NNN REIT : Third Quarter 2024 Operating Results Announced by NNN REIT, Inc Form 8 K

About this update from Nnn Reit, Inc.

Third Quarter 2024 Operating Results Announced by NNN REIT, Inc. Orlando, Florida, October 31, 2024 - NNN REIT, Inc. (NYSE: NNN), a real estate investment trust, today announced its operating results for the quarter and nine months ended September 30, 2024. Highlights include: Operating Results: • Revenues and net earnings, FFO, Core FFO and AFFO and diluted per share amounts: Quarter Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 (dollars in thousands, except per share data) Revenues $ 218,564 $ 205,132 $ 650,784 $ 611,880 Net earnings $ 97,904 $ 106,787 $ 298,941 $ 295,658 Net earnings per share $ 0.53 $ 0.59 $ 1.63 $ 1.63 FFO $ 154,171 $ 147,223 $ 457,812 $ 437,362 FFO per share $ 0.84 $ 0.81 $ 2.50 $ 2.41 Core FFO $ 154,327 $ 147,376 $ 458,438 $ 438,247 Core FFO per share $ 0.84 $ 0.81 $ 2.50 $ 2.42 AFFO $ 155,701 $ 148,281 $ 462,556 $ 442,526 AFFO per share $ 0.84 $ 0.82 $ 2.52 $ 2.44 Third Quarter 2024 Highlights: • FFO and Core FFO per share increased 3.7% over prior year results • AFFO per share increased 2.4% over prior year results • Maintained high occupancy levels at 99.3%, with a weighted average remaining lease term of 10.0 years, at September 30, 2024 as compared to 99.3% at June 30, 2024 and 99.5% at December 31, 2023 • $113.6 million in property investments, including the acquisition of eight properties with an aggregate gross leasable area of approximately 626,000 square feet at an initial cash cap rate of 7.6% • Sold nine properties for $20.0 million, producing $7.8 million of gains on sales • Raised $178.9 million in net proceeds from the issuance of 3,863,700 common shares • Maintained sector-leading 12.3 year weighted average debt maturity 1 Highlights for the nine months ended September 30, 2024: • FFO per share increased 3.7% over prior year results • Core FFO and AFFO per share increased 3.3% over prior year results • $348.6 million in property investments, including the acquisition of 44 properties with an aggregate gross leasable area of approximately 1,181,000 square feet at an initial cash cap rate of 7.8% • Sold 29 properties for $105.9 million, producing $30.2 million of gains on sales • Raised $213.7 million in net proceeds from the issuance of 4,701,452 common shares • Issued $500 million principal amount of 5.500% senior unsecured notes due 2034 • Redeemed $350 million principal amount of 3.900% senior unsecured notes due 2024 • Expanded line of credit borrowing capacity from $1.1 billion to $1.2 billion and extended maturity to April 2028 Previous Core FFO per share guidance for 2024 was narrowed from a range of $3.27 to $3.33 per share to a range of $3.28 to $3.32 per share. The 2024 AFFO is estimated to be $3.31 to $3.35 per share. The Core FFO guidance equates to net earnings of $1.93 to $1.97 per share, plus $1.35 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 continues to perform consistently, with a 3.7 percent increase in FFO and Core FFO per share results in the third quarter 2024 compared to prior year results. With over $175 million of cash, $1.2 billion available on our revolving credit facility and no debt maturities until the fourth quarter of 2025, our balance sheet continues to allow NNN to capitalize on sufficiently accretive opportunities and remain well positioned to provide long-term shareholder value." NNN REIT invests primarily in high-quality retail properties subject generally to long-term, net leases. As of September 30, 2024, the company owned 3,549 properties in 49 states with a gross leasable area of approximately 36.6 million square feet and a weighted average remaining lease term of 10.0 years. NNN is one of only three