Second Quarter 2019 Operating Results Announced By National Retail Properties, Inc.

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August 1, 2019 8:30 AM EDT

ORLANDO, Fla., Aug. 1, 2019 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced its operating results for the quarter and six months ended June 30, 2019.  Highlights include:

Operating Results:

  • Revenues and net earnings, FFO, Core FFO and AFFO available to common stockholders and diluted per share amounts:

Quarter Ended

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

(in thousands, except per share data)

Revenues

$

164,792

$

155,518

$

328,504

$

308,353

Net earnings available to common stockholders

$

70,097

$

61,992

$

141,537

$

156,690

Net earnings per common share

$

0.43

$

0.40

$

0.87

$

1.02

FFO available to common stockholders

$

110,859

$

104,944

$

221,203

$

207,713

FFO per common share

$

0.68

$

0.68

$

1.37

$

1.35

Core FFO available to common stockholders

$

110,859

$

105,204

$

219,872

$

208,234

Core FFO per common share

$

0.68

$

0.68

$

1.36

$

1.35

AFFO available to common stockholders

$

112,619

$

105,303

$

223,249

$

208,182

AFFO per common share

$

0.69

$

0.68

$

1.38

$

1.35

 

Second Quarter 2019 Highlights:

  • AFFO per common share increased 1.5% over prior year results
  • Portfolio occupancy was 98.8% at June 30, 2019 as compared to 98.2% on March 31, 2019 and 98.2% on December 31, 2018
  • Invested $275.8 million in property investments, including the acquisition of 71 properties with an aggregate 1,678,000 square feet of gross leasable area at an initial cash yield of 6.9%
  • Sold 13 properties for $42.0 million producing $12.6 million of gains on sales, net of noncontrolling interest
  • Raised $82.0 million net proceeds from the issuance of 1,531,684 common shares

First Half of 2019 Highlights:

  • FFO per share increased 1.5% over prior year results
  • Core FFO per share increased 0.7% over prior year results
  • AFFO per common share increased 2.2% over prior year results
  • Invested $392.8 million in property investments, including the acquisition of 104 properties with an aggregate 2,112,000 square feet of gross leasable area at an initial cash yield of 6.9%
  • Sold 30 properties for $61.4 million producing $23.0 million of gains on sales, net of noncontrolling interest
  • Raised $87.2 million in net proceeds from issuance of 1,632,864 common shares

Jay Whitehurst, Chief Executive Officer, commented: "National Retail Properties posted steady, consistent results in the second quarter of 2019, highlighted by a solid quarter of acquisitions and a meaningful uptick in our occupancy rate. In July, we increased our common stock dividend by three percent to 51.5 cents per quarter, while maintaining our very conservative dividend payout ratio. 2019 will mark our 30th consecutive year of increased annual dividends, a feat matched by only two other REITs and by less than 90 public companies in the United States."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of June 30, 2019, the company owned 3,043 properties in 48 states with a gross leasable area of approximately 32.1 million square feet and with a weighted average remaining lease term of 11.4 years.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on August 1, 2019, at 10:30 a.m. ET to review these results.  The call can be accessed on the National Retail Properties 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.  These statements generally are characterized by the use of terms such as "believe," "expect," "intend," "may," "estimated," or other similar words or expressions. 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 preferences and financial condition of the company's tenants, the availability of capital, and, risks related to the company's status as a REIT.  Additional information concerning these and other factors that could cause actual results to differ materially from these forward-looking statements is contained from time to time in the company's Securities and Exchange Commission (the "Commission") 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 Commission.  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, Inc. 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 filed on Form 10-Q with the Commission for the quarter and six months ended June 30, 2019.  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), any applicable taxes and noncontrolling interests on the disposition of certain assets, the company's share of these items from the company's unconsolidated partnerships and any impairment charges on a depreciable real estate asset.

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.  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.

Core Funds From Operations ("Core FFO") is a non-GAAP measure of operating performance that adjusts FFO to eliminate the impact of certain GAAP income and expense amounts that the company believes are infrequent and unusual in nature and/or not related to its core real estate operations.  Exclusion of these items from similar FFO-type metrics is common within the REIT industry, and management believes that presentation of Core FFO provides investors with a potential metric to assist in their evaluation of the company's operating performance across multiple periods and in comparison to the operating performance of its peers because it removes the effect of unusual items that are not expected to impact the company's operating performance on an ongoing basis.  Core FFO is used by management in evaluating the performance of the company's core business operations and is a factor in determining management compensation.  Items included in calculating FFO that may be excluded in calculating Core FFO may include items like transaction related gains, income or expense, impairments on land or commercial mortgage residual interests, preferred stock redemption costs or other non-core amounts as they occur.   The company's computation of Core FFO may differ from the methodology for calculating Core 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 Core FFO 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 adjusts FFO for certain non-cash items that reduce or increase net income in accordance with GAAP.  AFFO 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 AFFO a useful supplemental measure of the company's performance.  The company's computation of AFFO may differ from the methodology for calculating AFFO 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 AFFO is included in the financial information accompanying this release.

