Real Estate (Tables)

12 Months Ended

Dec. 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 December 31 (dollars in thousands):

	2022			2021
Land and improvements (1)	$	2,669,498		$	2,527,483
Buildings and improvements		6,985,394			6,375,583
Leasehold interests		355			355
		9,655,247			8,903,421
Less accumulated depreciation and amortization		(1,660,308	)		(1,470,062	)
		7,994,939			7,433,359
Work in progress and improvements		21,737			7,277
Accounted for using the operating method		8,016,676			7,440,636
Accounted for using the direct financing method		3,352			3,653
Classified as held for sale		786			5,557
	$	8,020,814		$	7,449,846

(1)Includes $22,356 and $8,979 in land for Properties under construction as of December 31, 2022 and 2021, respectively.

Rental Income, Operating Leases

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

	2022		2021		2020
Rental income from operating leases	$	751,680	$	703,865	$	639,265
Earned income from direct financing leases		595		623		647
Percentage rent		1,541		706		842
Real estate expense reimbursement from tenants		17,802		18,665		18,039
	$	771,618	$	723,859	$	658,793

Undiscounted Cash Flows to be Received on Noncancellable Operating Leases

The following is a schedule of undiscounted cash flows to be received on noncancellable operating leases as of December 31, 2022 (dollars in thousands):

2023	$	710,244
2024		693,766
2025		667,220
2026		624,196
2027		577,884
Thereafter		4,121,325
	$	7,394,635

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 December 31 (dollars in thousands):

	2022			2021
Intangible lease assets (included in other assets):
Above-market in-place leases	$	15,356		$	15,335
Less: accumulated amortization		(11,477	)		(10,821	)
Above-market in-place leases, net	$	3,879		$	4,514
In-place leases	$	124,198		$	122,069
Less: accumulated amortization		(79,675	)		(73,345	)
In-place leases, net	$	44,523		$	48,724
Intangible lease liabilities (included in other liabilities):
Below-market in-place leases	$	41,371		$	41,705
Less: accumulated amortization		(28,121	)		(27,447	)
Below-market in-place leases, net	$	13,250		$	14,258

The following is a schedule of the amortization of acquired above-market and below-market in-place lease intangibles and the amortization of the in-place lease intangibles as of December 31, 2022 (dollars in thousands):

	Above-Market and Below- Market In-Place Lease Intangibles(1)		In-Place Lease Intangibles(2)
2023	$	460	$	6,834
2024		457		6,146
2025		443		5,427
2026		452		4,840
2027		470		4,023
Thereafter		7,089		17,253
	$	9,371	$	44,523
Weighted average amortization period (years)		17.2		9.1

(1)Recorded as a net increase to rental income over the life of the lease.

(2)Amortized as an increase to amortization expense.

Gains on Dispositions of Properties

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

	2022				2021				2020
	# of Sold Properties		Gain		# of Sold Properties		Gain		# of Sold Properties		Gain
Gain on disposition of real estate		33	$	17,443		74	$	23,094		38	$	16,238

Remaining Funding Commitments

These construction commitments, at December 31, 2022, are outlined in the table below (dollars in thousands):

Total commitment(1)	$	117,640
Less amount funded		(44,093	)
Remaining commitment	$	73,547

(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 real estate assets, including identifiable intangible assets, NNN recognized real estate impairments, net of recoveries as summarized in the table below (dollars in thousands):

	2022		2021		2020
Total real estate impairments, net of recoveries	$	8,309	$	21,957	$	37,442
Number of Properties:
Vacant		9		30		14
Occupied		7		12		17