NNN REIT (NNN) Q3 2025 Earnings Call Transcript

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DATE

Tuesday, Nov. 4, 2025, at 10:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Steve Horn
• Chief Financial Officer — Vincent Chao

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TAKEAWAYS

• Core FFO per Share -- Core FFO per share was 85¢, up 1.22% year over year, with updated full-year guidance raised to $3.36–$3.40 per share.
• AFFO per Share -- AFFO per share was 86¢, up 4% year over year, and full-year guidance increased to $3.41–$3.45 per share.
• Annualized Base Rent -- Annualized base rent reached $912 million at quarter end, representing more than 7% year-over-year growth
• NOI Margin -- NOI margin reached 98% for the quarter, indicating a high level of property cash flow retention.
• G&A Expenses -- Represented approximately 5% of both total revenues and NOI; cash G&A was 3.6% of revenues.
• Free Cash Flow after Dividends -- Free cash flow after dividends totaled $48 million in the third quarter
• Dividend -- Declared a 60¢ quarterly dividend, with an annualized 5.6% dividend yield (as announced October 14, 2025), and a 70% payout ratio based on AFFO (non-GAAP).
• Portfolio Occupancy -- Portfolio occupancy was 97.5% at quarter end due to resolution of leases, with management expressing confidence that occupancy will "again exceed 98% by year-end 2025."
• Lease Renewal Rates -- Renewed 92% of 100 expiring leases, exceeding the historical average of 85%, with renewal rental rates at 108% of prior levels.
• New Lease Rates -- Seven newly leased properties achieved rents at 124% of prior levels.
• Acquisitions -- Invested $283 million in 57 assets at an initial cap rate of 7.3%, raising the annual acquisition guidance midpoint to a record $900 million for 2025.
• Disposition Activity -- Sold 23 properties for $41 million, including 11 vacant among the disposals; with sale cap rates approximately 145 basis points below original invested cash cap rates.
• Liquidity -- Total liquidity was $1.4 billion, including $1.2 billion undrawn revolver and nearly $160 million in cash at quarter end; no floating rate debt or encumbered assets.
• Balance Sheet Metrics -- Net debt-to-EBITDA leverage slightly decreased to 5.6x, with a weighted average debt maturity of 10.7 years.
• Equity Issuance -- Issued 1.7 million shares.
• Upcoming Maturities -- $400 million, 4% coupon bond matures in November 2025, with July’s $500 million, 4.6% five-year note issued on July 1 partly prefunding this need.
• Credit Loss Guidance -- Full-year bad debt expectation revised down to 25 basis points from 60, per 2025 guidance, attributed to low realized charge-offs and complete recovery from At Home leases.
• Acquisition Funding Strategy -- Leverage-neutral 60%-equity, 40%-debt blend for investments as restated by management.
• Vacant Asset Resolution -- Resolved 23 of 35 vacant furniture assets, with expectation to have only two left by year end, and more than 75% of former restaurant/furniture assets targeted for resolution by end of 2026.
• Termination Fees -- Lease termination fees totaled $669,000; with the year-to-date total reaching $11 million

SUMMARY

NNN REIT (NYSE:NNN) management raised both core FFO and AFFO per share guidance for 2025, citing better-than-expected execution and operating metrics. Portfolio occupancy temporarily declined to 97.5% at quarter end following proactive asset repositioning but is projected to recover above 98% by year-end 2025 based on asset resolutions already in progress. Funds from operations (non-GAAP) benefited from higher-than-expected interest income and lower bad debt, while recent lease renewals and re-leasing yielded significant rental rate increases. Property acquisitions at a 7.3% initial cap rate, with annual investment volume for 2025 projected to set a new record, funded through a targeted 60%-equity, 40%-debt mix, with recent equity raises and fixed-rate debt issuance strengthening liquidity and extending debt maturities.

• CEO Horn said, "we are raising our 2025 guidance for core FFO per share to a range of $3.36 to $3.40, reflecting the strength and discipline of our multiyear growth strategy."
• CFO Chao confirmed no floating rate debt, no encumbered assets, and access to $1.4 billion in total liquidity, providing flexibility for maturities and growth capital.
• Management stated, "our disciplined approach and long-standing tenant relationships enable us to consistently execute and deliver in a highly competitive environment," highlighting strategic clarity in response to increased market competition.
• Resolution of At Home’s bankruptcy brought full affirmation of NNN's leases, eliminating previously anticipated credit losses and bolstering the full-year bad debt outlook, which was reduced to 25 basis points.
• Occupancy improvement is supported by targeted resolutions, including 12 restaurant sites to be resolved by year-end 2025 and 14 under contract for sale in Q1 2026.
• CFO Chao stated, "AFFO per share for the quarter was slightly ahead of our expectations, driven primarily by lower than planned bad debt and higher interest income on our cash balance."

