For financial reporting purposes, leases recorded as a direct financing lease are excluded from the real estate gross amounts at the close of the period and depreciation is not applicable. As of December 31, 2025, the net investment in real estate accounted for under the direct financing method was $1,181.

[2]

The following is a reconciliation of the real estate portfolio accounted for using the operating method, including real estate held for sale for the years ended December 31:


	2025			2024			2023

Beginning balance, January 1	$	10,809,168		$	10,397,432		$	9,678,127
Acquisitions and dollars invested in projects under construction or tenant improvements		924,599			565,707			820,238
Dispositions		(207,334	)		(147,339	)		(94,943	)
Impairment losses		(28,602	)		(6,632	)		(5,990	)
Ending balance, December 31	$	11,497,831		$	10,809,168		$	10,397,432

[3]

As of December 31, 2025, there were no encumbrances or carrying costs on any of the properties in the Portfolio.

[4]

The following is a reconciliation of accumulated depreciation and amortization for the years ended December 31:


	2025			2024			2023
Beginning balance, January 1	$	2,065,520		$	1,864,614		$	1,660,665
Dispositions		(65,041	)		(41,046	)		(26,236	)
Depreciation and amortization expense		258,991			241,952			230,185
Ending balance, December 31	$	2,259,470		$	2,065,520		$	1,864,614

NNN REIT, INC. 10-K