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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 12, 2019
 
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 12, 2019, 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, 2018. 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

  
99.2

 





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 12, 2019
 
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
396706601_nnnlogo123118.jpg

NEWS RELEASE
For information contact:
Kevin B. Habicht
Chief Financial Officer
(407) 265-7348    FOR IMMEDIATE RELEASE
February 12, 2019


RECORD ANNUAL RESULTS
ANNOUNCED BY NATIONAL RETAIL PROPERTIES, INC.

Orlando, Florida, February 12, 2019 – National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and year ended December 31, 2018. 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,
 
2018
 
2017
 
2018
 
2017
 
(in thousands, except per share data)
Revenues
$
158,976

 
$
150,247

 
$
622,661

 
$
584,933

 
 
 
 
 
 
 
 
Net earnings available to common stockholders
$
27,980

 
$
63,586

 
$
258,120

 
$
217,193

Net earnings per common share
$
0.17

 
$
0.42

 
$
1.65

 
$
1.45

 
 
 
 
 
 
 
 
FFO available to common stockholders
$
82,491

 
$
95,267

 
$
395,337

 
$
359,179

FFO per common share
$
0.52

 
$
0.63

 
$
2.53

 
$
2.40

 
 
 
 
 
 
 
 
Core FFO available to common stockholders
$
101,001

 
$
95,459

 
$
414,590

 
$
376,991

Core FFO per common share
$
0.63

 
$
0.63

 
$
2.65

 
$
2.52

 
 
 
 
 
 
 
 
AFFO available to common stockholders
$
103,523

 
$
95,692

 
$
418,702

 
$
379,083

AFFO per common share
$
0.65

 
$
0.63

 
$
2.68

 
$
2.54


Portfolio occupancy was 98.2% at December 31, 2018 as compared to 98.7% at September 30, 2018, and 99.1% at December 31, 2017

2018 Highlights:
Increased annual net earnings per common share 13.8%
Increased annual FFO per common share 5.4%
Increased annual Core FFO per common share 5.2%
Increased annual AFFO per common share 5.5%
Dividend yield of 4.0% at December 31, 2018
Annual dividend per common share increased 4.8% to $1.95 marking the 29th consecutive year of annual dividend increases - making the company one of only three equity REITs and 86 publicly traded companies in America to have increased annual dividends for 29 or more consecutive years
Maintained high occupancy levels at 98.2% with a weighted average remaining lease term of 11.5 years



2018 Highlights (continued):
Invested $715.6 million in 265 properties with an aggregate gross leasable area of approximately 2,167,000 square feet at an initial cash yield of 6.8%
Sold 61 properties for $147.6 million, producing $65.1 million of gains on sale, at a cap rate of 5.1%
Raised $1,027.4 million of new long-term capital at attractive pricing
Raised $341.5 million in net proceeds from the issuance of 7,689,211 common shares
Raised $393.5 million in net proceeds from the issuance of 4.30% senior unsecured notes due 2028
Raised $292.4 million in net proceeds from the issuance of 4.80% senior unsecured notes due 2048
Paid off $300 million principal amount of 5.500% senior unsecured notes due 2021
$900 million availability on bank credit facility at December 31, 2018
99.7% of properties are unencumbered with secured mortgage debt
Total average annual shareholder return of 12.8% over the past 25 years exceeds industry and general equity averages

Selected Highlights for the quarter ended December 31, 2018:
Investments:
$319.5 million in property investments, including the acquisition of 136 properties with an aggregate gross leasable area of approximately 902,000 square feet at an initial cash yield of 6.7%
Dispositions:
Sold 15 properties with net proceeds of $26.5 million, producing $8.0 million of gains on sales at a cap rate of 6.2%
Long-term capital:
Raised $123.8 million in net proceeds from the issuance of 2,567,167 common shares

Jay Whitehurst, Chief Executive Officer, commented: "After a busy and productive fourth quarter, National Retail Properties once again delivered above average returns to our investors while taking below average risk.  Our commitment to consistent per share growth on a multi-year basis produced an annual dividend increase of 4.8% and annual AFFO per share growth of 5.5% in 2018, all while maintaining our low leverage, conservatively financed balance sheet.  Driven by our consistent strategy and focused execution, we are well positioned to continue producing total shareholder returns that we believe will exceed the REIT averages over the long term." 

