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What changed in NNN REIT, INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of NNN REIT, INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+159 added−172 removedSource: 10-K (2025-02-11) vs 10-K (2024-02-08)

Top changes in NNN REIT, INC.'s 2024 10-K

159 paragraphs added · 172 removed · 143 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

37 edited+6 added−3 removed35 unchanged
Biggest changeCorporate Responsibility and Environmental, Social and Governance Matters (“ESG”) NNN is focused on achieving success for its stockholders, providing a world-class working environment for NNN associates, enriching the community and preserving environmental resources. NNN operates its business in accordance with the highest ethical standards and strives to have class-leading corporate governance standards.
Biggest changeNNN operates its business in accordance with the highest ethical standards and strives to have class-leading corporate governance standards. Holding NNN to such standards is critical to the long-term success of NNN's stockholders, associates, and community. 4 Corporate Sustainability Team.
In evaluating a particular acquisition, management may consider a variety of factors, including but not limited to: • the location, visibility, accessibility, zoning and use restrictions of the property, • the geographic area and demographic characteristics of the community, • the local real estate market conditions, including potential for growth, redevelopment, market rents and existing or potential competing properties or retailers, • the size and age of the improvements on the property and title status of the property, • the quality of construction and design of the improvements on the property and the current physical condition of the property, • the potential for, and current extent of, any environmental issues on or around the property, • the purchase price, • the non-financial lease terms of the proposed acquisition, • the availability of funds or other consideration for the proposed acquisition and the cost thereof, • the compatibility of the property with NNN's existing Property Portfolio, • the property-level operating history, • the financial and other characteristics of the existing tenant, • the tenant's business plan, operating history and management team, • the tenant's industry, • the terms of any lease, • the rent to be paid by the tenant, • any existing debt encumbering the property which may be assumed in connection with acquiring or refinancing these investments, and • the merits relative to other opportunities. 3 NNN intends to engage in future investment activities in a manner that is consistent with the maintenance of its status as a REIT for federal income tax purposes.
In evaluating a particular acquisition, management may consider a variety of factors, including but not limited to: • the location, visibility, accessibility, zoning and use restrictions of the property, • the geographic area and demographic characteristics of the community, • the local real estate market conditions, including potential for growth, redevelopment, market rents and existing or potential competing properties or retailers, • the title status of the property, • the quality of construction and design of the improvements on the property and the current physical condition of the property, including the size and age of the improvements on the property, • the potential for, and current extent of, any environmental issues on or around the property, • the environmental sustainability related factors pertaining to the property, • the purchase price, • the non-financial lease terms of the proposed acquisition, • the availability of funds or other consideration for the proposed acquisition and the cost thereof, • the compatibility of the property with NNN's existing Property Portfolio, • the property-level operating history, • the financial and other characteristics of the existing tenant, • the tenant's business plan, operating history and management team, • the tenant's industry, • the terms of any lease, including the rent to be paid by the tenant, • any existing debt encumbering the property which may be assumed in connection with acquiring or refinancing these investments, and • the merits relative to other opportunities. 3 NNN intends to engage in future investment activities in a manner that is consistent with the maintenance of its status as a REIT for federal income tax purposes.
Many of NNN's tenants have programs that address environmental stewardship of the Properties they occupy and control. NNN Corporate Headquarters. NNN's corporate headquarters is located in a building that meets the Environmental Protection Agency's (“EPA”) strict energy performance standards to achieve ENERGY STAR® certification.
Many of NNN's tenants have programs that address environmental stewardship of the Properties they occupy and control. 5 NNN Corporate Headquarters. NNN's corporate headquarters is located in a building that meets the Environmental Protection Agency's (“EPA”) strict energy performance standards to achieve ENERGY STAR® certification.
On NNN's website you can also obtain, free of charge, a copy of this Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as amended, as soon as reasonably practicable, after NNN files such material electronically with, or furnish it to, the Securities and Exchange Commission ("Commission" or "SEC").
On NNN's website you can also obtain, free of charge, a copy of this Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as amended, as soon as reasonably practicable, after NNN files such material electronically with, or furnishes it to, the Securities and Exchange Commission ("Commission" or "SEC").
As of January 31, 2024, NNN had not been notified by any governmental authority of, nor is NNN's management aware of, any non-compliance with the ADA that NNN's management believes would have a material adverse effect on its business, financial position or results of operations. 7 Other Regulations, Rules and Laws State and local governmental entities regulate the use of the Properties.
As of January 31, 2025, NNN had not been notified by any governmental authority of, nor is NNN's management aware of, any non-compliance with the ADA that NNN's management believes would have a material adverse effect on its business, financial position or results of operations. 7 Other Regulations, Rules and Laws State and local governmental entities regulate the use of the Properties.
NNN generally will not be subject to federal income taxes on taxable income it distributes to stockholders, provided that it meets certain other requirements for qualifying as a REIT.
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 stated by the EPA, on average, ENERGY STAR certified buildings use 35 percent less energy and generate 35 percent fewer greenhouse gas emissions than typical buildings. 5 Property Portfolio.
As stated by the EPA, on average, ENERGY STAR certified buildings use 35 percent less energy and generate 35 percent fewer greenhouse gas emissions than typical buildings. Property Portfolio.
NNN's programs include, but are not limited to, a 401(k) plan with a company match, flexible work schedules, college saving plans, an educational assistance program, adoption benefits, flexible spending and health savings accounts, health and wellness events, and access to a state of the art online wellness platform. Community Service and Partnerships .
NNN's programs include, but are not limited to, a 401(k) plan with a company match, flexible work schedules, college saving plans, an educational assistance program, parental leave and adoption benefits, flexible spending and health savings accounts, health and wellness events, and access to a state-of-the-art online wellness platform. Community Service and Partnerships .
These key indicators for NNN include items such as: the composition of the Property Portfolio (such as tenant, geographic and line of trade diversification), the occupancy rate of the Property Portfolio, certain financial performance metrics and profitability measures, industry trends and industry performance compared to that of NNN. NNN evaluates the creditworthiness of its significant current and prospective tenants.
Key indicators include items such as: the composition of the Property Portfolio (such as tenant, line of trade and geographic diversification), the occupancy rate of the Property Portfolio, certain financial performance metrics and profitability measures, industry trends and industry performance compared to that of NNN. NNN evaluates the creditworthiness of its significant current and prospective tenants.
NNN's leases provide for annual base rental payments (generally payable in monthly installments) ranging from $7,000 to $4,085,000 (average of $235,000), and generally provide for limited increases in rent as a result of increases in the Consumer Price Index or fixed increases.
NNN's leases provide for annual base rental payments (generally payable in monthly installments) ranging from $7,000 to $4,085,000 (average of $245,000), and generally provide for limited increases in rent as a result of increases in the Consumer Price Index or fixed increases.
Financing Strategy NNN's financing objective is to manage its capital structure effectively in order to provide sufficient capital to execute its operating strategy while servicing its debt requirements, maintaining its investment grade credit ratings, staggering debt maturities and providing value to NNN's stockholders.
Financing Strategy NNN's financing objective is to manage its capital structure effectively in order to provide sufficient capital to execute its operating and investing strategies while servicing its debt requirements, maintaining its investment grade credit ratings, staggering debt maturities and providing value to NNN's stockholders.
The operating strategies employed by NNN have allowed NNN to increase the annual dividend (paid quarterly) per common share for 34 consecutive years. NNN has the third longest record of consecutive annual dividend increases of all publicly traded REITs.
The operating strategies employed by NNN have allowed NNN to increase the annual dividend (paid quarterly) per common share for 35 consecutive years. NNN has the third longest record of consecutive annual dividend increases of all publicly traded REITs.
In addition to NNN's donation of time, NNN is also a meaningful financial investor to numerous charities in the Central Florida community, including the Boys and Girls Clubs of Central Florida and Elevate Orlando (a teacher mentor program for high risk urban youth that help young women and men graduate high school with a plan for the future).
In addition to NNN's donation of time, NNN is also a meaningful benefactor to numerous charities in the Central Florida community, including the Boys and Girls Clubs of Central Florida and Elevate Orlando (a teacher mentor program for high-risk urban youth that help young women and men graduate high school with a plan for the future).
As of December 31, 2023, the weighted average remaining lease term of the Property Portfolio was approximately 10.1 years. The Properties are generally leased under triple-net leases, which require the tenant to pay all utilities and real estate taxes and assessments, to maintain the interior and exterior of the Property, and to carry property and liability insurance coverage.
As of December 31, 2024, the weighted average remaining lease term of the Property Portfolio was approximately 10 years. The Properties are generally leased under triple-net leases, which require the tenant to pay all utilities and real estate taxes and assessments, to maintain the interior and exterior of the Property, and to carry property and liability insurance coverage.
NNN also focuses on additional benefits for its associates in an effort to make sure the associates are not only well compensated, but also engaged, developed and satisfied with their work-life balance. There are six key elements to NNN's total rewards system: Compensation, Benefits, Wellness, Work-Life Balance, Professional Development and Recognition.
NNN focuses on additional benefits for its associates in an effort to ensure associates are not only well compensated, but also engaged, developed and satisfied with their work-life balance. There are six key elements to NNN's total rewards system: Compensation, Benefits, Wellness, Work-Life Balance, Professional Development and Recognition.
Additional information on NNN's website includes the guiding policies adopted by NNN, which include NNN's Corporate Governance Guidelines, Code of Business Conduct Policy and Whistleblower Policy, as well as NNN's position on corporate governance and risk management, social responsibility and environmental practices and their impact in the Corporate Responsibility and Sustainability Report. 8
Additional information on NNN's website includes the guiding policies adopted by NNN, which include NNN's Corporate Governance Guidelines, Code of Business Conduct, Supplier Code of Conduct and Whistleblower Policy, as well as NNN's position on corporate governance and risk management, social responsibility and environmental practices and their impact in the 2023-24 Corporate Responsibility Report. 8
NNN may incur costs if the seller or tenant does not comply with these requirements. As of January 31, 2024, NNN had 68 Properties currently under some level of environmental remediation and/or monitoring.
NNN may incur costs if the seller or tenant does not comply with these requirements. As of January 31, 2025, NNN had 66 Properties currently under some level of environmental remediation and/or monitoring.
Additional Information NNN's corporate headquarters are located at 450 South Orange Avenue, Suite 900, Orlando, Florida 32801, and its telephone number is (407) 265–7348. NNN's website is located at www.nnnreit.com .
Additional Information NNN's corporate headquarters is located at 450 South Orange Avenue, Suite 900, Orlando, Florida 32801, and its telephone number is (407) 265–7348. NNN's website can be accessed at www.nnnreit.com .
NNN's leases generally require the tenants to fully comply with all environmental laws, rules and regulations, including any remediation requirements. NNN's risk management associates actively monitor any environmental conditions on NNN's Properties to make sure that the tenants are meeting their obligations to remediate and/or mitigate any open environmental matters.
NNN's leases generally require tenants to fully comply with all environmental laws, rules and regulations, including any remediation requirements. NNN's risk management associates actively monitor any environmental conditions on NNN's Properties to ensure that the tenants meet their obligations to remediate and/or mitigate any open environmental matters.
Certain financial agreements to which NNN is a party contain covenants that limit NNN's ability to incur additional debt under certain circumstances. The organizational documents of NNN do not limit the absolute amount or percentage of debt that NNN may incur.
The ratio of total debt to total market capitalization was approximately 37 percent. Certain financial agreements, to which NNN is a party, contain covenants that limit NNN's ability to incur additional debt under certain circumstances. The organizational documents of NNN do not limit the absolute amount or percentage of debt that NNN may incur.
NNN's Properties are generally leased to tenants under long-term triple net leases with typical lease terms of 30 to 40 years including base and option terms which gives NNN's tenants exclusive control over the ability to institute energy conservation and environmental management programs at the Properties.
NNN's Properties are generally leased to tenants under long-term triple-net leases with initial lease terms of 10 to 20 years (plus option terms), which gives NNN's tenants exclusive control over the ability to institute energy conservation and environmental management programs at the Properties.