publicly traded real estate investment trusts to have increased annual dividends for 35 or more consecutive years. For more information on the company, visit www.nnnreit.com. Management will hold a conference call on October 31, 2024, at 10:30 a.m. ET to review its results of operations. The call can be accessed on the NNN REIT website live at 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," "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 areal estate investment trust ("REIT"), and the potential impacts of an epidemic or pandemic 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, 2023 and (ii) Quarterly Report on Form 10-Q for the quarters ended March 31, 2024, June 30, 2024 and September 30, 2024. 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. 2 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, net of recoveries. 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. 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Income Statement Summary Revenues: Rental income $ 218,155 $ 204,856 $ 649,120 $ 610,912 Interest and other income from real estate transactions 409 276 1,664 968 218,564 205,132 650,784 611,880 Operating expenses: General and administrative 11,209 10,225 35,582 33,216 Real estate 7,263 6,459 21,175 20,141 Depreciation and amortization 63,369 59,523 186,487 178,546 Leasing transaction costs 22 96 75 223 Impairment losses - real estate, net of recoveries 760 1,001 2,908 3,675 Executive retirement costs 156 153 626 885 82,779 77,457 246,853 236,686 Gain on disposition of real estate 7,765 19,992 30,207 40,222 Earnings from operations 143,550 147,667 434,138 415,416 Other expenses (revenues): Interest and other income (845 ) (644 ) (1,940 ) (751 ) Interest expense 46,491 41,524 137,137 120,509 45,646 40,880 135,197 119,758 Net earnings $ 97,904 $ 106,787 $ 298,941 $ 295,658 Weighted average shares outstanding: Basic 184,007,176 181,398,273 182,757,097 181,120,963 Diluted 184,561,431 181,721,467 183,301,570 181,460,622 Net earnings per share available to stockholders: Basic $ 0.53 $ 0.59 $ 1.63 $ 1.63 Diluted $ 0.53 $ 0.59 $ 1.63 $ 1.63 4 NNN REIT, Inc. (dollars in thousands, except per share data) (unaudited) Quarter Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Funds From Operations ("FFO") Reconciliation: Net earnings $ 97,904 $ 106,787 $ 298,941 $ 295,658 Real estate depreciation and amortization 63,272 59,427 186,170 178,251 Gain on disposition of real estate (7,765 ) (19,992 ) (30,207 ) (40,222 ) Impairment losses - depreciable real estate, net of recoveries 760 1,001 2,908 3,675 Total FFO adjustments 56,267 40,436 158,871 141,704 FFO $ 154,171 $ 147,223 $ 457,812 $ 437,362 FFO per share: Basic $ 0.84 $ 0.81 $ 2.51 $ 2.41 Diluted $ 0.84 $ 0.81 $ 2.50 $ 2.41 Core Funds From Operations ("Core FFO") Reconciliation: Net earnings $ 97,904 $ 106,787 $ 298,941 $ 295,658 Total FFO adjustments 56,267 40,436 158,871 141,704 FFO 154,171 147,223 457,812 437,362 Executive retirement costs 156 153 626 885 Total Core FFO adjustments 156 153 626 885 Core FFO $ 154,327 $ 147,376 $ 458,438 $ 438,247 Core FFO per share: Basic $ 0.84 $ 0.81 $ 2.51 $ 2.42 Diluted $ 0.84 $ 0.81 $ 2.50 $ 2.42 5 NNN REIT, Inc. (dollars in thousands, except per share data) (unaudited) Quarter Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Adjusted Funds From Operations ("AFFO") Reconciliation: Net earnings $ 97,904 $ 106,787 $ 298,941 $ 295,658 Total FFO adjustments 56,267 40,436 158,871 141,704 Total Core FFO adjustments 156 153 626 885 Core FFO 154,327 147,376 458,438 438,247 Straight-line accrued rent, net of reserves (123 ) (493 ) 8 (1,496 ) Net capital lease rent adjustment 56 83 164 244 Below-market rent amortization (109 ) (115 ) (351 ) (349 ) Stock based compensation expense 2,818 2,678 9,041 8,254 