2011 Operating Results and Increased 2012 Guidance Announced by National Retail Properties, Inc.

ORLANDO, Fla., Feb. 6, 2012 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and year ended December 31, 2011.  Highlights include:

Operating Results:

  • Revenues and net earnings, FFO and AFFO available to common stockholders:



Quarter Ended


Year Ended


December 31,


December 31,


2011


2010


2011


2010


(in thousands, except per share data)

Revenues

$

74,400



$

59,516



$

265,793



$

227,888










Net earnings available to common stockholders

$

25,874



$

12,519



$

85,540



$

66,212


Net earnings per common share (diluted)

$

0.26



$

0.15



$

0.96



$

0.80










FFO available to common stockholders

$

41,038



$

23,990



$

139,665



$

108,328


FFO per common share (diluted)

$

0.42



$

0.29



$

1.57



$

1.31










FFO excluding impairment losses and other charges, net
  of recoveries

$

40,051



$

31,661



$

139,258



$

119,781


FFO excluding impairment losses and other charges, net
  of recoveries per share

$

0.41



$

0.38



$

1.57



$

1.45










AFFO available to common stockholders

$

42,729



$

34,851



$

150,815



$

131,721


AFFO per common share (diluted)

$

0.43



$

0.41



$

1.70



$

1.59




  • Portfolio occupancy was 97.4% at December 31, 2011, as compared to 97.2% at September 30, 2011, and 96.9% at December 31, 2010

2011 Highlights:

  • Increased FFO per share 8.3% from $1.45 in 2010 to $1.57 in 2011 (excluding impairments)
  • Dividend yield at December 31, 2011 of 5.8%
  • Dividends per share increased to $1.53 (+ 1.3%) marking the 22nd consecutive year of annual dividend increases - one of only 104 public companies with 22 or more consecutive annual dividend increases
  • Maintained high occupancy levels at 97.4%
  • Invested $772.4 million in 218 properties with an aggregate 3,448,000 square feet of gross leasable area
  • Sold eight properties for $12.6 million producing $527,000 of gains on sale (not included in FFO)
  • Expanded unsecured bank credit facility to $450 million while extending the term to May 2015 and reducing the interest rate to LIBOR + 150 bps
  • Maintained strong balance sheet raising $521 million from the issuance of common equity
  • Generated annual total return to shareholders of 5.6% for 2011 and 11.8% annually for the past 15 years

Investments and Dispositions for the quarter ended December 31, 2011:

  • Investments:
    • $327.1 million in the Property Portfolio, including acquiring 111 properties with an aggregate 975,000 square feet of gross leasable area
  • Dispositions:
    • Three properties with net proceeds of $3.5 million

Capital transactions for the quarter ended December 31, 2011:

  • Completed 8,050,000 common shares offering priced at $25.75 generating net proceeds of $198.3 million
  • Issued 1,322,285 common shares generating $33.7 million of net proceeds pursuant to the Dividend Reinvestment and Stock Purchase Plan

National Retail Properties announced an increase in 2012 FFO guidance to $1.65 to $1.70 per share before any impairment expense and estimated AFFO to be $1.74 to $1.79 per share.  The FFO guidance equates to the net earnings before any gains or losses from the sale of real estate of $1.03 to $1.08 per share plus $0.62 per share of expected real estate depreciation and amortization.  The guidance is based on current plans and assumptions and subject to risks and uncertainties more fully described in this press release and the company's reports filed with the Securities and Exchange Commission.

Craig Macnab, Chief Executive Officer, commented: "The strong investment activity in 2011 drove significant FFO per share growth in 2011 and positions us well for continued growth in profitability in 2012 as evidenced by our increased FFO guidance. Notably, the $772 million of investments made in 2011 were financed with over $520 million of new equity which we were able to deploy on a very accretive basis and allow us to maintain a strong balance sheet as we start 2012. Most importantly, we are well positioned to perpetuate our 22-year consecutive annual dividend increase track record in 2012. We know the value of a safe and growing dividend is magnified in uncertain times."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of December 31, 2011, the company owned 1,422 properties in 47 states with a gross leasable area of approximately 16.4 million square feet.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on February 6, 2012, at 10:30 a.m. ET to review these results.  The call can be accessed on the National Retail Properties web site live at http://www.nnnreit.com.  For those unable to listen to the live broadcast, a replay will be available on the company's web site.  In addition, a summary of any earnings guidance given on the call will be posted to the company's web site.

