EX-99.1 2 nnn8-k20160331exhibit991.htm EXHIBIT 99.1 Exhibit

    

NEWS RELEASE
For information contact:
Kevin B. Habicht
Chief Financial Officer
(407) 265-7348    FOR IMMEDIATE RELEASE
May 2, 2016

FIRST QUARTER 2016 OPERATING RESULTS AND INCREASED 2016 GUIDANCE
ANNOUNCED BY NATIONAL RETAIL PROPERTIES, INC.

Orlando, Florida, May 2, 2016 – National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced its operating results for the quarter ended March 31, 2016. 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,
 
2016
 
2015
 
(in thousands, except per share data)
Revenues
$
126,980

 
$
116,187

 
 
 
 
Net earnings available to common stockholders
$
61,824

 
$
45,119

Net earnings per common share
$
0.44

 
$
0.34

 
 
 
 
FFO available to common stockholders
$
80,098

 
$
70,843

FFO per common share
$
0.57

 
$
0.54

 
 
 
 
Recurring FFO available to common stockholders
$
80,318

 
$
70,999

Recurring FFO per common share
$
0.57

 
$
0.54

 
 
 
 
AFFO available to common stockholders
$
81,749

 
$
72,123

AFFO per common share
$
0.58

 
$
0.55




First Quarter 2016 Highlights:

•
FFO per share and Recurring FFO per share increased 5.6% over prior year results
•
AFFO per share increased 5.5% over prior year results
•
Portfolio occupancy was 99.1% at March 31, 2016, consistent with December 31, 2015, and 98.8% at March 31, 2015
•
Invested $125.2 million in property investments, including the acquisition of 46 properties with an aggregate 591,000 square feet of gross leasable area at an initial cash yield of 7.0%
•
Sold 10 properties for $52.8 million producing $16.9 million of gain on sales
•
Raised $88.0 million net proceeds from the issuance of 1,999,410 common shares



National Retail Properties announced an increase in 2016 FFO guidance from a range of $2.29 to $2.35 to a range of $2.31 to $2.36 per share before any impairment expense. The 2016 AFFO is estimated to be $2.36 to $2.41 per share.

Craig Macnab, Chief Executive Officer, commented: "Our activity thus far in 2016, has set us up well for another solid, consistent year of growth. Our acquisition activity in the first quarter was encouraging, we harvested large gains by selling assets and importantly our balance sheet remains fortress-like as we were active issuing equity at attractive prices."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of March 31, 2016, the company owned 2,293 properties in 47 states with a gross leasable area of approximately 25.4 million square feet and with a weighted average remaining lease term of 11.3 years. For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on May 2, 2016, at 2:00 p.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. These statements generally are characterized by the use of terms such as "believe," "expect," "intend," "may," "estimated," or other similar words or expressions. 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 the company's tenants, the availability of capital, risks related to the company's 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, Inc. 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, 2016. 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), any applicable taxes and noncontrolling interests 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.

2

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

 
 
Quarter Ended
 
 
March 31,
 
 
2016
 
2015
Income Statement Summary
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
Rental and earned income
 
$
122,475

 
$
112,064

Real estate expense reimbursement from tenants
 
3,590

 
3,515

Interest and other income from real estate transactions
 
463

 
163

Interest income on commercial mortgage residual interests
 
452

 
445

 
 
126,980

 
116,187

 
 
 
 
 
Operating expenses:
 
 
 
 
General and administrative
 
9,249

 
8,605

Real estate
 
4,787

 
4,759

Depreciation and amortization
 
34,655

 
32,141

Impairment – commercial mortgage residual interests valuation
 
220

 
—

Impairment losses, net of recoveries
 
572

 
1,028

 
 
49,483

 
46,533

 
 
 
 
 
Other expenses (revenues):
 
 
 
 
Interest and other income
 
(19
)
 
(11
)
Interest expense
 
23,586

 
21,786

Real estate acquisition costs
 
129

 
599

 
 
23,696

 
22,374

 
 
 
 
 
Income tax expense
 
—

 
(442
)
 
 
 
 
 
Earnings before gain on disposition of real estate, net of income tax expense
 
53,801

 
46,838

 
 
 
 
 
Gain on disposition of real estate, net of income tax expense
 
16,875

 
7,200

 
 
 
 
 
Earnings including noncontrolling interests
 
70,676

 
54,038

 
 
 
 
 
Loss (earnings) attributable to noncontrolling interests
 
7

 
(60
)
 
 
 
 
 
