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
   July 31, 2008

INCREASED SECOND QUARTER OPERATING RESULTS

ANNOUNCED BY NATIONAL RETAIL PROPERTIES, INC.

Orlando, Florida, July 31, 2008 – National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter ended June 30, 2008, including a 26.7% increase in revenues and a 6.4% increase in Funds From Operations (“FFO”) per share compared to the same period for 2007. Additionally, the company announced a 32% increase in revenues and a 5.2% increase in FFO per share for the six months ended June 30, 2008 compared to the same period for 2007. Highlights include:

Operating Results:

 

  •  

Revenues, net earnings and FFO available to common stockholders:

 

     Quarter Ended
June 30,		    Six Months Ended
June 30,
     2008    2007    2008    2007
     (in thousands, except per share data)

Revenues

    $ 57,026    $ 44,998    $ 111,783    $ 84,692

Net earnings available to common stockholders

    $ 29,192    $ 46,959    $ 60,549    $ 71,967

Net earnings per common share (diluted)

    $ 0.40    $ 0.70    $ 0.83    $ 1.13

FFO available to common stockholders

    $ 36,654    $ 31,481    $ 73,628    $ 61,092

FFO per common share (diluted)

    $ 0.50    $ 0.47    $ 1.01    $ 0.96

 

  •  

Investment Portfolio occupancy was 98.4% at June 30, 2008.

Investments and Dispositions for the quarter ended June 30, 2008:

 

  •  

Investments:

 

  •  

$103.2 million in the Investment Portfolio, including acquiring 34 properties with an aggregate 208,000 square feet of gross leasable area

 

  •  

$1.9 million of development funding in the Inventory Portfolio

 

  •  

Dispositions:

 

  •  

7 Investment properties with an aggregate 70,000 square feet of gross leasable area, with net proceeds of $26.5 million, resulting in a gain of $2.7 million

 

  •  

7 Inventory properties with net proceeds of $29 million

 

450 S. Orange Ave., Suite 900 | Orlando, FL 32801    LOGO
(800) NNN-REIT | www.nnnreit.com   

Investments and Dispositions for the six months ended June 30, 2008:

 

  •  

Investments:

 

  •  

$253.8 million in the Investment Portfolio, including acquiring 61 properties with an aggregate 598,000 square feet of gross leasable area

 

  •  

$24.7 million in the Inventory Portfolio, including acquiring 5 properties and funding $3.1 million of development

 

  •  

Dispositions:

 

  •  

11 Investment properties with an aggregate 108,000 square feet of gross leasable area, with net proceeds of $36.8 million, resulting in a gain of $6.6 million

 

  •  

15 Inventory properties with net proceeds of $100.8 million

Capital transactions for the quarter ended June 30, 2008:

 

  •  

Issued 931,581 shares of common stock generating $20.6 million of net proceeds pursuant to the Dividend Reinvestment and Stock Purchase Plan

Craig Macnab, Chief Executive Officer, commented: “Our portfolio and balance sheet remain in very good condition. High visibility of 2008’s FFO per share growth paved the way to increase our quarterly dividend by 5.6% in the second quarter. We are on track to making 2008 the 19th consecutive year of increased annual dividends even while enhancing the safety of the increased dividend as our payout ratio declines to record lows.”

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of June 30, 2008, the company owned 959 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 July 31, 2008 at 10:00 a.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 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

 

2

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)

 

     Quarter Ended
June 30,		     Six Months Ended
June 30,		  
     2008     2007     2008     2007  

Income Statement Summary

         

Revenues:

         

Rental and earned income

    $ 52,992     $ 41,444     $ 103,579     $ 77,441  

Real estate expense reimbursement from tenants

      1,456       1,453       3,035       2,706  

Interest and other income from real estate transactions

      1,407       957       2,642       2,157  

Interest income on commercial mortgage residual interests

      1,171       1,144       2,527       2,388  
                                
     57,026       44,998       111,783       84,692  
                                

Disposition of real estate, Inventory Portfolio:

         

Gross proceeds

     —         —         4,900       825  

Costs

      —         —         (4,879 )     (493 )
                                

Gain

      —         —         21       332  
                                

Operating expenses:

         

General and administrative

      6,040       5,946       13,600       12,267  

Real estate

      2,254       1,935       4,677       3,774  

Depreciation and amortization

      10,894       7,575       20,998       14,314  

Impairment – commercial mortgage residual interests valuation

      —         —         758       —    
                                
     19,188       15,456       40,033       30,355  
                                

Other expenses (revenues):

         

Interest and other income

      (1,008 )     (1,024 )     (2,229 )     (2,327 )

