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Record Annual Results Announced By National Retail Properties, Inc.

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February 11, 2020 8:30 AM EST

ORLANDO, Fla., Feb. 11, 2020 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and year ended December 31, 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

Year Ended

December 31,

December 31,

2019

2018

2019

2018

(in thousands, except per share data)

Revenues

$

173,376

$

158,976

$

670,487

$

622,661

Net earnings available to common stockholders

$

58,534

$

27,980

$

258,183

$

258,120

Net earnings per common share

$

0.34

$

0.17

$

1.56

$

1.65

FFO available to common stockholders

$

110,445

$

82,491

$

446,661

$

395,337

FFO per common share

$

0.65

$

0.52

$

2.71

$

2.53

Core FFO available to common stockholders

$

120,301

$

101,001

$

455,186

$

414,590

Core FFO per common share

$

0.70

$

0.63

$

2.76

$

2.65

AFFO available to common stockholders

$

122,205

$

103,523

$

462,325

$

418,702

AFFO per common share

$

0.71

$

0.65

$

2.80

$

2.68

 

  • Portfolio occupancy was 99.0% at December 31, 2019 as compared to 99.1% at September 30, 2019, and 98.2% at December 31, 2018

2019 Highlights:

  • Increased annual FFO per common share 7.1%
  • Increased annual Core FFO per common share 4.2%
  • Increased annual AFFO per common share 4.5%
  • Dividend yield of 3.8% at December 31, 2019
  • Annual dividend per common share increased 4.1% to $2.03 marking the 30th consecutive year of annual dividend increases - making the company one of only three equity REITs and less than 90 publicly traded companies in America to have increased annual dividends for 30 or more consecutive years
  • Maintained high occupancy levels at 99.0% with a weighted average remaining lease term of 11.2 years

2019 Highlights (continued):

  • Invested $752.5 million in 210 properties with an aggregate gross leasable area of approximately 3,164,000 square feet at an initial cash yield of 6.9%
  • Sold 59 properties for $126.2 million, producing $32.1 million of gains on sale, net of noncontrolling interest, at a cap rate of 5.9%
  • Raised $524.8 million in net proceeds from issuance of 9,706,940 common shares
  • $766.4 million availability on bank credit facility at December 31, 2019
  • 99.7% of properties are unencumbered with secured mortgage debt
  • Total average annual shareholder return of 13.6% over the past 25 years exceeds industry and general equity averages

Selected Highlights for the quarter ended December 31, 2019:

  • Investments:
    • $242.9 million in property investments, including the acquisition of 79 properties with an aggregate gross leasable area of approximately 519,000 square feet at an initial cash yield of 6.8%
  • Dispositions:
    • Sold 16 properties with net proceeds of $31.4 million, producing $7.0 million of gains on sales at a cap rate of 6.4%
  • Long-term capital:
    • Raised $3.0 million in net proceeds from the issuance of 53,791 common shares

Jay Whitehurst, Chief Executive Officer, commented: "2019 was a year of significant milestones for National Retail Properties: our 35th year in business; our 25th year listed on the New York Stock Exchange, and most importantly, our 30th year of consecutive annual dividend increases.  Our steady execution continued to produce impressive outcomes.  Our Core FFO per share increased by 4.2% over 2018 and our long-term total shareholder returns continued to exceed the REIT averages while, in our opinion, taking below average risk.  Moreover, the continued execution of our long-term focused business plan positions National Retail Properties to continue this enviable track record of consistent performance into 2020 and beyond."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of December 31, 2019, the company owned 3,118 properties in 48 states with a gross leasable area of approximately 32.5 million square feet and with a weighted average remaining lease term of 11.2 years.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on February 11, 2020, 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-K with the Commission for the quarter and year ended December 31, 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

Year Ended

December 31,

December 31,

2019

2018

2019

2018

Income Statement Summary

Revenues:

Rental income

$

173,163

$

158,827

$

669,009

$

621,399

Interest and other income from real estate transactions

213

149

1,478

1,262

173,376

158,976

670,487

622,661

Operating expenses:

General and administrative

10,127

8,267

37,651

34,248

Real estate

7,258

7,649

27,656

25,099

Depreciation and amortization

48,102

44,117

188,871

174,398

Impairment losses – real estate, net of recoveries

10,868

18,494

31,992

28,211

Retirement severance costs

—

270

—

1,013

76,355

78,797

286,170

262,969

Gain on disposition of real estate

6,955

8,020

32,463

65,070

Earnings from operations

103,976

88,199

416,780

424,762

Other expenses (revenues):

Interest and other income

(200)

(1,553)

(3,112)

(1,810)

Interest expense

30,307

34,940

120,023

115,847

Leasing transaction costs

83

—

261

—

Loss on early extinguishment of debt

—

18,240

—

18,240

30,190

51,627

117,172

132,277

Net earnings

73,786

36,572

299,608

292,485

Earnings attributable to noncontrolling interests

—

(10)

(428)

(38)

Net earnings attributable to NNN

73,786

36,562

299,180

292,447

Series E preferred stock dividends

(911)

(4,097)

(13,201)

(16,387)

Series F preferred stock dividends

(4,485)

(4,485)

(17,940)

(17,940)

Excess of redemption value over carrying value of preferred      shares redeemed

(9,856)

—

(9,856)

—

Net earnings available to common stockholders

$

58,534

$

27,980

$

258,183

$

258,120

Weighted average common shares outstanding:

Basic

170,763

159,193

164,688

155,745

Diluted

171,175

159,772

165,084

156,296

Net earnings per share available to common stockholders:

Basic

$

0.34

$

0.17

$

1.56

$

1.65

Diluted

$

0.34

$

0.17

$

1.56

$

1.65

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 

Quarter Ended

Year Ended

December 31,

December 31,

2019

2018

2019

2018

Funds From Operations (FFO) Reconciliation:

Net earnings available to common stockholders

$

58,534

$

27,980

$

258,183

$

258,120

Real estate depreciation and amortization

47,998

44,037

188,537

174,076

Gain on disposition of real estate, net of noncontrolling interests

(6,955)

(8,020)

(32,051)

(65,070)

Impairment losses – depreciable real estate, net of recoveries

10,868

18,494

31,992

28,211

Total FFO adjustments

51,911

54,511

188,478

137,217

FFO available to common stockholders

$

110,445

$

82,491

$

446,661

$

395,337

FFO per common share:

Basic

$

0.65

$

0.52

$

2.71

$

2.54

Diluted

$

0.65

$

0.52

$

2.71

$

2.53

Core Funds From Operations Reconciliation:

Net earnings available to common stockholders

$

58,534

$

27,980

$

258,183

$

258,120

Total FFO adjustments

51,911

54,511

188,478

137,217

FFO available to common stockholders

110,445

82,491

446,661

395,337

Excess of redemption value over carrying value of preferred

   share redemption

9,856

—

9,856

—

Retirement severance costs

—

270

—

1,013

Gain on sale of equity investments

—

—

(1,331)

—

Loss on early extinguishment of debt

—

18,240

—

18,240

Total Core FFO adjustments

9,856

18,510

8,525

19,253

Core FFO available to common stockholders

$

120,301

$

101,001

$

455,186

$

414,590

Core FFO per common share:

Basic

$

0.70

$

0.63

$

2.76

$

2.66

Diluted

$

0.70

$

0.63

$

2.76

$

2.65

Quarter Ended

Year Ended

December 31,

December 31,

2019

2018

2019

2018

Adjusted Funds From Operations (AFFO) Reconciliation:

Net earnings available to common stockholders

$

58,534

$

27,980

$

258,183

$

258,120

Total FFO adjustments

51,911

54,511

188,478

137,217

Total Core FFO adjustments

9,856

18,510

8,525

19,253

Core FFO available to common stockholders

120,301

101,001

455,186

414,590

Straight-line accrued rent

(631)

124

(2,333)

(747)

Net capital lease rent adjustment

94

220

602

874

Below market rent amortization

(189)

(288)

(768)

(2,622)

Stock based compensation expense

2,932

2,641

10,737

9,282

Capitalized interest expense

(302)

(175)

(1,099)

(2,675)

