Record Quarter Operating Results
Announced by National Retail
Properties, Inc.
ORLANDO, Fla., May 1 /PRNewswire-FirstCall/ -- National Retail
Properties, Inc. (
NYSE:NNN
) , a real estate investment trust, today announced operating results for
the quarter ended March 31, 2008, including a 37.5% increase in revenues
and a 4.1% increase in Funds From Operations ("FFO") per share
compared to the same period for 2007. Highlights include:
Operating Results:
------------------
* Revenues and net earnings and FFO available to common stockholders:
Quarter Ended
March 31,
2008 2007
-------- --------
(in thousands, except per
share data)
Revenues $ 55,200 $ 40,134
Net earnings available to common
stockholders $ 31,357 $ 25,008
Net earnings per common share (diluted) $ 0.43 $ 0.41
FFO available to common stockholders $ 36,974 $ 29,610
FFO per common share (diluted) $ 0.51 $ 0.49
* Investment Portfolio occupancy was 97.9% at March 31, 2008.
Investments and Dispositions for the quarter ended March 31, 2008:
------------------------------------------------------------------
* Investments:
-- $150.6 million in the Investment Portfolio, including acquiring
27 properties with an aggregate 390,000 square feet of gross
leasable area
-- $22.8 million in the Inventory Portfolio, including acquiring 5
properties and funding $1.2 million of development
* Dispositions:
-- 4 Investment properties with an aggregate 38,000 square feet of
gross leasable area, with net proceeds of $10.3 million, resulting
in a gain of $3.9 million
-- 8 Inventory properties with net proceeds of $71.8 million
Capital transactions for the quarter ended March 31, 2008:
----------------------------------------------------------
* Issued 269,678 shares of common stock generating $5.9 million of net
proceeds pursuant to the Dividend Reinvestment and Stock Purchase Plan
* Issued $234 million of 5.125% convertible senior notes due in 2028 (with
2013 put option)
* Repayment in full of $100 million of 7.125% notes due March 2008
* Repayment in full of $12 million of 10.0% OAMI secured note payable due
2008
National Retail also announced increased 2008 FFO guidance
of $1.97 to $2.02 per share, which represents a 5% to 8% increase over
2007 results. This equates to earnings before any gains or losses from the
sale of investment properties of $1.54 to $1.59 per share plus $0.43 per
share of expected real estate related depreciation and amortization. This
guidance is based on current plans and assumptions and subject to the
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, "This is a great
start to what we see as another record year for NNN. Our portfolio and
balance sheet are in good shape and the competitive environment for
acquisitions is notably better than in recent years."
National Retail Properties invests primarily in
high-quality retail properties subject generally to long-term, net leases.
As of March 31, 2008, the company owned 931 Investment properties in 44
states with a gross leasable area of approximately 11 million square feet.
For more information on the company, visit
www.nnnreit.com
.
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 availability of capital, 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. Consequently,
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 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.
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 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 real
estate held for investment, and the company's share of these items from
the company's unconsolidated partnerships.
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.
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)
Income Statement Summary Quarter Ended March 31,
2008 2007
------------ -----------
Revenues:
Rental and earned income $ 51,031 $ 36,438
Real estate expense reimbursement from
tenants 1,578 1,251
Interest and other income from real estate
transactions 1,235 1,201
Interest income on commercial mortgage
residual interests 1,356 1,244
------------ -----------
55,200 40,134
------------ -----------
Disposition of real estate, Inventory
Portfolio:
Gross proceeds 4,900 825
Costs (4,879) (493)
------------ -----------
Gain 21 332
------------ -----------
Operating expenses:
General and administrative 7,560 6,321
Real estate 2,439 1,845
Depreciation and amortization 10,157 6,795
Impairment - commercial mortgage residual
interests valuation 758 -
------------ -----------
20,914 14,961
------------ -----------
Other expenses (revenues):
Interest and other income (1,221) (1,303)
Interest expense 15,366 11,101
Loss on interest rate hedge 804 -
------------ -----------
14,949 9,798
------------ -----------
Income tax benefit 2,652 2,793
Minority interest 1,016 189
Equity in earnings of unconsolidated
affiliates 79 -
------------ -----------
Earnings from continuing operations 23,105 18,689
Earnings from discontinued operations:
Real estate, Investment Portfolio 4,999 4,257
Real estate, Inventory Portfolio, net of
income tax expense and minority interest 4,949 3,758
------------ -----------
9,948 8,015
------------ -----------
Net earnings 33,053 26,704
Series C Preferred Stock dividends (1,696) (1,696)
------------ -----------
Net earnings available to common
stockholders - basic and diluted $ 31,357 $ 25,008
============ ===========
National Retail Properties, Inc.
