Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2020 | Apr. 29, 2020 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2020 | |
Document Transition Report | false | |
Entity File Number | 001-11290 | |
Entity Registrant Name | NATIONAL RETAIL PROPERTIES, INC. | |
Entity Central Index Key | 0000751364 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 56-1431377 | |
Entity Address, Address Line One | 450 South Orange Avenue, Suite 900 | |
Entity Address, City or Town | Orlando | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 32801 | |
City Area Code | 407 | |
Local Phone Number | 265-7348 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 171,964,151 | |
Common Stock, $0.01 par value | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | NNN | |
Security Exchange Name | NYSE | |
Depositary Shares, each representing one-hundredth of a share of 5.200% Series F Preferred Stock, $0.01 par value | ||
Entity Information [Line Items] | ||
Title of 12(b) Security | Depositary Shares, each representing one-hundredth of a share of 5.200% Series F Preferred Stock, $0.01 par value | |
Trading Symbol | NNN/PF | |
Security Exchange Name | NYSE |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Real estate portfolio: | ||
Accounted for using the operating method, net of accumulated depreciation and amortization | $ 7,285,236 | $ 7,286,217 |
Accounted for using the direct financing method | 4,143 | 4,204 |
Real estate held for sale | 4,498 | 10,818 |
Cash and cash equivalents | 217,383 | 1,112 |
Receivables, net of allowance of $506 | 4,214 | 2,874 |
Accrued rental income, net of allowance of $1,842 | 28,592 | 28,897 |
Debt costs, net of accumulated amortization of $15,939 and $15,574, respectively | 2,461 | 2,783 |
Other assets | 100,523 | 97,962 |
Total assets | 7,647,050 | 7,434,867 |
Liabilities: | ||
Long-term Line of Credit | 0 | 133,600 |
Mortgages payable, including unamortized premium and net of unamortized debt costs | 11,895 | 12,059 |
Notes payable, net of unamortized discount and unamortized debt costs | 3,206,563 | 2,842,698 |
Accrued interest payable | 41,698 | 18,250 |
Other liabilities | 85,959 | 96,578 |
Total liabilities | 3,346,115 | 3,103,185 |
Preferred stock, $0.01 par value. Authorized 15,000,000 shares | ||
Common stock, $0.01 par value. Authorized 375,000,000 shares; 171,963,354 and 171,694,209 shares issued and outstanding, respectively | 1,721 | 1,718 |
Capital in excess of par value | 4,499,255 | 4,495,314 |
Accumulated deficit | (526,684) | (499,229) |
Accumulated other comprehensive income (loss) | (18,362) | (11,128) |
Total stockholders’ equity of NNN | 4,300,930 | 4,331,675 |
Noncontrolling interests | 5 | 7 |
Total equity | 4,300,935 | 4,331,682 |
Total liabilities and equity | 7,647,050 | 7,434,867 |
5.200% Series F, 138,000 shares issued and outstanding, at stated liquidation value of $2,500 per share | ||
Preferred stock, $0.01 par value. Authorized 15,000,000 shares | ||
5.200% Series F, 138,000 shares issued and outstanding, at stated liquidation value of $2,500 per share | $ 345,000 | $ 345,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020 | Dec. 31, 2019 | |
Receivables allowance | $ 506 | $ 506 |
Accrued rental income allowance | 1,842 | 1,842 |
Debt costs accumulated amortization | $ 15,939 | $ 15,574 |
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) | 171,963,354 | 171,694,209 |
Common stock, shares outstanding (in shares) | 171,963,354 | 171,694,209 |
Series F Preferred Stock | ||
Dividend rate | 5.20% | 5.20% |
Preferred stock, shares issued (in shares) | 138,000 | 138,000 |
Preferred stock, shares outstanding (in shares) | 138,000 | 138,000 |
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 | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenues: | ||
Rental income | $ 174,547 | $ 163,026 |
Interest and other income from real estate transactions | 516 | 686 |
Total revenues | 175,063 | 163,712 |
Operating expenses: | ||
General and administrative | 10,100 | 9,521 |
Real estate | 7,635 | 7,093 |
Depreciation and amortization | 49,188 | 46,180 |
Leasing transaction costs | 36 | 52 |
Impairment losses – real estate, net of recoveries | 5,513 | 3,245 |
Total operating expenses | 72,472 | 66,091 |
Gain on disposition of real estate | 12,770 | 10,445 |
Earnings from operations | 115,361 | 108,066 |
Other expenses (revenues): | ||
Interest and other income | (164) | (1,924) |
Interest expense | 33,670 | 29,957 |
Loss on early extinguishment of debt | 16,679 | 0 |
Total other expenses (revenues) | 50,185 | 28,033 |
Net earnings | 65,176 | 80,033 |
Earnings attributable to noncontrolling interests | 2 | (10) |
Net earnings attributable to NNN | 65,178 | 80,023 |
Net earnings attributable to common stockholders | $ 60,693 | $ 71,441 |
Net earnings per share of common stock: | ||
Basic (in dollars per share) | $ 0.35 | $ 0.44 |
Diluted (in dollars per share) | $ 0.35 | $ 0.44 |
Weighted average number of common shares outstanding: | ||
Basic (in shares) | 171,039,017 | 161,105,315 |
Diluted (in shares) | 171,231,828 | 161,614,074 |
Other comprehensive income: | ||
Net earnings attributable to NNN | $ 65,178 | $ 80,023 |
Amortization of interest rate hedges | 383 | 323 |
Fair value of forward starting swaps | (7,617) | 0 |
Valuation adjustments – available-for-sale securities | 0 | 116 |
Realized gain – available-for-sale securities | 0 | (1,331) |
Comprehensive income attributable to NNN | 57,944 | 79,131 |
Series E Preferred Stock | ||
Other expenses (revenues): | ||
Dividends | 0 | (4,097) |
Series F Preferred Stock | ||
Other expenses (revenues): | ||
Dividends | $ (4,485) | $ (4,485) |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Total | Series E Preferred Stock | Series F Preferred Stock | Total Stockholders’ Equity | Total Stockholders’ EquitySeries E Preferred Stock | Total Stockholders’ EquitySeries F Preferred Stock | Preferred StockSeries E Preferred Stock | Preferred StockSeries F Preferred Stock | Common Stock | Capital in Excess of Par Value | Retained Earnings (Deficit) | Retained Earnings (Deficit)Series E Preferred Stock | Retained Earnings (Deficit)Series F Preferred Stock | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests |
Balance at Dec. 31, 2018 | $ 4,154,605 | $ 4,154,250 | $ 287,500 | $ 345,000 | $ 1,616 | $ 3,950,055 | $ (424,225) | $ (5,696) | $ 355 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net earnings | 80,033 | 80,023 | 80,023 | 10 | |||||||||||
Dividends declared and paid: | |||||||||||||||
Preferred stock dividends declared and paid | $ (4,097) | $ (4,485) | $ (4,097) | $ (4,485) | $ (4,097) | $ (4,485) | |||||||||
Common stock dividends declared and paid | (75,406) | (75,406) | 1 | 5,159 | (80,566) | ||||||||||
Issuance of common stock: | |||||||||||||||
Director compensation | 322 | 322 | 322 | ||||||||||||
Stock purchase plan | 119 | 119 | 119 | ||||||||||||
Restricted shares, net of forfeitures | 0 | 0 | 3 | (3) | |||||||||||
Stock issuance costs | (42) | (42) | (42) | ||||||||||||
Amortization of deferred compensation | 2,225 | 2,225 | 2,225 | ||||||||||||
Amortization of interest rate hedges | 323 | 323 | 323 | ||||||||||||
Fair value of forward starting swaps | 0 | ||||||||||||||
Valuation adjustments – available-for-sale securities | 116 | 116 | 116 | ||||||||||||
Realized gain – available-for-sale securities | (1,331) | (1,331) | (1,331) | ||||||||||||
Other | 505 | 505 | 505 | ||||||||||||
Balance at Mar. 31, 2019 | 4,152,887 | 4,152,522 | $ 287,500 | 345,000 | 1,620 | 3,957,835 | (432,845) | (6,588) | 365 | ||||||
Balance at Dec. 31, 2019 | 4,331,682 | 4,331,675 | 345,000 | 1,718 | 4,495,314 | (499,229) | (11,128) | 7 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net earnings | 65,176 | 65,178 | 65,178 | (2) | |||||||||||
Dividends declared and paid: | |||||||||||||||
Preferred stock dividends declared and paid | $ (4,485) | $ (4,485) | $ (4,485) | ||||||||||||
Common stock dividends declared and paid | (87,528) | (87,528) | 620 | (88,148) | |||||||||||
Issuance of common stock: | |||||||||||||||
Director compensation | 298 | 298 | 298 | ||||||||||||
Stock purchase plan | 76 | 76 | 76 | ||||||||||||
Restricted shares, net of forfeitures | 3 | (3) | |||||||||||||
Amortization of deferred compensation | 2,950 | 2,950 | 2,950 | ||||||||||||
Amortization of interest rate hedges | 383 | 383 | 383 | ||||||||||||
Fair value of forward starting swaps | (7,617) | (7,617) | (7,617) | ||||||||||||
Valuation adjustments – available-for-sale securities | 0 | ||||||||||||||
Realized gain – available-for-sale securities | 0 | ||||||||||||||
Balance at Mar. 31, 2020 | $ 4,300,935 | $ 4,300,930 | $ 345,000 | $ 1,721 | $ 4,499,255 | $ (526,684) | $ (18,362) | $ 5 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Dividends declared and paid: | ||
Common stock dividends (in dollars per share) | $ 0.515 | $ 0.50 |
Issuance of common stock: | ||
Director compensation (in shares) | 6,112 | 8,007 |
Stock purchase plan (in shares) | 1,477 | 2,324 |
Restricted shares, net of forfeitures (in shares) | 253,406 | 259,650 |
Series E Preferred Stock | ||
Dividends declared and paid: | ||
