National Retail Properties (NNN) 8-K Increased Operating Results and 2006 Guidance Announced by

Exhibit 99.1

NEWS RELEASE
For information contact:
Kevin B. Habicht
Chief Financial Officer
(407) 265-7348	For Immediate Release
	February 3, 2006

INCREASED OPERATING RESULTS AND 2006 GUIDANCE ANNOUNCED BY

COMMERCIAL NET LEASE REALTY, INC.

Orlando, Florida, February 3, 2006 - Commercial Net Lease Realty, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and year ended December 31, 2005. Highlights include:

Operating Results:

• Net earnings available to common shareholders, revenues, funds from operations (“FFO”) available to common shareholders:

	Quarter Ended December 31,						Year Ended December 31,
	2005			2004			2005			2004
	(in thousands, except per share data)
Revenues	$	41,037		$	32,420		$	145,177		$	127,190
Net earnings available to common shareholders	$	16,751		$	17,924	(1)	$	85,392		$	59,251	(1)
Net earnings per common share (diluted)	$	0.31		$	0.34	(1)	$	1.56		$	1.15	(1)
FFO available to common shareholders	$	19,560	(2)	$	20,760	(1)	$	81,803	(2)	$	73,065	(1)
FFO per common share (diluted)	$	0.36	(2)	$	0.39	(1)	$	1.50	(2)	$	1.41	(1)
FFO (Operations) available to common shareholders	$	21,942	(4)	$	21,249	(3)	$	84,185	(5)	$	76,806	(3)
FFO (Operations) per common share (diluted)	$	0.40	(4)	$	0.40	(3)	$	1.54	(5)	$	1.48	(3)

⁽¹⁾ Includes transition costs of $489 ($0.01 per share) and $3,741 ($0.07 per share) for the quarter and year ended December 31, 2004, respectively.

⁽²⁾ Excludes extraordinary gain of $2,980 ($0.06 per share) and $14,786 ($0.27 per share) related to acquisition of Orange Avenue Mortgage Investments, Inc. for the quarter and year ended December 31, 2005, respectively.

⁽³⁾ Excludes transition costs of $489 ($0.01 per share) and $3,741 ($0.07 per share) for the quarter and year ended December 31, 2004, respectively

⁽⁴⁾ Excludes extraordinary gain of $2,980 ($0.06 per share) and impairment charge of $2,382 ($0.04 per share) related to acquisition and REIT conversion of Orange Avenue Mortgage Investment, Inc. for the quarter ended December 31, 2005.

⁽⁵⁾ Excludes extraordinary gain of $14,786 ($0.27 per share) and impairment charge of $2,382 ($0.04 per share) related to acquisition and REIT conversion of Orange Avenue Mortgage Investment, Inc. for the year ended December 31, 2005.

• Investment Portfolio occupancy increased to 98.3% at December 31, 2005, compared to 97.4% at December 31, 2004.

450 S. Orange Avenue, Suite 900

Orlando, FL 32801

(800) NNN-REIT

(407) 265-7348

Fax: (407) 650-1044

www.nnnreit.com

NYSE:NNN

Investments and Dispositions for the quarter ended December 31, 2005:

• Investments:

• $156.7 million in the Investment Portfolio, including acquiring 60 properties with an aggregate 270,000 square feet of gross leasable area

• $18.3 million in the Development Inventory Portfolio, including acquiring two properties

• $51.9 million in the Exchange Inventory Portfolio, including acquiring 35 properties

• Dispositions:

• Three Investment properties with an aggregate 27,000 square feet of gross leasable area, with net proceeds of $3.4 million, resulting in a gain of $104,000

• Four Development Inventory properties with net proceeds of $16.7 million, resulting in a gain of $3.3 million, net of intercompany eliminations and minority interest

• Six Exchange Inventory properties with net proceeds of $4.8 million, resulting in a gain of $688,000

Investments and Dispositions for the year ended December 31, 2005:

• Investments:

• $332.4 million in the Investment Portfolio, including acquiring 170 properties with an aggregate 1,150,000 square feet of gross leasable area

• $67.8 million in the Development Inventory Portfolio, including acquiring 15 properties

• $66.6 million in the Exchange Inventory Portfolio, including acquiring 58 properties

• $9.4 million to acquire 78.9 percent of Orange Avenue Mortgage Investments, Inc.

