13.02.2017 14:30:00

Record Annual Results Announced By National Retail Properties, Inc.

ORLANDO, Fla., Feb. 13, 2017 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and year ended December 31, 2016.  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,


2016


2015


2016


2015


(in thousands, except per share data)

Revenues

$

141,199



$

126,377



$

533,647



$

482,916










Net earnings available to common stockholders

$

54,044



$

33,612



$

200,877



$

162,402


Net earnings per common share

$

0.37



$

0.24



$

1.38



$

1.20










FFO available to common stockholders

$

88,717



$

67,319



$

330,544



$

289,193


FFO per common share

$

0.60



$

0.49



$

2.28



$

2.15










Core FFO available to common stockholders

$

88,717



$

76,661



$

340,643



$

299,171


Core FFO per common share

$

0.60



$

0.56



$

2.35



$

2.22










AFFO available to common stockholders

$

90,285



$

77,953



$

347,933



$

304,772


AFFO per common share

$

0.62



$

0.57



$

2.41



$

2.27


 

  • Portfolio occupancy was 99.0% at December 31, 2016 and September 30, 2016, as compared to 99.1% at December 31, 2015

2016 Highlights:

  • Increased net earnings per common share 15.0%
  • Increased annual FFO per common share 6.0%
  • Increased annual Core FFO per common share 5.9%
  • Increased annual AFFO per common share 6.2%
  • Dividend yield of 4.0% at December 31, 2016
  • Annual dividend per common share increased to $1.78 marking the 27th consecutive year of annual dividend increases - making the company one of only four equity REITs and one of only 94 public companies with 27 or more consecutive annual dividend increases
  • Maintained high occupancy levels at or above 99.0% for the entire year with a weighted average remaining lease term of 11.6 years
  • Invested $846.9 million in 313 properties with an aggregate gross leasable area of approximately 2,734,000 square feet at an initial cash yield of 6.9%
  • Sold 38 properties for $103.2 million, producing $27.1 million of gains on sale, net of noncontrolling interests, at a cap rate of 6.8%
  • Raised $950.9 million of new long-term capital at attractive pricing
    • Raised $274.0 million in net proceeds from the issuance of 5,903,848 common shares
    • Raised $342.8 million in net proceeds from the issuance of 3.60% senior unsecured notes due 2026
    • Raised $334.1 million in net proceeds from the issuance of 5.20% Series F preferred stock
  • Entire $650 million availability on bank credit facility at December 31, 2016
  • 99.7% of properties are unencumbered with secured mortgage debt
  • Total shareholder return of 14.5% for 2016 exceeds industry averages and general equity averages
  • Total average annual shareholder return of 14.3% over the past 25 years exceeds industry averages and general equity averages

Selected Highlights for the quarter ended December 31, 2016:

  • Investments:
    • $250.4 million in property investments, including the acquisition of 64 properties with an aggregate gross leasable area of approximately 698,000 square feet at an initial cash yield of 6.9%
  • Dispositions:
    • Sold 14 properties with net proceeds of $20.1 million, producing $4.6 million of gains on sales, net of noncontrolling interests, at a cap rate of 7.2%
  • Long-term capital:
    • Raised $965,000 in net proceeds from the issuance of 22,986 common shares
    • Raised $342.8 million in net proceeds from the issuance of 3.60% senior unsecured notes due 2026
    • Raised $334.1 million in net proceeds from the issuance of 5.20% Series F preferred stock

Craig Macnab, Chief Executive Officer, commented: "We are delighted to report another excellent year at NNN, with per share FFO results and acquisitions activity all being records. We were pleased with our capital market activity in 2016 with well executed debt and preferred offerings which were attractively priced and improved our long term cost of capital. As we head into 2017, our balance sheet positions us well for building shareholder value, growing per share results and continuing our 27 year record of annual increases in our dividend."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of December 31, 2016, the company owned 2,535 properties in 48 states with a gross leasable area of approximately 27.2 million square feet and with a weighted average remaining lease term of 11.6 years.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on February 13, 2017, 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, 2016.  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,


2016


2015


2016


2015

Income Statement Summary
















Revenues:








Rental and earned income

$

135,947



$

121,106



$

515,954



$

465,282


Real estate expense reimbursement from tenants

4,732



4,561



14,984



14,868


Interest and other income from real estate transactions

128



264



1,032



988


Interest income on commercial mortgage residual interests

392



446



1,677



1,778



141,199



126,377



533,647



482,916










Operating expenses:








General and administrative

9,408



9,657



36,508



34,736


Real estate

6,555



5,575



20,852



19,776


Depreciation and amortization

38,987



34,848



149,101



134,798


Impairment – commercial mortgage residual interests valuation

—



51



6,830



531


Impairment losses – real estate and other charges, net of recoveries

338



708



11,287



4,420



55,288



50,839



224,578



194,261










Other expenses (revenues):








Interest and other income

(62)



(42)



(170)



(109)


Interest expense

24,429



24,548



96,352



90,008


Real estate acquisition costs

42



33



563



927



24,409



24,539



96,745



90,826










Income tax expense

—



(9,827)



—



(10,318)










Earnings before gain on disposition of real estate, net of income tax expense

61,502



41,172



212,324



187,511










Gain on disposition of real estate, net of income tax expense

4,624



1,305



27,182



10,450










Earnings including noncontrolling interests

66,126



42,477



239,506



197,961










Earnings from continuing operations attributable to noncontrolling interests:

(34)



(6)



(6)



(125)










Net earnings attributable to NNN

66,092



42,471



239,500



197,836


Series D preferred stock dividends

(4,762)



(4,762)



(19,047)



(19,047)


Series E preferred stock dividends

(4,097)



(4,097)



(16,387)



(16,387)


Series F preferred stock dividends

(3,189)



—



(3,189)



—


Net earnings available to common stockholders

$

54,044



$

33,612



$

200,877



$

162,402


















Weighted average common shares outstanding:








Basic

146,266



137,111



144,176



133,999


Diluted

146,763



137,623



144,661



134,489










Net earnings per share available to common stockholders:








Basic

$

0.37



$

0.24



$

1.39



$

1.21


Diluted

$

0.37



$

0.24



$

1.38



$

1.20


 

 

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

 


Quarter Ended


Year Ended


December 31,


December 31,


2016


2015


2016


2015

Funds From Operations (FFO) Reconciliation:








Net earnings available to common stockholders

$

54,044



$

33,612



$

200,877



$

162,402


Real estate depreciation and amortization:

38,907



34,754



148,779



134,380


Gain on disposition of real estate, net of income tax and noncontrolling interests

(4,579)



(1,305)



(27,137)



(10,397)


Impairment losses – depreciable real estate, net of recoveries and income tax

345



258



8,025



2,808


Total FFO adjustments

34,673



33,707



129,667



126,791


FFO available to common stockholders

$

88,717



$

67,319



$

330,544



$

289,193










FFO per common share:








Basic

$

0.61



$

0.49



$

2.29



$

2.16


Diluted

$

0.60



$

0.49



$

2.28



$

2.15










Core Funds from Operations Reconciliation:








Net earnings available to common stockholders

$

54,044



$

33,612



$

200,877



$

162,402


Total FFO adjustments

34,673



33,707



129,667



126,791


FFO available to common stockholders

88,717



67,319



330,544



289,193










Impairment – commercial mortgage residual interests valuation

—



51



6,830



531


Impairment losses – non-depreciable real estate and other charges

—



—



—



156


Bad debt expense – loans

—



—



3,269



—


Income tax benefit

—



(316)



—



(316)


TRS revocation election

—



9,607



—



9,607


Total Core FFO adjustments

—



9,342



10,099



9,978


Core FFO available to common stockholders

$

88,717



$

76,661



$

340,643



$

299,171










Core FFO per common share:








Basic

$

0.61



$

0.56



$

2.36



$

2.23


Diluted

$

0.60



$

0.56



$

2.35



$

2.22



































































Quarter Ended


Year Ended


December 31,


December 31,


2016


2015


2016


2015

Adjusted Funds From Operations (AFFO) Reconciliation:








Net earnings available to common stockholders

$

54,044



$

33,612



$

200,877



$

162,402


Total FFO adjustments

34,673



33,707



129,667



126,791


Total Core FFO adjustments

—



9,342



10,099



9,978


Core FFO available to common stockholders

88,717



76,661



340,643



299,171










Straight-line accrued rent

(273)



(529)



(252)



(368)


Net capital lease rent adjustment

309



331



1,364



1,277


Below market rent amortization

(662)



