2012 Operating Results And Increased 2013 Guidance Announced By National Retail Properties, Inc.

07 Feb, 2013, 08:30 ET from National Retail Properties, Inc.

ORLANDO, Fla., Feb. 7, 2013 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and year ended December 31, 2012.  Highlights include:

Operating Results:

  • Revenues and net earnings, FFO, Recurring FFO and AFFO available to common stockholders and diluted per share amounts:

Quarter Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

(in thousands, except per share data)

Revenues

$

88,899

$

72,959

$

331,752

$

259,939

Net earnings available to common stockholders

$

35,901

$

25,874

$

121,489

$

85,540

Net earnings per common share

$

0.32

$

0.26

$

1.11

$

0.96

FFO available to common stockholders

$

50,994

$

41,038

$

193,589

$

139,665

FFO per common share

$

0.46

$

0.42

$

1.77

$

1.57

Recurring FFO available to common stockholders

$

51,088

$

40,051

$

189,666

$

139,258

Recurring FFO per common share

$

0.46

$

0.41

$

1.74

$

1.57

AFFO available to common stockholders

$

54,164

$

42,729

$

200,746

$

150,815

AFFO per common share

$

0.48

$

0.43

$

1.84

$

1.70

  • Portfolio occupancy was 97.9% at December 31, 2012, as compared to 97.9% at September 30, 2012, and 97.4% at December 31, 2011

2012 Highlights:

  • Increased recurring FFO per share 10.8% from $1.57 in 2011 to $1.74 in 2012
  • Dividend yield at December 31, 2012 of 5.0%
  • Dividends per share increased to $1.56 marking the 23rd consecutive year of annual dividend increases - one of only four equity REITs and one of only 104 public companies with 23 or more consecutive annual dividend increases
  • Maintained high occupancy levels at 97.9% with weighted average remaining lease term of 12 years
  • Invested $707.2 million in 232 properties with an aggregate 2,955,000 square feet of gross leasable area
  • Sold 34 properties for $81.1 million producing $11.0 million of gains on sale (not included in FFO)
  • Expanded unsecured bank credit facility to $500 million while extending the term to October 2016 and reducing the interest rate to LIBOR + 117.5 basis points
  • Issued $325.0 million principal amount of 3.80% senior unsecured notes due 2022 generating net proceeds of $317.1 million
  • Paid off $123.2 million principal amount of 3.95% convertible senior notes due 2026 and the remaining $15.5 million principal amount of 3.95% notes were paid off in January 2013.
  • Raised $183.1 million in net proceeds from the issuance of 6,383,942 common shares and $277.6 million from the issuance of preferred equity
  • Over 99% of properties are not encumbered with secured mortgage debt
  • Generated annual total return to shareholders of 24.6% for 2012 and an average annual total return of 13.3% for the past 20 years
  • In January 2013, Fitch Ratings upgraded NNN's unsecured debt rating to BBB+ and Moody's Investors Service revised NNN's rating outlook to positive

Investments and Dispositions for the quarter ended December 31, 2012:

  • Investments:
    • $254.7 million in property investments, including the acquisition of 108 properties with an aggregate 907,000 square feet of gross leasable area
  • Dispositions:
    • 16 properties with net proceeds of $49.0 million producing $6.5 million of gains on sales (not included in FFO)

National Retail Properties announced an increase in 2013 FFO guidance from a range of $1.77 to $1.81 to a range of $1.81 to $1.85 per share before any impairment expense. 2013 AFFO is estimated to be $1.89 to $1.93 per share.  The FFO guidance equates to net earnings before any gains or losses from the sale of real estate of $1.09 to $1.13 per share plus $0.72 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 continuing strong results in 2012 are testament to the strength of our business model and balance sheet combined with the expertise of our talented associates who make it all happen. Over the past two years, NNN has grown per share results by 20% while improving our balance sheet credit metrics and maintaining very high occupancy levels. These results have perpetuated NNN's elite 23 year record of increased annual dividends which is the foundation of NNN's strong total shareholder returns for many years. Finally, 2013 is off to a good start as evidenced by our increased guidance."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of December 31, 2012, the company owned 1,622 properties in 47 states with a gross leasable area of approximately 19.2 million square feet.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on February 7, 2013, 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, 2012.  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,

2012

2011

2012

2011

Income Statement Summary

Revenues:

