NNN REIT, Inc. (NNN) Income Statement

Revenue growth of 7.7% in 2026Q2 is the strongest in the past year, yet FFO per share was unchanged from the prior year, suggesting that new investments are not immediately accretive. The sequential increase in revenue from $240.4M in 2026Q1 to $244.3M in 2026Q2 is modest, and FFO per share rose only $0.02, implying that the incremental revenue is being absorbed by higher operating costs or interest expenses. Investors should monitor whether the pace of acquisitions can sustain revenue growth without diluting FFO per share.

The NOI margin of 96.6% in 2026Q2 is consistent with the high-quality, net-lease portfolio, but the 38.6% margin in 2025Q4 is a clear outlier. This could be due to one-time charges, property dispositions, or a change in revenue recognition. Since NOI in 2025Q4 was only $91.9M versus revenue of $238.4M, the gap suggests a significant non-recurring expense. Analysts should adjust for this anomaly when evaluating underlying profitability trends.

While FFO per share has remained steady, the reported AFFO of -$260.3M in 2026Q2 is a red flag. This could be due to significant recurring capital expenditures, tenant improvements, or leasing commissions that are not fully captured in FFO. The negative AFFO suggests that the company may be spending more on maintenance and leasing costs than it is generating in cash flow, which could pressure the dividend if sustained. Investors should scrutinize the components of AFFO to determine if this is a one-time event or a trend.

The difference between net income and FFO is approximately $71M, which represents the depreciation and amortization charges. This is a normal occurrence for REITs, but the magnitude suggests that the company's assets are being depreciated at a rate that may not reflect economic reality. If the properties are maintaining their value, the depreciation charge is overstated, and the true earnings power is better captured by FFO. However, if the properties are aging, the depreciation may be justified, and investors should consider the adequacy of maintenance capital expenditures.

With revenue growing faster than FFO per share, it appears that new properties are not contributing significantly to same-store growth. The company's occupancy rate and rental rate increases on renewals are not disclosed in the provided data, but the flat FFO per share suggests that same-store NOI growth is minimal. Investors should monitor the company's ability to increase rents on existing properties, as this is a key driver of long-term FFO growth.