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Section 1: 8-K (FORM 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, 2018
 
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, 2018, 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, 2017. 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, 2018, of National Retail Properties, Inc.
99.2

 
Supplemental Data, dated February 13, 2018, 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, 2018
 
By:
 
/s/ Kevin B. Habicht
 
 
 
 
Kevin B. Habicht
 
 
 
 
Executive Vice President and Chief Financial Officer







EXHIBIT INDEX
 
 
 
 
Exhibit No.
  
Description
 
 
99.1

  
99.2

 


(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit

392166192_nnnlogoa02a03.jpg

NEWS RELEASE
For information contact:
Kevin B. Habicht
Chief Financial Officer
(407) 265-7348    FOR IMMEDIATE RELEASE
February 13, 2018


RECORD ANNUAL RESULTS
ANNOUNCED BY NATIONAL RETAIL PROPERTIES, INC.

Orlando, Florida, February 13, 2018 – National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and year ended December 31, 2017. 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,
 
2017
 
2016
 
2017
 
2016
 
(in thousands, except per share data)
Revenues
$
150,247

 
$
141,199

 
$
584,933

 
$
533,647

 
 
 
 
 
 
 
 
Net earnings available to common stockholders
$
63,586

 
$
54,044

 
$
217,193

 
$
200,877

Net earnings per common share
$
0.42

 
$
0.37

 
$
1.45

 
$
1.38

 
 
 
 
 
 
 
 
FFO available to common stockholders
$
95,267

 
$
88,717

 
$
359,179

 
$
330,544

FFO per common share
$
0.63

 
$
0.60

 
$
2.40

 
$
2.28

 
 
 
 
 
 
 
 
Core FFO available to common stockholders
$
95,459

 
$
88,717

 
$
376,991

 
$
340,643

Core FFO per common share
$
0.63

 
$
0.60

 
$
2.52

 
$
2.35

 
 
 
 
 
 
 
 
AFFO available to common stockholders
$
95,692

 
$
90,285

 
$
379,083

 
$
347,933

AFFO per common share
$
0.63

 
$
0.62

 
$
2.54

 
$
2.41


Portfolio occupancy was 99.1% at December 31, 2017 as compared to 98.8% at September 30, 2017, and 99.0% at December 31, 2016

2017 Highlights:
Increased annual net earnings per common share 5.1%
Increased annual FFO per common share 5.3%
Increased annual Core FFO per common share 7.2%
Increased annual AFFO per common share 5.4%
Dividend yield of 4.3% at December 31, 2017
Annual dividend per common share increased 4.3% to $1.86 marking the 28th consecutive year of annual dividend increases - making the company one of only three equity REITs and one of only 88 public companies with 28 or more consecutive annual dividend increases
Maintained high occupancy levels at 99.1% with a weighted average remaining lease term of 11.5 years



2017 Highlights (continued):
Invested $754.9 million in 276 properties with an aggregate gross leasable area of approximately 2,243,000 square feet at an initial cash yield of 6.9%
Sold 48 properties for $96.8 million, producing $36.3 million of gains on sale, net of noncontrolling interests, at a cap rate of 6.0%
Raised $647.9 million of new long-term capital at attractive pricing
Raised $253.2 million in net proceeds from the issuance of 6,051,062 common shares
Raised $394.7 million in net proceeds from the issuance of 3.50% senior unsecured notes due 2027
Paid off $250 million principal amount of 6.875% senior unsecured notes due 2017
Expanded unsecured bank credit facility to $900 million while extending the term to January 2022 and reducing the interest rate to LIBOR + 87.5 basis points
$779.5 million availability on bank credit facility at December 31, 2017
99.7% of properties are unencumbered with secured mortgage debt
Total average annual shareholder return of over 11% for the past 5-, 10-, 15-, 20-, and 25-years exceeds industry averages

Selected Highlights for the quarter ended December 31, 2017:
Investments:
$257.4 million in property investments, including the acquisition of 94 properties with an aggregate gross leasable area of approximately 955,000 square feet at an initial cash yield of 6.9%
Dispositions:
Sold 17 properties with net proceeds of $41.0 million, producing $15.8 million of gains on sales at a cap rate of 5.7%
Long-term capital:
Raised $81.0 million in net proceeds from the issuance of 1,946,089 common shares

Jay Whitehurst, Chief Executive Officer, commented: "2017 was another very strong year for National Retail Properties in every aspect of our business.  Our healthy portfolio, our broad acquisition pipeline, and our strong balance sheet position us well to continue delivering consistent per share growth over a multi-year term and maintain our guidance of 4-5% growth in per share results for 2018." 