INDUSTRY GLOSSARY

• REIT: Real Estate Investment Trust, a company that owns, and in most cases operates, income-producing real estate.
• Net Lease: A lease structure where tenants pay property taxes, insurance, and maintenance costs in addition to rent.
• Cap Rate: The ratio of a property's annual net operating income to its purchase price, used to estimate return on real estate investments.
• Core FFO: Core Funds From Operations, a REIT performance metric adjusting FFO for certain non-recurring or non-cash items to reflect normalized cash earnings.
• AFFO: Adjusted Funds From Operations, representing FFO further adjusted for recurring capital expenditures and other routine non-cash items, to more closely approximate actual cash available for distribution.
• NOI Margin: Net Operating Income divided by total revenues, indicating profitability from property operations before corporate expenses and interest.
• ATM: At-the-Market equity offering program enabling the company to issue and sell shares opportunistically on the open market.
• NAREIT: Nareit is the worldwide representative voice for REITs and listed real estate companies with an interest in U.S. real estate and capital markets.

Full Conference Call Transcript

Steve Horn: Thank you, Kelly. Good morning. Thank you for joining NNN's third quarter 2025 earnings call. I am joined today by our Chief Financial Officer, Vincent Chao. NNN's disciplined growth strategy, proven operations, and commitment to deploying shareholder money in sufficiently accretive acquisitions continues. Our focus remains on delivering long-term value, navigating market challenges, and capitalizing on opportunities that drive sustainable growth. As detailed in this morning's press release, NNN delivered strong performance in the third quarter. The team did an outstanding job closing 20 deals containing 57 assets for $283 million, while maintaining balance sheet flexibility with $1.4 billion in total availability and the industry-leading average debt maturity of nearly eleven years.

Based on our consistent performance, we are raising our 2025 guidance for core FFO per share to a range of $3.36 to $3.40, reflecting the strength and discipline of our multiyear growth strategy. In addition, we are increasing our 2025 acquisition volume to a midpoint of $900 million, which would be an all-time high for the company. Before we discuss day-to-day operations and market conditions, I want to highlight several important risk management events that demonstrate NNN's proactive approach and resilience. At Home emerged from bankruptcy in late October and eliminated substantially all of its nearly $2 billion of funded debt and secured $500 million in new financing.

More importantly, NNN had 100% of its leases affirmed during the restructuring given the strong property-level performance and low in-place rent. Moving to the vacant assets, by the end of the third quarter, we resolved 23 of the 35 furniture assets and we have strong interest in the remaining assets. We expect to only have two left to work out by the end of the year. There is still a real possibility of reducing that number to zero. This rapid progress reflects both the quality of our real estate and the effectiveness of our disposition and leasing team members.

Around the same time we were dealing with the furniture tenant, we proactively took back 64 assets that were previously leased to a restaurant operator by quickly executing an eviction process. This decisive action allows us to reposition the assets for future growth. As we discussed on previous earnings calls, we executed a lease on 28 assets, which provided ample time for the new operator to prepare for openings, commence rental payments, and more importantly, allow us to evaluate the performance. However, an unfortunate legal dispute that does not involve NNN arose between our new tenant and former tenant and is ongoing with no definitive end.

With that backdrop, during the quarter, NNN and the tenant agreed to part ways due to the continued legal uncertainty, temporarily reducing our occupancy to 97.5% as of September 30. Out of the 64 properties, 15 have been sold or released, 12 more are slated to be resolved by year-end, and 14 more are expected to be sold during the first quarter. Based on our execution and current visibility since September, we are confident that our occupancy will again exceed 98% by year-end. We have a clear line of sight to resolving more than 75% of the former furniture and restaurant operator assets by the end of 2026.

