Exhibit 99.1
| | |
| NEWS RELEASE | | |
| For information contact: | | |
| Kevin B. Habicht | | |
| Chief Financial Officer | | |
| (407) 265-7348 | | FOR IMMEDIATE RELEASE |
| | February 3, 2009 |
RECORD OPERATING RESULTS
ANNOUNCED BY NATIONAL RETAIL PROPERTIES, INC.
Orlando, Florida, February 3, 2009 – National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter ended December 31, 2008, including an 11.6% increase in revenues and an 8.9% increase in Funds From Operations (“FFO”) per share compared to the same period for 2007. Additionally, the company announced a 25.2% increase in revenues and a 6.4% increase in FFO per share for the year ended December 31, 2008 compared to the same period for 2007. Highlights include:
Operating Results:
| | • | | Revenues, net earnings and FFO available to common stockholders: |
| | | | | | | | | | | | |
| | | Quarter Ended
December 31, | | Year Ended
December 31, |
| | | 2008 | | 2007 | | 2008 | | 2007 |
| | | (in thousands, except per share data) |
Revenues | | $ | 57,244 | | $ | 51,307 | | $ | 226,516 | | $ | 180,875 |
Net earnings available to common stockholders | | $ | 27,172 | | $ | 32,669 | | $ | 116,297 | | $ | 150,325 |
Net earnings per common share (diluted) | | $ | 0.35 | | $ | 0.46 | | $ | 1.56 | | $ | 2.26 |
FFO available to common stockholders | | $ | 37,950 | | $ | 32,150 | | $ | 148,284 | | $ | 124,113 |
FFO per common share (diluted) | | $ | 0.49 | | $ | 0.45 | | $ | 1.99 | | $ | 1.87 |
| | • | | Investment Portfolio occupancy was 96.7% at December 31, 2008. |
2008 Highlights:
| | • | | FFO per share increased 6.4% to a record high of $1.99 |
| | • | | Dividends per share increased from $1.40 to $1.48 marking the 19th consecutive year of dividend increases—one of only 170 public companies with a dividend increase record of 19 or more years |
| | • | | Maintained balance sheet flexibility including $123.3 million of common equity issuance at an average price of $22.04 per share |
| | • | | Invested $355 million in 109 properties in our Investment Portfolio |
| | • | | Portfolio grew to over 1,000 properties for the first time in Company history |
| | • | | In June 2008, Moody’s Investors Service upgraded the Company’s senior unsecured debt rating to Baa2 and the preferred stock rating to Baa3 |
| | |
| 450 S. Orange Ave., Suite 900 | Orlando, FL 32801 | |  |
| (800) NNN-REIT | www.nnnreit.com | |
Investments and Dispositions for the quarter ended December 31, 2008:
| | o | $33.2 million in the Investment Portfolio, including acquiring 12 properties with an aggregate 57,000 square feet of gross leasable area |
| | o | $0.9 million of development funding in the Inventory Portfolio |
| | o | Two Investment properties with an aggregate 10,000 square feet of gross leasable area, with net proceeds of $3.3 million, resulting in a gain of $0.8 million |
| | o | One Inventory property with net proceeds of $0.6 million |
Investments and Dispositions for the year ended December 31, 2008:
| | o | $355.1 million in the Investment Portfolio, including acquiring 109 properties with an aggregate 868,000 square feet of gross leasable area |
| | o | $29.6 million in the Inventory Portfolio, including acquiring seven properties and funding $5.8 million of development |
| | o | 19 Investment properties with an aggregate 290,000 square feet of gross leasable area, with net proceeds of $59.8 million, resulting in a gain of $10.0 million |
| | o | 25 Inventory properties with net proceeds of $153.0 million |
Capital transactions for the quarter ended December 31, 2008:
| | • | | Issued 30,142 shares of common stock generating $451,000 of net proceeds pursuant to the Dividend Reinvestment and Stock Purchase Plan |
| | • | | Issued 3,450,000 shares of common stock at $23.05 per share, generating $75.9 million of net proceeds pursuant to an underwritten public offering |
| | • | | Repurchased $25.0 million of the Company’s outstanding 3.95% convertible senior notes due September 2026, which notes provide holders with a 2011 put option, for a discounted purchase price of $19.2 million |
National Retail Properties also announced revised 2009 FFO guidance of $1.78 to $1.88 per share, before deduction of estimated additional non-cash interest expense of approximately 8 cents per share due to changes required in accounting for convertible debt interest for fiscal years beginning after December 15, 2008. This equates to net earnings before any gains or losses from the sale on investment properties of $1.25 to $1.35 per share plus $0.53 per share of expected real estate related depreciation and amortization and before deduction of estimated additional non-cash interest expense of approximately 8 cents per share due to changes required in accounting for convertible debt interest for fiscal years beginning after December 15, 2008. The guidance incorporates a reduction in anticipated 2009 property acquisitions from $200 million to $60 million. This guidance is based on current plans and assumptions and subject to the risks and uncertainties more fully described in this press release and the company’s reports filed with the Securities and Exchange Commission.
