Real Estate (Tables)

12 Months Ended

Dec. 31, 2019

Real Estate [Abstract]

Classification of Investment Property Leases

The following outlines key information for NNN’s leases at December 31, 2019:

Lease classification:
Operating	3,143
Direct financing	6
Weighted average remaining lease term (years)	11.2

Summary of Real Estate Subject to Operating Leases

Real estate subject to operating leases consisted of the following at December 31 (dollars in thousands):

	2019			2018
Land and improvements (1)	$	2,492,984		$	2,369,014
Buildings and improvements	5,917,525			5,470,968
Leasehold interests	355			3,630
	8,410,864			7,843,612
Less accumulated depreciation and amortization	(1,148,277		)	(1,006,183		)
	7,262,587			6,837,429
Work in progress - improvements	27,438			8,017
	$	7,290,025		$	6,845,446

⁽¹⁾ Includes $16,930 and $5,571 in land for Properties under construction as of December 31, 2019 and 2018, respectively.

Rental Income, Operating Leases

NNN recognized the following revenues in rental income for the years ended December 31 (dollars in thousands):

	2019		2018		2017
Rental income from operating leases	$	650,112	$	602,131	$	565,405
Earned income from direct financing leases	798		923		978
Percentage rent	1,310		1,561		1,700
Real estate expense reimbursement from tenants	16,789		16,784		15,512
	$	669,009	$	621,399	$	583,595

Rental Income, Direct Financing Leases

NNN recognized the following revenues in rental income for the years ended December 31 (dollars in thousands):

	2019		2018		2017
Rental income from operating leases	$	650,112	$	602,131	$	565,405
Earned income from direct financing leases	798		923		978
Percentage rent	1,310		1,561		1,700
Real estate expense reimbursement from tenants	16,789		16,784		15,512
	$	669,009	$	621,399	$	583,595

Schedule of Future Minimum Lease Payments for Capital Leases

The following is a schedule of undiscounted cash flows to be received on noncancellable operating leases as of December 31, 2019 (dollars in thousands):

2020	$	664,571
2021	648,405
2022	618,646
2023	590,642
2024	569,865
Thereafter	4,458,973
	$	7,551,102

Net Investment in Direct Financing Leases

The following lists the components of net investment in direct financing leases at December 31 (dollars in thousands):

	2019			2018
Minimum lease payments to be received	$	9,356		$	10,899
Estimated unguaranteed residual values	1,227			4,395
Less unearned income	(6,379		)	(7,225		)
Net investment in direct financing leases	$	4,204		$	8,069

Schedule of Future Minimum Lease Receivables for Financing Leases

The following is a schedule of undiscounted cash flows to be received on direct financing leases held for investment as of December 31, 2019 (dollars in thousands):

2020	$	900
2021	920
2022	897
2023	895
2024	896
Thereafter	4,848
	$	9,356

Disclosure of Long Lived Assets Held-for-sale

Real estate held for sale consisted of the following as of December 31 (dollars in thousands):

	2019			2018
Land and improvements	$	4,996		$	13,597
Building and improvements	6,511			32,658
	11,507			46,255
Less accumulated depreciation and amortization	(3,390		)	(10,088		)
Less impairment	(1,107		)	(14,250		)
	$	7,010		$	21,917

Disclosure of Long Lived Assets Held-for-sale, Gains Recognized

The following table summarizes the Properties sold and the corresponding gain recognized on the disposition of Properties for the years ended December 31 (dollars in thousands):

	2019			2018			2017
	# of Sold Properties	Gain		# of Sold Properties	Gain		# of Sold Properties	Gain
Gain on disposition of real estate	59	$	32,463	61	$	65,070	48	$	36,655

Remaining Funding Commitments

These construction commitments, at December 31, 2019, are outlined in the table below (dollars in thousands):

Total commitment(1)	$	75,927
Less amount funded	44,368
Remaining commitment	$	31,559

⁽¹⁾

Includes land, construction costs, tenant improvements, lease costs and capitalized interest.

Intangible Assets, Lease Liabilities, and Related Amortization

The following is a schedule of the amortization of acquired above-market and below-market in-place lease intangibles and the amortization of the in-place lease intangibles as of December 31, 2019 (dollars in thousands):

	Above-Market and Below-Market In-Place Lease Intangibles(1)		In-Place Lease Intangibles(2)
2020	$	695	$	7,502
2021	590		6,800
2022	466		6,339
2023	383		5,833
2024	379		5,138
Thereafter	7,262		23,316
	$	9,775	$	54,928
Weighted average amortization period (years)	18.0		10.3

⁽¹⁾  Recorded as a net increase to rental income.

⁽²⁾ 

Amortized as an increase to amortization expense.

In accordance with purchase accounting for the acquisition of real estate subject to a lease, NNN has recorded intangible assets and lease liabilities that consisted of the following at December 31 (dollars in thousands):

	2019			2018
Intangible lease assets (included in other assets):
Above-market in-place leases	$	15,754		$	15,175
Less: accumulated amortization	(9,897		)	(9,239		)
Above-market in-place leases, net	$	5,857		$	5,936
In-place leases	$	119,846		$	104,871
Less: accumulated amortization	(64,918		)	(60,797		)
In-place leases, net	$	54,928		$	44,074
Intangible lease liabilities (included in other liabilities):
Below-market in-place leases	$	41,767		$	41,554
Less: accumulated amortization	(26,135		)	(25,258		)
Below-market in-place leases, net	$	15,632		$	16,296