EX-99.1 2 nnn-ex99_1.htm EX-99.1 EX-99.1

 

Exhibit 99.1

img41624055_0.jpg 

NEWS RELEASE

For information contact:

Kevin B. Habicht

Chief Financial Officer

(407) 265-7348

 FOR IMMEDIATE RELEASE

August 2, 2023

 

SECOND QUARTER 2023 OPERATING RESULTS AND INCREASED 2023 GUIDANCE

ANNOUNCED BY NNN REIT, INC.

 

Orlando, Florida, August 2, 2023 – NNN REIT, Inc. (NYSE: NNN), a real estate investment trust, today announced its operating results for the quarter and six months ended June 30, 2023. Highlights include:

 

Operating Results:

•
Revenues and net earnings, FFO, Core FFO and AFFO available to common stockholders and diluted per share amounts:

 

 

 

Quarter Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

(dollars in thousands, except per share data)

 

 

Revenues

 

$

202,640

 

 

$

190,783

 

 

$

406,748

 

 

$

381,062

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings available to common stockholders

 

$

98,704

 

 

$

74,171

 

 

$

188,871

 

 

$

155,543

 

 

Net earnings per common share

 

$

0.54

 

 

$

0.42

 

 

$

1.04

 

 

$

0.89

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO available to common stockholders

 

$

144,590

 

 

$

135,353

 

 

$

290,139

 

 

$

266,946

 

 

FFO per common share

 

$

0.80

 

 

$

0.77

 

 

$

1.60

 

 

$

1.53

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Core FFO available to common stockholders

 

$

144,899

 

 

$

138,008

 

 

$

290,871

 

 

$

273,195

 

 

Core FFO per common share

 

$

0.80

 

 

$

0.79

 

 

$

1.60

 

 

$

1.56

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO available to common stockholders

 

$

146,079

 

(1)

$

142,103

 

(2)

$

294,245

 

(1)

$

280,824

 

(2)

AFFO per common share

 

$

0.80

 

(1)

$

0.81

 

(2)

$

1.62

 

(1)

$

1.60

 

(2)

 

(1)

 

Amounts include $10 and $19 of net straight-line accrued rent from net rent deferral repayments from the COVID-19 rent deferral lease amendments for the quarter and six months ended June 30, 2023, respectively. Excluding such would have no affect on AFFO per common share for the quarter and six months ended June 30, 2023.

(2)

 

Amounts include $1,729 and $3,509 of net straight-line accrued rent from net deferral repayments from the COVID-19 rent deferral lease amendments for the quarter and six months ended June 30, 2022, respectively. Excluding such, AFFO per common share results would have been $0.80 and $1.58 for the quarter and six months ended June 30, 2022, respectively.

 

Second Quarter 2023 Highlights:

•
FFO per share increased 3.9% over prior year results
•
Core FFO per share increased 1.3% over prior year results
•
Maintained high occupancy levels at 99.4% as of June 30, 2023 (unchanged from March 31, 2023 and December 31, 2022), with a weighted average remaining lease term of 10.2 years
•
$181.3 million in property investments, including the acquisition of 36 properties with an aggregate gross leasable area of approximately 278,000 square feet at an initial cash cap rate of 7.2%
•
Sold seven properties for $28.2 million, producing $13.9 million of gains on sales at a cap rate of 5.1%
•
Raised $13.3 million net proceeds from the issuance of 318,488 common shares
•
Maintained sector leading 12.3 year weighted average debt maturity for unsecured debt

 

1

 

First Half of 2023 Highlights:

•
FFO per share increased 4.6% over prior year results
•
Core FFO per share increased 2.6% over prior year results
•
AFFO per share increased 1.3% over prior year results
•
$337.5 million in property investments, including the acquisition of 79 properties with an aggregate gross leasable area of approximately 553,000 square feet at an initial cash cap rate of 7.1%
•
Sold 13 properties for $40.2 million, producing $20.2 million of gains on sales at a cap rate of 5.6%
•
Raised $30.2 million net proceeds from the issuance of 686,057 common shares

Core FFO guidance for 2023 was increased from a range of $3.14 to $3.20 per share to a range of $3.17 to $3.22 per share. The 2023 AFFO is estimated to be $3.20 to $3.25 per share. The Core FFO guidance equates to net earnings of $1.88 to $1.93 per share, plus $1.29 per share of expected real estate depreciation and amortization and excludes any gains from the sale of real estate, charges for impairments and executive retirement costs. The guidance is based on current plans and assumptions and subject to risks and uncertainties more fully described in this press release and the company's reports filed with the Securities and Exchange Commission.

