Executive Summary

Q4 2024 was steady operationally: Revenues were $218.5m (+1.0% YoY; flat QoQ), diluted EPS was $0.52 (vs $0.53 YoY/QoQ), and Core FFO/AFFO per share were $0.82 (down from $0.84 in Q3 as occupancy dipped to 98.5% on Badcock/Frisch’s vacancies) .
2025 guidance was initiated at Core FFO per share of $3.33–$3.38 and AFFO of $3.39–$3.44; plan assumes $500–$600m acquisitions, $80–$120m dispositions, G&A of $47–$48m, and elevated property expenses of $15–$16m due to vacancy carry .
Balance sheet/liquidity remain strengths: zero drawn on the $1.2b revolver at year-end, weighted-average debt maturity 12.1 years, and net debt/EBITDA of 5.5x; free cash flow in 2024 was ~$196m, funding 61% of acquisitions alongside disposition proceeds .
Catalysts: faster-than-expected re-leasing/resolution of Badcock/Frisch’s (management already re-leased/sold 35%+ of affected sites with attractive economics), and an active relationship-driven acquisition pipeline despite some cap-rate compression at the margin .

What Went Well and What Went Wrong

What Went Well
- Relationship-driven acquisitions at attractive initial yields: Q4 deployed $216.8m into 31 properties at a 7.6% initial cash cap rate with ~20-year WALT; >80% through relationships; portfolio-level disposition yield remained below buys (7.3% in Q4) .
- Proactive portfolio management: Early outcomes on Badcock (11 stores re-leased/sold) imply ~113% rent recovery versus prior rent when reinvestment proceeds are considered, highlighting strong real estate positioning and capital recycling .
- Financial flexibility intact: zero revolver balance at 12/31, $1.2b capacity, 12.1-year WAM, and net debt/EBITDA 5.5x support 2025 external growth without heavy capital markets reliance .
What Went Wrong
- Occupancy declined to 98.5% (vs 99.3% at 9/30 and 99.5% at 12/31/23) due to the Badcock liquidation and Frisch’s non-payment/evictions in Q4, creating income downtime and elevated property expenses into 2025 .
- Non-repeatable items: 2024 benefited from unusually high lease termination fees ($11.4m FY vs ~$3m five-year average), creating a headwind for YoY growth optics as this normalizes .
- Modest sequential downtick in per-share FFO/AFFO (0.82 in Q4 vs 0.84 in Q3) as vacancies hit, with management guiding 2025 property expenses net of reimbursements above normal ($15–$16m) before fading in 2026 .

Financial Results

Metric	Q4 2023	Q3 2024	Q4 2024
Revenue ($USD Millions)	$216.2	$218.6	$218.5
Net Earnings ($USD Millions)	$96.7	$97.9	$97.9
Diluted EPS ($)	$0.53	$0.53	$0.52
FFO/share (Diluted) ($)	$0.83	$0.84	$0.82
Core FFO/share (Diluted) ($)	$0.85	$0.84	$0.82
AFFO/share (Diluted) ($)	$0.82	$0.84	$0.82
Net Income Margin (%)	44.7% (96.7/216.2)	44.8% (97.9/218.6)	44.8% (97.9/218.5)

Notes:

2023 EPS/FFO/Core FFO had a Q4’23 accrual reclass impact (+$5.6m accrued rent); ex that, Q4’23 EPS would have been $0.50 and Core FFO $0.82 .

KPIs and Portfolio Activity

KPI	Q4 2023	Q3 2024	Q4 2024
Occupancy	99.5% (12/31/23)	99.3% (9/30/24)	98.5% (12/31/24)
Annual Base Rent (ABR)	$818.7m (12/31/23)	$851.0m (9/30/24)	$860.6m (12/31/24)
Acquisitions	n/a	$113.6m; 8 props; 7.6% cap; WALT 18.4 yrs	$216.8m; 31 props; 7.6% cap; WALT 19.8 yrs
Dispositions	n/a	9 props; $20.0m; ~4.4% cap (mix)	12 props; $42.8m; 7.3% cap
Weighted Avg Debt Maturity	12.1 years (YE metric)	12.3 years	12.1 years
Net Debt/EBITDA	n/a	5.2x (9/30/24)	5.5x (12/31/24)

Segment breakdown: NNN reports as a net-lease retail REIT without multiple operating segments; property and tenant concentrations are provided instead (e.g., top trade lines, states, tenants) .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Core FFO/share	FY2024 (as of Q3)	$3.28 – $3.32	—	Narrowed in Q3 vs Q2; finished at $3.32 (reported)
AFFO/share	FY2024 (as of Q3)	$3.31 – $3.35	—	Maintained range heading into Q4
Core FFO/share	FY2025	—	$3.33 – $3.38	New
AFFO/share	FY2025	—	$3.39 – $3.44	New
Net EPS ex gains/impairments/exec costs	FY2025	—	$1.97 – $2.02	New
D&A per share	FY2025	—	$1.36	New
G&A Expense ($m)	FY2025	—	$47 – $48	New
Real estate expenses, net of reimbursements ($m)	FY2025	—	$15 – $16	New
Acquisition volume ($m)	FY2025	—	$500 – $600	New
Disposition volume ($m)	FY2025	—	$80 – $120	New

Management noted the FY2025 property expense guide is above normal due to Badcock/Frisch’s vacancy carry and should fade in 2026 as resolutions progress .