Preferred stock dividends (in dollars per share) | $ 0.356250 | |
Series F Preferred Stock | ||
Dividends declared and paid: | ||
Preferred stock dividends (in dollars per share) | $ 0.32500 | $ 0.32500 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | 3 Months Ended | |||
Mar. 31, 2020USD ($) | Mar. 31, 2019USD ($) | |||
Cash flows from operating activities: | ||||
Net earnings | $ 65,176,000 | $ 80,033,000 | ||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||
Depreciation and amortization | 49,188,000 | 46,180,000 | ||
Impairment losses – real estate, net of recoveries | 5,513,000 | 3,245,000 | ||
Loss on early extinguishment of debt | 16,679,000 | 0 | ||
Amortization of notes payable discount | 1,897,000 | 425,000 | ||
Amortization of debt costs | 1,816,000 | 920,000 | ||
Amortization of mortgages payable premium | (21,000) | (21,000) | ||
Amortization of interest rate hedges | 383,000 | 323,000 | ||
Settlement of forward starting swaps | (13,141,000) | 0 | ||
Gain on disposition of real estate | (12,770,000) | (10,445,000) | ||
Performance incentive plan expense | 3,078,000 | 2,787,000 | ||
Performance incentive plan payment | (846,000) | (775,000) | ||
Change in operating assets and liabilities, net of assets acquired and liabilities assumed: | ||||
Decrease in real estate leased to others using the direct financing method | 61,000 | 172,000 | ||
Decrease (increase) in receivables | (1,340,000) | 887,000 | ||
Increase in accrued rental income | (61,000) | (747,000) | ||
Decrease (increase) in other assets | 183,000 | (12,000) | ||
Increase in accrued interest payable | 23,448,000 | 27,937,000 | ||
Decrease in other liabilities | (11,299,000) | (7,315,000) | ||
Other | 140,000 | (218,000) | ||
Net cash provided by operating activities | 128,084,000 | 143,376,000 | ||
Cash flows from investing activities: | ||||
Proceeds from the disposition of real estate | 33,384,000 | 16,909,000 | ||
Additions to real estate: | ||||
Accounted for using the operating method | (64,197,000) | (112,130,000) | ||
Principal payments received on mortgages and notes receivable | 100,000 | 0 | ||
Other | 59,000 | 2,191,000 | ||
Net cash used in investing activities | (30,654,000) | (93,030,000) | ||
Cash flows from financing activities: | ||||
Proceeds from line of credit payable | 311,000,000 | 0 | ||
Repayment of line of credit payable | (444,600,000) | 0 | ||
Repayment of mortgages payable | (147,000) | (141,000) | ||
Proceeds from notes payable | 692,646,000 | 0 | ||
Repayment of notes payable | (325,000,000) | 0 | ||
Payment for early extinguishment of debt | (16,679,000) | 0 | ||
Payment of debt issuance costs | (6,397,000) | (40,000) | ||
Proceeds from issuance of common stock | 696,000 | 5,279,000 | ||
Stock issuance costs | (45,000) | (42,000) | ||
Payment of common stock dividends | (88,148,000) | (80,566,000) | ||
Net cash provided by (used in) financing activities | 118,841,000 | (84,092,000) | ||
Net increase (decrease) in cash, cash equivalents and restricted cash | 216,271,000 | (33,746,000) | ||
Cash, cash equivalents and restricted cash at beginning of period | 1,112,000 | [1] | 114,267,000 | [1] |
Cash, cash equivalents and restricted cash at end of period | 217,383,000 | [1] | 80,521,000 | [1] |
Supplemental disclosure of cash flow information: | ||||
Interest paid, net of amount capitalized | 6,613,000 | 499,000 | ||
Supplemental disclosure of noncash investing and financing activities: | ||||
Decrease in other comprehensive income | 7,234,000 | 892,000 | ||
Right-of-use assets recorded in connection with lease liabilities | 0 | 7,735,000 | ||
Work in progress accrual balance | 24,579,000 | 21,670,000 | ||
Mortgage receivable accepted in connection with real estate transactions | 3,000,000 | 3,100,000 | ||
Restricted cash and cash held in escrow | 0 | 0 | ||
Series E Preferred Stock | ||||
Cash flows from financing activities: | ||||
Payment of preferred stock dividends | 0 | (4,097,000) | ||
Series F Preferred Stock | ||||
Cash flows from financing activities: | ||||
Payment of preferred stock dividends | $ (4,485,000) | $ (4,485,000) | ||
[1] | Cash, cash equivalents and restricted cash is the aggregate of cash and cash equivalents and restricted cash and cash held in escrow from the Condensed Consolidated Balance Sheets. NNN had no restricted cash and cash held in escrow at March 31, 2020 and 2019 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
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" or the "Company" refer to National Retail Properties, Inc. and all of its consolidated subsidiaries. NNN's assets primarily include real estate assets. 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") . March 31, 2020 Property Portfolio: Total properties 3,125 Gross leasable area (square feet) 32,500,000 States 48 Weighted average remaining lease term (years) 11.1 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 ended March 31, 2020 , may not be indicative of the results that may be expected for the year ending December 31, 2020 . See "Footnote 8 – Subsequent Events." Amounts as of December 31, 2019 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, 2019 . Principles of Consolidation – NNN’s condensed consolidated financial statements include the accounts of each of the 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”) Accounting Standards Codifications ("ASC") guidance included in Consolidation. All significant intercompany account balances and transactions have been eliminated. Real Estate Portfolio – NNN records the acquisition of real estate at cost, including acquisition and closing costs. The cost of Properties developed or funded 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 $466,000 and $126,000 in capitalized interest during the development period for the quarter ended March 31, 2020 and 2019 , respectively. Purchase Accounting for Acquisition of Real Estate Subject to a Lease – In accordance with the FASB guidance on business combinations, consideration for the real estate acquired is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and, if applicable, to identified intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases, as applicable, based on their respective fair values. The fair value estimate is sensitive to significant assumptions, such as establishing a range of relevant market assumptions for land, building and rent and where the acquired property falls within that range. These market assumptions for land, building and rent use the most relevant comparable properties for an acquisition. The final range relies upon ranking comparable properties' attributes from most similar to least similar. The fair value of the tangible assets of an acquired 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 in that period. The value of tenant relationships is reviewed on individual transactions to determine if future value was derived from the acquisition. Lease Accounting – In accordance with FASB Accounting Standards Update ("ASU") 2016-02, "Leases (Topic 842)," ("ASC 842") NNN used the modified retrospective approach in which the cumulative effect of applying the new standard was recognized at the date of initial application with a positive adjustment to NNN’s opening balance of accumulated deficit. The modified retrospective approach provides a method for recording existing leases upon adoption, which in comparative periods approximates the results of a full retrospective approach. NNN elected the package of practical expedients permitted under the transition guidance (which included: (i) an entity need not reassess whether any expired or existing contracts are or contain leases, (ii) an entity need not reassess the lease classification for any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases), the land easement practical expedient to carry forward existing accounting treatment on existing land easements, and the lease and non-lease component combined practical expedient. 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 probable collection. At the point NNN deems the collection of lease payments not probable, a bad debt is recognized for any outstanding receivable and any related accrued rent and, subsequently, any lease revenue is only recognized when cash receipts are received. NNN recorded Right-Of-Use ("ROU") assets and operating lease liabilities of approximately $7,735,000 and $10,155,000 respectively, as of January 1, 2019. In April 2020, the FASB issued interpretive guidance relating to the accounting for lease concessions provided as a result of COVID-19. In this guidance, entities can elect not to apply lease modification accounting with respect to such lease concessions and instead, treat the concession as if it was a part of the existing contract. This guidance is only applicable to COVID-19 related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. NNN is currently evaluating the impact of this guidance and whether NNN will make this policy election for lease concessions such as rent deferrals for the quarter ended June 30, 2020. 