Craig Macnab, Chief Executive Officer, commented: “We are pleased with 2008’s record results despite the weak economic environment. In our opinion, 2009 will present difficult economic challenges and our guidance reflects this concern as our tenants are feeling the impact of weak consumer spending. However, our balance sheet is sound and we believe our dividend is secure.”
National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of December 31, 2008, the company owned 1,005 Investment properties in 44 states with a gross leasable area of approximately 11.3 million square feet. For more information on the company, visit www.nnnreit.com.
Management will hold a conference call on February 3, 2009 at 2:00 p.m. EDT to review these results. The call can be accessed on National Retail Properties, Inc. web site live athttp://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.
2
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. National Retail Properties 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 unaudited and there can be no assurance that the results will not vary from the final information for the year ended December 31, 2008. 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 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 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.
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. The results of operations for prior periods for these properties now classified as discontinued operations have been restated to reflect the results in earnings from discontinued operations for comparability purposes. These adjustments resulted in a decrease in the company’s reported total revenues and total and per share earnings from continuing operations and an increase in the company’s earnings from discontinued operations. However, the company’s total and per share FFO and net earnings available to common stockholders are not affected.
3
National Retail Properties, Inc.
(In thousands, except per share data)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Quarter Ended
December 31, | | | Year Ended
December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Income Statement Summary | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | |
Rental and earned income | | $ | 52,916 | | | $ | 46,738 | | | $ | 210,402 | | | $ | 165,471 | |
Real estate expense reimbursement from tenants | | | 2,660 | | | | 1,666 | | | | 7,126 | | | | 5,688 | |
Interest and other income from real estate transactions | | | 683 | | | | 1,544 | | | | 4,352 | | | | 4,834 | |
Interest income on commercial mortgage residual interests | | | 985 | | | | 1,359 | | | | 4,636 | | | | 4,882 | |
| | | | | | | | | | | | | | | | |
| | | 57,244 | | | | 51,307 | | | | 226,516 | | | | 180,875 | |
| | | | | | | | | | | | | | | | |
Disposition of real estate, Inventory Portfolio: | | | | | | | | | | | | | | | | |
Gross proceeds | | | — | | | | — | | | | 4,900 | | | | 1,750 | |
Costs | | | — | | | | — | | | | (4,879 | ) | | | (1,418 | ) |
| | | | | | | | | | | | | | | | |
Gain | | | — | | | | — | | | | 21 | | | | 332 | |
| | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
General and administrative | | | 6,025 | | | | 6,046 | | | | 24,868 | | | | 23,542 | |
Real estate | | | 3,459 | | | | 2,589 | | | | 10,532 | | | | 8,102 | |
Depreciation and amortization | | | 12,419 | | | | 9,716 | | | | 44,743 | | | | 31,843 | |
Impairment—real estate | | | — | | | | 288 | | | | — | | | | 416 | |