Steve Horn, Chief Executive Officer, commented: "NNN enjoyed another solid quarter as we invested $181.3 million in real estate, including 36 properties, with an accretive initial cash cap rate of 7.2 percent, which brings our total investment for the first half of 2023 to over $337 million. The portfolio is performing exceedingly well with a high level of occupancy and exceptional lease renewal percentages. Our operational execution coupled with over $750 million of liquidity, strong free cash flow and a solid balance sheet allowed us to increase Core FFO guidance for 2023."

NNN REIT invests primarily in high-quality retail properties subject generally to long-term, net leases. As of June 30, 2023, the company owned 3,479 properties in 49 states with a gross leasable area of approximately 35.5 million square feet and with a weighted average remaining lease term of 10.2 years. NNN is one of only three publicly traded REITs to have increased annual dividends for 34 or more consecutive years. For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on August 2, 2023, at 10:30 a.m. ET to review its results of operations. The call can be accessed on the NNN REIT website live at http://www.nnnreit.com. For those unable to listen to the live broadcast, a replay will be available on the company’s website. In addition, a summary of any earnings guidance given on the call will be posted to the company’s website.

 

Statements in this press release that are not strictly historical are “forward-looking” statements. These statements generally are characterized by the use of terms such as "believe," "expect," "in position," "intend," "may," "estimated," or other similar words or expressions. Forward-looking statements involve known and unknown risks, which may cause the company’s actual future results to differ materially from expected results. These risks include, among others, general economic conditions, including inflation, local real estate conditions, changes in interest rates, increases in operating costs, the preferences and financial condition of the company's tenants, the availability of capital, risks related to the company's status as a REIT, and the potential impacts of an epidemic or pandemic (such as the outbreak and worldwide spread of a novel strain of coronavirus, and its variants ("COVID-19")) on the company’s business operations, financial results, and financial position on the world economy. Additional information concerning these and other factors that could cause actual results to differ materially from these forward-looking statements is contained from time to time in the company’s Securities and Exchange Commission (the "Commission”) filings, including, but not limited to, the company’s (i) Annual Report on Form 10-K for the year ended December 31, 2022 and (ii) Quarterly Reports on Form 10-Q for the quarters ended March 31, 2023 and June 30, 2023. Copies of each filing may be obtained from the company or the Commission. Such forward-looking statements should be regarded solely as reflections of the company’s current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this press release. NNN REIT, Inc. undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.

 

Funds From Operations, commonly referred to as "FFO", is a relative non-GAAP financial measure of operating performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. FFO is defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and is used by the company as follows: net earnings (computed in accordance with GAAP) plus depreciation and amortization of assets unique to the real estate industry, excluding gains (or including losses), any applicable taxes and noncontrolling interests on the disposition of certain assets, the company’s share of these items from the company’s noncontrolling interests and any impairment charges on a depreciable real estate asset.

 

FFO is generally considered by industry analysts to be the most appropriate measure of performance of real estate companies. FFO does not necessarily represent cash provided by operating activities in accordance with GAAP and should not be considered an alternative to net earnings as an indication of the company’s performance or to cash flow as a measure of liquidity or ability to make distributions. Management considers FFO an appropriate measure of performance of an equity REIT because it primarily excludes the assumption that the value of the real estate assets diminishes predictably over time, and because industry analysts have accepted it as a performance measure. The company’s computation of FFO may differ from the methodology for calculating FFO used by other equity REITs, and therefore, may not be comparable to such other REITs. A reconciliation of net earnings (computed in accordance with GAAP) to FFO, as defined by NAREIT, is included in the financial information accompanying this release.

