Maryland (State or other jurisdiction of incorporation or organization) | 56-1431377 (I.R.S. Employer Identification No.) |
Large accelerated filer x | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ | |||
Emerging growth company ¨ |
PAGE REFERENCE | ||
Part I - Financial Information | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II - Other Information | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
NATIONAL RETAIL PROPERTIES, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share data) | |||||||
March 31, 2019 | December 31, 2018 | ||||||
ASSETS | (unaudited) | ||||||
Real estate portfolio: | |||||||
Accounted for using the operating method, net of accumulated depreciation and amortization | $ | $ | |||||
Accounted for using the direct financing method | |||||||
Real estate held for sale | |||||||
Cash and cash equivalents | |||||||
Receivables, net of allowance of $1,039 and $2,273, respectively | |||||||
Accrued rental income, net of allowance of $1,842 | |||||||
Debt costs, net of accumulated amortization of $14,482 and $14,118, respectively | |||||||
Other assets | |||||||
Total assets | $ | $ | |||||
LIABILITIES AND EQUITY | |||||||
Liabilities: | |||||||
Mortgages payable, including unamortized premium and net of unamortized debt costs | $ | $ | |||||
Notes payable, net of unamortized discount and unamortized debt costs | |||||||
Accrued interest payable | |||||||
Other liabilities | |||||||
Total liabilities | |||||||
Equity: | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.01 par value. Authorized 15,000,000 shares | |||||||
5.700% Series E, 115,000 shares issued and outstanding, at stated liquidation value of $2,500 per share | |||||||
5.200% Series F, 138,000 shares issued and outstanding, at stated liquidation value of $2,500 per share | |||||||
Common stock, $0.01 par value. Authorized 375,000,000 shares; 161,978,308 and 161,503,585 shares issued and outstanding, respectively | |||||||
Capital in excess of par value | |||||||
Accumulated deficit | ( | ) | ( | ) | |||
Accumulated other comprehensive income (loss) | ( | ) | ( | ) | |||
Total stockholders’ equity of NNN | |||||||
Noncontrolling interests | |||||||
Total equity | |||||||
Total liabilities and equity | $ | $ |
Quarter Ended March 31, | |||||||
2019 | 2018 | ||||||
Revenues: | |||||||
Lease income | $ | $ | — | ||||
Rental income from operating leases | — | ||||||
Earned income from direct financing leases | — | ||||||
Percentage rent | — | ||||||
Real estate expense reimbursement from tenants | — | ||||||
Interest and other income from real estate transactions | |||||||
Operating expenses: | |||||||
General and administrative | |||||||
Real estate | |||||||
Depreciation and amortization | |||||||
Impairment losses – real estate, net of recoveries | |||||||
Retirement severance costs | |||||||
Gain on disposition of real estate | |||||||
Earnings from operations | |||||||
Other expenses (revenues): | |||||||
Interest and other income | ( | ) | ( | ) | |||
Interest expense | |||||||
Leasing transaction costs | — | ||||||
Net earnings | |||||||
Earnings attributable to noncontrolling interests | ( | ) | ( | ) | |||
Net earnings attributable to NNN | |||||||
Series E preferred stock dividends | ( | ) | ( | ) | |||
Series F preferred stock dividends | ( | ) | ( | ) | |||
Net earnings attributable to common stockholders | $ | $ | |||||
Net earnings per share of common stock: | |||||||
Basic | $ | $ | |||||
Diluted | $ | $ | |||||
Weighted average number of common shares outstanding: | |||||||
Basic | |||||||
Diluted | |||||||
Other comprehensive income: | |||||||
Net earnings attributable to NNN | $ | $ | |||||
Amortization of interest rate hedges | |||||||
Fair value of forward starting swaps | ( | ) | |||||
Net gain (loss) – available-for-sale securities | ( | ) | ( | ) | |||
Comprehensive income attributable to NNN | $ | $ |
NATIONAL RETAIL PROPERTIES, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EQUITY Quarter Ended March 31, 2018 (dollars in thousands, except per share data) | |||||||||||||||||||||||||||||||||||
Series E Preferred Stock | Series F Preferred Stock | Common Stock | Capital in Excess of Par Value | Retained Earnings (Loss) | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||
Balances at December 31, 2017 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||
Net earnings | — | — | — | — | — | ||||||||||||||||||||||||||||||
Dividends declared and paid: | |||||||||||||||||||||||||||||||||||
$0.356250 per depositary share of Series E preferred stock | — | — | — | — | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||||||||||
$0.32500 per depositary share of Series F preferred stock | — | — | — | — | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||||||||||
$0.475 per share of common stock | — | — | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||
Issuance of common stock: | |||||||||||||||||||||||||||||||||||
9,597 shares – director compensation and other | — | — | — | — | — | — | |||||||||||||||||||||||||||||
2,537 shares – stock purchase plan | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Issuance of 222,684 shares of restricted common stock | — | — | ( | ) | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||||
Stock issuance costs | — | — | ( | ) | — | — | ( | ) | — | ( | ) | ||||||||||||||||||||||||
Amortization of deferred compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Amortization of interest rate hedges | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Fair value of forward starting swaps | — | — | — | — | — | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||||||||
Valuation adjustments – available-for-sale securities | — | — | — | — | — | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||||||||
Balances at March 31, 2018 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ |
NATIONAL RETAIL PROPERTIES, INC. and SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EQUITY Quarter Ended March 31, 2019 (dollars in thousands, except per share data) | |||||||||||||||||||||||||||||||||||
Series E Preferred Stock | Series F Preferred Stock | Common Stock | Capital in Excess of Par Value | Retained Earnings (Loss) | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity | Noncontrolling Interests | Total Equity | |||||||||||||||||||||||||||
Balances at December 31, 2018 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ | ||||||||||||||||||||||
Net earnings | — | — | — | — | — | ||||||||||||||||||||||||||||||
Dividends declared and paid: | |||||||||||||||||||||||||||||||||||
$0.356250 per depositary share of Series E preferred stock | — | — | — | — | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||||||||||
$0.32500 per depositary share of Series F preferred stock | — | — | — | — | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||||||||||
$0.50 per share of common stock | — | — | ( | ) | — | ( | ) | — | ( | ) | |||||||||||||||||||||||||
Issuance of common stock: | |||||||||||||||||||||||||||||||||||
8,007 shares – director compensation and other | — | — | — | — | — | — | |||||||||||||||||||||||||||||
2,324 shares – stock purchase plan | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Issuance of 259,650 shares of restricted common stock | — | — | ( | ) | — | — | — | ||||||||||||||||||||||||||||
Stock issuance costs | — | — | — | ( | ) | — | — | ( | ) | — | ( | ) | |||||||||||||||||||||||
Amortization of deferred compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Amortization of interest rate hedges | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Valuation adjustments – available-for-sale securities | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Realized gain – available-for-sale securities | — | — | — | — | — | ( | ) | ( | ) | — | ( | ) | |||||||||||||||||||||||
Other | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Balances at March 31, 2019 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | $ |
Quarter Ended March 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net earnings | $ | $ | |||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Impairment losses – real estate, net of recoveries | |||||||
Amortization of notes payable discount | |||||||
Amortization of debt costs | |||||||
Amortization of mortgages payable premium | ( | ) | ( | ) | |||
Amortization of interest rate hedges | |||||||
Gain on disposition of real estate | ( | ) | ( | ) | |||
Performance incentive plan expense | |||||||
Performance incentive plan payment | ( | ) | ( | ) | |||
Change in operating assets and liabilities, net of assets acquired and liabilities assumed: | |||||||
Decrease in real estate leased to others using the direct financing method | |||||||
Decrease in receivables | |||||||
Increase in accrued rental income | ( | ) | ( | ) | |||
Decrease (increase) in other assets | ( | ) | |||||
Increase in accrued interest payable | |||||||
Decrease in other liabilities | ( | ) | ( | ) | |||
Other | ( | ) | |||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities: | |||||||
Proceeds from the disposition of real estate | |||||||
Additions to real estate: | |||||||
Accounted for using the operating method | ( | ) | ( | ) | |||
Other | |||||||
Net cash used in investing activities | ( | ) | ( | ) |
Quarter Ended March 31, | |||||||
2019 | 2018 | ||||||
Cash flows from financing activities: | |||||||
Proceeds from line of credit payable | $ | $ | |||||
Repayment of line of credit payable | ( | ) | |||||
Repayment of mortgages payable | ( | ) | ( | ) | |||
Payment of debt issuance costs | ( | ) | ( | ) | |||
Proceeds from issuance of common stock | |||||||
Stock issuance costs | ( | ) | ( | ) | |||
Payment of Series E preferred stock dividends | ( | ) | ( | ) | |||
Payment of Series F preferred stock dividends | ( | ) | ( | ) | |||
Payment of common stock dividends | ( | ) | ( | ) | |||
Net cash used in financing activities | ( | ) | ( | ) | |||
Net increase (decrease) in cash, cash equivalents and restricted cash | ( | ) | |||||
Cash, cash equivalents and restricted cash at beginning of period(1) | |||||||
Cash, cash equivalents and restricted cash at end of period(1) | $ | $ | |||||
Supplemental disclosure of cash flow information: | |||||||
Interest paid, net of amount capitalized | $ | $ | |||||
Supplemental disclosure of noncash investing and financing activities: | |||||||
Increase (decrease) in other comprehensive income | $ | $ | |||||
Right-of-use assets recorded in connection with lease liabilities | $ | $ | |||||
Mortgage receivable accepted in connection with real estate transactions | $ | $ |
March 31, 2019 | ||
Property Portfolio: | ||
Total properties | ||
Gross leasable area (square feet) | ||
States | ||
Weighted average remaining lease term (years) |
March 31, 2019 | December 31, 2018 | |||||||
Intangible lease assets (included in other assets): | ||||||||
Above-market in-place leases | $ | $ | ||||||
Less: accumulated amortization | ( | ) | ( | ) | ||||
Above-market in-place leases, net | $ | $ | ||||||
In-place leases | $ | $ | ||||||
