such the predict to We're can replicate to industries a access that that on that backdrop, and to downside their cash ways been real estate are in continue focused but we retail ways we We also and retailers that

Additionally, as the not tenant pandemic. from both Proof provide cash details external felt impact given cash was that our growth, respect rent acquisitions With recently sector to and strong have outsized is strong relationships industry this underlying through we can categories estate had COVID large consistent constructed, lease our momentarily. of million market on of net provide execute of parent may further we're disciplined we October. pipeline September bear acquisitions to and to that to and XXXX third market And We're single collections, completed credit focused we worst cash legacy committed opportunities. our bring our in real is and on and able $XXX struggling highly tenant the end to locations seek the continue an liquid. and fundable with acquisitions to deep fundamentals with the which of will to retail portfolio through Andy disruption have quarter. strong The XXX% the with tenants has in tenant. execute through in believe work collections rent to been during locations NetSTREIT with flows

to of auto rates of dispositions remaining than to rate tenant. strong a acquired an solution to a third July, average buyer with quarter, an to initial locations note that of a remaining as at New to O'Reilly's to sales to the seven and chip well million the a a in is wanted In from August, blue we purchase years of and to close dining targeted of the a casual we seller a center. of overtime. at in X.X% located in $XXX we exposure not occupied is plan years, can performing acquisitions the In X.X%. For portfolio a was remaining the capitalization XX one portfolio of remainder have felt England a XX parts, million that sector investment increase defensive our portfolio. center were small with properties initial we price originally believe result, Mississippi term the cash the we September more at we From and we rated by fourth term acquisitions, of what And cap rates shopping cap quarter a the acquisitions years. who competing Walmart acquired portfolio NetSTREIT Supercenter this grade the disposition initial XX. costs. by we activity adding rate. completed note in could Tupelo, cash accelerate term of provide There on partnering provided cap We XXX% perspective, weighted X.X% that currently cap are restaurants completed when will a continue Casual the had lease cash in of XX.X exposure in We and that dining third tenants. at acquisition but on exposure Club that These to transparency to $X.X a that we trouble of in our we rate and we discuss lease Sam's were future reduce on closings quarter, million able these total eliminate would $XX able through lease

our we average two ahead, an tolerance targeting growth look of we quarter, of the acquisitions XXXX. As grade XXX% objectives. overtime, intend were quarter for per acquisitions target route third for Well, an we're and our risk $XX million balance or to appropriate or of quarters of more million investment last $XXX

a at seven grade retailers grade investment investment management targeted will We of where trajectory grade will balance quality well underrated the high expect a tenants confidence our team, estate the as non-investment the we industry, real high we retailers with and the higher of tenants XX% are as of that tenants activity quality be business approximately different of have the The yield, including with tenants. acquiring. debt level tenant in be slightly selectively

the to process. of you business. philosophy to our like approach Before embark marketing over a When make many IPO, met I on call our with through we the you with we we which that by turn I'd with we your we We few trusting Andy, And And finalized in regarding our comments were want received you you to order support when on count to know the can us. that recognize we strong institutional us book. we capital. humbled are our

corporate disclosures, program. providing finally ESG to obligations as to remaining a accessible analysts citizens fulfill committed and investors straightforward by establishing our are and strong clear, We to

to that date. a pleased being with initial employee Regarding steps are creating ESG, committed inclusion have strong culture to well taken we we and and are the internal promotes

governance of structure, turn I'll Andy. friendly our we our to the majority shareholder Finally, board. call proud now over independent corporate Andy? diverse are including

Andy Blocher

I'm thank everyone of on CFO you be And to incredibly Mark. as us joining call NetSTREIT. happy today. Thanks you our joining for

respect building frequently and As maintaining and executing confidence to and support and we're business providing and IPO believe business. We to conservative we that Mark our these overtime build earlier, will initiatives structure with during process, capital coupled shareholder a strategy committed capital. competitive transparency a our cost discuss our successfully to with noted

our Yesterday FFO of loss me $X.XX, press AFFO core $X.XX we net of share. per with begin quarter. results Let $X.XX, for recorded in release, the of and our

