Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2024 | Apr. 26, 2024 | |
Entity Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-11290 | |
Entity Registrant Name | NNN REIT, INC. | |
Entity Central Index Key | 0000751364 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
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 | |
Title of 12(b) Security | Common Stock, $0.01 par value | |
Trading Symbol | NNN | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 183,349,467 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
ASSETS | ||
Real estate portfolio, net of accumulated depreciation and amortization | $ 8,586,856 | $ 8,535,851 |
Cash and cash equivalents | 1,128 | 1,189 |
Restricted cash or cash held in escrow | 0 | 3,966 |
Receivables, net of allowance of $717 and $669, respectively | 3,569 | 3,649 |
Accrued rental income, net of allowance of $4,153 and $4,168, respectively | 34,404 | 34,611 |
Debt costs, net of accumulated amortization of $24,525 and $23,952, respectively | 2,723 | 3,243 |
Other assets | 77,062 | 79,459 |
Total assets | 8,705,742 | 8,661,968 |
Liabilities: | ||
Line of credit payable | 116,200 | 132,000 |
Notes payable, net of unamortized discount and unamortized debt costs | 4,229,933 | 4,228,544 |
Accrued interest payable | 75,487 | 34,374 |
Other liabilities | 109,264 | 109,593 |
Total liabilities | 4,530,884 | 4,504,511 |
Stockholders’ equity: | ||
Common stock, $0.01 par value. Authorized 375,000,000 shares; 183,350,322 and 182,474,770 shares issued and outstanding, respectively | 1,835 | 1,826 |
Capital in excess of par value | 4,996,698 | 4,971,625 |
Accumulated deficit | (814,196) | (805,883) |
Accumulated other comprehensive income (loss) | (9,479) | (10,111) |
Total equity | 4,174,858 | 4,157,457 |
Total liabilities and equity | $ 8,705,742 | $ 8,661,968 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Allowance on receivables | $ 717 | $ 669 |
Accrued rental income allowance | 4,153 | 4,168 |
Debt costs accumulated amortization | $ 24,525 | $ 23,952 |
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) | 183,350,322 | 182,474,770 |
Common stock, shares outstanding (in shares) | 183,350,322 | 182,474,770 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Revenues: | ||
Rental income | $ 214,825 | $ 203,630 |
Interest and other income from real estate transactions | 582 | 478 |
Total revenues | 215,407 | 204,108 |
Operating expenses: | ||
General and administrative | 12,584 | 12,251 |
Real estate | 7,154 | 6,846 |
Depreciation and amortization | 60,615 | 59,148 |
Leasing transaction costs | 33 | 75 |
Impairment losses – real estate, net of recoveries | 1,204 | 2,640 |
Executive retirement costs | 317 | 423 |
Total operating expenses | 81,907 | 81,383 |
Gain on disposition of real estate | 4,821 | 6,300 |
Earnings from operations | 138,321 | 129,025 |
Other expenses (revenues): | ||
Interest and other income | (119) | (33) |
Interest expense | 44,069 | 38,891 |
Total other expenses (revenues) | 43,950 | 38,858 |
Net earnings | $ 94,371 | $ 90,167 |
Net earnings per share | ||
Basic (in dollars per share) | $ 0.52 | $ 0.5 |
Diluted (in dollars per share) | $ 0.52 | $ 0.5 |
Weighted average shares outstanding: | ||
Basic (in shares) | 181,794,208 | 180,845,503 |
Diluted (in shares) | 182,212,897 | 181,434,345 |
Total comprehensive income | ||
Net earnings | $ 94,371 | $ 90,167 |
Amortization of interest rate hedges | 632 | 607 |
Total comprehensive income | $ 95,003 | $ 90,774 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Equity (Unaudited) - USD ($) | Total | Common Stock | Capital in Excess of Par Value | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Balances at Dec. 31, 2022 | $ 4,123,502,000 | $ 1,815,000 | $ 4,928,034,000 | $ (793,765,000) | $ (12,582,000) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net earnings | 90,167,000 | 90,167,000 | |||
Dividends declared and paid: | |||||
Common stock dividends declared and paid | (98,677,000) | 724,000 | (99,401,000) | ||
Issuance of common stock: | |||||
Director compensation | 269,000 | 269,000 | |||
Stock purchase plan | 98,000 | 98,000 | |||
ATM equity program | 16,368,000 | 4,000 | 16,364,000 | ||
Restricted shares, net of forfeitures | 3,000 | (3,000) | |||
Stock issuance costs | (294,000) | (294,000) | |||
Amortization of deferred compensation | 2,832,000 | 2,832,000 | |||
Amortization of interest rate hedges | 607,000 | 607,000 | |||
Balances at Mar. 31, 2023 | 4,134,872,000 | 1,822,000 | 4,948,024,000 | (802,999,000) | (11,975,000) |
Balances at Dec. 31, 2023 | 4,157,457,000 | 1,826,000 | 4,971,625,000 | (805,883,000) | (10,111,000) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net earnings | 94,371,000 | 94,371,000 | |||
Dividends declared and paid: | |||||
Common stock dividends declared and paid | (101,948,000) | 736,000 | (102,684,000) | ||
Issuance of common stock: | |||||
Director compensation | 320,000 | 320,000 | |||
Stock purchase plan | 32,000 | 32,000 | |||
ATM equity program | 20,925,000 | 5,000 | 20,920,000 | ||
Restricted shares, net of forfeitures | 4,000 | (4,000) | |||
Stock issuance costs | (178,000) | (178,000) | |||
Amortization of deferred compensation | 3,247,000 | 3,247,000 | |||
Amortization of interest rate hedges | 632,000 | 632,000 | |||
Balances at Mar. 31, 2024 | $ 4,174,858,000 | $ 1,835,000 | $ 4,996,698,000 | $ (814,196,000) | $ (9,479,000) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Equity (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Common stock dividends declared and paid (in dollars per share) | $ 0.565 | $ 0.55 |
Issuance of common stock - Director compensation (in shares) | 9,569 | 8,183 |
Issuance of common stock - Stock purchase plan (in shares) | 783 | 2,132 |
Issuance of common stock - ATM equity program (in shares) | 500,000 | 349,809 |
Issuance of common stock - restricted shares, net (in shares) | 354,270 | 256,517 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | ||
Cash flows from operating activities: | |||
Net earnings | $ 94,371 | $ 90,167 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Depreciation and amortization | 60,615 | 59,148 | |
Impairment losses – real estate, net of recoveries | 1,204 | 2,640 | |
Amortization of notes payable discount | 661 | 432 | |
Amortization of debt costs | 1,301 | 1,199 | |
Amortization of mortgages payable premium | 0 | (21) | |
Amortization of interest rate hedges | 632 | 607 | |
Gain on disposition of real estate | (4,821) | (6,300) | |
Performance incentive plan expense | 3,897 | 3,466 | |
Performance incentive plan payment | (1,274) | (916) | |
Change in operating assets and liabilities, net of assets acquired and liabilities assumed: | |||
Decrease in receivables | 80 | 337 | |
Decrease (increase) in accrued rental income | 36 | (469) | |
Increase in other assets | 303 | 832 | |
Increase in accrued interest payable | 41,113 | 34,392 | |
Decrease in other liabilities | (7,148) | (4,670) | |
Other | (255) | (22) | |
Net cash provided by operating activities | 190,715 | 180,822 | |
Cash flows from investing activities: | |||
Proceeds from the disposition of real estate | 18,940 | 12,136 | |
Additions to real estate | (116,406) | (153,726) | |
Principal payments received on mortgages and notes receivable | 120 | 111 | |
Other | (386) | (867) | |
Net cash used in investing activities | (97,732) | (142,346) | |
Cash flows from financing activities: | |||
Proceeds from line of credit payable | 152,000 | 218,000 | |
Repayment of line of credit payable | (167,800) | (175,200) | |
Repayment of mortgages payable | 0 | (173) | |
Payment of debt issuance costs | (53) | (50) | |
Proceeds from issuance of common stock | 21,693 | 17,190 | |
Stock issuance costs | (166) | (294) | |
Payment of common stock dividends | (102,684) | (99,401) | |
Net cash used in financing activities | (97,010) | (39,928) | |
Net decrease in cash, cash equivalents and restricted cash | (4,027) | (1,452) | |
Cash, cash equivalents and restricted cash at beginning of period | [1] | 5,155 | 6,778 |
Cash, cash equivalents and restricted cash at end of period | [1] | 1,128 | 5,326 |
Supplemental disclosure of cash flow information: | |||
Interest paid, net of amount capitalized | 2,221 | 2,687 | |
Supplemental disclosure of noncash investing and financing activities: | |||
Change in other comprehensive income | 632 | 607 | |
Right-of-use asset recorded in connection with lease liability | 0 | 6,401 | |
Change in work in progress accrual | $ 8,086 | $ 1,811 | |
[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. As of March 31, 2023 and December 31, 2023, NNN had restricted cash of $ 2,086 and $ 3,966 , respectively. NNN did no t have restricted cash and cash held in escrow as of March 31, 2024. |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 |
Statement of Cash Flows [Abstract] | |||