• Dispositions:

• Twelve Investment properties with an aggregate 476,000 square feet of gross leasable area, with net proceeds of $40.3 million, resulting in a gain of $9.8 million

• Twelve Development Inventory properties with net proceeds of $61.1 million, resulting in a gain of $13.0 million, net of intercompany eliminations and minority interest

• Sixteen Exchange Inventory properties with net proceeds of $17.7 million, resulting in a gain of $2.6 million

The Company also announced increased FFO per share guidance for 2006 at $1.58 - $1.62 per share. This equates to estimated net earnings per share before any gains or losses from the sale of investment properties of $1.22 - $1.26 per share plus $0.36 per share of expected real estate related depreciation.

Craig Macnab, Chief Executive Officer and President, commented, “2005 was a record year for our shareholders. More importantly, we are encouraged about the outlook for 2006. Our associates are firing on all cylinders and the timing of our activity over the last 60 days positions us well for the new year.”

Commercial Net Lease Realty invests primarily in high-quality, retail properties subject generally to long-term, net leases with established tenants, such as Barnes & Noble, Best Buy, CVS, OfficeMax and the United States of America. As of December 31, 2005, the Company owned 524 Investment Properties in 41 states with a gross leasable area of approximately 9.2 million square feet. These Investment Properties are leased to 176 corporations in 61 industry classifications.

Management will hold a conference call on February 3, 2006 at 10:00 am EST to review the Company’s results. The call can be accessed on the Company’s 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, the Company will post a summary of any earnings guidance given on the call to the Company’s web site.

Statements in this press release that are not strictly historical are “forward-looking” statements. 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 availability of capital, 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 those forward-looking statements is contained from time to time in the Company’s Securities and Exchange Commission (“SEC”) 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 SEC. Consequently, 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. The Company 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.

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 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) on the disposition of real estate held for investment, and the Company’s share of these items from the Company’s unconsolidated partnerships.

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 income 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.

The Company has determined that there are earnings from discontinued operations in each of its segments, real estate held for investment and real estate held for sale. All property dispositions from the Company’s held for investment segment are classified as discontinued operations. In addition, certain properties in the Company’s held for sale segment that have generated revenues before disposition are classified as discontinued operations. These held for sale properties have not historically been classified as discontinued operations, prior period comparable condensed consolidated financial statements have been restated to include these properties in its earnings from discontinued operations. These adjustments resulted in a decrease in the Company’s reported total revenues and total and per share income from continuing operations and an increase in the Company’s income from discontinued operations. However, the Company’s total and per share FFO and net income available to common shareholders are not affected.

Commercial Net Lease Realty, Inc.

(in thousands, except per share data)