Impairment—commercial mortgage residual interests valuation | | | — | | | | — | | | | 758 | | | | 638 | |
| | | | | | | | | | | | | | | | |
| | | 21,903 | | | | 18,639 | | | | 80,901 | | | | 64,541 | |
| | | | | | | | | | | | | | | | |
Other expenses (revenues): | | | | | | | | | | | | | | | | |
Interest and other income | | | (701 | ) | | | (1,633 | ) | | | (3,748 | ) | | | (4,753 | ) |
Interest expense | | | 13,659 | | | | 13,909 | | | | 58,483 | | | | 49,286 | |
Loss on interest rate hedge | | | — | | | | — | | | | 804 | | | | — | |
| | | | | | | | | | | | | | | | |
| | | 12,958 | | | | 12,276 | | | | 55,539 | | | | 44,533 | |
| | | | | | | | | | | | | | | | |
Income tax benefit | | | 1,425 | | | | 1,834 | | | | 7,501 | | | | 8,536 | |
Minority interest | | | (350 | ) | | | (56 | ) | | | 304 | | | | 188 | |
Equity in earnings of unconsolidated affiliate | | | 83 | | | | 49 | | | | 364 | | | | 49 | |
Gain on extinguishment of debt | | | 5,464 | | | | — | | | | 5,464 | | | | — | |
| | | | | | | | | | | | | | | | |
Earnings from continuing operations | | | 29,005 | | | | 22,219 | | | | 103,730 | | | | 80,906 | |
Earnings from discontinued operations: | | | | | | | | | | | | | | | | |
Real estate, Investment Portfolio | | | (415 | ) | | | 10,987 | | | | 12,476 | | | | 67,583 | |
Real estate, Inventory Portfolio, net of income tax expense and minority interest | | | 278 | | | | 1,159 | | | | 6,876 | | | | 8,621 | |
| | | | | | | | | | | | | | | | |
| | | (137 | ) | | | 12,146 | | | | 19,352 | | | | 76,204 | |
| | | | | | | | | | | | | | | | |
Net earnings | | | 28,868 | | | | 34,365 | | | | 123,082 | | | | 157,110 | |
Series C preferred stock dividends | | | (1,696 | ) | | | (1,696 | ) | | | (6,785 | ) | | | (6,785 | ) |
| | | | | | | | | | | | | | | | |
Net earnings available to common stockholders—basic and diluted | | $ | 27,172 | | | $ | 32,669 | | | $ | 116,297 | | | $ | 150,325 | |
| | | | | | | | | | | | | | | | |
4
National Retail Properties, Inc.
(In thousands, except per share data)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Quarter Ended
December 31, | | | Year Ended
December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Weighted average common shares outstanding: | | | | | | | | | | | | | | | | |
Basic | | | 77,816 | | | | 70,929 | | | | 74,249 | | | | 66,152 | |
| | | | | | | | | | | | | | | | |
Diluted | | | 78,010 | | | | 71,205 | | | | 74,522 | | | | 66,408 | |
| | | | | | | | | | | | | | | | |
Net earnings per share available to common stockholders: | | | | | | | | | | | | | | | | |
Basic: | | | | | | | | | | | | | | | | |
Continuing operations | | $ | 0.35 | | | $ | 0.29 | | | $ | 1.31 | | | $ | 1.12 | |
Discontinued operations | | | — | | | | 0.17 | | | | 0.26 | | | | 1.15 | |
| | | | | | | | | | | | | | | | |
Net earnings | | $ | 0.35 | | | $ | 0.46 | | | $ | 1.57 | | | $ | 2.27 | |
| | | | | | | | | | | | | | | | |
Diluted: | | | | | | | | | | | | | | | | |
Continuing operations | | $ | 0.35 | | | $ | 0.29 | | | $ | 1.30 | | | $ | 1.11 | |
Discontinued operations | | | — | | | | 0.17 | | | | 0.26 | | | | 1.15 | |
| | | | | | | | | | | | | | | | |
Net earnings | | $ | 0.35 | | | $ | 0.46 | | | $ | 1.56 | | | $ | 2.26 | |
| | | | | | | | | | | | | | | | |
Supplemental Information: | | | | | | | | | | | | | | | | |
Selected Non-Cash Income Statement Items: | | | | | | | | | | | | | | | | |
Straight-line rent | | $ | (107 | ) | | $ | (638 | ) | | $ | (1,085 | ) | | $ | (2,689 | ) |
| | | | | | | | | | | | | | | | |