Interest expense

      14,665       12,442       30,032       23,544  

Loss on interest rate hedge

      —         —         804       —    
                                
     13,657       11,418       28,607       21,217  
                                

Income tax benefit

      1,769       2,421       4,421       5,215  

Minority interest

      (246 )     148       768       337  

Equity in earnings of unconsolidated affiliate

      101       —         180       —    
                                

Earnings from continuing operations

      25,805       20,693       48,533       39,004  

Earnings from discontinued operations:

         

Real estate, Investment Portfolio

      3,629       26,169       9,006       30,804  

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

      1,454       1,793       6,402       5,551  
                                
     5,083       27,962       15,408       36,355  
                                

Net earnings

      30,888       48,655       63,941       75,359  

Series C preferred stock dividends

      (1,696 )     (1,696 )     (3,392 )     (3,392 )
                                

Net earnings available to common stockholders – basic and diluted

      29,192       46,959       60,549       71,967  
                                

 

4

National Retail Properties, Inc.

(In thousands, except per share data)

(unaudited)

 

     Quarter Ended June 30,     Six Months Ended June 30,  
     2008     2007     2008     2007  

Weighted average common shares outstanding:

         

Basic

      73,070       66,432       72,692       63,399  
                                

Diluted

      73,348       66,664       72,915       63,596  
                                

Net earnings per share available to common stockholders:

         

Basic:

         

Continuing operations

    $ 0.33     $ 0.29     $ 0.62     $ 0.57  

Discontinued operations

      0.07       0.42       0.21       0.57  
                                

Net earnings

    $ 0.40     $ 0.71     $ 0.83     $ 1.14  
                                

Diluted:

         

Continuing operations

    $ 0.33     $ 0.28     $ 0.62     $ 0.56  

Discontinued operations

      0.07       0.42       0.21       0.57  
                                

Net earnings

    $ 0.40     $ 0.70     $ 0.83     $ 1.13  
                                

Supplemental Information:

         

Percentage rent

    $ 302     $ 141     $ 361     $ 599  
                                

Earned income from direct financing leases

    $ 783     $ 1,764     $ 1,669     $ 3,586  

Decrease in real estate classified as direct financing leases

      (1,073 )     (2,406 )     (2,272 )     (4,868 )
                                

Net direct financing lease adjustment

      (290 )     (642 )     (603 )     (1,282 )

Accrued rental income (straight-line)

      550       701       1,129       1,391  
                                

Net lease accounting adjustments

    $ 260     $ 59     $ 526     $ 109  
                                

Net Inventory Portfolio gain on disposition (TRS)

    $ 917     $ 1,714     $ 6,550     $ 6,383  
                                

Capitalized interest

    $ 440     $ 826     $ 972     $ 1,444  
                                

Scheduled debt principal amortization (excluding maturities)

    $ 293     $ 451     $ 584     $ 902  
                                

 

5

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

     Quarter Ended June 30,     Six Months Ended June 30,  
     2008     2007     2008     2007  

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

         

Net earnings

    $ 30,888     $ 48,655     $ 63,941     $ 75,359  

Real estate depreciation and amortization:

         

Continuing operations

      10,067       6,995       19,440       13,152  

Discontinued operations

      60       173       137       382  

Joint venture real estate depreciation

      44       —         88       —    

Gain on disposition of real estate Investment Portfolio

      (2,709 )     (22,646 )     (6,586 )     (24,409 )
                                

FFO

      38,350       33,177       77,020       64,484  

Series C preferred stock dividends

      (1,696 )     (1,696 )     (3,392 )     (3,392 )
                                

FFO available to common stockholders – basic and diluted

      36,654       31,481       73,628       61,092  
                                

FFO per share:

         

Basic

    $ 0.50     $ 0.47     $ 1.01     $ 0.96  
                                

Diluted

    $ 0.50     $ 0.47     $ 1.01     $ 0.96  
                                

Real Estate Disposition Summary

 

     Quarter Ended June 30,     Six Months Ended June 30,  
     2008     2007     2008     2007  
     # of
Properties		    Gain     # of
Properties		    Gain     # of
Properties		    Gain     # of
Properties		    Gain  

Reconciliation of gain on disposition between continuing and discontinued operations:

                     

Continuing operations

    —      $ —       —      $ —       1    $ 21     1    $ 332  

Discontinued operations:

                     

Investment Portfolio

    7      2,709     9      22,646     11      6,586     14      24,409  

Inventory Portfolio

    7      707     16      1,893     14      9,835     38      6,230  

Minority interest, Inventory Portfolio

    —        210     —        (179 )   —        (3,306 )   —        (179 )
                                                    
   14    $ 3,626     25    $ 24,360     26    $ 13,136     53    $ 30,792  
                                                    

Reconciliation of gain on disposition by type:

                     

Inventory Portfolio:

                     

Development

    —      $ (420 )   3    $ 1,018     4    $ 7,864     8    $ 2,814  

Exchange

    7      1,127     13      875     11      1,992     31      3,748  

Minority interest, Development

    —        210     —        (179 )   —        (3,306 )   —        (179 )
                                                    

Total Inventory gain (TRS)

    7      917     16      1,714     15      6,550     39      6,383  

Investment Portfolio

    7      2,709     9      22,646     11      6,586     14      24,409  
                                                    
   14    $ 3,626     25    $ 24,360     26    $ 13,136     53    $ 30,792  
                                                    

 

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 June 30, 2008, as discontinued operations. The following is a summary of earnings from discontinued operations.