 

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

Quarter Ended

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

Income Statement Summary

Revenues:

Rental income

$

164,596

$

155,153

$

327,622

$

307,915

Interest and other income from real estate transactions

196

365

882

438

164,792

155,518

328,504

308,353

Operating expenses:

General and administrative

9,276

8,741

18,798

17,437

Real estate

6,600

5,828

13,692

11,690

Depreciation and amortization

46,241

43,304

92,421

87,802

Impairment losses – real estate, net of recoveries

7,187

3,835

10,432

6,083

Retirement severance costs

—

260

—

521

69,304

61,968

135,343

123,533

Gain on disposition of real estate

13,002

4,106

23,447

42,702

Earnings from operations

108,490

97,656

216,608

227,522

Other expenses (revenues):

Interest and other income

(487)

(37)

(2,411)

(63)

Interest expense

29,811

27,110

59,768

53,712

Leasing transaction costs

75

—

127

—

29,399

27,073

57,484

53,649

Net earnings

79,091

70,583

159,124

173,873

Earnings attributable to noncontrolling interests

(413)

(10)

(423)

(19)

Net earnings attributable to NNN

78,678

70,573

158,701

173,854

Series E preferred stock dividends

(4,096)

(4,096)

(8,194)

(8,194)

Series F preferred stock dividends

(4,485)

(4,485)

(8,970)

(8,970)

Net earnings available to common stockholders

$

70,097

$

61,992

$

141,537

$

156,690

Weighted average common shares outstanding:

Basic

161,893

153,811

161,502

153,428

Diluted

162,352

154,204

161,995

153,840

Net earnings per share available to common stockholders:

Basic

$

0.43

$

0.40

$

0.87

$

1.02

Diluted

$

0.43

$

0.40

$

0.87

$

1.02

 

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

Quarter Ended

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

Funds From Operations (FFO) Reconciliation:

Net earnings available to common stockholders

$

70,097

$

61,992

$

141,537

$

156,690

Real estate depreciation and amortization

46,165

43,223

92,269

87,642

Gain on disposition of real estate, net of noncontrolling      interests

(12,590)

(4,106)

(23,035)

(42,702)

Impairment losses – depreciable real estate, net of recoveries

7,187

3,835

10,432

6,083

Total FFO adjustments

40,762

42,952

79,666

51,023

FFO available to common stockholders

$

110,859

$

104,944

$

221,203

$

207,713

FFO per common share:

Basic

$

0.68

$

0.68

$

1.37

$

1.35

Diluted

$

0.68

$

0.68

$

1.37

$

1.35

Core Funds From Operations Reconciliation:

Net earnings available to common stockholders

$

70,097

$

61,992

$

141,537

$

156,690

Total FFO adjustments

40,762

42,952

79,666

51,023

FFO available to common stockholders

110,859

104,944

221,203

207,713

Retirement severance costs

—

260

—

521

Gain on sale of equity investments

—

—

(1,331)

—

Total Core FFO adjustments

—

260

(1,331)

521

Core FFO available to common stockholders

$

110,859

$

105,204

$

219,872

$

208,234

Core FFO per common share:

Basic

$

0.68

$

0.68

$

1.36

$

1.36

Diluted

$

0.68

$

0.68

$

1.36

$

1.35

Quarter Ended

Six Months Ended

June 30,

June 30,

2019

2018

2019

2018

Adjusted Funds From Operations (AFFO) Reconciliation:

Net earnings available to common stockholders

$

70,097

$

61,992

$

141,537

$

156,690

Total FFO adjustments

40,762

42,952

79,666

51,023

Total Core FFO adjustments

—

260

(1,331)

521

Core FFO available to common stockholders

110,859

105,204

219,872

208,234

Straight-line accrued rent

(413)

68

(1,160)

(930)

Net capital lease rent adjustment

167

234

338

462

Below-market rent amortization

(173)

(1,417)

(401)

(2,115)

Stock based compensation expense

2,524

2,290

5,071

4,435

Capitalized interest expense

(345)