Less: accumulated amortization | ( | ) | ( | ) | ||||
In-place leases, net | $ | $ | ||||||
Intangible lease liabilities (included in other liabilities): | ||||||||
Below-market in-place leases | $ | $ | ||||||
Less: accumulated amortization | ( | ) | ( | ) | ||||
Below-market in-place leases, net | $ | $ |
Quarter Ended March 31, | |||||||
2019 | 2018 | ||||||
Basic and Diluted Earnings: | |||||||
Net earnings attributable to NNN | $ | $ | |||||
Less: Series E preferred stock dividends | ( | ) | ( | ) | |||
Less: Series F preferred stock dividends | ( | ) | ( | ) | |||
Net earnings available to NNN’s common stockholders | |||||||
Less: Earnings allocated to unvested restricted shares | ( | ) | ( | ) | |||
Net earnings used in basic and diluted earnings per share | $ | $ | |||||
Basic and Diluted Weighted Average Shares Outstanding: | |||||||
Weighted average number of shares outstanding | |||||||
Less: Unvested restricted stock | ( | ) | ( | ) | |||
Less: Unvested contingent restricted shares | ( | ) | ( | ) | |||
Weighted average number of shares outstanding used in basic earnings per share | |||||||
Other dilutive securities | |||||||
Weighted average number of shares outstanding used in diluted earnings per share |
• | 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. |
• |
Gain or Loss on Cash Flow Hedges (1) | Gains and Losses on Available-for-Sale Securities | Total | |||||||||
Beginning balance, December 31, 2018 | $ | ( | ) | $ | $ | ( | ) | ||||
Other comprehensive income | |||||||||||
Reclassifications from accumulated other comprehensive income to net earnings | (2) | ( | ) | (3) | ( | ) | |||||
Net current period other comprehensive income (loss) | ( | ) | ( | ) | |||||||
Ending balance, March 31, 2019 | $ | ( | ) | $ | $ | ( | ) |
March 31, 2019 | ||
Lease classification: | ||
Operating | ||
Direct financing | ||
Building portion – direct financing/land portion – operating | ||
Weighted average remaining lease term (years) |
March 31, 2019 | December 31, 2018 | ||||||
Land and improvements(1) | $ | $ | |||||
Buildings and improvements | |||||||
Leasehold interests | |||||||
Less accumulated depreciation and amortization | ( | ) | ( | ) | |||
Work in progress for buildings and improvements | |||||||
$ | $ |
Rental income from operating leases | $ | ||
Earned income from direct financing leases | |||
Percentage rent | |||
Real estate expense reimbursement from tenants | |||
$ |
2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
$ |
March 31, 2019 | December 31, 2018 | ||||||
Minimum lease payments to be received | $ | $ | |||||
Estimated unguaranteed residual values | |||||||
Less unearned income | ( | ) | ( | ) | |||
Net investment in direct financing leases | $ | $ |
2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
$ |
March 31, 2019 | December 31, 2018 | ||||||
Land and improvements | $ | $ | |||||
Building and improvements | |||||||
Less accumulated depreciation and amortization | ( | ) | ( | ) | |||
Less impairment | ( | ) | ( | ) | |||
$ | $ |
Quarter Ended March 31, | |||||||||||
2019 | 2018 | ||||||||||
# of Sold Properties | Gain | # of Sold Properties | Gain | ||||||||
Gain on disposition of real estate | $ | $ |
Total commitment(1) | $ | ||
Less amount funded | |||
Remaining commitment | $ | ||
(1) Includes land, construction costs, tenant improvements, lease costs and capitalized interest. |
Ground Leases | Headquarters Office Lease | ||||||
Operating lease – ROU assets(1) | $ | $ | |||||
Operating lease – lease liabilities | ( | ) | ( | ) | |||
Weighted average remaining lease term (years) | |||||||
Weighted average discount rate | % | % |
(1) |
Ground Leases | Headquarters Office Lease | ||||||
2019 | $ | $ | |||||
2020 | |||||||
2021 | |||||||
2022 | |||||||
2023 | |||||||
Thereafter | |||||||
$ | $ |
Quarter Ended March 31, | |||||||
2019 | 2018 | ||||||
Shares of common stock | |||||||
Net proceeds | $ | $ |
2018 ATM | ||
Established date | February 2018 | |
Termination date | February 2021 | |
Total allowable shares | ||
Total shares issued as of March 31, 2019 |
Quarter Ended March 31, | |||||||
2019 | 2018 | ||||||
Series E preferred stock(1): | |||||||
Dividends | $ | $ | |||||
Per depositary share | |||||||
Series F preferred stock(2): | |||||||
Dividends | |||||||
Per depositary share | |||||||
Common stock: | |||||||
Dividends | |||||||
Per share |
Terminated | Description | Aggregate Notional Amount | Liability (Asset) Fair Value When Terminated | Fair Value Deferred In Other Comprehensive Income (1) | ||||||
April 2013 | Four forward starting swaps | $ | $ | $ | ||||||
May 2014 | Three forward starting swaps | |||||||||
October 2015 | Four forward starting swaps | |||||||||
December 2016 | Two forward starting swaps | ( | ) | ( | ) | |||||
September 2017 | Two forward starting swaps | |||||||||
September 2018 | Two forward starting swaps | ( | ) | ( | ) |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Financial and economic conditions may have an adverse impact on NNN, its tenants, and commercial real estate in general; |
• | NNN may be unable to obtain debt or equity capital on favorable terms, if at all; |
• | Changes in established interest rate index could have an adverse affect on NNN's results of operations; |
• | 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; |
• | Owning real estate and indirect interests in real estate carries inherent risks; |
• | NNN's real estate investments are illiquid; |
• | Costs of complying with changes in governmental laws and regulations may adversely affect NNN's results of operations; |
• | NNN may be subject to known or unknown environmental liabilities and hazardous materials on Properties owned by NNN; |
• | 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; |
• | NNN may suffer a loss in the event of a default of or bankruptcy of a tenant or a borrower; |
• | Certain provisions of NNN's leases or loan agreements may be unenforceable; |
• | Property ownership through joint ventures and partnerships could limit NNN's control of those investments; |
• | Competition from numerous other REITs, commercial developers, real estate limited partnerships and other investors may impede NNN's ability to grow; |
• | NNN's loss of key management personnel could adversely affect performance and the value of its securities; |
• | Uninsured losses may adversely affect NNN's operating results and asset values; |
• | Acts of violence, terrorist attacks or war may affect the markets in which NNN operates and NNN's results of operations; |
• | Vacant properties or bankrupt tenants could adversely affect NNN's business or financial condition; |
• | 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; |
• | The market value of NNN's equity and debt securities is subject to various factors that may cause significant fluctuations or volatility; |
• | NNN's failure to qualify as a REIT for federal income tax purposes could result in significant tax liability; |
• | Even if NNN remains qualified as a REIT, NNN faces other tax liabilities that reduce operating results and cash flow; |
• | Adverse legislative or regulatory tax changes could reduce NNN's earnings and cash flow and the market value of NNN's securities; |
• | Compliance with REIT requirements, including distribution requirements, may limit NNN's flexibility and may negatively affect NNN's operating decisions; |
• | Changes in accounting pronouncements could adversely impact NNN's or NNN's tenants' reported financial performance; |
• | 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; |
• | NNN's ability to pay dividends in the future is subject to many factors; |
• | Cybersecurity risks and cyber incidents could adversely affect NNN's business, disrupt operations and expose NNN to liabilities to tenants, employees, capital providers, and other third parties; and |
• | Future investment in international markets could subject NNN to additional risks, including foreign currency exchange rate fluctuations, operational risks due to local economic and political conditions and laws and policies of the U.S. affecting foreign investment. |
March 31, 2019 | December 31, 2018 | March 31, 2018 | ||||||
Properties Owned: | ||||||||
Number | 2,984 | 2,969 | 2,800 | |||||
Total gross leasable area (square feet) | 30,698,000 | 30,487,000 | 29,116,000 | |||||
Properties: | ||||||||
Leased and unimproved land | 2,931 | 2,917 | 2,777 | |||||
Percent of Properties – leased and unimproved land | 98 | % | 98 | % | 99 | % | ||
Weighted average remaining lease term (years) | 11.4 | 11.5 | 11.4 | |||||
Total gross leasable area (square feet) – leased | 29,618,000 | 29,439,000 | 28,752,000 |
% of Annual Base Rent (1) | |||||||||||
Lines of Trade | March 31, 2019 | December 31, 2018 | March 31, 2018 | ||||||||
1. | Convenience stores | 17.8 | % | 18.0 | % | 17.9 | % | ||||
2. | Restaurants – full service | 11.3 | % | 11.4 | % | 12.0 | % | ||||
3. | Restaurants – limited service | 9.0 | % | 8.9 | % | 8.0 | % | ||||
4. | Automotive service | 8.9 | % | 8.6 | % | 7.6 | % | ||||
5. | Family entertainment centers | 7.1 | % | 7.1 | % | 6.4 | % | ||||
6. | Health and fitness | 5.5 | % | 5.6 | % | 5.6 | % | ||||
7. | Theaters | 4.9 | % | 5.0 | % | 4.8 | % | ||||
8. | Recreational vehicle dealers, parts and accessories | 3.5 | % | 3.4 | % | 3.1 | % | ||||
9. | Automotive parts | 3.4 | % | 3.4 | % | 3.6 | % | ||||
10. | Home improvement | 2.4 | % | 2.2 | % | 1.7 | % | ||||
Other | 26.2 | % | 26.4 | % | 29.3 | % | |||||
100.0 | % | 100.0 | % | 100.0 | % |
Quarter Ended March 31, | |||||||
2019 | 2018 | ||||||
Acquisitions: | |||||||
Number of Properties | 33 | 52 | |||||
Gross leasable area (square feet) | 434,000 | 400,000 | |||||
Initial cash yield | 7.0 | % | 6.7 | % | |||
Total dollars invested(1) | $ | 116,952 | $ | 177,013 |
Quarter Ended March 31, | |||||||
2019 | 2018 | ||||||
Number of properties | 17 | 15 | |||||
Gross leasable area (square feet) | 180,000 | 280,000 | |||||
Net sales proceeds | $ | 19,389 | $ | 71,605 | |||
Gain | $ | 10,445 | $ | 38,596 |
Quarter Ended March 31, | |||||||||||||||
Percent Increase (Decrease) | Percent of Total | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Rental income from operating leases | $ | 158,398 | $ | 147,829 | 7.1% | 96.8 | % | 96.7 | % | ||||||
Earned income from direct financing leases | 213 | 230 | (7.4%) | 0.1 | % | 0.1 | % | ||||||||
Percentage rent | 422 | 546 | (22.7%) | 0.3 | % | 0.4 | % | ||||||||
Real estate expense reimbursement from tenants | 3,993 | 4,158 | (4.0%) | 2.4 | % | 2.7 | % | ||||||||
Lease income(1) | 163,026 | (2) | 99.6 | % | |||||||||||
Interest and other income from real estate transactions | 686 | 73 | 839.7% | 0.4 | % | 0.1 | % | ||||||||
Total revenues | $ | 163,712 | $ | 152,836 | 7.1% | 100.0 | % | 100.0 | % |
