NNN REIT Inc.
08/05/2026 | Press release | Distributed by Public on 08/05/2026 06:36
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in the Annual Report on Form 10-K of NNN REIT, Inc. for the year ended December 31, 2025 ("2025 Annual Report"). The term "NNN" or the "Company" refers to NNN REIT, Inc. and its consolidated subsidiaries.
Forward-Looking Statements
The information herein contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Also, when NNN uses any of the words "anticipate," "assume," "believe," "estimate," "expect," "intend" or similar expressions, NNN is making forward-looking statements. Although management believes that the expectations reflected in such forward-looking statements are based upon present expectations and reasonable assumptions, NNN's actual results could differ materially from those set forth in the forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and NNN undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law. The following is a summary of the risks and uncertainties, although not all risks and uncertainties, that could cause NNN's actual results to differ materially from those presented in NNN's forward-looking statement:
•
changes in financial and economic conditions;
•
inherent risks related to owning real estate and indirect interests in real estate;
•
the financial failure of, or other default in payment by, tenants under their leases and the potential resulting vacancies;
•
NNN's concentration with certain tenants, industries and geographic locations;
•
NNN's dependence on single tenant properties;
•
the successful execution of NNN's acquisition strategies;
•
the illiquid nature of NNN's real estate investments;
•
the degree and nature of NNN's competition;
•
climate change or impacts of weather on NNN's Property Portfolio (as defined below);
•
the accuracy of the tools NNN uses to determine the creditworthiness of its tenants;
•
NNN's ability to obtain debt or equity capital on favorable terms, if at all;
•
the inability to generate sufficient cash flows to service NNN's outstanding debt or to comply with financial and other covenants on its debt instruments;
•
NNN's failure to qualify or remain qualified for taxation as a real estate investment trust ("REIT");
•
failure, weakness, interruption or breach in security of the information systems of NNN or its vendors and tenants; and
•
the other risks identified in "Item 1A. Risk Factors" of NNN's 2025 Annual Report.
These risks and uncertainties may cause NNN's actual future results to differ materially from expected results. Readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. NNN undertakes no obligation to update or revise such forward-looking statements, whether as a result of new information, future events or otherwise.
Overview
NNN, a Maryland corporation, is a fully integrated REIT formed in 1984. NNN acquires, owns, invests in and develops high-quality properties that are leased primarily to tenants under long-term, net leases, with minimal ongoing capital expenditures and are primarily held for investment ("Properties" or "Property Portfolio" or individually a "Property").
As of June 30, 2026, NNN owned 3,774 Properties in all 50 states, the District of Columbia and Puerto Rico, with an aggregate gross leasable area of approximately 40,440,000 square feet and a weighted average remaining lease term of 10.1 years. As of June 30, 2026, 99.1 percent of the Properties were leased.
NNN's management team focuses on certain key indicators to evaluate the financial condition and operating performance of NNN. Key indicators include items such as: the composition of the Property Portfolio (such as tenant, line of trade and geographic diversification), the occupancy rate of the Property Portfolio, certain financial performance metrics and profitability measures, industry trends and industry performance compared to that of NNN.
NNN evaluates the creditworthiness of its significant current and prospective tenants. This evaluation may include reviewing available financial statements, store level financial performance, press releases, public credit ratings from major credit rating agencies, industry news publications and financial market data (debt and equity pricing). NNN may also evaluate the business and operations of its significant tenants, including past payment history and periodically meeting with senior management of certain tenants.
NNN continues to maintain its diversification by tenant, line of trade and geography. NNN's top line of trade concentrations are the automotive service (18.6%), convenience stores (15.9%) and restaurants (including full and limited service) (14.0%) sectors. NNN's management believes these sectors present attractive investment opportunities. The Property Portfolio is geographically concentrated in regions of historically above-average population growth, including the southeastern (25.4%) and southern (24.2%) United States. Given these concentrations, any financial hardship within these sectors or geographic regions could have a material adverse effect on the financial condition and operating performance of NNN.
Additional information related to NNN and the Property Portfolio is included in NNN's 2025 Annual Report.
