Press release from PR Newswire
2011 Operating Results and Increased 2012 Guidance Announced by National Retail Properties, Inc.
Monday, February 06, 2012
2011 Operating Results and Increased 2012 Guidance Announced by National Retail Properties, Inc.08:30 EST Monday, February 06, 2012ORLANDO, Fla., Feb. 6, 2012 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and year ended December 31, 2011. Highlights include:Operating Results:Revenues and net earnings, FFO and AFFO available to common stockholders:Quarter EndedYear EndedDecember 31,December 31,2011201020112010(in thousands, except per share data)Revenues$74,400$59,516$265,793$227,888Net earnings available to common stockholders$25,874$12,519$85,540$66,212Net earnings per common share (diluted)$0.26$0.15$0.96$0.80FFO available to common stockholders$41,038$23,990$139,665$108,328FFO per common share (diluted)$0.42$0.29$1.57$1.31FFO excluding impairment losses and other charges, net of recoveries$40,051$31,661$139,258$119,781FFO excluding impairment losses and other charges, net of recoveries per share$0.41$0.38$1.57$1.45AFFO available to common stockholders$42,729$34,851$150,815$131,721AFFO per common share (diluted)$0.43$0.41$1.70$1.59Portfolio occupancy was 97.4% at December 31, 2011, as compared to 97.2% at September 30, 2011, and 96.9% at December 31, 20102011 Highlights:Increased FFO per share 8.3% from $1.45 in 2010 to $1.57 in 2011 (excluding impairments)Dividend yield at December 31, 2011 of 5.8%Dividends per share increased to $1.53 (+ 1.3%) marking the 22nd consecutive year of annual dividend increases - one of only 104 public companies with 22 or more consecutive annual dividend increasesMaintained high occupancy levels at 97.4%Invested $772.4 million in 218 properties with an aggregate 3,448,000 square feet of gross leasable areaSold eight properties for $12.6 million producing $527,000 of gains on sale (not included in FFO)Expanded unsecured bank credit facility to $450 million while extending the term to May 2015 and reducing the interest rate to LIBOR + 150 bpsMaintained strong balance sheet raising $521 million from the issuance of common equityGenerated annual total return to shareholders of 5.6% for 2011 and 11.8% annually for the past 15 yearsInvestments and Dispositions for the quarter ended December 31, 2011:Investments:$327.1 million in the Property Portfolio, including acquiring 111 properties with an aggregate 975,000 square feet of gross leasable areaDispositions:Three properties with net proceeds of $3.5 millionCapital transactions for the quarter ended December 31, 2011:Completed 8,050,000 common shares offering priced at $25.75 generating net proceeds of $198.3 millionIssued 1,322,285 common shares generating $33.7 million of net proceeds pursuant to the Dividend Reinvestment and Stock Purchase PlanNational Retail Properties announced an increase in 2012 FFO guidance to $1.65 to $1.70 per share before any impairment expense and estimated AFFO to be $1.74 to $1.79 per share. The FFO guidance equates to the net earnings before any gains or losses from the sale of real estate of $1.03 to $1.08 per share plus $0.62 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.Craig Macnab, Chief Executive Officer, commented: "The strong investment activity in 2011 drove significant FFO per share growth in 2011 and positions us well for continued growth in profitability in 2012 as evidenced by our increased FFO guidance. Notably, the $772 million of investments made in 2011 were financed with over $520 million of new equity which we were able to deploy on a very accretive basis and allow us to maintain a strong balance sheet as we start 2012. Most importantly, we are well positioned to perpetuate our 22-year consecutive annual dividend increase track record in 2012. We know the value of a safe and growing dividend is magnified in uncertain times."National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of December 31, 2011, the company owned 1,422 properties in 47 states with a gross leasable area of approximately 16.4 million square feet. For more information on the company, visit www.nnnreit.com. Management will hold a conference call on February 6, 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-K with the SEC for the year ended December 31, 2011. 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. 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.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. 