NNN owned 3,532 Properties with an aggregate gross leasable area of approximately 35,966,000 square feet, located in 49 states, with a weighted average remaining lease term of 10.1 years as of December 31, 2023. Approximately 99 percent of the Properties were leased as of December 31, 2023.
NNN owned 3,568 Properties with an aggregate gross leasable area of approximately 36,557,000 square feet, located in 49 states, with a weighted average remaining lease term of 10 years as of December 31, 2024. Approximately 98 percent of the Properties were leased as of December 31, 2024.
Approximately 99 percent of total Properties were leased as of December 31, 2023. The following table summarizes the Property Portfolio as of December 31, 2023 (in thousands): Size (1) Total Dollars Invested (2) High Low Average High Low Average Land 3,913 5 101 $ 10,571 $ 5 $ 826 Building 179 1 11 45,286 30 2,160 (1) Approximate square feet.
The following table summarizes NNN's Property Portfolio as of December 31, 2024 (in thousands): Size (1) Total Dollars Invested (2) High Low Average High Low Average Land 3,733 5 102 $ 10,571 $ 5 $ 829 Building 313 1 10 45,286 30 2,240 (1) Approximate square feet.
Holding NNN to such standards is critical to the long-term success of NNN's stockholders, associates, and community. 4 Sustainability Team. In 2022, NNN created a Sustainability Team, which reports directly to the Executive Vice President, General Counsel and Secretary, with direct oversight by the Governance and Nominating Committee of the Board of Directors.
In 2022, NNN created a Corporate Sustainability Team, which reports directly to the Executive Vice President, General Counsel and Secretary, with oversight by the Governance and Nominating Committee of the Board of Directors. The Corporate Sustainability Team, led by the Corporate Sustainability Manager, is comprised of associates from a broad spectrum of seniority levels and departments of the Company.
For those Properties located in an area of high earthquake risk, NNN aims to require its tenants carry earthquake insurance above what is generally covered in an extended coverage policy. In addition, NNN also carries a contingent extended coverage policy on the Property Portfolio, which also provides coverage for certain casualty events, including fire and windstorm.
For those Properties located in a nationally designated flood zone, NNN typically requires the tenants to carry flood insurance pursuant to the federal flood insurance program. For those Properties located in an area of high earthquake risk, NNN aims to require its tenants carry earthquake insurance above what is generally covered in an extended coverage policy.
Strategies and Policy Changes Any of NNN's strategies or policies described above may be changed at any time by NNN without notice to or a vote of NNN's stockholders.
Strategies and Policy Changes Any of NNN's strategies or policies described above may be changed at any time by NNN without notice to or a vote of NNN's stockholders. Corporate Sustainability Matters NNN is focused on achieving success for its stockholders, providing a world-class working environment for NNN associates, enriching the community and preserving environmental resources.
NNN's form leases contain "green lease clauses" which NNN encourages tenants to accept during negotiations to require the tenants to report energy usage and emissions. Climate Preparedness. NNN regularly monitors the status of impending natural disasters and the impact of such disasters on the Property Portfolio.
Furthermore, NNN maintains a portfolio environmental insurance policy that covers substantially all of NNN's Properties for certain environmental risks. Additionally, NNN's form leases contain "green lease clauses" (to require the tenants to report energy usage and emissions), which NNN encourages tenants to accept during negotiations. Climate Preparedness.
NNN's acquisition process includes obtaining an environmental assessment from a licensed environmental consultant to understand any environmental risks and liabilities associated with a Property and to ensure that the tenant will address any environmental issues. Furthermore, NNN maintains a portfolio environmental insurance policy that covers substantially all of NNN's Properties for certain environmental risks.
NNN's acquisition process includes obtaining an environmental assessment from a licensed environmental consultant to understand any environmental risks and liabilities associated with a Property and to ensure that the tenant will address any environmental issues. NNN also researches and reviews climate change metrics primarily related to wildfire, water stress and depletion, flooding and sea level rise risks.
In cases where NNN's tenants do not provide coverage, or if a Property is vacant, NNN carries the necessary direct insurance coverage. Property Portfolio As of December 31, 2023, NNN owned 3,532 Properties in 49 states with an aggregate gross leasable area of approximately 35,966,000 square feet, and a weighted average remaining lease term of 10.1 years.
Property Portfolio As of December 31, 2024, NNN owned 3,568 Properties in 49 states with an aggregate gross leasable area of approximately 36,557,000 square feet, and a weighted average remaining lease term of 10 years. Approximately 98 percent of total Properties were leased as of December 31, 2024.
As of December 31, 2023, NNN had $5,155,000 of cash, cash equivalents and restricted cash and $968,000,000 available for future borrowings under the Credit Facility. NNN may also fund liquidity requirements with new debt or equity issuances, although newly issued debt may be at higher interest rates than the rates on NNN's existing outstanding debt.
NNN may also fund liquidity requirements with new debt or equity issuances, although newly issued debt may be at higher interest rates than the rates on NNN's existing outstanding debt. NNN also has the ability to limit future property acquisitions and strategically increase property dispositions.
NNN cares about the communities in which its associates live and work. NNN stands behind a commitment to improving education, strengthening neighborhoods and encouraging volunteer service. NNN actively promotes volunteering by its associates by organizing and sponsoring specific volunteer days throughout the year at various charities, including Ronald McDonald House of Central Florida.
NNN is committed to expanding educational opportunities, strengthening neighborhoods, and encouraging volunteer service in the communities where associates live and work. NNN sponsors specific volunteer days throughout the year at various charities and organizations, including Ronald McDonald House of Central Florida and Orange County Animal Services.
In the substantial majority of leases, NNN's tenants are required to carry full replacement cost coverage on all improvements located on the Properties. For those Properties located in a nationally designated flood zone, NNN typically requires the tenants to carry flood insurance pursuant to the federal flood insurance program.
NNN regularly monitors the status of impending natural disasters and the impact of such disasters on its Property Portfolio. In the substantial majority of leases, NNN's tenants are required to carry full replacement cost coverage on all improvements located on the Properties.
As of December 31, 2023, NNN's ratio of total debt, none of which was secured debt, to total gross assets (before accumulated depreciation and amortization) was approximately 42 percent. The ratio of total debt to total market capitalization was approximately 36 percent.
NNN expects these sources of liquidity and the discretionary nature of its property acquisition funding needs will allow NNN to meet its financial obligations over the long term. As of December 31, 2024, NNN's ratio of total debt, none of which was secured debt, to total gross assets (before accumulated depreciation and amortization) was approximately 40 percent.
NNN encourages continued professional and personal development of all associates by providing hundreds of hours of in-person and online training opportunities that touch all aspects of NNN's business. NNN also has associate mentoring and training programs and formalized talent development programs at all levels of the Company.
Engrained in NNN's talent philosophy is ensuring associates have access to continuing professional and personal development opportunities that are meaningful and relevant to them as they engage in all aspects of NNN's business. Additionally, NNN offers associate mentoring and training programs and formalized talent development programs at all levels within the Company.
The team has both internal and external projects, including, but not limited to engaging with NNN's tenants on environmental data collection and property level sustainability . Human Capital Development . As of January 31, 2024, the Company employed 82 associates, all of which are full-time. NNN's success is dependent upon the dedication and hard work of NNN's talented associates.
The team has both internal and external projects, including, but not limited to engaging with NNN's tenants on environmental data collection and property level sustainability, creating the annual sustainability report, and regularly engaging with raters and rankers. Materiality.
The institutional knowledge and long tenure of NNN's associates is a true competitive advantage of the Company. In addition, the Company's gender composition is 58% female and 42% male. NNN has adopted a Human Capital Policy which is available on the Company's website at www.nnnreit.com . Total Rewards, Benefits & Work-Life Balance .
The Company's gender representation has also continued to reflect balance and diversity, with a workforce comprising 57% female and 43% male as of January 31, 2025. More information can also be found in NNN's Human Capital Policy available on the Company's website at www.nnnreit.com . Total Rewards, Benefits & Work-Life Balance .
The success of NNN's commitment to its associates is shown in the long tenure of NNN's associates. The executive team, department heads and senior managers average over 19 years of experience with NNN. In addition 46% of NNN's associates have been with NNN for 10 years or longer.
The success of NNN's efforts to nurture the growth and development of its associates is evident in NNN's average tenure, with nearly half of its associates having been with the Company for 10 or more years.
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NNN has the ability to limit future property acquisitions and strategically increase property dispositions. NNN expects these sources of liquidity and the discretionary nature of its property acquisition funding needs will allow NNN to meet its financial obligations over the long term.
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As of December 31, 2024, NNN had $9,062,000 of cash, cash equivalents and restricted cash or cash held in escrow and $1,200,000,000 was available for future borrowings under the Credit Facility.
Removed
The Sustainability Team is comprised of a group of associates from a broad spectrum of seniority levels and departments of the Company, including but not limited to human resources, legal, asset management, lease administration, accounting, underwriting and acquisitions.
Added
NNN’s process for assessing materiality includes compiling a range of topics found within global standards, refined based on best corporate responsibility practices published by the National Association of Real Estate Investment Trusts (“Nareit”) and on the practices of similar companies identified through a peer benchmarking exercise.
Removed
Associates are encouraged to volunteer on work days during work hours for these events.
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The Corporate Sustainability Team then reviews the resulting categories, topics and definitions to create a Materiality Assessment Survey which is administered to key stakeholders, including all associates, executive management and the Board of Directors. The survey results inform company practices, policies, goals and data tracking mechanisms for relevant impacts.
Added
Impacts that occur along NNN’s value chain are also analyzed to understand NNN’s ability to manage or influence others to implement best corporate responsibility practices within their organizations with the goal of working collectively to mitigate impacts on the community and environment.
Added
The process is periodically revisited and refined to proactively engage key stakeholders and to keep NNN’s materiality assessment meaningful to stakeholders while monitoring the ever-changing landscape. Human Capital Development . As of January 31, 2025, the Company employed 83 associates whose hard work and expertise drive the Company's success.
Added
In addition, NNN also carries a contingent extended coverage policy on the Property Portfolio, which provides coverage for certain casualty events, including fire and windstorm. In cases where NNN's tenants do not provide coverage, or if a Property is vacant, NNN carries the necessary direct insurance coverage.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

17 edited+0 added−0 removed135 unchanged
Biggest changeNNN's ability to conduct its business may be impaired if its information technology networks, systems or resources, including its websites or e-mail systems, are compromised, degraded, damaged or fail, whether due to a virus or other harmful circumstance, fraud, intentional penetration or disruption of its information technology resources by: • a third party, • natural disaster, • a failure of hardware or software due to a design or programmatic flaw, • a failure of hardware or software security controls, • telecommunications system failure, • service provider error or failure, • fraudulent transactions, • intentional or unintentional personnel actions, • lost connectivity to NNN's networked resources, or • a failure of disaster recovery system.
Biggest changeNNN's ability to conduct its business may be impaired if its information technology networks, systems or resources, including its websites or e-mail systems, are compromised, degraded, damaged or fail, whether due to a virus or other harmful circumstance, fraud, intentional penetration or disruption of its information technology resources by: • a third party, • natural disaster, • a failure of hardware or software due to a design or programmatic flaw, • a failure of hardware or software security controls, • telecommunications system failure, • service provider error or failure, • fraudulent transactions, • intentional or unintentional personnel actions, • lost connectivity to NNN's networked resources, • a failure of disaster recovery system, • denial of service attacks, • office intrusion due to office or building security failures, • data center cooling failure, • fire or other catastrophic damage to equipment or facilities, • water intrusion to equipment, • supply chain attacks, or • zero-day attacks.
