On August 3, 2023, NNN REIT, Inc. (the “Company”) entered into an equity distribution agreement (the “Equity Distribution Agreement”) with each of Wells Fargo Securities, LLC, BofA Securities, Inc., B. Riley Securities, Inc., BTIG, LLC, Capital One Securities, Inc., Citigroup Global Markets Inc., Jefferies LLC, Morgan Stanley & Co. LLC, Raymond James & Associates, Inc., RBC Capital Markets, LLC, TD Securities (USA) LLC, and Truist Securities, Inc. (and, as applicable, their respective affiliates or agents), acting in their capacity as sales agents (the “sales agents”) and, as applicable, the “forward sellers” and “forward purchasers” (each as defined below), pursuant to which the Company may issue and sell, from time to time, up to 17,500,000 shares (the “Shares”) of the Company’s common stock, par value $0.01 per share. Concurrently with entry into the Equity Distribution Agreement, the Company entered into separate forward master confirmations (collectively, the “Master Confirmations”), each dated August 3, 2023, by and between the Company and each of Wells Fargo, National Association, Bank of America, N.A., B. Riley Securities, Inc., Citibank, N.A., Jefferies LLC, Morgan Stanley & Co. LLC, Nomura Global Financial Products, Inc., Raymond James & Associates, Inc., Royal Bank of Canada, The Toronto-Dominion Bank and Truist Bank (the “forward purchasers”).
The Equity Distribution Agreement provides that, in addition to the issuance and sale of common stock by the Company through a sales agent acting as a sales agent or directly to the sales agent acting as principal for its own account at a price agreed upon at the time of sale, the Company also may enter into forward sale agreements, between the Company and each of the forward purchasers, or their respective affiliates. Upon entering into the Equity Distribution Agreement, the Company simultaneously terminated the equity distribution agreements it entered into in connection with a prior at-the-market offering program established in August 2020.
The Equity Distribution Agreement provides that, in addition to the issuance and sale of the Shares by the Company through the sales agents, the Company also may enter into forward sale agreements under the Master Confirmations. In connection with any particular forward sale agreement, the relevant forward purchaser will, at the Company’s request, borrow from third parties and sell, through its relevant forward seller, a number of Shares equal to the number of Shares underlying the particular forward sale agreement. We refer to a sales agent (or its affiliate or agent or, in the case of BTIG, LLC, Nomura Securities International, Inc.), when acting as sales agent for the relevant forward purchaser, as, individually a “forward seller” and, collectively, the “forward sellers”; provided, however, that Capital One Securities, Inc. will not be acting as a forward seller.
The Company will not initially receive any proceeds from the sale of borrowed Shares. The Company expects to fully physically settle each particular forward sale agreement with the applicable forward purchaser on one or more dates specified by the Company on or prior to the maturity date of that particular forward sale agreement, in which case the Company will expect to receive aggregate net cash proceeds at settlement equal to the number of Shares underlying the particular forward sale agreement multiplied by the applicable forward sale price. However, subject to certain exceptions and conditions, the Company may also elect to cash settle or net share settle all or any portion of its obligations under a particular forward sale agreement, in which case the Company may not receive any proceeds (in the case of cash settlement) or will not receive any proceeds (in the case of net share settlement), and the Company may owe cash (in the case of cash settlement) or shares of its common stock (in the case of net share settlement) to the relevant forward purchaser.
Each sales agent will receive from the Company a commission that will not exceed, but may be lower than, 2.0% of the gross sales price of all Shares sold through it as sales agent under the Equity Distribution Agreement. In connection with each forward sale, the Company will pay the applicable forward purchaser, in the form of a reduced initial forward sale price under the related forward sale agreement with the related forward purchaser, commissions at a mutually agreed rate that shall not be more than 2.0% of the sales price of all borrowed Shares sold by it as a forward seller.
Sales of the Shares, if any, pursuant to the Equity Distribution Agreement may be made in transactions that are deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made directly on the New York Stock Exchange or sales made to or through a market maker other than on an exchange, as well as in negotiated or other transactions described in the prospectus supplement relating to the offering of the Shares, which may include block trades. The Company or any of the sales agents, forward sellers or forward purchasers may at any time suspend solicitation and offers under the Equity Distribution Agreement or terminate the Equity Distribution Agreement, but in the case of a sales agent, forward seller or a forward purchaser, only with respect to itself.
