NNN REIT, INC.

Previous wording

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in the Annual Report on Form 10-K of NNN REIT, Inc. for the year ended December 31, 2024 ("2024 Annual Report"). The term “NNN” or the “Company” refers to NNN REIT, Inc. and all of its consolidated subsidiaries.

Current wording

The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in the Annual Report on Form 10-K of NNN REIT, Inc. for the year ended December 31, 2024 ("2024 Annual Report"). The term “NNN” or the “Company” refers to NNN REIT, Inc. and its consolidated subsidiaries.

Previous wording

As of June 30, 2025, NNN owned 3,663 Properties in 50 states, with an aggregate gross leasable area of approximately 38,322,000 square feet, and a weighted average remaining lease term of 10 years. Approximately 98 percent of the Properties were leased as of June 30, 2025.

Current wording

As of September 30, 2025, NNN owned 3,697 Properties in 50 states, with an aggregate gross leasable area of approximately 39,209,000 square feet and a weighted average remaining lease term of 10.1 years. As of September 30, 2025, 97.5 percent of the Properties were leased.

Previous wording

NNN continues to maintain its diversification by tenant, line of trade and geography. NNN's top five line of trade concentrations are the automotive service (18.2%), convenience store (16.5%), restaurant (including full and limited service) (15.2%) and entertainment (7.3%) sectors. NNN's management believes these sectors present attractive investment opportunities. The Property Portfolio is geographically concentrated in the southeast (25.0%) and south (24.7%) United States, which are regions of historically above-average population growth. Given these concentrations, any financial hardship within these sectors or geographic regions could have a material adverse effect on the financial condition and operating performance of NNN.

Current wording

NNN continues to maintain its diversification by tenant, line of trade and geography. NNN's top five line of trade concentrations are the automotive service (18.4%), convenience store (16.2%), restaurant (including full and limited service) (14.5%) and entertainment (7.2%) sectors. NNN's management believes these sectors present attractive investment opportunities. The Property Portfolio is geographically concentrated primarily in regions of historically above-average population growth, including the southeast (25.4%) and south (24.4%) United States. Given these concentrations, any financial hardship within these sectors or geographic regions could have a material adverse effect on the financial condition and operating performance of NNN.

Previous wording

As of June 30, 2025 and 2024, the Property Portfolio remained leased at approximately 98 percent or higher and had a weighted average remaining lease term of approximately 10 years. High occupancy levels coupled with a triple-net lease structure provides enhanced probability of achieving consistent operating results.

Current wording

As of September 30, 2025 and 2024, the Property Portfolio remained at least 97.5 percent leased and had a weighted average remaining lease term of at least 10.0 years. High occupancy levels coupled with a triple-net lease structure provides enhanced probability of achieving consistent operating results.

Previous wording

Rental Income. Rental income increased for the quarter and six months ended June 30, 2025, as compared to the same periods in 2024. The increase is primarily due to the Rental Revenues from NNN's recent Property acquisitions (see "Results of Operations – Property Analysis – Property Acquisitions").

Current wording

Rental Income. Rental income increased for the quarter and nine months ended September 30, 2025, compared to the same periods in 2024. The increase is primarily due to the Rental Revenues from NNN's recent Property acquisitions (see "Results of Operations – Property Analysis – Property Acquisitions").

Previous wording

Real Estate. Total real estate expenses increased for the quarter and six months ended June 30, 2025, as compared to the same periods in 2024. NNN focuses on non-reimbursed real estate expenses (total real estate expenses, net of reimbursements from tenants). These expenses are typically attributable to (i) Properties for which the lease terms do not obligate the tenant to pay certain operating expenses, or (ii) vacant Properties. Non-reimbursed real estate expenses increased in amount and as a percentage of total revenues for the quarter and six months ended June 30, 2025, as compared to the same periods in 2024 primarily due to an increase in the number of vacant properties.

Current wording

Real Estate. Total real estate expenses increased for the quarter and nine months ended September 30, 2025, compared to the same periods in 2024. NNN focuses on non-reimbursed real estate expenses (total real estate expenses, net of reimbursements from tenants). These expenses are typically attributable to (i) Properties for which the lease terms do not obligate the tenant to pay certain operating expenses, or (ii) vacant Properties. Non-reimbursed real estate expenses increased in amount and as a percentage of total revenues for the quarter and nine months ended September 30, 2025, compared to the same periods in 2024 primarily due to an increase in the number of vacant properties.

