Record Annual Results And Increased 2016 Guidance Announced By National Retail Properties, Inc.

Feb 11, 2016, 08:30 ET from National Retail Properties, Inc.

ORLANDO, Fla., Feb. 11, 2016 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and year ended December 31, 2015.  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,

2015

2014

2015

2014

(in thousands, except per share data)

Revenues

$

126,377

$

115,315

$

482,914

$

434,847

Net earnings available to common stockholders

$

33,612

$

44,898

$

162,402

$

155,167

Net earnings per common share

$

0.24

$

0.35

$

1.20

$

1.24

FFO available to common stockholders

$

67,319

$

72,202

$

289,193

$

260,902

FFO per common share

$

0.49

$

0.56

$

2.15

$

2.09

Recurring FFO available to common stockholders

$

76,661

$

70,410

$

299,171

$

259,366

Recurring FFO per common share

$

0.56

$

0.55

$

2.22

$

2.08

AFFO available to common stockholders

$

77,953

$

71,895

$

304,772

$

263,968

AFFO per common share

$

0.57

$

0.56

$

2.27

$

2.12

 

  • Portfolio occupancy was 99.1% at December 31, 2015 and September 30, 2015, as compared to 98.6% at December 31, 2014

2015 Highlights:

  • Increased annual Recurring FFO per common share 6.7%
  • Increased annual AFFO per common share 7.1%
  • Dividend yield of 4.3% at December 31, 2015
  • Dividends per common share increased to $1.71 marking the 26th consecutive year of annual dividend increases - making the company one of only four equity REITs and one of only 99 public companies with 26 or more consecutive annual dividend increases
  • Maintained high occupancy levels above 98.5% for the entire year with a weighted average remaining lease term of 11.4 years
  • Invested $726.3 million in 221 properties with an aggregate gross leasable area of approximately 2,706,000 square feet at an initial cash yield of 7.2%
  • Sold 19 properties for $39.1 million, producing $10.4 million of gains on sale, net of income tax and noncontrolling interest at a cap rate of 5.9%
  • Raised $723.6 million of new long-term capital at attractive pricing
    • Raised $328.2 million in net proceeds from the issuance of 8,770,117 common shares
    • Raised $395.4 million in net proceeds from the issuance of 4.00% senior unsecured notes due 2025
  • Paid off $150 million principal amount of 6.15% senior unsecured notes due 2015
  • Full $650 million availability on bank credit facility at December 31, 2015
  • 99.2% of properties are unencumbered with secured mortgage debt
  • Total shareholder return of 6.4% for 2015 exceeds peers, industry averages and general equity averages
  • Total average annual shareholder return of 14.8% over the past 25 years exceeds peers, industry averages and general equity averages

Selected Highlights for the quarter ended December 31, 2015:

  • Investments:
    • $159.5 million in property investments, including the acquisition of 31 properties with an aggregate gross leasable area of approximately 524,000 square feet at an initial cash yield of 7.3%
  • Dispositions:
    • Five properties sold with net proceeds of $5.5 million, producing $1.3 million of gains on sales, net of income tax at a cap rate of 8.4%
  • Long-term capital:
    • Raised $202.6 million in net proceeds from the issuance of 5,517,001 common shares
    • Raised $395.4 million in net proceeds from the issuance of 4.00% senior unsecured notes due 2025
  • Revoked taxable REIT subsidiary status for certain subsidiaries, which resulted in a one-time non-cash charge of $9.6 million, with projected future annual income tax expense savings

FFO guidance for 2016 was increased from a range of $2.28 to $2.34 to a range of $2.29 to $2.35 per share before any impairment expense. The 2016 AFFO is estimated to be $2.34 to $2.40 per share. The FFO guidance equates to net earnings before any gains or losses from the sale of real estate of $1.31 to $1.37 per share, plus $0.98 per share of expected real estate depreciation, amortization and impairments.  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: "2015 was another terrific year for National Retail Properties. For the past four years, we have grown recurring FFO per share by 9.0% per annum. Over the same timeframe, we have simultaneously strengthened our balance sheet and decreased our use of debt. With our fortress-like balance sheet and our differentiated ability to source retail properties that meet our underwriting and yield standards, I am optimistic that 2016 will be another stellar year for NNN."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of December 31, 2015, the company owned 2,257 properties in 47 states with a gross leasable area of approximately 25.0 million square feet and with a weighted average remaining lease term of 11.4 years.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on February 11, 2016, 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.  These statements generally are characterized by the use of terms such as "believe," "expect," "intend," "may," "estimated," or other similar words or expressions. 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 the company's tenants, the availability of capital, risks related to the company's 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 (the "Commission") 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 Commission.  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, Inc. 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 Commission for the quarter and year ended December 31, 2015.  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), any applicable taxes and noncontrolling interests 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.