Net capital lease rent adjustment | | $ | 305 | | | $ | 377 | | | $ | 1,204 | | | $ | 2,130 | |
| | | | | | | | | | | | | | | | |
Above (below) market rent amortization | | $ | (64 | ) | | $ | (148 | ) | | $ | (611 | ) | | $ | (679 | ) |
| | | | | | | | | | | | | | | | |
Stock based compensation expense | | $ | 915 | | | $ | 671 | | | $ | 3,333 | | | $ | 2,641 | |
| | | | | | | | | | | | | | | | |
Impairment—real estate | | $ | 1,563 | | | $ | 1,508 | | | $ | 5,660 | | | $ | 1,971 | |
| | | | | | | | | | | | | | | | |
Impairment—mortgage residual interests | | $ | — | | | $ | — | | | $ | 758 | | | $ | 638 | |
| | | | | | | | | | | | | | | | |
Amortization of debt costs | | $ | 885 | | | $ | 620 | | | $ | 3,079 | | | $ | 2,094 | |
| | | | | | | | | | | | | | | | |
Capitalized interest expense | | $ | (605 | ) | | $ | (1,099 | ) | | $ | (2,013 | ) | | $ | (3,719 | ) |
| | | | | | | | | | | | | | | | |
Non-real estate depreciation expense | | $ | 79 | | | $ | 72 | | | $ | 279 | | | $ | 326 | |
| | | | | | | | | | | | | | | | |
Other Information: | | | | | | | | | | | | | | | | |
Percentage rent | | $ | 705 | | | $ | 793 | | | $ | 1,268 | | | $ | 1,572 | |
| | | | | | | | | | | | | | | | |
Net Inventory Portfolio gain on disposition (TRS) | | $ | 1 | | | $ | 1,807 | | | $ | 9,358 | | | $ | 11,013 | |
| | | | | | | | | | | | | | | | |
Scheduled debt principal amortization (excluding maturities) | | $ | 308 | | | $ | 286 | | | $ | 1,190 | | | $ | 1,586 | |
| | | | | | | | | | | | | | | | |
5
National Retail Properties, Inc.
(in thousands, except per share data)
(unaudited)
| | | | | | | | | | | | | | | | |
| | | Quarter Ended
December 31, | | | Year Ended
December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Reconciliation of net earnings to FFO and FFO available to common stockholders: | | | | | | | | | | | | | | | | |
Net earnings | | $ | 28,868 | | | $ | 34,365 | | | $ | 123,082 | | | $ | 157,110 | |
Real estate depreciation and amortization: | | | | | | | | | | | | | | | | |
Continuing operations | | | 11,454 | | | | 8,995 | | | | 41,357 | | | | 29,317 | |
Discontinued operations | | | 30 | | | | 210 | | | | 433 | | | | 1,065 | |
Joint venture real estate depreciation | | | 44 | | | | 28 | | | | 177 | | | | 31 | |
Gain on disposition of real estate Investment Portfolio | | | (750 | ) | | | (9,752 | ) | | | (9,980 | ) | | | (56,625 | ) |
| | | | | | | | | | | | | | | | |
FFO | | | 39,646 | | | | 33,846 | | | | 155,069 | | | | 130,898 | |
Series C preferred stock dividends | | | (1,696 | ) | | | (1,696 | ) | | | (6,785 | ) | | | (6,785 | ) |
| | | | | | | | | | | | | | | | |
FFO available to common stockholders—basic and diluted | | | 37,950 | | | | 32,150 | | | | 148,284 | | | | 124,113 | |
| | | | | | | | | | | | | | | | |
FFO per share: | | | | | | | | | | | | | | | | |
Basic | | $ | 0.49 | | | $ | 0.45 | | | $ | 2.00 | | | $ | 1.88 | |
| | | | | | | | | | | | | | | | |
Diluted | | $ | 0.49 | | | $ | 0.45 | | | $ | 1.99 | | | $ | 1.87 | |
| | | | | | | | | | | | | | | | |
Real Estate Disposition Summary
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended December 31, | | | Year Ended December 31, | |
| | | 2008 | | 2007 | | | 2008 | | | 2007 | |
| | | # of
Properties | | Gain | | # of
Properties | | Gain | | | # of
Properties | | Gain | | | # of
Properties | | Gain | |
Gain on disposition from continuing and discontinued operations as reported: | | | | | | | | | | | | | | | | | | | | | | | |
Continuing operations | | — | | $ | — | | — | | $ | — | | | 1 | | $ | 21 | | | 2 | | $ | 332 | |
