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

Feb 06, 2012, 08:30 ET from 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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