Record 2014 Operating Results Announced By National Retail Properties, Inc.

ORLANDO, Fla., Feb. 12, 2015 /PRNewswire/ -- National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced record operating results for the quarter and year ended December 31, 2014.  Highlights include:

Operating Results:

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

• Portfolio occupancy was 98.6% at December 31, 2014, as compared to 98.8% at September 30, 2014 and 98.2% at December 31, 2013

2014 Highlights:

• Increased annual FFO per common share 9.4%
• Increased annual Recurring FFO per common share 7.8%
• Increased annual AFFO per common share 6.5%
• Dividend yield of 4.2% at December 31, 2014
• Dividends per common share increased to $1.65 marking the 25th consecutive year of annual dividend increases - making the company one of only four equity REITs and one of only 99 public companies with 25 or more consecutive annual dividend increases
• Maintained high occupancy levels at 98.6% with weighted average remaining lease term of 12 years
• Invested $618.1 million in 221 properties with an aggregate gross leasable area of approximately 2,417,000 square feet at an initial cash yield of 7.5%
• Sold 27 properties for $55.4 million, producing $10.9 million of gains on sale, net of income tax and noncontrolling interest at a cap rate of 7.2%
• Renewed 82% of 39 expiring leases at 101.1% of expiring rent with no tenant improvement expenditures
• Raised $695.8 million of new long term capital at attractive pricing
  • Raised $349.7 million in net proceeds from the issuance of 9,643,268 common shares
  • Raised $346.1 million in net proceeds from the issuance of 3.90% senior unsecured notes due 2024
• Expanded unsecured bank credit facility to $650 million while extending the term to January 2019 and reducing the interest rate to Libor + 92.5 basis points. As of December 31, 2014, there was no outstanding balance
• Paid off $150 million principal amount of 6.25% senior unsecured notes due 2014
• 99% of properties are not encumbered with secured mortgage debt
• Total shareholder return of 35.8% for 2014 exceeds peers, industry averages and general equity averages
• Total annual shareholder return of 15.9% over the past 25 years exceeds peers, industry averages and general equity averages

Investments and Dispositions for the quarter ended December 31, 2014:

• Investments:
  • $86.6 million in property investments, including the acquisition of 19 properties with an aggregate gross leasable area of approximately 411,000 square feet
• Dispositions:
  • 3 properties with net proceeds of $13.9 million, producing $3.1 million of gains on sales, net of income tax

Craig Macnab, Chief Executive Officer, commented: "2014 was another excellent year for National Retail Properties. For the past three years, we have grown recurring FFO per share by, on average, 9.8% per annum. Importantly, we have sustained this multi-year performance while lowering the use of debt. Our fortress-like balance sheet and differentiated ability to source retail real estate for acquisition provides us with confidence that we can sustain our multi-year track record. Also, we are extremely proud to have raised our annual dividend for the 25^th consecutive year joining the elite Dividend Aristocrat group of companies which have been able to consistently grow results through all types of economic environments."

National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases.  As of December 31, 2014, the company owned 2,054 properties in 47 states with a gross leasable area of approximately 22.5 million square feet and with a weighted average remaining lease term of 12 years.  For more information on the company, visit www.nnnreit.com.

Management will hold a conference call on February 12, 2015, at 9:30 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.  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 ("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.  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 SEC for the quarter and year ended December 31, 2014.  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.

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.

In April 2014, the FASB issued Accounting Standards Update ("ASU") 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360):  Reporting Discontinued Operations and Disclosures of Disposal of Components of an Entity," effective for fiscal years beginning on or after December 15, 2014, with early adoption permitted beginning January 1, 2014.  Under ASU 2014-08, only disposals representing a strategic shift in operations are to be presented as discontinued operations. NNN has elected early adoption of ASU 2014-08. This requires the company to continue to classify any property disposal or property classified as held for sale as of December 31, 2013, as discontinued operations prospectively.  Therefore, the revenues and expenses related to these properties are presented as discontinued operations as of December 31, 2014.  The company did not classify any additional properties as discontinued operations subsequent to December 31, 2013. The adoption of ASU 2014-08 did not have a significant impact on NNN's financial position or results of operations.