Third Quarter 2012 Operating Results Announced by National Retail Properties, Inc.

Nov 05, 2012, 08:30 ET from National Retail Properties, Inc.

ORLANDO, Fla., Nov. 5, 2012 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and nine months ended September 30, 2012.  Highlights include:

Operating Results:

  • Revenues and net earnings, FFO, recurring FFO and AFFO available to common stockholders and diluted per share amounts:

Quarter Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

(in thousands, except per share data)

Revenues

$

85,013

$

66,626

$

244,856

$

188,729

Net earnings available to common stockholders

$

33,253

$

20,936

$

85,588

$

59,666

Net earnings per common share

$

0.30

$

0.24

$

0.79

$

0.69

FFO available to common stockholders

$

57,044

$

34,623

$

142,595

$

98,196

FFO per common share

$

0.52

$

0.39

$

1.32

$

1.15

Recurring FFO available to common stockholders

$

47,409

$

35,238

$

138,578

$

99,207

Recurring FFO per common share

$

0.43

$

0.40

$

1.28

$

1.16

AFFO available to common stockholders

$

51,365

$

37,972

$

146,582

$

108,086

AFFO per common share

$

0.47

$

0.43

$

1.36

$

1.27

  • Portfolio occupancy was 97.9% at September 30, 2012, as compared to 97.4% at December 31, 2011, and 97.2% at September 30, 2011

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

  • Investments:
    • $139.6 million in the Property Portfolio, including acquiring 30 properties with an aggregate 575,000 square feet of gross leasable area
  • Dispositions:
    • 8 properties with net proceeds of $20.3 million

Investments and Dispositions for the nine months ended September 30, 2012:

  • Investments:
    • $452.6 million in the Property Portfolio, including acquiring 124 properties with an aggregate 2,048,000 square feet of gross leasable area
  • Dispositions:
    • 18 properties with net proceeds of $32.1 million

Capital transactions for the quarter ended September 30, 2012:

  • Issued 1,969,203 common shares generating $58.0 million of net proceeds
  • Issued $325.0 million principal amount of 3.80% senior unsecured notes due 2022 generating net proceeds of $317.1 million received on August 14, 2012
  • Repayment of $18.2 million of maturing 6.90% mortgage
  • From October 1, 2012 through November 2, 2012 approximately $100.6 million principal amount of the 3.95% convertible senior notes due 2026 had been surrendered for conversion, leaving approximately $38.1 million principal amount of the 3.95% notes outstanding

National Retail Properties announced an increase in 2012 FFO guidance from a range of $1.67 to $1.72 to a range of  $1.71 to $1.73 per share excluding first quarter's $3.1 million preferred stock redemption charge, third quarter's $7.7 million income tax benefit and $2.0 million of non-recurring joint venture income and excluding any impairment charges. 2012 AFFO is estimated to be $1.81 to $1.83 per share.  The change in guidance is primarily related to an increase in projected volume and timing of property acquisitions and recent capital markets activity.  This FFO guidance equates to net earnings before any gains or losses from the sale of real estate, impairment charges and other items noted above of $1.03 to $1.05 per share plus $0.68 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.

The Company also announced 2013 FFO guidance of $1.77 to $1.81 per share and estimated 2013 AFFO to be $1.86 to $1.90 per share. This FFO guidance equates to net earnings before any gains or losses from the sale of real estate and impairment charges of $1.07 to $1.11 per share plus $0.70 per share of expected real estate related depreciation and amortization.  The guidance is based on current plans, assumptions, and estimates and is subject to the risks and uncertainties more fully described in this press release and the company's reports filed with the Securities and Exchange Commission.

National Retail Properties, Inc. also announced that its 15% owned joint venture NNN Retail Properties Fund I, LLC sold all 21 convenience stores owned by the joint venture in the third quarter of 2012 for approximately $87.5 million. The investors' $33.3 million total equity investment produced approximately $61.6 million of total cash distributions from operations and net sale proceeds since the joint venture was formed in September 2007.

