FIRST QUARTER 2022 OPERATING RESULTS AND INCREASED 2022 GUIDANCE ANNOUNCED BY NATIONAL RETAIL PROPERTIES, INC.

Quarter Ended
March 31,

2022

2021

(in thousands, except per share data)

Revenues

$

190,279

$

179,778

Net earnings available to common stockholders

$

81,372

$

52,102

Net earnings per common share

$

0.46

$

0.30

FFO available to common stockholders

$

131,593

$

99,821

FFO per common share

$

0.75

$

0.57

Core FFO available to common stockholders

$

135,187

$

121,149

Core FFO per common share

$

0.77

$

0.69

AFFO available to common stockholders

$

138,721

⁽¹⁾

$

133,532

⁽²⁾

AFFO per common share

$

0.79

⁽¹⁾

$

0.76

⁽²⁾

⁽¹⁾

Amounts include $1,780 of net straight-line accrued rent from net rent deferral repayments from the COVID-19 rent deferral lease amendments for the quarter ended March 31, 2022. Excluding such, AFFO per common share would have been $0.78 for the quarter ended March 31, 2022.

⁽²⁾

Amounts exclude $9,381 of net straight-line accrued rent from net rent deferral repayments from the COVID-19 rent deferral lease amendments for the quarter ended March 31, 2021. Excluding such, AFFO per common share would have been $0.71 for the quarter ended March 31, 2021.

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

Quarter Ended
March 31,

2022

2021

Income Statement Summary

Revenues:

     Rental income

$

189,763

$

179,198

     Interest and other income from real estate transactions

516

580

190,279

179,778

Operating expenses:

     General and administrative

11,042

11,748

     Real estate

7,198

7,725

     Depreciation and amortization

52,680

49,980

     Leasing transaction costs

88

38

     Impairment losses – real estate, net of recoveries

1,632

2,131

     Executive retirement costs

3,594

—

76,234

71,622

Gain on disposition of real estate

3,992

4,281

Earnings from operations

118,037

112,437

Other expenses (revenues):

     Interest and other income

(35)

(65)

     Interest expense

36,699

34,587

⁽¹⁾

     Loss on early extinguishment of debt

—

21,328

36,664

55,850

Net earnings

81,373

56,587

Earnings attributable to noncontrolling interests

(1)

—

Net earnings attributable to NNN

81,372

56,587

Series F preferred stock dividends

—

(4,485)

Net earnings available to common stockholders

$

81,372

$

52,102

Weighted average common shares outstanding:

     Basic

174,772

174,589

     Diluted

174,911

174,715

Net earnings per share available to common stockholders:

     Basic

$

0.46

$

0.30

     Diluted

$

0.46

$

0.30

⁽¹⁾

Includes $2,078 in connection with the redemption of 3.30% senior unsecured notes due 2023 for the quarter ended March 31, 2021.

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

Quarter Ended
March 31,

2022

2021

Funds From Operations (FFO) Reconciliation:

     Net earnings available to common stockholders

$

81,372

$

52,102

     Real estate depreciation and amortization

52,581

49,869

     Gain on disposition of real estate

(3,992)

(4,281)

     Impairment losses – depreciable real estate, net of recoveries

1,632

2,131

          Total FFO adjustments

50,221

47,719

FFO available to common stockholders

$

131,593

$

99,821

FFO per common share:

     Basic

$

0.75

$

0.57

     Diluted

$

0.75

$

0.57

Core Funds From Operations (Core FFO) Reconciliation:

     Net earnings available to common stockholders

$

81,372

$

52,102

     Total FFO adjustments

50,221

47,719

     FFO available to common stockholders

131,593

99,821

     Executive retirement costs

3,594

—

     Loss on early extinguishment of debt

—

21,328

          Total Core FFO adjustments

3,594

21,328

Core FFO available to common stockholders

$

135,187

$

121,149

Core FFO per common share:

     Basic

$

0.77

$

0.69

     Diluted

$

0.77

$

0.69

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

Quarter Ended
March 31,

2022

2021

Adjusted Funds From Operations (AFFO) Reconciliation:

     Net earnings available to common stockholders

$

81,372

$

52,102

     Total FFO adjustments

50,221

47,719

     Total Core FFO adjustments

3,594

21,328

     Core FFO available to common stockholders

135,187

121,149

     Straight-line accrued rent, net of reserves

1,096

8,332

     Net capital lease rent adjustment

75

90

     Below-market rent amortization

(140)

(162)

     Stock based compensation expense

2,601

4,186

     Capitalized interest expense

(98)

(63)

          Total AFFO adjustments

3,534

12,383

AFFO available to common stockholders

$

138,721

⁽¹⁾

$

133,532

⁽²⁾

AFFO per common share:

     Basic

$

0.79

⁽¹⁾

$

0.76

⁽²⁾

     Diluted

$

0.79

⁽¹⁾

$

0.76

⁽²⁾

Other Information:

     Rental income from operating leases⁽³⁾

$

184,311

$

173,583

     Earned income from direct financing leases⁽³⁾

$

151

$

158

     Percentage rent⁽³⁾

$

701

$

104

     Real estate expense reimbursement from tenants⁽³⁾

$

4,600

$

5,353

     Real estate expenses

(7,198)

(7,725)

     Real estate expenses, net of tenant reimbursements

$

(2,598)

$

(2,372)

     Amortization of debt costs

$

1,171

$

1,840

⁽⁴⁾

     Scheduled debt principal amortization (excluding maturities)

$

165

$

156

     Non-real estate depreciation expense

$

102

$

113

⁽¹⁾

Amounts include $1,780 of net straight-line accrued rent from net rent deferral repayments from the COVID-19 rent deferral lease amendments for the quarter ended March 31, 2022. Excluding such, AFFO per common share would have been $0.78 for the quarter ended March 31, 2022.

⁽²⁾

Amounts exclude $9,381 of net straight-line accrued rent from net rent deferral repayments from the COVID-19 rent deferral lease amendments for the quarter ended March 31, 2021. Excluding such, AFFO per common share would have been $0.71 for the quarter ended March 31, 2021.

⁽³⁾

For the quarters ended March 31, 2022 and 2021, the aggregate of such amounts is $189,763 and $179,198, respectively, and is classified as rental income on the income statement summary.

⁽⁴⁾

Includes $745 in connection with the redemption of the 3.30% senior unsecured notes due 2023 for the quarter ended March 31, 2021.

2022 Guidance

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

Real estate depreciation and amortization per share

$1.21 per share

Core FFO per share

$3.01 - $3.08 per share

AFFO per share⁽¹⁾

$3.08 - $3.15 per share

General and administrative expenses

$40 - $42 Million

Real estate expenses, net of tenant reimbursements

$10 - $12 Million

Acquisition volume

$550 - $650 Million

Disposition volume

$80 - $100 Million

⁽¹⁾

Estimates include the net straight-line accrued rent impact of the net rent repayment from the COVID-19 rent deferral lease amendments of $5.4 million for 2022. Excluding such, AFFO per common share guidance would have been $3.05 - $3.12 for 2022.

National Retail Properties, Inc.

(in thousands)

(unaudited)

March 31,
2022

December 31,
2021

Balance Sheet Summary

Assets:

     Real estate portfolio

$

7,591,643

$

7,444,289

     Real estate held for sale

562

5,557

     Cash and cash equivalents

53,736

171,322

     Receivables, net of allowance of $717 and $782, respectively

2,816

3,154

     Accrued rental income, net of allowance of $4,351 and $4,587, respectively

30,727

31,942

     Debt costs, net of accumulated amortization of $19,946 and $19,377, respectively

6,921

7,443

     Other assets

85,408

87,347

          Total assets

$

7,771,813

$

7,751,054

Liabilities:

     Line of credit payable

$

—

$

—

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

10,515

10,697

     Notes payable, net of unamortized discount and unamortized debt costs

3,736,781

3,735,769

     Accrued interest payable

58,022

23,923

     Other liabilities

68,749

79,002

          Total liabilities

3,874,067

3,849,391

Stockholders' equity of NNN

3,897,744

3,901,662

Noncontrolling interests

2

1

          Total equity

3,897,746

3,901,663

Total liabilities and equity

$

7,771,813

$

7,751,054

Common shares outstanding

175,810

175,636

Gross leasable area, Property Portfolio (square feet)

33,545

32,753

National Retail Properties, Inc. 