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 $31,140,000 and $26,932,000 , as of March 31, 2020 and December 31, 2019, respectively, are included in notes payable on the Condensed Consolidated Balance Sheets net of accumulated amortization of $7,492,000 and $8,962,000 , respectively. Impairment – Real Estate – Based upon certain events or changes in circumstances, management periodically assesses its Properties for possible impairment whenever the carrying value 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 currently vacant or become vacant in a reasonable period of time. Management evaluates whether an impairment in carrying value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), and the residual value of the real estate, with the carrying value of the individual asset. The future undiscounted cash flows are primarily driven by estimated future market rents. If an impairment is indicated, a loss will be recorded for the amount by which the carrying value of the asset exceeds its estimated fair value. NNN's Properties are leased primarily to retail tenants under long-term net leases and primarily held for investment. Generally, NNN’s Property leases provide for initial terms of 10 to 20 years , which provide for cash flows over this term. NNN intends to hold these assets for the long-term, therefore, a temporary change in cash flows due to COVID-19 alone would not be an indicator of impairment. Credit Losses on Financial Instruments – Effective January 1, 2020, NNN adopted FASB ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326),” (“ASC 326”). 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. ASU 326 requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings. The new guidance requires a lifetime credit loss expected at inception and requires pooling of assets, which share similar risk characteristics. NNN is required to evaluate current economic conditions, as well as, make future expectations of economic conditions. In addition, the measurement of the expected credit loss is over the asset’s contractual term. During the quarter ended March 31, 2020, NNN recorded a mortgage receivable of $2,737,000 included in other assets on the Condensed Consolidated Balance Sheets, net of $174,000 allowance for credit loss. NNN measures the allowance for credit loss based on the fair value of the collateral and the historical collectability trend analysis over 15 years . Adoption of ASC 326 did not materially impact NNN’s financial position or results of operations and had no impact on cash flows. 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 March 31, 2020 2019 Basic and Diluted Earnings: Net earnings attributable to NNN $ 65,178 $ 80,023 Less: Series E preferred stock dividends — (4,097 ) Less: Series F preferred stock dividends (4,485 ) (4,485 ) Net earnings available to NNN’s common stockholders 60,693 71,441 Less: Earnings allocated to unvested restricted shares (160 ) (116 ) Net earnings used in basic and diluted earnings per share $ 60,533 $ 71,325 Basic and Diluted Weighted Average Shares Outstanding: Weighted average number of shares outstanding 171,827,815 161,785,877 Less: Unvested restricted stock (311,553 ) (232,795 ) Less: Unvested contingent restricted shares (477,245 ) (447,767 ) Weighted average number of shares outstanding used in basic earnings per share 171,039,017 161,105,315 Other dilutive securities 192,811 508,759 Weighted average number of shares outstanding used in diluted earnings per share 171,231,828 161,614,074 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): Gain or Loss on Cash Flow Hedges (1) Beginning balance, December 31, 2019 $ (11,128 ) Other comprehensive income (7,617 ) Reclassifications from accumulated other comprehensive income to net earnings 383 (2) Net current period other comprehensive income (loss) (7,234 ) Ending balance, March 31, 2020 $ (18,362 ) (1) Additional disclosure is included in Note 6 – Derivatives. (2) Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income. New Accounting Pronouncements – In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” ("ASU 2019-12"), effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. NNN is currently evaluating to determine the potential impact the adoption of ASU 2019-12 will have on NNN's financial position or results of operations. Use of Estimates – Management 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 condensed consolidated financial statements and notes to condensed consolidated financial statements have been reclassified to conform to the 2020 presentation. |
Real Estate
Real Estate | 3 Months Ended |
Mar. 31, 2020 | |
Real Estate [Abstract] | |
Real Estate | Real Estate : Real Estate – Portfolio Leases – The following outlines key information for NNN’s leases: March 31, 2020 Lease classification: Operating 3,141 Direct financing 6 Weighted average remaining lease term (years) 11.1 The following is a summary of the general structure of the leases in the Property Portfolio, although the specific terms of each lease can vary significantly. Generally, the Property leases provide for initial terms of 10 to 20 years . The Properties are generally leased under net leases, pursuant to which the tenant typically bears responsibility for substantially all property costs and expenses associated with ongoing maintenance, repair, replacement and operation of the property, including utilities, property taxes and property and liability insurance. Certain Properties are subject to leases under which NNN retains responsibility for specific costs and expenses of the Property. NNN's leases provide for annual base rental payments (generally payable in monthly installments), and generally provide for limited increases in rent as a result of (i) increases in the Consumer Price Index ("CPI"), (ii) fixed increases, or, to a lesser extent, (iii) increases in the tenant’s sales volume. Generally, NNN's leases provide the tenant with one or more multi-year renewal options, subject to generally the same terms and conditions provided under the initial lease term, including rent increases. NNN’s lease term is based on the non-cancellable base term unless economic incentives make it reasonably certain that an option period to extend the lease will be exercised, in which event NNN includes the options. Some of the leases also provide that in the event NNN wishes to sell the Property subject to that lease, NNN first must offer the lessee the right to purchase the Property on the same terms and conditions as any offer which NNN intends to accept for the sale of the Property. Real Estate Portfolio – Accounted for Using the Operating Method – Real estate subject to operating leases consisted of the following at (dollars in thousands): March 31, 2020 December 31, 2019 Land and improvements (1) $ 2,489,398 $ 2,490,959 Buildings and improvements 5,943,971 5,913,799 Leasehold interests 355 355 8,433,724 8,405,113 Less accumulated depreciation and amortization (1,187,925 ) (1,146,334 ) 7,245,799 7,258,779 Work in progress for buildings and improvements 39,437 27,438 $ 7,285,236 $ 7,286,217 (1) Includes $16,618 and $16,930 in land for Properties under construction at March 31, 2020 and December 31, 2019 , respectively. NNN recognized the following revenues in rental income (dollars in thousands): Quarter Ended March 31, 2020 2019 Rental income from operating leases $ 168,733 $ 158,398 Earned income from direct financing leases 164 213 Percentage rent 403 422 Real estate expense reimbursement from tenants 5,247 3,993 $ 174,547 $ 163,026 Some leases provide for a free rent term or scheduled rent increases throughout the lease term. Such amounts are recognized on a straight-line basis over the terms of the leases. For the quarter ended March 31, 2020 and 2019 , NNN recognized ($177,000) and $630,000 , respectively, of such income, net of reserves. At March 31, 2020 and December 31, 2019 , the balance of accrued rental income was $28,592,000 and $28,897,000 , respectively, net of allowance of $1,842,000 . Real Estate – Intangibles In accordance with purchase accounting for the acquisition of real estate subject to a lease, NNN has recorded intangible assets and lease liabilities that consisted of the following at (dollars in thousands): March 31, 2020 December 31, 2019 Intangible lease assets (included in other assets ): Above-market in-place leases $ 15,845 $ 15,754 Less: accumulated amortization (10,090 ) (9,897 ) Above-market in-place leases, net $ 5,755 $ 5,857 In-place leases $ 121,674 $ 119,846 Less: accumulated amortization (66,048 ) (64,918 ) In-place leases, net $ 55,626 $ 54,928 Intangible lease liabilities (included in other liabilities ): Below-market in-place leases $ 42,633 $ 41,767 Less: accumulated amortization (26,351 ) (26,135 ) Below-market in-place leases, net $ 16,282 $ 15,632 The amounts amortized as a net increase to rental income for above-market and below-market in-place leases for the quarter ended March 31, 2020 and 2019 , were $220,000 and $228,000 , respectively. The value of in-place leases amortized to expense for the quarter ended March 31, 2020 and 2019 , were $2,395,000 and $2,244,000 , respectively. 