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YoY shift: Neutral
Year-over-year tone shift - average net-tone change across Risk Factors and MD&A vs the prior 10-K. This filing is 0.00pp more bullish than last year's.
Why YoY instead of absolute: the LM lexicon has ~6.6× more negative words than positive (legal/risk-disclosure language is heavy on hedging), so every 10-K reads bearish on raw tone. Year-over-year change strips that bias and surfaces the actual shift in management's framing.
Tone shift by section
The two components the gauge averages: how Risk Factors and MD&A each shifted in net tone versus last year's 10-K. The headline above is their average, so a green needle over a soft section just means the other section carried it.
Risk Factors
-
Not scored
Net-tone change vs last year's 10-K.
MD&A
+0.00pp
Flat
Net-tone change vs last year's 10-K.
Per-snippet highlights
Sentence-level sentiment highlighting with category and subcategory filters is coming once the snippet-scoring pipeline lands. For now, dig into the actual section text on the Sections tab.
No section text extracted for this filing. The 10-K may use a non-standard template that the parser doesn't recognize - the original doc is still linked in the Stats tab.
Language change vs prior 10-K
MD&A (Item 7) - words with the biggest YoY frequency increase
Negative rising
delayed+1
ineffectiveness+1
Positive rising
effective+2
MD&A (Item 7)
7,128 words
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
This section generally discusses 2025 and 2024 and year-to-year comparisons. Discussions of 2024 and 2023 year-to-year comparisons that are not included in this annual report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission ("Commission" or "SEC") on February 11, 2025.
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 real estate investment trust subsidiaries.
Forward-Looking Statements
The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. NNN makes statements in this section that are forward-looking statements within the meaning of the federal securities laws. For a complete discussion of forward-looking statements, see the section in this report entitled "Forward-Looking Statements." Certain risks may cause NNN's actual results, performance or achievements to differ materially from those expressed or implied by the following discussion. For a discussion of such risk factors, see "Item 1A. Risk Factors."
Overview
NNN, a Maryland corporation, is a fully integrated real estate investment trust ("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 December 31, 2025, NNN owned 3,692 Properties in all 50 states, the District of Columbia and Puerto Rico, with an aggregate gross leasable area of approximately 39,578,000 square feet and a weighted average remaining lease term of 10.2 years. As of December 31, 2025, 98.3 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 (16.3%), restaurants (including full and limited service) (14.3%), entertainment (7.2%) and dealerships (6.6%) 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 (25.3%) and southern (24.6%) United States ("U.S."). 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 December 31, 2025 and 2024, the Property Portfolio remained at least 98 percent leased and had a weighted average remaining lease term of approximately 10 years. High occupancy levels coupled with a triple-net lease structure provide enhanced probability of achieving consistent operating results.
Critical Accounting Estimates
The preparation of NNN's consolidated financial statements in conformity with accounting principles generally accepted in the U.S. 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 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 accounting policies and procedures is included in Note 1 of the December 31, 2025 Consolidated Financial Statements. Management believes the following critical accounting policies, among others, affect its more significant estimates and assumptions used in the preparation of NNN's consolidated financial statements.
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.
Purchase Accounting for Acquisition of Real Estate . In accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("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 in-place 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.
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 predominantly 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.
Substantially all of NNN's Property Portfolio consists of leases accounted for using the operating method. Under the operating method, 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.
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 bankruptcyclaims.
When NNN deems the collection of rental income from a tenant not probable, uncollected 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.
NNN includes an allowance for doubtful accounts in rental income on the 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.
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 under contract and/or 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 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 predominantly leased to tenants under long-term net leases and held for investment. In most cases, NNN's Property leases provide for initial terms of 10 to 20 years, with cash flows provided over the entire term.
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. 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.
New Accounting Pronouncements. Refer to Note 1 of the December 31, 2025, Consolidated Financial Statements for a summary and the anticipated impact of each accounting pronouncement on NNN's financial position and results of operations.