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of December 31, 2018, the company owned 2,969 properties in 48 states with a gross leasable area of approximately 30.5 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 12, 2019, at 10:30 a.m. ET to review these results. The call can be accessed on the National Retail Properties web site live at http://www.nnnreit.com. For those unable to listen to the live broadcast, a replay will be available on the company’s web site. In addition, a summary of any earnings guidance given on the call will be posted to the company’s web site.

Statements in this press release that are not strictly historical are “forward-looking” statements. These statements generally are
characterized by the use of terms such as "believe," "expect," "intend," "may," "estimated," or other similar words or expressions. Forward-looking statements involve known and unknown risks, which may cause the company’s actual future results to differ materially from expected results. These risks include, among others, general economic conditions, local real estate conditions, changes in interest rates, increases in operating costs, the preferences and financial condition of the company's tenants, the availability of capital and risks related to the company's status as a REIT. Additional information concerning these and other factors that could cause actual results to differ materially from these forward-looking statements is contained from time to time in the company’s Securities and Exchange Commission (the “Commission”) filings, including, but not limited to, the company’s Annual Report on Form 10-K. Copies of each filing may be obtained from the company or the Commission. Such forward-looking statements should be regarded solely as reflections of the company’s current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this press release. National Retail Properties, Inc. undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.

The reported results are preliminary and not final and there can be no assurance that the results will not vary from the final information filed on Form 10-K with the Commission for the quarter and year ended December 31, 2018. 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

2


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,
 
 
2018
 
2017
 
2018
 
2017
Income Statement Summary
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
Rental and earned income
 
$
153,684

 
$
145,187

 
$
604,615

 
$
568,083

Real estate expense reimbursement from tenants
 
5,143

 
4,338

 
16,784

 
15,512

Interest and other income from real estate transactions
 
149

 
722

 
1,262

 
1,338

 
 
158,976

 
150,247

 
622,661

 
584,933

 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
General and administrative
 
8,267

 
8,712

 
34,248

 
33,805

Real estate
 
7,649

 
6,465

 
25,099

 
23,105

Depreciation and amortization
 
44,117

 
43,843

 
174,398

 
173,720

Impairment losses – real estate and other charges, net of recoveries
 
18,494

 
7,708

 
28,211

 
8,955

Retirement severance costs
 
270

 
192

 
1,013

 
7,845

 
 
78,797

 
66,920

 
262,969

 
247,430

Gain on disposition of real estate
 
8,020


15,791


65,070


36,655

Earnings from operations
 
88,199

 
99,118

 
424,762

 
374,158

 
 
 
 
 
 
 
 
 
Other expenses (revenues):
 
 
 
 
 
 
 
 
Interest and other income
 
(1,553
)
 
(83
)
 
(1,810
)
 
(322
)
Interest expense
 
34,940

 
27,016

 
115,847

 
109,109

Loss on early extinguishment of debt
 
18,240

 

 
18,240

 

 
 
51,627

 
26,933

 
132,277

 
108,787

 
 
 
 
 
 
 
 
 
Net earnings
 
36,572

 
72,185

 
292,485

 
265,371

Earnings attributable to noncontrolling interests
 
(10
)
 
(17
)
 
(38
)
 
(398
)
 
 
 
 
 
 
 
 
 
Net earnings attributable to NNN
 
36,562

 
72,168

 
292,447

 
264,973

Series D preferred stock dividends
 

 

 

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

 

 

 
(9,855
)
Net earnings available to common stockholders
 
$
27,980

 
$
63,586

 
$
258,120

 
$
217,193

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
159,193

 
151,791

 
155,745

 
149,111

Diluted
 
159,772

 
152,148

 
156,296

 
149,433

 
 
 
 
 
 
 
 
 
Net earnings per share available to common stockholders:
 
 
 
 
 
 
 
 
Basic
 
$
0.17

 
$
0.42

 
$
1.65

 
$
1.45

Diluted
 
$
0.17

 
$
0.42

 
$
1.65

 
$
1.45


4



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

 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2018
 
2017
 
2018
 
2017
Funds From Operations (FFO) Reconciliation:
 
 
 
 
 
 
 
 
Net earnings available to common stockholders
 
$
27,980

 
$
63,586

 
$
258,120

 
$
217,193

Real estate depreciation and amortization:
 
44,037

 
43,764

 
174,076

 
173,404

Gain on disposition of real estate, net of noncontrolling interests
 
(8,020
)
 
