ORLANDO, Fla., Feb. 13, 2018 /PRNewswire/ -- 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 defined by the National Association of Real Estate Investment Trusts ('NAREIT') and is used by the company as follows: net earnings (computed in accordance with GAAP) plus depreciation and amortization of assets unique to the real estate industry, excluding gains (or including losses), any applicable taxes and noncontrolling interests on the disposition of certain assets, the company's share of these items from the company's unconsolidated partnerships and any impairment charges on a depreciable real estate asset.

FFO is generally considered by industry analysts to be the most appropriate measure of performance of real estate companies. FFO does not necessarily represent cash provided by operating activities in accordance with GAAP and should not be considered an alternative to net earnings as an indication of the company's performance or to cash flow as a measure of liquidity or ability to make distributions. Management considers FFO an appropriate measure of performance of an equity REIT because it primarily excludes the assumption that the value of the real estate assets diminishes predictably over time, and because industry analysts have accepted it as a performance measure. The company's computation of FFO may differ from the methodology for calculating FFO used by other equity REITs, and therefore, may not be comparable to such other REITs. A reconciliation of net earnings (computed in accordance with GAAP) to FFO, as defined by NAREIT, is included in the financial information accompanying this release.

Core Funds From Operations ('Core FFO') is a non-GAAP measure of operating performance that adjusts FFO to eliminate the impact of certain GAAP income and expense amounts that the company believes are infrequent and unusual in nature and/or not related to its core real estate operations. Exclusion of these items from similar FFO-type metrics is common within the REIT industry, and management believes that presentation of Core FFO provides investors with a potential metric to assist in their evaluation of the company's operating performance across multiple periods and in comparison to the operating performance of its peers because it removes the effect of unusual items that are not expected to impact the company's operating performance on an ongoing basis. Core FFO is used by management in evaluating the performance of the company's core business operations and is a factor in determining management compensation. Items included in calculating FFO that may be excluded in calculating Core FFO may include items like transaction related gains, income or expense, impairments on land or commercial mortgage residual interests, preferred stock redemption costs or other non-core amounts as they occur. The company's computation of Core FFO may differ from the methodology for calculating Core FFO used by other equity REITs, and therefore, may not be comparable to such other REITs. A reconciliation of net earnings (computed in accordance with GAAP) to Core FFO is included in the financial information accompanying this release.

Adjusted Funds From Operations ('AFFO') is a non-GAAP financial measure of operating performance used by many companies in the REIT industry. AFFO adjusts FFO for certain non-cash items that reduce or increase net income in accordance with GAAP. AFFO should not be considered an alternative to net earnings, as an indication of the company's performance or to cash flow as a measure of liquidity or ability to make distributions. Management considers AFFO a useful supplemental measure of the company's performance. The company's computation of AFFO may differ from the methodology for calculating AFFO used by other equity REITs, and therefore, may not be comparable to such other REITs. A reconciliation of net earnings (computed in accordance with GAAP) to AFFO is included in the financial information accompanying this release.

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)

Quarter Ended

Year Ended

December 31,

December 31,

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

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

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

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

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

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.

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 Theaters

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.

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SOURCE National Retail Properties, Inc.

National Retail Properties Inc. published this content on 13 February 2018 and is solely responsible for the information contained herein.
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