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of December 31, 2017, the company owned 2,764 properties in 48 states with a gross leasable area of approximately 29.1 million square feet and with a weighted average remaining lease term of 11.5 years. For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on February 13, 2018, 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, 2017. 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

2


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,
 
 
2017
 
2016
 
2017
 
2016
Income Statement Summary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
Rental and earned income
 
$
145,187

 
$
135,947

 
$
568,083

 
$
515,954

Real estate expense reimbursement from tenants
 
4,338

 
4,732

 
15,512

 
14,984

Interest and other income from real estate transactions
 
356

 
128

 
724

 
1,032

Interest income on commercial mortgage residual interests
 
366

 
392

 
614

 
1,677

 
 
150,247

 
141,199

 
584,933

 
533,647

 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
General and administrative
 
8,712

 
9,408

 
33,805

 
36,508

Real estate
 
6,465

 
6,555

 
23,105

 
20,852

Depreciation and amortization
 
43,843

 
38,987

 
173,720

 
149,101

Impairment – commercial mortgage residual interests valuation
 

 

 

 
6,830

Impairment losses – real estate and other charges, net of recoveries
 
7,708

 
338

 
8,955

 
11,287

Retirement severance costs
 
192

 

 
7,845

 

 
 
66,920

 
55,288

 
247,430

 
224,578

 
 
 
 
 
 
 
 
 
Other expenses (revenues):
 
 
 
 
 
 
 
 
Interest and other income
 
(83
)
 
(62
)
 
(322
)
 
(170
)
Interest expense
 
27,016

 
24,429

 
109,109

 
96,352

Real estate acquisition costs
 

 
42

 

 
563

 
 
26,933

 
24,409

 
108,787

 
96,745

 
 
 
 
 
 
 
 
 
Earnings before gain on disposition of real estate
 
56,394

 
61,502

 
228,716

 
212,324

 
 
 
 
 
 
 
 
 
Gain on disposition of real estate
 
15,791

 
4,624

 
36,655

 
27,182

 
 
 
 
 
 
 
 
 
Net earnings
 
72,185

 
66,126

 
265,371

 
239,506

 
 
 
 
 
 
 
 
 
Earnings attributable to noncontrolling interests
 
(17
)
 
(34
)
 
(398
)
 
(6
)
 
 
 
 
 
 
 
 
 
Net earnings attributable to NNN
 
72,168

 
66,092

 
264,973

 
239,500

Series D preferred stock dividends
 

 
(4,762
)
 
(3,598
)
 
(19,047
)
Series E preferred stock dividends
 
(4,097
)
 
(4,097
)
 
(16,387
)
 
(16,387
)
Series F preferred stock dividends
 
(4,485
)
 
(3,189
)
 
(17,940
)
 
(3,189
)
Excess of redemption value over carrying value of Series D preferred shares redeemed
 

 

 
(9,855
)
 

Net earnings available to common stockholders
 
$
63,586

 
$
54,044

 
$
217,193

 
$
200,877

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
151,791

 
146,266

 
149,111

 
144,176

Diluted
 
152,148

 
146,763

 
149,433

 
144,661

 
 
 
 
 
 
 
 
 
Net earnings per share available to common stockholders:
 
 
 
 
 
 
 
 
Basic
 
$
0.42

 
$
0.37

 
$
1.45

 
$
1.39

Diluted
 
$
0.42

 
$
0.37

 
$
1.45

 
$
1.38


4



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

 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2017
 
2016
 
2017
 
2016
Funds From Operations (FFO) Reconciliation:
 
 
 
 
 
 
 
 
Net earnings available to common stockholders
 
$
63,586

 
$
54,044

 
$
217,193

 
$
200,877

Real estate depreciation and amortization:
 
43,764

 
38,907

 
173,404

 
148,779

Gain on disposition of real estate, net of noncontrolling interests
 
(15,791
)
 
(4,579
)
 
(36,258
)
 