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 and Equipment, including management’s intent to commit to a plan to sell the asset. NNN anticipates the disposition of Properties classified as held for sale to occur within 12 months. As of March 31, 2020 , NNN had six of its Properties categorized as held for sale. NNN's real estate held for sale at December 31, 2019 , included 11 Properties, five of which were sold in 2020. Real estate held for sale consisted of the following as of (dollars in thousands): March 31, 2020 December 31, 2019 Land and improvements $ 3,817 $ 7,022 Building and improvements 7,972 10,888 11,789 17,910 Less accumulated depreciation and amortization (3,953 ) (5,334 ) Less impairment (3,338 ) (1,758 ) $ 4,498 $ 10,818 Real Estate – Dispositions The following table summarizes the Properties sold and the corresponding gain recognized on the disposition of Properties (dollars in thousands): Quarter Ended March 31, 2020 2019 # of Sold Properties Net Gain # of Sold Properties Net Gain Net gain on disposition of real estate 14 $ 12,770 17 $ 10,445 Real Estate – Commitments NNN has committed to fund construction on 17 Properties. The improvements on such Properties are estimated to be completed within 12 months . These construction commitments, as of March 31, 2020 , are outlined in the table below (dollars in thousands): Total commitment (1) $ 74,525 Less amount funded 56,055 Remaining commitment $ 18,470 (1) Includes land, construction costs, tenant improvements, lease costs and capitalized interest. 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 currently 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. NNN's Properties are leased primarily to retail tenants under long-term net leases and primarily held for investment. Generally, NNN’s Property leases provide for initial terms of 10 to 20 years , which provide for cash flows over this term. NNN intends to hold these assets for the long-term, therefore, a temporary change in cash flows due to COVID-19 alone would not be an indicator of impairment. 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 $5,513,000 and $3,245,000 for the quarter ended March 31, 2020 and 2019 , 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 | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Line of Credit Payable | Line of Credit Payable : NNN's $900,000,000 unsecured revolving credit facility (the “Credit Facility”) had a weighted average outstanding balance of $75,996,000 and a weighted average interest rate of 2.5% during the quarter ended March 31, 2020 . The Credit Facility matures January 2022, unless the Company exercises its option to extend maturity to January 2023. The Credit Facility bears interest at LIBOR plus 87.5 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 which permits NNN to increase the facility size up to $1,600,000,000 , subject to lender approval. As of March 31, 2020 , there was no outstanding balance and $900,000,000 was available for future borrowings under the Credit Facility. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2020 | |
Notes Payable [Abstract] | |
Notes Payable | Notes Payable : In February 2020, NNN filed a prospectus supplement to the prospectus contained in its February 2018 shelf registration statement and, subsequently, in March 2020, issued $400,000,000 aggregate principal amount of 2.500% notes due April 2030 (the “2030 Notes”) and $300,000,000 aggregate principal amount of 3.100% notes due April 2050 (the "2050 Notes" and, together with the 2030 Notes, the "Notes"). The 2030 Notes were sold at a discount with an aggregate purchase price of $398,712,000 with interest payable semi-annually commencing on October 15, 2020. The discount of $1,288,000 is being amortized to interest expense over the term of the notes using the effective interest method. The effective interest rate for the 2030 Notes after accounting for the note discount is 2.536% . NNN previously entered into three forward starting swaps with an aggregate notional amount of $200,000,000 . Upon issuance of the 2030 Notes, NNN terminated the forward starting swaps resulting in a loss of $13,141,000 , which was deferred in other comprehensive income. The loss is being amortized to interest expense over the term of the 2030 Notes using the effective interest method. The 2050 Notes were sold at a discount with an aggregate purchase price of $293,934,000 with interest payable semi-annually commencing on October 15, 2020. The discount of $6,066,000 is being amortized to interest expense over the term of the notes using the effective interest method. The effective interest rate for the 2050 Notes after accounting for the note discount is 3.205% . The Notes are senior unsecured obligations of NNN and are subordinated to all secured indebtedness and to the indebtedness and other liabilities of NNN's subsidiaries. Additionally, the Notes are each redeemable at NNN's option, in whole or part anytime, for an amount equal to (i) the sum of the outstanding principal balance of the notes being redeemed plus accrued interest thereon to the redemption date, and (ii) the make-whole amount, if any, as defined in the supplemental indenture dated February 18, 2020, relating to the Notes. NNN received approximately $395,062,000 and $290,459,000 of net proceeds in connection with the issuance of the 2030 Notes and the 2050 Notes, respectively, after incurring debt issuance costs consisting primarily of underwriting discounts and commissions, legal and accounting fees, rating agency fees and printing expenses, totaling $3,650,000 and $3,475,000 for the 2030 Notes and the 2050 Notes, respectively. On March 20, 2020, NNN redeemed the $325,000,000 3.800% notes payable due October 2022. The notes were redeemed at a price equal to 100% of the principal amount, plus (i) a make-whole amount of $16,679,000 , and (ii) accrued and unpaid interest. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity : In February 2018, 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 Purchase Plan – In February 2018, 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 10,000,000 shares of common stock. The following table outlines the common stock issuances pursuant to NNN's DRIP (dollars in thousands): Quarter Ended March 31, 2020 2019 Shares of common stock 12,528 101,180 Net proceeds $ 696 $ 5,279 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 program: 2018 ATM Established date February 2018 Termination date February 2021 Total allowable shares 12,000,000 Total shares issued as of March 31, 2020 9,722,185 There were no common stock issuances pursuant to NNN's ATM equity program for the quarter ended March 31, 2020 and 2019, respectively. 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 March 31, 2020 2019 Series E preferred stock (1) : Dividends $ — $ 4,097 Per depositary share — 0.356250 Series F preferred stock (2) : Dividends 4,485 4,485 Per depositary share 0.325000 0.325000 Common stock: Dividends 88,148 80,566 Per share 0.515 0.500 (1) The 5.700% Series E Cumulative Redeemable Preferred Stock (the "Series E Preferred Stock") was redeemed in October 2019. The dividends paid in 2019 include accumulated and unpaid dividends through, but not including, the redemption date. (2) The 5.200% Series F Cumulative Redeemable Preferred Stock (the "Series F Preferred Stock") has no maturity date and will remain outstanding unless redeemed by NNN. The earliest redemption date for the Series F Preferred Stock is October 2021. In April 2020 , NNN declared a dividend of $0.515 per share, which is payable in May 2020 to its common stockholders of record as of April 30, 2020 . |
Derivatives
Derivatives | 3 Months Ended |
Mar. 31, 2020 | |
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 a 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 starting 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 starting swaps also lock the associated swap spread. Interest rate swaps designated as cash flow hedges are used to hedge the variable cash flows associated with floating rate debt and involve the receipt or payment 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 change 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. 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 recognizes any changes in its fair value in earnings and continues to carry the derivative on the balance sheet or may choose to settle the derivative at that time with a cash payment or receipt. NNN records a cash settlement of forward starting swaps in the Condensed Consolidated Statements of Cash Flows as an operating activity. The following table outlines NNN's terminated derivatives which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt (dollars in thousands): Notes Payable Terminated Description Aggregate Notional Amount Liability (Asset) Fair Value When Terminated Fair Value Deferred In Other Comprehensive Income (1) 2023 April 2013 Four forward starting swaps $ 240,000 $ 3,156 $ 3,141 2024 May 2014 Three forward starting swaps 225,000 6,312 6,312 2025 October 2015 Four forward starting swaps 300,000 13,369 13,369 2026 December 2016 Two forward starting swaps 180,000 (13,352 ) (13,345 ) 2027 September 2017 Two forward starting swaps 250,000 7,690 7,688 2028 September 2018 Two forward starting swaps 250,000 (4,080 ) (4,080 ) 2030 March 2020 Three forward starting swaps 200,000 13,141 13,141 (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 March 31, 2020 , $18,362,000 remained in other comprehensive income related to NNN’s previously terminated interest rate hedges. During the quarter ended March 31, 2020 and 2019 , NNN reclassified out of other comprehensive income $384,000 and $323,000 , respectively, as an increase in interest expense. Over the next 12 months, NNN estimates that an additional $2,555,000 will be reclassified as an increase in interest expense from these terminated derivatives. 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. NNN does not use derivatives for trading or speculative purposes or currently have any derivatives that are not designated as hedges. NNN had no derivative financial instruments outstanding at March 31, 2020 . |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2020 | |
