Third Quarter 2013 Operating Results And 2014 FFO Guidance Announced By National Retail Properties, Inc.

Nov 05, 2013, 08:30 ET from National Retail Properties, Inc.

ORLANDO, Fla., Nov. 5, 2013 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced its operating results for the quarter and nine months ended September 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

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

(in thousands, except per share data)

Revenues

$

100,621

$

84,391

$

289,100

$

243,073

Net earnings available to common stockholders

$

34,810

$

33,253

$

96,839

$

85,588

Net earnings per common share

$

0.29

$

0.30

$

0.81

$

0.79

FFO available to common stockholders

$

59,946

$

57,044

$

168,828

$

142,595

FFO per common share

$

0.49

$

0.52

$

1.41

$

1.32

Recurring FFO available to common stockholders

$

59,465

$

47,409

$

169,106

$

138,578

Recurring FFO per common share

$

0.49

$

0.43

$

1.42

$

1.28

AFFO available to common stockholders

$

60,898

$

51,365

$

175,269

$

146,582

AFFO per common share

$

0.50

$

0.47

$

1.47

$

1.36

 

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

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

  • Investments:
    • $90.0 million in property investments, including the acquisition of 35 properties with an aggregate 243,000 square feet of gross leasable area
  • Dispositions:
    • 22 properties with net proceeds of $36.0 million producing $811,000 of gains on sales, net of income tax

Investments and Dispositions for the nine months ended September 30, 2013:

  • Investments:
    • $570.3 million in property investments, including the acquisition of 261 properties with an aggregate 1,468,000 square feet of gross leasable area
  • Dispositions:
    • 31 properties with net proceeds of $52.6 million producing $3,467,000 of gains on sales, net of income tax and noncontrolling interest

Capital transactions for the quarter ended September 30, 2013:

  • Raised $5.2 million in net proceeds from the issuance of 158,280 common shares
  • Settled $223.0 million principal amount of 5.125% convertible senior notes due 2028

Capital transactions for the nine months ended September 30, 2013:

  • Raised $881.7 million of new long term capital at attractive pricing:
    • Raised $259.8 million in net proceeds from the issuance of 7,591,138 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
  • Settled $223.0 million principal amount of 5.125% convertible senior notes due 2028

National Retail Properties  announced an increase in 2013 FFO guidance from a range of $1.86 to $1.90 to a range of $1.88 to $1.90 per share before any impairment expense. 2013 AFFO is estimated to be $1.96 to $1.98 per share. The FFO guidance equates to net earnings before any gains or losses from the sale of real estate of $1.06 to $1.08 per share, plus $0.82 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.

The Company also announced 2014 FFO guidance of $1.94 to $1.99 per share and estimated 2014 AFFO to be $2.00 to $2.05 per share. This FFO guidance equates to net earnings before any gains or losses from the sale of real estate and impairment charges of $1.08 to $1.13 per share plus $0.86 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.

Craig Macnab, Chief Executive Officer, commented: "We remain focused on making investments that drive per share accretion allowing us to increase our annual dividend for the 24th consecutive year in the third quarter.  We are on track to produce 8% - 9% of FFO per share growth for 2013 while simultaneously reducing leverage.  Our very strong balance sheet positions us attractively for continued per share growth in 2014.   Our capital costs remain among the lowest in the sector and at the lowest levels they have been for most of the past two decades.  With 1,850 properties, our portfolio is more than fully diversified and by continuing to focus on traditional real estate metrics we are finding attractive risk-adjusted opportunities."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of September 30, 2013, the company owned 1,850 properties in 47 states with a gross leasable area of approximately 20.3 million square feet.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on November 5, 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, 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-Q with the SEC for the quarter ended September 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 (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.

