Netstreets Q2 2025: Contradictions in Investment Guidance, Walgreens Strategy, and Cap Rate Outlook

Investment guidance and capital deployment, Walgreens disposition strategy, capital deployment and investment strategy, cap rates and investment strategy, disposition of Walgreens assets are the key contradictions discussed in Netstreat's latest 2025Q2 earnings call.



Capital Deployment and Investment Trends:
- NETSTREIT Corp reported net investment activity of $117.1 million in Q2 2025, with a blended cash yield of 7.8%.
- The company plans to increase its net investment guidance by $50 million at the midpoint, to a new range of $125 million to $175 million.
- This increased investment activity is attributed to a favorable cost of capital and a strategy to improve tenant diversification through accretive dispositions.

Cost of Capital and WACC Improvement:
- NETSTREIT's cost of capital has improved, enabling the company to raise over $46 million via the ATM program during Q2.
- The improved cost of capital is due to favorable investment spreads and a disciplined approach to capital deployment.

Portfolio Stability and Credit Quality:
- 68.7% of the company's total ABR is leased to investment-grade or investment-grade profile tenants, with a weighted average lease term of 9.8 years.
- The high concentration within necessity and service industries, along with disciplined underwriting, contributes to the stability of cash flows and low credit loss rates.

Dividend and Financial Guidance:
- NETSTREIT declared a quarterly cash dividend of $0.215 per share, a 2.4% increase over the prior quarter.
- The company increased its AFFO per share guidance by $0.01 to a new range of $1.29 to $1.31.
- This guidance is supported by disciplined capital deployment, improved cost of capital, and stable portfolio performance.