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Press release from PR Newswire

First Quarter 2013 Operating Results And Increased 2013 FFO Guidance Announced By National Retail Properties, Inc.

Thursday, May 02, 2013

First Quarter 2013 Operating Results And Increased 2013 FFO Guidance Announced By National Retail Properties, Inc.

08:30 EDT Thursday, May 02, 2013

ORLANDO, Fla., May 2, 2013 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced its operating results for the quarter ended March 31, 2013.  Highlights include:

Operating Results:

  • Revenues and net earnings, FFO, Recurring FFO and AFFO available to common stockholders and diluted per share amounts:

Quarter Ended

March 31,

2013

2012

(in thousands, except per share data)

Revenues

$

92,565

$

77,385

Net earnings available to common stockholders

$

29,304

$

24,755

Net earnings per common share

$

0.25

$

0.23

FFO available to common stockholders

$

54,618

$

41,820

FFO per common share

$

0.47

$

0.39

Recurring FFO available to common stockholders

$

55,377

$

44,890

Recurring FFO per common share

$

0.48

$

0.42

AFFO available to common stockholders

$

56,992

$

46,260

AFFO per common share

$

0.49

$

0.44

  • Portfolio occupancy was 97.8% at March 31, 2013, as compared to 97.9% at December 31, 2012, and 97.5% at March 31, 2012

Investments and Dispositions for the quarter ended March 31, 2013:

  • Investments:
    • $42.6 million in property investments, including the acquisition of 17 properties with an aggregate 162,000 square feet of gross leasable area
  • Dispositions:
    • Two properties with net proceeds of $3.6 million producing $505,000 of gains on sales (not included in FFO)

Capital transactions for the quarter ended March 31, 2013:

  • Raised $164.0 million in net proceeds from the issuance of 5,041,537 common shares

April 2013 transactions:

  • Invested $116.4 million in property investments, including the acquisition of 46 properties with an aggregate 134,240 square feet of gross leasable area
  • Closed on public offering of $350 million of 3.30% senior unsecured notes due April 15, 2023

National Retail Properties announced an increase in 2013 FFO guidance from a range of $1.81 to $1.85 to a range of $1.85 to $1.89 per share before any impairment expense. 2013 AFFO is estimated to be $1.93 to $1.97 per share. The FFO guidance equates to net earnings before any gains or losses from the sale of real estate of $1.08 to $1.12 per share plus $0.77 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: "Very strong recurring FFO per share growth of 14% in the first quarter was driven by continued high occupancy, improved operating expense efficiencies and increased rental revenue from 2012's property acquisitions. Additionally, we have taken advantage of the strong capital markets environment by issuing both long term fixed rate debt and common equity at very attractive pricing which provides very accretive funding for additional acquisitions. All of this has allowed us to increase our 2013 FFO guidance to levels that are projected to produce approximately 7-8% growth in recurring FFO per share results for 2013."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of March 31, 2013, the company owned 1,636 properties in 47 states with a gross leasable area of approximately 19.3 million square feet.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on May 2, 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 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 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 ended March 31, 2013.  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 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 Ended

March 31,

2013

2012

Income Statement Summary

Revenues:

Rental and earned income

$

88,598

$

73,074

Real estate expense reimbursement from tenants

2,977

2,849

Interest and other income from real estate transactions

384

707

Interest income on commercial mortgage residual interests

606

755

92,565

77,385

Retail operations:

Revenues

?

11,224

Operating expenses

?

(11,062)

Net

?

162

Operating expenses:

General and administrative

8,264

7,604

Real estate

3,954

4,576

Depreciation and amortization

23,755

17,765

Impairment ? commercial mortgage residual interests valuation

?

?

Impairment losses

1,812

35

37,785

29,980

Other expenses (revenues):

Interest and other income

(334)

(358)

Interest expense

21,827

19,818

21,493

19,460

Income tax benefit (expense)

780

(115)

Equity in earnings of unconsolidated affiliate

?

150

Earnings from continuing operations

34,067

28,142

Earnings (loss) from discontinued operations

(164)

1,682

Earnings including noncontrolling interests

33,903

29,824

Loss (earnings) attributable to noncontrolling interests:

Continuing operations

219

14

Discontinued operations

(56)

(6)

163

8

Net earnings attributable to NNN

34,066

29,832

Series C preferred stock dividends

?

