EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

 

NEWS RELEASE

  

For information contact:

  

Kevin B. Habicht

  

Chief Financial Officer

  

(407) 265-7348

  

FOR IMMEDIATE RELEASE

 

May 2, 2007

RECORD FIRST QUARTER OPERATING RESULTS

ANNOUNCED BY NATIONAL RETAIL PROPERTIES, INC.

Orlando, Florida, May 2, 2007 – National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced record operating results for the quarter ended March 31, 2007, including a 20.3% increase in revenues and a 19.5% increase in funds from operations (“FFO”) per share compared to the same period for 2006. Highlights include:

Operating Results:

 

  •  

Revenues and net earnings and FFO available to common shareholders:

 

     Quarter Ended March 31,
     2007    2006
     (in thousands, except per share data)

Revenues

    $ 42,713    $ 35,505

Net earnings available to common shareholders

    $ 25,008    $ 22,446

Net earnings per common share (diluted)

    $ 0.41    $ 0.39

FFO available to common shareholders

    $ 29,610    $ 23,627

FFO per common share (diluted)

    $ 0.49    $ 0.41

 

  •  

Investment Portfolio occupancy was 97.9% at March 31, 2007.

Investments and Dispositions for the quarter ended March 31, 2007:

 

  •  

Investments:

 

  •  

$66.6 million in the Investment Portfolio, including acquiring 25 properties with an aggregate 114,000 square feet of gross leasable area

 

  •  

$15.9 million in the Inventory Portfolio, including acquiring 3 properties

 

  •  

Dispositions:

 

  •  

Five Investment properties with an aggregate 60,000 square feet of gross leasable area, with net proceeds of $7.5 million, resulting in a gain of $1.8 million

 

  •  

23 Inventory properties with net proceeds of $57.5 million

 

450 S. Orange Ave., Suite 900 Orlando, FL 32801

(800) NNN-REIT www.nnnreit.com

  

LOGO

 

Capital transactions for the quarter ended March 31, 2007:

 

  •  

In January, the company redeemed all 1,781,589 shares of Series A 9% Preferred Stock at the liquidation value of $25.00 per share, for $44,540,000

 

  •  

Issued 699,346 shares of common stock generating $16.7 million of net proceeds pursuant to the Dividend Reinvestment and Stock Purchase Plan

 

  •  

In March, the company issued 5,000,000 shares of common stock at $24.70 per share, generating $118.1 million of net proceeds. Additionally, the underwriters’ over allotment option was exercised and the company issued 750,000 shares on April 2, 2007, generating net proceeds of $17.7 million.

The company also announced that it currently expects full-year investment property acquisitions to total approximately $400-$450 million in 2007, including more than $300 million of acquisitions expected to close during the first six months of 2007. Craig Macnab, Chief Executive Officer, commented; “We are happy to report record operating results for the first quarter highlighted by a 19% increase in FFO per share. With our fully diversified portfolio, our strong acquisition pipeline and continued execution of our strategy, I am encouraged about the outlook for NNN.”

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of March 31, 2007, the company owned 730 Investment properties in 44 states with a gross leasable area of approximately 9.4 million square feet. For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on May 2, 2007 at 2:00 p.m. EDT to review these results. The call can be accessed on National Retail’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, 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 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. 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 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 shareholders are not affected.

 

2

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

Income Statement Summary    Quarter Ended March 31,  
     2007     2006  

Revenues:

     

Rental and earned income

    $ 38,859     $ 30,825  

Real estate expense reimbursement from tenants

      1,343       924  

Interest and other income from real estate transactions

      1,267       1,459  

Interest income on mortgage residual interests

      1,244       2,297  
                
     42,713       35,505  
                

Disposition of real estate, Inventory Portfolio:

     

Gross proceeds

     825       16,740  

Costs

      (493 )     (10,296 )
                

Gain

      332       6,444  

Operating expenses:

     

General and administrative

      6,321       6,841  

Real estate

      1,978       1,401  

Depreciation and amortization

      6,927       5,238  

Impairment – mortgage residual interests valuation adjustment

      —         1,820  
                
     15,226       15,300  
                

Other expenses (revenues):

