ORLANDO, Fla., July 31 FL-Nat'l-Retail-2Q
ORLANDO, Fla., July 31 /PRNewswire-FirstCall/ -- 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 EndedSix Months Ended
June 30, 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
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 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.
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 1,4561,4533,0352,706
Interest and other
income from real
estate transactions 1,407 9572,6422,157
Interest income on
commercial mortgage
residual interests1,1711,1442,5272,388
-------- -------- -------- --------
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
administrative6,0405,946 13,600 12,267
Real estate2,2541,9354,6773,774
Depreciation and
amortization 10,8947,575 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 1,7692,4214,4215,215
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 26,1699,006 30,804
Real estate, Inventory
Portfolio, net of
income tax expense and
minority interest 1,4541,7936,4025,551
-------- -------- -------- --------
5,083 27,962 15,408 36,355
-------- -------- -------- --------
Net earnings30,888 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 diluted29,192 46,959 60,549 71,967
======== ======== ======== ========
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 7011,1291,391
-------- -------- -------- --------
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 $902
======== ======== ======== ========
National Retail Properties, Inc.
(in thousands, except per share data)
(unaudited)
Quarter Ended June 30, Six Months Ended June 30,
2008 2007 2008 2007
-------- -------- -------- --------
Reconciliation of net
earnings to FFO and FFO
available to common
stockholders:
Net earnings$ 30,888 $ 48,655 $ 63,941 $ 75,359
Real estate
depreciation and
amortization:
Continuing
operations 10,0676,995 19,440 13,152
Discontinued
operations 60 173 137 382
Joint venture real
estate depreciation44- 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 diluted36,654 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 # of # of # of
Proper- Proper-Proper- Proper-
ties Gain tiesGain tiesGain tiesGain
-------- ------ ------- ------ ------- ------ ------ ------
Reconciliation of
gain on disposition
between continuing
and discontinued
operations:
Continuing
operations - $--$ -1 $211 $ 332
Discontinued
operations:
Investment
Portfolio 72,7099 22,646 11 6,586 14 24,409
Inventory
Portfolio 7 707 16 1,893 14 9,835 386,230
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$ 1,0184 $ 7,8648 $ 2,814
Exchange 71,127 13875 11 1,992 313,748
Minority
interest,
Development - 210- (179) -(3,306) - (179)
------ ------ ------ ------- ------ ------- ----- -------
Total
Inventory
gain
(TRS) 7 917 16 1,714 15 6,550 396,383
Investment
Portfolio72,7099 22,646 11 6,586 14 24,409
------ ------ ------ ------- ------ ------- ----- -------
14 $3,626 25$24,360 26 $13,136 53 $30,792
====== ====== ====== ======= ====== ======= ===== =======
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,
20082007 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 2 388 130
Interest and other
income from real
estate transactions 416 192 949 316
-------- -------- -------- --------
1,2313,8212,5067,148
-------- -------- -------- --------
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 22,6466,586 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
transactions332 40 786 46
-------- -------- -------- --------
3,4342,4137,5765,566
-------- -------- -------- --------
Disposition of real estate:
Gross proceeds29,726 40,355 98,914 100,008
Costs(29,019) (38,462) (89,079) (93,778)
-------- -------- -------- --------
Gain 7071,8939,8356,230
-------- -------- -------- --------
Expenses:
General and
administrative 24 17 49 24
Real estate 329 369 878 801
Depreciation and
amortization 67 12 111 32
Interest 1,778 5952,7761,411
-------- -------- -------- --------
2,198 9933,8142,268
-------- -------- -------- --------
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
======== ======== ======== ========
National Retail Properties, Inc.
(in thousands)
Balance Sheet Summary June 30, December 31,
2008 2007
------------- ------------
(unaudited) (Note 1)
Assets:
Cash and cash equivalents $4,873 $ 27,499
Receivables, net of allowance4,198 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 176,070248,611
Commercial mortgage residual interests22,314 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 127,200129,800
Mortgages payable 26,896 27,480
Notes payable - secured - 12,000
Notes payable - convertible406,535172,500
Notes payable, net of unamortized discount 618,385718,290
Other liabilities 47,694 69,916
---------------------
Total liabilities1,226,710 1,129,986
Minority interest1,280 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.
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,December 31,
2008 2007
----------- ------------
(unaudited)(Note 1)
Assets:
Cash and cash equivalents $394 $ 15,541
Receivables and other assets36 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 71145
-------- --------
$ 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 2101,132
----------------- -----------------
1,1901,5742,7373,520
Expenses:
General and
administrative 69 85 147 210
Amortization - 51 35 115
Impairment - commercial
mortgage residual
interests valuation -- 758-
Interest - 619 2001,232
----------------- -----------------
69 7551,1401,557
----------------- -----------------
Income tax benefit 382 689 7901,459
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.
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, December 31,
2008 2007
-----------------------
(unaudited)
Assets:
Cash and cash equivalents $274$30
Real estate 75,046 65,413
Other assets 2,437921
--------- ---------
$ 77,757 $ 66,364
========= ========
Liabilities:
Notes payable$ 43,600 $ 38,600
Other liabilities 193180
--------- ---------
Total liabilities 43,793 38,780
--------- ---------
Members' equity 33,964 27,584
Total liabilities and equity $ 77,757 $ 66,364
========= ========
Quarter Six Months
Ended Ended
June 30, 2008 June 30, 2008
------------- -------------
(unaudited)(unaudited)
Revenues:
Rental income$ 1,565 $ 3,062
--------- ---------
1,565 3,062
Expenses:
General and administrative 66137
Real estate 5 10
Depreciation and amortization 362715
Interest 522 1,119
--------- ---------
955 1,981
--------- ---------
Net earnings $ 610 $ 1,081
========= ========
National Retail Properties, Inc.
Investment Portfolio
Top 20 Lines of Trade
---------------------
As of June 30,
Line of Trade 2008 (1)2007 (2)
-------------------------- --------- ---------
1. Convenience stores25.7%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 stores4.2% 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. Grocery2.7% 3.9%
13. Furniture 2.6% 3.4%
14. Office supplies2.5% 3.2%
15. Family entertainment centers 2.0% 2.4%
16. Beer, wine and liquor 1.8% 1.9%
17. General merchandise1.7% 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%
-------- --------
Total100.0% 100.0%
======== ========
Top 10 States
-------------
State % of Total(1) State % of Total(1)
----------- ------------ ------------ ------------
1. Texas19.3% 6. Georgia4.9%
2. Florida 10.4% 7. Pennsylvania 4.3%
3. Illinois 7.0% 8. Indiana4.2%
4. North Carolina6.1% 9. Colorado 3.1%
5. California5.1% 10. Arizona3.1%
Lease Expirations
-----------------
GrossGross
% of # ofLeasable % of # ofLeasable
Total(1) Properties Area(3) Total(1) Properties 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.
SOURCE National Retail Properties, Inc.
