First Quarter 2012 Operating Results Announced by National Retail Properties, Inc.

03 May, 2012, 08:30 ET from National Retail Properties, Inc.

ORLANDO, Fla., May 3, 2012 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter ended March 31, 2012.  Highlights include:

Operating Results:

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

Quarter Ended

March 31,

2012

2011

(in thousands, except per share data)

Revenues

$

78,658

$

61,529

Net earnings available to common stockholders

$

24,755

$

19,124

Net earnings per common share (diluted)

$

0.23

$

0.23

FFO available to common stockholders

$

41,820

$

31,393

FFO per common share (diluted)

$

0.39

$

0.38

AFFO available to common stockholders

$

46,260

$

34,516

AFFO per common share (diluted)

$

0.44

$

0.41

  • Excluding a $3.1 million charge for the redemption of our 7.375% Series C preferred stock, FFO per share for the quarter ended March 31, 2012 was $0.42
  • Portfolio occupancy was 97.5% at March 31, 2012, as compared to 97.4% at December 31, 2011, and 96.9% at March 31, 2011

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

  • Investments:
    • $197.9 million in the Property Portfolio, including acquiring 67 properties with an aggregate 594,000 square feet of gross leasable area
  • Dispositions:
    • Three properties with net proceeds of $5.2 million

Capital transactions for the quarter ended March 31, 2012:

  • Issued 11,500,000 depositary shares representing interests in our 6.625% Series D Cumulative preferred stock at a price of $25.00 per depositary share generating net proceeds of $277.6 million
  • Redeemed all 3,680,000 depositary shares representing interests in our 7.375% Series C Cumulative preferred stock at the liquidation value of $25.00 per depositary share, for $92 million
  • Issued 1,428,069 common shares generating $37.7 million of net proceeds pursuant to the Dividend Reinvestment and Stock Purchase Plan

National Retail Properties announced an increase in 2012 FFO guidance to $1.67 to $1.72 per share excluding first quarter's $3.1 million preferred stock redemption charge and before any impairment expense and estimated AFFO to be $1.76 to $1.81 per share.  The FFO guidance equates to the net earnings before any gains or losses from the sale of real estate of $1.02 to $1.07 per share plus $0.65 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: "We are very pleased with the strong start to 2012. Acquisition volume, initial yields and the cost of capital were all better than we originally anticipated and puts us on track to grow FFO per share by over 8% in 2012."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of March 31, 2012, the company owned 1,486 properties in 47 states with a gross leasable area of approximately 17.0 million square feet.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on May 3, 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-Q with the SEC for the quarter March 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.

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.  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. 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

March 31,

2012

2011

Income Statement Summary

Revenues:

Rental and earned income

$

74,364

$

57,862

Real estate expense reimbursement from tenants

2,832

2,280

Interest and other income from real estate transactions

707

620

Interest income on commercial mortgage residual interests

755

767

78,658

61,529

Retail operations:

Revenues

11,224

8,850

Operating expenses

(11,062)

(8,852)

Net

162

(2)

Operating expenses:

General and administrative

7,603

6,657

Real estate

4,612

3,652

Depreciation and amortization

18,117

13,428

Impairment – commercial mortgage residual interests valuation

129

30,332

23,866

Other expenses (revenues):

Interest and other income

(386)

(342)

Interest expense

19,645

17,662

19,259

17,320

Income tax benefit (expense)

(97)

19

Equity in earnings of unconsolidated affiliate

150

109

Earnings from continuing operations

29,282

20,469

Earnings from discontinued operations

542

384

Earnings including noncontrolling interests

29,824

20,853

Loss (earnings) attributable to noncontrolling interests:

Continuing operations

20

26

Discontinued operations

(12)

(59)

8

(33)

Net earnings attributable to NNN

29,832

20,820

Series C preferred stock dividends

(1,979)

(1,696)

Excess of redemption value over carrying value of preferred shares

   redeemed

(3,098)

Net earnings available to common stockholders

$

24,755

$

19,124

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

March 31,

2012

2011

Weighted average common shares outstanding:

Basic

104,841

83,123

Diluted

106,211

83,570

Net earnings per share available to common stockholders:

Basic:

