Commercial Mortgage Residual Interests Governmental Regulations Affecting Properties Item 1A. Risk Factors Orange Avenue Mortgage Investments, Inc. (“OAMI”), a wholly owned and consolidated subsidiary of NNN, holds the residual  interests (“Residuals”) from seven commercial real estate loan securitizations. Each of the Residuals is reported at fair value  based upon an independent valuation; unrealized gains or losses are reported as other comprehensive income in stockholders’  equity, and other than temporary losses as a result of a change in timing or amount of estimated cash flows are recorded as an  other than temporary valuation impairment. The Residuals had an estimated fair value of $11,721,000 and $13,096,000 at  December 31, 2013 and 2012, respectively. Property Environmental Considerations. Subject to a determination of the level of risk and potential cost of remediation, NNN  may acquire a property where some level of environmental contamination may exist. Investments in real property create a  potential for substantial environmental liability for the owner of such property from the presence or discharge of hazardous  materials on the property or the improper disposal of hazardous materials emanating from the property, regardless of fault. In  order to mitigate exposure to environmental liability, NNN maintains an environmental insurance policy that covers  substantially all of the properties which expires in August 2018. As a part of its acquisition due diligence process, NNN  generally obtains an environmental site assessment for each property. In such cases where NNN intends to acquire real estate  where some level of contamination may exist, NNN generally requires the seller or tenant to (i) remediate the problem,  (ii) indemnify NNN for environmental liabilities, and/or (iii) agree to other arrangements deemed appropriate by NNN,  including, under certain circumstances, the purchase of environmental insurance to address environmental conditions at the  property. As of February 12, 2014, NNN has 70 Properties currently under some level of environmental remediation and/or monitoring.  In general, the seller, a previous owner, the tenant or an adjacent land owner is responsible for the cost of the environmental  remediation for each of these Properties. Americans with Disabilities Act of 1990. The Properties, as commercial facilities, are required to comply with Title III of the  Americans with Disabilities Act of 1990 and similar state and local laws and regulations (collectively, the “ADA”).  Investigation of a property may reveal non-compliance with the ADA. The tenants will typically have primary responsibility for  complying with the ADA, but NNN may incur costs if the tenant does not comply. As of February 12, 2014, NNN has not been  notified by any governmental authority of, nor is NNN’s management aware of, any non-compliance with the ADA that NNN’s  management believes would have a material adverse effect on its business, financial position or results of operations. Other Regulations. State and local fire, life-safety and similar entities regulate the use of NNN’s Properties. NNN’s leases  generally require each tenant to undertake primary responsibility for complying with regulations, but failure to comply could  result in fines by governmental authorities, awards of damages to private litigants, or restrictions on the ability to conduct  business on such properties. Carefully consider the following risks and all of the other information set forth in this Annual Report on Form 10-K, including  the consolidated financial statements and the notes thereto. If any of the events or developments described below were actually  to occur, NNN’s business, financial condition or results of operations could be adversely affected. Financial and economic conditions may have an adverse impact on NNN, its tenants, and commercial real estate in general. Financial and economic conditions continue to be challenging and volatile and any worsening of such conditions, including any  disruption in the capital markets, could adversely affect NNN’s business and results of operations and the financial condition of  NNN’s tenants, developers, borrowers, lenders or the institutions that hold NNN’s cash balances and short-term investments,  which may expose NNN to increased risks of default by these parties. There can be no assurance that actions of the United States Government, Federal Reserve or other government and regulatory  bodies intended to stabilize the economy or financial markets will achieve their intended effect. Additionally, some of these  actions may adversely affect financial institutions, capital providers, retailers, consumers or NNN’s financial condition, results  of operations or the trading price of NNN’s shares.  6