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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission file number 001-11290

NNN REIT, INC.

(Exact name of registrant as specified in its charter)

     Maryland

     56-1431377

     (State or other jurisdiction of
incorporation or organization)

     (I.R.S. Employer Identification No.)

450 South Orange Avenue, Suite 900

Orlando, Florida 32801

(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (407) 265-7348

Securities registered pursuant to Section 12(b) of the Act:


Title of each class:	Trading Symbol(s):	Name of exchange on which registered:
Common Stock, $0.01 par value	NNN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 30, 2025, the registrant had 189,920,815 shares of common stock, $0.01 par value, outstanding.


		PAGE
Part I – Financial Information
Item 1.	Financial Statements (unaudited):
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income and Comprehensive Income	2
	Condensed Consolidated Statements of Equity	3
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
Part II – Other Information
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	34
Signatures		36

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NNN REIT, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)


	September 30, 2025			December 31, 2024
	(unaudited)
ASSETS
Real estate portfolio, net of accumulated depreciation and amortization	$	9,204,697		$	8,746,168
Cash and cash equivalents		157,917			8,731
Restricted cash and cash held in escrow		776			331
Receivables, net of allowance of $573 and $617, respectively		2,266			2,975
Accrued rental income, net of allowance of $3,325 and $4,156, respectively		33,897			34,005
Debt costs, net of accumulated amortization of $29,174 and $27,002, respectively		6,973			8,958
Other assets		73,580			71,560
Total assets	$	9,480,106		$	8,872,728
LIABILITIES AND EQUITY
Liabilities:
Notes payable, net of unamortized discount and unamortized debt costs	$	4,870,460		$	4,373,803
Accrued interest payable		79,926			29,699
Other liabilities		109,357			106,951
Total liabilities		5,059,743			4,510,453

Equity:
Stockholders' equity:
Common stock, $0.01 par value. Authorized 375,000,000 shares; 189,884,648 and 187,540,929 shares issued and outstanding, respectively		1,901			1,877
Capital in excess of par value		5,290,592			5,197,644
Accumulated deficit		(865,171	)		(829,287	)
Accumulated other comprehensive income (loss)		(6,959	)		(7,959	)
Total equity		4,420,363			4,362,275
Total liabilities and equity	$	9,480,106		$	8,872,728

See accompanying notes to condensed consolidated financial statements.

NNN REIT, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(dollars in thousands, except per share data)

(unaudited)


	Quarter Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Revenues:
Rental income	$	229,773		$	218,155		$	686,845		$	649,120
Interest and other income from real estate transactions		386			409			970			1,664
		230,159			218,564			687,815			650,784
Operating expenses:
General and administrative		11,056			11,209			35,281			35,582
Real estate		9,128			7,263			27,341			21,175
Depreciation and amortization		67,252			63,369			200,218			186,487
Leasing transaction costs		131			22			335			75
Impairment losses – real estate, net of recoveries		7,195			760			13,242			2,908
Retirement and severance costs		690			156			3,054			626
		95,452			82,779			279,471			246,853
Gain on disposition of real estate		12,570			7,765			32,581			30,207
Earnings from operations		147,277			143,550			440,925			434,138
Other expenses (revenues):
Interest and other income		(2,940	)		(845	)		(3,284	)		(1,940	)
Interest expense		53,378			46,491			150,383			137,137
		50,438			45,646			147,099			135,197
Net earnings	$	96,839		$	97,904		$	293,826		$	298,941
Net earnings per share:
Basic	$	0.51		$	0.53		$	1.57		$	1.63
Diluted	$	0.51		$	0.53		$	1.56		$	1.63
Weighted average shares outstanding:
Basic		187,838,711			184,007,176			187,200,093			182,757,097
Diluted		188,332,789			184,561,431			187,686,331			183,301,570
Other comprehensive income:
Net earnings	$	96,839		$	97,904		$	293,826		$	298,941
Amortization of interest rate hedges		480			450			1,409			1,692
Fair value of forward starting swaps		—			—			(409	)		—
Total comprehensive income	$	97,319		$	98,354		$	294,826		$	300,633

See accompanying notes to condensed consolidated financial statements.

NNN REIT, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Quarter Ended September 30, 2025

(dollars in thousands, except per share data)

(unaudited)


	Common Stock		Capital in Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Equity
Balances at June 30, 2025	$	1,884	$	5,217,161		$	(849,201	)	$	(7,439	)	$	4,362,405
Net earnings		—		—			96,839			—			96,839
Dividends declared and paid:
$0.600 per share of common stock		—		599			(112,809	)		—			(112,210	)
Issuance of common stock:
8,614 shares – director compensation		—		267			—			—			267
1,187 shares – stock purchase plan		—		48			—			—			48
1,655,053 shares – ATM equity program		17		70,996			—			—			71,013
5,695 restricted shares – net of forfeitures		—		—			—			—			—
Stock issuance costs		—		(1,277	)		—			—			(1,277	)
Amortization of deferred compensation		—		2,798			—			—			2,798
Amortization of interest rate hedges		—		—			—			480			480
Balances at September 30, 2025	$	1,901	$	5,290,592		$	(865,171	)	$	(6,959	)	$	4,420,363

See accompanying notes to condensed consolidated financial statements.