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

Quarter Ended

Year Ended

December 31,

December 31,

2015

2014

2015

2014

Income Statement Summary

Revenues:

Rental and earned income

$

121,106

$

110,248

$

465,282

$

416,842

Real estate expense reimbursement from tenants

4,561

4,093

14,868

13,875

Interest and other income from real estate transactions

264

510

986

2,296

Interest income on commercial mortgage residual interests

446

464

1,778

1,834

126,377

115,315

482,914

434,847

Operating expenses:

General and administrative

9,657

7,712

34,736

32,518

Real estate

5,575

5,236

19,774

18,905

Depreciation and amortization

34,848

30,376

134,798

116,162

Impairment – commercial mortgage residual interests      valuation

51

531

256

Impairment losses and other charges, net of recoveries

708

198

4,420

760

50,839

43,522

194,259

168,601

Other expenses (revenues):

Interest and other income

(42)

(113)

(109)

(357)

Interest expense

24,548

21,830

90,008

85,510

Real estate acquisition costs

33

202

927

1,391

24,539

21,919

90,826

86,544

Income tax benefit (expense)

(9,827)

797

(10,318)

75

Earnings from continuing operations

41,172

50,671

187,511

179,777

Earnings from discontinued operations, net of income tax     expense

124

Earnings before gain on disposition of real estate, net of    income tax expense

41,172

50,671

187,511

179,901

Gain on disposition of real estate, net of income tax expense

1,305

3,103

10,450

11,269

Earnings including noncontrolling interests

42,477

53,774

197,961

191,170

Earnings from continuing operations attributable to    noncontrolling interests:

(6)

(17)

(125)

(569)

Net earnings attributable to NNN

42,471

53,757

197,836

190,601

Series D preferred stock dividends

(4,762)

(4,762)

(19,047)

(19,047)

Series E preferred stock dividends

(4,097)

(4,097)

(16,387)

(16,387)

Net earnings available to common stockholders

$

33,612

$

44,898

$

162,402

$

155,167

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

Quarter Ended

Year Ended

December 31,

December 31,

2015

2014

2015

2014

Weighted average common shares outstanding:

Basic

137,111

128,332

133,999

124,258

Diluted

137,623

128,813

134,489

124,710

Net earnings per share available to common stockholders:

Basic:

Continuing operations

$

0.24

$

0.35

$

1.21

$

1.24

Net earnings

$

0.24

$

0.35

$

1.21

$

1.24

Diluted:

Continuing operations

$

0.24

$

0.35

$

1.20

$

1.24

Net earnings

$

0.24

$

0.35

$

1.20

$

1.24

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

Quarter Ended

Year Ended

December 31,

December 31,

2015

2014

2015

2014

Funds From Operations (FFO) Reconciliation:

Net earnings available to common stockholders

$

33,612

$

44,898

$

162,402

$

155,167

Real estate depreciation and amortization:

Continuing operations

34,754

30,284

134,380

115,888

Discontinued operations

3

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

(1,305)

(3,103)

(10,397)

(10,904)

Impairment losses – depreciable real estate, net of recoveries and income tax

258

123

2,808

748

Total FFO adjustments

33,707

27,304

126,791

105,735

FFO available to common stockholders

$

67,319

$

72,202

$

289,193

$

260,902

FFO per common share:

Basic

$

0.49

$

0.56

$

2.16

$

2.10

Diluted

$

0.49

$

0.56

$

2.15

$

2.09

Recurring Funds from Operations Reconciliation:

Net earnings available to common stockholders

$

33,612

$

44,898

$

162,402

$

155,167

Total FFO adjustments

33,707

27,304

126,791

105,735

FFO available to common stockholders

67,319

72,202

289,193

260,902

Impairment – commercial mortgage residual interests    valuation

51

531

256

Impairment losses – non-depreciable real estate

156

Income tax benefit

(316)