Importantly, NNN has already recognized the full financial impact of these events, positioning us for earnings upside as we release these assets and redeploy the proceeds from the sales without the need for future capital. NNN's proactive management and rapid asset resolution reinforce our ability to turn short-term challenges into long-term value creation. We are well-positioned to capture upside as these assets are resolved, further strengthening our portfolio and supporting continued growth. Turning to the operating results, our portfolio of approximately 3,697 freestanding single-tenant properties across all 50 states continues to perform well. I would classify this quarter as a home run on renewals, with 92 of the 100 renewed, ahead of our historical renewal rate of 85%.

More importantly, rental rates were 108% above prior rents. We also leased seven new properties to new tenants at rates of 124% of previous rents, demonstrating strong demand and execution. Our asset management team and leasing team have done a fantastic job getting deals done. At a high level, our tenant base remains stable with no material concerns at this time. Moving to acquisitions, during the quarter, we invested $283 million in 57 new assets at an initial cap rate of 7.3%, with an average lease duration of nearly eighteen years due to the sale-leaseback nature of our deals. For the first nine months, we have invested $150 million in 184 properties.

The cash cap rate is 7.4%, which has NNN tracking to a record year of acquisition volume. As we move through the year, cap rates for the most part have stabilized, and I do not see any material movement either up or down as we head into the fourth quarter and for the deals we are pricing for 2026. As one of the original net lease companies in the public markets, NNN has successfully operated through diverse economic cycles. While private capital has increased competition, especially for large portfolios, our disciplined approach and long-standing tenant relationships enable us to consistently execute and deliver in a highly competitive environment.

During the quarter, we sold 23 properties, 11 of which were vacant, generating $41 million in proceeds for redeployment into income-producing properties. Also, the properties we sold were not core assets, and the sales were executed approximately 145 basis points below our invested cash cap rate, demonstrating strong upfront underwriting and value extraction. Our balance sheet is one of the strongest in the sector. Our credit facility has plenty of capacity, as I mentioned earlier, with no balance outstanding, and we maintain the industry-best nearly eleven years weighted debt maturity. NNN is well-positioned to fund our remaining 2025 acquisition guidance and beyond. With a robust pipeline, strong financial foundation, and proven leadership, NNN is well-positioned for continued success.

We are committed to optimizing our portfolio, driving sustainable growth, and enhancing shareholder value. With that, let me turn the call over to Vincent Chao for more color and detail on our quarterly numbers and updated guidance.

Vincent Chao: Thank you, Steve. Let's start with our customary cautionary statements. During this call, we will make certain statements that may be considered forward-looking statements under federal securities law. The company's actual future results may differ significantly from the matters discussed in these forward-looking statements, and we may not release revisions to these forward-looking statements to reflect changes after the statements are made. Factors and risks that could cause actual results to differ from expectations are disclosed in greater detail in the company's filings with the SEC and in this morning's press release. Now on to results.

This morning, we reported core FFO of 85¢ per share and AFFO of 86¢ per share for 2025, up 1.22% and 4% respectively over the prior year period. Annualized base rent was $912 million at the end of the quarter, an increase of over 7% year over year. Our NOI margin was 98% for the quarter, while G&A as a percentage of total revenues and as a percentage of NOI was about 5%. Cash G&A was 3.6% of total revenues. AFFO per share for the quarter was slightly ahead of our expectations, driven primarily by lower than planned bad debt and higher interest income on our cash balance.

Free cash flow after dividends was about $48 million in the third quarter. Lease termination fees totaled $669,000 in the quarter, or less than half a penny per share. This line item has begun to normalize following the proactive monetization of the largest of our dark paying tenants. From a watch list perspective, there have been no material changes since last quarter, and while we remain vigilant regarding potential issues, we do not currently view any of our watch list tenants as near-term concerns. At Home, which remains on the watch list, successfully exited bankruptcy with a significantly derisked capital structure, reducing total debt by $1.5 billion through the bankruptcy process.

As expected, At Home assumed all of our properties, reflecting the strength of our underwriting and the high quality of our real estate. Turning to the balance sheet, our Baa1 balance sheet remains in great shape. At the end of the quarter, we had no floating rate debt, no encumbered assets, and $1.4 billion of liquidity, including full capacity on our $1.2 billion revolver and almost $160 million of cash. Our leverage ticked down modestly to 5.6 times from 5.7 times last quarter, and our debt duration remained the highest in the net lease space at ten point seven years. As previously announced, on July 1, we issued $500 million at 4.6% five-year unsecured notes.

