NETSTREIT Corp. (NTST) stock intrinsic value fair value estimate & owner earnings analysis

NetSTREIT owns and leases single-tenant retail real estate under long-term "triple net" leases, meaning the tenant -- not NetSTREIT -- pays the property taxes, insurance and maintenance. The portfolio has grown to 761 properties leased to 129 different tenants across 45 states. No single tenant accounts for more than about 5% of rental income, the five largest tenants (CVS, Dollar General, the owner of Food Lion and Stop & Shop, Home Depot, and Hobby Lobby) together make up about one-fifth, and roughly 58% of rent comes from tenants that are investment-grade rated or have an investment-grade-like credit profile. The average remaining lease term is just over ten years, which locks in a large share of near-term cash flow. Because tenants bear the ongoing cost of maintaining the buildings they lease, NetSTREIT itself spends almost nothing to sustain its existing properties -- the company's own filings confirm it has no material ongoing commitments for recurring building upkeep. Nearly all of the cash NetSTREIT spends on real estate is instead spent growing the portfolio: buying additional properties outright, or financing the construction of new build-to-suit locations for tenants. We have valued the business on owner earnings -- cash generated by operations, after adding back non-cash accounting charges (depreciation, amortization, and periodic write-downs on properties sold or held for sale) and after subtracting stock-based compensation -- without subtracting any allowance for maintenance spending, since essentially none is required. This is why NetSTREIT's cash generation converts so efficiently into distributable earnings. The catch is that nearly all of the money used to buy new properties comes from issuing new shares and new debt, not from retained cash flow. The number of shares outstanding has roughly quadrupled over the last five years. That dilution has, at times, largely offset the benefit of growth on a per-share basis: per-share owner earnings barely grew at all from 2023 to 2024, even though the total dollar amount of owner earnings grew nearly 20%, because the share count grew by a similar amount over the same period. Per-share owner earnings did resume growing in 2025, by about 7%. This dependence on external capital, rather than on internally funded growth, is the central risk and the central swing factor in the three cases below. In the base case, we assume NetSTREIT continues its disciplined acquisition strategy -- diversified across tenants, industries, and states by policy (no more than 5% of rent from one tenant, no more than 15% from one industry or one state) -- but that per-share growth continues at a modest pace, starting around 5% a year and gradually slowing toward 2% a year over the next decade as the ever-larger share base makes each new acquisition less impactful per share. Beyond ten years, we do not assume further compounding, because most of today's leases will have come up for renewal by then and we have no way to know today's re-leasing terms; we instead assume the diversified portfolio continues to produce roughly its year-ten level of cash flow. The bear case reflects a repeat of the growth-stall already seen in 2024, compounded by a period of net tenant/property losses: some of the properties NetSTREIT owns get written down and sold as part of ongoing portfolio pruning (the company wrote down and sold dozens of underperforming properties in both 2024 and 2025), and the pace of these losses picks up while acquisition growth stalls, producing several years of modest per-share decline before stabilizing. The bull case reflects a return to the more favorable acquisition environment NetSTREIT successfully executed in 2022, when it grew per-share owner earnings by about 25% for the year; we assume several years of high-single-digit to low-double-digit growth before it, too, tapers as the share base grows. Putting these cases through a discounted cash flow at a flat 6% discount rate (a rate we apply to every company we analyze, with risk expressed only through the range between the bear, base and bull cases, not through the discount rate itself), we estimate the shares are worth roughly $17 in the bear case, $25 in the base case, and $36 in the bull case, on a per-share basis. Given the company's continued reliance on capital markets to fund growth, and the real (if currently modest) drag from portfolio write-downs, the margin-of-safety price is set meaningfully below our base-case estimate -- around $16.50 a share -- to build in a cushion against a scenario closer to our bear case. One item we could not fully reconcile from the filings: the exact split, within the "real estate development and improvements" cash flow line, between new development projects and capitalized improvements on properties the company already owned. We have treated the entire line as growth spending, consistent with management's description of it as funding build-to-suit and reverse build-to-suit development, but a small portion could in principle relate to existing properties.