Restricted cash or cash held in escrow | $ 0 | $ 3,966 | $ 2,086 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Summary of Significant Accounting Policies | Note 1 – Organization and Summary of Significant Accounting Policies : Organization and Nature of Business. NNN REIT, Inc., a Maryland corporation, is a fully integrated real estate investment trust (“REIT”) formed in 1984. The term "NNN" or the "Company" refers to NNN REIT, Inc. and all of its consolidated subsidiaries. NNN may elect to treat certain of its subsidiaries as taxable REIT subsidiaries ("TRS"). 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 are primarily held for investment ("Properties" or "Property Portfolio", or individually a "Property") . March 31, 2024 Property Portfolio: Total Properties 3,546 Gross leasable area (square feet) 36,137,000 States 49 Weighted average remaining lease term (years) 10.0 NNN's operations are reported within one reportable segment in the unaudited condensed consolidated financial statements and all properties are considered part of the Properties or Property Portfolio. As such, property counts and calculations involving property counts reflect all NNN Properties. 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. 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, 2024, may not be indicative of the results that may be expected for the year ending December 31, 2024. Amounts as of December 31, 2023, 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, 2023. Principles of Consolidation. NNN's unaudited 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 Topic 810, 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, third-party costs and other miscellaneous costs incurred during the development period until the project is substantially complete and available for occupancy. NNN recorded $ 1,859,000 and $ 405,000 in capitalized interest during the development period for the quarters ended March 31, 2024 and 2023, respectively. Purchase Accounting for Acquisition of Real Estate. In accordance with the FASB ASC 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 value relies upon ranking comparable properties' attributes from most 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 renewal 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 valued by comparing the purchase price paid for a property after adjusting for existing in-place leases to the estimated fair value of the property as-if-vacant, determined as set forth above. This intangible asset 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. NNN records its leases on the Property Portfolio in accordance with FASB ASC Topic 842, Leases ("ASC 842"). In addition, NNN records right-of-use assets and operating lease liabilities as lessee under operating leases in accordance with ASC 842. NNN's real estate is generally leased to tenants on a net lease basis, whereby the tenant is responsible for all operating expenses relating to the Property, including property taxes, insurance, maintenance, repairs and capital expenditures. The leases on the Property Portfolio are predominantly classified as operating leases and are accounted for as follows: Operating method – Properties with leases accounted for using the operating method are recorded at the cost of the real estate and depreciated on the straight-line method over their estimated remaining useful lives, which generally range from 20 to 40 years for buildings and improvements and 15 years for land improvements. Leasehold interests are amortized on the straight-line method over the terms of their respective leases. Revenue is recognized as rentals are earned and expenses (including depreciation) are charged to operations as incurred. When scheduled rentals vary during the lease term, income is recognized on a straight-line basis so as to produce a constant periodic rent over the term of the lease. Accrued rental income is the aggregate difference between the scheduled rents which vary during the lease term and the income recognized on a straight-line basis. Collectability. In accordance with ASC 842, NNN reviews the collectability of its rental income on an ongoing basis. NNN considers collectability indicators when analyzing accounts receivable (and accrued rent) and historical bad debt levels, tenant credit-worthiness and current economic trends, all of which assists in evaluating the probability of outstanding and future rental income collections and the adequacy of the allowance for doubtful accounts. In addition, tenants in bankruptcy are analyzed and considerations are made in connection with the expected recovery of pre-petition and post-petition bankruptcy claims. When NNN deems the collection of rental income from a tenant not probable, uncollected previously recognized rental revenue and any related accrued rent are reversed as a reduction to rental income and, subsequently, any rental income is only recognized when cash receipts are received. At this point, a tenant is deemed cash basis for accounting purposes. If NNN subsequently deems the collection of rental income is probable, any related accrued rental income or expense is restored. As a result of the review of lease payments collectability, NNN recorded a write-off of $ 444,000 and $ 232,000 of outstanding receivables and related accrued rent for certain tenants reclassified to cash basis for accounting purposes during the quarters ended March 31, 2024 and 2023, respectively. The following table summarizes those tenants classified as cash basis for accounting purposes as of March 31: 2024 2023 Number of tenants 10 10 Cash basis tenants as a percent of: Total Properties 3.5 % 5.0 % Total annual base rent 5.1 % (1) 7.1 % (2) Total gross leasable area 4.9 % 6.7 % Based on annualized base rent for all leases in place at the end of each respective quarter. (1) $ 831,010,000 as of March 31, 2024. (2) $ 781,909,000 as of March 31, 2023. During the quarters ended March 31, 2024 and 2023, NNN recognized $ 9,775,000 and $ 15,565,000 , respectively, of rental income from certain tenants for periods following their classification to cash basis for accounting purposes. NNN includes an allowance for doubtful accounts in rental income on the Condensed Consolidated Statements of Income and Comprehensive Income. Real Estate – Held for Sale. Real estate held for sale is not depreciated and is recorded at the lower of cost or fair value, less cost to sell. On a quarterly basis, the Company evaluates its Properties for held for sale classification based on specific criteria as outlined in FASB ASC Topic 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. At March 31, 2024 and December 31, 2023 , NNN had recorded real estate held for sale of $ 22,239,000 (five properties) and $ 4,573,000 (one property), respectively, in real estate portfolio on the Condensed Consolidated Balance Sheets. The property classified as held for sale as of December 31, 2023 was sold during the quarter ended March 31, 2024 . Real Estate Dispositions. When real estate is disposed, the related cost, accumulated depreciation or amortization and any accrued rental income from operating leases and the net investment from direct financing leases are removed from the accounts, and gains and losses from the dispositions are reflected in income. FASB ASC Topic 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets ("ASC 610-20"), provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. An entity that transfers a nonfinancial asset in the scope of ASC 610-20 follows a two-step derecognition model to determine whether (and when) to derecognize the asset. NNN determined the key transactions impacted by ASC 610-20 are recorded in gain on disposition of real estate reported on the Condensed Consolidated Statements of Income and Comprehensive Income. In accordance with ASC 610-20, NNN evaluates any separate contracts or performance obligations to determine proper timing and/or amount of revenue recognition, as well as, transfer of control and transaction price allocation in determining the amount of gain or loss to record. Impairment – Real Estate. NNN periodically assesses its long-lived real estate assets for possible impairment whenever certain events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. These indicators include, but are not limited to: changes in real estate market conditions, the ability of NNN to re-lease properties that are currently vacant or become vacant, properties reclassified as held for sale, persistent vacancies greater than one year, and properties leased to tenants in bankruptcy. 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. Future cash flow estimates are sensitive to the assumptions made by management regarding future market rents, which are affected by expectations about future market and economic conditions. 