Craig Macnab, Chief Executive Officer, commented: "As evidenced by our acquisition volume thus far this year, our team continues to identify attractive investment opportunities which enable us to deploy capital at initial yields well in excess of our cost of capital and drive very accretive results. These property acquisitions also further diversify our net lease retail portfolio. We are pleased with 2012's projected 9.6% increase in FFO per share results and the opportunity to continue the growth into 2013."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of September 30, 2012, the company owned 1,530 properties in 47 states with a gross leasable area of approximately 18.3 million square feet.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on November 5, 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 ended September 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 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

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Income Statement Summary

Revenues:

Rental and earned income

$

81,261

$

63,026

$

232,843

$

178,011

Real estate expense reimbursement from tenants

2,647

2,437

7,967

6,859

Interest and other income from real estate transactions

512

381

1,982

1,534

Interest income on commercial mortgage residual interests

593

782

2,064

2,325

85,013

66,626

244,856

188,729

Retail operations:

Revenues

12,402

19,008

33,702

Operating expenses

(11,563)

(18,543)

(32,175)

Net

839

465

1,527

Operating expenses:

General and administrative

8,652

7,036

23,278

20,261

Real estate

3,878

4,434

12,437

11,983

Depreciation and amortization

17,465

14,777

54,253

41,707

Impairment – commercial mortgage residual interests

   valuation

2,718

396

Impairment losses and other charges

7,261

7,296

37,256

26,247

99,982

74,347

Other expenses (revenues):

Interest and other income

(1,194)

(457)

(1,913)

(1,083)

Interest expense

22,866

20,086

61,905

55,260

21,672

19,629

59,992

54,177

Income tax benefit (expense)

7,426

(68)

7,190

(258)

Equity in earnings of unconsolidated affiliate

3,769

109

4,074

321

Earnings from continuing operations

37,280

21,630

96,611

61,795

Earnings from discontinued operations

710

978

4,679

2,936

Earnings including noncontrolling interests

37,990

22,608

101,290

64,731

Loss (earnings) attributable to noncontrolling interests:

Continuing operations

32

20

87

113

Discontinued operations

(7)

4

(24)

(89)

25

24

63

24

Net earnings attributable to NNN

38,015

22,632

101,353

64,755

Series C preferred stock dividends

(1,696)

(1,979)

(5,089)

Series D preferred stock dividends

(4,762)

(10,688)

Excess of redemption value over carrying value of preferred

   shares redeemed

(3,098)

Net earnings available to common stockholders

$

33,253

$

20,936

$

85,588

$

59,666

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

September 30,

September 30,

2012

2011

2012

2011

Weighted average common shares outstanding:

Basic

107,488

87,109

106,140

84,897

Diluted

110,340

87,788

108,092

85,439

Net earnings per share available to common stockholders:

Basic:

Continuing operations

$

0.30

$

0.23

$

0.76

$

0.67

Discontinued operations

0.01

0.01

0.04

0.03

Net earnings

$

0.31

$

0.24

$

0.80

$

0.70

Diluted:

Continuing operations

$

0.29

$

0.23

$

0.75

$

0.66

Discontinued operations

0.01

0.01

0.04

0.03

Net earnings

$

0.30

$

0.24

$

0.79

$

0.69

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

Quarter Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Funds From Operations (FFO) Reconciliation:

Net earnings available to common stockholders

$

33,253

$

20,936

$

85,588

$

59,666

Real estate depreciation and amortization:

Continuing operations

19,086

13,426

54,186

37,792

Discontinued operations

54

225

453

699

Joint venture real estate depreciation

23

44

112

133

Joint venture gain on disposition of real estate

(2,341)

(2,341)

Gain on disposition of real estate

(1,694)

(8)

(4,446)

(94)

Impairment losses - real estate

8,663

9,043

Total FFO adjustments

23,791

13,687

57,007

38,530

FFO available to common stockholders

$

57,044

$

34,623

$

142,595

$

98,196

FFO per share:

Basic

$

0.53

$

0.40

$

1.34

$

1.16

Diluted

$

0.52

$

0.39

$

1.32

$

1.15

Recurring Funds from Operations Reconciliation:

Net earnings available to common shareholders

$

33,253

$

20,936

$

85,588

$

59,666

Total FFO Adjustments

23,791

13,687

57,007

38,530

FFO available to common shareholders

57,044

34,623

142,595

98,196

Excess of redemption value over carrying value of preferred

   share redemption

3,098

Impairment losses and other charges, net of recoveries

615

2,520

1,011

Income tax benefit

(7,671)

(7,671)