2

 

 

Core Funds From Operations (“Core FFO”) is a non-GAAP measure of operating performance that adjusts FFO to eliminate the impact of certain GAAP income and expense amounts that the company believes are infrequent and unusual in nature and/or not related to its core real estate operations. Exclusion of these items from similar FFO-type metrics is common within the REIT industry, and management believes that presentation of Core FFO provides investors with a potential metric to assist in their evaluation of the company’s operating performance across multiple periods and in comparison to the operating performance of its peers because it removes the effect of unusual items that are not expected to impact the company’s operating performance on an ongoing basis. Core FFO is used by management in evaluating the performance of the company’s core business operations and is a factor in determining management compensation. Items included in calculating FFO that may be excluded in calculating Core FFO may include items such as transaction related gains, income or expense, impairments on land or commercial mortgage residual interests, executive retirement costs or other non-core amounts as they occur. The company’s computation of Core FFO may differ from the methodology for calculating Core FFO used by other equity REITs, and therefore, may not be comparable to such other REITs. A reconciliation of net earnings (computed in accordance with GAAP) to Core FFO is included in the financial information accompanying this release.

 

Adjusted Funds From Operations (“AFFO”) is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO adjusts FFO for certain non-cash items that reduce or increase net income in accordance with GAAP. AFFO should not be considered an alternative to net earnings, as an indication of the company's performance or to cash flow as a measure of liquidity or ability to make distributions. Management considers AFFO a useful supplemental measure of the company’s performance. The company’s computation of AFFO may differ from the methodology for calculating AFFO used by other equity REITs, and therefore, may not be comparable to such other REITs. A reconciliation of net earnings (computed in accordance with GAAP) to AFFO is included in the financial information accompanying this release.

 

3

 

NNN REIT, Inc.

(dollars in thousands, except per share data)

(unaudited)

 

 

 

Quarter Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Income Statement Summary

 

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

Rental income

 

$

202,426

 

 

$

190,536

 

 

$

406,056

 

 

$

380,299

 

Interest and other income from real estate transactions

 

 

214

 

 

 

247

 

 

 

692

 

 

 

763

 

 

 

202,640

 

 

 

190,783

 

 

 

406,748

 

 

 

381,062

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

10,740

 

 

 

9,740

 

 

 

22,991

 

 

 

20,782

 

Real estate

 

 

6,836

 

 

 

6,173

 

 

 

13,682

 

 

 

13,371

 

Depreciation and amortization

 

 

59,875

 

 

 

57,444

 

 

 

119,023

 

 

 

110,124

 

Leasing transaction costs

 

 

52

 

 

 

76

 

 

 

127

 

 

 

164

 

Impairment losses – real estate, net of recoveries

 

 

34

 

 

 

4,618

 

 

 

2,674

 

 

 

6,250

 

Executive retirement costs

 

 

309

 

 

 

2,655

 

 

 

732

 

 

 

6,249

 

 

 

77,846

 

 

 

80,706

 

 

 

159,229

 

 

 

156,940

 

Gain on disposition of real estate

 

 

13,930

 

 

 

775

 

 

 

20,230

 

 

 

4,767

 

Earnings from operations

 

 

138,724

 

 

 

110,852

 

 

 

267,749

 

 

 

228,889

 

 

 

 

 

 

 

 

 

 

 

 

 

Other expenses (revenues):

 

 

 

 

 

 

 

 

Interest and other income

 

 

(74

)

 

 

(52

)

 

 

(107

)

 

 

(87

)

Interest expense

 

 

40,094

 

 

 

36,739

 

 

 

78,985

 

 

 

73,438

 

 

 

40,020

 

 

 

36,687

 

 

 

78,878

 

 

 

73,351

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings

 

 

98,704

 

 

 

74,165

 

 

 

188,871

 

 

 

155,538

 

Loss attributable to noncontrolling interests

 

 

—

 

 

 

6

 

 

 

—

 

 

 

5

 

Net earnings available to common stockholders

 

$

98,704

 

 

$

74,171

 

 

$

188,871

 

 

$

155,543

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

181,092,031

 

 

 

174,956,856

 

 

 

180,969,809

 

 

 

174,867,049

 

Diluted

 

 

181,627,857

 

 

 

175,107,914

 

 

 

181,544,275

 

 

 

175,021,871

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings per share available to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.54

 

 

$

0.42

 

 

$

1.04

 

 

$

0.89

 

Diluted

 

$

0.54

 

 

$

0.42

 

 

$

1.04

 

 

$

0.89

 

 

 

4

 

NNN REIT, Inc.

