Key Highlights

  • Diluted EPS was USD 0.57 against a USD 0.52 estimate, with AFFO of USD 0.91 per share.
  • Total revenues were USD 249.68 million against USD 230.16 million a year earlier, and net Earnings were USD 109.93 million.
  • The company invested USD 222 million in 76 properties at an initial cap rate of 7.3% during the quarter.
  • Full-year 2026 AFFO guidance of USD 3.55 to USD 3.59 per share was maintained, with disposition guidance raised.

NNN REIT, Inc. (NYSE:NNN) described a change in its Acquisition market that began in mid-September. Chief executive Stephen Horn said rising Debt and Equity costs led the company to reprice its acquisition pipeline, that some sellers accepted the revised Economics while others did not, and that the resulting abandoned deals raised deal costs reflected in updated guidance. Third quarter diluted EPS was USD 0.57 against an estimate of USD 0.52, and AFFO was USD 0.91 per share.

How the Repricing Fits the Quarter

Third quarter acquisitions were completed or committed before the shift. The company invested USD 222 million in 76 properties at an initial cap rate of 7.3%, with a weighted average Lease term above 19 years and a projected long-term Yield of 8.4% including contractual rent escalators. Over nine months it invested USD 658 million in 206 properties.

For the fourth quarter, management described movement of 30 to 40 basis points in initial cap rates, and said sale-leaseback sellers adjusted faster than open-market sellers with existing leases. On dispositions, the company sold 32 properties, 11 of them vacant, for USD 50 million, with income-producing Assets sold at 7.8%. Year to date, it has raised USD 123 million from 83 assets.

Results Around the Pipeline Change

Total revenues were USD 249.68 million against USD 230.16 million, of which rental income was USD 248.36 million. Earnings from operations were USD 164.96 million against USD 147.28 million, and net earnings were USD 109.93 million against USD 96.84 million. Basic EPS was USD 0.58 against USD 0.51, and diluted EPS was USD 0.57 against USD 0.51.

Depreciation and amortization was USD 74.16 million against USD 67.25 million, and interest expense was USD 55.14 million against USD 53.38 million. The gain on disposition of real estate was USD 15.05 million against USD 12.57 million. The portfolio of about 3,820 properties was 99.2% occupied, and annualized base rent was USD 974 million, which management stated was up 6.8% from last year.

Financing, Cash and Guidance

Net debt to EBITDA was 5.6 times, and 5.3 times pro forma for unsettled forward equity of about USD 204 million. Total Liquidity was USD 1.4 billion, 2.3% of debt carried floating rates, and the weighted average debt Maturity was 9.8 years. The company settled more than 2 million forward shares for just under USD 90 million of net proceeds. Swaps entered after quarter end fully hedged the USD 500 million term Loan at an all-in fixed rate of 4.35%.

Full-year 2026 AFFO guidance of USD 3.55 to USD 3.59 per share was maintained. The disposition outlook was raised by USD 30 million at the midpoint to USD 160 million to USD 180 million, general and administrative guidance rose by USD 1 million at the midpoint, and projected bad debt was lowered to about 25 basis points of annualized base rent from 40.

Quarter in Numbers

Diluted EPS of USD 0.57 sits alongside AFFO of USD 0.91 per share, core FFO of USD 0.90 per share and a quarterly Dividend of USD 0.62. The dividend, announced on October 15 and described as 3.3% higher than a year earlier, marks the 37th consecutive annual increase.

Management named several dated items. The additional USD 100 million swap is effective November 16, and a USD 350 million bond with a 3.6% coupon matures in mid-December, for which the company has assumed permanent financing while keeping a low year-end balance on its Credit line. Management said its objective is to deploy Capital only when returns justify the investment, funded by unsettled forward equity, free Cash Flow and dispositions.