Second Quarter 2012 Operating Results Announced By National Retail Properties, Inc.

ORLANDO, Fla., Aug. 2, 2012 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and six months ended June 30, 2012.  Highlights include:

Operating Results:

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

 


Quarter Ended


Six Months Ended


June 30,


June 30,


2012


2011


2012


2011


(in thousands, except per share data)

Revenues

$

82,751



$

61,865



$

161,350



$

123,336










Net earnings available to common stockholders

$

27,579



$

19,607



$

52,334



$

38,731


Net earnings per common share (diluted)

$

0.26



$

0.23



$

0.49



$

0.46










FFO available to common stockholders

$

43,731



$

32,180



$

85,551



$

63,573


FFO per common share (diluted)

$

0.41



$

0.38



$

0.80



$

0.75










FFO excluding impairment losses

$

46,449



$

32,447



$

88,269



$

63,969


FFO excluding impairment losses per share (diluted)

$

0.43



$

0.38



$

0.83



$

0.76










AFFO available to common stockholders

$

48,957



$

35,598



$

95,218



$

70,115


AFFO per common share (diluted)

$

0.46



$

0.42



$

0.89



$

0.83


 

  • Excluding a $3.1 million charge for the redemption of our 7.375% Series C Preferred Stock in the first quarter and all impairment charges, FFO for the six months ended June 30, 2012, was $0.86 per share
  • Portfolio occupancy was 98.2% at June 30, 2012, as compared to 97.4% at December 31, 2011, and 96.9% at June 30, 2011

Investments and Dispositions for the quarter ended June 30, 2012:

  • Investments:
    • $115 million in the Property Portfolio, including acquiring 27 properties with an aggregate 880,000 square feet of gross leasable area
  • Dispositions:
    • Seven properties with net proceeds of $6.6 million

Investments and Dispositions for the six months ended June 30, 2012:

  • Investments:
    • $312.9 million in the Property Portfolio, including acquiring 94 properties with an aggregate 1,473,000 square feet of gross leasable area
  • Dispositions:
    • 10 properties with net proceeds of $11.7 million

Capital transactions for the quarter ended June 30, 2012:

  • Issued 848,639 common shares generating $22.4 million of net proceeds

Craig Macnab, Chief Executive Officer, commented: "We were very pleased to have recently announced an increase in our quarterly dividend which will make this the 23rd consecutive year that we have raised our annual dividend – this is a long term track record that less than a handful of REITs can claim. Our strong consistent cash dividends have been an important part of the 14.0% annual total shareholder return NNN has produced over the past 20 years. Our portfolio and balance sheet remain in very good condition and 2012 remains on track to produce 8% FFO per share growth."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of June 30, 2012, the company owned 1,506 properties in 47 states with a gross leasable area of approximately 17.8 million square feet.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on August 2, 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 June 30, 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


Six Months Ended



June 30,


June 30,



2012


2011


2012


2011

Income Statement Summary


















Revenues:









Rental and earned income


$

78,766



$

58,403



$

153,072



$

116,206


Real estate expense reimbursement from tenants


2,505



2,142



5,337



4,422


Interest and other income from real estate transactions


764



543



1,470



1,164


Interest income on commercial mortgage residual interests


716



777



1,471



1,544




82,751



61,865



161,350



123,336











Retail operations:









Revenues


7,784



12,450



19,008



21,300


Operating expenses


(7,481)



(11,760)



(18,543)



(20,612)


Net


303



690



465



688











Operating expenses:









General and administrative


7,024



6,568



14,627



13,226


Real estate


4,025



3,919



8,597



7,573


Depreciation and amortization


19,032



13,765



37,140



27,184


Impairment – commercial mortgage residual interests valuation


2,718



267



2,718



396




32,799



24,519



63,082



48,379











Other expenses (revenues):









Interest and other income


(361)



(283)



(719)



(625)


Interest expense


19,394



17,512



39,039



35,174




19,033



17,229



38,320



34,549











Income tax expense


(140)



(210)



(236)



(191)


Equity in earnings of unconsolidated affiliate


155



104



305



213











Earnings from continuing operations


31,237



20,701



60,482



41,118











Earnings from discontinued operations


2,239



568



2,817



1,005











Earnings including noncontrolling interests


33,476



21,269



63,299



42,123











Loss (earnings) attributable to noncontrolling interests:









Continuing operations


34



67



55



93


Discontinued operations


(5)



(33)



(17)



(93)




29



34



38













Net earnings attributable to NNN


33,505



21,303



63,337



42,123


Series C preferred stock dividends




(1,696)



(1,979)



(3,392)


Series D preferred stock dividends


(5,926)





(5,926)




Excess of redemption value over carrying value of preferred

   shares redeemed






(3,098)




Net earnings available to common stockholders


$

27,579



$

19,607



$

52,334



$

38,731




















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












Quarter Ended

June 30,


Six Months Ended

June 30,



2012


2011


2012


2011










Weighted average common shares outstanding:









Basic


105,992



84,410



105,418



83,772


Diluted


107,459



84,726



106,844



84,271











Net earnings per share available to common stockholders:









Basic:









Continuing operations


$

0.24



$

0.23



$

0.47



$

0.46


Discontinued operations


0.02





0.02




Net earnings


$

0.26



$

0.23



$

0.49



$

0.46











Diluted:









Continuing operations


$

0.24



$

0.23



$

0.46



$

0.46


Discontinued operations


0.02





0.03




Net earnings


$

0.26



$

0.23



$

0.49



$

0.46




















 

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 








Quarter Ended


Six Months Ended



June 30,


June 30,



2012


2011


2012


2011

Funds From Operations (FFO) Reconciliation:









Net earnings available to common stockholders


$

27,579



$

19,607



$

52,334



$

38,731


Real estate depreciation and amortization:









Continuing operations


18,191



12,421



35,454



24,620


Discontinued operations


10



109



47



220


Joint venture real estate depreciation


44



44



88



88


Gain on disposition of real estate


(2,438)



(1)



(2,752)



(86)


Impairment losses - real estate


345





380




Total FFO adjustments


16,152



12,573



33,217



24,842


FFO available to common stockholders


$

43,731



$

32,180



$

85,551



$

63,573











FFO per share:









Basic


$

0.41



$

0.38



$

0.81



$

0.76


Diluted


$

0.41



$

0.38



$

0.80



$

0.75











Adjusted Funds From Operations (AFFO) Reconciliation:









Net earnings available to common stockholders


$

27,579



$

19,607



$

52,334



$

38,731


Total FFO adjustments


16,152



12,573



33,217



24,842


FFO available to common stockholders


43,731



32,180



85,551



63,573











Straight-line accrued rent


265



47



(529)



51


Net capital lease rent adjustment


405



388



807



802


Below market rent amortization


(602)



(116)



(1,237)



(213)


Stock based compensation expense


1,983



1,448



3,768



2,841


Capitalized interest expense


(436)



(246)



(867)



(569)


Convertible debt interest expense


1,063



1,630



2,107



3,234


Impairment losses and other charges, net of recoveries


2,548



267



2,520



396


Excess of redemption value over carrying value of preferred

     share redemption






3,098




Total AFFO adjustments


5,226



3,418



9,667



6,542


AFFO available to common stockholders


$

48,957



$

35,598



$

95,218



$

70,115











AFFO per share:









Basic


$

0.46



$

0.42



$

0.90



$

0.84


Diluted


$

0.46



$

0.42



$

0.89



$

0.83











Other Information:









Percentage rent


$

221



$

132



$

330



$

245


Amortization of debt costs


$

828



$

1,304



$

1,656



$

2,480


Scheduled debt principal amortization (excluding maturities)


$

391



$

269



$

679



$

541


Non-real estate depreciation expense


$

18



$

46



$

40



$

95


 

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 June 30, 2012, as discontinued operations.  The following is a summary of the earnings from discontinued operations.












Quarter Ended


Six Months Ended



June 30,


June 30,



2012


2011


2012


2011










Revenues:









Rental and earned income


$

687



$

1,450



$

1,575



$

2,202


Real estate expense reimbursement from tenants


106



8



228



321


Interest and other income from real estate transactions


4





36



39




797



1,458



1,839



2,562











Expenses:









General and administrative


4



3



7



7


Real estate


192



346



478



621


Depreciation and amortization


35



132



95



263


Impairment losses - real estate


345





380




Interest


360



340



717



681




936



821



1,677



1,572











Gain on disposition of real estate


2,438



1



2,752



132


Income tax expense


(60)



(70)



(97)



(117)











Earnings from discontinued operations including noncontrolling interests


2,239



568



2,817



1,005


Earnings attributable to noncontrolling interests


(5)



(33)



(17)



(93)











Earnings from discontinued operations attributable to NNN


$

2,234



$

535



$

2,800



$

912


 

National Retail Properties, Inc.
(in thousands)
(unaudited)








June 30,
2012


December 31,
2011

Balance Sheet Summary










Assets:





Cash and cash equivalents


$

2,907



$

2,082


Receivables, net of allowance


1,456



2,149


Investment in unconsolidated affiliate


4,283



4,358


Mortgages, notes and accrued interest receivable


36,740



33,428


Real estate:





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


3,485,819



3,225,119


Accounted for using the direct financing method


24,954



26,518


Real estate held for sale


40,351



36,105


Commercial mortgage residual interests


12,395



15,299


Accrued rental income, net of allowance


25,330



25,187


Other assets


69,755



64,184


Total assets


$

3,703,990



$

3,434,429







Liabilities:





Line of credit payable


$

142,600



$

65,600


Mortgages payable, net of unamortized premium


29,341



23,171


Notes payable - convertible, net of unamortized discount


357,479



355,371


Notes payable, net of unamortized discount


845,237



894,967


Other liabilities


101,923



91,444


Total liabilities


1,476,580



1,430,553







Stockholders' equity of NNN


2,226,070



2,002,498


Noncontrolling interests


1,340



1,378


Total equity


2,227,410



2,003,876







Total liabilities and equity


$

3,703,990



$

3,434,429







Common shares outstanding


107,449



104,755







Gross leasable area, Property Portfolio (square feet)


17,798



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."

