Press release from PR Newswire
2012 Operating Results And Increased 2013 Guidance Announced By National Retail Properties, Inc.
Thursday, February 07, 2013
2012 Operating Results And Increased 2013 Guidance Announced By National Retail Properties, Inc.08:30 EST Thursday, February 07, 2013ORLANDO, Fla., Feb. 7, 2013 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and year ended December 31, 2012. Highlights include:Operating Results:Revenues and net earnings, FFO, Recurring FFO and AFFO available to common stockholders and diluted per share amounts:Quarter EndedYear EndedDecember 31,December 31,2012201120122011(in thousands, except per share data)Revenues$88,899$72,959$331,752$259,939Net earnings available to common stockholders$35,901$25,874$121,489$85,540Net earnings per common share$0.32$0.26$1.11$0.96FFO available to common stockholders$50,994$41,038$193,589$139,665FFO per common share$0.46$0.42$1.77$1.57Recurring FFO available to common stockholders$51,088$40,051$189,666$139,258Recurring FFO per common share$0.46$0.41$1.74$1.57AFFO available to common stockholders$54,164$42,729$200,746$150,815AFFO per common share$0.48$0.43$1.84$1.70Portfolio occupancy was 97.9% at December 31, 2012, as compared to 97.9% at September 30, 2012, and 97.4% at December 31, 2011 2012 Highlights:Increased recurring FFO per share 10.8% from $1.57 in 2011 to $1.74 in 2012 Dividend yield at December 31, 2012 of 5.0% Dividends per share increased to $1.56 marking the 23rd consecutive year of annual dividend increases - one of only four equity REITs and one of only 104 public companies with 23 or more consecutive annual dividend increases Maintained high occupancy levels at 97.9% with weighted average remaining lease term of 12 years Invested $707.2 million in 232 properties with an aggregate 2,955,000 square feet of gross leasable area Sold 34 properties for $81.1 million producing $11.0 million of gains on sale (not included in FFO) Expanded unsecured bank credit facility to $500 million while extending the term to October 2016 and reducing the interest rate to LIBOR + 117.5 basis points Issued $325.0 million principal amount of 3.80% senior unsecured notes due 2022 generating net proceeds of $317.1 million Paid off $123.2 million principal amount of 3.95% convertible senior notes due 2026 and the remaining $15.5 million principal amount of 3.95% notes were paid off in January 2013. Raised $183.1 million in net proceeds from the issuance of 6,383,942 common shares and $277.6 million from the issuance of preferred equity Over 99% of properties are not encumbered with secured mortgage debt Generated annual total return to shareholders of 24.6% for 2012 and an average annual total return of 13.3% for the past 20 years In January 2013, Fitch Ratings upgraded NNN's unsecured debt rating to BBB+ and Moody's Investors Service revised NNN's rating outlook to positiveInvestments and Dispositions for the quarter ended December 31, 2012:Investments: $254.7 million in property investments, including the acquisition of 108 properties with an aggregate 907,000 square feet of gross leasable areaDispositions: 16 properties with net proceeds of $49.0 million producing $6.5 million of gains on sales (not included in FFO)National Retail Properties announced an increase in 2013 FFO guidance from a range of $1.77 to $1.81 to a range of $1.81 to $1.85 per share before any impairment expense. 2013 AFFO is estimated to be $1.89 to $1.93 per share. The FFO guidance equates to net earnings before any gains or losses from the sale of real estate of $1.09 to $1.13 per share plus $0.72 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 continuing strong results in 2012 are testament to the strength of our business model and balance sheet combined with the expertise of our talented associates who make it all happen. Over the past two years, NNN has grown per share results by 20% while improving our balance sheet credit metrics and maintaining very high occupancy levels. These results have perpetuated NNN's elite 23 year record of increased annual dividends which is the foundation of NNN's strong total shareholder returns for many years. Finally, 2013 is off to a good start as evidenced by our increased guidance." National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of December 31, 2012, the company owned 1,622 properties in 47 states with a gross leasable area of approximately 19.2 million square feet. For more information on the company, visit www.nnnreit.com.Management will hold a conference call on February 7, 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 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, 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. 