NETSTREIT Corp. Announces Closing of Forward Common Stock Offering and Full Exercise of Underwriters’ Option to Purchase Additional Shares

Rhea-AI Summary

NETSTREIT Corp. has closed its public offering of 11,040,000 shares of its common stock at a price of $18.00 per share, including the full exercise of the underwriters’ option to purchase additional shares. The forward sale agreements with affiliates of Wells Fargo Securities and BofA Securities allow for the delivery of the shares in exchange for cash proceeds per share equal to the applicable forward sale price. The net proceeds will be used for general corporate purposes and funding of acquisitions of properties and development activities in the Company’s pipeline.

Insights

Financial Analyst

An equity offering is a significant event for a company, as it impacts its capital structure and shareholder dilution. NETSTREIT Corp.'s completion of its public offering, including the full exercise of the underwriters' option, suggests a strong market demand for its shares. The offering price of $18.00 per share provides a basis for market valuation. Investors should assess the potential dilutive effect on earnings per share (EPS) and whether the capital raised justifies this dilution.

The involvement of reputable financial institutions as book-runners and co-managers indicates a credible process. The forward sale agreements are a strategic move, allowing NETSTREIT to lock in a selling price while postponing equity issuance. This can be beneficial if the company anticipates a need for capital in line with its stated purposes such as property acquisitions and development activities. However, investors should consider the risks associated with the potential adjustments in the forward sale agreements and the impact of market volatility on the eventual proceeds.

Real Estate Market Analyst

NETSTREIT Corp., operating in the real estate investment trust (REIT) sector, is likely to use the proceeds for portfolio expansion and development, which is typical for growth-oriented REITs. The strategy of funding acquisitions and developments through equity rather than debt could be seen as a move to maintain a conservative debt profile, which is often favorable in the eyes of investors and rating agencies.

The real estate market conditions, including interest rates and property values, will significantly influence the effectiveness of the capital deployment. The company's ability to select and manage profitable properties will ultimately determine the return on investment for the shareholders. The use of proceeds for repaying debt could also indicate a strategic financial management decision to optimize the balance sheet ahead of potential interest rate changes.

Securities Law Expert

The offering was conducted under a shelf registration, which allows for a more efficient capital raising process as it was automatically effective upon filing. This suggests that NETSTREIT Corp. has planned for strategic flexibility in accessing capital markets. Investors should note that the company's adherence to the Securities and Exchange Commission (SEC) regulations in such offerings is crucial for legal compliance and investor confidence.

For potential investors, the availability of the final prospectus is important for due diligence. It contains detailed information about the offering, the company's financials and risk factors. The transparency and availability of such documents are essential for an informed investment decision and are mandated by securities law to protect investor interests.

DALLAS--(BUSINESS WIRE)-- NETSTREIT Corp. (the “Company”) announced today that it has closed its previously announced public offering of 11,040,000 shares of its common stock, which includes the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $18.00 per share in connection with the forward sale agreements described below.

Wells Fargo Securities and BofA Securities acted as the book-running managers and representatives of the underwriters for the offering. Jefferies, Truist Securities, Capital One Securities, Regions Securities LLC, Scotiabank, TD Securities, Mizuho, Stifel and Citigroup acted as joint book-running managers for the offering. Baird, BTIG, Raymond James, Wolfe Capital Markets and Advisory, Ramirez & Co., Inc., Comerica Securities and Roberts & Ryan acted as co-managers for the offering.

The Company has entered into forward sale agreements with affiliates of Wells Fargo Securities and BofA Securities (the "forward purchasers") with respect to 11,040,000 shares of its common stock. In connection with the forward sale agreements, the forward purchasers or their affiliates borrowed from third parties and sold to the underwriters an aggregate of 11,040,000 shares of the Company’s common stock. Subject to its right to elect cash or net share settlement, which right is subject to certain conditions, the Company intends to deliver, upon physical settlement of such forward sale agreements on one or more dates specified by the Company occurring no later than January 9, 2025, an aggregate of 11,040,000 shares of its common stock to the forward purchasers in exchange for cash proceeds per share equal to the applicable forward sale price, which will be the public offering price, less underwriting discounts and commissions, and will be subject to certain adjustments as provided in the forward sale agreements.