Additionally, during the quarter, we issued 1.7 million shares, primarily through our ATM, as part of our overall capital plan for the year. In total, we raised $72 million in gross proceeds at a weighted average price of $42.89 per share. Looking forward, we have a $400 million 4% coupon bond maturing later this month. With our July bond offering, we have prefunded a portion of this pending maturity, and our strong balance sheet provides us with multiple options to refinance the balance. As I have stated on prior calls, our balance sheet is a source of strength, and we will look for ways to utilize this competitive advantage to support growth while protecting downside risk.

On October 14, we announced a 60¢ quarterly dividend payable on November 14, which equates to an attractive 5.6% annualized dividend yield and a healthy 70% AFFO payout ratio. Notably, since going public in 1984, NNN has paid over $5 billion in total dividends. I will conclude my opening remarks with some additional comments regarding our updated outlook. We are raising core FFO per share guidance to a new range of $3.36 to $3.40 and AFFO per share to $3.41 to $3.45. These increases reflect our year-to-date outperformance versus plan, as well as our updated assumptions over the balance of the year. We now expect to complete $850 to $950 million of acquisitions, up $250 million from our prior forecast.

We expect fourth-quarter acquisitions will be weighted towards the back half of the quarter. At the $900 million midpoint, our updated guidance represents a record level of annual investment volume for the company. We are also increasing our disposition outlook by $50 million to a new range of $170 to $200 million. As a reminder, we typically fund our investments with a leverage-neutral sixty-forty mix of equity and debt. From a credit loss perspective, we are now including 25 basis points of bad debt in our full-year outlook, including about 20 basis points booked year-to-date.

This is down from our prior 60 basis points projection given our limited loss thus far, the successful resolution of the At Home bankruptcy, and the collection of pre-petition rent from At Home. Lastly, there were no notable run-rate adjustments to call out in the third quarter. With that, I will turn the call back over to the operator for questions.

Operator: Certainly. The floor is now open for questions. If you have any questions or comments, please press 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality. Please hold just a moment while we poll for any questions. Your first question is coming from Jana Gulan with Bank of America. Please pose your question. Your line is live.

Vincent Chao: Morning. This is Dan Bian for Jana. My first question is could we get a little bit more color around the outsized interest income as well as just what caused the increase at the low end of the range?

Vincent Chao: Yes. For interest income, really, we did do the debt offering on July 1, and so we were sitting on a fairly high cash balance, and interest rates on that, we were deploying that into money markets and other short-term interest-bearing deposits, and rates were a little better than we had projected. So that was driving interest income. As far as the low end of the AFFO guidance, I mean, we did outperform for the quarter, and I think the upside is really fueled by the acquisition volume that we have had so far as well as what we expect in the balance of the year, offset by a couple of things. And so I want to point this out.

I think I saw a couple of notes to suggest folks it was not as much as expected. But if you look at our G&A guidance for the year, sort of the implied fourth is a little bit higher than we had in the fourth quarter. So alright. Third quarter. So that is just naturally just timing G&A expenses. And so there is a little bit higher G&A in the fourth quarter than the third quarter. And as we deploy that cash into acquisitions, we will see interest income come down as well. So two things that are sort of a little bit of a headwind for the fourth quarter.

Dan Bian: Got it. Thank you. And just to follow-up on the acquisition volume, just could we get a bit more on the rationale behind using equity to fund this given the current stock price? You know, in your presentation, you showed that your cost of capital is around 7.3% year-to-date. It is around 7.4% cap rates. You know, if we can get a little bit more on kind of just the investment spread and the rationale behind that.

Vincent Chao: Yeah. Look. I mean, I think when we think about how we deploy capital, we are looking at to issue or to fund it at sixty-forty equity and debt. And as far as the WACC, you know, I think what we put in the deck really, we do not try to change that too often. That is probably higher than, you know, long-term debt perspective. That is higher than we would, you know, be issuing today. And so think about we could issue today and the potential for using, you know, a little bit shorter-term debt just given how long our debt duration is, you know, we probably could be in the mid-sixes, maybe slightly higher than that.

I do not know. All in WACC. And so at that level, we can still fund forty and, you know, be accretive on our acquisitions.

Dan Bian: Got it. Thank you, Sean. Not looking to lever up. Got it. Thank you.

Operator: Your next question is coming from Brad Heffern with RBC Capital Markets. Please pose your question. Your line is live.

