What changed in this filing

/stocks — the workspaceLOADING

Item 2. Properties

2022-02-24 compared with 2021-03-04 · 68 added, 68 removed, 103 unchanged (57% of the section changed)

Between the closing of our initial public offering and December 31, 2021, we acquired 177 single-tenant retail net lease properties with an aggregate purchase price of $588.8 million.

As of December 31, 2020, our diversified portfolio consisted of 203 single-tenant retail net leased properties spanning 38 states, with tenants representing 56 different brands or concepts across 23 retail sectors.

As of December 31, 2021, our diversified portfolio consisted of 327 single-tenant retail net leased properties spanning 41 states, with 67 different tenants represented across 23 retail sectors.

As of December 31, 2021, our portfolio consisted of 6.4 million square feet and was 100% occupied.

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As of December 31, 2021, none of our tenants represented more than 7.3% of our portfolio by ABR, and our top 10 largest tenants represented in aggregate 54.3% of our ABR.

Nine of our top 10 tenants are publicly traded companies and nine have investment grade credit ratings, in addition to Ollie's Bargain Outlet, an investment grade profile tenant.

Eight of our top 10 tenants are publicly traded companies and eight have investment grade credit ratings, in addition to Hobby Lobby, an investment grade profile tenant.

Tenant Diversification

As of December 31, 2020, our 203 properties were operated by 56 tenants, each representing a distinct brand or concept, with no one tenant representing more than 8.9% of our portfolio by ABR.

As of December 31, 2021, our 327 properties were operated by 67 different tenants, each representing a distinct brand or concept, with no one tenant representing more than 7.3% of our portfolio by ABR.

The following table details information about our tenants as of December 31, 2021 (dollars in thousands):

Number of Properties Square Feet ABR 2

% of ABR ABR per Square Foot 2

Weighted Average Lease Term 3

Number of Properties Square Feet ABR % of ABR ABR per Square Foot Weighted Average Lease Term (2)

18 266,839 $ 5,200 7.3 % $ 19.49 12.2

7-Eleven, Inc.

21 71,618 4,879 6.9 % 68.12 13.5

Lowe's Companies, Inc.

Hobby Lobby Stores, Inc.

12 662,858 4,689 6.6 % 7.07 10.3

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(Advance Auto Parts) 39 278,953 3,882 5.5 % 13.92 9.5

Dollar General Corporation 37 350,670 3,701 5.2 % 10.55 7.6

CVS Health Corporation 18 207,477 3,666 5.1 % 17.67 14.0

Lowe's Companies, Inc.

4 501,771 3,578 5.0 % 7.13 12.2

Wal-Mart Stores, Inc.

5 771,538 3,288 4.6 % 4.26 7.0

CVS Health Corporation 12 131,535 2,221 5.3 % 16.89 14.0

Dollar General Corporation 21 195,309 1,991 4.8 % 10.19 8.7

Best Buy Stores, L.P.

6 285,495 3,150 4.4 % 11.03 5.5

Floor & Décor Outlets of America, Inc.

2 164,770 2,615 3.7 % 15.87 11.3

Big Lots Stores, Inc.

/ PNS Stores, Inc.

(Big Lots) 9 344,699 2,382 3.3 % 6.91 9.0

Ollie's Bargain Outlet, Inc.

9 342,278 2,282 3.2 % 6.67 8.1

Dollar Tree Stores, Inc.

/ Family Dollar Stores, Inc.

20 193,521 2,010 2.8 % 10.39 7.5

Koninklijke Ahold Delhaize N.V.

(Food Lion / Stop & Shop) 2 66,158 1,268 3.0 % 19.17 6.5

Home Depot U.S.A, Inc.

2 228,362 1,944 2.7 % 8.51 3.8

Kohl's Department Stores, Inc.

2 165,870 1,147 2.7 % 6.91 5.1

Tractor Supply Company 6 135,341 1,407 2.0 % 10.40 10.8

Koninklijke Ahold Delhaize N.V.

(Food Lion / Stop & Shop) 2 66,158 1,268 1.8 % 19.17 5.5

Burlington Coat Factory Warehouse Corporation 3 98,004 1,205 1.7 % 12.30 8.6

Best Buy Stores, L.P.

2 76,400 854 2.0 % 11.18 6.5

Floor & Décor Outlets of America, Inc.

The Kroger Co.

3 163,328 1,198 1.7 % 7.33 8.3

1 unchanged sentence

4 31,182 1,027 1.4 % 32.93 10.1

Dollar Tree Stores, Inc.

/ Family Dollar Stores, Inc.

Kohl's Department Stores, Inc.

2 165,870 1,006 1.4 % 6.06 10.1

CWGS Group, Inc.

(Camping World) 1 66,056 705 1.7 % 10.68 13.0

Branch Banking and Trust Company 5 15,388 660 1.6 % 42.87 8.0

Big Jack Holdings LP (Jack's) 4 12,289 656 1.6 % 53.35 15.0

Top 20 Subtotal 222 5,330,732 54,378 76.4 % 10.20 9.8

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(1) Represents tenant or guarantor.

