Document And Entity Information
Document And Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 28, 2016 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | NATIONAL RETAIL PROPERTIES, INC. | |
Entity Central Index Key | 751,364 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 147,003,019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Real estate portfolio: | ||
Accounted for using the operating method, net of accumulated depreciation and amortization | $ 5,630,117 | $ 5,253,511 |
Accounted for using the direct financing method | 13,826 | 14,518 |
Real estate held for sale | 3,062 | 35,429 |
Mortgages, notes and accrued interest receivable, net of allowance of $17 and $5, respectively | 5,271 | 8,688 |
Commercial mortgage residual interests | 10,580 | 11,115 |
Cash and cash equivalents | 2,371 | 13,659 |
Restricted cash and cash held in escrow | 242 | 601 |
Receivables, net of allowance of $745 and $566, respectively | 2,205 | 3,344 |
Accrued rental income, net of allowance of $3,110 and $3,078, respectively | 25,221 | 25,529 |
Debt costs, net of accumulated amortization of $10,559 and $9,877, respectively | 3,396 | 4,003 |
Other assets | 88,999 | 89,647 |
Total assets | 5,785,290 | 5,460,044 |
Liabilities: | ||
Line of credit payable | 147,300 | 0 |
Mortgages payable, including unamortized premium and net of unamortized debt costs | 16,900 | 23,964 |
Notes payable, net of unamortized discount and unamortized debt costs | 1,953,479 | 1,951,980 |
Accrued interest payable | 19,138 | 20,113 |
Other liabilities | 100,977 | 121,594 |
Total liabilities | 2,237,794 | 2,117,651 |
Stockholders’ equity: | ||
Common stock, $0.01 par value. Authorized 375,000,000 shares; 146,002,140 and 141,007,725 shares issued and outstanding, respectively | 1,462 | 1,412 |
Capital in excess of par value | 3,270,587 | 3,049,198 |
Accumulated deficit | (281,818) | (263,124) |
Accumulated other comprehensive income (loss) | (17,978) | (20,352) |
Total stockholders’ equity of NNN | 3,547,253 | 3,342,134 |
Noncontrolling interests | 243 | 259 |
Total equity | 3,547,496 | 3,342,393 |
Total liabilities and equity | 5,785,290 | 5,460,044 |
Series D Depositary Share | ||
Stockholders’ equity: | ||
Preferred stock, $0.01 par value. Authorized 15,000,000 shares, Series D and E, 11,500 shares issued and outstanding, at stated liquidation value of $2,500 per share | 287,500 | 287,500 |
Series E Depositary Share | ||
Stockholders’ equity: | ||
Preferred stock, $0.01 par value. Authorized 15,000,000 shares, Series D and E, 11,500 shares issued and outstanding, at stated liquidation value of $2,500 per share | $ 287,500 | $ 287,500 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Mortgages, notes and accrued interest receivable, allowance | $ 17 | $ 5 | |
Receivables allowance | 745 | 566 | |
Accrued rental income allowance | 3,110 | 3,078 | |
Debt costs accumulated amortization | $ 10,559 | $ 9,877 | |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Preferred stock, shares authorized (in shares) | 15,000,000 | 15,000,000 | |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, shares authorized (in shares) | 375,000,000 | 375,000,000 | |
Common stock, shares issued (in shares) | 146,002,140 | 141,007,725 | |
Common stock, shares outstanding (in shares) | 146,002,140 | 141,007,425 | |
Series D Depositary Share | |||
Dividend rate | 6.625% | 6.625% | |
Preferred stock, depositary shares issued (in shares) | 115,000 | 115,000 | |
Preferred stock, depositary shares outstanding (in shares) | 115,000 | 115,000 | |
Preferred stock, stated liquidation value per share (in dollars per share) | $ 2,500 | $ 2,500 | |
Series E Depositary Share | |||
Dividend rate | 5.70% | 5.70% | |
Preferred stock, depositary shares issued (in shares) | 115,000 | 115,000 | |
Preferred stock, depositary shares outstanding (in shares) | 115,000 | 115,000 | |
Preferred stock, stated liquidation value per share (in dollars per share) | $ 2,500 | $ 2,500 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | ||
Revenues: | |||||
Rental income from operating leases | $ 126,418 | $ 112,715 | $ 248,063 | $ 224,189 | |
Earned income from direct financing leases | 347 | 397 | 703 | 802 | |
Percentage rent | 164 | 112 | 638 | 297 | |
Real estate expense reimbursement from tenants | 3,248 | 3,324 | 6,838 | 6,838 | |
Interest and other income from real estate transactions | 301 | 213 | 764 | 376 | |
Interest income on commercial mortgage residual interests | 448 | 447 | 901 | 892 | |
Total revenues | 130,926 | 117,208 | 257,907 | 233,394 | |
Operating expenses: | |||||
General and administrative | 8,735 | 7,830 | 17,984 | 16,435 | |
Real estate | 4,567 | 4,658 | 9,355 | 9,417 | |
Depreciation and amortization | 36,489 | 34,202 | 71,144 | 66,343 | |
Impairment – commercial mortgage residual interests valuation | 632 | 428 | 852 | 428 | |
Impairment losses – real estate and other charges, net of recoveries | 5,459 | 2,686 | 6,031 | 3,714 | |
Total operating expenses | 55,882 | 49,804 | 105,366 | 96,337 | |
Earnings from operations | 75,044 | 67,404 | 152,541 | 137,057 | |
Other expenses (revenues): | |||||
Interest and other income | (72) | (35) | (91) | (47) | |
Interest expense | 24,081 | 21,678 | 47,667 | 43,464 | |
Real estate acquisition costs | 280 | 96 | 409 | 695 | |
Total other expenses (revenues) | 24,289 | 21,739 | 47,985 | 44,112 | |
Earnings before income tax benefit | 50,755 | 45,665 | 104,556 | 92,945 | |
Income tax benefit | 0 | 495 | 0 | 54 | |
Gain on disposition of real estate, net of income tax expense | 1,178 | 30 | 18,053 | 7,230 | |
Earnings including noncontrolling interests | 51,933 | 46,190 | 122,609 | 100,229 | |
Loss (earnings) attributable to noncontrolling interests | 9 | (2) | 16 | (62) | |
Net earnings attributable to NNN | 51,942 | 46,188 | 122,625 | 100,167 | |
Net earnings attributable to common stockholders | $ 43,084 | $ 37,330 | $ 104,908 | $ 82,450 | |
Net earnings per share of common stock: | |||||
Basic (in dollars per share) | $ 0.30 | $ 0.28 | $ 0.74 | $ 0.62 | |
Diluted (in dollars per share) | $ 0.30 | $ 0.28 | $ 0.73 | $ 0.62 | |
Weighted average number of common shares outstanding: | |||||
Basic (in shares) | 143,443,375 | 133,267,292 | 142,141,990 | 132,470,700 | |
Diluted (in shares) | 143,976,712 | 133,600,656 | 142,693,785 | 132,824,800 | |
Other comprehensive income: | |||||
Net earnings attributable to NNN | $ 51,942 | $ 46,188 | $ 122,625 | $ 100,167 | |
Amortization of interest rate hedges | 707 | 418 | 1,402 | 832 | |
Fair value forward starting swaps | 312 | 0 | 312 | 0 | |
Net gain (loss) – commercial mortgage residual interests | 282 | (38) | 107 | (384) | |
Net gain (loss) – available-for-sale securities | 379 | (147) | 553 | (74) | |
Comprehensive income attributable to NNN | 53,622 | 46,421 | 124,999 | 100,541 | |
Earnings before gain on disposition of real estate, net of income tax expense | 50,755 | 46,160 | 104,556 | 92,999 | |
Series D Preferred Stock | |||||
Other expenses (revenues): | |||||
Dividends | [1] | (4,762) | (4,762) | (9,523) | (9,523) |
Series E Preferred Stock | |||||
Other expenses (revenues): | |||||
Dividends | [1] | $ (4,096) | $ (4,096) | $ (8,194) | $ (8,194) |
[1] | The Series D and E preferred stock have no maturity date and will remain outstanding unless redeemed. The earliest redemption date for the Series D and Series E preferred stock is February 2017 and May 2018, respectively. |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities: | ||
Earnings including noncontrolling interests | $ 122,609 | $ 100,229 |
Adjustments to reconcile earnings including noncontrolling interests to net cash provided by operating activities: | ||
Depreciation and amortization | 71,144 | 66,343 |
Impairment losses – real estate and other charges, net of recoveries | 6,031 | 3,714 |
Impairment – commercial mortgage residual interests valuation | 852 | 428 |
Amortization of notes payable discount | 683 | 639 |
Amortization of debt costs | 1,513 | 1,423 |
Amortization of mortgages payable premium | (89) | (104) |
Amortization of deferred interest rate hedges | 1,402 | 832 |
Gain on disposition of real estate | (18,053) | (7,260) |
Performance incentive plan expense | 5,804 | 4,968 |
Performance incentive plan payment | (581) | (676) |
Change in operating assets and liabilities, net of assets acquired and liabilities assumed in business combinations: | ||
Decrease in real estate leased to others using the direct financing method | 692 | 676 |
Decrease in mortgages, notes and accrued interest receivable | 25 | 71 |
Decrease in receivables | 1,139 | 1,235 |
Increase in accrued rental income | (157) | (18) |
Decrease (increase) in other assets | 136 | (964) |
Increase (decrease) in accrued interest payable | (975) | 52 |
Decrease in other liabilities | (3,971) | (3,528) |
Other | (556) | (231) |
Net cash provided by operating activities | 187,648 | 167,829 |
Cash flows from investing activities: | ||
Proceeds from the disposition of real estate | 73,066 | 24,904 |
Transfers from restricted cash and cash held in escrow | 359 | 0 |
Additions to real estate: | ||
Accounted for using the operating method | (485,573) | (284,612) |
Principal payments on mortgages and notes receivable | 123 | 876 |
Other | (1,812) | (1,114) |
Net cash used in investing activities | (413,837) | (259,946) |
Cash flows from financing activities: | ||
Proceeds from line of credit payable | 598,500 | 679,800 |
Repayment of line of credit payable | (451,200) | (552,300) |
Repayment of mortgages payable | (6,990) | (1,126) |
Payment of debt costs | (159) | (75) |
Proceeds from issuance of common stock | 219,448 | 88,694 |
Stock issuance costs | (3,379) | (1,623) |
Payment of common stock dividends | (123,602) | (111,400) |
Noncontrolling interest distributions | 0 | (292) |
Net cash provided by financing activities | 214,901 | 83,961 |