Results of Operations
Property Analysis
General. The following table summarizes the Property Portfolio:
|
June 30, |
December 31, 2025 |
June 30, |
||||||||||
|
Properties Owned: |
||||||||||||
|
Number |
3,774 |
3,692 |
3,663 |
|||||||||
|
Total gross leasable area (square feet) |
40,440,000 |
39,578,000 |
38,322,000 |
|||||||||
|
States(1) |
50 |
50 |
50 |
|||||||||
|
Properties: |
||||||||||||
|
Leased and unimproved land |
3,739 |
3,628 |
3,590 |
|||||||||
|
Percent of Properties - leased and unimproved land |
99.1 |
% |
98.3 |
% |
98.0 |
% |
||||||
|
Weighted average remaining lease term (years) |
10.1 |
10.2 |
9.8 |
|||||||||
|
Total gross leasable area (square feet) - leased |
40,080,000 |
38,955,000 |
37,476,000 |
|||||||||
|
Total Annualized Base Rent ("ABR")(2) |
$ |
959,145,000 |
$ |
928,081,000 |
$ |
893,782,000 |
||||||
|
(1) |
Plus the District of Columbia and Puerto Rico. |
|
(2) |
ABR represents the monthly cash base rent for all leases in place as of the end of the period multiplied by 12. |
The following table summarizes the diversification of the Property Portfolio for the top 20 lines of trade as a percentage of ABR:
|
Lines of Trade |
June 30, |
December 31, 2025 |
June 30, |
|||||
|
1. |
Automotive service |
18.6% |
18.6% |
18.2% |
||||
|
2. |
Convenience stores |
15.9% |
16.3% |
16.5% |
||||
|
3. |
Restaurants - limited service |
7.7% |
7.9% |
8.2% |
||||
|
4. |
Entertainment |
7.3% |
7.2% |
7.3% |
||||
|
5. |
Dealerships |
6.4% |
6.6% |
6.7% |
||||
|
6. |
Restaurants - full service |
6.3% |
6.4% |
7.0% |
||||
|
7. |
Health and fitness |
3.8% |
3.9% |
4.1% |
||||
|
8. |
Theaters |
3.5% |
3.7% |
3.8% |
||||
|
9. |
Automotive parts |
3.2% |
3.2% |
2.4% |
||||
|
10. |
Equipment rental |
3.0% |
3.1% |
3.1% |
||||
|
11. |
Wholesale clubs |
2.2% |
2.3% |
2.3% |
||||
|
12. |
Early childhood education |
2.2% |
1.4% |
1.1% |
||||
|
13. |
Drug stores |
1.9% |
2.0% |
2.1% |
||||
|
14. |
Home improvement |
1.9% |
1.9% |
2.0% |
||||
|
15. |
Discount retail |
1.9% |
1.4% |
1.4% |
||||
|
16. |
Medical service providers |
1.7% |
1.8% |
1.9% |
||||
|
17. |
Pet supplies and services |
1.7% |
1.7% |
1.6% |
||||
|
18. |
Furniture |
1.2% |
1.2% |
1.3% |
||||
|
19. |
Travel plazas |
1.1% |
1.2% |
1.2% |
||||
|
20. |
Automobile auctions, wholesale |
1.1% |
1.1% |
1.0% |
||||
|
Other |
7.4% |
7.1% |
6.8% |
|||||
|
100.0% |
100.0% |
100.0% |
Property Acquisitions. The following table summarizes the Property acquisitions (dollars in thousands):
|
Quarter Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Acquisitions: |
||||||||||||||||
|
Number of Properties |
89 |
45 |
130 |
127 |
||||||||||||
|
Gross leasable area (square feet)(1) |
1,061,000 |
1,399,000 |
1,365,000 |
2,230,000 |
||||||||||||
|
Weighted average cap rate(2) |
7.3 |
% |
7.4 |
% |
7.4 |
% |
7.4 |
% |
||||||||
|
Total dollars invested(3) |
$ |
291,009 |
$ |
232,536 |
$ |
436,403 |
$ |
464,929 |
||||||||
|
(1) |
Includes additional square footage from completed construction on existing Properties. |
|
(2) |
Calculated as the initial cash annual base rent divided by the total purchase price of the Properties. |
|
(3) |
Includes dollars invested in projects under construction or tenant improvements for each respective period. |
NNN typically funds Property acquisitions either through borrowings under NNN's Credit Facility (as defined in "Capital Structure - Line of Credit Payable"), by issuing its debt or equity securities in the capital markets, with undistributed funds from operations or with proceeds from the sale of Properties.
Property Dispositions. The following table summarizes the properties sold by NNN (dollars in thousands):
|
Quarter Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Number of properties(1) |
26 |
23 |
51 |
33 |
||||||||||||
|
Gross leasable area (square feet) |
195,000 |
358,000 |
441,000 |
430,000 |
||||||||||||
|
Net sales proceeds |
$ |
36,734 |
$ |
51,248 |
$ |
72,561 |
$ |
67,087 |
||||||||
|
Net gain on disposition of real estate |
$ |
9,105 |
$ |
16,198 |
$ |
21,290 |
$ |
20,011 |
||||||||
|
Weighted average cap rate(2) |
5.6 |
% |
6.2 |
% |
6.6 |
% |
5.7 |
% |
||||||||
|
(1) |
Sold 35 vacant and 16 income producing properties during the six months ended June 30, 2026 compared to 14 vacant and 19 income producing properties sold during the six months ended June 30, 2025. |
|
(2) |
Calculated as the cash annual base rent divided by the total gross proceeds received for the occupied properties. |
NNN typically uses the disposition proceeds to either pay down the Credit Facility or reinvest in real estate.