(15,791
)
 
(65,070
)
 
(36,258
)
Impairment losses – depreciable real estate, net of recoveries
 
18,494

 
3,708

 
28,211

 
4,840

Total FFO adjustments
 
54,511

 
31,681

 
137,217

 
141,986

FFO available to common stockholders
 
$
82,491

 
$
95,267

 
$
395,337

 
$
359,179

 
 
 
 
 
 
 
 
 
FFO per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.52

 
$
0.63

 
$
2.54

 
$
2.41

Diluted
 
$
0.52

 
$
0.63

 
$
2.53

 
$
2.40

 
 
 
 
 
 
 
 
 
Core Funds from Operations Reconciliation:
 
 
 
 
 
 
 
 
Net earnings available to common stockholders
 
$
27,980

 
$
63,586

 
$
258,120

 
$
217,193

Total FFO adjustments
 
54,511

 
31,681

 
137,217

 
141,986

FFO available to common stockholders
 
82,491

 
95,267

 
395,337

 
359,179

 
 
 
 
 
 
 
 
 
Excess of redemption value over carrying value of preferred
   share redemption
 

 

 

 
9,855

Impairment losses – non-depreciable real estate
 

 

 

 
112

Retirement severance costs
 
270

 
192

 
1,013

 
7,845

Loss on early extinguishment of debt
 
18,240

 

 
18,240

 

Total Core FFO adjustments
 
18,510

 
192

 
19,253

 
17,812

Core FFO available to common stockholders
 
$
101,001

 
$
95,459

 
$
414,590

 
$
376,991

 
 
 
 
 
 
 
 
 
Core FFO per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.63

 
$
0.63

 
$
2.66

 
$
2.53

Diluted
 
$
0.63

 
$
0.63

 
$
2.65

 
$
2.52

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

5


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

 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2018
 
2017
 
2018
 
2017
Adjusted Funds From Operations (AFFO) Reconciliation:
 
 
 
 
 
 
 
 
Net earnings available to common stockholders
 
$
27,980

 
$
63,586

 
$
258,120

 
$
217,193

Total FFO adjustments
 
54,511

 
31,681

 
137,217

 
141,986

Total Core FFO adjustments
 
18,510

 
192

 
19,253

 
17,812

Core FFO available to common stockholders
 
101,001

 
95,459

 
414,590

 
376,991

 
 
 
 
 
 
 
 
 
Straight-line accrued rent
 
124

 
(552
)
 
(747
)
 
(1,752
)
Net capital lease rent adjustment
 
220

 
223

 
874

 
884

Below market rent amortization
 
(288
)
 
(659
)
 
(2,622
)
 
(3,355
)
Stock based compensation expense
 
2,641

 
1,962

 
9,282

 
8,750

Capitalized interest expense
 
(175
)
 
(741
)
 
(2,675
)
 
(2,435
)
Total AFFO adjustments
 
2,522

 
233

 
4,112

 
2,092

AFFO available to common stockholders
 
$
103,523

 
$
95,692

 
$
418,702

 
$
379,083

 
 
 
 
 
 
 
 
 
AFFO per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.65

 
$
0.63

 
$
2.69

 
$
2.54

Diluted
 
$
0.65

 
$
0.63

 
$
2.68

 
$
2.54

 
 
 
 
 
 
 
 
 
Other Information:
 
 
 
 
 
 
 
 
Percentage rent
 
$
543

 
$
715

 
$
1,561

 
$
1,700

Amortization of debt costs
 
$
1,917

 
$
891

 
$
4,611

 
$
3,502

Scheduled debt principal amortization (excluding maturities)
 
$
138

 
$
130

 
$
538

 
$
510

Non-real estate depreciation expense
 
$
83

 
$
82

 
$
332

 
$
327

 
 
 
 
 
 
 
 
 
2019 Earnings Guidance (Unchanged from November 2018):
 
 
 
 
 
 
 
Guidance is based on current plans and assumptions and subject to risks and uncertainties more fully described in this press release and the company's reports filed with the Securities and Exchange Commission.
 
