NNN REIT, Inc.

Reported second-quarter AFFO was $0.90 per share and core FFO was $0.89 per share, up 5.9% and 6.0% year over year, respectively. Annualized base rent grew more than 7% year over year to $959 million, NOI margin was 96.6% (up 70 basis points from last quarter), and cash G&A margin was 4.4% while G&A as a percentage of total revenue was 5.8%. Free cash flow after dividend was about $56 million. For the quarter, acquisitions were just over $290 million at a 7.3% initial cash cap rate; first-half acquisitions were $430 million at a 7.4% cap rate. Guidance was raised to AFFO per share of $3.55 to $3.59 for 2026, with the acquisition midpoint increased to $750 million and disposition midpoint to $140 million. Management now expects full-year bad debt of about 40 basis points, down from 60 basis points last quarter.

Steve Horn said the portfolio is performing well, supported by high occupancy, strong rent collections, and a “deep tenant relationships” acquisition pipeline. He emphasized disciplined underwriting, direct sale-leaseback sourcing, and active portfolio management, including recycling vacant or lower-conviction assets into higher-return opportunities. His tone was confident and constructive, repeatedly pointing to the company being “in great shape” and well positioned to finish 2026 strong.

Vincent Chao highlighted the quarter’s financial outperformance, driven mainly by lower-than-expected bad debt of about 2 basis points of quarterly ABR. He cited 96.6% NOI margin, 4.4% cash G&A margin, and $56 million of free cash flow after dividend, along with strong liquidity: $1.4 billion as noted by management and $4 billion of available liquidity cited later in the call. He also detailed capital actions, including adding $100 million to the term loan for a total of $500 million, swapping $400 million to a 4.1% fixed rate, lowering spreads by 5 basis points, settling 1.7 million forward shares for about $73 million of net proceeds, and ending with 2.5% floating-rate debt and net debt-to-EBITDA of 5.7x, or 5.2x pro forma including unsettled forward equity.

Analysts pressed management on acquisition cap rate compression, portfolio health, theater exposure, disposition quality, and leverage/capital structure. Management said the acquisition pipeline is robust, competition remains mostly the public REITs, and modest cap rate compression in the second half is possible because of deal mix and competition. On credit, management said the portfolio is in the best shape it has been in during Vincent Chao’s tenure, with no material near-term watch-list issues; on theaters, Steve Horn said they are actively trying to reduce exposure, but leases remain long-term and AMC has improved with a recent S&P upgrade. On leverage, management said it targets roughly 5.5x net debt-to-EBITDA and is weighing future debt issuance against a still-volatile rate backdrop.