 

     Quarter Ended June 30,     Six Months Ended June 30,  
     2008     2007     2008     2007  

Earnings from Discontinued Operations – Investment Portfolio:

         

Revenues:

         

Rental and earned income

    $ 813     $ 3,591     $ 1,549     $ 6,702  

Real estate expense reimbursement from tenants

      2       38       8       130  

Interest and other income from real estate transactions

      416       192       949       316  
                                
     1,231       3,821       2,506       7,148  
                                

Expenses:

         

General and administrative

      —         (46 )     (78 )     (46 )

Real estate

      99       77       (140 )     231  

Depreciation and amortization

      59       173       137       382  

Impairment – real estate

      153       95       167       189  

Interest

      —         (1 )     —         (3 )
                                
     311       298       86       753  
                                

Gain on disposition of real estate

      2,709       22,646       6,586       24,409  
                                

Earnings from discontinued operations

    $ 3,629     $ 26,169     $ 9,006     $ 30,804  
                                

Earnings from Discontinued Operations – Inventory Portfolio:

         

Revenues:

         

Rental income

    $ 2,875     $ 2,209     $ 6,234     $ 5,059  

Real estate expense reimbursement from tenants

      227       164       556       461  

Interest and other income from real estate transactions

      332       40       786       46  
                                
     3,434       2,413       7,576       5,566  
                                

Disposition of real estate:

         

Gross proceeds

      29,726       40,355       98,914       100,008  

Costs

      (29,019 )     (38,462 )     (89,079 )     (93,778 )
                                

Gain

      707       1,893       9,835       6,230  
                                

Expenses:

         

General and administrative

      24       17       49       24  

Real estate

      329       369       878       801  

Depreciation and amortization

      67       12       111       32  

Interest

      1,778       595       2,776       1,411  
                                
     2,198       993       3,814       2,268  
                                

Income tax expense

      (890 )     (1,097 )     (3,917 )     (3,396 )

Minority interest

      401       (423 )     (3,278 )     (581 )
                                

Earnings from discontinued operations

    $ 1,454     $ 1,793     $ 6,402     $ 5,551  
                                

 

7

National Retail Properties, Inc.

(in thousands)

 

     June 30,
2008		    December 31,
2007
     (unaudited)    (Note 1)

Balance Sheet Summary

      

Assets:

      

Cash and cash equivalents

    $ 4,873    $ 27,499

Receivables, net of allowance

      4,198      3,818

Investment in unconsolidated affiliate

      4,916      4,139

Mortgages, notes and accrued interest receivable, net of allowance

      90,114      73,162

Real estate, Investment Portfolio:

      

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

      2,270,493      2,055,846

Accounted for using the direct financing method

      32,141      37,497

Real estate, Inventory Portfolio, held for sale

      176,070      248,611

Commercial mortgage residual interests

      22,314      24,340

Accrued rental income, net of allowance

      24,499      24,652

Other assets

      42,813      40,041
             

Total assets

    $ 2,672,431    $ 2,539,605
             

Liabilities:

      

Line of credit payable

      127,200      129,800

Mortgages payable

      26,896      27,480

Notes payable – secured

      —        12,000

Notes payable – convertible

      406,535      172,500

Notes payable, net of unamortized discount

      618,385      718,290

Other liabilities

      47,694      69,916
             

Total liabilities

      1,226,710      1,129,986

Minority interest

      1,280      2,334

Stockholders’ equity

      1,444,441      1,407,285
             

Total liabilities and equity

    $ 2,672,431    $ 2,539,605
             

Common shares outstanding

      73,975      72,528
             

Gross leasable area, Investment Portfolio (square feet)

      11,053      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 $25 million since May 2005. The following summary represents the balances related to OAMI included in the company’s Balance Sheet and Income Statement Summary:

 

     June 30,
2008		    December 31,
2007
     (unaudited)    (Note 1)

Assets:

      

Cash and cash equivalents

    $ 394    $ 15,541

Receivables and other assets

      36      1,417

Commercial mortgage residual interests

      22,314      24,340
             
   $ 22,744    $ 41,298
             

Liabilities:

      

Notes payable – secured

    $ —      $ 12,000

Income tax liability

      5,971      6,768

Other liabilities

      71      145
             
   $ 6,042    $ 18,913
             

Minority interest

    $ 620    $ 1,895
             

 

     Quarter Ended June 30,     Six Months Ended June 30,  
     2008     2007     2008     2007  
     (unaudited)     (unaudited)     (unaudited)     (unaudited)  

Revenues:

         

Interest income on commercial mortgage residual interests

    $ 1,171     $ 1,144     $ 2,527     $ 2,388  

Interest and other income

      19       430       210       1,132  
                                
     1,190       1,574       2,737       3,520  

Expenses:

         

General and administrative

      69       85       147       210  

Amortization

      —         51       35       115  

Impairment – commercial mortgage residual interests valuation

      —         —         758       —    

Interest

      —         619       200       1,232  
                                
     69       755       1,140       1,557  
                                

Income tax benefit

      382       689       790       1,459  

Minority interest

      (179 )     (203 )     (319 )     (484 )
                                

Net earnings

    $ 1,324     $ 1,305     $ 2,068     $ 2,938  
                                

 

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.”

 

     June 30,
2008		    December 31,
2007
     (unaudited)     

Assets:

      

Cash and cash equivalents

    $ 274    $ 30

Real estate

      75,046      65,413

Other assets

      2,437      921
             
   $ 77,757    $ 66,364
             

Liabilities:

      

Notes payable

    $ 43,600    $ 38,600

Other liabilities

      193      180
             

Total liabilities

      43,793      38,780
             

Members’ equity

      33,964      27,584
             

Total liabilities and equity

    $ 77,757    $ 66,364
             
     Quarter Ended
June 30, 2008		    Six Months Ended
June 30, 2008
     (unaudited)    (unaudited)

Revenues:

      

Rental income

    $ 1,565    $ 3,062
             
     1,565      3,062

Expenses:

      

General and administrative

      66      137

Real estate

      5      10

Depreciation and amortization

      362      715

Interest

      522      1,119
             
     955      1,981
             

Net earnings

    $ 610    $ 1,081
             

 

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National Retail Properties, Inc.

Investment Portfolio

Top 20 Lines of Trade

 

         As of June 30,  
    

Line of Trade

    2008 (1)     2007 (2)  
1.   Convenience stores    25.7 %   24.5 %
2.   Restaurants – full service    9.2 %   10.6 %
3.   Automotive service    8.0 %   1.0 %
4.   Theaters    6.2 %   —    
5.   Automotive parts    4.8 %   1.5 %
6.   Drug stores    4.2 %   6.6 %
7.   Books    4.0 %   4.8 %
8.   Consumer electronics    3.8 %   4.7 %
9.   Sporting goods    3.6 %   5.8 %
10.   Restaurants – limited service    3.4 %   4.2 %
11.   Travel plazas    2.8 %   3.3 %
12.   Grocery    2.7 %   3.9 %
13.   Furniture    2.6 %   3.4 %
14.   Office supplies    2.5 %   3.2 %
15.   Family entertainment centers    2.0 %   2.4 %
16.   Beer, wine and liquor    1.8 %   1.9 %
17.   General merchandise    1.7 %   2.0 %
18.   Home furnishings    1.4 %   1.6 %
19.   Craft, fabric and novelty    1.3 %   1.6 %
20.   Auto dealerships    1.3 %   2.1 %
  Other    7.0 %   10.9 %
              
  Total    100.0 %   100.0 %
              

Top 10 States

 

   

State

    % of Total(1)        

State

    % of Total(1)  
1.   Texas    19.3 %   6.   Georgia    4.9 %
2.   Florida    10.4 %   7.   Pennsylvania    4.3 %
3.   Illinois    7.0 %   8.   Indiana    4.2 %
4.   North Carolina    6.1 %   9.   Colorado    3.1 %
5.   California    5.1 %   10.   Arizona    3.1 %

Lease Expirations

 

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

2008

    0.4 %   7    186,000    2014    4.4 %   31    510,000

2009

    1.3 %   23    440,000    2015    2.6 %   19    463,000

2010

    2.9 %   42    421,000    2016    1.9 %   14    240,000

2011

    2.1 %   21    338,000    2017    4.4 %   26    663,000

2012

    3.6 %   33    549,000    2018    3.7 %   31    479,000

2013

    4.3 %   35    787,000    Thereafter    68.4 %   661    5,733,000

 

(1)

Based on annual base rent of $216,155,000, which is the annualized base rent for all leases in place as of June 30, 2008.

(2)

Based on annual base rent of $177,858,000, which is the annualized base rent for all leases in place as of June 30, 2007.

(3)

Square feet.

 

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