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 1, 2008

RECORD QUARTER OPERATING RESULTS

ANNOUNCED BY NATIONAL RETAIL PROPERTIES, INC.

Orlando, Florida, May 1, 2008 – 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

 

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

(800) NNN-REIT | www.nnnreit.com

    LOGO

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.

Management will hold a conference call on May 1 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.

 

2

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.

 

3

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 affiliate

      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  
                

 

4

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  
                

 

5

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
Properties		    Gain     # of
Properties		    Gain

Real Estate Disposition Summary

           

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
                        

 

6

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  
                

 

7

National Retail Properties, Inc.

(in thousands)

 

Balance Sheet Summary    March 31,
2008		    December 31,
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 amended.

 

8

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,
2008		    December 31,
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 amended.

 

9

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,
2008		    December 31,
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

   
         

 

10

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 Total(1)         

State

    % of 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

 

     % of
Total(1)		     # of
Properties		    Gross
Leasable
Area(3)		         % of
Total(1)		     # of
Properties		    Gross
Leasable
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.

 

11