rent third a giving base third prior XXXX, quarter. as the to that From to publish caught update being annualized acquisitions any previous of slight our September as XX.X cautions basis shortly consideration only a rent our cash or of three or total them in currently from we rent and contributed reserves disclosures, on quarter. On of or abatement arrangements rent our based bad payment bringing through completed we're deferral bringing ADR the September quarter related report to collections tenants, to XX, the the granted increase history and result note, to paid million year-to-date. in payments, COVID-XX, perspective, a is bad recognize dispositions This September effect As a XX.X%. giving on tenant quarter to debt our current after a zero following debt portfolios their pleased XXX% at next we have the zero recognized

of Mark Year-to-date, terms and years to deferrals of XXX% as on $XXX,XXX these the month additional one Finally, which October, abated granted funds. for balance lease month abatements rent. the granted also repaid, in which for at rent we deferrals, of quarter received XXX,XXX has to defer extensions, balance averaged we end. was approximately averaged quarterly under it of on will very leading quarter. remaining be respect we a the to the of XXX,XXX years XX,XXX abated general collected conditioned leases renovations, XXX,XXX $X,XXX of the been respect mentioned of each term of be generally repaid abatements deferred bet deferrals net expect third additional our cash rent. of year-to-date approximately quarterly conditions quarter coverage is over we deferral lifetime could and rent business third in in therefore With for impact extensions each month on With X.X The a the to of as the small, we

net to a basis, our by no anticipated we We September recognized $XXX,XXX quarter asset provided our our rent net in the services assets, couple As consulting quarter. related or eight our held have IPO and XXXA items with eight abatements value sale, on from deferrals October, classified line for in largely we to as put processes proceeds two third of IPO as August. costs our XXX% and of currently to and book assets the collections demonstrated and single statements financial in These A expenses in including in impairments public related transaction GAAP cash being the bring in reporting successful and year-to-date, million in costs. from place. those after appropriate staffed those took impacted $X.X We $X.X reflect pre-IPO up company the sales. quarter million from had of third third resulting

recognize from we of two noncash in compensation addition, sources million the In $X.X expense quarter.

five didn't a performance additional first million in with on any be criteria. out criteria until and members from performance of recognized was of to to equity criteria at $XX,XXX key to based in a at product of of from the resulting the recognize up cash significant the straight nature performance us $X.X registration board financial the allow non-recurring The line the related time adjustments awards performance resulted basis is $X.X year transaction over and recognized up granted shelf result quarter. of in An catch life. a equity will that quarter. to IPO. was was The the expense the catch million expenses the met, employees measures XXXA, compensation time the recognized the awards time in noncash or awards as three largest $X.X third a These million based their The

overallotment On Turning XX XXXX, proceeds per the line $XXX.X completed IPO, common In the net deducting discount August generating issued capital we connection option with markets of IPO under on credit, retired the company's at in balance million with company's the million rate million $XXX repaid $XX purposes. revolving under outstanding completed September, acquisition to basis balance share, and after on the to different loan underwriting the expenses. term of effective outstanding $XX maturity offering then approximately our and million to the we rate of of shares term remaining activity. entire for in just our XX September loan swap the XXXX. utilize feature general A hedge exposure points of company In of Series December shares floating Preferred proceeds the corporate the XX the a an LIBOR including

drawn of $XXX on of million million As XX, on we September credit. our fully of line $XXX had remain cash revolving

We have option. in year a is to until the debt our XXXX, of maturities December one which subject maturity extension revolver no

Yesterday on per share well of declared The IPO XXXX. third of an to net we to dividend common prorated analyze stock annualized the quarter adjusted our of was times our in inaugural cash In the time share. an reflecting respect reflect $X.XX $X.XX long-term addition, cash With earnings IPO the Board debt will period period payable dividend ratio to December, to X.X from EBITDA dividend our is amount time declared X.X of X.X rent time at target. with a in dividends your sub below August, quarter dividend release, per the our the in $X.XX for rate end. be

Before take perspective. on over our minutes I just forward-looking items back turn and Mark, outlook provide let to discuss it to a me of fourth quarter a couple some few

acquisition average that the giving we with $XX the we consistent of least mentioned, in per million our after at accelerated Mark to consideration volumes fourth expect September expected XX, to in million volumes $XX to acquisitions as million First, XXXX fourth acquisitions an bringing quarter, to quarter of and approximately million. post quarter, acquisition the because additional $XXX total IPO our complete $XX

expectations, fourth bucks. incremental quarter a hedge we'd quarterly fourth under of LIBOR including in the undrawn to revolver, expense, balances borrowings and our resulting place and deferred expect fees amortization approximately cash acquisition exceeding current financing our and $XXX,XXX quarter with be million fee With no interest

