10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission file number 001-11290

NATIONAL RETAIL PROPERTIES, INC.

(Exact name of registrant as specified in its charter)

Maryland	56-1431377
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

450 South Orange Avenue, Suite 900

Orlando, Florida 32801

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (407) 265-7348

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, $0.01 par value	NNN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.

175,910,695 shares of common stock, $0.01 par value, outstanding as of April 28, 2022.

TABLE OF CONTENTS

		PAGE REFERENCE
Part I - Financial Information
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income and Comprehensive Income	2
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32
Part II - Other Information
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	33
Signatures		34

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)

	March 31, 2022			December 31, 2021
	(unaudited)
ASSETS
Real estate portfolio	$	7,591,643		$	7,444,289
Real estate held for sale		562			5,557
Cash and cash equivalents		53,736			171,322
Receivables, net of allowance of $717 and $782, respectively		2,816			3,154
Accrued rental income, net of allowance of $4,351 and $4,587, respectively		30,727			31,942
Debt costs, net of accumulated amortization of $19,946 and $19,377, respectively		6,921			7,443
Other assets		85,408			87,347
Total assets	$	7,771,813		$	7,751,054
LIABILITIES AND EQUITY
Liabilities:
Mortgages payable, including unamortized premium and net of unamortized debt costs	$	10,515		$	10,697
Notes payable, net of unamortized discount and unamortized debt costs		3,736,781			3,735,769
Accrued interest payable		58,022			23,923
Other liabilities		68,749			79,002
Total liabilities		3,874,067			3,849,391
Equity:
Stockholders’ equity:
Common stock, $0.01 par value. Authorized 375,000,000 shares; 175,810,465 and     175,635,792 shares issued and outstanding, respectively		1,759			1,757
Capital in excess of par value		4,669,590			4,662,714
Accumulated deficit		(759,232	)		(747,853	)
Accumulated other comprehensive income (loss)		(14,373	)		(14,956	)
Total stockholders’ equity of NNN		3,897,744			3,901,662
Noncontrolling interests		2			1
Total equity		3,897,746			3,901,663
Total liabilities and equity	$	7,771,813		$	7,751,054

See accompanying notes to condensed consolidated financial statements.

1

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(dollars in thousands, except per share data)

(unaudited)

	Quarter Ended March 31,
	2022			2021
Revenues:
Rental income	$	189,763		$	179,198
Interest and other income from real estate transactions		516			580
		190,279			179,778
Operating expenses:
General and administrative		11,042			11,748
Real estate		7,198			7,725
Depreciation and amortization		52,680			49,980
Leasing transaction costs		88			38
Impairment losses – real estate, net of recoveries		1,632			2,131
Executive retirement costs		3,594			—
		76,234			71,622
Gain on disposition of real estate		3,992			4,281
Earnings from operations		118,037			112,437
Other expenses (revenues):
Interest and other income		(35	)		(65	)
Interest expense		36,699			34,587
Loss on early extinguishment of debt		—			21,328
		36,664			55,850
Net earnings		81,373			56,587
Earnings attributable to noncontrolling interests		(1	)		—
Net earnings attributable to NNN		81,372			56,587
Series F preferred stock dividends		—			(4,485	)
Net earnings attributable to common stockholders	$	81,372		$	52,102
Net earnings per share of common stock:
Basic	$	0.46		$	0.30
Diluted	$	0.46		$	0.30
Weighted average number of common shares outstanding:
Basic		174,772,243			174,589,300
Diluted		174,911,213			174,714,617
Other comprehensive income:
Net earnings attributable to NNN	$	81,372		$	56,587
Amortization of interest rate hedges		583			1,368
Comprehensive income attributable to NNN		81,955			57,955
Comprehensive earnings attributable to noncontrolling interests		1			—
Total comprehensive income	$	81,956		$	57,955

See accompanying notes to condensed consolidated financial statements.

2

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Quarter Ended March 31, 2022

(dollars in thousands, except per share data)

(unaudited)

	Common Stock		Capital in   Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total  Stockholders’ Equity of NNN			Noncontrolling Interests		Total Equity
Balances at December 31, 2021	$	1,757	$	4,662,714		$	(747,853	)	$	(14,956	)	$	3,901,662		$	1	$	3,901,663
Net earnings		—		—			81,372			—			81,372			1		81,373
Dividends declared and paid:
$0.5300 per share of common stock		—		696			(92,751	)		—			(92,055	)		—		(92,055	)
Issuance of common stock:
8,429 shares – director compensation		—		305			—			—			305			—		305
1,173 shares – stock purchase plan		—		52			—			—			52			—		52
153,300 restricted shares – net of forfeitures		2		(2	)		—			—			—			—		—
Stock issuance costs		—		(65	)		—			—			(65	)		—		(65	)
Amortization of deferred compensation		—		5,890			—			—			5,890			—		5,890
Amortization of interest rate hedges		—		—			—			583			583			—		583
Balances at March 31, 2022	$	1,759	$	4,669,590		$	(759,232	)	$	(14,373	)	$	3,897,744		$	2	$	3,897,746

See accompanying notes to condensed consolidated financial statements.

3

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - CONTINUED

Quarter Ended March 31, 2021

(dollars in thousands, except per share data)

(unaudited)

	Series F Preferred Stock		Common Stock		Capital in   Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total  Stockholders’ Equity of NNN			Noncontrolling Interests		Total Equity
Balances at December 31, 2020	$	345,000	$	1,753	$	4,633,771		$	(644,779	)	$	(16,445	)	$	4,319,300		$	4	$	4,319,304
Net earnings		—		—		—			56,587			—			56,587			—		56,587
Dividends declared and paid:
$0.3250 per depositary share of Series F     preferred stock		—		—		—			(4,485	)		—			(4,485	)		—		(4,485	)
$0.5200 per share of common stock		—		—		578			(90,848	)		—			(90,270	)		—		(90,270	)
Issuance of common stock:
8,324 shares – director compensation		—		—		267			—			—			267			—		267
1,715 shares – stock purchase plan		—		—		70			—			—			70			—		70
30,000 shares – ATM equity program		—		1		1,233			—			—			1,234			—		1,234
287,957 restricted shares – net of forfeitures		—		3		(3	)		—			—			—			—		—
Stock issuance costs		—		—		(156	)		—			—			(156	)		—		(156	)
Amortization of deferred compensation		—		—		3,920			—			—			3,920			—		3,920
Amortization of interest rate hedges		—		—		—			—			1,368			1,368			—		1,368
Balances at March 31, 2021	$	345,000	$	1,757	$	4,639,680		$	(683,525	)	$	(15,077	)	$	4,287,835		$	4	$	4,287,839

See accompanying notes to condensed consolidated financial statements.

4

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)

	Quarter Ended March 31,
	2022			2021
Cash flows from operating activities:
Net earnings	$	81,373		$	56,587
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		52,680			49,980
Impairment losses – real estate, net of recoveries		1,632			2,131
Loss on early extinguishment of debt		—			21,328
Amortization of notes payable discount		415			993
Amortization of debt costs		1,171			1,840
Amortization of mortgages payable premium		(21	)		(21	)
Amortization of interest rate hedges		583			1,368
Gain on disposition of real estate		(3,992	)		(4,281	)
Performance incentive plan expense		6,246			4,318
Performance incentive plan payment		(103	)		(721	)
Change in operating assets and liabilities, net of assets acquired and liabilities assumed:
Decrease (increase) in receivables		338			(273	)
Decrease in accrued rental income		1,096			8,332
Decrease (increase) in other assets		(115	)		1,067
Increase in accrued interest payable		34,099			25,267
Decrease in other liabilities		(11,043	)		(6,438	)
Other		(21	)		(307	)
Net cash provided by operating activities		164,338			161,170
Cash flows from investing activities:
Proceeds from the disposition of real estate		20,315			18,067
Additions to real estate		(209,483	)		(106,490	)
Principal payments received on mortgages and notes receivable		102			93
Other		(577	)		(182	)
Net cash used in investing activities		(189,643	)		(88,512	)

See accompanying notes to condensed consolidated financial statements.

5

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(dollars in thousands)

(unaudited)

	Quarter Ended March 31,
	2022			2021
Cash flows from financing activities:
Repayment of mortgages payable	$	(165	)	$	(156	)
Proceeds from notes payable		—			441,594
Repayment of notes payable		—			(350,000	)
Payment for early extinguishment of debt		—			(21,328	)
Payment of debt issuance costs		(48	)		(5,145	)
Proceeds from issuance of common stock		748			1,882
Stock issuance costs		(65	)		(177	)
Payment of Series F preferred stock dividends		—			(4,485	)
Payment of common stock dividends		(92,751	)		(90,848	)
Net cash used in financing activities		(92,281	)		(28,663	)
Net increase (decrease) in cash, cash equivalents and restricted cash		(117,586	)		43,995
Cash, cash equivalents and restricted cash at beginning of period(1)		171,322			267,236
Cash, cash equivalents and restricted cash at end of period(1)	$	53,736		$	311,231
Supplemental disclosure of cash flow information:
Interest paid, net of amount capitalized	$	550		$	5,203
Supplemental disclosure of noncash investing and financing activities:
Change in other comprehensive income	$	583		$	1,368
Work in progress accrual balance	$	8,914		$	4,739

(1) Cash, cash equivalents and restricted cash is the aggregate of cash and cash equivalents and restricted cash and cash held in escrow from the Condensed Consolidated Balance Sheets. NNN had no restricted cash and cash held in escrow at March 31, 2022 and 2021.

See accompanying notes to condensed consolidated financial statements.

6

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

Note 1 – Organization and Summary of Significant Accounting Policies:

Organization and Nature of Business – National Retail Properties, Inc., a Maryland corporation, is a fully integrated real estate investment trust (“REIT”) formed in 1984. The terms "NNN" or the "Company" refer to National Retail Properties, Inc. and all of its consolidated subsidiaries.

NNN's assets primarily include real estate assets. NNN acquires, owns, invests in and develops properties that are leased primarily to retail tenants under long-term net leases and primarily held for investment ("Properties", "Property Portfolio", or individually a "Property").

	March 31, 2022
Property Portfolio:
Total properties		3,271
Gross leasable area (square feet)		33,545,000
States		48
Weighted average remaining lease term (years)		10.6

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles. The unaudited condensed consolidated financial statements reflect all adjustments (including normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. Operating results for the quarter ended March 31, 2022, may not be indicative of the results that may be expected for the year ending December 31, 2022. See "Note 8 – Subsequent Events." Amounts as of December 31, 2021, included in the condensed consolidated financial statements have been derived from the audited consolidated financial statements as of that date. The unaudited condensed consolidated financial statements, included herein, should be read in conjunction with the consolidated financial statements and notes thereto as well as Management's Discussion and Analysis of Financial Condition and Results of Operations in NNN's Form 10-K for the year ended December 31, 2021.

COVID-19 Pandemic – During 2021 and 2020, NNN and its tenants were impacted by the novel strain of coronavirus and its variants ("COVID-19") pandemic which resulted in the loss of revenue for certain tenants and challenged their ability to pay rent. As a result, NNN entered into rent deferral lease amendments with certain tenants (See Note 2).

Principles of Consolidation – NNN’s condensed consolidated financial statements include the accounts of each of the respective majority owned and controlled affiliates, including transactions whereby NNN has been determined to be the primary beneficiary in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codifications ("ASC") guidance included in Consolidation. All significant intercompany account balances and transactions have been eliminated.

Real Estate Portfolio – NNN records the acquisition of real estate at cost, including acquisition and closing costs. The cost of Properties developed or funded by NNN includes direct and indirect costs of construction, property taxes, interest and other miscellaneous costs incurred during the development period until the project is substantially complete and available for occupancy. NNN recorded $98,000 and $63,000 in capitalized interest during the development period for the quarters ended March 31, 2022 and 2021, respectively.

Purchase Accounting for Acquisition of Real Estate Subject to a Lease – In accordance with the FASB guidance on business combinations, consideration for the real estate acquired is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and, if applicable, to identified intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases, as applicable, based on their respective fair values.

The fair value estimate is sensitive to significant assumptions, such as establishing a range of relevant market assumptions for land, building and rent and where the acquired property falls within that range. These market assumptions for land, building and rent use the most relevant comparable properties for an acquisition. The final range relies upon ranking comparable properties' attributes from most to least similar.

7

The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, and the "as-if-vacant" value is then allocated to land, building and tenant improvements based on the determination of their fair values.

In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases, and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease and the renewal option terms if it is probable that the tenant will exercise options. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term unless the Company believes that it is likely that the tenant will renew the lease for an option term whereby the Company amortizes the value attributable to the renewal over the renewal period.

The aggregate value of other acquired intangible assets, consisting of in-place leases, is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as-if-vacant, determined as set forth above. The value of in-place leases exclusive of the value of above-market and below-market in-place leases is amortized to expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off in that period. The value of tenant relationships is reviewed on individual transactions to determine if future value was derived from the acquisition.

Lease Accounting – NNN records its leases on the Property Portfolio in accordance with FASB Accounting Standards Update ("ASU") 2016-02, "Leases (Topic 842)," ("ASC 842"). In addition, NNN recorded right-of-use assets and operating lease liabilities as lessee under operating leases in accordance with ASC 842.

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. The leases on the Property Portfolio are predominantly classified as operating leases and are accounted for as follows:

Operating method – Properties with leases accounted for using the operating method are recorded at the cost of the real estate and depreciated on the straight-line method over their estimated remaining useful lives, which generally range from 20 to 40 years for buildings and improvements and 15 years for land improvements. Leasehold interests are amortized on the straight-line method over the terms of their respective leases. Revenue is recognized as rentals are earned and expenses (including depreciation) are charged to operations as incurred. When scheduled rentals vary during the lease term, income is recognized on a straight-line basis so as to produce a constant periodic rent over the term of the lease. 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. In this guidance, entities can elect not to apply lease modification accounting with respect to such lease concessions and instead, treat the concession as if it was a part of the existing contract. This guidance is only applicable to COVID-19 related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. NNN elected to make this policy election for COVID-19 lease concessions, including the rent deferral lease amendments effective during the years ended December 31, 2021 and 2020.

During 2021 and 2020, NNN entered into rent deferral lease amendments with certain tenants, for an aggregate $4,758,000 and $52,019,000 of rent originally due for the years ending December 31, 2021 and 2020, respectively. The rent deferral lease amendments require the deferred rents to be repaid at a later time during the lease term. Approximately $31,776,000 of deferred rent was repaid in 2021 and approximately $4,063,000 of deferred rent was repaid during the quarter ended March 31, 2022. An additional $10,463,000 is due in 2022, with substantially all remaining deferred rent coming due periodically by December 31, 2023.

Collectability – In accordance with ASC 842, NNN reviews the collectability of its rental income on an ongoing basis. NNN considers collectability indicators when analyzing accounts receivable (and accrued rent) and historical bad debt levels, tenant credit-worthiness and current economic trends, all of which assists in evaluating the probability of outstanding and future rental income collections. In addition, tenants in bankruptcy are analyzed and considerations are made in connection with the expected recovery of pre-petition and post-petition bankruptcy claims.

At the point NNN deems the collection of rental income not probable, uncollected previously recognized rental revenue and any related accrued rent are reversed and, subsequently, any rental income is only recognized when cash receipts are received.

8

NNN includes an allowance for doubtful accounts in rental income on the Consolidated Statements of Income and Comprehensive Income.

As a result of the review of rental income collectability, no outstanding receivables and related accrued rent were written off during the quarters ended March 31, 2022 and 2021, and no tenants were reclassified as cash basis for accounting purposes.

The following table summarizes those tenants classified as cash basis for accounting purposes as of:

	March 31,
	2022			2021
Number of tenants		9			12
Cash basis tenants as a percent of:
Total properties		5.4	%		6.1	%
Total gross leasable area		7.0	%		7.7	%

During the quarters ended March 31, 2022 and 2021, NNN recognized $15,786,000 and $11,314,000, respectively, of rental income from certain tenants previously classified as cash basis for accounting.

During the quarter ended March 31, 2022, two tenants were reclassified to accrual basis for accounting purposes due to their improved qualitative and/or quantitative credit factors. The impact of the reclassification was immaterial.

Impairment – Real Estate – NNN periodically assesses its long-lived real estate assets for possible impairment whenever certain events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. These indicators include, but are not limited to: changes in real estate market conditions, the ability of NNN to re-lease properties that are currently vacant or become vacant, properties reclassified as held for sale, persistent vacancies greater than one year, and properties leased to tenants in bankruptcy. Management evaluates whether an impairment in carrying value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), and the residual value of the real estate, with the carrying value of the individual asset. The future undiscounted cash flows are primarily driven by estimated future market rents. Future cash flow estimates are sensitive to the assumptions made by management regarding future market rents, which are affected by expectations about future market and economic conditions. If an impairment is indicated, a loss will be recorded for the amount by which the carrying value of the asset exceeds its estimated fair value. NNN's Properties are leased primarily to retail tenants under long-term net leases and primarily held for investment. Generally, NNN’s Property leases provide for initial terms of 10 to 20 years, with cash flows provided over the entire term. NNN generally intends to hold these assets for the long-term, therefore, a temporary change in cash flows due to COVID-19 alone was determined not to be an indicator of impairment.

Credit Losses on Financial Instruments – FASB ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326),” (“ASC 326”) requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings. The guidance requires a lifetime credit loss expected at inception and requires pooling of assets, which share similar risk characteristics. NNN is required to evaluate current economic conditions, as well as, make future expectations of economic conditions. In addition, the measurement of the expected credit loss is over the asset’s contractual term.

NNN had mortgages receivable of $1,927,000 and $2,023,000 included in other assets on the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, respectively, net of $123,000 and $129,000 allowance for credit loss, respectively. NNN measures the allowance for credit loss based on the fair value of the collateral and the historical collectability trend analysis over 15 years.

Debt Costs – Line of Credit Payable – Debt costs incurred in connection with NNN's $1,100,000,000 unsecured revolving line of credit have been deferred and are being amortized to interest expense over the term of the loan commitment using the straight-line method, which approximates the effective interest method. NNN has recorded debt costs associated with the credit facility as an asset, in debt costs on the Condensed Consolidated Balance Sheets.

9

Debt Costs – Notes Payable – Debt costs incurred in connection with the issuance of NNN’s notes payable have been deferred and are being amortized to interest expense over the term of the respective debt obligation using the effective interest method. These costs of $38,145,000, as of March 31, 2022 and December 31, 2021, are included in notes payable on the Condensed Consolidated Balance Sheets net of accumulated amortization of $9,859,000 and $9,262,000, respectively.