     

Interest and other income

      (1,303 )     (815 )

Interest expense

      11,615       12,080  
                
     10,312       11,265  
                

Income tax benefit

      2,922       1,859  

Minority interest

      370       (3,108 )

Equity in earnings (losses) of unconsolidated affiliates

      —         (33 )
                

Earnings from continuing operations

      20,799       14,102  

Earnings from discontinued operations:

     

Real estate, Investment Portfolio

      1,937       7,609  

Real estate, Inventory Portfolio, net of income tax expense and minority interest

      3,968       1,737  
                
     5,905       9,346  
                

Net earnings

      26,704       23,448  

Series A Preferred Stock dividends

      —         (1,002 )

Series B Convertible Preferred Stock dividends

      —         (419 )

Series C Redeemable Preferred Stock dividends

      (1,696 )     —    
                

Net earnings available to common shareholders – basic

      25,008       22,027  

Series B Convertible Preferred Stock dividends, if dilutive

      —         419  
                

Net earnings available to common shareholders – diluted

    $ 25,008     $ 22,446  
                

 

3

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

     Quarter Ended March 31,  
     2007     2006  

Weighted average common shares outstanding:

     

Basic

      60,333       55,408  
                

Diluted

      60,472       56,957  
                

Net earnings per share available to common shareholders:

     

Basic:

     

Continuing operations

    $ 0.31     $ 0.23  

Discontinued operations

      0.10       0.17  
                

Net earnings

    $ 0.41     $ 0.40  
                

Diluted:

     

Continuing operations

    $ 0.31     $ 0.22  

Discontinued operations

      0.10       0.17  
                

Net earnings

    $ 0.41     $ 0.39  
                

Supplemental Information:

     

Contingent percentage rent

    $ 458     $ 456  
                

Earned income from direct financing leases

    $ 1,822     $ 2,402  

Decrease in real estate classified as direct financing leases

      (2,462 )     (3,179 )
                

Net direct financing lease adjustment

      (640 )     (777 )

Accrued rental income

      691       756  
                

Net lease accounting adjustments

    $ 51     $ (21 )
                

Net Inventory Portfolio gain on disposition

    $ 4,669     $ 4,382  
                

Capitalized interest

    $ 618     $ 481  
                

Scheduled debt principal amortization (excluding maturities)

    $ 450     $ 752  
                

 

4

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

     Quarter Ended March 31,  
     2007     2006  

Reconciliation of net earnings to FFO and FFO available to common shareholders:

     

Net earnings

    $ 26,704     $ 23,448  

Real estate depreciation and amortization:

     

Continuing operations

      6,345       4,626  

Discontinued operations

      20       1,366  

Partnership real estate depreciation

      —         140  

Gain on disposition of real estate Investment Portfolio

      (1,763 )     (4,951 )
                

FFO

      31,306       24,629  

Series A Preferred Stock dividends

      —         (1,002 )

Series B Convertible Preferred Stock dividends

      —         (419 )

Series C Redeemable Preferred Stock dividends

      (1,696 )     —    
                

FFO available to common shareholders – basic

      29,610       23,208  

Series B Convertible Preferred Stock dividends – if dilutive

      —         419  
                

FFO available to common shareholders – diluted

    $ 29,610     $ 23,627  
                

FFO per share:

     

Basic

    $ 0.49     $ 0.42  
                

Diluted

    $ 0.49     $ 0.41  
                

 

     Quarter Ended March 31,  
     2007    2006  
Real Estate Disposition Summary    # of
Properties		    Gain    # of
Properties		    Gain  

Reconciliation of gain on disposition between continuing and discontinued operations:

            

Continuing operations

    1    $ 332    1    $ 6,444  

Discontinued operations:

            

Investment Portfolio

    5      1,763    3      4,951  

Inventory Portfolio

    22      4,337    8      1,160  

Minority interest, Inventory Portfolio

    —        —      —        (3,222 )
                         
   28    $ 6,432    12    $ 9,333  
                         

Reconciliation of gain on disposition of type:

            

Inventory Portfolio:

            

Development

    5    $ 1,796    2    $ 6,797  

Exchange

    18      2,873    7      807  

Minority interest, Development

    —        —      —        (3,222 )
                         

Total TRS gain

    23      4,669    9      4,382  

Investment Portfolio

    5      1,763    3      4,951  
                         
   28    $ 6,432    12    $ 9,333  
                         

 

5

National Retail Properties, Inc.