Analysis of Revenues
The following table summarizes NNN's revenues (dollars in thousands):
|
Quarter Ended |
Six Months Ended |
|||||||||||||||||||||||
|
2026 |
2025 |
Change |
2026 |
2025 |
Change |
|||||||||||||||||||
|
Rental Revenues(1) |
$ |
237,827 |
$ |
222,110 |
$ |
15,717 |
$ |
471,796 |
$ |
447,166 |
$ |
24,630 |
||||||||||||
|
Real estate expenses reimbursed from tenants(2) |
4,855 |
4,388 |
467 |
10,900 |
9,906 |
994 |
||||||||||||||||||
|
Rental income |
242,682 |
226,498 |
16,184 |
482,696 |
457,072 |
25,624 |
||||||||||||||||||
|
Interest and other income from real estate transactions |
1,584 |
304 |
1,280 |
1,994 |
584 |
1,410 |
||||||||||||||||||
|
Total revenues |
$ |
244,266 |
$ |
226,802 |
$ |
17,464 |
$ |
484,690 |
$ |
457,656 |
$ |
27,034 |
||||||||||||
|
(1) |
Includes rental income from operating leases, earned income from direct financing leases and percentage rent ("Rental Revenues"). |
|
(2) |
See "Results of Operations - Analysis of Expenses - Real Estate" for additional information. |
Rental Income. Rental income increased for the quarter and six months ended June 30, 2026, compared to the same periods in 2025. The increase is primarily due to the Rental Revenues from NNN's recent Property acquisitions (see "Results of Operations - Property Analysis - Property Acquisitions").
Analysis of Expenses
The following table summarizes NNN's expenses (dollars in thousands):
|
Quarter Ended |
Six Months Ended |
|||||||||||||||||||||||
|
2026 |
2025 |
Change |
2026 |
2025 |
Change |
|||||||||||||||||||
|
General and administrative |
$ |
14,057 |
$ |
11,217 |
$ |
2,840 |
$ |
28,163 |
$ |
24,225 |
$ |
3,938 |
||||||||||||
|
Real estate: |
||||||||||||||||||||||||
|
Reimbursed from tenants |
4,855 |
4,388 |
467 |
10,900 |
9,906 |
994 |
||||||||||||||||||
|
Non-reimbursed |
3,411 |
4,450 |
(1,039 |
) |
7,165 |
8,307 |
(1,142 |
) |
||||||||||||||||
|
Total real estate |
8,266 |
8,838 |
(572 |
) |
18,065 |
18,213 |
(148 |
) |
||||||||||||||||
|
Depreciation and amortization |
71,025 |
68,349 |
2,676 |
141,822 |
132,966 |
8,856 |
||||||||||||||||||
|
Leasing transaction costs |
212 |
74 |
138 |
356 |
204 |
152 |
||||||||||||||||||
|
Impairment losses - real estate, net of recoveries |
8,067 |
4,535 |
3,532 |
18,747 |
6,047 |
12,700 |
||||||||||||||||||
|
Retirement and severance costs |
368 |
191 |
177 |
802 |
2,364 |
(1,562 |
) |
|||||||||||||||||
|
Total operating expenses |
$ |
101,995 |
$ |
93,204 |
$ |
8,791 |
$ |
207,955 |
$ |
184,019 |
$ |
23,936 |
||||||||||||
|
Interest and other income |
$ |
(35 |
) |
$ |
(15 |
) |
$ |
(20 |
) |
$ |
(63 |
) |
$ |
(344 |
) |
$ |
281 |
|||||||
|
Interest expense |
53,487 |
49,282 |
4,205 |
106,213 |
97,005 |
9,208 |
||||||||||||||||||
|
Total other expenses |
$ |
53,452 |
$ |
49,267 |
$ |
4,185 |
$ |
106,150 |
$ |
96,661 |
$ |
9,489 |
||||||||||||
|
As a percentage of total revenues: |
||||||||||||||||||||
|
General and administrative |
5.8 |
% |
4.9 |
% |
5.8 |
% |
5.3 |
% |
||||||||||||
|
Non-reimbursed real estate |
1.4 |
% |
2.0 |
% |
1.5 |
% |
1.8 |
% |
||||||||||||
General and Administrative. General and administrative expenses increased in amount and as a percentage of total revenues for the quarter and six months ended June 30, 2026, as compared to the same periods in 2025. The increase was primarily attributable to an increase in compensation costs.