Results of Operations
Property Analysis
General. The following table summarizes the Property Portfolio as of December 31:
Properties Owned:
Number
Total gross leasable area (square feet)
States
Properties:
Leased and unimproved land
Percent of Properties – leased and unimproved land
Weighted average remaining lease term (years)
Total gross leasable area (square feet) – leased
Total Annualized Base Rent ("ABR") (1)
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 lease expirations, assuming none of the tenants exercise renewal options, of the Property Portfolio for each of the next 10 years and then thereafter in the aggregate as of December 31, 2025:
# of Properties
Gross Leasable
Area (1)
ABR
# of Properties
Gross Leasable
Area (1)
ABR
Thereafter
Square feet.
The following table summarizes the diversification of the Property Portfolio for the top 20 lines of trade as a percentage of ABR as of December 31:
Lines of Trade
Automotive service
Convenience stores
Restaurants – limited service
Entertainment
Dealerships
Restaurants – full service
Health and fitness
Theaters
Automotive parts
Equipment rental
Wholesale clubs
Drug stores
Home improvement
Medical service providers
Pet supplies and services
Early childhood education
Discount retail
Furniture
Travel plazas
Consumer electronics
Other
ABR
The following table summarizes the diversification of the Property Portfolio by state as of December 31, 2025:
State
Properties
% of ABR
Texas
Florida
Illinois
Georgia
Ohio
Michigan
Indiana
Tennessee
Arizona
North Carolina
Other
Property Acquisitions. The following table summarizes the Property acquisitions for each of the years ended December 31 (dollars in thousands):
Acquisitions:
Number of Properties
Gross leasable area (square feet) (1)
Weighted average cap rate (2)
Total dollars invested (3)
Includes additional square footage from completed construction on existing Properties.
Calculated as the initial cash annual base rent divided by the total purchase price of the Properties.
Includes dollars invested in projects under construction or tenant improvements for each respective year.
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 for each of the years ended December 31 (dollars in thousands):
Number of properties
Gross leasable area (square feet)
Net sales proceeds
Net gain on disposition of real estate
Weighted average cap rate (1)
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 for each of the years ended December 31 (dollars in thousands):
Change
Rental Revenues (1)
Real estate expenses reimbursed from tenants (2)
Rental income
Interest and other income from real estate transactions
Total revenues
Includes rental income from operating leases, earned income from direct financing leases and percentage rent ("Rental Revenues").
See "Results of Operations – Analysis of Expenses – Real Estate" for additional information.
Rental Income. Rental income increased for the year ended December 31, 2025, compared to the same period in 2024. 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 for the year ended December 31 (dollars in thousands):
Change
General and administrative
Real estate:
Reimbursed from tenants
Non-reimbursed
Total real estate
Depreciation and amortization
Leasing transaction costs
Impairmentlosses – real estate, net of recoveries
Retirement and severance costs
Total operating expenses
Interest and other income
Interest expense
Total other expenses
As a percentage of total revenues:
General and administrative
Non-reimbursed real estate
Real Estate. Total real estate expenses increased for the year ended December 31, 2025, compared to the same period in 2024. 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 increased in amount and as a percentage of total revenues for the year ended December 31, 2025 compared to the same period in 2024 primarily due to an increase in the number of vacant properties.
Depreciation and Amortization. Depreciation and amortization expenses increased for the year ended December 31, 2025, compared to the same period in 2024. The increase is 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").
ImpairmentLosses – 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 years ended December 31, 2025 and 2024, which were less than one percent of NNN's total assets for the respective years as reported on the 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. Retirement and severance costs increased for the year ended December 31, 2025 compared to the same period in 2024, primarily due to costs in connection with the retirement and transition agreement of the former Executive Vice President, Chief Financial Officer, Assistant Secretary and Treasurer.
Interest Expense. Interest expense increased for the year ended December 31, 2025, compared to the same period in 2024. The following represents the primary changes in fixed rate long-term debt that impacted interest expense (dollars in thousands):
in May 2024, issued $500,000,000 aggregate principal amount of 5.500% notes due June 2034,
in June 2024, redeemed $350,000,000 aggregate principal amount of 3.900% notes due June 2024,
in July 2025, issued $500,000,000 aggregate principal amount of 4.600% notes due February 2031 (the "2031 Notes"), and
in November 2025, redeemed $400,000,000 aggregate principal amount of 4.000% notes due November 2025 (the "2025 Notes").