(27,137
)
Impairment losses – depreciable real estate, net of recoveries
 
3,708

 
345

 
4,840

 
8,025

Total FFO adjustments
 
31,681

 
34,673

 
141,986

 
129,667

FFO available to common stockholders
 
$
95,267

 
$
88,717

 
$
359,179

 
$
330,544

 
 
 
 
 
 
 
 
 
FFO per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.63

 
$
0.61

 
$
2.41

 
$
2.29

Diluted
 
$
0.63

 
$
0.60

 
$
2.40

 
$
2.28

 
 
 
 
 
 
 
 
 
Core Funds from Operations Reconciliation:
 
 
 
 
 
 
 
 
Net earnings available to common stockholders
 
$
63,586

 
$
54,044

 
$
217,193

 
$
200,877

Total FFO adjustments
 
31,681

 
34,673

 
141,986

 
129,667

FFO available to common stockholders
 
95,267

 
88,717

 
359,179

 
330,544

 
 
 
 
 
 
 
 
 
Excess of redemption value over carrying value of preferred
   share redemption
 

 

 
9,855

 

Impairment – commercial mortgage residual interests valuation
 

 

 

 
6,830

Impairment losses – non-depreciable real estate
 

 

 
112

 

Retirement severance costs
 
192

 

 
7,845

 

Bad debt expense – loans
 

 

 

 
3,269

Total Core FFO adjustments
 
192

 

 
17,812

 
10,099

Core FFO available to common stockholders
 
$
95,459

 
$
88,717

 
$
376,991

 
$
340,643

 
 
 
 
 
 
 
 
 
Core FFO per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.63

 
$
0.61

 
$
2.53

 
$
2.36

Diluted
 
$
0.63

 
$
0.60

 
$
2.52

 
$
2.35

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

5


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

 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2017
 
2016
 
2017
 
2016
Adjusted Funds From Operations (AFFO) Reconciliation:
 
 
 
 
 
 
 
 
Net earnings available to common stockholders
 
$
63,586

 
$
54,044

 
$
217,193

 
$
200,877

Total FFO adjustments
 
31,681

 
34,673

 
141,986

 
129,667

Total Core FFO adjustments
 
192

 

 
17,812

 
10,099

Core FFO available to common stockholders
 
95,459

 
88,717

 
376,991

 
340,643

 
 
 
 
 
 
 
 
 
Straight-line accrued rent
 
(552
)
 
(273
)
 
(1,752
)
 
(252
)
Net capital lease rent adjustment
 
223

 
309

 
884

 
1,364

Below market rent amortization
 
(659
)
 
(662
)
 
(3,355
)
 
(2,842
)
Stock based compensation expense
 
1,962

 
2,689

 
8,750

 
10,758

Capitalized interest expense
 
(741
)
 
(495
)
 
(2,435
)
 
(1,738
)
Total AFFO adjustments
 
233

 
1,568

 
2,092

 
7,290

AFFO available to common stockholders
 
$
95,692

 
$
90,285

 
$
379,083

 
$
347,933

 
 
 
 
 
 
 
 
 
AFFO per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.63

 
$
0.62

 
$
2.54

 
$
2.41

Diluted
 
$
0.63

 
$
0.62

 
$
2.54

 
$
2.41

 
 
 
 
 
 
 
 
 
Other Information:
 
 
 
 
 
 
 
 
Percentage rent
 
$
715

 
$
776

 
$
1,700

 
$
1,735

Amortization of debt costs
 
$
891

 
$
810

 
$
3,502

 
$
3,086

Scheduled debt principal amortization (excluding maturities)
 
$
130

 
$
129

 
$
510

 
$
656

Non-real estate depreciation expense
 
$
82

 
$
83

 
$
327

 
$
333

 
 
 
 
 
 
 
 
 
2018 Earnings Guidance (Unchanged from November 2017):
 
 
 
 
 
 
 
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.
 