(1) | The condensed consolidated financial statements for the quarter ended March 31, 2019 are presented under the new accounting standard, ASU 2016-02, "Leases (Topic 842)," (“ASC 842”), while comparative periods presented are not adjusted and continue to be reported in accordance with NNN's historical accounting policy. For the quarter ended March 31, 2019, lease revenues are included in lease income on the Condensed Consolidated Statements of Income and Comprehensive Income. |
(2) | Lease income for the quarter ended March 31, 2018 would have been $152,763. |
Quarter Ended March 31, | Percent Increase (Decrease) | Percentage of Total | Percentage of Revenues | ||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||
General and administrative | $ | 9,521 | $ | 8,697 | 9.5% | 14.4 | % | 14.1 | % | 5.8 | % | 5.7 | % | ||||||||
Real estate | 7,093 | 5,862 | 21.0% | 10.8 | % | 9.5 | % | 4.3 | % | 3.8 | % | ||||||||||
Depreciation and amortization | 46,180 | 44,498 | 3.8% | 69.9 | % | 72.3 | % | 28.2 | % | 29.1 | % | ||||||||||
Impairment losses – real estate, net of recoveries | 3,245 | 2,248 | 44.4% | 4.9 | % | 3.7 | % | 2.0 | % | 1.5 | % | ||||||||||
Retirement severance costs | — | 261 | (100.0%) | — | 0.4 | % | — | 0.2 | % | ||||||||||||
Total operating expenses | $ | 66,039 | $ | 61,566 | 7.3% | 100.0 | % | 100.0 | % | 40.3 | % | 40.3 | % | ||||||||
Interest and other income | $ | (1,924 | ) | $ | (25 | ) | 7,596.0% | (6.9 | %) | (0.1 | %) | (1.2 | %) | (0.1 | %) | ||||||
Interest expense | 29,957 | 26,602 | 12.6% | 106.7 | % | 100.1 | % | 18.3 | % | 17.5 | % | ||||||||||
Leasing transaction costs | 52 | — | N/C (1) | 0.2 | % | — | — | — | |||||||||||||
Total other expenses | $ | 28,085 | $ | 26,577 | 5.7% | 100.0 | % | 100.0 | % | 17.1 | % | 17.4 | % |
Quarter Ended March 31, | |||||||
2019 | 2018 | ||||||
Cash and cash equivalents: | |||||||
Provided by operating activities | $ | 143,376 | $ | 129,997 | |||
Used in investing activities | (93,030 | ) | (103,152 | ) | |||
Used in financing activities | (84,092 | ) | (24,207 | ) | |||
Increase (decrease) | (33,746 | ) | 2,638 | ||||
Net cash at beginning of period | 114,267 | 1,364 | |||||
Net cash at end of period | $ | 80,521 | $ | 4,002 |
• | $5,279,000 in net proceeds from the issuance of 101,180 shares of common stock in connection with the Dividend Reinvestment and Stock Purchase Plan ("DRIP"), |
• | $4,097,000 in dividends paid to holders of the depositary shares of NNN’s 5.700% Series E Cumulative Redeemable Preferred Stock (the "Series E Preferred Stock"), |
• | $4,485,000 in dividends paid to holders of the depositary shares of NNN's 5.200% Series F Cumulative Redeemable Preferred Stock (the "Series F Preferred Stock"), and |
• | $80,566,000 in dividends paid to common stockholders. |
Expected Maturity Date (dollars in thousands) | |||||||||||||||||||||||||||
Total | 2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | |||||||||||||||||||||
Long-term debt(1) | $ | 2,887,263 | $ | 426 | $ | 596 | $ | 630 | $ | 325,664 | $ | 359,947 | $ | 2,200,000 | |||||||||||||
Long-term debt – interest(2) | 1,076,054 | 84,295 | 112,365 | 112,331 | 109,724 | 91,308 | 566,031 | ||||||||||||||||||||
Headquarters office lease | 4,805 | 572 | 773 | 788 | 804 | 821 | 1,047 | ||||||||||||||||||||
Ground leases | 8,249 | 364 | 511 | 520 | 530 | 530 | 5,794 | ||||||||||||||||||||
Total contractual cash obligations | $ | 3,976,371 | $ | 85,657 | $ | 114,245 | $ | 114,269 | $ | 436,722 | $ | 452,606 | $ | 2,772,872 |
(1) | Includes only principal amounts outstanding under mortgages payable and notes payable and excludes unamortized mortgage |
(2) | Interest calculation based on stated rate of the principal amount. |
Total commitment(1) | $ | 58,616 | ||
Less amount funded | 30,270 | |||
Remaining commitment | $ | 28,346 | ||
(1) Includes land, construction costs, tenant improvements, lease costs and capitalized interest. |
Quarter Ended March 31, | |||||||
2019 | 2018 | ||||||
Series E Preferred Stock(1): | |||||||
Dividends | $ | 4,097 | $ | 4,097 | |||
Per depositary share | 0.356250 | 0.356250 | |||||
Series F Preferred Stock(2): | |||||||
Dividends | 4,485 | 4,485 | |||||
Per depositary share | 0.325000 | 0.325000 | |||||
Common stock: | |||||||
Dividends | 80,566 | 72,733 | |||||
Per share | 0.500 | 0.475 | |||||
(1) The Series E Preferred Stock has no maturity date and will remain outstanding unless redeemed by NNN. As of May 2018, the Series E Preferred Stock is redeemable by NNN. | |||||||
(2) The Series F Preferred Stock has no maturity date and will remain outstanding unless redeemed by NNN. The earliest redemption date for the Series F Preferred Stock is October 2021. |
March 31, 2019 | Percentage of Total | December 31, 2018 | Percentage of Total | ||||||||||
Mortgages payable | $ | 12,536 | 0.4 | % | $ | 12,694 | 0.4 | % | |||||
Notes payable | 2,839,678 | 99.6 | % | 2,838,701 | 99.6 | % | |||||||
Total outstanding debt | $ | 2,852,214 | 100.0 | % | $ | 2,851,395 | 100.0 | % |
Quarter Ended March 31, | |||||||
2019 | 2018 | ||||||
Shares of common stock | 101,180 | 44,659 | |||||
Net proceeds | $ | 5,279 | $ | 1,491 |
2018 ATM | ||
Established date | February 2018 | |
Termination date | February 2021 | |
Total allowable shares | 12,000,000 | |
Total shares issued as of March 31, 2019 | 7,378,163 |
Debt Obligations (dollars in thousands) | ||||||||||||
Fixed Rate Debt | ||||||||||||
Mortgages(1) | Unsecured Debt(2) | |||||||||||
Debt Obligation | Weighted Average Effective Interest Rate | Debt Obligation | Effective Interest Rate | |||||||||
2019 | $ | 490 | 5.23% | $ | — | — | ||||||
2020 | 682 | 5.23% | — | — | ||||||||
2021 | 716 | 5.23% | — | — | ||||||||
2022 | 750 | 5.23% | 323,031 | 3.99% | ||||||||
2023 | 9,968 | 5.23% | 348,846 | 3.39% | ||||||||
Thereafter | — | — | 2,187,477 | 4.06% | (3) | |||||||
Total | $ | 12,606 | 5.23% | $ | 2,859,354 | 3.97% | ||||||
Fair Value: | ||||||||||||
March 31, 2019 | $ | 12,606 | $ | 2,914,825 | ||||||||
December 31, 2018 | $ | 12,768 | $ | 2,813,583 |
Item 4. | Controls and Procedures |
Item 1. | Legal Proceedings. Not applicable. |
Item 1A. | Risk Factors. There were no material changes in NNN's risk factors disclosed in Item 1A. Risk Factors of NNN's Annual Report on Form 10-K for the year ended December 31, 2018. |
Item 3. | Defaults Upon Senior Securities. Not applicable. |
Item 4. | Mine Safety Disclosures. Not applicable. |
Item 5. | Other Information. Not applicable. |
Item 6. | Exhibits |
31. | Section 302 Certifications | |||
31.1 | ||||
31.2 | ||||
32. | Section 906 Certifications | |||
32.1 | ||||
32.2 | ||||
101. | Interactive Data File | |||
101.1 | The following materials from National Retail Properties, Inc. Quarterly Report on Form 10-Q for the period ended March 31, 2019, are formatted in Extensible Business Reporting Language: (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of income and comprehensive income, (iii) condensed consolidated statements of cash flows, and (iv) notes to condensed consolidated financial statements. |
NATIONAL RETAIL PROPERTIES, INC. | ||
By: | /s/ Julian E. Whitehurst | |
Julian E. Whitehurst | ||
Chief Executive Officer, President and Director | ||
By: | /s/ Kevin B. Habicht | |
Kevin B. Habicht | ||
Chief Financial Officer, Executive Vice President and Director |
31. | Section 302 Certifications | |
31.1 | ||
31.2 | ||
32. | Section 906 Certifications | |
32.1 | ||
32.2 | ||
101. | Interactive Data File | |
101.1 | The following materials from National Retail Properties, Inc. Quarterly Report on Form 10-Q for the period ended March 31, 2019, are formatted in Extensible Business Reporting Language: (i) condensed consolidated balance sheets, (ii) condensed consolidated statements of income and comprehensive income, (iii) condensed consolidated statements of cash flows, and (iv) notes to condensed consolidated financial statements. |
1. | I have reviewed this report on Form 10-Q of National Retail Properties, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
May 1, 2019 | /s/ Julian E. Whitehurst | |||
Date | Name: | Julian E. Whitehurst | ||
Title: | Chief Executive Officer and President |
1. | I have reviewed this report on Form 10-Q of National Retail Properties, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
May 1, 2019 | /s/ Kevin B. Habicht | |||
Date | Name: | Kevin B. Habicht | ||
Title: | Chief Financial Officer |
May 1, 2019 | /s/ Julian E. Whitehurst | |||
Date | Name: | Julian E. Whitehurst | ||
Title: | Chief Executive Officer and President |
May 1, 2019 | /s/ Kevin B. Habicht | |||
Date | Name: | Kevin B. Habicht | ||
Title: | Chief Financial Officer |
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Apr. 29, 2019 |
|
Document And Entity Information [Abstract] | ||
Entity Registrant Name | NATIONAL RETAIL PROPERTIES, INC. | |
Entity Central Index Key | 0000751364 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 162,679,012 |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands |
Total |
Series E Preferred Stock |
Series F Preferred Stock |
Total Stockholders’ Equity |
Total Stockholders’ Equity
Series E Preferred Stock
|
Total Stockholders’ Equity
Series F Preferred Stock
|
Preferred Stock
Series E Preferred Stock
|
Preferred Stock
Series F Preferred Stock
|
Common Stock |
Capital in Excess of Par Value |
Retained Earnings (Loss) |
Retained Earnings (Loss)
Series E Preferred Stock
|
Retained Earnings (Loss)
Series F Preferred Stock
|
Accumulated Other Comprehensive Income (Loss) |
Noncontrolling Interests |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2017 | $ 3,840,910 | $ 3,840,593 | $ 287,500 | $ 345,000 | $ 1,537 | $ 3,599,475 | $ (379,181) | $ (13,738) | $ 317 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net earnings | 103,289 | 103,280 | 103,280 | 9 | |||||||||||
Dividends declared and paid: | |||||||||||||||
Preferred stock dividends declared and paid | $ (4,097) | $ (4,485) | $ (4,097) | $ (4,485) | $ (4,097) | $ (4,485) | |||||||||
Common stock dividends declared and paid | (71,188) | (71,188) | 1 | 1,544 | (72,733) | ||||||||||
Issuance of common stock: | |||||||||||||||
Director compensation and other | 296 | 296 | 296 | ||||||||||||
Stock purchase plan | 98 | 98 | 98 | ||||||||||||
Issuance of shares of restricted common stock | (89) | (89) | 2 | (91) | |||||||||||
Stock issuance costs | (306) | (306) | (306) | ||||||||||||
Amortization of deferred compensation | 1,849 | 1,849 | 1,849 | ||||||||||||
Amortization of interest rate hedges | 525 | 525 | 525 | ||||||||||||
Fair value of forward starting swaps | (2,164) | (2,164) | (2,164) | ||||||||||||
Valuation adjustments – available-for-sale securities | (132) | (132) | (132) | ||||||||||||
Balance at Mar. 31, 2018 | 3,864,506 | 3,864,180 | 287,500 | 345,000 | 1,540 | 3,602,865 | (357,216) | (15,509) | 326 | ||||||
Balance at Dec. 31, 2018 | 4,154,605 | 4,154,250 | 287,500 | 345,000 | 1,616 | 3,950,055 | (424,225) | (5,696) | 355 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||
Net earnings | 80,033 | 80,023 | 80,023 | 10 | |||||||||||
Dividends declared and paid: | |||||||||||||||
Preferred stock dividends declared and paid | $ (4,097) | $ (4,485) | $ (4,097) | $ (4,485) | $ (4,097) | $ (4,485) | |||||||||
