Comparison of Expenses from Continuing Operations – 2013 versus 2012 General and Administrative Expenses. General and administrative expenses increased for the year ended December 31, 2013,  as compared to the same period in 2012, but decreased both as a percentage of total operating expenses and as a percentage of  revenues from continuing operations. The increase in general and administrative expenses for the year ended December 31,  2013, is primarily attributable to increases in real estate acquisition costs, but was partially offset by a decrease in incentive  compensation. Real Estate. Real estate expenses increased for the year ended December 31, 2013, as compared to the same period in 2012,  but decreased both as a percentage of total operating expenses and as a percentage of revenues from continuing operations. The  increase is primarily due to the increase in tenant reimbursable expenses related to a partial year of reimbursable expenses from  certain properties acquired in 2013 and a full year of reimbursable expenses from certain properties acquired in 2012. The  increase was partially offset by a decrease in real estate expenses that are not reimbursable by the tenant and a decrease in real  estate expenses incurred on vacant properties for the year ended December 31, 2013, as compared to the same period in 2012. Depreciation and Amortization. Depreciation and amortization expenses increased as a percentage of total operating expenses  and increased as a percentage of revenues from continuing operations for the year ended December 31, 2013, as compared to  the year ended December 31, 2012. The increase in expenses is primarily due to the acquisition of 275 properties in continuing  operations with an aggregate gross leasable area of approximately 1,652,000 square feet in 2013 and 232 properties in  continuing operations with an aggregate gross leasable area of approximately 2,955,000 square feet during 2012. Impairment – Commercial Mortgage Residual interests valuation.  In connection with the independent valuations of the  Residuals’ fair value, during the years ended December 31, 2013 and 2012, NNN recorded an other than temporary valuation  adjustment of $1,185,000 and $2,812,000, respectively, as a reduction of earnings from operations. Impairment Losses and Other Charges, Net of Recoveries. NNN reviews long-lived assets for impairment whenever certain  events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Events or  circumstances that may occur include changes in real estate market conditions, the ability of NNN to re-lease properties that are  currently vacant or become vacant, and the ability to sell properties at an attractive price. Management evaluates whether an  impairment in value has occurred by comparing the estimated future cash flows (undiscounted and without interest charges),  including the residual value of the real estate, with the carrying cost of the individual asset. If an impairment is indicated, a loss  will be recorded for the amount by which the carrying value of the asset exceeds its fair value. During the years ended  December 31, 2013 and 2012, NNN recorded $1,957,000 and $3,258,000, respectively, of real estate impairments.  Interest Expense. Interest expense increased for the year ended December 31, 2013, as compared to the same period in 2012,  but decreased as a percentage of revenues from continuing operations and as a percentage of total operating expenses. The following represents the primary changes in debt that have impacted interest expense: (i)  the issuance in August 2012 of $325,000,000 principal amount of notes payable with a maturity of October  2022, and stated interest rate of 3.800%; (ii)  the repayment in June 2012 of $50,000,000 principal amount of notes payable with a stated interest rate of  7.750%; (iii)  the repayment in July 2012 of a mortgage, with a balance of $18,488,000 at December 31, 2011 and an  interest rate of 6.900%; (iv)  the settlement of $138,700,000 principal amount of 3.950% convertible notes payable, of which  $123,163,000 was settled in the fourth quarter 2012 and the remaining $15,537,000 was settled in the first  quarter 2013; (v)  the issuance in April 2013 of $350,000,000 principal amount of notes payable with a maturity of April 2023,  and stated interest rate of 3.300%; (vi)  the settlement of $223,035,000 principal amount of 5.125% convertible notes payable in 2013; and (vii)  the decrease of $12,017,000 in the weighted average debt outstanding on the credit facility for the year ended  December 31, 2013, as compared to the same period in 2012.  26