Rental and earned income

$

84,385

$

68,542

$

315,226

$

244,618

Real estate expense reimbursement from tenants

3,477

3,055

11,443

9,914

Interest and other income from real estate transactions

428

583

2,410

2,302

Interest income on commercial mortgage residual interests

609

779

2,673

3,105

88,899

72,959

331,752

259,939

Retail operations:

Revenues

11,436

19,008

45,139

Operating expenses

(10,920)

(18,543)

(43,096)

Net

516

465

2,043

Operating expenses:

General and administrative

8,903

8,554

32,182

28,814

Real estate

4,632

4,849

17,069

16,832

Depreciation and amortization

20,281

15,612

74,140

56,926

Impairment – commercial mortgage residual interests valuation

94

628

2,812

1,024

Impairment losses and other charges, net of recoveries

1,115

(1,615)

8,411

(1,431)

35,025

28,028

134,614

102,165

Other expenses (revenues):

Interest and other income

(318)

(429)

(2,232)

(1,511)

Interest expense

20,597

19,585

82,502

74,845

20,279

19,156

80,270

73,334

Gain on disposition of real estate

297

297

Income tax benefit (expense)

(104)

(521)

7,086

(779)

Equity in earnings of unconsolidated affiliate

153

4,074

474

Earnings from continuing operations

33,491

26,220

128,493

86,475

Earnings from discontinued operations

7,156

1,465

13,444

5,941

Earnings including noncontrolling interests

40,647

27,685

141,937

92,416

Loss (earnings) attributable to noncontrolling interests:

Continuing operations

43

(123)

129

(11)

Discontinued operations

(27)

8

(51)

(80)

16

(115)

78

(91)

Net earnings attributable to NNN

40,663

27,570

142,015

92,325

Series C preferred stock dividends

(1,696)

(1,979)

(6,785)

Series D preferred stock dividends

(4,762)

(15,449)

Excess of redemption value over carrying value of preferred

  shares redeemed

(3,098)

Net earnings available to common stockholders

$

35,901

$

25,874

$

121,489

$

85,540

December 31,

December 31,

2012

2011

2012

2011

Weighted average common shares outstanding:

Basic

109,393

97,605

106,965

88,100

Diluted

112,013

98,671

109,118

88,837

Net earnings per share available to common stockholders:

Basic:

Continuing operations

$

0.26

$

0.25

$

1.00

$

0.90

Discontinued operations

0.07

0.01

0.13

0.06

Net earnings

$

0.33

$

0.26

$

1.13

$

0.96

Diluted:

Continuing operations

$

0.26

$

0.25

$

0.99

$

0.89

Discontinued operations

0.06

0.01

0.12

0.07

Net earnings

$

0.32

$

0.26

$

1.11

$

0.96

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

Quarter Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

Funds From Operations (FFO) Reconciliation:

Net earnings available to common stockholders

$

35,901

$

25,874

$

121,489

$

85,540

Real estate depreciation and amortization:

Continuing operations

20,223

15,239

74,016

52,638

Discontinued operations

111

313

957

1,405

Joint venture real estate depreciation

44

112

178

Joint venture gain on disposition of real estate

(2,341)

Gain on disposition of real estate

(6,510)

(432)

(10,956)

(527)

Impairment losses - real estate

1,269

10,312

431

Total FFO adjustments

15,093

15,164

72,100

54,125

FFO available to common stockholders

$

50,994

$

41,038

$

193,589

$

139,665

FFO per share:

Basic

$

0.47

$

0.42

$

1.81

$

1.59

Diluted

$

0.46

$

0.42

$

1.77

$

1.57

Recurring Funds from Operations Reconciliation:

Net earnings available to common stockholders

$

35,901

$

25,874

$

121,489

$

85,540

Total FFO adjustments

15,093

15,164

72,100

54,125

FFO available to common stockholders

50,994

41,038

193,589

139,665

Excess of redemption value over carrying value of preferred

   share redemption

3,098

Impairment losses and other charges, net of recoveries

94

(987)

2,614

(407)

Income tax benefit

(7,671)

Joint venture disposition fee and promote income

(1,964)

Total Recurring FFO adjustments

94

(987)

(3,923)

(407)

Recurring FFO available to common stockholders

$

51,088

$

40,051

$

189,666

$

139,258

Recurring FFO per share:

Basic

$

0.47

$

0.41

$

1.77

$

1.58

Diluted

$

0.46

$

0.41

$

1.74

$

1.57

Quarter Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

Adjusted Funds From Operations (AFFO) Reconciliation:

Net earnings available to common stockholders

$

35,901

$

25,874

$

121,489

$

85,540

Total FFO adjustments

15,093

15,164

72,100

54,125

Total Recurring FFO adjustments

94

(987)

(3,923)

(407)

Recurring FFO available to common stockholders

51,088

40,051

189,666

139,258

Straight-line accrued rent

160

108

(897)

54

Net capital lease rent adjustment

402

404

1,623

1,595

Below market rent amortization

(627)

(615)

(2,492)

(1,106)

Stock based compensation expense

2,375

2,121

8,131

6,390

Capitalized interest expense

(336)

(366)

(1,540)

(1,213)

Convertible debt interest expense (non-cash portion)

1,102

1,026

4,291

5,837

Joint venture disposition fee and promote income

1,964

Total AFFO adjustments

3,076

2,678

11,080

11,557

AFFO available to common stockholders

$

54,164

$

42,729

$

200,746

$

150,815

AFFO per share:

Basic

$

0.50

$

0.44

$

1.88

$

1.71

Diluted

$

0.48

$

0.43

$

1.84

$

1.70

Other Information:

Percentage rent

$

620

$

644

$

1,192

$

1,120

Amortization of debt costs

$

78

$

351

$

2,584

$

4,141

Scheduled debt principal amortization (excluding maturities)

$

256

$

283

$

1,187

$

1,098

Non-real estate depreciation expense

$

62

$

27

$

143

$

168

 

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, 2012, as discontinued operations.  The following is a summary of the earnings from discontinued operations.

Quarter Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

Revenues:

Rental and earned income

$

1,427

$

2,027

$

7,504

$

9,567

Real estate expense reimbursement from tenants

147

163

527

632

Interest and other income from real estate transactions

5

3

44

47

1,579

2,193

8,075

10,246

Expenses:

General and administrative

15

11

26

22

Real estate

213

272

997

1,201

Depreciation and amortization

128

336

1,046

1,495

Impairment losses - real estate

154

1,901

431

Interest

350

357

1,422

1,382

860

976

5,392

4,531

Gain on disposition of real estate

6,510

284

10,956

424

Income tax expense

(73)

(36)

(195)

(198)

Earnings from discontinued operations including noncontrolling

   interests

7,156

1,465

13,444

5,941

Loss (earnings) attributable to noncontrolling interests

(27)

8

(51)

(80)

Earnings from discontinued operations attributable to NNN

$

7,129

$

1,473

$

13,393

$

5,861

 

National Retail Properties, Inc.

(in thousands)

(unaudited)

 

December 31,

2012

December 31,

2011

Balance Sheet Summary

Assets:

Cash and cash equivalents

$

2,076

$

2,082

Receivables, net of allowance

3,112

2,763

Investment in unconsolidated affiliate

4,358

Mortgages, notes and accrued interest receivable

27,770

33,428

Real estate:

Accounted for using the operating method, net of

   accumulated depreciation and amortization

3,769,817

3,224,288

Accounted for using the direct financing method

23,217

26,518

Real estate held for sale

41,773

36,936

Commercial mortgage residual interests

13,096

15,299

Accrued rental income, net of allowance

25,458

25,187

Other assets

81,707

64,184

Total assets

$

3,988,026

$

3,435,043

Liabilities:

Line of credit payable

$

174,200

$

65,600

Mortgages payable, net of unamortized premium

10,602

23,171

Notes payable - convertible, net of unamortized discount

236,500

355,371

Notes payable, net of unamortized discount

1,165,662

894,967

Other liabilities

103,477

92,058

Total liabilities

1,690,441

1,431,167

Stockholders' equity of NNN

2,296,285

2,002,498

Noncontrolling interests

1,300

1,378

Total equity

2,297,585

2,003,876

Total liabilities and equity

$

3,988,026

$

3,435,043

Common shares outstanding

111,555

104,755

Gross leasable area, Property Portfolio (square feet)

19,168

16,428

 

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."

 

The joint venture sold all 21 convenience store properties it owned in the third quarter of 2012 for approximately $87.5 million. The investors' $33.3 million total equity investment produced approximately $61.6 million of total cash distributions from operations and net sale proceeds over the life of the joint venture.