Statements in this press release that are not strictly historical are "forward-looking" statements.  Forward-looking statements involve known and unknown risks, which may cause the company's actual future results to differ materially from expected results.  These risks include, among others, general economic conditions, local real estate conditions, changes in interest rates, increases in operating costs, the preferences and financial condition of our tenants, the availability of capital, risks related to our status as a REIT and the profitability of the company's taxable subsidiary.  Additional information concerning these and other factors that could cause actual results to differ materially from those forward-looking statements is contained from time to time in the company's Securities and Exchange Commission ("SEC") filings, including, but not limited to, the company's Annual Report on Form 10-K.  Copies of each filing may be obtained from the company or the SEC.  Such forward-looking statements should be regarded solely as reflections of the company's current operating plans and estimates.  Actual operating results may differ materially from what is expressed or forecast in this press release.  National Retail Properties undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.

The reported results are preliminary and not final and there can be no assurance that the results will not vary from the final information filed on Form 10-K with the SEC for the year ended December 31, 2011.  In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.  

Funds From Operations, commonly referred to as FFO, is a relative non-GAAP financial measure of operating performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP.  FFO is defined by the National Association of Real Estate Investment Trusts ("NAREIT") and is used by the company as follows:  net earnings (computed in accordance with GAAP) plus depreciation and amortization of assets unique to the real estate industry, excluding gains (or including losses) on the disposition of certain assets, the company's share of these items from the company's unconsolidated partnerships and any impairment charges on a depreciable real estate asset.

FFO is generally considered by industry analysts to be the most appropriate measure of performance of real estate companies.  FFO does not necessarily represent cash provided by operating activities in accordance with GAAP and should not be considered an alternative to net earnings as an indication of the company's performance or to cash flow as a measure of liquidity or ability to make distributions.  Management considers FFO an appropriate measure of performance of an equity REIT because it primarily excludes the assumption that the value of the real estate assets diminishes predictably over time, and because industry analysts have accepted it as a performance measure.  The company's computation of FFO may differ from the methodology for calculating FFO used by other equity REITs, and therefore, may not be comparable to such other REITs.  A reconciliation of net earnings (computed in accordance with GAAP) to FFO, as defined by NAREIT, is included in the financial information accompanying this release.  AFFO should not be considered an alternative to net earnings, as an indication of the company's performance or to cash flow as a measure of liquidity or ability to make distributions.

Adjusted Funds From Operations ("AFFO") is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO further adjusts FFO for certain non-cash items that reduce or increase net income in accordance with GAAP.  Management considers AFFO a useful supplemental measure of the company's performance.  The company's computation of AFFO may differ from the methodology for calculating AFFO used by other equity REITs, and therefore, may not be comparable to such other REITs.  A reconciliation of net earnings (computed in accordance with GAAP) to AFFO is included in the financial information accompanying this release.

The company has determined that there are earnings from discontinued operations in each of its segments, real estate held for investment and real estate held for sale.  All property dispositions from the company's held for investment segment are classified as discontinued operations.  In addition, certain properties in the company's held for sale segment that have generated revenues before disposition are classified as discontinued operations.  The results of operations for prior periods for these properties now classified as discontinued operations have been restated to reflect the results in earnings from discontinued operations for comparability purposes.  These adjustments resulted in a decrease in the company's reported total revenues and total and per share earnings from continuing operations and an increase in the company's earnings from discontinued operations.  However, the company's total and per share FFO and net earnings available to common stockholders are not affected.


