Business Overview
−Removed: We are an internally managed real estate company that acquires, owns, invests in and manages a diversified portfolio of single-tenant, retail commercial real estate subject to long-term net leases with high credit quality tenants across the United States.
−Removed: As of December 31, 2023, we owned or had investments in 598 single-tenant retail net leased properties that were diversified by tenant, industry and geography, including 85 different tenants, across 26 retail sectors in 45 states.
+Added: We are an internally managed real estate company that acquires, owns, and manages a diversified portfolio of single-tenant, retail commercial real estate subject to long-term net leases with high credit quality tenants across the United States.
+Added: We also invest in property developments and mortgage loans secured by real estate.
+Added: As of December 31, 2024, we owned or had investments in 687 properties that were diversified by tenant, industry, and geography, including 98 different tenants, across 26 retail sectors in 45 states, excluding five property developments where rent has yet to commence.
We focus on tenants in industries where 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 home improvement, auto parts, drug stores and pharmacies, general retail, grocers, convenience stores, discount stores, and quick-service restaurants, all of which we refer to as defensive retail industries.
1 unchanged sentence
Approximately 56% of our ABR is from investment grade 2 credit rated tenants and an additional 15% of our ABR is derived from tenants with an investment grade profile 3 .
−Removed: Exclusive of mortgage loans receivable, our portfolio was 100% occupied with a weighted average remaining lease term (“WALT”) of 9.5 years, which we believe provides us with a strong, stable source of recurring cash flow from our portfolio.
+Added: Our portfolio was 99.9% occupied and, excluding mortgage loans receivable, had a weighted average remaining lease term (“WALT”) of 9.8 years, which we believe provides a strong, stable source of recurring cash flow.
We were formed as a Maryland corporation on October 11, 2019, and our common stock began trading on the New York Stock Exchange (“NYSE”) under the symbol “NTST” on August 13, 2020.
2 unchanged sentences
As of December 31, 2024, we owned 99.5% of the limited partnership interests in our operating partnership.
−Removed: Beginning with our short taxable year ended December 31, 2019, we elected to be treated and qualify as a REIT for U.S.
+Added: We have elected to be treated and qualify as a REIT for U.S.
federal income tax purposes.
−Removed: 2023 Financing Activities
−Removed: Debt Transactions
−Removed: 2029 Term Loan
−Removed: On July 3, 2023, we entered into an agreement (the “2029 Term Loan 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 2029 Term Loan Agreement, be increased to an amount of up to $400.0 million at our request.
−Removed: The 2029 Term Loan contains a 12-month delayed draw feature and $150.0 million was drawn on July 3, 2023.
−Removed: The 2029 Term Loan is prepayable at our option in whole or in part without premium or penalty.
−Removed: The 2029 Term Loan matures on July 3, 2026, subject to extension options at our election on two occasions, by one year and, on one occasion, by six months (subject to certain conditions).
−Removed: We have hedged the entire $250.0 million of the 2029 Term Loan at an all-in fixed interest rate of 4.99%, through January 2029, which consists of the fixed rate SOFR swap of 3.74%, plus a credit spread adjustment of 0.10% and, at current leverage levels, a borrowing spread of 1.15%.
−Removed: Interest is payable monthly or at the end of the applicable interest period in arrears on any outstanding borrowings.
−Removed: 2027 Term Loan
−Removed: In December 2019, we entered into an agreement governing a $175.0 million senior unsecured term loan that was scheduled to mature in December 2024 (the “2024 Term Loan”).
−Removed: On June 15, 2023, we amended and restated the agreement governing the 2024 Term Loan to provide for a $175.0 million senior unsecured term loan with a maturity date of January 15, 2026 that is subject to a one year extension option at our election (subject to certain conditions) (the “2027 Term Loan”).
−Removed: The 2027 Term Loan is repayable at our option in whole or in part without premium or penalty.
−Removed: The Company has fully hedged the 2027 Term Loan.
−Removed: For additional information regarding our debt facilities, see “Note 6 – Debt” in “Item 8 – Financial Statements and Supplementary Data.”
+Added: Recent Financing Activities
+Added: January 2025 Debt Transactions
+Added: On January 15, 2025, the Company amended its existing credit agreements agented by PNC Bank, National Association (the “PNC Credit Agreement”), Wells Fargo Bank, National Association (the “Wells Fargo Credit Agreement”) and Truist Bank (the “Truist Credit Agreement”).
