8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: May 3, 2005 COMMERCIAL NET LEASE REALTY, INC. (exact name of registrant as specified in its charter)
Maryland (State or other jurisdiction of incorporation or organization)	001-11290 (Commission File Number)	56-1431377 (I.R.S. Employment Identification No.)
450 South Orange Avenue, Orlando, FL 32801 (Address of principal executive offices, including zip code) (407) 265-7348 (Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02.     Results of Operations and Financial Condition.

             On May 3, 2005, Commercial Net Lease Realty, Inc. issued a press release announcing its results of operations and financial condition for the quarter ended March 31, 2005. The press release is attached hereto as Exhibit 99.1.

             The information in this Form 8-K is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of such section, nor shall such information be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01.     Financial Statements and Exhibits.

             (c)        Exhibits.

                          99.1     Press Release, dated May 3, 2005, of Commercial Net Lease Realty, Inc.

             Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: May 3, 2005 Commercial Net Lease Realty, Inc.



By: /s/ Kevin B. Habicht
        Kevin B. Habicht
        Executive Vice President and
        Chief Financial Officer

EXHIBIT INDEX
Exhibit No.	Description
99.1	Press Release, dated May 3, 2005, of Commercial Net Lease Realty, Inc.

EX-99

NEWS RELEASE

For information contact:
Kevin B. Habicht
Chief Financial Officer
(407) 265-7348

For Immediate Release
May 3, 2005

INCREASED FIRST QUARTER OPERATING RESULTS ANNOUNCED BY
COMMERCIAL NET LEASE REALTY, INC.

Orlando, Florida, May 3, 2005 — Commercial Net Lease Realty, Inc. (NYSE: NNN), a real estate investment trust, announced operating results for the quarter ended March 31, 2005. Highlights for the quarter include:

• Net earnings available to common shareholders increased to $25.0 million or $0.47 per share compared to $14.8 million or $0.29 per share for the same period last year
• Revenues increased 12 percent to $33.1 million compared to the same period last year
• Funds from operations ("FFO") available to common shareholders increased to $19.6 million or $0.37 per share compared to $18.4 million for $0.36 per share for the same period last year
• Invested $47.0 million in the Investment Portfolio, including acquiring 21 properties
• Invested $18.6 million in the Development Inventory Portfolio, including acquiring three properties
• Invested $2.0 million in the Exchange Inventory Portfolio, including acquiring six properties
• Sold four Investment properties with net proceeds of $31.8 million, resulting in a gain of $9.8 million
• Sold two Development Inventory properties with net proceeds of $5.8 million, resulting in a gain of $1.4 million
• Sold three Exchange Inventory properties with net proceeds of $9.3 million, resulting a gain of $1.1 million
• Investment Portfolio occupancy was 97.5% at March 31, 2005, compared to 96.7% at March 31, 2004

Craig Macnab, Chief Executive Officer and President, said, “Our increased first quarter revenue over the same period last year results directly from the efficient execution of streamlining our retail property sector activities. We have been able to increase our stable rental revenue stream, and our acquisitions and development teams continue building relationships that position us to quickly act on advantageous opportunities and generate repeat business.”

Commercial Net Lease Realty invests primarily in high-quality, single-tenant retail properties subject generally to long-term, net leases with established tenants, such as Barnes & Noble, Best Buy, CVS, OfficeMax and the United States of America. As of March 31, 2005, the Company owns 379 Investment Properties in 38 states with a gross leasable area of approximately 8.5 million square feet. These Investment Properties are leased to 155 corporations in 58 industry classifications.

Management will hold a conference call on May 3, 2005, at 11:00 a.m. EDT to review the Company’s results. The call can be accessed on the Company’s 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, the Company will post a summary of any earnings guidance given on the call 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 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. The Company 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 income 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. These held for sale properties have not historically been classified as discontinued operations. Prior period comparable condensed consolidated financial statements have been restated to include these properties in its earnings from discontinued operations. These adjustments resulted in a decrease in the Company’s reported total revenues and total and per share income from continuing operations and an increase in the Company’s income from discontinued operations.  However, the Company’s total and per share FFO and net income available to common shareholders are not affected.