An epidemic or pandemic could have a material and adverse effect on or cause disruption to NNN's business or financial condition, results of operations, cash flows and the market value and trading price of NNN's securities due to, among other factors: • A complete or partial closure of, or other operational issues with, NNN's Property Portfolio as a result of government or tenant action; • The declines in or instability of the economy or financial markets may result in a recession or negatively impact consumer discretionary spending, which could adversely affect retailers and consumers; • The reduction of economic activity may severely impact NNN's tenants' business operations, financial condition, liquidity and access to capital resources and may cause one or more of NNN's tenants to be unable to meet their obligations to NNN in full, or at all, to default on their lease, or to otherwise seek modifications of such obligations; 20 • The inability to access debt and equity capital on favorable terms, if at all, or a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect NNN's access to capital necessary to fund business operations, pursue acquisition and development opportunities, refinance existing debt, reduce NNN's ability to make cash distributions to its stockholders and increase NNN's future interest expense; • A general decline in business activity and demand for real estate transactions would adversely affect NNN's ability to successfully execute investment strategies or expand the Property Portfolio; • A significant reduction in NNN's cash flows could impact NNN's ability to continue paying cash dividends to NNN stockholders at expected levels or at all; • The financial impact could negatively affect NNN's future compliance with financial and other covenants of NNN's Credit Facility and other debt instruments, and the failure to comply with such covenants could result in a default that accelerates the payment of such debt; and • The potential negative impact on the health of NNN's associates or Board of Directors, particularly if a significant number are impacted, or the impact of government actions or restrictions, including stay-at-home orders, restricting access to NNN's headquarters located in Orlando, Florida, could result in a deterioration in NNN's ability to ensure business continuity during a disruption.
An epidemic or pandemic, or the government mandates implemented to address such epidemic or pandemic, could have a material and adverse effect on or cause disruption to NNN's business or financial condition, results of operations, cash flows and the market value and trading price of NNN's securities due to, among other factors: • A complete or partial closure of, or other operational issues with, NNN's Property Portfolio as a result of government or tenant action; • The declines in or instability of the economy or financial markets may result in a recession or negatively impact consumer discretionary spending, which could adversely affect retailers and consumers; • The reduction of economic activity may severely impact NNN's tenants' business operations, financial condition, liquidity and access to capital resources and may cause one or more of NNN's tenants to be unable to meet their obligations to NNN in full, or at all, to default on their lease, or to otherwise seek modifications of such obligations; 20 • The inability to access debt and equity capital on favorable terms, if at all, or a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect NNN's access to capital necessary to fund business operations, pursue acquisition and development opportunities, refinance existing debt, reduce NNN's ability to make cash distributions to its stockholders and increase NNN's future interest expense; • A general decline in business activity and demand for real estate transactions would adversely affect NNN's ability to successfully execute investment strategies or expand the Property Portfolio; • A significant reduction in NNN's cash flows could impact NNN's ability to continue paying cash dividends to NNN stockholders at expected levels or at all; • The financial impact could negatively affect NNN's future compliance with financial and other covenants of NNN's Credit Facility and other debt instruments, and the failure to comply with such covenants could result in a default that accelerates the payment of such debt; and • The potential negative impact on the health of NNN's associates or Board of Directors, particularly if a significant number are impacted, or the impact of government actions or restrictions, including stay-at-home orders, restricting access to NNN's headquarters located in Orlando, Florida, could result in a deterioration in NNN's ability to ensure business continuity during a disruption.
In order to qualify as a REIT, five or fewer individuals, as defined in the Code, may not own, actually or constructively, more than 50% in value of NNN's issued and outstanding shares of stock at any time during the last half of each taxable year, other than the first year for which a REIT election is made.
In order to qualify as a REIT, five or fewer individuals, as defined in the Code, may not own, actually or constructively, more than 50 percent in value of NNN's issued and outstanding shares of stock at any time during the last half of each taxable year, other than the first year for which a REIT election is made.
NNN may be unable to obtain capital on favorable terms, if at all, to further its business objectives or meet its existing obligations. Nearly all of NNN's debt, including the Credit Facility, is subject to balloon principal payments due at maturity. These maturities range from 2024 to 2052.
NNN may be unable to obtain capital on favorable terms, if at all, to further its business objectives or meet its existing obligations. Nearly all of NNN's debt, including the Credit Facility, is subject to balloon principal payments due at maturity. These maturities range from 2025 to 2052.
NNN generally will not be subject to federal income taxes on taxable income it distributes to stockholders, providing it meets certain other requirements for qualifying as a REIT. For each of the years in the three-year period ended December 31, 2023, NNN believes it has qualified as a REIT.
NNN generally will not be subject to federal income taxes on taxable income it distributes to stockholders, providing it meets certain other requirements for qualifying as a REIT. For each of the years in the three-year period ended December 31, 2024, NNN believes it has qualified as a REIT.
As of January 31, 2024, NNN had not been notified by any governmental authority of, nor is NNN's management aware of, any non-compliance with the ADA that NNN's management believes would have a material adverse effect on its business, financial position or results of operations.
As of January 31, 2025, NNN had not been notified by any governmental authority of, nor is NNN's management aware of, any non-compliance with the ADA that NNN's management believes would have a material adverse effect on its business, financial position or results of operations.
To maintain its status as a REIT for United States federal income tax purposes, NNN must meet certain requirements on an on-going basis, including requirements regarding its sources of income, the nature and diversification of its assets, the amounts NNN distributes to its stockholders and the ownership of its shares.
To maintain its status as a REIT for United States federal income tax purposes, NNN must meet certain requirements on an ongoing basis, including requirements regarding its sources of income, the nature and diversification of its assets, the amounts NNN distributes to its stockholders and the ownership of its shares.
Furthermore, new tax legislation, administrative guidance or court decisions, in each instance potentially with retroactive effect, could make it more difficult or impossible for NNN to qualify as a REIT or avoid significant tax liability.
Furthermore, new tax legislation, administrative guidance or court decisions, in each instance potentially with retroactive effect, could make it more difficult or impossible for NNN to qualify, or desirable to continue, as a REIT or avoid significant tax liability.
Furthermore, NNN may have strict liability to governmental agencies or third parties as a result of the existence of hazardous materials on Properties, whether or not NNN knew about or caused such hazardous materials to exist. As of January 31, 2024, NNN had 68 Properties currently under some level of environmental remediation and/or monitoring.
Furthermore, NNN may have strict liability to governmental agencies or third parties as a result of the existence of hazardous materials on Properties, whether or not NNN knew about or caused such hazardous materials to exist. As of January 31, 2025, NNN had 66 Properties currently under some level of environmental remediation and/or monitoring.
As of December 31, 2023, NNN held mortgages receivable of $1,002,000, which represented less than one percent of total assets. If a borrower defaults on a mortgage or other loan made by NNN, and does not have sufficient assets to satisfy the loan, NNN may suffer a loss of principal and interest.
As of December 31, 2024, NNN held mortgages receivable of $454,000, which represented less than one percent of total assets. If a borrower defaults on a mortgage or other loan made by NNN, and does not have sufficient assets to satisfy the loan, NNN may suffer a loss of principal and interest.
General Risks NNN's loss of key management personnel could adversely affect performance and the value of its securities. NNN is dependent on the efforts of its key management. As of January 31, 2024, the executive team, department heads and senior managers average over 19 years of experience with NNN.
General Risks NNN's loss of key management personnel could adversely affect performance and the value of its securities. NNN is dependent on the efforts of its key management. As of January 31, 2025, the executive team and senior managers average over 20 years of experience with NNN.
As of December 31, 2023, approximately, • 55.6% of the Property Portfolio annual base rent is generated from tenants in five retail lines of trade: full-service and limited-service restaurants (17.2%), convenience stores (16.4%), automotive service (15.6%) and family entertainment centers (6.4%), • 19.0% of the Property Portfolio annual base rent is generated from five tenants: 7-Eleven (4.4%), Mister Car Wash (4.2%), Camping World (3.8%), Dave & Buster's (3.5%) and LA Fitness (3.1%), and • 41.0% of the Property Portfolio annual base rent is generated from properties located in five states: Texas (16.8%), Florida (9.4%), Illinois (5.2%), Ohio (4.9%) and Georgia (4.7%).
As of December 31, 2024, approximately, • 57.3% of the Property Portfolio annual base rent is generated from tenants in five retail lines of trade: convenience stores (17.0%), automotive service (16.9%), full-service and limited-service restaurants (16.2%) and family entertainment centers (7.2%), • 19.0% of the Property Portfolio annual base rent is generated from five tenants: 7-Eleven (4.5%), Mister Car Wash (4.1%), Dave & Buster's (3.8%), Camping World (3.8%) and GPM Investments (convenience stores) (2.8%), and • 41.3% of the Property Portfolio annual base rent is generated from properties located in five states: Texas (18.8%), Florida (8.7%), Illinois (5.1%), Georgia (4.5%) and Ohio (4.2%).
An epidemic or pandemic (such as the outbreak and worldwide spread of a novel strain of coronavirus, and its variants ("COVID-19")), and the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, may precipitate or materially exacerbate one or more of the other risks, and may significantly disrupt NNN's tenants' ability to operate their businesses and/or pay rent to NNN or prevent NNN from operating its business in the ordinary course for an extended period.
An epidemic or pandemic and/or the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, may precipitate or materially exacerbate one or more of the other risks, and may significantly disrupt NNN's tenants' ability to operate their businesses and/or pay rent to NNN or prevent NNN from operating its business in the ordinary course for an extended period.
As of December 31, 2023, NNN had outstanding debt, including total unsecured notes payable of $4,228,544,000 and $132,000,000 outstanding on the Credit Facility. NNN's organizational documents do not limit the level or amount of debt that it may incur.
As of December 31, 2024, NNN had outstanding debt, including total unsecured notes payable of $4,373,803,000 and no outstanding balance on the Credit Facility. NNN's organizational documents do not limit the level or amount of debt that it may incur.
As of January 31, 2024, less than one percent of total Properties, and less than one percent of aggregate gross leasable area held in the Property Portfolio, was leased to one tenant that is currently in bankruptcy under Chapter 11 of the U.S. Bankruptcy Code.
As of January 31, 2025, less than one percent of total annualized base rent, less than one percent of total Properties and less than one percent of aggregate gross leasable area held in the Property Portfolio, was leased to three tenants that are currently in bankruptcy under Chapter 11 of the U.S. Bankruptcy Code.
As a result, this tenant has the right to reject or affirm their leases with NNN. As of December 31, 2023, NNN owned 18 vacant, un-leased Properties, which accounted for less than one percent of total Properties, and less than one percent of aggregate gross leasable area held in the Property Portfolio.
As a result, these tenants have the right to reject or affirm their leases with NNN. As of December 31, 2024, NNN owned 54 vacant, un-leased Properties, which accounted for less than two percent of total Properties, and approximately two percent of aggregate gross leasable area held in the Property Portfolio.
As of December 31, 2023, NNN had approximately $4,360,544,000 of outstanding debt, none of which was secured debt.
As of December 31, 2024, NNN had approximately $4,373,803,000 of outstanding debt, none of which was secured debt.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeBelow are examples of actions NNN takes to protect NNN's information systems and data from cybersecurity risk: • Align systems and processes with best practices for securing NNN information systems and data; • Perform continuous systems monitoring and tactical measures for impending viruses, malware, tampering, exploits and other cyber threats; • Deploy systems tools to detect, prevent and neutralize cyber threats; • Engage independent third-party consultants to assist in evaluating cybersecurity risks and response profile and plans; • Identify, oversee and evaluate the risks associated with third-party service providers and consultants; • Continuously educate and provide procedural training to all associates and the Board of Directors regarding cybersecurity awareness and risks such as enterprise security, malware, data protection best practices, anti-phishing exercises and updates with respect to other implemented information security measures; • Periodically measure the effectiveness of associate training; • Cybersecurity risk management is periodically reviewed with the Enterprise Risk Management Team; • Perform ongoing internal and external penetration testing and vulnerability assessments with a high priority for timely remediation; and • Establish reporting deadlines and hierarchies so that data regarding an incident or possible incident is communicated in a timely manner to NNN's management, to the Audit Committee of the Board of Directors, and if, appropriate or required by law, to the Commission.