National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)




Quarter Ended


Year Ended



December 31,


December 31,



2011


2010


2011


2010

Income Statement Summary


















Revenues:









Rental and earned income


$

69,978



$

55,930



$

250,449



$

214,249


Real estate expense reimbursement from tenants


3,060



2,333



9,927



7,197


Interest and other income from real estate transactions


583



498



2,312



2,982


Interest income on commercial mortgage residual interests


779



755



3,105



3,460




74,400



59,516



265,793



227,888











Retail operations:









Revenues


11,436



8,500



45,139



32,958


Operating expenses


(10,920)



(8,133)



(43,096)



(31,647)


Net


516



367



2,043



1,311











Operating expenses:









General and administrative


8,554



5,464



28,814



22,763


Real estate


4,852



3,854



16,887



13,235


Depreciation and amortization


15,910



12,635



58,115



48,047


Impairment losses and other charges, net of recoveries


(1,615)



7,525



(1,431)



7,458


Impairment – commercial mortgage residual interests valuation


628



146



1,024



3,995




28,329



29,624



103,409



95,498











Other expenses (revenues):









Interest and other income


(429)



(343)



(1,511)



(1,513)


Interest expense


19,585



16,655



74,845



65,179




19,156



16,312



73,334



63,666











Gain on disposition of real estate


297





297



641


Income tax benefit (expense)


(521)



23



(779)



(475)


Equity in earnings of unconsolidated affiliate


153



108



474



428











Earnings from continuing operations


27,360



14,078



91,085



70,629











Earnings from discontinued operations


326



134



1,331



2,724











Earnings including noncontrolling interests


27,686



14,212



92,416



73,353











Loss (earnings) attributable to noncontrolling interests:









Continuing operations


(124)



(5)



(11)



(367)


Discontinued operations


8



8



(80)



11




(116)



3



(91)



(356)











Net earnings attributable to NNN


27,570



14,215



92,325



72,997


Series C preferred stock dividends


(1,696)



(1,696)



(6,785)



(6,785)


Net earnings available to common stockholders


$

25,874



$

12,519



$

85,540



$

66,212











National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)



Quarter Ended


Quarter Ended



December 31,


December 31,



2011


2010


2011


2010










Weighted average common shares outstanding:









Basic


97,605



82,899



88,100



82,716


Diluted


98,671



84,041



88,837



82,849











Net earnings per share available to common stockholders:









Basic:









Continuing operations


$

0.26



$

0.15



$

0.95



$

0.77


Discontinued operations






0.01


0.03


Net earnings


$

0.26



$

0.15



$

0.96



$

0.80











Diluted:









Continuing operations


$

0.26



$

0.15



$

0.95



$

0.77


Discontinued operations






0.01


0.03


Net earnings


$

0.26



$

0.15



$

0.96



$

0.80
























National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited) 




Quarter Ended


Year Ended



December 31,


December 31,



2011


2010


2011


2010

Funds From Operations (FFO) Reconciliation:









Net earnings available to common stockholders


$

25,874



$

12,519



$

85,540



$

66,212


Real estate depreciation and amortization:









Continuing operations


15,537



11,456



53,827



43,182


Discontinued operations


15



92



216



468


Joint venture real estate depreciation


44



45



178



178


Gain on disposition of real estate


(432)



(122)



(527)



(1,712)


Impairment losses - real estate






431




Total FFO adjustments


15,164



11,471



54,125



42,116


FFO available to common stockholders


$

41,038



$

23,990



$

139,665



$     108,328











FFO per share:









Basic


$

0.42



$

0.29



$

1.59



$

1.31


Diluted


$

0.42



$

0.29



$

1.57



$

1.31











Adjusted Funds From Operations (AFFO) Reconciliation:









Net earnings available to common stockholders


$

25,874



$

12,519



$

85,540



$

66,212


Total FFO adjustments


15,164



11,471



54,125



42,116


FFO available to common stockholders


41,038



23,990



139,665



108,328











Straight-line accrued rent


108



285



54



(74)


Net capital lease rent adjustment


404



400



1,595



1,544


Below market rent amortization


(615)



(99)



(1,106)



(376)


Stock based compensation expense


2,121



1,284



6,390



5,309


Capitalized interest expense


(366)



(257)



(1,213)



(617)


Convertible debt interest expense


1,026



1,577



5,837



6,154


Impairment losses and other charges, net of recoveries


(1,615)



7,525



(1,431)



7,458


Impairment - commercial mortgage residual interests valuation


628



146



1,024



3,995


Total AFFO adjustments


1,691



10,861



11,150



23,393


AFFO available to common stockholders


$

42,729



$

34,851



$

150,815



$

131,721











AFFO per share:









Basic


$

0.44



$

0.42



$

1.71



$

1.59


Diluted


$

0.43



$

0.41



$

1.70



$

1.59











Other Information:









Percentage rent


$

644



$

577



$

1,120



$

959


Amortization of debt costs


$

351



$

1,163



$

4,141



$

4,599


Scheduled debt principal amortization (excluding maturities)


$

283



$

263



$

1,098



$

1,051


Non-real estate depreciation expense


$

27



$

21



$

168



$

287






National Retail Properties, Inc.