NNN REIT, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY – CONTINUED

Quarter Ended September 30, 2024

(dollars in thousands, except per share data)

(unaudited)


	Common Stock		Capital in Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Equity
Balances at June 30, 2024	$	1,838	$	5,012,642		$	(810,689	)	$	(8,869	)	$	4,194,922
Net earnings		—		—			97,904			—			97,904
Dividends declared and paid:
$0.580 per share of common stock		—		635			(106,077	)		—			(105,442	)
Issuance of common stock:
8,614 shares – director compensation		—		320			—			—			320
1,074 shares – stock purchase plan		—		49			—			—			49
3,848,657 shares – ATM equity program		39		181,095			—			—			181,134
Stock issuance costs		—		(2,909	)		—			—			(2,909	)
Amortization of deferred compensation		—		2,498			—			—			2,498
Amortization of interest rate hedges		—		—			—			450			450
Balances at September 30, 2024	$	1,877	$	5,194,330		$	(818,862	)	$	(8,419	)	$	4,368,926

See accompanying notes to condensed consolidated financial statements.

NNN REIT, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY – CONTINUED

Nine Months Ended September 30, 2025

(dollars in thousands, except per share data)

(unaudited)


	Common Stock		Capital in Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Equity
Balances at December 31, 2024	$	1,877	$	5,197,644		$	(829,287	)	$	(7,959	)	$	4,362,275
Net earnings		—		—			293,826			—			293,826
Dividends declared and paid:
$1.760 per share of common stock		1		1,841			(329,710	)		—			(327,868	)
Issuance of common stock:
26,243 shares – director compensation		—		802			—			—			802
4,127 shares – stock purchase plan		—		168			—			—			168
1,891,959 shares – ATM equity program		19		81,224			—			—			81,243
396,624 restricted shares – net of forfeitures		4		(4	)		—			—			—
Stock issuance costs		—		(1,529	)		—			—			(1,529	)
Amortization of deferred compensation		—		10,446			—			—			10,446
Amortization of interest rate hedges		—		—			—			1,409			1,409
Fair value of forward starting swap		—		—			—			(409	)		(409	)
Balances at September 30, 2025	$	1,901	$	5,290,592		$	(865,171	)	$	(6,959	)	$	4,420,363

See accompanying notes to condensed consolidated financial statements.

NNN REIT, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY – CONTINUED

Nine Months Ended September 30, 2024

(dollars in thousands, except per share data)

(unaudited)


	Common Stock		Capital in Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Equity
Balances at December 31, 2023	$	1,826	$	4,971,625		$	(805,883	)	$	(10,111	)	$	4,157,457
Net earnings		—		—			298,941			—			298,941
Dividends declared and paid:
$1.710 per share of common stock		—		1,941			(311,920	)		—			(309,979	)
Issuance of common stock:
27,838 shares – director compensation		—		959			—			—			959
3,061 shares – stock purchase plan		—		132			—			—			132
4,652,100 shares – ATM equity program		47		214,814			—			—			214,861
344,525 restricted shares – net of forfeitures		4		(4	)		—			—			—
Stock issuance costs		—		(3,219	)		—			—			(3,219	)
Amortization of deferred compensation		—		8,082			—			—			8,082
Amortization of interest rate hedges		—		—			—			1,692			1,692
Balances at September 30, 2024	$	1,877	$	5,194,330		$	(818,862	)	$	(8,419	)	$	4,368,926

See accompanying notes to condensed consolidated financial statements.

NNN REIT, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)


	Nine Months Ended September 30,
	2025			2024
Cash flows from operating activities:
Net earnings	$	293,826		$	298,941
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		200,218			186,487
Impairment losses – real estate, net of recoveries		13,242			2,908
Amortization of notes payable discount		2,545			2,149
Amortization of debt costs		4,574			4,538
Amortization of interest rate hedges		1,409			1,692
Settlement of forward starting swaps		(409	)		—
Gain on disposition of real estate		(32,581	)		(30,207	)
Performance incentive plan expense		12,194			9,976
Performance incentive plan payment		(1,702	)		(1,274	)
Change in operating assets and liabilities, net of assets acquired and liabilities assumed:
Decrease in receivables		709			1,425
Decrease (increase) in accrued rental income		(715	)		8
Increase in other assets		(190	)		(1,057	)
Increase in accrued interest payable		50,227			41,025
Increase (decrease) in other liabilities		(2,479	)		1,353
Other		95			(138	)
Net cash provided by operating activities		540,963			517,826
Cash flows from investing activities:
Proceeds from the disposition of real estate		108,668			106,764
Additions to real estate		(742,419	)		(351,149	)
Principal payments received on mortgages and notes receivable		460			470
Other		(1,554	)		(1,099	)
Net cash used in investing activities		(634,845	)		(245,014	)

See accompanying notes to condensed consolidated financial statements.

NNN REIT, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS – CONTINUED

(dollars in thousands)

(unaudited)


	Nine Months Ended September 30,
	2025			2024
Cash flows from financing activities:
Proceeds from line of credit payable	$	618,000		$	449,000
Repayment of line of credit payable		(618,000	)		(581,000	)
Proceeds from notes payable		495,910			493,840
Repayment of notes payable		—			(350,000	)
Payment of debt issuance costs		(4,411	)		(13,103	)
Proceeds from issuance of common stock		83,253			216,934
Stock issuance costs		(1,529	)		(3,206	)
Payment of common stock dividends		(329,710	)		(311,920	)
Net cash provided by (used in) financing activities		243,513			(99,455	)
Net increase in cash, cash equivalents and restricted cash(1)		149,631			173,357
Cash, cash equivalents and restricted cash at beginning of period(1)		9,062			5,155
Cash, cash equivalents and restricted cash at end of period(1)	$	158,693		$	178,512
Supplemental disclosure of cash flow information:
Interest paid, net of amount capitalized	$	93,548		$	92,477
Supplemental disclosure of noncash investing and financing activities:
Change in other comprehensive income	$	1,000		$	1,692
Change in work in progress accrual	$	5,537		$	(2,539	)


(1)	Cash, cash equivalents and restricted cash is the aggregate of cash and cash equivalents and restricted cash and cash held in escrow from the Condensed Consolidated Balance Sheets. As of September 30, 2025, December 31, 2024 and September 30, 2024, NNN had restricted cash of $776, $331 and $4,986, respectively.

