NATIONAL RETAIL PROPERTIES, INC. [NNN] Filings

10-Q 1 nnn-20220930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to

Commission file number 001-11290

NATIONAL RETAIL PROPERTIES, INC.

(Exact name of registrant as specified in its charter)

Maryland

56-1431377

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer Identification No.)

450 South Orange Avenue, Suite 900

Orlando, Florida 32801

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (407) 265-7348

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, $0.01 par value	NNN	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.

178,732,789 shares of common stock, $0.01 par value, outstanding as of October 28, 2022.

TABLE OF CONTENTS


		PAGE REFERENCE
Part I – Financial Information
Item 1.	Financial Statements:
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income and Comprehensive Income	2
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36
Part II – Other Information
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	37
Item 6.	Exhibits	37
Signatures		38

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share data)


	September 30, 2022			December 31, 2021
	(unaudited)
ASSETS
Real estate portfolio	$	7,826,292		$	7,449,846
Cash and cash equivalents		3,277			171,322
Receivables, net of allowance of $664 and $782, respectively		2,978			3,154
Accrued rental income, net of allowance of $3,924 and $4,587, respectively		28,231			31,942
Debt costs, net of accumulated amortization of $21,085 and $19,377, respectively		5,858			7,443
Other assets		85,211			87,347
Total assets	$	7,951,847		$	7,751,054
LIABILITIES AND EQUITY
Liabilities:
Line of credit payable	$	47,500		$	—
Mortgages payable, including unamortized premium and net of unamortized debt costs		10,151			10,697
Notes payable, net of unamortized discount and unamortized debt costs		3,738,843			3,735,769
Accrued interest payable		57,384			23,923
Other liabilities		91,037			79,002
Total liabilities		3,944,915			3,849,391

Equity:
Stockholders’ equity:
Common stock, $0.01 par value. Authorized 375,000,000 shares; 178,731,891 and 175,635,792 shares issued and outstanding, respectively		1,788			1,757
Capital in excess of par value		4,804,856			4,662,714
Accumulated deficit		(786,526	)		(747,853	)
Accumulated other comprehensive income (loss)		(13,186	)		(14,956	)
Total stockholders’ equity of NNN		4,006,932			3,901,662
Noncontrolling interests		—			1
Total equity		4,006,932			3,901,663
Total liabilities and equity	$	7,951,847		$	7,751,054

See accompanying notes to condensed consolidated financial statements.

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(dollars in thousands, except per share data)

(unaudited)


	Quarter Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Revenues:
Rental income	$	193,102		$	180,024		$	573,401		$	537,226
Interest and other income from real estate transactions		369			333			1,132			1,920
		193,471			180,357			574,533			539,146
Operating expenses:
General and administrative		10,124			11,077			30,906			34,693
Real estate		5,875			6,521			19,246			20,865
Depreciation and amortization		56,388			50,976			166,512			151,831
Leasing transaction costs		96			86			260			146
Impairment losses – real estate, net of recoveries		971			4,781			7,221			14,647
Executive retirement costs		556			—			6,805			—
		74,010			73,441			230,950			222,182
Gain on disposition of real estate		5,889			9,473			10,656			17,935
Earnings from operations		125,350			116,389			354,239			334,899
Other expenses (revenues):
Interest and other income		(33	)		(61	)		(120	)		(159	)
Interest expense		36,962			33,518			110,400			101,190
Loss on early extinguishment of debt		—			—			—			21,328
		36,929			33,457			110,280			122,359
Net earnings		88,421			82,932			243,959			212,540
Loss attributable to noncontrolling interests		—			1			5			3
Net earnings attributable to NNN		88,421			82,933			243,964			212,543
Series F preferred stock dividends		—			(4,485	)		—			(13,455	)
Net earnings attributable to common stockholders	$	88,421		$	78,448		$	243,964		$	199,088
Net earnings per share of common stock:
Basic	$	0.50		$	0.45		$	1.39		$	1.14
Diluted	$	0.50		$	0.45		$	1.38		$	1.14
Weighted average number of common shares outstanding:
Basic		176,900,786			174,629,442			175,542,356			174,610,026
Diluted		177,367,710			174,738,903			175,993,907			174,716,053
Other comprehensive income:
Net earnings attributable to NNN	$	88,421		$	82,933		$	243,964		$	212,543
Amortization of interest rate hedges		595			565			1,770			2,494
Fair value of forward starting swaps		—			(1,584	)		—			(1,584	)
Comprehensive income attributable to NNN		89,016			81,914			245,734			213,453
Comprehensive loss attributable to noncontrolling interests		—			(1	)		(5	)		(3	)
Total comprehensive income	$	89,016		$	81,913		$	245,729		$	213,450

See accompanying notes to condensed consolidated financial statements.