Discontinued operations: | | | | | | | | | | | | | | | | | | | | | | | |
Investment Portfolio | | 2 | | | 750 | | 10 | | | 9,752 | | | 19 | | | 9,980 | | | 37 | | | 56,625 | |
Inventory Portfolio | | 1 | | | 1 | | 5 | | | 1,924 | | | 24 | | | 12,644 | | | 69 | | | 11,801 | |
Minority interest, Inventory Portfolio | | — | | | — | | — | | | (117 | ) | | — | | | (3,307 | ) | | — | | | (1,120 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 3 | | $ | 751 | | 15 | | $ | 11,559 | | | 44 | | $ | 19,338 | | | 108 | | $ | 67,638 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of gain on disposition by type: | | | | | | | | | | | | | | | | | | | | | | | |
Inventory Portfolio: | | | | | | | | | | | | | | | | | | | | | | | |
Development | | 1 | | $ | 1 | | 3 | | $ | 1,781 | | | 6 | | $ | 8,058 | | | 13 | | $ | 6,245 | |
Exchange | | — | | | — | | 2 | | | 143 | | | 19 | | | 4,607 | | | 58 | | | 5,888 | |
Minority interest, Development | | — | | | — | | — | | | (117 | ) | | — | | | (3,307 | ) | | — | | | (1,120 | ) |
| | | | | | | | | | | | | | | | | | | | | | | |
Total Inventory gain (TRS) | | 1 | | | 1 | | 5 | | | 1,807 | | | 25 | | | 9,358 | | | 71 | | | 11,013 | |
Investment Portfolio | | 2 | | | 750 | | 10 | | | 9,752 | | | 19 | | | 9,980 | | | 37 | | | 56,625 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | 3 | | $ | 751 | | 15 | | $ | 11,559 | | | 44 | | $ | 19,338 | | | 108 | | $ | 67,638 | |
| | | | | | | | | | | | | | | | | | | | | | | |
6
National Retail Properties, Inc.
(in thousands)
(unaudited)
Earnings from Discontinued Operations: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 or revenue generating inventory asset that was held for sale at December 31, 2008, as discontinued operations. The following is a summary of earnings from discontinued operations.
| | | | | | | | | | | | | | | | |
| | | Quarter Ended
December 31, | | | Year Ended December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Earnings from Discontinued Operations—Investment Portfolio: | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | |
Rental and earned income | | $ | 135 | | | $ | 1,603 | | | $ | 2,940 | | | $ | 11,928 | |
Real estate expense reimbursement from tenants | | | 10 | | | | 50 | | | | 51 | | | | 351 | |
Interest and other income from real estate transactions | | | 292 | | | | 222 | | | | 1,528 | | | | 866 | |
| | | | | | | | | | | | | | | | |
| | | 437 | | | | 1,875 | | | | 4,519 | | | | 13,145 | |
| | | | | | | | | | | | | | | | |
Expenses: | | | | | | | | | | | | | | | | |
General and administrative | | | 2 | | | | — | | | | (77 | ) | | | (44 | ) |
Real estate | | | 10 | | | | 55 | | | | (60 | ) | | | 459 | |
Depreciation and amortization | | | 30 | | | | 210 | | | | 433 | | | | 1,065 | |
Impairment—real estate | | | 1,563 | | | | 375 | | | | 1,730 | | | | 710 | |
Interest | | | (3 | ) | | | — | | | | (3 | ) | | | (3 | ) |
| | | | | | | | | | | | | | | | |
| | | 1,602 | | | | 640 | | | | 2,023 | | | | 2,187 | |
| | | | | | | | | | | | | | | | |
Gain on disposition of real estate | | | 750 | | | | 9,752 | | | | 9,980 | | | | 56,625 | |
| | | | | | | | | | | | | | | | |
Earnings from discontinued operations | | $ | (415 | ) | | $ | 10,987 | | | $ | 12,476 | | | $ | 67,583 | |
| | | | | | | | | | | | | | | | |
Earnings from Discontinued Operations—Inventory Portfolio: | | | | | | | | | | | | | | | | |
Revenues: | | | | | | | | | | | | | | | | |
Rental income | | $ | 1,882 | | | $ | 2,078 | | | $ | 10,765 | | | $ | 8,616 | |