Net earnings attributable to NNN
 
70,683

 
53,978

Series D preferred stock dividends
 
(4,762
)
 
(4,762
)
Series E preferred stock dividends
 
(4,097
)
 
(4,097
)
Net earnings available to common stockholders
 
$
61,824

 
$
45,119

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3

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

 
 
Quarter Ended
 
 
March 31,
 
 
2016
 
2015
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
Basic
 
140,840

 
131,665

Diluted
 
141,326

 
132,110

 
 
 
 
 
Net earnings per share available to common stockholders:
 
 
 
 
Basic
 
$
0.44

 
$
0.34

Diluted
 
$
0.44

 
$
0.34

 
 
 
 
 
 
 
 
 
 


4

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

 
 
Quarter Ended
 
 
March 31,
 
 
2016
 
2015
Funds From Operations (FFO) Reconciliation:
 
 
 
 
Net earnings available to common stockholders
 
$
61,824

 
$
45,119

Real estate depreciation and amortization
 
34,577

 
32,028

Gain on disposition of real estate, net of income tax and noncontrolling interest
 
(16,875
)
 
(7,148
)
Impairment losses – depreciable real estate, net of recoveries and income tax
 
572

 
844

Total FFO adjustments
 
18,274

 
25,724

FFO available to common stockholders
 
$
80,098

 
$
70,843

 
 
 
 
 
FFO per common share:
 
 
 
 
Basic
 
$
0.57

 
$
0.54

Diluted
 
$
0.57

 
$
0.54

 
 
 
 
 
Recurring Funds from Operations Reconciliation:
 
 
 
 
Net earnings available to common stockholders
 
$
61,824

 
$
45,119

Total FFO adjustments
 
18,274

 
25,724

FFO available to common stockholders
 
80,098

 
70,843

 
 
 
 
 
Impairment – commercial mortgage residual interests valuation
 
220

 
—

Impairment losses – non-depreciable real estate
 
—

 
156

Total Recurring FFO adjustments
 
220

 
156

Recurring FFO available to common stockholders
 
$
80,318

 
$
70,999

 
 
 
 
 
Recurring FFO per common share:
 
 
 
 
Basic
 
$
0.57

 
$
0.54

Diluted
 
$
0.57

 
$
0.54

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

5

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

 
 
Quarter Ended
 
 
March 31,
 
 
2016
 
2015
Adjusted Funds From Operations (AFFO) Reconciliation:
 
 
 
 
Net earnings available to common stockholders
 
$
61,824

 
$
45,119

Total FFO adjustments
 
18,274

 
25,724

Total Recurring FFO adjustments
 
220

 
156

Recurring FFO available to common stockholders
 
80,318

 
70,999

 
 
 
 
 
Straight line accrued rent
 
(242
)
 
(205
)
Net capital lease rent adjustment
 
340

 
334

Below market rent amortization
 
(859
)
 
(1,024
)
Stock based compensation expense
 
2,703

 
2,409

Capitalized interest expense
 
(511
)
 
(390
)
Total AFFO adjustments
 
1,431

 
1,124

AFFO available to common stockholders
 
$
81,749

 
$
72,123

 
 
 
 
 
AFFO per common share:
 
 
 
 
Basic
 
$
0.58

 
$
0.55

Diluted
 
$
0.58

 
$
0.55

 
 
 
 
 
Other Information:
 
 
 
 
Percentage rent
 
$
474

 
$
185

Amortization of debt costs
 
$
756

 
$
709

Scheduled debt principal amortization (excluding maturities)
 
$
260

 
$
409

Non-real estate depreciation expense
 
$
81

 
$
118

 
 
 
 
 
2016 Earnings Guidance:
 
 
 
FFO guidance for 2016 was increased from a range of $2.29 to $2.35 to a range of $2.31 to $2.36 per share before any impairment expense. The 2016 AFFO is estimated to be $2.36 to $2.41 per share. The FFO guidance equates to net earnings before any impairments or gains or losses from the sale of real estate of $1.32 to $1.37 per share, plus $0.99 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.
 