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, with cash flows provided over the entire term. Credit Losses on Financial Instruments. FASB ASC Topic 326, Financial Instruments – Credit Losses, requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings. The 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. NNN held mortgages receivable, including accrued interest, of $ 926,000 and $ 1,002,000 included in other assets on the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023, respectively, net of $ 19,000 and $ 64,000 allowance for credit loss, respectively. NNN periodically evaluates the allowance for credit loss based on the fair value of the collateral and a 15-year historical collectability trend analysis. Cash and Cash Equivalents. NNN considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash and money market accounts. Cash equivalents are stated at cost plus accrued interest, which approximates fair value. Cash accounts maintained on behalf of NNN in demand deposits at commercial banks and money market funds may exceed federally insured levels or may be held in accounts without any federal insurance or any other insurance or guarantee. However, NNN has not experienced any losses in such accounts. Restricted Cash and Cash Held in Escrow. Restricted cash and cash held in escrow may include (i) cash proceeds from the sale of assets held by qualified intermediaries in anticipation of the acquisition of replacement properties in tax-free exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) cash that has been placed in escrow for the future funding of construction commitments, or (iii) cash that is not immediately available to NNN. As of December 31, 2023 , NNN held $ 3,966,000 in restricted cash and cash held in escrow. NNN had no restricted cash or cash held in escrow as of March 31, 2024 . Debt Costs – Line of Credit Payable. Debt costs incurred in connection with NNN's $ 1,100,000,000 unsecured revolving line of credit have been deferred and are being amortized to interest expense over the term of the loan commitment using the straight-line method, which approximates the effective interest method. NNN has recorded debt costs associated with the Credit Facility (as defined in "Note 3 – Line of Credit Payable") as an asset, in debt costs on the Condensed Consolidated Balance Sheets. Debt Costs – Notes Payable. Debt costs incurred in connection with the issuance of NNN's unsecured notes have been deferred and are being amortized to interest expense over the term of the respective debt obligation using the effective interest method. NNN had debt costs of $ 42,595,000, included in notes payable on the Condensed Consolidated Balance Sheets, as of March 31, 2024 and December 31, 2023, net of accumulated amortization of $ 15,071,000 and $ 14,343,000 , respectively. Revenue Recognition. Rental revenues for properties under construction commence upon completion of construction of the leased asset and delivery of the leased asset to the tenant. Rental revenues for non-development real estate assets are recognized when earned in accordance with ASC 842 , based on the terms of the lease of the leased asset. Leasehold interests are amortized on the straight-line method over the terms of their respective leases. When scheduled rentals vary during the lease term, income is recognized on a straight-line basis so as to produce a constant periodic rent over the term of the lease. Lease termination fees are recognized when collected subsequent to the related lease that is cancelled and NNN no longer has continuing involvement with the former tenant with respect to that property. Earnings Per Share. Earnings per share have been computed pursuant to the FASB guidance included in FASB ASC Topic 260, 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 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 share using the two-class method (dollars in thousands): Quarter Ended March 31, 2024 2023 Basic and Diluted Earnings: Net earnings $ 94,371 $ 90,167 Less: Earnings allocated to unvested restricted shares ( 153 ) ( 132 ) Net earnings used in basic and diluted earnings per share $ 94,218 $ 90,035 Basic and Diluted Weighted Average Shares Outstanding: Weighted average shares outstanding 182,700,682 181,720,238 Less: Unvested restricted shares ( 270,664 ) ( 240,699 ) Less: Unvested contingent restricted shares ( 635,810 ) ( 634,036 ) Weighted average shares outstanding used in 181,794,208 180,845,503 Other dilutive securities 418,689 588,842 Weighted average shares outstanding used in 182,212,897 181,434,345 Income Taxes. NNN has made an election to be taxed as a REIT under Sections 856 through 860 of the Code, and related regulations. NNN generally will not be subject to federal income taxes on taxable income it distributes to stockholders, provided it meets certain other requirements for qualifying as a REIT. As of March 31, 2024 , NNN believes it has qualified as a REIT. Notwithstanding NNN's qualification for taxation as a REIT, NNN is subject to certain state and local income, franchise and excise taxes. Fair Value Measurement. NNN's estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in FASB ASC Topic 820, Fair Value Measurement . 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) for the quarter ended March 31, 2024 (dollars in thousands): Gain (Loss) on (1) Beginning balance, December 31, 2023 $ ( 10,111 ) Reclassifications from accumulated other comprehensive income to net earnings 632 (2) Ending balance, March 31, 2024 $ ( 9,479 ) (1) Additional disclosure is included in "Note 4 – Notes Payable and Derivatives". (2) Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income. There is no income tax expense (benefit) resulting from this reclassification. New Accounting Pronouncements. FASB Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”) contains practical expedients for reference rate reform-related activities, including the transition away from the London Interbank Offered Rate ("LIBOR"), that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. In 2021, NNN elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. In December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”) which was issued to defer the sunset date of ASU 2020-04. ASU 2022-06 is effective immediately for all companies. NNN continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. NNN had no derivative financial instruments outstanding as of March 31, 2024. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), effective for fiscal years, beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The amendments in this update require public entities to provide enhanced disclosures primarily around segment expenses. On an annual and interim basis, entities will disclose significant segment expenses that are regularly provided to the chief operating decision maker and included with each measure of segment profit or loss, an amount for “other segment items” by reportable segment accompanied by a description of its composition, and all annual disclosures about segment profit and loss currently required by Topic 280 to be disclosed in interim periods. While NNN only has one reportable segment, NNN is currently evaluating the potential impact the adoption of ASU 2023-07 will have on its future disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), effective for annual periods beginning after December 15, 2024. The amendments in the update require public business entities on an annual basis to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold of equal to or greater than five percent of the amount computed by multiplying pretax income by the statutory income tax rate. The amendments also require that entities disclose on an annual basis information about the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid. The amendments eliminate some of the previous required disclosures for all entities relating to estimates of the change in unrecognized tax benefits reasonably possible within 12 months. NNN is currently evaluating the potential impact the adoption of ASU 2023-09 will have on its future disclosures. Use of Estimates. Additional critical accounting policies of NNN include management's estimates and assumptions relating to the reporting of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities which are required to prepare the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Significant accounting policies include management's estimates of the purchase accounting for acquisition of real estate, the recoverability of the carrying value of long-lived assets and management's evaluation of the probability of outstanding and future lease payment collections. Estimates are sensitive to evaluations by management about current and future expectations of market and economic conditions. Actual results could differ from those estimates. |
Real Estate
Real Estate | 3 Months Ended |
Mar. 31, 2024 | |
Real Estate [Abstract] | |
Real Estate | Note 2 – Real Estate : Real Estate – Portfolio Leases. At March 31, 2024, NNN's real estate portfolio had a weighted average remaining lease term of 10.0 years and consisted of 3,554 leases classified as operating leases and an additional four leases accounted for as direct financing leases. 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. Typically, the Property leases provide for initial terms of 10 to 20 years. The Properties are generally leased under triple-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, real estate taxes and assessments, 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 increases in the Consumer Price Index or fixed increases. 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 renewal 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. NNN's real estate consisted of the following at (dollars in thousands): March 31, December 31, Land and improvements (1) $ 2,888,657 $ 2,878,400 Buildings and improvements 7,459,462 7,368,873 Leasehold interests 355 355 10,348,474 10,247,628 Less accumulated depreciation and amortization ( 1,913,861 ) ( 1,863,451 ) 8,434,613 8,384,177 Work in progress and improvements 127,025 144,068 Accounted for using the operating method 8,561,638 8,528,245 Accounted for using the direct financing method 2,979 3,033 Classified as held for sale (2) 22,239 4,573 $ 8,586,856 $ 8,535,851 (1) Includes $ 76,281 and $ 96,464 in land for Properties under construction at March 31, 2024 and December 31, 2023, respectively. (2) As of March 31, 2024 , five Properties were classified as held for sale. The property classified as held for sale as of December 31, 2023 was sold during the quarter ended March 31, 2024. NNN recognized the following revenues in rental income (dollars in thousands): Quarter Ended March 31, 2024 2023 Rental income from operating leases $ 209,084 $ 198,183 Earned income from direct financing leases 119 144 Percentage rent 888 763 Rental revenues 210,091 199,090 Real estate expense reimbursement from tenants 4,734 4,540 $ 214,825 $ 203,630 Some leases provide for a free rent period 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 quarters ended March 31, 2024 and 2023, NNN recognized ($ 36,000 ) and $ 469,000 , respectively, of net straight-line accrued rental income, net of reserves. 