2014

2012 Operating Results And Increased 2013 Guidance Announced By 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.



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