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

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ORLANDO, Fla., Aug. 1, 2019 /PRNewswire/ -- National Retail Properties, Inc. 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)



# of

Properties



Gross Leasable

Area(3)







% of

Total(1)



# of

Properties



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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