In addition to the transactions outlined above, interest expense increased as a result of the Credit Facility's weighted average outstanding balance of $106,166,000 with a weighted average interest rate of 5.04% for the year ended December 31, 2025, compared to a lower weighted average outstanding balance of $60,775,000, but with a higher weighted average interest rate of 6.25% for the year ended December 31, 2024.
Impact of Inflation
NNN's leases typically contain provisions to mitigate the adverse impact of inflation on NNN's results of operations. Tenant leases typically provide for limited increases in rent as a result of fixed increases and/or capped increases in the Consumer Price Index. As a result of limitations on rent increases, during times when inflation is high, rent increases may not meet or exceed the rate of inflation.
Properties are leased to tenants under long-term triple-net leases which typically require the tenant to pay certain operating expenses for a Property, thus, NNN's exposure to inflation is reduced with respect to these expenses. Inflation may have an adverse impact on NNN's tenants and challenge their ability to meet lease obligations, including to pay rent. See "Item 1A. Risk Factors."
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 or senior unsecured term loan ("Term Loan") or proceeds from the sale of Properties. As of December 31, 2025, NNN had $5,822,000 of cash, cash equivalents and restricted cash or cash held in escrow, and $851,900,000 and $300,000,000 were available for future borrowings under the Credit Facility and Term Loan, respectively. 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.
As of December 31, 2025, NNN's ratio of total debt, none of which was secured debt, to total gross assets (before accumulated depreciation and amortization) was approximately 42 percent. The ratio of total debt to total market capitalization was approximately 39 percent. Certain financial agreements, to which NNN is a party, contain covenants that limit NNN's ability to incur additional debt under certain circumstances. The organizational documents of NNN do not limit the absolute amount or percentage of debt that NNN may incur.
Cash Flows. NNN had $5,822,000 of cash, cash equivalents and restricted cash, of which $776,000 was restricted cash or cash held in escrow at December 31, 2025. The table below summarizes NNN's cash flows for each of the years ended December 31 (dollars in thousands):
Cash, cash equivalents and restricted cash:
Provided by operating activities
Used in investing activities
Provided by (used in) financing activities
Increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at the beginning of the year
Cash, cash equivalents and restricted cash at the end of the year
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 year presented. The change in cash provided by operations for the years ended December 31, 2025 and 2024, 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 year ended December 31, 2025, included the following significant transactions:
$348,100,000 in net borrowings of NNN's Credit Facility,
$491,710,000 in net proceeds from the issuance in July of the 2031 Notes,
$400,000,000 payment in November for the redemption of the 2025 Notes,
$81,106,000 in net proceeds from the issuance of 1,927,893 shares of common stock in connection with the at-the-market equity program ("ATM"),
$2,628,000 in net proceeds from the issuance of 65,062 shares of common stock in connection with the Dividend Reinvestment and Stock Purchase Plan ("DRIP"), and
$443,202,000 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 December 31, 2025 (see "Capital Structure") (dollars in thousands):
Year of Obligation
Total
Thereafter
Long-term debt (1)
Long-term debt – interest (2)
Credit Facility
Total contractual cash obligations
Includes only principal amounts outstanding under notes payable and excludes unamortized note discounts and debt costs.
Interest calculation on notes payable based on stated rate of the principal amount.
Property Construction. 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, at December 31, 2025, are outlined in the table below (dollars in thousands):
Total commitment (1)
Less amount funded
Remaining commitment
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, Term Loan, 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 December 31, 2025, NNN owned 64 vacant, un-leased Properties which accounted for less than two percent of total Properties and of the aggregate gross leasable area held in the Property Portfolio.
Additionally, as of January 30, 2026, less than one percent of total annualized base rent, 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 lease 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 for the years ended December 31 (dollars in thousands, except per share data):
Dividends
Per share
The following table presents the characterizations for tax purposes of NNN's common stock dividends for the years ended December 31:
Ordinary dividends (1)
Nontaxable distributions
Eligible for the 20% qualified business income deduction under section 199A of the Internal Revenue Code of 1986, as amended (the "Code").
