Press release from PR Newswire
Second Quarter 2012 Operating Results Announced By National Retail Properties, Inc.
Thursday, August 02, 2012
Second Quarter 2012 Operating Results Announced By National Retail Properties, Inc.08:30 EDT Thursday, August 02, 2012ORLANDO, Fla., Aug. 2, 2012 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and six months ended June 30, 2012. Highlights include:Operating Results:Revenues and net earnings, FFO and AFFO available to common stockholders: Quarter EndedSix Months EndedJune 30,June 30,2012201120122011(in thousands, except per share data)Revenues$82,751$61,865$161,350$123,336Net earnings available to common stockholders$27,579$19,607$52,334$38,731Net earnings per common share (diluted)$0.26$0.23$0.49$0.46FFO available to common stockholders$43,731$32,180$85,551$63,573FFO per common share (diluted)$0.41$0.38$0.80$0.75FFO excluding impairment losses$46,449$32,447$88,269$63,969FFO excluding impairment losses per share (diluted)$0.43$0.38$0.83$0.76AFFO available to common stockholders$48,957$35,598$95,218$70,115AFFO per common share (diluted)$0.46$0.42$0.89$0.83 Excluding a $3.1 million charge for the redemption of our 7.375% Series C Preferred Stock in the first quarter and all impairment charges, FFO for the six months ended June 30, 2012, was $0.86 per share Portfolio occupancy was 98.2% at June 30, 2012, as compared to 97.4% at December 31, 2011, and 96.9% at June 30, 2011Investments and Dispositions for the quarter ended June 30, 2012:Investments: $115 million in the Property Portfolio, including acquiring 27 properties with an aggregate 880,000 square feet of gross leasable areaDispositions: Seven properties with net proceeds of $6.6 millionInvestments and Dispositions for the six months ended June 30, 2012:Investments: $312.9 million in the Property Portfolio, including acquiring 94 properties with an aggregate 1,473,000 square feet of gross leasable areaDispositions: 10 properties with net proceeds of $11.7 millionCapital transactions for the quarter ended June 30, 2012:Issued 848,639 common shares generating $22.4 million of net proceedsCraig Macnab, Chief Executive Officer, commented: "We were very pleased to have recently announced an increase in our quarterly dividend which will make this the 23rd consecutive year that we have raised our annual dividend ? this is a long term track record that less than a handful of REITs can claim. Our strong consistent cash dividends have been an important part of the 14.0% annual total shareholder return NNN has produced over the past 20 years. Our portfolio and balance sheet remain in very good condition and 2012 remains on track to produce 8% FFO per share growth."National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of June 30, 2012, the company owned 1,506 properties in 47 states with a gross leasable area of approximately 17.8 million square feet. For more information on the company, visit www.nnnreit.com.Management will hold a conference call on August 2, 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 June 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 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 EndedSix Months EndedJune 30,June 30,2012201120122011Income Statement SummaryRevenues:Rental and earned income$78,766$58,403$153,072$116,206Real estate expense reimbursement from tenants2,5052,1425,3374,422Interest and other income from real estate transactions7645431,4701,164Interest income on commercial mortgage residual interests7167771,4711,54482,75161,865161,350123,336Retail operations:Revenues7,78412,45019,00821,300Operating expenses(7,481)(11,760)(18,543)(20,612)Net303690465688Operating expenses:General and administrative7,0246,56814,62713,226Real estate4,0253,9198,5977,573Depreciation and amortization19,03213,76537,14027,184Impairment ? commercial mortgage residual interests valuation2,7182672,71839632,79924,51963,08248,379Other expenses (revenues):Interest and other income(361)(283)(719)(625)Interest expense19,39417,51239,03935,17419,03317,22938,32034,549Income tax expense(140)(210)(236)(191)Equity in earnings of unconsolidated affiliate155104305213Earnings from continuing operations31,23720,70160,48241,118Earnings from discontinued operations2,2395682,8171,005Earnings including noncontrolling interests33,47621,26963,29942,123Loss (earnings) attributable to noncontrolling interests:Continuing operations34675593Discontinued operations(5)(33)(17)(93)293438?Net earnings attributable to NNN33,50521,30363,33742,123Series C preferred stock dividends?