+Added: The PNC Credit Agreement was amended and restated and provides for:
+Added: a new $175.0 million senior unsecured term loan (the “2030 Term Loan B”);
+Added: an existing $200.0 million senior unsecured term loan, which was fully funded under the existing PNC Credit Agreement (the “2028 Term Loan”);
+Added: and an upsized $500.0 million senior unsecured revolving credit facility (increased from $400 million under the existing PNC Credit Agreement) (the “Revolver”).
+Added: The 2030 Term Loan B and the upsized Revolver initially mature in January 2029 and include, at the Company’s election, a one-year option to extend the maturity to January 2030.
+Added: The 2030 Term Loan B was fully funded on the closing date and the Company has hedged the entire $175.0 million 2030 Term Loan B at an all-in fixed interest rate of 5.12% through January 2030.
+Added: The Wells Fargo Credit Agreement was amended and restated to extend the maturity date of the existing $175.0 million senior unsecured term loan (the “2030 Term Loan A” or, prior to the extended maturity, referred to as the “2027 Term Loan”) thereunder from January 2027 to January 2029 with an option, at the Company’s election, to extend the maturity to January 2030.
+Added: The Truist Credit Agreement governs existing term loans thereunder (the “2029 Term Loan”).
+Added: Among other changes, each of the PNC Credit Agreement, Wells Fargo Credit Agreement, and Truist Credit Agreement were also amended to remove certain financial covenants and provide for revised, improved pricing when the Company meets certain investment grade rating and leverage targets.
+Added: During 2024, we entered into forward sale agreements with respect to an aggregate 1,895,647 shares of common stock under our at-the-market (“ATM”) program at a weighted average price of $17.63 per share that remain unsettled.
+Added: We 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, 2025.
1 Annualized base rent (“ABR”) is annualized base rent as of December 31, 2024, for all leases that commenced, and annualized cash interest on mortgage loans receivable in place as of that date.
5 unchanged sentences
We did not initially receive any proceeds from the sale of shares of common stock by the forward purchasers.
−Removed: We expect to physically settle the forward sale agreements (by the 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 January 9, 2025.
−Removed: On October 25, 2023, we entered into a $300.0 million at-the-market equity program (the “2023 ATM Program”) through which, from time to time, we may sell shares of our common stock in registered transactions.
−Removed: From October 25, 2023 through December 31, 2023, we sold 4,478,539 shares of our common stock at a weighted average price of $17.27 per share, from which we received net proceeds of approximately $76.5 million.
−Removed: As of December 31, 2023, we had $222.7 million in remaining gross proceeds available for future issuances of shares of our common stock under the 2023 ATM Program.
−Removed: Effective October 24, 2023, in connection with the establishment of the 2023 ATM Program, we terminated our prior $250.0 million at-the-market equity program (the “2021 ATM Program”).
−Removed: As a result of such termination, we will not offer or sell any additional shares of common stock under the 2021 ATM Program.
−Removed: We have entered into a forward confirmation with respect to 5,983,711 shares of common stock under the 2021 ATM Program that remains unsettled.
−Removed: We may physically settle this forward confirmation (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 September 13, 2024.
+Added: On September 26, 2024, we physically settled 2,200,000 shares of common stock at a price of $17.22 per share in accordance with the forward sale agreements.
+Added: We received net proceeds from the settlement of $37.8 million, net of underwriting discounts and offering costs of $1.8 million.
+Added: As of December 31, 2024, 8,840,000 shares remain unsettled under the January 2024 forward sale agreements.
+Added: We expect to physically settle the forward sale agreements (by the 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, 2025.
General Investment Criteria
Our objective is to maximize stockholder value by generating attractive risk-adjusted returns through owning, managing and growing a diversified portfolio of commercially desirable properties.
−Removed: As we continue to grow our portfolio, we seek to acquire single-tenant, retail commercial real estate net leased on a long-term basis (at least ten years) to high credit quality tenants in industries where 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 home improvement, auto parts, drug stores and pharmacies, general retail, grocers, convenient stores, discount stores, and quick-service restaurants.
+Added: As we continue to grow our portfolio, we seek to acquire single-tenant, retail commercial real estate net leased on a long-term basis (generally at least ten years) to high credit quality tenants in industries where 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 home improvement, auto parts, drug stores and pharmacies, general retail, grocers, convenient stores, discount stores, and quick-service restaurants.
We believe these characteristics make our tenants’ businesses e-commerce resistant and resilient through all economic cycles.
2 unchanged sentences
• be primarily leased to tenants operating in businesses we believe to be e-commerce resistant and resilient through all economic cycles;
−Removed: • have at least 60% of its tenants with an investment grade rating;
−Removed: • have a WALT that approximates 10 years.
+Added: • generate strong cash flows at the unit level.