Real Estate. Total real estate expenses decreased for both the quarter and six months ended June 30, 2026, compared to the same periods in 2025. NNN focuses on non-reimbursed real estate expenses (total real estate expenses, net of reimbursements from tenants). In most cases, these expenses are attributable to (i) Properties for which the lease terms do not obligate the tenant to pay certain operating expenses, or (ii) vacant Properties. Non-reimbursed real estate expenses decreased in amount and as a percentage of total revenues for the quarter and six months ended June 30, 2026, compared to the same periods in 2025 primarily due to a decrease in the number of vacant Properties.
Depreciation and Amortization. Depreciation and amortization expenses increased for the quarter and six months ended June 30, 2026, compared to the same periods in 2025. The increase was primarily attributable to the increase in NNN's Property Portfolio from recent acquisitions and was partially offset by recent dispositions (see "Results of Operations - Property Analysis").
Impairment Losses - Real Estate, Net of Recoveries. 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 for the quarters and six months ended June 30, 2026 and 2025, which were less than one percent of NNN's total assets for the respective periods as reported on the Condensed Consolidated Balance Sheets. Due to NNN's core business of investing in real estate leased primarily to tenants under long-term net leases, the inherent risks of owning commercial real estate and unknown potential changes in financial and economic conditions that may impact NNN's tenants, NNN believes it is reasonably possible to incur real estate impairment charges in the future.
Retirement and Severance Costs. In March 2025, the former Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer retired from employment. During the quarters and six months ended June 30, 2026 and 2025, NNN recorded retirement and severance costs in connection with this retirement and transition agreement along with the departure of certain other associates.
Interest Expense. Interest expense increased for the quarter and six months ended June 30, 2026, compared to the same periods in 2025. The following represents the primary changes in fixed rate long-term debt that impacted interest expense:
•
in July 2025, issued $500,000,000 aggregate principal amount of 4.600% notes due February 2031, and
•
in November 2025, redeemed $400,000,000 aggregate principal amount of 4.000% notes due November 2025.
In addition to the transactions outlined above, the following represents the primary changes in variable rate long-term debt that impacted interest expense:
•
during the six months ended June 30, 2026, NNN drew $500,000,000 on its senior unsecured term loan (the "Term Loan"). The Term Loan had a weighted average outstanding balance of $270,166,000 at a weighted average interest rate of 4.13% for the six months ended June 30, 2026 (see "Capital Structure - Term Loan"), and
•
the Credit Facility had a weighted average outstanding balance of $117,913,000 with a weighted average interest rate of 4.44% for the six months ended June 30, 2026, compared to a weighted average outstanding balance of $113,919,000 with a weighted average interest rate of 5.22% for the same period in 2025.
Liquidity and Capital Resources
NNN's demand for funds has been and will continue to be for (i) payment of operating expenses and dividends, (ii) property acquisitions and construction commitments, (iii) capital expenditures, (iv) payment of principal and interest on its outstanding debt, and (v) other investments.
Financing Strategy. NNN's financing objective is to manage its capital structure effectively in order to provide sufficient capital to execute its operating and investing strategies while servicing its debt requirements, maintaining its investment grade credit ratings, staggering debt maturities and providing value to NNN's stockholders. NNN's capital resources have and will continue to include, if available (i) proceeds from issuing debt or equity in the capital markets; (ii) secured or unsecured borrowings from banks or other lenders; (iii) proceeds from the sale of Properties; and (iv) to a lesser extent, by internally generated funds as well as undistributed funds from operations. However, there can be no assurance that additional financing or capital will be available, or that the terms will be acceptable or advantageous to NNN.
NNN expects to fund both its short-term and long-term liquidity requirements, including investments in additional properties, with cash and cash equivalents, cash provided from operations, borrowings from the Credit Facility, proceeds from the settlement of outstanding forward sale agreements or proceeds from the sale of Properties. As of June 30, 2026, NNN had $4,223,000 of cash and cash equivalents and $1,171,500,000 available for future borrowings under the Credit Facility. In addition, NNN had estimated net proceeds of $272,109,000 available from outstanding unsettled forward sale agreements. NNN may also fund liquidity requirements with new debt or equity issuances. NNN also has the ability to limit future property acquisitions and strategically increase property dispositions. NNN expects these liquidity sources and the discretionary nature of its property acquisition funding needs will allow NNN to meet its financial obligations over the long term.