 
2018 Guidance
  Net earnings per common share excluding any gains on sale of real estate, impairment charges or retirement severance costs
 
$1.53 - $1.57 per share
  Real estate depreciation and amortization per share
 
$1.07 per share
Core FFO per share
 
$2.60 - $2.64 per share
  AFFO per share
 
$2.64 - $2.68 per share
  G&A expenses (excluding retirement severance costs)
 
$34 - $35 Million
  Real estate expenses, net of tenant reimbursements
 
$8 - $9 Million
  Acquisition volume
 
$500 - $600 Million
  Disposition volume
 
$80 - $120 Million

6



National Retail Properties, Inc.
(in thousands)
(unaudited)

 
 
December 31, 2017
 
December 31, 2016
Balance Sheet Summary
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
Real estate:
 
 
 
 
Accounted for using the operating method, net of accumulated depreciation and amortization
 
$
6,428,928

 
$
5,879,046

Accounted for using the direct financing method
 
9,650

 
11,230

Real estate held for sale
 
4,083

 
26,084

Cash and cash equivalents
 
1,364

 
294,540

Receivables, net of allowance
 
4,317

 
3,418

Accrued rental income, net of allowance
 
25,916

 
25,101

Debt costs, net of accumulated amortization
 
5,380

 
2,715

Other assets
 
80,896

 
92,017

Total assets
 
$
6,560,534

 
$
6,334,151

 
 
 
 
 
Liabilities:
 
 
 
 
Line of credit payable
 
$
120,500

 
$

Mortgages payable, including unamortized premium and net of unamortized debt cost
 
13,300

 
13,878

Notes payable, net of unamortized discount and unamortized debt costs
 
2,446,407

 
2,297,811

Accrued interest payable
 
20,311

 
19,665

Other liabilities
 
119,106

 
85,869

Total liabilities
 
2,719,624

 
2,417,223

 
 
 
 
 
Stockholders’ equity of NNN
 
3,840,593

 
3,916,799

Noncontrolling interests
 
317

 
129

Total equity
 
3,840,910

 
3,916,928

 
 
 
 
 
Total liabilities and equity
 
$
6,560,534

 
$
6,334,151

 
 
 
 
 
Common shares outstanding
 
153,577

 
147,150

 
 
 
 
 
Gross leasable area, Property Portfolio (square feet)
 
29,093

 
27,204

 
 
 
 
 




7


National Retail Properties, Inc.
Debt Summary
As of December 31, 2017
(in thousands)
(unaudited)
Unsecured Debt
 
Principal
 
Principal, Net of Unamortized Discount
 
Stated Rate
 
Effective Rate
 
Maturity Date
Line of credit payable
 
$
120,500

 
$
120,500

 
L + 87.5 bps
 
2.155%
 
January 2022
 
 
 
 
 
 
 
 
 
 
 
Unsecured notes payable:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2021
 
300,000

 
298,209

 
5.500%
 
5.689%
 
July 2021
2022
 
325,000

 
322,400

 
3.800%
 
3.985%
 
October 2022
2023
 
350,000

 
348,520

 
3.300%
 
3.388%
 
April 2023
2024
 
350,000

 
349,516

 
3.900%
 
3.924%
 
June 2024
2025
 
400,000

 
399,214

 
4.000%
 
4.029%
 
November 2025
2026
 
350,000

 
346,481

 
3.600%
 
3.733%
 
December 2026
2027
 
400,000

 
398,412

 
3.500%
 
3.548%
 
October 2027
Total
 
2,475,000

 
2,462,752

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total unsecured debt
 
$
2,595,500

 
$
2,583,252

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt costs
 
(22,682
)
 
 
 
 
 
 
Accumulated amortization
 
6,337

 
 
 
 
 
 
Debt costs, net of accumulated amortization
 
(16,345
)
 
 
 
 
 
 
Notes payable, net of unamortized discount and unamortized debt costs (1)
 
$
2,446,407

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Unsecured notes payable have a weighted average interest rate of 4.0% and a weighted average maturity of 6.9 years

Mortgages Payable
 
Principal Balance
 
Interest Rate
 
Maturity Date
Mortgage(1)
 
$
13,392

 
5.230%
 
July 2023
 
Debt costs
 
(147
)
 
 
 
 
Accumulated amortization
 
55

 
 
 
 
Debt costs, net of accumulated amortization
 
(92
)
 
 
 
 
Mortgages payable, including unamortized premium and net of unamortized debt costs
 
$
13,300

 
 
 
 
 
 
 
 
 
 
 
(1) Includes unamortized premium
 
 
 
 
 
 

8


National Retail Properties, Inc.
Property Portfolio

Top 20 Lines of Trade
 
 
 
 
As of December 31,
 
 
Line of Trade
 
2017(1)
 
2016(2)
1.
 
Convenience stores
 
18.1
%
 
16.9
%
2.
 