While we consider the foregoing when making investments, we will be opportunistic in managing our business and make investments that do not meet one or more of these criteria if we believe the opportunity presents an attractive risk-adjusted return.
+Added: This may include opportunistically acquiring properties that we believe will generate consistent cash flows but may initially result in higher tenant concentrations than we generally target, with the intent to reduce those concentrations over time.
In addition, we may purchase assets for long-term investment, expand and improve the properties we presently own or other acquired properties, or sell such properties, in whole or in part, when circumstances warrant.
3 unchanged sentences
We seek to acquire, own, invest in and manage a diversified portfolio of single-tenant, retail commercial real estate subject to long-term net leases with high credit quality tenants across the United States.
−Removed: Our growth and diversification strategy focuses on tenants in industries where 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 home improvement, auto parts, drug stores and pharmacies, general retail, grocers, convenient stores, discount stores, and quick-service restaurants.
+Added: Our growth and diversification strategy focuses on tenants in industries where 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 home improvement, auto parts, drug stores and pharmacies, general retail, grocers, convenience stores, discount stores, and quick-service restaurants.
We believe these characteristics make our tenants’ businesses e-commerce resistant and resilient through all economic cycles.
3 unchanged sentences
We generally target properties with a purchase price between $1 million and $10 million, a segment of the market that we believe is undercapitalized and where we can maintain a consistent pipeline of relatively small assets to acquire on attractive terms without the threat of broad competition while increasing our revenue diversification.
−Removed: We also selectively review larger properties with a purchase price in excess of $10 million, which are typically leased to investment grade tenants like Walmart and Home Depot, when we believe the acquisition will be accretive to the quality of our portfolio.
+Added: We also selectively review larger properties with a purchase price in excess of $10 million when we believe the acquisition will be accretive to the quality of our portfolio.
The average purchase price of a property in our portfolio as of December 31, 2024 was $3.6 million, our ABR per property is approximately $251 thousand, and 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.
32 unchanged sentences
• Tenant Credit Underwriting:
−Removed: We review corporate level financial information, assess business risks, including barriers to entry and technology risks.
+Added: We review corporate level financial information and assess business risks, including barriers to entry.
As part of this analysis, we look for tenants that operate in industries where 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 home improvement, auto parts, drug stores and pharmacies, general retail, grocers, convenient stores, discount stores, and quick-service restaurants.
1 unchanged sentence
We then review the tenant’s investment rating or establish a “shadow rating” using our proprietary credit modeling process for unrated tenants.
−Removed: and review investment rating or establish a “shadow rating” using our proprietary credit modeling process for unrated tenants.
• Real Estate Valuation:
3 unchanged sentences
We analyze and/or estimate unit-level profitability and cost variability to determine the likelihood of each location sustainably operating as a profit center.
+Added: For tenants not required to provide unit-level reporting pursuant to their lease, we use technology tools that track cell phone use in stores to assess the performance of that store.
Finally, we use our active portfolio management strategy to (i) regularly review each of our properties for changes in unit performance, tenant credit and local real estate conditions, (ii) identify properties that do not meet our disciplined underwriting strategy, diversification objectives or risk management criteria, including rent coverage ratios below 2.0x or likelihood of non-renewal upon lease expiration, and (iii) opportunistically dispose of those properties and reinvest the proceeds in tax-deferred exchanges under Section 1031 (“1031 Exchange”) of the Internal Revenue Code of 1986, as amended, (the “Code”), that will generate higher returns, enhance the credit quality of our real estate portfolio or extend our average remaining lease term.
−Removed: During 2023, we disposed of 19 properties totaling $40.3 million in aggregate sales price and improved portfolio performance by diversifying tenant concentration and improving key metrics such as tenant credit quality, WALT and geographic diversity.
+Added: During 2024, we disposed of 56 properties for a total sales price, net of disposal costs, of $110.9 million and improved portfolio performance by diversifying tenant concentration and improving key metrics such as tenant credit quality, WALT, and geographic diversity.
Capital Allocation Strategy
We seek to maintain a capital structure that provides us with flexibility to manage our business and scale our platform through targeted acquisitions, while allowing us to service our debt requirements and generate appropriate risk-adjusted returns.
−Removed: As of December 31, 2023, we had $80.0 million of borrowings outstanding under our $400.0 million senior unsecured revolving credit facility (the “Revolver”) as well as $175.0 million outstanding under the 2027 Term Loan, $200.0 million outstanding under the $200 million senior unsecured term loan (the “2028 Term Loan”), and $150.0 million outstanding under the 2029 Term Loan.