Net decrease in cash and cash equivalents | (11,288) | (8,156) |
Cash and cash equivalents at beginning of period | 13,659 | 10,604 |
Cash and cash equivalents at end of period | 2,371 | 2,448 |
Supplemental disclosure of cash flow information: | ||
Interest paid, net of amount capitalized | 45,960 | 41,570 |
Taxes paid | 0 | 196 |
Supplemental disclosure of noncash investing and financing activities: | ||
Issued 278,671 and 274,693 shares of restricted and unrestricted common stock in 2016 and 2015, respectively, pursuant to NNN’s performance incentive plan | 11,004 | 8,594 |
Change in other comprehensive income | 2,374 | 374 |
Mortgage receivable accepted in connection with real estate transactions | 0 | 500 |
Change in lease classification (direct financing lease to operating lease) | 0 | 311 |
Series D Depositary Share | ||
Cash flows from financing activities: | ||
Payment of Series D and Series E preferred stock dividends | (9,523) | (9,523) |
Series E Depositary Share | ||
Cash flows from financing activities: | ||
Payment of Series D and Series E preferred stock dividends | $ (8,194) | $ (8,194) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Parenthetical) - shares | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Statement of Cash Flows [Abstract] | ||
Issued shares of restricted and unrestricted common stock, pursuant to NNN’s performance incentive plan | 278,671 | 274,693 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies: Organization and Nature of Business – National Retail Properties, Inc., a Maryland corporation, is a fully integrated real estate investment trust (“REIT”) formed in 1984. The terms "NNN" and the "Company" refer to National Retail Properties, Inc. and all of its consolidated subsidiaries. NNN may elect to treat certain subsidiaries as taxable REIT subsidiaries. These taxable subsidiaries and their majority owned and controlled subsidiaries are collectively referred to as the "TRS." At the close of business on December 31, 2015, NNN elected to revoke its TRS election ("TRS Revocation"). NNN's assets include: real estate, mortgages and notes receivable, and commercial mortgage residual interests. NNN acquires, owns, invests in and develops properties that are leased primarily to retail tenants under long-term net leases and primarily held for investment ("Properties", "Property Portfolio", or individually a "Property") . June 30, 2016 Property Portfolio: Total properties 2,452 Gross leasable area (square feet) 26,326,000 States 48 Weighted average remaining lease term (years) 11.4 The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles ("GAAP"). The unaudited condensed consolidated financial statements reflect all adjustments (including normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. Operating results for the quarter and six months ended June 30, 2016 , may not be indicative of the results that may be expected for the year ending December 31, 2016 . Amounts as of December 31, 2015 , included in the condensed consolidated financial statements have been derived from the audited consolidated financial statements as of that date. The unaudited condensed consolidated financial statements, included herein, should be read in conjunction with the consolidated financial statements and notes thereto as well as Management's Discussion and Analysis of Financial Condition and Results of Operations in NNN's Form 10-K for the year ended December 31, 2015 . Principles of Consolidation – NNN’s condensed consolidated financial statements include the accounts of each of the Company's respective majority owned and controlled affiliates, including transactions whereby NNN has been determined to be the primary beneficiary in accordance with the Financial Accounting Standards Board (“FASB”) guidance included in Consolidation. All significant intercompany account balances and transactions have been eliminated. Real Estate Portfolio – NNN records the acquisition of real estate which is not subject to a lease at cost, including acquisition and closing costs. The cost of properties developed by NNN includes direct and indirect costs of construction, property taxes, interest and other miscellaneous costs incurred during the development period until the project is substantially complete and available for occupancy. NNN recorded $827,000 and $948,000 in capitalized interest during the development period for the six months ended June 30, 2016 and 2015 , respectively, of which $316,000 and $558,000 was recorded during the quarters ended June 30, 2016 and 2015 , respectively. Purchase Accounting for Acquisition of Real Estate Subject to a Lease – In accordance with the FASB guidance on business combinations, the fair value of the real estate acquired with in-place leases is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases, based on their respective fair values. Acquisition costs incurred in connection with a business combination are expensed when incurred. The fair value of the tangible assets of an acquired leased property is determined by valuing the property as if it were vacant, and the "as-if-vacant" value is then allocated to land, building and tenant improvements based on the determination of their fair values. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases, and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease and the applicable option terms if it is probable that the tenant will exercise options. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term unless the Company believes that it is likely that the tenant will renew the lease for an option term whereby the Company amortizes the value attributable to the renewal over the renewal period. The aggregate value of other acquired intangible assets, consisting of in-place leases, is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as-if-vacant, determined as set forth above. The value of in-place leases exclusive of the value of above-market and below-market in-place leases is amortized to expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off. The value of tenant relationships is reviewed on individual transactions to determine if future value was derived from the acquisition. Intangible assets and liabilities consisted of the following as of (dollars in thousands): June 30, 2016 December 31, 2015 Intangible lease assets (included in Other assets): Value of above market in-place leases, net $ 10,231 $ 10,883 Value of in-place leases, net 59,611 61,359 Intangible lease liabilities (included in Other liabilities): Value of below market in-place leases, net 24,009 25,767 Cash and Cash Equivalents – NNN considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents consist of demand deposits and money market accounts and are stated at cost plus accrued interest, which approximates fair value. Cash accounts maintained on behalf of NNN in demand deposits at commercial banks and money market funds may exceed federally insured levels or may be held in accounts without any federal insurance or any other insurance or guarantee. However, NNN has not experienced any losses in such accounts. Restricted Cash and Cash Held in Escrow – Restricted cash and cash held in escrow include (i) cash proceeds from the sale of assets held by qualified intermediaries in anticipation of the acquisition of replacement properties in tax-free exchanges under Section 1031 of the Internal Revenue Code, (ii) cash that has been placed in escrow for the future funding of construction commitments, or (iii) cash that is not immediately available to NNN. As of June 30, 2016 and December 31, 2015 , NNN held $242,000 and $601,000 , respectively, in escrow and other restricted accounts. Valuation of Receivables – NNN estimates the collectability of its accounts receivable related to rents, expense reimbursements and other revenues. NNN analyzes accounts receivable and historical bad debt levels, tenant credit-worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. In addition, tenants in bankruptcy are analyzed and estimates are made in connection with the expected recovery of pre-petition and post-petition claims. Debt Costs – In April 2015, the FASB issued Accounting Standards Update ("ASU") 2015-03, "Interest – Imputation of Interest (Subtopic 835-30)." To simplify presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. NNN adopted ASU 2015-03 in 2015. Debt Costs – Line of Credit Payable – Debt costs incurred in connection with NNN’s $650,000,000 line of credit have been deferred and are being amortized over the term of the loan commitment using the straight-line method, which approximates the effective interest method. In accordance with ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated With Line-of-Credit Arrangements,” NNN has recorded debt costs associated with the line of credit as an asset, in Debt Costs on the Consolidated Balance Sheets. Debt Costs – Mortgages Payable – Debt costs incurred in connection with NNN’s mortgages payable have been deferred and are being amortized over the term of the respective loan commitment using the straight-line method, which approximates the effective interest method. These costs of $226,000 at June 30, 2016 and December 31, 2015 , are included in Mortgages Payable on the Consolidated Balance Sheets net of accumulated amortization of $108,000 and $93,000 , respectively. Debt Costs – Notes Payable – Debt costs incurred in connection with the issuance of NNN’s notes payable have been deferred and are being amortized to interest expense over the term of the respective debt obligation using the effective interest method. These costs of $17,782,000 at June 30, 2016 and December 31, 2015 , are included in Notes Payable on the Consolidated Balance Sheets net of accumulated amortization of $5,521,000 and $4,704,000 , respectively. Earnings Per Share – Earnings per share have been computed pursuant to the FASB guidance included in Earnings Per Share . The guidance requires classification of the Company’s unvested restricted share units, which carry rights to receive nonforfeitable dividends, as participating securities requiring the two-class method of computing earnings per share. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average shares outstanding during the period. The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted earnings per common share using the two-class method (dollars in thousands): Quarter Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Basic and Diluted Earnings: Net earnings attributable to NNN $ 51,942 $ 46,188 $ 122,625 $ 100,167 Less: Series D preferred stock dividends (4,762 ) (4,762 ) (9,523 ) (9,523 ) Less: Series E preferred stock dividends (4,096 ) (4,096 ) (8,194 ) (8,194 ) Net earnings available to NNN’s common stockholders 43,084 37,330 104,908 82,450 Less: Earnings allocated to unvested restricted shares (177 ) (176 ) (326 ) (340 ) Net earnings used in basic and diluted earnings per share $ 42,907 $ 37,154 $ 104,582 $ 82,110 Basic and Diluted Weighted Average Shares Outstanding: Weighted average number of shares outstanding 144,315,093 134,163,959 142,946,299 133,313,523 Less: Unvested restricted stock (406,170 ) (420,417 ) (374,701 ) (404,463 ) Less: Unvested contingent shares (465,548 ) (476,250 ) (429,608 ) (438,360 ) Weighted average number of shares outstanding used in basic earnings per share 143,443,375 133,267,292 142,141,990 132,470,700 Other dilutive securities 533,337 333,364 551,795 354,100 Weighted average number of shares outstanding used in diluted earnings per share 143,976,712 133,600,656 142,693,785 132,824,800 Fair Value Measurement – NNN’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The guidance describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels: • Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities. • Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques. Accumulated Other Comprehensive Income (Loss) – The following table outlines the changes in accumulated other comprehensive income (loss) (dollars in thousands): Gains or Losses on Cash Flow Hedges (1) Gains and Losses on Commercial Mortgage Residual Interests (2) Gains and Losses on Available-for-Sale Securities Total Beginning balance, December 31, 2015 $ (25,046 ) $ 4,454 $ 240 $ (20,352 ) Other comprehensive income (loss) 312 (182 ) 553 683 Reclassifications from accumulated other comprehensive income to net earnings 1,402 (3) 289 (4) — 1,691 Net current period other comprehensive income 1,714 107 553 2,374 Ending balance, June 30, 2016 $ (23,332 ) $ 4,561 $ 793 $ (17,978 ) (1) Additional disclosure is included in Note 6 – Derivatives. (2) Additional disclosure is included in Note 7 – Fair Value Measurements. (3) Reclassifications out of other comprehensive income (loss) are recorded in Interest Expense on the Condensed Consolidated Statements of Income and Comprehensive Income. There is no income tax expense (benefit) resulting from this reclassification. (4) Reclassifications out of other comprehensive income are recorded in Impairment on the Condensed Consolidated Statements of Income and Comprehensive Income. There is no income tax expense (benefit) resulting from this reclassification. New Accounting Pronouncements – In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The core principle of ASU 2014-09, is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Certain contracts are excluded from ASU 2014-09, including lease contracts within the scope of the FASB guidance included in Leases . In March 2016, the FASB issued ASU 2016-08 as an update to ASU 2014-09. ASU 2016-08, "Revenue from Contracts with customers (Topic 606) - Principal versus Agent Considerations (Reporting Gross Versus Net)," clarifies the implementation guidance on principal versus agent considerations included within the scope of ASU 2014-09. NNN is currently evaluating to determine the potential impact, if any, the adoption of ASU 2014-09 and ASU 2016-08 will have on its financial position and results of operations. In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities," effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The adoption of ASU 2016-01 will not have an impact on NNN's financial position or results of operations. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The FASB issued final guidance that requires lessees to put most leases on their balance sheets but recognize expenses in the income statement in a manner similar to today’s accounting. The guidance also eliminates today’s real estate-specific provisions and changes the guidance on sale-leaseback transactions, initial direct costs and lease executory costs for all entities. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. NNN is currently evaluating to determine the potential impact the adoption of ASU 2016-02 will have on NNN's financial position or results of operations. In March 2016, the FASB issued ASU 2016-06, "Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments." The update is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The update clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. NNN is currently evaluating to determine the potential impact, if any, the adoption of ASU 2016-06 will have on NNN's financial position or results of operations. In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718)," effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. NNN is currently evaluating to determine the potential impact, if any, the adoption of ASU 2016-09 will have on NNN's financial position or results of operations. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. NNN is currently evaluating to determine the potential impact, if any, the adoption of ASU 2016-13 will have on NNN's financial position or results of operations. Use of Estimates – Management of NNN has made a number of estimates and assumptions relating to the reporting of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in conformity with GAAP. Significant estimates include provisions for impairment and allowances for certain assets, accruals, useful lives of assets and purchase price allocation. Actual results could differ from those estimates. Reclassification – Certain items in the prior year’s consolidated financial statements and notes to consolidated financial statements have been reclassified to conform to the 2016 presentation. |
Real Estate
Real Estate | 6 Months Ended |
Jun. 30, 2016 | |
Real Estate [Abstract] | |
Real Estate | Real Estate: Real Estate – Portfolio Leases – The following outlines key information for NNN’s leases: June 30, 2016 Lease classification: Operating 2,485 Direct financing 10 Building portion – direct financing/land portion – operating 2 Weighted average remaining lease term (years) 11.4 The leases generally provide for limited increases in rent as a result of fixed increases, increases in the consumer price index, and/or increases in the tenant’s sales volume. Generally, the tenant is also required to pay all property taxes and assessments, substantially maintain the Property and carry property and liability insurance coverage. Certain of the Properties are subject to leases under which NNN retains responsibility for specific costs and expenses of the Property. Generally, the leases provide the tenant with one or more multi-year renewal options subject to generally the same terms and conditions of the base term of the lease, including rent increases. Real Estate Portfolio – Accounted for Using the Operating Method – Real estate subject to operating leases consisted of the following as of (dollars in thousands): June 30, 2016 December 31, 2015 Land and improvements $ 2,041,642 $ 1,921,657 Buildings and improvements 4,237,019 3,888,656 Leasehold interests 4,565 1,290 6,283,226 5,811,603 Less accumulated depreciation and amortization (677,671 ) (619,446 ) 5,605,555 5,192,157 Work in progress 24,562 61,354 $ 5,630,117 $ 5,253,511 Real Estate – Held For Sale On a quarterly basis, the Company evaluates its Properties for held for sale classification based on specific criteria as outlined in ASC 360, Property, Plant & Equipment, including management’s intent to commit to sell the asset. As of June 30, 2016 , NNN had four Properties categorized as held for sale. NNN anticipates the disposition of these Properties to occur within 12 months . NNN's real estate held for sale at December 31, 2015 , included nine Properties, five of which were sold in 2016. Real estate held for sale consisted of the following as of (dollars in thousands): June 30, 2016 December 31, 2015 Land and improvements $ 1,597 $ 10,342 Building and improvements 2,583 30,464 4,180 40,806 Less accumulated depreciation and amortization (778 ) (5,161 ) Less impairment (340 ) (216 ) $ 3,062 $ 35,429 Real Estate – Dispositions The following table summarizes the number of Properties sold and the corresponding gain recognized on the disposition of Properties (dollars in thousands): Quarter Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 # of Sold Properties Gain # of Sold Properties Gain # of Sold Properties Gain # of Sold Properties Gain Gain on disposition of real estate 7 $ 1,178 3 $ 30 17 $ 18,053 9 $ 7,260 Income tax expense — — — (30 ) $ 1,178 $ 30 $ 18,053 $ 7,230 Real Estate – Commitments NNN has agreed to fund construction commitments on leased Properties. The improvements are estimated to be completed within 12 months . These construction commitments, as of June 30, 2016 , are outlined in the table below (dollars in thousands): Number of properties 21 Total commitment (1) $ 80,825 Amount funded $ 44,205 Remaining commitment $ 36,620 (1) Includes land, construction costs, tenant improvements and lease costs. Real Estate – Impairments Management periodically assesses its real estate for possible impairment whenever certain events or changes in circumstances indicate that the carrying amount of the asset, including accrued rental income, may not be recoverable through operations. Events or circumstances that may occur include significant changes in real estate market conditions and the ability of NNN to re-lease or sell properties that are vacant or become vacant in a reasonable period of time. Impairments are measured as the amount by which the current book value of the asset exceeds the estimated fair value of the asset. As a result of the Company's review of long lived assets, including identifiable intangible assets, NNN recognized real estate impairments, net of recoveries of $2,762,000 and $3,714,000 for the six months ended June 30, 2016 and 2015 , respectively, of which $2,190,000 and $2,686,000 was recorded during the quarters ended June 30, 2016 and 2015 , respectively. The valuation of impaired assets is determined using widely accepted valuation techniques including discounted cash flow analysis, income capitalization, analysis of recent comparable sales transactions, actual sales negotiations and bona fide purchase offers received from third parties, which are Level 3 inputs. NNN may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate. |