(in thousands, except per share data)
(unaudited)
Quarter Ended March 31,
2008 2007
------------ -----------
Weighted average common shares outstanding:
Basic 72,315 60,333
============ ===========
Diluted 72,447 60,472
============ ===========
Net earnings per share available to common
stockholders:
Basic:
Continuing operations $ 0.29 $ 0.28
Discontinued operations 0.14 0.13
------------ -----------
Net earnings $ 0.43 $ 0.41
============ ===========
Diluted:
Continuing operations $ 0.29 $ 0.28
Discontinued operations 0.14 0.13
------------ -----------
Net earnings $ 0.43 $ 0.41
============ ===========
Supplemental Information:
Percentage rent $ 58 $ 458
============ ===========
Earned income from direct financing leases $ 886 $ 1,822
Decrease in real estate classified as direct
financing leases (1,199) (2,462)
------------ -----------
Net direct financing lease adjustment (313) (640)
Accrued rental income (straight-line) 579 691
------------ -----------
Net lease accounting adjustments $ 266 $ 51
============ ===========
Net Inventory Portfolio gain on disposition
(TRS) $ 5,633 $ 4,669
============ ===========
Capitalized interest $ 531 $ 618
============ ===========
Scheduled debt principal amortization
(excluding maturities) $ 291 $ 450
============ ===========
National Retail Properties, Inc.
(in thousands, except per share data)
(unaudited)
Quarter Ended March 31,
2008 2007
----------- ----------
Reconciliation of net earnings to FFO and FFO
available to common stockholders:
Net earnings $ 33,053 $ 26,704
Real estate depreciation and amortization:
Continuing operations 9,426 6,212
Discontinued operations 25 153
Joint venture real estate depreciation 43 -
Gain on disposition of real estate Investment
Portfolio (3,877) (1,763)
----------- ----------
FFO 38,670 31,306
Series C Preferred Stock dividends (1,696) (1,696)
----------- ----------
FFO available to common stockholders - basic
and diluted $ 36,974 $ 29,610
=========== ==========
FFO per share:
Basic $ 0.51 $ 0.49
=========== ==========
Diluted $ 0.51 $ 0.49
=========== ==========
Quarter Ended March 31,
2008 2007
------------------ -------------------
# of # of
Real Estate Disposition Summary Properties Gain Properties Gain
------------------------------- ---------- ------- ---------- -------
Reconciliation of gain on
disposition between
continuing and discontinued
operations:
Continuing operations 1 $ 21 1 $ 332
Discontinued operations:
Investment Portfolio 4 3,877 5 1,763
Inventory Portfolio 7 9,128 22 4,337
Minority interest, Inventory
Portfolio - (3,516) - -
---------- ------- ---------- -------
12 $ 9,510 28 $ 6,432
========== ======= ========== =======
Reconciliation of gain on
disposition by type:
Inventory Portfolio:
Development 4 $ 8,284 5 $ 1,796
Exchange 4 865 18 2,873
Minority interest,
Development - (3,516 ) - -
---------- ------- ---------- -------
Total Inventory gain (TRS) 8 5,633 23 4,669
Investment Portfolio 4 3,877 5 1,763
---------- ------- ---------- -------
12 $ 9,510 28 $ 6,432
========== ======= ========== =======
National Retail Properties, Inc.
(in thousands)
(unaudited)
Earnings from Discontinued Operations:
--------------------------------------
In accordance with Statement of Financial Accounting Standards No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
No. 144"), the company has classified its investment assets sold and
leasehold interests expired subsequent to December 31, 2001, the effective
date of SFAS No. 144, as discontinued operations. In addition, the
company has classified any investment asset or revenue generating
inventory asset that was held for sale at March 31, 2008, as discontinued
operations. The following is a summary of earnings from discontinued
operations.