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 mortgages payable at March 31, 2020 and December 31, 2019 , approximate fair value based upon current market prices of comparable instruments (Level 3). At March 31, 2020 and December 31, 2019 , the fair value of NNN’s notes payable net of unamortized discount and excluding debt costs was $3,277,730,000 and $3,074,538,000 , respectively, based upon quoted market prices, which is a Level 1 valuation since NNN's notes payable are publicly traded. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events : Overview A novel strain of coronavirus was reported to have surfaced in Wuhan, China in December 2019, and has since spread globally, including to every state in the United States. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19. As a result, the COVID-19 pandemic is negatively affecting almost every industry directly or indirectly. The actions taken by the government to mitigate the spread of COVID-19 by ordering closure of many businesses and ordering residents to generally stay at home has resulted in the loss of revenue for many of NNN's tenants and challenged their ability to pay rent. NNN expects these economic hardships to have a negative effect on its financial results, particularly beginning the quarter ending June 30, 2020. Generally, NNN leases do not allow tenants to withhold rent as a result of such closures or reduced operations by tenants. NNN is actively working with its tenants that have been impacted by the mandated closures or other social-distancing guidelines resulting from the COVID-19 pandemic. As of April 29, 2020, NNN has collected approximately 52% of annualized base rent originally due in April 2020. As of April 29, 2020, certain tenants, representing approximately 37% of annualized base rent, have requested adjustments to their lease terms, primarily consisting of short-term rent deferrals of 30 to 90 days . NNN is negotiating terms with these tenants that would require the deferred rental revenues to be paid at a later time in the lease term, typically over 3 to 18 months with payment beginning in fourth quarter 2020. Rent collections may continue below amounts required under the leases until economic activity materially improves. April rent collections and rent relief requests to- date may not be indicative of rent collections and requests in the future. Depending upon the duration of impact on tenants and the overall economic downturn resulting from the COVID-19 pandemic, NNN may find deferred rents difficult to collect. A prolonged imposition of mandated closures or other social-distancing guidelines may adversely impact NNN's tenants’ revenues, and could force tenants to default on their leases, or result in the bankruptcy or insolvency of tenants, which would diminish the rental revenue NNN receives under its leases. The rapid development and fluidity of the pandemic precludes any prediction as to the ultimate adverse impact on NNN. Nevertheless, COVID-19 presents material uncertainty and risk with respect to NNN’s performance, business or financial condition, results from operations and cash flows. NNN is currently deferring material new property investments until there is more visibility on how and when the economy and capital markets might begin to recover from the COVID-19 pandemic. Business Continuity The extent of the effects of COVID-19 on NNN's business, results of operations, cash flows, and growth prospects is highly uncertain and will ultimately depend on future developments, none of which can be predicted with any certainty. See Item "1A. Risk Factors." NNN was able to transition a large portion of its associates to work remotely and does not anticipate any adverse impact on its ability to continue to operate its business nor have any material adverse impact on NNN's financial reporting systems, internal controls over financial reporting or disclosure controls and procedures. NNN reviewed its subsequent events and transactions that have occurred after March 31, 2020, the date of the condensed consolidated balance sheet. There were no other reportable subsequent events or transactions. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation – NNN’s condensed consolidated financial statements include the accounts of each of the 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”) Accounting Standards Codifications ("ASC") guidance included in Consolidation. All significant intercompany account balances and transactions have been eliminated. |
Real Estate Portfolio and Impairment | Real Estate Portfolio – NNN records the acquisition of real estate at cost, including acquisition and closing costs. The cost of Properties developed or funded 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 $466,000 and $126,000 in capitalized interest during the development period for the quarter ended March 31, 2020 and 2019 , respectively. Purchase Accounting for Acquisition of Real Estate Subject to a Lease – In accordance with the FASB guidance on business combinations, consideration for the real estate acquired is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and, if applicable, to identified intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases, as applicable, based on their respective fair values. The fair value estimate is sensitive to significant assumptions, such as establishing a range of relevant market assumptions for land, building and rent and where the acquired property falls within that range. These market assumptions for land, building and rent use the most relevant comparable properties for an acquisition. The final range relies upon ranking comparable properties' attributes from most similar to least similar. The fair value of the tangible assets of an acquired 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 in that period. The value of tenant relationships is reviewed on individual transactions to determine if future value was derived from the acquisition. Impairment – Real Estate – Based upon certain events or changes in circumstances, management periodically assesses its Properties for possible impairment whenever the carrying value 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 currently vacant or become vacant in a reasonable period of time. Management evaluates whether an impairment in carrying value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), and the residual value of the real estate, with the carrying value of the individual asset. The future undiscounted cash flows are primarily driven by estimated future market rents. If an impairment is indicated, a loss will be recorded for the amount by which the carrying value of the asset exceeds its estimated fair value. NNN's Properties are leased primarily to retail tenants under long-term net leases and primarily held for investment. Generally, NNN’s Property leases provide for initial terms of 10 to 20 years , which provide for cash flows over this term. NNN intends to hold these assets for the long-term, therefore, a temporary change in cash flows due to COVID-19 alone would not be an indicator of impairment. |