Common stock dividends declared and paid | (75,406) | (75,406) | 1 | 5,159 | (80,566) | ||||||||||
Issuance of common stock: | |||||||||||||||
Director compensation and other | 322 | 322 | 322 | ||||||||||||
Stock purchase plan | 119 | 119 | 119 | ||||||||||||
Issuance of shares of restricted common stock | 0 | 0 | 3 | (3) | |||||||||||
Stock issuance costs | (42) | (42) | (42) | ||||||||||||
Amortization of deferred compensation | 2,225 | 2,225 | 2,225 | ||||||||||||
Amortization of interest rate hedges | 323 | 323 | 323 | ||||||||||||
Fair value of forward starting swaps | 0 | ||||||||||||||
Valuation adjustments – available-for-sale securities | 116 | 116 | 116 | ||||||||||||
Realized gain – available-for-sale securities | (1,331) | (1,331) | (1,331) | ||||||||||||
Balance at Mar. 31, 2019 | $ 4,152,887 | $ 4,152,522 | $ 287,500 | $ 345,000 | $ 1,620 | $ 3,957,835 | $ (432,845) | $ (6,588) | $ 365 |
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Dividends declared and paid: | ||
Common stock dividends (in dollars per share) | $ 0.50 | $ 0.475 |
Issuance of common stock: | ||
Director compensation and other (in shares) | 8,007 | 9,597 |
Stock purchase plan (in shares) | 2,324 | 2,537 |
Issuance of restricted common stock (in shares) | 259,650 | 222,684 |
Series E Preferred Stock | ||
Dividends declared and paid: | ||
Preferred stock dividends (in dollars per share) | $ 0.356250 | $ 0.356250 |
Series F Preferred Stock | ||
Dividends declared and paid: | ||
Preferred stock dividends (in dollars per share) | $ 0.32500 | $ 0.32500 |
Organization and Summary of Significant Accounting Policies |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies: Organization and Nature of Business – National Retail Properties, Inc., a Maryland corporation, is a fully integrated real estate investment trust (“REIT”) formed in 1984. The terms "NNN" or the "Company" refer to National Retail Properties, Inc. and all of its consolidated subsidiaries. NNN's assets primarily include real estate assets. NNN acquires, owns, invests in and develops properties that are leased primarily to retail tenants under long-term net leases and primarily held for investment ("Properties", "Property Portfolio", or individually a "Property").
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 ("GAAP"). 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 ended March 31, 2019, may not be indicative of the results that may be expected for the year ending December 31, 2019. Amounts as of December 31, 2018 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, 2018. Principles of Consolidation – NNN’s 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 Financial Accounting Standards Board (“FASB”) guidance included in 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 by NNN includes costs of construction, property taxes, interest and other miscellaneous costs incurred during the development period until the project is substantially complete and available for occupancy. NNN recorded $126,000 and $828,000 in capitalized interest during the development period for the quarter ended March 31, 2019 and 2018, respectively. Purchase Accounting for Acquisition of Real Estate Subject to a Lease – In accordance with the FASB guidance on business combinations, the fair value of the real estate acquired with in-place leases is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and 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 range relies upon ranking comparable properties' attributes from most similar to least similar. The fair value of the tangible assets of an acquired leased 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 applicable 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 measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as-if-vacant, determined as set forth above. The value of in-place leases exclusive of the value of above-market and below-market in-place leases 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. Intangible assets and liabilities consisted of the following as of (dollars in thousands):
The amounts amortized as a net increase to rental income for above-market and below-market leases for the quarter ended March 31, 2019 and 2018, were $228,000 and $698,000, respectively. The value of in-place leases amortized to expense for the quarter ended March 31, 2019 and 2018, were $2,244,000 and $3,146,000, respectively. Lease Accounting – In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," ("ASC 842"), effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The FASB issued final guidance that requires lessees to record a right-of-use ("ROU") asset and lease liability on its balance sheets but recognize expenses in the income statement in a manner similar to previous accounting. The guidance also eliminated certain real estate-specific provisions and changed the guidance on sale-leaseback transactions, initial direct costs and lease executory costs for all entities. For lessors, the standard modified the classification criteria and the accounting for sales-type and direct financing leases. Effective January 1, 2019, NNN adopted the lease guidance using the modified retrospective approach in which the cumulative effect of applying the new standard was recognized at the date of initial application with a positive adjustment to NNN’s opening balance of accumulated deficit. The modified retrospective approach provides a method for recording existing leases upon adoption which in comparative periods approximates the results of a full retrospective approach. NNN elected the package of practical expedients permitted under the transition guidance (which included: (i) an entity need not reassess whether any expired or existing contracts are or contain leases, (ii) an entity need not reassess the lease classification for any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases), the land easement practical expedient to carry forward existing accounting treatment on existing land easements, and the lease and non-lease component combined practical expedient. NNN estimates the collectibility of its accounts receivable related to rents, expense reimbursements and other revenues. NNN analyzes accounts receivable and historical bad debt levels, tenant credit-worthiness and current economic trends when evaluating the probable collection. At the point NNN deems the collection of lease payments not probable, a bad debt is recognized for any outstanding receivable and any related accrued rent and, subsequently, any lease revenue is only recognized when cash receipts are received. Adoption of the new standard resulted in the recording of ROU assets and operating lease liabilities of approximately $7,735,000 and $10,155,000 respectively, as of January 1, 2019, additional disclosure is included in Note 3. The condensed consolidated financial statements for the quarter ended March 31, 2019 are presented under the new standard, while comparative periods presented are not adjusted and continue to be reported in accordance with NNN's historical accounting policy. ASC 842 did not materially impact NNN’s financial position, or results of operations and had no impact on cash flows. Debt Costs – Line of Credit Payable – Debt costs incurred in connection with NNN’s $900,000,000 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 line of credit as an asset, in debt costs on the Condensed Consolidated Balance Sheets. Debt Costs – Mortgages Payable – Debt costs incurred in connection with NNN’s mortgages payable have been deferred and are being amortized over the term of the respective loan commitment using the straight-line method, which approximates the effective interest method. These costs of $147,000 as of March 31, 2019 and December 31, 2018, are included in mortgages payable on the Condensed Consolidated Balance Sheets net of accumulated amortization of $77,000 and $73,000, respectively. Debt Costs – Notes Payable – Debt costs incurred in connection with the issuance of NNN’s notes payable have been deferred and are being amortized to interest expense over the term of the respective debt obligation using the effective interest method. These costs of $26,932,000, as of March 31, 2019 and December 31, 2018, respectively, are included in notes payable on the Condensed Consolidated Balance Sheets net of accumulated amortization of $7,256,000 and $6,705,000, respectively. Revenue Recognition – In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606). The core principle of ASU 2014-09, is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Certain contracts are excluded from ASU 2014-09, including lease contracts within the scope of the FASB guidance included in Leases (Topic 842). NNN adopted ASU 2014-09 on January 1, 2018, and applied the cumulative catch-up transition method. Through the evaluation and implementation process, NNN determined the key revenue stream impacted by ASU 2014-09 is gain on disposition of real estate reported on the Condensed Consolidated Statements of Income and Comprehensive Income. Prior to the adoption of ASU 2014-09, NNN recognized revenue at the time of closing (i.e., transfer of asset). Following the adoption of ASU 2014-09, NNN evaluates any separate contracts or performance obligations to determine proper timing and/or amount of revenue recognition, as well as, transaction price allocation. The adoption of ASU 2014-09 did not have a material impact on NNN's financial position and results of operations. Earnings Per Share – Earnings per share have been computed pursuant to the FASB guidance included in Earnings Per Share. The guidance requires classification of the Company’s unvested restricted share units, which carry 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 number of 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 common share using the two-class method (dollars in thousands):
Fair Value Measurement – NNN’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. 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:
Accumulated Other Comprehensive Income (Loss) – The following table outlines the changes in accumulated other comprehensive income (loss) (dollars in thousands):
(1) Additional disclosure is included in Note 5 – Derivatives. (2) Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income. (3) Recorded in interest and other income on the Condensed Consolidated Statements of Income and Comprehensive Income. Use of Estimates – Management of NNN has made a number of estimates and assumptions relating to the reporting of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in conformity with GAAP. Significant estimates include provisions for impairment and allowances for certain assets, accruals, useful lives of assets and purchase price allocation. Actual results could differ from those estimates. Reclassification – Certain items in the prior year’s consolidated financial statements and notes to consolidated financial statements have been reclassified to conform to the 2019 presentation.