Brad Heffern: Yep. Everyone. Maybe as a follow-on to that last question. I mean, triple net has never really been a volume story historically, and it does not seem like spreads are, you know, uniquely attractive right now. So I guess I am just wondering why we are seeing record volumes. Is that a pull from your relationship tenants, or is there something that I am missing on the cost of capital side that makes it more attractive than normal?

Steve Horn: Now, again, you know, Vincent, you have been touched base on the cost of capital yet, but our relationships are, you know, in the market. And we had the ability to do a little bit more elevated volume in the third quarter. Basically, the tenants are kind of pushing us to do a little bit of the deals. And, you know, it is still accretive. Maybe not historically as accretive. But, yeah, it is good deals. Good real estate. And we can service the tenant base.

Brad Heffern: Okay. Got it. And then there has been a decent amount of talk on your peers' calls this quarter about increased competition. Obviously, you are seeing very high volume. So I am curious, are you seeing that and is it impacting pricing at all?

Steve Horn: I mean, we have always operated in a highly competitive market. Since I have been with the company. You know, you had private REITs, non-traded REITs always in the market. And it is a highly competitive space. The difference is now you are having more financial institutions, brand names, that people recognize in the space. So that being said, the larger portfolios we are seeing increased competition. And they are using leverage to lower the cap rates. The good news is NNN does not need to do that ridiculously high volume. So we do not need the big portfolios. And the $15 to $20 million deals we are not seeing that much competition. Outside our ordinary competitors.

You know, we did five deals this past quarter under $5 million. So now we are still finding our fair share.

Brad Heffern: Okay. Thank you.

Operator: Your next question is coming from Michael Goldsmith with UBS. Please pose your question. Your line is live.

Michael Goldsmith: Good morning. Thanks a lot for taking my question. You provided an update on At Home, and it seems like the situation is resolved, but, you know, are you seeing any other credit issues within your portfolio? And what are your bad debt assumptions now maybe compared to where they were earlier in the year?

Steve Horn: I will take the first half of that. Currently, our overall portfolio, just based on the, you know, the bad debt, that we mentioned earlier is in really good shape. And we are getting to a solution on the restaurant and the furniture tenants here in short over the next, you know, four months. And I will let Vincent talk about the bad debt assumption.

Vincent Chao: Yeah. Hey, Michael. As far as bad debt goes, I mentioned in my prepared remarks here, we have assumed for the full year now 25 basis points of bad debt. That is down from our prior expectation of 60 basis points. That is largely a function of At Home resolving with no issues, you know, and assuming all of our leases. We have also had, you know, pretty limited bad debt so far this year, roughly 20 basis points booked year-to-date. And then, you know, helping the fourth quarter a little bit here is we are actually getting pre-petition rent from At Home.

So, you know, credit loss from At Home will have no impact by the end of the year.

Michael Goldsmith: Got it. And thank you. As a follow-up, can you just kind of walk through the occupancy path going forward? You kind of laid out some sort of the plan of disposing of some assets, but can you just kind of walk through that, you know, the trajectory and where it should be kind of by the end of the year? And the setup, you know, as you enter in 2026. Thanks.

Steve Horn: Yeah. It is kind of what I touched base on in my prepared remarks. You know, for the most part, it is the restaurant operator, and, you know, 15 have been solved. So we have 12 more that will be resolved by the year-end, which will help with our occupancy. And we have 14 more that are under contract or under advanced negotiations that potentially can be resolved a little bit by the end of the year. But if not, for the most part, it will be resolved in the fourth quarter. And kind of what we talked about with our renewals being at 92% this past quarter, that helps with the occupancy on a go-forward basis.

And we do not see any other tenants in the portfolio that are calling us that there are issues.

Vincent Chao: Yeah. One other thing on that, Michael, you know, former restaurant. Steve mentioned the tenant put on the former furniture tenant. We do have line of sight on 10 additional resolutions by the end of the year. So that would be targeting.

Michael Goldsmith: Thank you very much. Good luck in the fourth quarter.

Vincent Chao: Just the first one for me would be back on the cost of capital question. I am trying to think about 2026 here, and then I think you gave some helpful color on that your cost of AFFO yield or your CAPM need to be where.

Vincent Chao: Yeah. Look. I think the way we think about, you know, to think about 2026. Right? We have stated, you know, repeatedly that, you know, we can self-fund about $550 million without really hitting equity markets. And so that part is sort of, you know, addressed upfront. And then beyond that, we would require some additional equity if we wanted to maintain leverage neutrality. You know, part of the solution could be to lean into dispositions a bit more. We do have higher vacancies than usual, and so that is a potential source of capital that can offset some of the equity needs. Stock needs, I should say.

