2013 Operating Results Announced By National Retail Properties, Inc.

Feb 11, 2014, 08:30 ET from National Retail Properties, Inc.

ORLANDO, Fla., Feb. 11, 2014 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and year ended December 31, 2013.  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,

2013

2012

2013

2012

(in thousands, except per share data)

Revenues

$

103,648

$

89,059

$

392,327

$

331,536

Net earnings available to common stockholders

$

35,382

$

35,901

$

132,222

$

121,489

Net earnings per common share

$

0.29

$

0.32

$

1.10

$

1.11

FFO available to common stockholders

$

60,646

$

51,012

$

229,518

$

193,682

FFO per common share

$

0.50

$

0.46

$

1.91

$

1.77

Recurring FFO available to common stockholders

$

61,815

$

51,106

$

230,965

$

189,759

Recurring FFO per common share

$

0.51

$

0.46

$

1.93

$

1.74

AFFO available to common stockholders

$

63,603

$

54,182

$

238,917

$

200,839

AFFO per common share

$

0.52

$

0.48

$

1.99

$

1.84

 

  • Portfolio occupancy was 98.2% at December 31, 2013, as compared to 98.1% at September 30, 2013, and 97.9% at December 31, 2012

2013 Highlights:

  • Increased annual Recurring FFO per share 10.9%
  • Dividend yield at December 31, 2013 of 5.3%
  • Dividends per share increased to $1.60 marking the 24th consecutive year of annual dividend increases - one of only four equity REITs and one of only 102 public companies with 24 or more consecutive annual dividend increases
  • Maintained high occupancy levels at 98.2% with weighted average remaining lease term of 12 years
  • Invested $629.9 million in 275 properties with an aggregate 1,652,000 square feet of gross leasable area at an initial cash yield of 7.8%
  • Sold 35 properties for $61.0 million producing $5.4 million of gains on sale, net of income tax and noncontrolling interest at a cap rate of 7.5%
  • Raised $886.0 million of new long term capital at attractive pricing
    • Raised $264.1 million in net proceeds from the issuance of 7,721,883 common shares
    • Raised $277.6 million in net proceeds from the issuance of 5.70% Series E preferred stock
    • Raised $344.3 million in net proceeds from the issuance of 3.30% senior unsecured notes due 2023
  • Settled $223.0 million principal amount of 5.125% convertible senior notes due 2028
  • Over 99% of properties are not encumbered with secured mortgage debt
  • In January 2013, Fitch Ratings upgraded NNN's unsecured debt rating to BBB+
  • In November 2013, Moody's Investors Service upgraded NNN's unsecured debt rating to Baa1

Investments and Dispositions for the quarter ended December 31, 2013:

  • Investments:
    • $59.6 million in property investments, including the acquisition of 14 properties with an aggregate 183,000 square feet of gross leasable area
  • Dispositions:
    • 4 properties with net proceeds of $8.4 million producing $2.0 million of gains on sales, net of income tax

Craig Macnab, Chief Executive Officer, commented: "Growing FFO and AFFO per share results 8% in 2013 while deleveraging an already strong balance sheet is the continuation of a trend during recent years. Over the past three years, we have been able to grow FFO and AFFO per share results more than 25% while funding 80% of our $2.1 billion of acquisitions with permanent capital consisting of equity and asset disposition proceeds. We are well positioned to deliver solid per share growth in 2014 and we are optimistic this will be our 25th consecutive year of increased dividends per share. We will continue to build value by allocating capital to the disciplined acquisition of well underwritten retail properties, focusing on increasing per share results as opposed to asset size goals and maintaining a conservative and flexible balance sheet."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of December 31, 2013, the company owned 1,860 properties in 47 states with a gross leasable area of approximately 20.4 million square feet.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on February 11, 2014, 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, 2013.  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 earnings from discontinued operations. The company classified the revenues and expenses related to properties which generated revenue and were sold or generated revenue and were held for sale as of December 31, 2013, 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,

2013

2012

2013

2012

Income Statement Summary

Revenues:

Rental and earned income

$

98,868

$

84,458

$

375,460

$

315,037

Real estate expense reimbursement from tenants

3,907

3,564

13,110

11,587

Interest and other income from real estate transactions

372

428

1,467

2,239

Interest income on commercial mortgage residual interests

501

609

2,290

2,673

103,648

89,059

392,327

331,536

Retail operations:

Revenues

19,008

Operating expenses

(18,542)

Net

466

Operating expenses:

