First Quarter 2013 Operating Results And Increased 2013 FFO Guidance Announced By National Retail Properties, Inc.

ORLANDO, Fla., May 2, 2013 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced its operating results for the quarter ended March 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


March 31,


2013


2012


(in thousands, except per share data)

Revenues

$

92,565



$

77,385






Net earnings available to common stockholders

$

29,304



$

24,755


Net earnings per common share

$

0.25



$

0.23






FFO available to common stockholders

$

54,618



$

41,820


FFO per common share

$

0.47



$

0.39






Recurring FFO available to common stockholders

$

55,377



$

44,890


Recurring FFO per common share

$

0.48



$

0.42






AFFO available to common stockholders

$

56,992



$

46,260


AFFO per common share

$

0.49



$

0.44


  • Portfolio occupancy was 97.8% at March 31, 2013, as compared to 97.9% at December 31, 2012, and 97.5% at March 31, 2012

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

  • Investments:
    • $42.6 million in property investments, including the acquisition of 17 properties with an aggregate 162,000 square feet of gross leasable area
  • Dispositions:
    • Two properties with net proceeds of $3.6 million producing $505,000 of gains on sales (not included in FFO)

Capital transactions for the quarter ended March 31, 2013:

  • Raised $164.0 million in net proceeds from the issuance of 5,041,537 common shares

April 2013 transactions:

  • Invested $116.4 million in property investments, including the acquisition of 46 properties with an aggregate 134,240 square feet of gross leasable area
  • Closed on public offering of $350 million of 3.30% senior unsecured notes due April 15, 2023

National Retail Properties announced an increase in 2013 FFO guidance from a range of $1.81 to $1.85 to a range of $1.85 to $1.89 per share before any impairment expense. 2013 AFFO is estimated to be $1.93 to $1.97 per share. The FFO guidance equates to net earnings before any gains or losses from the sale of real estate of $1.08 to $1.12 per share plus $0.77 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: "Very strong recurring FFO per share growth of 14% in the first quarter was driven by continued high occupancy, improved operating expense efficiencies and increased rental revenue from 2012's property acquisitions. Additionally, we have taken advantage of the strong capital markets environment by issuing both long term fixed rate debt and common equity at very attractive pricing which provides very accretive funding for additional acquisitions. All of this has allowed us to increase our 2013 FFO guidance to levels that are projected to produce approximately 7-8% growth in recurring FFO per share results for 2013."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of March 31, 2013, the company owned 1,636 properties in 47 states with a gross leasable area of approximately 19.3 million square feet.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on May 2, 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 these 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 ended March 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.

Adjusted Funds From Operations ("AFFO") is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO 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,



2013


2012

Income Statement Summary










Revenues:





Rental and earned income


$

88,598



$

73,074


Real estate expense reimbursement from tenants


2,977



2,849


Interest and other income from real estate transactions


384



707


Interest income on commercial mortgage residual interests


606



755




92,565



77,385







Retail operations:





Revenues




11,224


Operating expenses




(11,062)


Net




162







Operating expenses:





General and administrative


8,264



7,604


Real estate


3,954



4,576


Depreciation and amortization


23,755



17,765


Impairment – commercial mortgage residual interests valuation





Impairment losses


1,812



35




37,785



29,980







Other expenses (revenues):





Interest and other income


(334)



(358)


Interest expense


21,827



19,818




21,493



19,460







Income tax benefit (expense)


780



(115)


Equity in earnings of unconsolidated affiliate




150







Earnings from continuing operations


34,067



28,142







Earnings (loss) from discontinued operations


(164)



1,682







Earnings including noncontrolling interests


33,903



29,824







Loss (earnings) attributable to noncontrolling interests:





Continuing operations


219



14


Discontinued operations


(56)



(6)




163



8







Net earnings attributable to NNN


34,066



29,832


Series C preferred stock dividends




(1,979)


Series D preferred stock dividends


(4,762)




Excess of redemption value over carrying value of Series C

   preferred shares redeemed




(3,098)


Net earnings available to common stockholders


$

29,304



$

24,755












National Retail Properties, Inc.
(in thousands, except per share data)
(unaudited)