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, December 31, Intangible lease assets (included in other assets ): Above-market in-place leases $ 15,113 $ 15,297 Less: accumulated amortization ( 12,055 ) ( 12,080 ) Above-market in-place leases, net $ 3,058 $ 3,217 In-place leases $ 121,664 $ 122,802 Less: accumulated amortization ( 85,841 ) ( 85,332 ) In-place leases, net $ 35,823 $ 37,470 Intangible lease liabilities (included in other liabilities ): Below-market in-place leases $ 40,996 $ 41,244 Less: accumulated amortization ( 29,145 ) ( 29,117 ) Below-market in-place leases, net $ 11,851 $ 12,127 The amounts amortized as a net increase to rental income for above-market and below-market in-place leases for the quarters ended March 31, 2024 and 2023 were $ 117,000 and $ 112,000 , respectively. The value of in-place leases amortized to expense for the quarters ended March 31, 2024 and 2023, was $ 1,647,000 and $ 1,760,000 , respectively. 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, 2024 2023 # of Sold Net # of Sold Net Gain on disposition of real estate 6 $ 4,821 6 $ 6,300 Real Estate – Commitments NNN has committed to fund construction on 39 Properties. The improvements on such Properties are estimated to be completed within 12 to 18 months. These construction commitments, as of March 31, 2024, are outlined in the table below (dollars in thousands): Total commitment (1) $ 320,410 Less amount funded ( 203,306 ) Remaining commitment $ 117,104 (1) Includes land, construction costs, tenant improvements, lease costs, capitalized interest and third-party costs. Real Estate – Impairments NNN periodically assesses its long-lived real estate assets for possible impairment whenever certain events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. As a result of NNN's review of long-lived assets, including identifiable intangible assets, NNN recognized real estate impairments, net of recoveries as summarized in the table below (dollars in thousands): Quarter Ended March 31, 2024 2023 Total real estate impairments, net of recoveries $ 1,204 $ 2,640 Number of Properties: Vacant — 3 Occupied 3 1 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, 2024 | |
Debt Disclosure [Abstract] | |
Line of Credit Payable | Note 3 – Line of Credit Payable : NNN's $ 1,100,000,000 revolving credit facility (the "Credit Facility") had a weighted average outstanding balance of $ 116,067,000 and a weighted average interest rate of 6.26 % during the quarter ended March 31, 2024 . The Credit Facility has a base interest rate of the Secured Overnight Financing Rate ("SOFR") plus a SOFR adjustment of 10 basis points ("Adjusted SOFR"). The Credit Facility bears interest at Adjusted SOFR plus 77.5 basis points; however, such interest rate may change pursuant to a tiered interest rate structure based on NNN's debt rating. Additionally, as part of NNN's environmental, social and governance ("ESG") initiative, pricing may be reduced if specified ESG metrics are achieved. The Credit Facility matures in June 2025, unless the Company exercises its options to extend maturity to June 2026. The Credit Facility also includes an accordion feature which permits NNN to increase the facility size up to $ 2,000,000,000 , subject to lender approval. In connection with the Credit Facility, loan costs are classified as debt costs on the Condensed Consolidated Balance Sheets. As of March 31, 2024, there was $ 116,200,000 outstanding and $ 983,800,000 available for future borrowings under the Credit Facility, and NNN was in compliance with each of the Credit Facility financial covenants. |
Notes Payable and Derivatives
Notes Payable and Derivatives | 3 Months Ended |
Mar. 31, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Notes Payable and Derivatives | Note 4 – Notes Payable and Derivatives : Additional information related to NNN's notes payable and derivatives is included in NNN's Annual Report on Form 10-K for the year ended December 31, 2023. As of March 31, 2024, $ 9,479,000 remained in accumulated other comprehensive income (loss) related to NNN's previously terminated interest rate hedges. During the quarters ended March 31, 2024 and 2023, NNN reclassified out of accumulated other comprehensive income (loss) $ 632,000 and $ 607,000 , respectively, as an increase in interest expense. Over the next 12 months, NNN estimates that an additional $ 1,980,000 will be reclassified as an increase in interest expense from these terminated derivatives. Amounts reported in accumulated other comprehensive income (loss) 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. NNN had no derivative financial instruments outstanding at March 31, 2024 . |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Stockholders' Equity | Note 5 – Stockholders' Equity : Universal Shelf Registration Statement. In August 2023, NNN filed a shelf registration statement with the Securities and Exchange Commission (the "Commission") which became automatically effective ("Universal Shelf"). The Universal Shelf permits the issuance by NNN of an indeterminate amount of debt and equity securities, including preferred stock, depositary shares, common stock, stock purchase contracts, rights, warrants, and units. NNN may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering. 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: 2023 ATM 2020 ATM Shelf registration statement: Effective date August 2023 August 2020 Termination date August 2026 August 2023 Total allowable shares 17,500,000 17,500,000 Total shares issued as of March 31, 2024 500,000 7,722,511 The following table outlines the common stock issuances pursuant to NNN's ATM (dollars in thousands, except per share data): Quarter Ended March 31, 2024 2023 Shares of common stock 500,000 349,809 Average price per share (net) $ 41.61 $ 45.95 Net proceeds $ 20,806 $ 16,074 Stock issuance costs (1) $ 119 $ 294 (1) Stock issuance costs consist primarily of underwriters' and agents' fees and commissions, and legal and accounting fees. Dividend Reinvestment and Stock Purchase Plan. In February 2024, NNN filed a shelf registration statement for its Dividend Reinvestment and Stock Purchase Plan ("DRIP") with the Commission that was automatically effective, and permits NNN to issue up to 4,000,000 shares of common stock. The following outlines the common stock issuances pursuant to NNN's DRIP (dollars in thousands): Quarter Ended March 31, 2024 2023 Shares of common stock 19,494 17,760 Net proceeds $ 709 $ 822 Dividends. The following table outlines the dividends declared and paid for NNN's common stock (dollars in thousands, except per share data): Quarter Ended March 31, 2024 2023 Dividends $ 102,684 $ 99,401 Per share 0.5650 0.5500 In April 2024, NNN declared a dividend of $ 0.5650 per share, which is payable in May 2024 to its common stockholders of record as of April 30, 2024 . |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Note 6 – 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. At March 31, 2024 and December 31, 2023, the fair value of NNN's notes payable excluding unamortized discount and debt costs was $ 3,762,576,000 and $ 3,801,367,000 , respectively, based upon quoted market prices as of the close of the period, which is a Level 1 valuation since NNN's notes payable are publicly traded. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Event | Note 7 – Subsequent Events : NNN reviewed its subsequent events and transactions that have occurred after March 31, 2024, the date of the condensed consolidated balance sheet. In April 2024, NNN announced it had amended its Credit Facility, (as so amended, the "Amended Credit Facility") by increasing borrowing capacity from $ 1,100,000,000 to $ 1,200,000,000 and by extending the maturity date from June 2025 to April 2028 , with options by NNN to extend maturity to April 2029 . No other material terms were modified in the Amended Credit Facility. There were no additional reportable events or transactions. |
Organization and Summary of S_2
Organization and Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation. NNN's unaudited 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 Topic 810, Consolidation. All significant intercompany account balances and transactions have been eliminated. |