Line of Credit Payable
Line of Credit Payable | 6 Months Ended |
Jun. 30, 2016 | |
Debt Disclosure [Abstract] | |
Line of Credit Payable | Line of Credit Payable : NNN's $650,000,000 revolving credit facility (the “Credit Facility”) had a weighted average outstanding balance of $45,202,000 and a weighted average interest rate of 1.4% during the six months ended June 30, 2016 . The Credit Facility matures January 2019, unless the Company exercises its option to extend maturity to January 2020. The Credit Facility bears interest at LIBOR plus 92.5 basis points; however, such interest rate may change pursuant to a tiered interest rate structure based on NNN's debt rating. The Credit Facility also includes an accordion feature to increase the facility size up to $1,000,000,000 , subject to lender approval. As of June 30, 2016 , $147,300,000 was outstanding and $502,700,000 was available for future borrowings under the Credit Facility, excluding undrawn letters of credit totaling $230,000 . |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity : In February 2015, NNN filed a shelf registration statement with the Securities and Exchange Commission (the "Commission") which permits the issuance by NNN of an indeterminate amount of debt and equity securities. Dividend Reinvestment and Stock Repurchase Plan – In February 2015, NNN filed a shelf registration statement with the Commission for its Dividend Reinvestment and Stock Purchase Plan ("DRIP") which permits the issuance by NNN of up to 16,000,000 shares of common stock. The following table outlines the common stock issuances pursuant to NNN's DRIP (dollars in thousands): Six Months Ended June 30, 2016 2015 Shares of common stock 149,543 82,271 Net proceeds $ 6,609 $ 3,019 At-The-Market Offerings – NNN has established an at-the-market equity program ("ATM") which allows NNN to sell shares of common stock from time to time. The following outlines NNN's ATM programs: 2016 ATM 2015 ATM 2013 ATM Established date March 2016 February 2015 March 2013 Termination date March 2019 March 2016 February 2015 Total allowable shares 12,000,000 10,000,000 9,000,000 Total shares issued as of June 30, 2016 3,120,490 9,852,465 6,252,812 The following table outlines the common stock issuances pursuant to NNN's ATM equity programs (dollars in thousands, except per share data): Six Months Ended June 30, 2016 2015 Shares of common stock 4,613,422 2,124,873 Average price per share (net) $ 45.46 $ 39.71 Net proceeds $ 209,722 $ 84,382 Stock issuance costs (1) $ 3,379 $ 1,442 (1) Stock issuance costs consist primarily of underwriters' fees and commissions, and legal and accounting fees. Dividends – The following table outlines the dividends declared and paid for each issuance of NNN's stock (dollars in thousands, except per share data): Quarter Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Series D preferred stock (1) : Dividends $ 4,762 $ 4,762 $ 9,523 $ 9,523 Per depositary share 0.414063 0.414063 0.828125 0.828125 Series E preferred stock (1) : Dividends 4,096 4,096 8,194 8,194 Per depositary share 0.356250 0.356250 0.712500 0.712500 Common stock: Dividends 62,451 56,086 123,602 111,400 Per share 0.435 0.420 0.870 0.840 (1) The Series D and E preferred stock have no maturity date and will remain outstanding unless redeemed. The earliest redemption date for the Series D and Series E preferred stock is February 2017 and May 2018, respectively. In July 2016 , NNN declared a dividend of $0.455 per share, which is payable in August 2016 to its common stockholders of record as of July 29, 2016 . |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes : NNN has elected to be taxed as a REIT under the Internal Revenue Code (“Code”), commencing with its taxable year ended December 31, 1984. To qualify as a REIT, NNN must meet a number of organizational and operational requirements, including a requirement that it currently distribute at least 90% of its REIT taxable income to its stockholders. NNN intends to adhere to these requirements and maintain its REIT status. As a REIT, NNN generally will not be subject to corporate level federal income tax on taxable income that it distributes currently to its stockholders. NNN may be subject to certain state and local taxes on its income and property, and to federal income and excise taxes on its undistributed taxable income, if any. The provision for federal income taxes in NNN's consolidated financial statements relates to its TRS operations and any potential taxable built-in gain. NNN did not have significant tax provisions or deferred income tax items during the periods reported hereunder. At the close of business on December 31, 2015, NNN elected to revoke its TRS election. NNN, in accordance with FASB guidance included in Income Taxes , has analyzed its various federal and state tax filing positions. NNN believes that its income tax filing positions and deductions are well documented and supported. Additionally, NNN believes that its accruals for tax liabilities are adequate. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to the FASB guidance. NNN has had no increases or decreases in unrecognized tax benefits for current or prior years. Further, no interest or penalties have been included since no reserves were recorded and no significant increases or decreases are expected to occur within the next 12 months. When applicable, such interest and penalties will be recorded as non-operating expenses. The periods that remain open under federal statute are 2012 through 2016. NNN also files tax returns in many states with varying open years under statute. |
Derivatives
Derivatives | 6 Months Ended |
Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives : In accordance with the guidance on derivatives and hedging, NNN records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. NNN’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, NNN primarily uses treasury locks, forward swaps and interest rate swaps as part of its cash flow hedging strategy. Treasury locks and forward starting swaps are used to hedge forecasted debt issuances. Treasury locks designated as cash flow hedges lock in the yield/price of a treasury security. Forward swaps also lock the associated swap spread. Interest rate swaps designated as cash flow hedges hedging the variable cash flows associated with floating rate debt involve the receipt of variable rate amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amount. For derivatives designated as cash flow hedges, the effective portion of changes in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings, and the ineffective portion of changes in the fair value of the derivative is recognized directly in earnings. NNN discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the cash flows of the hedged item, the derivative expires or is sold, terminated, or exercised, the derivative is re-designated as a hedging instrument or management determines that designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, NNN continues to carry the derivative at its fair value on the balance sheet, and recognizes any changes in its fair value in earnings or may choose to cash settle the derivative at that time. The following table outlines NNN's derivatives which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt (dollars in thousands): Terminated Description Aggregate Notional Amount Liability Fair Value When Terminated Fair Value Deferred In Other Comprehensive Income (1) September 2007 Two interest rate hedges $ 100,000 $ 3,260 $ 3,228 June 2011 Two treasury locks 150,000 5,300 5,218 April 2013 Four forward starting swaps 240,000 3,156 3,141 May 2014 Three forward starting swaps 225,000 6,312 6,312 October 2015 Four forward starting swaps 300,000 13,369 13,369 (1) The amount reported in accumulated other comprehensive income will be reclassified to interest expense as interest payments are made on the related notes payable. As of June 30, 2016 , $23,644,000 remained in other comprehensive income related to the effective portion of NNN’s previous terminated interest rate hedges. During the six months ended June 30, 2016 and 2015 , NNN reclassified out of other comprehensive income $1,402,000 and $832,000 , respectively, as an increase in interest expense. Over the next 12 months, NNN estimates that an additional $2,933,000 will be reclassified as an increase in interest expense. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on NNN’s long-term debt. During the quarter ended June 30, 2016, NNN entered into two forward starting swaps with a total notional amount of $180,000,000 to hedge the risk of changes in the interest-related cash outflows associated with the potential issuance of long-term debt. The outstanding forward swaps were designated as cash flow hedges, and at June 30, 2016, have a fair value of $312,000 included in other assets and accumulated other comprehensive income (loss) on the condensed consolidated balance sheet. The fair value of the forward starting swaps was based on a Level 2 valuation. No hedge ineffectiveness was recognized during the quarter ended June 30, 2016. These derivative financial instruments were still outstanding as of June 30, 2016. NNN does not use derivatives for trading or speculative purposes or currently have any derivatives that are not designated as hedges. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements : NNN holds the commercial mortgage residual interests (“Residuals”) from seven securitizations. Each of the Residuals is recorded at estimated fair value. Unrealized gains and losses are reported as other comprehensive income in stockholders' equity and other than temporary losses as a result of a change in the timing or amount of estimated cash flows are recorded as an other than temporary valuation impairment. NNN currently values its Residuals using a projected discounted cash flow analysis based upon estimated prepayment speeds, expected loan losses and yield curves. These valuation inputs are generally considered unobservable; therefore, the Residuals are considered Level 3 financial assets. The table below presents a roll forward of the Residuals (dollars in thousands): Six Months Ended June 30, 2016 Balance at beginning of period $ 11,115 Total gains (losses) – realized/unrealized: Included in earnings (852 ) Included in other comprehensive income 107 Interest income on Residuals 901 Cash received from Residuals (691 ) Purchases, sales, issuances and settlements, net — Transfers in and/or out of Level 3 — Balance at end of period $ 10,580 Changes in gains (losses) included in earnings attributable to a change in unrealized gains (losses) relating to assets still held at the end of period $ 289 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2016 | |
Financial Instruments, Owned, at Fair Value [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments : NNN believes the carrying value of its Credit Facility approximates fair value based upon its nature, terms and variable interest rate. NNN believes that the carrying value of its cash and cash equivalents, mortgages, notes and other receivables, mortgages payable and other liabilities at June 30, 2016 and December 31, 2015 , approximate fair value based upon current market prices of comparable instruments (Level 1). At June 30, 2016 and December 31, 2015 , the fair value of NNN’s notes payable net of unamortized discount and excluding debt costs was $2,103,940,000 and $2,007,242,000 , respectively, based upon quoted market prices, which is a Level 1 valuation since NNN's debt is publicly traded. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events : NNN reviewed its subsequent events and transactions that have occurred after June 30, 2016 , the date of the condensed consolidated balance sheet. There were no reportable subsequent events or transactions. |
Organization and Summary of S16
Organization and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation – NNN’s condensed consolidated financial statements include the accounts of each of the Company's respective majority owned and controlled affiliates, including transactions whereby NNN has been determined to be the primary beneficiary in accordance with the Financial Accounting Standards Board (“FASB”) guidance included in Consolidation. All significant intercompany account balances and transactions have been eliminated. |
Real Estate Portfolio | Real Estate Portfolio – NNN records the acquisition of real estate which is not subject to a lease at cost, including acquisition and closing costs. The cost of properties developed by NNN includes direct and indirect costs of construction, property taxes, interest and other miscellaneous costs incurred during the development period until the project is substantially complete and available for occupancy. NNN recorded $827,000 and $948,000 in capitalized interest during the development period for the six months ended June 30, 2016 and 2015 , respectively, of which $316,000 and $558,000 was recorded during the quarters ended June 30, 2016 and 2015 , respectively. Purchase Accounting for Acquisition of Real Estate Subject to a Lease – In accordance with the FASB guidance on business combinations, the fair value of the real estate acquired with in-place leases is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and identified intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases, based on their respective fair values. Acquisition costs incurred in connection with a business combination are expensed when incurred. The fair value of the tangible assets of an acquired leased property is determined by valuing the property as if it were vacant, and the "as-if-vacant" value is then allocated to land, building and tenant improvements based on the determination of their fair values. In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases, and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease and the applicable option terms if it is probable that the tenant will exercise options. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term unless the Company believes that it is likely that the tenant will renew the lease for an option term whereby the Company amortizes the value attributable to the renewal over the renewal period. The aggregate value of other acquired intangible assets, consisting of in-place leases, is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as-if-vacant, determined as set forth above. The value of in-place leases exclusive of the value of above-market and below-market in-place leases is amortized to expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off. The value of tenant relationships is reviewed on individual transactions to determine if future value was derived from the acquisition. |
Cash and Cash Equivalents | Cash and Cash Equivalents – NNN considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash equivalents consist of demand deposits and money market accounts and are stated at cost plus accrued interest, which approximates fair value. Cash accounts maintained on behalf of NNN in demand deposits at commercial banks and money market funds may exceed federally insured levels or may be held in accounts without any federal insurance or any other insurance or guarantee. However, NNN has not experienced any losses in such accounts. |
Restricted Cash and Cash Held in Escrow | Restricted Cash and Cash Held in Escrow – Restricted cash and cash held in escrow include (i) cash proceeds from the sale of assets held by qualified intermediaries in anticipation of the acquisition of replacement properties in tax-free exchanges under Section 1031 of the Internal Revenue Code, (ii) cash that has been placed in escrow for the future funding of construction commitments, or (iii) cash that is not immediately available to NNN. |
Valuation of Receivables | Valuation of Receivables – NNN estimates the collectability of its accounts receivable related to rents, expense reimbursements and other revenues. NNN analyzes accounts receivable and historical bad debt levels, tenant credit-worthiness and current economic trends when evaluating the adequacy of the allowance for doubtful accounts. In addition, tenants in bankruptcy are analyzed and estimates are made in connection with the expected recovery of pre-petition and post-petition claims. |
Debt Costs | Debt Costs – In April 2015, the FASB issued Accounting Standards Update ("ASU") 2015-03, "Interest – Imputation of Interest (Subtopic 835-30)." To simplify presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. NNN adopted ASU 2015-03 in 2015. Debt Costs – Line of Credit Payable – Debt costs incurred in connection with NNN’s $650,000,000 line of credit have been deferred and are being amortized over the term of the loan commitment using the straight-line method, which approximates the effective interest method. In accordance with ASU 2015-15, “Presentation and Subsequent Measurement of Debt Issuance Costs Associated With Line-of-Credit Arrangements,” NNN has recorded debt costs associated with the line of credit as an asset, in Debt Costs on the Consolidated Balance Sheets. Debt Costs – Mortgages Payable – Debt costs incurred in connection with NNN’s mortgages payable have been deferred and are being amortized over the term of the respective loan commitment using the straight-line method, which approximates the effective interest method. These costs of $226,000 at June 30, 2016 and December 31, 2015 , are included in Mortgages Payable on the Consolidated Balance Sheets net of accumulated amortization of $108,000 and $93,000 , respectively. Debt Costs – Notes Payable – Debt costs incurred in connection with the issuance of NNN’s notes payable have been deferred and are being amortized to interest expense over the term of the respective debt obligation using the effective interest method. These costs of $17,782,000 at June 30, 2016 and December 31, 2015 , are included in Notes Payable on the Consolidated Balance Sheets net of accumulated amortization of $5,521,000 and $4,704,000 , respectively. |
Earnings Per Share | Earnings Per Share – Earnings per share have been computed pursuant to the FASB guidance included in Earnings Per Share . The guidance requires classification of the Company’s unvested restricted share units, which carry rights to receive nonforfeitable dividends, as participating securities requiring the two-class method of computing earnings per share. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average shares outstanding during the period. |