 

December 31,

2012

December 31,

2011

Assets:

Cash and cash equivalents

$

253

$

307

Receivables

200

Real estate

70,911

Other assets

402

$

253

$

71,820

Liabilities:

Notes payable

$

$

42,700

Other liabilities

228

65

Total liabilities

228

42,765

Members' equity

25

29,055

Total liabilities and equity

$

253

$

71,820

 

Quarter Ended

Year Ended

December 31,

December 31,

2012

2011

2012

2011

Revenues:

Rental income

$

$

1,565

$

4,158

$

6,261

Expenses:

General and administrative

73

441

332

Real estate

4

25

18

Depreciation and amortization

339

833

1,444

Interest

192

506

1,558

608

1,805

3,352

Gain on disposition of real estate

15,609

Net earnings

$

$

957

$

17,962

$

2,909

 

National Retail Properties, Inc.

Property Portfolio

 

Top 20 Lines of Trade

As of December 31,

Line of Trade

2012(1)

2011 (2)

1.

Convenience stores

19.8

%

24.6

%

2.

Restaurants - full service

10.7

%

9.4

%

3.

Automotive service

7.6

%

4.9

%

4.

Automotive parts

5.6

%

6.5

%

5.

Restaurants - limited service

5.2

%

3.6

%

6.

Theaters

4.7

%

5.0

%

7.

Sporting goods

4.0

%

4.8

%

8.

Health and fitness

3.7

%

2.6

%

9.

Wholesale clubs

3.4

%

4.0

%

10.

Home improvement

3.0

%

2.1

%

11.

Drug stores

3.0

%

3.2

%

12.

Consumer electronics

3.0

%

3.5

%

13.

Recreational vehicle dealers, parts and accessories

2.7

%

2.3

%

14.

Travel plazas

2.2

%

2.5

%

15.

Family entertainment centers

2.1

%

1.9

%

16.

Books

1.8

%

2.0

%

17.

Grocery

1.7

%

2.1

%

18.

Home furnishings

1.6

%

0.8

%

19.

General merchandise

1.5

%

1.1

%

20.

Financial services

1.4

%

1.3

%

Other

11.3

%

11.8

%

Total

100.0

%

100.0

%

 

Top 10 States

State

% of Total(1)

State

% of Total(1)

1.

Texas

21.8

%

6.

California

4.3

%

2.

Florida

9.2

%

7.

Indiana

4.2

%

3.

Illinois

5.7

%

8.

Pennsylvania

3.7

%

4.

Georgia

4.7

%

9.

Virginia

3.5

%

5.

North Carolina

4.7

%

10.

Ohio

3.3

%

 

(1)  

Based on the annualized base rent for all leases in place as of December 31, 2012.

(2)  

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

 

National Retail Properties, Inc.

Property Portfolio

 

Top Tenants (>2.0%)

Properties

% of Total (1)

Susser

86

5.4%

Pantry

84

5.0%

Mister Car Wash

75

4.8%

7-Eleven

68

4.7%

AMC Theatre

15

3.9%

LA Fitness

16

3.6%

BJ's Wholesale Club

7

3.4%

Best Buy

19

2.9%

Camping World

20

2.7%

Gander Mountain

9

2.5%

Road Ranger

27

2.3%

Pull-A-Part

20

2.3%

Bloomin' Brands (Outback)

34

2.2%

Pep Boys

17

2.1%

 

Lease Expirations(2)

% of Total(1)

# of Properties

Gross Leasable Area (3)

% of Total(1)

# of Properties

Gross

Leasable Area (3)

2013

1.7%

32

566,000

2019

2.9%

46

766,000

2014

2.6%

41

552,000

2020

3.4%

96

905,000

2015

2.3%

33

630,000

2021

4.8%

98

867,000

2016

1.8%

29

523,000

2022

7.5%

93

1,070,000

2017

3.9%

46

1,008,000

2023

3.5%

42

830,000

2018

4.3%

55

1,173,000

Thereafter

61.3%

969

9,624,000

 

(1)  

Based on the annual base rent of $354,836,000, which is the annualized base rent for all leases in place as of December 31, 2012.

(2)  

As of December 31, 2012, the weighted average remaining lease term is 12 years.

(3)  

Square feet.

 

 

SOURCE National Retail Properties, Inc.



RELATED LINKS

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