$35.70
$71.03
bear $35.70
base $62.59
bull $71.03
margin of safety $24.00
market price* $41.54
NNN (NNN REIT) owns single-tenant retail buildings leased on long-term triple-net terms, so tenants pay property taxes, insurance and upkeep. At the end of 2025 it owned 3,692 properties across all 50 states, the District of Columbia and Puerto Rico, 98.3 percent leased, with about 10.2 years left on the average lease. The biggest lines of trade by rent are automotive service (18.6 percent), convenience stores (16.3 percent), restaurants (14.3 percent), entertainment (7.2 percent) and dealerships (6.6 percent); Texas is 18.4 percent of rent and Florida 8.7 percent. Leases run to an average of $256,000 of annual rent per property, and most carry fixed or inflation-linked increases, so no single property matters much. Revenue has grown from $534 million in 2016 to $926 million in 2025, almost all of it from buying more properties. How we measured the cash the business earns. We start with operating cash flow and remove timing swings in working capital: in 2020 about $26 million of rent was deferred during the shutdown and in 2021 about $21 million of it came back, and neither belongs in a normal year. We deduct the performance-incentive-plan compensation ($15.0 million in 2025). The $937 million spent on real estate in 2025 (239 properties at a 7.4 percent initial cash yield, versus 7.7 percent in 2024) is a discretionary purchase of new rent streams, so we treat it as growth investment rather than the cost of keeping the existing portfolio going. The filing says only that ongoing capital spending is minimal and gives no figure, so as an estimate of re-tenanting and building wear we deduct 7.5 percent of operating cash flow, about $50 million in 2025. On that basis owner earnings were $3.18 per share in 2025, versus $3.11 in 2024, $3.04 in 2023, $2.91 in 2022 and $2.75 in 2021; the reconciliation from net earnings, depreciation of $268 million, impairments and other non-cash items ties to reported operating cash flow exactly. These figures replace the prior ones, which did not strip out the working-capital timing, so the earlier values per share are not directly comparable. Valuing the business before its lenders. NNN's owner earnings are stated after $184 million of cash interest in 2025, so we add that interest back to see what the properties produce before the lenders are paid, then subtract what is owed. That pre-interest cash was $3.85 per share in 2023, $4.11 in 2024 and $4.16 in 2025. We anchor on $4.11, the three-year median; 2021 and 2022 describe a smaller portfolio before borrowing costs reset, so they were left out. In 2025 this figure grew 1.2 percent per share, and the base and bull cases start year one at that same 1.2 percent. First-half 2026 filings corroborate the level: operating cash flow rose 1.8 percent while the diluted share count rose about 1.4 percent, so per-share cash is roughly flat, and real estate impairments reached $18.7 million in six months versus $6.0 million a year earlier. What we owe. At year-end 2025 NNN had $348 million on its revolving credit line and about $4.5 billion face amount of unsecured notes ($4.47 billion carried net of discounts), none secured, with an average coupon of 4.2 percent and an average maturity of 10.8 years, and only $5 million of cash. Because those coupons are well below what new borrowing would cost for years, the notes are worth less than face to the owners; in the base and bull cases we count them at about $3.95 billion, for total debt of about $22.63 per share on 189.9 million shares. In the bear case we count them at full face, $25.63 per share, because a downturn is exactly when cheap refinancing would be unavailable. A $200 million term loan was drawn in January 2026 with its base rate fixed at 3.22 percent through January 2029; it funded purchases that also add rent, so we leave both sides out. Base case, about $62.59 per share: the business is worth $85.22 per share, it owes $22.63, the difference is $62.59. Credited growth is limited to what is already in hand: about 1 percent a year from rent increases written into most leases, and about 1 percent more from reinvesting the roughly $157 million NNN keeps after its $441 million dividend, bought at initial yields of 7.7 percent in 2024 and 7.4 percent in 2025, a buying program NNN has run every year since at least 2016, including through 2020. That is 1.2 percent in year one, 2 percent a year through year ten and 1.5 percent a year through year twenty, then flat, because the land, 98 percent occupancy and a ten-year average lease term keep the rent roll going. We left out acquisitions paid for with newly issued shares and debt, because nothing shows those add value for existing holders, and any re-leasing premiums or margin gains. Bull case, about $71.03: the business is worth $93.65 per share, less $22.63 owed. Rent increases of about 1.5 percent a year (our estimate of 2025 rent growth from existing properties) plus the same reinvestment give 3 percent a year for nine years after year one, then 2 percent through year twenty and flat after. Nothing here relies on a better market. Bear case, about $35.70: the business is worth $61.33 per share, less $25.63 owed. It uses a shutdown-style episode that is deeper and longer than 2020, when owner earnings per share fell 10.5 percent from 2019 and impairments hit $37 million: pre-interest cash falls 2 percent in year one, then 16 percent below the anchor for two years, recovers only to 12 percent below, and then grows 0.5 percent a year. The permanent loss is built from named stress: 14 tenants whose rent is only counted when cash arrives now occupy 7.1 percent of leasable area (4.5 percent a year earlier), although they are 4.4 percent of rent and 1.8 percent of properties, 2025 impairments more than quadrupled to $28.6 million from $6.6 million, 116 properties were sold versus 41, and restaurants, entertainment and auto service are 40 percent of rent. Even at the bottom the business earns about $3.45 per share before interest against about $0.98 of interest per share, and there is no near-term maturity wall, so debt is serviced; the 42 percent debt-to-gross-assets ratio and unsecured investment-grade structure would survive this. What could make this wrong. The anchor, the discount to face on the notes and the 7.5 percent capital reserve are the main judgements. If NNN grew not at all from today, the shares would be worth about $46; with the notes at full face, about $43. A worse outcome than the bear case would be a wave of failures in a single line of trade such as convenience stores or restaurants combined with a closed bond market, which the bear case does not fully model. Margin-of-safety price, $24. We are fairly sure of the earnings level: rents are contracted, the portfolio was at least 98 percent leased at both of the last two year-ends, and owner earnings per share fell in only two of the last nine years (slightly in 2017 and by 10.5 percent in 2020). We are least sure of how much growth is real, how many cash-basis tenants recover, and how much re-tenanting really costs. If there is no growth at all the shares are worth roughly $43 to $46; in the bear case about $36, though with a dividend cut from $2.40 to about $2.00 for a few years. The price assumes a four-to-five-year holding period while NNN pays $2.40 a year ($0.60 quarterly), about 75 percent of 2025 owner earnings, and keeps cash to reinvest. At $24 the dividend alone is a 10 percent yield, and from that price a no-growth outcome implies roughly 26 percent a year, and the bear case implies about 18 percent a year. Above about $26 the bear case implies roughly 15 percent a year, which is not enough for the amount of leverage, so the margin-of-safety price is $24.