General and administrative

7,367

8,905

32,576

32,187

Real estate

5,519

4,661

18,100

17,041

Depreciation and amortization

27,172

20,185

99,246

73,707

Impairment – commercial mortgage residual interests valuation

1,169

94

1,185

2,812

Impairment losses and other charges, net of recoveries

1,972

3,088

41,227

33,845

153,079

128,835

Other expenses (revenues):

Interest and other income

(60)

(318)

(1,493)

(2,232)

Interest expense

20,074

20,767

85,283

83,192

20,014

20,449

83,790

80,960

Gain on disposition of real estate

173

173

Income tax benefit (expense)

(254)

(221)

(618)

6,947

Equity in earnings of unconsolidated affiliate

4,074

Earnings from continuing operations

42,326

34,544

155,013

133,228

Earnings from discontinued operations, net of income tax expense

1,908

6,103

5,072

8,709

Earnings including noncontrolling interests

44,234

40,647

160,085

141,937

Loss (earnings) attributable to noncontrolling interests:

Continuing operations

10

34

286

107

Discontinued operations

(3)

(18)

(226)

(29)

7

16

60

78

Net earnings attributable to NNN

44,241

40,663

160,145

142,015

Series C preferred stock dividends

(1,979)

Series D preferred stock dividends

(4,762)

(4,762)

(19,047)

(15,449)

Series E preferred stock dividends

(4,097)

(8,876)

Excess of redemption value over carrying value of Series C preferred shares redeemed

(3,098)

Net earnings available to common stockholders

$

35,382

$

35,901

$

132,222

$

121,489

 

 

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

December 31,

December 31,

2013

2012

2013

2012

Weighted average common shares outstanding:

Basic

121,118

109,393

118,204

106,965

Diluted

121,309

112,013

119,865

109,118

Net earnings per share available to common stockholders:

Basic:

Continuing operations

$

0.27

$

0.27

$

1.07

$

1.05

Discontinued operations

0.02

0.06

0.04

0.08

Net earnings

$

0.29

$

0.33

$

1.11

$

1.13

Diluted:

Continuing operations

$

0.27

$

0.26

$

1.06

$

1.03

Discontinued operations

0.02

0.06

0.04

0.08

Net earnings

$

0.29

$

0.32

$

1.10

$

1.11

 

 

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

Quarter Ended

Year Ended

December 31,

December 31,

2013

2012

2013

2012

Funds From Operations (FFO) Reconciliation:

Net earnings available to common stockholders

$

35,382

$

35,901

$

132,222

$

121,489

Real estate depreciation and amortization:

Continuing operations

27,113

20,128

99,020

73,586

Discontinued operations

23

224

371

1,480

Joint venture real estate depreciation

112

Joint venture gain on disposition of real estate

(2,341)

Gain on disposition of real estate, net of tax and noncontrolling interest

(1,975)

(6,510)

(5,442)

(10,956)

Impairment losses – real estate

103

1,269

3,347

10,312

Total FFO adjustments

25,264

15,111

97,296

72,193

FFO available to common stockholders

$

60,646

$

51,012

$

229,518

$

193,682

FFO per share:

Basic

$

0.50

$

0.47

$

1.94

$

1.81

Diluted

$

0.50

$

0.46

$

1.91

$

1.77

Recurring Funds from Operations Reconciliation:

Net earnings available to common stockholders

$

35,382

$

35,901

$

132,222

$

121,489

Total FFO adjustments

25,264

15,111

97,296

72,193

FFO available to common stockholders

60,646

51,012

229,518

193,682

Excess of redemption value over carrying value of preferred

   share redemption

3,098

Impairment – commercial mortgage residual interests valuation

1,169

1,185

2,812

Impairment losses and other charges, net of recoveries

94

759

(198)

Income tax benefit

(7,671)

Joint venture disposition fee and promote income

(1,964)

Notes receivable redemption income

(497)

Total Recurring FFO adjustments

1,169

94

1,447

(3,923)

Recurring FFO available to common stockholders

$

61,815

$

51,106

$

230,965

$

189,759

Recurring FFO per share:

Basic

$

0.51

$

0.47

$

1.95

$

1.77

Diluted

$

0.51

$

0.46

$

1.93

$

1.74

 

 

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

Quarter Ended

Year Ended

December 31,

December 31,

2013

2012

2013

2012

Adjusted Funds From Operations (AFFO) Reconciliation:

Net earnings available to common stockholders

$

35,382

$

35,901

$

132,222

$

121,489

Total FFO adjustments

25,264

15,111

97,296

72,193

Total Recurring FFO adjustments

1,169

94

1,447

(3,923)

Recurring FFO available to common stockholders

61,815

51,106

230,965

189,759

Straight-line accrued rent

483

160

165

(897)

Net capital lease rent adjustment

343

402

1,573

1,623

Below market rent amortization

(613)

(627)

(2,445)

(2,492)

Stock based compensation expense

1,934

2,375

7,459

8,131

Capitalized interest expense

(359)

(336)

(1,369)

(1,540)

Convertible debt interest expense (non-cash portion)

1,102

2,072

4,291

Joint venture disposition fee and promote income

1,964

Notes receivable redemption income

497

Total AFFO adjustments

1,788

3,076

7,952

11,080

AFFO available to common stockholders

$

63,603

$

54,182

$

238,917

$

200,839

AFFO per share:

Basic

$

0.53

$

0.50

$

2.02

$

1.88

Diluted

$

0.52

$

0.48

$

1.99

$

1.84

Other Information:

Percentage rent

$

757

$

620

$

1,558

$

1,192

Amortization of debt costs

$

658

$

78

$

3,118

$

2,584

Scheduled debt principal amortization (excluding maturities)

$

275

$

256

$

1,070

$

1,187

Non-real estate depreciation expense

$

63

$

62

$

248

$

143

Real estate acquisition costs (included in general and administrative expenses)

$

35

$

30

$

1,694

$

375

 

 

National Retail Properties, Inc.

(in thousands) (unaudited)

 

Earnings from Discontinued Operations:  NNN classified the revenues and expenses related to properties which were sold or  were held for sale as of December 31, 2013 and generated revenue, as discontinued operations.  The following is a summary of the earnings from discontinued operations.

Quarter Ended

Year Ended

December 31,

December 31,

2013

2012

2013

2012

Revenues:

Rental and earned income

$

363

$

1,354

$

2,822

$

7,693

Real estate expense reimbursement from tenants

97

60

327

383

Interest and other income from real estate transactions

1

5

37

17

461

1,419

3,186

8,093

Expenses:

General and administrative

2

13

219

20

Real estate

122

184

600

1,026

Depreciation and amortization

23

224

371

1,480

Impairment losses and other charges

103

1,269

2,149

7,026

Interest

135

180

580

732

385

1,870

3,919

10,284

Gain on disposition of real estate

1,870

6,510

6,272

10,956

Income tax benefit (expense)

(38)

44

(467)

(56)

Earnings from discontinued operations including noncontrolling interests

1,908

6,103

5,072

8,709

Loss attributable to noncontrolling interests

(3)

(18)

(226)

(29)

Earnings from discontinued operations attributable to NNN

$

1,905

$

6,085

$

4,846

$

8,680

 

 

National Retail Properties, Inc.

(in thousands)

(unaudited)

 

December 31, 2013

December 31, 2012

Balance Sheet Summary

Assets:

Cash and cash equivalents

$

1,485

$

2,076

Receivables, net of allowance

4,107

3,112

Mortgages, notes and accrued interest receivable

17,119

27,770

Real estate:

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

4,253,299

3,794,044

Accounted for using the direct financing method

18,342

23,217

Real estate held for sale

15,409

17,546

Commercial mortgage residual interests

11,721

13,096

Accrued rental income, net of allowance

24,797

25,458

Debt costs, net of accumulated amortization

12,877

12,781

Other assets

95,367

68,926

Total assets

$

4,454,523

$

3,988,026

Liabilities:

Line of credit payable

$

46,400

$

174,200

Mortgages payable, net of unamortized premium

9,475

10,602

Notes payable - convertible, net of unamortized discount

236,500

Notes payable, net of unamortized discount

1,514,184

1,165,662

Accrued interest payable

17,142

17,527

Other liabilities

89,037

85,950

Total liabilities

1,676,238

1,690,441

Stockholders' equity of NNN

2,777,045

2,296,285

Noncontrolling interests

1,240

1,300

Total equity

2,778,285

2,297,585

Total liabilities and equity

$

4,454,523

$

3,988,026

Common shares outstanding

121,992

111,555

Gross leasable area, Property Portfolio (square feet)

20,402

19,168

 

 

National Retail Properties, Inc

Debt Summary

As of December 31, 2013

(in thousands)

(unaudited)

Unsecured Debt

Principal

Principal, Net of Discount

Stated Rate

Effective Rate

Maturity Date

Line of credit payable

$

46,400

$

46,400

L + 107.5 bps

-

October 2016

Unsecured notes payable:

2014

150,000

149,975

6.25%

5.91%

June 2014

2015

150,000

149,904

6.15%

6.19%

December 2015

2017

250,000

249,596

6.88%

6.92%

October 2017

2021

300,000

296,570

5.50%

5.69%

July 2021

2022

325,000

320,576

3.80%

3.98%

October 2022

2023

350,000

347,563

3.30%

3.39%

April 2023

Total

1,525,000

1,514,184

Total unsecured debt

$

1,571,400

$

1,560,584

                  

 

Mortgages Payable

Principal Balance

Interest Rate

Maturity Date

Mortgage(1)

$

6,457

5.75%

April 2016

Mortgage

2,257

6.90%

January 2017

Mortgage(2)

761

8.62%

April 2014 - April 2019

$

9,475

(1) Includes unamortized premium

(2) Represents the total balance of five separate mortgage loans and their weighted average interest rate

 

 

National Retail Properties, Inc.

Property Portfolio

Top 20 Lines of Trade

As of December 31,

Line of Trade

2013(1)

2012 (2)

1.

Convenience stores

19.7

%

19.8

%

2.

Restaurants - full service

9.7

%

10.7

%

3.

Automotive service

7.6

%

7.6

%

4.

Restaurants - limited service

5.5

%

5.2

%

5.

Automotive parts

5.1

%

5.6

%

6.

Theaters

4.5

%

4.7

%

7.

Health and fitness

4.3

%

3.7

%

8.

Banks

4.1

%

0.2

%

9.

Sporting goods

3.7

%

4.0

%

10.

Recreational vehicle dealers, parts and accessories

3.2

%

2.7

%

11.

Wholesale clubs

3.1

%

3.4

%

12.

Consumer electronics

2.7

%

3.0

%

13.

Drug stores

2.6

%

3.0

%

14.

Home improvement

2.5

%

3.0

%

15.

Family entertainment centers

2.3

%

2.1

%

16.

Travel plazas

2.1

%

2.2

%

17.

Home furnishings

1.6

%

1.6

%

18.

Medical service providers

1.6

%

1.1

%

19.

Books

1.6

%

1.8

%

20.

Grocery

1.5

%

1.7

%

Other

11.0

%

12.9

%

Total

100.0

%

100.0

%

 

Top 10 States

State

% of Total(1)

State

% of Total(1)

1.

Texas

20.4

%

6.

Virginia

4.6

%

2.

Florida

10.5

%

7.

Indiana

3.9

%

3.

Illinois

5.3

%

8.

California

3.5

%

4.

Georgia

4.8

%

9.

Ohio

3.4

%

5.

North Carolina

4.7

%

10.

Pennsylvania

3.3

%

(1) Based on the annualized base rent for all leases in place as of December 31, 2013.

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

 

 

National Retail Properties, Inc.

Property Portfolio

Top Tenants (>2.0%)

Properties

% of Total (1)

Susser Holdings

86

5.0%

Mister Car Wash

85

4.9%

Pantry

84

4.4%

7-Eleven

68

4.2%

LA Fitness

20

4.2%

SunTrust

121

3.9%

AMC Theatre

15

3.6%

Camping World

24

3.2%

BJ's Wholesale Club

7

3.1%

Best Buy

19

2.6%

Gander Mountain

10

2.3%

Energy Transfer Partners (Sunoco)

38

2.1%

Road Ranger

27

2.1%

Pull-A-Part

20

2.1%

 

Lease Expirations(2)

% of Total(1)

# of Properties

Gross Leasable Area (3)

% of Total(1)

# of Properties

Gross Leasable Area (3)

2014

1.4%

32

434,000

2020

3.1%

97

916,000

2015

1.6%

32

482,000

2021

4.6%

99

918,000

2016

1.7%

32

567,000

2022

6.9%

92

1,150,000

2017

3.5%

46

1,009,000

2023

3.3%

54

962,000

2018

8.3%

186

1,957,000

2024

2.2%

33

504,000

2019

3.5%

57

1,005,000

Thereafter

59.9%

1,059

9,968,492

(1) Based on the annual base rent of $395,594,000, which is the annualized base rent for all leases in place as of December 31, 2013.

(2) As of December 31, 2013, the weighted average remaining lease term is 12 years.

(3) Square feet.

 

SOURCE National Retail Properties, Inc.



RELATED LINKS

http://www.nnnreit.com