(1,076)

(471)

(1,904)

Total AFFO adjustments

1,760

99

3,377

(52)

AFFO available to common stockholders

$

112,619

$

105,303

$

223,249

$

208,182

AFFO per common share:

Basic

$

0.70

$

0.68

$

1.38

$

1.36

Diluted

$

0.69

$

0.68

$

1.38

$

1.35

Other Information:

Rental income from operating leases(1)

$

160,234

$

150,969

$

318,632

$

298,798

Earned income from direct financing leases(1)

$

208

$

225

$

420

$

455

Percentage rent(1)

$

300

$

189

$

722

$

734

Real estate expense reimbursement from tenants(1)

$

3,854

$

3,770

$

7,848

$

7,928

Real estate expenses

(6,600)

(5,828)

(13,692)

(11,690)

Real estate expenses, net of tenant reimbursements

$

(2,746)

$

(2,058)

$

(5,844)

$

(3,762)

Amortization of debt costs

$

931

$

894

$

1,851

$

1,781

Scheduled debt principal amortization (excluding maturities)

$

139

$

132

$

281

$

266

Non-real estate depreciation expense

$

78

$

84

$

158

$

165

(1) 

The condensed consolidated financial statements for the quarter and six months ended June 30, 2019 and 2018 are presented under the new accounting standard, ASU 2016-02, "Leases (Topic 842)."  For the quarter and six months ended June 30, 2019, the aggregate of such amounts is $164,596 and $327,622, respectively, classified as rental income on the income statement summary. For the quarter and six months ended June 30, 2018, the aggregate of such amounts is $155,153 and $307,915, respectively.

 

 

2019 Earnings Guidance:

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.

2019 Guidance

  Net earnings per common share excluding any gains on disposition of real estate and      impairment charges

$1.60 - $1.65 per share

  Real estate depreciation and amortization per share

$1.11 per share

Core FFO per share

$2.71 - $2.76 per share

  AFFO per share

$2.76 - $2.81 per share

  G&A expenses

$37.0 - $38.0 Million

  Real estate expenses, net of tenant reimbursements

$10.0 - $10.5 Million

  Acquisition volume

$550 - $650 Million

  Disposition volume

$80 - $120 Million

 

 

National Retail Properties, Inc.

(in thousands)

(unaudited)

June 30, 2019

December 31, 2018

Balance Sheet Summary

Assets:

Real estate:

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

$

7,110,598

$

6,851,216

Accounted for using the direct financing method

7,052

8,069

Real estate held for sale

288

16,147

Cash and cash equivalents

2,209

114,267

Receivables, net of allowance of $506 and $2,273, respectively

2,507

3,797

Accrued rental income, net of allowance of $1,842

28,198

25,387

Debt costs, net of accumulated amortization

3,468

4,081

Other assets

98,481

80,474

Total assets

$

7,252,801

$

7,103,438

Liabilities:

Line of credit payable

$

63,200

$

—

 Mortgages payable, including unamortized premium and net of unamortized debt cost

12,379

12,694

 Notes payable, net of unamortized discount and unamortized      debt costs

2,840,674

2,838,701

Accrued interest payable

17,984

19,519

Other liabilities

96,113

77,919

Total liabilities

3,030,350

2,948,833

Stockholders' equity of NNN

4,222,449

4,154,250

Noncontrolling interests

2

355

Total equity

4,222,451

4,154,605

Total liabilities and equity

$

7,252,801

$

7,103,438

Common shares outstanding

163,513

161,504

Gross leasable area, Property Portfolio (square feet)

32,053

30,487

 

 

National Retail Properties, Inc.

Debt Summary

As of June 30, 2019

(in thousands)

(unaudited)

Unsecured Debt

Principal

Principal, Net of Unamortized Discount

Stated Rate

Effective Rate

Maturity Date

Line of credit payable

$

63,200

$

63,200

L + 87.5 bps

3.295

%

   January 2022

Unsecured notes payable:

2022

325,000

323,162

3.800

%

3.985

%

   October 2022

2023

350,000

348,913

3.300

%

3.388

%

   April 2023

2024

350,000

349,618

3.900

%

3.924

%

   June 2024

2025

400,000

399,346

4.000

%

4.029

%

   November 2025

2026

350,000

346,992

3.600

%

3.733

%

   December 2026

2027

400,000

398,621

3.500

%

3.548

%

   October 2027

2028

400,000

397,326

4.300

%

4.388

%

   October 2028

2048

300,000

295,809

4.800

%

4.890

%

   October 2048

Total

2,875,000

2,859,787

Total unsecured debt(1)

$

2,938,200

$

2,922,987

Debt costs

(26,932)

Accumulated amortization

7,819

Debt costs, net of accumulated amortization

(19,113)

Notes payable, net of unamortized discount and unamortized debt costs

$

2,840,674

(1)  Unsecured notes payable have a weighted average interest rate of 4.0% and a weighted average maturity of 8.8 years.