Real Estate Portfolio | 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, third-party costs and other miscellaneous costs incurred during the development period until the project is substantially complete and available for occupancy. NNN recorded $ 1,859,000 and $ 405,000 in capitalized interest during the development period for the quarters ended March 31, 2024 and 2023, respectively. Purchase Accounting for Acquisition of Real Estate. In accordance with the FASB ASC 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 value relies upon ranking comparable properties' attributes from most 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 renewal 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 valued by comparing the purchase price paid for a property after adjusting for existing in-place leases to the estimated fair value of the property as-if-vacant, determined as set forth above. This intangible asset 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 | Lease Accounting. NNN records its leases on the Property Portfolio in accordance with FASB ASC Topic 842, Leases ("ASC 842"). In addition, NNN records right-of-use assets and operating lease liabilities as lessee under operating leases in accordance with ASC 842. NNN's real estate is generally leased to tenants on a net lease basis, whereby the tenant is responsible for all operating expenses relating to the Property, including property taxes, insurance, maintenance, repairs and capital expenditures. The leases on the Property Portfolio are predominantly classified as operating leases and are accounted for as follows: Operating method – Properties with leases accounted for using the operating method are recorded at the cost of the real estate and depreciated on the straight-line method over their estimated remaining useful lives, which generally range from 20 to 40 years for buildings and improvements and 15 years for land improvements. Leasehold interests are amortized on the straight-line method over the terms of their respective leases. Revenue is recognized as rentals are earned and expenses (including depreciation) are charged to operations as incurred. When scheduled rentals vary during the lease term, income is recognized on a straight-line basis so as to produce a constant periodic rent over the term of the lease. Accrued rental income is the aggregate difference between the scheduled rents which vary during the lease term and the income recognized on a straight-line basis. |
Collectability | Collectability. In accordance with ASC 842, NNN reviews the collectability of its rental income on an ongoing basis. NNN considers collectability indicators when analyzing accounts receivable (and accrued rent) and historical bad debt levels, tenant credit-worthiness and current economic trends, all of which assists in evaluating the probability of outstanding and future rental income collections and the adequacy of the allowance for doubtful accounts. In addition, tenants in bankruptcy are analyzed and considerations are made in connection with the expected recovery of pre-petition and post-petition bankruptcy claims. When NNN deems the collection of rental income from a tenant not probable, uncollected previously recognized rental revenue and any related accrued rent are reversed as a reduction to rental income and, subsequently, any rental income is only recognized when cash receipts are received. At this point, a tenant is deemed cash basis for accounting purposes. If NNN subsequently deems the collection of rental income is probable, any related accrued rental income or expense is restored. As a result of the review of lease payments collectability, NNN recorded a write-off of $ 444,000 and $ 232,000 of outstanding receivables and related accrued rent for certain tenants reclassified to cash basis for accounting purposes during the quarters ended March 31, 2024 and 2023, respectively. The following table summarizes those tenants classified as cash basis for accounting purposes as of March 31: 2024 2023 Number of tenants 10 10 Cash basis tenants as a percent of: Total Properties 3.5 % 5.0 % Total annual base rent 5.1 % (1) 7.1 % (2) Total gross leasable area 4.9 % 6.7 % Based on annualized base rent for all leases in place at the end of each respective quarter. (1) $ 831,010,000 as of March 31, 2024. (2) $ 781,909,000 as of March 31, 2023. During the quarters ended March 31, 2024 and 2023, NNN recognized $ 9,775,000 and $ 15,565,000 , respectively, of rental income from certain tenants for periods following their classification to cash basis for accounting purposes. NNN includes an allowance for doubtful accounts in rental income on the Condensed Consolidated Statements of Income and Comprehensive Income. |
Real Estate - Held for Sale | Real Estate – Held for Sale. Real estate held for sale is not depreciated and is recorded at the lower of cost or fair value, less cost to sell. On a quarterly basis, the Company evaluates its Properties for held for sale classification based on specific criteria as outlined in FASB ASC Topic 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. At March 31, 2024 and December 31, 2023 , NNN had recorded real estate held for sale of $ 22,239,000 (five properties) and $ 4,573,000 (one property), respectively, in real estate portfolio on the Condensed Consolidated Balance Sheets. The property classified as held for sale as of December 31, 2023 was sold during the quarter ended March 31, 2024 . |
Real Estate Dispositions | Real Estate Dispositions. When real estate is disposed, the related cost, accumulated depreciation or amortization and any accrued rental income from operating leases and the net investment from direct financing leases are removed from the accounts, and gains and losses from the dispositions are reflected in income. FASB ASC Topic 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets ("ASC 610-20"), provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. An entity that transfers a nonfinancial asset in the scope of ASC 610-20 follows a two-step derecognition model to determine whether (and when) to derecognize the asset. NNN determined the key transactions impacted by ASC 610-20 are recorded in gain on disposition of real estate reported on the Condensed Consolidated Statements of Income and Comprehensive Income. In accordance with ASC 610-20, NNN evaluates any separate contracts or performance obligations to determine proper timing and/or amount of revenue recognition, as well as, transfer of control and transaction price allocation in determining the amount of gain or loss to record. |
Impairment - Real Estate | Impairment – Real Estate. NNN periodically assesses its long-lived real estate assets for possible impairment whenever certain events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. These indicators include, but are not limited to: changes in real estate market conditions, the ability of NNN to re-lease properties that are currently vacant or become vacant, properties reclassified as held for sale, persistent vacancies greater than one year, and properties leased to tenants in bankruptcy. 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. Future cash flow estimates are sensitive to the assumptions made by management regarding future market rents, which are affected by expectations about future market and economic conditions. 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, with cash flows provided over the entire term. |
Credit Losses on Financial Instruments | Credit Losses on Financial Instruments. FASB ASC Topic 326, Financial Instruments – Credit Losses, requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings. The 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. NNN held mortgages receivable, including accrued interest, of $ 926,000 and $ 1,002,000 included in other assets on the Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023, respectively, net of $ 19,000 and $ 64,000 allowance for credit loss, respectively. NNN periodically evaluates the allowance for credit loss based on the fair value of the collateral and a 15-year historical collectability trend analysis. |
Cash and Cash Equivalents | Cash and Cash Equivalents. NNN considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash and money market accounts. Cash equivalents are stated at cost plus accrued interest, which approximates fair value. Cash accounts maintained on behalf of NNN in demand deposits at commercial banks and money market funds may exceed federally insured levels or may be held in accounts without any federal insurance or any other insurance or guarantee. However, NNN has not experienced any losses in such accounts. |
Restricted Cash and Cash Held in Escrow | Restricted Cash and Cash Held in Escrow. Restricted cash and cash held in escrow may include (i) cash proceeds from the sale of assets held by qualified intermediaries in anticipation of the acquisition of replacement properties in tax-free exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) cash that has been placed in escrow for the future funding of construction commitments, or (iii) cash that is not immediately available to NNN. As of December 31, 2023 , NNN held $ 3,966,000 in restricted cash and cash held in escrow. NNN had no restricted cash or cash held in escrow as of March 31, 2024 . |
Debt Costs | Debt Costs – Line of Credit Payable. Debt costs incurred in connection with NNN's $ 1,100,000,000 unsecured revolving line of credit have been deferred and are being amortized to interest expense over the term of the loan commitment using the straight-line method, which approximates the effective interest method. NNN has recorded debt costs associated with the Credit Facility (as defined in "Note 3 – Line of Credit Payable") as an asset, in debt costs on the Condensed Consolidated Balance Sheets. Debt Costs – Notes Payable. Debt costs incurred in connection with the issuance of NNN's unsecured notes have been deferred and are being amortized to interest expense over the term of the respective debt obligation using the effective interest method. NNN had debt costs of $ 42,595,000, included in notes payable on the Condensed Consolidated Balance Sheets, as of March 31, 2024 and December 31, 2023, net of accumulated amortization of $ 15,071,000 and $ 14,343,000 , respectively. |