 
2019 Guidance
  Net earnings per common share excluding any gains on disposition of real estate and impairment charges
 
$1.60 - $1.65 per share
  Real estate depreciation and amortization per share
 
$1.11 per share
Core FFO per share
 
$2.71 - $2.76 per share
  AFFO per share
 
$2.76 - $2.81 per share
  G&A expenses
 
$35.5 - $36.5 Million
  Real estate expenses, net of tenant reimbursements
 
$8.5 - $9.0 Million
  Acquisition volume
 
$550 - $650 Million
  Disposition volume
 
$80 - $120 Million

6



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

 
 
December 31, 2018
 
December 31, 2017
Balance Sheet Summary
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
Real estate:
 
 
 
 
Accounted for using the operating method, net of accumulated depreciation and amortization
 
$
6,853,757

 
$
6,403,638

Accounted for using the direct financing method
 
8,069

 
9,650

Real estate held for sale
 
13,606

 
29,373

Cash and cash equivalents
 
114,267

 
1,364

Receivables, net of allowance
 
3,797

 
4,317

Accrued rental income, net of allowance
 
25,387

 
25,916

Debt costs, net of accumulated amortization
 
4,081

 
5,380

Other assets
 
80,474

 
80,896

Total assets
 
$
7,103,438

 
$
6,560,534

 
 
 
 
 
Liabilities:
 
 
 
 
Line of credit payable
 
$

 
$
120,500

Mortgages payable, including unamortized premium and net of unamortized debt cost
 
12,694

 
13,300

Notes payable, net of unamortized discount and unamortized debt costs
 
2,838,701

 
2,446,407

Accrued interest payable
 
19,519

 
20,311

Other liabilities
 
77,919

 
119,106

Total liabilities
 
2,948,833

 
2,719,624

 
 
 
 
 
Stockholders’ equity of NNN
 
4,154,250

 
3,840,593

Noncontrolling interests
 
355

 
317

Total equity
 
4,154,605

 
3,840,910

 
 
 
 
 
Total liabilities and equity
 
$
7,103,438

 
$
6,560,534

 
 
 
 
 
Common shares outstanding
 
161,504

 
153,577

 
 
 
 
 
Gross leasable area, Property Portfolio (square feet)
 
30,487

 
29,093

 
 
 
 
 




7


National Retail Properties, Inc.
Debt Summary
As of December 31, 2018
(in thousands)
(unaudited)
Unsecured Debt
 
Principal
 
Principal, Net of Unamortized Discount
 
Stated Rate
 
Effective Rate
 
Maturity Date
Line of credit payable
 
$

 
$

 
L + 87.5 bps
 
2.823%
 
January 2022
 
 
 
 
 
 
 
 
 
 
 
Unsecured notes payable:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2022
 
325,000

 
322,903

 
3.800%
 
3.985%
 
October 2022
2023
 
350,000

 
348,780

 
3.300%
 
3.388%
 
April 2023
2024
 
350,000

 
349,583

 
3.900%
 
3.924%
 
June 2024
2025
 
400,000

 
399,301

 
4.000%
 
4.029%
 
November 2025
2026
 
350,000

 
346,818

 
3.600%
 
3.733%
 
December 2026
2027
 
400,000

 
398,550

 
3.500%
 
3.548%
 
October 2027
2028
 
400,000

 
397,215

 
4.300%
 
4.388%
 
October 2028
2048
 
300,000

 
295,778

 
4.800%
 
4.890%
 
October 2048
Total
 
2,875,000

 
2,858,928

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total unsecured debt
 
$
2,875,000

 
$
2,858,928

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt costs
 
(26,932
)
 
 
 
 
 
 
Accumulated amortization
 
6,705

 
 
 
 
 
 
Debt costs, net of accumulated amortization
 
(20,227
)
 
 
 
 
 
 
Notes payable, net of unamortized discount and unamortized debt costs (1)
 
$
2,838,701

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Unsecured notes payable have a weighted average interest rate of 4.0% and a weighted average maturity of 9.3 years

Mortgages Payable
 
Principal Balance
 
Interest Rate
 
Maturity Date
Mortgage(1)
 
$
12,768

 
5.230%
 
July 2023
 
Debt costs
 
(147
)
 
 
 
 
Accumulated amortization
 
73

 
 
 
 
Debt costs, net of accumulated amortization
 
(74
)
 
 
 
 
Mortgages payable, including unamortized premium and net of unamortized debt costs
 
$
12,694

 
 
 
 
 
 
 
 
 
 
 
(1) Includes unamortized premium
 
 
 
 
 
 

8


National Retail Properties, Inc.
Property Portfolio

Top 20 Lines of Trade
 
 
 
 
As of December 31,
 
 
Line of Trade
 
2018(1)
 
2017(2)
1.
 
