ORLANDO, Fla., May 5 - National Retail Properties, Inc. (NYSE:NNN), a real estate investment trust, today announced operating results for the quarter ended March 31, 2009. Highlights include:
Operating Results: - Revenues, net earnings and FFO available to common stockholders:
Quarter Ended
March 31,
2009 2008
---- ----
(in thousands,
except per share data)
Revenues $57,963 $54,009
Net earnings available to common
stockholders $25,108 $30,543
Net earnings per common share (diluted) $0.32 $0.42
FFO available to common stockholders $35,056 $36,160
FFO per common share (diluted) $0.45 $0.50
- NNN paid cash dividends to its common shareholders of $0.375 per share during the quarter ended March 31, 2009.
- Investment Portfolio occupancy was 96.7% at March 31, 2009.
Investments and Dispositions for the quarter ended March 31, 2009: - Investments:
- $7.6 million of development funding in the Investment Portfolio with an aggregate 105,000 square feet of gross leasable area
- $2.2 million of development funding in the Inventory Portfolio
- Dispositions:
- Three Investment properties with an aggregate 61,000 square feet of gross leasable area, with net proceeds of $4.1 million, resulting in a gain of $1.0 million
- One Inventory property with net proceeds of $4.9 million
Capital transactions for the quarter ended March 31, 2009: - Issued 602,112 shares of common stock generating $8,852,000 of net proceeds pursuant to the Dividend Reinvestment and Stock Purchase Plan
- Repurchased $8.8 million of the Company's outstanding 3.95% convertible senior notes due September 2026, which notes provide holders with a 2011 put option, for a discounted purchase price of $7.0 million
- Repurchased $8.5 million of the Company's outstanding 5.125% convertible notes due June 2028, which notes provide holders with a 2013 put option, for a discounted purchase price of $6.5 million
National Retail Properties also announced revised 2009 FFO guidance from $1.70 to $1.80 per share to $1.65 to $1.75 per share. This guidance includes non-cash interest expense of approximately 7 cents per share due to changes required in accounting for convertible debt interest for fiscal years beginning after December 15, 2008. This equates to net earnings before any gains or losses from the sale of investment properties of $1.14 to $1.24 per share plus $0.51 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: "Despite the uncertain economic times and weak retail environment, our first quarter results were in line with expectations. While 2009 will be a year focused on controlling expenses and maintaining occupancy, our solid results and strong balance sheet puts us on track to make this NNN's 20th consecutive year of increased cash dividends per share." National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of March 31, 2009, the company owned 1,002 Investment properties in 44 states with a gross leasable area of approximately 11.3 million square feet. NNN is one of only four publicly traded REITs and 156 publicly traded companies in America to have increased its annual dividends for 19 or more consecutive years. For more information on the company, visit www.nnnreit.com. Management will hold a conference call on May 5, 2009 at 2:00 p.m. EDT to review these results. The call can be accessed on National Retail Properties, Inc. 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 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 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 unaudited and there can be no assurance that the results will not vary from the final information for the quarter ended March 31, 2009. 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 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,
2009 2008
------ ------
Revenues:
Rental and earned income $53,722 $49,858
Real estate expense reimbursement from
tenants 2,353 1,560
Interest and other income from real
estate transactions 834 1,235
Interest income on commercial mortgage
residual interests 1,054 1,356
------ ------
57,963 54,009
------ ------
Disposition of real estate, Inventory
Portfolio:
Gross proceeds - 4,900
Costs - (4,879)
------ -----
Gain - 21
------ -----
Operating expenses:
General and administrative 5,305 7,560
Real estate 3,587 2,390
Depreciation and amortization 11,819 9,970
Impairment - commercial mortgage
residual interests valuation - 758
Restructuring charges 731 -
------ ------
21,442 20,678
------ ------
Other expenses (revenues):
Interest and other income (347) (1,221)
Interest expense 15,431 16,186
Loss on interest rate hedge - 804
------ ------
15,084 15,769
------ ------
Income tax benefit 537 2,652
Equity in earnings of unconsolidated
affiliate 103 79
Gain on extinguishment of debt 2,418 -
------ ------
Earnings from continuing operations 24,495 20,314
Earnings from discontinued operations:
Real estate, Investment Portfolio 2,040 5,963
Real estate, Inventory Portfolio, net of
income tax expense and noncontrolling
interests 444 4,948
----- ------
2,484 10,911
----- ------
Net earnings including noncontrolling
interests 26,979 31,225
Loss (earnings) attributable to
noncontrolling interests (175) 1,014
------ ------
Net earnings 26,804 32,239
Series C Preferred Stock dividends (1,696) (1,696)
------ ------
Net earnings available to common
stockholders - basic and diluted $25,108 $30,543
------ ------
National Retail Properties, Inc.
