NNN REIT Q3 AFFO Rises 5.8% on Rent Base Growth

NNN REIT Inc. reported third-quarter 2026 adjusted funds from operations of $0.91 per share, up 5.8% from a year earlier, as new property investments and a larger rent base supported earnings growth. The net-lease real estate investment trust also maintained 99.2% occupancy, 170 basis points above the prior-year level.

Annualized base rent increased 6.8% year over year to $974.0 million as of September 30. NNN’s portfolio comprised 3,817 properties with 40.8 million square feet of gross leasable area across all 50 states.

Acquisitions expand the rent base

NNN completed $222 million of investments during the quarter at a 7.3% initial cash capitalization rate. The acquired properties had a weighted average lease term of 19.6 years, consistent with the company’s focus on long-term, single-tenant net leases.

Management said its acquisition strategy centers on granular transactions, including sale-leasebacks, split-funded developments and purchases of existing leased assets. The company seeks to evaluate property quality, tenant credit, location-level performance and acquisition basis rather than relying solely on investment-grade credit ratings.

NNN’s tenant base remained diversified, with no single tenant accounting for more than 5% of annualized base rent. Its largest tenant, 7-Eleven, represented 4.1%, followed by Mister Car Wash at 3.7% and Dave & Buster’s at 3.5%. Automotive service was the largest line of trade at 19.2% of annualized base rent, while convenience stores accounted for 15.5%.

Service and non-discretionary retail tenants generated 88.7% of annualized base rent, with discretionary retail accounting for the remaining 11.3%. The portfolio’s weighted average remaining lease term was 10.1 years.

Liquidity supports capital deployment

NNN reported approximately $1.4 billion of available liquidity, including about $1.2 billion of unused revolving credit capacity, $204 million of outstanding forward equity and $2.7 million of cash. Revolver utilization was 1.6%, while floating-rate debt represented 2.3% of gross debt.

The company’s average debt duration was 9.8 years, broadly matching the duration of its leases. All assets were unencumbered, and NNN carried credit ratings of BBB+ from S&P and Baa1 from Moody’s. Net debt to EBITDAre stood at 5.6 times, compared with the company’s target of approximately 5.5 times.

NNN estimates that it can fund about $550 million of annual acquisitions on a leverage-neutral basis with limited new equity issuance. The illustrative funding mix consists of $200 million of AFFO retained after dividends, $100 million of disposition proceeds, $220 million of debt and $30 million of equity. The company emphasized that this model is illustrative and does not constitute guidance for a specific period.

Dividend and long-term growth framework

NNN declared a quarterly dividend of $0.62 per share, equivalent to an annualized dividend of $2.48. The AFFO payout ratio was 68%. The company has increased its annual dividend for 37 consecutive years.

Management’s long-term framework targets mid-single-digit annual per-share earnings growth and a mid-single-digit dividend yield. Its illustrative model estimates baseline annual earnings growth of 3% to 4% from rent escalators and self-funded acquisitions, after accounting for refinancing costs. Additional acquisitions dependent on market-based capital could support a longer-term growth range of 4% to 5%, although the company said the analysis is not guidance for any particular period.

NNN’s outlook remains subject to changes in economic and financing conditions, tenant defaults or bankruptcies, vacancies, refinancing risk and the availability of debt or equity on acceptable terms. Other disclosed risks include concentrations by tenant, industry or geography, the illiquidity of real estate, competition for acquisitions, weather and climate effects, cybersecurity incidents and the company’s ability to retain its REIT tax status.