Restaurants - full service
 
12.1
%
 
11.8
%
3.
 
Restaurants - limited service
 
7.6
%
 
7.5
%
4.
 
Automotive service
 
6.9
%
 
6.6
%
5.
 
Family entertainment centers
 
6.4
%
 
5.8
%
6.
 
Health and fitness
 
5.6
%
 
5.7
%
7.
 
Theaters
 
4.8
%
 
4.9
%
8.
 
Automotive parts
 
3.6
%
 
3.9
%
9.
 
Recreational vehicle dealers, parts and accessories
 
3.4
%
 
3.4
%
10.
 
Banks
 
2.5
%
 
3.1
%
11.
 
Medical service providers
 
2.4
%
 
2.4
%
12.
 
Wholesale clubs
 
2.2
%
 
2.4
%
13.
 
Equipment Rental
 
2.0
%
 
0.7
%
14.
 
Drug stores
 
1.9
%
 
2.1
%
15.
 
Furniture
 
1.9
%
 
1.9
%
16.
 
General Merchandise
 
1.8
%
 
1.8
%
17.
 
Home Improvement
 
1.8
%
 
1.8
%
18.
 
Consumer Electronics
 
1.8
%
 
2.0
%
19.
 
Travel Plazas
 
1.8
%
 
1.9
%
20.
 
Home furnishings
 
1.6
%
 
1.7
%
 
 
Other
 
9.8
%
 
11.7
%
 
 
Total
 
100.0
%
 
100.0
%

Top 10 States
 
State
 
 
% of Total(1)
 
 
State
 
 
% of Total(1)
1.
Texas
 
 
18.2
%
 
6.
Georgia
 
 
4.3
%
2.
Florida
 
 
8.7
%
 
7.
Tennessee
 
 
4.0
%
3.
Illinois
 
 
5.4
%
 
8.
Virginia
 
 
3.9
%
4.
Ohio
 
 
5.3
%
 
9.
Indiana
 
 
3.9
%
5.
North Carolina
 
 
5.1
%
 
10.
Alabama
 
 
3.1
%

(1) 
Based on the annualized base rent for all leases in place as of December 31, 2017.
(2) 
Based on the annualized base rent for all leases in place as of December 31, 2016.


9


National Retail Properties, Inc.
Property Portfolio

Top Tenants (≥ 2.0%)
 
 
 
Properties
 
% of Total (1)
 
Sunoco
 
124
 
5.1%
 
Camping World
 
46
 
4.2%
 
Mister Car Wash
 
96
 
4.1%
 
LA Fitness
 
30
 
3.8%
 
AMC Theatres
 
20
 
3.4%
 
Couche-Tard (Pantry)
 
86
 
3.2%
 
7-Eleven
 
77
 
3.1%
 
GPM Investments (Convenience Stores)
 
103
 
2.8%
 
Bell American (Taco Bell)
 
115
 
2.6%
 
Chuck E. Cheese's
 
53
 
2.3%
 
Suntrust
 
101
 
2.3%
 
BJ's Wholesale Club
 
8
 
2.2%
 
Frisch's Restaurant
 
74
 
2.0%


Lease Expirations(2) 
 
 
% of
Total
(1)
 
# of
Properties
 
Gross Leasable
Area
(3)
 
 
 
% of
Total
(1)
 
# of
Properties
 
Gross Leasable Area (3)
2018
 
2.0%
 
61
 
787,000

 
2024
 
2.2%
 
50
 
833,000

2019
 
2.7%
 
75
 
1,081,000

 
2025
 
4.7%
 
128
 
1,123,000

2020
 
3.5%
 
127
 
1,559,000

 
2026
 
5.6%
 
184
 
1,854,000

2021
 
4.1%
 
121
 
1,320,000

 
2027
 
8.7%
 
197
 
2,766,000

2022
 
6.4%
 
125
 
1,697,000

 
2028
 
5.5%
 
171
 
1,326,000

2023
 
2.6%
 
99
 
1,143,000

 
Thereafter
 
52.0%
 
1,395
 
13,214,000


(1) 
Based on the annual base rent of $585,304,000, which is the annualized base rent for all leases in place as of December 31, 2017.
(2) 
As of December 31, 2017, the weighted average remaining lease term is 11.5 years.
(3) 
Square feet.


