Press release from PR Newswire
First Quarter 2012 Operating Results Announced by National Retail Properties, Inc.
Thursday, May 03, 2012
First Quarter 2012 Operating Results Announced by National Retail Properties, Inc.08:30 EDT Thursday, May 03, 2012ORLANDO, Fla., May 3, 2012 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter ended March 31, 2012. Highlights include:Operating Results:Revenues and net earnings, FFO and AFFO available to common stockholders:Quarter EndedMarch 31,20122011(in thousands, except per share data)Revenues$78,658$61,529Net earnings available to common stockholders$24,755$19,124Net earnings per common share (diluted)$0.23$0.23FFO available to common stockholders$41,820$31,393FFO per common share (diluted)$0.39$0.38AFFO available to common stockholders$46,260$34,516AFFO per common share (diluted)$0.44$0.41Excluding a $3.1 million charge for the redemption of our 7.375% Series C preferred stock, FFO per share for the quarter ended March 31, 2012 was $0.42 Portfolio occupancy was 97.5% at March 31, 2012, as compared to 97.4% at December 31, 2011, and 96.9% at March 31, 2011Investments and Dispositions for the quarter ended March 31, 2012:Investments: $197.9 million in the Property Portfolio, including acquiring 67 properties with an aggregate 594,000 square feet of gross leasable areaDispositions: Three properties with net proceeds of $5.2 millionCapital transactions for the quarter ended March 31, 2012:Issued 11,500,000 depositary shares representing interests in our 6.625% Series D Cumulative preferred stock at a price of $25.00 per depositary share generating net proceeds of $277.6 million Redeemed all 3,680,000 depositary shares representing interests in our 7.375% Series C Cumulative preferred stock at the liquidation value of $25.00 per depositary share, for $92 million Issued 1,428,069 common shares generating $37.7 million of net proceeds pursuant to the Dividend Reinvestment and Stock Purchase PlanNational Retail Properties announced an increase in 2012 FFO guidance to $1.67 to $1.72 per share excluding first quarter's $3.1 million preferred stock redemption charge and before any impairment expense and estimated AFFO to be $1.76 to $1.81 per share. The FFO guidance equates to the net earnings before any gains or losses from the sale of real estate of $1.02 to $1.07 per share plus $0.65 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: "We are very pleased with the strong start to 2012. Acquisition volume, initial yields and the cost of capital were all better than we originally anticipated and puts us on track to grow FFO per share by over 8% in 2012."National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of March 31, 2012, the company owned 1,486 properties in 47 states with a gross leasable area of approximately 17.0 million square feet. For more information on the company, visit www.nnnreit.com.Management will hold a conference call on May 3, 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 March 31, 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 further 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 EndedMarch 31,20122011Income Statement SummaryRevenues:Rental and earned income$74,364$57,862Real estate expense reimbursement from tenants2,8322,280Interest and other income from real estate transactions707620Interest income on commercial mortgage residual interests75576778,65861,529Retail operations:Revenues11,2248,850Operating expenses(11,062)(8,852)Net162(2)Operating expenses:General and administrative7,6036,657Real estate4,6123,652Depreciation and amortization18,11713,428Impairment ? commercial mortgage residual interests valuation?12930,33223,866Other expenses (revenues):Interest and other income(386)(342)Interest expense19,64517,66219,25917,320Income tax benefit (expense)(97)19Equity in earnings of unconsolidated affiliate150109Earnings from continuing operations29,28220,469Earnings from discontinued operations542384Earnings including noncontrolling interests29,82420,853Loss (earnings) attributable to noncontrolling interests:Continuing operations2026Discontinued operations(12)(59)8(33)Net earnings attributable to NNN29,83220,820Series C preferred stock dividends(1,979)(1,696)Excess of redemption value over carrying value of preferred shares redeemed(3,098)?Net earnings available to common stockholders$24,755$19,124National Retail Properties, Inc.(in thousands, except per share data)(unaudited) March 31,20122011Weighted average common shares outstanding:Basic104,84183,123Diluted106,21183,570Net earnings per share available to common stockholders:Basic:Continuing operations$0.23$0.23Discontinued operations??Net earnings$0.23$0.23Diluted:Continuing operations$0.22$0.22Discontinued operations0.010.01Net earnings$0.23$0.23 National Retail Properties, Inc.