Capitalized interest expense (1,268 ) (1,248 ) (4,744 ) (2,374 ) Total AFFO adjustments 1,374 905 4,118 4,279 AFFO $ 155,701 $ 148,281 $ 462,556 $ 442,526 AFFO per share: Basic $ 0.85 $ 0.82 $ 2.53 $ 2.44 Diluted $ 0.84 $ 0.82 $ 2.52 $ 2.44 Other Information: Rental income from operating leases(1) $ 213,447 $ 200,287 $ 634,088 $ 596,099 Earned income from direct financing leases(1) $ 116 $ 140 $ 353 $ 427 Percentage rent(1) $ 200 $ 336 $ 1,347 $ 1,390 Real estate expenses reimbursed from tenants(1) $ 4,392 $ 4,093 $ 13,332 $ 12,996 Real estate expenses (7,263 ) (6,459 ) (21,175 ) (20,141 ) Real estate expenses, net of tenant reimbursements $ (2,871 ) $ (2,366 ) $ (7,843 ) $ (7,145 ) Amortization of debt costs $ 1,450 $ 1,247 $ 4,538 $ 3,648 Scheduled debt principal amortization (excluding maturities) $ - $ - $ - $ 173 (2) Non-real estate depreciation expense $ 101 $ 98 $ 327 $ 303 (1) For the quarters ended September 30, 2024 and 2023, the aggregate of such amounts is $218,155 and $204,856, respectively, and $649,120 and $610,912, for the nine months ended September 30, 2024 and 2023, respectively, and is classified as rental income on the income statement summary. (2) In April 2023, NNN repaid the remaining mortgages payable principal balance of $9,774. 6 NNN REIT, Inc. 2024 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. 2024 Guidance Net earnings per share excluding any gains on disposition of real estate, impairment charges, and executive retirement costs $1.93 - $1.97 per share Real estate depreciation and amortization per share $1.35 per share Core FFO per share $3.28 - $3.32 per share AFFO per share $3.31 - $3.35 per share General and administrative expenses $45 - $46 Million Real estate expenses, net of tenant reimbursements $11 - $12 Million Acquisition volume $500 - $600 Million Disposition volume $110 - $130 Million 7 NNN REIT, Inc. (dollars in thousands) (unaudited) September 30, 2024 December 31, 2023 Balance Sheet Summary Assets: Real estate portfolio, net of accumulated depreciation and amortization $ 8,625,489 $ 8,535,851 Cash and cash equivalents 173,526 1,189 Restricted cash and cash held in escrow 4,986 3,966 Receivables, net of allowance of $592 and $669, respectively 2,224 3,649 Accrued rental income, net of allowance of $4,117 and $4,168, respectively 33,849 34,611 Debt costs, net of accumulated amortization of $26,280 and $23,952, respectively 9,656 3,243 Other assets 73,913 79,459 Total assets $ 8,923,643 $ 8,661,968 Liabilities: Line of credit payable $ - $ 132,000 Notes payable, net of unamortized discount and unamortized debt costs 4,372,293 4,228,544 Accrued interest payable 75,399 34,374 Other liabilities 107,025 109,593 Total liabilities 4,554,717 4,504,511 Total equity 4,368,926 4,157,457 Total liabilities and equity $ 8,923,643 $ 8,661,968 Common shares outstanding 187,525,891 182,474,770 Gross leasable area, Property Portfolio (square feet) 36,550,000 35,966,000 8 NNN REIT, Inc. Debt Summary As of September 30, 2024 (dollars in thousands) (unaudited) Unsecured Debt Principal Principal, Net of Unamortized Discount Stated Rate Effective Rate Maturity Date Line of credit payable $ - $ - SOFR + 87.5 bps - April 2028 Unsecured notes payable: 2025 400,000 399,872 4.000 % 4.029 % November 2025 2026 350,000 349,022 3.600 % 3.733 % December 2026 2027 400,000 399,447 3.500 % 3.548 % October 2027 2028 400,000 398,704 4.300 % 4.388 % October 2028 2030 400,000 399,254 2.500 % 2.536 % April 2030 2033 500,000 489,352 5.600 % 5.905 % October 2033 2034 500,000 494,002 5.500 % 5.662 % June 2034 2048 300,000 296,197 4.800 % 4.890 % October 2048 2050 300,000 294,526 3.100 % 3.205 % April 2050 2051 450,000 442,184 3.500 % 3.602 % April 2051 2052 450,000 440,226 3.000 % 3.118 % April 2052 Total 4,450,000 4,402,786 Total unsecured debt(1) $ 4,450,000 $ 4,402,786 Debt costs $ (43,820 ) Accumulated amortization 13,327 Debt costs, net of accumulated amortization (30,493 ) Notes payable, net of unamortized discount and unamortized debt costs $ 4,372,293 (1) Unsecured debt has a weighted average interest rate of 4.1% and a weighted average maturity of 12.3 years. 