On January 15, 2026, NNN declared a dividend of $0.600 per share, which is payable February 13, 2026 to its common stockholders of record as of January 30, 2026.
C apital Structure
NNN has used, and expects to use in the future, 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 December 31 (dollars in thousands):
Percentage
of Total
Percentage
of Total
Line of credit payable
Notes payable
Total debt outstanding
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 $106,166,000 and a weighted average interest rate of 5.04% during the year ended December 31, 2025. 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. As of December 2025, the Credit Facility bears interest at 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, NNN incurred loan costs of $36,146,000 which are included in debt costs on the Consolidated Balance Sheet. As of December 31, 2025, there was $348,100,000 outstanding and $851,900,000 available for future borrowings under the Credit Facility.
Term Loan. In December 2025, NNN entered into a senior unsecured term loan with a $300,000,000 capacity (the "Term Loan"). The Term Loan has a six-month delayed draw commitment period and an accordion option to increase the aggregate facility size up to $500,000,000. The Term Loan matures in February 2029, unless the Company exercises its options to extend maturity to February 2031. Based on NNN's current credit ratings, the Term Loan will bear interest at an effective rate of SOFR plus the applicable margin of 85 basis points. In connection with the Term Loan, NNN incurred loan costs of $2,429,000 which are included in debt costs on the Consolidated Balance Sheet. As of December 31, 2025, no funds had been drawn on the Term Loan.
In accordance with the terms of both the Credit Facility and Term Loan, NNN is required to meet certain restrictive financial covenants, which, among other things, require NNN to maintain certain (i) leverage ratios, (ii) debt service coverage, (iii) cash flow coverage, and (iv) investment limitations. At December 31, 2025, NNN was in compliance with those covenants. In the event that NNN violates any of these restrictive financial covenants, it could cause the debt under the Credit Facility and Term Loan to be accelerated and may impair NNN's access to the debt and equity markets and limit NNN's ability to pay dividends to its stockholders, each of which would likely have a material adverse impact on NNN's financial condition and results of operations.
As of December 31, 2025, NNN had the following outstanding interest rate derivatives that were designated as cash flow hedges to hedge the risk of changes in the interest cash outflows associated with the Term Loan (dollars in thousands):
Description
Aggregate Notional Amount
Estimated
Fair
Value (1)
Effective Date
Two forward starting swaps (2)
January 15, 2026
Included in other assets and other comprehensive income on the Consolidated Balance Sheets (see "Note 10 – Fair Value of Financial Instruments").
No hedge ineffectiveness was recognized during the year ended December 31, 2025.
On January 15, 2026, the Company drew $200,000,000 on the Term Loan. These forward starting swaps fix SOFR for the $200,000,000 borrowed at 3.22% through January 15, 2029.
Universal Shelf Registration Statement. In August 2023, NNN filed a shelf registration statement with 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 of 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 supplements, or other offering materials, at the time of any offering.
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
Price
Stated
Rate
Effective
Rate (3)
Maturity Date
December 2016
December 2026 (4)(5)
September 2017
October 2027 (4)
September 2018
October 2028 (4)
March 2020
April 2030 (4)
July 2025
February 2031
August 2023
October 2033
May 2024
June 2034
September 2018
October 2048
March 2020
April 2050
March 2021
April 2051
September 2021
April 2052
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.
The note discounts are amortized to interest expense over the respective term of each debt obligation using the effective interest method.
Includes the effects of the discount at issuance.
The aggregate principal balance of the unsecured note maturities for the next five years is $1,550,000.
NNN plans to use proceeds from the Credit Facility and/or potential debt or equity offerings to repay the outstanding debt.
NNN entered into forward starting swaps which hedged the risk of changes in forecasted interest payments on the forecasted issuance of long-term unsecured notes. Upon the issuance of a series of unsecured notes, NNN terminated such derivatives as outlined in the following table (dollars in thousands):
Notes
Terminated
Description
Aggregate Notional Amount
Liability (Asset) Fair Value When Terminated (1)
Fair Value Deferred In Other Comprehensive Income (2)
December 2016
Two forward starting swaps
September 2017
Two forward starting swaps
September 2018
Two forward starting swaps
March 2020
Three forward starting swaps
June 2025
Two forward starting swaps
September 2021
Two forward starting swaps
The deferred liability (asset) is being amortized over the term of the hedged forecasted transaction using the effective interest method.