Total AFFO adjustments

1,904

2,522

7,139

4,112

AFFO available to common stockholders

$

122,205

$

103,523

$

462,325

$

418,702

AFFO per common share:

Basic

$

0.72

$

0.65

$

2.81

$

2.69

Diluted

$

0.71

$

0.65

$

2.80

$

2.68

Other Information:

Rental income from operating leases(1)

$

167,805

$

152,915

$

650,112

$

602,131

Earned income from direct financing leases(1)

$

174

$

226

$

798

$

923

Percentage rent(1)

$

260

$

543

$

1,310

$

1,561

Real estate expense reimbursement from tenants(1)

$

4,924

$

5,143

$

16,789

$

16,784

Real estate expenses

(7,258)

(7,649)

(27,656)

(25,099)

Real estate expenses, net of tenant reimbursements

$

(2,334)

$

(2,506)

$

(10,867)

$

(8,315)

Amortization of debt costs

$

944

$

1,917

$

3,731

$

4,611

Scheduled debt principal amortization (excluding maturities)

$

145

$

138

$

567

$

538

Non-real estate depreciation expense

$

108

$

83

$

346

$

332

(1)

The consolidated financial statements for the quarter and year ended December 31, 2019 and 2018 are presented under the new accounting standard, ASU 2016-02, "Leases (Topic 842)."  For the quarter and year ended December 31, 2019, the aggregate of such amounts is $173,163 and $669,009, respectively, classified as rental income on the income statement summary. For the quarter and year ended December 31, 2018, the aggregate of such amounts is $158,827 and $621,399, respectively.

 

2020 Earnings Guidance (Unchanged from October 2019):

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.

2020 Guidance

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

$1.70 - $1.74 per share

  Real estate depreciation and amortization per share

$1.13 per share

 Core FFO per share

$2.83 - $2.87 per share

  AFFO per share

$2.90 - $2.94 per share

  General and administrative expenses

$42.0 - $43.0 Million

  Real estate expenses, net of tenant reimbursements

$8.0 - $9.0 Million

  Acquisition volume

$550 - $650 Million

  Disposition volume

$80 - $120 Million

 

National Retail Properties, Inc.

(in thousands)

(unaudited)

 

December 31, 2019

December 31, 2018

Balance Sheet Summary

Assets:

Real estate:

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

$

7,290,025

$

6,845,446

Accounted for using the direct financing method

4,204

8,069

Real estate held for sale

7,010

21,917

Cash and cash equivalents

1,112

114,267

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

2,874

3,797

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

28,897

25,387

Debt costs, net of accumulated amortization of $15,574 and $14,118, respectively

2,783

4,081

Other assets

97,962

80,474

Total assets

$

7,434,867

$

7,103,438

Liabilities:

Line of credit payable

$

133,600

$

—

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

12,059

12,694

Notes payable, net of unamortized discount and unamortized debt costs

2,842,698

2,838,701

Accrued interest payable

18,250

19,519

Other liabilities

96,578

77,919

Total liabilities

3,103,185

2,948,833

Stockholders' equity of NNN

4,331,675

4,154,250

Noncontrolling interests

7

355

Total equity

4,331,682

4,154,605

Total liabilities and equity

$

7,434,867

$

7,103,438

Common shares outstanding

171,694

161,504

Gross leasable area, Property Portfolio (square feet)

32,460

30,487

 

National Retail Properties, Inc.

Debt Summary

As of December 31, 2019

(in thousands)

(unaudited)

Unsecured Debt

Principal

Principal, Net of Unamortized Discount

Stated Rate

Effective Rate

Maturity Date

Line of credit payable

$

133,600

$

133,600

L + 87.5 bps

2.788%

January 2022

Unsecured notes payable:

2022

325,000

323,426

3.800%

3.985%

October 2022

2023

350,000

349,049

3.300%

3.388%

April 2023

2024

350,000

349,653

3.900%

3.924%

June 2024

2025

400,000

399,391

4.000%

4.029%

November 2025

2026

350,000

347,169

3.600%

3.733%

December 2026

2027

400,000

398,693

3.500%

3.548%

October 2027

2028

400,000

397,445

4.300%

4.388%

October 2028

2048

300,000

295,842

4.800%

4.890%

October 2048

Total

2,875,000

2,860,668

Total unsecured debt

$

3,008,600

$

2,994,268

Debt costs

$

(26,932)