Biggest changeBelow are examples of actions NNN takes to protect NNN's information systems and data from cybersecurity risk : • Align systems and processes with best practices, including the National Institute of Standards and Technology Cybersecurity Framework, for securing NNN information systems and data; • Perform continuous systems monitoring and tactical measures for impending viruses, malware, tampering, exploits and other cyber threats; • Deploy systems tools to detect, prevent and neutralize cyber threats; • Engage independent third-party consultants to assist in evaluating cybersecurity risks and response profile and plans; • Identify, oversee and evaluate the risks associated with third-party service providers and consultants; • Continuously educate and provide procedural training to all associates and the Board of Directors regarding cybersecurity awareness and risks such as enterprise security, malware, data protection best practices, anti-phishing exercises and updates with respect to other implemented information security measures; • Periodically measure the effectiveness of associate training; • Cybersecurity risk management is periodically reviewed with NNN's Enterprise Risk Management Team; • Perform ongoing internal and external penetration testing and vulnerability assessments with a high priority for timely remediation; and • Establish reporting deadlines and hierarchies so that data regarding an incident or possible incident is communicated in a timely manner to NNN's management, to the Audit Committee of the Board of Directors, and if, appropriate or required by law, to the Commission. 23 Management is aware that preventive measures cannot prevent all cyber incidents.
For a detailed discussion of risks from cybersecurity threats, please see “Item 1A. Risk Factors.” 23
For a detailed discussion of risks from cybersecurity threats, please see “Item 1A. Risk Factors.”
NNN's cybersecurity risk profile and cyber security program status, including results of any third-party evaluations are reported to the Audit Committee by the Chief Accounting and Technology Officer. NNN's information systems process and store critical and sensitive NNN data.
NNN's cybersecurity risk profile and cybersecurity program status, including results of any third-party evaluations are reported to the Audit Committee by the CATO . NNN's information systems process and store critical and sensitive NNN data.
Item 1C. C ybersecurity With oversight from the Board of Directors, NNN's management is responsible for managing all cyber risks and overseeing NNN's security programs. Primary cybersecurity risk oversight has been delegated to the Audit Committee. The Senior Vice President of Information Technology ("SVP of IT") oversees NNN's security programs and its Incident Response Policy and Plan.
Item 1C. C ybersecurity With oversight from the Board of Directors, NNN's management is responsible for managing all cyber risks and overseeing NNN's security programs. Primary cybersecurity risk oversight has been delegated to the Audit Committee.
Management is aware that preventive measures cannot prevent all cyber incidents. The SVP of IT has direct oversight over the Company's security programs on a daily basis.
The CATO has direct oversight over the Company's security programs on a daily basis.
Removed
The SVP of IT reports to the Chief Accounting and Technology Officer, and together, they have a combined industry knowledge for technology and information systems of over 40 years.
Added
The Chief Accounting and Technology Officer (the "CATO") oversees NNN's security programs and its Incident Response Policy and Plan and provides direct oversight and guidance to the technology team that manages NNN's day-to-day technology and cybersecurity operations.
Added
The CATO has been with NNN for over 25 years and has overseen NNN's information systems, including its cyber risk management program, for the last 15 years.
Added
The technology team has the appropriate educational background and certifications in the area of information security governance and technical controls, penetration testing and vulnerability assessments, incident response and digital forensics and secure systems design and architecture.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeComparison to Fifteen-Year Cumulative Total Return Dividends NNN intends to pay regular quarterly dividends to its stockholders, although all future distributions will be declared and paid at the discretion of the Board of Directors and will depend upon cash generated by operating activities, NNN's financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986, as amended, and such other factors as the Board of Directors deems relevant.
Biggest changeComparison to Twenty-Five-Year Cumulative Total Return Dividends NNN intends to pay regular quarterly dividends to its stockholders, although all future distributions will be declared and paid at the discretion of the Board of Directors and will depend upon cash generated by operating activities, NNN's financial condition, capital requirements, annual distribution requirements under the REIT provisions of the Code and such other factors as the Board of Directors deems relevant.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The common stock of NNN currently is traded on the NYSE under the symbol “NNN.” Performance Graphs Set forth below is a line graph comparing the cumulative total stockholder return on NNN's common stock, based on the market price of the common stock and assuming reinvestment of dividends, with the FTSE National Association of Real Estate Investment Trusts Equity Index (“FNER”) and the S&P 500 Index (“S&P 500”) for the five-year period commencing December 31, 2018 and ending December 31, 2023.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The common stock of NNN currently is traded on the NYSE under the symbol “NNN.” Performance Graphs Set forth below is a line graph comparing the cumulative total stockholder return on NNN's common stock, based on the market price of the common stock and assuming reinvestment of dividends, with the FTSE National Association of Real Estate Investment Trusts Equity Index (“FNER”) and the S&P 500 Index (“S&P 500”) for the five-year period commencing December 31, 2019 and ending December 31, 2024.
Comparison to Five-Year Cumulative Total Return 25 Set forth below is a line graph comparing the cumulative total stockholder return on NNN's common stock, based on the market price of the common stock and assuming reinvestment of dividends, with the FNER and the S&P 500 for the fifteen-year period commencing December 31, 2008 and ending December 31, 2023.
Comparison to Five-Year Cumulative Total Return 25 Set forth below is a line graph comparing the cumulative total stockholder return on NNN's common stock, based on the market price of the common stock and assuming reinvestment of dividends, with the FNER and the S&P 500 for the twenty-five-year period commencing December 31, 1999 and ending December 31, 2024.
The graph assumes an investment of $100 on December 31, 2018.
The graph assumes an investment of $100 on December 31, 2019.
The graph assumes an investment of $100 on December 31, 2008.
The graph assumes an investment of $100 on December 31, 1999.
In January 2024, NNN declared dividends payable to its stockholders of $102,683,000, or $0.5650 per share, of common stock. Holders On January 31, 2024, there were 1,509 registered holders of record of NNN's common stock.
In January 2025, NNN declared dividends payable to its stockholders of $108,335,000, or $0.580 per share, of common stock. Holders On January 31, 2025, there were 1,425 registered holders of record of NNN's common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe increase is primarily due to the Rental Revenues from NNN's recent Property acquisitions (see "Results of Operations – Property Analysis – Property Acquisitions"). 34 Analysis of Expenses The following summarizes NNN's expenses for the year ended December 31 (dollars in thousands): 2023 2022 2021 2023 Versus 2022 2022 Versus 2021 General and administrative $ 43,746 $ 41,695 $ 44,640 4.9 % (6.6 )% Real estate 28,378 26,281 28,385 8.0 % (7.4 )% Depreciation and amortization 238,625 223,834 205,220 6.6 % 9.1 % Leasing transaction costs 299 320 203 (6.6 )% 57.6 % Impairment losses – real estate, net of recoveries 5,990 8,309 21,957 (27.9 )% (62.2 )% Executive retirement costs 3,454 7,520 — (54.1 )% N/C Total operating expenses $ 320,492 $ 307,959 $ 300,405 4.1 % 2.5 % Interest and other income $ (1,134 ) $ (149 ) $ (216 ) 661.1 % (31.0 )% Interest expense 163,898 148,065 137,874 10.7 % 7.4 % Loss on early extinguishment of debt — — 21,328 — % (100.0 )% Total other expenses $ 162,764 $ 147,916 $ 158,986 10.0 % (7.0 )% As a percentage of total revenues: General and administrative 5.3 % 5.4 % 6.1 % Real estate 3.4 % 3.4 % 3.9 % General and Administrative Expenses.
Biggest changeAnalysis of Expenses The following summarizes NNN's expenses for the year ended December 31 (dollars in thousands): 2024 2023 2024 Versus 2023 General and administrative $ 44,287 $ 43,746 1.2 % Real estate: Reimbursed from tenants 18,811 18,763 0.3 % Non-reimbursed 13,506 9,615 40.5 % Total real estate 32,317 28,378 13.9 % Depreciation and amortization 249,681 238,625 4.6 % Leasing transaction costs 99 299 (66.9 )% Impairment losses – real estate, net of recoveries 6,632 5,990 10.7 % Executive retirement costs 668 3,454 (80.7 )% Total operating expenses $ 333,684 $ 320,492 4.1 % Interest and other income $ (2,980 ) $ (1,134 ) 162.8 % Interest expense 184,017 163,898 12.3 % Total other expenses $ 181,037 $ 162,764 11.2 % As a percentage of total revenues: General and administrative 5.1 % 5.3 % Non-reimbursed real estate 1.6 % 1.2 % 34 Real Estate.
Cash provided by operating activities represents cash received primarily from rental income and interest income less cash used for general and administrative expenses. NNN's cash flow from operating activities has been sufficient to pay the distributions for each year presented.
Cash provided by operating activities represents cash received primarily from rental income less cash used for general and administrative and interest expenses. NNN's cash flow from operating activities has been sufficient to pay the distributions for each year presented.
Typically, the Properties are leased under long-term triple net leases, which require the tenant to pay all real estate taxes and assessments, utilities, to maintain the interior and exterior of the Property, and to carry property and liability insurance coverage.
Typically, the Properties are leased under long-term triple-net leases, which require the tenant to pay all utilities and real estate taxes and assessments, to maintain the interior and exterior of the Property, and to carry property and liability insurance coverage.
In August 2023, NNN filed a shelf registration statement with 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.
Universal Shelf Registration Statement. In August 2023, NNN filed a shelf registration statement with 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.
Risk Factors." Liquidity and Capital Resources NNN's demand for funds has been and will continue to be primarily for (i) payment of operating expenses and cash dividends, (ii) property acquisitions and construction commitments, (iii) capital expenditures, (iv) payment of principal and interest on its outstanding debt, and (v) other investments. Financing Strategy.
Risk Factors." Liquidity and Capital Resources NNN's demand for funds has been and will continue to be primarily for (i) payment of operating expenses and dividends, (ii) property acquisitions and construction commitments, (iii) capital expenditures, (iv) payment of principal and interest on its outstanding debt, and (v) other investments. Financing Strategy.
The ratio of total debt to total market capitalization was approximately 36 percent. Certain financial agreements to which NNN is a party contain covenants that limit NNN's ability to incur additional debt under certain circumstances. The organizational documents of NNN do not limit the absolute amount or percentage of debt that NNN may incur. Cash Flows.
The ratio of total debt to total market capitalization was approximately 37 percent. Certain financial agreements to which NNN is a party contain covenants that limit NNN's ability to incur additional debt under certain circumstances. The organizational documents of NNN do not limit the absolute amount or percentage of debt that NNN may incur. 36 Cash Flows.
The lost revenues and increased property expenses resulting from vacant Properties or the inability to collect lease revenues could have a material adverse effect on the liquidity and results of operations if NNN is unable to re-lease the Properties at comparable rental rates and in a timely manner.
The lost revenues and increased property expenses resulting from vacant Properties or the inability to collect lease payments could have a material adverse effect on the liquidity and results of operations if NNN is unable to re-lease the Properties at comparable rental rates and in a timely manner.
The key indicators for NNN include items such as: the composition of the Property Portfolio (such as tenant, geographic and line of trade diversification), the occupancy rate of the Property Portfolio, certain financial performance metrics and profitability measures, industry trends and industry performance compared to that of NNN. NNN evaluates the creditworthiness of its significant current and prospective tenants.
Key indicators include items such as: the composition of the Property Portfolio (such as tenant, line of trade and geographic diversification), the occupancy rate of the Property Portfolio, certain financial performance metrics and profitability measures, industry trends and industry performance compared to that of NNN. NNN evaluates the creditworthiness of its significant current and prospective tenants.
In accordance with the terms of the Credit Facility, NNN is required to meet certain restrictive financial covenants, which, among other things, require NNN to maintain certain (i) leverage ratios, (ii) debt service coverage, (iii) cash flow coverage, and (iv) investment limitations. At December 31, 2023, NNN was in compliance with those covenants.
In accordance with the terms of the Credit Facility, NNN is required to meet certain restrictive financial covenants, which, among other things, require NNN to maintain certain (i) leverage ratios, (ii) debt service coverage, (iii) cash flow coverage, and (iv) investment limitations. At December 31, 2024, NNN was in compliance with those covenants.