(dollars in thousands, except per share data)

(unaudited)

 

 

 

Quarter Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Funds From Operations (FFO) Reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings available to common stockholders

 

$

98,704

 

 

$

74,171

 

 

$

188,871

 

 

$

155,543

 

Real estate depreciation and amortization

 

 

59,782

 

 

 

57,339

 

 

 

118,824

 

 

 

109,920

 

Gain on disposition of real estate

 

 

(13,930

)

 

 

(775

)

 

 

(20,230

)

 

 

(4,767

)

Impairment losses – depreciable real estate, net of recoveries

 

 

34

 

 

 

4,618

 

 

 

2,674

 

 

 

6,250

 

Total FFO adjustments

 

 

45,886

 

 

 

61,182

 

 

 

101,268

 

 

 

111,403

 

FFO available to common stockholders

 

$

144,590

 

 

$

135,353

 

 

$

290,139

 

 

$

266,946

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.80

 

 

$

0.77

 

 

$

1.60

 

 

$

1.53

 

Diluted

 

$

0.80

 

 

$

0.77

 

 

$

1.60

 

 

$

1.53

 

 

 

 

 

 

 

 

 

 

 

 

 

Core Funds From Operations (Core FFO) Reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings available to common stockholders

 

$

98,704

 

 

$

74,171

 

 

$

188,871

 

 

$

155,543

 

Total FFO adjustments

 

 

45,886

 

 

 

61,182

 

 

 

101,268

 

 

 

111,403

 

FFO available to common stockholders

 

 

144,590

 

 

 

135,353

 

 

 

290,139

 

 

 

266,946

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive retirement costs

 

 

309

 

 

 

2,655

 

 

 

732

 

 

 

6,249

 

Total Core FFO adjustments

 

 

309

 

 

 

2,655

 

 

 

732

 

 

 

6,249

 

Core FFO available to common stockholders

 

$

144,899

 

 

$

138,008

 

 

$

290,871

 

 

$

273,195

 

 

 

 

 

 

 

 

 

 

 

 

 

Core FFO per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.80

 

 

$

0.79

 

 

$

1.61

 

 

$

1.56

 

Diluted

 

$

0.80

 

 

$

0.79

 

 

$

1.60

 

 

$

1.56

 

 

5

 

NNN REIT, Inc.

(dollars in thousands, except per share data)

(unaudited)

 

 

 

Quarter Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

Adjusted Funds From Operations (AFFO) Reconciliation:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings available to common stockholders

 

$

98,704

 

 

$

74,171

 

 

$

188,871

 

 

$

155,543

 

 

Total FFO adjustments

 

 

45,886

 

 

 

61,182

 

 

 

101,268

 

 

 

111,403

 

 

Total Core FFO adjustments

 

 

309

 

 

 

2,655

 

 

 

732

 

 

 

6,249

 

 

Core FFO available to common stockholders

 

 

144,899

 

 

 

138,008

 

 

 

290,871

 

 

 

273,195

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Straight-line accrued rent, net of reserves

 

 

(534

)

 

 

1,547

 

 

 

(1,003

)

 

 

2,643

 

 

Net capital lease rent adjustment

 

 

82

 

 

 

74

 

 

 

161

 

 

 

149

 

 

Below-market rent amortization

 

 

(122

)

 

 

(140

)

 

 

(234

)

 

 

(280

)

 

Stock based compensation expense

 

 

2,475

 

 

 

2,790

 

 

 

5,576

 

 

 

5,391

 

 

Capitalized interest expense

 

 

(721

)

 

 

(176

)

 

 

(1,126

)

 

 

(274

)

 

Total AFFO adjustments

 

 

1,180

 

 

 

4,095

 

 

 

3,374

 

 

 

7,629

 

 

AFFO available to common stockholders

 

$

146,079

 

(1)

$

142,103

 

(2)

$

294,245

 

(1)

$

280,824

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.81

 

(1)

$

0.81

 

(2)

$

1.63

 

(1)

$

1.61

 

(2)

Diluted

 

$

0.80

 

(1)

$

0.81

 

(2)

$

1.62

 

(1)

$

1.60

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental income from operating leases(3)

 

$

197,629

 

 

$

185,791

 

