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Real Estate (Tables)

9 Months Ended

Sep. 30, 2020

The following outlines key information for NNN’s leases:


			September 30, 2020
Lease classification:
Operating			3,109
Direct financing			6

Weighted average remaining lease term (years)			10.7

Real Estate Subject to Operating Leases

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


	September 30, 2020		December 31, 2019
Land and improvements(1)	$	2,479,994	$	2,491,073
Buildings and improvements	5,937,116		5,916,425
Leasehold interests	355		355
	8,417,465		8,407,853
Less accumulated depreciation and amortization	(1,276,495)		(1,147,918)
	7,140,970		7,259,935
Work in progress for buildings and improvements	27,022		27,439
	$	7,167,992	$	7,287,374

(1)Includes $9,449 and $16,930 in land for Properties under construction at September 30, 2020 and December 31, 2019, respectively.

Rental Income

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


	Quarter Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Rental income from operating leases	$	153,825	$	163,674	$	481,858	$	482,306
Earned income from direct financing leases	161		204		487		624
Percentage rent	160		329		728		1,051
Real estate expense reimbursement from tenants	3,719		4,017		12,818		11,865
	$	157,865	$	168,224	$	495,891	$	495,846

Intangible Assets, Lease Liabilities, and Related Amortization

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


	September 30, 2020		December 31, 2019
Intangible lease assets (included in other assets):
Above-market in-place leases	$	15,828	$	15,754
Less: accumulated amortization	(10,444)		(9,897)
Above-market in-place leases, net	$	5,384	$	5,857

In-place leases	$	119,868	$	119,846
Less: accumulated amortization	(68,208)		(64,918)
In-place leases, net	$	51,660	$	54,928

Intangible lease liabilities (included in other liabilities):
Below-market in-place leases	$	41,786	$	41,767
Less: accumulated amortization	(26,358)		(26,135)
Below-market in-place leases, net	$	15,428	$	15,632

Real Estate Held for Sale

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


	September 30, 2020		December 31, 2019
Land and improvements	$	3,703	$	6,908
Building and improvements	4,695		7,610
	8,398		14,518
Less accumulated depreciation and amortization	(2,386)		(3,750)
Less impairment	(604)		(1,107)
	$	5,408	$	9,661

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,
	2020			2019			2020			2019
	# of Sold Properties	Net Gain		# of Sold Properties	Net Gain		# of Sold Properties	Net Gain		# of Sold Properties	Net Gain
Gain on disposition of real estate	3	$	148	13	$	2,061	25	$	13,637	43	$	25,508

Real Estate Commitments

These construction commitments, as of September 30, 2020, are outlined in the table below (dollars in thousands):



Total commitment(1)	$	47,424
Less amount funded	36,471
Remaining commitment	$	10,953
(1)Includes land, construction costs, tenant improvements, lease costs and capitalized interest.