 
2016 Guidance
  Net earnings per common share before any impairments or gains (losses) on sale of real estate
 
$1.32 - $1.37 per share
  Real estate depreciation and amortization per share
 
$0.99 per share
FFO per share
 
$2.31 - $2.36 per share
  AFFO per share
 
$2.36 - $2.41 per share
  G&A expenses
 
$35.5 Million
  Real estate expenses, net of tenant reimbursements
 
$5.5 Million
  Acquisition volume
 
$500 - $600 Million
  Disposition volume
 
$85 - $100 Million


6

National Retail Properties, Inc.
(in thousands)
(unaudited)

 
 
March 31, 2016
 
December 31, 2015
Balance Sheet Summary
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
Cash and cash equivalents
 
$
8,203

 
$
13,659

Restricted cash and cash held in escrow
 
43,136

 
601

Receivables, net of allowance
 
5,236

 
3,344

Mortgages, notes and accrued interest receivable, net of allowance
 
8,558

 
8,688

Real estate portfolio:
 
 
 
 
Accounted for using the operating method, net of accumulated depreciation and amortization
 
5,343,433

 
5,256,274

Accounted for using the direct financing method
 
14,178

 
14,518

Real estate held for sale
 
627

 
32,666

Commercial mortgage residual interests
 
10,801

 
11,115

Accrued rental income, net of allowance
 
25,575

 
25,529

Debt costs, net of accumulated amortization
 
3,662

 
4,003

Other assets
 
89,494

 
89,647

Total assets
 
$
5,552,903

 
$
5,460,044

 
 
 
 
 
Liabilities:
 
 
 
 
Line of credit payable
 
$
—

 
$
—

 Mortgages payable, including unamortized premium and net of unamortized debt costs
 
17,066

 
23,964

 Notes payable, net of unamortized discount and unamortized debt costs
 
1,952,723

 
1,951,980

Accrued interest payable
 
33,637

 
20,113

Other liabilities
 
115,315

 
121,594

Total liabilities
 
2,118,741

 
2,117,651

 
 
 
 
 
Stockholders' equity of NNN
 
3,433,910

 
3,342,134

Noncontrolling interests
 
252

 
259

Total equity
 
3,434,162

 
3,342,393

 
 
 
 
 
Total liabilities and equity
 
$
5,552,903

 
$
5,460,044

 
 
 
 
 
Common shares outstanding
 
143,236

 
141,008

 
 
 
 
 
Gross leasable area, Property Portfolio (square feet)
 
25,401

 
24,964

 
 
 
 
 


7

National Retail Properties, Inc.
Debt Summary
As of March 31, 2016
(in thousands)
(unaudited)
Unsecured Debt
 
Principal
 
Principal, Net of Unamortized Discount
 
Stated Rate
 
Effective Rate
 
Maturity Date
Line of credit payable
 
$
—

 
$
—

 
L + 92.5 bps

 
—

 
January 2019
 
 
 
 
 
 
 
 
 
 
 
Unsecured notes payable:
 
 
 
 
 
 
 
 
 
 
2017
 
250,000

 
249,823

 
6.875
%
 
6.924
%
 
October 2017
2021
 
300,000

 
297,447

 
5.500
%
 
5.689
%
 
July 2021
2022
 
325,000

 
321,566

 
3.800
%
 
3.985
%
 
October 2022
2023
 
350,000

 
348,085

 
3.300
%
 
3.388
%
 
April 2023
2024
 
350,000

 
349,405

 
3.900
%
 
3.924
%
 
June 2024
2025
 
400,000

 
399,071

 
4.000
%
 
4.029
%
 
November 2025
Total
 
1,975,000

 
1,965,397

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total unsecured debt (1)
 
$
1,975,000

 
$
1,965,397

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt costs
 
 
 
(17,782
)
 
 
 
 
 
 
Accumulated amortization
 
5,108

 
 
 
 
 
 
Debt costs, net of accumulated amortization
 
(12,674)
 
 
 
 
 
 
Notes payable, net of unamortized discount and unamortized debt costs
 
$
1,952,723

 
 
 
 
 
 

(1) Unsecured notes payable have a weighted average interest rate of 4.5% and a weighted maturity of 7 years


Mortgages Payable
 
Principal Balance
 
Interest Rate
 
Maturity Date
Mortgage(1)
 
$
14,414

 
5.230
%
 
July 2023
Mortgage(1)
 
2,774

 
6.400
%
 
February 2017
 
 
$
17,188

 
(2) 
 
 
 
 
 
 
 
 
 
Debt costs
 
(226)
 
 
 
 
Accumulated amortization
 
104
 
 
 
 
Debt costs, net of accumulated amortization
 
(122)
 
 
 
 
Mortgages payable, including unamortized premium and net of unamortized debt costs
 
$
17,066

 
 
 
 
(1) Includes unamortized premium
 
 
 
 
 
 
(2) Mortgages payable have a weighted average interest rate of 5.4% and a weighted average maturity of 6 years


8

National Retail Properties, Inc.
Property Portfolio

Top 20 Lines of Trade
 
 
 
 
As of March 31,
 
 
Line of Trade
 
2016(1)
 
2015(2)
1.
 