Earnings Call Themes & Trends

Topic	Q2 2024 (8/1)	Q3 2024 (10/31)	Q4 2024 (2/11)	Trend
Tenant credit (Badcock/Frisch’s)	Badcock bankruptcy noted (0.7% rent); watch-list reviewed; normal rent-loss assumption ~100 bps with actual typically 30–50 bps .	Frisch’s paid half rent in Q3; expect >100 bps rent loss in Q4; guidance conservatism reiterated .	Badcock leases rejected; 5 re-leased + 6 sold with ~113% rent recapture economics; Frisch’s 28 re-leased with % rent; rent resumes May 1, 2025 .	Improving resolution pace; economic outcomes tracking better than history.
Acquisitions/cap rates	$110m at 7.9% initial cap; pipeline relationship-driven; mid-high 7s expected .	$113.6m at 7.6% initial cap; larger deal flow into Q4/Q1; competition steady .	$217m at 7.6% in Q4; expect slight cap-rate compression at the margin from competition .	Slight compression risk; pipeline remains robust via relationships.
Lease termination fees	Elevated 1H’24 ($6.3m) vs ~$3m annual norm .	YTD $10.2m; Q3 $3.9m; non-recurring by nature .	FY’24 $11.4m; helps 2024 comps but not structurally repeatable .	Normalization expected in 2025.
Balance sheet/liquidity	12.6-year WAM; revolver increased to $1.2b; limited equity needs .	12.3-year WAM; $175m cash; no revolver draw; 2025 debt due Nov .	12.1-year WAM; no revolver draw; 10-year new issue implied ~5.5% .	Durable.
Property expense outlook	Normal run-rate; 2024 RE expenses net guided $10–11m .	Modestly higher RE expenses alongside rent loss as vacancies emerge .	2025 RE expenses net $15–$16m (fade in 2026) .	Temporary elevation in 2025.

Management Commentary

“In 2024, we executed more than $560 million in acquisitions with minimal reliance on capital markets and ended the year with a zero balance on our revolving credit facility.”
“We anticipate another strong quarter of acquisitions and are making significant progress with the assets related to Frisch’s and Badcock.”
“Today, we initiated our 2025 core FFO guidance at a range of $3.33 to $3.38 per share… G&A expense of $47 million to $48 million, and property expenses net of reimbursement of $15 million to $16 million, which is higher than usual due to the Badcock and Frisch’s vacancy.”
“Net debt to EBITDA was 5.5x at December 31. Interest coverage and fixed charge coverage was 4.2x for 2024.”

Q&A Highlights

Guidance bridge: Despite elevated 2024 lease termination fees and vacancy, 2025 growth is supported by faster-than-expected Badcock/Frisch’s resolutions and the 2H’24 acquisitions flowing through 2025; no major offsets beyond timing effects .
Frisch’s re-leasing economics: $2.8m ABR on 28 stores (~50% of prior base rent) plus 7% percentage rent above a breakpoint; base rent starts 5/1/25, with potential to exceed historical ~70% recoveries as operations stabilize .
Credit loss assumptions: 2025 guide includes 60 bps rent loss vs historical assumptions of ~100 bps; long-term actuals often 30–50 bps; major near-term exposures addressed .
Property expenses: 2025 net RE expenses ($15–$16m) are $4–$5m above normal due to vacancy carry; expected to fade into 2026 as re-tenanting completes .
Acquisition market: Healthy pipeline with relationship-driven flow; modest cap-rate compression (10–15 bps) at the margin amid competition; hurdle remains low-7% WACC equivalent .

Estimates Context

Comparison to Wall Street consensus: S&P Global consensus EPS/revenue for Q4 2024 was unavailable due to access limits; therefore, we cannot provide a vs-consensus beat/miss assessment for this quarter (Values retrieved from S&P Global were unavailable at time of analysis).
Management indicated Q4 and FY results were “generally in line with our expectations” and placed FY results at the top of the prior guidance range, implying limited fundamental surprise versus internal expectations .

Key Takeaways for Investors

2025 guide is conservative but credible: modest per-share growth despite 2024 non-recurring items and vacancy carry, with potential upside if re-leasing exceeds the 60 bps rent-loss assumption or if acquisition pacing remains strong .
Re-leasing momentum is the near-term catalyst: early outcomes on Badcock/Frisch’s are better/faster than history; percentage rent structures add upside optionality into 2H’25/2026 .
External growth remains well-funded: ~$1.2b revolver availability, long-duration debt stack, and strong FCF reduce need for equity, preserving accretion while cap rates compress slightly at the margin .
Portfolio quality/risk: Diversified tenant/trade-line exposure with manageable watch list; occupancy expected to grind higher through 2025 as re-tenanting completes .
2024’s elevated lease term fees will normalize: expect a small headwind to YoY optics; offset by re-leasing progress and acquisitions flowing through 2025 .
Expense normalization in 2026: elevated 2025 property expenses tied to vacant carry should recede as leases commence, providing an embedded tailwind to NOI and per-share metrics .
Dividend durability: 35-year increase streak and ~68% AFFO payout in 2024 underscore dividend safety while supporting modest growth .

Additional source context:

Q4 press release (annual results and 2025 guidance) summarized detailed income statement/FFO/AFFO reconciliations, balance sheet, debt, and property portfolio metrics .
Prior quarters for trend analysis: Q3’24 press release and call -; Q2’24 press release and call - -.
Other relevant Q4-period releases: CFO retirement (Jan 6, 2025) and dividend declaration (Jan 14, 2025) .

Note: We did not locate a separate 8-K Item 2.02 in the document feed for Q4; the comprehensive press release on Feb 11, 2025 contained the earnings details used above -.

NNN REIT, INC. (NNN)·Q4 2024 Earnings Summary