The NETLease Corporate Real Estate ETF (NETL) seeks to track the performance, before fees and expenses, of the Fundamental Income Net Lease Real Estate Index (NETL). The index’s goal is to track the performance of the U.S. listed Net Lease real estate sector in a diversified manner by screening for real estate companies that focus on investments in net lease real estate and assigning only those companies identified to the Index. The Index places constraints on constituents to protect against concentration in any one company or tenant.
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.
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 23 companies which own more than 24,000 properties across all 50 states leased to tenants operating in a variety of industries.
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 9/30/2020. Market data as of September 30, 2020. *Average Annual Return includes the period January 2008 to September 30, 2020.
Company Highlights: weighted average and cumulative data comprised of the 23 companies held by the Fundamental Income Net Lease Real Estate Index
Portfolio Highlights: weighted average and cumulative data comprised of the 23 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 September 30, 2020 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 09/30/2020.
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 September 30, 2020 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 09/30/2020.
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 09/30/2020.
The properties owned by Net Lease REITs are leased to corporate tenants that require the real estate to generate revenue and operate their respective businesses. Approximately 64% of the Top 100 Tenants of the publicly traded Net Lease REITS, based on rental revenue, are companies rated by national rating agencies, 44% of which are Investment Grade rated. Many of the companies not rated or not rated investment grade are substantial companies with long operating histories and recognizable brands. The chart below is a representative sampling of the Top 100 Tenants in each category.
Note: Based on constituent disclosures in most recent company filings including 10Ks, 10Qs, supplementals and presentations. Weights based on NETLXT as of 9/30/20. Ratings represent tenant ultimate parent company ratings (Source: Capital IQ)
Fund holdings and sector allocations are subject to change at any time and should not be considered recommendations to buy or sell any security. For fund holdings, please click here.
The Tenants occupying the properties owned by Net Lease REITs operate across a variety of industries. The buildings that process your online orders, the gym you work out at, the drug store you shop at, your favorite movie theater and restaurant are likely leased from one of the nation’s public Net Lease REITs.
Note: : Industry disclosed in constituent company filings categorized according to Fundamental Income industry classification. Based on constituent disclosures in most recent company filings including 10Ks, 10Qs, supplementals and presentations. Weights based on NETLXT weights as of 9/30/20.
The 24,000+ properties that are owned by the public Net Lease REITs are primarily spread across all 50 states. This geographic dispersion provides broad and diverse exposure to the U.S economy.
Note: Industry disclosed in constituent company filings categorized according to Fundamental Income industry classification. Based on constituent disclosures in most recent company filings including 10Ks, 10Qs, supplementals and presentations. Weights based on NETLXT weights as of 9/30/20.
Fundamental Income Net Lease Real Estate Index: The Fundamental Income Net Lease Real Estate Index (NETLXT) is a rules based, passive index that, for the first time, defines and tracks the performance of the rapidly expanding net lease real estate sector in a diversified manner.
It is not possible to invest directly in an index.
Exchange Traded Concepts, LLC serves as the investment advisor. Fundamental Income serves as the index provider. The Funds are distributed by Quasar Distributors, LLC which is not affiliated with Fundamental Income, Exchange Traded Concepts, LLC or any of their affiliates.
The Funds' investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company and may be obtained by clicking here. Please read it carefully before investing. A free, hard-copy of the prospectus can also be requested by calling 1-800-617-0004.
Investments involve risk. Principal loss is possible. The fund may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. The Index, and consequently the Fund, is expected to concentrate its investments in real estate companies. As a result, the value of the Fund’s shares may rise and fall more than the value of shares of a fund that invests in securities of companies in a broader range of industries.
Investments in real estate companies and REITs involve unique risks, including limited financial resources, they may trade less frequently and in limited volume, and they may be more volatile than other securities. In addition, securities in the real estate sector are subject to certain risks associated with direct ownership of real estate and the risk that the value of their underlying real estate may go down. Companies in the Net Lease Real Estate sector may be affected by unique factors related to leasing properties to single tenants including dependence on the financial performance of its’ tenants and lease terms related to rent escalations based on economic measurements. The fund may invest in foreign securities which involves political, economic and currency risks, differences in accounting methods and greater volatility. Investments in small and mid-sized companies have historically been subject to greater investment risk than large company stocks.
Performance data as of 10/31/2020. Returns for periods of less than one year are not annualized. Performance data represents past performance and does not guarantee future results. An investor's return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost. Performance data current to the most recent month-end can be obtained by calling 800-617-0004.
Performance data quoted represents past performance and is no guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor`s shares, when redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the original cost. Returns for periods of less than one year are not annualized. Returns are determined based on the midpoint of the bid/ask spread at 4:00pm Eastern time, when the NAV is typically calculated. Market returns does not represent the returns you would receive if you traded shares at other times.
Market Price: The current price at which shares are bought and sold. Market returns are based upon the midpoint or the last bid/ask spread at 4:00pm Eastern time.
NAV: The dollar value of a single share, based on the value of the underlying assets of the fund minus its liabilities, divided by the number of shares outstanding. Calculated at the end of each business day.
To request other information or make general inquiries about the Fund contact NETLease Corporate Real Estate ETF, c/o U.S. Bank Global Fund Services, P.O. Box 701, Milwaukee, Wisconsin 53201-0701 or call 1-800-617-0004.
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