|
Real Estate |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate | Real Estate: Real Estate – Portfolio Leases – The following outlines key information for NNN’s 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. Generally, the Property leases provide for initial terms of 10 to 20 years. The Properties are generally leased under net leases, pursuant to which the tenant typically bears responsibility for substantially all property costs and expenses associated with ongoing maintenance, repair, replacement and operation of the property, including utilities, property taxes and property and liability insurance. Certain Properties are subject to leases under which NNN retains responsibility for specific costs and expenses of the Property. NNN's leases provide for annual base rental payments (generally payable in monthly installments), and generally provide for limited increases in rent as a result of (i) increases in the Consumer Price Index ("CPI"), (ii) fixed increases, or, to a lesser extent, (iii) increases in the tenant’s sales volume. Generally, NNN's leases provide the tenant with one or more multi-year renewal options, subject to generally 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 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 – Accounted for Using the Operating Method – Real estate subject to operating leases consisted of the following as of (dollars in thousands):
(1) Includes $10,846 and $5,571 in land for Properties under construction at March 31, 2019 and December 31, 2018, respectively. NNN recognized the following revenues in lease income for the quarter ended March 31, 2019 (dollars in thousands):
Some leases provide for scheduled rent increases throughout the lease term. Such amounts are recognized on a straight-line basis over the terms of the leases. For the quarter ended March 31, 2019 and 2018, NNN recognized $630,000 and $872,000, respectively, of such income, net of reserves. At March 31, 2019 and December 31, 2018, the balance of accrued rental income was $28,120,000 and $25,387,000, respectively, net of allowance of $1,842,000, respectively. The following is a schedule of undiscounted cash flows to be received on noncancellable operating leases as of March 31, 2019 (dollars in thousands):
Since lease renewal periods are exercisable at the option of the tenant, the above table only presents undiscounted cash flows due during the current lease terms. In addition, this table does not include amounts for potential variable rent increases that are based on the Consumer Price Index ("CPI") or future contingent rents which may be received on the leases based on a percentage of the tenant’s sales volume. Real Estate Portfolio – Accounted for Using the Direct Financing Method – The following lists the components of net investment in direct financing leases as of (dollars in thousands):
The following is a schedule of undiscounted cash flows to be received on direct financing leases held for investment as of March 31, 2019 (dollars in thousands):
The table above does not include future minimum lease payments for renewal periods, potential variable CPI rent increases or contingent rental payments that may become due in future periods (see Real Estate Portfolio – Accounted for Using the Operating Method). Real Estate – Held For Sale On a quarterly basis, the Company evaluates its Properties for held for sale classification based on specific criteria as outlined in ASC 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. As of March 31, 2019 and December 31, 2018, NNN had seven of its Properties categorized as held for sale, respectively. Real estate held for sale consisted of the following as of (dollars in thousands):
Real Estate – Dispositions The following table summarizes the Properties sold and the corresponding gain recognized on the disposition of Properties (dollars in thousands):
Real Estate – Commitments NNN has committed to fund construction on 26 Properties. The improvements on such Properties are estimated to be completed within 12 months. These construction commitments, as of March 31, 2019, are outlined in the table below (dollars in thousands):
Real Estate – Impairments Management periodically assesses its real estate for possible impairment whenever certain events or changes in circumstances indicate that the carrying amount of the asset, including accrued rental income, may not be recoverable through operations. Events or circumstances that may occur include significant changes in real estate market conditions and the ability of NNN to re-lease or sell properties that are vacant or become vacant in a reasonable period of time. Impairments are measured as the amount by which the current book value of the asset exceeds the estimated fair value of the asset. As a result of the Company's review of long-lived assets, including identifiable intangible assets, NNN recognized real estate impairments, net of recoveries of $3,245,000 and $2,248,000 for the quarter ended March 31, 2019 and 2018, respectively. |
Right-of-Use Assets and Operating Lease Liabilities |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Right-of-Use Assets and Operating Lease Liabilities | Right-Of-Use Assets and Operating Lease Liabilities: NNN is a lessee for three ground lease arrangements and for its headquarters office lease. NNN recognized an ROU asset (recorded in other assets on the Condensed Consolidated Balance Sheets) and an operating lease liability (recorded in other liabilities on the Condensed Consolidated Balance Sheets) for the present value of the minimum lease payments. ROU assets represent NNN’s right to use an underlying asset for the lease term and lease liabilities represent NNN’s obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at the lease commencement date based on the estimated present value of the lease payments over the lease term. 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 options. NNN estimates an incremental borrowing rate, which is derived from information available at the lease commencement date, in determining the present value of the lease payments. NNN gives consideration to the Company's debt issuances, as well as, publicly available data for secured instruments with similar characteristics when calculating its incremental borrowing rates. A 50 basis point increase or decrease in the estimate of the incremental borrowing rate at January 1, 2019 (the date of adoption of ASC 842) would not have a material impact on NNN’s financial position. NNN will reevaluate its incremental borrowing rate on an annual basis. NNN's lease agreements do not contain any residual value guarantees. As of March 31, 2019, NNN has recorded the following (dollars in thousands):
The following is a schedule of the undiscounted cash flows to be paid as of March 31, 2019 (dollars in thousands):
|
Stockholders' Equity |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Stockholders' Equity: In February 2018, NNN filed a shelf registration statement with the Securities and Exchange Commission (the "Commission") which permits the issuance by NNN of an indeterminate amount of debt and equity securities. Dividend Reinvestment and Stock Purchase Plan – In February 2018, NNN filed a shelf registration statement with the Commission for its Dividend Reinvestment and Stock Purchase Plan ("DRIP") which permits the issuance by NNN of up to 10,000,000 shares of common stock. The following table outlines the common stock issuances pursuant to NNN's DRIP (dollars in thousands):
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 program:
There were no common stock issuances pursuant to NNN's ATM equity program for the quarter ended March 31, 2019 and 2018, respectively. Dividends – The following table outlines the dividends declared and paid for each issuance of NNN's stock (dollars in thousands, except per share data):
(1) The 5.700% Series E Cumulative Redeemable Preferred Stock (the "Series E Preferred Stock") has no maturity date and will remain outstanding unless redeemed by NNN. As of May 2018, the Series E Preferred Stock is redeemable by NNN. (2) The 5.200% Series F Cumulative Redeemable Preferred Stock (the "Series F Preferred Stock") has no maturity date and will remain outstanding unless redeemed by NNN. The earliest redemption date for the Series F Preferred Stock is October 2021. In April 2019, NNN declared a dividend of $0.500 per share, which is payable in May 2019 to its common stockholders of record as of April 30, 2019.
|
Derivatives |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | Derivatives: In accordance with the guidance on derivatives and hedging, NNN records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure to changes in the fair value of an asset, liability, or a firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. NNN’s objective in using derivatives is to add stability to interest expense and to manage its exposure to interest rate movements or other identified risks. To accomplish this objective, NNN primarily uses treasury locks, forward starting swaps and interest rate swaps as part of its cash flow hedging strategy. Treasury locks and forward starting swaps are used to hedge forecasted debt issuances. Treasury locks designated as cash flow hedges lock in the yield/price of a treasury security. Forward starting swaps also lock the associated swap spread. Interest rate swaps designated as cash flow hedges are used to hedge the variable cash flows associated with floating rate debt and involve the receipt or payment of variable rate amounts in exchange for fixed-rate payments over the life of the agreements without exchange of the underlying principal amount. For derivatives designated as cash flow hedges, the change in the fair value of the derivative is initially reported in other comprehensive income (outside of earnings) and subsequently reclassified to earnings when the hedged transaction affects earnings. NNN discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the cash flows of the hedged item, the derivative expires or is sold, terminated or exercised, the derivative is re- designated as a hedging instrument or management determines that designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, NNN recognizes any changes in its fair value in earnings and continues to carry the derivative on the balance sheet or may choose to settle the derivative at that time with a cash payment or receipt. The following table outlines NNN's terminated derivatives which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt (dollars in thousands):
(1) The amount reported in accumulated other comprehensive income will be reclassified to interest expense as interest payments are made on the related notes payable. As of March 31, 2019, $6,588,000 remained in other comprehensive income related to NNN’s previously terminated interest rate hedges. During the quarter ended March 31, 2019 and 2018, NNN reclassified out of other comprehensive income $323,000 and $525,000, respectively, as an increase in interest expense. Over the next 12 months, NNN estimates that an additional $1,317,000 will be reclassified as an increase in interest expense from these terminated derivatives. Amounts reported in accumulated other comprehensive income 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 or currently have any derivatives that are not designated as hedges. NNN had no derivative financial instruments outstanding at March 31, 2019.