See accompanying notes to condensed consolidated financial statements.

NNN REIT, INC.

and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2025

(Unaudited)

Note 1 – Organization and Summary of Significant Accounting Policies:

Organization and Nature of Business. NNN REIT, Inc., a Maryland corporation, is a fully integrated real estate investment trust (“REIT”) formed in 1984. The term "NNN" or the "Company" refers to NNN REIT, Inc. and its consolidated subsidiaries. NNN may elect to treat certain of its subsidiaries as taxable REIT subsidiaries.

NNN's assets primarily include real estate assets. NNN acquires, owns, invests in and develops high-quality properties that are leased primarily to tenants under long-term, net leases and are primarily held for investment ("Properties" or "Property Portfolio", or individually a "Property").


		September 30, 2025
Property Portfolio:
Total Properties		3,697
Gross leasable area (square feet)		39,209,000
States		50
Weighted average remaining lease term (years)		10.1

In accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") guidance included in Topic 280, Segment Reporting, NNN's operations are reported within one reportable segment in the unaudited condensed consolidated financial statements and all properties are considered part of the Properties or Property Portfolio. As such, property counts and calculations involving property counts reflect all NNN properties. See additional disclosure in "Note 7 – Segment Information."

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. Operating results for the quarter and nine months ended September 30, 2025, may not be indicative of the results that may be expected for the year ending December 31, 2025. Amounts as of December 31, 2024, included in the condensed consolidated financial statements have been derived from the audited consolidated financial statements as of that date. The unaudited condensed consolidated financial statements, included herein, should be read in conjunction with the consolidated financial statements and notes thereto as well as Management's Discussion and Analysis of Financial Condition and Results of Operations in NNN's Form 10-K for the year ended December 31, 2024.

Principles of Consolidation. NNN's unaudited condensed consolidated financial statements include the accounts of each of the respective majority owned and controlled affiliates, including transactions whereby NNN has been determined to be the primary beneficiary in accordance with the FASB ASC guidance included in Topic 810, Consolidation. All significant intercompany account balances and transactions have been eliminated.

Real Estate Portfolio. NNN records the acquisition of real estate at cost, including acquisition and closing costs. The cost of Properties developed or funded by NNN includes direct and indirect costs of construction, property taxes, interest, third-party costs and other miscellaneous costs incurred during the development period until the project is substantially completed and available for occupancy. NNN recorded $1,920,000 and $4,744,000 in capitalized interest during the development period for the nine months ended September 30, 2025 and 2024, respectively, of which $457,000 and $1,268,000 was recorded during the quarters ended September 30, 2025 and 2024, respectively.

Purchase Accounting for Acquisition of Real Estate. In accordance with the FASB ASC Topic 805, Business Combinations, consideration for the real estate acquired is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and, if applicable, to identified intangible assets and liabilities, consisting of the value of above-market and below-market leases and the value of in-place leases, as applicable, based on their respective fair values.

The fair value estimate is sensitive to significant assumptions, such as establishing a range of relevant market assumptions for land, building and rent and where the acquired property falls within that range. These market assumptions for land, building and rent use the most relevant comparable properties for an acquisition. The final value relies upon ranking comparable properties' attributes from most to least similar.

The fair value of the tangible assets of an acquired property is determined by valuing the property as if it were vacant, and the "as-if-vacant" value is then allocated to land, building and tenant improvements based on the determination of their fair values.

In allocating the fair value of the identified intangible assets and liabilities of an acquired property, above-market and below-market in-place lease values are recorded as other assets or liabilities based on the present value (using an interest rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to the in-place leases and (ii) management's estimate of fair market lease rates for the corresponding in-place leases, measured over a period equal to the remaining term of the lease and the renewal option terms if it is probable that the tenant will exercise options. The capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. The capitalized below-market lease values are amortized as an increase to rental income over the initial term unless the Company believes that it is likely that the tenant will renew the lease for an option term whereby the Company amortizes the value attributable to the renewal over the renewal period.

The aggregate value of other acquired intangible assets, consisting of in-place leases, is valued by comparing the purchase price paid for a property after adjusting for existing in-place leases to the estimated fair value of the property as-if-vacant, determined as set forth above. This intangible asset is amortized to expense over the remaining non-cancelable periods of the respective leases. If a lease were to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be written off in that period. The value of tenant relationships is reviewed on individual transactions to determine if future value was derived from the acquisition.

Lease Accounting. NNN records its leases on the Property Portfolio in accordance with FASB ASC Topic 842, Leases ("ASC 842").

