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Real Estate (Tables)

9 Months Ended

Sep. 30, 2019

The following outlines key information for NNN’s leases:



	September 30, 2019
Lease classification:
Operating	3,084
Direct financing	7
Building portion – direct financing/land portion – operating	1
Weighted average remaining lease term (years)	11.2

Real Estate Subject to Operating Leases

Real estate subject to operating leases consisted of the following as of (dollars in thousands):



	September 30, 2019			December 31, 2018
Land and improvements⁽¹⁾	$	2,463,934		$	2,368,891
Buildings and improvements	5,752,916			5,461,888
Leasehold interests	355			3,630
	8,217,205			7,834,409
Less accumulated depreciation and amortization	(1,109,285		)	(1,003,519		)
	7,107,920			6,830,890
Work in progress for buildings and improvements	13,236			8,017
	$	7,121,156		$	6,838,907

⁽¹⁾ Includes $11,707 and $5,571 in land for Properties under construction at September 30, 2019 and December 31, 2018,

respectively.

Rental Income

NNN recognized the following revenues in rental income (dollars in thousands):



	Quarter Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Rental income from operating leases	$	163,674	$	150,418	$	482,306	$	449,216
Earned income from direct financing leases	204		242		624		696
Percentage rent	329		284		1,051		1,018
Real estate expense reimbursement from tenants	4,017		3,712		11,865		11,640
	$	168,224	$	154,656	$	495,846	$	462,570

Undiscounted Cash Flows - Operating Leases

The following is a schedule of undiscounted cash flows to be received on noncancellable operating leases as of September 30, 2019 (dollars in thousands):



2019	$	163,060
2020	648,578
2021	630,739
2022	600,904
2023	572,995
Thereafter	4,757,532
	$	7,373,808

Components of Net Investment in Direct Financing Leases

The following lists the components of net investment in direct financing leases as of (dollars in thousands):



	September 30, 2019			December 31, 2018
Minimum lease payments to be received	$	9,860		$	10,899
Estimated unguaranteed residual values	3,632			4,395
Less unearned income	(6,610		)	(7,225		)
Net investment in direct financing leases	$	6,882		$	8,069

Undiscounted Cash Flows - Direct Financing Leases

The following is a schedule of undiscounted cash flows to be received on direct financing leases held for investment as of September 30, 2019 (dollars in thousands):



2019	$	360
2020	1,045
2021	920
2022	897
2023	895
Thereafter	5,743
	$	9,860

Real Estate Held for Sale

Real estate held for sale consisted of the following as of (dollars in thousands):



	September 30, 2019			December 31, 2018
Land and improvements	$	5,120		$	13,720
Building and improvements	15,591			41,738
	20,711			55,458
Less accumulated depreciation and amortization	(6,172		)	(12,752		)
Less impairment	(578		)	(14,250		)
	$	13,961		$	28,456

Real Estate Dispositions

The following table summarizes the Properties sold and the corresponding gain recognized on the disposition of Properties (dollars in thousands):



	Quarter Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
	# of Sold Properties	Gain		# of Sold Properties	Gain		# of Sold Properties	Gain		# of Sold Properties	Gain
Gain on disposition of real estate	13	$	2,061	18	$	14,348	43	$	25,508	46	$	57,050

Real Estate Commitments

These construction commitments, as of September 30, 2019, are outlined in the table below (dollars in thousands):



Total commitment⁽¹⁾	$	53,724
Less amount funded	24,943
Remaining commitment	$	28,781
⁽¹⁾ Includes land, construction costs, tenant improvements, lease costs and capitalized interest.