EX-99.1 2 dex991.htm PRESS RELEASE, DATED MAY 4, 2010 PRESS RELEASE, DATED MAY 4, 2010

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   Exhibit 99.1

NEWS RELEASE

For information contact:

Kevin B. Habicht

Chief Financial Officer

(407) 265-7348

   FOR IMMEDIATE RELEASE

May 4, 2010

FIRST QUARTER 2010 OPERATING RESULTS

ANNOUNCED BY NATIONAL RETAIL PROPERTIES, INC.

Orlando, Florida, May 4, 2010 – National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter ended March 31, 2010. Highlights include:

Operating Results:

 

  •  

Revenues, net earnings, FFO and AFFO available to common stockholders:

 

    Quarter Ended March 31,
    2010   2009
    (in thousands, except per share data)

Revenues

   $ 56,626   $ 58,190

Net earnings available to common stockholders

   $ 14,669   $ 25,108

Net earnings per common share (diluted)

   $ 0.18   $ 0.32

FFO available to common stockholders

   $ 25,259   $ 34,510

FFO per common share (diluted)

   $ 0.31   $ 0.44

AFFO available to common stockholders

   $ 31,444   $ 36,827

AFFO per common share (diluted)

   $ 0.38   $ 0.47

 

  •  

NNN paid cash dividends to its common stockholders of $0.375 per share during the quarter ended March 31, 2010.

 

  •  

Investment Portfolio occupancy was 96.4% at March 31, 2010, as compared to 96.4% at December 31, 2009, and 96.7% at March 31, 2009.

Investments and Dispositions for the quarter ended March 31, 2010:

 

  •  

Investments:

 

  •  

$12.4 million in the Investment Portfolio, including acquiring four properties with an aggregate 64,000 square feet of gross leasable area

 

  •  

Dispositions:

 

  •  

Five Investment properties with an aggregate 14,000 square feet of gross leasable area, with net proceeds of $6.8 million, resulting in a gain of $22,000

 

  •  

One Inventory property with net proceeds of $775,000

 

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

(800) NNN-REIT www.nnnreit.com

  

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Capital transactions for the quarter ended March 31, 2010:

 

  •  

Issued 502,892 shares of common stock generating $10,460,000 of net proceeds pursuant to the Dividend Reinvestment and Stock Purchase Plan

National Retail Properties also announced revised 2010 FFO guidance of $1.47 to $1.52 per share before any impairment expense and estimated AFFO to be $1.62 to $1.67 per share. The change in guidance is primarily related to projected timing of property acquisitions and an increase in projected property dispositions.

This guidance equates to net earnings before any gains or losses from the sale of real estate of $0.93 to $0.98 per share plus $0.50 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.

Craig Macnab, Chief Executive Officer, commented: “Our portfolio and balance sheet remain in very good condition and visibility on potential acquisitions is improving. We believe our business model of owning and acquiring net lease retail properties and prudent risk management will continue to produce relatively high returns and less volatility in the long run. Excluding the non-cash impairment charge taken on our mortgage residual portfolio this quarter, we would have earned FFO of approximately 35 cents and AFFO of approximately 38 cents which is in line with our internal expectations. Our revised guidance for 2010 takes into account the sale of a large multi-tenant retail shopping center in our taxable REIT subsidiary. If this property sale closes, it will be dilutive to FFO this year, however as we invest the approximately $41 million of proceeds in higher yielding net lease retail properties our shareholders will reap the benefit of this capital recycling transaction for years to come.”

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of March 31, 2010, the company owned 1,014 Investment Properties in 43 states with a gross leasable area of approximately 11.4 million square feet. For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on May 4, 2010, at 10:30 a.m. ET 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 Properties 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 for the quarter ended March 31, 2010. 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) 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

 

2

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 further adjusts FFO for certain non-cash items that reduce or increase net income in accordance with GAAP. Management considers AFFO a useful supplemental measure of the company’s performance. The company’s computation of AFFO may differ from the calculation used by other equity REITs and therefore may not be comparable to such other REITs. A reconciliation of net earnings to AFFO is included in this release.