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 31,2012201120122011Income Statement SummaryRevenues:Rental and earned income$84,385$68,542$315,226$244,618Real estate expense reimbursement from tenants3,4773,05511,4439,914Interest and other income from real estate transactions4285832,4102,302Interest income on commercial mortgage residual interests6097792,6733,10588,89972,959331,752259,939Retail operations:Revenues?11,43619,00845,139Operating expenses?(10,920)(18,543)(43,096)Net?5164652,043Operating expenses:General and administrative8,9038,55432,18228,814Real estate4,6324,84917,06916,832Depreciation and amortization20,28115,61274,14056,926Impairment ? commercial mortgage residual interests valuation946282,8121,024Impairment losses and other charges, net of recoveries1,115(1,615)8,411(1,431)35,02528,028134,614102,165Other expenses (revenues):Interest and other income(318)(429)(2,232)(1,511)Interest expense20,59719,58582,50274,84520,27919,15680,27073,334Gain on disposition of real estate?297?297Income tax benefit (expense)(104)(521)7,086(779)Equity in earnings of unconsolidated affiliate?1534,074474Earnings from continuing operations33,49126,220128,49386,475Earnings from discontinued operations7,1561,46513,4445,941Earnings including noncontrolling interests40,64727,685141,93792,416Loss (earnings) attributable to noncontrolling interests:Continuing operations43(123)129(11)Discontinued operations(27)8(51)(80)16(115)78(91)Net earnings attributable to NNN40,66327,570142,01592,325Series C preferred stock dividends?(1,696)(1,979)(6,785)Series D preferred stock dividends(4,762)?(15,449)?Excess of redemption value over carrying value of preferred shares redeemed??(3,098)?Net earnings available to common stockholders$35,901$25,874$121,489$85,540December 31,December 31,2012201120122011Weighted average common shares outstanding:Basic109,39397,605106,96588,100Diluted112,01398,671109,11888,837Net earnings per share available to common stockholders:Basic:Continuing operations$0.26$0.25$1.00$0.90Discontinued operations0.070.010.130.06Net earnings$0.33$0.26$1.13$0.96Diluted:Continuing operations$0.26$0.25$0.99$0.89Discontinued operations0.060.010.120.07Net earnings$0.32$0.26$1.11$0.96 National Retail Properties, Inc.(in thousands, except per share data)(unaudited) Quarter EndedYear EndedDecember 31,December 31,2012201120122011Funds From Operations (FFO) Reconciliation:Net earnings available to common stockholders$35,901$25,874$121,489$85,540Real estate depreciation and amortization:Continuing operations20,22315,23974,01652,638Discontinued operations1113139571,405Joint venture real estate depreciation?44112178Joint venture gain on disposition of real estate??(2,341)?Gain on disposition of real estate(6,510)(432)(10,956)(527)Impairment losses - real estate1,269?10,312431Total FFO adjustments15,09315,16472,10054,125FFO available to common stockholders$50,994$41,038$193,589$139,665FFO per share:Basic$0.47$0.42$1.81$1.59Diluted$0.46$0.42$1.77$1.57Recurring Funds from Operations Reconciliation:Net earnings available to common stockholders$35,901$25,874$121,489$85,540Total FFO adjustments15,09315,16472,10054,125FFO available to common stockholders50,99441,038193,589139,665Excess of redemption value over carrying value of preferred share redemption??3,098?Impairment losses and other charges, net of recoveries94(987)2,614(407)Income tax benefit??(7,671)?Joint venture disposition fee and promote income??(1,964)?Total Recurring FFO adjustments94(987)(3,923)(407)Recurring FFO available to common stockholders$51,088$40,051$189,666$139,258Recurring FFO per share:Basic$0.47$0.41$1.77$1.58Diluted$0.46$0.41$1.74$1.57Quarter EndedYear EndedDecember 31,December 31,2012201120122011Adjusted Funds From Operations (AFFO) Reconciliation:Net earnings available to common stockholders$35,901$25,874$121,489$85,540Total FFO adjustments15,09315,16472,10054,125Total Recurring FFO adjustments94(987)(3,923)(407)Recurring FFO available to common stockholders51,08840,051189,666139,258Straight-line accrued rent160108(897)54Net capital lease rent adjustment4024041,6231,595Below market rent amortization(627)(615)(2,492)(1,106)Stock based compensation expense2,3752,1218,1316,390Capitalized interest expense(336)(366)(1,540)(1,213)Convertible debt interest expense (non-cash portion)1,1021,0264,2915,837Joint venture disposition fee and promote income??1,964?Total AFFO adjustments3,0762,67811,08011,557AFFO available to common stockholders$54,164$42,729$200,746$150,815AFFO per share:Basic$0.50$0.44$1.88$1.71Diluted$0.48$0.43$1.84$1.70Other Information:Percentage rent$620$644$1,192$1,120Amortization of debt costs$78$351$2,584$4,141Scheduled debt principal amortization (excluding maturities)$256$283$1,187$1,098Non-real estate depreciation expense$62$27$143$168 National 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, 2012, as discontinued operations. The following is a summary of the earnings from discontinued operations.Quarter EndedYear EndedDecember 31,December 31,2012201120122011Revenues:Rental and