In accordance with the terms of the indentures pursuant to which NNN's notes have been issued, NNN is required to meet certain restrictive financial covenants, which, among other things, require NNN to maintain (i) certain leverage ratios, and (ii) certain interest coverage. At December 31, 2023, NNN was in compliance with those covenants.
In accordance with the terms of the indentures pursuant to which NNN's notes have been issued, NNN is required to meet certain restrictive financial covenants, which, among other things, require NNN to maintain (i) certain leverage ratios, and (ii) certain interest coverage. At December 31, 2024, NNN was in compliance with those covenants.
As a result of NNN's review of long-lived real estate assets, including identifiable intangible assets, NNN recognized real estate impairments, net of recoveries for the years ended December 31, 2023 and 2022, which were less than one percent of NNN's total assets for the respective years as reported on the Consolidated Balance Sheets.
As a result of NNN's review of long-lived real estate assets, including identifiable intangible assets, NNN recognized real estate impairments, net of recoveries for the years ended December 31, 2024 and 2023, which were less than one percent of NNN's total assets for the respective years as reported on the Consolidated Balance Sheets.
NNN may redeem each series of notes, in whole or in part, at any time prior to the par call date for the notes at the redemption price as set forth in the applicable supplemental indenture relating to the notes; provided, however, that if NNN redeems the notes on or after the par call date, the redemption price will equal 100 percent of the principal amount of the notes to be redeemed, plus accrued and unpaid interest thereon to, but not including, the redemption date. 41 In connection with the outstanding note offerings, NNN incurred debt issuance costs totaling $42,595,000 consisting primarily of underwriting discounts and commissions, legal and accounting fees, rating agency fees and printing expenses.
NNN may redeem each series of notes, in whole or in part, at any time prior to the par call date for the notes at the redemption price as set forth in the applicable supplemental indenture relating to the notes; provided, however, that if NNN redeems the notes on or after the par call date, the redemption price will equal 100 percent of the principal amount of the notes to be redeemed, plus accrued and unpaid interest thereon to, but not including, the redemption date. 41 In connection with the outstanding note offerings, NNN incurred debt issuance costs totaling $43,820,000 consisting primarily of underwriting discounts and commissions, legal and accounting fees, rating agency fees and printing expenses.
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. 31 New Accounting Pronouncements.
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. 30 New Accounting Pronouncements.
(2) The note discounts are amortized to interest expense over the respective term of each debt obligation using the effective interest method. (3) Includes the effects of the discount at issuance. (4) The aggregate principal balance of the unsecured note maturities for the next five years is $1,900,000.
(2) The note discounts are amortized to interest expense over the respective term of each debt obligation using the effective interest method. (3) Includes the effects of the discount at issuance. (4) The aggregate principal balance of the unsecured note maturities for the next five years is $1,550,000.
A summary of NNN's accounting policies and procedures is included in Note 1 of the December 31, 2023, Consolidated Financial Statements. Management believes the following critical accounting policies, among others, affect its more significant estimates and assumptions used in the preparation of NNN's consolidated financial statements. Real Estate Portfolio.
A summary of NNN's accounting policies and procedures is included in Note 1 of the December 31, 2024 Consolidated Financial Statements. Management believes the following critical accounting policies, among others, affect its more significant estimates and assumptions used in the preparation of NNN's consolidated financial statements. Real Estate Portfolio.
(2) Interest calculation on notes payable based on stated rate of the principal amount. Property Construction. NNN has committed to fund construction of 53 Properties. The improvements of such Properties are estimated to be completed within 12 to 18 months.
(2) Interest calculation on notes payable based on stated rate of the principal amount. Property Construction. NNN has committed to fund construction of 15 Properties. The improvements of such Properties are estimated to be completed within 12 to 18 months.
Management anticipates satisfying these obligations with a combination of NNN's cash provided from operations, current capital resources on hand, its Credit Facility, debt or equity financings and asset dispositions. Properties.
Management anticipates satisfying these obligations with a combination of NNN's cash provided from operations, current capital resources on hand, its Credit Facility, debt or equity financings and property dispositions. Properties.
Each of NNN's outstanding series of unsecured notes is summarized in the table below (dollars in thousands): Notes (1) Issue Date Principal Discount (2) Net Price Stated Rate Effective Rate (3) Maturity Date 2024 May 2014 $ 350,000 $ 707 $ 349,293 3.900% 3.924% June 2024 (4)(5) 2025 October 2015 400,000 964 399,036 4.000% 4.029% November 2025 (4) 2026 December 2016 350,000 3,860 346,140 3.600% 3.733% December 2026 (4) 2027 September 2017 400,000 1,628 398,372 3.500% 3.548% October 2027 (4) 2028 September 2018 400,000 2,848 397,152 4.300% 4.388% October 2028 (4) 2030 March 2020 400,000 1,288 398,712 2.500% 2.536% April 2030 2033 August 2023 500,000 11,620 488,380 5.600% 5.905% October 2033 2048 September 2018 300,000 4,239 295,761 4.800% 4.890% October 2048 2050 March 2020 300,000 6,066 293,934 3.100% 3.205% April 2050 2051 March 2021 450,000 8,406 441,594 3.500% 3.602% April 2051 2052 September 2021 450,000 10,422 439,578 3.000% 3.118% April 2052 (1) The proceeds from each note issuance were used to (i) pay down the outstanding balance on NNN's Credit Facility, (ii) redeem notes payable prior to maturity, (iii) redeem outstanding preferred stock, (iv) fund future property acquisitions, and/or (v) for general corporate purposes.
Each of NNN's outstanding series of unsecured notes is summarized in the table below (dollars in thousands): Notes (1) Issue Date Principal Discount (2) Net Price Stated Rate Effective Rate (3) Maturity Date 2025 October 2015 $ 400,000 $ 964 $ 399,036 4.000% 4.029% November 2025 (4)(5) 2026 December 2016 350,000 3,860 346,140 3.600% 3.733% December 2026 (4) 2027 September 2017 400,000 1,628 398,372 3.500% 3.548% October 2027 (4) 2028 September 2018 400,000 2,848 397,152 4.300% 4.388% October 2028 (4) 2030 March 2020 400,000 1,288 398,712 2.500% 2.536% April 2030 2033 August 2023 500,000 11,620 488,380 5.600% 5.905% October 2033 2034 May 2024 500,000 6,160 493,840 5.500% 5.662% June 2034 2048 September 2018 300,000 4,239 295,761 4.800% 4.890% October 2048 2050 March 2020 300,000 6,066 293,934 3.100% 3.205% April 2050 2051 March 2021 450,000 8,406 441,594 3.500% 3.602% April 2051 2052 September 2021 450,000 10,422 439,578 3.000% 3.118% April 2052 (1) The proceeds from each note issuance were used to (i) pay down the outstanding balance on NNN's Credit Facility, (ii) redeem notes payable prior to maturity, (iii) redeem outstanding preferred stock, (iv) fund future property acquisitions, and/or (v) for general corporate purposes.
Refer to Note 1 of the December 31, 2023, Consolidated Financial Statements for a summary and the anticipated impact of each accounting pronouncement on NNN's financial position and results of operations. Results of Operations Property Analysis General.
Refer to Note 1 of the December 31, 2024, Consolidated Financial Statements for a summary and the anticipated impact of each accounting pronouncement on NNN's financial position and results of operations. Results of Operations Property Analysis General.
Upon the issuance of a series of unsecured notes, NNN terminated such derivatives as outlined in the following table (dollars in thousands): Notes Terminated Description Aggregate Notional Amount Liability (Asset) Fair Value When Terminated (1) Fair Value Deferred In Other Comprehensive Income (2) 2024 May 2014 Three forward starting swaps $ 225,000 $ 6,312 $ 6,312 2025 October 2015 Four forward starting swaps 300,000 13,369 13,369 2026 December 2016 Two forward starting swaps 180,000 (13,352 ) (13,345 ) 2027 September 2017 Two forward starting swaps 250,000 7,690 7,688 2028 September 2018 Two forward starting swaps 250,000 (4,080 ) (4,080 ) 2030 March 2020 Three forward starting swaps 200,000 13,141 13,141 2052 September 2021 Two forward starting swaps 120,000 1,584 1,584 (1) The deferred liability (asset) is being amortized over the term of the respective notes using the effective interest method.
Upon the issuance of a series of unsecured notes, NNN terminated such derivatives as outlined in the following table (dollars in thousands): Notes Terminated Description Aggregate Notional Amount Liability (Asset) Fair Value When Terminated (1) Fair Value Deferred In Other Comprehensive Income (2) 2025 October 2015 Four forward starting swaps $ 300,000 $ 13,369 $ 13,369 2026 December 2016 Two forward starting swaps 180,000 (13,352 ) (13,345 ) 2027 September 2017 Two forward starting swaps 250,000 7,690 7,688 2028 September 2018 Two forward starting swaps 250,000 (4,080 ) (4,080 ) 2030 March 2020 Three forward starting swaps 200,000 13,141 13,141 2052 September 2021 Two forward starting swaps 120,000 1,584 1,584 (1) The deferred liability (asset) is being amortized over the term of the respective notes using the effective interest method.
The change in cash provided by operations for the years ended December 31, 2023, 2022 and 2021, is primarily the result of changes in revenues and expenses as discussed in “Results of Operations.” Cash generated from operations is expected to fluctuate in the future. Investing Activities.
The change in cash provided by operations for the years ended December 31, 2024 and 2023, is primarily the result of changes in revenues and expenses as discussed in “Results of Operations.” Cash generated from operations is expected to fluctuate in the future. Investing Activities.
NNN's financing objective is to manage its capital structure effectively in order to provide sufficient capital to execute its operating strategy while servicing its debt requirements, maintaining its investment grade credit rating, staggering debt maturities and providing value to NNN's stockholders.
NNN's financing objective is to manage its capital structure effectively in order to provide sufficient capital to execute its operating and investing strategies while servicing its debt requirements, maintaining its investment grade credit rating, staggering debt maturities and providing value to NNN's stockholders.
NNN expects these sources of liquidity and the discretionary nature of its property acquisition funding needs will allow NNN to meet its financial obligations over the long term. 36 As of December 31, 2023, NNN's ratio of total debt, none of which was secured debt, to total gross assets (before accumulated depreciation and amortization) was approximately 42 percent.
NNN expects these sources of liquidity and the discretionary nature of its property acquisition funding needs will allow NNN to meet its financial obligations over the long term. As of December 31, 2024, NNN's ratio of total debt, none of which was secured debt, to total gross assets (before accumulated depreciation and amortization) was approximately 40 percent.
Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this annual report on Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission ("Commission" or "SEC") on February 9, 2023.
Discussions of 2023 and 2022 year-to-year comparisons that are not included in this annual report on Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission ("Commission" or "SEC") on February 8, 2024.
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 Consolidated Balance Sheet.
The Credit Facility matures in April 2028, unless the Company exercises its options to extend maturity to April 2029. 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 Consolidated Balance Sheet.
Given these concentrations, any financial hardship within these sectors or geographic regions could have a material adverse effect on the financial condition and operating performance of NNN. 28 As of December 31, 2023, 2022 and 2021, the Property Portfolio remained approximately 99 percent leased and had a weighted average remaining lease term of approximately 10 years.
Given these concentrations, any financial hardship within these sectors or geographic regions could have a material adverse effect on the financial condition and operating performance of NNN. 28 As of December 31, 2024 and 2023, the Property Portfolio remained at least 98 percent leased and had a weighted average remaining lease term of approximately 10 years.
The increase is primarily attributable to the increase in NNN's Property Portfolio from recent acquisitions (see "Results of Operations – Property Analysis – Property Acquisitions"). Impairment Losses – Real Estate, Net of Recoveries.
The increase is primarily attributable to the increase in NNN's Property Portfolio from recent acquisitions (see "Results of Operations – Property Analysis – Property Acquisitions"), and is partially offset by recent dispositions (see "Results of Operations – Property Analysis – Property Dispositions"). Impairment Losses – Real Estate, Net of Recoveries.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section generally discusses 2024 and 2023 and year-to-year comparisons.