Revenue Recognition – Rental revenues for properties under construction commence upon completion of construction of the leased asset and delivery of the leased asset to the tenant. Rental revenues for non-development real estate assets are recognized when earned in accordance with ASC 842, based on the terms of the lease of the leased asset. Lease termination fees are recognized when collected subsequent to the related lease that is cancelled and NNN no longer has continuing involvement with the former tenant with respect to that property.

The core principle of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09"), is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Certain contracts are excluded from ASU 2014-09, including lease contracts within the scope of ASC 842. NNN determined the key revenue stream impacted by ASU 2014-09 is gain on disposition of real estate reported on the Condensed Consolidated Statements of Income and Comprehensive Income. In accordance with ASU 2014-09, NNN evaluates any separate contracts or performance obligations to determine proper timing and/or amount of revenue recognition, as well as, transaction price allocation.

Earnings Per Share – Earnings per share have been computed pursuant to the FASB guidance included in Earnings Per Share. The guidance requires classification of the Company’s unvested restricted share units, which carry rights to receive nonforfeitable dividends, as participating securities requiring the two-class method of computing earnings per share. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average shares outstanding during the period.

The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted earnings per common share using the two-class method (dollars in thousands):

	Quarter Ended March 31,
	2022			2021
Basic and Diluted Earnings:
Net earnings attributable to NNN	$	81,372		$	56,587
Less: Series F preferred stock dividends		—			(4,485	)
Net earnings available to NNN’s common stockholders		81,372			52,102
Less: Earnings allocated to unvested restricted shares		(156	)		(151	)
Net earnings used in basic and diluted earnings per share	$	81,216		$	51,951
Basic and Diluted Weighted Average Shares Outstanding:
Weighted average number of shares outstanding		175,635,634			175,391,723
Less: Unvested restricted shares		(294,665	)		(288,658	)
Less: Unvested contingent restricted shares		(568,726	)		(513,765	)
Weighted average number of shares outstanding used in basic earnings per share		174,772,243			174,589,300
Other dilutive securities		138,970			125,317
Weighted average number of shares outstanding used in diluted earnings per share		174,911,213			174,714,617

Income Taxes – NNN has made an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, and related regulations. NNN generally will not be subject to federal income tax on income it distributed to stockholders, providing it distributes 100 percent of its REIT taxable income and meets certain other requirements for qualifying as a REIT. For the quarters ended March 31, 2022 and 2021, NNN believes it has qualified as a REIT. Notwithstanding NNN’s qualification for taxation as a REIT, NNN is subject to certain state and local income, franchise and excise taxes.

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Fair Value Measurement – NNN’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The guidance describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:

•Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities.

•Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques.

Accumulated Other Comprehensive Income (Loss) – The following table outlines the changes in accumulated other comprehensive income (loss) for the quarter ended March 31, 2022 (dollars in thousands):

	Gain (Loss) on Cash Flow Hedges(1)
Beginning balance, December 31, 2021	$	(14,956	)
Reclassifications from accumulated other comprehensive income to net earnings		583		(2)
Ending balance, March 31, 2022	$	(14,373	)

(1)	Additional disclosure is included in Note 6 – Derivatives.
(2)	Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income.

New Accounting Pronouncements – ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”) contains practical expedients for reference rate reform-related activities, including the transition away from the London Interbank Offered Rate ("LIBOR"), that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. In 2021, NNN elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. NNN continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

NNN had no derivative financial instruments outstanding as of March 31, 2022.

Use of Estimates – Additional critical accounting policies of NNN include management’s estimates and assumptions relating to the reporting of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities and are required to prepare the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Significant accounting policies include management’s estimates of the useful lives used in calculating depreciation expense relating to real estate asset purchase accounting for acquisition of real estate subject to a lease, the recoverability of the carrying value of long-lived assets and management's evaluation of the probability of outstanding and future lease payment collections. Actual results could differ from those estimates.

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Note 2 – Real Estate:

Real Estate – Portfolio

Leases – At March 31, 2022, NNN’s real estate portfolio had a weighted average remaining lease term of 10.6 years and consisted of 3,285 leases classified as operating leases and an additional five leases accounted for as direct financing leases.

The following is a summary of the general structure of the leases in the Property Portfolio, although the specific terms of each lease can vary significantly. Generally, the Property leases provide for initial terms of 10 to 20 years. The Properties are generally leased under net leases, pursuant to which the tenant typically bears responsibility for substantially all property costs and expenses associated with ongoing maintenance, repair, replacement and operation of the property, including utilities, property taxes and property and liability insurance. Certain Properties are subject to leases under which NNN retains responsibility for specific costs and expenses of the Property. NNN's leases provide for annual base rental payments (generally payable in monthly installments), and generally provide for limited increases in rent as a result of (i) increases in the Consumer Price Index, (ii) fixed increases, or, to a lesser extent, (iii) increases in the tenant’s sales volume.

Generally, NNN's leases provide the tenant with one or more multi-year renewal options, subject to generally the same terms and conditions provided under the initial lease term, including rent increases. NNN’s lease term is based on the non-cancellable base term unless economic incentives make it reasonably certain that an option period to extend the lease will be exercised, in which event NNN includes the renewal options. Some of the leases also provide that in the event NNN wishes to sell the Property subject to that lease, NNN first must offer the lessee the right to purchase the Property on the same terms and conditions as any offer which NNN intends to accept for the sale of the Property.

Real Estate Portfolio – NNN's real estate consisted of the following at (dollars in thousands):

	March 31, 2022			December 31, 2021
Land and improvements(1)	$	2,556,405		$	2,527,483
Buildings and improvements		6,536,540			6,375,583
Leasehold interests		355			355
		9,093,300			8,903,421
Less accumulated depreciation and amortization		(1,517,047	)		(1,470,062	)
		7,576,253			7,433,359
Work in progress for buildings and improvements		11,811			7,277
Accounted for using the operating method		7,588,064			7,440,636
Accounted for using the direct financing method		3,579			3,653
	$	7,591,643		$	7,444,289

(1) Includes $8,070 and $8,979 in land for Properties under construction at March 31, 2022 and December 31, 2021, respectively.

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

	Quarter Ended March 31,
	2022		2021
Rental income from operating leases	$	184,311	$	173,583
Earned income from direct financing leases		151		158
Percentage rent		701		104
Real estate expense reimbursement from tenants		4,600		5,353
	$	189,763	$	179,198

Some leases provide for a free rent period or scheduled rent increases throughout the lease term. Such amounts are recognized on a straight-line basis over the terms of the leases.

For the quarters ended March 31, 2022 and 2021, NNN recognized ($1,206,000) and ($8,445,000), respectively, of accrued rental income, net of reserves. Included in accrued rental income are the impacts of the rent deferral lease amendments NNN entered into as a result of the COVID-19 pandemic. During the quarters ended March 31, 2022 and 2021, NNN recorded ($1,780,000) and ($9,381,000), respectively, of net straight-line accrued rental income related to such amendments.

At March 31, 2022 and December 31, 2021, the balance of accrued rental income was $30,727,000 and $31,942,000, respectively, net of allowance of $4,351,000 and $4,587,000, respectively.

Real Estate – Intangibles

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):

	March 31, 2022			December 31, 2021
Intangible lease assets (included in other assets):
Above-market in-place leases	$	15,335		$	15,335
Less: accumulated amortization		(10,993	)		(10,821	)
Above-market in-place leases, net	$	4,342		$	4,514
In-place leases	$	121,431		$	122,069
Less: accumulated amortization		(74,480	)		(73,345	)
In-place leases, net	$	46,951		$	48,724
Intangible lease liabilities (included in other liabilities):
Below-market in-place leases	$	41,160		$	41,705
Less: accumulated amortization		(27,214	)		(27,447	)
Below-market in-place leases, net	$	13,946		$	14,258

The amounts amortized as a net increase to rental income for above-market and below-market in-place leases for the quarters ended March 31, 2022 and 2021, were $140,000 and $162,000, respectively. The value of in-place leases amortized to expense for the quarters ended March 31, 2022 and 2021, was $1,773,000 and $1,800,000, respectively.

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Real Estate – Held For Sale

On a quarterly basis, the Company evaluates its Properties for held for sale classification based on specific criteria as outlined in ASC 360, Property, Plant and Equipment, including management’s intent to commit to a plan to sell the asset. NNN anticipates the disposition of Properties classified as held for sale to occur within 12 months. Real estate held for sale consisted of the following as of (dollars in thousands):

	March 31, 2022			December 31, 2021(1)
Land and improvements	$	546		$	6,440
Building and improvements		1,192			4,313
		1,738			10,753
Less accumulated depreciation and amortization		(714	)		(1,331	)
Less impairment		(462	)		(3,865	)
	$	562		$	5,557
Number of Properties		2			2

(1) Both properties classified as held for sale as of December 31, 2021 were sold during the quarter ended March 31, 2022.

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 March 31,
	2022			2021
	# of Sold Properties	Net Gain		# of Sold Properties	Net Gain
Gain on disposition of real estate	10	$	3,992	11	$	4,281

Real Estate – Commitments

NNN has committed to fund construction on 13 Properties. The improvements on such Properties are estimated to be completed within 12 months. These construction commitments, as of March 31, 2022, are outlined in the table below (dollars in thousands):

Total commitment(1)	$	38,889
Less amount funded		19,881
Remaining commitment	$	19,008

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

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Real Estate – Impairments

NNN periodically assesses its long-lived real estate assets for possible impairment whenever certain events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. These indicators include, but are not limited to: changes in real estate market conditions, the ability of NNN to re-lease properties that are currently vacant or become vacant, properties reclassified as held for sale, persistent vacancies greater than one year, and properties leased to tenants in bankruptcy. Management evaluates whether an impairment in carrying value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), and the residual value of the real estate, with the carrying value of the individual asset. The future undiscounted cash flows are primarily driven by estimated future market rents. Future cash flow estimates are sensitive to the assumptions made by management regarding future market rents, which are affected by expectations about future market and economic conditions. If an impairment is indicated, a loss will be recorded for the amount by which the carrying value of the asset exceeds its estimated fair value. NNN's Properties are leased primarily to retail tenants under long-term net leases and primarily held for investment. Generally, NNN’s Property leases provide for initial terms of 10 to 20 years, with cash flows provided over the entire term. NNN generally intends to hold these assets for the long-term, therefore, a temporary change in cash flows due to the COVID-19 pandemic alone was determined not to be an indicator of impairment.

As a result of NNN's review of long-lived assets, including identifiable intangible assets, NNN recognized real estate impairments, net of recoveries as summarized in the table below (dollars in thousands):

	Quarter Ended March 31,
	2022		2021
Total real estate impairments, net of recoveries	$	1,632	$	2,131
Number of Properties:
Vacant		3		6
Occupied		2		1

The valuation of impaired assets is determined using widely accepted valuation techniques including discounted cash flow analysis, income capitalization, analysis of recent comparable sales transactions, actual sales negotiations and bona fide purchase offers received from third parties, which are Level 3 inputs. NNN may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate.

Note 3 – Line of Credit Payable:

In June 2021, NNN amended and restated its credit agreement to increase the borrowing capacity under its unsecured revolving credit facility from $900,000,000 to $1,100,000,000 and amended certain other terms under the former revolving credit facility (as the context requires, the previous and new revolving credit facility, the "Credit Facility"). The Credit Facility had no weighted average outstanding balance during the quarter ended March 31, 2022. The Credit Facility matures in June 2025, unless the Company exercises its options to extend maturity to June 2026. The Credit Facility bears interest at LIBOR plus 77.5 basis points; however, such interest rate may change pursuant to a tiered interest rate structure based on NNN's debt rating. Additionally, as part of NNN's environmental, social and governance ("ESG") initiative, pricing may be reduced if specified ESG metrics are achieved. 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 Condensed Consolidated Balance Sheets. As of March 31, 2022, there was no outstanding balance and $1,100,000,000 was available for future borrowings under the Credit Facility, and NNN was in compliance with each of the financial covenants.

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Note 4 – Notes Payable:

In 2021, NNN filed prospectus supplements to the prospectus contained in its August 2020 shelf registration statement and issued $450,000,000 aggregate principal amount of 3.500% notes due April 2051 (the “2051 Notes”) and $450,000,000 aggregate principal amount of 3.000% notes due April 2052 (the "2052 Notes" and, together with the 2051 Notes, the "Notes"). Each note issuance is summarized in the table below (dollar in thousands):

Notes	Issue Date	Principal		Discount (1)		Net Price		Stated Rate			Effective Rate (2)			Maturity Date
2051 Notes	March 2021	$	450,000	$	8,406	$	441,594		3.500	%		3.602	%	April 2051
2052 Notes (3)	September 2021		450,000		10,422		439,578		3.000	%		3.118	%	April 2052

(1)	The note discounts are amortized to interest expense over the respective term of each debt obligation using the effective interest method.
(2)	Includes the effects of the discount at issuance.
(3)	NNN entered into forward swaps which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt. Upon the issuance of the 2052 Notes, NNN terminated such derivatives, and the resulting fair value was deferred in accumulated other comprehensive income (loss) and is being amortized over the term of the respective notes using the effective interest method. Additional disclosure is included in Note 6 – Derivatives.

Each series of Notes is a senior unsecured obligation of NNN and is subordinated to all secured debt of NNN and to the debt and other liabilities of NNN's subsidiaries. Each series of Notes is redeemable at NNN's option, at any time, in whole or in part, at a redemption price equal to (i) the sum of the outstanding principal amount of the notes being redeemed plus accrued interest thereon, up to but not including the redemption date, and (ii) the make-whole amount, if any, as defined in the applicable supplemental indenture related to the notes.

In connection with the Notes, NNN incurred debt issuance costs totaling $10,144,000 consisting primarily of underwriting discounts and commissions, legal and accounting fees, rating agency fees and printing expenses. Debt issuance costs for all note issuances have been deferred and presented as a reduction to notes payable and are being amortized over the term of the respective notes using the effective interest method.

In March 2021, NNN redeemed the $350,000,000 3.300% notes payable that were due in April 2023. The notes were redeemed at a price equal to 100% of the principal amount, plus (i) a make-whole amount of $21,328,000 which is included in loss on early extinguishment of debt on the Condensed Consolidated Statement of Income and Comprehensive Income, and (ii) accrued and unpaid interest.

Note 5 – Stockholders' Equity:

Universal Shelf Registration Statement – In August 2020, NNN filed a shelf registration statement with the Securities and Exchange Commission (the "Commission") which was automatically effective and permits the issuance by NNN of an indeterminate amount of debt and equity securities.

Preferred Stock – In October 2021, NNN redeemed all outstanding depositary shares (13,800,000) representing interests in its 5.200% Series F preferred stock. The Series F preferred stock was redeemed at $25.00 per depositary share, plus all accrued and unpaid dividends through, but not including, the redemption date, for an aggregate redemption price of $25.111944 per depositary share. The excess carrying amount of the Series F preferred stock redeemed over the cash paid to redeem the Series F preferred stock was $10,897,000, representing issuance costs which is reflected as a reduction to earnings attributable to common stockholders.

At-The-Market Offerings – Under NNN's shelf registration statement, NNN has established an at-the-market equity program ("ATM") which allows NNN to sell shares of common stock from time to time. The following outlines NNN's ATM program:

	2020 ATM
Established date	August 2020
Termination date	August 2023
Total allowable shares		17,500,000
Total shares issued as of March 31, 2022		1,599,304

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The following table outlines the common stock issuances pursuant to NNN's ATM equity program for the quarter ended March 31, 2021 (dollars in thousands, except per share data):

Shares of common stock		30,000
Average price per share (net)	$	38.59
Net proceeds	$	1,158
Stock issuance costs(1)	$	75

(1) Stock issuance costs consist primarily of underwriters' fees and commissions, and legal and accounting fees.

There were no common stock issuances pursuant to NNN's ATM equity program for the quarter ended March 31, 2022.

Dividend Reinvestment and Stock Purchase Plan – In February 2021, NNN filed a shelf registration statement that was automatically effective with the Commission for its Dividend Reinvestment and Stock Purchase Plan ("DRIP"), which permits NNN to issue up to 6,000,000 shares of common stock. The following table outlines the common stock issuances pursuant to NNN's DRIP (dollars in thousands):

	Quarter Ended March 31,
	2022		2021
Shares of common stock		17,571		15,769
Net proceeds	$	748	$	569

Dividends – The following table outlines the dividends declared and paid for each issuance of NNN's stock (dollars in thousands, except per share data):

	Quarter Ended March 31,
	2022		2021
Series F preferred stock(1):
Dividends	$	—	$	4,485
Per depositary share		—		0.3250
Common stock:
Dividends		92,751		90,848
Per share		0.5300		0.5200

(1) The Series F preferred stock was redeemed in October 2021.

In April 2022, NNN declared a dividend of $0.5300 per share, which is payable in May 2022 to its common stockholders of record as of April 29, 2022.

Note 6 – Derivatives:

In accordance with the guidance on derivatives and hedging, NNN records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or a firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

NNN’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, NNN primarily uses treasury locks, forward starting swaps and interest rate swaps as part of its cash flow hedging strategy. Treasury locks and forward starting swaps are used to hedge forecasted debt issuances. Treasury locks designated as cash flow hedges lock in the yield/price of a treasury security. Forward starting swaps also lock the associated swap spread. Interest rate swaps designated as cash flow hedges are used to hedge the variable cash flows associated with floating rate debt and involve the receipt or payment of variable rate amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amount.

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For derivatives designated as cash flow hedges, the change in the fair value of the derivative is initially reported in other comprehensive income (loss) (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings.

NNN discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the cash flows of the hedged item, the derivative expires or is sold, terminated or exercised, the derivative is re-designated as a hedging instrument or management determines that designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, NNN recognizes any changes in its fair value in earnings and continues to carry the derivative on the balance sheet or may choose to settle the derivative at that time with a cash payment or receipt. NNN records a cash settlement of forward starting swaps in the Condensed Consolidated Statements of Cash Flows as an operating activity.

The following table outlines NNN's terminated derivatives which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt (dollars in thousands):

Notes Payable	Terminated	Description	Aggregate Notional Amount		Liability (Asset) Fair Value When Terminated			Fair Value Deferred In Other Comprehensive Income (1)
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 amount reported in accumulated other comprehensive income (loss) will be reclassified to interest expense as interest payments are made on the related notes payable.

As of March 31, 2022, $14,373,000 remained in other comprehensive income (loss) related to NNN’s previously terminated interest rate hedges. During the quarters ended March 31, 2022 and 2021, NNN reclassified out of other comprehensive income (loss) $583,000 and $1,368,000, respectively, as an increase in interest expense. Over the next 12 months, NNN estimates that an additional $2,398,000 will be reclassified as an increase in interest expense from these terminated derivatives. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on NNN’s long-term debt.

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 March 31, 2022.

