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

ORLANDO, Fla., Aug. 1, 2013 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced its operating results for the quarter and six months ended June 30, 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


Six Months Ended


June 30,


June 30,


2013


2012


2013


2012


(in thousands, except per share data)

Revenues

$

96,121



$

81,206



$

188,599



$

158,439










Net earnings available to common stockholders

$

32,724



$

27,579



$

62,029



$

52,334


Net earnings per common share

$

0.27



$

0.26



$

0.52



$

0.49










FFO available to common stockholders

$

54,265



$

43,731



$

108,884



$

85,551


FFO per common share

$

0.45



$

0.41



$

0.92



$

0.80










Recurring FFO available to common stockholders

$

54,265



$

46,279



$

109,643



$

91,169


Recurring FFO per common share

$

0.45



$

0.43



$

0.93



$

0.85










AFFO available to common stockholders

$

57,381



$

48,957



$

114,373



$

95,218


AFFO per common share

$

0.47



$

0.46



$

0.97



$

0.89


 

  • Portfolio occupancy was  98.1% at June 30, 2013, as compared to 97.9% at December 31, 2012, and 98.2% at June 30, 2012

Investments and Dispositions for the quarter ended June 30, 2013:

  • Investments:
    • $437.7 million in property investments, including the acquisition of 209 properties with an aggregate 1,063,000 square feet of gross leasable area
  • Dispositions:
    • Seven properties with net proceeds of $13.0 million producing $2,150,000 of gains on sales, net of income tax and minority interest (not included in FFO)

Investments and Dispositions for the six months ended June 30, 2013:

  • Investments:
    • $480.3 million in property investments, including the acquisition of 226 properties with an aggregate 1,225,000 square feet of gross leasable area
  • Dispositions:
    • Nine properties with net proceeds of $16.6 million producing $2,655,000 of gains on sales, net of income tax and minority interest (not included in FFO)

Capital transactions for the quarter ended June 30, 2013:

  • Raised $90.6 million in net proceeds from the issuance of 2,391,321 common shares
  • Issued 11,500,000 depositary shares representing interests in its 5.70% Series E preferred stock generating net proceeds of $277.6 million
  • Issued $350 million principal amount of 3.30% senior unsecured notes due 2023 generating net proceeds of $344.3 million
  • Called $223.0 million principal amount of 5.125% convertible senior notes due 2028 which will be settled during the third quarter

Capital transactions for the six months ended June 30, 2013:

  • Raised $876.5 million of new long term capital at attractive pricing:
    • Raised $254.6 million in net proceeds from the issuance of 7,432,858 common shares
    • Raised $277.6 million in net proceeds from the issuance of 5.70% Series E preferred stock
    • Raised $344.3 million in net proceeds from the issuance of 3.30% senior unsecured notes due 2023
  • Called $223.0 million principal amount of 5.125% convertible senior notes due 2028 for redemption which will be settled during the third quarter
  • Paid off $174.2 million bank credit facility balance leaving full availability of $500 million

National Retail Properties also announced an increase in 2013 FFO guidance from a range of $1.85 to $1.89 to a range of $1.86 to $1.90 per share before any impairment expense. 2013 AFFO is estimated to be $1.94 to $1.98 per share. The FFO guidance equates to net earnings before any gains or losses from the sale of real estate of $1.02 to $1.09 per share, plus $0.81 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: "We are very pleased to have completed a number of attractive acquisitions during the second quarter which allowed us to increase our earnings guidance again to a level that produces approximately 8% growth in FFO per share over 2012's results. Additionally, we raised $877 million of very well-priced long-term capital during the first half which positions us well to fund future acquisitions. While this may modestly constrain 2013 per share results, securing this low cost capital provides us with increased visibility in per share growth for 2014."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of June 30, 2013, the company owned 1,838 properties in 47 states with a gross leasable area of approximately 20.2 million square feet.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on August 1, 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 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 ("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 June 30, 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 and any applicable taxes (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 earnings from discontinued operations. The company classified the revenues and expenses related to properties which generated revenue and were sold or generated revenue and were held for sale as of June 30, 2013, 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,