9 NNN REIT, Inc. Debt Summary - Continued As of September 30, 2024 (unaudited) Credit Facility and Notes 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 September 30, 2024, the company believes it is in compliance with the covenants. Key Covenants Required September 30, 2024 Unsecured Bank Credit Facility: Maximum leverage ratio < 0.60 0.37 Minimum fixed charge coverage ratio > 1.50 4.29 Maximum secured indebtedness ratio < 0.40 - Unencumbered asset value ratio > 1.67 2.71 Unencumbered interest ratio > 1.75 4.22 Unsecured Notes: Limitation on incurrence of total debt ≤ 60% 40.0% Limitation on incurrence of secured debt ≤ 40% - Debt service coverage ratio ≥ 1.50 4.2 Maintenance of total unencumbered assets ≥ 150% 250% 10 NNN REIT, Inc. Property Portfolio As of September 30, 2024 Top 20 Lines of Trade As of September 30, Lines of Trade 2024(1) 2023(2) 1. Automotive service 16.8% 14.7% 2. Convenience stores 15.9% 16.8% 3. Restaurants - limited service 8.4% 8.8% 4. Restaurants - full service 8.3% 8.8% 5. Family entertainment centers 7.2% 5.8% 6. Recreational vehicle dealers, parts and accessories 5.1% 4.7% 7. Theaters 4.0% 4.2% 8. Health and fitness 4.0% 4.6% 9. Equipment rental 3.2% 3.0% 10. Wholesale clubs 2.4% 2.5% 11. Automotive parts 2.4% 2.5% 12. Drug stores 2.2% 2.5% 13. Home improvement 2.1% 2.3% 14. Furniture 1.9% 2.1% 15. Medical service providers 1.8% 1.8% 16. General merchandise 1.4% 1.5% 17. Pet supplies and services 1.3% 1.0% 18. Home furnishings 1.3% 1.3% 19. Consumer electronics 1.3% 1.4% 20. Travel plazas 1.2% 1.3% Other 7.8% 8.4% Total 100.0% 100.0% Top 10 States State % of Total(1) State % of Total(1) 1. Texas 17.3% 6. Tennessee 3.9% 2. Florida 9.2% 7. North Carolina 3.8% 3. Illinois 5.1% 8. Indiana 3.6% 4. Ohio 4.7% 9. Virginia 3.3% 5. Georgia 4.6% 10. Arizona 3.2% As a percentage of annual base rent, which is the annualized base rent for all leases in place. (1) $850,976,000 as of September 30, 2024. (2) $800,194,000 as of September 30, 2023. 11 NNN REIT, Inc. Property Portfolio - Continued As of September 30, 2024 Top 20 Tenants Tenant # of Properties % of Total(1) 1. 7-Eleven 146 4.6% 2. Mister Car Wash 121 4.1% 3. Dave & Buster's 34 3.9% 4. Camping World 48 3.8% 5. GPM Investments (convenience stores) 150 2.9% 6. Flynn Restaurant Group (Taco Bell/Arby's) 204 2.7% 7. AMC Theatre 20 2.6% 8. LA Fitness 26 2.5% 9. BJ's Wholesale Club 13 2.4% 10. Mavis Tire Express Services 140 2.2% 11. Couche Tard (Pantry) 92 2.2% 12. Chuck-E-Cheese 53 1.8% 13. Walgreens 49 1.8% 14. Sunoco 53 1.8% 15. United Rentals 49 1.6% 16. Fikes (convenience stores) 58 1.5% 17. Frisch's Restaurants 64 1.5% 18. Tidal Wave Auto Spa 35 1.3% 19. Bob Evans 106 1.3% 20. Life Time Fitness 3 1.3% Lease Expirations(2) % of Total(1) # of Properties Gross Leasable Area(3) % of Total(1) # of Properties Gross Leasable Area(3) 2024 0.1% 8 52,000 2030 3.9% 128 1,691,000 2025 3.8% 153 1,254,000 2031 7.0% 184 2,655,000 2026 4.2% 205 1,992,000 2032 5.7% 215 2,361,000 2027 7.8% 232 3,542,000 2033 4.6% 135 1,403,000 2028 5.5% 228 2,109,000 Thereafter 52.8% 1,893 17,101,000 2029 4.6% 143 2,083,000 (1) Based on the annual base rent of $850,976,000, which is the annualized base rent for all leases in place as of September 30, 2024. (2) As of September 30, 2024, the weighted average remaining lease term is 10.0 years. (3) Square feet. 12

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