(671)



(2,842)



(3,046)


Stock based compensation expense

2,689



2,461



10,758



9,671


Capitalized interest expense

(495)



(750)



(1,738)



(2,383)


Loss on sale of mortgage receivable

—



450



—



450


Total AFFO adjustments

1,568



1,292



7,290



5,601


AFFO available to common stockholders

$

90,285



$

77,953



$

347,933



$

304,772










AFFO per common share:








Basic

$

0.62



$

0.57



$

2.41



$

2.27


Diluted

$

0.62



$

0.57



$

2.41



$

2.27










Other Information:








Percentage rent

$

776



$

802



$

1,735



$

1,430


Amortization of debt costs

$

810



$

773



$

3,086



$

2,915


Scheduled debt principal amortization (excluding maturities)

$

129



$

378



$

656



$

1,587


Non-real estate depreciation expense

$

83



$

77



$

333



$

418


















2017 Earnings Guidance:
















Core FFO guidance for 2017 is $2.42 to $2.48 per share. The 2017 AFFO is estimated to be $2.46 to $2.52 per share. The FFO guidance equates to net earnings of $1.37 to $1.43 per share, plus $1.05 per share of expected real estate depreciation and amortization and excludes any gains from the sale of real estate and any charges for impairments, severance costs, or preferred stock redemption charges. The 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.



2017 Guidance

 Net earnings per common share excluding any gains on sale of real estate, impairment charges, severance charges or charges in connection with preferred stock redemption

$1.37 - $1.43 per share

 Real estate depreciation and amortization per share

$1.05 per share

Core FFO per share

$2.42 - $2.48 per share

  AFFO per share

$2.46 - $2.52 per share

  G&A expenses (excluding severance charges)

$34 - $35 Million

  Real estate expenses, net of tenant reimbursements

$6.0 - $6.5 Million

  Acquisition volume

$500 - $600 Million

  Disposition volume

$80 - $120 Million

 

 

National Retail Properties, Inc.

(in thousands)

(unaudited)

 



December 31, 2016


December 31, 2015

Balance Sheet Summary










Assets:





Real estate:





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


$

5,881,280



$

5,231,413


Accounted for using the direct financing method


11,230



14,518


Real estate held for sale


23,850



57,527


Cash and cash equivalents


294,540



13,659


Restricted cash and cash held in escrow


—



601


Receivables, net of allowance


3,418



3,344


Mortgages, notes and accrued interest receivable, net of allowance


1,252



8,688


Accrued rental income, net of allowance


25,101



25,529


Debt costs, net of accumulated amortization


2,715



4,003


Commercial mortgage residual interests


36



11,115


Other assets


90,729



89,647


Total assets


$

6,334,151



$

5,460,044







Liabilities:





Line of Credit Payable


$

-



$

-


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


13,878



23,964


Notes payable, net of unamortized discount and unamortized debt costs


2,297,811



1,951,980


Accrued interest payable


19,665



20,113


Other liabilities


85,869



121,594


Total liabilities


2,417,223



2,117,651







Stockholders' equity of NNN


3,916,799



3,342,134


Noncontrolling interests


129



259


Total equity


3,916,928



3,342,393







Total liabilities and equity


$

6,334,151



$

5,460,044







Common shares outstanding


147,150



141,008







Gross leasable area, Property Portfolio (square feet)


27,204



24,964







 

 

National Retail Properties, Inc.

Debt Summary

As of December 31, 2016

(in thousands)

(unaudited)


Unsecured Debt


Principal


Principal,
Net of
Unamortized
Discount


Stated Rate


Effective Rate


Maturity Date

Line of credit payable


$

—



$

—



L + 92.5 bps


—


January 2019












Unsecured notes payable:






















2017


250,000



249,907



6.875%


6.924%


October 2017

2021


300,000



297,764



5.500%


5.689%


July 2021

2022


325,000



321,917



3.800%


3.985%


October 2022

2023


350,000



348,269



3.300%


3.388%


April 2023

2024


350,000



349,451



3.900%


3.924%


June 2024

2025


400,000



399,131



4.000%


4.029%


November 2025

2026


350,000



346,153



3.600%


3.733%


December 2026

Total


2,325,000



2,312,592



















Total unsecured debt (1)


$

2,325,000



$

2,312,592



















Debt costs


(21,157)








Accumulated amortization


6,376








Debt costs, net of accumulated amortization


(14,781)








Notes payable, net of unamortized discount and unamortized debt costs


$

2,297,811



















(1) Unsecured notes payable have a weighted average interest rate of 4.4% and a weighted average maturity of 6.6 years

















 

Mortgages Payable


Principal Balance


Interest Rate


Maturity Date

Mortgage(1)


$

13,987



5.230%


July 2023


Debt costs


(147)






Accumulated amortization


38






Debt costs, net of accumulated amortization


(109)






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


$

13,878













(1) Includes unamortized premium







 

 

National Retail Properties, Inc.

