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Business Context and Reporting Period

Company: NNN REIT, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Quarter and six months ended June 30, 2026
Business Overview: NNN is a fully integrated REIT owning 3,774 properties across 50 states, D.C., and Puerto Rico. The portfolio consists primarily of single-tenant, triple-net leased properties with a weighted average remaining lease term of 10.1 years. As of June 30, 2026, 99.1% of the portfolio was leased.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Total revenues increased by 7.7% for the quarter and 5.9% for the six months ended June 30, 2026, compared to the prior year periods. This was driven primarily by rental revenues from recent property acquisitions.
• Net Earnings Decline: Net earnings decreased slightly by 2.6% for the quarter and 2.6% for the six months. This decline was primarily due to increased interest expense and higher impairment losses, which offset revenue growth.
• Impairment Losses: Real estate impairment losses, net of recoveries, increased significantly to $8.07 million for the quarter (vs. $4.54 million in Q2 2025) and $18.75 million for the six months (vs. $6.05 million in 2025). This was driven by the review of long-lived assets, including vacant properties.
• Interest Expense: Interest expense rose to $53.49 million for the quarter (vs. $49.28 million) and $106.21 million for the six months (vs. $97.01 million). Increases were attributed to new fixed-rate debt issuances in late 2025 and the drawdown of a new $500 million Term Loan in 2026.
• Debt Structure: The company fully drew its new $500 million Term Loan in June 2026. Conversely, the Line of Credit balance decreased significantly from $348.1 million at year-end 2025 to $28.5 million at June 30, 2026.

Guidance, Outlook, and Risks

• Dividend Outlook: In July 2026, the Board declared a quarterly dividend of $0.620 per share, payable in August 2026, representing an increase from the $0.600 per share paid in Q2 2026.
• Liquidity: The company maintains strong liquidity with $1.17 billion available under its Credit Facility and approximately $272 million in anticipated net proceeds from unsettled forward sale agreements under its ATM program.
• Construction Commitments: NNN has $75.3 million in remaining construction commitments for 26 properties, expected to be completed within 12 to 18 months.
• Risks: Key risks include tenant defaults (13 tenants currently on cash-basis accounting, representing 4.0% of Annualized Base Rent), interest rate fluctuations on variable debt, and the potential for future real estate impairments due to economic conditions or vacancies.
• Unusual Items: The filing notes a significant increase in impairment charges related to vacant properties. Additionally, the company recorded retirement and severance costs related to the departure of the former CFO and other associates.

Investor Verification Checklist

• Impairment Drivers: Verify the specific properties contributing to the $18.75 million in impairment losses and the likelihood of re-leasing these assets.
• Debt Maturities: Review the schedule of long-term debt maturities, noting $350 million in notes due in December 2026 and $400 million due in October 2027.
• Tenant Concentration: Assess the impact of the top three lines of trade (Automotive Service 18.6%, Convenience Stores 15.9%, Restaurants 14.0%) on future cash flows.
• Forward Sale Agreements: Confirm the settlement terms and potential dilution impact of the 5.99 million shares subject to forward sale agreements under the ATM program.
• Interest Rate Hedging: Evaluate the effectiveness of the $400 million in interest rate swaps hedging the Term Loan against rising SOFR rates.