 

$

395,812

 

 

$

370,102

 

 

Earned income from direct financing leases(3)

 

$

143

 

 

$

150

 

 

$

287

 

 

$

301

 

 

Percentage rent(3)

 

$

291

 

 

$

295

 

 

$

1,054

 

 

$

996

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Real estate expense reimbursement from tenants(3)

 

$

4,363

 

 

$

4,300

 

 

$

8,903

 

 

$

8,900

 

 

Real estate expenses

 

 

(6,836

)

 

 

(6,173

)

 

 

(13,682

)

 

 

(13,371

)

 

Real estate expenses, net of tenant reimbursements

 

$

(2,473

)

 

$

(1,873

)

 

$

(4,779

)

 

$

(4,471

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of debt costs

 

$

1,202

 

 

$

1,178

 

 

$

2,401

 

 

$

2,349

 

 

Scheduled debt principal amortization (excluding maturities)

 

$

—

 

(4)

$

163

 

 

$

173

 

(4)

$

328

 

 

Non-real estate depreciation expense

 

$

97

 

 

$

108

 

 

$

205

 

 

$

210

 

 

 

(1)

Amounts include $10 and $19 of net straight-line accrued rent from net rent deferral repayments from the COVID-19 rent deferral lease amendments for the quarter and six months ended June 30, 2023, respectively. Excluding such would have no affect on AFFO per common share for the quarter and six months ended June 30, 2023.

 

 

(2)

Amounts include $1,729 and $3,509 of net straight-line accrued rent from net deferral repayments from the COVID-19 rent deferral lease amendments for the quarter and six months ended June 30, 2022, respectively. Excluding such, AFFO per common share results would have been $0.80 and $1.58 for the quarter and six months ended June 30, 2022, respectively.

 

 

(3)

For the quarter and six months ended June 30, 2023, the aggregate of such amounts is $202,426 and $406,056, respectively, and is classified as rental income on the income statement summary. For the quarter and six months ended June 30, 2022, the aggregate of such amounts is $190,536 and $380,299, respectively.

 

 

(4)

In April 2023, NNN repaid the remaining mortgages payable principal balance of $9,774.

 

 

6

 

NNN REIT, Inc.

 

2023 Earnings Guidance

Guidance is based on current plans and assumptions and subject to risks and uncertainties more fully described in this press release and the company's reports filed with the Commission.

 

 

 

2023 Guidance

Net earnings per common share excluding any gains on disposition
    of real estate, impairment charges, and executive retirement costs

 

$1.88 - $1.93 per share

Real estate depreciation and amortization per share

 

$1.29 per share

Core FFO per share

 

$3.17 - $3.22 per share

AFFO per share

 

$3.20 - $3.25 per share

General and administrative expenses

 

$43 - $45 Million

Real estate expenses, net of tenant reimbursements

 

$8 - $10 Million

Acquisition volume

 

$600 - $700 Million

Disposition volume

 

$100 - $120 Million

 

 

7

 

NNN REIT, Inc.

(dollars in thousands)

(unaudited)

 

 

 

June 30,
2023

 

 

December 31,
2022

 

Balance Sheet Summary

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

Real estate portfolio, net of accumulated depreciation and amortization

 

$

8,221,192

 

 

$

8,020,814

 

Cash and cash equivalents

 

 

2,281

 

 

 

2,505

 

Restricted cash and cash held in escrow

 

 

2,971

 

 

 

4,273

 

Receivables, net of allowance of $686 and $708, respectively

 

 

2,246

 

 

 

3,612

 

Accrued rental income, net of allowance of $3,861 and $3,836, respectively

 

 

28,422

 

 

 

27,795

 

Debt costs, net of accumulated amortization of $22,807 and $21,663, respectively

 

 

4,333

 

 

 

5,352

 

Other assets

 

 

84,490

 

 

 

81,694

 

Total assets

 

$

8,345,935

 

 

$

8,146,045

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

Line of credit payable

 

$

332,500

 

 

$

166,200

 

Mortgages payable, including unamortized premium and net of unamortized debt cost

 

 

—

 

 

 

9,964

 

Notes payable, net of unamortized discount and unamortized debt costs

 

 

3,742,012

 

 

 

3,739,890

 

Accrued interest payable

 