Convenience stores
 
18.0
%
 
18.1
%
2.
 
Restaurants - full service
 
11.4
%
 
12.1
%
3.
 
Restaurants - limited service
 
8.9
%
 
7.6
%
4.
 
Automotive service
 
8.6
%
 
6.9
%
5.
 
Family entertainment centers
 
7.1
%
 
6.4
%
6.
 
Health and fitness
 
5.6
%
 
5.6
%
7.
 
Theaters
 
5.0
%
 
4.8
%
8.
 
Automotive parts
 
3.4
%
 
3.6
%
9.
 
Recreational vehicle dealers, parts and accessories
 
3.4
%
 
3.4
%
10.
 
Wholesale clubs
 
2.3
%
 
2.2
%
11.
 
Medical service providers
 
2.2
%
 
2.4
%
12.
 
Home improvement
 
2.2
%
 
1.8
%
13.
 
Equipment rental
 
1.9
%
 
2.0
%
14.
 
Drug stores
 
1.8
%
 
1.9
%
15.
 
Travel plazas
 
1.7
%
 
1.8
%
16.
 
Furniture
 
1.7
%
 
1.9
%
17.
 
Bank
 
1.6
%
 
2.5
%
18.
 
Consumer electronics
 
1.6
%
 
1.8
%
19.
 
General merchandise
 
1.6
%
 
1.8
%
20.
 
Home furnishings
 
1.5
%
 
1.6
%
 
 
Other
 
8.5
%
 
9.8
%
 
 
Total
 
100.0
%
 
100.0
%

Top 10 States
 
State
 
 
% of Total(1)
 
 
State
 
 
% of Total(1)
1.
Texas
 
 
17.3
%
 
6.
Georgia
 
 
4.5
%
2.
Florida
 
 
8.7
%
 
7.
Tennessee
 
 
3.9
%
3.
Ohio
 
 
5.7
%
 
8.
Indiana
 
 
3.9
%
4.
Illinois
 
 
5.2
%
 
9.
Virginia
 
 
3.7
%
5.
North Carolina
 
 
4.6
%
 
10.
Alabama
 
 
3.1
%

(1) 
Based on the annualized base rent for all leases in place as of December 31, 2018.
(2) 
Based on the annualized base rent for all leases in place as of December 31, 2017.


9


National Retail Properties, Inc.
Property Portfolio

Top Tenants (≥ 2.0%)
 
 
 
Properties
 
% of Total (1)
 
7-Eleven
 
140
 
5.4%
 
Mister Car Wash
 
106
 
4.4%
 
Camping World
 
47
 
4.3%
 
LA Fitness
 
30
 
4.0%
 
Flynn Restaurant Group (Taco Bell/Arby's)
 
201
 
3.6%
 
GPM Investments (Convenience Stores)
 
151
 
3.6%
 
AMC Theatres
 
20
 
3.2%
 
Couche-Tard (Pantry)
 
86
 
3.0%
 
Sunoco
 
61
 
2.4%
 
BJ's Wholesale Club
 
9
 
2.3%
 
Chuck E. Cheese's
 
53
 
2.2%


Lease Expirations(2) 
 
 
% of
Total
(1)
 
# of
Properties
 
Gross Leasable
Area
(3)
 
 
 
% of
Total
(1)
 
# of
Properties
 
Gross Leasable Area (3)
2019
 
1.7%
 
51
 
648,000

 
2025
 
4.4%
 
129
 
1,130,000

2020
 
3.0%
 
116
 
1,498,000

 
2026
 
5.0%
 
179
 
1,697,000

2021
 
3.8%
 
121
 
1,317,000

 
2027
 
7.6%
 
193
 
2,600,000

2022
 
5.9%
 
124
 
1,636,000

 
2028
 
5.0%
 
162
 
1,188,000

2023
 
2.9%
 
113
 
1,420,000

 
2029
 
3.3%
 
73
 
1,208,000

2024
 
3.0%
 
75
 
1,284,000

 
Thereafter
 
54.4%
 
1,578
 
13,813,000


(1) 
Based on the annual base rent of $626,451,000, which is the annualized base rent for all leases in place as of December 31, 2018.
(2) 
As of December 31, 2018, 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





396706601_nnnlogo123118.jpg




ANNUAL SUPPLEMENTAL DATA



As of December 31, 2018




396706601_nnnlogo123118.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.