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)

 

     Quarter Ended March 31,  
     2010     2009  

Income Statement Summary

     

Revenues:

     

Rental and earned income

    $ 52,856      $ 53,662   

Real estate expense reimbursement from tenants

      1,772        2,342   

Interest and other income from real estate transactions

      949        1,132   

Interest income on commercial mortgage residual interests

      1,049        1,054   
                
     56,626        58,190   
                

Retail operations:

     

Revenues

      6,536        —     

Operating expenses

      (6,669 )      —     
                

Net

      (133 )      —     
                

Operating expenses:

     

General and administrative

      5,611        5,306   

Real estate

      3,530        3,420   

Depreciation and amortization

      11,855        11,692   

Impairment - commercial mortgage residual interests valuation adjustment

      3,683        —     

Restructuring costs

      —          731   
                
     24,679        21,149   
                

Other expenses (revenues):

     

Interest and other income

      (252 )      (347 ) 

Interest expense

      15,989        15,431   
                
     15,737        15,084   
                

Income tax (expense) benefit

      (92 )      425   

Equity in earnings of unconsolidated affiliate

      105        103   

Gain on note receivable and property foreclosure

      16        —     

Gain on extinguishment of debt

      —          2,418   
                

Earnings from continuing operations

      16,106        24,903   

Earnings from discontinued operations:

     

Real estate, Investment Portfolio

      61        1,820   

Real estate, Inventory Portfolio, net of income tax expense

      131        51   
                
     192        1,871   
                

Earnings including noncontrolling interests

      16,298        26,774   

Loss (earnings) attributable to noncontrolling interests:

     

Continuing operations

      119        (179 ) 

Discontinued operations

      (52 )      209   
                
     67        30   
                

Net earnings attributable to NNN

      16,365        26,804   

Series C preferred stock dividends

      (1,696 )      (1,696 ) 
                

Net earnings available to common stockholders

    $ 14,669      $ 25,108   
                

 

4

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

     Quarter Ended March 31,
     2010    2009

Weighted average common shares outstanding:

      

Basic

      82,321      78,166
             

Diluted

      82,446      78,254
             

Net earnings per share available to common stockholders:

      

Basic:

      

Continuing operations

    $ 0.18    $ 0.29

Discontinued operations

      0.00      0.03
             

Net earnings

    $ 0.18    $ 0.32
             

Diluted:

      

Continuing operations

    $ 0.18    $ 0.29

Discontinued operations

      0.00      0.03
             

Net earnings

    $ 0.18    $ 0.32
             

 

5

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

     Quarter Ended March 31,  
     2010     2009  

Funds From Operations (FFO) Reconciliation:

     

Net earnings available to common stockholders

    $ 14,669      $ 25,108   

Real estate depreciation and amortization:

     

Continuing operations

      10,583        10,777   

Discontinued operations

      30        159   

Joint venture real estate depreciation

      44        44   

Gain on disposition of real estate - Investment Portfolio

      (22 )      (1,032 ) 

Gain on disposition of real estate - Inventory Portfolio (TRS)

      (45 )      (546 ) 
                

Total FFO adjustments

      10,590        9,402   
                

FFO available to common stockholders

    $ 25,259      $ 34,510   
                

FFO per share:

     

Basic

    $ 0.31      $ 0.44   
                

Diluted

    $ 0.31      $ 0.44   
                

Adjusted Funds From Operations (AFFO) Reconciliation:

     

Net earnings available to common stockholders

    $ 14,669      $ 25,108   

Total FFO adjustments

      10,590        9,402   
                

FFO available to common stockholders

      25,259        34,510   

Straight-line accrued rent

      (319 )      91   

Net capital lease rent adjustment

      372        330   

Below market rent amortization

      (96 )      (153 ) 

Stock based compensation expense

      1,113        1,119   

Capitalized interest expense

      (53 )      (518 ) 

Convertible debt interest expense

      1,501        1,448   

Impairment - commercial mortgage residual interests valuation adjustment

      3,683        —     

Gain on note receivable and property foreclosures

      (16 )      —     
                

Total AFFO adjustments

      6,185        2,317   
                

AFFO available to common stockholders

    $ 31,444      $ 36,827   
                

AFFO per share:

     

Basic

    $ 0.38      $ 0.47   
                

Diluted

    $ 0.38      $ 0.47   
                

Other Information:

     

Percentage rent

    $ 54      $ 147   
                

Amortization of debt costs

    $ 1,133      $ 837   
                

Scheduled debt principal amortization (excluding maturities)

    $ 253      $ 248   
                

Non-real estate depreciation expense

    $ 145      $ 78   
                

 

6

National Retail Properties, Inc.

(in thousands)

(unaudited)

Earnings from Discontinued Operations: The company has classified its investment assets sold and leasehold interests expired 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, 2010, as discontinued operations. The following is a summary of earnings from discontinued operations.