|
Fair Value of Financial Instruments |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Financial Instruments, Owned, at Fair Value [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments:NNN believes the carrying value of its Credit Facility approximates fair value based upon its nature, terms and variable interest rate. NNN believes that the carrying value of its mortgages payable at March 31, 2019 and December 31, 2018, approximate fair value based upon current market prices of comparable instruments (Level 3). At March 31, 2019 and December 31, 2018, the fair value of NNN’s notes payable net of unamortized discount and excluding debt costs was $2,914,825,000 and $2,813,583,000, respectively, based upon quoted market prices, which is a Level 1 valuation since NNN's notes payable are publicly traded. |
Subsequent Events |
3 Months Ended |
---|---|
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events:NNN reviewed its subsequent events and transactions that have occurred after March 31, 2019, the date of the condensed consolidated balance sheet. There were no reportable subsequent events or transactions. |
Organization and Summary of Significant Accounting Policies (Policies) |
3 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||
Accounting Policies [Abstract] | |||||||||
Principles of Consolidation | Principles of Consolidation – NNN’s 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 Financial Accounting Standards Board (“FASB”) guidance included in Consolidation. All significant intercompany account balances and transactions have been eliminated. | ||||||||
Real Estate Portfolio | Real Estate Portfolio – NNN records the acquisition of real estate at cost, including acquisition and closing costs. The cost of properties developed by NNN includes costs of construction, property taxes, interest and other miscellaneous costs incurred during the development period until the project is substantially complete and available for occupancy. NNN recorded $126,000 and $828,000 in capitalized interest during the development period for the quarter ended March 31, 2019 and 2018, respectively. Purchase Accounting for Acquisition of Real Estate Subject to a Lease – In accordance with the FASB guidance on business combinations, the fair value of the real estate acquired with in-place leases is allocated to the acquired tangible assets, consisting of land, building and tenant improvements, and 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 range relies upon ranking comparable properties' attributes from most similar to least similar. The fair value of the tangible assets of an acquired leased 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 applicable 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 measured by the excess of (i) the purchase price paid for a property after adjusting existing in-place leases to market rental rates over (ii) the estimated fair value of the property as-if-vacant, determined as set forth above. The value of in-place leases exclusive of the value of above-market and below-market in-place leases 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, Lessor | Lease Accounting – In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," ("ASC 842"), effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The FASB issued final guidance that requires lessees to record a right-of-use ("ROU") asset and lease liability on its balance sheets but recognize expenses in the income statement in a manner similar to previous accounting. The guidance also eliminated certain real estate-specific provisions and changed the guidance on sale-leaseback transactions, initial direct costs and lease executory costs for all entities. For lessors, the standard modified the classification criteria and the accounting for sales-type and direct financing leases. Effective January 1, 2019, NNN adopted the lease guidance using the modified retrospective approach in which the cumulative effect of applying the new standard was recognized at the date of initial application with a positive adjustment to NNN’s opening balance of accumulated deficit. The modified retrospective approach provides a method for recording existing leases upon adoption which in comparative periods approximates the results of a full retrospective approach. NNN elected the package of practical expedients permitted under the transition guidance (which included: (i) an entity need not reassess whether any expired or existing contracts are or contain leases, (ii) an entity need not reassess the lease classification for any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases), the land easement practical expedient to carry forward existing accounting treatment on existing land easements, and the lease and non-lease component combined practical expedient. NNN estimates the collectibility of its accounts receivable related to rents, expense reimbursements and other revenues. NNN analyzes accounts receivable and historical bad debt levels, tenant credit-worthiness and current economic trends when evaluating the probable collection. At the point NNN deems the collection of lease payments not probable, a bad debt is recognized for any outstanding receivable and any related accrued rent and, subsequently, any lease revenue is only recognized when cash receipts are received.
|
||||||||
Lease Accounting, Lessee | Lease Accounting – In February 2016, the FASB issued ASU 2016-02, "Leases (Topic 842)," ("ASC 842"), effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The FASB issued final guidance that requires lessees to record a right-of-use ("ROU") asset and lease liability on its balance sheets but recognize expenses in the income statement in a manner similar to previous accounting. The guidance also eliminated certain real estate-specific provisions and changed the guidance on sale-leaseback transactions, initial direct costs and lease executory costs for all entities. For lessors, the standard modified the classification criteria and the accounting for sales-type and direct financing leases. Effective January 1, 2019, NNN adopted the lease guidance using the modified retrospective approach in which the cumulative effect of applying the new standard was recognized at the date of initial application with a positive adjustment to NNN’s opening balance of accumulated deficit. The modified retrospective approach provides a method for recording existing leases upon adoption which in comparative periods approximates the results of a full retrospective approach. NNN elected the package of practical expedients permitted under the transition guidance (which included: (i) an entity need not reassess whether any expired or existing contracts are or contain leases, (ii) an entity need not reassess the lease classification for any expired or existing leases, and (iii) an entity need not reassess initial direct costs for any existing leases), the land easement practical expedient to carry forward existing accounting treatment on existing land easements, and the lease and non-lease component combined practical expedient. NNN estimates the collectibility of its accounts receivable related to rents, expense reimbursements and other revenues. NNN analyzes accounts receivable and historical bad debt levels, tenant credit-worthiness and current economic trends when evaluating the probable collection. At the point NNN deems the collection of lease payments not probable, a bad debt is recognized for any outstanding receivable and any related accrued rent and, subsequently, any lease revenue is only recognized when cash receipts are received.
|
||||||||
Debt Costs | Debt Costs – Notes Payable – Debt costs incurred in connection with the issuance of NNN’s notes payable have been deferred and are being amortized to interest expense over the term of the respective debt obligation using the effective interest method.Debt Costs – Line of Credit Payable – Debt costs incurred in connection with NNN’s $900,000,000 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 line of credit as an asset, in debt costs on the Condensed Consolidated Balance Sheets. Debt Costs – Mortgages Payable – Debt costs incurred in connection with NNN’s mortgages payable have been deferred and are being amortized over the term of the respective loan commitment using the straight-line method, which approximates the effective interest method. | ||||||||
Revenue Recognition | Revenue Recognition – In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606). The core principle of ASU 2014-09, is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Certain contracts are excluded from ASU 2014-09, including lease contracts within the scope of the FASB guidance included in Leases (Topic 842). NNN adopted ASU 2014-09 on January 1, 2018, and applied the cumulative catch-up transition method. Through the evaluation and implementation process, NNN determined the key revenue stream impacted by ASU 2014-09 is gain on disposition of real estate reported on the Condensed Consolidated Statements of Income and Comprehensive Income. Prior to the adoption of ASU 2014-09, NNN recognized revenue at the time of closing (i.e., transfer of asset). Following the adoption of ASU 2014-09, NNN evaluates any separate contracts or performance obligations to determine proper timing and/or amount of revenue recognition, as well as, transaction price allocation. The adoption of ASU 2014-09 did not have a material impact on NNN's financial position and results of operations. | ||||||||
Earnings Per Share | Earnings Per Share – Earnings per share have been computed pursuant to the FASB guidance included in Earnings Per Share. The guidance requires classification of the Company’s unvested restricted share units, which carry 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 number of 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. | ||||||||
Fair Value Measurement | Fair Value Measurement – NNN’s estimates of fair value of financial and non-financial assets and liabilities are based on the framework established in the fair value accounting guidance. 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 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.
|
||||||||
Use of Estimates | Use of Estimates – Management of NNN has made a number of estimates and assumptions relating to the reporting of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements in conformity with GAAP. Significant estimates include provisions for impairment and allowances for certain assets, accruals, useful lives of assets and purchase price allocation. Actual results could differ from those estimates. | ||||||||
Reclassification | Reclassification – Certain items in the prior year’s consolidated financial statements and notes to consolidated financial statements have been reclassified to conform to the 2019 presentation. |
Organization and Summary of Significant Accounting Policies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of NNN's Investment Portfolio | NNN acquires, owns, invests in and develops properties that are leased primarily to retail tenants under long-term net leases and primarily held for investment ("Properties", "Property Portfolio", or individually a "Property").
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets and Liabilities | Intangible assets and liabilities consisted of the following as of (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Earnings Per Share | The following table is a reconciliation of the numerator and denominator used in the computation of basic and diluted earnings per common share using the two-class method (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of AOCI | The following table outlines the changes in accumulated other comprehensive income (loss) (dollars in thousands):
(1) Additional disclosure is included in Note 5 – Derivatives. (2) Recorded in interest expense on the Condensed Consolidated Statements of Income and Comprehensive Income. (3) Recorded in interest and other income on the Condensed Consolidated Statements of Income and Comprehensive Income.
|
Real Estate (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Key Information for Leases | The following outlines key information for NNN’s leases:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Subject to Operating Leases | Real estate subject to operating leases consisted of the following as of (dollars in thousands):
(1) Includes $10,846 and $5,571 in land for Properties under construction at March 31, 2019 and December 31, 2018, respectively.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Income | NNN recognized the following revenues in lease income for the quarter ended March 31, 2019 (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Undiscounted Cash Flows - Operating Leases | The following is a schedule of undiscounted cash flows to be received on noncancellable operating leases as of March 31, 2019 (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Net Investment in Direct Financing Leases | The following lists the components of net investment in direct financing leases as of (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Undiscounted Cash Flows - Direct Financing Leases | The following is a schedule of undiscounted cash flows to be received on direct financing leases held for investment as of March 31, 2019 (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Held for Sale | Real estate held for sale consisted of the following as of (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Dispositions | The following table summarizes the Properties sold and the corresponding gain recognized on the disposition of Properties (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Commitments | These construction commitments, as of March 31, 2019, are outlined in the table below (dollars in thousands):
|
Right-of-Use Assets and Operating Lease Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Lease Information | As of March 31, 2019, NNN has recorded the following (dollars in thousands):
(1) ROU assets are shown net of accrued lease payments of $1,708 and $696, respectively.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Leases - Undiscounted Cash Flows | The following is a schedule of the undiscounted cash flows to be paid as of March 31, 2019 (dollars in thousands):
|
Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock Issuance | The following table outlines the common stock issuances pursuant to NNN's DRIP (dollars in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of ATM Program | The following outlines NNN's ATM program:
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Dividends Declared and Paid | The following table outlines the dividends declared and paid for each issuance of NNN's stock (dollars in thousands, except per share data):
(1) The 5.700% Series E Cumulative Redeemable Preferred Stock (the "Series E Preferred Stock") has no maturity date and will remain outstanding unless redeemed by NNN. As of May 2018, the Series E Preferred Stock is redeemable by NNN. (2) The 5.200% Series F Cumulative Redeemable Preferred Stock (the "Series F Preferred Stock") has no maturity date and will remain outstanding unless redeemed by NNN. The earliest redemption date for the Series F Preferred Stock is October 2021.
|
Derivatives (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments | The following table outlines NNN's terminated derivatives which were hedging the risk of changes in forecasted interest payments on forecasted issuance of long-term debt (dollars in thousands):
(1) The amount reported in accumulated other comprehensive income will be reclassified to interest expense as interest payments are made on the related notes payable.