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 September 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

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

Income Statement Summary

Revenues:

Rental and earned income

$

96,573

$

80,628

$

277,013

$

231,003

Real estate expense reimbursement from tenants

3,113

2,658

9,203

8,024

Interest and other income from real estate transactions

341

512

1,095

1,982

Interest income on commercial mortgage residual interests

594

593

1,789

2,064

100,621

84,391

289,100

243,073

Retail operations:

Revenues

19,008

Operating expenses

(18,543)

Net

465

Operating expenses:

General and administrative

7,534

8,653

25,209

23,282

Real estate

4,420

3,842

12,580

12,376

Depreciation and amortization

25,856

17,242

72,126

53,574

Impairment – commercial mortgage residual interests

     valuation

16

16

2,718

Impairment losses and other charges, net of recoveries

3,223

1,972

3,258

37,826

32,960

111,903

95,208

Other expenses (revenues):

Interest and other income

(722)

(1,194)

(1,433)

(1,913)

Interest expense

19,989

23,039

65,210

62,425

19,267

21,845

63,777

60,512

Income tax benefit (expense)

(365)

7,438

(363)

7,167

Equity in earnings of unconsolidated affiliate

3,769

4,074

Earnings from continuing operations

43,163

40,793

113,057

99,059

Earnings (loss) from discontinued operations, net of income tax expense

1,179

(2,803)

2,794

2,231

Earnings including noncontrolling interests

44,342

37,990

115,851

101,290

Loss (earnings) attributable to noncontrolling interests:

Continuing operations

17

27

276

73

Discontinued operations

(7)

(2)

(223)

(10)

10

25

53

63

Net earnings attributable to NNN

44,352

38,015

115,904

101,353

Series C preferred stock dividends

(1,979)

Series D preferred stock dividends

(4,762)

(4,762)

(14,285)

(10,688)

Series E preferred stock dividends

(4,780)

(4,780)

Excess of redemption value over carrying value of Series C

   preferred shares redeemed

(3,098)

Net earnings available to common stockholders

$

34,810

$

33,253

$

96,839

$

85,588

September 30,

September 30,

2013

2012

2013

2012

Weighted average common shares outstanding:

Basic

120,288

107,488

117,222

106,140

Diluted

121,230

110,340

119,356

108,092

Net earnings per share available to common stockholders:

Basic:

Continuing operations

$

0.28

$

0.33

$

0.80

$

0.78

Discontinued operations

0.01

(0.02)

0.02

0.02

Net earnings

$

0.29

$

0.31

$

0.82

$

0.80

Diluted:

Continuing operations

$

0.28

$

0.32

$

0.79

$

0.77

Discontinued operations

0.01

(0.02)

0.02

0.02

Net earnings

$

0.29

$

0.30

$

0.81

$

0.79

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

Quarter Ended

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

Funds From Operations (FFO) Reconciliation:

Net earnings available to common stockholders

$

34,810

$

33,253

$

96,839

$

85,588

Real estate depreciation and amortization:

Continuing operations

25,939

18,852

72,100

53,475

Discontinued operations

9

288

112

1,164

Joint venture real estate depreciation

23

112

Joint venture gain on disposition of real estate

(2,341)

(2,341)

Gain on disposition of real estate, net of tax and

     noncontrolling interest

(811)

(1,694)

(3,467)

(4,446)

Impairment losses (recoveries) - real estate

(1)

8,663

3,244

9,043

Total FFO adjustments

25,136

23,791

71,989

57,007

FFO available to common stockholders

$

59,946

$

57,044

$

168,828

$

142,595

FFO per share:

Basic

$

0.50

$

0.53

$

1.44

$

1.34

Diluted

$

0.49

$

0.52

$

1.41

$

1.32

Recurring Funds from Operations Reconciliation:

Net earnings available to common shareholders

$

34,810

$

33,253

$

96,839

$

85,588

Total FFO adjustments

25,136

23,791

71,989

57,007

FFO available to common shareholders

59,946

57,044

168,828

142,595

Excess of redemption value over carrying value of preferred

   share redemption

3,098

Impairment losses and other charges, net of recoveries

16

775

2,520

Income tax benefit

(7,671)