Fair Value Measurement | Fair Value Measurement – NNN’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The guidance describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels: • Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities. • Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. • Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques. |
New Accounting Pronouncements | New Accounting Pronouncements – In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606),” effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. The core principle of ASU 2014-09, is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Certain contracts are excluded from ASU 2014-09, including lease contracts within the scope of the FASB guidance included in Leases . In March 2016, the FASB issued ASU 2016-08 as an update to ASU 2014-09. ASU 2016-08, "Revenue from Contracts with customers (Topic 606) - Principal versus Agent Considerations (Reporting Gross Versus Net)," clarifies the implementation guidance on principal versus agent considerations included within the scope of ASU 2014-09. NNN is currently evaluating to determine the potential impact, if any, the adoption of ASU 2014-09 and ASU 2016-08 will have on its financial position and results of operations. In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities," effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The amendments in this update address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The adoption of ASU 2016-01 will not have an impact on NNN's financial position or results of operations. In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The FASB issued final guidance that requires lessees to put most leases on their balance sheets but recognize expenses in the income statement in a manner similar to today’s accounting. The guidance also eliminates today’s real estate-specific provisions and changes the guidance on sale-leaseback transactions, initial direct costs and lease executory costs for all entities. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. NNN is currently evaluating to determine the potential impact the adoption of ASU 2016-02 will have on NNN's financial position or results of operations. In March 2016, the FASB issued ASU 2016-06, "Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments." The update is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. The update clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. NNN is currently evaluating to determine the potential impact, if any, the adoption of ASU 2016-06 will have on NNN's financial position or results of operations. In March 2016, the FASB issued ASU 2016-09, "Compensation - Stock Compensation (Topic 718)," effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. NNN is currently evaluating to determine the potential impact, if any, the adoption of ASU 2016-09 will have on NNN's financial position or results of operations. In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendments in this update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. NNN is currently evaluating to determine the potential impact, if any, the adoption of ASU 2016-13 will have on NNN's financial position or results of operations. |
Use of Estimates | Use of Estimates – Management of NNN has made a number of estimates and assumptions relating to the reporting of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in conformity with GAAP. Significant estimates include provisions for impairment and allowances for certain assets, accruals, useful lives of assets and purchase price allocation. Actual results could differ from those estimates. |
Reclassification | Reclassification – Certain items in the prior year’s consolidated financial statements and notes to consolidated financial statements have been reclassified to conform to the 2016 presentation. |
Organization and Summary of S17
Organization and Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Summary of NNN's Investment Portfolio | NNN acquires, owns, invests in and develops properties that are leased primarily to retail tenants under long-term net leases and primarily held for investment ("Properties", "Property Portfolio", or individually a "Property") . June 30, 2016 Property Portfolio: Total properties 2,452 Gross leasable area (square feet) 26,326,000 States 48 Weighted average remaining lease term (years) 11.4 |
Intangible Assets and Liabilities | Intangible assets and liabilities consisted of the following as of (dollars in thousands): June 30, 2016 December 31, 2015 Intangible lease assets (included in Other assets): Value of above market in-place leases, net $ 10,231 $ 10,883 Value of in-place leases, net 59,611 61,359 Intangible lease liabilities (included in Other liabilities): Value of below market in-place leases, net 24,009 25,767 |
Computation of Basic and Diluted Earnings Per Share | The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted earnings per common share using the two-class method (dollars in thousands): Quarter Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Basic and Diluted Earnings: Net earnings attributable to NNN $ 51,942 $ 46,188 $ 122,625 $ 100,167 Less: Series D preferred stock dividends (4,762 ) (4,762 ) (9,523 ) (9,523 ) Less: Series E preferred stock dividends (4,096 ) (4,096 ) (8,194 ) (8,194 ) Net earnings available to NNN’s common stockholders 43,084 37,330 104,908 82,450 Less: Earnings allocated to unvested restricted shares (177 ) (176 ) (326 ) (340 ) Net earnings used in basic and diluted earnings per share $ 42,907 $ 37,154 $ 104,582 $ 82,110 Basic and Diluted Weighted Average Shares Outstanding: Weighted average number of shares outstanding 144,315,093 134,163,959 142,946,299 133,313,523 Less: Unvested restricted stock (406,170 ) (420,417 ) (374,701 ) (404,463 ) Less: Unvested contingent shares (465,548 ) (476,250 ) (429,608 ) (438,360 ) Weighted average number of shares outstanding used in basic earnings per share 143,443,375 133,267,292 142,141,990 132,470,700 Other dilutive securities 533,337 333,364 551,795 354,100 Weighted average number of shares outstanding used in diluted earnings per share 143,976,712 133,600,656 142,693,785 132,824,800 |
Schedule of AOCI | The following table outlines the changes in accumulated other comprehensive income (loss) (dollars in thousands): Gains or Losses on Cash Flow Hedges (1) Gains and Losses on Commercial Mortgage Residual Interests (2) Gains and Losses on Available-for-Sale Securities Total Beginning balance, December 31, 2015 $ (25,046 ) $ 4,454 $ 240 $ (20,352 ) Other comprehensive income (loss) 312 (182 ) 553 683 Reclassifications from accumulated other comprehensive income to net earnings 1,402 (3) 289 (4) — 1,691 Net current period other comprehensive income 1,714 107 553 2,374 Ending balance, June 30, 2016 $ (23,332 ) $ 4,561 $ 793 $ (17,978 ) (1) Additional disclosure is included in Note 6 – Derivatives. (2) Additional disclosure is included in Note 7 – Fair Value Measurements. (3) Reclassifications out of other comprehensive income (loss) are recorded in Interest Expense on the Condensed Consolidated Statements of Income and Comprehensive Income. There is no income tax expense (benefit) resulting from this reclassification. (4) Reclassifications out of other comprehensive income are recorded in Impairment on the Condensed Consolidated Statements of Income and Comprehensive Income. There is no income tax expense (benefit) resulting from this reclassification. |
Real Estate (Tables)
Real Estate (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Real Estate [Abstract] | |
Classification of Investment Property Leases | The following outlines key information for NNN’s leases: June 30, 2016 Lease classification: Operating 2,485 Direct financing 10 Building portion – direct financing/land portion – operating 2 Weighted average remaining lease term (years) 11.4 |
Summary of Real Estate Subject to Operating Leases | Real estate subject to operating leases consisted of the following as of (dollars in thousands): June 30, 2016 December 31, 2015 Land and improvements $ 2,041,642 $ 1,921,657 Buildings and improvements 4,237,019 3,888,656 Leasehold interests 4,565 1,290 6,283,226 5,811,603 Less accumulated depreciation and amortization (677,671 ) (619,446 ) 5,605,555 5,192,157 Work in progress 24,562 61,354 $ 5,630,117 $ 5,253,511 |
Disclosure of Long Lived Assets Held-for-sale | Real estate held for sale consisted of the following as of (dollars in thousands): June 30, 2016 December 31, 2015 Land and improvements $ 1,597 $ 10,342 Building and improvements 2,583 30,464 4,180 40,806 Less accumulated depreciation and amortization (778 ) (5,161 ) Less impairment (340 ) (216 ) $ 3,062 $ 35,429 |
Disclosure of Long Lived Assets Held-for-sale, Gains Recognized | The following table summarizes the number of Properties sold and the corresponding gain recognized on the disposition of Properties (dollars in thousands): Quarter Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 # of Sold Properties Gain # of Sold Properties Gain # of Sold Properties Gain # of Sold Properties Gain Gain on disposition of real estate 7 $ 1,178 3 $ 30 17 $ 18,053 9 $ 7,260 Income tax expense — — — (30 ) $ 1,178 $ 30 $ 18,053 $ 7,230 |
Real Estate Funding Commitments | These construction commitments, as of June 30, 2016 , are outlined in the table below (dollars in thousands): Number of properties 21 Total commitment (1) $ 80,825 Amount funded $ 44,205 Remaining commitment $ 36,620 (1) Includes land, construction costs, tenant improvements and lease costs. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Equity [Abstract] | |