 

     Quarter Ended March 31,  
     2010     2009  

Earnings from Discontinued Operations - Investment Portfolio:

     

Revenues:

     

Rental and earned income

    $ 66      $ 1,154   

Real estate expense reimbursement from tenants

      1        44   

Interest and other income from real estate transactions

      28        —     
                
     95        1,198   
                

Expenses:

     

General and administrative

      —          3   

Real estate

      26        248   

Depreciation and amortization

      30        159   
                
     56        410   
                

Gain on disposition of real estate

      22        1,032   
                

Earnings from discontinued operations attributable to NNN

    $ 61      $ 1,820   
                

Earnings from Discontinued Operations - Inventory Portfolio:

     

Revenues:

     

Rental income

    $ 1,152      $ 1,096   

Real estate expense reimbursement from tenants

      987        941   

Interest and other income from real estate transactions

      36        39   
                
     2,175        2,076   
                

Disposition of real estate:

     

Gross proceeds

      802        4,900   

Costs

      (715 )      (4,354 ) 
                

Gain

      87        546   
                

Expenses:

     

General and administrative

      38        45   

Real estate

      1,041        1,298   

Depreciation and amortization

      61        139   

Interest

      943        930   
                
     2,083        2,412   
                

Income tax expense

      (48 )      (159 ) 
                

Earnings from discontinued operations including noncontrolling interests

      131        51   

Loss (earnings) attributable to noncontrolling interests

      (52 )      209   
                

Earnings from discontinued operations attributable to NNN

    $ 79      $ 260   
                

 

7

National Retail Properties, Inc.

(in thousands)

(unaudited)

 

     Quarter Ended March 31,
     2010     2009
     # of
Properties		      Gain       # of
Properties		      Gain  

Real Estate Disposition Summary:

           

Reconciliation of gain on disposition between continuing and discontinued operations:

           

Continuing operations

    —      $ —        —      $ —  

Discontinued operations:

           

Investment Portfolio

    5      22      3      1,032

Inventory Portfolio

    1      87      1      546

Noncontrolling interests, Inventory Portfolio

    —        (42 )    —        —  
                        
   6    $ 67      4    $ 1,578
                        

Reconciliation of gain on disposition by type:

           

Inventory Portfolio:

           

Development

    1    $ 87      1    $ 546

Noncontrolling interests, Development

    —        (42 )    —        —  
                        

Total Inventory gain (TRS)

    1      45      1      546

Investment Portfolio

    5      22      3      1,032
                        
   6    $ 67      4    $ 1,578
                        

 

8

National Retail Properties, Inc.

(in thousands)

(unaudited)

 

     March 31,
2010		    December 31,
2009

Balance Sheet Summary

      

Assets:

      

Cash and cash equivalents

    $ 31,243    $ 15,225

Receivables, net of allowance

      1,189      1,946

Investment in unconsolidated affiliate

      4,656      4,703

Mortgages, notes and accrued interest receivable

      47,338      41,976

Real estate, Investment Portfolio:

      

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

      2,323,515      2,328,576

Accounted for using the direct financing method

      30,945      31,317

Real estate, Inventory Portfolio, held for sale

      71,778      72,423

Commercial mortgage residual interests

      16,577      20,153

Accrued rental income, net of allowance

      25,945      25,745

Other assets

      48,615      48,898
             

Total assets

    $ 2,601,801    $ 2,590,962
             

Liabilities:

      

Mortgages payable

    $ 30,469    $ 25,290

Notes payable - convertible

      344,880      343,380

Notes payable, net of unamortized discount

      618,728      618,676

Other liabilities

      47,654      36,754
             

Total liabilities

      1,041,731      1,024,100

Stockholders’ equity of NNN

      1,557,624      1,564,240

Noncontrolling interests

      2,446      2,622
             

Total equity

      1,560,070      1,566,862

Total liabilities and equity

    $ 2,601,801    $ 2,590,962
             

Common shares outstanding

      83,311      82,428
             

Gross leasable area, Investment Portfolio (square feet)

      11,423      11,373
             

 

9

Orange Avenue Mortgage Investments, Inc.

(in thousands)

(unaudited)

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 $29.3 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,
2010		    December 31,
2009

Assets:

      

Cash and cash equivalents

    $ 1,632    $ 1,088

Receivables and other assets

      16      43

Commercial mortgage residual interests

      16,577      20,153
             
   $ 18,225    $ 21,284
             

Liabilities:

      

Income tax liability

    $ 4,638    $ 4,732

Other liabilities

      49      49
             
   $ 4,687    $ 4,781
             

Noncontrolling interests

    $ 1,377    $ 1,579
             

 

     Quarter Ended March 31,  
     2010     2009  

Revenues:

     

Interest income on commercial mortgage residual interests

    $ 1,049      $ 1,054   
                
     1,049        1,054   
                

Expenses:

     

General and administrative

      94        61   

Impairment - commercial mortgage residual interests valuation adjustment

      3,683        —     
                
     3,777        61   
                

Income tax benefit

      94        128   
                

Earnings (loss) including noncontrolling interests

      (2,634 )      1,121   

Loss (earnings) attributable to noncontrolling interests

      92        (110 ) 
                