Real estate expense reimbursement from tenants | | | 20 | | | | 419 | | | | 877 | | | | 1,008 | |
Interest and other income from real estate transactions | | | 21 | | | | 83 | | | | 916 | | | | 224 | |
| | | | | | | | | | | | | | | | |
| | | 1,923 | | | | 2,580 | | | | 12,558 | | | | 9,848 | |
| | | | | | | | | | | | | | | | |
Disposition of real estate: | | | | | | | | | | | | | | | | |
Gross proceeds | | | 615 | | | | 12,594 | | | | 151,713 | | | | 164,338 | |
Costs | | | (614 | ) | | | (10,670 | ) | | | (139,069 | ) | | | (152,537 | ) |
| | | | | | | | | | | | | | | | |
Gain | | | 1 | | | | 1,924 | | | | 12,644 | | | | 11,801 | |
| | | | | | | | | | | | | | | | |
Expenses: | | | | | | | | | | | | | | | | |
General and administrative | | | (37 | ) | | | 39 | | | | 35 | | | | 78 | |
Real estate | | | 249 | | | | 474 | | | | 1,523 | | | | 1,509 | |
Depreciation and amortization | | | 61 | | | | 23 | | | | 226 | | | | 68 | |
Impairment—real estate | | | — | | | | 844 | | | | 3,930 | | | | 844 | |
Interest | | | 1,371 | | | | 1,147 | | | | 5,283 | | | | 3,923 | |
| | | | | | | | | | | | | | | | |
| | | 1,644 | | | | 2,527 | | | | 10,997 | | | | 6,422 | |
| | | | | | | | | | | | | | | | |
Income tax expense | | | (170 | ) | | | (709 | ) | | | (4,207 | ) | | | (5,275 | ) |
Minority interest | | | 168 | | | | (109 | ) | | | (3,122 | ) | | | (1,331 | ) |
| | | | | | | | | | | | | | | | |
Earnings from discontinued operations | | $ | 278 | | | $ | 1,159 | | | $ | 6,876 | | | $ | 8,621 | |
| | | | | | | | | | | | | | | | |
7
National Retail Properties, Inc.
(in thousands)
| | | | | | |
Balance Sheet Summary | | December 31,
2008 | | December 31,
2007 |
| | | (unaudited) | | (Note 1) |
Assets: | | | | | | |
Cash and cash equivalents | | $ | 2,626 | | $ | 27,499 |
Receivables, net of allowance | | | 3,612 | | | 3,818 |
Investment in unconsolidated affiliate | | | 4,927 | | | 4,139 |
Mortgages, notes and accrued interest receivable, net of allowance | | | 60,472 | | | 73,162 |
Real estate, Investment Portfolio: | | | | | | |
Accounted for using the operating method, net of accumulated depreciation and amortization | | | 2,357,894 | | | 2,055,846 |
Accounted for using the direct financing method | | | 31,240 | | | 37,497 |
Real estate, Inventory Portfolio, held for sale | | | 101,106 | | | 248,611 |
Commercial mortgage residual interests | | | 22,000 | | | 24,340 |
Accrued rental income, net of allowance | | | 23,972 | | | 24,652 |
Other assets | | | 41,513 | | | 40,041 |
| | | | | | |
Total assets | | $ | 2,649,362 | | $ | 2,539,605 |
| | | | | | |
Liabilities: | | | | | | |
Line of credit payable | | | 26,500 | | | 129,800 |
Mortgages payable | | | 26,290 | | | 27,480 |
Notes payable—secured | | | — | | | 12,000 |
Notes payable—convertible | | | 381,535 | | | 172,500 |
Notes payable, net of unamortized discount | | | 618,479 | | | 718,290 |
Other liabilities | | | 53,134 | | | 69,916 |
| | | | | | |
Total liabilities | | | 1,105,938 | | | 1,129,986 |
Minority interest | | | 1,215 | | | 2,334 |
Stockholders’ equity | | | 1,542,209 | | | 1,407,285 |
| | | | | | |
Total liabilities and equity | | $ | 2,649,362 | | $ | 2,539,605 |
| | | | | | |
Common shares outstanding | | | 78,415 | | | 72,528 |
| | | | | | |
Gross leasable area, Investment Portfolio (square feet) | | | 11,251 | | | 10,610 |
| | | | | | |
Note 1: Amounts are derived from audited consolidated financial statements included in the company’s Form 10-K, as amended.
8
Orange Avenue Mortgage Investments, Inc.