 

24,779

 

 

 

23,826

 

Other liabilities

 

 

96,410

 

 

 

82,663

 

Total liabilities

 

 

4,195,701

 

 

 

4,022,543

 

 

 

 

 

 

 

 

Stockholders' equity of NNN

 

 

4,150,234

 

 

 

4,123,502

 

 

 

 

 

 

 

Total liabilities and equity

 

$

8,345,935

 

 

$

8,146,045

 

 

 

 

 

 

 

Common shares outstanding

 

 

182,407,911

 

 

 

181,424,670

 

 

 

 

 

 

 

Gross leasable area, Property Portfolio (square feet)

 

 

35,492,000

 

 

 

35,010,000

 

 

 

8

 

NNN REIT, Inc.

Debt Summary

As of June 30, 2023

(dollars in thousands)

(unaudited)

 

Unsecured Debt

 

Principal

 

 

Principal,
Net of
Unamortized
Discount

 

 

Stated
Rate

 

 

Effective
Rate

 

 

Maturity Date

Line of credit payable

 

$

332,500

 

 

$

332,500

 

 

SOFR +
87.5 bps

 

 

 

5.925

%

 

June 2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unsecured notes payable:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2024

 

 

350,000

 

 

 

349,920

 

 

 

3.900

%

 

 

3.924

%

 

June 2024

2025

 

 

400,000

 

 

 

399,737

 

 

 

4.000

%

 

 

4.029

%

 

November 2025

2026

 

 

350,000

 

 

 

348,502

 

 

 

3.600

%

 

 

3.733

%

 

December 2026

2027

 

 

400,000

 

 

 

399,236

 

 

 

3.500

%

 

 

3.548

%

 

October 2027

2028

 

 

400,000

 

 

 

398,347

 

 

 

4.300

%

 

 

4.388

%

 

October 2028

2030

 

 

400,000

 

 

 

399,100

 

 

 

2.500

%

 

 

2.536

%

 

April 2030

2048

 

 

300,000

 

 

 

296,096

 

 

 

4.800

%

 

 

4.890

%

 

October 2048

2050

 

 

300,000

 

 

 

294,355

 

 

 

3.100

%

 

 

3.205

%

 

April 2050

2051

 

 

450,000

 

 

 

441,968

 

 

 

3.500

%

 

 

3.602

%

 

April 2051

2052

 

 

450,000

 

 

 

439,950

 

 

 

3.000

%

 

 

3.118

%

 

April 2052

Total

 

 

3,800,000

 

 

 

3,767,211

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total unsecured debt(1)

 

$

4,132,500

 

 

$

4,099,711

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt costs

 

 

 

 

$

(38,145

)

 

 

 

 

 

 

 

 

Accumulated amortization

 

 

 

12,946

 

 

 

 

 

 

 

 

 

Debt costs, net of accumulated amortization

 

 

 

(25,199

)

 

 

 

 

 

 

 

 

Notes payable, net of unamortized discount and
    unamortized debt costs

 

 

$

3,742,012

 

 

 

 

 

 

 

 

 

 

(1)

 

Unsecured debt has a weighted average interest rate of 3.8% and a weighted average maturity of 12.3 years.

 

As of June 30, 2023, Debt / EBITDA based on current quarter EBITDA annualized is 5.5x.

 

9

 

NNN REIT, Inc.

Debt Summary – Continued

As of June 30, 2023

(unaudited)

 

Credit Facility and Note Covenants

 

The following is a summary of key financial covenants for the company's unsecured credit facility and notes, as defined and calculated per the terms of the facility's credit agreement and the notes' governing documents, respectively, which are included in the company's filings with the Commission. These calculations, which are not based on U.S. GAAP measurements, are presented to investors to show that as of June 30, 2023, the company believes it is in compliance with the covenants.

 

Unsecured Credit Facility Key Covenants

 

Required

 

June 30, 2023

Maximum leverage ratio

 

< 0.60

 

0.37

Minimum fixed charge coverage ratio

 

> 1.50

 

4.73

Maximum secured indebtedness ratio

 

< 0.40

 

—

Unencumbered asset value ratio

 

> 1.67

 

2.73

Unencumbered interest ratio

 

> 1.75

 

4.73

 

 

 

 

 

Unsecured Notes Key Covenants

 

Required

 

June 30, 2023

Limitation on incurrence of total debt

 

≤ 60%

 

40.3%

Limitation on incurrence of secured debt

 

≤ 40%

 

—

Debt service coverage ratio

 

≥ 1.50

 

4.7

Maintenance of total unencumbered assets

 

≥ 150%

 

248%

 

10

 

NNN REIT, Inc.

