First Quarter 2012 Operating Results Announced by 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.



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