NATIONAL RETAIL PROPERTIES, INC. [NNN] Filings

10-Q 1 nnn-20220630.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 June 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.

177,111,721 shares of common stock, $0.01 par value, outstanding as of July 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	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	35
Part II – Other Information
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36
Item 3.	Defaults Upon Senior Securities	36
Item 4.	Mine Safety Disclosures	36
Item 5.	Other Information	36
Item 6.	Exhibits	36
Signatures		37

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)


	June 30, 2022			December 31, 2021
	(unaudited)
ASSETS
Real estate portfolio	$	7,674,508		$	7,444,289
Real estate held for sale		3,461			5,557
Cash and cash equivalents		3,289			171,322
Receivables, net of allowance of $699 and $782, respectively		2,612			3,154
Accrued rental income, net of allowance of $4,090 and $4,587, respectively		29,065			31,942
Debt costs, net of accumulated amortization of $20,515 and $19,377, respectively		6,427			7,443
Other assets		84,893			87,347
Total assets	$	7,804,255		$	7,751,054
LIABILITIES AND EQUITY
Liabilities:
Line of credit payable	$	40,000		$	—
Mortgages payable, including unamortized premium and net of unamortized debt costs		10,334			10,697
Notes payable, net of unamortized discount and unamortized debt costs		3,737,808			3,735,769
Accrued interest payable		23,178			23,923
Other liabilities		77,409			79,002
Total liabilities		3,888,729			3,849,391

Equity:
Stockholders’ equity:
Common stock, $0.01 par value. Authorized 375,000,000 shares; 176,615,017 and 175,635,792 shares issued and outstanding, respectively		1,767			1,757
Capital in excess of par value		4,705,479			4,662,714
Accumulated deficit		(777,939	)		(747,853	)
Accumulated other comprehensive income (loss)		(13,781	)		(14,956	)
Total stockholders’ equity of NNN		3,915,526			3,901,662
Noncontrolling interests		—			1
Total equity		3,915,526			3,901,663
Total liabilities and equity	$	7,804,255		$	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 June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
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
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 attributable to common stockholders	$	74,171		$	68,538		$	155,543		$	120,640
Net earnings per share of common stock:
Basic	$	0.42		$	0.39		$	0.89		$	0.69
Diluted	$	0.42		$	0.39		$	0.89		$	0.69
Weighted average number of common shares outstanding:
Basic		174,956,856			174,610,897			174,867,049			174,600,158
Diluted		175,107,914			174,726,812			175,021,871			174,733,076
Other comprehensive income:
Net earnings attributable to NNN	$	74,171		$	73,023		$	155,543		$	129,610
Amortization of interest rate hedges		592			561			1,175			1,929
Comprehensive income attributable to NNN		74,763			73,584			156,436			131,539
Comprehensive loss attributable to noncontrolling interests		(6	)		(2	)		(5	)		(2	)
Total comprehensive income	$	74,757		$	73,582		$	156,431		$	131,537

See accompanying notes to condensed consolidated financial statements.

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

Quarter Ended June 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 March 31, 2022	$	1,759	$	4,669,590		$	(759,232	)	$	(14,373	)	$	3,897,744		$	2		$	3,897,746
Net earnings		—		—			74,171			—			74,171			(6	)		74,165
Dividends declared and paid:
$0.5300 per share of common stock		—		647			(92,878	)		—			(92,231	)		—			(92,231	)
Issuance of common stock:
8,040 shares – director compensation		—		304			—			—			304			—			304
1,394 shares – stock purchase plan		—		60			—			—			60			—			60
717,473 shares – ATM equity program		7		31,586			—			—			31,593			—			31,593
66,651 restricted shares		1		(1	)		—			—			—			—			—
Stock issuance costs		—		(510	)		—			—			(510	)		—			(510	)
Amortization of deferred compensation		—		4,085			—			—			4,085			—			4,085
Amortization of interest rate hedges		—		—			—			592			592			—			592
Distributions to noncontrolling interests		—		—			—			—			—			(278	)		(278	)
Other		—		(282	)		—			—			(282	)		282			—
Balances at June 30, 2022	$	1,767	$	4,705,479		$	(777,939	)	$	(13,781	)	$	3,915,526		$	—		$	3,915,526

See accompanying notes to condensed consolidated financial statements.

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY – CONTINUED

Quarter Ended June 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 March 31, 2021	$	345,000	$	1,757	$	4,639,680		$	(683,525	)	$	(15,077	)	$	4,287,835		$	4		$	4,287,839
Net earnings		—		—		—			73,023			—			73,023			(2	)		73,021
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		—		—		629			(90,971	)		—			(90,342	)		—			(90,342	)
Issuance of common stock:
6,875 shares – director compensation		—		—		267			—			—			267			—			267
2,017 shares – stock purchase plan		—		—		95			—			—			95			—			95
Stock issuance costs		—		—		(46	)		—			—			(46	)		—			(46	)
Amortization of deferred compensation		—		—		3,968			—			—			3,968			—			3,968
Amortization of interest rate hedges		—		—		—			—			561			561			—			561
Balances at June 30, 2021	$	345,000	$	1,757	$	4,644,593		$	(705,958	)	$	(14,516	)	$	4,270,876		$	2		$	4,270,878

See accompanying notes to condensed consolidated financial statements.

NATIONAL RETAIL PROPERTIES, INC.

and SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY – CONTINUED

Six Months Ended June 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		$	1		$	3,901,663
Net earnings		—		—		155,543			—			155,543			(5	)		155,538
Dividends declared and paid:
$1.0600 per share of common stock		—		1,343		(185,629	)		—			(184,286	)		—			(184,286	)
Issuance of common stock:

NATIONAL RETAIL PROPERTIES, INC. [NNN] Filings
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]