Note 7 – Fair Value of Financial Instruments:

NNN believes the carrying value of its Credit Facility approximates fair value based upon its nature, terms and variable interest rate. NNN believes that the carrying value of its mortgages payable at March 31, 2022 and December 31, 2021, approximate fair value based upon current market prices of comparable instruments (Level 3). At March 31, 2022 and December 31, 2021, the fair value of NNN’s notes payable excluding unamortized discount and debt costs was $3,624,822,000 and $4,032,757,000, respectively, based upon quoted market prices as of the close of the period, which is a Level 1 valuation since NNN's notes payable are publicly traded.

Note 8 – Subsequent Events:

NNN reviewed its subsequent events and transactions that have occurred after March 31, 2022, the date of the interim condensed consolidated balance sheet.

There were no reportable subsequent events or transactions.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in the Annual Report on Form 10-K of National Retail Properties, Inc. for the year ended December 31, 2021 ("2021 Annual Report"). The terms “NNN” and the “Company” refer to National Retail Properties, Inc. and all of its consolidated subsidiaries.

Forward-Looking Statements

The information herein contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934 (the “Exchange Act”). Also, when NNN uses any of the words “anticipate,” “assume,” “believe,” “estimate,” “expect,” “intend,” or similar expressions, NNN is making forward-looking statements. Although management believes that the expectations reflected in such forward-looking statements are based upon present expectations and reasonable assumptions, NNN’s actual results could differ materially from those set forth in the forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and NNN undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statement:

•Changes in financial and economic conditions may have an adverse impact on NNN, its tenants, and commercial real estate in general;

•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;

•Loss of rent from tenants would reduce NNN's cash flow;

•A significant portion of NNN's annual base rent is concentrated in specific industry classifications, tenants and geographic locations;

•NNN may not be able to successfully execute its acquisition or development strategies;

•NNN may not be able to dispose of properties consistent with its operating strategy;

•Certain provisions of NNN's leases or loan agreements may be unenforceable;

•Competition from numerous other real estate investment trusts (“REIT”), commercial developers, real estate limited partnerships and other investors may impede NNN’s ability to grow;

•Uninsured losses may adversely affect NNN's operating results and asset values;

•NNN's ability to fully control the management of its net-leased properties may be limited;

•Vacant properties or bankrupt tenants could adversely affect NNN's business or financial condition;

•Cybersecurity risks and cyber incidents could adversely affect NNN's business, disrupt operations and expose NNN to liabilities to tenants, employees, capital providers, and other third parties;

•Future investment in international markets could subject NNN to additional risks;

•NNN may suffer a loss in the event of a default of or bankruptcy of a tenant or a borrower;

•Property ownership through joint ventures and partnerships could limit NNN's control of those investments;

•NNN may be unable to obtain debt or equity capital on favorable terms, if at all;

•The amount of debt NNN has and the restrictions imposed by that debt could adversely affect NNN's business and financial condition;

•NNN is obligated to comply with financial and other covenants in its debt instruments that could restrict its operating activities, and the failure to comply with such covenants could result in defaults that accelerate the payment of such debt;

•NNN's ability to pay dividends in the future is subject to many factors;

•Owning real estate and indirect interests in real estate carries inherent risks;

•NNN's real estate investments are illiquid;

•NNN may be subject to known or unknown environmental liabilities and risks, including but not limited to liabilities and risks resulting from the existence of hazardous materials on or under properties owned by NNN;

•NNN's failure to qualify as a REIT for federal income tax purposes could result in significant tax liability;

•Compliance with REIT requirements, including distribution requirements, may limit NNN's flexibility and may negatively affect NNN's operating decisions;

•The share ownership restrictions of the Internal Revenue Code of 1986, as amended (the "Code"), for REITs and the 9.8% share ownership limit in NNN's charter may inhibit market activity in NNN's shares of stock and restrict NNN's business combination opportunities;

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•The cost of complying with changes in governmental laws and regulations may adversely affect NNN's results of operations;

•Non-compliance with Title III of the Americans with Disabilities Act of 1990 could have an adverse effect on NNN's business and operating results;

•NNN's loss of key management personnel could adversely affect performance and the value of its securities;

•NNN's failure to maintain effective internal control over financial reporting could have a material adverse effect on its business, operating results and the market value of NNN's securities;

•Acts of violence, terrorist attacks or war may affect NNN's properties, the markets in which NNN operates and NNN's results of operations;

•Changes in accounting pronouncements could adversely impact NNN's or NNN's tenants' reported financial performance;

•The market value of NNN's equity and debt securities is subject to various factors that may cause significant fluctuations or volatility;

•The phase-out of the London Interbank Offered Rate ("LIBOR") could affect interest rates under NNN's variable rate debt;

•Even if NNN remains qualified as a REIT, NNN faces other tax liabilities that reduce operating results and cash flow; and

•Adverse legislative or regulatory tax changes could reduce NNN's earnings and cash flow and the market value of NNN's securities.

Additional information related to these risks and uncertainties are included in "Item 1A. Risk Factors" of NNN's 2021 Annual Report.

These risks and uncertainties may cause NNN's actual future results to differ materially from expected results, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. NNN undertakes no obligation to update or revise such forward-looking statements, whether as a result of new information, future events or otherwise.

Overview

NNN, a Maryland corporation, is a fully integrated REIT formed in 1984. NNN's assets are primarily real estate assets. NNN acquires, owns, invests in and develops properties that are leased primarily to retail tenants under long-term net leases and are primarily held for investment ("Properties" or "Property Portfolio", or individually a "Property").

As of March 31, 2022, NNN owned 3,271 Properties, with an aggregate gross leasable area of approximately 33,545,000 square feet, located in 48 states, with a weighted average remaining lease term of 10.6 years. Approximately 99 percent of the Properties were leased as of March 31, 2022.

NNN’s management team focuses on certain key indicators to evaluate the financial condition and operating performance of NNN. 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 ratios and profitability measures, industry trends and industry performance compared to that of NNN.

NNN evaluates the creditworthiness of its current and prospective tenants. This evaluation may include reviewing available financial statements, store level financial performance, press releases, public credit ratings from major credit rating agencies, industry news publications and financial market data (debt and equity pricing). NNN may also evaluate the business and operations of its tenants, including past payment history and periodically meeting with senior management of certain tenants.

NNN continues to maintain its diversification by tenant, geography and tenant's line of trade. NNN’s largest line of trade concentrations are the convenience store (17.5%), automotive service (12.6%) and restaurant (including full and limited service) (18.9%) sectors. 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 south and southeast United States, which are regions of historically above-average population growth. 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.

As of March 31, 2022 and 2021, the Property Portfolio remained at least 98 percent leased and had a weighted average remaining lease term of approximately 11 years. High occupancy levels coupled with a net lease structure, provides enhanced probability of maintaining operating earnings.

Additional information related to NNN is included in "Item 1. Business" of NNN's 2021 Annual Report.

20

Impact of COVID-19 on NNN’s Business

NNN and certain of NNN's tenants were impacted by the COVID-19 pandemic which resulted in the loss of revenue for certain tenants and challenged their ability to pay rent.

As a result, during 2021 and 2020, NNN entered into rent deferral lease amendments with certain tenants for rent originally due for the years ending December 31, 2021 and 2020, which require the deferred rents to be repaid at a later time during the lease term. Substantially all remaining deferred rent will come due periodically by December 31, 2023.

The following table outlines the rent deferred and corresponding scheduled repayment of the COVID-19 rent deferral lease amendments (dollars in thousands):

	Deferred									Scheduled Repayment
	Accrual Basis		Cash Basis		Total		% of Total			Accrual Basis		Cash Basis		Total		% of Total			Cumulative Total
2020	$	33,594	$	18,425	$	52,019		91.7	%	$	3,239	$	20	$	3,259		5.7	%		5.7	%
2021		990		3,768		4,758		8.3	%		25,935		5,841		31,776		56.0	%		61.7	%
2022		—		—		—		—			5,391		9,135		14,526		25.6	%		87.3	%
2023		—		—		—		—			19		3,334		3,353		5.9	%		93.2	%
2024		—		—		—		—			—		1,932		1,932		3.4	%		96.6	%
2025		—		—		—		—			—		1,931		1,931		3.4	%		100.0	%
	$	34,584	$	22,193	$	56,777				$	34,584	$	22,193	$	56,777

While NNN's rent collections have returned to pre-pandemic levels, NNN's operations and those of NNN's tenants will depend on future developments, which are highly uncertain and cannot be predicted with confidence.

Historical rent collections and rent relief requests may not be indicative of collections and requests in the future. Depending on macroeconomic conditions and their impact on a tenant's business and operations, deferred rents may be difficult to collect.

Results of Operations

Property Analysis

General. The following table summarizes the Property Portfolio:

	March 31, 2022			December 31, 2021			March 31, 2021
Properties Owned:
Number		3,271			3,223			3,161
Total gross leasable area (square feet)		33,545,000			32,753,000			32,717,000
Properties:
Leased and unimproved land		3,245			3,191			3,106
Percent of Properties – leased and unimproved land		99	%		99	%		98	%
Weighted average remaining lease term (years)		10.6			10.6			10.6
Total gross leasable area (square feet) – leased		33,258,000			32,395,000			31,910,000

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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	March 31, 2022	December 31, 2021	March 31, 2021
1.	Convenience stores	17.5%	17.9%	18.0%
2.	Automotive service	12.6%	12.3%	10.7%
3.	Restaurants – full service	9.7%	9.8%	10.2%
4.	Restaurants – limited service	9.2%	9.4%	9.5%
5.	Family entertainment centers	6.2%	5.9%	6.0%
6.	Health and fitness	5.0%	5.2%	5.2%
7.	Theaters	4.4%	4.5%	4.4%
8.	Recreational vehicle dealers, parts and accessories	4.1%	3.9%	3.5%
9.	Equipment rental	3.1%	3.2%	3.1%
10.	Automotive parts	3.0%	3.0%	3.1%
11.	Home improvement	2.4%	2.5%	2.6%
12.	Wholesale clubs	2.4%	2.5%	2.5%
13.	Furniture	2.4%	1.7%	1.7%
14.	Medical service providers	2.0%	2.0%	2.1%
15.	General merchandise	1.6%	1.7%	1.7%
16.	Home furnishings	1.5%	1.5%	1.6%
17.	Consumer electronics	1.5%	1.5%	1.5%
18.	Travel plazas	1.5%	1.5%	1.5%
19.	Automobile auctions, wholesale	1.3%	1.3%	1.1%
20.	Drug stores	1.2%	1.3%	1.4%
	Other	7.4%	7.4%	8.6%
		100.0%	100.0%	100.0%

(1) Based on annualized base rent for all leases in place for each respective period.

Property Acquisitions. The following table summarizes the Property acquisitions (dollars in thousands):

	Quarter Ended March 31,
	2022			2021
Acquisitions:
Number of Properties		59			29
Gross leasable area (square feet)(1)		879,000			355,000
Initial cash yield		6.2	%		6.4	%
Total dollars invested(2)	$	210,823		$	105,626

(1)	Includes additional square footage from completed construction on existing Properties.
(2)	Includes dollars invested in projects under construction or tenant improvements for each respective year.

NNN typically funds Property acquisitions either through borrowings under the Credit Facility or by issuing its debt or equity securities in the capital markets.

22

Property Dispositions. The following table summarizes the Properties sold by NNN (dollars in thousands):

	Quarter Ended March 31,
	2022		2021
Number of properties		10		11
Gross leasable area (square feet)		81,000		96,000
Net sales proceeds	$	20,074	$	17,575
Net gain	$	3,992	$	4,281

NNN typically uses the proceeds from a Property disposition to either pay down the Credit Facility or reinvest in real estate.

Analysis of Revenue

General. During the quarter ended March 31, 2022, total revenues increased as compared to the same period in 2021, primarily due to scheduled rent increases and to the income generated from recently acquired Properties (See "Results of Operations - Property Analysis - Property Acquisitions").

The following table summarizes NNN’s revenues (dollars in thousands):

	Quarter Ended March 31,				Percent Increase
	2022		2021		(Decrease)
Rental Revenues(1)	$	185,163	$	173,845		6.5	%
Real estate expense reimbursement from tenants		4,600		5,353		(14.1	)%
Rental income		189,763		179,198		5.9	%
Interest and other income from real estate transactions		516		580		(11.0	)%
Total revenues	$	190,279	$	179,778		5.8	%

(1) Includes rental income from operating leases, earned income from direct financing leases and percentage rent ("Rental Revenues").

Quarter Ended March 31, 2022 versus Quarter Ended March 31, 2021

Rental Income. Rental income increased for the quarter ended March 31, 2022, as compared to the same period in 2021. The increase is primarily due to scheduled rent increases based on increases in the Consumer Price Index and the income generated from Property acquisitions:

•a partial period of Rental Revenue from NNN's 2022 acquisition of 59 Properties with an aggregate gross leasable area of approximately 879,000 square feet, and

•a full period of Rental Revenue from NNN's 2021 acquisition of 156 Properties with aggregate gross leasable area of approximately 1,341,000 square feet.

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Analysis of Expenses

General. Operating expenses increased for the quarter ended March 31, 2022, as compared to the same period in 2021, primarily due to the increase in executive retirement costs and depreciation and amortization. The following table summarizes NNN’s expenses (dollars in thousands):

	Quarter Ended March 31,						Percent Increase
	2022			2021			(Decrease)
General and administrative	$	11,042		$	11,748			(6.0	)%
Real estate		7,198			7,725			(6.8	)%
Depreciation and amortization		52,680			49,980			5.4	%
Leasing transaction costs		88			38			131.6	%
Impairment losses – real estate, net of recoveries		1,632			2,131			(23.4	)%
Executive retirement costs		3,594			—		N/C
Total operating expenses	$	76,234		$	71,622			6.4	%
Interest and other income	$	(35	)	$	(65	)		(46.2	)%
Interest expense		36,699			34,587			6.1	%
Loss on early extinguishment of debt		—			21,328			(100.0	)%
Total other expenses	$	36,664		$	55,850			(34.4	)%

As a percentage of total revenues:
General and administrative	5.8	%	6.5	%
Real estate	3.8	%	4.3	%

Quarter Ended March 31, 2022 versus Quarter Ended March 31, 2021

Depreciation and Amortization. Depreciation and amortization expenses increased for the quarter ended March 31, 2022, as compared to the same periods in 2021, primarily due to Property acquisitions subsequent to March 31, 2021.

Impairment Losses – real estate, net of recoveries. NNN periodically assesses its long-lived real estate assets for possible impairment whenever certain events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. These indicators include, but are not limited to: changes in real estate market conditions, the ability of NNN to re-lease properties that are currently vacant or become vacant, properties reclassified as held for sale, persistent vacancies greater than one year, and properties leased to tenants in bankruptcy. Management evaluates whether an impairment in carrying value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), and the residual value of the real estate, with the carrying value of the individual asset. The future undiscounted cash flows are primarily driven by estimated future market rents. Future cash flow estimates are sensitive to the assumptions made by management regarding future market rents, which are affected by expectations about future market and economic conditions. If an impairment is indicated, a loss will be recorded for the amount by which the carrying value of the asset exceeds its estimated fair value. NNN's Properties are leased primarily to retail tenants under long-term net leases and primarily held for investment. Generally, NNN’s Property leases provide for initial terms of 10 to 20 years, with cash flows provided over the entire term. NNN generally intends to hold these assets for the long-term, therefore, a temporary change in cash flows due to the COVID-19 pandemic alone was determined not to be an indicator of impairment.

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As a result of NNN's review of long-lived assets, including identifiable intangible assets, NNN recognized real estate impairments, net of recoveries as summarized in the table below (dollars in thousands):

	Quarter Ended March 31,
	2022		2021
Total real estate impairments, net of recoveries	$	1,632	$	2,131
Number of Properties:
Vacant		3		6
Occupied		2		1

For the quarters ended March 31, 2022 and 2021, real estate impairments, net of recoveries, was less than one percent of NNN's total assets for the respective periods as reported on the Condensed Consolidated Balance Sheets. Due to NNN's core business of investing in real estate leased primarily to retail tenants under long-term net leases, the inherent risks of owning commercial real estate, and unknown potential changes in financial and economic conditions that may impact NNN's tenants, NNN believes it is reasonably possible to incur real estate impairment charges in the future.

Executive retirement costs. In January 2022, as contemplated under the Company’s long-term executive succession planning process, NNN announced that Julian (“Jay”) Whitehurst will retire from employment with the Company as President and Chief Executive Officer on April 28, 2022. During the quarter ended March 31, 2022, NNN recorded executive retirement costs as a result of the accounting treatment for long-term incentive compensation related to Mr. Whitehurst’s Retirement and Transition Agreement.

Interest expense. Interest expense increased for the quarter ended March 31, 2022, as compared to the same periods in 2021. The following represents the primary changes in debt that have impacted interest expense (dollars in thousands):

Transaction	Effective Date	Principal			Stated Rate			Original Maturity
Issuance 2051 Notes	March 2021	$	450,000			3.500	%	April 2051
Redemption 2023 Notes	March 2021		(350,000	)		3.300	%	April 2023
Issuance 2052 Notes	September 2021		450,000			3.000	%	April 2052

In addition, interest expense for the quarter ended March 31, 2021 includes $2,078,000 in connection with the early redemption of the 2023 Notes.

Loss on Early Extinguishment of Debt. As part of NNN's financing strategy, NNN may opt to redeem outstanding notes payable prior to the original maturity date. Upon an early redemption, notes are redeemed at a price equal to 100% of the principal amount, plus (i) a make-whole amount, and (ii) accrued and unpaid interest. In March 2021, NNN redeemed the $350,000,000 3.300% notes payable that were due in April 2023 with a make-whole amount of $21,328,000. The make-whole amount is included in loss on early extinguishment of debt on the Condensed Consolidated Statement of Income and Comprehensive Income.

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 development; (iii) capital expenditures; (iv) payment of principal and interest on its outstanding indebtedness; and (v) other investments.

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 rating, staggering debt maturities and providing value to NNN’s stockholders. NNN’s capital resources have and will continue to include, if available (i) proceeds from the issuance of public or private equity or debt capital market transactions; (ii) secured or unsecured borrowings from banks or other lenders; (iii) proceeds from the sale of Properties; and (iv) to a lesser extent, by internally generated funds as well as undistributed funds from operations. However, there can be no assurance that additional financing or capital will be available, or that the terms will be acceptable or advantageous to NNN.

NNN typically expects to fund short-term liquidity requirements, including investments in additional properties, with cash and cash equivalents, cash provided from operations and NNN's Credit Facility. As of March 31, 2022, NNN has $53,736,000 of cash and cash equivalents and $1,100,000,000 available for future borrowings under its Credit Facility.