(1,979)

Series D preferred stock dividends

(4,762)

?

Excess of redemption value over carrying value of Series C

   preferred shares redeemed

?

(3,098)

Net earnings available to common stockholders

$

29,304

$

24,755

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

Quarter Ended

March 31,

2013

2012

Weighted average common shares outstanding:

Basic

113,491

104,841

Diluted

115,850

106,211

Net earnings per share available to common stockholders:

Basic:

Continuing operations

$

0.26

$

0.22

Discontinued operations

?

0.01

Net earnings

$

0.26

$

0.23

Diluted:

Continuing operations

$

0.25

$

0.22

Discontinued operations

?

0.01

Net earnings

$

0.25

$

0.23

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

Quarter Ended

March 31,

2013

2012

Funds From Operations (FFO) Reconciliation:

Net earnings available to common stockholders

$

29,304

$

24,755

Real estate depreciation and amortization:

Continuing operations

23,691

16,910

Discontinued operations

36

390

Joint venture real estate depreciation

?

44

Gain on disposition of real estate

(505)

(314)

Impairment losses - real estate

2,092

35

Total FFO adjustments

25,314

17,065

FFO available to common stockholders

$

54,618

$

41,820

FFO per share:

Basic

$

0.48

$

0.40

Diluted

$

0.47

$

0.39

Recurring Funds from Operations Reconciliation:

Net earnings available to common shareholders

$

29,304

$

24,755

Total FFO adjustments

25,314

17,065

FFO available to common shareholders

54,618

41,820

Excess of redemption value over carrying value of preferred

   share redemption

?

3,098

Impairment losses and other charges, net of recoveries

759

(28)

Total Recurring FFO adjustments

759

3,070

Recurring FFO available to common shareholders

$

55,377

$

44,890

Recurring FFO per share:

Basic

$

0.49

$

0.43

Diluted

$

0.48

$

0.42

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

Quarter Ended

March 31,

2013

2012

Adjusted Funds From Operations (AFFO) Reconciliation:

Net earnings available to common shareholders

$

29,304

$

24,755

Total FFO adjustments

25,314

17,065

Total Recurring FFO adjustments

759

3,070

Recurring FFO available to common stockholders

55,377

44,890

Straight line accrued rent

(777)

(795)

Net capital lease rent adjustment

400

402

Below market rent amortization

(625)

(635)

Stock based compensation expense

1,714

1,785

Capitalized interest expense

(219)

(431)

Convertible debt interest expense

1,122

1,044

Total AFFO adjustments

1,615

1,370

AFFO available to common stockholders

$

56,992

$

46,260

AFFO per share:

Basic

$

0.50

$

0.44

Diluted

$

0.49

$

0.44

Other Information:

Percentage rent

$

372

$

109

Amortization of debt costs

$

907

$

828

Scheduled debt principal amortization (excluding maturities)

$

260

$

288

Non-real estate depreciation expense

$

61

$

22

 

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 March 31, 2013 and generated revenue, as discontinued operations.  The following is a summary of the earnings (loss)from discontinued operations.

Quarter Ended

March 31,

2013

2012

Revenues:

Rental and earned income

$

539

$

2,122

Real estate expense reimbursement from tenants

72

104

Interest and other income from real estate transactions

5

2

616

2,228

Expenses:

General and administrative

2

2

Real estate

30

280

Depreciation and amortization

50

403

Impairment losses and other charges, net of recoveries

1,039

(28)

Interest

164

184

1,285

841

Gain on disposition of real estate

505

314

Income tax expense

?

(19)

Earnings (loss) from discontinued operations attributable to NNN

(164)

1,682

Earnings attributable to noncontrolling interests

(56)

(6)

Earnings (loss) from discontinued operations attributable to NNN

$

(220)

$

1,676

 

National Retail Properties, Inc.