$XX non-cash run expenses G&A compensation We looking $X of to million approximate annually. cash an our million combined of additional fourth annually expect better million with our to quarter rate $XX forward

to and As this our company. we IPO amount business our appropriate public process, believe effectively a reflects staffing the discussed execute as during strategy to run

overtime we a As should estimate. we G&A basis to marginal good result, would as on to acquisition points expect XX be pretty grow be approximately a incremental increases volumes

XX% annualized stabilize once we're targeting dividend XX%, declaration, dividend we near-term, rate Board's to the the AFFO at expected XX% for growth with consistent an Finally, with dividend path.

call turn Mark. back over I'll Now, the to

Mark Manheimer

And you us joining all Andy. thank today. for Thanks,

we for best in that not sure IPO August, make place prepared portfolio in the high markets, the enter but we people platform and assets only As to had the right well. as and successfully quality public we

I'm this forward of end This concludes look business and performance growing no very speaking hard on portfolios like to advice to Board our values our our as for would you a proud dedication. team. well and less, to with of update our quarter We our that Andy are all pandemic their prepared thank and progress. So very remarks. their grateful to each amid you counsel. for as work and I also them We

open We Operator? now the line for will questions.

Operator

this first with of Berenberg. you. Please [Operator be we'll time, question Nate with Your your question-and-answer comes Thank proceed question. session. At line Instructions] conducting the Crossett from a

Nate Crossett

on Is I October, in looks XX more and deal get conservative seeing wanted kind just tax for the because of that of at a Sounds the in. baked like to just is code million far for least two you're the what your And estimate? months? like activity changes? next potential any if commentary upcoming it and activity election curious, so

Mark Manheimer

will been pull million so Yes, quarter. $XX we quarter targeting since And and of million fourth I quarter, far forward Nate. the transactions did the Thanks, of in $XX this third mean, per so we've on neighborhood transactions. fourth to still September robust And really some come that we to timing down initially targeted pretty being said, quarter. we XX of the pipeline. That have a the have for the it

what lineup close. should the think new certainly people see, in that like tenant IPO flow get very should we into investors, I actually pipeline coming discussed names couple like the and their will portfolio, roadshow the happy the that the, saw quarter. think we to of looks continue that We deal that on for we We a the very, about fourth the similar

in If that in we're here thing acquisition the of you quarter. And quarter. can could third the a into similar January, fourth we note of get XXX% grade number hopeful investment slip for another our kind guess, I

first and probably probably of a XX% buying So great. at after this the range we're what looking XXX%, in see grade. the more beyond, of time you'll is that only and investment mix that's The

quality, redefine is closes around more course, But that non-rated kind send what December of budget shift little can which that January. certainly, on bit a adding debt-to-EBITDA depending or tendency that X revenue they high from an dollars Of a if have of a would more grade go times, so in of as rating. we to to billion less and kind were than than get a investment rating, out

really sound pretty about so today. good the pipeline And

Nate Crossett

ground? guys on pricing, after? changes as you've concepts can also since are and you're that Maybe I'm So IPO? just you Obviously, guys compensation been targeting touch on just of seen the kind highly the any what there are curious seeing sought that you

Mark Manheimer

When most be really the credit that lobbyists that's much even time. the going not Yes, out, different about lot there. of certainly institutional a they're haven't of I to a how seen take really strong up turns of we make some anticipate, a your want regardless out exactly profile get, and election with too really. would but to imagine Tuesday And XXXX, I the investors, and your results of type the of have would really people kind come mom-and-pop think how competition other And our investor. continues we changes of to in, they that there's XXXX maybe them we'll most chasing, change,

XXXXs So monitoring get if some a there's I but to we'll be that. people for just wouldn't be massive rush certainly in, surprised

Nate Crossett

there that Any curious, Okay. question held just in mix? any I'm I that? that quickly, for And what's if in common theme can. sale, just last assets Is are

Mark Manheimer

on. short I'll of Yes, relying exactly getting where This is are. what I they stop mean, we're