Debt Summary 

As of March 31, 2022 

(in thousands) 

(unaudited) 

Unsecured Debt

Principal

Principal,
Net of
Unamortized
Discount

Stated
Rate

Maturity Date

Line of credit payable

$

—

$

—

L + 77.5 bps

—

%

June 2025

Unsecured notes payable:

2024

350,000

349,821

3.900

%

3.924

%

June 2024

2025

400,000

399,608

4.000

%

4.029

%

November 2025

2026

350,000

348,006

3.600

%

3.733

%

December 2026

2027

400,000

399,035

3.500

%

3.548

%

October 2027

2028

400,000

398,009

4.300

%

4.388

%

October 2028

2030

400,000

398,950

2.500

%

2.536

%

April 2030

2048

300,000

296,000

4.800

%

4.890

%

October 2048

2050

300,000

294,192

3.100

%

3.205

%

April 2050

2051

450,000

441,761

3.500

%

3.602

%

April 2051

2052

450,000

439,685

3.000

%

3.118

%

April 2052

Total

3,800,000

3,765,067

Total unsecured debt⁽¹⁾

$

3,800,000

$

3,765,067

Debt costs

$

(38,145)

Accumulated amortization

9,859

Debt costs, net of accumulated amortization

(28,286)

Notes payable, net of unamortized discount and
     unamortized debt costs

$

3,736,781

⁽¹⁾

Unsecured notes payable have a weighted average interest rate of 3.7% and a weighted average maturity of 14.5 years.

Mortgages Payable

Principal
Balance

Interest
Rate

Maturity Date

Mortgage⁽¹⁾

$

10,532

5.230

%

July 2023

Debt costs

(147)

Accumulated amortization

130

Debt costs, net of accumulated amortization

(17)

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

$

10,515

⁽¹⁾

Includes unamortized premium

Unsecured Credit Facility Key Covenants

Required

March 31, 2022

Maximum leverage ratio

< 0.60

0.36

Minimum fixed charge coverage ratio

> 1.50

4.54

Maximum secured indebtedness ratio

< 0.40

—

Unencumbered asset value ratio

> 1.67

2.81

Unencumbered interest ratio

> 1.75

4.92

Unsecured Notes Key Covenants

Required

March 31, 2022

Limitation on incurrence of total debt

≤ 60%

40%

Limitation on incurrence of secured debt

≤ 40%

0.1%

Debt service coverage ratio

≥ 1.50

4.71

Maintenance of total unencumbered assets

≥ 150%

248%

As of March 31,

Lines of Trade

2022⁽¹⁾

2021⁽²⁾

1.

Convenience stores

17.5%

18.0%

2.

Automotive service

12.6%

10.7%

3.

Restaurants – full service

9.7%

10.2%

4.

Restaurants – limited service

9.2%

9.5%

5.

Family entertainment centers

6.2%

6.0%

6.

Health and fitness

5.0%

5.2%

7.

Theaters

4.4%

4.4%

8.

Recreational vehicle dealers, parts and accessories

4.1%

3.5%

9.

Equipment rental

3.1%

3.1%

10.

Automotive parts

3.0%

3.1%

11.

Home improvement

2.4%

2.6%

12.

Wholesale clubs

2.4%

2.5%

13.

Furniture

2.4%

1.7%

14.

Medical service providers

2.0%

2.1%

15.

General merchandise

1.6%

1.7%

16.

Home furnishings

1.5%

1.6%

17.

Consumer electronics

1.5%

1.5%

18.

Travel plazas

1.5%

1.5%

19.

Automobile auctions, wholesale

1.3%

1.1%

20.