	Quarter Ended December 31,						Year Ended December 31,
Income Statement Summary	2005			2004			2005			2004
Revenues:
Rental and earned income	$	33,701		$	27,742		$	123,252		$	109,036
Real estate expense reimbursement from tenants		2,129			1,830			6,350			5,756
Gain on disposition of real estate, Inventory Portfolio (Note 1)		1,302			574			2,010			4,700
Interest and other income from real estate transactions		1,275			2,274			6,216			7,698
Interest income on mortgage residual interests		2,630			—			7,349			—
		41,037			32,420			145,177			127,190
Operating expenses:
General and administrative		6,578			5,846			23,411			22,995
Real estate		3,860			3,034			11,534			11,870
Depreciation and amortization		6,457			4,312			22,276			16,682
Transition costs		—			489			—			3,741
Impairment - real estate		—			—			1,673			—
Impairment - mortgage residual interests		2,382			—			2,382			—
		19,277			13,681			61,276			55,288
Other expenses (revenues):
Interest and other income		(862	)		(704	)		(2,054	)		(3,761	)
Interest expense		10,827			8,338			35,941			32,381
		9,965			7,634			33,887			28,620
Income tax benefit		1,395			551			2,776			2,544
Minority interest		(102	)		(227	)		137			(1,243	)
Equity in earnings of unconsolidated affiliates		(82	)		1,030			1,209			4,724
Earnings from continuing operations		13,006			12,459			54,136			49,307
Earnings from discontinued operations:
Real estate, Investment Portfolio		252			2,293			11,102			6,080
Real estate, Inventory Portfolio, net of income tax expense and minority interest		1,934			4,174			9,376			9,547
		2,186			6,467			20,478			15,627
Earnings before extraordinary gain		15,192			18,926			74,614			64,934
Extraordinary gain		2,980			—			14,786			—
Net earnings		18,172			18,926			89,400			64,934
Series A Preferred Stock dividends		(1,002	)		(1,002	)		(4,008	)		(4,008	)
Series B Convertible Preferred Stock dividends		(419	)		(419	)		(1,675	)		(1,675	)
Net earnings available to common shareholders – basic		16,751			17,505			83,717			59,251
Series B Convertible Preferred Stock dividends, if dilutive		—			419			1,675			—
Net earnings available to common stockholders – diluted	$	16,751		$	17,924		$	85,392		$	59,251
Weighted average common shares outstanding:
Basic		54,160			51,725			52,985			51,312
Diluted		54,508			53,460			54,640			51,743

Commercial Net Lease Realty, Inc.

(in thousands, except per share data)

	Quarter Ended December 31,				Year Ended December 31,
Income Statement Summary	2005		2004		2005		2004
Net earnings per share available to common shareholders:
Basic:
Continuing operations	$	0.21	$	0.22	$	0.91	$	0.85
Discontinued operations		0.04		0.12		0.39		0.30
Extraordinary gain		0.06		—		0.28		—
Net earnings	$	0.31	$	0.34	$	1.58	$	1.15
Diluted:
Continuing operations	$	0.21	$	0.22	$	0.92	$	0.85
Discontinued operations		0.04		0.12		0.37		0.30
Extraordinary gain		0.06		—		0.27		—
Net earnings	$	0.31	$	0.34	$	1.56	$	1.15

Commercial Net Lease Realty, Inc.

(in thousands)

Earnings from Discontinued Operations – Investment Portfolio:

In accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”), the Company has classified its investment assets sold and leasehold interests expired subsequent to December 31, 2001, the effective date of SFAS No. 144, as discontinued operations. In addition, the Company has classified any investment asset that was held for sale at December 31, 2005, as discontinued operations. The following is a summary of earnings from discontinued operations from the real estate Investment Portfolio.

	Quarter Ended December 31,					Year Ended December 31,
	2005		2004			2005		2004
Revenues:
Rental and earned income	$	31	$	1,062		$	3,365	$	4,540
Real estate expense reimbursements from tenants		—		(1	)		—		3
Interest and other income from real estate transactions		125		49			358		257
		156		1,110			3,723		4,800
Expenses:
General and administrative		1		—			20		(4	)
Real estate		6		121			251		411
Depreciation and amortization		1		133			53		711
Impairment – real estate		—		—			2,056		—
Interest		—		(52	)		57		125
		8		202			2,437		1,243
Gain on disposition of real estate (Note 1)		104		1,385			9,816		2,523
Earnings from discontinued operations from real estate held for investment	$	252	$	2,293		$	11,102	$	6,080

Earnings from Discontinued Operations – Inventory Portfolio:

The Company has classified its Inventory Properties that are currently held for sale and generating rental revenues as discontinued operations. The Company has reclassified all held for sale properties that generated rental revenue before disposition which were sold subsequent to December 31, 2001, the effective date of SFAS No. 144, as discontinued operations. The following is a summary of earnings from discontinued operations from the real estate Inventory Portfolio.