Revenue Recognition | Revenue Recognition. Rental revenues for properties under construction commence upon completion of construction of the leased asset and delivery of the leased asset to the tenant. Rental revenues for non-development real estate assets are recognized when earned in accordance with ASC 842 , based on the terms of the lease of the leased asset. Leasehold interests are amortized on the straight-line method over the terms of their respective leases. When scheduled rentals vary during the lease term, income is recognized on a straight-line basis so as to produce a constant periodic rent over the term of the lease. Lease termination fees are recognized when collected subsequent to the related lease that is cancelled and NNN no longer has continuing involvement with the former tenant with respect to that property. |
Earnings Per Share | Earnings Per Share. Earnings per share have been computed pursuant to the FASB guidance included in FASB ASC Topic 260, 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 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 share using the two-class method (dollars in thousands): Quarter Ended March 31, 2024 2023 Basic and Diluted Earnings: Net earnings $ 94,371 $ 90,167 Less: Earnings allocated to unvested restricted shares ( 153 ) ( 132 ) Net earnings used in basic and diluted earnings per share $ 94,218 $ 90,035 Basic and Diluted Weighted Average Shares Outstanding: Weighted average shares outstanding 182,700,682 181,720,238 Less: Unvested restricted shares ( 270,664 ) ( 240,699 ) Less: Unvested contingent restricted shares ( 635,810 ) ( 634,036 ) Weighted average shares outstanding used in 181,794,208 180,845,503 Other dilutive securities 418,689 588,842 Weighted average shares outstanding used in 182,212,897 181,434,345 |
Income Taxes | Income Taxes. NNN has made an election to be taxed as a REIT under Sections 856 through 860 of the Code, and related regulations. NNN generally will not be subject to federal income taxes on taxable income it distributes to stockholders, provided it meets certain other requirements for qualifying as a REIT. As of March 31, 2024 , NNN believes it has qualified as a REIT. Notwithstanding NNN's qualification for taxation as a REIT, NNN is subject to certain state and local income, franchise and excise taxes. |
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 FASB ASC Topic 820, Fair Value Measurement . 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) | Accumulated Other Comprehensive Income (Loss). The following table outlines the changes in accumulated other comprehensive income (loss) for the quarter ended March 31, 2024 (dollars in thousands): Gain (Loss) on (1) Beginning balance, December 31, 2023 $ ( 10,111 ) Reclassifications from accumulated other comprehensive income to net earnings 632 (2) Ending balance, March 31, 2024 $ ( 9,479 ) (1) Additional disclosure is included in "Note 4 – Notes Payable and Derivatives". (2) Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income. There is no income tax expense (benefit) resulting from this reclassification. |
New Accounting Pronouncements | New Accounting Pronouncements. FASB Accounting Standards Update ("ASU") 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”) contains practical expedients for reference rate reform-related activities, including the transition away from the London Interbank Offered Rate ("LIBOR"), that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. In 2021, NNN elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. In December 2022, the FASB issued ASU 2022-06, Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”) which was issued to defer the sunset date of ASU 2020-04. ASU 2022-06 is effective immediately for all companies. NNN continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur. NNN had no derivative financial instruments outstanding as of March 31, 2024. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"), effective for fiscal years, beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The amendments in this update require public entities to provide enhanced disclosures primarily around segment expenses. On an annual and interim basis, entities will disclose significant segment expenses that are regularly provided to the chief operating decision maker and included with each measure of segment profit or loss, an amount for “other segment items” by reportable segment accompanied by a description of its composition, and all annual disclosures about segment profit and loss currently required by Topic 280 to be disclosed in interim periods. While NNN only has one reportable segment, NNN is currently evaluating the potential impact the adoption of ASU 2023-07 will have on its future disclosures. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), effective for annual periods beginning after December 15, 2024. The amendments in the update require public business entities on an annual basis to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold of equal to or greater than five percent of the amount computed by multiplying pretax income by the statutory income tax rate. The amendments also require that entities disclose on an annual basis information about the amount of income taxes paid disaggregated by federal, state, and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid. The amendments eliminate some of the previous required disclosures for all entities relating to estimates of the change in unrecognized tax benefits reasonably possible within 12 months. NNN is currently evaluating the potential impact the adoption of ASU 2023-09 will have on its future disclosures. |
Use of Estimates | Use of Estimates. Additional critical accounting policies of NNN include management's estimates and assumptions relating to the reporting of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities which are required to prepare the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Significant accounting policies include management's estimates of the purchase accounting for acquisition of real estate, the recoverability of the carrying value of long-lived assets and management's evaluation of the probability of outstanding and future lease payment collections. Estimates are sensitive to evaluations by management about current and future expectations of market and economic conditions. Actual results could differ from those estimates. |
Organization and Summary of S_3
Organization and Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Accounting Policies [Abstract] | |
Summary of NNN's Investment Portfolio | 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 are primarily held for investment ("Properties" or "Property Portfolio", or individually a "Property") . March 31, 2024 Property Portfolio: Total Properties 3,546 Gross leasable area (square feet) 36,137,000 States 49 Weighted average remaining lease term (years) 10.0 |
Summary of tenants classified as cash basis | The following table summarizes those tenants classified as cash basis for accounting purposes as of March 31: 2024 2023 Number of tenants 10 10 Cash basis tenants as a percent of: Total Properties 3.5 % 5.0 % Total annual base rent 5.1 % (1) 7.1 % (2) Total gross leasable area 4.9 % 6.7 % Based on annualized base rent for all leases in place at the end of each respective quarter. (1) $ 831,010,000 as of March 31, 2024. (2) $ 781,909,000 as of March 31, 2023. |
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 share using the two-class method (dollars in thousands): Quarter Ended March 31, 2024 2023 Basic and Diluted Earnings: Net earnings $ 94,371 $ 90,167 Less: Earnings allocated to unvested restricted shares ( 153 ) ( 132 ) Net earnings used in basic and diluted earnings per share $ 94,218 $ 90,035 Basic and Diluted Weighted Average Shares Outstanding: Weighted average shares outstanding 182,700,682 181,720,238 Less: Unvested restricted shares ( 270,664 ) ( 240,699 ) Less: Unvested contingent restricted shares ( 635,810 ) ( 634,036 ) Weighted average shares outstanding used in 181,794,208 180,845,503 Other dilutive securities 418,689 588,842 Weighted average shares outstanding used in 182,212,897 181,434,345 |
Changes in Accumulated Other Comprehensive Income (Loss) | The following table outlines the changes in accumulated other comprehensive income (loss) for the quarter ended March 31, 2024 (dollars in thousands): Gain (Loss) on (1) Beginning balance, December 31, 2023 $ ( 10,111 ) Reclassifications from accumulated other comprehensive income to net earnings 632 (2) Ending balance, March 31, 2024 $ ( 9,479 ) (1) Additional disclosure is included in "Note 4 – Notes Payable and Derivatives". (2) Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income. There is no income tax expense (benefit) resulting from this reclassification. |
Real Estate (Tables)
Real Estate (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Real Estate [Abstract] | |
Summary of Real Estate Subject to Operating Leases | Real Estate Portfolio. NNN's real estate consisted of the following at (dollars in thousands): March 31, December 31, Land and improvements (1) $ 2,888,657 $ 2,878,400 Buildings and improvements 7,459,462 7,368,873 Leasehold interests 355 355 10,348,474 10,247,628 Less accumulated depreciation and amortization ( 1,913,861 ) ( 1,863,451 ) 8,434,613 8,384,177 Work in progress and improvements 127,025 144,068 Accounted for using the operating method 8,561,638 8,528,245 Accounted for using the direct financing method 2,979 3,033 Classified as held for sale (2) 22,239 4,573 $ 8,586,856 $ 8,535,851 (1) Includes $ 76,281 and $ 96,464 in land for Properties under construction at March 31, 2024 and December 31, 2023, respectively. (2) As of March 31, 2024 , five Properties were classified as held for sale. The property classified as held for sale as of December 31, 2023 was sold during the quarter ended March 31, 2024. |