Cash Flows. NNN had $4,223,000 of cash and cash equivalents, none of which was restricted or cash held in escrow at June 30, 2026. The table below summarizes NNN's cash flows (dollars in thousands):
|
Six Months Ended June 30, |
||||||||
|
2026 |
2025 |
|||||||
|
Cash, cash equivalents and restricted cash: |
||||||||
|
Provided by operating activities |
$ |
328,579 |
$ |
322,702 |
||||
|
Used in investing activities |
(356,708 |
) |
(386,969 |
) |
||||
|
Provided by financing activities |
26,530 |
61,953 |
||||||
|
Decrease in cash, cash equivalents and restricted cash |
(1,599 |
) |
(2,314 |
) |
||||
|
Cash, cash equivalents and restricted cash at the beginning of the period |
5,822 |
9,062 |
||||||
|
Cash, cash equivalents and restricted cash at the end of the period |
$ |
4,223 |
$ |
6,748 |
||||
Cash flow activities include:
Operating Activities. Cash provided by operating activities represents cash received from rental income less cash used for general and administrative and interest expenses. NNN's cash flow from operating activities has been sufficient to pay the distributions for each period presented. The change in cash provided by operations for the six months ended June 30, 2026 and 2025, is the result of changes in revenues and expenses as discussed in "Results of Operations." Cash generated from operations is expected to fluctuate in the future.
Investing Activities. Changes in cash for investing activities are largely attributable to the acquisitions and dispositions of Properties as discussed in "Results of Operations - Property Analysis." NNN typically uses cash on hand, borrowings from its Credit Facility or proceeds from the sale of Properties to fund the acquisition of its Properties.
Financing Activities. NNN's financing activities for the six months ended June 30, 2026, included the following significant transactions:
•
$319,600,000 in net repayments of NNN's Credit Facility,
•
$500,000,000 in borrowings of NNN's Term Loan,
•
$73,279,000 in net proceeds from the issuance of 1,667,232 shares of common stock in connection with the at-the-market equity program ("ATM"),
•
$1,337,000 in net proceeds from the issuance of 30,874 shares of common stock in connection with the Dividend Reinvestment and Stock Purchase Plan ("DRIP"), and
•
$227,122,000 in dividends paid to common stockholders.
Material Cash Requirements
NNN's material cash requirements include (i) long-term debt maturities; (ii) interest on long-term debt; (iii) common stock dividends (although all future distributions will be declared and paid at the discretion of the Board of Directors); and (iv) to a lesser extent, Property construction and other Property related costs that may arise.
The table below presents material cash requirements related to NNN's long-term obligations outstanding as of June 30, 2026 (see "Capital Structure") (dollars in thousands):
|
Date of Obligation |
||||||||||||||||||||||||||||
|
Total |
2026 |
2027 |
2028 |
2029 |
2030 |
Thereafter |
||||||||||||||||||||||
|
Long-term debt(1) |
$ |
4,550,000 |
$ |
350,000 |
$ |
400,000 |
$ |
400,000 |
$ |
- |
$ |
400,000 |
$ |
3,000,000 |
||||||||||||||
|
Long-term debt - interest(2) |
1,911,506 |
92,100 |
169,733 |
155,067 |
141,450 |
134,367 |
1,218,789 |
|||||||||||||||||||||
|
Term Loan |
500,000 |
- |
- |
- |
500,000 |
- |
- |
|||||||||||||||||||||
|
Term Loan - interest(3) |
54,153 |
10,315 |
20,630 |
20,630 |
2,578 |
- |
- |
|||||||||||||||||||||
|
Credit Facility |
28,500 |
- |
- |
28,500 |
- |
- |
- |
|||||||||||||||||||||
|
Total contractual cash obligations |
$ |
7,044,159 |
$ |
452,415 |
$ |
590,363 |
$ |
604,197 |
$ |
644,028 |
$ |
534,367 |
$ |
4,218,789 |
||||||||||||||
|
(1) |
Includes only principal amounts outstanding under notes payable and excludes unamortized note discounts and debt costs. |
|
(2) |
Interest calculation on notes payable based on stated rate of the principal amount. |
|
(3) |
Interest calculation on Term Loan based on weighted average rate of 4.13% (see "Capital Structure - Term Loan"). |
Property Construction. NNN has committed to fund construction on 26 Properties. The improvements on such Properties are estimated to be completed within 12 to 18 months. These construction commitments, at June 30, 2026, are outlined in the table below (dollars in thousands):
|
Total commitment(1) |
$ |
145,513 |
||
|
Less amount funded |
(70,199 |
) |
||
|
Remaining commitment |
$ |
75,314 |
|
(1) |
Includes land, construction costs, tenant improvements, lease costs, capitalized interest and third-party costs. |
Management anticipates satisfying these obligations with a combination of NNN's cash provided from operations, current capital resources on hand, its Credit Facility, debt or equity financings and property dispositions.