Property Portfolio

 

Top 20 Lines of Trade

 

 

 

 

As of June 30,

 

 

Lines of Trade

 

2023(1)

 

2022(2)

1.

 

Convenience stores

 

16.9%

 

17.0%

2.

 

Automotive service

 

14.5%

 

13.1%

3.

 

Restaurants – full service

 

8.9%

 

9.6%

4.

 

Restaurants – limited service

 

8.8%

 

9.2%

5.

 

Family entertainment centers

 

5.7%

 

6.2%

6.

 

Health and fitness

 

4.7%

 

5.0%

7.

 

Theaters

 

4.3%

 

4.3%

8.

 

Recreational vehicle dealers, parts and accessories

 

4.2%

 

4.2%

9.

 

Equipment rental

 

3.0%

 

3.2%

10.

 

Wholesale clubs

 

2.5%

 

2.4%

11.

 

Automotive parts

 

2.5%

 

2.9%

12.

 

Drug stores

 

2.5%

 

1.2%

13.

 

Home improvement

 

2.3%

 

2.4%

14.

 

Furniture

 

2.1%

 

2.4%

15.

 

Medical service providers

 

1.8%

 

2.0%

16.

 

Home furnishings

 

1.5%

 

1.5%

17.

 

General merchandise

 

1.5%

 

1.6%

18.

 

Consumer electronics

 

1.4%

 

1.5%

19.

 

Travel plazas

 

1.3%

 

1.5%

20.

 

Automobile auctions, wholesale

 

1.2%

 

1.2%

 

Other

 

8.4%

 

7.6%

 

Total

 

100.0%

 

100.0%

 

Top 10 States

 

 

State

 

% of
Total(1)

 

 

 

State

 

% of
Total(1)

1.

 

Texas

 

16.8%

 

6.

 

North Carolina

 

4.0%

2.

 

Florida

 

9.4%

 

7.

 

Indiana

 

3.8%

3.

 

Illinois

 

5.2%

 

8.

 

Tennessee

 

3.8%

4.

 

Ohio

 

5.0%

 

9.

 

Virginia

 

3.5%

5.

 

Georgia

 

4.5%

 

10.

 

California

 

3.4%

 

As a percentage of annual base rent, which is the annualized base rent for all leases in place.

 

(1)

$794,475,000 as of June 30, 2023.

 

(2)

$738,670,000 as of June 30, 2022.

 

 

 

11

 

NNN REIT, Inc.

Property Portfolio – Continued

 

Top 20 Tenants

 

 

Tenant

 

# of
Properties

 

% of
Total(1)

1.

 

7-Eleven

 

138

 

4.6%

2.

 

Mister Car Wash

 

121

 

4.3%

3.

 

Camping World

 

47

 

3.9%

4.

 

LA Fitness

 

30

 

3.3%

5.

 

GPM Investments (Convenience Stores)

 

152

 

3.1%

6.

 

Flynn Restaurant Group (Taco Bell/Arby's)

 

204

 

2.8%

7.

 

Dave & Busters

 

28

 

2.8%

8.

 

AMC Theatre

 

20

 

2.8%

9.

 

BJ's Wholesale Club

 

13

 

2.5%

10.

 

Couche Tard (Pantry)

 

91

 

2.3%

11.

 

Mavis Tire Express Services

 

138

 

2.2%

12.

 

Sunoco

 

61

 

2.1%

13.

 

Walgreens

 

49

 

1.9%

14.

 

Chuck-E-Cheese

 

53

 

1.9%

15.

 

United Rentals

 

52

 

1.8%

16.

 

Frisch's Restaurants

 

68

 

1.6%

17.

 

Fikes (Convenience Stores)

 

59

 

1.6%

18.

 

Life Time Fitness

 

3

 

1.4%

19.

 

Bob Evans

 

106

 

1.4%

20.