(1,792)

(316)

(1,792)

Taxable REIT subsidiary revocation election

9,607

9,607

Total Recurring FFO adjustments

9,342

(1,792)

9,978

(1,536)

Recurring FFO available to common stockholders

$

76,661

$

70,410

$

299,171

$

259,366

Recurring FFO per common share:

Basic

$

0.56

$

0.55

$

2.23

$

2.09

Diluted

$

0.56

$

0.55

$

2.22

$

2.08

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

Quarter Ended

Year Ended

December 31,

December 31,

2015

2014

2015

2014

Adjusted Funds From Operations (AFFO) Reconciliation:

Net earnings available to common stockholders

$

33,612

$

44,898

$

162,402

$

155,167

Total FFO adjustments

33,707

27,304

126,791

105,735

Total Recurring FFO adjustments

9,342

(1,792)

9,978

(1,536)

Recurring FFO available to common stockholders

76,661

70,410

299,171

259,366

Straight-line accrued rent

(529)

(318)

(368)

(1,731)

Net capital lease rent adjustment

331

356

1,277

1,369

Below market rent amortization

(671)

(692)

(3,046)

(2,631)

Stock based compensation expense

2,461

2,450

9,671

9,224

Capitalized interest expense

(750)

(311)

(2,383)

(1,629)

Loss on sale of mortgage receivable

450

450

Total AFFO adjustments

1,292

1,485

5,601

4,602

AFFO available to common stockholders

$

77,953

$

71,895

$

304,772

$

263,968

AFFO per common share:

Basic

$

0.57

$

0.56

$

2.27

$

2.12

Diluted

$

0.57

$

0.56

$

2.27

$

2.12

Other Information:

Percentage rent

$

802

$

585

$

1,430

$

1,074

Amortization of debt costs

$

773

$

716

$

2,915

$

2,782

Scheduled debt principal amortization (excluding maturities)

$

378

$

326

$

1,587

$

1,151

Non-real estate depreciation expense

$

77

$

98

$

418

$

297

 

National Retail Properties, Inc.

(in thousands)

(unaudited)

December 31, 2015

December 31, 2014

Balance Sheet Summary

Assets:

Cash and cash equivalents

$

14,260

$

10,604

Receivables, net of allowance

3,344

3,013

Mortgages, notes and accrued interest receivable, net of       allowance

8,688

11,075

Real estate:

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

5,256,274

4,685,001

Accounted for using the direct financing method

14,518

16,974

Real estate held for sale

32,666

38,074

Commercial mortgage residual interests

11,115

11,626

Accrued rental income, net of allowance

25,529

25,659

Debt costs, net of accumulated amortization

4,003

5,290

Other assets

89,647

108,235

Total assets

$

5,460,044

$

4,915,551

Liabilities:

Mortgages payable, including unamortized premium and net        of unamortized debt cost

23,964

26,182

Notes payable, net of unamortized discount and unamortized        debt costs

1,951,980

1,703,709

Accrued interest payable

20,113

17,396

Other liabilities

121,594

85,172

Total liabilities

2,117,651

1,832,459

Stockholders' equity of NNN

3,342,134

3,082,515

Noncontrolling interests

259

577

Total equity

3,342,393

3,083,092

Total liabilities and equity

$

5,460,044

$

4,915,551

Common shares outstanding

141,008

132,010

Gross leasable area, Property Portfolio (square feet)

24,964

22,479

 

National Retail Properties, Inc

Debt Summary

As of December 31, 2015

(in thousands)

(unaudited)

Unsecured Debt

Principal

Principal, Net of Unamortized Discount

Stated Rate

Effective Rate

Maturity Date

Line of credit payable

$

$

L + 92.5 bps

January 2019

Unsecured notes payable:

2017

250,000

249,796

6.875%

6.924%

October 2017

2021

300,000

297,344

5.500%

5.689%

July 2021

2022

325,000

321,452

3.800%

3.985%

October 2022

2023

350,000

348,025

3.300%

3.388%

April 2023

2024

350,000

349,389

3.900%

3.924%

June 2024

2025

400,000

399,052

4.000%

4.029%

November 2025

Total

1,975,000

1,965,058

Total unsecured debt (1)

$

1,975,000

$

1,965,058

Debt costs

(19,100)

Accumulated amortization

6,022

Debt costs, net of accumulated amortization

(13,078)

