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Spirit Realty Capital is a sizeable REIT with a yield of nearly 7.4% and a fundamentally healthy business model. The company owns and leases out single tenant real estate under long-term, triple net leases, with a 99.8% occupancy rate. Spirit Realty Capital has diverse industry exposure and geographic distribution, and has shown growth in revenue and profitability metrics.

Net Lease REITs have sold off this year, creating significant bargains. Several Net Lease REITs offer investors high safe yield at low prices, with strong balance sheets and double-digit upside in share price. This article examines growth, balance sheet, dividend, and valuation metrics for three such companies.

This mid-cap REIT specializes in sale-leasebacks. The 6.9% dividend is attractive, but recent increases are small. The portfolio is diversified by geography and building type, but only 19.3% of tenants are rated investment grade.

Spirit Realty Capital, Inc. (NYSE:SRC ) Q2 2023 Results Conference Call August 8, 2023 9:30 AM ET Company Participants Pierre Revol - SVP, Corporate Finance & IR Jackson Hsieh - President, CEO Michael Hughes - CFO Ken Heimlich - CIO Conference Call Participants Anthony Paolone - JP Morgan Greg McGinniss - Scotiabank Haendel St. Juste - Mizuho Joshua Dennerlein - Bank of America Ki Bin Kim - Truist Linda Tsai - Jefferies Michael Goldsmith - UBS Michael Gorman - BTIG Rob Stevenson - Janney Wes Golladay - Baird Ronald Kamdem - Morgan Stanley Operator Good day, and welcome to the Spirit Realty Capital Second Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.

While the top- and bottom-line numbers for Spirit Realty (SRC) give a sense of how the business performed in the quarter ended June 2023, it could be worth looking at how some of its key metrics compare to Wall Street estimates and year-ago values.

Spirit Realty (SRC) came out with quarterly funds from operations (FFO) of $0.91 per share, beating the Zacks Consensus Estimate of $0.90 per share. This compares to FFO of $0.90 per share a year ago.

W.P. Carey is a diversified net-lease REIT. Spirit Realty is a retail-focused net-lease REIT that is branching out into new areas.

Spirit Realty is a net lease REIT trading at just 11 times the anticipated AFFO. The REIT needs just 2% of its AFFO to cover the preferred dividend. In a stress test scenario, an overnight jump of the cost of debt to 6.75% would reduce the AFFO by just 25%.

Spirit Realty Capital, Inc. is a net-lease REIT with a well-diversified portfolio and a 6.5% yield, making it an attractive investment option for those seeking retail REIT exposure. Spirit Realty has a 99.8% occupancy rate and has significantly improved its tenant mix and industry exposure, with a focus on service retail and industrial sectors. The company has a strong track record of positive results, and its current valuation decline may present a good investment opportunity.

Given the wide discounts today in REIT-dom, I believe it's a perfect storm for M&A activities, especially within the Net Lease sector. I would not be surprised to see Broadstone Net Lease, Alpine Net Lease, or Spirit Realty being sold to either public or private REITs. Agree Realty, Realty Income, and W.P. Carey have terrific platforms in which they can use their scale and cost of capital advantages to generate solid accretion and long-term shareholder value.