Company: NNN
Filing Date: 2025-02-11
Form Type: 10-K
Source: 0000950170-25-017472
Chunk: 151

Company: NNN REIT, INC.
Filing Date: 2025-02-11
Form: 10-K
Item: Item 6
Chunk 151
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 present, the Company first performs a recoverability test by comparing the undiscounted future cash flows of the real estate asset to the net carrying value.  If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of the asset, the Company determines the fair value of the real estate asset and recognizes an impairment loss if the carrying amount of the asset exceeds its fair value. Auditing management’s evaluation of held and used real estate assets for impairment was complex and involved subjectivity due to the significant estimation required to determine the undiscounted future cash flows of held and used assets where impairment indicators were determined to be present and the fair value for those properties in which the net carrying value of the asset exceeds its undiscounted cash flows. In particular, future cash flow estimates were sensitive to the assumptions made by management regarding future market rents, which are affected by expectations about future market and economic conditions. 

    How We Addressed the Matter in Our Audit
    We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s impairment of held and used real estate assets process. For example, we tested controls over management’s review of the market rent assumption.To test the Company’s impairment assessment over held and used real estate assets, our audit procedures included, among others, assessing the methodologies used by management, testing the market rent assumption used to develop the estimates of future cash flows, and testing the completeness and accuracy of the underlying data used by the Company in its analysis. We evaluated the historical accuracy of the Company’s estimates by performing a historical look back on market rent assumptions. For certain properties, we involved our real estate valuation specialists to evaluate management’s market rent assumptions by benchmarking against comparable properties.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2006.

Orlando, Florida 

February 11, 2025

48

NNN REIT, INC.and SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(dollars in thousands, except per share data)  

    ASSETS
     
    December 31,2024

    December 31,2023

    Real estate portfolio, net of accumulated depreciation and amortization
     
    $
    8,746,168

    $
    8,535,851

    Cash and cash equivalents

    8,731

    1,189

    Restricted cash and cash held in escrow

    331

    3