But, you know, as far as, you know, when where when the stock price or where the stock price would be to say, hey. We are just cutting off. Equity. I mean, I think, you know, that is a we are talking about buying. But, you know, I think the do not want to be, you know, sufficiently less than where we are at today. Think you know, it is.

Michael Goldsmith: Okay. Thank you.

Vincent Chao: And then the second one would just be on sort of one-time fees, any, you know, termination fees, anything else. That you have received this year that you would expect to roll off next year to be somewhat of a headwind? I know I think historically, you have talked about maybe a $3 million being a run rate number. Is that a reasonable expectation for next year? And what would that mean as far as do you sell from this year?

Vincent Chao: Yeah. Well, I think we had booked about $11 million year-to-date. So I think $3 million is probably more consistent with historical levels. We saw that, you know, our volume or at least our mission volume in the quarter some normalization as I mentioned last a number of very large dark book paying tenants that we have been working our way through, and that was driving the outsized termination fees. So, you know, call it $11 million to $3 million would be an $8 million headwind. But I will point out net, that is going to be the offset.

You know, maybe not 100%, but as those vacancies are addressed and kind of outlined visibility on, you know, 2020 plus by the end of the year to be resolved. You know, that real estate expense and that will come down to our, you know, historical levels, which is closer to $12 million or so. So that will be a natural offset to us.

Michael Goldsmith: Got it. Thank you.

Operator: Your next question is coming from Spencer Glimcher with Green Street. Please pose your question. Your line is live.

Spencer Glimcher: Thank you. In regards to the higher acquisition volume, you know, despite the lower spreads you are seeing today, do you think that the increased competition is impeding your ability to push cap rates with existing tenants? Because I would think with the long-standing relationships here, you have some leverage just given surety of close and just familiarity, you know, with your team. So do you think that the alternative capital sources are kind of swinging the pricing power pendulum more to tenants than we have seen historically?

Steve Horn: Our tenants are very sophisticated and understand what the market is. So, you know, we are not stealing properties from our tenants. Yes. We may get five, 10 basis points for, you know, certainty of closing, you know, saving money on the transaction cost because our documents are in place. But I do not think it is the increased competition because, as I stated, we are always operating in a highly competitive market. Just the names come and go.

Spencer Glimcher: Yeah. Thank you. And then I think you mentioned, you know, you did deals with seven new segments these are in? And have you got a sense from these newer tenants what their growth pipelines look like in the next twelve to twenty-four months? Just trying to get a sense if these are higher growth tenants in the near term.

Steve Horn: Yeah. But the seven new tenants were just vacancies that we re-leased. And, you know, primarily in the convenience store, but, no, I do not have a, you know, a grasp to give you a good number about their growth trajectory over the next twelve months. However, there is high demand for our vacant assets. So I feel like, you know, our tenants are trying to grow. And we are actually getting some new tenants in the portfolio.

Spencer Glimcher: Okay. Great. Thank you.

Operator: Your next question is coming from Smedes Rose with Citi. Please pose your question. Your line is live. Your line is live. Smedes, your line is live. Please ask your question.

Steve Horn: We will come back to Smedes.

Operator: Okay. You got it. Your next question is, Rich Hightower with Barclays. Please pose your question. Your line is live.

Rich Hightower: I guess really quickly on the At Home rent. Have you guys disclosed the, I guess, the amount of pre-petition rent that you have gotten from them or that you expect in April?

Vincent Chao: Yeah. Rich, yeah, at this point, we have not disclosed the dollar amount, but at this point, we have collected all of it.

Rich Hightower: Okay. Great. And then I guess maybe bigger picture, just, you know, it seems like renewal spreads have been pretty good. Maybe relative to history. I mean, do you expect that trend to continue maybe just with sort of the supply-demand tightness in general? I mean, what are you kind of seeing on that front?

Steve Horn: As we move forward, I am not expecting it to be below our historical norms. Given the kind of conversations we are having for the 2026 renewals, but do I think is it sustainable on the releasing that, you know, 125%? Probably not. It will be closer to kind of our, you know, or releasing and renewals, kind of expect a fall between that 85-95% range.

Rich Hightower: Okay. Wonderful. Thanks, guys.

