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NETLease
Corporate Real Estate ETF

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What is Net Lease Real Estate?

A net lease is a type of lease agreement made between the property owner and the tenant in which the tenant is responsible for paying both the rent and most, if not all, the property expenses. The most common net lease is a “triple-net lease”, where the tenant pays rent “net” of all the expenses of a property, namely, (1) property taxes, (2) insurance and (3) maintenance. Property owners benefit from the consistency of receiving rental revenue paid by the tenant without the responsibility for managing the property or paying expenses that can change over time. In addition, net leases generally have long initial lease terms of 10 years or more providing predictability to the property owner.

All types of properties are net leased to companies including properties used to generate revenue and profits like restaurants, convenience stores or drug stores, distribution centers used by the businesses or other logistics-focused companies to move goods from production to customers, manufacturing facilities to make the goods, and corporate headquarters. When you invest in the net lease sector, you are investing in the backbone of American business.

What are Net Lease REITs?

Net Lease REITs are real estate investment trusts which own portfolios of properties primarily comprised of properties leased to single tenants under net leases. The Net Lease real estate sector is defined and grouped by lease type as opposed to a property type such as industrial, office, or retail. Collectively, the Net Lease Sector, as defined by the Fundamental Income Net Lease Real Estate Index, includes 25 companies which own more than 26,700 properties across all 50 states leased to tenants operating in a variety of industries.

Net Lease Sector Index Highlights

As of December 31, 2020

25Companies
$218BEnterprise Value
$150BMarket Capitalization
$12.7BAnnualized Revenue
31.1%Debt/Enterprise Value
26,713Properties
98.6%Occupancy
12.3 yrsWeighted Avg.
Remaining Lease Term
50States
3.2%Largest Weighted Tenant
Concentration
3.71%30-Day SEC Yield
(as of 6/30/21 )
17.2xEquity Cash Flow Multiple
7.1 yrsWeighted Avg.
Debt Term Remaining
3.5%Avg. Borrowing Rate

Note: It is not possible to invest directly in an index. Exposure to an asset class represented by an index is available through investable instruments based on that index. Data from Capital IQ and most recent constituent company filings including 10K’s, 10Q’s, earnings supplementals and investor presentations. Weights based on NETLXT proforma Index weightings as of 6/30/2021. Market data as of June 30, 2021. *Average Annual Return includes the period January 2008 to June 30, 2021.

Company Highlights: weighted average and cumulative data comprised of the 25 companies held by the Fundamental Income Net Lease Real Estate Index

Portfolio Highlights: weighted average and cumulative data comprised of the 25 companies held by the Fundamental Income Net Lease Real Estate Index

Debt/Enterprise Value: Debt-to-Enterprise Value is the weighted average Total Debt-to-Enterprise Value of the index constituents, where Total Debt is as of most recent constituent company 10K or 10Q filings. Enterprise Value is equal to the equity market capitalization as of June 30, 2021 plus total debt and preferred equity less cash as of most recent constituent company 10K or 10Q filing. Weightings for each constituent based on NETL weighting as of 6/30/2021.

Equity Cash Flow Multiple: equal to the weighted average Equity Cash Flow Multiple, where Equity Cash Flow Multiple is calculated for each constituent as Price Per Share as of June 30, 2021 divided by Adjusted Funds From Operations Per Share for most recent quarter annualized as of most recent constituent company 10K or 10Q filing. Weightings for each constituent based on NETL weighting as of 6/30/21.

Weighted Avg Debt Term Remaining: equal to the weighted average sector Debt Term Remaining, where Debt Term Remaining is calculated for each constituent as the weighted average debt term remaining where debt term is weighted based on outstanding debt balance maturity as of most recent constituent company 10K or 10Q filing. Weightings for each constituent based on NETL weighting as of 6/30/21.