The common shares of National Retail Properties, Inc. are traded on the New York Stock Exchange (the “NYSE”) under the  ticker symbol “NNN.” The depositary shares, each representing a 1/100$^{th}$ of a share of 6.625% Series D Cumulative  Redeemable Preferred Stock, par value $0.01 per share (“Series D Preferred Stock”), of NNN are traded on the NYSE under  the ticker symbol “NNNPRD.” The depositary shares, each representing a 1/100$^{th}$ of a share of 5.700% Series E Cumulative  Redeemable Preferred Stock, par value $0.01 per share (“Series E Preferred Stock”), of NNN are traded on the NYSE under the  ticker symbol “NNNPRE.” The following is a discussion of NNN’s operating strategy and certain of its investment, financing and other policies. These  strategies and policies have been set by management and/or the Board of Directors and, in general, may be amended or revised  from time to time by management and/or the Board of Directors without a vote of NNN’s stockholders. NNN’s strategy is to invest primarily in retail real estate that is typically well located within each local market for its tenants’  lines of trade. Management believes that these types of properties, generally leased pursuant to triple-net leases, provide  attractive opportunities for a stable current return and the potential for increased returns and capital appreciation. Triple-net  leases typically require the tenant to pay property operating expenses such as insurance, utilities, repairs, maintenance, capital  expenditures, real estate taxes, assessments and other governmental charges. Initial lease terms are generally 15 to 20 years. NNN holds real estate assets until it determines that the sale of such an asset is advantageous in view of NNN’s investment  objectives. In deciding whether to sell a real estate asset, NNN may consider factors such as potential capital appreciation, net  cash flow, tenant credit quality, market lease rates, local market conditions, potential use of sale proceeds and federal income  tax considerations. NNN’s management team focuses on certain key indicators to evaluate the financial condition and operating performance of  NNN. These key indicators include the composition of the Property Portfolio (such as tenant, geographic and line of trade  diversification), the occupancy rate of the Property Portfolio, certain financial performance ratios and profitability measures,  industry trends and industry performance compared to that of NNN. In some cases, NNN’s investment in real estate is in the form of mortgages or other loans which may be secured by real estate  or a borrower’s pledge of ownership interests in the entity that owns the real estate or other assets. These investments, which  represent less than approximately one-percent of NNN's total assets, may be subordinated to senior loans encumbering the  underlying real estate or assets. Subordinated positions are generally subject to a higher risk of nonpayment of principal and  interest than the more senior loans. The operating strategies employed by NNN have allowed NNN to increase the annual dividend (paid quarterly) per common  share for 24 consecutive years, one of only four publicly traded REIT's to do so. NNN’s management believes that single tenant, freestanding net lease retail properties will continue to provide attractive  investment opportunities and that NNN is well suited to take advantage of these opportunities because of its experience in  accessing capital markets, and its ability to identify, underwrite and acquire properties. In evaluating a particular acquisition, management may consider a variety of factors, including: •  the location, visibility and accessibility of the property, •  the geographic area and demographic characteristics of the community, as well as the local real estate market,  including potential for growth, market rents, and existing or potential competing properties or retailers, •  the size and age of the property, •  the purchase price, •  the non-financial terms of the proposed acquisition, •  the availability of funds or other consideration for the proposed acquisition and the cost thereof, •  the compatibility of the property with NNN’s existing portfolio, •  the quality of construction and design and the current physical condition of the property, •  the property level operating history, •  the financial and other characteristics of the existing tenant, •  the tenant’s business plan, operating history and management team,  2 Business Strategies and Policies Operating Strategies Investment in Real Estate or Interests in Real Estate