(in thousands)
In May 2005, the company acquired a 78.9 percent equity investment of OAMI for $9.4 million. The company’s 78.9 percent share of OAMI’s net cash flow has totaled over $26.5 million since May 2005. The following summary represents the balances related to OAMI included in the company’s Balance Sheet and Income Statement Summary:
| | | | | | |
| | | December 31,
2008 | | December 31,
2007 |
| | | (unaudited) | | (Note 1) |
Assets: | | | | | | |
Cash and cash equivalents | | $ | 405 | | $ | 15,541 |
Receivables and other assets | | | 39 | | | 1,417 |
Commercial mortgage residual interests | | | 22,000 | | | 24,340 |
| | | | | | |
| | $ | 22,444 | | $ | 41,298 |
| | | | | | |
Liabilities: | | | | | | |
Notes payable—secured | | $ | — | | $ | 12,000 |
Income tax liability | | | 5,195 | | | 6,768 |
Other liabilities | | | 49 | | | 145 |
| | | | | | |
| | $ | 5,244 | | $ | 18,913 |
| | | | | | |
Minority interest | | $ | 578 | | $ | 1,895 |
| | | | | | |
| | | | | | | | | | | | | | | | |
| | | Quarter Ended
December 31, | | | Year Ended
December 31, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
| | | (unaudited) | | | (unaudited) | | | (unaudited) | | | (unaudited) | |
Revenues: | | | | | | | | | | | | | | | | |
Interest income on commercial mortgage residual interests | | $ | 985 | | | $ | 1,359 | | | $ | 4,636 | | | $ | 4,882 | |
Interest and other income | | | 1 | | | | 333 | | | | 218 | | | | 1,722 | |
| | | | | | | | | | | | | | | | |
| | | 986 | | | | 1,692 | | | | 4,854 | | | | 6,604 | |
Expenses: | | | | | | | | | | | | | | | | |
General and administrative | | | 62 | | | | 79 | | | | 267 | | | | 397 | |
Amortization | | | — | | | | 52 | | | | 35 | | | | 218 | |
Impairment—commercial mortgage residual interests valuation | | | — | | | | — | | | | 758 | | | | 638 | |
Interest | | | — | | | | 575 | | | | 200 | | | | 2,382 | |
| | | | | | | | | | | | | | | | |
| | | 62 | | | | 706 | | | | 1,260 | | | | 3,635 | |
| | | | | | | | | | | | | | | | |
Income tax benefit | | | 325 | | | | 669 | | | | 1,572 | | | | 2,679 | |
Minority interest | | | (143 | ) | | | (203 | ) | | | (650 | ) | | | (689 | ) |
| | | | | | | | | | | | | | | | |
Net earnings | | $ | 1,106 | | | $ | 1,452 | | | $ | 4,516 | | | $ | 4,959 | |
| | | | | | | | | | | | | | | | |
| Note | 1: Amounts are derived from audited consolidated financial statements included in the company’s Form 10-K, as amended. |
9
NNN Retail Properties Fund I LLC
(dollars in thousands)
In September 2007, the company entered into a joint venture, NNN Retail Properties Fund I LLC, with an affiliate of Crow Holdings Realty Partners IV, L.P. The company owns a 15 percent equity interest, and the following summary represents the Balance Sheet and Income Statement Summary for the joint venture. The company’s investment in the joint venture is included in the company’s Balance Sheet Summary under “Investment in unconsolidated affiliate.”
| | | | | | |
| | | December 31,
2008 | | December 31,
2007 |
| | | (unaudited) | | (Note 1) |
Assets: | | | | | | |
Cash and cash equivalents | | $ | 833 | | $ | 30 |
Receivables | | | 202 | | | — |
Real estate | | | 74,463 | | | 65,413 |
Other assets | | | 1,135 | | | 921 |
| | | | | | |
| | $ | 76,633 | | $ | 66,364 |
| | | | | | |
Liabilities: | | | | | | |
Notes payable | | $ | 43,600 | | $ | 38,600 |
Other liabilities | | | 1,677 | | | 180 |
| | | | | | |
Total liabilities | | | 45,277 | | | 38,780 |
| | | | | | |
Members’ equity | | | 31,356 | | | 27,584 |
| | | | | | |
Total liabilities and equity | | $ | 76,633 | | $ | 66,364 |
| | | | | | |
| | |
| | | Quarter Ended
December 31, | | Year Ended
December 31, |
| | | 2008 | | 2008 |
| | | (unaudited) | | (unaudited) |
Revenues: | | | | | | |
Rental income | | $ | 1,565 | | $ | 6,192 |
| | | | | | |
Expenses: | | | | | | |
General and administrative | | | 142 | | | 347 |
Real estate | | | 47 | | | 61 |
Depreciation and amortization | | | 368 | | | 1,445 |
Interest | | | 517 | | | 2,164 |
| | | | | | |
| | | 1,074 | | | 4,017 |
| | | | | | |
Net earnings | | $ | 491 | | $ | 2,175 |
| | | | | | |
Note 1: Amounts are derived from an audited consolidated financial statement.