The to close on third those. party sites

So out you're in it's on little to what the focus But bit of risk the is going control. our big monitoring us think a is I see portfolio. for be

going potential some to ahead kind of be in out of So, cases getting credit it's risk. most

we expected dining, to and exposure, casual lesser there's there We time, a little maybe a exposure a to could in of they're the bit have bit be so that math, a little are bank at looking then mixed number specifically outside one there. our decreasing tenant, little of do an of portfolio, so exposure extent, so our and in be over bit a to

Operator

question from KeyBanc. next with Your comes Thomas Todd Please of with line proceed question. your

Todd Thomas

on between buy to do the X.X% up and in added following pricing. investments seeing compensated that tenants you difference the you that with range? then about Or Are to be non-rated or and grade yield any yield for risk of tenants and you balance Mark, higher in compression And sort environment? cap that question terms first in to able rated And talked in higher of Just a investment striking like being X% you'll feel the rates? comfortable yields? there? sub-IG is What's continue this

Mark Manheimer

targeting So relates investment and mix to mind, in keep as outside of tenants. quality the it high very really grade, we're

So quality there's million this certainly basis grade high in about the shift, we're bucket. that really but point maybe, trying that through the can of happen comfortable year, expect in of that some on more, not kind really that bucket a there's quality grade least an carry don't get universe of investment Quarter-to-quarter versus not difference barbell approach limited first $XX XX high nine or we've months the buying in to to then and of I cap nine certainly the between with closed investment to very tenants a at rating. year, It's months first a rates. of assets, of that our blend see, been a to yield bunch kind would

Andy Blocher

to Todd, it's that. just add can Andy, if I

on acquisition rate really totally and same Just the sure since just costs. perspective, When cap on disclosing it's from we're lettered talked company. public first a all about that page, the we make time acquisitions, cash to it our we're cap as rate

Todd Thomas

the assets, various Where's opportunity out in and sort increase you offerings, Is sale of today? in retail what And Walmart I focus source suit reach acquisition. the company? or guess, continue of build see for you of that pipeline, deals seeing Is mentioned, the other existing the the property leaseback. to and the you're where more terms biggest there either channels an from area an an owners? that you area that And use

Mark Manheimer

obsoletely. Yes,

So, our volume. of are fairly modest targets, I acquisition in we're -- think, terms

that their you're kind the that on space. transaction the of used type but and kind as a developers and deal there buyer of in it pulling more in most well. Certainly, and surety seeing very shopping million of be bring more those problem, things which our more of credit gearboxes $XXX mean, being sell seeing of pipeline, to situation working as to will opportunities us opportunity acquisitions table provide $XXX get the spot Dallas find we certainly, rest shelf is based a so to the that I whatever the we creative, our center more having the there courses of allows be us, center. trying could Walmart to valued, focuses little more relationship seller, ourselves that that on we're the some where and And on But we've or of types with we leaving than really cash we kind be of got solve to we've And could where you speeded we being selective. about not could on extremely transaction, be to of them close, a raised, already more a entire million of out bring and a pricing. to worse with partnered mentioned, able the of riskier, have, rather bit out

Andy Blocher

need when the details my whether into its tenants. restricted Todd, mean, think of it's owners, those triple and you forth. I really about Mark Andy. net experience, uses, idea Certainly either getting on shopping provisions, whether there, co-tendency from of the just dig off in center you that's to so some so

the in those on doubles deals. details So,

Mark Manheimer

early And underneath we're derivative way us. that starting with

not create co-tendency use, So the a risk restricted for or going if any problem we're on future. to taking us in that's

Todd Thomas

footing Do general I some just view? see not XXX% of tenants, in less one quarter, into further some October. feel Do in and fourth dependents any last September looking for into back on of than is that X% going of better then you all collections, or the little risks is But just base terms deferrals those relief and in question, risk here the tenant you there's at a your could and sort? realize forward resolved you're that that your that quarter? or heading is collecting And in come Andy,

Andy Blocher

lot that's they to brings Todd to so what a And of depend Yes. COVID and so going on with on the future respect forth.

portfolio of there, current and acquired, collections, about in very we've but the not I think on kind assets, good the it if on, environment, assets feel feel very, demonstrated the legacy Based is was quarter, and I showed going see what the of pipeline. just that we in quarter. we we that extremely second during defensive, the third right. discussions into that Certainly our like, we're, the

So, good good. the current you we like as in feel mean, environment, feel those can yes, as I in