 

 

Mortgages Payable

Principal Balance

Interest Rate

Maturity Date

Mortgage(1)

$

12,445

5.23

%

   July 2023

Debt costs

(147)

Accumulated amortization

81

Debt costs, net of accumulated      amortization

(66)

Mortgages payable, including      unamortized premium and net of      unamortized debt costs

$

12,379

(1)   Includes unamortized premium

 

 

National Retail Properties, Inc.

Property Portfolio

Top 20 Lines of Trade

As of June 30,

Line of Trade

2019(1)

2018(2)

1.

Convenience stores

17.7

%

18.8

%

2.

Restaurants – full service

11.1

%

12.1

%

3.

Automotive service

9.1

%

7.7

%

4.

Restaurants – limited service

8.8

%

7.9

%

5.

Family entertainment centers

6.9

%

6.5

%

6.

Health and fitness

5.4

%

5.6

%

7.

Theaters

4.8

%

4.8

%

8.

Recreational vehicle dealers, parts and accessories

3.4

%

3.1

%

9.

Automotive parts

3.3

%

3.6

%

10.

Equipment rental

2.7

%

1.9

%

11.

Home improvement

2.6

%

1.7

%

12.

Wholesale clubs

2.3

%

2.4

%

13.

Medical service providers

2.2

%

2.3

%

14.

General merchandise

1.8

%

1.8

%

15.

Home furnishings

1.7

%

1.6

%

16.

Furniture

1.7

%

1.8

%

17.

Travel plazas

1.6

%

1.7

%

18.

Drug stores

1.6

%

1.9

%

19.

Consumer electronics

1.6

%

1.7

%

20.

Bank

1.5

%

1.9

%

Other

8.2

%

9.2

%

Total

100.0

%

100.0

%

 

 

Top 10 States

State

% of Total(1)

State

% of Total(1)

1.

Texas

17.4

%

6.

Georgia

4.5

%

2.

Florida

8.9

%

7.

Indiana

3.9

%

3.

Ohio

5.7

%

8.

Tennessee

3.9

%

4.

Illinois

5.2

%

9.

Virginia

3.7

%

5.

North Carolina

4.5

%

10.

California

3.1

%

(1) Based on the annualized base rent for all leases in place as of June 30, 2019.

(2) Based on the annualized base rent for all leases in place as of June 30, 2018.

 

 

National Retail Properties, Inc.

Property Portfolio

Top Tenants ( ≥ 2.0%)

Properties

% of Total(1)

7-Eleven

140

5.2

%

Mister Car Wash

109

4.4

%

Camping World

46

4.2

%

LA Fitness

30

3.8

%

Flynn Restaurant Group (Taco Bell/Arby's)

203

3.6

%

GPM Investments (Convenience Stores)

151

3.5

%

AMC Theatre

20

3.1

%

Couche Tard (Pantry)

85

2.9

%

Sunoco

61

2.3

%

BJ's Wholesale Club

9

2.3

%

Chuck E. Cheese's

53

2.1

%

 

 

Lease Expirations(2)

% of Total(1)

# ofProperties

Gross Leasable Area(3)

% of Total(1)

# ofProperties

Gross Leasable Area(3)

2019

0.4

%

20

418,000

2025

4.9

%

141

1,486,000

2020

2.3

%

97

1,060,000

2026

4.8

%

179

1,697,000

2021

3.7

%

119

1,301,000

2027

7.4

%

194

2,624,000

2022

5.7

%

123

1,634,000

2028

4.8

%

158

1,176,000

2023

3.0

%

117

1,456,000

2029

3.2

%

75

1,109,000

2024

3.6

%

96

1,546,000

Thereafter

56.2

%

1,684

15,813,000

(1)   

Based on the annual base rent of $650,091,000, which is the annualized base rent for all leases in place as of June 30, 2019.

(2)   

As of June 30, 2019, the weighted average remaining lease term is 11.4 years.

(3)   

Square feet.

 

Cision View original content:http://www.prnewswire.com/news-releases/second-quarter-2019-operating-results-announced-by-national-retail-properties-inc-300894507.html

SOURCE National Retail Properties, Inc.


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