(in thousands)

(unaudited)

March 31, 2013

December 31, 2012

Balance Sheet Summary

Assets:

Cash and cash equivalents

$

3,442

$

2,076

Receivables, net of allowance

3,260

3,112

Mortgages, notes and accrued interest receivable

26,884

27,770

Real estate portfolio:

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

3,801,517

3,788,053

Accounted for using the direct financing method

22,817

23,217

Real estate held for sale

23,492

23,537

Commercial mortgage residual interests

13,719

13,096

Accrued rental income, net of allowance

26,161

25,458

Debt costs, net of accumulated amortization

11,874

12,781

Other assets

68,624

68,926

Total assets

$

4,001,790

$

3,988,026

Liabilities:

Line of credit payable

$

59,400

$

174,200

Mortgages payable, including unamortized premium

10,328

10,602

Notes payable - convertible, net of unamortized discount

222,084

236,500

Notes payable, net of unamortized discount

1,165,897

1,165,662

Accrued interest payable

28,130

17,527

Other liabilities

73,191

85,950

Total liabilities

1,559,030

1,690,441

Stockholders' equity of NNN

2,441,623

2,296,285

Noncontrolling interests

1,137

1,300

Total equity

2,442,760

2,297,585

Total liabilities and equity

$

4,001,790

$

3,988,026

Common shares outstanding

116,891

111,555

Gross leasable area, Property Portfolio (square feet)

19,267

19,168

 

National Retail Properties, Inc.

Property Portfolio

 

Top 20 Lines of Trade

As of March 31,

Line of Trade

2013(1)

2012 (2)

1.

Convenience stores

19.8%

23.5%

2.

Restaurants - full service

10.7%

11.7%

3.

Automotive service

7.7%

5.3%

4.

Automotive parts

5.5%

6.2%

5.

Restaurants - limited service

5.2%

3.6%

6.

Theaters

4.8%

4.7%

7.

Sporting goods

4.0%

4.6%

8.

Health and fitness

3.6%

2.4%

9.

Wholesale clubs

3.4%

3.8%

10.

Home improvement

3.0%

2.1%

11.

Consumer electronics

3.0%

3.3%

12.

Drug stores

3.0%

3.3%

13.

Recreational vehicle dealers, parts and accessories

2.9%

2.6%

14.

Travel plazas

2.2%

2.4%

15.

Family entertainment centers

2.2%

2.0%

16.

Books

1.7%

1.9%

17.

Home furnishings

1.6%

0.8%

18.

Grocery

1.6%

1.9%

19.

General merchandise

1.5%

1.3%

20.

Financial services

1.3%

1.2%

Other

11.3%

11.4%

Total

100.0%

100.0%

 

 

Top 10 States

State

% of Total(1)

State

% of Total(1)

1.

Texas

21.7%

6.

California

4.2%

2.

Florida

9.3%

7.

Indiana

4.2%

3.

Illinois

5.7%

8.

Pennsylvania

3.6%

4.

North Carolina

4.6%

9.

Virginia

3.6%

5.

Georgia

4.6%

10.

Ohio

3.3%

(1) Based on the annualized base rent for all leases in place as of March 31, 2013.

(2) Based on the annualized base rent for all leases in place as of March 31, 2012.

 

 

National Retail Properties, Inc.

Property Portfolio

 

Top Tenants (> 2.0%)

Properties

% of Total (1)

Susser

86

5.5%

Pantry

84

4.9%

Mister Car Wash

75

4.8%

7-Eleven

68

4.6%

AMC Theatre

15

4.0%

LA Fitness

16

3.5%

BJ's Wholesale Club

7

3.4%

Camping World

21

2.9%

Best Buy

19

2.9%

Gander Mountain

9

2.5%

Road Ranger

27

2.3%

Pull-A-Part

20

2.3%

Bloomin' Brands (Outback)

34

2.1%

Logan's Roadhouse

29

2.1%

Pep Boys

17

2.0%

 

 

Lease Expirations(2)

% ofTotal(1)

# ofProperties

Gross LeasableArea (3)

% ofTotal(1)

# ofProperties

Gross Leasable Area (3)

2013

1.0%

21

324,000

2019

2.9%

46

766,000

2014

2.6%

40

583,000

2020

3.4%

96

907,000

2015

2.3%

34

638,000

2021

4.8%

98

867,000

2016

1.8%

30

539,000

2022

7.4%

93

1,071,000

2017

3.9%

46

1,008,000

2023

3.6%

45

892,000

2018

4.5%

60

1,254,000

Thereafter

61.8%

983

9,780,000

(1) Based on the annual base rent of $357,978,000, which is the annualized base rent for all leases in place as of March 31, 2013.

(2) As of March 31, 2013, 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, (407) 265-7348

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