NNN's real estate is typically leased to tenants under triple-net leases, whereby the tenant is responsible for all operating expenses relating to the Property, including utilities, real estate taxes and assessments, property and liability insurance, maintenance, repairs and capital expenditures. The leases on the Property Portfolio are predominantly classified as operating leases and are accounted for as follows:

Operating method – Properties with leases accounted for using the operating method are recorded at the cost of the real estate and depreciated on the straight-line method over their estimated remaining useful lives, which generally range from 20 to 40 years for buildings and improvements and 15 years for land improvements. Leasehold interests are amortized on the straight-line method over the terms of their respective leases. Revenue is recognized as rentals are earned and expenses (including depreciation) are charged to operations as incurred. When scheduled rentals vary during the lease term, income is recognized on a straight-line basis so as to produce a constant periodic rent over the term of the lease. Accrued rental income is the aggregate difference between the scheduled rents which vary during the lease term and the income recognized on a straight-line basis.

NNN adopted certain practical expedients in ASC 842 and does not separate the non-lease components from the lease components when the timing and patterns of transfer for the lease and non-lease components are the same and the lease is classified as an operating lease. As a result, all income earned pursuant to tenant leases is reflected as one-line, rental income, in the Condensed Consolidated Statements of Income and Comprehensive Income. In addition, NNN records right-of-use assets and operating lease liabilities as lessee under operating leases in accordance with ASC 842.

Collectability. In accordance with ASC 842, NNN reviews the collectability of its lease payments on an ongoing basis. NNN considers collectability indicators when analyzing accounts receivable (and accrued rent), historical bad debt levels, tenant credit-worthiness and current economic trends, all of which assist in evaluating the probability of outstanding and future rental income collections and the adequacy of the allowance for doubtful accounts. In addition, tenants in bankruptcy are analyzed and considerations are made in connection with the expected recovery of pre-petition and post-petition bankruptcy claims.

When NNN deems the collection of rental income from a tenant not probable, uncollected and previously recognized rental revenue and any related accrued rent are reversed as a reduction to rental income and, subsequently, rental income is only recognized when cash receipts are received. At this point, a tenant is deemed cash basis for accounting purposes. If NNN subsequently deems the collection of rental income is probable, any related accrued rental income or expense is restored.

As a result of the review of collectability, NNN recorded a write-off of $2,471,000 and $709,000 of outstanding receivables and related accrued rent during the nine months ended September 30, 2025 and 2024, respectively, and reclassified certain tenants as cash basis for accounting purposes.

The following table summarizes those tenants classified as cash basis for accounting purposes as of September 30:


	2025				2024
Number of tenants		13				11
Cash basis tenants as a percent of:
Total Properties		1.9	%			4.3	%
% of Annualized Base Rent ("ABR")(1)		4.4	%	(2)		5.6	%	(3)
% of gross leasable area		7.0	%			6.5	%


(1)	ABR represents the monthly cash base rent for all leases in place as of the end of the period multiplied by 12. Based on ABR of:
	(2)	$912,218,000 as of September 30, 2025.
	(3)	$850,976,000 as of September 30, 2024.

During the nine months ended September 30, 2025 and 2024, NNN recognized $25,366,000 and $31,330,000, respectively, of rental income from certain tenants for periods following their classification to cash basis for accounting purposes, of which $10,050,000 and $10,446,000 was recognized during the quarters ended September 30, 2025 and 2024, respectively.

NNN includes an allowance for doubtful accounts in rental income on the Condensed Consolidated Statements of Income and Comprehensive Income.

Real Estate – Held For Sale. Real estate held for sale is not depreciated and is recorded at the lower of cost or fair value, less cost to sell. On a quarterly basis, the Company evaluates its Properties for held for sale classification based on specific criteria as outlined in FASB ASC Topic 360, Property, Plant and Equipment, including management's intent to commit to a plan to sell the asset. NNN anticipates the disposition of Properties classified as held for sale to occur within 12 months. At September 30, 2025 and December 31, 2024, NNN had recorded real estate held for sale of $22,863,000 (15 properties) and $283,000 (two properties), respectively, in real estate portfolio on the Condensed Consolidated Balance Sheets. The properties classified as held for sale as of December 31, 2024 were sold during the nine months ended September 30, 2025.

Real Estate Dispositions. When real estate is disposed, the related cost, accumulated depreciation or amortization and any accrued rental income from operating leases and the net investment from direct financing leases are removed from the accounts and gains and losses from the dispositions are reflected in income. FASB ASC Topic 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets ("ASC 610-20"), provides guidance for recognizing gains and losses from the transfer of nonfinancial assets in contracts with noncustomers. An entity that transfers a nonfinancial asset in the scope of ASC 610-20 follows a two-step derecognition model to determine whether (and when) to derecognize the asset. NNN determined the key revenue stream impacted by ASC 610-20 is gain on disposition of real estate reported on the Condensed Consolidated Statements of Income and Comprehensive Income. In accordance with ASC 610-20, NNN evaluates any separate contracts or performance obligations to determine proper timing and/or amount of revenue recognition, as well as transfer of control and transaction price allocation in determining the amount of gain or loss to record.

Impairment – Real Estate. 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. These indicators include, but are not limited to: changes in real estate market conditions, the ability of NNN to re-lease properties that are currently vacant or become vacant, properties reclassified as held for sale, persistent vacancies greater than one year and properties leased to tenants in bankruptcy. Management evaluates whether an impairment in carrying value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges), and the residual value of the real estate, with the carrying value of the individual asset. The future undiscounted cash flows are primarily driven by estimated future market rents. Future cash flow estimates are sensitive to the assumptions made by management regarding future market rents, which are affected by expectations about future market and economic conditions. If an impairment is indicated, a loss will be recorded for the amount by which the carrying value of the asset exceeds its estimated fair value. NNN's Properties are leased primarily to tenants under long-term net leases and primarily held for investment. Generally, NNN's Property leases provide for initial terms of 10 to 20 years, with cash flows provided over the entire term.

