Note 2 – Real Estate:

Real Estate – Portfolio

Leases. At September 30, 2025, NNN's real estate portfolio had a weighted average remaining lease term of 10.1 years and consisted of 3,622 leases classified as operating leases and an additional four leases accounted for as direct financing leases.

The following is a summary of the general structure of the leases in the Property Portfolio, although the specific terms of each lease can vary significantly. Typically, the Property leases provide for initial terms of 10 to 20 years and a triple-net lease structure, pursuant to which the tenant bears responsibility for operating expenses of the Property, including utilities, real estate taxes and assessments, property and liability insurance, maintenance, repairs and capital expenditures. Certain Properties are subject to leases under which NNN retains responsibility for specific costs and expenses associated with the Property. NNN's leases provide for annual base rental payments (payable in monthly installments), the majority of which include negotiated increases in rent as a result of increases in the Consumer Price Index or set fixed increases.

NNN's leases often provide the tenant with one or more multi-year renewal options, subject to the same terms and conditions provided under the initial lease term, including rent increases. NNN's lease term is based on the non-cancellable base term unless economic incentives make it reasonably certain that an option period to extend the lease will be exercised, in which event NNN includes the renewal options. Some of the leases also provide that in the event NNN wishes to sell the Property subject to that lease, NNN first must offer the lessee the right to purchase the Property on the same terms and conditions as any offer which NNN intends to accept for the sale of the Property.

Real Estate Portfolio. NNN's real estate consisted of the following at (dollars in thousands):


	September 30, 2025			December 31, 2024
Land and improvements(1)	$	3,042,105		$	2,919,976
Buildings and improvements		8,310,558			7,805,939
Leasehold interests		355			355
		11,353,018			10,726,270
Less accumulated depreciation and amortization		(2,216,029	)		(2,065,316	)
		9,136,989			8,660,954
Work in progress and improvements		42,509			82,411
Accounted for using the operating method		9,179,498			8,743,365
Accounted for using the direct financing method		2,336			2,520
Classified as held for sale(2)		22,863			283
	$	9,204,697		$	8,746,168


(1)	Includes $21,784 and $34,356 in land for Properties under construction at September 30, 2025 and December 31, 2024, respectively.


(2)	As of September 30, 2025, 15 Properties were classified as held for sale. The two properties classified as held for sale as of December 31, 2024 were sold during the nine months ended September 30, 2025.

NNN recognized the following revenues in rental income (dollars in thousands):


	Quarter Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Rental income from operating leases	$	225,053	$	213,447	$	670,823	$	634,088
Earned income from direct financing leases		111		116		337		353
Percentage rent		211		200		1,381		1,347
Rental revenues		225,375		213,763		672,541		635,788
Real estate expenses reimbursed from tenants		4,398		4,392		14,304		13,332
	$	229,773	$	218,155	$	686,845	$	649,120

Some leases provide for a free rent period or scheduled rent increases throughout the lease term. Such amounts are recognized on a straight-line basis over the terms of the leases.

For the nine months ended September 30, 2025 and 2024, NNN recognized $715,000 and ($8,000), respectively, of net straight-line accrued rental income, net of reserves, of which $631,000 and $123,000 of such income, net of reserves was recorded during the quarters ended September 30, 2025 and 2024, respectively.

Real Estate – Intangibles

In accordance with purchase accounting for the acquisition of real estate subject to a lease, NNN has recorded intangible assets and lease liabilities that consisted of the following at (dollars in thousands):


	September 30, 2025			December 31, 2024
Intangible lease assets (included in other assets):
Above-market in-place leases	$	14,355		$	14,753
Less: accumulated amortization		(11,084	)		(12,159	)
Above-market in-place leases, net	$	3,271		$	2,594

In-place leases	$	116,282		$	116,549
Less: accumulated amortization		(82,407	)		(85,741	)
In-place leases, net	$	33,875		$	30,808

Intangible lease liabilities (included in other liabilities):
Below-market in-place leases	$	37,375		$	39,869
Less: accumulated amortization		(27,902	)		(28,946	)
Below-market in-place leases, net	$	9,473		$	10,923

The amounts amortized as a net increase to rental income for above-market and below-market leases for the nine months ended September 30, 2025 and 2024, were $1,781,000 and $351,000, respectively, of which $68,000 and $109,000 were recorded during the quarters ended September 30, 2025 and 2024, respectively. The value of in-place leases amortized to expense for the nine months ended September 30, 2025 and 2024 was $6,545,000 and $4,687,000, respectively, of which $1,279,000 and $1,457,000 was recorded for the quarters ended September 30, 2025 and 2024, respectively.

Real Estate – Dispositions

The following table summarizes the properties sold and the corresponding gain recognized on the disposition of properties (dollars in thousands):


	Quarter Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
	# of Sold Properties	Net Gain		# of Sold Properties	Net Gain		# of Sold Properties	Net Gain		# of Sold Properties	Net Gain
Gain on disposition of real estate	23	$	12,570	9	$	7,765	56	$	32,581	29	$	30,207

Real Estate – Commitments

NNN has committed to fund construction on 19 Properties. The improvements on such Properties are estimated to be completed within 12 to 18 months. These construction commitments, as of September 30, 2025, are outlined in the table below (dollars in thousands):


Total commitment(1)	$	114,030
Less amount funded		(64,293	)
Remaining commitment	$	49,737


(1)	Includes land, construction costs, tenant improvements, lease costs, capitalized interest and third-party costs.

Real Estate – Impairments

NNN periodically assesses its long-lived real estate assets for possible impairment whenever certain events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

As a result of NNN's review of long-lived real estate assets, including identifiable intangible assets, NNN recognized real estate impairments, net of recoveries as summarized in the table below (dollars in thousands):


	Quarter Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Total real estate impairments, net of recoveries	$	7,195	$	760	$	13,242	$	2,908

Number of Properties:
Vacant		14		—		22		2
Occupied		1		2		2		5

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.