	Quarter Ended December 31,						Year Ended December 31,
	2005			2004			2005			2004
Revenues:
Rental income	$	598		$	598		$	1,992		$	2,336
Real estate expense reimbursements from tenants		30			14			69			183
Gain on disposition of real estate, held for sale (Note 1)		3,244			7,898			19,617			18,702
Interest and other income from real estate transactions		21			121			826			202
		3,893			8,631			22,504			21,423
Expenses:
General and administrative		3			10			37			33
Real estate		55			101			222			343
Depreciation and amortization		—			3			21			5
Interest		109			283			815			511
		167			397			1,095			892
Income tax expense		(1,183	)		(2,554	)		(5,737	)		(5,841	)
Minority interest		(609	)		(1,506	)		(6,296	)		(5,143	)
Earnings from discontinued operations	$	1,934		$	4,174		$	9,376		$	9,547

Commercial Net Lease Realty, Inc.

(in thousands, except per share data)

	Quarter Ended December 31,						Year Ended December 31,
	2005			2004			2005			2004
Reconciliation of net earnings to FFO and FFO available to common shareholders:
Net earnings	$	18,172		$	18,926		$	89,400		$	64,934
Real estate depreciation and amortization:
Continuing operations		5,744			3,932			20,354			15,004
Discontinued operations		1			133			53			711
Partnership real estate depreciation		148			156			606			622
Gain on disposition of real estate held for investment from discontinued operations		(104	)		(1,385	)		(9,816	)		(2,523	)
Extraordinary gain		(2,980	)		—			(14,786	)		—
FFO		20,981			21,762			85,811			78,748
Series A Preferred Stock dividends		(1,002	)		(1,002	)		(4,008	)		(4,008	)
Series B Convertible Preferred Stock dividends		(419	)		(419	)		(1,675	)		(1,675	)
FFO available to common stockholders – basic		19,560			20,341			80,128			73,065
Series B Convertible Preferred Stock dividends, if dilutive		—			419			1,675			—
FFO available to common stockholders – diluted		19,560			20,760			81,803			73,065
Transition costs		—			489			—			3,741
Impairment – mortgage residual interests		2,382			—			2,382			—
FFO (Operations) available to common shareholders	$	21,942		$	21,249		$	84,185		$	76,806
Funds from operations per share:
Basic	$	0.36		$	0.39		$	1.51		$	1.42
Diluted	$	0.36		$	0.39		$	1.50		$	1.41
Diluted (Operations)	$	0.40		$	0.40		$	1.54		$	1.48

Note 1: Real Estate Disposition Summary

	Quarter Ended December 31,								Year Ended December 31,
	2005				2004				2005				2004
	# of Properties				# of Properties				# of Properties				# of Properties
Reconciliation of gain on disposition between    continuing and discontinued operations:
Continuing operations	3	$	1,302		1	$	574		6	$	2,010		7	$	4,700
Discontinued operations:
Investment Portfolio	3		104		6		1,385		12		9,816		20		2,523
Inventory Portfolio	7		3,244		9		7,898		22		19,617		17		18,702
Minority interest, Inventory Portfolio	—		(606	)	—		(1,760	)	—		(5,999	)	—		(6,422	)
	13	$	4,044		16	$	8,097		40	$	25,444		44	$	19,503
Reconciliation of gain on disposition of type:
Inventory Portfolio:
Development	4	$	3,502		5	$	6,730		12	$	18,065		16	$	20,673
Exchange	6		688		5		1,505		16		2,641		8		1,912
Intercompany eliminations	—		356		—		237		—		921		—		817
Minority interest, Development	—		(606	)	—		(1,760	)	—		(5,999	)	—		(6,422	)
	10		3,940		10		6,712		28		15,628		24		16,980
Investment Portfolio	3		104		6		1,385		12		9,816		20		2,523
	13	$	4,044		16	$	8,097		40	$	25,444		44	$	19,503

Commercial Net Lease Realty, Inc.