|
Organization and Summary of Significant Accounting Policies (Summary of NNN's Investment Portfolio) (Details) ft² in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
ft²
state
property
| |
Property Portfolio: | |
Total properties | property | 2,984 |
Gross leasable area (square feet) | ft² | 30,698 |
States | state | 48 |
Weighted average remaining lease term (years) | 11 years 4 months 24 days |
Organization and Summary of Significant Accounting Policies (Narrative) (Details) - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Jan. 01, 2019 |
Dec. 31, 2018 |
|
Debt Instrument [Line Items] | ||||
Interest costs capitalized | $ 126,000 | $ 828,000 | ||
Amortization of above and below market leases | 228,000 | 698,000 | ||
Revolving credit facility borrowing capacity | 900,000,000 | |||
Mortgages | ||||
Debt Instrument [Line Items] | ||||
Debt costs | 147,000 | $ 147,000 | ||
Debt costs accumulated amortization | 77,000 | 73,000 | ||
Notes Payable to Banks | ||||
Debt Instrument [Line Items] | ||||
Debt costs | 26,932,000 | |||
Debt costs accumulated amortization | 7,256,000 | $ 6,705,000 | ||
In-place leases, net | ||||
Debt Instrument [Line Items] | ||||
Acquired-in-place leases | $ 2,244,000 | $ 3,146,000 | ||
ASC 842 | ||||
Debt Instrument [Line Items] | ||||
Operating lease – ROU assets | $ 7,735,000 | |||
Operating lease – lease liabilities | $ 10,155,000 |
Organization and Summary of Significant Accounting Policies (Gross Intangible Assets and Liabilities) (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Intangible lease liabilities (included in other liabilities): | ||
Below-market in-place leases | $ 41,395 | $ 41,554 |
Less: accumulated amortization | (25,357) | (25,258) |
Below-market in-place leases, net | 16,038 | 16,296 |
Above-market in-place leases, net | ||
Intangible lease assets (included in Other assets): | ||
Leases | 15,456 | 15,175 |
Less: accumulated amortization | (9,404) | (9,239) |
Leases, net | 6,052 | 5,936 |
In-place leases, net | ||
Intangible lease assets (included in Other assets): | ||
Leases | 109,558 | 104,871 |
Less: accumulated amortization | (61,344) | (60,797) |
Leases, net | $ 48,214 | $ 44,074 |
Organization and Summary of Significant Accounting Policies (Computation of Basic and Diluted Earnings per Share) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Basic and Diluted Earnings: | ||
Net earnings attributable to NNN | $ 80,023 | $ 103,280 |
Net earnings attributable to common stockholders | 71,441 | 94,698 |
Less: Earnings allocated to unvested restricted shares | (116) | (147) |
Net earnings used in basic and diluted earnings per share | $ 71,325 | $ 94,551 |
Basic and Diluted Weighted Average Shares Outstanding: | ||
Weighted average number of shares outstanding (in shares) | 161,785,877 | 153,678,913 |
Less: Unvested restricted stock (in shares) | (232,795) | (237,617) |
Less: Unvested contingent restricted shares (in shares) | (447,767) | (400,240) |
Weighted average number of shares outstanding used in basic earnings per share (in shares) | 161,105,315 | 153,041,056 |
Other dilutive securities (in shares) | 508,759 | 352,327 |
Weighted average number of shares outstanding used in diluted earnings per share (in shares) | 161,614,074 | 153,393,383 |
Series E Preferred Stock | ||
Basic and Diluted Earnings: | ||
Less: preferred stock dividends | $ (4,097) | $ (4,097) |
Series F Preferred Stock | ||
Basic and Diluted Earnings: | ||
Less: preferred stock dividends | $ (4,485) | $ (4,485) |
Organization and Summary of Significant Accounting Policies (Changes in AOCI) (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
| |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Balance | $ 4,154,605 |
Other comprehensive income | 116 |
Reclassifications from accumulated other comprehensive income to net earnings | (1,008) |
Net current period other comprehensive income (loss) | (892) |
Balance | 4,152,887 |
Gain or Loss on Cash Flow Hedges | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Balance | (6,911) |
Other comprehensive income | 0 |
Reclassifications from accumulated other comprehensive income to net earnings | 323 |
Net current period other comprehensive income (loss) | 323 |
Balance | (6,588) |
Gains and Losses on Available-for-Sale Securities | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Balance | 1,215 |
Other comprehensive income | 116 |
Reclassifications from accumulated other comprehensive income to net earnings | (1,331) |
Net current period other comprehensive income (loss) | (1,215) |
Balance | 0 |
Total | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Balance | (5,696) |
Balance | $ (6,588) |
Real Estate (Key Information for Leases) (Details) |
3 Months Ended |
---|---|
Mar. 31, 2019
property
| |
Lease classification: | |
Operating | 2,986 |
Direct financing | 7 |
Building portion – direct financing/land portion – operating | 1 |
Weighted average remaining lease term (years) | 11 years 4 months 24 days |
Minimum | |
Lease classification: | |
Initial lease terms | 10 years |
Maximum | |
Lease classification: | |
Initial lease terms | 20 years |
Real Estate (Real Estate Subject to Operating Leases) (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Property Subject to or Available for Operating Lease [Line Items] | ||
Land and improvements | $ 2,386,548 | $ 2,368,635 |
Buildings and improvements | 5,535,000 | 5,469,460 |
Leasehold interests | 3,630 | 3,630 |
Real estate subject to operating leases, gross | 7,925,178 | 7,841,725 |
Less accumulated depreciation and amortization | (1,043,855) | (1,005,724) |
Real estate subject to operating leases, net, before work in process | 6,881,323 | 6,836,001 |
Work in progress for buildings and improvements | 19,424 | 8,017 |
Accounted for using the operating method, net of accumulated depreciation and amortization | 6,900,747 | 6,844,018 |
Asset under construction | ||
Property Subject to or Available for Operating Lease [Line Items] | ||
Land and improvements | $ 10,846 | $ 5,571 |
Real Estate (Lease Income) (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
|
Lease Income [Abstract] | |||
Rental income from operating leases | $ 158,398 | ||
Earned income from direct financing leases | 213 | ||
Percentage rent | 422 | ||
Real estate expense reimbursement from tenants | 3,993 | $ 4,158 | |
Total lease income | 163,026 | ||
Straight line rent adjustments | 630 | $ 872 | |
Accrued rental income, net of allowance | 28,120 | $ 25,387 | |
Accrued rental income allowance | $ 1,842 | $ 1,842 |
Real Estate (Undiscounted Cash Flows - Operating Leases) (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Real Estate [Abstract] | |
2019 | $ 470,392 |
2020 | 617,630 |
2021 | 599,143 |
2022 | 569,341 |
2023 | 541,303 |
Thereafter | 4,422,859 |
Total | $ 7,220,668 |
Real Estate (Components of Net Investment in Direct Financing Leases) (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Real Estate [Abstract] | ||
Minimum lease payments to be received | $ 10,609 | $ 10,899 |
Estimated unguaranteed residual values | 3,632 | 4,395 |
Less unearned income | (7,022) | (7,225) |
Net investment in direct financing leases | $ 7,219 | $ 8,069 |
Real Estate (Undiscounted Cash Flows - Direct Financing Leases) (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Real Estate [Abstract] | |
2019 | $ 1,109 |
2020 | 1,045 |
2021 | 920 |
2022 | 897 |
2023 | 895 |
Thereafter | 5,743 |
Total | $ 10,609 |
Real Estate (Real Estate Held for Sale) (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
property
|
Dec. 31, 2018
USD ($)
|
---|---|---|
Real Estate [Abstract] | ||
Number of properties classified as held for sale | property | 7 | |
Land and improvements | $ 13,982 | $ 13,976 |
Building and improvements | 34,166 | 34,166 |
Real estate held-for-sale | 48,148 | 48,142 |
Less accumulated depreciation and amortization | (10,608) | (10,547) |
Less impairment | (16,143) | (14,250) |
Real estate held for sale | $ 21,397 | $ 23,345 |
Real Estate (Real Estate Dispositions) (Details) - Assets Held-for-sale $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019
USD ($)
property
|
Mar. 31, 2018
USD ($)
property
|
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Number of sold properties - gain on disposition of real estate | property | 17 | 15 |
Gain on disposition of real estate | $ | $ 10,445 | $ 38,596 |