396706601_nnnlogo123118.jpg
INCOME STATEMENT SUMMARY
(in thousands, except per share data)
(unaudited)
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2018
 
2017
 
2018
 
2017
Revenues:
 
 
 
 
 
 
 
 
Rental and earned income
 
$
153,684

 
$
145,187

 
$
604,615

 
$
568,083

Real estate expense reimbursement from tenants
 
5,143

 
4,338

 
16,784

 
15,512

Interest and other income from real estate transactions
 
149

 
722

 
1,262

 
1,338

 
 
158,976

 
150,247

 
622,661

 
584,933

 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
General and administrative
 
8,267

 
8,712

 
34,248

 
33,805

Real estate
 
7,649

 
6,465

 
25,099

 
23,105

Depreciation and amortization
 
44,117

 
43,843

 
174,398

 
173,720

Impairment losses – real estate and other charges, net of recoveries
 
18,494

 
7,708

 
28,211

 
8,955

Retirement severance costs
 
270

 
192

 
1,013

 
7,845

 
 
78,797

 
66,920

 
262,969

 
247,430

 
 
 
 
 
 
 
 
 
Gain on disposition of real estate
 
8,020

 
15,791

 
65,070

 
36,655

Earnings from operations
 
88,199

 
99,118

 
424,762

 
374,158

 
 
 
 
 
 
 
 
 
Other expenses (revenues):
 
 
 
 
 
 
 
 
Interest and other income
 
(1,553
)
 
(83
)
 
(1,810
)
 
(322
)
Interest expense
 
34,940

 
27,016

 
115,847

 
109,109

Loss on early extinguishment of debt
 
18,240

 

 
18,240

 

 
 
51,627

 
26,933

 
132,277

 
108,787

 
 
 
 
 
 
 
 
 
Net earnings
 
36,572

 
72,185

 
292,485

 
265,371

Earnings attributable to noncontrolling interests
 
(10
)
 
(17
)
 
(38
)
 
(398
)
Net earnings attributable to NNN
 
$
36,562

 
$
72,168

 
$
292,447

 
$
264,973

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

1


396706601_nnnlogo123118.jpg
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INCOME STATEMENT SUMMARY
(in thousands, except per share data)
(unaudited)
 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2018
 
2017
 
2018
 
2017
Net earnings attributable to NNN
 
$
36,562

 
$
72,168

 
$
292,447

 
$
264,973

Series D preferred stock dividends
 

 

 

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

 

 

 
(9,855
)
Net earnings available to common stockholders
 
$
27,980

 
$
63,586

 
$
258,120

 
$
217,193

 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
Basic
 
159,193

 
151,791

 
155,745

 
149,111

Diluted
 
159,772

 
152,148

 
156,296

 
149,433

 
 
 
 
 
 
 
 
 
Net earnings per share available to common stockholders:
 
 
 
 
 
 
 
 
Basic
 
$
0.17

 
$
0.42

 
$
1.65

 
$
1.45

Diluted
 
$
0.17

 
$
0.42

 
$
1.65

 
$
1.45



2


396706601_nnnlogo123118.jpg
FUNDS FROM OPERATIONS (FFO)
(in thousands, except per share data)
(unaudited)
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2018
 
2017
 
2018
 
2017
Net earnings available to common stockholders
 
$
27,980

 
$
63,586

 
$
258,120

 
$
217,193

Real estate depreciation and amortization:
 
44,037

 
43,764

 
174,076

 
173,404

Gain on disposition of real estate, net of noncontrolling interests
 
(8,020
)
 
(15,791
)
 
(65,070
)
 
(36,258
)
Impairment losses – depreciable real estate, net of recoveries
 
18,494

 
3,708

 
28,211

 
4,840

Total FFO adjustments
 
54,511

 
31,681

 
137,217

 
141,986

FFO available to common stockholders
 
$
82,491

 
$
95,267

 
$
395,337

 
$
359,179

 
 
 
 
 
 
 
 
 
FFO per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.52

 
$
0.63

 
$
2.54

 
$
2.41

Diluted
 
$
0.52

 
$
0.63

 
$
2.53

 
$
2.40


CORE FUNDS FROM OPERATIONS
(in thousands, except per share data)
(unaudited)
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2018
 