(in thousands)

(unaudited)


Earnings from Discontinued Operations:  NNN classified the revenues and expenses related to leasehold interests which expired and properties which generated revenue and were sold or generated revenue and were held for sale as of December 31, 2011, as discontinued operations.  The following is a summary of the earnings from discontinued operations.












Quarter Ended


Year Ended



December 31,


December 31,



2011


2010


2011


2010










Revenues:









Rental and earned income


$

591



$

651



$

3,736



$

5,434


Real estate expense reimbursement from tenants


159



190



619



1,647


Interest and other income from real estate transactions


3



5



37



578


Interest and other income from non-real estate








2




753



846



4,392



7,661











Expenses:









General and administrative


11



13



22



101


Real estate


269



297



1,146



2,363


Depreciation and amortization


38



114



306



627


Impairment losses - real estate






431




Interest


357



383



1,382



2,655




675



807



3,287



5,746











Gain on disposition of real estate


284



122



424



1,434


Income tax expense


(36)



(27)



(198)



(625)











Earnings from discontinued operations including noncontrolling
   interests


326



134



1,331



2,724


Loss (earnings) attributable to noncontrolling interests


8



8



(80)



11











Earnings from discontinued operations attributable to NNN


$

334



$

142



$

1,251



$

2,735






National Retail Properties, Inc.

(in thousands)

(unaudited)



Quarter Ended December 31,


Year Ended December 31,


2011


2010


2011


2010


# of

Properties


Gain


# of

Properties


Gain


# of

Properties


Gain


# of

Properties


Gain

















Real Estate Disposition Summary
















Reconciliation of gain on disposition 
  between continuing and
  discontinued operations:
















Continuing operations



$

297




$




$

297


2


$

641

Discontinued operations

3


284



1



122



8


424


16



1,434

Noncontrolling interest



(149)








(194)




(363)


3



$

432



1


$

122



8


$

527


18


$

1,712





















National Retail Properties, Inc.

(in thousands)

(unaudited)




December 31,

2011


December 31,

2010

Balance Sheet Summary










Assets:





Cash and cash equivalents


$

2,082



$

2,048


Receivables, net of allowance


2,149



3,403


Investment in unconsolidated affiliate


4,358



4,515


Mortgages, notes and accrued interest receivable


33,428



30,331


Real estate:





Accounted for using the operating method, net of
  accumulated depreciation and amortization


3,224,023



2,514,302


Accounted for using the direct financing method


26,518



29,773


Real estate held for sale


37,201



37,724


Commercial mortgage residual interests


15,299



15,915


Accrued rental income, net of allowance


25,187



25,535


Other assets


64,184



50,029







Total assets


$

3,434,429



$

2,713,575







Liabilities:





Line of credit payable


$

65,600



$

161,000


Mortgages payable


23,171



24,269


Notes payable - convertible, net of unamortized discount


355,371



349,534


Notes payable, net of unamortized discount


894,967



598,882


Other liabilities


91,444



51,116


Total liabilities


1,430,553



1,184,801







Stockholders' equity of NNN


2,002,498



1,527,483


Noncontrolling interests


1,378



1,291


Total equity


2,003,876



1,528,774







Total liabilities and equity


$

3,434,429



$

2,713,575







Common shares outstanding


104,755



83,613







Gross leasable area, Property Portfolio (square feet)


16,428



12,972










NNN Retail Properties Fund I LLC

(in thousands)

(unaudited)


In September 2007, the company entered into a joint venture, NNN Retail Properties Fund I LLC, with an

affiliate of Crow Holdings Realty Partners IV, L.P.  The company owns a 15 percent equity interest, and the

following summary represents the Balance Sheet and Income Statement Summary for the joint venture.

The company's investment in the joint venture is included in the company's Balance Sheet Summary under

"Investment in unconsolidated affiliate."