Credit Losses on Financial Instruments. FASB ASC Topic 326, Financial Instruments – Credit Losses, requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings. The guidance requires a lifetime credit loss expected at inception and requires pooling of assets, which share similar risk characteristics. NNN is required to evaluate current economic conditions, as well as make future expectations of economic conditions. In addition, the measurement of the expected credit loss is over the asset's contractual term.

NNN held mortgages receivable, including accrued interest, of $454,000 included in other assets on the Condensed Consolidated Balance Sheets as of December 31, 2024, net of $9,000 allowance for credit loss. As of September 30, 2025, NNN held no mortgages receivable.

Cash and Cash Equivalents. NNN considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents consist of cash and money market accounts. Cash equivalents are stated at cost plus accrued interest, which approximates fair value. Cash accounts maintained on behalf of NNN in demand deposits at commercial banks and money market funds may exceed federally insured levels or may be held in accounts without any federal insurance or any other insurance or guarantee. However, NNN has not experienced any losses in such accounts.

Restricted Cash and Cash Held in Escrow. Restricted cash and cash held in escrow may include (i) cash proceeds from the sale of assets held by qualified intermediaries in anticipation of the acquisition of replacement properties in tax-deferred exchanges under Section 1031 of the Internal Revenue Code of 1986, as amended (the "Code"), (ii) cash that has been placed in escrow for the future funding of construction commitments, or (iii) cash that is not immediately available to NNN. NNN held $776,000 and $331,000 in restricted cash and cash held in escrow as of September 30, 2025 and December 31, 2024, respectively.

Debt Costs – Line of Credit Payable. Debt costs incurred in connection with NNN's $1,200,000,000 unsecured revolving line of credit have been deferred and are being amortized to interest expense over the term of the loan commitment using the straight-line method, which approximates the effective interest method. NNN has recorded debt costs associated with the Credit Facility (as defined in "Note 3 – Line of Credit Payable") as an asset, in debt costs on the Condensed Consolidated Balance Sheets.

Debt Costs – Notes Payable. Debt costs incurred in connection with the issuance of NNN's unsecured notes have been deferred and are being amortized to interest expense over the term of the respective debt obligation using the effective interest method. NNN had debt costs of $48,020,000 and $43,820,000, included in notes payable on the Condensed Consolidated Balance Sheets, as of September 30, 2025 and December 31, 2024, respectively, net of accumulated amortization of $16,463,000 and $14,060,000, respectively.

Revenue Recognition. Rental revenues for properties under construction commence upon completion of construction and delivery of the leased asset to the tenant. Rental revenues for non-development real estate assets are recognized when earned in accordance with ASC 842, based on the terms of the lease of the leased asset. Leasehold interests are amortized on the straight-line method over the terms of their respective leases. When scheduled rentals vary during the lease term, income is recognized on a straight-line basis so as to produce a constant periodic rent over the term of the lease. Lease termination fees are recognized when collected subsequent to the related lease that is cancelled and NNN no longer has continuing involvement with the former tenant with respect to that property.

Earnings Per Share. Earnings per share have been computed in accordance with FASB ASC Topic 260, Earnings Per Share. The guidance requires classification of the Company's unvested restricted share units, which contain rights to receive nonforfeitable dividends, as participating securities requiring the two-class method of computing earnings per share. Under the two-class method, earnings per common share are computed by dividing the sum of distributed earnings to common stockholders and undistributed earnings allocated to common stockholders by the weighted average common shares outstanding for the period. In applying the two-class method, undistributed earnings are allocated to both common shares and participating securities based on the weighted average shares outstanding during the period.

The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted earnings per share using the two-class method (dollars in thousands):


	Quarter Ended September 30,						Nine Months Ended September 30,
	2025			2024			2025			2024
Basic and Diluted Earnings:
Net earnings	$	96,839		$	97,904		$	293,826		$	298,941
Less: Earnings allocated to unvested restricted shares		(191	)		(185	)		(538	)		(511	)
Net earnings used in basic and diluted earnings per share	$	96,648		$	97,719		$	293,288		$	298,430

Basic and Diluted Weighted Average Shares Outstanding:
Weighted average shares outstanding		188,926,954			185,094,982			188,225,188			183,780,842
Less: Unvested restricted shares		(318,662	)		(318,796	)		(305,442	)		(298,973	)
Less: Unvested contingent restricted shares		(769,581	)		(769,010	)		(719,653	)		(724,772	)
Weighted average shares outstanding used in basic earnings per share		187,838,711			184,007,176			187,200,093			182,757,097
Other dilutive securities		494,078			554,255			486,238			544,473
Weighted average shares outstanding used in diluted earnings per share		188,332,789			184,561,431			187,686,331			183,301,570

Income Taxes. NNN has made an election to be taxed as a REIT under Sections 856 through 860 of the Code, and related regulations. NNN generally will not be subject to federal income taxes on taxable income it distributes to stockholders, provided it meets certain other requirements for qualifying as a REIT. As of September 30, 2025, NNN believes it has qualified as a REIT. Notwithstanding NNN's qualification for taxation as a REIT, NNN is subject to certain state and local income, franchise and excise taxes.