2017
 
2018
 
2017
Net earnings available to common stockholders
 
$
27,980

 
$
63,586

 
$
258,120

 
$
217,193

Total FFO adjustments
 
54,511

 
31,681

 
137,217

 
141,986

FFO available to common stockholders
 
82,491

 
95,267

 
395,337

 
359,179

 
 
 
 
 
 
 
 
 
Excess of redemption value over carrying value of preferred
share redemption
 

 

 

 
9,855

Impairment losses – non-depreciable real estate
 

 

 

 
112

Retirement severance costs
 
270

 
192

 
1,013

 
7,845

Loss on early extinguishment of debt
 
18,240

 

 
18,240

 

Total Core FFO adjustments
 
18,510

 
192

 
19,253

 
17,812

Core FFO available to common stockholders
 
$
101,001

 
$
95,459

 
$
414,590

 
$
376,991

 
 
 
 
 
 
 
 
 
Core FFO per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.63

 
$
0.63

 
$
2.66

 
$
2.53

Diluted
 
$
0.63

 
$
0.63

 
$
2.65

 
$
2.52



3


396706601_nnnlogo123118.jpg
ADJUSTED FUNDS FROM OPERATIONS (AFFO)
(in thousands, except per share data)
(unaudited)
 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2018
 
2017
 
2018
 
2017
Net earnings available to common stockholders
 
$
27,980

 
$
63,586

 
$
258,120

 
$
217,193

Total FFO adjustments
 
54,511

 
31,681

 
137,217

 
141,986

Total Core FFO adjustments
 
18,510

 
192

 
19,253

 
17,812

Core FFO available to common stockholders
 
101,001

 
95,459

 
414,590

 
376,991

 
 
 
 
 
 
 
 
 
Straight-line accrued rent
 
124

 
(552
)
 
(747
)
 
(1,752
)
Net capital lease rent adjustment
 
220

 
223

 
874

 
884

Below market rent amortization
 
(288
)
 
(659
)
 
(2,622
)
 
(3,355
)
Stock based compensation expense
 
2,641

 
1,962

 
9,282

 
8,750

Capitalized interest expense
 
(175
)
 
(741
)
 
(2,675
)
 
(2,435
)
Total AFFO adjustments
 
2,522

 
233

 
4,112

 
2,092

AFFO available to common stockholders
 
$
103,523

 
$
95,692

 
$
418,702

 
$
379,083

 
 
 
 
 
 
 
 
 
AFFO per common share:
 
 
 
 
 
 
 
 
Basic
 
$
0.65

 
$
0.63

 
$
2.69

 
$
2.54

Diluted
 
$
0.65

 
$
0.63

 
$
2.68

 
$
2.54


OTHER INFORMATION
(in thousands)
(unaudited)
 
 
Quarter Ended
 
Year Ended
 
 
December 31,
 
December 31,
 
 
2018
 
2017
 
2018
 
2017
Percentage rent
 
$
543

 
$
715

 
$
1,561

 
$
1,700

Amortization of debt costs
 
$
1,917

 
$
891

 
$
4,611

 
$
3,502

Scheduled debt principal amortization (excluding maturities)
 
$
138

 
$
130

 
$
538

 
$
510

Non-real estate depreciation expense
 
$
83

 
$
82

 
$
332

 
$
327



4


396706601_nnnlogo123118.jpg
BALANCE SHEET
(in thousands)
(unaudited)
 
 
 
December 31, 2018
 
December 31, 2017
Assets:
 
 
 
 
Real estate:
 
 
 
 
Accounted for using the operating method, net of accumulated depreciation and amortization
 
$
6,853,757

 
$
6,403,638

Accounted for using the direct financing method
 
8,069

 
9,650

Real estate held for sale
 
13,606

 
29,373

Cash and cash equivalents
 
114,267

 
1,364

Receivables, net of allowance
 
3,797

 
4,317

Accrued rental income, net of allowance
 
25,387

 
25,916

Debt costs, net of accumulated amortization
 
4,081

 
5,380

Other assets
 
80,474

 
80,896

Total assets
 
$
7,103,438

 
$
6,560,534

 
 
 
 
 
Liabilities:
 
 
 
 
Line of credit payable
 
$

 
$
120,500

Mortgages payable, including unamortized premium and net of unamortized debt cost
 
12,694

 
13,300