These sectors represent a large part of the freestanding retail property marketplace and NNN's management believes these sectors present attractive investment opportunities. The Property Portfolio is geographically concentrated in the southeast (26.4%) and south (22.9%) United States, which are regions of historically above-average population growth.
These sectors represent a large part of the freestanding retail property marketplace and NNN's management believes these sectors present attractive investment opportunities. The Property Portfolio is geographically concentrated in the southeast (25.5%) and south (24.7%) United States, which are regions of historically above-average population growth.
NNN typically funds Property acquisitions either through borrowings under NNN's unsecured revolving credit facility (the "Credit Facility"), by issuing its debt or equity securities in the capital markets, with undistributed funds from operations or with proceeds from the sale of Properties. Property Dispositions.
NNN typically funds Property acquisitions either through borrowings under NNN's Credit Facility (as defined in "Capital Structure – Line of Credit Payable"), by issuing its debt or equity securities in the capital markets, with undistributed funds from operations or with proceeds from the sale of Properties. Property Dispositions.
(2) Square feet. 32 The following table summarizes the diversification of the Property Portfolio based on the top 20 lines of trade: % of Annual Base Rent (1) Lines of Trade 2023 2022 2021 1. Convenience stores 16.4% 16.5% 17.9% 2. Automotive service 15.6% 13.7% 12.3% 3. Restaurants – full service 8.7% 9.1% 9.8% 4.
(2) Square feet. 31 The following table summarizes the diversification of the Property Portfolio based on the top 20 lines of trade: % of Annual Base Rent (1) Lines of Trade 2024 2023 1. Convenience stores 17.0% 16.4% 2. Automotive service 16.9% 15.6% 3. Restaurants – limited service 8.4% 8.5% 4. Restaurants – full service 7.8% 8.7% 5.
NNN continues to maintain its diversification by tenant, geography and tenant's line of trade. NNN's largest lines of trade concentrations are the restaurant (17.2%) (including full and limited service), convenience store (16.4%), automotive service (15.6%) and family entertainment centers (6.4%) sectors.
NNN continues to maintain its diversification by tenant, line of trade and geography. NNN's largest line of trade concentrations are the convenience store (17.0%), automotive service (16.9%), restaurant (16.2%) (including full and limited service) and family entertainment centers (7.2%) sectors.
Bankruptcy Code. As a result, this tenant has the right to reject or affirm their leases with NNN. NNN generally monitors the financial performance of its significant tenants on an ongoing basis. Common Stock Dividends.
Bankruptcy Code. As a result, these tenants have the right to reject or affirm their leases with NNN. NNN generally monitors the financial performance of its significant tenants on an ongoing basis. Dividends.
As of December 31, 2023, NNN owned 18 vacant, un-leased Properties which accounted for less than one percent of total Properties and less than one percent of aggregate gross leasable area held in the Property Portfolio. 38 Additionally, as of January 31, 2024, less than one percent of total Properties, and less than one percent of aggregate gross leasable area held in the Property Portfolio, was leased to one tenant currently in bankruptcy under Chapter 11 of the U.S.
As of December 31, 2024, NNN owned 54 vacant, un-leased Properties which accounted for less than two percent of total Properties and approximately two percent of aggregate gross leasable area held in the Property Portfolio. 38 Additionally, as of January 31, 2025, less than one percent of total annualized base rent, less than one percent of total Properties, and less than one percent of aggregate gross leasable area held in the Property Portfolio, was leased to three tenants currently in bankruptcy under Chapter 11 of the U.S.
In February 2021, NNN filed a shelf registration statement that was automatically effective with the Commission for a term of three years, for its DRIP, which permits NNN to issue up to 6,000,000 shares of common stock. NNN's DRIP provides an economical and convenient way for current stockholders and other interested new investors to invest in NNN's common stock.
Dividend Reinvestment and Stock Purchase Plan. In February 2024, NNN filed a shelf registration statement for its DRIP with the Commission that was automatically effective, and permits NNN to issue up to 4,000,000 shares of common stock. NNN's DRIP provides an economical and convenient way for current stockholders and other interested new investors to invest in NNN's common stock.
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 real estate investment trust subsidiaries ("TRS"). Effective May 1, 2023, National Retail Properties, Inc. changed its name to NNN REIT, Inc.
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 real estate investment trust subsidiaries ("TRS").
In April 2022, the former President and Chief Executive Officer retired from employment, as contemplated under the Company's long-term executive succession planning process and as previously announced in January 2022.
In April 2022, the former President and Chief Executive Officer retired from employment, as contemplated under the Company's long-term executive succession planning process and as previously announced in January 2022. In addition, in January 2024, the former Executive Vice President, General Counsel and Secretary retired from employment as previously announced in November 2023.
As of December 31, 2023, NNN owned 3,532 Properties in 49 states, with an aggregate gross leasable area of approximately 35,966,000 square feet, and a weighted average remaining lease term of 10.1 years. Approximately 99 percent of the Properties were leased as of December 31, 2023.
As of December 31, 2024, NNN owned 3,568 Properties in 49 states, with an aggregate gross leasable area of approximately 36,557,000 square feet, and a weighted average remaining lease term of 10 years. Approximately 98 percent of the Properties were leased as of December 31, 2024.
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. NNN's Property Portfolio primarily consists of leases accounted for using the operating method.
NNN's real estate is typically leased to tenants under triple-net leases, whereby the tenant is responsible for all operating expenses relating to the Property, including utilities, real estate taxes and assessments, property and liability insurance, maintenance, repairs and capital expenditures. NNN's Property Portfolio primarily consists of leases accounted for using the operating method.
Restaurants – limited service 8.5% 8.9% 9.4% 5. Family entertainment centers 6.4% 5.9% 5.9% 6. Recreational vehicle dealers, parts and accessories 4.6% 4.1% 3.9% 7. Health and fitness 4.5% 4.9% 5.2% 8. Theaters 4.1% 4.3% 4.5% 9. Equipment rental 3.0% 3.1% 3.2% 10. Wholesale clubs 2.5% 2.6% 2.5% 11. Automotive parts 2.5% 2.6% 3.0% 12.
Family entertainment centers 7.2% 6.4% 6. Recreational vehicle dealers, parts and accessories 5.1% 4.6% 7. Theaters 4.0% 4.1% 8. Health and fitness 3.9% 4.5% 9. Equipment rental 3.2% 3.0% 10. Wholesale clubs 2.4% 2.5% 11. Automotive parts 2.4% 2.5% 12. Drug stores 2.2% 2.4% 13. Home improvement 2.1% 2.2% 14. Medical service providers 1.7% 1.7% 15.
The final value relies upon ranking comparable properties' attributes from most to least similar. 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.
The final value relies upon ranking comparable properties' attributes from most to least similar. Lease Accounting. NNN records its leases on the Property Portfolio in accordance with FASB ASC Topic 842, Leases ("ASC 842").
(See "Capital Structure – Preferred Stock"). As of December 31, 2023, NNN had no outstanding shares of preferred stock. 39 C apital Structure NNN has used, and expects to use in the future, various forms of debt and equity securities primarily to fund property acquisitions and construction on its Properties and to pay down or refinance its outstanding debt.
C apital Structure NNN has used, and expects to use in the future, various forms of debt and equity securities primarily to fund property acquisitions and construction on its Properties and to pay down or refinance its outstanding debt.
The following table 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 December 31, 2023 — 7,722,511 The following table outlines the common stock issuances pursuant to NNN's ATM for the years ended December 31 (dollars in thousands, except per share data): 2023 2022 2021 Shares of common stock 650,135 5,473,072 30,000 Average price per share (net) $ 43.52 $ 45.15 $ 33.65 Net proceeds $ 28,292 $ 247,129 $ 1,009 Stock issuance costs (1) $ 858 $ 3,761 $ 224 (1) Stock issuance costs consist primarily of underwriters' and agent's fees and commissions, and legal and accounting fees. 42 Dividend Reinvestment and Stock Purchase Plan.
The following table 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 December 31, 2024 4,652,100 7,722,511 The following table outlines the common stock issuances pursuant to NNN's ATM for the years ended December 31 (dollars in thousands, except per share data): 2024 2023 Shares of common stock 4,652,100 650,135 Average price per share (net) $ 45.49 $ 43.52 Net proceeds $ 211,619 $ 28,292 Stock issuance costs (1) $ 3,242 $ 858 (1) Stock issuance costs consist primarily of underwriters' and agent's fees and commissions, and legal and accounting fees.
The following table summarizes the Property acquisitions for each of the years ended December 31 (dollars in thousands): 2023 2022 2021 Acquisitions: Number of Properties 165 223 156 Gross leasable area (square feet) (1) 1,281,000 2,629,000 1,341,000 Cap rate (2) 7.3 % 6.4 % 6.5 % Total dollars invested (3) $ 819,710 $ 847,747 $ 555,415 (1) Includes additional square footage from completed construction on existing Properties.
The following table summarizes the Property acquisitions for each of the years ended December 31 (dollars in thousands): 2024 2023 Acquisitions: Number of Properties 75 165 Gross leasable area (square feet) (1) 1,486,000 1,281,000 Cap rate (2) 7.7 % 7.3 % Total dollars invested (3) $ 565,416 $ 819,710 (1) Includes additional square footage from completed construction on existing Properties.
These construction commitments, at December 31, 2023, are outlined in the table below (dollars in thousands): Total commitment (1) $ 379,674 Less amount funded (240,532 ) Remaining commitment $ 139,142 (1) Includes land, construction costs, tenant improvements, lease costs, capitalized interest and third-party costs.
These construction commitments, at December 31, 2024, are outlined in the table below (dollars in thousands): Total commitment (1) $ 165,550 Less amount funded (116,767 ) Remaining commitment $ 48,783 (1) Includes land, construction costs, tenant improvements, lease costs, capitalized interest and third-party costs.
The following table outlines the dividends declared and paid for NNN's common stock for the years ended December 31 (dollars in thousands, except per share data): 2023 2022 2021 Dividends $ 404,458 $ 380,538 $ 367,291 Per share 2.230 2.160 2.100 The following table presents the characterizations for tax purposes of NNN's common stock dividends for the years ended December 31: 2023 2022 2021 Ordinary dividends (1) $ 2.192636 98.3245 % $ 2.156330 99.8301 % $ 1.615753 76.9406 % Nontaxable distributions 0.037364 1.6755 % 0.003670 0.1699 % 0.484247 23.0594 % $ 2.230000 100.0000 % $ 2.160000 100.0000 % $ 2.100000 100.0000 % (1) Eligible for the 20% qualified business income deduction under section 199A of the Internal Revenue Code of 1986, as amended (the "Code").
The following table outlines the dividends declared and paid for NNN's common stock for the years ended December 31 (dollars in thousands, except per share data): 2024 2023 Dividends $ 420,239 $ 404,458 Per share 2.290 2.230 The following table presents the characterizations for tax purposes of NNN's common stock dividends for the years ended December 31: 2024 2023 Ordinary dividends (1) $ 2.286498 99.8471 % $ 2.192636 98.3245 % Nontaxable distributions 0.003502 0.1529 % 0.037364 1.6755 % $ 2.290000 100.0000 % $ 2.230000 100.0000 % (1) Eligible for the 20% qualified business income deduction under section 199A of the Internal Revenue Code of 1986, as amended (the "Code").
The following table summarizes the properties sold by NNN for each of the years ended December 31 (dollars in thousands): 2023 2022 2021 Number of properties 45 33 74 Gross leasable area (square feet) 293,000 311,000 1,015,000 Net sales proceeds $ 115,716 $ 65,216 $ 122,018 Net gain on disposition of real estate $ 47,485 $ 17,443 $ 23,094 Cap rate (1) 5.9 % 5.9 % 7.4 % (1) The cap rate is a weighted average of properties occupied at disposition, calculated as the cash annual base rent dividend by the total sales price of the properties.