Quarter Ended



March 31,



2013


2012






Weighted average common shares outstanding:





Basic


113,491



104,841


Diluted


115,850



106,211







Net earnings per share available to common stockholders:





Basic:





Continuing operations


$

0.26



$

0.22


Discontinued operations




0.01


Net earnings


$

0.26



$

0.23







Diluted:





Continuing operations


$

0.25



$

0.22


Discontinued operations




0.01


Net earnings


$

0.25



$

0.23












 


National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)



Quarter Ended



March 31,



2013


2012

Funds From Operations (FFO) Reconciliation:





Net earnings available to common stockholders


$

29,304



$

24,755


Real estate depreciation and amortization:





Continuing operations


23,691



16,910


Discontinued operations


36



390


Joint venture real estate depreciation




44


Gain on disposition of real estate


(505)



(314)


Impairment losses - real estate


2,092



35


Total FFO adjustments


25,314



17,065


FFO available to common stockholders


$

54,618



$

41,820







FFO per share:





Basic


$

0.48



$

0.40


Diluted


$

0.47



$

0.39







Recurring Funds from Operations Reconciliation:





Net earnings available to common shareholders


$

29,304



$

24,755


Total FFO adjustments


25,314



17,065


FFO available to common shareholders


54,618



41,820







Excess of redemption value over carrying value of preferred

   share redemption




3,098


Impairment losses and other charges, net of recoveries


759



(28)


Total Recurring FFO adjustments


759



3,070


Recurring FFO available to common shareholders


$

55,377



$

44,890







Recurring FFO per share:





Basic


$

0.49



$

0.43


Diluted


$

0.48



$

0.42







National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)



Quarter Ended



March 31,



2013


2012

Adjusted Funds From Operations (AFFO) Reconciliation:





Net earnings available to common shareholders


$

29,304



$

24,755


Total FFO adjustments


25,314



17,065


Total Recurring FFO adjustments


759



3,070


Recurring FFO available to common stockholders


55,377



44,890







Straight line accrued rent


(777)



(795)


Net capital lease rent adjustment


400



402


Below market rent amortization


(625)



(635)


Stock based compensation expense


1,714



1,785


Capitalized interest expense


(219)



(431)


Convertible debt interest expense


1,122



1,044


Total AFFO adjustments


1,615



1,370


AFFO available to common stockholders


$

56,992



$

46,260







AFFO per share:





Basic


$

0.50



$

0.44


Diluted


$

0.49



$

0.44







Other Information:





Percentage rent


$

372



$

109


Amortization of debt costs


$

907



$

828


Scheduled debt principal amortization (excluding maturities)


$

260



$

288


Non-real estate depreciation expense


$

61



$

22


 

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 March 31, 2013 and generated
revenue, as discontinued operations.  The following is a summary of the earnings (loss)
from discontinued operations.








Quarter Ended



March 31,



2013


2012






Revenues:





Rental and earned income


$

539



$

2,122


Real estate expense reimbursement from tenants


72



104


Interest and other income from real estate transactions


5



2




616



2,228







Expenses:





General and administrative


2



2


Real estate


30



280


Depreciation and amortization


50



403


Impairment losses and other charges, net of recoveries


1,039



(28)


Interest


164



184




1,285



841







Gain on disposition of real estate


505



314


Income tax expense




(19)







Earnings (loss) from discontinued operations attributable to NNN


(164)



1,682


Earnings attributable to noncontrolling interests


(56)



(6)







Earnings (loss) from discontinued operations attributable to NNN


$

(220)



$

1,676


 

National Retail Properties, Inc.