Drug stores

1.2%

1.4%

Other

7.4%

8.6%

Total

100.0%

100.0%

State

% of
Total⁽¹⁾

State

% of
Total⁽¹⁾

1.

Texas

16.9%

6.

North Carolina

4.6%

2.

Florida

8.9%

7.

Indiana

4.0%

3.

Illinois

5.5%

8.

Tennessee

3.8%

4.

Ohio

5.4%

9.

Virginia

3.3%

5.

Georgia

4.7%

10.

California

3.3%

As a percentage of annual base rent, which is the annualized base rent for all leases in place.

⁽¹⁾

$732,042,000 as of March 31, 2022.

⁽²⁾

$684,283,000 as of March 31, 2021.

Tenant

# of
Properties

% of
Total⁽¹⁾

1.

7-Eleven

138

4.9%

2.

Mister Car Wash

121

4.5%

3.

Camping World

47

4.0%

4.

LA Fitness

30

3.5%

5.

GPM Investments (Convenience Stores)

152

3.1%

6.

Flynn Restaurant Group (Taco Bell/Arby's)

204

3.0%

7.

AMC Theatre

20

2.8%

8.

Couche Tard (Pantry)

81

2.6%

9.

BJ's Wholesale Club

12

2.4%

10.

Sunoco

59

2.1%

11.

Mavis Tire Express Services

123

2.0%

12.

Chuck E. Cheese's

53

2.0%

13.

Frisch's Restaurants

69

1.8%

14.

Main Event

18

1.7%

15.

Fikes (Convenience Stores)

59

1.7%

16.

Life Time Fitness

3

1.5%

17.

Best Buy

16

1.5%

18.

Bob Evans

106

1.4%

19.

Dave & Buster's

11

1.4%

20.

Pull-A-Part

20

1.3%

% of
Total⁽¹⁾

# of
Properties

Gross
Leasable
Area ⁽²⁾

% of
Total⁽¹⁾

# of
Properties

Gross
Leasable
Area ⁽²⁾

2022

1.3%

40

433,000

2028

4.6%

158

1,286,000

2023

2.4%

109

1,321,000

2029

3.1%

79

1,015,000

2024

3.2%

92

1,447,000

2030

3.6%

107

1,205,000

2025

5.7%

190

2,000,000

2031

8.2%

190

2,781,000

2026

5.4%

217

2,139,000

2032

6.3%

212

2,063,000

2027

8.7%

231

3,546,000

Thereafter

47.5%

1,618

14,022,000

⁽¹⁾

Based on the annual base rent of $732,042,000, which is the annualized base rent for all leases in place as of March 31, 2022.

⁽²⁾

Square feet.

⁽³⁾

As of March 31, 2022, the weighted average remaining lease term is 10.6 years.

Deferred

Scheduled Repayment

Accrual
Basis

Cash
Basis

Total

% of
Total

Accrual
Basis

Cash
Basis

Total

% of
Total

Cumulative
Total

2020

$

33,594

$

18,425

$

52,019

91.7

%

$

3,239

$

20

$

3,259

5.7

%

5.7

%

2021

990

3,768

4,758

8.3

%

25,935

5,841

31,776

56.0

%

61.7

%

2022

Q1

—

—

—

—

1,780

2,283

4,063

7.2

%

68.9

%

Q2

—

—

—

—

1,729

2,284

4,013

7.1

%

76.0

%

Q3

—

—

—

—

1,201

2,284

3,485

6.1

%

82.1

%

Q4

—

—

—

—

681

2,284

2,965

5.2

%

87.3

%

—

—

—

—

5,391

9,135

14,526

25.6

%

87.3

%

2023

Q1

—

—

—

—

9

1,704

1,713

2.9

%

90.2

%

Q2

—

—

—

—

10

543

553

1.0

%

91.2

%

Q3

—

—

—

—

—

543

543

1.0

%

92.2

%

Q4

—

—

—

—

—

544

544

1.0

%

93.2

%

—

—

—

—

19

3,334

3,353

5.9

%

93.2

%

2024

—

—

—

—

—

1,932