10
National Retail Properties, Inc.
Investment Portfolio
Top 20 Lines of Trade
| | | | | | | | |
| | | | | As of December 31 | |
| | | Line of Trade | | 2008 (1) | | | 2007 (2) | |
1. | | Convenience stores | | 25.7 | % | | 23.9 | % |
2. | | Automotive service | | 8.9 | % | | 5.2 | % |
3. | | Restaurants - full service | | 8.7 | % | | 10.3 | % |
4. | | Theaters | | 6.1 | % | | 4.2 | % |
5. | | Automotive parts | | 5.1 | % | | 4.9 | % |
6. | | Drug stores | | 4.0 | % | | 5.0 | % |
7. | | Books | | 4.0 | % | | 4.4 | % |
8. | | Restaurants - limited service | | 3.3 | % | | 3.7 | % |
9. | | Sporting goods | | 3.3 | % | | 3.9 | % |
10. | | Consumer electronics | | 3.2 | % | | 4.3 | % |
11. | | Family entertainment centers | | 3.0 | % | | 2.1 | % |
12. | | Grocery | | 2.6 | % | | 2.9 | % |
13. | | Furniture | | 2.5 | % | | 3.1 | % |
14. | | Office supplies | | 2.5 | % | | 2.8 | % |
15. | | Travel plazas | | 2.4 | % | | 3.0 | % |
16. | | Beer, wine and liquor | | 1.7 | % | | 2.1 | % |
17. | | Craft, fabric and novelty | | 1.3 | % | | 1.4 | % |
18. | | Home furnishings | | 1.3 | % | | 1.5 | % |
19. | | Auto dealerships | | 1.3 | % | | 2.1 | % |
20. | | General merchandise | | 1.3 | % | | 1.7 | % |
| | Other | | 7.8 | % | | 7.5 | % |
| | | | | | | | |
| | Total | | 100.0 | % | | 100.0 | % |
| | | | | | | | |
Top 10 States
| | | | | | | | | | | | |
| | | State | | % of Total(1) | | | | | State | | % of Total(1) | |
1. | | Texas | | 19.9 | % | | 6. | | Georgia | | 5.1 | % |
2. | | Florida | | 9.8 | % | | 7. | | Pennsylvania | | 4.2 | % |
3. | | Illinois | | 6.6 | % | | 8. | | Indiana | | 4.2 | % |
4. | | North Carolina | | 6.1 | % | | 9. | | Ohio | | 3.1 | % |
5. | | California | | 5.2 | % | | 10. | | Tennessee | | 3.1 | % |
Lease Expirations
| | | | | | | | | | | | | | | | |
| | | % of
Total(1) | | | # of
Properties | | Gross Leasable
Area(3) | | | | % of
Total(1) | | | # of
Properties | | Gross Leasable
Area(3) |
2009 | | 1.0 | % | | 20 | | 386,000 | | 2015 | | 2.5 | % | | 19 | | 463,000 |
2010 | | 2.8 | % | | 40 | | 405,000 | | 2016 | | 1.9 | % | | 15 | | 287,000 |
2011 | | 2.0 | % | | 20 | | 333,000 | | 2017 | | 4.4 | % | | 26 | | 751,000 |
2012 | | 3.5 | % | | 34 | | 525,000 | | 2018 | | 2.9 | % | | 24 | | 418,000 |
2013 | | 4.5 | % | | 38 | | 842,000 | | 2019 | | 4.2 | % | | 41 | | 656,000 |
2014 | | 4.2 | % | | 36 | | 523,000 | | Thereafter | | 66.1 | % | | 659 | | 5,139,000 |
(1) | Based on annual base rent of $219,326,000, which is the annualized base rent for all leases in place as of December 31, 2008. |
(2) | Based on annual base rent of $196,739,000, which is the annualized base rent for all leases in place as of December 31, 2007. |
11