(in thousands)

(unaudited)



March 31, 2013


December 31, 2012

Balance Sheet Summary










Assets:





Cash and cash equivalents


$

3,442



$

2,076


Receivables, net of allowance


3,260



3,112


Mortgages, notes and accrued interest receivable


26,884



27,770


Real estate portfolio:





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


3,801,517



3,788,053


Accounted for using the direct financing method


22,817



23,217


Real estate held for sale


23,492



23,537


Commercial mortgage residual interests


13,719



13,096


Accrued rental income, net of allowance


26,161



25,458


Debt costs, net of accumulated amortization


11,874



12,781


Other assets


68,624



68,926


Total assets


$

4,001,790



$

3,988,026







Liabilities:





Line of credit payable


$

59,400



$

174,200


Mortgages payable, including unamortized premium


10,328



10,602


Notes payable - convertible, net of unamortized discount


222,084



236,500


Notes payable, net of unamortized discount


1,165,897



1,165,662


Accrued interest payable


28,130



17,527


Other liabilities


73,191



85,950


Total liabilities


1,559,030



1,690,441







Stockholders' equity of NNN


2,441,623



2,296,285


Noncontrolling interests


1,137



1,300


Total equity


2,442,760



2,297,585







Total liabilities and equity


$

4,001,790



$

3,988,026







Common shares outstanding


116,891



111,555







Gross leasable area, Property Portfolio (square feet)


19,267



19,168







 

National Retail Properties, Inc.

Property Portfolio

 

Top 20 Lines of Trade







As of March 31,



Line of Trade


2013(1)


2012 (2)

1.


Convenience stores


19.8%


23.5%

2.


Restaurants - full service


10.7%


11.7%

3.


Automotive service


7.7%


5.3%

4.


Automotive parts


5.5%


6.2%

5.


Restaurants - limited service


5.2%


3.6%

6.


Theaters


4.8%


4.7%

7.


Sporting goods


4.0%


4.6%

8.


Health and fitness


3.6%


2.4%

9.


Wholesale clubs


3.4%


3.8%

10.


Home improvement


3.0%


2.1%

11.


Consumer electronics


3.0%


3.3%

12.


Drug stores


3.0%


3.3%

13.


Recreational vehicle dealers, parts and accessories


2.9%


2.6%

14.


Travel plazas


2.2%


2.4%

15.


Family entertainment centers


2.2%


2.0%

16.


Books


1.7%


1.9%

17.


Home furnishings


1.6%


0.8%

18.


Grocery


1.6%


1.9%

19.


General merchandise


1.5%


1.3%

20.


Financial services


1.3%


1.2%



Other


11.3%


11.4%



Total


100.0%


100.0%

 

 

Top 10 States





















State



% of Total(1)



State



% of Total(1)

1.

Texas



21.7%


6.

California



4.2%

2.

Florida



9.3%


7.

Indiana



4.2%

3.

Illinois



5.7%


8.

Pennsylvania



3.6%

4.

North Carolina



4.6%


9.

Virginia



3.6%

5.

Georgia



4.6%


10.

Ohio



3.3%












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

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

 

 

National Retail Properties, Inc.

Property Portfolio

 






Top Tenants (> 2.0%)







Properties


% of Total (1)

Susser


86


5.5%

Pantry


84


4.9%

Mister Car Wash


75


4.8%

7-Eleven


68


4.6%

AMC Theatre


15


4.0%

LA Fitness


16


3.5%

BJ's Wholesale Club


7


3.4%

Camping World


21


2.9%

Best Buy


19


2.9%

Gander Mountain


9


2.5%

Road Ranger


27


2.3%

Pull-A-Part


20


2.3%

Bloomin' Brands (Outback)


34


2.1%

Logan's Roadhouse


29


2.1%

Pep Boys


17


2.0%

 

 

Lease Expirations(2)



























% of
Total(1)


# of
Properties


Gross Leasable
Area (3)




% of
Total(1)


# of
Properties


Gross Leasable
Area (3)

2013

1.0%


21


324,000


2019


2.9%


46


766,000

2014

2.6%


40


583,000


2020


3.4%


96


907,000

2015

2.3%


34


638,000


2021


4.8%


98


867,000

2016

1.8%


30


539,000


2022


7.4%


93


1,071,000

2017

3.9%


46


1,008,000


2023


3.6%


45


892,000

2018

4.5%


60


1,254,000


Thereafter


61.8%


983


9,780,000















(1) Based on the annual base rent of $357,978,000, which is the annualized base rent for all leases in place as of March 31, 2013.

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

(3) Square feet.

 

 

SOURCE National Retail Properties, Inc.



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