Rental Income, Operating Leases | NNN recognized the following revenues in rental income (dollars in thousands): Quarter Ended March 31, 2024 2023 Rental income from operating leases $ 209,084 $ 198,183 Earned income from direct financing leases 119 144 Percentage rent 888 763 Rental revenues 210,091 199,090 Real estate expense reimbursement from tenants 4,734 4,540 $ 214,825 $ 203,630 |
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, December 31, Intangible lease assets (included in other assets ): Above-market in-place leases $ 15,113 $ 15,297 Less: accumulated amortization ( 12,055 ) ( 12,080 ) Above-market in-place leases, net $ 3,058 $ 3,217 In-place leases $ 121,664 $ 122,802 Less: accumulated amortization ( 85,841 ) ( 85,332 ) In-place leases, net $ 35,823 $ 37,470 Intangible lease liabilities (included in other liabilities ): Below-market in-place leases $ 40,996 $ 41,244 Less: accumulated amortization ( 29,145 ) ( 29,117 ) Below-market in-place leases, net $ 11,851 $ 12,127 |
Gains on Dispositions of Properties | The following table summarizes the properties sold and the corresponding gain recognized on the disposition of properties (dollars in thousands): Quarter Ended March 31, 2024 2023 # of Sold Net # of Sold Net Gain on disposition of real estate 6 $ 4,821 6 $ 6,300 |
Remaining Funding Commitments | These construction commitments, as of March 31, 2024, are outlined in the table below (dollars in thousands): Total commitment (1) $ 320,410 Less amount funded ( 203,306 ) Remaining commitment $ 117,104 (1) Includes land, construction costs, tenant improvements, lease costs, capitalized interest and third-party costs. |
Real Estate Impairments | As a result of NNN's review of long-lived assets, including identifiable intangible assets, NNN recognized real estate impairments, net of recoveries as summarized in the table below (dollars in thousands): Quarter Ended March 31, 2024 2023 Total real estate impairments, net of recoveries $ 1,204 $ 2,640 Number of Properties: Vacant — 3 Occupied 3 1 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Schedule of ATM Program | The following outlines NNN's ATM: 2023 ATM 2020 ATM Shelf registration statement: Effective date August 2023 August 2020 Termination date August 2026 August 2023 Total allowable shares 17,500,000 17,500,000 Total shares issued as of March 31, 2024 500,000 7,722,511 |
Schedule of Common Stock Issuances Pursuant to NNN's ATM | The following table outlines the common stock issuances pursuant to NNN's ATM (dollars in thousands, except per share data): Quarter Ended March 31, 2024 2023 Shares of common stock 500,000 349,809 Average price per share (net) $ 41.61 $ 45.95 Net proceeds $ 20,806 $ 16,074 Stock issuance costs (1) $ 119 $ 294 (1) Stock issuance costs consist primarily of underwriters' and agents' fees and commissions, and legal and accounting fees. |
Schedule of Common Stock Issuances Pursuant to NNN's DRIP | The following outlines the common stock issuances pursuant to NNN's DRIP (dollars in thousands): Quarter Ended March 31, 2024 2023 Shares of common stock 19,494 17,760 Net proceeds $ 709 $ 822 |
Schedule of Dividends Declared and Paid | The following table outlines the dividends declared and paid for NNN's common stock (dollars in thousands, except per share data): Quarter Ended March 31, 2024 2023 Dividends $ 102,684 $ 99,401 Per share 0.5650 0.5500 |
Organization and Summary of S_4
Organization and Summary of Significant Accounting Policies (Summary of NNN's Investment Portfolio) (Details) | 3 Months Ended |
Mar. 31, 2024 ft² State Property | |
Property Portfolio: | |
Total properties | Property | 3,546 |
Gross leasable area (square feet) | ft² | 36,137,000 |
States | State | 49 |
Weighted average remaining lease term | 10 years |
Organization and Summary of S_5
Organization and Summary of Significant Accounting Policies - (Summary of tenants classified as cash basis) (Details) - Tenant | Mar. 31, 2024 | Mar. 31, 2023 |
Accounting Policies [Abstract] | ||
Number of tenants | 10 | 10 |
Cash basis tenants as a percent of: | ||
Total Properties | 3.50% | 5% |
Total annual base rent | 5.10% | 7.10% |
Total gross leasable area | 4.90% | 6.70% |
Organization and Summary of S_6
Organization and Summary of Significant Accounting Policies - (Summary of tenants classified as cash basis) (Parenthetical) (Details) - USD ($) | Mar. 31, 2024 | Mar. 31, 2023 |
Accounting Policies [Abstract] | ||
Lease income annualized on base rent | $ 831,010,000 | $ 781,909,000 |
Organization and Summary of S_7
Organization and Summary of Significant Accounting Policies (Computation of Basic and Diluted Earnings per Share) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Basic and Diluted Earnings: | ||
Net earnings | $ 94,371 | $ 90,167 |
Less: Earnings allocated to unvested restricted shares | (153) | (132) |
Net earnings used in basic and diluted earnings per share | $ 94,218 | $ 90,035 |
Basic and Diluted Weighted Average Shares Outstanding: | ||
Weighted average number of shares outstanding | 182,700,682 | 181,720,238 |
Less: Unvested restricted shares (in shares) | (270,664) | (240,699) |
Less: Unvested contingent restricted shares (in shares) | (635,810) | (634,036) |
Weighted average number of shares outstanding used in basic earnings per share | 181,794,208 | 180,845,503 |
Other dilutive securities (in shares) | 418,689 | 588,842 |
Weighted average number of shares outstanding used in diluted earnings per share (in shares) | 182,212,897 | 181,434,345 |
Organization and Summary of S_8
Organization and Summary of Significant Accounting Policies (Changes in AOCI) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 USD ($) | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Balances | $ 4,157,457 | |
Balances | 4,174,858 | |
AOCI, cash flow hedges | ||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||
Balances | (10,111) | [1] |
Reclassifications from accumulated other comprehensive income to net earnings | 632 | [1],[2] |
Balances | $ (9,479) | [1] |
[1] (1) Additional disclosure is included in "Note 4 – Notes Payable and Derivatives". (2) Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income. There is no income tax expense (benefit) resulting from this reclassification. |
Organization and Summary of S_9
Organization and Summary of Significant Accounting Policies (Narrative) (Details) | 3 Months Ended | |||||
Mar. 31, 2024 USD ($) Segment | Mar. 31, 2023 USD ($) | Apr. 30, 2024 USD ($) | Dec. 31, 2023 USD ($) | |||
Accounting Policies [Line Items] | ||||||
Interest costs capitalized | $ 1,859,000 | $ 405,000 | ||||
Revenue recognized on cash basis | 9,775,000 | 15,565,000 | ||||
Revolving credit facility borrowing capacity | $ 983,800,000,000 | $ 1,200,000,000 | ||||
Number of Operating Segments | Segment | 1 | |||||
Classified as held for sale | $ 22,239,000 | [1] | 4,573,000 | $ 4,573,000 | [1] | |
Write-off of outstanding receivables and related accrued rent | 444,000 | $ 232,000 | ||||
Escrow and other restricted accounts | $ 0 | 3,966,000 | ||||
Land Improvements [Member] | ||||||
Accounting Policies [Line Items] | ||||||
Property estimated useful life | 15 years | |||||
Mortgage loan | ||||||
Accounting Policies [Line Items] | ||||||
Mortgage receivable | $ 926,000 | 1,002,000 | ||||
Allowance for credit loss | $ 19,000 | 64,000 | ||||
Minimum | Building and Building Improvements [Member] | ||||||
Accounting Policies [Line Items] | ||||||
Property estimated useful life | 20 years | |||||
Maximum | Building and Building Improvements [Member] | ||||||
Accounting Policies [Line Items] | ||||||
Property estimated useful life | 40 years | |||||
Line of Credit | ||||||
Accounting Policies [Line Items] | ||||||
Revolving credit facility borrowing capacity | $ 1,100,000,000 | |||||
Loans Payable | ||||||
Accounting Policies [Line Items] | ||||||
Debt costs | 42,595,000 | |||||
Debt costs accumulated amortization | $ 15,071,000 | $ 14,343,000 | ||||
[1] (2) As of March 31, 2024 , five Properties were classified as held for sale. The property classified as held for sale as of December 31, 2023 was sold during the quarter ended March 31, 2024. |
Real Estate (Key Information fo
Real Estate (Key Information for Leases) (Details) | 3 Months Ended |
Mar. 31, 2024 Property | |
Lessor, Lease, Description [Line Items] | |
Weighted average remaining lease term | 10 years |
Leases classified as operating leases | 3,554 |
Leases classified as direct financing leases | 4 |
Minimum | |
Lessor, Lease, Description [Line Items] | |
Initial lease term | 10 years |
Maximum | |
Lessor, Lease, Description [Line Items] | |
Initial lease term | 20 years |
Real Estate (Summary of Real Es
Real Estate (Summary of Real Estate Subject to Operating Leases) (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 | Mar. 31, 2023 | |||
Property, Plant and Equipment [Line Items] | ||||||
Land and improvements | [1] | $ 2,888,657,000 | $ 2,878,400,000 | |||
Buildings and improvements | 7,459,462,000 | 7,368,873,000 | ||||
Leasehold interests | 355,000 | 355,000 | ||||
Real estate subject to operating leases, gross | 10,348,474,000 | 10,247,628,000 | ||||
Less accumulated depreciation and amortization | (1,913,861,000) | (1,863,451,000) | ||||