Previous wording

Depreciation and Amortization. Depreciation and amortization expenses increased for the quarter and six months ended June 30, 2025, as compared to the same periods in 2024. The increase was primarily attributable to the increase in NNN's Property Portfolio from recent acquisitions (see "Results of Operations – Property Analysis – Property Acquisitions") and was partially offset by recent dispositions (see "Results of Operations – Property Analysis – Property Dispositions").

Current wording

Depreciation and Amortization. Depreciation and amortization expenses increased for the quarter and nine months ended September 30, 2025, compared to the same periods in 2024. The increase was primarily attributable to the increase in NNN's Property Portfolio from recent acquisitions (see "Results of Operations – Property Analysis – Property Acquisitions") and was partially offset by recent dispositions (see "Results of Operations – Property Analysis – Property Dispositions").

Previous wording

Impairment Losses – Real Estate, Net of Recoveries. 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 for the quarters and six months ended June 30, 2025 and 2024, which were less than one percent of NNN's total assets for the respective periods as reported on the Condensed Consolidated Balance Sheets. Due to NNN's core business of investing in real estate leased primarily to tenants under long-term net leases, the inherent risks of owning commercial real estate and unknown potential changes in financial and economic conditions that may impact NNN's tenants, NNN believes it is reasonably possible to incur real estate impairment charges in the future.

Current wording

Impairment Losses – Real Estate, Net of Recoveries. 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 for the quarters and nine months ended September 30, 2025 and 2024, which were less than one percent of NNN's total assets for the respective periods as reported on the Condensed Consolidated Balance Sheets. Due to NNN's core business of investing in real estate leased primarily to tenants under long-term net leases, the inherent risks of owning commercial real estate and unknown potential changes in financial and economic conditions that may impact NNN's tenants, NNN believes it is reasonably possible to incur real estate impairment charges in the future.

Previous wording

Retirement and Severance Costs. Retirement and severance costs increased for the six months ended June 30, 2025, as compared to the same period in 2024, primarily due to costs in connection with the retirement and transition agreement of the former Executive Vice President and Chief Financial Officer.

Current wording

Retirement and Severance Costs. Retirement and severance costs increased for the nine months ended September 30, 2025, compared to the same period in 2024, primarily due to costs in connection with the retirement and transition agreement of the former Executive Vice President and Chief Financial Officer.

Previous wording

Interest Expense. Interest expense increased for the quarter and six months ended June 30, 2025, as compared to the same periods in 2024. The following represents the primary changes in fixed rate long-term debt that impacted interest expense (dollars in thousands):

Current wording

Interest Expense. Interest expense increased for the quarter and nine months ended September 30, 2025, compared to the same periods in 2024. The following are the primary changes in fixed rate long-term debt that impacted interest expense:

Previous wording

statement and, in July 2025, issued $500,000,000 aggregate principal amount of 4.600% notes due February 2031 (the “2031 Notes”).

Current wording

in July 2025, issued $500,000,000 aggregate principal amount of 4.600% notes due February 2031 (the “2031 Notes”).

Previous wording

The increase in interest expense was partially offset by the Credit Facility having a weighted average outstanding balance of $113,919,000 with a weighted average interest rate of 5.22% for the six months ended June 30, 2025, compared to a weighted average outstanding balance of $111,966,000 with a weighted average interest rate of 6.26% for the six months ended June 30, 2024.

Current wording

The increase in interest expense was partially offset by the Credit Facility having a weighted average interest rate of 5.25% for the nine months ended September 30, 2025, compared to 6.28% for the same period in 2024. The weighted average outstanding balance remained consistent across both periods.

Previous wording

NNN typically expects to fund both its short-term and long-term liquidity requirements, including investments in additional properties, with cash and cash equivalents, cash provided from operations, borrowings from NNN's Credit Facility or proceeds from the sale of Properties. As of June 30, 2025, NNN had $6,748,000 of cash, cash equivalents and restricted cash or cash held in escrow and $932,300,000 was available for future borrowings under the Credit Facility. NNN may also fund liquidity requirements with new debt or equity issuances, although newly issued debt may be at higher interest rates than the rates on NNN's existing outstanding debt. NNN also has the ability to limit future property acquisitions and strategically increase property dispositions. NNN expects these sources of liquidity and the discretionary nature of its property acquisition funding needs will allow NNN to meet its financial obligations over the long term.