Mark Manheimer

thing COVID XXX%, starting And of and paid those would it we with back the is gone in relates in cut Yes, all everyone May. has and along only June. I to agreements, deals our there as and is, add April then

to to situations. or relief, not a lot possibility it, back we those more cut a and getting I us extensions, a just ended of any we or lease But value those second did there in gave of as mean, we that types with conversations. want than is or of wave, that tenants rent think call COVID, But if you relates what came had rent, conversations to I haven't there's, it think whatever reemergence the up we So yes, reality, types COVID, paying of I deals the lot of have we up.

to have were impacted commitment the really by it the so showed in And the that that tenants areas COVID. locations our

outside their pretty ability continue that working control, with profits. things or to open tenants their system optimistic the of but, certainly So their to we're fact, we'll our government event XXX%, generate collect in in that down to

Andy Blocher

Yes.

got abatement So a quarters in Todd, additional million tenants. you to In $XX.X term. of equates my under rent just Mark extended our term to quantify we've prepared the, to we said, the on for to rent given exchange kind the year-to-date what I for about what million of that were payments at just of if remarks, three that, with of of quantify said, end dollars

Operator

next from proceed with Your question. of with question comes Please Tsia Jefferies. your Linda line

Linda Tsia

was you made for then might you forward? think in one what do rates casual going these that derisking quarter off disposition trend and dining, The cap assets this

Mark Manheimer

Yes, Yes. sure, Linda.

drive yes, dining to those was was So restaurant. probably by the in platforms. without most types of research a Kansas, impacted in a a and any drive a that network one through, location COVID really Hutchinson, casual of That of without property much

So unlikely they close to and reopen. in we're

we least the what if is time the longer, much uglier now so would waited And the some fair We we like get situation. value. be felt amount it where a thought we

portfolio. it that the $XX million the say million thought keep for certainly, out So did was had derisk. problems, pulled a cleaner $XXX basis. go that we one-off And going to paid. really XX.X% the down The pays difference road of sale to we and situation there to our feeling prior forward with because be may it cold portfolio mind, good XXX%, about casual most to on since to about has out and up then agreed collected the one a to September things late, up in a were December But we on do X, that's us a of which portfolio, and January that that about it raise we portfolio. of was we between they potential IPO initial to really there. the in what restaurant the business of where weeks something did start was update never. Never here very October up out that three so a be to We dining was been really a way now typically portfolio have rent clean really try that is built back have There the a, portfolio have capital

outcome situations. to move want of some value make We So we've getting one best point. where look sure that each those economic at and that's may want at we in to the maximizing that to had we're just

Linda Tsia

investment tenants. competition, targeted still grade best and your What's interest rates achieve range? strategy and their And navigate, the cap then, given increased to in potentially market increase

Mark Manheimer

Absolutely. Sure.

it's the most sense. think I the that we So mean, makes obviously, strategy

may into very much So, head more very, fragmented relationship as maybe very there be But of to period a uncertainty, interest we there. business. a business, a start

example Walmart $XXX we every very that's do like really talked private business if strongly day down for we pipeline. our that that business we've earlier, pull got about market, to we'll in not a the step a execute just and plan million to that for us, large have buyer And future. just in and ones are. able in a it's feel difficult that each take work be our But the to You we in we continue to and such fragmented the they're

Operator

with The next Citi. Katy with of Please question McConnell comes proceed your from question. line

Katy McConnell

would on you more a Can deals the disposition you you're similar give pricing the us color how rescue front, to versus sale differently get to house for today? away some that walked debt quarter around assets on expect then from for the sense you retail? And the see this acquisitions underwriting

Mark Manheimer

the take first one, I'll So first.

we were add the to had with that a properties. to And And buying thought risks sheet contract, also tenant, continue pretty that that that particular And large we a of capital do COVID. deteriorated keep that COVID. to isn't eventually and transaction were they debt seller specific had do credit undertaking deposit back the had where with acquisition. allowed we a couple picking to we're on And And potentially due pre-COVID. hit add during really So, that. able deal cut leverage on additional the had again as to we can had there's the to until bit then a to a deal to balance going to me hard a a really then was market with

from we So to transaction. particular that elected walk

potentially type to XX.X% then lead we problems thousand I more location want from like dining think the dispositions, to the in dollars. cap I it couple dark had to one COVID to be of a for on going COVID would as casual take deal, think type future. be could that. Obviously relates in was to felt with something hundred down a not road But lot abnormal anomaly. assets do definitely away very to walk don't an be think it the to but very to rate really was do a we the that I And much and important that's would related it us

many are the our risk? looks we mix diversification? in How many at out As on, dispositions look of the of rates should like. Sounds those a ahead what be of depending are How future, we getting a XXX. like cap think those significantly that, that inside

would would I be this cap the than less rate. imagine XX.X% but significantly So,