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 EndedYear EndedDecember 31,December 31,2011201020112010Income Statement SummaryRevenues:Rental and earned income$69,978$55,930$250,449$214,249Real estate expense reimbursement from tenants3,0602,3339,9277,197Interest and other income from real estate transactions5834982,3122,982Interest income on commercial mortgage residual interests7797553,1053,46074,40059,516265,793227,888Retail operations:Revenues11,4368,50045,13932,958Operating expenses(10,920)(8,133)(43,096)(31,647)Net5163672,0431,311Operating expenses:General and administrative8,5545,46428,81422,763Real estate4,8523,85416,88713,235Depreciation and amortization15,91012,63558,11548,047Impairment losses and other charges, net of recoveries(1,615)7,525(1,431)7,458Impairment ? commercial mortgage residual interests valuation6281461,0243,99528,32929,624103,40995,498Other expenses (revenues):Interest and other income(429)(343)(1,511)(1,513)Interest expense19,58516,65574,84565,17919,15616,31273,33463,666Gain on disposition of real estate297?297641Income tax benefit (expense)(521)23(779)(475)Equity in earnings of unconsolidated affiliate153108474428Earnings from continuing operations27,36014,07891,08570,629Earnings from discontinued operations3261341,3312,724Earnings including noncontrolling interests27,68614,21292,41673,353Loss (earnings) attributable to noncontrolling interests:Continuing operations(124)(5)(11)(367)Discontinued operations88(80)11(116)3(91)(356)Net earnings attributable to NNN27,57014,21592,32572,997Series C preferred stock dividends(1,696)(1,696)(6,785)(6,785)Net earnings available to common stockholders$25,874$12,519$85,540$66,212National Retail Properties, Inc.(in thousands, except per share data)(unaudited)Quarter EndedQuarter EndedDecember 31,December 31,2011201020112010Weighted average common shares outstanding:Basic97,60582,89988,10082,716Diluted98,67184,04188,83782,849Net earnings per share available to common stockholders:Basic:Continuing operations$0.26$0.15$0.95$0.77Discontinued operations??0.010.03Net earnings$0.26$0.15$0.96$0.80Diluted:Continuing operations$0.26$0.15$0.95$0.77Discontinued operations??0.010.03Net earnings$0.26$0.15$0.96$0.80National Retail Properties, Inc.(in thousands, except per share data)(unaudited) Quarter EndedYear EndedDecember 31,December 31,2011201020112010Funds From Operations (FFO) Reconciliation:Net earnings available to common stockholders$25,874$12,519$85,540$66,212Real estate depreciation and amortization:Continuing operations15,53711,45653,82743,182Discontinued operations1592216468Joint venture real estate depreciation4445178178Gain on disposition of real estate(432)(122)(527)(1,712)Impairment losses - real estate??431?Total FFO adjustments15,16411,47154,12542,116FFO available to common stockholders$41,038$23,990$139,665$ 108,328FFO per share:Basic$0.42$0.29$1.59$1.31Diluted$0.42$0.29$1.57$1.31Adjusted Funds From Operations (AFFO) Reconciliation:Net earnings available to common stockholders$25,874$12,519$85,540$66,212Total FFO adjustments15,16411,47154,12542,116FFO available to common stockholders41,03823,990139,665108,328Straight-line accrued rent10828554(74)Net capital lease rent adjustment4044001,5951,544Below market rent amortization(615)(99)(1,106)(376)Stock based compensation expense2,1211,2846,3905,309Capitalized interest expense(366)(257)(1,213)(617)Convertible debt interest expense1,0261,5775,8376,154Impairment losses and other charges, net of recoveries(1,615)7,525(1,431)7,458Impairment - commercial mortgage residual interests valuation6281461,0243,995Total AFFO adjustments1,69110,86111,15023,393AFFO available to common stockholders$42,729$34,851$150,815$131,721AFFO per share:Basic$0.44$0.42$1.71$1.59Diluted$0.43$0.41$1.70$1.59Other Information:Percentage rent$644$577$1,120$959Amortization of debt costs$351$1,163$4,141$4,599Scheduled debt principal amortization (excluding maturities)$283$263$1,098$1,051Non-real estate depreciation expense$27$21$168$287National Retail Properties, Inc.(in thousands)(unaudited)Earnings from Discontinued Operations: NNN classified the revenues and expenses related to leasehold interests which expired and properties which generated revenue and were sold or generated revenue and were held for sale as of December 31, 2011, as discontinued operations. The following is a summary of the earnings from discontinued operations.Quarter EndedYear EndedDecember 31,December 31,2011201020112010Revenues:Rental and earned income$591$651$3,736$5,434Real estate expense reimbursement from tenants1591906191,647Interest and other income from real estate transactions3537578Interest and other income from non-real estate???27538464,3927,661Expenses:General and administrative111322101Real estate2692971,1462,363Depreciation and amortization38114306627Impairment losses - real estate??431?Interest3573831,3822,6556758073,2875,746Gain on disposition of real estate2841224241,434Income tax expense(36)(27)(198)(625)Earnings from discontinued operations including noncontrolling interests3261341,3312,724Loss (earnings) attributable to noncontrolling interests88(80)11Earnings from discontinued operations attributable to NNN$334$142$1,251$2,735National Retail Properties, Inc.