NNN Reit Raises Outlook as Property Investments Accelerate
The real-estate investment trust lifted its 2026 acquisition target to as much as $800 million.
NNN REIT (NNN), a real-estate investment trust focused on single-tenant properties, reported a 6.0% increase in second-quarter Core FFO to $0.89 a diluted share as portfolio occupancy and acquisition activity strengthened.
The quarter marked an acceleration from the start of the year. Core FFO per share had been unchanged year over year in the first quarter, while AFFO growth resumed and annualized base rent increased at a faster pace.
Revenue rose 7.7% from a year earlier to $244.3 million, following 9.1% growth in the fourth quarter, and increased 1.6% sequentially. Net earnings fell 2.6% to $97.9 million, and diluted earnings declined to $0.52 a share from $0.54, as higher interest, administrative and impairment expenses weighed on profit.
Portfolio occupancy climbed to 99.1% from 98.6% in the first quarter and 98.0% a year earlier, extending a run of sequential gains. Annualized base rent rose 7.3% to $959.1 million, while the portfolio expanded to 3,774 properties covering 40.44 million square feet.
NNN invested $291.0 million in 89 properties during the quarter, twice the first quarter's volume and 59% above the fourth quarter's level. The initial cash capitalization rate eased to 7.3%, while the weighted-average lease term on second-quarter acquisitions shortened to 17.9 years.
The company now expects 2026 acquisitions of $700 million to $800 million, up from $550 million to $650 million. Its Core FFO forecast is $3.50 to $3.54 a share, compared with $3.48 to $3.54 previously, while the AFFO outlook is $3.55 to $3.59 a share, up from $3.53 to $3.59.
NNN increased its quarterly dividend 3.3% to $0.62 a share, marking its 37th consecutive annual increase, as the AFFO payout ratio improved to 67%. The company also lined up an expected $272.1 million of unsettled forward-equity proceeds, which would reduce pro forma net debt to annualized EBITDAre to 5.4 times from the reported 5.7 times.