(in thousands, except per share data)(unaudited) Quarter EndedMarch 31,20122011Funds From Operations (FFO) Reconciliation:Net earnings available to common stockholders$24,755$19,124Real estate depreciation and amortization:Continuing operations17,27312,209Discontinued operations27102Joint venture real estate depreciation4444Gain on disposition of real estate(314)(86)Impairment losses - real estate35?Total FFO adjustments17,06512,269FFO available to common stockholders$41,820$31,393FFO per share:Basic$0.40$0.38Diluted$0.39$0.38Adjusted Funds From Operations (AFFO) Reconciliation:Net earnings available to common stockholders$24,755$19,124Total FFO adjustments17,06512,269FFO available to common stockholders41,82031,393Straight-line accrued rent(795)4Net capital lease rent adjustment402413Below market rent amortization(635)(97)Stock based compensation expense1,7851,393Capitalized interest expense(431)(322)Convertible debt interest expense1,0441,603Impairment losses and other charges, net of recoveries(28)129Excess of redemption value over carrying value of preferred share redemption3,098?Total AFFO adjustments4,4403,123AFFO available to common stockholders$46,260$34,516AFFO per share:Basic$0.44$0.42Diluted$0.44$0.41Other Information:Percentage rent$109$113Amortization of debt costs$828$1,176Scheduled debt principal amortization (excluding maturities)$288$272Non-real estate depreciation expense$22$49 National Retail Properties, Inc.(in thousands)(unaudited) Earnings from Discontinued Operations: NNN classified the revenues and expenses related to properties which generated revenue and were sold or generated revenue and were held for sale as of March 31, 2012, as discontinued operations. Thefollowing is a summary of the earnings from discontinued operations.Quarter EndedMarch 31,20122011Revenues:Rental and earned income$830$849Real estate expense reimbursement from tenants122165Interest and other income from real estate transactions4319561,045Expenses:General and administrative44Real estate244279Depreciation and amortization51123Impairment losses - real estate35?Interest357340691746Gain on disposition of real estate314132Income tax expense(37)(47)Earnings from discontinued operations including noncontrolling interests542384Earnings attributable to noncontrolling interests(12)(59)Earnings from discontinued operations attributable to NNN$530$325 National Retail Properties, Inc.(in thousands)(unaudited) March 31, 2012December 31, 2011Balance Sheet SummaryAssets:Cash and cash equivalents$3,033$2,082Receivables, net of allowance1,5632,149Investment in unconsolidated affiliate4,3124,358Mortgages, notes and accrued interest receivable36,36633,428Real estate:Accounted for using the operating method, net of accumulated depreciation and amortization3,393,9063,223,304Accounted for using the direct financing method25,35925,752Real estate held for sale42,99738,686Commercial mortgage residual interests15,01615,299Accrued rental income, net of allowance25,68725,187Other assets64,29964,184Total assets$3,612,538$3,434,429Liabilities:Line of credit payable$26,200$65,600Mortgages payable22,88323,171Notes payable - convertible, net of unamortized discount356,416355,371Notes payable, net of unamortized discount895,103894,967Other liabilities95,76491,444Total liabilities1,396,3661,430,553Stockholders' equity of NNN2,214,8022,002,498Noncontrolling interests1,3701,378Total equity2,216,1722,003,876Total liabilities and equity$3,612,538$3,434,429Common shares outstanding106,595104,755Gross leasable area, Property Portfolio (square feet)16,99916,428 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 percent equity interest, and the following summaryrepresents 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." March 31, 2012December 31, 2011Assets:Cash and cash equivalents$334$307Receivables200200Real estate70,61570,911Other assets372402$71,521$71,820Liabilities:Notes payable$42,700$42,700Other liabilities7465Total liabilities42,77442,765Members' equity28,74729,055Total liabilities and equity$71,521$71,820 Quarter EndedMarch 31,20122011Revenues:Rental income$1,565$1,565Expenses:General and administrative10673Real estate45Depreciation and amortization323369Interest193454626901Net earnings$939$664 National Retail Properties, Inc.Property PortfolioTop 20 Lines of Trade As of March 31,Line of Trade2012(1)2011 (2)1.Convenience stores23.5%23.3%2.Restaurants - full service11.7%10.7%3.Automotive parts6.2%7.8%4.Automotive service5.3%5.4%5.Theaters4.7%5.6%6.Sporting goods4.6%4.4%7.Wholesale clubs3.8%0.4%8.Restaurants - limited service3.6%4.1%9.Drug Stores3.3%3.9%10.Consumer electronics3.3%2.4%11.Recreational vehicle dealers, parts and accessories2.6%0.9%12.Health and fitness2.4%2.7%13.Travel plazas2.4%2.3%14.Home improvement2.1%1.0%15.Family entertainment centers2.0%1.3%16.Books1.9%3.8%17.Grocery1.9%2.6%18.Office supplies1.5%2.3%19.Furniture1.3%2.3%20.General Merchandise1.3%1.2%Other10.6%11.6%Total100.0%100.0% Top 10 StatesState% of Total(1)State% of Total(1)1.Texas22.4%6.Ohio3.7%2.Florida9.4%7.California3.3%3.Illinois5.6%8.Indiana3.2%4.North Carolina5.0%9.Virginia3.1%5.Georgia4.1%10.Arizona3.1%(1) Based on the annualized base rent for all leases in place as of March 31, 2012.(2) Based on the annualized base rent for all leases in place as of March 31, 2011.National Retail Properties, Inc.Property PortfolioTop Tenants Properties% of Total (1)Pantry956.2%Susser866.1%CL Thomas665.1%AMC Theatre154.1%BJ's Wholesale Club73.8%Best Buy193.2%Mister Car Wash463.0%Road Ranger342.9%Gander Mountain82.6%Camping World192.6%Pull-A-Part202.6%OSI Restaurant Partners342.4%LA Fitness92.3%Pep Boys172.3%Logan's Roadhouse282.2% Lease Expirations(2)% ofTotal(1)# ofPropertiesGross LeasableArea (3)% ofTotal(1)# ofPropertiesGross Leasable Area (3)20121.1%20295,00020183.6%42873,00020133.2%41863,00020193.1%41685,00020143.2%43587,00020203.6%90829,00020152.9%68945,00020214.9%86723,00020162.0%38593,00020228.5%96964,00020174.0%39906,000Thereafter59.9%8267,969,000(1) Based on the annual base rent of $313,918,000, which is the annualized base rent for all leases in place as of March 31, 2012.(2) As of March 31, 2012, 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