NATIONAL RETAIL PROPERTIES, INC. [NNN] Filings

10-Q 1 nnn-20220331.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 March 31, 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.

175,910,695 shares of common stock, $0.01 par value, outstanding as of April 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	5
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	32
Part II - Other Information
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 3.	Defaults Upon Senior Securities	33
Item 4.	Mine Safety Disclosures	33
Item 5.	Other Information	33
Item 6.	Exhibits	33
Signatures		34

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)


	March 31, 2022			December 31, 2021
	(unaudited)
ASSETS
Real estate portfolio	$	7,591,643		$	7,444,289
Real estate held for sale		562			5,557
Cash and cash equivalents		53,736			171,322
Receivables, net of allowance of $717 and $782, respectively		2,816			3,154
Accrued rental income, net of allowance of $4,351 and $4,587, respectively		30,727			31,942
Debt costs, net of accumulated amortization of $19,946 and $19,377, respectively		6,921			7,443
Other assets		85,408			87,347
Total assets	$	7,771,813		$	7,751,054
LIABILITIES AND EQUITY
Liabilities:
Mortgages payable, including unamortized premium and net of unamortized debt costs	$	10,515		$	10,697
Notes payable, net of unamortized discount and unamortized debt costs		3,736,781			3,735,769
Accrued interest payable		58,022			23,923
Other liabilities		68,749			79,002
Total liabilities		3,874,067			3,849,391

Equity:
Stockholders’ equity:
Common stock, $0.01 par value. Authorized 375,000,000 shares; 175,810,465 and 175,635,792 shares issued and outstanding, respectively		1,759			1,757
Capital in excess of par value		4,669,590			4,662,714
Accumulated deficit		(759,232	)		(747,853	)
Accumulated other comprehensive income (loss)		(14,373	)		(14,956	)
Total stockholders’ equity of NNN		3,897,744			3,901,662
Noncontrolling interests		2			1
Total equity		3,897,746			3,901,663
Total liabilities and equity	$	7,771,813		$	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 March 31,
	2022			2021
Revenues:
Rental income	$	189,763		$	179,198
Interest and other income from real estate transactions		516			580
		190,279			179,778
Operating expenses:
General and administrative		11,042			11,748
Real estate		7,198			7,725
Depreciation and amortization		52,680			49,980
Leasing transaction costs		88			38
Impairment losses – real estate, net of recoveries		1,632			2,131
Executive retirement costs		3,594			—
		76,234			71,622
Gain on disposition of real estate		3,992			4,281
Earnings from operations		118,037			112,437
Other expenses (revenues):
Interest and other income		(35	)		(65	)
Interest expense		36,699			34,587
Loss on early extinguishment of debt		—			21,328
		36,664			55,850
Net earnings		81,373			56,587
Earnings attributable to noncontrolling interests		(1	)		—
Net earnings attributable to NNN		81,372			56,587
Series F preferred stock dividends		—			(4,485	)
Net earnings attributable to common stockholders	$	81,372		$	52,102
Net earnings per share of common stock:
Basic	$	0.46		$	0.30
Diluted	$	0.46		$	0.30
Weighted average number of common shares outstanding:
Basic		174,772,243			174,589,300
Diluted		174,911,213			174,714,617
Other comprehensive income:
Net earnings attributable to NNN	$	81,372		$	56,587
Amortization of interest rate hedges		583			1,368
Comprehensive income attributable to NNN		81,955			57,955
Comprehensive earnings attributable to noncontrolling interests		1			—
Total comprehensive income	$	81,956		$	57,955

See accompanying notes to condensed consolidated financial statements.

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Quarter Ended March 31, 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		$	1	$	3,901,663
Net earnings		—		—			81,372			—			81,372			1		81,373
Dividends declared and paid:
$0.5300 per share of common stock		—		696			(92,751	)		—			(92,055	)		—		(92,055	)
Issuance of common stock:
8,429 shares – director compensation		—		305			—			—			305			—		305
1,173 shares – stock purchase plan		—		52			—			—			52			—		52
153,300 restricted shares – net of forfeitures		2		(2	)		—			—			—			—		—
Stock issuance costs		—		(65	)		—			—			(65	)		—		(65	)
Amortization of deferred compensation		—		5,890			—			—			5,890			—		5,890
Amortization of interest rate hedges		—		—			—			583			583			—		583
Balances at March 31, 2022	$	1,759	$	4,669,590		$	(759,232	)	$	(14,373	)	$	3,897,744		$	2	$	3,897,746

See accompanying notes to condensed consolidated financial statements.