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award | The following table outlines the common stock issuances pursuant to NNN's DRIP (dollars in thousands): Six Months Ended June 30, 2016 2015 Shares of common stock 149,543 82,271 Net proceeds $ 6,609 $ 3,019 |
Schedule of ATM Program | The following outlines NNN's ATM programs: 2016 ATM 2015 ATM 2013 ATM Established date March 2016 February 2015 March 2013 Termination date March 2019 March 2016 February 2015 Total allowable shares 12,000,000 10,000,000 9,000,000 Total shares issued as of June 30, 2016 3,120,490 9,852,465 6,252,812 |
Schedule of Stock by Class | The following table outlines the common stock issuances pursuant to NNN's ATM equity programs (dollars in thousands, except per share data): Six Months Ended June 30, 2016 2015 Shares of common stock 4,613,422 2,124,873 Average price per share (net) $ 45.46 $ 39.71 Net proceeds $ 209,722 $ 84,382 Stock issuance costs (1) $ 3,379 $ 1,442 (1) Stock issuance costs consist primarily of underwriters' fees and commissions, and legal and accounting fees. |
Schedule of Dividends Declared and Paid | The following table outlines the dividends declared and paid for each issuance of NNN's stock (dollars in thousands, except per share data): Quarter Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Series D preferred stock (1) : Dividends $ 4,762 $ 4,762 $ 9,523 $ 9,523 Per depositary share 0.414063 0.414063 0.828125 0.828125 Series E preferred stock (1) : Dividends 4,096 4,096 8,194 8,194 Per depositary share 0.356250 0.356250 0.712500 0.712500 Common stock: Dividends 62,451 56,086 123,602 111,400 Per share 0.435 0.420 0.870 0.840 (1) The Series D and E preferred stock have no maturity date and will remain outstanding unless redeemed. The earliest redemption date for the Series D and Series E preferred stock is February 2017 and May 2018, respectively. |
Derivatives (Tables)
Derivatives (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The following table outlines NNN's derivatives which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt (dollars in thousands): Terminated Description Aggregate Notional Amount Liability Fair Value When Terminated Fair Value Deferred In Other Comprehensive Income (1) September 2007 Two interest rate hedges $ 100,000 $ 3,260 $ 3,228 June 2011 Two treasury locks 150,000 5,300 5,218 April 2013 Four forward starting swaps 240,000 3,156 3,141 May 2014 Three forward starting swaps 225,000 6,312 6,312 October 2015 Four forward starting swaps 300,000 13,369 13,369 (1) The amount reported in accumulated other comprehensive income will be reclassified to interest expense as interest payments are made on the related notes payable. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Fair Value Disclosures [Abstract] | |
Reconciliation of Residuals | The table below presents a roll forward of the Residuals (dollars in thousands): Six Months Ended June 30, 2016 Balance at beginning of period $ 11,115 Total gains (losses) – realized/unrealized: Included in earnings (852 ) Included in other comprehensive income 107 Interest income on Residuals 901 Cash received from Residuals (691 ) Purchases, sales, issuances and settlements, net — Transfers in and/or out of Level 3 — Balance at end of period $ 10,580 Changes in gains (losses) included in earnings attributable to a change in unrealized gains (losses) relating to assets still held at the end of period $ 289 |
Organization and Summary of S22
Organization and Summary of Significant Accounting Policies (Summary of NNN's Investment Portfolio) (Details) ft² in Thousands | 6 Months Ended |
Jun. 30, 2016ft²stateproperty | |
Property Portfolio: | |
Total properties | property | 2,452 |
Gross leasable area (square feet) | ft² | 26,326 |
States | state | 48 |
Weighted average remaining lease term (years) | 11 years 5 months |
Organization and Summary of S23
Organization and Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | |||||
Interest costs capitalized | $ 316,000 | $ 558,000 | $ 827,000 | $ 948,000 | |
Restricted cash and cash held in escrow | 242,000 | 242,000 | $ 601,000 | ||
Revolving credit facility borrowing capacity | 650,000,000 | 650,000,000 | |||
Mortgages [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt costs | 226,000 | 226,000 | 226,000 | ||
Debt costs accumulated amortization | 108,000 | 108,000 | 93,000 | ||
Notes Payable to Banks [Member] | |||||
Debt Instrument [Line Items] | |||||
Debt costs | 17,782,000 | 17,782,000 | 17,782,000 | ||
Debt costs accumulated amortization | $ 5,521,000 | $ 5,521,000 | $ 4,704,000 |
Organization and Summary of S24
Organization and Summary of Significant Accounting Policies (Gross Intangible Assets and Liabilities) (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Value of above market in-place leases, net | ||
Intangible lease assets (included in Other assets): | ||
Intangible lease assets (included in Other assets): | $ 10,231 | $ 10,883 |
Value of in-place leases, net | ||
Intangible lease assets (included in Other assets): | ||
Intangible lease assets (included in Other assets): | 59,611 | 61,359 |
Value of below market in-place leases, net | ||
Intangible lease liabilities (included in Other liabilities): | ||
Intangible lease liabilities (included in Other liabilities): | $ 24,009 | $ 25,767 |
Organization and Summary of S25
Organization and Summary of Significant Accounting Policies (Computation of Basic and Diluted Earnings per Share) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | ||
Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Line Items] | |||||
Net earnings attributable to NNN | $ 51,942 | $ 46,188 | $ 122,625 | $ 100,167 | |
Net earnings attributable to common stockholders | 43,084 | 37,330 | 104,908 | 82,450 | |
Less: Earnings allocated to unvested restricted shares | (177) | (176) | (326) | (340) | |
Net earnings used in basic and diluted earnings per share | $ 42,907 | $ 37,154 | $ 104,582 | $ 82,110 | |
Weighted average number of shares outstanding (in shares) | 144,315,093 | 134,163,959 | 142,946,299 | 133,313,523 | |
Less: Unvested restricted stock (in shares) | (406,170) | (420,417) | (374,701) | (404,463) | |
Less: Unvested contingent shares (in shares) | (465,548) | (476,250) | (429,608) | (438,360) | |
Weighted average number of shares outstanding used in basic earnings per share (in shares) | 143,443,375 | 133,267,292 | 142,141,990 | 132,470,700 | |
Other dilutive securities (in shares) | 533,337 | 333,364 | 551,795 | 354,100 | |
Weighted average number of shares outstanding used in diluted earnings per share (in shares) | 143,976,712 | 133,600,656 | 142,693,785 | 132,824,800 | |
Series D Preferred Stock | |||||
Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Line Items] | |||||
Less: preferred stock dividends | [1] | $ (4,762) | $ (4,762) | $ (9,523) | $ (9,523) |
Series E Preferred Stock | |||||
Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Line Items] | |||||
Less: preferred stock dividends | [1] | $ (4,096) | $ (4,096) | $ (8,194) | $ (8,194) |
[1] | The Series D and E preferred stock have no maturity date and will remain outstanding unless redeemed. The earliest redemption date for the Series D and Series E preferred stock is February 2017 and May 2018, respectively. |
Organization and Summary of S26
Organization and Summary of Significant Accounting Policies (Changes in AOCI) (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016USD ($) | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | $ 3,342,393 | |
Ending balance | 3,547,496 | |
Gains or Loss on Cash Flow Hedges | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (25,046) | [1] |
Other comprehensive income (loss) | 312 | [1] |
Reclassifications from accumulated other comprehensive income to net earnings | 1,402 | [1],[2] |
Net current period other comprehensive income | 1,714 | [1] |
Ending balance | (23,332) | [1] |
Gains and Losses on Commercial Mortgage Residual Interests | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | 4,454 | [3] |
Other comprehensive income (loss) | (182) | [3] |
Reclassifications from accumulated other comprehensive income to net earnings | 289 | [3],[4] |
Net current period other comprehensive income | 107 | [3] |
Ending balance | 4,561 | [3] |
Gains and Losses on Available-for-Sale Securities | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | 240 | |
Other comprehensive income (loss) | 553 | |
Reclassifications from accumulated other comprehensive income to net earnings | 0 | |
Net current period other comprehensive income | 553 | |
Ending balance | 793 | |
AOCI Attributable to Parent | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Beginning balance | (20,352) | |
Other comprehensive income (loss) | 683 | |
Reclassifications from accumulated other comprehensive income to net earnings | 1,691 | |
Net current period other comprehensive income | 2,374 | |
Ending balance | $ (17,978) | |
[1] | Additional disclosure is included in Note 6 – Derivatives. | |
[2] | Reclassifications out of other comprehensive income (loss) are recorded in Interest Expense on the Condensed Consolidated Statements of Income and Comprehensive Income. There is no income tax expense (benefit) resulting from this reclassification. | |
[3] | Additional disclosure is included in Note 7 – Fair Value Measurements. | |
[4] | Reclassifications out of other comprehensive income are recorded in Impairment on the Condensed Consolidated Statements of Income and Comprehensive Income. There is no income tax expense (benefit) resulting from this reclassification. |
Real Estate (Classification of
Real Estate (Classification of Investment Property Leases) (Details) | 6 Months Ended |
Jun. 30, 2016propertyoption | |
Lease classification: | |
Weighted average remaining lease term (years) | 11 years 5 months |
Number of renewal options, or more | option | 1 |
Operating | |
Lease classification: | |
Number of properties leased-operating | 2,485 |
Direct financing | |
Lease classification: | |