Fair Value Measurement. NNN's estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in FASB ASC Topic 820, Fair Value Measurement. The framework specifies a hierarchy of valuation inputs which was established to increase consistency, clarity and comparability in fair value measurements and related disclosures. The guidance describes a fair value hierarchy based upon three levels of inputs that may be used to measure fair value, two of which are considered observable and one that is considered unobservable. The following describes the three levels:

•

Level 1 – Valuation is based upon quoted prices in active markets for identical assets or liabilities.

•

Level 2 – Valuation is based upon inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include option pricing models, discounted cash flow models and similar techniques.

Accumulated Other Comprehensive Income (Loss). The following table outlines the changes in accumulated other comprehensive income (loss) for the nine months ended September 30, 2025 (dollars in thousands):


	Gain (Loss) on Cash Flow Hedges(1)
Beginning balance, December 31, 2024	$	(7,959	)
Other comprehensive income (loss)		(409	)
Reclassifications from accumulated other comprehensive income to net earnings		1,409		(2)
Ending balance, September 30, 2025	$	(6,959	)

            (1)

            Additional disclosure is included in "Note 4 – Notes Payable and Derivatives".

            (2)
 
            Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income. There is no income tax expense (benefit) resulting from this reclassification.

New Accounting Pronouncements. In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures ("ASU 2023-09"), effective for annual periods beginning after December 15, 2024. The amendments in the update require public business entities on an annual basis to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold of equal to or greater than five percent of the amount computed by multiplying pretax income by the statutory income tax rate. The amendments also require that entities disclose on an annual basis information about the amount of income taxes paid disaggregated by federal, state and foreign taxes and the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid. The amendments eliminate some of the previous required disclosures for all entities relating to estimates of the change in unrecognized tax benefits reasonably possible within 12 months. NNN has evaluated ASU 2023-09 and determined it will have no material impact on its future disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expense ("ASU 2024-03"), effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The amendments in this update require disclosure, in the notes to the financial statements, of specified information about certain costs and expenses and a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. NNN is currently evaluating the potential impact the adoption of ASU 2024-03 will have on its future disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments–Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”), effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. The amendments in this update provide all entities with a practical expedient, which allows entities to assume current conditions as of the balance sheet date do not change for the remaining life of the asset, in developing reasonable and supportable forecasts as part of estimating expected credit losses. NNN has evaluated ASU 2025-05 and determined it will have no material impact on its future disclosures.

Use of Estimates. Additional critical accounting policies of NNN include management's estimates and assumptions relating to the reporting of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities which are required to prepare the unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Significant accounting policies include management's estimates of the purchase accounting for acquisition of real estate, the recoverability of the carrying value of long-lived assets and management's evaluation of the probability of outstanding and future lease payment collections. Estimates are sensitive to evaluations by management about current and future expectations of market and economic conditions. Actual results could differ from those estimates.

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.

Note 3 – Line of Credit Payable:

In April 2024, NNN amended certain terms of its credit agreement to, among other things, increase borrowing capacity under its unsecured revolving credit facility from $1,100,000,000 to $1,200,000,000 (the "Credit Facility"). The Credit Facility had a weighted average outstanding balance of $75,529,000 and a weighted average interest rate of 5.25% during the nine months ended September 30, 2025. The Credit Facility has a base interest rate of the Secured Overnight Financing Rate ("SOFR") plus a SOFR adjustment of 10 basis points ("Adjusted SOFR"). The Credit Facility bears interest at Adjusted SOFR plus 77.5 basis points; however, such interest rate may change pursuant to a tiered interest rate structure based on NNN's debt 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, loan costs are classified as debt costs on the Condensed Consolidated Balance Sheets. As of September 30, 2025, there was no outstanding balance and $1,200,000,000 was available for future borrowings under the Credit Facility, and NNN was in compliance with each of the Credit Facility financial covenants.

Note 4 – Notes Payable and Derivatives:

Additional information related to NNN's notes payable and derivatives is included in NNN's Annual Report on Form 10-K for the year ended December 31, 2024.

In June 2025, NNN filed a prospectus supplement to the prospectus contained in its August 2023 shelf registration
statement (see "Note 5 – Stockholders' Equity") and, in July 2025, issued $500,000,000 aggregate principal amount of 4.600% notes due February 2031 (the “2031 Notes”).

The 2031 Notes were sold at a discount with an aggregate net price of $495,910,000 with interest payable semi-annually on February 15 and August 15, commencing on February 15, 2026. The discount of $4,090,000 is being amortized to interest expense over the term of the 2031 Notes using the effective interest method. The effective interest rate for the 2031 Notes after accounting for the note discount is 4.766%.

NNN received approximately $491,710,000 of net proceeds in connection with the issuance of the 2031 Notes, after incurring debt issuance costs consisting primarily of underwriting discounts and commissions, legal and accounting fees, rating agency fees and printing expenses, totaling $4,200,000 for the 2031 Notes.

The 2031 Notes are senior, unsecured obligations of NNN and are subordinated to all secured debt of NNN. NNN may redeem the 2031 Notes, in whole or in part, at any time prior to the par call date at the redemption price as set forth in the supplemental indenture dated July 1, 2025, relating to the 2031 Notes; provided, however, that if NNN redeems the notes on or after the par call date, the redemption price will equal 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest thereon to, but not including, the redemption date.