 

Best Buy

 

16

 

1.4%

 

 

Lease Expirations(2)

 

 

% of
Total(1)

 

# of
Properties

 

Gross Leasable
Area(3)

 

 

 

% of
Total(1)

 

# of
Properties

 

Gross Leasable
Area(3)

2023

 

0.7%

 

28

 

368,000

 

2029

 

3.1%

 

90

 

1,140,000

2024

 

2.7%

 

82

 

1,319,000

 

2030

 

3.4%

 

107

 

1,207,000

2025

 

5.4%

 

189

 

2,014,000

 

2031

 

7.5%

 

187

 

2,711,000

2026

 

5.0%

 

214

 

2,136,000

 

2032

 

6.2%

 

217

 

2,336,000

2027

 

8.4%

 

237

 

3,604,000

 

2033

 

5.1%

 

141

 

1,490,000

2028

 

5.7%

 

223

 

2,057,000

 

Thereafter

 

46.8%

 

1,740

 

14,870,000

 

(1)

 

Based on the annual base rent of $794,475,000, which is the annualized base rent for all leases in place as of June 30, 2023.

(2)

 

As of June 30, 2023, the weighted average remaining lease term is 10.2 years.

(3)

 

Square feet.

 

12

 

NNN REIT, Inc.

Rent Deferral Lease Amendments

 

The following table outlines the rent deferred and corresponding scheduled repayment of the COVID-19 rent deferral lease amendments executed as of June 30, 2023 (dollars in thousands):

 

 

 

 

Deferred

 

 

 

Scheduled Repayment

 

 

 

 

Accrual
Basis

 

 

Cash
Basis

 

 

Total

 

 

% of
Total

 

 

 

Accrual
Basis

 

 

Cash
Basis

 

 

Total

 

 

% of
Total

 

 

Cumulative
Total

 

2020

 

 

$

33,594

 

 

$

18,129

 

 

$

51,723

 

 

 

91.6

%

 

 

$

3,239

 

 

$

20

 

 

$

3,259

 

 

 

5.8

%

 

 

5.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

 

990

 

 

 

3,732

 

 

 

4,722

 

 

 

8.4

%

 

 

 

25,935

 

 

 

5,841

 

 

 

31,776

 

 

 

56.3

%

 

 

62.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2022

Q1

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

1,780

 

 

 

2,277

 

 

 

4,057

 

 

 

7.2

%

 

 

69.3

%

Q2

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

1,729

 

 

 

2,276

 

 

 

4,005

 

 

 

7.1

%

 

 

76.4

%

Q3

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

1,201

 

 

 

2,257

 

 

 

3,458

 

 

 

6.1

%

 

 

82.5

%

Q4

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

681

 

 

 

2,277

 

 

 

2,958

 

 

 

5.3

%

 

 

87.8

%

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

5,391

 

 

 

9,087

 

 

 

14,478

 

 

 

25.7

%

 

 

87.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2023

Q1

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

9

 

 

 

1,677

 

 

 

1,686

 

 

 

3.0

%

 

 

90.8

%

Q2

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

10

 

 

 

476

 

 

 

486

 

 

 

0.9

%

 

 

91.7

%

Q3

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

476

 

 

 

476

 

 

 

0.8

%

 

 

92.5

%

Q4

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

476

 

 

 

476

 

 

 

0.8

%

 

 

93.3

%

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

19

 

 

 

3,105

 

 

 

3,124

 

 

 

5.5

%

 

 

93.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2024

Q1

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

476

 

 

 

476

 

 

 

0.8

%

 

 

94.1

%

Q2

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

476

 

 

 

476

 

 

 

0.8

%

 

 

94.9

%

Q3

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

476

 

 

 

476

 

 

 

0.8

%

 

 

95.7

%

Q4

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

476

 

 

 

476

 

 

 

0.9

%

 

 

96.6

%

 

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

1,904

 

 

 

1,904

 

 

 

3.3

%

 

 

96.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2025

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

 

—

 

 

 

1,904

 

 

 

1,904

 

 

 

3.4

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

34,584

 

 

$

21,861

 

 

$

56,445

 

 

 

100.0

%

 

 

$

34,584

 

 

$

21,861

 

 

$

56,445

 

 

 

100.0

%

 

 

 

 

13