Property Portfolio


Top 20 Lines of Trade






As of December 31,



Line of Trade


2016(1)


2015(2)

1.


Convenience stores


16.9

%


16.7

%

2.


Restaurants - full service


11.8

%


11.0

%

3.


Restaurants - limited service


7.5

%


7.2

%

4.


Automotive service


6.6

%


7.0

%

5.


Family entertainment centers


5.8

%


5.6

%

6.


Health and fitness


5.7

%


3.8

%

7.


Theaters


4.9

%


5.2

%

8.


Automotive parts


3.9

%


4.2

%

9.


Recreational vehicle dealers, parts and accessories


3.4

%


3.6

%

10.


Banks


3.1

%


3.4

%

11.


Sporting goods


2.5

%


3.3

%

12.


Medical service providers


2.4

%


2.2

%

13.


Wholesale clubs


2.4

%


2.6

%

14.


Drug stores


2.1

%


2.3

%

15.


Consumer electronics


2.0

%


2.2

%

16.


Travel plazas


1.9

%


2.1

%

17.


Furniture


1.9

%


1.1

%

18.


General merchandise


1.8

%


1.9

%

19.


Home improvement


1.8

%


1.8

%

20.


Home furnishings


1.7

%


1.9

%



Other


9.9

%


10.9

%



Total


100.0

%


100.0

%

 

 

Top 10 States



State



% of Total(1)



State



% of Total(1)

1.

Texas



18.4

%


6.

Georgia



4.3

%

2.

Florida



9.1

%


7.

Indiana



4.2

%

3.

Illinois



5.7

%


8.

Virginia



3.5

%

4.

Ohio



5.7

%


9.

Alabama



3.0

%

5.

North Carolina



4.7

%


10.

Tennessee



2.8

%



(1)  

  Based on the annualized base rent for all leases in place as of December 31, 2016.

(2)  

  Based on the annualized base rent for all leases in place as of December 31, 2015.

 

 

National Retail Properties, Inc.
Property Portfolio


Top Tenants (≥ 2.0%)





Properties


% of Total (1)


Sunoco


125


5.4%


Mister Car Wash


90


4.0%


LA Fitness


29


3.8%


AMC Theatres


20


3.5%


Camping World


32


3.4%


Couche-Tard (Pantry)


86


3.3%


7-Eleven


77


3.3%


SunTrust


121


3.0%


Bell American (Taco Bell)


115


2.8%


Chuck E. Cheese's


53


2.5%


BJ's Wholesale Club


8


2.4%


Frisch's Restaurant


74


2.2%


Gander Mountain


12


2.2%


Bob Evans


117


2.0%







 

 

Lease Expirations(2)




% of
Total(1)


# of
Properties


Gross
Leasable
Area (3)




% of
Total(1)


# of
Properties


Gross
Leasable
Area (3)

2017


1.2%


27


502,000


2023


2.5%


85


1,014,000

2018


3.2%


90


1,153,000


2024


2.6%


50


883,000

2019


3.0%


76


1,122,000


2025


5.0%


132


1,116,000

2020


3.8%


132


1,571,000


2026


6.0%


181


1,830,000

2021


4.4%


122


1,320,000


2027


9.0%


190


2,842,000

2022


6.1%


111


1,456,000


Thereafter


53.2%


1,305


11,891,000



(1)  

Based on the annual base rent of $543,446,000, which is the annualized base rent for all leases in place as of December 31, 2016.

(2)  

As of December 31, 2016, the weighted average remaining lease term is 11.6 years.

(3)  

Square feet.

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/record-annual-results-announced-by-national-retail-properties-inc-300405749.html

SOURCE National Retail Properties, Inc.

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