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Notes Payable and Derivatives | 12 Months Ended
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Dec. 31, 2023
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Notes Payable and Derivatives | Note 5 – Notes Payable and Derivatives: Each of NNN's outstanding series of unsecured notes is summarized in the table below (dollars in thousands):
Notes |  | Issue Date |  | Principal |  |  | Discount(1) |  |  | Net Price |  |  | Stated Rate |  | Effective Rate(2) |  | Maturity Date
2024(3) |  | May 2014 |  | $ | 350,000 |  |  | $ | 707 |  |  | $ | 349,293 |  |  | 3.900% |  | 3.924% |  | June 2024(4)(5)
2025(3) |  | October 2015 |  |  | 400,000 |  |  |  | 964 |  |  |  | 399,036 |  |  | 4.000% |  | 4.029% |  | November 2025(4)
2026(3) |  | December 2016 |  |  | 350,000 |  |  |  | 3,860 |  |  |  | 346,140 |  |  | 3.600% |  | 3.733% |  | December 2026(4)
2027(3) |  | September 2017 |  |  | 400,000 |  |  |  | 1,628 |  |  |  | 398,372 |  |  | 3.500% |  | 3.548% |  | October 2027(4)
2028(3) |  | September 2018 |  |  | 400,000 |  |  |  | 2,848 |  |  |  | 397,152 |  |  | 4.300% |  | 4.388% |  | October 2028(4)
2030(3) |  | March 2020 |  |  | 400,000 |  |  |  | 1,288 |  |  |  | 398,712 |  |  | 2.500% |  | 2.536% |  | April 2030
2033 |  | August 2023 |  |  | 500,000 |  |  |  | 11,620 |  |  |  | 488,380 |  |  | 5.600% |  | 5.905% |  | October 2033
2048 |  | September 2018 |  |  | 300,000 |  |  |  | 4,239 |  |  |  | 295,761 |  |  | 4.800% |  | 4.890% |  | October 2048
2050 |  | March 2020 |  |  | 300,000 |  |  |  | 6,066 |  |  |  | 293,934 |  |  | 3.100% |  | 3.205% |  | April 2050
2051 |  | March 2021 |  |  | 450,000 |  |  |  | 8,406 |  |  |  | 441,594 |  |  | 3.500% |  | 3.602% |  | April 2051
2052(3) |  | September 2021 |  |  | 450,000 |  |  |  | 10,422 |  |  |  | 439,578 |  |  | 3.000% |  | 3.118% |  | April 2052
(1) The note discounts are amortized to interest expense over the respective term of each debt obligation using the effective interest method. (2) Includes the effects of the discount at issuance. (3) NNN entered into forward starting swaps which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt. Upon the issuance of a series of unsecured notes, NNN terminated such derivatives, and the resulting fair value was deferred in other comprehensive income. The deferred liability (asset) is being amortized over the term of the respective notes using the effective interest method. (4) The aggregate principal balance of the unsecured note maturities for the next five years is $1,900,000. (5) NNN plans to use proceeds from the Credit Facility and/or potential debt or equity offerings to repay the outstanding debt. Each series of the notes represents senior, unsecured obligations of NNN and is subordinated to all secured debt of NNN. NNN may redeem each series of notes in whole or in part at any time prior to the par call date for the notes at the redemption price as set forth in the applicable supplemental indenture relating to the notes; provided, however, that if NNN redeems the notes on or after the par call date, the redemption price will equal 100 percent of the principal amount of the notes to be redeemed, plus accrued and unpaid interest thereon to, but not including, the redemption date. In connection with the outstanding debt offerings, NNN incurred debt issuance costs totaling $42,595,000 consisting primarily of underwriting discounts and commissions, legal and accounting fees, rating agency fees and printing expenses. Debt issuance costs for all note issuances have been deferred and presented as a reduction to notes payable and are being amortized over the term of the respective notes using the effective interest method. In March 2021, NNN redeemed the $350,000,000 3.300% notes payable that were due in April 2023. The notes were redeemed at a price equal to 100 percent of the principal amount, plus (i) a make-whole amount of $21,328,000, and (ii) all accrued and unpaid interest. In accordance with the terms of the indentures, pursuant to which NNN's notes have been issued, NNN is required to meet certain restrictive financial covenants, which, among other things, require NNN to maintain (i) certain leverage ratios and (ii) certain interest coverage. At December 31, 2023, NNN was in compliance with each of the financial covenants. 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 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 (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 statement 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 December 31, 2023, $10,111,000 remains in accumulated other comprehensive income (loss) related to NNN's previously terminated interest rate hedges. During the years ended December 31, 2023, 2022 and 2021, NNN reclassified $2,471,000, $2,374,000 and $3,073,000, respectively, out of accumulated other comprehensive income (loss) as an increase to interest expense. Over the next 12 months, NNN estimates that an additional $2,152,000 will be reclassified as an increase in interest expense. 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. NNN had no derivative financial instruments outstanding at December 31, 2023.

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