(1,696)(1,979)(3,392)Series D preferred stock dividends(5,926)?(5,926)?Excess of redemption value over carrying value of preferred shares redeemed??(3,098)?Net earnings available to common stockholders$27,579$19,607$52,334$38,731National Retail Properties, Inc.(in thousands, except per share data)(unaudited)Quarter EndedJune 30,Six Months EndedJune 30,2012201120122011Weighted average common shares outstanding:Basic105,99284,410105,41883,772Diluted107,45984,726106,84484,271Net earnings per share available to common stockholders:Basic:Continuing operations$0.24$0.23$0.47$0.46Discontinued operations0.02?0.02?Net earnings$0.26$0.23$0.49$0.46Diluted:Continuing operations$0.24$0.23$0.46$0.46Discontinued operations0.02?0.03?Net earnings$0.26$0.23$0.49$0.46 National Retail Properties, Inc. (in thousands, except per share data) (unaudited) Quarter EndedSix Months EndedJune 30,June 30,2012201120122011Funds From Operations (FFO) Reconciliation:Net earnings available to common stockholders$27,579$19,607$52,334$38,731Real estate depreciation and amortization:Continuing operations18,19112,42135,45424,620Discontinued operations1010947220Joint venture real estate depreciation44448888Gain on disposition of real estate(2,438)(1)(2,752)(86)Impairment losses - real estate345?380?Total FFO adjustments16,15212,57333,21724,842FFO available to common stockholders$43,731$32,180$85,551$63,573FFO per share:Basic$0.41$0.38$0.81$0.76Diluted$0.41$0.38$0.80$0.75Adjusted Funds From Operations (AFFO) Reconciliation:Net earnings available to common stockholders$27,579$19,607$52,334$38,731Total FFO adjustments16,15212,57333,21724,842FFO available to common stockholders43,73132,18085,55163,573Straight-line accrued rent26547(529)51Net capital lease rent adjustment405388807802Below market rent amortization(602)(116)(1,237)(213)Stock based compensation expense1,9831,4483,7682,841Capitalized interest expense(436)(246)(867)(569)Convertible debt interest expense1,0631,6302,1073,234Impairment losses and other charges, net of recoveries2,5482672,520396Excess of redemption value over carrying value of preferred share redemption??3,098?Total AFFO adjustments5,2263,4189,6676,542AFFO available to common stockholders$48,957$35,598$95,218$70,115AFFO per share:Basic$0.46$0.42$0.90$0.84Diluted$0.46$0.42$0.89$0.83Other Information:Percentage rent$221$132$330$245Amortization of debt costs$828$1,304$1,656$2,480Scheduled debt principal amortization (excluding maturities)$391$269$679$541Non-real estate depreciation expense$18$46$40$95 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 June 30, 2012, as discontinued operations. The following is a summary of the earnings from discontinued operations.Quarter EndedSix Months EndedJune 30,June 30,2012201120122011Revenues:Rental and earned income$687$1,450$1,575$2,202Real estate expense reimbursement from tenants1068228321Interest and other income from real estate transactions4?36397971,4581,8392,562Expenses:General and administrative4377Real estate192346478621Depreciation and amortization3513295263Impairment losses - real estate345?380?Interest3603407176819368211,6771,572Gain on disposition of real estate2,43812,752132Income tax expense(60)(70)(97)(117)Earnings from discontinued operations including noncontrolling interests2,2395682,8171,005Earnings attributable to noncontrolling interests(5)(33)(17)(93)Earnings from discontinued operations attributable to NNN$2,234$535$2,800$912 National Retail Properties, Inc.