NNN REIT, Inc. (NYSE:NNN) Q4 2023 Earnings Conference Call February 8, 2024 10:30 AM ET

Company Participants

Steve Horn – Chief Executive Officer

Kevin Habicht – Chief Financial Officer

Conference Call Participants

Spenser Allaway – Green Street

Farrell Granath – Bank of America

Smedes Rose – Citi

Alec Feygin – Baird

Linda Tsai – Jefferies

Ronald Kamdem – Morgan Stanley

Connor Siversky – Wells Fargo

John Massocca – B. Riley

Operator

Greetings. Welcome to the NNN REIT Inc. Q4 and Year-End 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Steve Horn, Chief Executive Officer. You may begin.

Steve Horn

Thank you, Holly. Good morning, and welcome to NNN REIT's fourth quarter 2023 earnings call. Joining me on the call is Chief Financial Officer, Kevin Habicht. As this morning's press release reflects NNN's performance in 2023 produced 3.8% Core FFO growth along with acquisition volume over $800 million. In addition, the year concluded with high occupancy of 99.5% and dispositions income-producing assets were 140 basis points lower than our acquisition cap rate, all driven by our best-in-class team here at NNN.

The end of the year surge positions the company well in the near-term, but a few highlights of 2023 that I'm proud of what NNN accomplished. The 34th consecutive annual dividend increase, the rebranding initiative and the positioning of the executive team for the future. While the name changed in 2023, the core philosophy to realize long-term value at below average risk for our shareholders remain in the most simplistic form. One, we continue to execute our strategy using a bottom-up approach, continue to increase the annual dividend, maintaining the top-tier payout ratio and focusing on growing FFO per share in the mid-single digits over multiple years. We maintain this core philosophy by keeping disciplined and setting our acquisition activity and our balance sheet management to achieve that objective.

Before I get into day-to-day operations and current market conditions, I'd like to welcome Gina Steffens to the executive team. Gina assumed General Counsel role late in the fourth quarter. She joins NNN with a fantastic resume from public and private companies, bringing significant transactional experience. I look forward to the partnership going forward as NNN grows. As I alluded earlier, NNN is in great shape. At year-end, NNN had $132 million drawn on the $1.1 billion credit facility after deploying over $800 million of capital for the year. Based on our initial 2020 guidance, NNN has the ability to have minimal capital market activity in 2024. This is accomplished by using a nominal amount of the credit facility to roughly $180 million free cash flow we generate and $100 million from dispositions to execute 2024 strategy.