Net earnings (loss) attributable to NNN

    $ (2,542 )    $ 1,011   
                

 

10

NNN Retail Properties Fund I LLC

(in thousands)

(unaudited)

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,
2010		    December  31,
2009

Assets:

      

Cash and cash equivalents

    $ 871    $ 829

Receivables

      200      200

Real estate

      72,983      73,279

Other assets

      761      838
             
   $ 74,815    $ 75,146
             

Liabilities:

      

Notes payable

    $ 43,600    $ 43,600

Other liabilities

      1,474      1,427
             

Total liabilities

      45,074      45,027
             

Members’ equity

      29,741      30,119
             

Total liabilities and equity

    $ 74,815    $ 75,146
             

 

     Quarter Ended March 31,
     2010    2009

Revenues:

      

Rental income

    $ 1,565    $ 1,565
             

Expenses:

      

General and administrative

      107      104

Real estate

      5      5

Depreciation and amortization

      369      371

Interest

      447      462
             
     928      942
             

Net earnings

    $ 637    $ 623
             

 

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National Retail Properties, Inc.

Investment Portfolio

Top 20 Lines of Trade

 

                    As of March 31,  
     

Line of Trade

              2010(1)     2009(2)  

1.

    Convenience stores          26.5 %    25.4 % 

2.

    Restaurants - full service          9.2 %    8.8 % 

3.

    Automotive parts          6.7 %    6.0 % 

4.

    Theaters          6.2 %    6.0 % 

5.

    Automotive service          5.6 %    8.9 % 

6.

    Drug stores          4.4 %    4.0 % 

7.

    Books          4.1 %    3.9 % 

8.

    Restaurants - limited service          3.2 %    3.3 % 

9.

    Sporting goods          3.1 %    3.3 % 

10.

    Grocery          2.9 %    2.9 % 

11.

    Consumer electronics          2.7 %    2.6 % 

12.

    Furniture          2.6 %    2.5 % 

13.

    Office supplies          2.5 %    2.5 % 

14.

    Travel plazas          2.5 %    2.4 % 

15.

    Beer, wine and liquor          2.0 %    1.7 % 

16.

    Health and fitness          1.6 %    0.5 % 

17.

    Equipment rental          1.4 %    1.2 % 

18.

    General merchandise          1.3 %    1.1 % 

19.

    Auto dealerships          1.3 %    1.3 % 

20.

    Financial services          1.2 %    1.2 % 
   Other          9.0 %    10.5 % 
                     
   Total          100.0 %    100.0 % 
                     

Top 10 States

 

   

State

    % of  Total(1)             

State

    % of  Total(1)  

1.

   Texas    20.2 %      6.    Indiana    4.3 % 

2.

   Florida    9.6 %      7.    Pennsylvania    4.2 % 

3.

   Illinois    6.9 %      8.    Ohio    3.8 % 

4.

   North Carolina    6.3 %      9.    Tennessee    3.1 % 

5.

   Georgia    5.4 %      10.    Missouri    2.8 % 

 

(1)

Based on the annualized base rent for all leases in place as of March 31, 2010.

(2)

Based on the annualized base rent for all leases in place as of March 31, 2009.

 

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National Retail Properties, Inc.

Investment Portfolio

Top Tenants

 

      Properties    % of  Total(1)  

Pantry

    96    9.0 % 

Susser

    86    8.7 % 

Kerasotes Theatres

    16    6.2 % 

Road Ranger

    34    3.9 % 

Mister Car Wash

    40    3.6 % 

Pull-A-Part

    20    3.5 % 

Pep Boys

    16    3.1 % 

Best Buy

    7    2.6 % 

Barnes & Noble

    9    2.5 % 

Logans Roadhouse

    17    2.3 % 

CVS

    16    2.0 % 

Lease Expirations

 

     % of
Total(1) 		    # of
Properties		    Gross  Leasable
Area(2) 		                  % of
Total(1)		     # of
Properties		    Gross  Leasable
Area(2)

2010

    1.7 %    28    326,000       2016       1.7 %    13    240,000

2011

    2.1 %    22    404,000       2017       4.2 %    27    676,000

2012

    3.3 %    35    511,000       2018       2.9 %    24    345,000

2013

    4.7 %    38    822,000       2019       4.4 %    42    632,000

2014

    4.9 %    44    617,000       2020       3.1 %    41    345,000

2015

    3.5 %    27    591,000       Thereafter       63.5 %    624    4,943,000

 

(1)

Based on annual base rent of $214,254,000, which is the annualized base rent for all leases in place as of March 31, 2010.

(2)

Square feet.

 

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