Lease Accounting, Lessor | Lease Accounting – In accordance with FASB Accounting Standards Update ("ASU") 2016-02, "Leases (Topic 842)," ("ASC 842") NNN used the modified retrospective approach in which the cumulative effect of applying the new standard was recognized at the date of initial application with a positive adjustment to NNN’s opening balance of accumulated deficit. The modified retrospective approach provides a method for recording existing leases upon adoption, which in comparative periods approximates the results of a full retrospective approach. NNN elected the package of practical expedients permitted under the transition guidance (which included: (i) an entity need not reassess whether any expired or existing contracts are or contain leases, (ii) an entity need not reassess the lease classification for any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases), the land easement practical expedient to carry forward existing accounting treatment on existing land easements, and the lease and non-lease component combined practical expedient. 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 probable collection. At the point NNN deems the collection of lease payments not probable, a bad debt is recognized for any outstanding receivable and any related accrued rent and, subsequently, any lease revenue is only recognized when cash receipts are received. NNN recorded Right-Of-Use ("ROU") assets and operating lease liabilities of approximately $7,735,000 and $10,155,000 respectively, as of January 1, 2019. In April 2020, the FASB issued interpretive guidance relating to the accounting for lease concessions provided as a result of COVID-19. In this guidance, entities can elect not to apply lease modification accounting with respect to such lease concessions and instead, treat the concession as if it was a part of the existing contract. This guidance is only applicable to COVID-19 related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. NNN is currently evaluating the impact of this guidance and whether NNN will make this policy election for lease concessions such as rent deferrals for the quarter ended June 30, 2020. |
Lease Accounting, Lessee | Lease Accounting – In accordance with FASB Accounting Standards Update ("ASU") 2016-02, "Leases (Topic 842)," ("ASC 842") NNN used the modified retrospective approach in which the cumulative effect of applying the new standard was recognized at the date of initial application with a positive adjustment to NNN’s opening balance of accumulated deficit. The modified retrospective approach provides a method for recording existing leases upon adoption, which in comparative periods approximates the results of a full retrospective approach. NNN elected the package of practical expedients permitted under the transition guidance (which included: (i) an entity need not reassess whether any expired or existing contracts are or contain leases, (ii) an entity need not reassess the lease classification for any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases), the land easement practical expedient to carry forward existing accounting treatment on existing land easements, and the lease and non-lease component combined practical expedient. 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 probable collection. At the point NNN deems the collection of lease payments not probable, a bad debt is recognized for any outstanding receivable and any related accrued rent and, subsequently, any lease revenue is only recognized when cash receipts are received. NNN recorded Right-Of-Use ("ROU") assets and operating lease liabilities of approximately $7,735,000 and $10,155,000 respectively, as of January 1, 2019. In April 2020, the FASB issued interpretive guidance relating to the accounting for lease concessions provided as a result of COVID-19. In this guidance, entities can elect not to apply lease modification accounting with respect to such lease concessions and instead, treat the concession as if it was a part of the existing contract. This guidance is only applicable to COVID-19 related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. NNN is currently evaluating the impact of this guidance and whether NNN will make this policy election for lease concessions such as rent deferrals for the quarter ended June 30, 2020. |
Debt Costs | 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 $31,140,000 and $26,932,000 , as of March 31, 2020 and December 31, 2019, respectively, are included in notes payable on the Condensed Consolidated Balance Sheets net of accumulated amortization of $7,492,000 and $8,962,000 , respectively. |
Credit Losses on Financial Instruments | Credit Losses on Financial Instruments – Effective January 1, 2020, NNN adopted FASB ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326),” (“ASC 326”). 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. ASU 326 requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings. The new guidance requires a lifetime credit loss expected at inception and requires pooling of assets, which share similar risk characteristics. NNN is required to evaluate current economic conditions, as well as, make future expectations of economic conditions. In addition, the measurement of the expected credit loss is over the asset’s contractual term. During the quarter ended March 31, 2020, NNN recorded a mortgage receivable of $2,737,000 included in other assets on the Condensed Consolidated Balance Sheets, net of $174,000 allowance for credit loss. NNN measures the allowance for credit loss based on the fair value of the collateral and the historical collectability trend analysis over 15 years . Adoption of ASC 326 did not materially impact NNN’s financial position or results of operations and had no impact on cash flows. |
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 December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes,” ("ASU 2019-12"), effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The amendments simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. NNN is currently evaluating to determine the potential impact the adoption of ASU 2019-12 will have on NNN's financial position or results of operations. |
Use of Estimates | Use of Estimates – Management 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 condensed consolidated financial statements and notes to condensed consolidated financial statements have been reclassified to conform to the 2020 presentation. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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") . March 31, 2020 Property Portfolio: Total properties 3,125 Gross leasable area (square feet) 32,500,000 States 48 Weighted average remaining lease term (years) 11.1 |
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 March 31, 2020 2019 Basic and Diluted Earnings: Net earnings attributable to NNN $ 65,178 $ 80,023 Less: Series E preferred stock dividends — (4,097 ) Less: Series F preferred stock dividends (4,485 ) (4,485 ) Net earnings available to NNN’s common stockholders 60,693 71,441 Less: Earnings allocated to unvested restricted shares (160 ) (116 ) Net earnings used in basic and diluted earnings per share $ 60,533 $ 71,325 Basic and Diluted Weighted Average Shares Outstanding: Weighted average number of shares outstanding 171,827,815 161,785,877 Less: Unvested restricted stock (311,553 ) (232,795 ) Less: Unvested contingent restricted shares (477,245 ) (447,767 ) Weighted average number of shares outstanding used in basic earnings per share 171,039,017 161,105,315 Other dilutive securities 192,811 508,759 Weighted average number of shares outstanding used in diluted earnings per share 171,231,828 161,614,074 |
Changes in Accumulated Other Comprehensive Income (Loss) | The following table outlines the changes in accumulated other comprehensive income (loss) (dollars in thousands): Gain or Loss on Cash Flow Hedges (1) Beginning balance, December 31, 2019 $ (11,128 ) Other comprehensive income (7,617 ) Reclassifications from accumulated other comprehensive income to net earnings 383 (2) Net current period other comprehensive income (loss) (7,234 ) Ending balance, March 31, 2020 $ (18,362 ) (1) Additional disclosure is included in Note 6 – Derivatives. (2) Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income. |
Real Estate (Tables)
Real Estate (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Real Estate [Abstract] | |
Key Information for Leases | The following outlines key information for NNN’s leases: March 31, 2020 Lease classification: Operating 3,141 Direct financing 6 Weighted average remaining lease term (years) 11.1 |
Real Estate Subject to Operating Leases | Real estate subject to operating leases consisted of the following at (dollars in thousands): March 31, 2020 December 31, 2019 Land and improvements (1) $ 2,489,398 $ 2,490,959 Buildings and improvements 5,943,971 5,913,799 Leasehold interests 355 355 8,433,724 8,405,113 Less accumulated depreciation and amortization (1,187,925 ) (1,146,334 ) 7,245,799 7,258,779 Work in progress for buildings and improvements 39,437 27,438 $ 7,285,236 $ 7,286,217 (1) Includes $16,618 and $16,930 in land for Properties under construction at March 31, 2020 and December 31, 2019 , respectively. |
Rental Income | NNN recognized the following revenues in rental income (dollars in thousands): Quarter Ended March 31, 2020 2019 Rental income from operating leases $ 168,733 $ 158,398 Earned income from direct financing leases 164 213 Percentage rent 403 422 Real estate expense reimbursement from tenants 5,247 3,993 $ 174,547 $ 163,026 |