Commercial Net Lease Realty, Inc. (in thousands, except per share data)
Income Statement Summary	Quarter Ended March 31,
	2005			2004
Revenues:
Rental and earned income	$	29,254		$	25,892
Real estate expense reimbursement from tenants		1,657			1,705
Contingent rental income		393			329
Gain (loss) on disposition of real estate, Inventory Portfolio(Note 1)		469			(31	)
Interest and other income from real estate transactions		1,308			1,715
		33,081			29,610
Operating expenses:
General and administrative		4,813			5,907
Real estate		2,824			2,916
Depreciation and amortization		4,546			4,052
Impairments		587			-
		12,770			12,875
Other expenses (revenues):
Interest and other income		(467	)		(1,067	)
Interest expense		7,866			7,571
		7,399			6,504
Provision for income taxes		570			943
Minority interest		15			175
Equity in earnings of unconsolidated affiliates		1,081			1,253
Earnings from continuing operations		14,578			12,602
Earnings from discontinued operations:
Real estate, Investment Portfolio		10,086			1,320
Real estate, Inventory Portfolio, net of provision for income          taxes and minority interest		1,340			2,346
		11,426			3,666
Net earnings		26,004			16,268
Series A Preferred Stock dividends		(1,002	)		(1,002	)
Series B Convertible Preferred Stock dividends		(419	)		(419	)
Net earnings available to common shareholders - basic		24,583			14,847
Series B Convertible Preferred Stock dividends		419			-
Net earnings available to common shareholders - diluted	$	25,002		$	14,847
Weighted average common shares outstanding:
Basic		51,868			50,711
Diluted		53,539			51,052
Net earnings per share available to common shareholders:
Basic:
Continuing operations	$	0.25		$	0.22
Discontinued operations	$	0.22		$	0.07
Net earnings	$	0.47		$	0.29
Diluted:
Continuing operations	$	0.25		$	0.22
Discontinued operations	$	0.22		$	0.07
Net earnings	$	0.47		$	0.29

Commercial Net Lease Realty, Inc. (in thousands)
Earnings from Discontinued Operations - Investment Portfolio: 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 that was held for sale at March 31, 2005, as discontinued operations. The following is a summary of earnings from discontinued operations from the real estate Investment Portfolio.
	Quarter Ended March 31,
	2005			2004
Revenues:
Rental and earned income	$	1,751		$	1,126
Real estate expense reimbursements from tenants		-			2
Interest and other income from real estate transactions		50			105
		1,801			1,233
Expenses:
General and administrative		-			3
Real estate		48			61
Depreciation and amortization		28			213
Impairment		1,403			-
Interest		21			62
		1,500			339
Gain on disposition of real estate(Note 1)		9,785			426
Earnings from discontinued operations	$	10,086		$	1,320
Earnings from Discontinued Operations - Inventory Portfolio: The Company has classified its Inventory Properties that are currently held for sale and generating rental revenues as discontinued operations. The Company has reclassified all held for sale properties that have generated rental revenue before disposition which were sold subsequent to December 31, 2001, the effective date of SFAS No. 144, as discontinued operations. The following is a summary of earnings from discontinued operations from the real estate Inventory Portfolio.
Revenues:
Rental income	$	347		$	517
Real estate expense reimbursements from tenants		31			33
Gain on disposition of real estate, Inventory Portfolio(Note 1)		2,062			3,411
Interest and other income from real estate transactions		126			81
		2,566			4,042
Expenses:
General and administrative		9			2
Real estate		98			36
Depreciation and amortization		11			-
Interest		268			98
		386			136
Provision for income taxes		(820	)		(1,435	)
Minority interest		(20	)		(125	)
Earnings from discontinued operations	$	1,340		$	2,346

Commercial Net Lease Realty, Inc. (in thousands)
	Quarter Ended March 31,
	2005			2004
Reconciliation of net earnings to FFO and FFO available to     common shareholders:
Net earnings	$	26,004		$	16,268
Real estate depreciation and amortization:
Continuing operations		4,190			3,601
Discontinued operations		28			213
Partnership real estate depreciation		161			159
Gain on disposition of real estate held for investment                   from discontinued operations		(9,785	)		(426	)
FFO		20,598			19,815
Series A Preferred Stock dividends		(1,002	)		(1,002	)
Series B Convertible Preferred Stock dividends		(419	)		(419	)
FFO available to common shareholders – basic		19,177			18,394
Series B Convertible Preferred dividends		419			-
FFO available to common shareholders – diluted	$	19,596		$	18,394
Funds from operations per share:
Basic	$	0.37		$	0.36
Diluted	$	0.37		$	0.36