NNN previously entered into two forward starting swaps with an aggregate notional amount of $200,000,000. The forward starting swaps were entered into to hedge the risk of changes in forecasted interest payments on a forecasted issuance of long-term debt. Upon pricing of the 2031 Notes, NNN terminated the forward starting swaps, designated as cash flow hedges, resulting in a net liability of $409,000, which was deferred in accumulated other comprehensive income and will be amortized as an increase in interest expense over 10 years.

As of September 30, 2025, $6,959,000 remained in accumulated other comprehensive income (loss) related to NNN's previously terminated interest rate hedges. During the nine months ended September 30, 2025 and 2024, NNN reclassified out of accumulated other comprehensive income (loss) $1,409,000 and $1,692,000, respectively, of which $480,000 and $450,000 was reclassified during the quarters ended September 30, 2025 and 2024, respectively, as an increase in interest expense. Over the next 12 months, NNN estimates that an additional $510,000 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 September 30, 2025.

Note 5 – Stockholders' Equity:

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. NNN may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if these securities are offered. The specifics of any future offerings along with the use of proceeds of any securities offered, will be described in detail in a prospectus supplement, or other offering materials, at the time of any offering.

At-The-Market Offerings. NNN has established an at-the-market equity program ("ATM") which allows NNN to sell shares of common stock from time to time. The following outlines NNN's ATM:


		2023 ATM
Shelf registration statement:
Effective date		August 2023
Termination date		August 2026
Total allowable shares		17,500,000
Total shares issued as of September 30, 2025		6,544,059

The following table outlines the common stock issuances pursuant to NNN's ATM (dollars in thousands, except per share data):


	Quarter Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Shares of common stock		1,655,053		3,848,657		1,891,959		4,652,100
Average price per share (net)	$	42.13	$	46.31	$	42.13	$	45.51
Net proceeds	$	69,736	$	178,235	$	79,714	$	211,727
Stock issuance costs(1)	$	1,277	$	2,899	$	1,529	$	3,134


(1)	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 Dividend Reinvestment and Stock Purchase Plan ("DRIP") with the Commission that was automatically effective and permits NNN to issue up to 4,000,000 shares of common stock. The following outlines the common stock issuances pursuant to NNN's DRIP (dollars in thousands):


	Quarter Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Shares of common stock		15,684		15,043		49,776		49,352
Net proceeds	$	647	$	675	$	2,010	$	1,988

Dividends. The following table outlines the dividends declared and paid for NNN's common stock (dollars in thousands, except per share data):


	Quarter Ended September 30,				Nine Months Ended September 30,
	2025		2024		2025		2024
Dividends	$	112,809	$	106,077	$	329,710	$	311,920
Per share		0.600		0.580		1.760		1.710

In October 2025, NNN declared a dividend of $0.600 per share, which is payable in November 2025 to its common stockholders of record as of October 31, 2025.

Note 6 – Fair Value of Financial Instruments:

Line of Credit Payable. NNN believes the carrying value of its Credit Facility approximates fair value based upon its nature, terms and variable interest rate.

Notes Payable. At September 30, 2025 and December 31, 2024, the fair value of NNN's notes payable excluding unamortized discount and debt costs were $4,526,095,000 and $3,894,030,000, respectively, based upon quoted market prices as of the close of the period, which is a Level 1 valuation since NNN's notes payable are publicly traded.

Note 7 – Segment Information:

NNN's operations are reported within one reportable segment and constitute all of the consolidated entities which are reported in the unaudited condensed consolidated financial statements. NNN primarily derives its revenues from real estate leased to tenants under long-term net leases. NNN’s Properties are located in the United States.

NNN’s Chief Operating Decision Maker (“CODM”) is the Chief Executive Officer. The CODM assesses entity-wide operating results and performance and decides how to allocate resources based on net earnings which is reported on the Condensed Consolidated Statements of Income and Comprehensive Income. Additionally, the measure of segment assets is reported on the Condensed Consolidated Balance Sheets as total assets. Included in the total assets are long-lived real estate assets which include land, buildings, improvements and right-of-use assets subject to operating leases.

The CODM uses net earnings to evaluate income generated from assets (return on assets) in deciding whether to reinvest profits to grow the Property Portfolio or deploy into other aspects of the Company, such as to retire or repay debt or pay dividends. The CODM also uses net earnings to monitor the budget versus actual results, which is used in assessing NNN’s entity-wide operating results and performance.

Significant expense categories, including general and administrative, real estate, depreciation and amortization and interest, are included on NNN’s Condensed Consolidated Statements of Income and Comprehensive Income. Asset information is included in the Condensed Consolidated Balance Sheets and “Note 2 – Real Estate.”