earned income$1,427$2,027$7,504$9,567Real estate expense reimbursement from tenants147163527632Interest and other income from real estate transactions5344471,5792,1938,07510,246Expenses:General and administrative15112622Real estate2132729971,201Depreciation and amortization1283361,0461,495Impairment losses - real estate154?1,901431Interest3503571,4221,3828609765,3924,531Gain on disposition of real estate6,51028410,956424Income tax expense(73)(36)(195)(198)Earnings from discontinued operations including noncontrolling interests7,1561,46513,4445,941Loss (earnings) attributable to noncontrolling interests(27)8(51)(80)Earnings from discontinued operations attributable to NNN$7,129$1,473$13,393$5,861 National Retail Properties, Inc.(in thousands)(unaudited) December 31,2012December 31,2011Balance Sheet SummaryAssets:Cash and cash equivalents$2,076$2,082Receivables, net of allowance3,1122,763Investment in unconsolidated affiliate?4,358Mortgages, notes and accrued interest receivable27,77033,428Real estate:Accounted for using the operating method, net of accumulated depreciation and amortization3,769,8173,224,288Accounted for using the direct financing method23,21726,518Real estate held for sale41,77336,936Commercial mortgage residual interests13,09615,299Accrued rental income, net of allowance25,45825,187Other assets81,70764,184Total assets$3,988,026$3,435,043Liabilities:Line of credit payable$174,200$65,600Mortgages payable, net of unamortized premium10,60223,171Notes payable - convertible, net of unamortized discount236,500355,371Notes payable, net of unamortized discount1,165,662894,967Other liabilities103,47792,058Total liabilities1,690,4411,431,167Stockholders' equity of NNN2,296,2852,002,498Noncontrolling interests1,3001,378Total equity2,297,5852,003,876Total liabilities and equity$3,988,026$3,435,043Common shares outstanding111,555104,755Gross leasable area, Property Portfolio (square feet)19,16816,428 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." The joint venture sold all 21 convenience store properties it owned in the third quarter of 2012 for approximately $87.5 million. The investors' $33.3 million total equity investment produced approximately $61.6 million of total cash distributions from operations and net sale proceeds over the life of the joint venture. December 31,2012December 31,2011Assets:Cash and cash equivalents$253$307Receivables?200Real estate?70,911Other assets?402$253$71,820Liabilities:Notes payable$?$42,700Other liabilities22865Total liabilities22842,765Members' equity2529,055Total liabilities and equity$253$71,820 Quarter EndedYear EndedDecember 31,December 31,2012201120122011Revenues:Rental income$?$1,565$4,158$6,261Expenses:General and administrative?73441332Real estate?42518Depreciation and amortization?3398331,444Interest?1925061,558?6081,8053,352Gain on disposition of real estate??15,609?Net earnings$?$957$17,962$2,909 National Retail Properties, Inc.Property Portfolio Top 20 Lines of TradeAs of December 31,Line of Trade2012(1)2011 (2)1.Convenience stores19.8%24.6%2.Restaurants - full service10.7%9.4%3.Automotive service7.6%4.9%4.Automotive parts5.6%6.5%5.Restaurants - limited service5.2%3.6%6.Theaters4.7%5.0%7.Sporting goods4.0%4.8%8.Health and fitness3.7%2.6%9.Wholesale clubs3.4%4.0%10.Home improvement3.0%2.1%11.Drug stores3.0%3.2%12.Consumer electronics3.0%3.5%13.Recreational vehicle dealers, parts and accessories2.7%2.3%14.Travel plazas2.2%2.5%15.Family entertainment centers2.1%1.9%16.Books1.8%2.0%17.Grocery1.7%2.1%18.Home furnishings1.6%0.8%19.General merchandise1.5%1.1%20.Financial services1.4%1.3%Other11.3%11.8%Total100.0%100.0% Top 10 StatesState% of Total(1)State% of Total(1)1.Texas21.8%6.California4.3%2.Florida9.2%7.Indiana4.2%3.Illinois5.7%8.Pennsylvania3.7%4.Georgia4.7%9.Virginia3.5%5.North Carolina4.7%10.Ohio3.3% (1) Based on the annualized base rent for all leases in place as of December 31, 2012.(2) Based on the annualized base rent for all leases in place as of December 31, 2011. National Retail Properties, Inc.Property Portfolio Top Tenants (>2.0%)Properties% of Total (1)Susser865.4%Pantry845.0%Mister Car Wash754.8%7-Eleven684.7%AMC Theatre153.9%LA Fitness163.6%BJ's Wholesale Club73.4%Best Buy192.9%Camping World202.7%Gander Mountain92.5%Road Ranger272.3%Pull-A-Part202.3%Bloomin' Brands (Outback)342.2%Pep Boys172.1% Lease Expirations(2)% ofTotal(1)# ofPropertiesGross LeasableArea (3)% ofTotal(1)# ofPropertiesGrossLeasable Area (3)20131.7%32566,00020192.9%46766,00020142.6%41552,00020203.4%96905,00020152.3%33630,00020214.8%98867,00020161.8%29523,00020227.5%931,070,00020173.9%461,008,00020233.5%42830,00020184.3%551,173,000Thereafter61.3%9699,624,000 (1) Based on the annual base rent of $354,836,000, which is the annualized base rent for all leases in place as of December 31, 2012.(2) As of December 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