+Added: As of December 31, 2024, we had $239.0 million of borrowings outstanding under our $400.0 million Revolver, as well as $175.0 million outstanding under the 2027 Term Loan, $200.0 million outstanding under the $200.0 million 2028 Term Loan, and $250.0 million outstanding under the 2029 Term Loan.
We intend to target a conservative net debt to EBITDA re leverage ratio of 4.5x to 5.5x, including the impact of any forward unsettled equity, to best position the Company for growth, and we intend to capitalize on our leading origination, underwriting, financing, documentation and property processes to improve our efficiency.
7 unchanged sentences
To qualify as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we annually distribute at least 90% of our taxable income to our stockholders, computed without regard to the dividends paid deduction and excluding our net capital gain, plus 90% of our net income after tax from foreclosure property (if any), minus the sum of various items of excess non-cash income.
−Removed: Our properties are subject to various laws, ordinances and regulations, including those relating to fire and safety requirements, and affirmative and negative covenants and, in some instances, common area obligations.
+Added: Our properties are subject to various laws, ordinances and regulations, including those relating to fire and safety requirements, affirmative and negative covenants, and, in some instances, common area obligations.
Our tenants have primary responsibility for compliance with these requirements pursuant to our leases.
11 unchanged sentences
Such laws may impose fines or penalties for violations and may require permits or other governmental approvals to be obtained for the operation of a business involving such activities.
−Removed: As a result of the foregoing, we could be materially and adversely affected.
+Added: As a result, we could be materially and adversely affected.
Environmental laws also govern the presence, maintenance, and removal of asbestos-containing materials (“ACM”) and impose various requirements, including operation and maintenance plans for the presence of any suspect ACM.
13 unchanged sentences
We cannot predict what other environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted, or what environmental conditions may be found to exist on the properties in the future.
−Removed: Compliance with existing and new laws and regulations may require us or our tenants to spend funds to remedy environmental noncompliance or investigate and cleanup contamination.
+Added: Compliance with existing and new laws and regulations may require us or our tenants to spend funds to remedy environmental noncompliance or investigate and clean up contamination.
If we or our tenants were to become subject to significant environmental liabilities, we could be materially and adversely affected.
5 unchanged sentences
Although our tenants are generally responsible for all maintenance and repairs of the property pursuant to our leases, including compliance with the ADA and other similar laws or regulations, we could be held liable as the owner of the property for a failure of one of our tenants to comply with these laws or regulations.
−Removed: Our tenants are generally required to maintain liability and property insurance coverage for the properties they lease from us pursuant to triple or double-net leases.
+Added: Our tenants are generally required to maintain liability and property insurance coverage for the properties they lease from us pursuant to triple-net or double-net leases.
These leases generally require our tenants to name us (and any of our lenders that have a mortgage on the property leased by the tenant) as additional insureds on their liability policies and additional named insured and/or loss payee (or mortgagee, in the case of our lenders) on their property policies.
13 unchanged sentences
As of December 31, 2024, we had 22 full-time employees.
−Removed: Our staff is mostly comprised of professional employees engaged in origination, underwriting, closing, accounting and financial reporting, portfolio management and capital markets activities essential to our business.
+Added: Our staff mostly comprises professional employees engaged in origination, underwriting, closing, accounting and financial reporting, portfolio management, and capital markets activities essential to our business.
We are committed to creating a strong internal culture that promotes inclusion and employee well-being.
2 unchanged sentences
◦ Talent acquisition and development.
+Added: We provide equal employment opportunities to all individuals and seek to cultivate an inclusive culture that respects and appreciates diversity of experience, ideas, and opinions.
To ensure we attract and retain top talent, we provide competitive compensation and benefits, including equity compensation for all employees.
1 unchanged sentence
We encourage regular informal feedback directly from the leadership team and complete formal evaluations of each employee annually.
−Removed: ◦ Diversity, equity, and inclusion.
−Removed: We provide equal employment opportunities to all individuals and seek to cultivate an inclusive culture that respects and appreciates diversity of experience, ideas and opinions.
−Removed: We have adopted a Diversity, Equity and Inclusion Policy to outline our diversity, equity and inclusion goals, commitment, initiatives and monitoring practices.
−Removed: As of December 31, 2023, our workforce was approximately 64% male and 36% female;
−Removed: females represented approximately 14% of our senior management team;
−Removed: and 29% of our workforce was ethnically diverse.
−Removed: As part of our effort to attract a more diverse candidate base, we partner with local universities and organizations in our recruiting efforts with a focus on recruitment of candidates that are underserved in our industry.
◦ Workplace culture and empowerment.
18 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.