Operator: Your next question is coming from Wes Golladay with Baird. Please pose your question. Your line is live.

Wesley Keith Golladay: Hey. Good morning, everyone. Just want to look at the acquisition guidance. It looks like it is implying about $100 million to $200 million for the fourth quarter, which is typically a big quarter for you guys. So just curious if you pulled any deals forward into March, or you are just being conservative here?

Steve Horn: I think it is a little bit of a combination, Wes, that we pulled a little bit of the deal volume into the third quarter. And as Vincent mentioned, we have some deals that are slated to close probably back half of the fourth quarter. So you do want to be a little conservative if they did slide to the first quarter.

Wesley Keith Golladay: Okay. Thank you.

Operator: Your next question is coming from Ronald Kamdem with Morgan Stanley. Hey. Good morning. This is Jenny on for Ron. Hope you guys are doing well. I just want to follow-up on the At Home portfolio. Just curious, are you looking to hold those assets or if you have any plan to kind of dispose of them? Thank you.

Steve Horn: Yeah. I mean, given the position that At Home is in, currently, it was a balance sheet issue, and they solved that issue. Their credit profile going forward is pretty solid. But more importantly, it is a testament to the real estate quality and the in-place rent being so low on those assets. That they are good real estate. And, financially, they are performing. So there is no knee-jerk reaction to sell those assets. Now if somebody comes and offers us a really good deal, yeah, absolutely, we would sell that at the right price.

Jenny: That makes sense. Just switching gears to kind of refinancing plan. Have you thought about your debt maturity in 2026 yet? And like, what is your approach given the current rate environment? Thanks.

Vincent Chao: I think you said '26. I think I am at 25. But, yes, twenty-six. Yeah. As far as the November maturity, you know, we are looking at a variety of options. As I mentioned, we have some flexibility on how we deal with it. You know, certainly, could run it on the line for some period of time. We have plenty of capacity, both cash and our revolver. That is one option. We could and, obviously, we could hit the bond market. You know, we are looking at, you know, we have been considering some bank debt as well. We have got a maturity hole in 2029 that fits.

And given the size of what we expect we will need, by the end of the year here, it is a bit more in line. Opposed to a bond deal. So a couple of different options we are weighing. But we certainly are, you know, we have got lots of options.

Jenny: Okay. That is all for me. Thanks.

Operator: Your next question is coming from Linda Tsai with Jefferies. Hi. If your cost of equity stays the same, would the mix of disposals and free cash flow and debt usage look similar for 2026 acquisitions?

Vincent Chao: Yeah. I think if our cost of equity stays where it is at, it certainly makes the hurdle, you know, makes it a little bit more challenging. So, I mean, depending on what we are sourcing on the acquisition side, will be part of the equation. But, you know, I think from a disposition perspective, yes, if it is exactly where it is at today, dispositions could be an alternative form of equity to help fund deals. So, yeah, I mean, I think free cash flow is what it is. Not like I can increase that. You know? But just know that. But I think that is a good point, though, and we are talking about this spread.

I know that is what folks are focused on in terms of earnings and whatnot. But from a cash flow perspective, you know, even if the spread is a little tighter than we like it to be, you know, we are still getting a good cash flow spread on that, you know, you think about the dividend yield, and so you know, that generates more free cash flow, which then generates additional internal capacity.

Linda Tsai: And then on Steve's comments that tenants are pushing you to do more deals, can you give us some color on who these tenants are and would these be the same types of tenants that would push you to do more higher acquisition volume in '26?

Steve Horn: No. I mean, when I say push, then there are opportunities to do deals. With that and that. And we passed on a lot, and we did a little elevated number this year. But, you know, historically speaking, we kind of did that $750 million range. So the midpoint of $900 million is not a big jump in acquisition volume per se. It is just elevated a little bit. But, primarily, it was kind of the auto services, auto parts, of our portfolio. That are being active in doing some new development and small M&A.

Linda Tsai: Does that continue in '26?

Steve Horn: In 2026, you know, we only have line of sight in our industry sixty, ninety days. And the first quarter is starting, you know, to, you know, we are pricing deals in the first quarter. Right now. I cannot speak second or third quarter if they continue.

Linda Tsai: One final follow-up. Just on the idea of tenants not calling you with any credit issues, what is the line of sight for that type of situation?