2 ABR does not give effect to an aggregate $0.2 million of rent deferral and $0.7 million of rent abatement in the period from March 2020 through August 2020.

The Company has not provided for any abatements or deferrals after August 2020.

(2) Weighted by ABR.

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Discount retailers offer a low price point and consist of off-price and dollar stores.

The following chart illustrates the percentage of our ABR attributable to defensive retail industries as of December 31, 2020:

The breakdown of our necessity-based retail, service-oriented, discount-focused, and other, non-defensive retail industries by sector and by percentage of ABR as of December 31, 2021 is set forth below (dollars in thousands):

Annualized Base Rent 1

Gross Leasable Area

2 unchanged sentences

Home Improvement 23 $ 10,325 14.5 % 1,071,206 16.7 %

Auto Parts 48 4,169 10.0 % 328,563 8.8 %

Drug Stores & Pharmacies 36 8,866 12.5 % 474,316 7.4 %

General Retail 4 2,658 6.4 % 666,846 17.9 %

Auto Parts 58 5,174 7.3 % 401,908 6.3 %

Grocery 10 4,206 5.9 % 380,332 5.9 %

Farm Supplies 5 1,016 2.4 % 105,142 2.8 %

General Retail 5 3,226 4.5 % 787,083 12.3 %

Healthcare 8 1,685 2.4 % 52,425 0.8 %

Farm Supplies 6 1,407 2.0 % 135,341 2.1 %

Wholesale Warehouse Club 1 417 0.6 % 110,858 1.7 %

4 unchanged sentences

Quick Service Restaurants 17 2,777 3.9 % 48,778 0.8 %

Casual Dining 5 904 2.2 % 25,886 0.7 %

Automotive Service 13 1,222 1.7 % 77,515 1.2 %

Health and Fitness (2)

1 985 1.4 % 33,616 0.5 %

Casual Dining (2)

4 755 1.1 % 23,531 0.4 %

Equipment Rental and Leasing 5 679 1.0 % 49,275 0.8 %

Total Service-Oriented Industry 65 12,038 16.9 % 329,434 5.1 %

1 unchanged sentence

Discount Retail (2)

29 8,141 11.4 % 1,076,710 16.8 %

Dollar Stores 57 5,711 8.0 % 544,191 8.5 %

2 unchanged sentences

Other, Non-Defensive Industries

Furniture Stores 2 872 2.1 % 47,101 1.3 %

Arts & Crafts 12 4,689 6.6 % 662,858 10.3 %

Consumer Electronics 6 3,150 4.4 % 285,495 4.4 %

RV Sales 1 705 1.7 % 66,056 1.8 %

Furniture Stores 2 878 1.2 % 47,101 0.7 %

Apparel 4 506 0.7 % 39,126 0.6 %

Arts & Crafts 1 451 1.1 % 55,079 1.5 %

Equipment Rental and Leasing 2 237 0.6 % 17,687 0.5 %

Gift, Novelty, and Souvenir Shops 1 200 0.3 % 8,081 0.1 %

3 unchanged sentences

(1) Certain figures in this table may not foot due to rounding.

(2) Health and Fitness, Casual Dining, and Discount Retail industries have one, two, and one properties, respectively, that reside in NETSTREIT Management TRS, LLC (“NETSTREIT TRS”), representing 1.38%, 0.48%, and 0.39% of ABR, respectively.

Geographic Diversification

The following table presents ABR by state for our portfolio as of December 31, 2021 (dollars in thousands):