Quarter Ended March 31,
2008 2007
----------- -----------
Earnings from Discontinued Operations -
Investment Portfolio:
---------------------------------------
Revenues:
Rental and earned income $ 290 $ 2,671
Real estate expense reimbursement from
tenants 7 93
Interest and other income from real estate
transactions 534 124
----------- -----------
831 2,888
----------- -----------
Expenses:
General and administrative (79) -
Real estate (250) 148
Depreciation and amortization 24 153
Impairment - real estate 14 95
Interest - (2)
----------- -----------
(291) 394
----------- -----------
Gain on disposition of real estate 3,877 1,763
----------- -----------
Earnings from discontinued operations $ 4,999 $ 4,257
=========== ===========
Earnings from Discontinued Operations -
Inventory Portfolio:
---------------------------------------
Revenues:
Rental income $ 3,360 $ 2,850
Real estate expense reimbursement from
tenants 328 297
Interest and other income from real estate
transactions 454 6
----------- -----------
4,142 3,153
----------- -----------
Disposition of real estate:
Gross proceeds 69,187 59,652
Costs (60,059) (55,315)
----------- -----------
Gain 9,128 4,337
----------- -----------
Expenses:
General and administrative 25 8
Real estate 546 431
Depreciation and amortization 44 20
Interest 998 816
----------- -----------
1,613 1,275
----------- -----------
Income tax expense (3,028) (2,299)
Minority interest (3,680) (158)
----------- -----------
Earnings from discontinued operations $ 4,949 $ 3,758
=========== ===========
National Retail Properties, Inc.
(in thousands)
March 31, December 31,
Balance Sheet Summary 2008 2007
------------ ------------
(unaudited) (Note 1)
Assets:
Cash and cash equivalents $ 11,838 $ 27,499
Receivables, net of allowance 7,212 3,818
Investment in unconsolidated affiliate 4,958 4,139
Mortgages, notes and accrued interest
receivable, net of allowance 113,891 73,162
Real estate, Investment Portfolio:
Accounted for using the operating
method, net of accumulated
depreciation and amortization 2,195,701 2,055,846
Accounted for using the direct
financing method 33,038 37,497
Real estate, Inventory Portfolio,
held for sale 205,384 248,611
Commercial mortgage residual interests 22,617 24,340
Accrued rental income, net of allowance 24,855 24,652
Other assets 43,266 40,041
------------ ------------
Total assets $ 2,662,760 $ 2,539,605
============ ============
Liabilities:
Line of credit payable $ 123,500 $ 129,800
Mortgages payable 27,189 27,480
Note payable - secured - 12,000
Notes payable - convertible 406,535 172,500
Notes payable, net of unamortized discount 618,340 718,290
Income tax liability 1,115 1,671
Other liabilities 60,045 68,245
------------ ------------
Total liabilities 1,236,724 1,129,986
Minority interest 5,241 2,334
Stockholders' equity 1,420,795 1,407,285
------------ ------------
Total liabilities and equity $ 2,662,760 $ 2,539,605
============ ============
Common shares outstanding 73,031 72,528
============ ============
Gross leasable area, Investment
Portfolio (square feet) 10,962 10,610
============ ============
Note 1: Amounts are derived from audited consolidated financial
statements included in the company's Form 10-K, as amenended.
Orange Avenue Mortgage Investments, Inc.
(in thousands)
In May 2005, the company acquired a 78.9 percent equity investment of
OAMI for $9.4 million. The company's 78.9 percent share of OAMI's net
cash flow has totaled over $24 million since May 2005. The following
summary represents the balances related to OAMI included in the company's
Balance Sheet and Income Statement Summary:
March 31, December 31,
2008 2007
------------- -------------
(unaudited) (Note 1)
Assets:
Cash and cash equivalents $ 533 $ 15,541
Receivables and other assets 29 1,417
Commercial mortgage residual
interests 22,617 24,340
------------- -------------
$ 23,179 $ 41,298
============= =============
Liabilities:
Notes payable - secured $ - $ 12,000
Income tax liability 6,353 6,768
Other liabilities 65 145
------------- -------------
$ 6,418 $ 18,913
============= =============
Minority interest $ 757 $ 1,895
============= =============
Quarter Ended March 31,
2008 2007
------------- -------------
(unaudited) (unaudited)
Revenues:
Interest income on commercial
mortgage residual interests $ 1,356 $ 1,244
Interest and other income 191 702
------------- -------------
1,547 1,946
Expenses:
General and administrative 78 125
Amortization 35 63
Impairment - commercial mortgage
residual interests valuation 758 -
Interest 200 613
------------- -------------
1,071 801
------------- -------------
Income tax benefit 407 768
Minority interest (139) (282)
------------- -------------
Net earnings $ 744 $ 1,631
============= =============
Note 1: Amounts are derived from audited consolidated financial
statements included in the company's Form 10-K, as amenended.
