Real Estate - Portfolio

12 Months Ended

Dec. 31, 2011

Real Estate Investments [Abstract]

Real Estate - Investment Portfolio

Real Estate – Portfolio:

Leases – The following outlines key information for NNN’s leases at December 31, 2011:

Lease classification:
Operating	1,377
Direct financing	15
Building portion – direct financing / land portion – operating	5
Weighted average remaining lease term	12 Years

The leases generally provide for limited increases in rent as a result of fixed increases, increases in the consumer price index, and/or increases in the tenant’s sales volume. Generally, the tenant is also required to pay all property taxes and assessments, substantially maintain the interior and exterior of the building and carry property and liability insurance coverage. Certain of NNN’s Properties are subject to leases under which NNN retains responsibility for specific costs and expenses of the property. Generally, the leases of the Properties provide the tenant with one or more multi-year renewal options subject to generally the same terms and conditions, including rent increases, consistent with the initial lease term.

Real Estate Portfolio – Accounted for Using the Operating Method – Real estate subject to operating leases consisted of the following as of December 31 (dollars in thousands):

	2011			2010
Land and improvements	$	1,314,157		$	1,117,915
Buildings and improvements	2,118,656			1,591,113
Leasehold interests	1,290			1,290
	3,434,103			2,710,318
Less accumulated depreciation and amortization	(270,094		)	(222,406		)
	3,164,009			2,487,912
Work in progress	60,014			26,390
	$	3,224,023		$	2,514,302

Some leases provide for scheduled rent increases throughout the lease term. Such amounts are recognized on a straight-line basis over the terms of the leases. For the years ended December 31, 2011, 2010 and 2009, NNN recognized collectively in continuing and discontinued operations, ($222,000), ($93,000) and $2,102,000, respectively, of such income, net of reserves. At December 31, 2011 and 2010, the balance of accrued rental income, net of allowances of $4,870,000 and $3,609,000, respectively, was $25,187,000 and $25,535,000, respectively.

As of December 31, 2011, in connection with the development of Properties, NNN has the following funding commitments (dollars in thousands):

	# of Properties	Total Commitment(1)		Amount Funded		Remaining Commitment
Real Estate Portfolio	54	$	158,725	$	103,614	$	55,111

⁽¹⁾  Includes land and construction costs.

The following is a schedule of future minimum lease payments to be received on noncancellable operating leases at December 31, 2011 (dollars in thousands):

2012	$	280,328
2013	273,762
2014	264,869
2015	257,821
2016	251,055
Thereafter	2,151,781
	$	3,479,616

Since lease renewal periods are exercisable at the option of the tenant, the above table only presents future minimum lease payments due during the initial lease terms. In addition, this table does not include amounts for potential variable rent increases that are based on the CPI or future contingent rents which may be received on the leases based on a percentage of the tenant’s gross sales.

Real Estate Portfolio – Accounted for Using the Direct Financing Method – The following lists the components of net investment in direct financing leases at December 31 (dollars in thousands):

	2011			2010
Minimum lease payments to be received	$	32,587		$	37,699
Estimated unguaranteed residual values	11,464			12,297
Less unearned income	(17,533		)	(20,223		)
Net investment in direct financing leases	$	26,518		$	29,773

The following is a schedule of future minimum lease payments to be received on direct financing leases held for investment at December 31, 2011 (dollars in thousands):

2012	$	4,263
2013	4,213
2014	3,454
2015	3,160
2016	3,077
Thereafter	14,420
	$	32,587

The above table does not include future minimum lease payments for renewal periods, potential variable CPI rent increases or contingent rental payments that may become due in future periods (see Real Estate Portfolio – Accounted for Using the Operating Method).