10
(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit
Exhibit 99.2





392166192_nnnlogoa02a03.jpg




ANNUAL SUPPLEMENTAL DATA



As of December 31, 2017




392166192_nnnlogoa02a03.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.




392166192_nnnlogoa02a03.jpg
INCOME STATEMENT SUMMARY
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2017
 
2016
 
2017
 
2016
Revenues:
 
 
 
 
 
 
 
 
Rental and earned income
 
$
145,187

 
$
135,947

 
$
568,083

 
$
515,954

Real estate expense reimbursement from tenants
 
4,338

 
4,732

 
15,512

 
14,984

Interest and other income from real estate transactions
 
356

 
128

 
724

 
1,032

Interest income on commercial mortgage residual interests
 
366

 
392

 
614

 
1,677

 
 
150,247

 
141,199

 
584,933

 
533,647

 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
General and administrative
 
8,712

 
9,408

 
33,805

 
36,508

Real estate
 
6,465

 
6,555

 
23,105

 
20,852

Depreciation and amortization
 
43,843

 
38,987

 
173,720

 
149,101

Impairment – commercial mortgage residual interests valuation
 

 

 

 
6,830

Impairment losses – real estate and other charges, net of recoveries
 
7,708

 
338

 
8,955

 
11,287

Retirement severance costs
 
192

 

 
7,845

 

 
 
66,920

 
55,288

 
247,430

 
224,578

 
 
 
 
 
 
 
 
 
Other expenses (revenues):
 
 
 
 
 
 
 
 
Interest and other income
 
(83
)
 
(62
)
 
(322
)
 
(170
)
Interest expense
 
27,016

 
24,429

 
109,109

 
96,352

Real estate acquisition costs
 

 
42

 

 
563

 
 
26,933

 
24,409

 
108,787

 
96,745

 
 
 
 
 
 
 
 
 
Earnings before gain on disposition of real estate
 
56,394

 
61,502

 
228,716

 
212,324

 
 
 
 
 
 
 
 
 
Gain on disposition of real estate
 
15,791

 
4,624

 
36,655

 
27,182

Net earnings
 
72,185

 
66,126

 
265,371

 
239,506

 
 
 
 
 
 
 
 
 
Earnings from continuing operations attributable to noncontrolling interests:
 
(17
)
 
(34
)
 
(398
)
 
(6
)
Net earnings attributable to NNN
 
$
72,168

 
$
66,092

 
$
264,973

 
$
239,500

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1


392166192_nnnlogoa02a03.jpg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INCOME STATEMENT SUMMARY
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2017
 
2016
 
2017
 
2016
Net earnings attributable to NNN
 
$
72,168

 
$
66,092

 
$
264,973

 
$
239,500

Series D preferred stock dividends
 

 
(4,762
)
 
(3,598
)
 
(19,047
)
Series E preferred stock dividends
 
(4,097
)
 
(4,097
)
 
(16,387
)
 
(16,387
)
Series F preferred stock dividends
 
(4,485
)
 
(3,189
)
 
(17,940
)
 
(3,189
)
Excess of redemption value over carrying value of Series D preferred shares redeemed
 

 

 
(9,855
)
 

Net earnings available to common stockholders
 
$
63,586

 
$
54,044

 
$
217,193

 
$
200,877

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
151,791

 
146,266

 
149,111

 
144,176

Diluted
 
152,148

 
146,763

 
149,433

 
144,661

 
 
 
 
 
 
 
 
 
Net earnings per share available to common stockholders:
 
 
 
 
 
 
 
 
Basic
 
$
0.42

 
$
0.37

 
$
1.45

 
$
1.39

Diluted
 
$
0.42

 
$
0.37

 
$
1.45

 
$
1.38



2


392166192_nnnlogoa02a03.jpg
FUNDS FROM OPERATIONS (FFO)
(in thousands, except per share data)
(unaudited)
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2017
 
2016
 
2017
 
2016
Net earnings available to common stockholders
 
$
63,586

 
$
54,044

 
$
217,193

 
$
200,877

Real estate depreciation and amortization:
 
43,764

 
38,907

 
173,404

 
148,779

Gain on disposition of real estate, net of noncontrolling interests
 
(15,791
)
 
(4,579
)
 
(36,258
)
 
