Leases. At March 31, 2024, NNN's real estate portfolio had a weighted average remaining lease term of 10.0 years and consisted of 3,554 leases classified as operating leases and an additional four 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. Typically, the Property leases provide for initial terms of 10 to 20 years. The Properties are generally leased under triple-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, real estate taxes and assessments, 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 increases in the Consumer Price Index or fixed increases.

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, 2024			December 31, 2023
Land and improvements(1)	$	2,888,657		$	2,878,400
Buildings and improvements		7,459,462			7,368,873
Leasehold interests		355			355
		10,348,474			10,247,628
Less accumulated depreciation and amortization		(1,913,861	)		(1,863,451	)
		8,434,613			8,384,177
Work in progress and improvements		127,025			144,068
Accounted for using the operating method		8,561,638			8,528,245
Accounted for using the direct financing method		2,979			3,033
Classified as held for sale(2)		22,239			4,573
	$	8,586,856		$	8,535,851


(1)	Includes $76,281 and $96,464 in land for Properties under construction at March 31, 2024 and December 31, 2023, respectively.


(2)	As of March 31, 2024, five Properties were classified as held for sale. The property classified as held for sale as of December 31, 2023 was sold during the quarter ended March 31, 2024.

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


	Quarter Ended March 31,
	2024		2023
Rental income from operating leases	$	209,084	$	198,183
Earned income from direct financing leases		119		144
Percentage rent		888		763
Rental revenues		210,091		199,090
Real estate expense reimbursement from tenants		4,734		4,540
	$	214,825	$	203,630

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, 2024 and 2023, NNN recognized ($36,000) and $469,000, respectively, of net straight-line accrued rental income, net of reserves.

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, 2024			December 31, 2023
Intangible lease assets (included in other assets):
Above-market in-place leases	$	15,113		$	15,297
Less: accumulated amortization		(12,055	)		(12,080	)
Above-market in-place leases, net	$	3,058		$	3,217

In-place leases	$	121,664		$	122,802
Less: accumulated amortization		(85,841	)		(85,332	)
In-place leases, net	$	35,823		$	37,470

Intangible lease liabilities (included in other liabilities):
Below-market in-place leases	$	40,996		$	41,244
Less: accumulated amortization		(29,145	)		(29,117	)
Below-market in-place leases, net	$	11,851		$	12,127

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, 2024 and 2023 were $117,000 and $112,000, respectively. The value of in-place leases amortized to expense for the quarters ended March 31, 2024 and 2023, was $1,647,000 and $1,760,000, respectively.

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


	Quarter Ended March 31,
	2024			2023
	# of Sold Properties	Net Gain		# of Sold Properties	Net Gain
Gain on disposition of real estate	6	$	4,821	6	$	6,300

NNN has committed to fund construction on 39 Properties. The improvements on such Properties are estimated to be completed within 12 to 18 months. These construction commitments, as of March 31, 2024, are outlined in the table below (dollars in thousands):

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.

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,
	2024		2023
Total real estate impairments, net of recoveries	$	1,204	$	2,640

Number of Properties:
Vacant		—		3
Occupied		3		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.