(in thousands)

(unaudited)

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, 2007, as discontinued operations. The following is a summary of earnings from discontinued operations from the Investment Portfolio.

 

     Quarter Ended March 31,  
     2007     2006  

Revenues:

     

Rental and earned income

    $ 250     $ 6,306  

Real estate expense reimbursement from tenants

      1       550  

Interest and other income from real estate transactions

      59       76  
                
     310       6,932  
                

Expenses:

     

General and administrative

      —         25  

Real estate

      21       1,596  

Depreciation and amortization

      20       1,366  

Impairment – real estate

      95       —    

Interest

      —         1,287  
                
     136       4,274  
                

Gain on disposition of real estate

      1,763       4,951  
                

Earnings from discontinued operations

    $ 1,937     $ 7,609  
                
Earnings from Discontinued Operations – Inventory Portfolio:     
     Quarter Ended March 31,  
     2007     2006  

Revenues:

     

Rental income

    $ 2,850     $ 1,926  

Real estate expense reimbursement from tenants

      297       48  

Interest and other income from real estate transactions

      6       —    
                
     3,153       1,974  
                

Disposition of real estate:

     

Gross proceeds

      59,652       9,060  

Costs

      (55,315 )     (7,900 )
                

Gain

      4,337       1,160  

Expenses:

     

General and administrative

      8       —    

Real estate

      425       29  

Depreciation and amortization

      20       —    

Interest

      302       137  
                
     755       166  
                

Income tax expense

      (2,428 )     (1,063 )

Minority interest

      (339 )     (168 )
                

Earnings from discontinued operations

    $ 3,968     $ 1,737  
                

 

6

National Retail Properties, Inc.

(in thousands)

 

Balance Sheet Summary    March 31,
2007		    December 31,
2006
     (unaudited)    (Note 1)

Assets:

      

Cash and cash equivalents

    $ 56,561    $ 1,675

Restricted cash

      36,054      36,587

Receivables, net of allowance

      8,312      7,915

Mortgages, notes and accrued interest receivable, net of allowance

      32,591      30,945

Real estate, Investment Portfolio:

      

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

      

Held for investment

      1,493,312      1,437,792

Held for sale

      3,194      3,204

Accounted for using the direct financing method:

      

Held for investment

      68,512      69,787

Held for sale

      1,532      1,547

Real estate, Inventory Portfolio, held for sale

      190,781      228,159

Mortgage residual interests

      29,577      31,512

Accrued rental income, net of allowance

      26,826      26,413

Other assets

      40,316      41,249
             

Total assets

    $ 1,987,568    $ 1,916,785
             

Liabilities and shareholders’ equity:

      

Line of credit payable

      —        28,000

Mortgages payable

      35,442      35,892

Notes payable – secured

      24,500      24,500

Notes payable – convertible

      172,500      172,500

Notes payable, net of unamortized discount

      489,840      489,804

Financing lease obligation

      26,041      26,041

Income tax liability

      5,050      6,340

Other liabilities

      40,256      36,105

Minority interest

      1,067      1,098

Shareholders’ equity

      1,192,872      1,096,505
             

Total liabilities and equity

    $ 1,987,568    $ 1,916,785
             

Common shares outstanding

      65,746      59,823
             

Gross leasable area, Investment Portfolio

      9,395      9,341
             

Note 1: Amounts are derived from audited consolidated financial statements included in the company’s Form 10-K.