Real estate subject to operating leases, net, before work in progress | 8,434,613,000 | 8,384,177,000 | ||||
Work in progress and improvements | 127,025,000 | 144,068,000 | ||||
Accounted for using the operating method | 8,561,638,000 | 8,528,245,000 | ||||
Accounted for using the direct financing method | 2,979,000 | 3,033,000 | ||||
Classified as held for sale | 22,239,000 | [2] | 4,573,000 | [2] | $ 4,573,000 | |
Accounted for using the operating method, net of accumulated depreciation and amortization | 8,586,856,000 | 8,535,851,000 | ||||
Properties as held for sale | 5 | |||||
Asset under construction | ||||||
Property, Plant and Equipment [Line Items] | ||||||
Land and improvements | $ 76,281,000 | $ 96,464,000 | ||||
[1] (1) Includes $ 76,281 and $ 96,464 in land for Properties under construction at March 31, 2024 and December 31, 2023, respectively. (2) As of March 31, 2024 , five Properties were classified as held for sale. The property classified as held for sale as of December 31, 2023 was sold during the quarter ended March 31, 2024. |
Real Estate (Rental Income) (De
Real Estate (Rental Income) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Lease Income [Abstract] | ||
Rental income from operating leases | $ 209,084,000 | $ 198,183,000 |
Earned income from direct financing leases | 119,000 | 144,000 |
Percentage rent | 888,000 | 763,000 |
Rental revenues | 210,091,000 | 199,090,000 |
Real estate expense reimbursement from tenants | 4,734,000 | 4,540,000 |
Rental income | 214,825,000 | 203,630,000 |
Rental income accrued during period | $ (36,000) | $ 469,000 |
Real Estate (Intangible Assets
Real Estate (Intangible Assets and Liabilities) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | |
Intangible lease liabilities (included in other liabilities): | |||
Below-market in-place leases | $ 40,996,000 | $ 41,244,000 | |
Less: accumulated amortization | (29,145,000) | (29,117,000) | |
Below-market in-place leases, net | 11,851,000 | 12,127,000 | |
Above-market in-place leases, net | |||
Intangible lease assets (included in other assets): | |||
Leases | 15,113,000 | 15,297,000 | |
Less: accumulated amortization | (12,055,000) | (12,080,000) | |
Leases, net | 3,058,000 | 3,217,000 | |
In-place leases ,net | |||
Intangible lease assets (included in other assets): | |||
Leases | 121,664,000 | 122,802,000 | |
Less: accumulated amortization | (85,841,000) | (85,332,000) | |
Leases, net | 35,823,000 | $ 37,470,000 | |
Intangible lease liabilities (included in other liabilities): | |||
Amortization expense, in-place leases | 1,647,000 | $ 1,760,000 | |
Above-market and below-market in-place leases | |||
Intangible lease liabilities (included in other liabilities): | |||
Amortization expense, above- and below-market leases | $ 117,000 | $ 112,000 |
Real Estate (Dispositions) (Det
Real Estate (Dispositions) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 USD ($) Property | Mar. 31, 2023 USD ($) Property | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Gain | $ | $ 4,821 | $ 6,300 |
Assets Held-for-sale | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Number of properties sold at a gain | Property | 6 | 6 |
Real Estate (Commitments) (Deta
Real Estate (Commitments) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 USD ($) Property | ||
Real Estate Properties [Line Items] | ||
Number of properties | Property | 39 | |
Total commitment | $ 320,410 | [1] |
Less amount funded | (203,306) | |
Remaining commitment | $ 117,104 | |
Minimum [Member] | ||
Real Estate Properties [Line Items] | ||
Period for improvements to construction commitments | 12 months | |
Maximum [Member] | ||
Real Estate Properties [Line Items] | ||
Period for improvements to construction commitments | 18 months | |
[1] (1) Includes land, construction costs, tenant improvements, lease costs, capitalized interest and third-party costs. |
Real Estate (Impairments) (Deta
Real Estate (Impairments) (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 USD ($) Property | Mar. 31, 2023 USD ($) Property | |
Real Estate [Abstract] | ||
Real estate impairments, net of recoveries | $ | $ 1,204 | $ 2,640 |
Vacant | 0 | 3 |
Occupied | 3 | 1 |
Line of Credit Payable (Details
Line of Credit Payable (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Apr. 30, 2024 | |
Line of Credit Facility [Line Items] | ||
Revolving credit facility borrowing capacity | $ 983,800,000,000 | $ 1,200,000,000 |
Revolving credit facility weighted average outstanding balance | $ 116,067,000,000 | |
Weighted average interest rate | 6.26% | |
Option to increase facility size | $ 2,000,000,000,000 | |
LIBOR | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 77.50% | |
SOFR | ||
Line of Credit Facility [Line Items] | ||
Basis spread on variable rate | 10% | |
Revolving Credit Facility [Member] | ||
Line of Credit Facility [Line Items] | ||
Revolving credit facility borrowing capacity | $ 1,100,000,000,000 | |
Line of Credit | ||
Line of Credit Facility [Line Items] | ||
Revolving credit facility borrowing capacity | 1,100,000,000 | |
Line of credit payable | $ 116,200,000,000 |
Notes Payable and Derivatives (
Notes Payable and Derivatives (Narrative) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Derivative [Line Items] | ||
Amortization of interest rate hedges | $ 632,000 | $ 607,000 |
Amortization of debt costs | 1,301,000 | 1,199,000 |
Interest rate cash flow hedge gain (loss) to be reclassified over next 12 months, net | 1,980,000 | |
Loans Payable | ||
Derivative [Line Items] | ||
Debt issuance costs | 42,595,000 | |
AOCI, cash flow hedges | ||
Derivative [Line Items] | ||
Amortization of interest rate hedges | 9,479,000 | |
Accumulated Other Comprehensive Income (Loss) | ||
Derivative [Line Items] | ||
Amortization of interest rate hedges | $ 632,000 | $ 607,000 |
Stockholders' Equity (Additiona
Stockholders' Equity (Additional Information) (Details) - $ / shares | 3 Months Ended | ||||
Apr. 30, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | Feb. 29, 2024 | Dec. 31, 2023 | |
Class of Stock [Line Items] | |||||
Common stock, shares authorized (in shares) | 375,000,000 | 375,000,000 | |||
Common stock dividends declared and paid (in dollars per share) | $ 0.565 | $ 0.55 | |||
Subsequent Event | |||||
Class of Stock [Line Items] | |||||
Common stock dividends declared and paid (in dollars per share) | $ 0.565 | ||||
DRIP | |||||
Class of Stock [Line Items] | |||||
Common stock, shares authorized (in shares) | 4,000,000 |
Stockholders' Equity (ATM Progr
Stockholders' Equity (ATM Program) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Dec. 31, 2023 | ||
Class of Stock [Line Items] | ||||
Total allowable shares (in shares) | 375,000,000 | 375,000,000 | ||
Total shares issued (in shares) | 183,350,322 | 182,474,770 | ||
Net proceeds | $ 21,693 | $ 17,190 | ||
Stock issuance costs | $ 53 | $ 50 | ||
ATM equity programs | ||||
Class of Stock [Line Items] | ||||
Shares of common stock (in shares) | 500,000 | 349,809 | ||
Average price per share (net) (in dollars per share) | $ 41.61 | $ 45.95 | ||
Net proceeds | $ 20,806 | $ 16,074 | ||
Stock issuance costs | [1] | $ 119 | $ 294 | |
2020 ATM | ||||
Class of Stock [Line Items] | ||||
Total allowable shares (in shares) | 17,500,000 | |||
Total shares issued (in shares) | 7,722,511 | |||
2023 ATM | ||||
Class of Stock [Line Items] | ||||
Total allowable shares (in shares) | 17,500,000 | |||
Total shares issued (in shares) | 500,000 | |||
[1] Stock issuance costs consist primarily of underwriters' and agents' fees and commissions, and legal and accounting fees. |
Stockholders' Equity (DRIP) (De
Stockholders' Equity (DRIP) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Class of Stock [Line Items] | ||
Net proceeds | $ 21,693 | $ 17,190 |
DRIP | ||
Class of Stock [Line Items] | ||
Shares of common stock (in shares) | 19,494 | 17,760 |
Net proceeds | $ 709 | $ 822 |
Stockholders' Equity (Dividends
Stockholders' Equity (Dividends) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Apr. 30, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | |
Class of Stock [Line Items] | |||
Common stock dividends | $ 102,684 | $ 99,401 | |
Common stock dividends declared (in dollars per share) | $ 0.565 | $ 0.55 | |
DRIP [Member] | |||
Class of Stock [Line Items] | |||
Common stock dividends | $ 102,684 | $ 99,401 | |
Common stock dividends per share (in dollars per share) | $ 0.565 | $ 0.55 | |
Subsequent Event | |||
Class of Stock [Line Items] | |||
Common stock dividends declared (in dollars per share) | $ 0.565 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Details) - USD ($) | Mar. 31, 2024 | Dec. 31, 2023 |
Fair Value Disclosures [Abstract] | ||
Fair value of notes payable | $ 3,762,576,000 | $ 3,801,367,000 |
Subsequent Events (Additional I
Subsequent Events (Additional Information) (Details) - USD ($) | Apr. 30, 2024 | Mar. 31, 2024 |
Subsequent Event [Line Items] | ||
Line of credit facility, current borrowing capacity | $ 1,100,000,000 | |
Line of credit facility, maximum borrowing capacity | $ 1,200,000,000 | $ 983,800,000,000 |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Credit facility maturity date | Jun. 30, 2025 | |
Subsequent Event [Member] | Minimum [Member] | Extended Maturity [Member] | ||
Subsequent Event [Line Items] | ||
Credit facility maturity date | Apr. 04, 2030 | |
Subsequent Event [Member] | Maximum [Member] | Extended Maturity [Member] | ||
Subsequent Event [Line Items] | ||
Credit facility maturity date | Apr. 30, 2029 |