Note 1:	Quarter Ended March 31,
	2005			2004
	# of Properties			# of Properties
Reconciliation of gain (loss) on disposition between     continuing and discontinued operations:
Continuing operations	1	$	469	2	$	(31	)
Discontinued operations, Investment Portfolio	4		9,785	1		426
Discontinued operations, Inventory Portfolio	4		2,062	3		3,411
Minority interest, Inventory Portfolio	-		-	-		18
	9	$	12,316	6	$	3,824
Reconciliation of gain on disposition of type:
Investment Portfolio	4	$	9,785	1	$	426
Inventory Portfolio:
Development	2		1,351	5		3,270
Exchange	3		1,127	-		-
Intercompany eliminations	-		53	-		110
Minority interest on Development gain	-		-	-		18
	9	$	12,316	6	$	3,824

Commercial Net Lease Realty, Inc. (in thousands)
Balance Sheet Summary	March 31, 2005		December 31, 2004
Assets:
Cash and cash equivalents	$	3,149	$	1,947
Receivables, net of allowance		4,877		6,636
Mortgages, notes and accrued interest receivable, net of allowance		42,122		45,564
Investments in and other receivables from unconsolidated affiliates		28,199		29,307
Real estate, Investment Portfolio:
Accounted for using the operating method, net of              accumulated depreciation and amortization		1,027,096		1,006,319
Accounted for using the direct financing method		101,606		102,311
Held for sale, net of accumulated depreciation and impairment		1,650		3,078
Real estate, Inventory Portfolio, net of accumulated depreciation		66,064		58,049
Accrued rental income, net of allowance		29,020		28,619
Other assets		17,623		18,218
Total assets	$	1,321,406	$	1,300,048
Liabilities and stockholders' equity:
Line of credit payable	$	33,000	$	17,900
Mortgages payable		154,817		157,168
Notes payable		323,077		323,132
Financing lease obligation		26,041		26,041
Other liabilities		17,524		16,781
Minority interest		1,567		2,028
Stockholders' equity		765,380		756,998
Total liabilities and equity	$	1,321,406	$	1,300,048
Common shares outstanding		52,190		52,078
Gross leasable area, Investment Portfolio		8,465		8,542

Commercial Net Lease Realty, Inc. Investment Portfolio (Based on annual base rent of $121,922,000 as of March 31, 2005)
Top 20 Tenants
	Tenant	% of Total		Tenant	% of Total
1.	United States of America	15.1%	11.	Majestic Liquors	1.9%
2.	CVS	6.3%	12.	Jared Jewelers	1.6%
3.	Best Buy	4.8%	13.	Bed Bath & Beyond	1.4%
4.	OfficeMax	4.1%	14.	CarMax	1.3%
5.	Barnes & Noble	4.1%	15.	Food 4 Less	1.3%
6.	Eckerd	3.8%	16.	Havertys Furniture	1.3%
7.	The Sports Authority	3.0%	17.	Rite Aid	1.2%
8.	Academy	2.9%	18.	Dick's Sporting Goods	1.1%
9.	Borders Books	2.6%	19.	Reliable	1.1%
10.	United Rentals	2.0%	20.	Ashley Furniture	1.0%
Top 10 States
	State	% of Total		State	% of Total
1.	Virginia	19.4%	6.	Ohio	3.0%
2.	Texas	15.9%	7.	Missouri	3.0%
3.	Florida	14.0%	8.	New Jersey	2.8%
4.	California	5.9%	9.	Maryland	2.8%
5.	Georgia	5.6%	10.	Colorado	2.6%

Lease Expirations
	# of Properties	% of Total		# of Properties	% of Total
2005	7	0.4%	2011	14	2.9%
2006	6	1.4%	2012	19	4.6%
2007	16	1.9%	2013	27	6.6%
2008	21	2.5%	2014	37	23.7%
2009	19	2.6%	2015	19	5.4%
2010	16	4.0%	Thereafter	168	44.0%