(in thousands, except per share data)
(unaudited)
Quarter Ended March 31,
2009 2008
------ ------
Weighted average common shares
outstanding:
Basic 78,166 72,315
====== ======
Diluted 78,254 72,447
====== ======
Net earnings per share available to
common stockholders:
Basic:
Continuing operations $0.29 $0.27
Discontinued operations 0.03 0.15
------ ------
Net earnings $0.32 $0.42
====== ======
Diluted:
Continuing operations $0.29 $0.27
Discontinued operations 0.03 0.15
------ ------
Net earnings $0.32 $0.42
====== ======
Supplemental Information:
-------------------------
Selected Non-Cash Income Statement Items:
-----------------------------------------
Straight-line rent $91 $(579)
====== ======
Net capital lease rent adjustment $330 $314
====== ======
Above (below) market rent amortization $(153) $(151)
====== ======
Stock based compensation expense $1,119 $654
====== ======
Impairment - real estate $- $14
====== ======
Impairment - mortgage residual interests $- $758
====== ======
Amortization of debt costs $837 $629
====== ======
Capitalized interest expense $(518) $(531)
====== ======
Convertible debt interest expense (FSP
APB 14-1) $1,448 $820
====== ======
Non-real estate depreciation expense $78 $68
====== ======
Other Information:
------------------
Percentage rent $147 $58
====== ======
Net Inventory Portfolio gain on
disposition (TRS) $546 $5,633
====== ======
Scheduled debt principal amortization
(excluding maturities) $78 $291
====== ======
National Retail Properties, Inc.
(in thousands, except per share data)
(unaudited)
Quarter Ended March 31,
2009 2008
---- ----
Reconciliation of net earnings to FFO and FFO
available to common stockholders:
Net earnings $26,804 $32,239
Real estate depreciation and
amortization:
Continuing operations 10,904 9,245
Discontinued operations 32 206
Joint venture real estate depreciation 44 43
Gain on disposition of real estate
Investment Portfolio (1,032) (3,877)
------ ------
FFO 36,752 37,856
Series C Preferred Stock dividends (1,696) (1,696)
------ ------
FFO available to common stockholders - basic
and diluted $35,056 $36,160
====== ======
FFO per share:
Basic $0.45 $0.50
====== ======
Diluted $0.45 $0.50
====== ======
Real Estate Disposition Summary
-------------------------------
Quarter Ended March 31,
2009 2008
---- ----
# of Gain # of Gain
Properties Properties
---------- ---- ---------- ----
Gain on disposition
from continuing
and discontinued
operations as
reported:
Continuing
operations - $- 1 $21
Discontinued
operations:
Investment
Portfolio 3 1,032 4 3,877
Inventory
Portfolio 1 546 7 9,128
Noncontrolling
interests,
Inventory
Portfolio - - - (3,516)
----- ----- ----- -----
4 $1,578 12 $9,510
===== ===== ===== =====
Reconciliation of gain
on disposition by
type:
Inventory
Portfolio:
Development 1 $546 4 $8,284
Exchange - - 4 865
Noncontrolling
interests,
Development - - - (3,516)
----- ----- ----- -----
Total Inventory
gain (TRS) 1 546 8 5,633
Investment
Portfolio 3 1,032 4 3,877
----- ----- ----- -----
4 $1,578 12 $9,510
===== ===== ===== =====
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, 2009, as discontinued operations. The following is a
summary of earnings from discontinued operations.