25

Cash and Cash Equivalents. NNN's cash and cash equivalents includes the aggregate of cash and cash equivalents and restricted cash and cash held in escrow from the Condensed Consolidated Balance Sheets. NNN did not have restricted cash or cash held in escrow as of March 31, 2022 and December 31, 2021. The table below summarizes NNN’s cash flows (dollars in thousands):

	Quarter Ended March 31,
	2022			2021
Cash and cash equivalents:
Provided by operating activities	$	164,338		$	161,170
Used in investing activities		(189,643	)		(88,512	)
Used in financing activities		(92,281	)		(28,663	)
Increase (decrease)		(117,586	)		43,995
Net cash at beginning of period		171,322			267,236
Net cash at end of period	$	53,736		$	311,231

Cash flow activities include:

Operating Activities. Cash provided by operating activities represents cash received primarily from Rental Revenue 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 period presented. The change in cash provided by operations for the quarters ended March 31, 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. Changes in cash for investing activities are primarily attributable to the acquisitions and dispositions of Properties as discussed in "Results of Operations - Property Analysis." NNN typically uses cash on hand or proceeds from its Credit Facility to fund the acquisition of its Properties.

Financing Activities. NNN’s financing activities for the quarter ended March 31, 2022, included the following significant transactions:

•$748,000 from the issuance of 17,571 shares of common stock in connection with the Dividend Reinvestment and Stock Purchase Plan ("DRIP"), and

•$92,751,000 in dividends paid to common stockholders.

Material Cash Requirements

NNN's material cash requirements include (i) long-term debt maturities; (ii) interest on long-term debt; (iii) to a lesser extent, Property construction and other Property related costs that may arise; and (iv) common stock dividends (although all future distributions will be declared and paid at the discretion of the Board of Directors).

The table below presents material cash requirements related to NNN's long-term debt outstanding as of March 31, 2022 (dollars in thousands):

	Date of Obligation
	Total		2022		2023		2024		2025		2026		Thereafter
Long-term debt(1)	$	3,810,447	$	500	$	9,947	$	350,000	$	400,000	$	350,000	$	2,700,000
Long-term debt – interest(2)		1,924,653		102,711		136,701		129,006		120,750		106,225		1,329,260
Total contractual cash     obligations	$	5,735,100	$	103,211	$	146,648	$	479,006	$	520,750	$	456,225	$	4,029,260

(1)	Includes only principal amounts outstanding under mortgages payable and notes payable and excludes unamortized mortgage premiums, note discounts and note costs. See "Capital Structure".
(2)	Interest calculation on mortgage and notes payable based on stated rate of the principal amount. See "Capital Structure".

26

Property Construction. NNN has committed to fund construction on 13 Properties. The improvements of such Properties are estimated to be completed within 12 months. These construction commitments, at March 31, 2022, are outlined in the table below (dollars in thousands):

Total commitment(1)	$	38,889
Less amount funded		19,881
Remaining commitment	$	19,008

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

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. Generally, the Properties are leased under long-term triple net leases, which require the tenant to pay all property taxes and assessments, utilities, to maintain the interior and exterior of the property, and to carry property and liability insurance coverage. Therefore, management anticipates that capital demands to meet obligations with respect to these Properties will be modest for the foreseeable future and can be met with funds from operations and working capital. Certain Properties are subject to leases under which NNN retains responsibility for specific costs and expenses associated with the Property. Management anticipates that the costs associated with these Properties, NNN's vacant Properties or those Properties that become vacant will also be met with funds from operations and working capital. NNN may be required to borrow under its Credit Facility or use other sources of capital in the event of significant capital expenditures or major repairs.

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.

As of March 31, 2022, NNN owned 26 vacant, un-leased Properties which accounted for approximately one percent of total Properties held in the Property Portfolio.

Additionally, as of April 28, 2022, NNN had no tenants currently in bankruptcy under Chapter 11 of the U.S. Bankruptcy Code.

NNN generally monitors the financial performance of its significant tenants on an ongoing basis.

Dividends. One of NNN’s primary objectives is to distribute a substantial portion of its funds available from operations to its stockholders in the form of dividends, while retaining sufficient cash for reserves and working capital purposes, and maintaining its status as a REIT.

The following table outlines the dividends declared and paid for each issuance of NNN's stock (dollars in thousands, except per share data):

	Quarter Ended March 31,
	2022		2021
Series F preferred stock(1):
Dividends	$	—	$	4,485
Per depositary share		—		0.3250
Common stock:
Dividends		92,751		90,848
Per share		0.5300		0.5200

(1) The Series F preferred stock was redeemed in October 2021.

In April 2022, NNN declared a dividend of $0.5300 per share which is payable in May 2022 to its common stockholders of record as of April 29, 2022.

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Capital Structure

NNN has used, and expects to use in the future, various forms of debt and equity securities primarily to pay down or refinance its outstanding debt, to finance property acquisitions and to fund construction on its Properties.

The following is a summary of NNN’s total outstanding debt as of (dollars in thousands):

	March 31, 2022		Percentage of Total			December 31, 2021		Percentage of Total
Mortgages payable	$	10,515		0.3	%	$	10,697		0.3	%
Notes payable		3,736,781		99.7	%		3,735,769		99.7	%
Total outstanding debt	$	3,747,296		100.0	%	$	3,746,466		100.0	%

Line of Credit Payable. In June 2021, NNN amended and restated its credit agreement to increase the borrowing capacity under its Credit Facility from $900,000,000 to $1,100,000,000 and amended certain other terms under the former Credit Facility. The Credit Facility had no weighted average outstanding balance during the quarter ended March 31, 2022. The Credit Facility matures June 2025, unless the Company exercises its options to extend maturity to June 2026. The Credit Facility bears interest at LIBOR plus 77.5 basis points; however, such interest rate may change pursuant to a tiered interest rate structure based on NNN's debt rating. Additionally, as part of NNN's environmental, social and governance ("ESG") initiative, pricing may be reduced if specified ESG metrics are achieved. 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 Condensed Consolidated Balance Sheets. As of March 31, 2022, there was no outstanding balance and $1,100,000,000 was available for future borrowings under the Credit Facility, and NNN was in compliance with each of the financial covenants.

LIBOR is used as a reference rate for NNN’s revolving Credit Facility. On March 5, 2021, the Financial Conduct Authority (“FCA”) announced that USD LIBOR will no longer be published after June 30, 2023. This announcement has several implications, including setting the spread that may be used to automatically convert contracts from LIBOR to the Secured Overnight Financing Rate ("SOFR"). Additionally, as of December 31, 2021, banks have ceased issuance of any new LIBOR based debt. NNN anticipates that LIBOR will continue to be available until June 30, 2023. For a discussion of the phase-out of LIBOR and its impact to NNN, see NNN's Annual Report on Form 10-K for the year ended December 31, 2021.

Universal Shelf Registration Statement. In August 2020, NNN filed a shelf registration statement with the Securities and Exchange Commission (the "Commission") which was automatically effective and permits the issuance by NNN of an indeterminate amount of debt and equity securities. Information related to NNN's publicly held debt and equity securities is included in NNN's Annual Report on Form 10-K for the year ended December 31, 2021.

Debt Securities – Notes Payable. In 2021, NNN filed prospectus supplements to the prospectus contained in its August 2020 shelf registration statement and issued $450,000,000 aggregate principal amount of 3.500% notes due April 2051 (the “2051 Notes”) and $450,000,000 aggregate principal amount of 3.000% notes due April 2052 (the "2052 Notes" and, together with the 2051 Notes, the "Notes"). Each note issuance is summarized in the table below (dollar in thousands):

Notes	Issue Date	Principal		Discount (1)		Net Price		Stated Rate			Effective Rate (2)			Maturity Date
2051 Notes (3)	March 2021	$	450,000	$	8,406	$	441,594		3.500	%		3.602	%	April 2051
2052 Notes (4)(5)	September 2021		450,000		10,422		439,578		3.000	%		3.118	%	April 2052

(1)	The note discounts are amortized to interest expense over the respective term of each debt obligation using the effective interest method.
(2)	Includes the effects of the discount at issuance.
(3)	NNN used the net proceeds from the issuance of the 2051 Notes to redeem all of its 3.300% notes payable that were due 2023, fund future property acquisitions and for general corporate purposes.
(4)	In October 2021, NNN used the net proceeds from the issuance of the 2052 Notes to redeem all of its 13,800,000 outstanding depositary shares, each representing a 1/100th interest in a share of its Series F preferred stock, with the remainder of the net proceeds used to fund property acquisitions and for general corporate purposes.
(5)	NNN entered into forward swaps which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt. Upon the issuance of the 2052 Notes, NNN terminated such derivatives, and the resulting fair value was deferred in accumulated other comprehensive income (loss) and is being amortized over the term of the respective notes using the effective interest method. Additional disclosure is included in Note 6 – Derivatives.

28

Each series of Notes is senior, unsecured obligations of NNN and is subordinated to all secured debt of NNN and to the debt and other liabilities of NNN's subsidiaries. Each of the Notes is redeemable at NNN's option, at any time, in whole or in part, at a redemption price equal to (i) the sum of the outstanding principal amount of the notes being redeemed plus accrued interest thereon, but not including the redemption date, and (ii) the make-whole amount, if any, as defined in the applicable supplemental indenture related to the notes.

In connection with the Notes, NNN incurred debt issuance costs totaling $10,144,000 consisting primarily of underwriting discounts and commissions, legal and accounting fees, rating agency fees and printing expenses. Debt issuance costs for all note issuances have been deferred and presented as a reduction to notes payable and are being amortized over the term of the respective notes using the effective interest method.

As a part of NNN's financing strategy, NNN may opt to redeem outstanding notes payable prior to the original maturity date. Upon early redemption, notes are redeemed at a price equal to 100% of the principal amount, plus (i) a make-whole amount, and (ii) accrued and unpaid interest. In March 2021, NNN redeemed the $350,000,000 3.300% notes payable that were due in April 2023 with a make-whole amount of $21,328,000. The make-whole amount is included in loss on early extinguishment of debt on the Condensed Consolidated Statement of Income and Comprehensive Income.

Equity Securities

Preferred Stock. In October 2021, NNN redeemed all outstanding depositary shares (13,800,000) representing interests in its 5.200% Series F preferred stock. The Series F preferred stock was redeemed at $25.00 per depositary share, plus all accrued and unpaid dividends through, but not including, the redemption date, for an aggregate redemption price of $25.111944 per depositary share. The excess carrying amount of the Series F preferred stock redeemed over the cash paid to redeem the Series F preferred stock was $10,897,000, representing issuance costs which is reflected as a reduction to earnings attributable to common stockholders.

As of March 31, 2022, NNN had no outstanding shares of preferred stock.

At-The-Market Offerings. Under NNN's shelf registration statement, NNN established an ATM equity program which allows NNN to sell shares of common stock from time to time. The following outlines NNN's ATM program:

	2020 ATM
Established date	August 2020
Termination date	August 2023
Total allowable shares	17,500,000
Total shares issued as of March 31, 2022	1,599,304

The following table outlines the common stock issuances pursuant to NNN's ATM equity program for the quarter ended March 31, 2021 (dollars in thousands, except per share data):

Shares of common stock		30,000
Average price per share (net)	$	38.59
Net proceeds	$	1,158
Stock issuance costs(1)	$	75

(1) Stock issuance costs consist primarily of underwriters' fees and commissions, and legal and accounting fees.

There were no common stock issuances pursuant to NNN's ATM equity program for the quarter ended March 31, 2022.

Dividend Reinvestment and Stock Purchase Plan. In February 2021, NNN filed a shelf registration statement that was automatically effective with the Commission 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. The following outlines the common stock issuances pursuant to NNN’s DRIP (dollars in thousands):

	Quarter Ended March 31,
	2022		2021
Shares of common stock		17,571		15,769
Net proceeds	$	748	$	569

29

Critical Accounting Estimates

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles. The unaudited condensed consolidated financial statements reflect all adjustments (including normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The preparation of NNN’s condensed consolidated financial statements 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 condensed consolidated financial statements. On an ongoing basis, management evaluates its estimates and assumptions; however, actual results may differ from these estimates and assumptions, which in turn could have a material impact on NNN’s consolidated financial statements. A summary of NNN’s critical accounting estimates are included in NNN’s 2021 Annual Report. NNN has not made any material changes to these policies during the periods covered by this Quarterly Report on Form 10-Q.

Recent Accounting Pronouncements

Refer to Note 1 to the March 31, 2022, condensed consolidated financial statements.

30

Item 3. Quantitative and Qualitative Disclosures About Market Risk

NNN is exposed to interest rate risk primarily as a result of its variable rate Credit Facility and its fixed rate long-term debt which is used to finance NNN’s Property acquisitions and development activities, as well as for general corporate purposes. NNN’s interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to reduce overall borrowing costs. To achieve its objectives, NNN borrows at both fixed and variable rates on its long-term debt and periodically uses derivatives to hedge the interest rate risk of future borrowings. As of March 31, 2022, NNN had no outstanding derivatives.

NNN's variable rate Credit Facility:

•as of March 31, 2022 and 2021, had no weighted average outstanding balance, and

•had a zero outstanding balance at March 31, 2022 and 2021.

The information in the table below summarizes NNN’s market risks associated with its debt obligations outstanding. The table presents, by year of expected maturity, principal payments and related interest rates for debt obligations outstanding as of March 31, 2022. The table incorporates only those debt obligations that existed as of March 31, 2022, and it does not consider those debt obligations or positions which could arise after this date and therefore has limited predictive value. As a result, NNN’s ultimate realized gain or loss with respect to interest rate fluctuations will depend on the exposures that arise during the period, NNN’s hedging strategies at that time and interest rates. If interest rates on NNN's variable rate debt increased by one percent, NNN's interest expense would remain unchanged for the quarter ended March 31, 2022.

Debt Obligations (dollars in thousands)
	Fixed Rate Debt
	Mortgages(1)					Unsecured Debt(2)
	Principal Debt Obligation		Weighted Average Interest Rate			Principal Debt Obligation		Effective Interest Rate
2022	$	500		5.23	%	$	—		—
2023		9,947		5.23	%		—		—
2024		—		—			350,000		3.92	%
2025		—		—			400,000		4.03	%
2026		—		—			350,000		3.73	%
Thereafter		—		—			2,700,000		3.57	%	(3)
Total	$	10,447		5.23	%	$	3,800,000		3.69	%
Fair Value:
March 31, 2022	$	10,447				$	3,624,822
December 31, 2021	$	10,611				$	4,032,757

(1)	NNN's mortgages payable represent principal payments by year and exclude both unamortized premiums and debt costs.
(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 period, 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 periods after 2026.

31

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. An evaluation was performed under the supervision and with the participation of NNN's management, including NNN's Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer ("NNN's Chief Officers"), of the effectiveness as of March 31, 2022, of the design and operation of NNN's disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act. Based on that evaluation, NNN's Chief Officers concluded that the design and operation of these disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting. There has been no change in NNN's internal control over financial reporting that occurred during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, NNN's internal control over financial reporting.

32

PART II. OTHER INFORMATION

Item 1. Legal Proceedings. Not applicable.

Item 1A. Risk Factors.

There were no material changes in NNN's risk factors disclosed in Item 1A. Risk Factors in NNN's Annual Report on Form 10-K for the year ended December 31, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. Not applicable.

Item 3. Defaults Upon Senior Securities. Not applicable.

Item 4. Mine Safety Disclosures. Not applicable.

Item 5. Other Information. Not applicable.

Item 6. Exhibits

The following exhibits are filed as a part of this report.

31.	Section 302 Certifications(1)
		31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
		31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.	Section 906 Certifications(1)
		32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
		32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
101.	Interactive Data File
		101.1	The following materials from National Retail Properties, Inc. Quarterly Report on Form 10-Q for the period ended March 31, 2022, are formatted in Inline Extensible Business Reporting Language ("Inline XBRL"): (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of income and comprehensive income, (iii) condensed consolidated statements of cash flows, and (iv) notes to condensed consolidated financial statements.
104.	Cover Page Interactive Data File
		104.1	The cover page XBRL tags are embedded within the Inline XBRL document and included in Exhibit 101.
(1)	In accordance with Item 601((b)(32) of Regulation S-K, this exhibit is not deemed "filed" for purposes of section 18 of the exchange act or otherwise subject to the liabilities of that section. Such certifications will not be deemed incorporated by reference into any filing under the securities act or the exchange act, except to the extent that the registrant specifically incorporates it by reference.

33

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DATED this 3rd day of May, 2022.

NATIONAL RETAIL PROPERTIES, INC.
By:	/s/ Stephen A. Horn, Jr.
	Stephen A. Horn, Jr.
	Chief Executive Officer, President and Director
By:	/s/ Kevin B. Habicht
	Kevin B. Habicht
	Chief Financial Officer, Executive Vice President and Director

34

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen A. Horn, Jr., certify that:

1.I have reviewed this report on Form 10-Q of National Retail Properties, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

May 3, 2022		/s/ Stephen A. Horn, Jr.
Date	Name:	Stephen A. Horn, Jr.
	Title:	Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Kevin B. Habicht, certify that:

1.I have reviewed this report on Form 10-Q of National Retail Properties, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

May 3, 2022		/s/ Kevin B. Habicht
Date	Name:	Kevin B. Habicht
	Title:	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Stephen A. Horn, Jr., Chief Executive Officer and President, certifies, to the best of his knowledge, that (1) this Quarterly Report of National Retail Properties, Inc. (“NNN”) on Form 10-Q for the period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (this “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and (2) the information contained in this Report fairly presents, in all material respects, the financial condition of NNN as of March 31, 2022 and December 31, 2021 and its results of operations for the quarter ended March 31, 2022 and 2021.

May 3, 2022		/s/ Stephen A. Horn, Jr.
Date	Name:	Stephen A. Horn, Jr.
	Title:	Chief Executive Officer and President

A signed original of this written statement required by Section 906 has been provided to NNN and will be retained by NNN and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, Kevin B. Habicht, Chief Financial Officer, certifies, to the best of his knowledge, that (1) this Quarterly Report of National Retail Properties, Inc. (“NNN”) on Form 10-Q for the period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (this “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and (2) the information contained in this Report fairly presents, in all material respects, the financial condition of NNN as of March 31, 2022 and December 31, 2021 and its results of operations for the quarter ended March 31, 2022 and 2021.