Real Estate (Real Estate Commitments) (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2019
USD ($)
property
| |
Real Estate [Abstract] | |
Number of properties | property | 26 |
Period for improvements to construction commitments | 12 months |
Total commitment | $ 58,616 |
Less amount funded | 30,270 |
Remaining commitment | $ 28,346 |
Real Estate (Real Estate Impairments) (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2019 |
Mar. 31, 2018 |
|
Real Estate [Abstract] | ||
Impairment losses – real estate and other charges, net of recoveries | $ 3,245 | $ 2,248 |
Right-of-Use Assets and Operating Lease Liabilities (Lease Information) (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
lease
|
---|---|
Lessee, Lease, Description [Line Items] | |
Number of ground leases | lease | 3 |
Ground Leases | |
Lessee, Lease, Description [Line Items] | |
Operating lease – ROU assets | $ 4,190 |
Operating lease – lease liabilities | $ (5,898) |
Weighted average remaining lease term | 15 years 2 months 12 days |
Weighted average discount rate | 4.10% |
Operating lease - accrued lease payments | $ 1,708 |
Headquarters Office Lease | |
Lessee, Lease, Description [Line Items] | |
Operating lease – ROU assets | 3,367 |
Operating lease – lease liabilities | $ (4,063) |
Weighted average remaining lease term | 6 years |
Weighted average discount rate | 3.50% |
Operating lease - accrued lease payments | $ 696 |
Right-of-Use Assets and Operating Lease Liabilities (Operating Leases - Undiscounted Cash Flows) (Details) $ in Thousands |
Mar. 31, 2019
USD ($)
|
---|---|
Ground Leases | |
Lessee, Lease, Description [Line Items] | |
2019 | $ 364 |
2020 | 511 |
2021 | 520 |
2022 | 530 |
2023 | 530 |
Thereafter | 5,794 |
Total | 8,249 |
Headquarters Office Lease | |
Lessee, Lease, Description [Line Items] | |
2019 | 572 |
2020 | 773 |
2021 | 788 |
2022 | 804 |
2023 | 821 |
Thereafter | 1,047 |
Total | $ 4,805 |
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands |
1 Months Ended | 3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Apr. 30, 2019 |
Mar. 31, 2019 |
Mar. 31, 2018 |
Dec. 31, 2018 |
Feb. 28, 2018 |
|
Class of Stock [Line Items] | |||||
Total allowable shares (in shares) | 375,000,000 | 375,000,000 | |||
Net proceeds | $ 5,279 | $ 1,554 | |||
Total shares issued (in shares) | 161,978,308 | 161,503,585 | |||
Common stock dividends | $ 80,566 | $ 72,733 | |||
Common stock per share (in dollars per share) | $ 0.500 | $ 0.475 | |||
Common stock dividends declared (in dollars per share) | $ 0.50 | $ 0.475 | |||
Subsequent Event | |||||
Class of Stock [Line Items] | |||||
Common stock dividends declared (in dollars per share) | $ 0.500 | ||||
Series E Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Dividends | $ 4,097 | $ 4,097 | |||
Per depository share (in dollars per share) | $ 0.356250 | $ 0.356250 | |||
Dividend rate | 5.70% | 5.70% | |||
Series F Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Dividends | $ 4,485 | $ 4,485 | |||
Per depository share (in dollars per share) | $ 0.325000 | $ 0.325000 | |||
Dividend rate | 5.20% | 5.20% | |||
DRIP | |||||
Class of Stock [Line Items] | |||||
Total allowable shares (in shares) | 10,000,000 | ||||
Shares of common stock (in shares) | 101,180 | 44,659 | |||
Net proceeds | $ 5,279 | $ 1,491 | |||
2018 ATM | |||||
Class of Stock [Line Items] | |||||
Total allowable shares (in shares) | 12,000,000 | ||||
Total shares issued (in shares) | 7,378,163 |
Derivatives (Details) |
3 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2019
USD ($)
|
Mar. 31, 2018
USD ($)
|
Dec. 31, 2018
USD ($)
|
Sep. 30, 2018
USD ($)
instrument
|
Dec. 31, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
instrument
|
Dec. 31, 2016
USD ($)
instrument
|
Oct. 31, 2015
USD ($)
instrument
|
May 31, 2014
USD ($)
instrument
|
Apr. 30, 2013
USD ($)
instrument
|
|
Derivative [Line Items] | ||||||||||
Stockholders' equity (deficit) | $ 4,152,887,000 | $ 3,864,506,000 | $ 4,154,605,000 | $ 3,840,910,000 | ||||||
Interest expense | 29,957,000 | 26,602,000 | ||||||||
Interest rate cash flow hedge gain (loss) to be reclassified over next 12 months, net | (1,317,000) | |||||||||
Reclassification out of Accumulated Other Comprehensive Income | ||||||||||
Derivative [Line Items] | ||||||||||
Interest expense | 323,000 | $ 525,000 | ||||||||
Forward Swap | ||||||||||
Derivative [Line Items] | ||||||||||
Number of interest rate derivatives terminated | instrument | 2 | 2 | 2 | 4 | 3 | 4 | ||||
Aggregate Notional Amount | $ 250,000,000 | $ 250,000,000 | $ 180,000,000 | $ 300,000,000 | $ 225,000,000 | $ 240,000,000 | ||||
Liability Fair Value When Terminated | 7,690,000 | 13,369,000 | 6,312,000 | 3,156,000 | ||||||
Asset Fair Value When Terminated | (4,080,000) | (13,352,000) | ||||||||
Fair Value Deferred In Other Comprehensive Income | $ (4,080,000) | $ 7,688,000 | $ (13,345,000) | $ 13,369,000 | $ 6,312,000 | $ 3,141,000 | ||||
Interest rate cash flow hedge | ||||||||||
Derivative [Line Items] | ||||||||||
Stockholders' equity (deficit) | $ (6,588,000) |
Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands |
Mar. 31, 2019 |
Dec. 31, 2018 |
---|---|---|
Financial Instruments, Owned, at Fair Value [Abstract] | ||
Fair value of notes payable | $ 2,914,825 | $ 2,813,583 |
Label | Element | Value |
---|---|---|
Accounting Standards Update 2016-02 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 505,000 |
Accounting Standards Update 2016-02 [Member] | Parent [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 505,000 |
Accounting Standards Update 2016-02 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 505,000 |
V;Q2]MB]GM'
M&GK;V)[]:GBJSY50!B?/>GPFWXCXWN^9W#DCR[%N2<=KVEF,G#;VUGLLO$ Y
M:,2/FMSX9&VI5 Z4/JO-Y^/&=I4BTI!2* HL;U=2D*913%+'KX'4'F,JQ^GZ
ME?VC3EXF<\"<%+3Y61]%M;$3VSJ2$[XTXHG>/I$AH="VANR_D"MI)%PID3%*
MVG!]M VJE@L6<&+D5U?)-O/WOE=!C:]$OK#Q
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M!!0 ( /5$H4X^4U4E @( &T% 9 >&PO=V]R:W-H965T :,R2;0O3F:3=L*^TTG+_7N+5^EZ\R[&:(>
ML^LPP1BS]@>,I_D'D0 5"2S!ZH& X 0KE&!E"<('@F"298>)+*;N,+A$B$J$
MB,0"08021.\O,D8)XED&P3J=%-EAXE&1(5DZBP1521"5Z8$G,Y4/43K*Y4$F
M1652I)WA1 ;#1+C(&A59(P3Q1 3#)+@(\7&+^ C%]&!ZT+AG)/$76D86O$@0
MH?4"!>XT\A]6([C7R-QL\WM($+>MXJ6^XHXC<\O-KV(/>KB+H1\O.)/@UB31
M.VXC @K]!6L1W,%D;N'YA41 H;]T1+B'R=S$R(V I;6BPW]+HQ5-YN:];OEZL@JD'+)I#2/-6!,=4W3YGJFU]SJCA&T/KP
M]IN*?A6)=ROI737F[@P$YWZ]K'*,Z:#4(;##^;9(UZ8JK7>D"
M@_#;!>Y J4#D9?R>.>F2,@#7YU?V+[%V7\M96+A#]4M6KLWI#245U&)0[A''
MKS#7\X&2N?A[N(#RX4&)SU&BLG$EY6 =ZIG%2]'B>=IE%_=QNN&?9M@V@,\
MO@!N8AXV)8K*/PLGBLS@2,S4^UZ$)TX.W/>F#,[8BGCGQ5OOO10\X1F[!*(Y
MYCC%\%5,LD0PS[ZDX%LICOP=G&_#]YL*]Q&^_T?A?IL@W21((T'ZWQ*W8M(W
M2=BJIQI,$Z?)DA*'+D[RRKL,["V/;_(W?)KV!V$:V5ER1N=?-O:_1G3@I>RN
M_ BU_H,MAH+:A>.U/YMIS";#83__(+9\X^(/4$L#!!0 ( /5$H4Y#H<5^
M,@( &P' 9 >&PO=V]R:W-H965TF@Q9O*F.U\&C:FKG.@B@C22O&DV3/M) MS=/H
MN]@\-;U7LH6+):[76MC?9U!FR.B&OCM>9-WXX&!YVHD:OH'_WETL6FQ6*:6&
MUDG3$@M51A\VI_,NX"/@AX3!+ECT+WF0X=5A+S4(?V
M;Y1'P'"S'6%S.R"!^8.S%SVX9"++4&(>GA%S=WKR&)AV_H/2;H+9[==B>E*=
MA7D5N71<7B*SW:E[/:L+W=A?1XN-[D&W,+HE_D#T5'?,VQ,N[F9U@QX)X5B8
M#)]$4<^B"T^+!A^YG&9B3G4KT@M.^K'-!E.O7_T#4$L#!!0 ( /5$H4Y!
M]$#8$ ( ,X% 9 >&PO=V]R:W-H965T
$K \V6EQ%\]+]H.+:=-([<:5OM;U[%\X5:,_@
M2===Z\=U#AA
_RI(JMF[K."<[TRM0+;[]
M7U#D.GWUW^ &3,--)EKCR)FTO\[Q*A6O>A:=2D7?NK&L[=CV_/D24X(T49J5]E
MFD\@?4PZ@J0P4TB&0C($4DP@F0^A!(?D*"1'(.4$DON0> 92H)#"AV1D BG>
M#RE12(E IB^^]"%Y.?/F@> N(AX'()O:B'B@@B;E#&C&KH!8:4X"-R/0]YL)
M<#M"_'\[#3%OEW7FKP&X:<%WK>^H(6C,R?.9GPO@Q@7,N5-3@6_=O"AF.+AW
M 3/OU%?@N[<@_ ]S"0))\!X2X&W\:(
MO4KO!YX4))V HM'&: \>WY@\5JT*MD*;/=;MA
J0'#SJ:BF'N@90A"E&8P%09282$5Y$6]8$'4B*$)SXF?R0<025-"
M!9>FQ)VUPYX04W<@F+E3 TBWTBHMF'6E
M/A,S:&!-( E.LB2Y)X+U$E=%Z!UU5:B+Y;V$HT;F(@33;X_ U5CB%'\TGOIS
M9WV#5,7 SO ;[)_AJ%U%9I6F%R!-KR32T);X2[H_4(\/@+\]C&8Q1S[)2:D7
M7_QH2IQX0\"AMEZ!N>$*!^#<"SD;_Z(FGK?TQ.7\0_U;R.ZRG)B!@^+/?6.[
M$N\P:J!E%VZ?U/@=8IX-1C'\3[@"=W#OQ.U1*V["%]478Y6(*LZ*8*_3V,LP
MCM/*-HVT=4(6"=E,2/-/"302Z V!3,Y"U*_,LJK0:D1Z^ED#\W>D@>P
M4VEBIJ>I[D-7IF&.Y#*:97*;0V;+3?DFV)KD@ 7&>4"0) I85ZQ0/S-#["='
M'Z]_/CIE@<.RT-I5CR2+R<#A^"Z5?($_=Q6U"(;UWQ*="".
UBNCU7)+-P2VM^=)W5Q>[5A7I2I" J9*.J\HI*
MT^<$,Q"Q+]!'%UBZ07"]#(Y+$XMU9LJYJ!(+1TI)BE0QA[,^5Z$&=*/25-DU
M*_!%E1=ZDV_J8I8 ^GJAXDJNN&[K 7U/=&B7&-RS!*:Q1#JEC".1MVF!F(P=
M%=BX%8O!"0VL!^*A0JJ9U&.LE@6AFY
"P\R''_;F'=C!QP@NX<1P/C/HB9N-P3L=\>@/J>$7X3%E>'
M],]M)_RYO=0FG]SH8@BQ@)P8N 0OWUL%UC&A"CV\&/GA.]-BX3'V.YLL-I/7
M9E/;OLN
K&BF?QC3W7;'-FP<),Z?&F%) /4+N)'