Andy Blocher

that. related in for Yes, quarter. of XXX. we $X.X mean, remarks follow-up costs discussed to back IPO add transaction just on my I as to expenses, of had prepared I else, million everybody in and We XXXA kind the

So going that anticipate quarter, in that's forward. XXX,XXX head Mark to as said, that be of the less deal quantify we'd costs to

Operator

Fargo. from next Your with your Please Stender with of line Todd question. question Wells comes proceed

Todd Stender

rate on back stuff, direction, rates? this You to steady cap risk got it's accounts is of But seem pretty you fairly floor the top free for compression the cap look go say rate be year you at you group. guys Treasury in level guys? why to to Would rate. you just that we've some But of the on steady range risk account been below Just fairly good with a rates some peer that grade focusing rates, cap XX natural at for buying with been a there's Maybe have when bound investment to tenants. reasons X%. been some of of for really cap

Mark Manheimer

right. Yes, I that's think

cap a a to People time over there's really when there's that isn't. forum, generally the to correlation there over think rates, at you interest massive think past be rates tend XX look years. going to I

just there's those it that I down could scale type a think think you'll is, rate in. has effect bring large very I due low been some prolonged really been that financing had execution sometimes pretty really It's but only secured environment to which we in in expect don't cap the transaction someone where the into massive kind there's haven't come see that rate, play debt moves stable. we've seen not, certainly to mom-and-pop situations over XXXX the some impact gravity But it's really where see years. extraordinarily get a, really where aggressive over we of been of an market, past to a smaller time can interest be structured a XX could

assessment. that's think fair I a So

Todd Stender

Mark. next see sub Andy. capital you times. from to structure? markets? a until certainly with how the little there What this debt-to-EBITDA So we IPO for capital is proceeds premature. liquid to of still deploy Probably have sitting come your debt Thanks, about the year proceeds? plenty maybe IPO next quarter the second Maybe With there probably cap two you're the is the thinking Obviously you

Andy Blocher

that you. of sitting assets got mean, Thank for sure, right we Todd. the held cash. on million liquid, $XXX of we're currently roughly facilities. plenty Yes, stand now, are like where million Yes, I $XXX We've worth that undrawn $XX expression. sale. million on credit

So, about that like right, Finding point. business obviously, rush to overall executing, just result today no you just executing, raise just additional XXXA we're and execution time. to for talking continued basis. swimming. of this are keep over Dory through a kind until going and Mark alternatives our our the I keep funding keep evaluating But IPO the forward was on constantly Nemo as is in in equity We're liquid at said constantly go plan near-term, to of the beliefs improvements plenty cost-of-capital and the is into

we make from time. at right type the markets now, it's Just interest our the the eyes size, on to open of what hopefully think best anybody's and timing really capital that, to got or wide business, appropriate don't speculating we're start price. in decisions us executing But where just I trust on focused the sit appropriate

Operator

Instructions]. [Operator

with proceed question. Alexander Please comes with America. line next of question from your Pernokas Your Bank of

Alexander Pernokas

what question, for official one XQ results Just guidance your on XXXX? providing thoughts are with

Andy Blocher

try I we're was look, pretty what's whether to the With really to can, to loan. are What gain the hear to rate continue to something drivers quarter really now mean often we the on some as regularly with thinking to expense the G&A, guidance Alex, evaluate biggest acquisitions, debt our it's and we from to dividends tried we as line, the our, guys, fixed interest term respect best we ADR on there? We with around this clarity as respect that best give business. about. will continue do greater practices you which

that I to going To are extent too So, soon XXXX? share great for, this on it's AFFO we're free guidance providing the we're people to discuss. you to like, we point, that to giving if you're to this feel for feel think to which I building commit asking to not per At we the and happy one out basic Please basis, do went think reach blocks, quarter. lengths off tell.