Notes payable, net of unamortized discount and unamortized debt costs

$

1,951,980

(1) Unsecured notes payable have a weighted average interest rate of 4.5% and a weighted average maturity of 7 years

 

Mortgages Payable

Principal Balance

Interest Rate

Maturity Date

Mortgage(1)

$

14,555

5.230%

July 2023

Mortgage(1)

5,890

5.750%

April 2016

Mortgage(1)

2,804

6.400%

February 2017

Mortgage

848

6.900%

January 2017

24,097

(2)

Debt costs

(226)

Accumulated amortization

93

Debt costs, net of accumulated amortization

(133)

Mortgages payable, including unamortized premium and net of unamortized debt costs

$

23,964

(1) Includes unamortized premium

(2) Mortgages payable have a weighted average interest rate of 5.4% and a weighted average maturity of 5 years

 

National Retail Properties, Inc.

Property Portfolio

Top 20 Lines of Trade

As of December 31,

Line of Trade

2015(1)

2014(2)

1.

Convenience stores

16.7%

18.0%

2.

Restaurants - full service

11.0%

9.1%

3.

Restaurants - limited service

7.2%

6.5%

4.

Automotive service

7.0%

7.2%

5.

Family entertainment centers

5.6%

5.1%

6.

Theaters

5.2%

5.2%

7.

Automotive parts

4.2%

4.7%

8.

Health and fitness

3.8%

3.9%

9.

Recreational vehicle dealers, parts and accessories

3.6%

3.1%

10.

Banks

3.4%

3.7%

11.

Sporting goods

3.3%

3.5%

12.

Wholesale clubs

2.6%

2.9%

13.

Drug stores

2.3%

2.5%

14.

Consumer electronics

2.2%

2.4%

15.

Medical service providers

2.2%

2.0%

16.

Travel plazas

2.1%

2.3%

17.

General merchandise

1.9%

1.6%

18.

Home furnishings

1.9%

1.9%

19.

Home improvement

1.8%

2.1%

20.

Grocery

1.7%

1.6%

Other

10.3%

10.7%

Total

100.0%

100.0%

 

Top 10 States

State

% of Total(1)

State

% of Total(1)

1.

Texas

19.7%

6.

Georgia

4.5%

2.

Florida

9.3%

7.

Virginia

3.8%

3.

Ohio

5.2%

8.

Indiana

3.8%

4.

North Carolina

5.2%

9.

Alabama

3.2%

5.

Illinois

4.9%

10.

Tennessee

3.0%

(1)  Based on the annualized base rent for all leases in place as of December 31, 2015.

(2)  Based on the annualized base rent for all leases in place as of December 31, 2014.

 

National Retail Properties, Inc.

Property Portfolio

Top Tenants (>2.0%)

Properties

% of Total (1)

Sunoco

125

5.9%

Mister Car Wash

90

4.4%

LA Fitness

25

3.7%

Couche-Tard (Pantry)

86

3.6%

Camping World

32

3.6%

7-Eleven

77

3.5%

SunTrust

121

3.3%

AMC Theatre

16

3.0%

Chuck E. Cheese's

53

2.7%

BJ's Wholesale Club

7

2.6%

Frisch's Restaurant

74

2.4%

Gander Mountain

12

2.4%

Bell American (Taco Bell)

78

2.2%

Best Buy

19

2.1%

 

Lease Expirations(2)

% of Total(1)

# of Properties

Gross Leasable Area (3)

% of Total(1)

# of Properties

Gross Leasable Area (3)

2016

1.0%

27

363,000

2022

5.6%

96

1,143,000

2017

3.0%

52

1,084,000

2023

2.5%

55

903,000

2018

6.3%

183

1,645,000

2024

2.6%

49

767,000

2019

3.4%

80

1,109,000

2025

5.3%

132

996,000

2020

4.3%

137

1,550,000

2026

5.8%

162

1,624,000

2021

4.7%

116

1,271,000

Thereafter

55.5%

1,140

12,089,000

(1)  Based on the annual base rent of $487,410,000, which is the annualized base rent for all leases in place as of        December 31, 2015.

(2)  As of December 31, 2015, the weighted average remaining lease term is 11.4 years.

(3)  Square feet.

 

 

 

SOURCE National Retail Properties, Inc.



RELATED LINKS

http://www.nnnreit.com