Continuing operations

$

0.23

$

0.23

Discontinued operations

Net earnings

$

0.23

$

0.23

Diluted:

Continuing operations

$

0.22

$

0.22

Discontinued operations

0.01

0.01

Net earnings

$

0.23

$

0.23

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

Quarter Ended

March 31,

2012

2011

Funds From Operations (FFO) Reconciliation:

Net earnings available to common stockholders

$

24,755

$

19,124

Real estate depreciation and amortization:

Continuing operations

17,273

12,209

Discontinued operations

27

102

Joint venture real estate depreciation

44

44

Gain on disposition of real estate

(314)

(86)

Impairment losses - real estate

35

Total FFO adjustments

17,065

12,269

FFO available to common stockholders

$

41,820

$

31,393

FFO per share:

Basic

$

0.40

$

0.38

Diluted

$

0.39

$

0.38

Adjusted Funds From Operations (AFFO) Reconciliation:

Net earnings available to common stockholders

$

24,755

$

19,124

Total FFO adjustments

17,065

12,269

FFO available to common stockholders

41,820

31,393

Straight-line accrued rent

(795)

4

Net capital lease rent adjustment

402

413

Below market rent amortization

(635)

(97)

Stock based compensation expense

1,785

1,393

Capitalized interest expense

(431)

(322)

Convertible debt interest expense

1,044

1,603

Impairment losses and other charges, net of recoveries

(28)

129

Excess of redemption value over carrying value of preferred share

   redemption

3,098

Total AFFO adjustments

4,440

3,123

AFFO available to common stockholders

$

46,260

$

34,516

AFFO per share:

Basic

$

0.44

$

0.42

Diluted

$

0.44

$

0.41

Other Information:

Percentage rent

$

109

$

113

Amortization of debt costs

$

828

$

1,176

Scheduled debt principal amortization (excluding maturities)

$

288

$

272

Non-real estate depreciation expense

$

22

$

49

 

National Retail Properties, Inc.

(in thousands) (unaudited)

 

Earnings from Discontinued Operations:  NNN classified the revenues and expenses related to properties which generated revenue and were sold or generated revenue and were held for sale as of March 31, 2012, as discontinued operations.  The following is a summary of the earnings from discontinued operations.

Quarter Ended

March 31,

2012

2011

Revenues:

Rental and earned income

$

830

$

849

Real estate expense reimbursement from tenants

122

165

Interest and other income from real estate transactions

4

31

956

1,045

Expenses:

General and administrative

4

4

Real estate

244

279

Depreciation and amortization

51

123

Impairment losses - real estate

35

Interest

357

340

691

746

Gain on disposition of real estate

314

132

Income tax expense

(37)

(47)

Earnings from discontinued operations including noncontrolling interests

542

384

Earnings attributable to noncontrolling interests

(12)

(59)

Earnings from discontinued operations attributable to NNN

$

530

$

325

 

National Retail Properties, Inc.

(in thousands)

(unaudited)

 

March 31,

2012

December 31,

2011

Balance Sheet Summary

Assets:

Cash and cash equivalents

$

3,033

$

2,082

Receivables, net of allowance

1,563

2,149

Investment in unconsolidated affiliate

4,312

4,358

Mortgages, notes and accrued interest receivable

36,366

33,428

Real estate:

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

3,393,906

3,223,304

Accounted for using the direct financing method

25,359

25,752

Real estate held for sale

42,997

38,686

Commercial mortgage residual interests

15,016

15,299

Accrued rental income, net of allowance

25,687

25,187

Other assets

64,299

64,184

Total assets

$

3,612,538

$

3,434,429

Liabilities:

Line of credit payable

$

26,200

$

65,600

Mortgages payable

22,883

23,171

Notes payable - convertible, net of unamortized discount

356,416

355,371

Notes payable, net of unamortized discount

895,103

894,967

Other liabilities

95,764

91,444

Total liabilities

1,396,366

1,430,553

Stockholders' equity of NNN

2,214,802

2,002,498

Noncontrolling interests

1,370

1,378

Total equity

2,216,172

2,003,876

Total liabilities and equity

$

3,612,538

$

3,434,429

Common shares outstanding

106,595

104,755

Gross leasable area, Property Portfolio (square feet)

16,999

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."