Joint venture disposition fee and promote income

(1,964)

(1,964)

Total Recurring FFO adjustments

(9,635)

615

(4,017)

1,011

Recurring FFO available to common shareholders

$

47,409

$

35,238

$

138,578

$

99,207

Recurring FFO per share:

Basic

$

0.44

$

0.40

$

1.31

$

1.17

Diluted

$

0.43

$

0.40

$

1.28

$

1.16

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

Quarter Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Adjusted Funds From Operations (AFFO) Reconciliation:

Net earnings available to common shareholders

$

33,253

$

20,936

$

85,588

$

59,666

Total FFO Adjustments

23,791

13,687

57,007

38,530

Total Recurring FFO adjustments

(9,635)

615

(4,017)

1,011

Recurring FFO available to common stockholders

47,409

35,238

138,578

99,207

Straight line accrued rent

(528)

(105)

(1,058)

(55)

Net capital lease rent adjustment

414

389

1,222

1,191

Below market rent amortization

(628)

(278)

(1,865)

(491)

Stock based compensation expense

1,988

1,428

5,756

4,269

Capitalized interest expense

(336)

(278)

(1,204)

(846)

Convertible debt interest expense

1,082

1,578

3,189

4,811

Joint venture disposition fee and promote income

1,964

1,964

Total AFFO adjustments

3,956

2,734

8,004

8,879

AFFO available to common stockholders

$

51,365

$

37,972

$

146,582

$

108,086

AFFO per share:

Basic

$

0.48

$

0.44

$

1.38

$

1.27

Diluted

$

0.47

$

0.43

$

1.36

$

1.27

Other Information:

Percentage rent

$

242

$

230

$

572

$

476

Amortization of debt costs

$

850

$

1,310

$

2,506

$

3,790

Scheduled debt principal amortization (excluding maturities)

$

252

$

274

$

931

$

815

Non-real estate depreciation expense

$

40

$

46

$

80

$

141

 

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 September 30, 2012 and generated revenue, as discontinued operations.  The following is a

summary of the earnings from discontinued operations.

Quarter Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Revenues:

Rental and earned income

$

1,011

$

2,182

$

4,078

$

5,606

Interest and other income from real estate transactions

138

144

417

514

1,149

2,326

4,495

6,120

Expenses:

General and administrative

3

4

11

11

Real estate

269

283

785

929

Depreciation and amortization

78

248

525

766

Impairment losses - real estate

1,402

431

1,747

431

Interest

356

345

1,072

1,025

2,108

1,311

4,140

3,162

Gain on disposition of real estate

1,694

8

4,446

140

Income tax expense

(25)

(45)

(122)

(162)

Earnings from discontinued operations including noncontrolling

   interests

710

978

4,679

2,936

Loss (earnings) attributable to noncontrolling interests

(7)

4

(24)

(89)

Earnings from discontinued operations attributable to NNN

$

703

$

982

$

4,655

$

2,847

 

National Retail Properties, Inc.

(in thousands)

(unaudited)

 

September 30,

2012

December 31,

2011

Balance Sheet Summary

Assets:

Cash and cash equivalents

$

141,446

$

2,082

Receivables, net of allowance

1,220

2,149

Investment in unconsolidated affiliate

4,358

Mortgages, notes and accrued interest receivable

29,682

33,428

Real estate:

Accounted for using the operating method, net of

   accumulated depreciation and amortization

3,565,782

3,211,022

Accounted for using the direct financing method

24,539

26,518

Real estate held for sale

53,361

50,202

Commercial mortgage residual interests

12,508

15,299

Accrued rental income, net of allowance

25,806

25,187

Other assets

79,854

64,184

Total assets

$

3,934,198

$

3,434,429

Liabilities:

Line of credit payable

$

$

65,600

Mortgages payable, net of unamortized premium

10,873

23,171

Notes payable - convertible, net of unamortized discount

358,561

355,371

Notes payable, net of unamortized discount

1,165,429

894,967

Other liabilities

121,257

91,444

Total liabilities

1,656,120

1,430,553

Stockholders' equity of NNN

2,276,763

2,002,498

Noncontrolling interests

1,315

1,378

Total equity

2,278,078

2,003,876

Total liabilities and equity

$

3,934,198

$

3,434,429

Common shares outstanding

109,422

104,755

Gross leasable area, Property Portfolio (square feet)

18,331

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% 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."