Convenience stores
 
16.5
%
 
17.7
%
2.
 
Restaurants – full service
 
10.8
%
 
9.0
%
3.
 
Restaurants – limited service
 
7.9
%
 
6.9
%
4.
 
Automotive service
 
7.0
%
 
7.2
%
5.
 
Family entertainment centers
 
5.7
%
 
5.1
%
6.
 
Theaters
 
5.1
%
 
5.1
%
7.
 
Automotive parts
 
4.1
%
 
4.6
%
8.
 
Health and fitness
 
4.0
%
 
3.8
%
9.
 
Recreational vehicle dealers, parts and accessories
 
3.6
%
 
3.3
%
10.
 
Banks
 
3.4
%
 
3.6
%
11.
 
Sporting goods
 
2.9
%
 
3.7
%
12.
 
Wholesale clubs
 
2.3
%
 
2.8
%
13.
 
Drug stores
 
2.3
%
 
2.4
%
14.
 
Medical service providers
 
2.3
%
 
2.0
%
15.
 
Consumer electronics
 
2.2
%
 
2.4
%
16.
 
Travel plazas
 
2.0
%
 
2.3
%
17.
 
General merchandise
 
2.0
%
 
2.1
%
18.
 
Home improvement
 
2.0
%
 
1.9
%
19.
 
Home furnishings
 
1.8
%
 
1.8
%
20.
 
Grocery
 
1.7
%
 
1.6
%
 
 
Other
 
10.4
%
 
10.7
%
 
 
Total
 
100.0
%
 
100.0
%

Top 10 States
 
State
 
 
% of Total(1)
 
 
State
 
 
% of Total(1)
1.
Texas
 
 
19.6
%
 
6.
Georgia
 
 
4.4
%
2.
Florida
 
 
9.5
%
 
7.
Indiana
 
 
4.0
%
3.
Illinois
 
 
5.3
%
 
8.
Virginia
 
 
3.8
%
4.
North Carolina
 
 
5.1
%
 
9.
Alabama
 
 
3.1
%
5.
Ohio
 
 
5.1
%
 
10.
Tennessee
 
 
3.0
%

(1) 
Based on the annualized base rent for all leases in place as of March 31, 2016.
(2) 
Based on the annualized base rent for all leases in place as of March 31, 2015.


9

National Retail Properties, Inc.
Property Portfolio

Top Tenants (> 2.0%)
 
 
 
Properties
 
% of Total (1)
 
Sunoco
 
125

 
5.8
%
 
Mister Car Wash
 
90

 
4.3
%
 
LA Fitness
 
25

 
3.9
%
 
Couche-Tard (Pantry)
 
86

 
3.6
%
 
Camping World
 
32

 
3.6
%
 
7-Eleven
 
77

 
3.5
%
 
SunTrust
 
121

 
3.2
%
 
AMC Theatre
 
17

 
3.1
%
 
Bell American (Taco Bell)
 
115

 
3.0
%
 
Chuck E. Cheese's
 
53

 
2.7
%
 
Frisch's Restaurant
 
74

 
2.4
%
 
Gander Mountain
 
12

 
2.3
%
 
BJ's Wholesale Club
 
7

 
2.3
%
 
Best Buy
 
19

 
2.1
%

Lease Expirations(2) 
 
 
% of
Total(1)
 
# of
Properties
 
Gross Leasable
Area (3)
 
 
 
% of
Total(1)
 
# of
Properties
 
Gross Leasable Area (3)
2016
 
0.7
%
 
19

 
256,000

 
2022
 
5.6
%
 
95

 
1,189,000

2017
 
2.8
%
 
51

 
1,002,000

 
2023
 
2.4
%
 
55

 
905,000

2018
 
6.1
%
 
183

 
1,645,000

 
2024
 
2.6
%
 
49

 
770,000

2019
 
3.3
%
 
79

 
1,116,000

 
2025
 
5.5
%
 
133

 
1,118,000

2020
 
4.2
%
 
137

 
1,553,000

 
2026
 
6.0
%
 
167

 
1,732,000

2021
 
4.8
%
 
118

 
1,354,000

 
Thereafter
 
56.0
%
 
1,180

 
12,415,000


(1) 
Based on the annual base rent of $496,053,000, which is the annualized base rent for all leases in place as of March 31, 2016.
(2) 
As of March 31, 2016, the weighted average remaining lease term is 11.3 years.
(3) 
Square feet.










10