Current wording

NNN typically expects to fund both its short-term and long-term liquidity requirements, including investments in additional properties, with cash and cash equivalents, cash provided from operations, borrowings from NNN's Credit Facility or proceeds from the sale of Properties. As of September 30, 2025, NNN had $158,693,000 of cash, cash equivalents and restricted cash or cash held in escrow and $1,200,000,000 was available for future borrowings under the Credit Facility. NNN may also fund liquidity requirements with new debt or equity issuances, although newly issued debt may bear higher interest rates than the rates on NNN's existing outstanding debt. NNN also has the ability to limit future property acquisitions and strategically increase property dispositions. NNN expects these liquidity sources and the discretionary nature of its property acquisition funding needs will allow NNN to meet its financial obligations over the long term.

Previous wording

Cash Flows. NNN had $6,748,000 of cash, cash equivalents and restricted cash, of which $775,000 was restricted cash or cash held in escrow at June 30, 2025. The table below summarizes NNN's cash flows (dollars in thousands):

Current wording

Cash Flows. NNN had $158,693,000 of cash, cash equivalents and restricted cash, of which $776,000 was restricted cash or cash held in escrow at September 30, 2025. The table below summarizes NNN's cash flows (dollars in thousands):

Previous wording

Operating Activities. Cash provided by operating activities represents cash received primarily from rental income less cash used for general and administrative and interest expenses. NNN's cash flow from operating activities has been sufficient to pay the distributions for each period presented. The change in cash provided by operations for the six months ended June 30, 2025 and 2024, is primarily the result of changes in revenues and expenses as discussed in “Results of Operations.” Cash generated from operations is expected to fluctuate in the future.

Current wording

Operating Activities. Cash provided by operating activities represents cash received primarily from rental income less cash used for general and administrative and interest expenses. NNN's cash flow from operating activities has been sufficient to pay the distributions for each period presented. The change in cash provided by operations for the nine months ended September 30, 2025 and 2024, is primarily the result of changes in revenues and expenses as discussed in “Results of Operations.” Cash generated from operations is expected to fluctuate in the future.

Previous wording

Financing Activities. NNN's financing activities for the six months ended June 30, 2025, included the following significant transactions:

Current wording

Financing Activities. NNN's financing activities for the nine months ended September 30, 2025, included the following significant transactions:

Previous wording

$9,978,000 from the issuance of 236,906 shares of common stock in connection with the at-the-market equity program ("ATM"),

Current wording

$79,714,000 from the issuance of 1,891,959 shares of common stock in connection with the at-the-market equity program ("ATM"),

Previous wording

$1,363,000 from the issuance of 34,092 shares of common stock in connection with the Dividend Reinvestment and Stock Purchase Plan ("DRIP"), and

Current wording

$2,010,000 from the issuance of 49,776 shares of common stock in connection with the Dividend Reinvestment and Stock Purchase Plan ("DRIP"), and

Previous wording

$216,901,000 in dividends paid to common stockholders.

Current wording

$329,710,000 in dividends paid to common stockholders.

Previous wording

Property Construction. NNN has committed to fund construction on 20 Properties. The improvements of such Properties are estimated to be completed within 12 to 18 months. These construction commitments, at June 30, 2025, are outlined in the table below (dollars in thousands):

Current wording

Property Construction. NNN has committed to fund construction on 19 Properties. The improvements of such Properties are estimated to be completed within 12 to 18 months. These construction commitments, at September 30, 2025, are outlined in the table below (dollars in thousands):

Previous wording

As of June 30, 2025, NNN owned 73 vacant, un-leased Properties which accounted for two percent of total Properties and approximately two percent of aggregate gross leasable area held in the Property Portfolio.

Current wording

As of September 30, 2025, NNN owned 94 vacant, un-leased Properties which accounted for less than three percent of total Properties and approximately two percent of aggregate gross leasable area held in the Property Portfolio.