The Company did not initially receive any proceeds from the sale of shares of its common stock by the forward purchasers. The Company expects to contribute the net proceeds, if any, it receives upon the future settlement of the forward sale agreements to its operating partnership in exchange for Class A limited partnership units in the operating partnership and the operating partnership intends to use the net proceeds for general corporate purposes, which may include the repayment of amounts outstanding from time to time under the Company’s revolving credit facility, and funding of acquisitions of properties and development activities in the Company’s pipeline. Selling common stock through the forward sale agreements enabled the Company to set the price of such shares upon pricing the offering (subject to certain adjustments) while delaying the issuance of such shares and the receipt of the net proceeds by the Company until the expected funding requirements described above have occurred.

The offering was made pursuant to the Company’s shelf registration statement, which was automatically effective upon filing with the U.S. Securities and Exchange Commission on September 1, 2021. Copies of the final prospectus may be obtained from the SEC's website at www.sec.gov or by contacting: Wells Fargo Securities, LLC, Attention: Equity Syndicate Department, 500 West 33rd Street, New York, New York, 10001, at (800) 326-5897 or email a request to cmclientsupport@wellsfargo.com and BofA Securities, Attention: Prospectus Department, NC1-022-02-25, 201 North Tryon Street, Charlotte, North Carolina 28255-0001 or by email at dg.prospectus_requests@bofa.com.

About NETSTREIT Corp.

NETSTREIT Corp. is an internally managed real estate investment trust (REIT) based in Dallas, Texas that specializes in acquiring single-tenant net lease retail properties nationwide. The growing portfolio consists of high-quality properties leased to e-commerce resistant tenants with healthy balance sheets. Led by a management team of seasoned commercial real estate executives, NETSTREIT’s strategy is to create the highest quality net lease retail portfolio in the country with the goal of generating consistent cash flows and dividends for its investors.

Forward-Looking and Cautionary Statements

This press release contains “forward-looking statements.” Forward-looking statements include statements regarding the public offering and other statements identified by words such as “could,” “may,” “might,” “will,” “likely,” “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects,” “continues,” “projects” and similar references to future periods, or by the inclusion of forecasts or projections. Forward-looking statements, including statements regarding the expected use of proceeds of the offering, are based on the Company’s current expectations and assumptions regarding the Company’s business, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. As a result, the Company’s actual results may differ materially from those contemplated by the forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include financial market and regulatory conditions, general real estate market conditions, the Company’s competitive environment and other factors set forth under “Risk Factors” in the Company’s prospectus supplement and accompanying prospectus and in the Company’s annual and quarterly reports and other documents filed with the U.S. Securities and Exchange Commission from time to time. Any forward-looking statement made in this press release speaks only as of the date on which it is made. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240112379676/en/

Investor Relations

ir@netstreit.com

972-597-4825

Source: NETSTREIT Corp.

FAQ

How many shares were included in NETSTREIT Corp.'s public offering?

NETSTREIT Corp.'s public offering included 11,040,000 shares of its common stock.

What was the public offering price per share in NETSTREIT Corp.'s public offering?

The public offering price per share in NETSTREIT Corp.'s public offering was $18.00.

What will the net proceeds be used for?

The net proceeds will be used for general corporate purposes and funding of acquisitions of properties and development activities in the Company’s pipeline.

Who were the book-running managers and representatives of the underwriters for NETSTREIT Corp.'s public offering?

Wells Fargo Securities and BofA Securities acted as the book-running managers and representatives of the underwriters for the offering.

What was the purpose of the forward sale agreements with affiliates of Wells Fargo Securities and BofA Securities?

The forward sale agreements allowed for the delivery of the shares in exchange for cash proceeds per share equal to the applicable forward sale price.