 



June 30,
2012


December 31,
2011






Assets:





Cash and cash equivalents


$

435



$

307


Receivables


200



200


Real estate


70,319



70,911


Other assets


342



402




$

71,296



$

71,820


Liabilities:





Notes payable


$

42,700



$

42,700


Other liabilities


45



65


Total liabilities


42,745



42,765







Members' equity


28,551



29,055







Total liabilities and equity


$

71,296



$

71,820


 


Quarter Ended


Six Months Ended


June 30,


June 30,


2012


2011


2012


2011









Revenues:








Rental income

$

1,565



$

1,565



$

3,130



$

3,130










Expenses:








General and administrative

81



112



187



185


Real estate

4



5



8



10


Depreciation and amortization

323



369



646



737


Interest

189



452



382



907



597



938



1,223



1,839










Net earnings

$

968



$

627



$

1,907



$

1,291


 

 

National Retail Properties, Inc.

Property Portfolio

 

Top 20 Lines of Trade







As of June 30,



Line of Trade


2012(1)


2011 (2)

1.


Convenience stores


22.6

%


22.9

%

2.


Restaurants - full service


11.4

%


10.6

%

3.


Automotive parts


6.0

%


7.6

%

4.


Automotive service


5.9

%


5.3

%

5.


Theaters


4.6

%


5.7

%

6.


Sporting goods


4.5

%


4.5

%

7.


Wholesale clubs


3.7

%


0.4

%

8.


Restaurants - limited service


3.6

%


4.2

%

9.


Drug Stores


3.2

%


3.8

%

10.


Consumer electronics


3.2

%


2.5

%

11.


Recreational vehicle dealers, parts and accessories


2.9

%


1.3

%

12.


Health and fitness


2.6

%


2.9

%

13.


Travel plazas


2.3

%


2.2

%

14.


Home improvement


2.2

%


1.0

%

15.


Family entertainment centers


2.1

%


1.9

%

16.


Books


1.9

%


2.9

%

17.


Grocery


1.8

%


2.5

%

18.


Home furnishings


1.5

%


1.0

%

19.


Office supplies


1.3

%


2.2

%

20.


General merchandise


1.3

%


1.2

%



Other


11.4

%


13.4

%



Total


100.0

%


100.0

%

 

Top 10 States













State



% of Total(1)



State



% of Total(1)

1.

Texas



22.2

%


6.

Ohio



3.6

%

2.

Florida



9.3

%


7.

California



3.6

%

3.

Illinois



5.4

%


8.

Virginia



3.4

%

4.

North Carolina



5.3

%


9.

Indiana



3.3

%

5.

Georgia



4.1

%


10.

Pennsylvania



3.2

%














 

(1) Based on the annualized base rent for all leases in place as of June 30, 2012.

 

(2) Based on the annualized base rent for all leases in place as of June 30, 2011.


National Retail Properties, Inc.
Property Portfolio

Top Tenants










Properties


% of Total (1)


Pantry


95


6.2%


Susser


86


5.9%


CL Thomas


66


5.0%


AMC Theatre


15


4.0%


BJ's Wholesale Club


7


3.7%


Mister Car Wash


53


3.3%


Best Buy


19


3.1%


Camping World


19


2.9%


Road Ranger


34


2.8%


Gander Mountain


9


2.6%


LA Fitness


10


2.5%


Pull-A-Part


20


2.5%


OSI Restaurant Partners


34


2.4%


Pep Boys


17


2.2%


Logan's Roadhouse


30


2.1%

 

Lease Expirations(2)



% of
Total(1)


# of
Properties


Gross Leasable
Area (3)




% of
Total(1)


# of
Properties


Gross Leasable
Area (3)

2012


0.7%


18


333,000



2018


3.6%


43


933,000


2013


2.8%


38


764,000



2019


3.0%


42


704,000


2014


3.0%


43


587,000



2020


3.6%


92


867,000


2015


2.8%


69


948,000



2021


5.2%


91


791,000


2016


2.1%


39


619,000



2022


8.8%


102


1,041,000


2017


3.9%


43


973,000



Thereafter


60.5%


851


8,771,000



















 

(1) Based on the annual base rent of $325,984,000, which is the annualized base rent for all leases in place as of June 30, 2012.

(2) As of June 30, 2012, the weighted average remaining lease term is 12 years.

(3) Square feet.

 

 

 

SOURCE National Retail Properties, Inc.



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