(7,671)

Joint venture disposition fee and promote income

(1,964)

(1,964)

Notes receivable redemption income

(497)

(497)

Total Recurring FFO adjustments

(481)

(9,635)

278

(4,017)

Recurring FFO available to common shareholders

$

59,465

$

47,409

$

169,106

$

138,578

Recurring FFO per share:

Basic

$

0.49

$

0.44

$

1.44

$

1.31

Diluted

$

0.49

$

0.43

$

1.42

$

1.28

Quarter Ended

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

Adjusted Funds From Operations (AFFO) Reconciliation:

Net earnings available to common shareholders

$

34,810

$

33,253

$

96,839

$

85,588

Total FFO adjustments

25,136

23,791

71,989

57,007

Total Recurring FFO adjustments

(481)

(9,635)

278

(4,017)

Recurring FFO available to common stockholders

59,465

47,409

169,106

138,578

Straight line accrued rent

(346)

(528)

(318)

(1,058)

Net capital lease rent adjustment

420

414

1,230

1,222

Below market rent amortization

(585)

(628)

(1,833)

(1,865)

Stock based compensation expense

1,917

1,988

5,525

5,756

Capitalized interest expense

(470)

(336)

(1,010)

(1,204)

Convertible debt interest expense

1,082

2,072

3,189

Joint venture disposition fee and promote income

1,964

1,964

Notes receivable redemption income

497

497

Total AFFO adjustments

1,433

3,956

6,163

8,004

AFFO available to common stockholders

$

60,898

$

51,365

$

175,269

$

146,582

AFFO per share:

Basic

$

0.51

$

0.48

$

1.50

$

1.38

Diluted

$

0.50

$

0.47

$

1.47

$

1.36

Other Information:

Percentage rent

$

267

$

242

$

801

$

572

Amortization of debt costs

$

654

$

850

$

2,460

$

2,506

Scheduled debt principal amortization (excluding maturities)

$

270

$

252

$

795

$

931

Non-real estate depreciation expense

$

62

$

40

$

185

$

80

Real estate acquisition costs (included in general and

     administrative expense)

$

55

$

40

$

1,659

$

345

 

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

Quarter Ended

Nine Months Ended

September 30,

September 30,

2013

2012

2013

2012

Revenues:

Rental and earned income

$

803

$

1,643

$

2,037

$

5,917

Real estate expense reimbursement from tenants

63

124

231

323

Interest and other income from real estate transactions

1

4

37

38

867

1,771

2,305

6,278

Expenses:

General and administrative

3

2

218

7

Real estate

219

305

479

846

Depreciation and amortization

148

301

297

1,204

Impairment losses and other charges, net of recoveries

(1)

5,440

2,046

5,785

Interest

136

183

444

552

505

6,231

3,484

8,394

Gain on disposition of real estate

1,228

1,694

4,402

4,446

Income tax expense

(411)

(37)

(429)

(99)

Earnings (loss) from discontinued operations attributable to

  NNN

1,179

(2,803)

2,794

2,231

Earnings (loss) attributable to noncontrolling interests

(7)

(2)

(223)

(10)

Earnings (loss) from discontinued operations attributable to

  NNN

$

1,172

$

(2,805)

$

2,571

$

2,221

 

National Retail Properties, Inc.

(in thousands)

(unaudited)

 

September 30,

2013

December 31,

2012

Balance Sheet Summary

Assets:

Cash and cash equivalents

$

6,530

$

2,076

Receivables, net of allowance

2,736

3,112

Mortgages, notes and accrued interest receivable

16,693

27,770

Real estate portfolio:

Accounted for using the operating method, net of

     accumulated depreciation and amortization

4,221,892

3,793,416

Accounted for using the direct financing method

21,523

22,692

Real estate held for sale

16,792

18,699

Commercial mortgage residual interests

14,755

13,096

Accrued rental income, net of allowance

25,411

25,458

Debt costs, net of accumulated amortization

13,535

12,781

Other assets

96,993

68,926

Total assets

$

4,436,860

$

3,988,026

Liabilities:

Line of credit payable

$

$

174,200

Mortgages payable, including unamortized premium

9,764

10,602

Notes payable - convertible, net of unamortized discount

236,500

Notes payable, net of unamortized discount

1,513,884

1,165,662

Accrued interest payable

27,913

17,527

Other liabilities

97,369

85,950

Total liabilities

1,648,930

1,690,441

Stockholders' equity of NNN

2,786,683

2,296,285

Noncontrolling interests

1,247

1,300

Total equity

2,787,930

2,297,585

Total liabilities and equity

$

4,436,860

$

3,988,026

Common shares outstanding

121,857

111,555

Gross leasable area, Property Portfolio (square feet)

20,292

19,168

 

National Retail Properties, Inc. Property Portfolio

 Top 20 Lines of Trade

As of September 30,

Line of Trade

2013(1)

2012 (2)

1.

Convenience stores

19.9%

21.6%

2.

Restaurants - full service

9.8%

11.3%

3.

Automotive service

7.6%

6.4%

4.

Restaurants - limited service

5.4%

3.5%

5.

Automotive parts

5.1%

5.8%

6.

Theaters

4.4%

4.5%

7.

Banks

4.1%

0.2%

8.

Health and fitness

4.0%

2.8%

9.

Sporting goods

3.7%

4.5%

10.

Wholesale clubs

3.1%

3.6%

11.

Recreational vehicle dealers, parts and accessories

3.1%

2.9%

12.

Drug stores

2.7%

3.2%

13.

Consumer electronics

2.7%

3.2%

14.

Home improvement

2.5%

3.1%

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

11.5%

12.5%

Total

100.0%

100.0%

 

Top 10 States

State

% of Total(1)

State

% of Total(1)

1.

Texas

20.6%

6.

Virginia

4.6%

2.

Florida

10.6%

7.

Indiana

3.9%

3.

Illinois

5.3%

8.

California

3.6%

4.

Georgia

4.9%

9.

Pennsylvania

3.3%

5.

North Carolina

4.7%

10.

Ohio

3.2%

 

(1)

Based on the annualized base rent for all leases in place as of September 30, 2013.

(2)

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

 

National Retail Properties, Inc.

Property Portfolio

Top Tenants (> 2.0%)

Properties

% of Total (1)

Susser Holdings

86

5.1

%

Mister Car Wash

85

5.0

%

Pantry

84

4.5

%

7-Eleven

68

4.2

%

LA Fitness

19

3.9

%

SunTrust

121

3.9

%

AMC Theatre

15

3.6

%

BJ's Wholesale Club

7

3.1

%

Camping World

23

3.1

%

Best Buy

19

2.7

%

Gander Mountain

9

2.3

%

Energy Transfer Partners (Sunoco)

38

2.1

%

Road Ranger

27

2.1

%

Pull-A-Part

20

2.1

%

Logan's Roadhouse

30

2.0

%

 

Lease Expirations(2)

% of Total(1)

# of Properties

Gross Leasable Area (3)

% of Total(1)

# of Properties

Gross Leasable

Area (3)

2013

0.4

%

8

90,000

2019

2.6

%

47

785,000

2014

2.3

%

37

567,000

2020

3.1

%

96

907,000

2015

2.1

%

33

614,000

2021

4.6

%

99

912,000

2016

1.7

%

32

567,000

2022

6.8

%

92

1,060,000

2017

3.5

%

46

1,009,000

2023

3.3

%

53

947,000

2018

8.3

%

186

1,956,000

Thereafter

61.3

%

1,078

10,314,000

 

(1)

Based on the annual base rent of $391,340,000, which is the annualized base rent for all leases in place as of September 30, 2013.

(2)

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

(3)

Square feet.

 

SOURCE National Retail Properties, Inc.



RELATED LINKS

http://www.nnnreit.com