NNN REIT(NNN) - 2024 Q4 - Annual Report

Property Portfolio - NNN owned 3,568 properties with a total gross leasable area of approximately 36,557,000 square feet, achieving a 98% occupancy rate as of December 31, 2024[14]. - As of December 31, 2024, NNN owned 3,568 properties with a total gross leasable area of approximately 36,557,000 square feet and a weighted average remaining lease term of 10 years, with 98% of properties leased[43]. - NNN's properties are generally leased under long-term triple-net leases, allowing tenants to manage energy conservation and environmental programs[40]. - The average annual base rental payment for NNN's leases is $245,000, with payments ranging from$7,000 to $4,085,000[45]. - Approximately 57.3$869,266,000, a 5.0% increase from $828,111,000 in 2023[180]. - Rental revenues for 2024 were$848,657,000, up 5.1% from $807,327,000 in 2023, driven by recent property acquisitions[180]. - Total annualized base rent increased to$860,562,000 in 2024 from $818,749,000 in 2023, reflecting a growth of 5.1$420,239,000 for 2024, an increase from $404,458,000 in 2023, with a per share dividend of$2.290 compared to $2.230 in the previous year[203]. - Cash provided by operating activities was$635,504,000, up from $612,410,000 in 2023[5]. - NNN had$9,062,000 in cash, cash equivalents, and restricted cash as of December 31, 2024, compared to $5,155,000 at the end of 2023[6]. Debt and Financing - As of December 31, 2024, NNN's total debt to total gross assets ratio was approximately 40$4,373,803,000, with no secured debt[87]. - NNN's credit facility had no outstanding balance as of December 31, 2024, with $1,200,000,000 available for future borrowings[205]. - The weighted average interest rate on NNN's credit facility was 6.25$1,200,000,000[205]. - NNN's debt instruments contain various restrictive covenants that could limit operational activities and may result in defaults if not complied with[90]. - NNN was in compliance with all restrictive financial covenants as of December 31, 2024, which include leverage ratios and interest coverage[206]. Environmental and Sustainability Practices - The Corporate Sustainability Team was established in 2022 to enhance environmental stewardship and corporate governance practices[33]. - NNN actively monitors environmental conditions and requires tenants to comply with environmental laws, including remediation obligations[40]. - NNN maintains an environmental insurance policy covering substantially all properties to mitigate exposure to environmental liability[47]. - As of January 31, 2025, NNN had 66 properties under some level of environmental remediation and/or monitoring[48]. - NNN's properties are primarily located in Texas (18.8% of annual base rent), Florida (8.7%), and Illinois (5.1%) as of December 31, 2024[177]. Risks and Challenges - NNN may face challenges in executing its acquisition or development strategies due to competition and market conditions[63]. - NNN's financial condition may be adversely affected by changes in economic conditions, including inflation and tenant defaults[58]. - Cybersecurity risks could adversely affect NNN's business and expose it to liabilities[75]. - The presence of hazardous materials on properties could significantly impact NNN's results of operations and ability to distribute to stockholders[102]. - An epidemic or pandemic could disrupt NNN's tenants' ability to operate and pay rent, adversely affecting NNN's financial condition[115]. - Changes in governmental laws and regulations could impose significant costs on NNN and adversely affect its operations[110]. Management and Governance - NNN's management evaluates tenant creditworthiness through financial statements and performance metrics, ensuring a robust tenant selection process[152]. - The loss of key management personnel could negatively impact NNN's performance and the value of its securities[113]. - Compliance with REIT requirements may limit NNN's operational flexibility and affect its decision-making[107]. - If NNN fails to qualify as a REIT, it could face significant tax liabilities and penalties[105].