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Real Estate | 12 Months Ended
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Dec. 31, 2014
Real Estate Investments, Net [Abstract] |
Real Estate | Real Estate: Real Estate – Portfolio Leases – The following outlines key information for NNN’s leases at December 31, 2014:
Lease classification: |
Operating | 2,083 |
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 the 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 December 31 (dollars in thousands):
| 2014 |  | 2013
Land and improvements | $ | 1,784,494 |  |  | $ | 1,652,304 |
Buildings and improvements | 3,414,691 |  |  | 2,960,845 |
Leasehold interests | 1,290 |  |  | 1,290 |
| 5,200,475 |  |  | 4,614,439 |
Less accumulated depreciation and amortization | (511,703 | ) |  | (415,774 | )
| 4,688,772 |  |  | 4,198,665 |
Work in progress | 28,908 |  |  | 60,719 |
| $ | 4,717,680 |  |  | $ | 4,259,384 |
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, 2014, 2013 and 2012, NNN recognized collectively in continuing and discontinued operations, $1,521,000, ($338,000) and $487,000, respectively, of such income, net of reserves. At December 31, 2014 and 2013, the balance of accrued rental income, net of allowances of $3,086,000 and $3,181,000, respectively, was $25,659,000 and $24,797,000, respectively. The following is a schedule of future minimum lease payments to be received on noncancellable operating leases at December 31, 2014 (dollars in thousands):
2015 | $ | 432,369 |
2016 | 427,152 |
2017 | 417,412 |
2018 | 392,925 |
2019 | 375,013 |
Thereafter | 3,025,217 |
| $ | 5,070,088 |
Since lease renewal periods are exercisable at the option of the tenant, the above table only presents future minimum lease payments due during the current 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):
| 2014 |  | 2013
Minimum lease payments to be received | $ | 17,376 |  |  | $ | 20,469 |
Estimated unguaranteed residual values | 8,274 |  |  | 8,274 |
Less unearned income | (8,676 | ) |  | (10,401 | )
Net investment in direct financing leases | $ | 16,974 |  |  | $ | 18,342 |
The following is a schedule of future minimum lease payments to be received on direct financing leases held for investment at December 31, 2014 (dollars in thousands):
2015 | $ | 2,956 |
2016 | 2,873 |
2017 | 2,035 |
2018 | 2,007 |
2019 | 1,513 |
Thereafter | 5,992 |
| $ | 17,376 |
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). 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 December 31, 2014, NNN had seven 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, included eight properties, two of which were subsequently sold in 2014. Real estate held for sale consisted of the following as of (dollars in thousands):
| 2014 |  | 2013
Land and improvements | $ | 3,246 |  |  | $ | 5,751 |
Building and improvements | 4,644 |  |  | 8,067 |
| 7,890 |  |  | 13,818 |
Less accumulated depreciation and amortization | (1,473 | ) |  | (2,362 | )
Less impairment | (1,022 | ) |  | (2,132 | )
| $ | 5,395 |  |  | $ | 9,324 |
Real Estate – Dispositions 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):
| 2014 |  | 2013 |  | 2012 |
# of Sold Properties |  | Gain |  | # of Sold Properties |  | Gain |  | # of Sold Properties |  | Gain |
Gain on disposition of real estate | 25 |  | $ | 11,587 |  |  | — |  | $ | 173 |  |  | — |  | $ | — |  |
Income tax expense |  |  | (318 | ) |  |  |  | (66 | ) |  |  |  | — |  |
|  |  | 11,269 |  |  |  |  | 107 |  |  |  |  | — |  |
Gain on disposition of real estate included in discontinued operations | 2 |  | 155 |  | (1) | 35 |  | 6,272 |  | (1) | 34 |  | 10,956 |  | (1)
Income tax expense |  |  | — |  |  |  |  | (784 | ) |  |  |  | — |  |
|  |  | $ | 11,424 |  |  |  |  | $ | 5,595 |  |  |  |  | $ | 10,956 |  |
(1) Amount includes the recognition of deferred gains 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 December 31, 2014, are outlined in the table below (dollars in thousands):
Number of properties |  | 26 |
Total commitment(1) |  | $ | 110,081 |
Amount funded |  | $ | 57,465 |
Remaining commitment |  | $ | 52,616 |
(1) | Includes land, construction costs, tenant improvements and lease costs.
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. 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 for the years ended December 31 (dollars in thousands):
| 2014 |  | 2013 |  | 2012
Continuing operations | $ | 760 |  |  | $ | 3,565 |  |  | $ | 4,070 |
Discontinued operations | 63 |  |  | 541 |  |  | 6,242 |
| $ | 823 |  |  | $ | 4,106 |  |  | $ | 10,312 |
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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- 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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