Second Quarter 2015 Operating Results and Increased 2015 Guidance Announced by National Retail Properties, Inc.

Jul 30, 2015, 08:30 ET from National Retail Properties, Inc.

ORLANDO, Fla., July 30, 2015 /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, 2015.  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,

2015

2014

2015

2014

(in thousands, except per share data)

Revenues

$

117,208

$

105,613

$

233,394

$

209,677

Net earnings available to common stockholders

$

37,330

$

36,713

$

82,450

$

71,187

Net earnings per common share

$

0.28

$

0.30

$

0.62

$

0.58

FFO available to common stockholders

$

73,090

$

61,690

$

143,933

$

123,331

FFO per common share

$

0.55

$

0.50

$

1.08

$

1.01

Recurring FFO available to common stockholders

$

73,518

$

61,767

$

144,517

$

123,566

Recurring FFO per common share

$

0.55

$

0.50

$

1.09

$

1.01

AFFO available to common stockholders

$

75,181

$

62,710

$

147,304

$

125,428

AFFO per common share

$

0.56

$

0.51

$

1.11

$

1.02

Second Quarter 2015 Highlights:

  • FFO per share and Recurring FFO per share increased 10.0% over prior year results
  • AFFO per share increased 9.8% over prior year results
  • Portfolio occupancy is 98.8% at June 30, 2015, consistent with March 31, 2015, and 98.6% at December 31, 2014
  • Invested $147.8 million in 37 properties with an aggregate 669,000 square feet of gross leasable area at an initial cash yield of 7.1%
  • Sold three properties for $2.2 million producing $30,000 of gains on sales
  • Raised $38.7 million in net proceeds from the issuance of 983,317 common shares

First Half 2015 Highlights:

  • FFO per share increased 6.9% over prior year results
  • Recurring FFO per share increased 7.9% over prior year results
  • AFFO per share increased 8.8% over prior year results
  • Invested $303.0 million in 93 properties with an aggregate 1,451,000 square feet of gross leasable area at an initial cash yield of 7.2%
  • Sold nine properties for $25.5 million producing $7.2 million of gains on sales, net of income tax and noncontrolling interest
  • Raised $87.4 million in net proceeds from the issuance of 2,207,144 common shares

National Retail Properties announced an increase in 2015 FFO guidance from a range of $2.14 to $2.17 to a range of $2.16 to $2.19 per share before any impairment expense. The 2015 AFFO is estimated to be $2.21 to $2.24 per share. The FFO guidance equates to net earnings before any gains or losses from the sale of real estate of $1.23 to $1.26 per share, plus $0.98 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: "With our recently announced dividend increase, 2015 will be the 26th consecutive year of annual dividend increases which is a long-term record that all of us at NNN are working to perpetuate. Our team continues to source attractive retail properties for acquisition at excellent initial cash yields that will help us accomplish our objective."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of June 30, 2015, the company owned 2,138 properties in 47 states with a gross leasable area of approximately 23.7 million square feet and with a weighted average remaining lease term of 11.4 years. For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on July 30, 2015, at 10:00 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 and six months ended June 30, 2015.  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.

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

Quarter Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Income Statement Summary

Revenues:

Rental and earned income

$

113,224

$

101,388

$

225,288

$

200,977

Real estate expense reimbursement from tenants

3,324

3,228

6,838

6,460

Interest and other income from real estate transactions

213

543

376

1,334

Interest income on commercial mortgage residual interests

447

454

892

906

117,208

105,613

233,394

209,677

Operating expenses:

General and administrative

7,830

8,055

16,435

16,762

Real estate

4,658

4,746

9,417

9,086

Depreciation and amortization

34,202

28,007

66,343

56,019

Impairment – commercial mortgage residual interests    valuation

428

77

428

235

Impairment losses

2,686

89

3,714

485

49,804

40,974

96,337

82,587

Other expenses (revenues):

Interest and other income

(35)

(94)

(47)

(158)

Interest expense

21,678

21,761

43,464

42,040

Real estate acquisition costs

96

19

695

227

21,739

21,686

44,112

42,109

Income tax benefit (expense)

495

(441)

54

(349)

Earnings from continuing operations

46,160

42,512

92,999

84,632

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

18

(18)

Earnings before gain on disposition of real estate, net of income    tax expense

46,160

42,530

92,999

84,614

Gain on disposition of real estate, net of income tax expense

30

3,054

7,230

4,810

Earnings including noncontrolling interests

46,190

45,584

100,229

89,424

Earnings attributable to noncontrolling interests:

Continuing operations

(2)

(13)

(62)

(520)

Net earnings attributable to NNN

46,188

45,571

100,167

88,904

Series D preferred stock dividends

(4,762)

(4,762)

(9,523)

(9,523)

Series E preferred stock dividends

(4,096)

(4,096)

(8,194)

(8,194)