Intangible Assets, Lease Liabilities, and Related Amortization | In accordance with purchase accounting for the acquisition of real estate subject to a lease, NNN has recorded intangible assets and lease liabilities that consisted of the following at (dollars in thousands): March 31, 2020 December 31, 2019 Intangible lease assets (included in other assets ): Above-market in-place leases $ 15,845 $ 15,754 Less: accumulated amortization (10,090 ) (9,897 ) Above-market in-place leases, net $ 5,755 $ 5,857 In-place leases $ 121,674 $ 119,846 Less: accumulated amortization (66,048 ) (64,918 ) In-place leases, net $ 55,626 $ 54,928 Intangible lease liabilities (included in other liabilities ): Below-market in-place leases $ 42,633 $ 41,767 Less: accumulated amortization (26,351 ) (26,135 ) Below-market in-place leases, net $ 16,282 $ 15,632 |
Real Estate Held for Sale | Real estate held for sale consisted of the following as of (dollars in thousands): March 31, 2020 December 31, 2019 Land and improvements $ 3,817 $ 7,022 Building and improvements 7,972 10,888 11,789 17,910 Less accumulated depreciation and amortization (3,953 ) (5,334 ) Less impairment (3,338 ) (1,758 ) $ 4,498 $ 10,818 |
Real Estate Dispositions | The following table summarizes the Properties sold and the corresponding gain recognized on the disposition of Properties (dollars in thousands): Quarter Ended March 31, 2020 2019 # of Sold Properties Net Gain # of Sold Properties Net Gain Net gain on disposition of real estate 14 $ 12,770 17 $ 10,445 |
Real Estate Commitments | These construction commitments, as of March 31, 2020 , are outlined in the table below (dollars in thousands): Total commitment (1) $ 74,525 Less amount funded 56,055 Remaining commitment $ 18,470 (1) Includes land, construction costs, tenant improvements, lease costs and capitalized interest. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Schedule of Stock Issuance | The following table outlines the common stock issuances pursuant to NNN's DRIP (dollars in thousands): Quarter Ended March 31, 2020 2019 Shares of common stock 12,528 101,180 Net proceeds $ 696 $ 5,279 |
Schedule of ATM Program | The following outlines NNN's ATM program: 2018 ATM Established date February 2018 Termination date February 2021 Total allowable shares 12,000,000 Total shares issued as of March 31, 2020 9,722,185 |
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 March 31, 2020 2019 Series E preferred stock (1) : Dividends $ — $ 4,097 Per depositary share — 0.356250 Series F preferred stock (2) : Dividends 4,485 4,485 Per depositary share 0.325000 0.325000 Common stock: Dividends 88,148 80,566 Per share 0.515 0.500 (1) The 5.700% Series E Cumulative Redeemable Preferred Stock (the "Series E Preferred Stock") was redeemed in October 2019. The dividends paid in 2019 include accumulated and unpaid dividends through, but not including, the redemption date. (2) The 5.200% Series F Cumulative Redeemable Preferred Stock (the "Series F Preferred Stock") has no maturity date and will remain outstanding unless redeemed by NNN. The earliest redemption date for the Series F Preferred Stock is October 2021. |
Derivatives (Tables)
Derivatives (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The following table outlines NNN's terminated derivatives which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt (dollars in thousands): Notes Payable Terminated Description Aggregate Notional Amount Liability (Asset) Fair Value When Terminated Fair Value Deferred In Other Comprehensive Income (1) 2023 April 2013 Four forward starting swaps $ 240,000 $ 3,156 $ 3,141 2024 May 2014 Three forward starting swaps 225,000 6,312 6,312 2025 October 2015 Four forward starting swaps 300,000 13,369 13,369 2026 December 2016 Two forward starting swaps 180,000 (13,352 ) (13,345 ) 2027 September 2017 Two forward starting swaps 250,000 7,690 7,688 2028 September 2018 Two forward starting swaps 250,000 (4,080 ) (4,080 ) 2030 March 2020 Three forward starting swaps 200,000 13,141 13,141 (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. |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies (Summary of NNN's Investment Portfolio) (Details) ft² in Thousands | 3 Months Ended |
Mar. 31, 2020ft²stateproperty | |
Property Portfolio: | |
Total properties | property | 3,125 |
Gross leasable area (square feet) | ft² | 32,500 |
States | state | 48 |
Weighted average remaining lease term (years) | 11 years 1 month 6 days |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies (Computation of Basic and Diluted Earnings per Share) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Basic and Diluted Earnings: | ||
Net earnings attributable to NNN | $ 65,178 | $ 80,023 |
Net earnings attributable to common stockholders | 60,693 | 71,441 |
Less: Earnings allocated to unvested restricted shares | (160) | (116) |
Net earnings used in basic and diluted earnings per share | $ 60,533 | $ 71,325 |
Basic and Diluted Weighted Average Shares Outstanding: | ||
Weighted average number of shares outstanding (in shares) | 171,827,815 | 161,785,877 |
Less: Unvested restricted stock (in shares) | (311,553) | (232,795) |
Less: Unvested contingent restricted shares (in shares) | (477,245) | (447,767) |
Weighted average number of shares outstanding used in basic earnings per share (in shares) | 171,039,017 | 161,105,315 |
Other dilutive securities (in shares) | 192,811 | 508,759 |
Weighted average number of shares outstanding used in diluted earnings per share (in shares) | 171,231,828 | 161,614,074 |
Series E Preferred Stock | ||
Basic and Diluted Earnings: | ||
Less: preferred stock dividends | $ 0 | $ (4,097) |
Series F Preferred Stock | ||
Basic and Diluted Earnings: | ||
Less: preferred stock dividends | $ (4,485) | $ (4,485) |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies (Changes in AOCI) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Balance | $ 4,331,682 |
Balance | 4,300,935 |
AOCI, cash flow hedges | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Balance | (11,128) |
Other comprehensive income | (7,617) |
Reclassifications from accumulated other comprehensive income to net earnings | 383 |
Net current period other comprehensive income (loss) | (7,234) |
Balance | $ (18,362) |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Jan. 01, 2019 | |
Accounting Policies [Line Items] | ||||
Interest costs capitalized | $ 466 | $ 126 | ||
Mortgage loan | ||||
Accounting Policies [Line Items] | ||||
Mortgage receivable increase | 2,737 | |||
Allowance for credit loss increase | $ 174 | |||
Collectability analysis, period used | 15 years | |||
Minimum | ||||
Accounting Policies [Line Items] | ||||
Initial lease term | 10 years | |||
Maximum | ||||
Accounting Policies [Line Items] | ||||
Initial lease term | 20 years | |||
Notes Payable to Banks | ||||
Accounting Policies [Line Items] | ||||
Debt costs | $ 31,140 | $ 26,932 | ||
Debt costs accumulated amortization | $ 7,492 | $ 8,962 | ||
ASC 842 | ||||
Accounting Policies [Line Items] | ||||
Operating lease – ROU assets | $ 7,735 | |||
Operating lease – lease liabilities | $ 10,155 |
Real Estate (Key Information fo
Real Estate (Key Information for Leases) (Details) | 3 Months Ended |
Mar. 31, 2020property | |
Lease classification: | |
Operating | 3,141 |
Direct financing | 6 |
Weighted average remaining lease term (years) | 11 years 1 month 6 days |
Minimum | |
Lease classification: | |
Initial lease term | 10 years |
Maximum | |
Lease classification: | |
Initial lease term | 20 years |
Real Estate (Real Estate Subjec
Real Estate (Real Estate Subject to Operating Leases) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Property Subject to or Available for Operating Lease [Line Items] | ||
Land and improvements | $ 2,489,398 | $ 2,490,959 |
Buildings and improvements | 5,943,971 | 5,913,799 |
Leasehold interests | 355 | 355 |
Real estate subject to operating leases, gross | 8,433,724 | 8,405,113 |
Less accumulated depreciation and amortization | (1,187,925) | (1,146,334) |
Real estate subject to operating leases, net, before work in process | 7,245,799 | 7,258,779 |
Work in progress for buildings and improvements | 39,437 | 27,438 |
Accounted for using the operating method, net of accumulated depreciation and amortization | 7,285,236 | 7,286,217 |
Asset under construction | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Land and improvements | $ 16,618 | $ 16,930 |
Real Estate (Rental Income) (De
Real Estate (Rental Income) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Lease Income [Abstract] | |||
Rental income from operating leases | $ 168,733 | $ 158,398 | |
Earned income from direct financing leases | 164 | 213 | |
Percentage rent | 403 | 422 | |
Real estate expense reimbursement from tenants | 5,247 | 3,993 | |
Total lease income | 174,547 | 163,026 | |
Straight line rent adjustments | (177) | $ 630 | |
Accrued rental income, net of allowance | 28,592 | $ 28,897 | |
Accrued rental income allowance | $ 1,842 | $ 1,842 |
Real Estate (Intangible Assets,
Real Estate (Intangible Assets, Lease Liabilities, and Related Amortization) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Intangible lease liabilities (included in other liabilities): | |||
Below-market in-place leases | $ 42,633 | $ 41,767 | |
Less: accumulated amortization | (26,351) | (26,135) | |
Below-market in-place leases, net | 16,282 | 15,632 | |
Above-market in-place leases | |||
Intangible lease assets (included in other assets): | |||
Leases | 15,845 | 15,754 | |
