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Section 1: 8-K (8-K)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: February 13, 2017
 
NATIONAL RETAIL PROPERTIES, INC.
(exact name of registrant as specified in its charter)
 
 
 
 
 
 
Maryland
 
001-11290
 
56-1431377
(State or other jurisdiction of
incorporation or organization)
 
(Commission
File Number)
 
(I.R.S. Employment
Identification No.)
450 South Orange Avenue, Suite 900, Orlando, Florida 32801
(Address of principal executive offices, including zip code)
(407) 265-7348
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02.
Results of Operations and Financial Condition.
On February 13, 2017, National Retail Properties, Inc. (the "Company"), issued a press release announcing its results of operations and financial condition for the quarter and year ended December 31, 2016. The press release is attached hereto as Exhibit 99.1 to this report and the supplemental data is attached hereto as Exhibit 99.2 to this report. The press release and the supplemental data are available on the Company's website.
The information in this Form 8-K is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of such section, nor shall such information be deemed to be incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
 
Item 9.01.
Financial Statements and Exhibits.
(d)
Exhibits.
 
 
 
99.1

  
Press Release, dated February 13, 2017, of National Retail Properties, Inc.
99.2

 
Supplemental Data, dated February 13, 2017, of National Retail Properties, Inc.






Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
National Retail Properties, Inc.
 
 
 
Dated: February 13, 2017
 
By:
 
/s/ Kevin B. Habicht
 
 
 
 
Kevin B. Habicht
 
 
 
 
Executive Vice President and Chief Financial Officer







EXHIBIT INDEX
 
 
 
 
Exhibit No.
  
Description
 
 
99.1

  
Press Release, dated February 13, 2017, of National Retail Properties, Inc.
99.2

 
Supplemental Data, dated February 13, 2017, of National Retail Properties, Inc.


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

38005915_nnnlogoa02a02.jpg

NEWS RELEASE
For information contact:
Kevin B. Habicht
Chief Financial Officer
(407) 265-7348    FOR IMMEDIATE RELEASE
February 13, 2017


RECORD ANNUAL RESULTS
ANNOUNCED BY NATIONAL RETAIL PROPERTIES, INC.

Orlando, Florida, February 13, 2017 – 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 annual 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



2016 Highlights (continued):
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.


2


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.





3



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


4



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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

5


National Retail Properties, Inc.
(in thousands, except per share data)
(unaudited)

 
 
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

6



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

 
 
 
 
 




7


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
 
 
 
 
 
 

8


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.


9


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.


10
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2





38005915_nnnlogoa02a02.jpg




ANNUAL SUPPLEMENTAL DATA



As of December 31, 2016




38005915_nnnlogoa02a02.jpg

TABLE OF CONTENTS
 
PAGE REFERENCE
Financial Summary
 
Income Statement Summary
Funds From Operations (FFO)
Core Funds From Operation
Adjusted Funds From Operations (AFFO)
Other Information
Balance Sheet
Debt Summary
Credit Metrics
Credit Facility and Note Covenants
Long-Term Dividend History
Transaction Summary
 
Property Acquisitions
Property Dispositions
Property Portfolio
 
Lease Expirations
Top 20 Lines of Trade
Top 10 States
Portfolio By Region
Top Tenants
Same Store Rental Income
Leasing Data
Other Property Portfolio Data
Earnings Guidance

Statements in this supplemental 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, risks related to the company's status as a REIT and the profitability of the company’s taxable subsidiary. 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.




38005915_nnnlogoa02a02.jpg
INCOME STATEMENT SUMMARY
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2016
 
2015
 
2016
 
2015
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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1


38005915_nnnlogoa02a02.jpg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INCOME STATEMENT SUMMARY
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
 
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



2


38005915_nnnlogoa02a02.jpg
FUNDS FROM OPERATIONS (FFO)
(in thousands, except per share data)
(unaudited)
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2016
 
2015
 
2016
 
2015
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
(in thousands, except per share data)
(unaudited)
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2016
 
2015
 
2016
 
2015
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
)
Taxable REIT subsidiary revocation election(1)
 

 
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

(1) At the close of business on December 31, 2015, NNN elected to revoke its election to classify the TRS as taxable REIT subsidiaries. This TRS revocation election resulted in an additional tax expense of approximately $9,607 for 2015.

3


38005915_nnnlogoa02a02.jpg
ADJUSTED FUNDS FROM OPERATIONS (AFFO)
(in thousands, except per share data)
(unaudited)
 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2016
 
2015
 
2016
 
2015
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
(in thousands)
(unaudited)
 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2016
 
2015
 
2016
 
2015
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



4