The amount reported in accumulated other comprehensive income will be reclassified to interest expense as interest payments are made on the related notes payable.
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 December 31, 2025, NNN was in compliance with those covenants. NNN's failure to comply with certain of its debt covenants could result in defaults that accelerate the payment under such debt and limit the dividends paid to NNN's stockholders which would likely have a material adverse impact on NNN's financial condition and results of operations. In addition, these defaults could impair its access to the debt and equity markets.
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:
2023 ATM
2020 ATM
Shelf registration statement:
Effective date
August 2023
August 2020
Termination date
August 2026
August 2023
Total allowable shares
Total shares issued as of December 31, 2025
The following table outlines the common stock issuances pursuant to NNN's ATM for the years ended December 31 (dollars in thousands, except per share data):
Shares of common stock
Average price per share (net)
Net proceeds
Stock issuance costs (2)
Includes 35,934 shares settled as part of a forward sale agreement. There were no outstanding forward sale agreements as of December 31, 2025.
Stock issuance costs consist primarily of underwriters' and agent's fees and commissions and legal and accounting fees.
Dividend Reinvestment and Stock Purchase Plan. In February 2021 and 2024, NNN filed shelf registration statements for its DRIP with the Commission that were automatically effective, and permit NNN to issue up to 6,000,000 and 4,000,000 shares of common stock, respectively. 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 for the years ended December 31 (dollars in thousands):
Shares of common stock
Net proceeds
Item 7A. Quantitative and Q ualitative Disclosures About Market Risk
NNN is exposed to interest rate risk primarily as a result of its variable rate Credit Facility and Term Loan and its fixed rate long-term debt which is used to finance NNN's Property acquisitions and construction commitments, as well as for general corporate purposes. NNN's interest rate risk management objective is to limit the impact of interest rate changes on earnings and cash flows and to lower its overall borrowing costs. To achieve its objectives, NNN borrows at both fixed and variable rates on its long-term debt and periodically uses derivatives to hedge the interest rate risk of future borrowings.
As of December 31, 2025, NNN's variable rate Credit Facility had $348,100,000 outstanding. For the year ended December 31, 2025, the Credit Facility had a weighted average outstanding balance of $106,166,000 and a weighted average interest rate of 5.04% compared to a weighted average outstanding balance of $60,775,000 and a weighted average interest rate of 6.25% for 2024.
In December 2025, NNN entered into the Term Loan, and had no outstanding balance as of December 31, 2025. NNN entered into two forward starting swaps with an aggregate notional amount of $200,000,000 to hedge the risk of changes in the interest cash outflows associated with future draws on NNN's Term Loan. The forward starting swaps were outstanding as of December 31, 2025, and have an effective date of January 15, 2026.
The table below summarizes NNN's market risks associated with its outstanding debt obligations as of December 31, 2025, detailing principal payments and related interest rates by maturity year. The table incorporates only debt obligations that existed as of December 31, 2025, and it does not account for future obligations and therefore has limited predictive value. Actual realized gains or losses from interest rate fluctuations will depend on future exposures, interest rates and NNN's hedging strategies. If interest rates on NNN's variable rate debt increased by one percent, NNN's interest expense would have increased by less than one percent for the year ended December 31, 2025.
Debt Obligations (1) (dollars in thousands)
Variable Rate Debt
Fixed Rate Debt
Credit Facility
Unsecured Debt (2)
Debt
Obligation
Weighted
Average
Interest Rate
Principal
Debt
Obligation
Effective
Interest
Rate
Thereafter
Total
Fair Value:
December 31, 2025
December 31, 2024
NNN's unsecured debt obligations have a weighted average interest rate of 4.2% and a weighted average maturity of 10.8 years.
Includes NNN's notes payable, each exclude unamortized discounts and debt costs. The fair value is based upon quoted market prices as of the close of the year, which is a Level 1 valuation since NNN's notes payable are publicly traded on the over-the-counter market.
Weighted average effective interest rate for years after 2030.