May 3, 2022		/s/ Kevin B. Habicht
Date	Name:	Kevin B. Habicht
	Title:	Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to NNN and will be retained by NNN and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Cover - shares	3 Months Ended
	Mar. 31, 2022	Apr. 28, 2022
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2022
Document Transition Report	false
Entity File Number	001-11290
Entity Registrant Name	NATIONAL RETAIL PROPERTIES, INC.
Entity Central Index Key	0000751364
Current Fiscal Year End Date	--03-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	56-1431377
Entity Address, Address Line One	450 South Orange Avenue, Suite 900
Entity Address, City or Town	Orlando
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	32801
City Area Code	407
Local Phone Number	265-7348
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	NNN
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		175,910,695

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
ASSETS
Real estate portfolio	$ 7,591,643	$ 7,444,289
Real estate held for sale	562	5,557
Cash and cash equivalents	53,736	171,322
Receivables, net of allowance of $717 and $782, respectively	2,816	3,154
Accrued rental income, net of allowance of $4,351 and $4,587, respectively	30,727	31,942
Debt costs, net of accumulated amortization of $19,946 and $19,377, respectively	6,921	7,443
Other assets	85,408	87,347
Total assets	7,771,813	7,751,054
Liabilities:
Mortgages payable, including unamortized premium and net of unamortized debt costs	10,515	10,697
Notes payable, net of unamortized discount and unamortized debt costs	3,736,781	3,735,769
Accrued interest payable	58,022	23,923
Other liabilities	68,749	79,002
Total liabilities	3,874,067	3,849,391
Stockholders’ equity:
Common stock, $0.01 par value. Authorized 375,000,000 shares; 175,810,465 and 175,635,792 shares issued and outstanding, respectively	1,759	1,757
Capital in excess of par value	4,669,590	4,662,714
Accumulated deficit	(759,232)	(747,853)
Accumulated other comprehensive income (loss)	(14,373)	(14,956)
Total stockholders’ equity of NNN	3,897,744	3,901,662
Noncontrolling interests	2	1
Total equity	3,897,746	3,901,663
Total liabilities and equity	$ 7,771,813	$ 7,751,054

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Receivables allowance	$ 717	$ 782
Accrued rental income allowance	4,351	4,587
Debt costs accumulated amortization	$ 19,946	$ 19,377
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares issued (in shares)	175,810,465	175,635,792
Common stock, shares authorized (in shares)	375,000,000	375,000,000
Common stock, shares outstanding (in shares)	175,810,465	175,635,792

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenues:
Rental income	$ 189,763	$ 179,198
Interest and other income from real estate transactions	516	580
Total revenues	190,279	179,778
Operating expenses:
General and administrative	11,042	11,748
Real estate	7,198	7,725
Depreciation and amortization	52,680	49,980
Leasing transaction costs	88	38
Impairment losses – real estate, net of recoveries	1,632	2,131
Executive retirement costs	3,594	0
Total operating expenses	76,234	71,622
Gain on disposition of real estate	3,992	4,281
Earnings from operations	118,037	112,437
Other expenses (revenues):
Interest and other income	(35)	(65)
Interest expense	36,699	34,587
Loss on early extinguishment of debt	0	21,328
Total other expenses (revenues)	36,664	55,850
Net earnings	81,373	56,587
Earnings attributable to noncontrolling interests	(1)	0
Net earnings attributable to NNN	81,372	56,587
Series F preferred stock dividends	0	(4,485)
Net earnings attributable to common stockholders	$ 81,372	$ 52,102
Net earnings per share of common stock:
Basic (in dollars per share)	$ 0.46	$ 0.30
Diluted (in dollars per share)	$ 0.46	$ 0.30
Weighted average number of common shares outstanding:
Basic (in shares)	174,772,243	174,589,300
Diluted (in shares)	174,911,213	174,714,617
Other comprehensive income:
Net earnings attributable to NNN	$ 81,372	$ 56,587
Amortization of interest rate hedges	583	1,368
Comprehensive income attributable to NNN	81,955	57,955
Comprehensive earnings attributable to noncontrolling interests	1	0
Total comprehensive income	$ 81,956	$ 57,955

XML

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($)	Total	Series F Preferred Stock	Total  Stockholders’ Equity of NNN	Total  Stockholders’ Equity of NNN Series F Preferred Stock	Preferred Stock Series F Preferred Stock	Common Stock	Capital in Excess of Par Value	Accumulated Deficit	Accumulated Deficit Series F Preferred Stock	Accumulated Other Comprehensive Income (Loss)	Noncontrolling Interests
Balances at Dec. 31, 2020	$ 4,319,304,000		$ 4,319,300,000		$ 345,000,000	$ 1,753,000	$ 4,633,771,000	$ (644,779,000)		$ (16,445,000)	$ 4,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	56,587,000		56,587,000					56,587,000
Dividends declared and paid:
Preferred stock dividends declared and paid		$ (4,485,000)		$ (4,485,000)					$ (4,485,000)
Common stock dividends declared and paid	(90,270,000)		(90,270,000)				578,000	(90,848,000)
Issuance of common stock:
Director compensation	267,000		267,000				267,000
Stock purchase plan	70,000		70,000				70,000
ATM equity program	1,234,000		1,234,000			1,000	1,233,000
Restricted shares, net of forfeitures						3,000	(3,000)
Stock issuance costs	(156,000)		(156,000)				(156,000)
Amortization of deferred compensation	3,920,000		3,920,000				3,920,000
Amortization of interest rate hedges	1,368,000		1,368,000							1,368,000
Balances at Mar. 31, 2021	4,287,839,000		4,287,835,000		$ 345,000,000	1,757,000	4,639,680,000	(683,525,000)		(15,077,000)	4,000
Balances at Dec. 31, 2021	3,901,663,000		3,901,662,000			1,757,000	4,662,714,000	(747,853,000)		(14,956,000)	1,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net earnings	81,373,000		81,372,000					81,372,000			1,000
Dividends declared and paid:
Common stock dividends declared and paid	(92,055,000)		(92,055,000)				696,000	(92,751,000)
Issuance of common stock:
Director compensation	305,000		305,000				305,000
Stock purchase plan	52,000		52,000				52,000
Restricted shares, net of forfeitures						2,000	(2,000)
Stock issuance costs	(65,000)		(65,000)				(65,000)
Amortization of deferred compensation	5,890,000		5,890,000				5,890,000
Amortization of interest rate hedges	583,000		583,000							583,000
Balances at Mar. 31, 2022	$ 3,897,746,000		$ 3,897,744,000			$ 1,759,000	$ 4,669,590,000	$ (759,232,000)		$ (14,373,000)	$ 2,000

XML

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Common stock dividends declared and paid (in dollars per share)	$ 0.5300	$ 0.5200
Issuance of common stock - Director compensation (in shares)	8,429	8,324
Issuance of common stock - Stock purchase plan (in shares)	1,173	1,715
Issuance of common stock - ATM equity program (in shares)		30,000
Issuance of common stock - restricted shares, net (in shares)	153,300	287,957
Series F Preferred Stock
Preferred stock dividends declared and paid (in dollars per share)		$ 0.3250

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($)		Mar. 31, 2021 USD ($)
Cash flows from operating activities:
Net earnings	$ 81,373		$ 56,587
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	52,680		49,980
Impairment losses – real estate, net of recoveries	1,632		2,131
Loss on early extinguishment of debt	0		21,328
Amortization of notes payable discount	415		993
Amortization of debt costs	1,171		1,840
Amortization of mortgages payable premium	(21)		(21)
Amortization of interest rate hedges	583		1,368
Gain on disposition of real estate	(3,992)		(4,281)
Performance incentive plan expense	6,246		4,318
Performance incentive plan payment	(103)		(721)
Change in operating assets and liabilities, net of assets acquired and liabilities assumed:
Decrease (increase) in receivables	338		(273)
Decrease in accrued rental income	1,096		8,332
Decrease (increase) in other assets	(115)		1,067
Increase in accrued interest payable	34,099		25,267
Decrease in other liabilities	(11,043)		(6,438)
Other	(21)		(307)
Net cash provided by operating activities	164,338		161,170
Cash flows from investing activities:
Proceeds from the disposition of real estate	20,315		18,067
Additions to real estate accounted for using the operating method	(209,483)		(106,490)
Principal payments received on mortgages and notes receivable	102		93
Other	(577)		(182)
Net cash used in investing activities	(189,643)		(88,512)
Cash flows from financing activities:
Repayment of mortgages payable	(165)		(156)
Proceeds from Notes Payable	0		441,594
Repayments of Notes Payable	0		350,000
Payment for early extinguishment of debt	0		(21,328)
Payment of debt issuance costs	(48)		(5,145)
Proceeds from issuance of common stock	748		1,882
Stock issuance costs	(65)		(177)
Payment of common stock dividends	(92,751)		(90,848)
Net cash used in financing activities	(92,281)		(28,663)
Net increase (decrease) in cash, cash equivalents and restricted cash	(117,586)		43,995
Cash, cash equivalents and restricted cash at beginning of period	171,322	[1]	267,236	[1]
Cash, cash equivalents and restricted cash at end of period	53,736	[1]	311,231	[1]
Supplemental disclosure of cash flow information:
Interest paid, net of amount capitalized	550		5,203
Supplemental disclosure of noncash investing and financing activities:
Change in other comprehensive income	583		1,368
Work in progress accrual balance	8,914		4,739
Restricted cash and cash held in escrow	0		0
Series F Preferred Stock
Cash flows from financing activities:
Payment of Series F preferred stock dividends	$ 0		$ (4,485)

[1] Cash, cash equivalents and restricted cash is the aggregate of cash and cash equivalents and restricted cash and cash held in escrow from the Condensed Consolidated Balance Sheets. NNN had no restricted cash and cash held in escrow at March 31, 2022 and 2021.

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Organization and Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Summary of Significant Accounting Policies

Note 1 – Organization and Summary of Significant Accounting Policies:

Organization and Nature of Business – National Retail Properties, Inc., a Maryland corporation, is a fully integrated real estate investment trust (“REIT”) formed in 1984. The terms "NNN" or the "Company" refer to National Retail Properties, Inc. and all of its consolidated subsidiaries.

NNN's assets primarily include real estate assets. NNN acquires, owns, invests in and develops properties that are leased primarily to retail tenants under long-term net leases and primarily held for investment ("Properties", "Property Portfolio", or individually a "Property").

	March 31, 2022
Property Portfolio:
Total properties		3,271
Gross leasable area (square feet)		33,545,000
States		48
Weighted average remaining lease term (years)		10.6

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles. The unaudited condensed consolidated financial statements reflect all adjustments (including normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. Operating results for the quarter ended March 31, 2022, may not be indicative of the results that may be expected for the year ending December 31, 2022. See "Note 8 – Subsequent Events." Amounts as of December 31, 2021, included in the condensed consolidated financial statements have been derived from the audited consolidated financial statements as of that date. The unaudited condensed consolidated financial statements, included herein, should be read in conjunction with the consolidated financial statements and notes thereto as well as Management's Discussion and Analysis of Financial Condition and Results of Operations in NNN's Form 10-K for the year ended December 31, 2021.

COVID-19 Pandemic – During 2021 and 2020, NNN and its tenants were impacted by the novel strain of coronavirus and its variants ("COVID-19") pandemic which resulted in the loss of revenue for certain tenants and challenged their ability to pay rent. As a result, NNN entered into rent deferral lease amendments with certain tenants (See Note 2).

Principles of Consolidation – NNN’s condensed consolidated financial statements include the accounts of each of the respective majority owned and controlled affiliates, including transactions whereby NNN has been determined to be the primary beneficiary in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codifications ("ASC") guidance included in Consolidation. All significant intercompany account balances and transactions have been eliminated.

Real Estate Portfolio – NNN records the acquisition of real estate at cost, including acquisition and closing costs. The cost of Properties developed or funded by NNN includes direct and indirect costs of construction, property taxes, interest and other miscellaneous costs incurred during the development period until the project is substantially complete and available for occupancy. NNN recorded $98,000 and $63,000 in capitalized interest during the development period for the quarters ended March 31, 2022 and 2021, respectively.

Purchase Accounting for Acquisition of Real Estate Subject to a Lease – In accordance with the FASB guidance on business combinations, consideration for the real estate acquired is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and, if applicable, to identified intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases, as applicable, based on their respective fair values.

The fair value estimate is sensitive to significant assumptions, such as establishing a range of relevant market assumptions for land, building and rent and where the acquired property falls within that range. These market assumptions for land, building and rent use the most relevant comparable properties for an acquisition. The final range relies upon ranking comparable properties' attributes from most to least similar.

The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, and the "as-if-vacant" value is then allocated to land, building and tenant improvements based on the determination of their fair values.

In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases, and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease and the renewal option terms if it is probable that the tenant will exercise options. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term unless the Company believes that it is likely that the tenant will renew the lease for an option term whereby the Company amortizes the value attributable to the renewal over the renewal period.

The aggregate value of other acquired intangible assets, consisting of in-place leases, is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as-if-vacant, determined as set forth above. The value of in-place leases exclusive of the value of above-market and below-market in-place leases is amortized to expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off in that period. The value of tenant relationships is reviewed on individual transactions to determine if future value was derived from the acquisition.

Lease Accounting – NNN records its leases on the Property Portfolio in accordance with FASB Accounting Standards Update ("ASU") 2016-02, "Leases (Topic 842)," ("ASC 842"). In addition, NNN recorded right-of-use assets and operating lease liabilities as lessee under operating leases in accordance with ASC 842.

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. The leases on the Property Portfolio are predominantly classified as operating leases and are accounted for as follows:

Operating method – Properties with leases accounted for using the operating method are recorded at the cost of the real estate and depreciated on the straight-line method over their estimated remaining useful lives, which generally range from 20 to 40 years for buildings and improvements and 15 years for land improvements. Leasehold interests are amortized on the straight-line method over the terms of their respective leases. Revenue is recognized as rentals are earned and expenses (including depreciation) are charged to operations as incurred. When scheduled rentals vary during the lease term, income is recognized on a straight-line basis so as to produce a constant periodic rent over the term of the lease. 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. In this guidance, entities can elect not to apply lease modification accounting with respect to such lease concessions and instead, treat the concession as if it was a part of the existing contract. This guidance is only applicable to COVID-19 related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. NNN elected to make this policy election for COVID-19 lease concessions, including the rent deferral lease amendments effective during the years ended December 31, 2021 and 2020.

During 2021 and 2020, NNN entered into rent deferral lease amendments with certain tenants, for an aggregate $4,758,000 and $52,019,000 of rent originally due for the years ending December 31, 2021 and 2020, respectively. The rent deferral lease amendments require the deferred rents to be repaid at a later time during the lease term. Approximately $31,776,000 of deferred rent was repaid in 2021 and approximately $4,063,000 of deferred rent was repaid during the quarter ended March 31, 2022. An additional $10,463,000 is due in 2022, with substantially all remaining deferred rent coming due periodically by December 31, 2023.

Collectability – In accordance with ASC 842, NNN reviews the collectability of its rental income on an ongoing basis. NNN considers collectability indicators when analyzing accounts receivable (and accrued rent) and historical bad debt levels, tenant credit-worthiness and current economic trends, all of which assists in evaluating the probability of outstanding and future rental income collections. In addition, tenants in bankruptcy are analyzed and considerations are made in connection with the expected recovery of pre-petition and post-petition bankruptcy claims.

At the point NNN deems the collection of rental income not probable, uncollected previously recognized rental revenue and any related accrued rent are reversed and, subsequently, any rental income is only recognized when cash receipts are received.

NNN includes an allowance for doubtful accounts in rental income on the Consolidated Statements of Income and Comprehensive Income.

As a result of the review of rental income collectability, no outstanding receivables and related accrued rent were written off during the quarters ended March 31, 2022 and 2021, and no tenants were reclassified as cash basis for accounting purposes.

The following table summarizes those tenants classified as cash basis for accounting purposes as of:

	March 31,
	2022			2021
Number of tenants		9			12
Cash basis tenants as a percent of:
Total properties		5.4	%		6.1	%
Total gross leasable area		7.0	%		7.7	%

During the quarters ended March 31, 2022 and 2021, NNN recognized $15,786,000 and $11,314,000, respectively, of rental income from certain tenants previously classified as cash basis for accounting.

During the quarter ended March 31, 2022, two tenants were reclassified to accrual basis for accounting purposes due to their improved qualitative and/or quantitative credit factors. The impact of the reclassification was immaterial.

Impairment – Real Estate – NNN periodically assesses its long-lived real estate assets for possible impairment whenever certain events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. These indicators include, but are not limited to: changes in real estate market conditions, the ability of NNN to re-lease properties that are currently vacant or become vacant, properties reclassified as held for sale, persistent vacancies greater than one year, and properties leased to tenants in bankruptcy. Management evaluates whether an impairment in carrying value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), and the residual value of the real estate, with the carrying value of the individual asset. The future undiscounted cash flows are primarily driven by estimated future market rents. Future cash flow estimates are sensitive to the assumptions made by management regarding future market rents, which are affected by expectations about future market and economic conditions. If an impairment is indicated, a loss will be recorded for the amount by which the carrying value of the asset exceeds its estimated fair value. NNN's Properties are leased primarily to retail tenants under long-term net leases and primarily held for investment. Generally, NNN’s Property leases provide for initial terms of 10 to 20 years, with cash flows provided over the entire term. NNN generally intends to hold these assets for the long-term, therefore, a temporary change in cash flows due to COVID-19 alone was determined not to be an indicator of impairment.

Credit Losses on Financial Instruments – FASB ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326),” (“ASC 326”) requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings. The guidance requires a lifetime credit loss expected at inception and requires pooling of assets, which share similar risk characteristics. NNN is required to evaluate current economic conditions, as well as, make future expectations of economic conditions. In addition, the measurement of the expected credit loss is over the asset’s contractual term.

NNN had mortgages receivable of $1,927,000 and $2,023,000 included in other assets on the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, respectively, net of $123,000 and $129,000 allowance for credit loss, respectively. NNN measures the allowance for credit loss based on the fair value of the collateral and the historical collectability trend analysis over 15 years.

Debt Costs – Line of Credit Payable – Debt costs incurred in connection with NNN's $1,100,000,000 unsecured revolving line of credit have been deferred and are being amortized to interest expense over the term of the loan commitment using the straight-line method, which approximates the effective interest method. NNN has recorded debt costs associated with the credit facility as an asset, in debt costs on the Condensed Consolidated Balance Sheets.

Debt Costs – Notes Payable – Debt costs incurred in connection with the issuance of NNN’s notes payable have been deferred and are being amortized to interest expense over the term of the respective debt obligation using the effective interest method. These costs of $38,145,000, as of March 31, 2022 and December 31, 2021, are included in notes payable on the Condensed Consolidated Balance Sheets net of accumulated amortization of $9,859,000 and $9,262,000, respectively.

Revenue Recognition – Rental revenues for properties under construction commence upon completion of construction of the leased asset and delivery of the leased asset to the tenant. Rental revenues for non-development real estate assets are recognized when earned in accordance with ASC 842, based on the terms of the lease of the leased asset. Lease termination fees are recognized when collected subsequent to the related lease that is cancelled and NNN no longer has continuing involvement with the former tenant with respect to that property.