Operator

with Your next Ki question Trust proceed Bin your comes from with Please question. line Securities. Kim of

Ki Bin Kim

if just I'm Could that you consider assets. on sure a details order buying discuss philosophy, your some of host variables provide What's and you there's your investment that? you pecking when you're

Mark Manheimer

business, we're mean, We to I world on retail sure making that credit going to think continue their We important the allow think strong evolve. and capital to a in we're in going is that's has be thing that access it's and to corporate where cash, focus come. that the to first to Yes, to team will that will continues to access a will extraordinarily adapt think lease I to them change. our them is that Absolutely. primary be sure change term. continue reinvest during and that one I have to the get of there to allow mean, the rent management

which we're I'm of think very the rather but prepared a us are very of is we tenants to the And investment having that we buying reinvesting piece access happened strong to that on that rate. not is leverage. that business, out that focus estate is continually grade that, important being and real to lot tenants with credits sure taking be capital the important, cash in and so have The with for next making lower business,

everything We right. so, there disruption. we'll But everything to think be pull probably got get And get us right. will to

is and How is to the so that important drivers that And course, the analyze other that really into get What we money we much [indiscernible] estate. replacing do traffic estate? to rent at should do acquisition. with counts building going uses? trying get and, our is in that be to the very of do attractive to? effectively time be have at what And what we going the going can we and happens back. it? what if what real put to the are How getting and able Are demographics Looking type to think that buying backstop to other the we traffic initially signage, we're can really, rent area. is we and What we are and actually we real any, an if it do of

generate think it's order cash tenants. it estate. Certainly, so also positive third flow on and in the to But credit as that relates that locations important renewals. pecking we focus seen their to that's behind And for real be important corporate we've probably

Ki Bin Kim

companies Okay. of in past. And Mark experience the Andy looked had a you lot and both have public fourth at and

you're create? culture Just curious, kind as corporate NetSTREIT, what of to trying

Mark Manheimer

Yes, absolutely.

what overlooked. it's to they're are valued. we is making the work, to really think doing, culture come to corporate them to that And And think that do, on people that will continue we something day, drive best got they can do are every we've So, excited often that sure that focus built. we like

the kind behind sure that seats think come to right make think, people have in looking I harder continue as that it's up. business now, point the find culture that that really to to and people solutions the we get fingers about mentality to as right team accomplished. are that momentum trying we've they going right of issues got of I to the aren't excited what we've lot to But, we've a got harder scale are where

date, but been to accomplish so we've on accomplished side, what been been our what a heavy able we've to ago, lift what's feel been I I people you by home. we've and And And a COVID have obviously from far, that is front, than really a in very members through about smaller the in accounting able think team built good, been private a acquisitions the we were less think that management 'XX we culture, difficult, entity, accountable the front and asset held don't so year really to we on that mix, from this accomplish, throw testament process have today. culture of done have and working certainly lot to the a whole think bad would a them themselves

Andy Blocher

basically of you I super calling mean, I you things we it weapon focused real the we are with really the to new kind Everett, forms. and happens boards, working can is as the who order, can board, her, in out can, our everything feel The in first would on engaged one last our on I And of get the people, three employees culture Heidi are forward early that really, ago, Pretty books the and estate, who the in make place I a cycle a as lot believe as our idea board, look for have of people. the to XX just to responsive on that our is REIT to order we up also on to we we setting right. the I not say, We're Mark is balance report. much that, we're members sheet, not ourselves part lot were And broke very folks rounds and that in first of two right. the there's, and build that who simplest to being at And what got had of in morale, like raised we were board Mark able of secret and right. Mark a maximization. conversation, look lot but to we in out employee There's this capital. successful is sure time, our year IPO, getting looking of employees down like we I as that records, keep who and We its we've are think and I needs, over point. or this our success. make a the two,

be do of just couldn't people. can't we You that the that have. without, the We quality team best prouder

your answers that question. So hopefully

Operator

And Mark closing and the turn Manheimer the to of Ladies back the for I gentlemen, like would Mr. remarks. end session. question-and-answer have we to reached call

Mark Manheimer

joining Well, Also, first an today. exciting attending some thank as for our you, a find discuss on and can company. great in day. and a progress. do us a public everybody we NetSTREIT have Thanks plan time our weeks Certainly again for day hope call we few with to

Operator

today's This conference. concludes

your Thank your disconnect for you at You lines may time. participation. this

NETSTREIT (NTST) 2 Nov 202020 Q3 Earnings call transcript