Net earnings available to common stockholders

$

37,330

$

36,713

$

82,450

$

71,187

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

Quarter Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Weighted average common shares outstanding:

Basic

133,267

122,490

132,471

122,036

Diluted

133,601

122,833

132,825

122,393

Net earnings per share available to common stockholders:

Basic:

Continuing operations

$

0.28

$

0.30

$

0.62

$

0.58

Net earnings

$

0.28

$

0.30

$

0.62

$

0.58

Diluted:

Continuing operations

$

0.28

$

0.30

$

0.62

$

0.58

Net earnings

$

0.28

$

0.30

$

0.62

$

0.58

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

Quarter Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Funds From Operations (FFO) Reconciliation:

Net earnings available to common stockholders

$

37,330

$

36,713

$

82,450

$

71,187

Real estate depreciation and amortization

34,086

27,945

66,113

55,898

Gain on disposition of real estate, net of income tax and    noncontrolling interest

(30)

(3,057)

(7,178)

(4,302)

Impairment losses – depreciable real estate, net of income tax

1,704

89

2,548

548

Total FFO adjustments

35,760

24,977

61,483

52,144

FFO available to common stockholders

$

73,090

$

61,690

$

143,933

$

123,331

FFO per common share:

Basic

$

0.55

$

0.50

$

1.09

$

1.01

Diluted

$

0.55

$

0.50

$

1.08

$

1.01

Recurring Funds from Operations Reconciliation:

Net earnings available to common stockholders

$

37,330

$

36,713

$

82,450

$

71,187

Total FFO adjustments

35,760

24,977

61,483

52,144

FFO available to common stockholders

73,090

61,690

143,933

123,331

Impairment  – commercial mortgage residual interests valuation

428

77

428

235

Impairment losses – non-depreciable real estate

156

Total Recurring FFO adjustments

428

77

584

235

Recurring FFO available to common stockholders

$

73,518

$

61,767

$

144,517

$

123,566

Recurring FFO per common share:

Basic

$

0.55

$

0.50

$

1.09

$

1.01

Diluted

$

0.55

$

0.50

$

1.09

$

1.01

 

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

Quarter Ended

Six Months Ended

June 30,

June 30,

2015

2014

2015

2014

Adjusted Funds From Operations (AFFO) Reconciliation:

Net earnings available to common stockholders

$

37,330

$

36,713

$

82,450

$

71,187

Total FFO adjustments

35,760

24,977

61,483

52,144

Total Recurring FFO adjustments

428

77

584

235

Recurring FFO available to common stockholders

73,518

61,767

144,517

123,566

Straight line accrued rent

187

(516)

(18)

(1,118)

Net capital lease rent adjustment

342

338

676

667

Below market rent amortization

(676)

(633)

(1,700)

(1,259)

Stock based compensation expense

2,368

2,241

4,777

4,493

Capitalized interest expense

(558)

(487)

(948)

(921)

Total AFFO adjustments

1,663

943

2,787

1,862

AFFO available to common stockholders

$

75,181

$

62,710

$

147,304

$

125,428

AFFO per common share:

Basic

$

0.56

$

0.51

$

1.11

$

1.03

Diluted

$

0.56

$

0.51

$

1.11

$

1.02

Other Information:

Percentage rent

$

112

$

223

$

297

$

312

Amortization of debt costs

$

714

$

697

$

1,423

$

1,353

Scheduled debt principal amortization (excluding maturities)

$

410

$

275

$

819

$

554

Non-real estate depreciation expense

$

122

$

67

$

240

$

132

 

National Retail Properties, Inc.

(in thousands)

(unaudited)

 

June 30, 2015

December 31, 2014

Balance Sheet Summary

Assets:

Cash and cash equivalents

$

2,448

$

10,604

Receivables, net of allowance

1,778

3,013

Mortgages, notes and accrued interest receivable, net of allowance

10,628

11,075

Real estate portfolio:

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

4,935,472

4,715,906

Accounted for using the direct financing method

15,987

16,974

Real estate held for sale

3,753

7,169

Commercial mortgage residual interests

10,832

11,626

Accrued rental income, net of allowance

25,359

25,659

Debt costs, net of accumulated amortization

15,105

16,453

Other assets

110,603

108,235

Total assets

$

5,131,965

$

4,926,714

Liabilities:

Line of credit payable

$

127,500

$

Mortgages payable, including unamortized premium

25,109

26,339

Notes payable, net of unamortized discount

1,715,354

1,714,715

Accrued interest payable

17,448

17,396

Other liabilities

100,400

85,172

Total liabilities

1,985,811

1,843,622

Stockholders' equity:

Preferred stockholders' equity (stated liquidation value)

575,000

575,000

Common stockholders' equity

2,570,807

2,507,515

Total stockholders' equity of NNN

3,145,807

3,082,515

Noncontrolling interests

347

577

Total equity

3,146,154

3,083,092

Total liabilities and equity

$

5,131,965

$

4,926,714

Common shares outstanding

134,434

132,010

Gross leasable area, Property Portfolio (square feet)

23,747

22,479

 

National Retail Properties, Inc.