Quarter Ended March 31,
2009 2008
---- ----
Earnings from Discontinued
Operations - Investment Portfolio:
-----------------------------------
Revenues:
Rental and earned income $788 $1,462
Real estate expense reimbursement
from tenants 24 25
Interest and other income from
real estate transactions 298 534
----- -----
1,110 2,021
----- -----
Expenses:
General and administrative - (79)
Real estate 70 (206)
Depreciation and amortization 32 206
Impairment - real estate - 14
----- -----
102 (65)
----- -----
Gain on disposition of real estate 1,032 3,877
----- -----
Earnings from discontinued
operations $2,040 $5,963
----- -----
Earnings from Discontinued
Operations - Inventory Portfolio:
----------------------------------
Revenues:
Rental income $1,401 $3,360
Real estate expense reimbursement
from tenants 950 329
Interest and other income from
real estate transactions 39 453
----- -----
2,390 4,142
----- -----
Disposition of real estate:
Gross proceeds 4,900 69,187
Costs (4,354) (60,059)
----- -----
Gain 546 9,128
----- -----
Expenses:
General and administrative 48 24
Real estate 1,309 550
Depreciation and amortization 139 44
Interest 930 998
----- -----
2,426 1,616
----- -----
Income tax expense (271) (3,028)
----- -----
Earnings from discontinued
operations including
noncontrolling interests 239 8,626
Loss (earnings) attributable to
noncontrolling interests 205 (3,678)
----- -----
Earnings from discontinued
operations $444 $4,948
===== =====
National Retail Properties, Inc.
(in thousands)
Balance Sheet March 31, December 31,
Summary 2009 2008
-------- -----------
(unaudited) (Note 1)
Assets:
Cash and cash equivalents $1,858 $2,626
Receivables, net of allowance 2,778 3,612
Investment in unconsolidated
affiliate 4,863 4,927
Mortgages, notes and accrued
Interest receivable, net
of allowance 60,887 60,472
Real estate, Investment Portfolio:
Accounted for using the
operating method, net of
accumulated depreciation and
amortization 2,352,293 2,357,894
Accounted for using the direct
financing method 30,911 31,240
Real estate, Inventory
Portfolio, held for sale 98,889 101,106
Commercial mortgage residual
interests 22,617 22,000
Accrued rental income, net of
allowance 23,840 23,972
Other assets 39,829 41,622
--------- ---------
Total assets $2,638,765 $2,649,471
========= =========
Liabilities:
Line of credit payable $22,900 $26,500
Mortgages payable 26,043 26,290
Notes payable - convertible 341,335 356,122
Notes payable, net of
unamortized discount 618,527 618,479
Other liabilities 54,205 53,134
--------- ---------
Total liabilities 1,063,010 1,080,525
Stockholders' equity 1,573,655 1,566,860
Noncontrolling interests 2,100 2,086
--------- ---------
Total liabilities
and equity $2,638,765 $2,649,471
========= =========
Common shares outstanding 79,303 78,415
========= =========
Gross leasable area, Investment
Portfolio (square feet) 11,295 11,251
========= =========
Note 1: Includes adjustment based on the adoption of FSP APB 14-1,
"Accounting for Convertible Debt Instruments That May Be Settled in Cash
Upon Conversion (Including Partial Cash Settlement)"
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 $27.3 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,
2009 2008
-------- -----------
(unaudited) (Note 1)
Assets:
Cash and cash equivalents $139 $405
Receivables and other assets 37 39
Commercial mortgage residual
interests 22,617 22,000
------ ------
$22,793 $22,444
====== ======
Liabilities:
Income tax liability $5,067 $5,195
------ ------
Other liabilities 49 49
------ ------
$5,116 $5,244
====== ======
Noncontrolling interests $1,464 $1,190
====== ======
Quarter Ended March 31,
2009 2008
(unaudited) (unaudited)
Revenues:
Interest income on commercial
mortgage residual interests $1,054 $1,356
Interest and other income - 191
------ ------
1,054 1,547
------ ------
Expenses:
General and administrative 61 78
Amortization - 35
Impairment - commercial mortgage
residual interests valuation - 758
Interest - 200
------ ------
61 1,071
------ ------
Income tax benefit 128 407
------ ------
Net earnings including
noncontrolling interests 1,121 883
------ ------
Earnings attributable to noncontrolling
interests (110) (139)
------ ------
Net earnings $1,011 $744
====== ======
Note 1: Amounts are derived from audited consolidated financial
statements included in the company's Form 10-K.