(in thousands)(unaudited)Quarter Ended December 31,Year Ended December 31,2011201020112010# ofPropertiesGain# ofPropertiesGain# ofPropertiesGain# ofPropertiesGainReal Estate Disposition SummaryReconciliation of gain on disposition between continuing and discontinued operations:Continuing operations?$297?$??$2972$641Discontinued operations328411228424161,434Noncontrolling interest?(149)???(194)?(363)3$4321$1228$52718$1,712National Retail Properties, Inc.(in thousands)(unaudited)December 31,2011December 31,2010Balance Sheet SummaryAssets:Cash and cash equivalents$2,082$2,048Receivables, net of allowance2,1493,403Investment in unconsolidated affiliate4,3584,515Mortgages, notes and accrued interest receivable33,42830,331Real estate:Accounted for using the operating method, net of accumulated depreciation and amortization3,224,0232,514,302Accounted for using the direct financing method26,51829,773Real estate held for sale37,20137,724Commercial mortgage residual interests15,29915,915Accrued rental income, net of allowance25,18725,535Other assets64,18450,029Total assets$3,434,429$2,713,575Liabilities:Line of credit payable$65,600$161,000Mortgages payable23,17124,269Notes payable - convertible, net of unamortized discount355,371349,534Notes payable, net of unamortized discount894,967598,882Other liabilities91,44451,116Total liabilities1,430,5531,184,801Stockholders' equity of NNN2,002,4981,527,483Noncontrolling interests1,3781,291Total equity2,003,8761,528,774Total liabilities and equity$3,434,429$2,713,575Common shares outstanding104,75583,613Gross leasable area, Property Portfolio (square feet)16,42812,972NNN 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 anaffiliate of Crow Holdings Realty Partners IV, L.P. The company owns a 15 percent equity interest, and thefollowing 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."December 31, 2011December 31, 2010Assets:Cash and cash equivalents$307$999Receivables200200Real estate70,91172,095Other assets402561$71,820$73,855Liabilities:Notes payable$42,700$43,600Other liabilities65995Total liabilities42,76544,595Members' equity29,05529,260Total liabilities and equity$71,820$73,855Quarter EndedYear EndedDecember 31,December 31,2011201020112010Revenues:Rental income$1,565$1,565$6,261$6,261Expenses:General and administrative7373332331Real estate441819Depreciation and amortization3393691,4441,475Interest1924631,5581,8376089093,3523,662Net earnings$957$656$2,909$2,599National Retail Properties, Inc.Property PortfolioTop 20 Lines of TradeAs of December 31,Line of Trade2011(1)2010 (2)1.Convenience stores24.6%23.5%2.Restaurants - full service9.4%10.1%3.Automotive parts6.5%7.8%4.General merchandise5.2%1.4%5.Theaters5.0%5.7%6.Automotive service4.9%5.3%7.Sporting goods4.8%4.5%8.Restaurants - limited service3.6%4.3%9.Consumer electronics3.5%2.6%10.Drug stores3.2%3.9%11.Health and fitness2.6%2.1%12.Travel plazas2.5%2.3%13.Recreational vehicle dealers, parts and accessories2.3%0.9%14.Home improvement2.1%1.0%15.Grocery2.1%2.6%16.Books2.0%3.7%17.Family entertainment centers1.9%1.3%18.Office supplies1.5%2.4%19.Furniture1.5%2.3%20.Financial services1.3%1.2%Other9.5%11.1%Total100.0%100.0%Top 10 StatesState% of Total(1)State% of Total(1)1.Texas23.0%6.Indiana3.5%2.Florida9.2%7.California3.4%3.Illinois5.6%8.Ohio3.3%4.North Carolina5.2%9.Pennsylvania3.1%5.Georgia4.1%10.Virginia3.1%(1) Based on the annualized base rent for all leases in place as of December 31, 2011.(2) Based on the annualized base rent for all leases in place as of December 31, 2010.National Retail Properties, Inc.Property PortfolioTop TenantsProperties% of Total (1)Pantry966.6%Susser866.4%C.L. Thomas665.4%AMC Theatre154.3%BJ's Wholesale Club74.0%Best Buy203.4%Mister Car Wash443.1%Road Ranger343.0%Gander Mountain82.7%Pull-A-Part202.7%LA Fitness92.5%Pep Boys172.4%Camping World152.3%Logan's Roadhouse262.2%Lease Expirations(2)% ofTotal(1)# ofPropertiesGrossLeasableArea (3)% ofTotal(1)# ofPropertiesGrossLeasableArea (3)20121.5%28434,00020183.5%39829,00020133.5%42883,00020193.1%40670,00020143.3%43587,00020203.5%87746,00020153.1%68926,00020215.1%86723,00020162.1%38569,00020228.9%97934,00020173.8%32812,000Thereafter58.6%7647,472,000(1) Based on the annual base rent of $297,576,000, which is the annualized base rent for all leases in place as of December 31, 2011.(2) As of December 31, 2011, the weighted average remaining lease term is 12 years.(3) Square feet.SOURCE National Retail Properties, Inc.For further information: Kevin B. Habicht, Chief Financial Officer, +1-407-265-7348