Debt Summary

As of June 30, 2015

(in thousands)

(unaudited)

Unsecured Debt

Principal

Principal, Net of Discount

Stated Rate

Effective Rate

Maturity Date

Line of credit payable

$

127,500

$

127,500

L + 92.5 bps

1.110%

January 2019

Unsecured notes payable:

2015

150,000

149,976

6.150%

6.185%

December 2015

2017

250,000

249,744

6.875%

6.924%

October 2017

2021

300,000

297,142

5.500%

5.689%

July 2021

2022

325,000

321,226

3.800%

3.985%

October 2022

2023

350,000

347,907

3.300%

3.388%

April 2023

2024

350,000

349,359

3.900%

3.924%

June 2024

Total

1,725,000

1,715,354

Total unsecured debt

$

1,852,500

$

1,842,854

 

Mortgages Payable

Principal Balance

Interest Rate

Maturity Date

Mortgage(1)

$

14,829

5.230%

July 2023

Mortgage(1)

6,037

5.750%

April 2016

Mortgage(1)

2,863

6.400%

February 2017

Mortgage

1,219

6.900%

January 2017

Mortgage

161

8.140%

September 2016

$

25,109

(1) Includes unamortized premium

 

National Retail Properties, Inc.

Property Portfolio

Top 20 Lines of Trade

As of June 30,

Line of Trade

2015(1)

2014(2)

1.

Convenience stores

17.5%

19.3%

2.

Restaurants – full service

8.9%

9.6%

3.

Automotive service

7.1%

7.5%

4.

Restaurants – limited service

7.1%

6.8%

5.

Family entertainment centers

5.6%

2.3%

6.

Theaters

5.1%

4.5%

7.

Automotive parts

4.5%

5.1%

8.

Health and fitness

3.8%

4.2%

9.

Banks

3.6%

4.1%

10.

Recreational vehicle dealers, parts and accessories

3.6%

3.2%

11.

Sporting goods

3.4%

3.8%

12.

Wholesale clubs

2.8%

3.1%

13.

Drug stores

2.4%

2.7%

14.

Consumer electronics

2.3%

2.6%

15.

Travel plazas

2.2%

2.0%

16.

Grocery

2.1%

1.2%

17.

Medical service providers

2.0%

1.8%

18.

Home furnishings

2.0%

1.6%

19.

Home improvement

1.9%

2.4%

20.

General merchandise

1.5%

1.6%

Other

10.6%

10.6%

Total

100.0%

100.0%

 

Top 10 States

State

% of Total(1)

State

% of Total(1)

1.

Texas

20.4%

6.

Virgina

4.1%

2.

Florida

9.6%

7.

Indiana

4.0%

3.

North Carolina

5.5%

8.

Ohio

3.5%

4.

Illinois

4.9%

9.

Pennsylvania

3.2%

5.

Georgia

4.8%

10.

Alabama

2.9%

(1)

Based on the annualized base rent for all leases in place as of June 30, 2015.

(2)

Based on the annualized base rent for all leases in place as of June 30, 2014.

 

National Retail Properties, Inc.

Property Portfolio

Top Tenants (> 2.0%)

Properties

% of Total (1)

Energy Transfer Partners (Sunoco)

125

6.3%

Mister Car Wash

87

4.4%

Pantry

86

3.9%

7-Eleven

78

3.8%

LA Fitness

24

3.7%

Camping World

30

3.6%

SunTrust

121

3.5%

AMC Theatre

16

3.2%

Chuck E. Cheese's

53

2.9%

BJ's Wholesale Club

7

2.8%

Gander Mountain

12

2.4%

Bell American (Taco Bell)

78

2.3%

Best Buy

19

2.3%

 

Lease Expirations(2)

% of Total(1)

# of Properties

Gross Leasable Area (3)

% of Total(1)

# of Properties

Gross Leasable Area (3)

2015

0.5%

15

157,000

2021

4.4%

105

1,072,000

2016

1.4%

34

502,000

2022

6.0%

96

1,158,000

2017

3.2%

53

1,086,000

2023

2.9%

57

952,000

2018

6.7%

184

1,650,000

2024

2.8%

50

771,000

2019

3.6%

80

1,085,000

2025

5.4%

125

954,000

2020

4.4%

132

1,525,000

Thereafter

58.7%

1,175

12,343,000

(1)

Based on the annual base rent of $458,586,000, which is the annualized base rent for all leases in place as of June 30, 2015.

(2) 

As of June 30, 2015, the weighted average remaining lease term is 11.4 years.

(3) 

Square feet.

 

SOURCE National Retail Properties, Inc.



RELATED LINKS

http://www.nnnreit.com