The core principle of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09"), is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Certain contracts are excluded from ASU 2014-09, including lease contracts within the scope of ASC 842. NNN determined the key revenue stream impacted by ASU 2014-09 is gain on disposition of real estate reported on the Condensed Consolidated Statements of Income and Comprehensive Income. In accordance with ASU 2014-09, NNN evaluates any separate contracts or performance obligations to determine proper timing and/or amount of revenue recognition, as well as, transaction price allocation.

Earnings Per Share – Earnings per share have been computed pursuant to the FASB guidance included in Earnings Per Share. The guidance requires classification of the Company’s unvested restricted share units, which carry rights to receive nonforfeitable dividends, as participating securities requiring the two-class method of computing earnings per share. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average shares outstanding during the period.

The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted earnings per common share using the two-class method (dollars in thousands):

	Quarter Ended March 31,
	2022			2021
Basic and Diluted Earnings:
Net earnings attributable to NNN	$	81,372		$	56,587
Less: Series F preferred stock dividends		—			(4,485	)
Net earnings available to NNN’s common stockholders		81,372			52,102
Less: Earnings allocated to unvested restricted shares		(156	)		(151	)
Net earnings used in basic and diluted earnings per share	$	81,216		$	51,951
Basic and Diluted Weighted Average Shares Outstanding:
Weighted average number of shares outstanding		175,635,634			175,391,723
Less: Unvested restricted shares		(294,665	)		(288,658	)
Less: Unvested contingent restricted shares		(568,726	)		(513,765	)
Weighted average number of shares outstanding used in basic earnings per share		174,772,243			174,589,300
Other dilutive securities		138,970			125,317
Weighted average number of shares outstanding used in diluted earnings per share		174,911,213			174,714,617

Income Taxes – NNN has made an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, and related regulations. NNN generally will not be subject to federal income tax on income it distributed to stockholders, providing it distributes 100 percent of its REIT taxable income and meets certain other requirements for qualifying as a REIT. For the quarters ended March 31, 2022 and 2021, NNN believes it has qualified as a REIT. Notwithstanding NNN’s qualification for taxation as a REIT, NNN is subject to certain state and local income, franchise and excise taxes.

Fair Value Measurement – NNN’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The guidance describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:

•Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities.

•Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques.

Accumulated Other Comprehensive Income (Loss) – The following table outlines the changes in accumulated other comprehensive income (loss) for the quarter ended March 31, 2022 (dollars in thousands):

	Gain (Loss) on Cash Flow Hedges(1)
Beginning balance, December 31, 2021	$	(14,956	)
Reclassifications from accumulated other comprehensive income to net earnings		583		(2)
Ending balance, March 31, 2022	$	(14,373	)

(1)	Additional disclosure is included in Note 6 – Derivatives.
(2)	Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income.

New Accounting Pronouncements – ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”) contains practical expedients for reference rate reform-related activities, including the transition away from the London Interbank Offered Rate ("LIBOR"), that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. In 2021, NNN elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. NNN continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

NNN had no derivative financial instruments outstanding as of March 31, 2022.

Use of Estimates – Additional critical accounting policies of NNN include management’s estimates and assumptions relating to the reporting of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities and are required to prepare the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Significant accounting policies include management’s estimates of the useful lives used in calculating depreciation expense relating to real estate asset purchase accounting for acquisition of real estate subject to a lease, the recoverability of the carrying value of long-lived assets and management's evaluation of the probability of outstanding and future lease payment collections. Actual results could differ from those estimates.

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Real Estate

3 Months Ended

Mar. 31, 2022

Real Estate [Abstract]

Real Estate

Note 2 – Real Estate:

Real Estate – Portfolio

Leases – At March 31, 2022, NNN’s real estate portfolio had a weighted average remaining lease term of 10.6 years and consisted of 3,285 leases classified as operating leases and an additional five leases accounted for as direct financing leases.

The following is a summary of the general structure of the leases in the Property Portfolio, although the specific terms of each lease can vary significantly. Generally, the Property leases provide for initial terms of 10 to 20 years. The Properties are generally leased under net leases, pursuant to which the tenant typically bears responsibility for substantially all property costs and expenses associated with ongoing maintenance, repair, replacement and operation of the property, including utilities, property taxes and property and liability insurance. Certain Properties are subject to leases under which NNN retains responsibility for specific costs and expenses of the Property. NNN's leases provide for annual base rental payments (generally payable in monthly installments), and generally provide for limited increases in rent as a result of (i) increases in the Consumer Price Index, (ii) fixed increases, or, to a lesser extent, (iii) increases in the tenant’s sales volume.

Generally, NNN's leases provide the tenant with one or more multi-year renewal options, subject to generally the same terms and conditions provided under the initial lease term, including rent increases. NNN’s lease term is based on the non-cancellable base term unless economic incentives make it reasonably certain that an option period to extend the lease will be exercised, in which event NNN includes the renewal options. Some of the leases also provide that in the event NNN wishes to sell the Property subject to that lease, NNN first must offer the lessee the right to purchase the Property on the same terms and conditions as any offer which NNN intends to accept for the sale of the Property.

Real Estate Portfolio – NNN's real estate consisted of the following at (dollars in thousands):

	March 31, 2022			December 31, 2021
Land and improvements(1)	$	2,556,405		$	2,527,483
Buildings and improvements		6,536,540			6,375,583
Leasehold interests		355			355
		9,093,300			8,903,421
Less accumulated depreciation and amortization		(1,517,047	)		(1,470,062	)
		7,576,253			7,433,359
Work in progress for buildings and improvements		11,811			7,277
Accounted for using the operating method		7,588,064			7,440,636
Accounted for using the direct financing method		3,579			3,653
	$	7,591,643		$	7,444,289

(1) Includes $8,070 and $8,979 in land for Properties under construction at March 31, 2022 and December 31, 2021, respectively.

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

	Quarter Ended March 31,
	2022		2021
Rental income from operating leases	$	184,311	$	173,583
Earned income from direct financing leases		151		158
Percentage rent		701		104
Real estate expense reimbursement from tenants		4,600		5,353
	$	189,763	$	179,198

Some leases provide for a free rent period or scheduled rent increases throughout the lease term. Such amounts are recognized on a straight-line basis over the terms of the leases.

For the quarters ended March 31, 2022 and 2021, NNN recognized ($1,206,000) and ($8,445,000), respectively, of accrued rental income, net of reserves. Included in accrued rental income are the impacts of the rent deferral lease amendments NNN entered into as a result of the COVID-19 pandemic. During the quarters ended March 31, 2022 and 2021, NNN recorded ($1,780,000) and ($9,381,000), respectively, of net straight-line accrued rental income related to such amendments.

At March 31, 2022 and December 31, 2021, the balance of accrued rental income was $30,727,000 and $31,942,000, respectively, net of allowance of $4,351,000 and $4,587,000, respectively.

Real Estate – Intangibles

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):

	March 31, 2022			December 31, 2021
Intangible lease assets (included in other assets):
Above-market in-place leases	$	15,335		$	15,335
Less: accumulated amortization		(10,993	)		(10,821	)
Above-market in-place leases, net	$	4,342		$	4,514
In-place leases	$	121,431		$	122,069
Less: accumulated amortization		(74,480	)		(73,345	)
In-place leases, net	$	46,951		$	48,724
Intangible lease liabilities (included in other liabilities):
Below-market in-place leases	$	41,160		$	41,705
Less: accumulated amortization		(27,214	)		(27,447	)
Below-market in-place leases, net	$	13,946		$	14,258

The amounts amortized as a net increase to rental income for above-market and below-market in-place leases for the quarters ended March 31, 2022 and 2021, were $140,000 and $162,000, respectively. The value of in-place leases amortized to expense for the quarters ended March 31, 2022 and 2021, was $1,773,000 and $1,800,000, respectively.

Real Estate – Held For Sale

On a quarterly basis, the Company evaluates its Properties for held for sale classification based on specific criteria as outlined in ASC 360, Property, Plant and Equipment, including management’s intent to commit to a plan to sell the asset. NNN anticipates the disposition of Properties classified as held for sale to occur within 12 months. Real estate held for sale consisted of the following as of (dollars in thousands):

	March 31, 2022			December 31, 2021(1)
Land and improvements	$	546		$	6,440
Building and improvements		1,192			4,313
		1,738			10,753
Less accumulated depreciation and amortization		(714	)		(1,331	)
Less impairment		(462	)		(3,865	)
	$	562		$	5,557
Number of Properties		2			2

(1) Both properties classified as held for sale as of December 31, 2021 were sold during the quarter ended March 31, 2022.

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 March 31,
	2022			2021
	# of Sold Properties	Net Gain		# of Sold Properties	Net Gain
Gain on disposition of real estate	10	$	3,992	11	$	4,281

Real Estate – Commitments

NNN has committed to fund construction on 13 Properties. The improvements on such Properties are estimated to be completed within 12 months. These construction commitments, as of March 31, 2022, are outlined in the table below (dollars in thousands):

Total commitment(1)	$	38,889
Less amount funded		19,881
Remaining commitment	$	19,008

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

Real Estate – Impairments

NNN periodically assesses its long-lived real estate assets for possible impairment whenever certain events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. These indicators include, but are not limited to: changes in real estate market conditions, the ability of NNN to re-lease properties that are currently vacant or become vacant, properties reclassified as held for sale, persistent vacancies greater than one year, and properties leased to tenants in bankruptcy. Management evaluates whether an impairment in carrying value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), and the residual value of the real estate, with the carrying value of the individual asset. The future undiscounted cash flows are primarily driven by estimated future market rents. Future cash flow estimates are sensitive to the assumptions made by management regarding future market rents, which are affected by expectations about future market and economic conditions. If an impairment is indicated, a loss will be recorded for the amount by which the carrying value of the asset exceeds its estimated fair value. NNN's Properties are leased primarily to retail tenants under long-term net leases and primarily held for investment. Generally, NNN’s Property leases provide for initial terms of 10 to 20 years, with cash flows provided over the entire term. NNN generally intends to hold these assets for the long-term, therefore, a temporary change in cash flows due to the COVID-19 pandemic alone was determined not to be an indicator of impairment.

As a result of NNN's review of long-lived assets, including identifiable intangible assets, NNN recognized real estate impairments, net of recoveries as summarized in the table below (dollars in thousands):

	Quarter Ended March 31,
	2022		2021
Total real estate impairments, net of recoveries	$	1,632	$	2,131
Number of Properties:
Vacant		3		6
Occupied		2		1

The valuation of impaired assets is determined using widely accepted valuation techniques including discounted cash flow analysis, income capitalization, analysis of recent comparable sales transactions, actual sales negotiations and bona fide purchase offers received from third parties, which are Level 3 inputs. NNN may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate.

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Line of Credit Payable

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Line of Credit Payable

Note 3 – Line of Credit Payable:

In June 2021, NNN amended and restated its credit agreement to increase the borrowing capacity under its unsecured revolving credit facility from $900,000,000 to $1,100,000,000 and amended certain other terms under the former revolving credit facility (as the context requires, the previous and new revolving credit facility, the "Credit Facility"). The Credit Facility had no weighted average outstanding balance during the quarter ended March 31, 2022. The Credit Facility matures in June 2025, unless the Company exercises its options to extend maturity to June 2026. The Credit Facility bears interest at LIBOR plus 77.5 basis points; however, such interest rate may change pursuant to a tiered interest rate structure based on NNN's debt rating. Additionally, as part of NNN's environmental, social and governance ("ESG") initiative, pricing may be reduced if specified ESG metrics are achieved. 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 Condensed Consolidated Balance Sheets. As of March 31, 2022, there was no outstanding balance and $1,100,000,000 was available for future borrowings under the Credit Facility, and NNN was in compliance with each of the financial covenants.

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Notes Payable

3 Months Ended

Mar. 31, 2022

Notes Payable [Abstract]

Notes Payable

Note 4 – Notes Payable:

In 2021, NNN filed prospectus supplements to the prospectus contained in its August 2020 shelf registration statement and issued $450,000,000 aggregate principal amount of 3.500% notes due April 2051 (the “2051 Notes”) and $450,000,000 aggregate principal amount of 3.000% notes due April 2052 (the "2052 Notes" and, together with the 2051 Notes, the "Notes"). Each note issuance is summarized in the table below (dollar in thousands):

Notes	Issue Date	Principal		Discount (1)		Net Price		Stated Rate			Effective Rate (2)			Maturity Date
2051 Notes	March 2021	$	450,000	$	8,406	$	441,594		3.500	%		3.602	%	April 2051
2052 Notes (3)	September 2021		450,000		10,422		439,578		3.000	%		3.118	%	April 2052

(1)	The note discounts are amortized to interest expense over the respective term of each debt obligation using the effective interest method.
(2)	Includes the effects of the discount at issuance.
(3)	NNN entered into forward swaps which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt. Upon the issuance of the 2052 Notes, NNN terminated such derivatives, and the resulting fair value was deferred in accumulated other comprehensive income (loss) and is being amortized over the term of the respective notes using the effective interest method. Additional disclosure is included in Note 6 – Derivatives.

Each series of Notes is a senior unsecured obligation of NNN and is subordinated to all secured debt of NNN and to the debt and other liabilities of NNN's subsidiaries. Each series of Notes is redeemable at NNN's option, at any time, in whole or in part, at a redemption price equal to (i) the sum of the outstanding principal amount of the notes being redeemed plus accrued interest thereon, up to but not including the redemption date, and (ii) the make-whole amount, if any, as defined in the applicable supplemental indenture related to the notes.

In connection with the Notes, NNN incurred debt issuance costs totaling $10,144,000 consisting primarily of underwriting discounts and commissions, legal and accounting fees, rating agency fees and printing expenses. Debt issuance costs for all note issuances have been deferred and presented as a reduction to notes payable and are being amortized over the term of the respective notes using the effective interest method.

In March 2021, NNN redeemed the $350,000,000 3.300% notes payable that were due in April 2023. The notes were redeemed at a price equal to 100% of the principal amount, plus (i) a make-whole amount of $21,328,000 which is included in loss on early extinguishment of debt on the Condensed Consolidated Statement of Income and Comprehensive Income, and (ii) accrued and unpaid interest.

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Stockholders' Equity

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Stockholders' Equity

Note 5 – Stockholders' Equity:

Universal Shelf Registration Statement – In August 2020, NNN filed a shelf registration statement with the Securities and Exchange Commission (the "Commission") which was automatically effective and permits the issuance by NNN of an indeterminate amount of debt and equity securities.

Preferred Stock – In October 2021, NNN redeemed all outstanding depositary shares (13,800,000) representing interests in its 5.200% Series F preferred stock. The Series F preferred stock was redeemed at $25.00 per depositary share, plus all accrued and unpaid dividends through, but not including, the redemption date, for an aggregate redemption price of $25.111944 per depositary share. The excess carrying amount of the Series F preferred stock redeemed over the cash paid to redeem the Series F preferred stock was $10,897,000, representing issuance costs which is reflected as a reduction to earnings attributable to common stockholders.

At-The-Market Offerings – Under NNN's shelf registration statement, NNN has established an at-the-market equity program ("ATM") which allows NNN to sell shares of common stock from time to time. The following outlines NNN's ATM program:

	2020 ATM
Established date	August 2020
Termination date	August 2023
Total allowable shares		17,500,000
Total shares issued as of March 31, 2022		1,599,304

The following table outlines the common stock issuances pursuant to NNN's ATM equity program for the quarter ended March 31, 2021 (dollars in thousands, except per share data):

Shares of common stock		30,000
Average price per share (net)	$	38.59
Net proceeds	$	1,158
Stock issuance costs(1)	$	75

(1) Stock issuance costs consist primarily of underwriters' fees and commissions, and legal and accounting fees.

There were no common stock issuances pursuant to NNN's ATM equity program for the quarter ended March 31, 2022.

Dividend Reinvestment and Stock Purchase Plan – In February 2021, NNN filed a shelf registration statement that was automatically effective with the Commission for its Dividend Reinvestment and Stock Purchase Plan ("DRIP"), which permits NNN to issue up to 6,000,000 shares of common stock. The following table outlines the common stock issuances pursuant to NNN's DRIP (dollars in thousands):

	Quarter Ended March 31,
	2022		2021
Shares of common stock		17,571		15,769
Net proceeds	$	748	$	569

Dividends – The following table outlines the dividends declared and paid for each issuance of NNN's stock (dollars in thousands, except per share data):

	Quarter Ended March 31,
	2022		2021
Series F preferred stock(1):
Dividends	$	—	$	4,485
Per depositary share		—		0.3250
Common stock:
Dividends		92,751		90,848
Per share		0.5300		0.5200

(1) The Series F preferred stock was redeemed in October 2021.

In April 2022, NNN declared a dividend of $0.5300 per share, which is payable in May 2022 to its common stockholders of record as of April 29, 2022.

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Derivatives

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives

Note 6 – Derivatives:

In accordance with the guidance on derivatives and hedging, NNN records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or a firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges.

NNN’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, NNN primarily uses treasury locks, forward starting swaps and interest rate swaps as part of its cash flow hedging strategy. Treasury locks and forward starting swaps are used to hedge forecasted debt issuances. Treasury locks designated as cash flow hedges lock in the yield/price of a treasury security. Forward starting swaps also lock the associated swap spread. Interest rate swaps designated as cash flow hedges are used to hedge the variable cash flows associated with floating rate debt and involve the receipt or payment of variable rate amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amount.

For derivatives designated as cash flow hedges, the change in the fair value of the derivative is initially reported in other comprehensive income (loss) (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings.

NNN discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the cash flows of the hedged item, the derivative expires or is sold, terminated or exercised, the derivative is re-designated as a hedging instrument or management determines that designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, NNN recognizes any changes in its fair value in earnings and continues to carry the derivative on the balance sheet or may choose to settle the derivative at that time with a cash payment or receipt. NNN records a cash settlement of forward starting swaps in the Condensed Consolidated Statements of Cash Flows as an operating activity.

The following table outlines NNN's terminated derivatives which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt (dollars in thousands):

Notes Payable	Terminated	Description	Aggregate Notional Amount		Liability (Asset) Fair Value When Terminated			Fair Value Deferred In Other Comprehensive Income (1)
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 amount reported in accumulated other comprehensive income (loss) will be reclassified to interest expense as interest payments are made on the related notes payable.

As of March 31, 2022, $14,373,000 remained in other comprehensive income (loss) related to NNN’s previously terminated interest rate hedges. During the quarters ended March 31, 2022 and 2021, NNN reclassified out of other comprehensive income (loss) $583,000 and $1,368,000, respectively, as an increase in interest expense. Over the next 12 months, NNN estimates that an additional $2,398,000 will be reclassified as an increase in interest expense from these terminated derivatives. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on NNN’s long-term debt.

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 March 31, 2022.