 

March 31,

2012

December 31,

2011

Assets:

Cash and cash equivalents

$

334

$

307

Receivables

200

200

Real estate

70,615

70,911

Other assets

372

402

$

71,521

$

71,820

Liabilities:

Notes payable

$

42,700

$

42,700

Other liabilities

74

65

Total liabilities

42,774

42,765

Members' equity

28,747

29,055

Total liabilities and equity

$

71,521

$

71,820

 

Quarter Ended

March 31,

2012

2011

Revenues:

Rental income

$

1,565

$

1,565

Expenses:

General and administrative

106

73

Real estate

4

5

Depreciation and amortization

323

369

Interest

193

454

626

901

Net earnings

$

939

$

664

 

National Retail Properties, Inc.

Property Portfolio

Top 20 Lines of Trade

As of March 31,

Line of Trade

2012(1)

2011 (2)

1.

Convenience stores

23.5

%

23.3

%

2.

Restaurants - full service

11.7

%

10.7

%

3.

Automotive parts

6.2

%

7.8

%

4.

Automotive service

5.3

%

5.4

%

5.

Theaters

4.7

%

5.6

%

6.

Sporting goods

4.6

%

4.4

%

7.

Wholesale clubs

3.8

%

0.4

%

8.

Restaurants - limited service

3.6

%

4.1

%

9.

Drug Stores

3.3

%

3.9

%

10.

Consumer electronics

3.3

%

2.4

%

11.

Recreational vehicle dealers, parts and accessories

2.6

%

0.9

%

12.

Health and fitness

2.4

%

2.7

%

13.

Travel plazas

2.4

%

2.3

%

14.

Home improvement

2.1

%

1.0

%

15.

Family entertainment centers

2.0

%

1.3

%

16.

Books

1.9

%

3.8

%

17.

Grocery

1.9

%

2.6

%

18.

Office supplies

1.5

%

2.3

%

19.

Furniture

1.3

%

2.3

%

20.

General Merchandise

1.3

%

1.2

%

Other

10.6

%

11.6

%

Total

100.0

%

100.0

%

 

Top 10 States

State

% of Total(1)

State

% of Total(1)

1.

Texas

22.4

%

6.

Ohio

3.7

%

2.

Florida

9.4

%

7.

California

3.3

%

3.

Illinois

5.6

%

8.

Indiana

3.2

%

4.

North Carolina

5.0

%

9.

Virginia

3.1

%

5.

Georgia

4.1

%

10.

Arizona

3.1

%

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

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

National Retail Properties, Inc.

Property Portfolio

Top Tenants

Properties

% of Total (1)

Pantry

95

6.2%

Susser

86

6.1%

CL Thomas

66

5.1%

AMC Theatre

15

4.1%

BJ's Wholesale Club

7

3.8%

Best Buy

19

3.2%

Mister Car Wash

46

3.0%

Road Ranger

34

2.9%

Gander Mountain

8

2.6%

Camping World

19

2.6%

Pull-A-Part

20

2.6%

OSI Restaurant Partners

34

2.4%

LA Fitness

9

2.3%

Pep Boys

17

2.3%

Logan's Roadhouse

28

2.2%

 

Lease Expirations(2)

% of Total(1)

# of Properties

Gross Leasable Area (3)

% of Total(1)

# of Properties

Gross Leasable

Area (3)

2012

1.1%

20

295,000

2018

3.6%

42

873,000

2013

3.2%

41

863,000

2019

3.1%

41

685,000

2014

3.2%

43

587,000

2020

3.6%

90

829,000

2015

2.9%

68

945,000

2021

4.9%

86

723,000

2016

2.0%

38

593,000

2022

8.5%

96

964,000

2017

4.0%

39

906,000

Thereafter

59.9%

826

7,969,000

(1) Based on the annual base rent of $313,918,000, which is the annualized base rent for all leases in place as of March 31, 2012.

(2) As of March 31, 2012, the weighted average remaining lease term is 12 years.

(3) Square feet.

 

SOURCE National Retail Properties, Inc.



RELATED LINKS

http://www.nnnreit.com