(27,137
)
Impairment losses – depreciable real estate, net of recoveries
 
3,708

 
345

 
4,840

 
8,025

Total FFO adjustments
 
31,681

 
34,673

 
141,986

 
129,667

FFO available to common stockholders
 
$
95,267

 
$
88,717

 
$
359,179

 
$
330,544

 
 
 
 
 
 
 
 
 
FFO per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.63

 
$
0.61

 
$
2.41

 
$
2.29

Diluted
 
$
0.63

 
$
0.60

 
$
2.40

 
$
2.28


CORE FUNDS FROM OPERATIONS
(in thousands, except per share data)
(unaudited)
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2017
 
2016
 
2017
 
2016
Net earnings available to common stockholders
 
$
63,586

 
$
54,044

 
$
217,193

 
$
200,877

Total FFO adjustments
 
31,681

 
34,673

 
141,986

 
129,667

FFO available to common stockholders
 
95,267

 
88,717

 
359,179

 
330,544

 
 
 
 
 
 
 
 
 
Excess of redemption value over carrying value of preferred
share redemption
 

 

 
9,855

 

Impairment – commercial mortgage residual interests valuation
 

 

 

 
6,830

Impairment losses – non-depreciable real estate
 

 

 
112

 

Retirement severance costs
 
192

 

 
7,845

 

Bad debt expense – loans
 

 

 

 
3,269

Total Core FFO adjustments
 
192

 

 
17,812

 
10,099

Core FFO available to common stockholders
 
$
95,459

 
$
88,717

 
$
376,991

 
$
340,643

 
 
 
 
 
 
 
 
 
Core FFO per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.63

 
$
0.61

 
$
2.53

 
$
2.36

Diluted
 
$
0.63

 
$
0.60

 
$
2.52

 
$
2.35



3


392166192_nnnlogoa02a03.jpg
ADJUSTED FUNDS FROM OPERATIONS (AFFO)
(in thousands, except per share data)
(unaudited)
 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2017
 
2016
 
2017
 
2016
Net earnings available to common stockholders
 
$
63,586

 
$
54,044

 
$
217,193

 
$
200,877

Total FFO adjustments
 
31,681

 
34,673

 
141,986

 
129,667

Total Core FFO adjustments
 
192

 

 
17,812

 
10,099

Core FFO available to common stockholders
 
95,459

 
88,717

 
376,991

 
340,643

 
 
 
 
 
 
 
 
 
Straight-line accrued rent
 
(552
)
 
(273
)
 
(1,752
)
 
(252
)
Net capital lease rent adjustment
 
223

 
309

 
884

 
1,364

Below market rent amortization
 
(659
)
 
(662
)
 
(3,355
)
 
(2,842
)
Stock based compensation expense
 
1,962

 
2,689

 
8,750

 
10,758

Capitalized interest expense
 
(741
)
 
(495
)
 
(2,435
)
 
(1,738
)
Total AFFO adjustments
 
233

 
1,568

 
2,092

 
7,290

AFFO available to common stockholders
 
$
95,692

 
$
90,285

 
$
379,083

 
$
347,933

 
 
 
 
 
 
 
 
 
AFFO per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.63

 
$
0.62

 
$
2.54

 
$
2.41

Diluted
 
$
0.63

 
$
0.62

 
$
2.54

 
$
2.41


OTHER INFORMATION
(in thousands)
(unaudited)
 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2017
 
2016
 
2017
 
2016
Percentage rent
 
$
715

 
$
776

 
$
1,700

 
$
1,735

Amortization of debt costs
 
$
891

 
$
810

 
$
3,502

 
$
3,086

Scheduled debt principal amortization (excluding maturities)
 
$
130

 
$
129

 
$
510

 
$
656

Non-real estate depreciation expense
 
$
82

 
$
83

 
$
327

 
$
333



4


392166192_nnnlogoa02a03.jpg
BALANCE SHEET
(in thousands)
(unaudited)
 
 
 
December 31, 2017
 
December 31, 2016
Assets:
 
 
 
 
Real estate:
 
 
 
 
Accounted for using the operating method, net of accumulated depreciation and amortization
 
$
6,428,928

 
$
5,879,046

Accounted for using the direct financing method
 
9,650

 
11,230

Real estate held for sale
 
4,083

 
26,084

Cash and cash equivalents
 
1,364

 
294,540

Receivables, net of allowance
 
4,317

 
3,418

Accrued rental income, net of allowance
 
25,916