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 affiliate."
March 31, December 31,
2009 2008
-------- ----------
(unaudited) (Note 1)
Assets:
Cash and cash equivalents $914 $833
Receivables 200 202
Real estate 74,167 74,463
Other assets 1,056 1,135
--------- ----------
$76,337 $76,633
========= ==========
Liabilities:
Notes payable $43,600 $43,600
Other liabilities 1,911 1,677
--------- ----------
Total liabilities 45,511 45,277
--------- ----------
Members' equity 30,826 31,356
--------- ----------
Total liabilities and equity $76,337 $76,633
========= ==========
Quarter Ended March 31,
2009 2008
---------- -----------
(unaudited) (unaudited)
Revenues:
Rental income $1,565 $1,497
---------- -----------
Expenses:
General and administrative 104 71
Real estate 5 5
Depreciation and amortization 371 353
Interest 462 597
---------- -----------
942 1,026
---------- -----------
Net earnings $623 $471
========== ===========
Note 1: Amounts are derived from an audited consolidated financial
statement.
National Retail Properties, Inc.
Investment Portfolio
Top 20 Lines of Trade
As of March 31
Line of Trade 2009(1) 2008(2)
------------- ------ -----
1. Convenience stores 25.4% 23.0%
2. Automotive service 8.9% 8.1%
3. Restaurants - full service 8.8% 9.6%
4. Theaters 6.0% 6.4%
5. Automotive parts 6.0% 4.7%
6. Drug stores 4.0% 4.3%
7. Books 3.9% 4.1%
8. Restaurants - limited service 3.3% 3.5%
9. Sporting goods 3.3% 3.7%
10. Family entertainment centers 3.0% 2.0%
11. Grocery 2.9% 2.8%
12. Consumer electronics 2.6% 4.1%
13. Furniture 2.5% 2.8%
14. Office supplies 2.5% 2.6%
15. Travel plazas 2.4% 2.9%
16. Beer, wine and liquor 1.7% 2.0%
17. Auto dealerships 1.3% 2.0%
18. Home furnishings 1.2% 1.4%
19. Financial services 1.2% 0.5%
20. Equipment rental 1.2% 1.2%
Other 7.9% 8.3%
------ ------
Total 100.0% 100.0%
====== ======
Top 10 States
State % of Total(1) State % of Total(1)
-------------- ------------ ----------- ------------
1. Texas 19.8% 6. Georgia 5.3%
2. Florida 9.7% 7. Indiana 4.2%
3. Illinois 6.6% 8. Pennsylvania 4.0%
4. North Carolina 5.9% 9. Ohio 3.1%
5. California 5.5% 10. Colorado 3.0%
Lease Expirations
% of # of Gross % of # of Gross
Total(1) Properties Leasable Total(1) Properties Leasable
Area(3) Area(3)
------- ---------- --------- ------- ---------- --------
2009 0.4% 12 199,000 2015 2.5% 19 463,000
2010 2.6% 37 396,000 2016 1.9% 15 287,000
2011 1.9% 20 333,000 2017 4.4% 26 751,000
2012 3.3% 34 482,000 2018 3.0% 24 418,000
2013 4.5% 38 844,000 2019 4.2% 41 656,000
2014 4.6% 41 604,000 There
after 66.7% 662 5,217,000
(1) Based on annual base rent of $221,248,000, which is the annualized base rent for all leases in place as of March 31, 2009. (2) 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. (3) Square feet. |