Properties. In most cases, 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. Therefore, management anticipates that capital demands to meet obligations with respect to these Properties will be modest for the foreseeable future and can be met with funds from operations and working capital. Certain Properties are subject to leases under which NNN retains responsibility for specific costs and expenses associated with the Property. Management anticipates the costs associated with these Properties, NNN's vacant Properties or those Properties that become vacant will also be met with funds from operations and working capital. NNN may be required to borrow under its Credit Facility or use other sources of capital in the event of significant capital expenditures or major repairs.
The lost revenues and increased property expenses resulting from vacant Properties or the inability to collect lease payments could have a material adverse effect on the liquidity and results of operations if NNN is unable to re-lease the Properties at comparable rental rates and in a timely manner.
As of June 30, 2026, NNN owned 35 vacant, un-leased Properties which accounted for less than one percent of total Properties and of aggregate gross leasable area held in the Property Portfolio.
Additionally, as of July 31, 2026, less than one percent of total ABR, total Properties and aggregate gross leasable area held in the Property Portfolio, was leased to one tenant currently in bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. As a result, this tenant has the right to reject or affirm their leases with NNN.
NNN generally monitors the financial performance of its significant tenants on an ongoing basis.
Dividends. One of NNN's primary objectives is to distribute a substantial portion of its funds available from operations to its stockholders in the form of dividends, while retaining sufficient cash for reserves and working capital purposes and maintaining its status as a REIT.
The following table outlines the dividends declared and paid for NNN's common stock (dollars in thousands, except per share data):
|
Quarter Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Dividends |
$ |
113,620 |
$ |
108,566 |
$ |
227,122 |
$ |
216,901 |
||||||||
|
Per share |
0.600 |
0.580 |
1.200 |
1.160 |
||||||||||||
In July 2026, NNN declared a dividend of $0.620 per share, which is payable in August 2026 to its common stockholders of record as of July 31, 2026.
Capital Structure
NNN has used, and expects to use in the future, cash and various forms of debt and equity securities to fund property acquisitions and construction on its Properties and to pay down or refinance its outstanding debt.
The following is a summary of NNN's total debt outstanding as of (dollars in thousands):
|
June 30, |
Percentage |
December 31, 2025 |
Percentage |
|||||||||||||
|
Line of credit payable |
$ |
28,500 |
0.6 |
% |
$ |
348,100 |
7.2 |
% |
||||||||
|
Term loan payable, net |
496,835 |
9.9 |
% |
- |
- |
% |
||||||||||
|
Notes payable, net |
4,475,938 |
89.5 |
% |
4,472,324 |
92.8 |
% |
||||||||||
|
Total debt outstanding |
$ |
5,001,273 |
100.0 |
% |
$ |
4,820,424 |
100.0 |
% |
||||||||
Line of Credit Payable. NNN's $1,200,000,000 unsecured revolving credit facility (the "Credit Facility") had a weighted average outstanding balance of $117,913,000 and a weighted average interest rate of 4.44% during the six months ended June 30, 2026. In December 2025, NNN entered into an amendment to the Credit Facility to remove the 10 basis point Secured Overnight Financing Rate ("SOFR") credit spread adjustment. In June 2026, NNN amended its Credit Facility to lower the applicable margin by five basis points, resulting in a new interest rate of SOFR plus 72.5 basis points, subject to change based on a tiered margin structure tied to NNN's credit rating. Additionally, as part of NNN's environmental, social and governance ("ESG") initiative, pricing may be reduced if specified ESG metrics are achieved. The Credit Facility matures in April 2028, unless the Company exercises its options to extend maturity to April 2029. The Credit Facility also includes an accordion feature which permits NNN to increase the facility size up to $2,000,000,000, subject to lender approval. In connection with the Credit Facility, NNN incurred loan costs of $36,335,000 which are included in debt costs on the Condensed Consolidated Balance Sheets. As of June 30, 2026, there was $28,500,000 outstanding and $1,171,500,000 was available for future borrowings under the Credit Facility, and NNN was in compliance with the Credit Facility financial covenants.
Term Loan. In December 2025, NNN entered into a $300,000,000 senior unsecured term loan (the "Term Loan") featuring a six-month delayed draw commitment period. In June 2026, NNN exercised its accordion option to increase the facility size to $500,000,000 and amended the Term Loan to reduce the applicable margin from 85 to 80 basis points. As amended, the Term Loan bears interest at SOFR plus 80 basis points, subject to a tiered margin structure based on NNN's credit rating. The Term Loan matures in February 2029, with options to extend maturity to February 2031.