The following table summarizes the properties sold by NNN for each of the years ended December 31 (dollars in thousands): 2024 2023 Number of properties 41 45 Gross leasable area (square feet) 849,000 293,000 Net sales proceeds $ 148,658 $ 115,716 Net gain on disposition of real estate $ 42,290 $ 47,485 Cap rate (1) 7.3 % 5.9 % (1) The cap rate is a weighted average of properties occupied at disposition, calculated as the cash annual base rent divided by the total gross proceeds received for the properties.
As of December 31, 2023, there was $132,000,000 outstanding and $968,000,000 available for future borrowings under the Credit Facility.
As of December 31, 2024, there was no outstanding balance and $1,200,000,000 was available for future borrowings under the Credit Facility.
On January 16, 2024, NNN declared a dividend of $0.5650 per share, payable February 15, 2024, to its common stockholders of record as of January 31, 2024. Preferred Stock Distributions.
On January 14, 2025, NNN declared a dividend of $0.580 per share, payable February 14, 2025, to its common stockholders of record as of January 31, 2025.
NNN had $5,155,000 in cash and cash equivalents, of which $3,966,000 was restricted cash or cash held in escrow at December 31, 2023.
NNN had $9,062,000 of cash, cash equivalents and restricted cash, of which $331,000 was restricted cash or cash held in escrow at December 31, 2024.
NNN's financing activities for the year ended December 31, 2023, included the following significant transactions: • $34,200,000 in net repayments of NNN's Credit Facility, • $483,930,000 in net proceeds from the issuance of the 5.600% notes payable due in October 2033, • $28,292,000 from the issuance of 650,135 shares of common stock in connection with the at-the-market equity program ("ATM"), • $3,082,000 from the issuance of 76,229 shares of common stock in connection with the Dividend Reinvestment and Stock Purchase Plan (“DRIP”), • $404,458,000 in dividends paid to common stockholders, and • $9,774,000 payment in April for the repayment of the remaining mortgages payable principal. 37 Material Cash Requirements NNN's material cash requirements include (i) long-term debt maturities; (ii) interest on long-term debt; (iii) common stock dividends (although all future distributions will be declared and paid at the discretion of the Board of Directors); and (iv) to a lesser extent, Property construction and other Property related costs that may arise.
NNN's financing activities for the year ended December 31, 2024, included the following significant transactions: • $132,000,000 in net repayments of NNN's Credit Facility, • $489,390,000 in net proceeds from the issuance in May of the 5.500% notes payable due in June 2034, • $350,000,000 payment in June for the redemption of the 3.900% notes payable due in June 2024, • $211,619,000 from the issuance of 4,652,100 shares of common stock in connection with the at-the-market equity program ("ATM"), • $2,634,000 from the issuance of 64,654 shares of common stock in connection with the Dividend Reinvestment and Stock Purchase Plan (“DRIP”), and • $420,239,000 in dividends paid to common stockholders. 37 Material Cash Requirements NNN's material cash requirements include (i) long-term debt maturities; (ii) interest on long-term debt; (iii) common stock dividends (although all future distributions will be declared and paid at the discretion of the Board of Directors); and (iv) to a lesser extent, Property construction and other Property related costs that may arise.
Depending on macroeconomic conditions and their impact on a tenant's business and operations, the remaining $3,808,000 of deferred rents may be difficult to collect. 29 Critical Accounting Estimates The preparation of NNN's consolidated financial statements in conformance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as other disclosures in the financial statements.
Critical Accounting Estimates The preparation of NNN's consolidated financial statements in conformance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as other disclosures in the financial statements.
During the year ended December 31, 2023, NNN recorded executive retirement costs as a result of the accounting treatment for long-term incentive compensation related to Mr. Tessitore's retirement and transition agreement. Interest Expense. Interest expense increased for the year ended December 31, 2023, compared to the same period in 2022.
During the years ended December 31, 2024 and 2023, NNN recorded executive retirement costs in connection with the long-term incentive compensation related to these retirement and transition agreements. Interest Expense. Interest expense increased for the year ended December 31, 2024, compared to the same period in 2023.
Rental Income. Rental income increased for the year ended December 31, 2023, as compared to the same period in 2022.
Depreciation and amortization expenses increased in amount for the year ended December 31, 2024, as compared to the same period in 2023.
The increase is primarily attributable to non-reimbursable real estate expenses and certain properties that became vacant. Depreciation and Amortization. Depreciation and amortization expenses increased in amount for the year ended December 31, 2023, as compared to the same period in 2022.
Non-reimbursed real estate expenses increased in amount and as a percentage of total revenues for the year ended December 31, 2024 as compared to the same period in 2023 primarily due to a minor increase in the number of vacant properties. Depreciation and Amortization.
Impact of Inflation NNN's leases typically contain provisions to mitigate the adverse impact of inflation on NNN's results of operations. Tenant leases generally provide for limited increases in rent as a result of fixed increases, capped increases in the Consumer Price Index, and/or, to a lesser extent, increases in the tenant's sales volume.
Tenant leases generally provide for limited increases in rent as a result of fixed increases, capped increases in the Consumer Price Index, and/or, to a lesser extent, increases in the tenant's sales volume. As a result of limitations on rent increases, during times when inflation is high, rent increases may not meet or exceed the rate of inflation.
The table below summarizes NNN's cash flows for each of the years ended December 31 (dollars in thousands): 2023 2022 2021 Cash, cash equivalents and restricted cash: Provided by operating activities $ 612,410 $ 578,355 $ 568,425 Used in investing activities (680,660 ) (777,631 ) (432,177 ) Provided by (used in) financing activities 66,627 34,732 (232,162 ) Decrease in cash, cash equivalents and restricted cash (1,623 ) (164,544 ) (95,914 ) Cash, cash equivalents and restricted cash at the beginning of the year 6,778 171,322 267,236 Cash, cash equivalents and restricted cash at the end of the year $ 5,155 $ 6,778 $ 171,322 Cash flow activities include: Operating Activities.
The table below summarizes NNN's cash flows for each of the years ended December 31 (dollars in thousands): 2024 2023 Cash, cash equivalents and restricted cash: Provided by operating activities $ 635,504 $ 612,410 Used in investing activities (424,336 ) (680,660 ) Provided by (used in) financing activities (207,261 ) 66,627 Increase (decrease) in cash, cash equivalents and restricted cash 3,907 (1,623 ) Cash, cash equivalents and restricted cash at the beginning of the year 5,155 6,778 Cash, cash equivalents and restricted cash at the end of the year $ 9,062 $ 5,155 Cash flow activities include: Operating Activities.
The following is a summary of NNN's total outstanding debt as of December 31 (dollars in thousands): 2023 Percentage of Total 2022 Percentage of Total Line of credit payable $ 132,000 3.0 % $ 166,200 4.2 % Mortgages payable (1) — — % 9,964 0.3 % Notes payable 4,228,544 97.0 % 3,739,890 95.5 % Total outstanding debt $ 4,360,544 100.0 % $ 3,916,054 100.0 % (1) In April 2023, NNN repaid the remaining mortgages payable principal balance of $9,774.
The following is a summary of NNN's total outstanding debt as of December 31 (dollars in thousands): 2024 Percentage of Total 2023 Percentage of Total Line of credit payable $ — — % $ 132,000 3.0 % Notes payable 4,373,803 100.0 % 4,228,544 97.0 % Total outstanding debt $ 4,373,803 100.0 % $ 4,360,544 100.0 % 39 Line of Credit Payable.
As a result of limitations on rent increases, during times when inflation is high, rent increases may not meet or exceed the rate of inflation. Properties are leased to tenants under long-term, net leases which typically require the tenant to pay certain operating expenses for a Property, thus, NNN's exposure to inflation is reduced with respect to these expenses.
Properties are leased to tenants under long-term triple-net leases which typically require the tenant to pay certain operating expenses for a Property, thus, NNN's exposure to inflation is reduced with respect to these expenses. Inflation may have an adverse impact on NNN's tenants and challenge their ability to meet lease obligations, including to pay rent. See "Item 1A.
Real estate expenses increased in amount and remained consistent as a percentage of revenues for the year ended December 31, 2023, as compared to the same period in 2022. NNN focuses on real estate expenses, net of reimbursements from tenants. NNN's net real estate expenses for the years ended December 31, 2023 and 2022 were $9,615,000 and $8,479,000, respectively.
Total real estate expenses increased for the year ended December 31, 2024, as compared to the same period in 2023. NNN focuses on non-reimbursed real estate expenses (total real estate expenses, net of reimbursements from tenants).
Virginia 118 3.3% Other 1,513 41.0% 3,532 100.0% (1) Based on annualized base rent for all leases in place as of December 31, 2023. 33 Property Acquisitions.
North Carolina 161 3.7% 8. Indiana 149 3.6% 9. Arizona 81 3.2% 10. Virginia 118 3.2% Other 1,520 41.2% 3,568 100.0% (1) Based on the annualized base rent for all leases in place as of December 31, 2024. Property Acquisitions.
As of December 31, 2023, NNN had $5,155,000 of cash, cash equivalents and restricted cash and $968,000,000 available for future borrowings under the Credit Facility. NNN may also fund liquidity requirements with new debt or equity issuances, although newly issued debt may be at higher interest rates than the rates on NNN's existing outstanding debt.
NNN may also fund liquidity requirements with new debt or equity issuances, although newly issued debt may be at higher interest rates than the rates on NNN's existing outstanding debt. NNN has the ability to limit future property acquisitions and strategically increase property dispositions.
NNN does not use derivatives for trading or speculative purposes or currently have any derivatives that are not designated as hedges. NNN had no derivative financial instruments outstanding at December 31, 2023. Equity Securities Preferred Stock. In October 2021, NNN redeemed all outstanding depositary shares (13,800,000) representing interests in its Series F Preferred Stock.
NNN does not use derivatives for trading or speculative purposes or currently have any derivatives that are not designated as hedges. NNN had no derivative financial instruments outstanding at December 31, 2024. Equity Securities At-The-Market Offerings. NNN has established an ATM which allows NNN to sell shares of common stock from time to time.
The table presents material cash requirements related to NNN's long-term obligations outstanding as of December 31, 2023 (see "Capital Structure") (dollars in thousands): Date of Obligation Total 2024 2025 2026 2027 2028 Thereafter Long-term debt (1) $ 4,300,000 $ 350,000 $ 400,000 $ 350,000 $ 400,000 $ 400,000 $ 2,400,000 Long-term debt – interest (2) 1,959,408 157,006 148,750 134,225 119,233 104,567 1,295,627 Credit Facility 132,000 — 132,000 — — — — Headquarters office lease 10,103 837 210 981 1,005 1,030 6,040 Total contractual cash obligations $ 6,401,511 $ 507,843 $ 680,960 $ 485,206 $ 520,238 $ 505,597 $ 3,701,667 (1) Includes only principal amounts outstanding under notes payable and excludes unamortized note discounts and debt costs.
The table presents material cash requirements related to NNN's long-term obligations outstanding as of December 31, 2024 (see "Capital Structure") (dollars in thousands): Date of Obligation Total 2025 2026 2027 2028 2029 Thereafter Long-term debt (1) $ 4,450,000 $ 400,000 $ 350,000 $ 400,000 $ 400,000 $ — $ 2,900,000 Long-term debt – interest (2) 2,062,506 176,250 161,725 146,733 132,067 118,450 1,327,281 Total contractual cash obligations $ 6,512,506 $ 576,250 $ 511,725 $ 546,733 $ 532,067 $ 118,450 $ 4,227,281 (1) Includes only principal amounts outstanding under notes payable and excludes unamortized note discounts and debt costs.
Analysis of Revenues The following summarizes NNN's revenues for each of the years ended December 31 (dollars in thousands): 2023 2022 2021 2023 Versus 2022 2022 Versus 2021 Rental Revenues (1) $ 807,327 $ 753,816 $ 705,194 7.1 % 6.9 % Real estate expense reimbursement from tenants 18,763 17,802 18,665 5.4 % (4.6 )% Rental income 826,090 771,618 723,859 7.1 % 6.6 % Interest and other income from real estate transactions 2,021 1,435 2,548 40.8 % (43.7 )% Total revenues $ 828,111 $ 773,053 $ 726,407 7.1 % 6.4 % (1) Includes rental income from operating leases, earned income from direct financing leases and percentage rent ("Rental Revenues").
