NNN

Dividend Milestone

• Increased the common stock quarterly dividend by 3.3% to $0.62, marking 37 consecutive years of annual dividend increases, placing NNN among only 3 US REITs and 70 US public companies to achieve this track record. The new annualized rate offers a 5.3% dividend yield with a 69% AFFO payout ratio.

Acquisition Activity

• Invested just over $290 million to acquire 89 new properties in Q2 2026 at an initial cash cap rate of 7.3%, with an average lease duration of nearly 18 years. For the first half of 2026, total investment reached $430 million across 130 properties at an initial cap rate of 7.4%, with an average lease duration of just over 18 years.
• Acquisitions are concentrated in auto service, discount retail, and early childhood education, with a median purchase price of $2.1 million and an average purchase price of $3.2 million.
• Management continues to prioritize proprietary direct sale-leaseback transactions with existing relationship tenants, structured with landlord-friendly long-term triple net leases, which deliver more attractive risk-adjusted returns than broadly marketed assets.

Disposition Activity

• Sold 26 properties (19 of which were vacant) in Q2 2026, generating $37 million in proceeds for reinvestment. Income-producing dispositions were non-core assets sold at cap rates approximately 170 basis points below current acquisition cap rates, demonstrating strong demand for high-quality net lease properties.
• Disciplined capital recycling from non-core assets into higher-conviction opportunities is a core component of NNN's strategy to improve long-term portfolio earnings quality.

Balance Sheet and Capital Structure

• NNN maintains a sector-leading conservative balance sheet with $1.4 billion of available liquidity, a weighted average debt maturity of 10.1 years (nearly double the average for net lease peers), and only 2.5% of debt is floating-rate.
• Exercised an accordion option on the term loan to add $200 million, bringing the total term loan size to $500 million; $400 million of the term loan has been swapped to a fixed all-in rate of 4.1%, and the spread on the term loan and revolver was reduced by 5 basis points.
• Net debt to EBITDA was 5.7x at quarter-end (5.4x pro forma for unsettled forward equity), down from 5.6x last quarter. Debt duration of 10.1 years is perfectly matched to portfolio lease duration of 10.1 years.
• Sold ~6 million common shares on a forward basis via the at-the-market (ATM) program at ~$46 per share in Q2 2026, generating proceeds to pay down revolving debt and support future acquisitions.

Portfolio Health

• Rent collection remains very strong, with uncollected rent below 5 basis points, and the watch list for near-term credit concerns remains immaterial. Bad debt year-to-date is well below budget.

• Increased 2026 AFFO per share guidance to a range of $3.55 to $3.59, representing a 1 cent increase at the midpoint, the second upward guidance revision of the year. At the midpoint, this implies 3.8% year-over-year AFFO per share growth, an acceleration from 2.7% growth in 2025.
• Increased the midpoint of 2026 acquisition guidance to $750 million, up from the prior midpoint of $600 million, reflecting a stronger-than-expected active acquisition pipeline. Most new acquisition volume is expected to come from direct sale-leaseback transactions.
• Increased the midpoint of 2026 disposition guidance to $140 million, reflecting elevated 2026 disposition activity for portfolio optimization, a $10 million increase from the prior midpoint.
• Full-year 2026 expected bad debt was revised down to 40 basis points from the prior expectation of 60 basis points, due to year-to-date outperformance against plan.
• Management maintained a long-term target of sustainable mid-single-digit earnings per share growth, supported by disciplined capital allocation, proactive portfolio management, and a self-funded growth model.

NNN REIT is a single-tenant net lease REIT with one consolidated operating portfolio of 3,774 freestanding properties, no distinct product segments are reported. Q2 2026 AFFO was $0.90 per share, Core FFO was $0.89 per share, representing year-over-year increases of 5.9% and 6.0% respectively. Occupancy reached 99.1% in Q2 2026, up 50 basis points from Q1 2026 and 110 basis points from Q2 2025. NOI margin was 96.6%, up 70 basis points from the prior quarter. G&A as a percentage of total revenue was 5.8%, with a cash G&A margin of 4.4%. Annualized base rent grew 7% year-over-year to $959 million, and free cash flow after dividend was $56 million for the quarter. Bad debt totaled 2 basis points of quarterly annualized base rent, coming in well below projections.

• Bad debt and credit losses are the primary near-term swing factor for full-year earnings; while current credit performance is well ahead of plan, a unexpected increase in bad debt could push results toward the lower end of the guidance range.
• Volume and timing of acquisition completions can impact full-year results; while the pipeline is robust, deal closing timelines may shift and not all targeted deals are guaranteed to complete.
• Interest rate volatility creates uncertainty around long-term debt pricing for the upcoming $350 million December 2026 debt maturity, which could impact full-year earnings depending on when the debt is refinanced.
• Competition for attractive net lease assets remains robust, and modest cap rate compression could compress acquisition margins in the second half of 2026.
• M&A activity among existing tenants can lead to reduced future acquisition flow as consolidated acquirers often use their own capital instead of new sale-leaseback transactions.
• Market and macroeconomic volatility continues to create uncertainty around forward-looking results, and actual outcomes may differ materially from management projections.

Q: The company raised acquisition guidance and cap rates have ticked down. What acquisition activity are you seeing, what is the competitive landscape, and what is driving potential cap rate compression in H2 2026? / A: The increase in acquisition guidance reflects a robust current pipeline of available opportunities, with multiple large portfolios currently in the market that could support a strong second half. Competition remains stable, with the usual mix of competing public REITs and limited private capital competition currently. Management expects modest cap rate compression based on the quality of deals in their current pipeline, as they have had to slightly lower cap rates to win competitive deals for high-quality assets with existing relationship tenants. We do not shift our risk profile to achieve lower cap rates, and our pricing bandwidth remains narrow. (348 characters)

Q: With bad debt coming in far below expectations and occupancy over 99%, how healthy is the portfolio, and what credit risks are you monitoring? / A: Management confirmed the portfolio is in the best shape it has been in recent history, with no material near-term credit concerns on the watch list. Long-watched tenant AMC has seen improving performance this year, with rising box office revenue and a recent S&P credit upgrade, reducing near-term risk. Credit concerns are largely idiosyncratic rather than concentrated in specific industries, with the portfolio diversified across 3,774 properties. (316 characters)

Q: Can you explain the drivers of attractive low cap rate pricing for your non-core and underperforming disposition assets? / A: NNN's portfolio consists of high-quality, well-located real estate, and most dispositions fall into three categories that support strong pricing. First, many dispositions are pre-planned defensive sales where tenants signal they will not renew, giving NNN time to maximize proceeds while lease term remains. Second, individual buyers and 1031 exchange buyers are often willing to pay a premium for high-quality single-tenant assets, particularly 1031 buyers looking to avoid tax payments. Third, even vacant assets have low original cost bases, leading to solid recovery rates amid current inflation. (419 characters)

Q: What tenant segments are seeing the most aggressive growth from relationship-driven acquisition opportunities right now? / A: The majority of current growth opportunities remain in the auto service segment, followed by convenience stores and early childhood education. Limited service restaurants are seeing very little M&A or expansion activity currently, and there is no growth coming from movie theater tenants. The acquisition team is actively targeting new tenant relationships to backfill future growth as consolidation reduces deal flow from existing acquired tenants, which is a core long-term growth priority. (303 characters)