Accumulated amortization

8,962

Debt costs, net of accumulated amortization

(17,970)

Notes payable, net of unamortized discount and unamortized debt costs (1)

$

2,842,698

(1) Unsecured notes payable have a weighted average interest rate of 4.0% and a weighted average maturity of 8.3 years

 

Mortgages Payable

Principal Balance

Interest Rate

Maturity Date

Mortgage(1)

$

12,116

5.230

%

July 2023

Debt costs

(147)

Accumulated amortization

90

Debt costs, net of accumulated amortization

(57)

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

$

12,059

(1) Includes unamortized premium

 

National Retail Properties, Inc.

Property Portfolio

Top 20 Lines of Trade

As of December 31,

Line of Trade

2019(1)

2018(2)

1.

Convenience stores

18.2

%

18.0

%

2.

Restaurants - full service

11.1

%

11.4

%

3.

Automotive service

9.6

%

8.6

%

4.

Restaurants - limited service

8.8

%

8.9

%

5.

Family entertainment centers

6.7

%

7.1

%

6.

Health and fitness

5.2

%

5.6

%

7.

Theaters

4.7

%

5.0

%

8.

Recreational vehicle dealers, parts and accessories

3.4

%

3.4

%

9.

Automotive parts

3.1

%

3.4

%

10.

Equipment rental

2.6

%

1.9

%

11.

Home improvement

2.6

%

2.2

%

12.

Wholesale clubs

2.5

%

2.3

%

13.

Medical service providers

2.1

%

2.2

%

14.

General merchandise

1.8

%

1.6

%

15.

Home furnishings

1.7

%

1.5

%

16.

Furniture

1.6

%

1.7

%

17.

Travel plazas

1.6

%

1.7

%

18.

Drug stores

1.6

%

1.8

%

19.

Consumer electronics

1.5

%

1.6

%

20.

Bank

1.3

%

1.6

%

Other

8.3

%

8.5

%

Total

100.0

%

100.0

%

 

Top 10 States

State

% of Total(1)

State

% of Total(1)

1.

Texas

17.6

%

6.

North Carolina

4.5

%

2.

Florida

8.8

%

7.

Indiana

4.0

%

3.

Ohio

5.8

%

8.

Tennessee

3.8

%

4.

Illinois

5.0

%

9.

Virginia

3.6

%

5.

Georgia

4.5

%

10.

California

3.3

%

(1)

Based on the annualized base rent for all leases in place as of December 31, 2019.

(2)

Based on the annualized base rent for all leases in place as of December 31, 2018.

 

National Retail Properties, Inc.

Property Portfolio

Top Tenants (≥ 2.0%)

Tenant

Properties

% of Total (1)

7-Eleven

140

5.0%

Mister Car Wash

116

4.6%

Camping World

47

4.2%

LA Fitness

30

3.7%

Flynn Restaurant Group (Taco Bell/Arby's)

204

3.5%

GPM Investments (Convenience Stores)

151

3.3%

AMC Theatres

20

3.0%

Couche-Tard (Pantry)

85

2.8%

BJ's Wholesale Club

11

2.5%

Sunoco

61

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)

2020

1.7%

66

688,000

1,253,000

2026

4.5%

174

1,672,000

2021

3.5%

115

2027

7.1%

194

2,582,000

2022

5.5%

123

1,634,000

2028

4.5%

153

1,158,000

2023

2.9%

118

1,471,000

2029

3.0%

75

1,030,000

2024

3.7%

100

1,600,000

2030

3.7%

101

1,137,000

2025

5.3%

167

1,850,000

Thereafter

54.6%

1,698

15,743,000

(1)

Based on the annual base rent of $674,338,000, which is the annualized base rent for all leases in place as of December 31, 2019.

(2)

As of December 31, 2019, the weighted average remaining lease term is 11.2 years.

(3)

Square feet.

 

Cision View original content:http://www.prnewswire.com/news-releases/record-annual-results-announced-by-national-retail-properties-inc-301002372.html

SOURCE National Retail Properties, Inc.


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