(in thousands)

Balance Sheet Summary	December 31, 2005		December 31, 2004
Assets:
Cash and cash equivalents	$	8,234	$	1,947
Restricted cash		30,191		—
Receivables, net of allowance		8,547		6,636
Mortgages, notes and accrued interest receivable, net of allowance		51,086		45,564
Real estate, Investment Portfolio:
Accounted for using the operating method, net of accumulated depreciation and amortization		1,296,793		1,009,397
Accounted for using the direct financing method		95,704		102,311
Held for sale, net of impairment		1,600		—
Real estate, Inventory Portfolio, net of accumulated depreciation		131,074		58,049
Investment in unconsolidated mortgage residual interests		—		29,672
Mortgage residual interests		55,184		—
Accrued rental income, net of allowance		27,999		28,619
Other assets		27,004		17,853
Total assets	$	1,733,416	$	1,300,048
Liabilities and stockholders’ equity:
Line of credit payable	$	162,300	$	17,900
Mortgages payable		151,133		157,168
Notes payable - secured		28,250		—
Notes payable		493,321		323,132
Financing lease obligation		26,041		26,041
Income tax liability		13,748		702
Other liabilities		25,597		16,079
Minority interest		4,939		2,028
Stockholders’ equity		828,087		756,998
Total liabilities and equity	$	1,733,416	$	1,300,048
Common shares outstanding		55,131		52,078
Gross leaseable area, Investment Portfolio		9,227		8,542

Orange Avenue Mortgage Investments, Inc.

(in thousands)

The Company acquired 78.9 percent of Orange Avenue Mortgage Investments, Inc. (“OAMI”) on May 2, 2005. The following summary represents the balances related to OAMI included in the Company’s Balance Sheet and Income Statement Summary:

Balance Sheet Summary	December 31, 2005
Assets
Cash and restricted cash	$	17,978
Receivables and other assets		6,632
Mortgage residual interests		55,184
	$	79,794
Liabilities
Notes payable – secured	$	28,250
Income tax liability		14,551
Other liabilities		474
	$	43,275
Minority interest	$	3,682

	Quarter Ended December 31, 2005			May 2, 2005 Through December 31, 2005
Income Statement Summary
Revenues:
Interest income on mortgage residual interests	$	2,630		$	7,349
Interest and other income		453			825
		3,083			8,174
Expenses:
General and administrative		208			397
Impairment – mortgage residual interests		2,382			2,382
Interest		767			2,076
Amortization		66			177
		3,423			5,032
Income tax benefit		686			28
Minority interest		(151	)		(378	)
Net earnings	$	195		$	2,792

Commercial Net Lease Realty, Inc.

Investment Portfolio

Top 20 Tenants

	Tenant	% of Total(1)
1.	United States of America	13.0	%
2.	Circle K	7.7	%
3.	CVS	5.4	%
4.	Best Buy	4.1	%
5.	OfficeMax	3.5	%
6.	Barnes & Noble	3.5	%
7.	Eckerd	3.2	%
8.	Academy	3.1	%
9.	The Sports Authority	2.6	%
10.	Borders Books	2.1	%
11.	Uni-Mart	2.1	%
12.	Majestic Liquors	2.1	%
13.	United Rentals	2.0	%
14.	Quik Trip	1.5	%
15.	Bed Bath & Beyond	1.2	%
16.	Jared Jewelers	1.2	%
17.	Food 4 Less	1.1	%
18.	CarMax	1.1	%
19.	Havertys Furniture	1.1	%
20.	Rite Aid	1.0	%

Top 10 States

	State	% of Total(1)
1.	Texas	22.0	%
2.	Virginia	16.8	%
3.	Florida	12.3	%
4.	California	5.1	%
5.	Georgia	4.6	%
6.	Pennsylvania	3.5	%
7.	Missouri	3.2	%
8.	Ohio	2.6	%
9.	Tennessee	2.4	%
10.	New Jersey	2.3	%

Lease Expirations

	% of Total(1)		# of Properties	Gross Leasable Area(2)
2006	0.7	%	9	163,000
2007	1.7	%	17	227,000
2008	2.2	%	22	467,000
2009	2.5	%	24	475,000
2010	3.9	%	22	351,000
2011	3.2	%	17	331,000
2012	4.1	%	22	473,000
2013	5.8	%	29	688,000
2014	20.1	%	36	1,160,000
2015	5.0	%	24	667,000
2016	4.8	%	22	527,000
Thereafter	46.0	%	268	3,537,000

⁽¹⁾ Based on annual base rent of $145,100,000, which is the annualized base rent for all leases in place as of December 31, 2005.

⁽²⁾ Square feet.