December 31,

2011


December 31,

2010






Assets:





Cash and cash equivalents


$

307



$

999


Receivables


200



200


Real estate


70,911



72,095


Other assets


402



561




$

71,820



$

73,855


Liabilities:





Notes payable


$

42,700



$

43,600


Other liabilities


65



995


Total liabilities


42,765



44,595







Members' equity


29,055



29,260







Total liabilities and equity


$

71,820



$

73,855





Quarter Ended


Year Ended


December 31,


December 31,


2011


2010


2011


2010









Revenues:








Rental income

$

1,565



$

1,565



$

6,261



$

6,261










Expenses:








General and administrative

73



73



332



331


Real estate

4



4



18



19


Depreciation and amortization

339



369



1,444



1,475


Interest

192



463



1,558



1,837



608



909



3,352



3,662










Net earnings

$

957



$

656



$

2,909



$

2,599





National Retail Properties, Inc.

Property Portfolio


Top 20 Lines of Trade






As of December 31,



Line of Trade


2011(1)


2010 (2)

1.


Convenience stores


24.6

%


23.5

%

2.


Restaurants - full service


9.4

%


10.1

%

3.


Automotive parts


6.5

%


7.8

%

4.


General merchandise


5.2

%


1.4

%

5.


Theaters


5.0

%


5.7

%

6.


Automotive service


4.9

%


5.3

%

7.


Sporting goods


4.8

%


4.5

%

8.


Restaurants - limited service


3.6

%


4.3

%

9.


Consumer electronics


3.5

%


2.6

%

10.


Drug stores


3.2

%


3.9

%

11.


Health and fitness


2.6

%


2.1

%

12.


Travel plazas


2.5

%


2.3

%

13.


Recreational vehicle dealers, parts and accessories


2.3

%


0.9

%

14.


Home improvement


2.1

%


1.0

%

15.


Grocery


2.1

%


2.6

%

16.


Books


2.0

%


3.7

%

17.


Family entertainment centers


1.9

%


1.3

%

18.


Office supplies


1.5

%


2.4

%

19.


Furniture


1.5

%


2.3

%

20.


Financial services


1.3

%


1.2

%



Other


9.5

%


11.1

%



Total


100.0

%


100.0

%




Top 10 States



State



% of Total(1)



State



% of Total(1)

1.

Texas



23.0

%


6.

Indiana



3.5

%

2.

Florida



9.2

%


7.

California



3.4

%

3.

Illinois



5.6

%


8.

Ohio



3.3

%

4.

North Carolina



5.2

%


9.

Pennsylvania



3.1

%

5.

Georgia



4.1

%


10.

Virginia



3.1

%


(1)    Based on the annualized base rent for all leases in place as of December 31, 2011.

(2)    Based on the annualized base rent for all leases in place as of December 31, 2010.



National Retail Properties, Inc.

Property Portfolio


Top Tenants





Properties


% of Total (1)


Pantry


96



6.6%



Susser


86



6.4%



C.L. Thomas


66



5.4%



AMC Theatre


15



4.3%



BJ's Wholesale Club


7



4.0%



Best Buy


20



3.4%



Mister Car Wash


44



3.1%



Road Ranger


34



3.0%



Gander Mountain


8



2.7%



Pull-A-Part


20



2.7%



LA Fitness


9



2.5%



Pep Boys


17



2.4%



Camping World


15



2.3%



Logan's Roadhouse


26



2.2%





Lease Expirations(2)




% of
Total(1)


# of
Properties


Gross
Leasable
Area (3)




% of
Total(1)


# of
Properties


Gross
Leasable
Area (3)

2012


1.5

%


28


434,000


2018


3.5%


39


829,000

2013


3.5

%


42


883,000


2019


3.1%


40


670,000

2014


3.3

%


43


587,000


2020


3.5%


87


746,000

2015


3.1

%


68


926,000


2021


5.1%


86


723,000

2016


2.1

%


38


569,000


2022


8.9%


97


934,000

2017


3.8

%


32


812,000


Thereafter


58.6%


764


7,472,000


(1)    Based on the annual base rent of $297,576,000, which is the annualized base rent for all leases in place as of
         December 31, 2011.

(2)    As of December 31, 2011, the weighted average remaining lease term is 12 years.

(3)    Square feet.




SOURCE National Retail Properties, Inc.



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