Previous wording

Additionally, as of July 31, 2025, approximately one percent of total annualized base rent, less than one percent of total Properties and less than four percent of aggregate gross leasable area held in the Property Portfolio was leased to two tenants currently in bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. As a result, these tenants have the right to reject or affirm their leases with NNN.

Current wording

Additionally, as of October 31, 2025, one property, representing less than one percent of total annualized base rent and of aggregate gross leasable area held in the Property Portfolio was leased to one tenant currently in bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. As a result, this tenant has the right to reject or affirm their lease with NNN.

Previous wording

In July 2025, NNN declared a dividend of $0.6000 per share which is payable in August 2025 to its common stockholders of record as of July 31, 2025.

Current wording

In October 2025, NNN declared a dividend of $0.600 per share which is payable in November 2025 to its common stockholders of record as of October 31, 2025.

Previous wording

Line of Credit Payable. In April 2024, NNN amended certain terms of its credit agreement to, among other things, increase borrowing capacity under its unsecured revolving credit facility from $1,100,000,000 to $1,200,000,000 (the "Credit Facility"). The Credit Facility had a weighted average outstanding balance of $113,919,000 and a weighted average interest rate of 5.22% during the six months ended June 30, 2025. The Credit Facility has a base interest rate of the Secured Overnight Financing Rate ("SOFR") plus a SOFR adjustment of 10 basis points ("Adjusted SOFR"). The Credit Facility bears interest at Adjusted SOFR plus 77.5 basis points; however, such interest rate may change pursuant to a tiered interest rate structure based on NNN's debt rating. Additionally, as part of NNN's environmental, social and governance ("ESG") initiative, pricing may be reduced if specified ESG metrics are achieved. The Credit Facility matures in April 2028, unless the Company exercises its options to extend maturity to April 2029. The Credit Facility also includes an accordion feature which permits NNN to increase the facility size up to $2,000,000,000, subject to lender approval. In connection with the Credit Facility, loan costs are classified asdebt costs on the Condensed Consolidated Balance Sheets. As of June 30, 2025, there was $267,700,000 outstanding and $932,300,000 available for future borrowings under the Credit Facility, and NNN was in compliance with each of the Credit Facility financial covenants.

Current wording

Line of Credit Payable. In April 2024, NNN amended certain terms of its credit agreement to, among other things, increase borrowing capacity under its unsecured revolving credit facility from $1,100,000,000 to $1,200,000,000 (the "Credit Facility"). The Credit Facility had a weighted average outstanding balance of $75,529,000 and a weighted average interest rate of 5.25% during the nine months ended September 30, 2025. The Credit Facility has a base interest rate of the Secured Overnight Financing Rate ("SOFR") plus a SOFR adjustment of 10 basis points ("Adjusted SOFR"). The Credit Facility bears interest at Adjusted SOFR plus 77.5 basis points; however, such interest rate may change pursuant to a tiered interest rate structure based on NNN's debt rating. Additionally, as part of NNN's environmental, social and governance ("ESG") initiative, pricing may be reduced if specified ESG metrics are achieved. The Credit Facility matures in April 2028, unless the Company exercises its options to extend maturity to April 2029. The Credit Facility also includes an accordion feature which permits NNN to increase the facility size up to $2,000,000,000, subject to lender approval. In connection with the Credit Facility, loan costs are classified asdebt costs on the Condensed Consolidated Balance Sheets. As of September 30, 2025, there was no outstanding balance and $1,200,000,000 was available for future borrowings under the Credit Facility, and NNN was in compliance with each of the Credit Facility financial covenants.

Previous wording

In connection with the outstanding note offerings, NNN incurred debt issuance costs totaling $43,820,000 consisting primarily of underwriting discounts and commissions, legal and accounting fees, rating agency fees and printing expenses. Debt issuance costs for all note issuances have been deferred and presented as a reduction to notes payable and are being amortized over the term of the respective notes using the effective interest method.

Current wording

In connection with the outstanding note offerings, NNN incurred debt issuance costs totaling $48,020,000 consisting primarily of underwriting discounts and commissions, legal and accounting fees, rating agency fees and printing expenses. Debt issuance costs for all note issuances have been deferred and presented as a reduction to notes payable and are being amortized over the term of the respective notes using the effective interest method.