(in thousands)(unaudited)June 30, 2012December 31, 2011Balance Sheet SummaryAssets:Cash and cash equivalents$2,907$2,082Receivables, net of allowance1,4562,149Investment in unconsolidated affiliate4,2834,358Mortgages, notes and accrued interest receivable36,74033,428Real estate:Accounted for using the operating method, net of accumulated depreciation and amortization3,485,8193,225,119Accounted for using the direct financing method24,95426,518Real estate held for sale40,35136,105Commercial mortgage residual interests12,39515,299Accrued rental income, net of allowance25,33025,187Other assets69,75564,184Total assets$3,703,990$3,434,429Liabilities:Line of credit payable$142,600$65,600Mortgages payable, net of unamortized premium29,34123,171Notes payable - convertible, net of unamortized discount357,479355,371Notes payable, net of unamortized discount845,237894,967Other liabilities101,92391,444Total liabilities1,476,5801,430,553Stockholders' equity of NNN2,226,0702,002,498Noncontrolling interests1,3401,378Total equity2,227,4102,003,876Total liabilities and equity$3,703,990$3,434,429Common shares outstanding107,449104,755Gross leasable area, Property Portfolio (square feet)17,79816,428 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 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." June 30,2012December 31,2011Assets:Cash and cash equivalents$435$307Receivables200200Real estate70,31970,911Other assets342402$71,296$71,820Liabilities:Notes payable$42,700$42,700Other liabilities4565Total liabilities42,74542,765Members' equity28,55129,055Total liabilities and equity$71,296$71,820 Quarter EndedSix Months EndedJune 30,June 30,2012201120122011Revenues:Rental income$1,565$1,565$3,130$3,130Expenses:General and administrative81112187185Real estate45810Depreciation and amortization323369646737Interest1894523829075979381,2231,839Net earnings$968$627$1,907$1,291 National Retail Properties, Inc.Property Portfolio Top 20 Lines of TradeAs of June 30,Line of Trade2012(1)2011 (2)1.Convenience stores22.6%22.9%2.Restaurants - full service11.4%10.6%3.Automotive parts6.0%7.6%4.Automotive service5.9%5.3%5.Theaters4.6%5.7%6.Sporting goods4.5%4.5%7.Wholesale clubs3.7%0.4%8.Restaurants - limited service3.6%4.2%9.Drug Stores3.2%3.8%10.Consumer electronics3.2%2.5%11.Recreational vehicle dealers, parts and accessories2.9%1.3%12.Health and fitness2.6%2.9%13.Travel plazas2.3%2.2%14.Home improvement2.2%1.0%15.Family entertainment centers2.1%1.9%16.Books1.9%2.9%17.Grocery1.8%2.5%18.Home furnishings1.5%1.0%19.Office supplies1.3%2.2%20.General merchandise1.3%1.2%Other11.4%13.4%Total100.0%100.0% Top 10 StatesState% of Total(1)State% of Total(1)1.Texas22.2%6.Ohio3.6%2.Florida9.3%7.California3.6%3.Illinois5.4%8.Virginia3.4%4.North Carolina5.3%9.Indiana3.3%5.Georgia4.1%10.Pennsylvania3.2% (1) Based on the annualized base rent for all leases in place as of June 30, 2012. (2) Based on the annualized base rent for all leases in place as of June 30, 2011.National Retail Properties, Inc.Property PortfolioTop TenantsProperties% of Total (1)Pantry956.2%Susser865.9%CL Thomas665.0%AMC Theatre154.0%BJ's Wholesale Club73.7%Mister Car Wash533.3%Best Buy193.1%Camping World192.9%Road Ranger342.8%Gander Mountain92.6%LA Fitness102.5%Pull-A-Part202.5%OSI Restaurant Partners342.4%Pep Boys172.2%Logan's Roadhouse302.1% Lease Expirations(2)% ofTotal(1)# ofPropertiesGross LeasableArea (3)% ofTotal(1)# ofPropertiesGross LeasableArea (3)20120.7%18333,00020183.6%43933,00020132.8%38764,00020193.0%42704,00020143.0%43587,00020203.6%92867,00020152.8%69948,00020215.2%91791,00020162.1%39619,00020228.8%1021,041,00020173.9%43973,000Thereafter60.5%8518,771,000 (1) Based on the annual base rent of $325,984,000, which is the annualized base rent for all leases in place as of June 30, 2012.(2) As of June 30, 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