 

7

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 been over $18.8 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,
2007		     December 31,
2006		  
     (unaudited)     (Note 1)  

Assets:

     

Cash and cash equivalents

    $ 1,528     $ 823  

Restricted cash

      18,950       17,165  

Receivables and other assets

      4,696       5,246  

Mortgage residual interests

      29,577       31,512  
                
   $ 54,751     $ 54,746  
                

Liabilities:

     

Notes payable – secured

    $ 24,500     $ 24,500  

Income tax liability

      8,678       9,480  

Other liabilities

      178       410  
                
   $ 33,356     $ 34,390  
                

Minority interest

    $ 1,499     $ 1,217  
                
     Quarter Ended March 31,  
     2007     2006  
     (unaudited)     (Note 1)  

Revenues:

     

Interest income on mortgage residual interests

    $ 1,244     $ 2,297  

Interest and other income

      295       398  
                
     1,539       2,695  

Expenses:

     

General and administrative

      125       170  

Amortization

      63       66  

Impairment – mortgage residual interests valuation adjustment

      —         1,820  

Interest

      613       706  
                
     801       2,762  
                

Income tax expense

      (34 )     —    

Income tax amortization

      802       1,358  

Minority interest

      (282 )     (80 )
                

Net earnings

    $ 1,224     $ 1,211  
                
Note 1: Amounts are derived from audited consolidated financial statements included in the company’s Form 10-K.

 

8

National Retail Properties, Inc.

Investment Portfolio

Top 20 Lines of Trade

 

          As of March 31,  

Line of Trade

    2007 (1)     2006 (2)  
1.    Convenience stores    18.1 %   13.8 %
2.    Restaurants – full service    12.1 %   5.7 %
3.    Drug stores    8.0 %   9.7 %
4.    Sporting goods    7.1 %   7.3 %
5.    Consumer electronics    5.8 %   5.5 %
6.    Books    5.5 %   5.8 %
7.    Grocery    5.5 %   6.3 %
8.    Restaurants – limited service    4.8 %   2.8 %
9.    Furniture    4.1 %   4.6 %
10.    Travel plazas    3.7 %   0.5 %
11.    Office supplies    3.7 %   4.1 %
12.    General merchandise    2.6 %   2.6 %
13.    Beer, wine and liquor    2.1 %   2.1 %
14.    Auto dealerships    2.0 %   2.1 %
15.    Equipment rental    1.9 %   1.9 %
16.    Home furnishings    1.8 %   2.4 %
17.    Craft, fabric and novelty    1.8 %   1.6 %
18.    Automotive parts    1.5 %   0.1 %
19.    Home improvement    1.4 %   1.4 %
20.    Jewelry    1.2 %   1.2 %
   Other    5.3 %   18.5 %
               
   Total    100.0 %   100.0 %
               

Top 10 States

 

State

    % of Total (1)         

State

    % of Total (1)  
1.    Texas    21.7 %      6.    Virginia    3.9 %
2.    Florida    13.6 %      7.    California    3.7 %
3.    Pennsylvania    5.2 %      8.    Missouri    3.5 %
4.    Georgia    5.1 %      9.    Tennessee    3.3 %
5.    Illinois    4.4 %      10.    Ohio    3.0 %

Lease Expirations

 

    

% of

Total (1)

    

# of

Properties

    Gross
Leasable
Area(3)		              % of
Total (1)		    

# of

Properties

    Gross
Leasable
Area(3)

2007

    1.0 %   10    175,000       2013    5.5 %   31    717,000

2008

    1.5 %   19    321,000       2014    7.0 %   38    582,000

2009

    2.5 %   25    472,000       2015    4.5 %   24    627,000

2010

    3.8 %   37    394,000       2016    4.8 %   23    591,000

2011

    2.9 %   21    347,000       2017    6.7 %   27    748,000

2012

    4.6 %   31    535,000       Thereafter    55.2 %   432    3,689,000

(1)

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.

(2)

Based on annual base rent of $147,892,000, which is the annualized base rent for all leases in place as of March 31, 2006.

(3)

Square feet.

 

9