Item 2. 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, 2024 ("2024 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 and 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, including inflation and tariffs impacting international trade, may have an adverse impact on NNN, its tenants and commercial real estate in general;

•

Loss of rent from tenants would reduce NNN's cash flow;

•

A significant portion of the source of the Property Portfolio annual base rent is concentrated in specific industry classifications, tenants and geographic locations;

•

NNN may not be able to successfully execute its acquisition or development strategies;

•

NNN may not be able to dispose of Properties consistent with its operating strategy;

•

Certain provisions of NNN's leases or loan agreements may be unenforceable;

•

Competition from numerous other real estate investment trusts (“REIT”), commercial developers, real estate limited partnerships and other investors or a lack of properties for sale may impede NNN's ability to grow;

•

A natural disaster or impacts of weather or other event resulting in uninsured loss may adversely affect the operations of NNN's tenants and therefore the ability of NNN's tenants to pay rent, NNN's operating results and asset values of NNN's Property Portfolio (as defined below);

•

NNN's ability to fully control the management of its net-leased Properties may be limited;

•

Bankrupt tenants or vacant Properties could adversely affect NNN's business or financial condition;

•

Cybersecurity risks and cyber incidents as well as other significant disruptions of NNN's information technology networks and related systems and resources, or those of NNN's vendors or other third-parties, could adversely affect NNN's business, disrupt operations and expose NNN to liabilities to tenants, associates, capital providers, governmental regulators and other third parties;

•

NNN relies upon cloud computing services to operate certain aspects of its business and any disruption could have an adverse effect on its financial condition and results of operations;

•

Future investment in international markets could subject NNN to additional risks;

•

NNN may suffer a loss in the event of a default or bankruptcy of a borrower;

•

Property ownership through joint ventures and partnerships could limit NNN's control of those investments;

•

NNN may be unable to obtain debt or equity capital on favorable terms, if at all;

•

The amount of debt NNN has and the restrictions imposed by that debt could adversely affect NNN's business and financial condition;

•

NNN is obligated to comply with financial and other covenants in its debt instruments that could restrict its operating activities, and the failure to comply with such covenants could result in defaults that accelerate the payment of such debt;

•

NNN's ability to pay dividends in the future is subject to many factors;

•

Future issuances of NNN's equity securities could dilute the interest of NNN's common stockholders;

•

Owning real estate and indirect interests in real estate carries inherent risks;

•

NNN's real estate investments are illiquid;

•

NNN may be subject to known or unknown environmental liabilities and risks, including but not limited to liabilities and risks resulting from the existence of hazardous materials on or under Properties owned by NNN;

•

NNN's failure to qualify as a REIT for federal income tax purposes could result in significant tax liability;

•

Compliance with REIT requirements, including distribution requirements, may limit NNN's flexibility and may negatively affect NNN's operating decisions;

•

The share ownership restrictions of the Internal Revenue Code of 1986, as amended (the "Code"), for REITs and the 9.8% share ownership limit in NNN's charter may inhibit market activity in NNN's shares of stock and restrict NNN's business combination opportunities;

•

Costs of complying with changes in governmental laws and regulations may adversely affect NNN's results of operations;

•

Non-compliance with Title III of the Americans with Disabilities Act of 1990 and similar state and local laws could have an adverse effect on NNN's business and operating results;

•

NNN's loss of key management personnel could adversely affect performance and the value of its securities;

•

NNN's failure to maintain effective internal control over financial reporting could have a material adverse effect on its business, operating results and the market value of NNN's securities;

•

An epidemic or pandemic and/or the measures that international, federal, state and local governments, agencies, law enforcement and/or health authorities implement to address it, may precipitate or materially exacerbate one or more of the other risks and may significantly disrupt NNN's tenants' ability to operate their businesses and/or pay rent to NNN or prevent NNN from operating its business in the ordinary course for an extended period;

•

Acts of violence, terrorist attacks or war may affect NNN's Properties, the markets in which NNN operates and NNN's results of operations;

•

Changes in accounting pronouncements could adversely impact NNN's or NNN's tenants' reported financial performance;

•

The market value of NNN's equity and debt securities is subject to various factors that may cause significant fluctuations or volatility;

•

Even if NNN remains qualified as a REIT, NNN faces other tax liabilities that reduce operating results and cash flow; and

•

Adverse legislative or regulatory tax changes could reduce NNN's earnings and cash flow and the market value of NNN's securities.

Additional information related to these risks and uncertainties are included in "Item 1A. Risk Factors" of NNN's 2024 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's assets primarily include real estate assets. NNN acquires, owns, invests in and develops high-quality properties that are leased primarily to tenants under long-term, net leases and are primarily held for investment ("Properties" or "Property Portfolio", or individually a "Property").

As of September 30, 2025, NNN owned 3,697 Properties in 50 states, with an aggregate gross leasable area of approximately 39,209,000 square feet and a weighted average remaining lease term of 10.1 years. As of September 30, 2025, 97.5 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 five line of trade concentrations are the automotive service (18.4%), convenience store (16.2%), restaurant (including full and limited service) (14.5%) and entertainment (7.2%) sectors. NNN's management believes these sectors present attractive investment opportunities. The Property Portfolio is geographically concentrated primarily in regions of historically above-average population growth, including the southeast (25.4%) and south (24.4%) 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.

As of September 30, 2025 and 2024, the Property Portfolio remained at least 97.5 percent leased and had a weighted average remaining lease term of at least 10.0 years. High occupancy levels coupled with a triple-net lease structure provides enhanced probability of achieving consistent operating results.

Additional information related to NNN and the Property Portfolio is included in NNN's 2024 Annual Report.

Results of Operations

Property Analysis

General. The following table summarizes the Property Portfolio:

      
     September 30,
2025

     December 31, 2024

     September 30,
2024

     Properties Owned:

     

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Note 1 – Organization and Summary of Significant Accounting Policies:

Note 2 – Real Estate:

Note 3 – Line of Credit Payable:

Note 4 – Notes Payable and Derivatives:

Note 5 – Stockholders' Equity:

Note 6 – Fair Value of Financial Instruments:

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

NNN REIT, INC. 10-Q