NNN REIT Inc. Delivers 28% Core FFO Growth in 2024, Maintains Sector-Leading Position
The company's strong performance in 2024 has set a solid foundation for its continued success, with key highlights including 35 consecutive years of annual dividend increases and maintaining a sector-leading 12.1 year weighted average debt maturity.
During the recent conference call, Stephen Horn, CEO of NNN REIT Inc., emphasized the company's commitment to delivering long-term value with below-average risk for its shareholders, highlighting its disciplined approach to investing and balance sheet management.
The company has delivered 28% core FFO growth for 2024, alongside over $550 million in acquisition volume, and concluded the year with a strong 98.5% occupancy rate. Dispositions of income-producing assets were executed at a cap rate 40 basis points lower than the company's acquisition yield, including several strategic and defensive asset sales.
Stephen Horn also welcomed Vincent Chao to the executive team as incoming CFO, noting that he brings extensive public company and investment banking experience with expertise in Capital Markets, Corporate Finance, and Investor Relations. The CEO expressed gratitude for the outgoing CFO, Kevin Habicht, who has dedicated over 30 years of service to the company.
The company's robust position is maintained as it enters the first quarter of 2025, anticipating another strong quarter of acquisitions, with significant progress made on assets related to Frisch's and Badcock home furnishings. The portfolio comprises 3,568 freestanding single-tenant properties, which continue to perform exceptionally well.
Key financial highlights for the fourth quarter include a decrease in occupancy rate to 98.5% due to challenges with two specific tenants; however, this rate remains above the company's long-term average of roughly 98%. The leasing team is generating positive activity, and the CEO anticipates the occupancy level increasing as the year progresses.
The company invested $217 million in 31 new properties during the quarter, achieving an initial cap rate of 7.6% and average lease duration of 20 years. Over 80% of the capital deployed this quarter was allocated to business relationship partners, reflecting the company's preference for sale-leaseback acquisition models over purchasing existing shorter-term leases.
Disposition activity was elevated this year, with nearly $150 million sold at a 7.3% cap rate. The team identified several nonperforming assets for strategic and defensive sales, leading to more of a compressed spread between disposition and acquisition cap rates compared to previous years.
The company's commitment to its core philosophy remains unchanged, delivering long-term value with below-average risk for its shareholders. This disciplined approach drives the company's acquisition and disposition strategy as well as its balance sheet management, ensuring it stays on track to achieve its objectives.