 

The joint venture sold all 21 convenience store properties it owned in the third quarter of 2012 for

approximately $87.5 million. The investors' $33.3 million total equity investment produced approximately

$61.6 million of total cash distributions from operations and net sale proceeds over the life of the joint

venture.

September 30, 2012

December 31, 2011

Assets:

Cash and cash equivalents

$

256

$

307

Receivables

200

Real estate

70,911

Other assets

402

$

256

$

71,820

Liabilities:

Notes payable

$

$

42,700

Other liabilities

231

65

Total liabilities

231

42,765

Members' equity

25

29,055

Total liabilities and equity

$

256

$

71,820

 

Quarter Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Revenues:

Rental income

$

1,028

$

1,565

$

4,158

$

4,695

Expenses:

General and administrative

254

73

441

259

Real estate

17

4

25

14

Depreciation and amortization

187

369

833

1,106

Interest

124

459

506

1,365

582

905

1,805

2,744

Gain on disposition of real estate

15,609

15,609

Net earnings

$

16,055

$

660

$

17,962

$

1,951

 

National Retail Properties, Inc.

Property Portfolio

 

 Top 20 Lines of Trade

As of September 30,

Line of Trade

  2012(1)

  2011(2)

1.

Convenience stores

21.6%

21.4%

2.

Restaurants - full service

11.3%

9.9%

3.

Automotive service

6.4%

5.2%

4.

Automotive parts

5.8%

7.1%

5.

Theaters

4.5%

5.5%

6.

Sporting goods

4.5%

5.4%

7.

Wholesale clubs

3.6%

4.4%

8.

Restaurants - limited service

3.5%

3.6%

9.

Home improvement

3.2%

1.2%

10.

Drug stores

3.2%

3.4%

11.

Consumer electronics

3.1%

3.8%

12.

Recreational vehicle dealers, parts and accessories

2.9%

1.8%

13.

Health and fitness

2.8%

2.8%

14.

Travel plazas

2.3%

2.0%

15.

Family entertainment centers

2.1%

2.1%

16.

Books

1.9%

2.3%

17.

Grocery

1.8%

2.3%

18.

Home furnishings

1.5%

0.9%

19.

General merchandise

1.3%

1.2%

20.

Office supplies

1.2%

1.7%

Other

11.5%

12.0%

Total

100.0%

100.0%

 

Top 10 States

State

% of Total(1)

State

% of Total(1)

1.

Texas

21.8%

6.

California

4.5%

2.

Florida

9.2%

7.

Ohio

3.5%

3.

Illinois

5.6%

8.

Virginia

3.4%

4.

North Carolina

5.3%

9.

Indiana

3.3%

5.

Georgia

4.6%

10.

Pennsylvania

3.1%

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

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

 

National Retail Properties, Inc. Property Portfolio

Top Tenants

Properties

% of Total (1)

Pantry

95

6.0%

Susser

86

5.7%

CL Thomas

66

4.8%

AMC Theatre

15

3.8%

Mister Car Wash

62

3.7%

BJ's Wholesale Club

7

3.6%

Best Buy

19

3.0%

Camping World

20

2.9%

LA Fitness

11

2.7%

Gander Mountain

9

2.6%

Pull-A-Part

20

2.4%

Road Ranger

27

2.4%

Bloomin' Brands (Outback)

34

2.3%

Logan's Roadhouse

31

2.2%

Pep Boys

17

2.2%

 

Lease Expirations(2)

% of

 Total(1) 

# of

Properties

Gross Leasable

Area (3)

% of

 Total(1) 

# of

Properties

Gross Leasable

Area (3)

2012

0.3%

6

103,000

2018

4.1%

49

1,108,000

2013

2.2%

34

623,000

2019

2.9%

42

704,000

2014

2.9%

42

582,000

2020

3.5%

92

867,000

2015

2.8%

71

960,000

2021

5.0%

91

791,000

2016

2.0%

39

610,000

2022

8.7%

102

1,091,000

2017

4.0%

47

1,003,000

Thereafter

61.6%

875

9,313,000

(1)    Based on the annual base rent of $335,417,000, which is the annualized base rent for all leases in place as of September 30, 2012.

(2)    As of September 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