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

Aug 02, 2012, 08:30 ET from 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.



RELATED LINKS

http://www.nnnreit.com