Annualized Base Rent Gross Leasable Area

ABR Gross Leasable Area

Tenant State Number of Leases Dollars % of Total Square Feet % of Total

Texas 33 $ 7,756 10.9 % 408,992 6.4 %

Georgia 13 3,365 8.0 % 470,421 12.6 %

Virginia 4 2,551 6.1 % 170,494 4.6 %

Mississippi 12 2,324 5.6 % 383,089 10.3 %

Ohio 11 2,271 5.4 % 222,300 6.0 %

Florida 12 1,803 4.3 % 77,318 2.1 %

Illinois 19 7,690 10.8 % 481,865 7.5 %

Pennsylvania 13 1,748 4.2 % 116,906 3.1 %

Ohio 28 4,739 6.7 % 544,676 8.5 %

Georgia 18 4,289 6.0 % 591,374 9.2 %

Wisconsin 16 3,466 4.9 % 451,747 7.0 %

New York 13 3,143 4.4 % 402,062 6.3 %

Alabama 11 1,633 3.9 % 91,682 2.5 %

California 10 2,876 4.0 % 141,051 2.2 %

Mississippi 13 2,787 3.9 % 433,090 6.7 %

Indiana 13 2,691 3.8 % 210,925 3.3 %

Virginia 5 2,655 3.7 % 181,736 2.8 %

Pennsylvania 15 2,421 3.4 % 180,581 2.8 %

Florida 15 2,280 3.2 % 102,070 1.6 %

Michigan 7 1,966 2.8 % 207,312 3.2 %

Tennessee 5 1,249 3.0 % 91,970 2.5 %

Arkansas 7 1,182 2.8 % 46,275 1.2 %

Minnesota 4 1,151 2.8 % 92,535 2.5 %

Missouri 5 960 2.3 % 114,252 3.1 %

California 1 815 2.0 % 84,177 2.3 %

New Jersey 6 780 1.9 % 26,740 0.7 %

Arizona 5 1,837 2.6 % 161,661 2.5 %

Alabama 13 1,801 2.5 % 117,258 1.8 %

Louisiana 6 1,730 2.4 % 180,537 2.8 %

Washington 3 1,399 2.0 % 116,222 1.8 %

South Carolina 9 1,373 1.9 % 139,128 2.2 %

Kentucky 4 1,366 1.9 % 166,529 2.6 %

New Mexico 4 1,232 1.7 % 54,357 0.8 %

Wisconsin 7 545 1.3 % 36,208 1.0 %

78 11,715 16.5 % 1,147,073 17.9 %

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Lease Terms and Expirations

Our leases typically have initial lease terms of at least 10 years and contain two or more options for the tenant to extend the lease term, most often for additional five-year periods.

All of our tenants are subject to net lease agreements.

More than 83% of the leases in our portfolio are triple-net, with the remaining leases double-net.

Under a triple-net lease, the tenant is generally responsible for materially all property operating expenses, including property taxes, insurance, and property maintenance and repairs;

however as is common for triple-net leases, the landlord may be responsible for maintenance of the roof and parking lot.

Under a double-net lease, the tenant is generally responsible for materially all property expenses, including property taxes and insurance, but excluding property maintenance and repairs.

In addition, as of December 31, 2020, approximately 42% of our investment grade tenants and 98% of our sub-investment grade tenants were subject to future rent increases based on fixed amounts, increases in the consumer price index or other stipulated reference rate, or provide for additional rent calculated as a percentage of the tenants’ gross sales above a specified level.

The leases in our portfolio as of December 31, 2020 provided for an average 0.79% increase in ABR.

As of December 31, 2020, the leases in our portfolio had a WALT of 10.5 years, with no lease expiring prior to June 2023.

Our leases typically have initial lease terms of approximately 10 years and contain two or more options for the tenant to extend the lease term, most often for additional five-year periods.

As of December 31, 2021, the leases in our portfolio had a WALT of 9.9 years, with no lease expiring prior to April 2023.

The following table illustrates contractual lease expirations within the Company's portfolio as of December 31, 2021, assuming no exercise of contractual extension options (dollars in thousands):

Annualized Base Rent 1

Gross Leasable Area

ABR Gross Leasable Area

Year Number of Leases Dollars % of Total Square Feet % of Total

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Total 327 $ 71,212 100.0 % 6,420,246 100.0 %

1 Certain figures in this table may not foot due to rounding.

During the fourth quarter of 2020, construction was completed on a build-to-suit project with rent scheduled to commence in January 2021.

Total cost of the project was $1.6 million.

During the second quarter of 2020, construction was completed on a build-to-suit project with rent commencing in July 2020.

Total cost of the project was $0.8 million.

Tenant Land Acquired Location Lease Structure Lease Term Actual or Anticipated Rent Commencement Status

Circle K 1/14/2020 North Little Rock, AR Build-to-Suit 20 years 7/1/2020 Complete

Circle K 4/3/2020 North Little Rock, AR Build-to-Suit 20 years 1/1/2021 Complete

During the year ended December 31, 2021, the Company had 10 development projects completed or under construction.

Actual and anticipated total costs for these projects are approximately $40.3 million and are included in the following completed or commenced projects:

Tenant Industry Land Acquired Location Lease Structure Lease Term Actual or Anticipated Rent Commencement Status

Convenience Stores 1/14/2020 North Little Rock, AR Build-to-Suit 20 years 7/1/2020 Complete

Convenience Stores 4/3/2020 North Little Rock, AR Build-to-Suit 20 years 1/1/2021 Complete

Discount Retail 5/18/2021 Fond Du Lac, WI Build-to-Suit 10 years First quarter 2022 Complete

Home Improvement 7/8/2021 Sioux Falls, SD Build-to-Suit 12 years First quarter 2022 Under Construction

Arts & Crafts 5/18/2021 Fond Du Lac, WI Build-to-Suit 10 years Second quarter 2022 Under Construction

Discount Retail 2/5/2021 Yuma, AZ Build-to-Suit 10 years Second quarter 2022 Under Construction

Dollar Stores 11/12/2021 Woodland, AL Build-to-Suit 10 years Second quarter 2022 Under Construction

Arts & Crafts 12/29/2021 D'Iberville, MS Build-to-Suit 15 years Third quarter 2022 Under Construction

Arts & Crafts 12/30/2021 Winder, GA Build-to-Suit 15 years Third quarter 2022 Under Construction

Arts & Crafts 12/3/2021 Sheboygan, WI Build-to-Suit 10 years Fourth quarter 2022 Under Construction

Discount Retail 12/3/2021 Sheboygan, WI Build-to-Suit 10 years Fourth quarter 2022 Under Construction

TBD 8/23/2021 Sumter, SC Redevelopment TBD TBD Redevelopment Property

Legal Proceedings

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 2. Properties