2Q Preview: Favor the YTD Laggards While Sector Remains Defensive Option for Inv

Research evidence excerpt

2Q Preview: Favor the YTD Laggards While Sector Remains Defensive Option for Inv

Real Estate | Net Lease

June 29, 2026

James Kammert 2Q Preview: Favor the YTD Laggards While

312 705-4233 Sector Remains Defensive Option for james.kammert@evercoreisi.com

Steve Sakwa Investors

212-446-9462 Net lease outperformed REITs overall in FY25 but trailed by Steve.Sakwa@evercoreisi.com

about 308bp YTD (through 6/26). A channeled, meandering

yield curve; earnings accretive spreads between investment cap

rates and WACC; and less exposure, relative to many other

property types, to headline geopolitical & economic headwinds

can support valuations and share price gains in 2H26, in our

view. Valuations are not extended (Figures 11 & 12) equating to

valuation re-rating potential. Growing dividends remain secure

and companies are financially positioned to support external

growth. However, a more ‘risk on’ market could extend a

rotation out of net lease in 2H26.

ADC ($87 PT) & EPRT ($38 PT) remain OP rated, while FCPT,

NNN, O, VICI & WPC remain IL rated- dictated by absolute and

relative valuation & growth expectations lens. The sector

exhibits strong balance sheets, rising retained cash flow, access

to growth capital, moderate near to intermediate term debt

refinancing headwinds, and expansive, often relationship driven,

addressable markets.

Focal topics for the 2Q earnings updates span:

▪ How will reported 1H investing volumes compare to prior full

year ‘26 guidance and will ’26 guides be increased

selectively? What does that imply for incremental equity

capital raising/needs vs existing liquidity?

▪ YTD share valuations are up/implied cap rates are down.

What are the views/expectations regarding investment

yields/cap rates trends?