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Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2022

Financial Instruments, Owned, at Fair Value [Abstract]

Fair Value of Financial Instruments

Note 7 – Fair Value of Financial Instruments:

NNN believes the carrying value of its Credit Facility approximates fair value based upon its nature, terms and variable interest rate. NNN believes that the carrying value of its mortgages payable at March 31, 2022 and December 31, 2021, approximate fair value based upon current market prices of comparable instruments (Level 3). At March 31, 2022 and December 31, 2021, the fair value of NNN’s notes payable excluding unamortized discount and debt costs was $3,624,822,000 and $4,032,757,000, respectively, based upon quoted market prices as of the close of the period, which is a Level 1 valuation since NNN's notes payable are publicly traded.

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Subsequent Events

3 Months Ended

Mar. 31, 2022

Subsequent Events [Abstract]

Subsequent Events

Note 8 – Subsequent Events:

NNN reviewed its subsequent events and transactions that have occurred after March 31, 2022, the date of the interim condensed consolidated balance sheet.

There were no reportable subsequent events or transactions.

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Organization and Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation – NNN’s condensed consolidated financial statements include the accounts of each of the respective majority owned and controlled affiliates, including transactions whereby NNN has been determined to be the primary beneficiary in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codifications ("ASC") guidance included in Consolidation. All significant intercompany account balances and transactions have been eliminated.

Real Estate Portfolio and Impairment

Real Estate Portfolio – NNN records the acquisition of real estate at cost, including acquisition and closing costs. The cost of Properties developed or funded by NNN includes direct and indirect costs of construction, property taxes, interest and other miscellaneous costs incurred during the development period until the project is substantially complete and available for occupancy. NNN recorded $98,000 and $63,000 in capitalized interest during the development period for the quarters ended March 31, 2022 and 2021, respectively.

Purchase Accounting for Acquisition of Real Estate Subject to a Lease – In accordance with the FASB guidance on business combinations, consideration for the real estate acquired is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and, if applicable, to identified intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases, as applicable, based on their respective fair values.

The fair value estimate is sensitive to significant assumptions, such as establishing a range of relevant market assumptions for land, building and rent and where the acquired property falls within that range. These market assumptions for land, building and rent use the most relevant comparable properties for an acquisition. The final range relies upon ranking comparable properties' attributes from most to least similar.

The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, and the "as-if-vacant" value is then allocated to land, building and tenant improvements based on the determination of their fair values.

In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases, and (ii) management’s estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease and the renewal option terms if it is probable that the tenant will exercise options. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term unless the Company believes that it is likely that the tenant will renew the lease for an option term whereby the Company amortizes the value attributable to the renewal over the renewal period.

The aggregate value of other acquired intangible assets, consisting of in-place leases, is measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as-if-vacant, determined as set forth above. The value of in-place leases exclusive of the value of above-market and below-market in-place leases is amortized to expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off in that period. The value of tenant relationships is reviewed on individual transactions to determine if future value was derived from the acquisition.

Impairment – Real Estate – NNN periodically assesses its long-lived real estate assets for possible impairment whenever certain events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. These indicators include, but are not limited to: changes in real estate market conditions, the ability of NNN to re-lease properties that are currently vacant or become vacant, properties reclassified as held for sale, persistent vacancies greater than one year, and properties leased to tenants in bankruptcy. Management evaluates whether an impairment in carrying value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), and the residual value of the real estate, with the carrying value of the individual asset. The future undiscounted cash flows are primarily driven by estimated future market rents. Future cash flow estimates are sensitive to the assumptions made by management regarding future market rents, which are affected by expectations about future market and economic conditions. If an impairment is indicated, a loss will be recorded for the amount by which the carrying value of the asset exceeds its estimated fair value. NNN's Properties are leased primarily to retail tenants under long-term net leases and primarily held for investment. Generally, NNN’s Property leases provide for initial terms of 10 to 20 years, with cash flows provided over the entire term. NNN generally intends to hold these assets for the long-term, therefore, a temporary change in cash flows due to COVID-19 alone was determined not to be an indicator of impairment.

Lease Accounting, Lessee

Lease Accounting – NNN records its leases on the Property Portfolio in accordance with FASB Accounting Standards Update ("ASU") 2016-02, "Leases (Topic 842)," ("ASC 842"). In addition, NNN recorded right-of-use assets and operating lease liabilities as lessee under operating leases in accordance with ASC 842.

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. The leases on the Property Portfolio are predominantly classified as operating leases and are accounted for as follows:

Operating method – Properties with leases accounted for using the operating method are recorded at the cost of the real estate and depreciated on the straight-line method over their estimated remaining useful lives, which generally range from 20 to 40 years for buildings and improvements and 15 years for land improvements. Leasehold interests are amortized on the straight-line method over the terms of their respective leases. Revenue is recognized as rentals are earned and expenses (including depreciation) are charged to operations as incurred. When scheduled rentals vary during the lease term, income is recognized on a straight-line basis so as to produce a constant periodic rent over the term of the lease. 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. In this guidance, entities can elect not to apply lease modification accounting with respect to such lease concessions and instead, treat the concession as if it was a part of the existing contract. This guidance is only applicable to COVID-19 related lease concessions that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee. NNN elected to make this policy election for COVID-19 lease concessions, including the rent deferral lease amendments effective during the years ended December 31, 2021 and 2020.

During 2021 and 2020, NNN entered into rent deferral lease amendments with certain tenants, for an aggregate $4,758,000 and $52,019,000 of rent originally due for the years ending December 31, 2021 and 2020, respectively. The rent deferral lease amendments require the deferred rents to be repaid at a later time during the lease term. Approximately $31,776,000 of deferred rent was repaid in 2021 and approximately $4,063,000 of deferred rent was repaid during the quarter ended March 31, 2022. An additional $10,463,000 is due in 2022, with substantially all remaining deferred rent coming due periodically by December 31, 2023.

Collectability – In accordance with ASC 842, NNN reviews the collectability of its rental income on an ongoing basis. NNN considers collectability indicators when analyzing accounts receivable (and accrued rent) and historical bad debt levels, tenant credit-worthiness and current economic trends, all of which assists in evaluating the probability of outstanding and future rental income collections. In addition, tenants in bankruptcy are analyzed and considerations are made in connection with the expected recovery of pre-petition and post-petition bankruptcy claims.

At the point NNN deems the collection of rental income not probable, uncollected previously recognized rental revenue and any related accrued rent are reversed and, subsequently, any rental income is only recognized when cash receipts are received.

NNN includes an allowance for doubtful accounts in rental income on the Consolidated Statements of Income and Comprehensive Income.

As a result of the review of rental income collectability, no outstanding receivables and related accrued rent were written off during the quarters ended March 31, 2022 and 2021, and no tenants were reclassified as cash basis for accounting purposes.

The following table summarizes those tenants classified as cash basis for accounting purposes as of:

	March 31,
	2022			2021
Number of tenants		9			12
Cash basis tenants as a percent of:
Total properties		5.4	%		6.1	%
Total gross leasable area		7.0	%		7.7	%

During the quarters ended March 31, 2022 and 2021, NNN recognized $15,786,000 and $11,314,000, respectively, of rental income from certain tenants previously classified as cash basis for accounting.

During the quarter ended March 31, 2022, two tenants were reclassified to accrual basis for accounting purposes due to their improved qualitative and/or quantitative credit factors. The impact of the reclassification was immaterial.

Credit Losses on Financial Instruments

Credit Losses on Financial Instruments – FASB ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326),” (“ASC 326”) requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings. The guidance requires a lifetime credit loss expected at inception and requires pooling of assets, which share similar risk characteristics. NNN is required to evaluate current economic conditions, as well as, make future expectations of economic conditions. In addition, the measurement of the expected credit loss is over the asset’s contractual term.

NNN had mortgages receivable of $1,927,000 and $2,023,000 included in other assets on the Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021, respectively, net of $123,000 and $129,000 allowance for credit loss, respectively. NNN measures the allowance for credit loss based on the fair value of the collateral and the historical collectability trend analysis over 15 years.

Debt Costs

Debt Costs – Line of Credit Payable – Debt costs incurred in connection with NNN's $1,100,000,000 unsecured revolving line of credit have been deferred and are being amortized to interest expense over the term of the loan commitment using the straight-line method, which approximates the effective interest method. NNN has recorded debt costs associated with the credit facility as an asset, in debt costs on the Condensed Consolidated Balance Sheets.

Debt Costs – Notes Payable – Debt costs incurred in connection with the issuance of NNN’s notes payable have been deferred and are being amortized to interest expense over the term of the respective debt obligation using the effective interest method. These costs of $38,145,000, as of March 31, 2022 and December 31, 2021, are included in notes payable on the Condensed Consolidated Balance Sheets net of accumulated amortization of $9,859,000 and $9,262,000, respectively.

Revenue Recognition – Rental revenues for properties under construction commence upon completion of construction of the leased asset and delivery of the leased asset to the tenant. Rental revenues for non-development real estate assets are recognized when earned in accordance with ASC 842, based on the terms of the lease of the leased asset. Lease termination fees are recognized when collected subsequent to the related lease that is cancelled and NNN no longer has continuing involvement with the former tenant with respect to that property.

The core principle of ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)" ("ASU 2014-09"), is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Certain contracts are excluded from ASU 2014-09, including lease contracts within the scope of ASC 842. NNN determined the key revenue stream impacted by ASU 2014-09 is gain on disposition of real estate reported on the Condensed Consolidated Statements of Income and Comprehensive Income. In accordance with ASU 2014-09, NNN evaluates any separate contracts or performance obligations to determine proper timing and/or amount of revenue recognition, as well as, transaction price allocation.

Earnings Per Share

Earnings Per Share – Earnings per share have been computed pursuant to the FASB guidance included in Earnings Per Share. The guidance requires classification of the Company’s unvested restricted share units, which carry rights to receive nonforfeitable dividends, as participating securities requiring the two-class method of computing earnings per share. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average shares outstanding during the period.

The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted earnings per common share using the two-class method (dollars in thousands):

	Quarter Ended March 31,
	2022			2021
Basic and Diluted Earnings:
Net earnings attributable to NNN	$	81,372		$	56,587
Less: Series F preferred stock dividends		—			(4,485	)
Net earnings available to NNN’s common stockholders		81,372			52,102
Less: Earnings allocated to unvested restricted shares		(156	)		(151	)
Net earnings used in basic and diluted earnings per share	$	81,216		$	51,951
Basic and Diluted Weighted Average Shares Outstanding:
Weighted average number of shares outstanding		175,635,634			175,391,723
Less: Unvested restricted shares		(294,665	)		(288,658	)
Less: Unvested contingent restricted shares		(568,726	)		(513,765	)
Weighted average number of shares outstanding used in basic earnings per share		174,772,243			174,589,300
Other dilutive securities		138,970			125,317
Weighted average number of shares outstanding used in diluted earnings per share		174,911,213			174,714,617

Income Taxes

Income Taxes – NNN has made an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, and related regulations. NNN generally will not be subject to federal income tax on income it distributed to stockholders, providing it distributes 100 percent of its REIT taxable income and meets certain other requirements for qualifying as a REIT. For the quarters ended March 31, 2022 and 2021, NNN believes it has qualified as a REIT. Notwithstanding NNN’s qualification for taxation as a REIT, NNN is subject to certain state and local income, franchise and excise taxes.

Fair Value Measurement

Fair Value Measurement – NNN’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The guidance describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:

•Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities.

•Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques.

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss) – The following table outlines the changes in accumulated other comprehensive income (loss) for the quarter ended March 31, 2022 (dollars in thousands):

	Gain (Loss) on Cash Flow Hedges(1)
Beginning balance, December 31, 2021	$	(14,956	)
Reclassifications from accumulated other comprehensive income to net earnings		583		(2)
Ending balance, March 31, 2022	$	(14,373	)

(1)	Additional disclosure is included in Note 6 – Derivatives.
(2)	Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income.

New Accounting Pronouncements

New Accounting Pronouncements – ASU 2020-04, Reference Rate Reform (Topic 848) (“ASU 2020-04”) contains practical expedients for reference rate reform-related activities, including the transition away from the London Interbank Offered Rate ("LIBOR"), that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. In 2021, NNN elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. NNN continues to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.

NNN had no derivative financial instruments outstanding as of March 31, 2022.

Use of Estimates

Use of Estimates – Additional critical accounting policies of NNN include management’s estimates and assumptions relating to the reporting of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities and are required to prepare the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Significant accounting policies include management’s estimates of the useful lives used in calculating depreciation expense relating to real estate asset purchase accounting for acquisition of real estate subject to a lease, the recoverability of the carrying value of long-lived assets and management's evaluation of the probability of outstanding and future lease payment collections. Actual results could differ from those estimates.

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Organization and Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Summary of NNN's Investment Portfolio

NNN acquires, owns, invests in and develops properties that are leased primarily to retail tenants under long-term net leases and primarily held for investment ("Properties", "Property Portfolio", or individually a "Property").

	March 31, 2022
Property Portfolio:
Total properties		3,271
Gross leasable area (square feet)		33,545,000
States		48
Weighted average remaining lease term (years)		10.6

Summary of tenants classified as cash basis

The following table summarizes those tenants classified as cash basis for accounting purposes as of:

	March 31,
	2022			2021
Number of tenants		9			12
Cash basis tenants as a percent of:
Total properties		5.4	%		6.1	%
Total gross leasable area		7.0	%		7.7	%

Computation of Basic and Diluted Earnings Per Share

The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted earnings per common share using the two-class method (dollars in thousands):

	Quarter Ended March 31,
	2022			2021
Basic and Diluted Earnings:
Net earnings attributable to NNN	$	81,372		$	56,587
Less: Series F preferred stock dividends		—			(4,485	)
Net earnings available to NNN’s common stockholders		81,372			52,102
Less: Earnings allocated to unvested restricted shares		(156	)		(151	)
Net earnings used in basic and diluted earnings per share	$	81,216		$	51,951
Basic and Diluted Weighted Average Shares Outstanding:
Weighted average number of shares outstanding		175,635,634			175,391,723
Less: Unvested restricted shares		(294,665	)		(288,658	)
Less: Unvested contingent restricted shares		(568,726	)		(513,765	)
Weighted average number of shares outstanding used in basic earnings per share		174,772,243			174,589,300
Other dilutive securities		138,970			125,317
Weighted average number of shares outstanding used in diluted earnings per share		174,911,213			174,714,617

Changes in Accumulated Other Comprehensive Income (Loss)

The following table outlines the changes in accumulated other comprehensive income (loss) for the quarter ended March 31, 2022 (dollars in thousands):

	Gain (Loss) on Cash Flow Hedges(1)
Beginning balance, December 31, 2021	$	(14,956	)
Reclassifications from accumulated other comprehensive income to net earnings		583		(2)
Ending balance, March 31, 2022	$	(14,373	)

(1)	Additional disclosure is included in Note 6 – Derivatives.
(2)	Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income.

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Real Estate (Tables)

3 Months Ended

Mar. 31, 2022

Real Estate [Abstract]

Summary of Real Estate Subject to Operating Leases

Real Estate Portfolio – NNN's real estate consisted of the following at (dollars in thousands):

	March 31, 2022			December 31, 2021
Land and improvements(1)	$	2,556,405		$	2,527,483
Buildings and improvements		6,536,540			6,375,583
Leasehold interests		355			355
		9,093,300			8,903,421
Less accumulated depreciation and amortization		(1,517,047	)		(1,470,062	)
		7,576,253			7,433,359
Work in progress for buildings and improvements		11,811			7,277
Accounted for using the operating method		7,588,064			7,440,636
Accounted for using the direct financing method		3,579			3,653
	$	7,591,643		$	7,444,289

(1) Includes $8,070 and $8,979 in land for Properties under construction at March 31, 2022 and December 31, 2021, respectively.

Rental Income, Operating Leases

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

	Quarter Ended March 31,
	2022		2021
Rental income from operating leases	$	184,311	$	173,583
Earned income from direct financing leases		151		158
Percentage rent		701		104
Real estate expense reimbursement from tenants		4,600		5,353
	$	189,763	$	179,198

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):

	March 31, 2022			December 31, 2021
Intangible lease assets (included in other assets):
Above-market in-place leases	$	15,335		$	15,335
Less: accumulated amortization		(10,993	)		(10,821	)
Above-market in-place leases, net	$	4,342		$	4,514
In-place leases	$	121,431		$	122,069
Less: accumulated amortization		(74,480	)		(73,345	)
In-place leases, net	$	46,951		$	48,724
Intangible lease liabilities (included in other liabilities):
Below-market in-place leases	$	41,160		$	41,705
Less: accumulated amortization		(27,214	)		(27,447	)
Below-market in-place leases, net	$	13,946		$	14,258

Real Estate Held for Sale

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

	March 31, 2022			December 31, 2021(1)
Land and improvements	$	546		$	6,440
Building and improvements		1,192			4,313
		1,738			10,753
Less accumulated depreciation and amortization		(714	)		(1,331	)
Less impairment		(462	)		(3,865	)
	$	562		$	5,557
Number of Properties		2			2

(1) Both properties classified as held for sale as of December 31, 2021 were sold during the quarter ended March 31, 2022.

Gains on Dispositions of Properties

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

	Quarter Ended March 31,
	2022			2021
	# of Sold Properties	Net Gain		# of Sold Properties	Net Gain
Gain on disposition of real estate	10	$	3,992	11	$	4,281

Remaining Funding Commitments

These construction commitments, as of March 31, 2022, are outlined in the table below (dollars in thousands):

Total commitment(1)	$	38,889
Less amount funded		19,881
Remaining commitment	$	19,008

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

Real Estate Impairments

As a result of NNN's review of long-lived assets, including identifiable intangible assets, NNN recognized real estate impairments, net of recoveries as summarized in the table below (dollars in thousands):

	Quarter Ended March 31,
	2022		2021
Total real estate impairments, net of recoveries	$	1,632	$	2,131
Number of Properties:
Vacant		3		6
Occupied		2		1

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Notes Payable (Tables)

3 Months Ended

Mar. 31, 2022

Notes Payable [Abstract]

Notes Payable

Each note issuance is summarized in the table below (dollar in thousands):

Notes	Issue Date	Principal		Discount (1)		Net Price		Stated Rate			Effective Rate (2)			Maturity Date
2051 Notes	March 2021	$	450,000	$	8,406	$	441,594		3.500	%		3.602	%	April 2051
2052 Notes (3)	September 2021		450,000		10,422		439,578		3.000	%		3.118	%	April 2052

(1)	The note discounts are amortized to interest expense over the respective term of each debt obligation using the effective interest method.
(2)	Includes the effects of the discount at issuance.
(3)	NNN entered into forward swaps which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt. Upon the issuance of the 2052 Notes, NNN terminated such derivatives, and the resulting fair value was deferred in accumulated other comprehensive income (loss) and is being amortized over the term of the respective notes using the effective interest method. Additional disclosure is included in Note 6 – Derivatives.