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Quarter Ended September 30, 2022

(dollars in thousands, except per share data)

(unaudited)


	Common Stock		Capital in Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity of NNN			Noncontrolling Interests		Total Equity
Balances at June 30, 2022	$	1,767	$	4,705,479		$	(777,939	)	$	(13,781	)	$	3,915,526		$	—	$	3,915,526
Net earnings		—		—			88,421			—			88,421			—		88,421
Dividends declared and paid:
$0.5500 per share of common stock		—		715			(97,008	)		—			(96,293	)		—		(96,293	)
Issuance of common stock:
7,740 shares – director compensation		—		318			—			—			318			—		318
1,949 shares – stock purchase plan		—		88			—			—			88			—		88
2,084,305 shares – ATM equity program		21		97,535			—			—			97,556			—		97,556
12,800 restricted shares		—		—			—			—			—			—		—
Stock issuance costs		—		(1,304	)		—			—			(1,304	)		—		(1,304	)
Amortization of deferred compensation		—		2,025			—			—			2,025			—		2,025
Amortization of interest rate hedges		—		—			—			595			595			—		595
Balances at September 30, 2022	$	1,788	$	4,804,856		$	(786,526	)	$	(13,186	)	$	4,006,932		$	—	$	4,006,932

See accompanying notes to condensed consolidated financial statements.

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY – CONTINUED

Quarter Ended September 30, 2021

(dollars in thousands, except per share data)

(unaudited)


	Series F Preferred Stock		Common Stock		Capital in Excess of Par Value			Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity of NNN			Noncontrolling Interests			Total Equity
Balances at June 30, 2021	$	345,000	$	1,757	$	4,644,593		$	(705,958	)	$	(14,516	)	$	4,270,876		$	2		$	4,270,878
Net earnings		—		—		—			82,933			—			82,933			(1	)		82,932
Dividends declared and paid:
$0.3250 per depositary share of Series F preferred stock		—		—		—			(4,485	)		—			(4,485	)		—			(4,485	)
$0.5300 per share of common stock		—		—		634			(92,731	)		—			(92,097	)		—			(92,097	)
Issuance of common stock:
7,443 shares – director compensation		—		—		306			—			—			306			—			306
1,811 shares – stock purchase plan		—		—		86			—			—			86			—			86
Stock issuance costs		—		—		(51	)		—			—			(51	)		—			(51	)
Amortization of deferred compensation		—		—		3,593			—			—			3,593			—			3,593
Amortization of interest rate hedges		—		—		—			—			565			565			—			565
Fair value of forward starting swaps		—		—		—			—			(1,584	)		(1,584	)		—			(1,584	)
Balances at September 30, 2021	$	345,000	$	1,757	$	4,649,161		$	(720,241	)	$	(15,535	)	$	4,260,142		$	1		$	4,260,143

See accompanying notes to condensed consolidated financial statements.

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY – CONTINUED

Nine Months Ended September 30, 2022

(dollars in thousands, except per share data)

(unaudited)


	Common Stock		Capital in Excess of Par Value		Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity of NNN		Noncontrolling Interests	Total Equity
Balances at December 31, 2021	$	1,757	$	4,662,714	$	(747,853	)	$	(14,956	)	$	3,901,662

NATIONAL RETAIL PROPERTIES, INC. [NNN] Filings
10-Q	[2022-11-02]
10-Q	[2022-08-03]
10-Q	[2022-05-03]
10-K	[2022-02-09]
10-Q	[2021-11-02]
10-Q	[2021-08-03]
10-Q	[2021-05-04]
10-K	[2021-02-11]
10-Q	[2020-11-02]
10-Q	[2020-08-03]
10-Q	[2020-05-04]
10-K	[2020-02-11]
10-Q	[2019-10-31]
10-Q	[2019-08-01]
10-Q	[2019-05-01]
10-K	[2019-02-12]
10-Q	[2018-11-01]
10-Q	[2018-08-01]
10-Q	[2018-05-01]
10-K	[2018-02-13]
10-Q	[2017-11-02]
10-Q	[2017-08-01]
10-Q	[2017-05-02]
10-K	[2017-02-13]
10-Q	[2016-11-03]
10-Q	[2016-08-02]
10-Q	[2016-05-02]
10-K	[2016-02-12]
10-Q	[2015-11-03]
10-Q	[2015-07-30]
10-Q	[2015-05-05]
10-K	[2015-02-20]
10-Q	[2014-11-04]
10-Q	[2014-08-05]
10-Q	[2014-05-01]
10-K	[2014-02-19]
10-Q	[2013-11-05]
10-Q	[2013-08-01]
10-Q	[2013-05-02]
10-K	[2013-02-22]
10-Q	[2012-11-05]
10-Q	[2012-08-03]
10-Q	[2012-05-04]
10-K	[2012-02-24]