To hedge the risk of changes in forecasted interest payments on the Term Loan, NNN entered into forward starting swaps with a total notional value of $400,000,000 that fix SOFR at 3.30%. As of June 30, 2026, NNN had the following outstanding interest rate derivatives that were designated as cash flow hedges (dollars in thousands):
|
# of Swap Agreements |
Aggregate Notional Amount |
Fixed Rate Paid(1) |
Estimated Fair Value(2) |
Effective Date |
Maturity Date |
|||||||||
|
Two(3) |
$ |
200,000 |
3.22% |
$ |
3,271 |
January 15, 2026 |
January 15, 2029 |
|||||||
|
One(3) |
100,000 |
3.32% |
1,436 |
February 13, 2026 |
February 15, 2029 |
|||||||||
|
One(3) |
100,000 |
3.43% |
1,147 |
June 15, 2026 |
February 15, 2029 |
|||||||||
|
Total |
$ |
400,000 |
3.30% |
$ |
5,854 |
|||||||||
|
(1) |
Fixed rate paid is average of strike price for the associated hedges. |
|
(2) |
Included in other assets and other comprehensive income on the Condensed Consolidated Balance Sheets (see "Note 8 - Fair value of Financial Instruments"). |
|
(3) |
No hedge ineffectiveness was recognized during the six months ended June 30, 2026. |
During the six months ended June 30, 2026, the Term Loan had a weighted average outstanding balance of $270,166,000 and a weighted average interest rate of 4.13%, inclusive of the outstanding swaps and the applicable margin. In connection with the Term Loan, NNN incurred loan costs of $3,604,000 which are included in term loan payable on the Condensed Consolidated Balance Sheets. As of June 30, 2026, there was $500,000,000 outstanding, and NNN was in compliance with the Term Loan financial covenants.
Universal Shelf Registration Statement. In August 2023, NNN filed a shelf registration statement with the Securities and Exchange Commission (the "Commission") which became automatically effective ("Universal Shelf"). The Universal Shelf permits the issuance by NNN of an indeterminate amount of debt and equity securities, including preferred stock, depositary shares, common stock, stock purchase contracts, rights, warrants and units.
Debt Securities - Notes Payable. Each of NNN's outstanding series of unsecured notes is summarized in the table below (dollars in thousands):
|
Notes(1) |
Issue Date |
Principal |
Discount(2) |
Net |
Stated |
Effective |
Maturity Date |
|||||||||||||
|
2026(4) |
December 2016 |
$ |
350,000 |
$ |
3,860 |
$ |
346,140 |
3.600% |
3.733% |
December 2026(5)(6) |
||||||||||
|
2027(4) |
September 2017 |
400,000 |
1,628 |
398,372 |
3.500% |
3.548% |
October 2027(5) |
|||||||||||||
|
2028(4) |
September 2018 |
400,000 |
2,848 |
397,152 |
4.300% |
4.388% |
October 2028(5) |
|||||||||||||
|
2030(4) |
March 2020 |
400,000 |
1,288 |
398,712 |
2.500% |
2.536% |
April 2030(5) |
|||||||||||||
|
2031(4) |
July 2025 |
500,000 |
4,090 |
495,910 |
4.600% |
4.766% |
February 2031(5) |
|||||||||||||
|
2033 |
August 2023 |
500,000 |
11,620 |
488,380 |
5.600% |
5.905% |
October 2033 |
|||||||||||||
|
2034 |
May 2024 |
500,000 |
6,160 |
493,840 |
5.500% |
5.662% |
June 2034 |
|||||||||||||
|
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(4) |
September 2021 |
450,000 |
10,422 |
439,578 |
3.000% |
3.118% |
April 2052 |
|||||||||||||
|
$ |
4,550,000 |
$ |
60,627 |
$ |
4,489,373 |
|||||||||||||||
|
(1) |
The proceeds from each note issuance were used to (i) pay down the outstanding balance on the Credit Facility, (ii) redeem notes payable prior to maturity, (iii) redeem outstanding preferred stock, (iv) fund future property acquisitions, and/or (v) for general corporate purposes. |
|
(2) |
The note discounts are amortized to interest expense over the respective term of each debt obligation using the effective interest method. |
|
(3) |
Includes the effects of the discount at issuance. |
|
(4) |
NNN entered into forward starting swaps which hedged 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 hedged forecasted transaction using the effective interest method. |
|
(5) |
The aggregate principal balance of the unsecured note maturities for the next five years is $2,050,000. |
|
(6) |
NNN may 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 note offerings, NNN incurred debt issuance costs totaling $44,420,000 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 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 June 30, 2026, NNN was in compliance with those covenants.