2013


2012


2013


2012

Income Statement Summary


















Revenues:









   Rental and earned income


$

92,013



$

77,340



$

180,524



$

150,302


   Real estate expense reimbursement from tenants


3,149



2,556



6,126



5,366


   Interest and other income from real estate transactions


371



594



754



1,300


   Interest income on commercial mortgage residual interests


588



716



1,195



1,471




96,121



81,206



188,599



158,439











Retail operations:









   Revenues




7,784





19,008


   Operating expenses




(7,480)





(18,542)


   Net




304





466











Operating expenses:









   General and administrative


9,412



7,025



17,676



14,630


   Real estate


4,301



4,040



8,218



8,549


   Depreciation and amortization


22,552



18,678



46,270



36,388


   Impairment losses and other charges, net of recoveries


160



2,548



1,972



2,583




36,425



32,291



74,136



62,150











Other expenses (revenues):









   Interest and other income


(377)



(361)



(711)



(720)


   Interest expense


23,394



19,569



45,221



39,387




23,017



19,208



44,510



38,667











Income tax benefit (expense)


(432)



(156)



2



(271)


Equity in earnings of unconsolidated affiliate




155





305











Earnings from continuing operations


36,247



30,010



69,955



58,122











Earnings from discontinued operations


1,359



3,466



1,554



5,177











Earnings including noncontrolling interests


37,606



33,476



71,509



63,299











Loss (earnings) attributable to noncontrolling interests:









   Continuing operations


40



32



259



46


   Discontinued operations


(160)



(3)



(216)



(8)




(120)



29



43



38











Net earnings attributable to NNN


37,486



33,505



71,552



63,337


Series C preferred stock dividends








(1,979)


Series D preferred stock dividends


(4,762)



(5,926)



(9,523)



(5,926)


Excess of redemption value over carrying value of Series C

   preferred shares redeemed








(3,098)


Net earnings available to common stockholders


$

32,724



$

27,579



$

62,029



$

52,334











 

 

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 












Quarter Ended


Six Months Ended



June 30,


June 30,



2013


2012


2013


2012










Weighted average common shares outstanding:









   Basic


117,813



105,992



115,664



105,418


   Diluted


120,866



107,459



118,404



106,844











Net earnings per share available to common stockholders:









  Basic:









   Continuing operations


$

0.27



$

0.23



$

0.52



$

0.44


   Discontinued operations


0.01



0.03



0.01



0.05


   Net earnings


$

0.28



$

0.26



$

0.53



$

0.49











Diluted:









   Continuing operations


$

0.26



$

0.23



$

0.51



$

0.44


   Discontinued operations


0.01



0.03



0.01



0.05


   Net earnings


$

0.27



$

0.26



$

0.52



$

0.49




















 


National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 



Quarter Ended


Six Months Ended



June 30,


June 30,



2013


2012


2013


2012

Funds From Operations (FFO) Reconciliation:









Net earnings available to common stockholders


$

32,724



$

27,579



$

62,029



$

52,334


Real estate depreciation and amortization:









  Continuing operations


22,508



17,825



46,162



34,681


  Discontinued operations


30



376



103



820


Joint venture real estate depreciation




44





88


Gain on disposition of real estate, net of tax and minority interest


(2,150)



(2,438)



(2,655)



(2,752)


Impairment losses - real estate


1,153



345



3,245



380


        Total FFO adjustments


21,541



16,152



46,855



33,217


FFO available to common stockholders


$

54,265



$

43,731



$

108,884



$

85,551











FFO per share:









  Basic


$

0.46



$

0.41



$

0.94



$

0.81


  Diluted


$

0.45



$

0.41



$

0.92



$

0.80











Recurring Funds from Operations Reconciliation:









Net earnings available to common shareholders


$

32,724



$

27,579



$

62,029



$

52,334


Total FFO adjustments


21,541



16,152



46,855



33,217


FFO available to common shareholders


54,265



43,731



108,884



85,551











Excess of redemption value over carrying value of preferred

   share redemption








3,098


Impairment losses and other charges, net of recoveries




2,548



759



2,520


        Total Recurring FFO adjustments




2,548



759



5,618


Recurring FFO available to common shareholders


$

54,265



$

46,279



$

109,643



$

91,169











Recurring FFO per share:









  Basic


$

0.46



$

0.44



$

0.95



$

0.86


  Diluted


$

0.45



$

0.43



$

0.93



$

0.85



















































































National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)





















Quarter Ended


Six Months Ended



June 30,


June 30,



2013


2012


2013



2012


Adjusted Funds From Operations (AFFO) Reconciliation:









   Net earnings available to common shareholders


$

32,724



$

27,579



$

62,029



$

52,334


   Total FFO adjustments


21,541



16,152



46,855



33,217


   Total Recurring FFO adjustments




2,548



759



5,618


   Recurring FFO available to common stockholders


54,265



46,279



109,643



91,169











  Straight line accrued rent


805



265



27



(529)


   Net capital lease rent adjustment


410



405



810



807


   Below market rent amortization


(622)



(602)



(1,247)



(1,237)


   Stock based compensation expense


1,894



1,983



3,608



3,768


   Capitalized interest expense


(321)



(436)



(540)



(867)


   Convertible debt interest expense


950



1,063



2,072



2,107


        Total AFFO adjustments


3,116



2,678



4,730



4,049


   AFFO available to common stockholders


$

57,381



$

48,957



$

114,373



$

95,218











AFFO per share:









   Basic


$

0.49



$

0.46



$

0.99



$

0.90


   Diluted


$

0.47



$

0.46



$

0.97



$

0.89











Other Information:









   Percentage rent


$

162



$

221



$

534



$

330


   Amortization of debt costs


$

900



$

828



$

1,806



$

1,656


   Scheduled debt principal amortization (excluding maturities)


$

265



$

391



$

526



$

679


   Non-real estate depreciation expense


$

61



$

18



$

123



$

40


   Real estate acquisition costs (included in general and
    administrative expense)


$

1,604



$

252



$

1,604



$

305


 

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












Quarter Ended


Six Months Ended



June 30,


June 30,



2013


2012


2013


2012










Revenues:









  Rental and earned income


$

523



$

2,113



$

1,149



$

4,347


  Real estate expense reimbursement from tenants


60



55



132



199


  Interest and other income from real estate transactions


31



4



36



6




614



2,172



1,317



4,552











Expenses:









  General and administrative


212



3



214



5


  Real estate


135



178



202



527


  Depreciation and amortization


61



389



148



847


  Impairment losses and other charges, net of recoveries


1,008



345



2,047



317


  Interest


145



185



308



369




1,561



1,100



2,919



2,065











Gain on disposition of real estate


2,669



2,438



3,174



2,752


Income tax expense


(363)



(44)



(18)



(62)











Earnings from discontinued operations attributable to

  NNN


1,359



3,466



1,554



5,177


Earnings attributable to noncontrolling interests


(160)



(3)



(216)



(8)


Earnings from discontinued operations attributable to

  NNN


$

1,199



$

3,463



$

1,338



$

5,169


 

National Retail Properties, Inc.

(in thousands)

(unaudited)

 



June 30,
2013


December 31,
2012

Balance Sheet Summary










Assets:





   Cash and cash equivalents


$

236,916



$

2,076


   Receivables, net of allowance


3,443



3,112


   Mortgages, notes and accrued interest receivable


26,203



27,770


   Real estate portfolio:





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


4,158,943



3,791,282


      Accounted for using the direct financing method


22,407



23,217


   Real estate held for sale


46,691



20,308


   Commercial mortgage residual interests


14,173



13,096


   Accrued rental income, net of allowance


25,226



25,458


   Debt costs, net of accumulated amortization


14,189



12,781


   Other assets


101,161



68,926


        Total assets


$

4,649,352



$

3,988,026







Liabilities:





   Line of credit payable


$



$

174,200


   Mortgages payable, including unamortized premium


10,048



10,602


   Notes payable - convertible, net of unamortized discount


222,944



236,500


   Notes payable, net of unamortized discount


1,513,587



1,165,662


   Accrued interest payable


17,277



17,527


   Other liabilities


87,925



85,950


        Total liabilities


1,851,781



1,690,441







Stockholders' equity of NNN


2,796,314



2,296,285


Noncontrolling interests


1,257



1,300


        Total equity


2,797,571



2,297,585







        Total liabilities and equity


$

4,649,352



$

3,988,026







Common shares outstanding


119,287



111,555







Gross leasable area, Property Portfolio (square feet)


20,218



19,168







 


National Retail Properties, Inc.

Property Portfolio

Top 20 Lines of Trade





As of June 30,



Line of Trade


2013(1)


2012 (2)

1.


Convenience stores


19.9%


22.6%

2.


Restaurants - full service


9.9%


11.4%

3.


Automotive service


7.6%


5.9%

4.


Automotive parts


5.2%


6.0%

5.


Restaurants - limited service


4.9%


3.6%

6.


Banks


4.7%


0.2%

7.


Theaters


4.4%


4.6%

8.


Health and fitness


3.7%


2.6%

9.


Sporting goods


3.7%


4.5%

10.


Wholesale clubs


3.1%


3.7%

11.


Recreational vehicle dealers, parts and accessories


2.8%


2.9%

12.


Drug stores


2.7%


3.2%

13.


Home improvement


2.7%


2.2%

14.


Consumer electronics


2.7%


3.2%

15.


Family entertainment centers


2.2%


2.1%

16.


Travel plazas


2.0%


2.3%

17.


Home furnishings


1.6%


1.5%

18.


Books


1.6%


1.9%

19.


Grocery


1.5%


1.8%

20.


General merchandise


1.5%


1.3%



Other


11.6%


12.5%



Total


100.0%


100.0%

 

Top 10 States


State



% of Total(1)



State



% of Total(1)

1.

Texas



21.1%


6.

Virginia



4.7%

2.

Florida



10.7%


7.

Indiana



3.9%

3.

Illinois



5.2%


8.

California



3.8%

4.

Georgia



5.0%


9.

Pennsylvania



3.3%

5.

North Carolina



4.7%


10.

Ohio



3.1%


(1) Based on the annualized base rent for all leases in place as of June 30, 2013.

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

 

National Retail Properties, Inc.

Property Portfolio


Top Tenants (> 2.0%)




Properties


% of Total (1)


Susser


86



5.1

%


Mister Car Wash


84



4.9

%


Pantry


84



4.5

%


SunTrust


139



4.5

%


7-Eleven


68



4.3

%


LA Fitness


18



3.7

%


AMC Theatre


15



3.6

%


BJ's Wholesale Club


7



3.1

%


Camping World


21



2.8

%


Best Buy


19



2.7

%


Gander Mountain


9



2.3

%


Mid-Atlantic Convenience Stores


38



2.2

%


Road Ranger


27



2.1

%


Pull-A-Part


20



2.1

%


Logan's Roadhouse


29



2.0

%

 

 

 

Lease Expirations(2)







% of
Total(1)


# of
Properties


Gross Leasable
Area (3)




% of
Total(1)


# of
Properties


Gross Leasable
Area (3)

2013


0.5

%


12



153,000



2019


2.6

%


46



778,000


2014


2.4

%


41



587,000



2020


3.1

%


96



907,000


2015


2.1

%


33



615,000



2021


4.6

%


99



912,000


2016


1.7

%


32



565,000



2022


6.8

%


92



1,060,000


2017


3.5

%


46



1,009,000



2023


3.1

%


50



879,000


2018


8.8

%


203



2,029,000



Thereafter


60.8

%


1,045



10,181,000











(1)

Based on the annual base rent of $390,754,000, which is the annualized base rent for all leases in place as of June 30, 2013.

(2)

As of June 30, 2013, the weighted average remaining lease term is 12 years.

(3)

Square feet.

 


SOURCE National Retail Properties, Inc.



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