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Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2022

Equity [Abstract]

Schedule of ATM Program

The following outlines NNN's ATM program:

	2020 ATM
Established date	August 2020
Termination date	August 2023
Total allowable shares		17,500,000
Total shares issued as of March 31, 2022		1,599,304

Schedule of Common Stock Issuances Pursuant to Equity Programs

The following table outlines the common stock issuances pursuant to NNN's ATM equity program for the quarter ended March 31, 2021 (dollars in thousands, except per share data):

Shares of common stock		30,000
Average price per share (net)	$	38.59
Net proceeds	$	1,158
Stock issuance costs(1)	$	75

(1) Stock issuance costs consist primarily of underwriters' fees and commissions, and legal and accounting fees.

Schedule of Common Stock Issuances Pursuant to DRIP

The following table outlines the common stock issuances pursuant to NNN's DRIP (dollars in thousands):

	Quarter Ended March 31,
	2022		2021
Shares of common stock		17,571		15,769
Net proceeds	$	748	$	569

Schedule of Dividends Declared and Paid

The following table outlines the dividends declared and paid for each issuance of NNN's stock (dollars in thousands, except per share data):

	Quarter Ended March 31,
	2022		2021
Series F preferred stock(1):
Dividends	$	—	$	4,485
Per depositary share		—		0.3250
Common stock:
Dividends		92,751		90,848
Per share		0.5300		0.5200

(1) The Series F preferred stock was redeemed in October 2021.

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Derivatives (Tables)

3 Months Ended

Mar. 31, 2022

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

The following table outlines NNN's terminated derivatives which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt (dollars in thousands):

Notes Payable	Terminated	Description	Aggregate Notional Amount		Liability (Asset) Fair Value When Terminated			Fair Value Deferred In Other Comprehensive Income (1)
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 amount reported in accumulated other comprehensive income (loss) will be reclassified to interest expense as interest payments are made on the related notes payable.

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Organization and Summary of Significant Accounting Policies (Summary of NNN's Investment Portfolio) (Details)	3 Months Ended
	Mar. 31, 2022 ft²
Property Portfolio:
Total properties	3,271
Gross leasable area (square feet)	33,545,000
States	48
Weighted average remaining lease term	10 years 7 months 6 days

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Organization and Summary of Significant Accounting Policies - (Summary of tenants classified as cash basis) (Details) - Tenant	Mar. 31, 2022	Mar. 31, 2021
Accounting Policies [Abstract]
Percentage of tenants for which revenue recognized on cash basis	9	12
Cash basis tenants as a percent of:
Percentage of total properties for which revenue recognized on cash basis	5.40%	6.10%
Percentage of aggregate gross leasable area for which revenue recognized on cash basis	7.00%	7.70%

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Organization and Summary of Significant Accounting Policies (Computation of Basic and Diluted Earnings per Share) (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Basic and Diluted Earnings:
Net earnings attributable to NNN	$ 81,372	$ 56,587
Less: Series F preferred stock dividends	0	(4,485)
Net earnings attributable to common stockholders	81,372	52,102
Less: Earnings allocated to unvested restricted shares	(156)	(151)
Net earnings used in basic and diluted earnings per share	$ 81,216	$ 51,951
Basic and Diluted Weighted Average Shares Outstanding:
Weighted average number of shares outstanding (in shares)	175,635,634	175,391,723
Less: Unvested restricted shares (in shares)	(294,665)	(288,658)
Less: Unvested contingent restricted shares (in shares)	(568,726)	(513,765)
Weighted Average Number of Shares Outstanding, Basic, Total	174,772,243	174,589,300
Other dilutive securities (in shares)	138,970	125,317
Weighted average number of shares outstanding used in diluted earnings per share (in shares)	174,911,213	174,714,617

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Organization and Summary of Significant Accounting Policies (Changes in AOCI) (Details)	3 Months Ended
	Mar. 31, 2022 USD ($)
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balances	$ 3,901,663,000
Balances	3,897,746,000
AOCI, cash flow hedges
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Balances	(14,956,000)	[1]
Other comprehensive income (loss)	(583,000)	[1]
Net other comprehensive income (loss)	14,373,000	[1]
Balances	$ (14,373,000)

[1] (1) Additional disclosure is included in Note 6 – Derivatives. (2) Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income.

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Organization and Summary of Significant Accounting Policies (Narrative) (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2022 USD ($) Tenant	Mar. 31, 2021 USD ($) Tenant	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Jun. 30, 2021 USD ($)	May 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Accounting Policies [Line Items]
Interest costs capitalized	$ 98,000	$ 63,000
Percentage of total properties for which revenue recognized on cash basis	5.40%	6.10%
Percentage of aggregate gross leasable area for which revenue recognized on cash basis	7.00%	7.70%
Percentage of tenants for which revenue recognized on cash basis | Tenant	9	12
Lessor Lease, Rent Deferral Lease Amendments Due To Covid-19, Deferred Rent Originally Due Current Fiscal Year				$ 4,758,000,000			$ 52,019,000,000
Lessor Lease, Rent Deferral Lease Amendments Due To Covid-19, Deferred Rent Repaid	$ 4,063,000			31,776,000,000
Revenue recognized on cash basis	15,786,000,000	$ 11,314,000
Revolving credit facility borrowing capacity	1,100,000,000,000				$ 1,100,000,000,000	$ 900,000,000,000
Debt costs	$ 10,144,000
Rent repaid			$ 10,463,000,000
Number of tenants | Tenant	2
Mortgage loan
Accounting Policies [Line Items]
Mortgage receivable	$ 1,927,000			2,023,000
Allowance for credit loss	$ 123,000			129,000
Collectability analysis, period used	15 years
Minimum
Accounting Policies [Line Items]
Initial lease term	10 years
Maximum
Accounting Policies [Line Items]
Initial lease term	20 years
Line of Credit
Accounting Policies [Line Items]
Revolving credit facility borrowing capacity	$ 1,100,000,000
Loans Payable
Accounting Policies [Line Items]
Debt costs	38,145,000			38,145,000
Debt costs accumulated amortization	$ 9,859,000			$ 9,262,000

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Real Estate (Key Information for Leases) (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2022 USD ($) Tenant	Mar. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Lessor, Lease, Description [Line Items]
Weighted average remaining lease term	10 years 7 months 6 days
Operating	3,285
Direct financing	5
Leases classified as operating leases	3,285
Straight Line Rent | $	$ (1,780,000)	$ (9,381,000)
Leases classified as direct financing leases	5
Rent deferral, year ending December 31, 2021 | $			$ 4,758,000,000	$ 52,019,000,000
Deferred rent repaid | $	$ 4,063,000		$ 31,776,000,000
Minimum
Lessor, Lease, Description [Line Items]
Initial lease term	10 years
Maximum
Lessor, Lease, Description [Line Items]
Initial lease term	20 years

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Real Estate (Summary of Real Estate Subject to Operating Leases) (Details) - USD ($) $ in Thousands	Mar. 31, 2022	Dec. 31, 2021
Property Subject to or Available for Operating Lease [Line Items]
Land and improvements	$ 2,556,405	$ 2,527,483
Buildings and improvements	6,536,540	6,375,583
Leasehold interests	355	355
Real estate subject to operating leases, gross	9,093,300	8,903,421
Less accumulated depreciation and amortization	(1,517,047)	(1,470,062)
Real estate subject to operating leases, net, before work in progress	7,576,253	7,433,359
Work in progress for buildings and improvements	11,811	7,277
Accounted for using the operating method	7,588,064	7,440,636
Accounted for using the direct financing method	3,579	3,653
Real estate portfolio	7,591,643	7,444,289
Asset under construction
Property Subject to or Available for Operating Lease [Line Items]
Land and improvements	$ 8,070	$ 8,979

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Real Estate (Rental Income) (Details)	3 Months Ended
	Mar. 31, 2022 USD ($) Tenant	Mar. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)
Lease Income [Abstract]
Rental income from operating leases	$ 184,311,000	$ 173,583,000
Earned income from direct financing leases	151,000	158,000
Percentage rent	701,000	104,000
Real estate expense reimbursement from tenants	4,600,000	5,353,000
Total lease income	189,763,000	179,198,000
Rental income accrued during period	(1,206,000)	(8,445,000)
Balance of accrued rental income	30,727,000		$ 31,942,000
Allowances	$ 4,351,000		4,587,000
Number of tenants | Tenant	2
Straight-line accrued rent from rent deferral repayments	$ (1,780,000)	$ (9,381,000)
Accrued rental income	30,727,000		31,942,000
Accrued rental income allowance	$ 4,351,000		$ 4,587,000

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Real Estate (Intangible Assets and Liabilities) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Intangible lease liabilities (included in other liabilities):
Below-market in-place leases	$ 41,160,000		$ 41,705,000
Less: accumulated amortization	(27,214,000)		(27,447,000)
Below-market in-place leases, net	13,946,000		14,258,000
Above-market in-place leases
Intangible lease assets (included in other assets):
Leases	15,335,000		15,335,000
Less: accumulated amortization	10,993,000		10,821,000
Leases, net	4,342,000		4,514,000
In-place leases
Intangible lease assets (included in other assets):
Leases	121,431,000		122,069,000
Less: accumulated amortization	74,480,000		73,345,000
Leases, net	46,951,000		$ 48,724,000
Intangible lease liabilities (included in other liabilities):
Amortization expense, in-place leases	1,773,000	$ 1,800,000
Above-market and below-market in-place leases
Intangible lease liabilities (included in other liabilities):
Amortization expense, above- and below-market leases	$ 1,400,000	$ 162,000

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Real Estate - (Amortization of Acquired Lease Intangibles) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Above-Market and Below-Market In-Place Lease Intangibles
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization expense, above- and below-market leases	$ 1,400,000	$ 162,000
In-Place Lease Intangibles
Acquired Finite-Lived Intangible Assets [Line Items]
Amortization expense, in-place leases	$ 1,773,000	$ 1,800,000

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Real Estate (Held For Sale) (Details) $ in Thousands	Mar. 31, 2022 USD ($) Property	Dec. 31, 2021 USD ($) Property
Real Estate [Abstract]
Land and improvements	$ 546	$ 6,440
Building and improvements	1,192	4,313
Real estate held-for-sale	1,738	10,753
Less accumulated depreciation and amortization	(714)	(1,331)
Less impairment	(462)	(3,865)
Real estate held for sale	$ 562	$ 5,557
Number of properties classified as held for sale | Property	2	2

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Real Estate (Dispositions) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) Property	Mar. 31, 2021 USD ($) Property
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gain | $	$ 3,992	$ 4,281
Assets Held-for-sale
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Number of properties sold at a gain | Property	10	11

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Real Estate (Commitments) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) Property
Real Estate [Abstract]
Number of properties | Property	13
Period for improvements to construction commitments	12 months
Total commitment	$ 38,889
Less amount funded	19,881
Remaining commitment	$ 19,008

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Real Estate ((Impairments) (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2022 USD ($) Property	Mar. 31, 2021 USD ($) Property
Lessor, Lease, Description [Line Items]
Impairment of Real Estate | $	$ 1,632	$ 2,131
Number of Properties:
Vacant	3	6
Occupied	2	1
Minimum
Lessor, Lease, Description [Line Items]
Initial lease term	10 years
Maximum
Lessor, Lease, Description [Line Items]
Initial lease term	20 years

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Line of Credit Payable (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Jun. 30, 2021	May 31, 2021
Line of Credit Facility [Line Items]
Revolving credit facility borrowing capacity	$ 1,100,000,000,000	$ 1,100,000,000,000	$ 900,000,000,000
Option to increase facility size	$ 2,000,000,000,000
LIBOR
Line of Credit Facility [Line Items]
Basis spread on variable rate	77.50%
Line of Credit
Line of Credit Facility [Line Items]
Revolving credit facility borrowing capacity	$ 1,100,000,000
Line of credit payable	$ 0

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Notes Payable (Details)	1 Months Ended	3 Months Ended
	Mar. 31, 2021 USD ($)	Mar. 31, 2022 USD ($)	Mar. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)	Sep. 30, 2021 USD ($) Instrument	Mar. 31, 2020 USD ($) Instrument	Sep. 30, 2018 USD ($) Instrument	Sep. 30, 2017 USD ($) Instrument	Dec. 31, 2016 USD ($) Instrument	Oct. 31, 2015 USD ($) Instrument	May 31, 2014 USD ($) Instrument
Debt Instrument [Line Items]
Debt issuance costs		$ 10,144,000
Payment of debt issuance costs		48,000	$ 5,145,000
Payment of make-whole premium		0	$ 21,328,000
Forward Swap Member
Debt Instrument [Line Items]
Number of interest rate derivatives terminated | Instrument					2	3	2	2	2	4	3
Aggregate notional amount					$ 120,000,000	$ 200,000,000	$ 250,000,000	$ 250,000,000	$ 180,000,000	$ 300,000,000	$ 225,000,000
Loans Payable
Debt Instrument [Line Items]
Debt issuance costs		38,145,000		$ 38,145,000
2051 Notes
Debt Instrument [Line Items]
Principal		$ 450,000,000			$ 450,000,000
Stated Rate		3.50%			3.50%
Net Price		$ 441,594,000
Discount		$ 8,406,000
Effective Rate		3.602%
2052 Notes
Debt Instrument [Line Items]
Principal		$ 450,000,000			$ 450,000,000
Stated Rate		3.00%			3.00%
Net Price		$ 439,578,000
Discount		$ 10,422,000
Effective Rate		3.118%
2022 Notes
Debt Instrument [Line Items]
Stated Rate	3.30%		3.30%
Notes payable redeemed	$ 350,000,000,000
Redemption price percentage	100.00%
Payment of make-whole premium	$ 21,328,000,000

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Stockholders' Equity (DRIP) (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Feb. 28, 2021
Class of Stock [Line Items]
Common stock, shares authorized (in shares)	375,000,000		375,000,000
Net proceeds	$ 748	$ 1,882
DRIP
Class of Stock [Line Items]
Common stock, shares authorized (in shares)				6,000,000
Shares of common stock (in shares)	17,571	15,769
Net proceeds	$ 748	$ 569

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Stockholders' Equity (ATM Program) (Details) - USD ($)		1 Months Ended	3 Months Ended
		Oct. 31, 2021	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Class of Stock [Line Items]
Total allowable shares (in shares)			375,000,000		375,000,000
Total shares issued (in shares)			175,810,465		175,635,792
Net proceeds			$ 748,000	$ 1,882,000
Stock issuance costs			$ 48,000	$ 5,145,000
Series F Preferred Stock
Class of Stock [Line Items]
Preferred stock, shares redeemed (in shares)		13,800,000
Dividend rate		5.20%
Stated liquidation value per share (in dollars per share)		$ 25.00
Aggregate redemption price (in dollars per share)		$ 25.111944
Excess of redemption value over carrying value of preferred shares redeemed		$ 10,897,000
ATM equity programs
Class of Stock [Line Items]
Shares of common stock (in shares)				30,000
Average price per share (net) (in dollars per share)				$ 38.59
Net proceeds				$ 1,158,000
Stock issuance costs	[1]			$ 75,000
2020 ATM
Class of Stock [Line Items]
Total allowable shares (in shares)			17,500,000
Total shares issued (in shares)			1,599,304

[1] Stock issuance costs consist primarily of underwriters' fees and commissions, and legal and accounting fees.

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Stockholders' Equity (Dividends) (Details) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended		3 Months Ended
		Apr. 30, 2022	Oct. 31, 2021	Mar. 31, 2022	Mar. 31, 2021
Class of Stock [Line Items]
Preferred stock dividends				$ 0	$ 4,485
Common stock dividends				$ 92,751	$ 90,848
Common stock dividends per share (in dollars per share)				$ 0.5300	$ 0.5200
Common stock dividends declared (in dollars per share)				$ 0.5300	$ 0.5200
Subsequent event
Class of Stock [Line Items]
Common stock dividends declared (in dollars per share)		$ 0.5300
Series F Preferred Stock
Class of Stock [Line Items]
Preferred stock dividends	[1]				$ 4,485
Preferred stock dividends per depositary share (in dollars per share)	[1]				$ 0.3250
Dividend rate			5.20%

[1] (1) The Series F preferred stock was redeemed in October 2021.

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Derivatives (Terminated Derivatives) (Details) - Forward Swap Member $ in Thousands		Sep. 30, 2021 USD ($) Instrument	Mar. 31, 2020 USD ($) Instrument	Sep. 30, 2018 USD ($) Instrument	Sep. 30, 2017 USD ($) Instrument	Dec. 31, 2016 USD ($) Instrument	Oct. 31, 2015 USD ($) Instrument	May 31, 2014 USD ($) Instrument
Derivative [Line Items]
Number of interest rate derivatives terminated | Instrument		2	3	2	2	2	4	3
Aggregate Notional Amount		$ 120,000	$ 200,000	$ 250,000	$ 250,000	$ 180,000	$ 300,000	$ 225,000
Liability Fair Value When Terminated		1,584	13,141		7,690		13,369	6,312
Asset Fair Value When Terminated				(4,080)		(13,352)
Fair Value Deferred In Other Comprehensive Income	[1]	$ 1,584	$ 13,141	$ (4,080)	$ 7,688	$ (13,345)	$ 13,369	$ 6,312

[1] (1) The amount reported in accumulated other comprehensive income (loss) will be reclassified to interest expense as interest payments are made on the related notes payable.

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Derivatives (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021		Dec. 31, 2020
Derivative [Line Items]
Stockholders' equity	$ (3,897,746,000)	$ (4,287,839,000)	$ (3,901,663,000)		$ (4,319,304,000)
Gain (loss) reclassification to interest expense	583,000	1,368,000
Interest rate cash flow hedge gain (loss) to be reclassified over next 12 months, net	2,398,000,000
AOCI, cash flow hedges
Derivative [Line Items]
Stockholders' equity	14,373,000		14,956,000	[1]
Accumulated Other Comprehensive Income (Loss)
Derivative [Line Items]
Stockholders' equity	14,373,000	15,077,000	$ 14,956,000		$ 16,445,000
Gain (loss) reclassification to interest expense	$ 583,000	$ 1,368,000

[1] (1) Additional disclosure is included in Note 6 – Derivatives. (2) Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income.

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Fair Value of Financial Instruments (Details) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Financial Instruments, Owned, at Fair Value [Abstract]
Fair value of notes payable	$ 3,624,822,000	$ 4,032,757,000

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Subsequent Events (Details) - Series F Preferred Stock	1 Months Ended
	Oct. 31, 2021 USD ($) $ / shares
Subsequent Event [Line Items]
Preferred stock redemption price including accrued dividends	$ 25.111944
Preferred stock redemption price per depository share	$ 25.00
Dividend rate	5.20%
Preferred stock redemption charge | $	$ 10,897,000