Leases. At December 31, 2025, NNN's real estate portfolio had a weighted average remaining lease term of 10.2 years and consisted of 3,648 leases classified as operating leases and an additional three leases accounted for as direct financing leases.

The following is a summary of the structure of the leases in the Property Portfolio, although the specific terms of each lease can vary significantly. In most cases, the Property leases provide for initial terms of 10 to 20 years and a triple-net lease structure, pursuant to which the tenant bears responsibility for operating expenses of the Property, including utilities, real estate taxes and assessments, property and liability insurance, maintenance, repairs and capital expenditures. Certain Properties are subject to leases under which NNN retains responsibility for specific costs and expenses associated with the Property. NNN's leases provide for annual base rental payments (payable in monthly installments), the majority of which include negotiated increases in rent as a result of increases in the Consumer Price Index ("CPI") or set fixed increases.

NNN's leases often provide the tenant with one or more multi-year renewal options, subject to the same terms and conditions provided under the initial lease term, including rent increases. NNN's lease term is based on the non-cancellable base term unless economic incentives make it reasonably certain that an option period to extend the lease will be exercised, in which case NNN includes the renewal options. Some of the leases also provide that in the event NNN wishes to sell the Property subject to that lease, NNN first must offer the lessee the right to purchase the Property on the same terms and conditions as any offer which NNN intends to accept for the sale of the Property.

Real Estate Portfolio. NNN's real estate consisted of the following at December 31 (dollars in thousands):


	2025			2024
Land and improvements (1)	$	3,100,444		$	2,919,976
Buildings and improvements		8,323,201			7,805,939
Leasehold interests		355			355
		11,424,000			10,726,270
Less accumulated depreciation and amortization		(2,248,856	)		(2,065,316	)
		9,175,144			8,660,954
Work in progress and improvements		42,019			82,411
Accounted for using the operating method		9,217,163			8,743,365
Accounted for using the direct financing method		1,181			2,520
Classified as held for sale(2)		21,198			283
	$	9,239,542		$	8,746,168


(1)	Includes $24,523 and $34,356 in land for Properties under construction as of December 31, 2025 and 2024, respectively.


(2)	As of December 31, 2025, 10 Properties were classified as held for sale. The two properties classified as held for sale as of December 31, 2024 were sold during the year ended December 31, 2025.

NNN recognized the following revenues in rental income for the years ended December 31 (dollars in thousands):


	2025		2024		2023
Rental income from operating leases	$	902,369	$	846,653	$	805,136
Earned income from direct financing leases		424		468		560
Percentage rent		1,549		1,536		1,631
Rental revenues		904,342		848,657		807,327
Real estate expense reimbursement from tenants		20,038		18,811		18,763
	$	924,380	$	867,468	$	826,090

Some leases provide for a free rent period or scheduled rent increases throughout the lease term. Such amounts are recognized on a straight-line basis over the terms of the leases.

For the years ended December 31, 2025, 2024 and 2023, NNN recognized $1,921,000, $294,000 and $7,453,000, respectively, of net-straight-line accrued rental income, net of reserves. During the year ended December 31, 2023, one tenant was reclassified to accrual basis for accounting purposes due to their improved qualitative and/or quantitative credit factors, which resulted in an increase of accrued rental income in the amount of $5,573,000.

The following is a schedule of undiscounted cash flows to be received on noncancellable operating leases as of December 31, 2025 (dollars in thousands):


2026	$	873,239
2027		844,659
2028		797,780
2029		761,231
2030		726,275
Thereafter		5,125,734
	$	9,128,918

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 CPI or future contingent percentage rents which may be received based on the tenant's sales volume, per the lease.

In accordance with purchase accounting for the acquisition of real estate subject to a lease, NNN has recorded intangible assets and lease liabilities that consisted of the following at December 31 (dollars in thousands):


	2025			2024
Intangible lease assets (included in other assets):
Above-market in-place leases	$	14,051		$	14,753
Less: accumulated amortization		(11,115	)		(12,159	)
Above-market in-place leases, net	$	2,936		$	2,594

In-place leases	$	117,302		$	116,549
Less: accumulated amortization		(82,926	)		(85,741	)
In-place leases, net	$	34,376		$	30,808

Intangible lease liabilities (included in other liabilities):
Below-market in-place leases	$	37,758		$	39,869
Less: accumulated amortization		(27,293	)		(28,946	)
Below-market in-place leases, net	$	10,465		$	10,923

The amounts amortized as a net increase to rental income for above-market and below-market in-place leases for the years ended December 31, 2025, 2024 and 2023 were $1,898,000, $495,000 and $430,000, respectively. The value of in-place leases amortized to expense for the years ended December 31, 2025, 2024 and 2023 was $7,919,000, $6,108,000 and $6,793,000, respectively.

The following is a schedule of the amortization of acquired above-market and below-market in-place lease intangibles and the amortization of the in-place lease intangibles as of December 31, 2025 (dollars in thousands):


	Above-Market and Below- Market In-Place Lease Intangibles(1)		In-Place Lease Intangibles(2)
2026	$	503	$	5,201
2027		514		4,759
2028		675		4,339
2029		712		3,917
2030		667		3,342
Thereafter		4,458		12,818
	$	7,529	$	34,376

Weighted average amortization period (years)		15		9


(1)	Recorded as a net increase to rental income over the life of the lease.


(2)	Amortized as an increase to amortization expense.

The following table summarizes the properties sold and the corresponding gain recognized on the disposition of properties for the years ended December 31 (dollars in thousands):


	2025				2024				2023
	# of Sold Properties		Net Gain		# of Sold Properties		Net Gain		# of Sold Properties		Net Gain
Gain on disposition of real estate		116	$	48,220		41	$	42,290		45	$	47,485

As of December 31, 2025, NNN has committed to fund construction on 19 Properties. The improvements on such Properties are estimated to be completed within 12 to 18 months. These construction commitments, at December 31, 2025, are outlined in the table below (dollars in thousands):

NNN periodically assesses its long-lived real estate assets for possible impairment whenever certain events or changes in circumstances indicate that the carrying value of the asset may not be recoverable.

As a result of NNN's review of long-lived real estate assets, including identifiable intangible assets, NNN recognized real estate impairments, net of recoveries as summarized in the table below (dollars in thousands):


	2025		2024		2023
Total real estate impairments, net of recoveries	$	28,602	$	6,632	$	5,990
Number of Properties:
Vacant		45		4		11
Occupied		4		9		3

The valuation of impaired assets, including assets held for sale, is determined using widely accepted valuation techniques including discounted cash flow analysis, income capitalization, analysis of recent comparable sales transactions, actual sales negotiations and bona fide purchase offers received from third parties, which are Level 3 inputs. NNN may consider a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of its real estate.