Number of properties leased-direct financing | 10 |
Building portion – direct financing/land portion – operating | |
Lease classification: | |
Number of properties leased-building portion-direct financing land portion-operating | 2 |
Real Estate (Summary of Real Es
Real Estate (Summary of Real Estate Subject to Operating Leases) (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Property Subject to or Available for Operating Lease [Line Items] | ||
Real estate subject to operating leases, gross | $ 6,283,226 | $ 5,811,603 |
Less accumulated depreciation and amortization | (677,671) | (619,446) |
Real estate subject to operating leases before work in process | 5,605,555 | 5,192,157 |
Accounted for using the operating method, net of accumulated depreciation and amortization | 5,630,117 | 5,253,511 |
Land and improvements | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Land and improvements | 2,041,642 | 1,921,657 |
Buildings and improvements | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Buildings and improvements | 4,237,019 | 3,888,656 |
Leasehold interests | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Leasehold interests | 4,565 | 1,290 |
Work in progress | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Work in progress | $ 24,562 | $ 61,354 |
Real Estate (Held for Sale) (De
Real Estate (Held for Sale) (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016USD ($)property | Dec. 31, 2015USD ($)property | |
Real Estate [Abstract] | ||
Number of properties classified as held for sale | property | 4 | 9 |
Period for disposal of properties classified as held for sale | 12 months | |
Number of properties sold | property | 5 | |
Land and improvements | $ 1,597 | $ 10,342 |
Building and improvements | 2,583 | 30,464 |
Real estate held-for-sale | 4,180 | 40,806 |
Less accumulated depreciation and amortization | (778) | (5,161) |
Less impairment | (340) | (216) |
Real estate held for sale | $ 3,062 | $ 35,429 |
Real Estate (Dispositions) (Det
Real Estate (Dispositions) (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016USD ($)property | Jun. 30, 2015USD ($)property | Jun. 30, 2016USD ($)property | Jun. 30, 2015USD ($)property | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Income tax expense | $ 0 | $ 495 | $ 0 | $ 54 |
Assets Held-for-sale | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Number of sold properties - gain on disposition of real estate | property | 7 | 3 | 17 | 9 |
Gain on disposition of real estate | $ 1,178 | $ 30 | $ 18,053 | $ 7,260 |
Income tax expense | 0 | 0 | 0 | (30) |
Gain on disposition of real estate, net of income tax expense | $ 1,178 | $ 30 | $ 18,053 | $ 7,230 |
Real Estate (Commitments) (Deta
Real Estate (Commitments) (Details) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016USD ($)property | ||
Real Estate [Abstract] | ||
Period for improvements to construction commitments | 12 months | |
Number of properties | property | 21 | |
Total commitment | $ 80,825 | [1] |
Amount funded | 44,205 | |
Remaining commitment | $ 36,620 | |
[1] | Includes land, construction costs, tenant improvements and lease costs. |
Real Estate (Impairments) (Deta
Real Estate (Impairments) (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Real Estate [Abstract] | ||||
Impairment losses – real estate and other charges, net of recoveries | $ 2,190,000 | $ 2,686,000 | $ 2,762,000 | $ 3,714,000 |
Line of Credit Payable (Details
Line of Credit Payable (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | |
Line of Credit Facility [Line Items] | ||
Revolving credit facility borrowing capacity | $ 650,000,000 | |
Revolving credit facility weighted average outstanding balance | $ 45,202,000 | |
Revolving credit facility weighted average interest rate | 1.40% | |
Option to increase facility size | $ 1,000,000,000 | |
Line of credit payable | 147,300,000 | $ 0 |
Line of credit facility available for future borrowings | 502,700,000 | |
Letter of Credit | ||
Line of Credit Facility [Line Items] | ||
Line of credit facility, undrawn letters of credit | $ 230,000 | |
Line of Credit | LIBOR | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 0.925% |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||||
Jul. 31, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | Feb. 28, 2015 | ||
Class of Stock [Line Items] | ||||||||
Total allowable shares (in shares) | 375,000,000 | 375,000,000 | 375,000,000 | |||||
Net proceeds | $ 219,448 | $ 88,694 | ||||||
Total shares issued (in shares) | 146,002,140 | 146,002,140 | 141,007,725 | |||||
Stock issuance costs | $ 3,379 | 1,623 | ||||||
Common stock dividends | $ 62,451 | $ 56,086 | $ 123,602 | $ 111,400 | ||||
Common stock per share (in dollars per share) | $ 0.435 | $ 0.42 | $ 0.87 | $ 0.840 | ||||
Subsequent Event | ||||||||
Class of Stock [Line Items] | ||||||||
Common stock, dividends, per share, declared (in dollars per share) | $ 0.455 | |||||||
Series D Preferred Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock dividends | [1] | $ 4,762 | $ 4,762 | $ 9,523 | $ 9,523 | |||
Preferred stock per share (in dollars per share) | [1] | $ 0.414063 | $ 0.414063 | $ 0.828125 | $ 0.828125 | |||
Series E Preferred Stock | ||||||||
Class of Stock [Line Items] | ||||||||
Preferred stock dividends | [1] | $ 4,096 | $ 4,096 | $ 8,194 | $ 8,194 | |||
Preferred stock per share (in dollars per share) | [1] | $ 0.356250 | $ 0.356250 | $ 0.712500 | $ 0.712500 | |||
DRIP | ||||||||
Class of Stock [Line Items] | ||||||||
Total allowable shares (in shares) | 16,000,000 | |||||||
Shares of common stock (in shares) | 149,543 | 82,271 | ||||||
Net proceeds | $ 6,609 | $ 3,019 | ||||||
2016 ATM | ||||||||
Class of Stock [Line Items] | ||||||||
Total allowable shares (in shares) | 12,000,000 | 12,000,000 | ||||||
Total shares issued (in shares) | 3,120,490 | 3,120,490 | ||||||
Shares of common stock (in shares) | 4,613,422 | |||||||
Average price per share (net) (in dollars per share) | $ 45.46 | |||||||
Net proceeds | $ 209,722 | |||||||
Stock issuance costs | $ 3,379 | |||||||
2015 ATM | ||||||||
Class of Stock [Line Items] | ||||||||
Total allowable shares (in shares) | 10,000,000 | 10,000,000 | ||||||
Total shares issued (in shares) | 9,852,465 | 9,852,465 | ||||||
Shares of common stock (in shares) | 2,124,873 | |||||||
Average price per share (net) (in dollars per share) | $ 39.71 | |||||||
Net proceeds | $ 84,382 | |||||||
Stock issuance costs | $ 1,442 | |||||||
2013 ATM | ||||||||
Class of Stock [Line Items] | ||||||||
Total allowable shares (in shares) | 9,000,000 | 9,000,000 | ||||||
Total shares issued (in shares) | 6,252,812 | 6,252,812 | ||||||
[1] | The Series D and E preferred stock have no maturity date and will remain outstanding unless redeemed. The earliest redemption date for the Series D and Series E preferred stock is February 2017 and May 2018, respectively. |
Derivatives (Details)
Derivatives (Details) | 6 Months Ended | ||||||||||
Jun. 30, 2016USD ($)derivative | Jun. 30, 2015USD ($) | Oct. 31, 2015USD ($)instrument | May 31, 2014USD ($)instrument | Apr. 30, 2013USD ($)instrument | Jun. 30, 2011USD ($)instrument | Sep. 30, 2007USD ($)instrument | |||||
Derivative [Line Items] | |||||||||||
Fair value of interest rate hedges recognized in other comprehensive income | $ 23,644,000 | ||||||||||
Interest expense | (1,402,000) | $ (832,000) | |||||||||
Interest rate hedges gain (loss) to be reclassified into interest expense over next 12 months | (2,933,000) | ||||||||||
Interest Rate Swap | |||||||||||
Derivative [Line Items] | |||||||||||
Aggregate Notional Amount | $ 100,000,000 | ||||||||||
Liability Fair Value When Terminated | 3,260,000 | ||||||||||
Fair Value Deferred In Other Comprehensive Income | [1] | $ 3,228,000 | |||||||||
Number of derivatives | instrument | 2 | ||||||||||
Treasury Lock | |||||||||||
Derivative [Line Items] | |||||||||||
Aggregate Notional Amount | $ 150,000,000 | ||||||||||
Liability Fair Value When Terminated | 5,300,000 | ||||||||||
Fair Value Deferred In Other Comprehensive Income | [1] | $ 5,218,000 | |||||||||
Number of derivatives | instrument | 2 | ||||||||||
Forward Swap | |||||||||||
Derivative [Line Items] | |||||||||||
Aggregate Notional Amount | 180,000,000 | $ 300,000,000 | $ 225,000,000 | $ 240,000,000 | |||||||
Liability Fair Value When Terminated | 13,369,000 | 6,312,000 | 3,156,000 | ||||||||
Fair Value Deferred In Other Comprehensive Income | $ 312,000 | $ 13,369,000 | [1] | $ 6,312,000 | [1] | $ 3,141,000 | [1] | ||||
Number of derivatives | 2 | 4 | 3 | 4 | |||||||
[1] | The amount reported in accumulated other comprehensive income will be reclassified to interest expense as interest payments are made on the related notes payable. |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016USD ($)securitization | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($)securitization | Jun. 30, 2015USD ($) | |
Fair Value Disclosures [Abstract] | ||||
Residual interests held from securitizations | securitization | 7 | 7 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||||
Balance at beginning of period | $ 11,115 | |||
Total gains (losses) – realized/unrealized: | ||||
Included in earnings | (852) | |||
Included in other comprehensive income | 107 | |||
Interest income on Residuals | $ 448 | $ 447 | 901 | $ 892 |
Cash received from Residuals | (691) | |||
Purchases, sales, issuances and settlements, net | 0 | |||
Transfers in and/or out of Level 3 | 0 | |||
Balance at end of period | $ 10,580 | 10,580 | ||
Changes in gains (losses) included in earnings attributable to a change in unrealized gains (losses) relating to assets still held at the end of period | $ 289 |
Fair Value of Financial Instr37
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Financial Instruments, Owned, at Fair Value [Abstract] | ||
Fair value of notes payable | $ 2,103,940 | $ 2,007,242 |