NNN typically uses the disposition proceeds to either pay down the Credit Facility or reinvest in real estate. 33 Analysis of Revenues The following summarizes NNN's revenues for each of the years ended December 31 (dollars in thousands): 2024 2023 2024 Versus 2023 Rental Revenues (1) $ 848,657 $ 807,327 5.1 % Real estate expenses reimbursed from tenants 18,811 18,763 0.3 % Rental income 867,468 826,090 5.0 % Interest and other income from real estate transactions 1,798 2,021 (11.0 )% Total revenues $ 869,266 $ 828,111 5.0 % (1) Includes rental income from operating leases, earned income from direct financing leases and percentage rent ("Rental Revenues").
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. In April 2020, the FASB issued interpretive guidance relating to the accounting for lease concessions provided as a result of COVID-19.
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. 29 Collectability . In accordance with ASC 842, NNN reviews the collectability of its lease payments on an ongoing basis.
The following outlines the common stock issuances pursuant to NNN's DRIP for the years ended December 31 (dollars in thousands): 2023 2022 2021 Shares of common stock 76,229 70,342 62,577 Net proceeds $ 3,082 $ 3,082 $ 2,744 NNN's DRIP shelf registration statement expires in February 2024; however, NNN intends to file a new registration statement in order to continue providing current stockholders and other interested new investors an economical and convenient way to invest in NNN's common stock. 43
The following outlines the common stock issuances pursuant to NNN's DRIP for the years ended December 31 (dollars in thousands): 2024 2023 Shares of common stock 64,654 76,229 Net proceeds $ 2,634 $ 3,082 42
The following table summarizes the Property Portfolio as of December 31: 2023 2022 2021 Properties Owned: Number 3,532 3,411 3,223 Total gross leasable area (square feet) 35,966,000 35,010,000 32,753,000 Properties: Leased and unimproved land 3,514 3,390 3,191 Percent of Properties – leased and unimproved land 99 % 99 % 99 % Weighted average remaining lease term (years) 10.1 10.4 10.6 Total gross leasable area (square feet) – leased 35,683,000 34,829,000 32,395,000 Total annualized base rent $ 818,749,000 $ 771,984,000 $ 713,169,000 The following table summarizes the lease expirations, assuming none of the tenants exercise renewal options, of the Property Portfolio for each of the next 10 years and then thereafter in the aggregate as of December 31, 2023: % of Annual Base Rent (1) # of Properties Gross Leasable Area (2) % of Annual Base Rent (1) # of Properties Gross Leasable Area (2) 2024 1.7% 54 803,000 2030 3.3% 109 1,221,000 2025 5.1% 185 1,941,000 2031 7.3% 185 2,697,000 2026 4.8% 212 2,127,000 2032 5.9% 215 2,328,000 2027 8.2% 235 3,591,000 2033 4.9% 138 1,467,000 2028 5.7% 229 2,172,000 Thereafter 49.1% 1,831 15,592,000 2029 4.0% 119 1,744,000 (1) Based on the annualized base rent for all leases in place as of December 31, 2023.
The following table summarizes the lease expirations, assuming none of the tenants exercise renewal options, of the Property Portfolio for each of the next 10 years and then thereafter in the aggregate as of December 31, 2024: % of Annual Base Rent (1) # of Properties Gross Leasable Area (2) % of Annual Base Rent (1) # of Properties Gross Leasable Area (2) 2025 3.2% 132 874,000 2031 7.0% 184 2,655,000 2026 4.2% 204 1,981,000 2032 5.1% 183 1,804,000 2027 7.6% 231 3,401,000 2033 4.6% 134 1,398,000 2028 5.8% 255 2,306,000 2034 5.8% 182 2,398,000 2029 4.6% 143 2,083,000 Thereafter 47.7% 1,711 14,840,000 2030 4.4% 154 2,086,000 (1) Based on the annualized base rent for all leases in place as of December 31, 2024.
Line of Credit Payable. NNN's $1,100,000,000 Credit Facility had a weighted average outstanding balance of $169,620,000 and a weighted average interest rate of 5.86% during the year ended December 31, 2023.
The Credit Facility had a weighted average outstanding balance of $60,775,000 and a weighted average interest rate of 6.25% during the year ended December 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").
General and administrative expenses increased in amount and remained consistent as a percentage of total revenues for the year ended December 31, 2023, as compared to the same period in 2022. The increase is primarily attributable to personnel compensation costs. Real Estate.
Rental Income. Rental income increased for the year ended December 31, 2024, as compared to the same period in 2023. The increase is primarily due to the Rental Revenues from NNN's recent Property acquisitions (see "Results of Operations – Property Analysis – Property Acquisitions").
Automobile auctions, wholesale 1.1% 1.3% 1.3% Other 8.4% 8.1% 7.4% 100.0% 100.0% 100.0% (1) Based on annualized base rent for all leases in place as of December 31 of the respective year. The following table summarizes the diversification of the Property Portfolio by state as of December 31, 2023: State # of Properties % of Annual Base Rent (1) 1.
(2) $818,749,000 as of December 31, 2023. 32 The following table summarizes the diversification of the Property Portfolio by state as of December 31, 2024: State # of Properties % of Annual Base Rent (1) 1. Texas 575 18.8% 2. Florida 276 8.7% 3. Illinois 167 5.1% 4. Georgia 175 4.5% 5. Ohio 193 4.2% 6. Tennessee 153 3.8% 7.
Removed
High occupancy levels coupled with a net lease structure, provides enhanced probability of maintaining operating earnings. Impact of COVID-19 on NNN's Business Beginning March 2020, the COVID-19 pandemic and the government reaction to it negatively affected almost every industry directly or indirectly. See "Item 1A.
Added
High occupancy levels coupled with a net lease structure, provides enhanced probability of achieving consistent operating results.
Removed
Risk Factors." A number of NNN's tenants experienced temporary closures of their operations which resulted in the loss of revenue and challenged their ability to pay rent. Certain of these NNN tenants requested adjustments to their lease terms during this pandemic.
Added
The following table summarizes the Property Portfolio as of December 31: 2024 2023 Properties Owned: Number 3,568 3,532 Total gross leasable area (square feet) 36,557,000 35,966,000 Properties: Leased and unimproved land 3,514 3,514 Percent of Properties – leased and unimproved land 98 % 99 % Weighted average remaining lease term (years) 10 10 Total gross leasable area (square feet) – leased 35,826,000 35,683,000 Total annualized base rent $ 860,562,000 $ 818,749,000 (1) Annualized base rent is calculated by multiplying the monthly cash base rent in place on each respective date by 12.
Removed
As a result, these economic hardships increased uncertainty with respect to the collectability of lease payments and had a negative effect on NNN's financial results, including increased accounts receivables and related allowances and recognizing revenue on a cash basis from certain of its tenants.
Added
General merchandise 1.4% 1.4% 16. Furniture 1.3% 2.0% 17. Pet supplies and services 1.3% 1.1% 18. Consumer electronics 1.3% 1.4% 19. Travel plazas 1.2% 1.3% 20. Home furnishings 1.1% 1.3% Other 8.1% 8.4% 100.0% 100.0% Based on annualized base rent for all leases in place on each respective date. (1) $860,562,000 as of December 31, 2024.
Removed
NNN entered into rent deferral lease amendments with certain tenants, for an aggregate $4,722,000 and $51,723,000 of rent originally due for the years ending December 31, 2021 and 2020, respectively, which require the deferred rents to be repaid at a later time during the lease term.
Added
These expenses are typically attributable to (i) Properties for which the lease terms do not obligate the tenant to pay certain operating expenses or (ii) vacant Properties.
Removed
As of December 31, 2023, an aggregate of approximately $52,637,000 or 93 percent of the deferred rent has been repaid to NNN. The remaining deferred rents are expected to be repaid as due periodically by December 31, 2025.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed3 unchanged
Biggest changeDebt Obligations (1) (dollars in thousands) Variable Rate Debt Fixed Rate Debt Credit Facility Unsecured Debt (2) Debt Obligation Weighted Average Interest Rate Principal Debt Obligation Effective Interest Rate 2024 $ — — $ 350,000 3.92 % 2025 132,000 5.86 % 400,000 4.03 % 2026 — — 350,000 3.73 % 2027 — — 400,000 3.55 % 2028 — — 400,000 4.39 % Thereafter — — 2,400,000 3.92 % (3) Total $ 132,000 5.86 % $ 4,300,000 3.93 % Fair Value: December 31, 2023 $ 132,000 $ 3,801,367 December 31, 2022 $ 166,200 $ 3,140,774 (1) NNN's unsecured debt obligations have a weighted average interest rate of 4.0% and a weighted average maturity of 12.0 years.
Biggest changeDebt Obligations (1) (dollars in thousands) Variable Rate Debt Fixed Rate Debt Credit Facility Unsecured Debt (2) Debt Obligation Weighted Average Interest Rate Principal Debt Obligation Effective Interest Rate 2025 $ — — $ 400,000 4.03 % 2026 — — 350,000 3.73 % 2027 — — 400,000 3.55 % 2028 — — 400,000 4.39 % 2029 — — — — Thereafter — — 2,900,000 4.22 % (3) Total $ — — $ 4,450,000 4.12 % Fair Value: December 31, 2024 $ — $ 3,894,030 December 31, 2023 $ 132,000 $ 3,801,367 (1) NNN's unsecured debt obligations have a weighted average interest rate of 4.1% and a weighted average maturity of 12.1 years.
The information in the table below summarizes NNN's market risks associated with its outstanding debt obligations. The table presents, by year of expected maturity, principal payments and related interest rates for debt obligations outstanding as of December 31, 2023.
The information in the table below summarizes NNN's market risks associated with its outstanding debt obligations. The table presents, by year of expected maturity, principal payments and related interest rates for debt obligations outstanding as of December 31, 2024.
The table incorporates only those debt obligations that existed as of December 31, 2023, and it does not consider those debt obligations or positions which could arise after this date and therefore has limited predictive value.
The table incorporates only those debt obligations that existed as of December 31, 2024, and it does not consider those debt obligations or positions which could arise after this date and therefore has limited predictive value.
(2) Includes NNN's notes payable, each exclude unamortized discounts and debt costs. The fair value is based upon quoted market prices as of the close of the year, which is a Level 1 valuation since NNN's notes payable are publicly traded on the over-the-counter market. (3) Weighted average effective interest rate for years after 2028. 44
(2) Includes NNN's notes payable, each exclude unamortized discounts and debt costs. The fair value is based upon quoted market prices as of the close of the year, which is a Level 1 valuation since NNN's notes payable are publicly traded on the over-the-counter market. (3) Weighted average effective interest rate for years after 2029. 43
If interest rates on NNN's variable rate debt increased by one percent, NNN's interest expense would have increased by approximately one percent for the year ended December 31, 2023.
If interest rates on NNN's variable rate debt increased by one percent, NNN's interest expense would have increased by less than one percent for the year ended December 31, 2024.
As of December 31, 2023, NNN had no outstanding derivatives. As of December 31, 2023, NNN's variable rate Credit Facility had $132,000,000 outstanding.
As of December 31, 2024, NNN had no outstanding derivatives. As of December 31, 2024, NNN's variable rate Credit Facility had no outstanding balance.
For the year ended December 31, 2023, the Credit Facility had a weighted average outstanding balance of $169,620,000 and a weighted average interest rate of 5.86% compared to a weighted average outstanding balance of $39,220,000 and a weighted average interest rate of 4.13% for the same period in 2022.
For the year ended December 31, 2024, the Credit Facility had a weighted average outstanding balance of $60,775,000 and a weighted average interest rate of 6.25% compared to a weighted average outstanding balance of $169,620,000 and a weighted average interest rate of 5.86% for 2023.

Other NNN 10-K year-over-year comparisons