Steve Horn: Usually, it is, I mean, it could be twelve months. It is amazing how retailers have the innate ability to keep paying rent when things are going, you know, or being challenged. Yeah. Just per se, when you take a public company that is traded on the stock exchange, just because their stock is getting hit does not mean they cannot pay rent. They are just not as profitable. We usually have a line of sight of twelve months plus. Just like when we were talking about Frisch's. I mean, we were talking about Frisch's twelve, eighteen months. Because they knew that challenges were coming and we started trying to work with them.

But, yeah, so right now, as far as 2026, we are not hearing any rumblings.

Linda Tsai: Thank you.

Operator: Your next question is coming from Jim Cameron with Evercore ISI. Please pose your question. Your line is live.

Jim Cameron: Hi. Good morning. Thank you. Actually, just on that last point, Steve, this Frisch's kind of interesting. You said the tenant had a dispute with its former landlord or I missed that entirely. And I am trying to understand also what rent would have been collected by NNN in the third quarter that you would, you know, theoretically then lose, correct, in the fourth quarter?

Steve Horn: I will touch on the first part. The former tenant, Frisch's, entered into a lawsuit with our new tenant to operate in the markets. And it is tied up in the courts. And we thought we were going to have a resolution, you know, springtime, early spring. But the courts keep delaying the decision. You know, first kicked it out. I believe it was September. Then kicked it out until November. And that is when we decided we have to move forward and monetize these assets or release them.

Vincent Chao: Yeah. And, Jim, on your second part of your question, I am not sure I was following there. You were saying something about, you know, getting some collecting some rent and then giving it back later? I was not following up.

Jim Cameron: No. I am sorry. I am saying, did you collect rent, I guess, was Dolly's or whatever was the new tenant? Did you collect rent from them in the third quarter? Meaning that, obviously, you are taking these assets back. Where you would have a little bit of a headwind, in other words, for the fourth quarter.

Vincent Chao: Yeah. I mean, there was an immaterial amount, you know, collected, you know, early on in the quarter but nothing, yeah, nothing material at all. And nothing that would be.

Jim Cameron: So that is in your guidance. No. It is okay.

Vincent Chao: Yeah. Mhmm. Correct.

Jim Cameron: Thank you.

Operator: Once again, if there are any remaining questions or comments, please press next question is coming from John Massocca with B. Riley Securities. Please pose your question. Your line is live.

John Massocca: Good morning. Apologies maybe if I missed this earlier in the call, but, you know, the other element of the guidance, right, is the ramp expected in 4Q in disposition activities. And I am imagining there is anything else factoring into the acceleration in dispositions expected by year-end? And I guess in the context of the former restaurant properties, furniture properties, broader market. Like how should we expect this split in 4Q disposition activity to be between vacant and rent-paying assets?

Vincent Chao: Yeah. I mean, I think, yeah, you are spot on of vacant sales than maybe we have historically had. You know, but exactly what the split is, I cannot say for sure. But, you know, I think 50% plus might be vacant in sales.

John Massocca: And I guess kind of even, you know, following on that question, is beyond what is going on with the former restaurant tenant properties, is some of that increase in disposition activity at all a reaction to maybe where cap rates and capital markets are kind of diverging? Or is that just purely kind of working out of the former Frisch's and Badcock assets?

Steve Horn: Yeah. It is the latter part. More so that, you know, there is a high level of interest, and we have the opportunity to dispose of the former restaurant assets at good pricing. And then secondly, you know, there is a fair amount of interest if it is QSR, convenience, store. For some of those restaurant assets as well.

John Massocca: So I guess, I mean, I know if you do not give guidance on this, but it would be fair to assume kind of cap rate trends from the last two quarters continue into 4Q for occupied sales?

Steve Horn: The occupied sales, yeah. I still think for modeling purposes, a 100 basis points inside where we are deploying capital is probably a better number because the tenant mix, we may do some dispositions that are defensive that would be a little bit elevated for proactive portfolio management. Also, selling assets at a real low cap rate. But, yeah, a 100 basis points is what I would model.

John Massocca: I appreciate that detail. That is it for me. Thank you.

Operator: 1 at this time. There appear to be no further questions in queue at this time. I would now like to turn the floor back over to Steve Horn for closing remarks.

Steve Horn: Thank you, everyone, for joining us today. We look forward to seeing many of you in person in the next few weeks and then in the NAREIT. Thanks.

Operator: Thank you, everyone. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

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