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SECOND QUARTER 2022 OPERATING RESULTS AND INCREASED 2022 GUIDANCE ANNOUNCED BY NATIONAL RETAIL PROPERTIES, INC.

ORLANDO, Fla., Aug. 3, 2022 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced its operating results for the quarter and six months ended June 30, 2022. Highlights include:

Operating Results:

  • Revenues and net earnings, FFO, Core FFO and AFFO available to common stockholders and diluted per share amounts:



Quarter Ended
June 30,



Six Months Ended
June 30,





2022



2021



2022



2021





(in thousands, except per share data)



Revenues


$

190,783



$

179,011



$

381,062



$

358,789

















Net earnings available to common stockholders


$

74,171



$

68,538



$

155,543



$

120,640



Net earnings per common share


$

0.42



$

0.39



$

0.89



$

0.69

















FFO available to common stockholders


$

135,353



$

122,862



$

266,946



$

222,683



FFO per common share


$

0.77



$

0.70



$

1.53



$

1.27

















Core FFO available to common stockholders


$

138,008



$

122,862



$

273,195



$

244,011



Core FFO per common share


$

0.79



$

0.70



$

1.56



$

1.40

















AFFO available to common stockholders


$

142,103


(1)

$

134,375


(2)

$

280,824


(1)

$

267,908


(2)

AFFO per common share


$

0.81


(1)

$

0.77


(2)

$

1.60


(1)

$

1.53


(2)




(1)


Amounts include $1,729 and $3,509 of net straight-line accrued rent from net rent deferral repayments from the COVID-19 rent deferral lease amendments for the quarter and six months ended June 30, 2022, respectively. Excluding such, AFFO per common share would have been $0.80 and $1.58 for the quarter and six months ended June 30, 2022, respectively.




(2)


Amounts include $8,323 and $17,706 of net straight-line accrued rent from net rent deferral repayments from the COVID-19 rent deferral lease amendments for the quarter and six months ended June 30, 2021, respectively. Excluding such, AFFO per common share would have been $0.72 and $1.43 for the quarter and six months ended June 30, 2021, respectively.

Second Quarter 2022 Highlights:

  • Maintained high occupancy levels at 99.1%, with a weighted average remaining lease term of 10.6 years, at June 30, 2022 as compared to 99.2% at March 31, 2022 and 99.0% at December 31, 2021

  • Invested $153.8 million in property investments, including the acquisition of 43 properties with an aggregate 348,000 square feet of gross leasable area at an initial cash yield of 6.2%

  • Sold 8 properties for $7.9 million producing $0.8 million of gains on sales

  • Raised $31.8 million net proceeds from the issuance of 734,298 common shares

  • Maintained sector leading 14.2 year weighted average debt maturity for fixed rate debt

First Half of 2022 Highlights:

  • Invested $364.6 million in property investments, including the acquisition of 102 properties with an aggregate 1,227,000 square feet of gross leasable area at an initial cash yield of 6.2%

  • Sold 18 properties for $28.0 million producing $4.8 million gains on sales

  • Raised $32.5 million net proceeds from the issuance of 751,869 common shares

Core FFO guidance for 2022 was increased from a range of $3.01 to $3.08 per share to a range of $3.07 to $3.12 per share. The 2022 AFFO is estimated to be $3.14 to $3.19 per share. The Core FFO guidance equates to net earnings of $1.83 to $1.88 per share, plus $1.24 per share of expected real estate depreciation and amortization and excludes any gains from the sale of real estate, charges for impairments and executive retirement costs. The 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.

Steve Horn, Chief Executive Officer, commented: "National Retail Properties saw continued operational momentum through the second quarter of 2022, highlighted by the selective acquisition of just over $150 million in new properties. In July, we increased our common stock dividend by nearly four percent to 55 cents per share, while preserving our low dividend payout ratio, marking our 33rd consecutive year of increased annual dividends, a feat matched by only two other REITs and by fewer than 90 public companies in the United States."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of June 30, 2022, the company owned 3,305 properties in 48 states with a gross leasable area of approximately 33.8 million square feet and with a weighted average remaining lease term of 10.6 years. For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on August 3, 2022, 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, the potential impacts of the COVID-19 pandemic on the company's business operations, financial results and financial position and on the world economy, 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 (i) Annual Report on Form 10-K for the year ended December 31, 2021 and (ii) Quarterly Reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022. 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.

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 such as transaction related gains, income or expense, impairments on land or commercial mortgage residual interests, preferred stock redemption costs, executive retirement costs, loss on early extinguishment of debt 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
June 30,



Six Months Ended
June 30,





2022



2021



2022



2021



Income Statement Summary














Revenues:














Rental income


$

190,536



$

178,004



$

380,299



$

357,202



Interest and other income from real estate transactions



247




1,007




763




1,587






190,783




179,011




381,062




358,789

















Operating expenses:














General and administrative



9,740




11,868




20,782




23,616



Real estate



6,173




6,619




13,371




14,344



Depreciation and amortization



57,444




50,875




110,124




100,855



Leasing transaction costs



76




22




164




60



Impairment losses – real estate, net of recoveries



4,618




7,735




6,250




9,866



Executive retirement costs



2,655







6,249









80,706




77,119




156,940




148,741



Gain on disposition of real estate



775




4,181




4,767




8,462



Earnings from operations



110,852




106,073




228,889




218,510

















Other expenses (revenues):














Interest and other income



(52)




(33)




(87)




(98)



Interest expense



36,739




33,085




73,438




67,672


(1)

Loss on early extinguishment of debt












21,328






36,687




33,052




73,351




88,902

















Net earnings



74,165




73,021




155,538




129,608



Loss attributable to noncontrolling interests



6




2




5




2

















Net earnings attributable to NNN



74,171




73,023




155,543




129,610



Series F preferred stock dividends






(4,485)







(8,970)



Net earnings available to common stockholders


$

74,171



$

68,538



$

155,543



$

120,640

















Weighted average common shares outstanding:














Basic



174,957




174,611




174,867




174,600



Diluted



175,108




174,727




175,022




174,733

















Net earnings per share available to common stockholders:














Basic


$

0.42



$

0.39



$

0.89



$

0.69



Diluted


$

0.42



$

0.39



$

0.89



$

0.69



(1)


Includes $2,078 in connection with the redemption of 3.30% senior unsecured notes due 2023 for the six months ended June 30, 2021.

National Retail Properties, Inc.

(in thousands, except per share data)

(unaudited)




Quarter Ended
June 30,



Six Months Ended
June 30,





2022



2021



2022



2021



Funds From Operations (FFO) Reconciliation:














Net earnings available to common stockholders


$

74,171



$

68,538



$

155,543



$

120,640



Real estate depreciation and amortization