NNN does not use derivatives for trading or speculative purposes or currently have any derivatives that are not designated as hedges.
Equity Securities
At-The-Market Offerings. NNN has established an ATM which allows NNN to sell shares of common stock from time to time. The following table outlines NNN's ATM: (dollars in thousands):
|
2023 ATM |
||||
|
Shelf registration statement: |
||||
|
Effective date |
August 2023 |
|||
|
Termination date |
August 2026 |
|||
|
Total allowable shares |
17,500,000 |
|||
|
As of June 30, 2026: |
||||
|
Total shares issued |
8,247,225 |
|||
|
Total unsettled shares subject to forward sale agreements(1) |
5,999,528 |
|||
|
Total remaining allowable shares(2) |
3,253,247 |
|||
|
Anticipated net proceeds from unissued shares(3) |
$ |
272,099 |
||
|
(1) |
NNN may physically settle the forward sale agreements (by the delivery of shares of common stock) and receive proceeds from the sales of those shares on one or more forward settlement dates, which shall occur no later than July 2027. |
|
(2) |
Includes impact of outstanding forward sale agreements. |
|
(3) |
Includes impact of forward price adjustments through June 30, 2026. Subject to certain conditions, NNN has the right to elect cash or net share settlement rather than physical settlement of the forward sale agreements, which, if elected, could result in cash outflows rather than share issuances. NNN currently intends to physically settle its forward sale agreements. |
The following table outlines the common stock activity pursuant to NNN's ATM (dollars in thousands, except per share data):
|
Quarter Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Common stock: |
||||||||||||||||
|
Shares(1) |
5,999,528 |
236,906 |
7,666,760 |
236,906 |
||||||||||||
|
Average sale price per share |
$ |
45.91 |
$ |
43.18 |
$ |
45.70 |
$ |
43.18 |
||||||||
|
Common stock issued: |
||||||||||||||||
|
Shares(2) |
1,667,232 |
236,906 |
1,667,232 |
236,906 |
||||||||||||
|
Average price per share (gross) |
$ |
44.76 |
$ |
43.18 |
$ |
44.76 |
$ |
43.18 |
||||||||
|
Gross proceeds |
$ |
74,617 |
$ |
10,230 |
$ |
74,617 |
$ |
10,230 |
||||||||
|
Less: stock issuance costs(3) |
(1,238 |
) |
(167 |
) |
(1,338 |
) |
(252 |
) |
||||||||
|
Net proceeds |
$ |
73,379 |
$ |
10,063 |
$ |
73,279 |
$ |
9,978 |
||||||||
|
(1) |
Includes 5,999,528, and 7,666,760 shares of common stock sold pursuant to forward sale agreements as of the quarter and six months ended June 30, 2026, respectively. There were no shares of common stock sold pursuant to forward sales agreements as of the quarter and six months ended June 30, 2025. |
|
(2) |
Includes 1,667,232 shares of common stock issued in settlement of forward sale agreements during the quarter and six months ended June 30, 2026. There were no shares of common stock issued in settlement of forward sale agreements during the quarter and six months ended June 30, 2025. |
|
(3) |
Stock issuance costs consist primarily of underwriters' and agents' fees and commissions and legal and accounting fees. |
Dividend Reinvestment and Stock Purchase Plan. In February 2024, NNN filed a shelf registration statement for its DRIP with the Commission that was automatically effective and permits NNN to issue up to 4,000,000 shares of common stock. NNN's DRIP provides an economical and convenient way for current stockholders and other interested new investors to invest in NNN's common stock. The following outlines the common stock issuances pursuant to NNN's DRIP (dollars in thousands):
|
Quarter Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
|
2026 |
2025 |
2026 |
2025 |
|||||||||||||
|
Shares of common stock |
14,553 |
17,316 |
30,874 |
34,092 |
||||||||||||
|
Net proceeds |
$ |
638 |
$ |
707 |
$ |
1,337 |
$ |
1,363 |
||||||||
Critical Accounting Estimates
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by U.S. generally accepted accounting principles. The unaudited condensed consolidated financial statements reflect all adjustments (including normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. The preparation of NNN's unaudited condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses as well as other disclosures in the unaudited condensed consolidated financial statements. Estimates are sensitive to evaluations by management about current and future expectations of market and economic conditions. On an ongoing basis, management evaluates its estimates and assumptions; however, actual results may differ from these estimates and assumptions, which in turn could have a material impact on NNN's consolidated financial statements. A summary of NNN's critical accounting estimates is included in NNN's 2025 Annual Report. NNN has not made any material changes to these policies during the periods covered by this Quarterly Report on Form 10-Q.
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