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - CONTINUED

Quarter Ended March 31, 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 December 31, 2020	$	345,000	$	1,753	$	4,633,771		$	(644,779	)	$	(16,445	)	$	4,319,300		$	4	$	4,319,304
Net earnings		—		—		—			56,587			—			56,587			—		56,587
Dividends declared and paid:
$0.3250 per depositary share of Series F preferred stock		—		—		—			(4,485	)		—			(4,485	)		—		(4,485	)
$0.5200 per share of common stock		—		—		578			(90,848	)		—			(90,270	)		—		(90,270	)
Issuance of common stock:
8,324 shares – director compensation		—		—		267			—			—			267			—		267
1,715 shares – stock purchase plan		—		—		70			—			—			70			—		70
30,000 shares – ATM equity program		—		1		1,233			—			—			1,234			—		1,234
287,957 restricted shares – net of forfeitures		—		3		(3	)		—			—			—			—		—
Stock issuance costs		—		—		(156	)		—			—			(156	)		—		(156	)
Amortization of deferred compensation		—		—		3,920			—			—			3,920			—		3,920
Amortization of interest rate hedges		—		—		—			—			1,368			1,368			—		1,368
Balances at March 31, 2021	$	345,000	$	1,757	$	4,639,680		$	(683,525	)	$	(15,077	)	$	4,287,835		$	4	$	4,287,839

See accompanying notes to condensed consolidated financial statements.

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(unaudited)


	Quarter Ended March 31,
	2022			2021
Cash flows from operating activities:
Net earnings	$	81,373		$	56,587
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		52,680			49,980
Impairment losses – real estate, net of recoveries		1,632			2,131
Loss on early extinguishment of debt		—			21,328
Amortization of notes payable discount		415			993
Amortization of debt costs		1,171			1,840
Amortization of mortgages payable premium		(21	)		(21	)
Amortization of interest rate hedges		583			1,368
Gain on disposition of real estate		(3,992	)		(4,281	)
Performance incentive plan expense		6,246			4,318
Performance incentive plan payment		(103	)		(721	)
Change in operating assets and liabilities, net of assets acquired and liabilities assumed:
Decrease (increase) in receivables		338			(273	)
Decrease in accrued rental income		1,096			8,332
Decrease (increase) in other assets		(115	)		1,067
Increase in accrued interest payable		34,099			25,267
Decrease in other liabilities		(11,043	)		(6,438	)
Other		(21	)		(307	)
Net cash provided by operating activities		164,338			161,170
Cash flows from investing activities:
Proceeds from the disposition of real estate		20,315			18,067
Additions to real estate		(209,483	)		(106,490	)
Principal payments received on mortgages and notes receivable		102			93
Other		(577	)		(182	)
Net cash used in investing activities		(189,643	)		(88,512	)

See accompanying notes to condensed consolidated financial statements.

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(dollars in thousands)

(unaudited)


	Quarter Ended March 31,
	2022			2021
Cash flows from financing activities:
Repayment of mortgages payable	$	(165	)	$	(156	)
Proceeds from notes payable		—			441,594
Repayment of notes payable		—			(350,000	)
Payment for early extinguishment of debt		—			(21,328	)
Payment of debt issuance costs		(48	)		(5,145	)
Proceeds from issuance of common stock		748			1,882
Stock issuance costs		(65	)		(177	)
Payment of Series F preferred stock dividends		—			(4,485	)
Payment of common stock dividends		(92,751	)		(90,848	)
Net cash used in financing activities		(92,281	)		(28,663	)
Net increase (decrease) in cash, cash equivalents and restricted cash		(117,586	)		43,995
Cash, cash equivalents and restricted cash at beginning of period(1)		171,322			267,236
Cash, cash equivalents and restricted cash at end of period(1)	$	53,736		$	311,231
Supplemental disclosure of cash flow information:
Interest paid, net of amount capitalized	$	550		$	5,203
Supplemental disclosure of noncash investing and financing activities:
Change in other comprehensive income	$	583		$	1,368
Work in progress accrual balance	$	8,914		$	4,739


(1)	Cash, cash equivalents and restricted cash is the aggregate of cash and cash equivalents and restricted cash and cash held in escrow from the Condensed Consolidated Balance Sheets. NNN had no restricted cash and cash held in escrow at March 31, 2022 and 2021.

See accompanying notes to condensed consolidated financial statements.

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

(Unaudited)

Note 1 – Organization and Summary of Significant Accounting Policies:

Organization and Nature of Business – National Retail Properties, Inc., a Maryland corporation, is a fully integrated real estate investment trust (“REIT”) formed in 1984. The terms "NNN" or the "Company" refer to National Retail Properties, Inc. and all of its consolidated subsidiaries.

NNN's assets primarily include real estate assets. NNN acquires, owns, invests in and develops properties that are leased primarily to retail tenants under long-term net leases and primarily held for investment ("Properties", "Property Portfolio", or individually a "Property").


	March 31, 2022
Property Portfolio:
Total properties		3,271
Gross leasable area (square feet)		33,545,000
States		48
Weighted average remaining lease term (years)

NATIONAL RETAIL PROPERTIES, INC. [NNN] Filings
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]