Less: accumulated amortization | (10,090) | (9,897) | |
Leases, net | 5,755 | 5,857 | |
In-place leases | |||
Intangible lease assets (included in other assets): | |||
Leases | 121,674 | 119,846 | |
Less: accumulated amortization | (66,048) | (64,918) | |
Leases, net | 55,626 | $ 54,928 | |
Intangible lease liabilities (included in other liabilities): | |||
Amortization expense, in-place leases | 2,395 | $ 2,244 | |
Above-market and below-market in-place leases | |||
Intangible lease liabilities (included in other liabilities): | |||
Amortization expense, above- and below-market leases | $ 220 | $ 228 |
Real Estate (Real Estate Held f
Real Estate (Real Estate Held for Sale) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)property | Dec. 31, 2019USD ($)property | |
Real Estate [Abstract] | ||
Number of properties classified as held for sale | property | 6 | 11 |
Number of properties sold | property | 5 | |
Land and improvements | $ 3,817 | $ 7,022 |
Building and improvements | 7,972 | 10,888 |
Real estate held-for-sale | 11,789 | 17,910 |
Less accumulated depreciation and amortization | (3,953) | (5,334) |
Less impairment | (3,338) | (1,758) |
Real estate held for sale | $ 4,498 | $ 10,818 |
Real Estate (Real Estate Dispos
Real Estate (Real Estate Dispositions) (Details) - Assets Held-for-sale $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)property | Mar. 31, 2019USD ($)property | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Number of sold properties | property | 14 | 17 |
Net gain on disposition of real estate | $ | $ 12,770 | $ 10,445 |
Real Estate (Real Estate Commit
Real Estate (Real Estate Commitments) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($)property | |
Real Estate [Abstract] | |
Number of properties | property | 17 |
Period for improvements to construction commitments | 12 months |
Total commitment | $ 74,525 |
Less amount funded | 56,055 |
Remaining commitment | $ 18,470 |
Real Estate (Real Estate Impair
Real Estate (Real Estate Impairments) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Lessor, Lease, Description [Line Items] | ||
Impairment losses – real estate, net of recoveries | $ 5,513 | $ 3,245 |
Minimum | ||
Lessor, Lease, Description [Line Items] | ||
Initial lease term | 10 years | |
Maximum | ||
Lessor, Lease, Description [Line Items] | ||
Initial lease term | 20 years |
Line of Credit Payable (Details
Line of Credit Payable (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Line of Credit Facility [Line Items] | ||
Line of credit payable | $ 0 | $ 133,600,000 |
Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Revolving credit facility borrowing capacity | 900,000,000 | |
Revolving credit facility weighted average outstanding balance | $ 75,996,000 | |
Revolving credit facility weighted average interest rate | 2.50% | |
Option to increase facility size | $ 1,600,000,000 | |
Line of credit payable | 0 | |
Line of credit facility available for future borrowings | $ 900,000,000 | |
Line of Credit | LIBOR | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 0.875% |
Notes Payable (Details)
Notes Payable (Details) | Mar. 20, 2020USD ($) | Mar. 31, 2020USD ($)instrument | Mar. 31, 2020USD ($)instrument | Mar. 31, 2019USD ($) | Sep. 30, 2018USD ($)instrument | Sep. 30, 2017USD ($)instrument | Dec. 31, 2016USD ($)instrument | Oct. 31, 2015USD ($)instrument | May 31, 2014USD ($)instrument | Apr. 30, 2013USD ($)instrument |
Debt Instrument [Line Items] | ||||||||||
Loss deferred in other comprehensive income | $ 7,617,000 | $ 0 | ||||||||
Proceeds from notes payable | 692,646,000 | 0 | ||||||||
Payment of debt issuance costs | 6,397,000 | 40,000 | ||||||||
Payment of make-whole premium | $ 16,679,000 | $ 0 | ||||||||
Forward Swap | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Number of interest rate derivatives terminated | instrument | 3 | 3 | 2 | 2 | 2 | 4 | 3 | 4 | ||
Aggregate notional amount | $ 200,000,000 | $ 200,000,000 | $ 250,000,000 | $ 250,000,000 | $ 180,000,000 | $ 300,000,000 | $ 225,000,000 | $ 240,000,000 | ||
Loss deferred in other comprehensive income | 13,141,000 | |||||||||
2030 Notes | Loans Payable | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal amount | $ 400,000,000 | $ 400,000,000 | ||||||||
Stated interest rate | 2.50% | 2.50% | ||||||||
Aggregate purchase price | $ 398,712,000 | $ 398,712,000 | ||||||||
Discount | $ 1,288,000 | $ 1,288,000 | ||||||||
Effective Rate | 2.536% | 2.536% | ||||||||
Proceeds from notes payable | $ 395,062,000 | |||||||||
Payment of debt issuance costs | 3,650,000 | |||||||||
2050 Notes | Loans Payable | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Principal amount | $ 300,000,000 | $ 300,000,000 | ||||||||
Stated interest rate | 3.10% | 3.10% | ||||||||
Aggregate purchase price | $ 293,934,000 | $ 293,934,000 | ||||||||
Discount | $ 6,066,000 | $ 6,066,000 | ||||||||
Effective Rate | 3.205% | 3.205% | ||||||||
Proceeds from notes payable | $ 290,459,000 | |||||||||
Payment of debt issuance costs | $ 3,475,000 | |||||||||
2022 Notes | Loans Payable | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Stated interest rate | 3.80% | |||||||||
Notes payable redeemed | $ 325,000,000 | |||||||||
Redemption price, percent of principal amount | 100.00% | |||||||||
Payment of make-whole premium | $ 16,679,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Apr. 30, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Feb. 28, 2018 | |
Class of Stock [Line Items] | |||||
Total allowable shares (in shares) | 375,000,000 | 375,000,000 | |||
Net proceeds | $ 696 | $ 5,279 | |||
Total shares issued (in shares) | 171,963,354 | 171,694,209 | |||
Common stock dividends | $ 88,148 | $ 80,566 | |||
Common stock dividends per share (in dollars per share) | $ 0.515 | $ 0.500 | |||
Common stock dividends declared (in dollars per share) | $ 0.515 | $ 0.50 | |||
Subsequent event | |||||
Class of Stock [Line Items] | |||||
Common stock dividends declared (in dollars per share) | $ 0.515 | ||||
Series E Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Preferred stock dividends | $ 0 | $ 4,097 | |||
Preferred stock dividends per depositary share (in dollars per share) | $ 0 | $ 0.356250 | |||
Dividend rate | 5.70% | ||||
Series F Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Preferred stock dividends | $ 4,485 | $ 4,485 | |||
Preferred stock dividends per depositary share (in dollars per share) | $ 0.325000 | $ 0.325000 | |||
Dividend rate | 5.20% | 5.20% | |||
DRIP | |||||
Class of Stock [Line Items] | |||||
Total allowable shares (in shares) | 10,000,000 | ||||
Shares of common stock (in shares) | 12,528 | 101,180 | |||
Net proceeds | $ 696 | $ 5,279 | |||
ATM equity program | |||||
Class of Stock [Line Items] | |||||
Total allowable shares (in shares) | 12,000,000 | ||||
Total shares issued (in shares) | 9,722,185 |
Derivatives (Terminated Derivat
Derivatives (Terminated Derivatives) (Details) - Forward Swap | Mar. 31, 2020USD ($)instrument | Sep. 30, 2018USD ($)instrument | Sep. 30, 2017USD ($)instrument | Dec. 31, 2016USD ($)instrument | Oct. 31, 2015USD ($)instrument | May 31, 2014USD ($)instrument | Apr. 30, 2013USD ($)instrument |
Derivative [Line Items] | |||||||
Number of interest rate derivatives terminated | instrument | 3 | 2 | 2 | 2 | 4 | 3 | 4 |
Aggregate Notional Amount | $ 200,000,000 | $ 250,000,000 | $ 250,000,000 | $ 180,000,000 | $ 300,000,000 | $ 225,000,000 | $ 240,000,000 |
Liability Fair Value When Terminated | 13,141,000 | 7,690,000 | 13,369,000 | 6,312,000 | 3,156,000 | ||
Asset Fair Value When Terminated | (4,080,000) | (13,352,000) | |||||
Fair Value Deferred In Other Comprehensive Income | $ 13,141,000 | $ (4,080,000) | $ 7,688,000 | $ (13,345,000) | $ 13,369,000 | $ 6,312,000 | $ 3,141,000 |
Derivatives (Narrative) (Detail
Derivatives (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | |
Derivative [Line Items] | ||||
Stockholders' equity | $ (4,300,935) | $ (4,152,887) | $ (4,331,682) | $ (4,154,605) |
Interest expense | 33,670 | 29,957 | ||
Interest rate cash flow hedge gain (loss) to be reclassified over next 12 months, net | (2,555) | |||
Reclassification out of other comprehensive income | ||||
Derivative [Line Items] | ||||
Interest expense | 384 | $ 323 | ||
AOCI, cash flow hedges | ||||
Derivative [Line Items] | ||||
Stockholders' equity | $ 18,362 | $ 11,128 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Financial Instruments, Owned, at Fair Value [Abstract] | ||
Fair value of notes payable | $ 3,277,730 | $ 3,074,538 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event | Apr. 29, 2020 |
Subsequent Event [Line Items] | |
Percentage of annualized base rent due in April 2020 collected | 52.00% |
Percentage of tenants requested adjustment to lease terms due to COVID-19 pandemic | 37.00% |
Minimum | |
Subsequent Event [Line Items] | |
Short-term rent deferral term due to COVID-19 pandemic | 30 days |
Payment term of rent deferred due to COVID-19 pandemic | 3 months |
Maximum | |
Subsequent Event [Line Items] | |
Short-term rent deferral term due to COVID-19 pandemic | 90 days |
Payment term of rent deferred due to COVID-19 pandemic | 18 months |