NNN Retail Properties Fund I LLC
(dollars in thousands)
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
affiliates."
March 31, December 31,
2008 2007
----------- -----------
(unaudited)
Assets:
Cash and cash equivalents $ 131 $ 30
Receivables 14 -
Real estate 75,337 65,413
Other assets 1,239 921
----------- ----------
$ 76,721 $ 66,364
=========== ==========
Liabilities:
Notes payable $ 43,600 $ 38,600
Other liabilities 65 180
----------- ----------
Total liabilities 43,665 38,780
----------- ----------
Members' equity 33,056 27,584
----------- ----------
Total liabilities and equity $ 76,721 $ 66,364
=========== ==========
Quarter Ended
March 31,
2008
(unaudited)
Revenues:
Rental income $ 1,497
-----------
1,497
Expenses:
General and administrative 71
Real estate 5
Depreciation and amortization 353
Interest 597
-----------
1,026
Net earnings $ 471
===========
National Retail Properties, Inc.
Investment Portfolio
Top 20 Lines of Trade
---------------------
March 31,
Line of Trade 2008(1) 2007(2)
---------------------------------- ---------- ---------
1. Convenience stores 23.0 % 18.1 %
2. Restaurants - full service 9.6 % 12.1 %
3. Automotive service 8.1 % 0.2 %
4. Theaters 6.4 % -
5. Automotive parts 4.7 % 1.5 %
6. Drug stores 4.3 % 8.0 %
7. Books 4.1 % 5.5 %
8. Consumer electronics 4.1 % 5.8 %
9. Sporting goods 3.7 % 7.1 %
10. Restaurants - limited service 3.4 % 4.8 %
11. Travel plazas 2.9 % 3.7 %
12. Grocery 2.8 % 5.5 %
13. Furniture 2.8 % 4.1 %
14. Office supplies 2.6 % 3.7 %
15. Family entertainment centers 2.0 % -
16. Auto dealerships 2.0 % 2.0 %
17. Beer, wine and liquor 2.0 % 2.1 %
18. General merchandise 1.6 % 2.6 %
19. Home furnishings 1.4 % 1.8 %
20. Craft, fabric and novelty 1.4 % 1.8 %
Other 7.1 % 9.6 %
---------- ---------
Total 100.0 % 100.0 %
========== =========
Top 10 States
-------------
State % of State % of
Total(1) Total(1)
------------------------- -------------------------
1. Texas 19.2 % 6. Georgia 4.7 %
2. Florida 10.8 % 7. Pennsylvania 4.5 %
3. Illinois 7.1 % 8. Indiana 4.3 %
4. North Carolina 6.3 % 9. Colorado 3.2 %
5. California 5.3 % 10. Ohio 3.2 %
Lease Expirations
-----------------
Gross Gross
% of # of Leasable % of # of Leasable
Total(1) Properties Area(3) Total(1) Properties Area(3)
------- ------- ------- ------- ------- -------
2008 0.5% 11 182,000 2014 4.5% 31 510,000
2009 1.5% 23 427,000 2015 2.7% 20 469,000
2010 2.9% 38 401,000 2016 1.9% 14 240,000
2011 2.1% 21 336,000 2017 4.7% 26 663,000
2012 3.7% 33 549,000 2018 4.0% 32 500,000
2013 4.2% 34 753,000 Thereafter 67.3% 628 5,622,000
(1) Based on annual base rent of $209,409,000, which is the annualized
base rent for all leases in place as of March 31, 2008.
(2) Based on annual base rent of $154,809,000, which is the annualized
base rent for all leases in place as of March 31, 2007.
(3) Square feet.
Source: National Retail Properties, Inc.
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