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Derivatives | 9 Months Ended
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Sep. 30, 2021
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives | Note 6 – Derivatives: In accordance with the guidance on derivatives and hedging, NNN records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or a firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. NNN’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, NNN primarily uses treasury locks, forward starting swaps and interest rate swaps as part of its cash flow hedging strategy. Treasury locks and forward starting swaps are used to hedge forecasted debt issuances. Treasury locks designated as cash flow hedges lock in the yield/price of a treasury security. Forward starting swaps also lock the associated swap spread. Interest rate swaps designated as cash flow hedges are used to hedge the variable cash flows associated with floating rate debt and involve the receipt or payment of variable rate amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amount. For derivatives designated as cash flow hedges, the change in the fair value of the derivative is initially reported in other comprehensive income (loss) (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings. NNN discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the cash flows of the hedged item, the derivative expires or is sold, terminated or exercised, the derivative is re-designated as a hedging instrument or management determines that designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, NNN recognizes any changes in its fair value in earnings and continues to carry the derivative on the balance sheet or may choose to settle the derivative at that time with a cash payment or receipt. NNN records a cash settlement of forward starting swaps in the Condensed Consolidated Statements of Cash Flows as an operating activity. The following table outlines NNN's terminated derivatives which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt (dollars in thousands):
Notes Payable |  | Terminated |  | Description |  | Aggregate Notional Amount |  |  | Liability (Asset) Fair Value When Terminated |  |  | Fair Value Deferred In Other Comprehensive Income (1) |
2024 |  | May 2014 |  | Three forward starting swaps |  | $ | 225,000 |  |  | $ | 6,312 |  |  | $ | 6,312 |
2025 |  | October 2015 |  | Four forward starting swaps |  |  | 300,000 |  |  |  | 13,369 |  |  |  | 13,369 |
2026 |  | December 2016 |  | Two forward starting swaps |  |  | 180,000 |  |  |  | (13,352 | ) |  |  | (13,345 | )
2027 |  | September 2017 |  | Two forward starting swaps |  |  | 250,000 |  |  |  | 7,690 |  |  |  | 7,688 |
2028 |  | September 2018 |  | Two forward starting swaps |  |  | 250,000 |  |  |  | (4,080 | ) |  |  | (4,080 | )
2030 |  | March 2020 |  | Three forward starting swaps |  |  | 200,000 |  |  |  | 13,141 |  |  |  | 13,141 |
2052 |  | September 2021 |  | Two forward starting swaps |  |  | 120,000 |  |  |  | 1,584 |  |  |  | 1,584 |
(1) | The amount reported in accumulated other comprehensive income (loss) will be reclassified to interest expense as interest payments are made on the related notes payable.
As of September 30, 2021, $15,535,000 remained in other comprehensive income (loss) related to NNN’s previously terminated interest rate hedges. During the nine months ended September 30, 2021 and 2020, NNN reclassified out of other comprehensive income (loss) $2,494,000 and $1,663,000, respectively, of which $565,000 and $642,000 was reclassified during the quarters ended September 30, 2021 and 2020, respectively, as an increase in interest expense. Over the next 12 months, NNN estimates that an additional $2,349,000 will be reclassified as an increase in interest expense from these terminated derivatives. Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on NNN’s long-term debt. NNN does not use derivatives for trading or speculative purposes or currently have any derivatives that are not designated as hedges. NNN had no derivative financial instruments outstanding at September 30, 2021.

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- Definition The entire disclosure for derivative instruments and hedging activities including, but not limited to, risk management strategies, non-hedging derivative instruments, assets, liabilities, revenue and expenses, and methodologies and assumptions used in determining the amounts. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -SubTopic 40 -Section 50 -Paragraph 5 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123477628&loc=d3e90205-114008 + Details
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