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Real Estate | 9 Months Ended
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Sep. 30, 2014
Real Estate Investments, Net [Abstract] |
Real Estate | Real Estate: Real Estate – Portfolio Leases – The following outlines key information for NNN’s leases:
| September 30, 2014
Lease classification: |
Operating | 2,075 |
Direct financing | 12 |
Building portion – direct financing / land portion – operating | 1 |
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 property 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 provide the tenant with one or more multi-year renewal options subject to generally the same terms and conditions of the base term of the lease, including rent increases. Real Estate Portfolio – Accounted for Using the Operating Method – Real estate subject to operating leases consisted of the following as of (dollars in thousands):
| September 30, 2014 |  | December 31, 2013
Land and improvements | $ | 1,760,747 |  |  | $ | 1,650,250 |
Buildings and improvements | 3,360,140 |  |  | 2,953,712 |
Leasehold interests | 1,290 |  |  | 1,290 |
| 5,122,177 |  |  | 4,605,252 |
Less accumulated depreciation and amortization | (484,955 | ) |  | (415,424 | )
| 4,637,222 |  |  | 4,189,828 |
Work in progress | 25,553 |  |  | 60,719 |
| $ | 4,662,775 |  |  | $ | 4,250,547 |
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 & Equipment, including management’s intent to commit to a plan to sell the asset. In January 2014, NNN completed a strategic review of its Properties held for sale and reclassified one Property that was previously held for sale to held for investment, included in Real Estate – Portfolio. As of September 30, 2014, NNN had eight of its Properties categorized as held for sale. NNN anticipates the disposition of these Properties to occur within 12 months. NNN's real estate held for sale at December 31, 2013, includes 10 properties, two of which were subsequently sold in 2014. Real estate held for sale consisted of the following as of (dollars in thousands):
| September 30, 2014 |  | December 31, 2013
Land and improvements | $ | 5,285 |  |  | $ | 7,805 |
Building and improvements | 11,777 |  |  | 15,200 |
| 17,062 |  |  | 23,005 |
Less accumulated depreciation and amortization | (1,980 | ) |  | (2,712 | )
Less impairment | (1,022 | ) |  | (2,132 | )
| $ | 14,060 |  |  | $ | 18,161 |
Real Estate – Dispositions The following table summarizes the number of Properties sold and the corresponding gain recognized on the disposition of Properties (dollars in thousands):
| Quarter Ended September 30, |  | Nine Months Ended September 30, |
| 2014 |  | 2013 |  | 2014 |  | 2013 |
# of Sold Properties |  | Gain |  | # of Sold Properties |  | Gain |  | # of Sold Properties |  | Gain |  | # of Sold Properties |  | Gain |
Gain on disposition of real estate | 10 |  | $ | 3,464 |  |  | — |  | $ | — |  |  | 22 |  | $ | 8,472 |  |  | — |  | $ | — |  |
Income tax expense |  |  | (108 | ) |  |  |  | — |  |  |  |  | (306 | ) |  |  |  | — |  |
|  |  | 3,356 |  |  |  |  | — |  |  |  |  | 8,166 |  |  |  |  | — |  |
Gain on disposition of real estate included in discontinued operations | — |  | 143 |  | (1) | 22 |  | 1,228 |  | (1) | 2 |  | 155 |  | (1) | 31 |  | 4,402 |  | (1)
Income tax expense |  |  | — |  |  |  |  | (416 | ) |  |  |  | — |  |  |  |  | (782 | ) |
|  |  | $ | 3,499 |  |  |  |  | $ | 812 |  |  |  |  | $ | 8,321 |  |  |  |  | $ | 3,620 |  |
(1) Amount includes deferred gain on previously sold properties. Real Estate – Commitments NNN has agreed to fund construction commitments on leased Properties. The improvements are estimated to be completed within 12 months. These construction commitments, as of September 30, 2014, are outlined in the table below (dollars in thousands):
Number of properties | 22 |
Total commitment(1) | $ | 84,782 |
Amount funded | $ | 43,895 |
Remaining commitment | $ | 40,887 |
(1) Includes land, construction costs and tenant improvements. Real Estate – Impairments Management periodically assesses its real estate for possible impairment whenever certain events or changes in circumstances indicate that the carrying amount of the asset, including accrued rental income, may not be recoverable through operations. Events or circumstances that may occur include significant changes in real estate market conditions and the ability of NNN to re-lease or sell properties that are vacant or become vacant in a reasonable period of time. Impairments are measured as the amount by which the current book value of the asset exceeds the estimated fair value of the asset. As a result of the Company's review of long lived assets, including identifiable intangible assets, NNN recognized the following real estate impairments (dollars in thousands):
| Quarter Ended September 30, |  | Nine Months Ended September 30,
| 2014 |  | 2013 |  | 2014 |  | 2013
Continuing operations | $ | 77 |  |  | $ | 435 |  |  | $ | 562 |  |  | $ | 3,535 |
Discontinued operations | — |  |  | 292 |  |  | 63 |  |  | 1,196 |
Impairment recoveries – discontinued operations | — |  |  | (728 | ) |  | — |  |  | (728 | )
| $ | 77 |  |  | $ | (1 | ) |  | $ | 625 |  |  | $ | 4,003 |
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 measuring the fair value of its real estate.

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- Definition The entire disclosure for certain real estate investment financial statements, real estate investment trust operating support agreements, real estate owned, retail land sales, time share transactions, as well as other real estate related disclosures. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 6 -Subparagraph a -Article 5 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 970 -SubTopic 360 -Section S99 -Paragraph 1 -Subparagraph (SX 210.12-28) -URI http://asc.fasb.org/extlink&oid=6590653&loc=d3e638233-123024 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 28 -Article 12 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 04 -Paragraph c -Subparagraph Schedule III -Article 5 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 10 -Subparagraph 4 -Article 9 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 11 -Article 9 + Details
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