National Retail Properties (NNN) 4 May 212021 Q1 Earnings call transcript

Good day, ladies and gentlemen, and welcome to your National Retail Properties' First Quarter 2021 Earnings Conference Call. All lines have been placed in a listen-only mode and the floor will be open for your questions and comments following the presentation.

As a reminder, today's call is being recorded. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, Jay Whitehurst. Sir, the floor is yours.

Melinda. you, Thank welcome XXXX and National Properties' Retail Good call. to quarter earnings first morning, the

Joining call Operating on Kevin me the Habicht; Financial our and Officer, Chief our Chief Officer, Horn. this Steve morning is

morning's start National great this to for press is Retail XXXX As off reflects a Properties. release

take we I'd XXXX as and opportunity our the one putting this quarter the few impressive like Bloomberg honor in and REITs who that during results, pleased Beyond the Gender-Equality effort important of And Index. to to financial in everyone office thank first were be achieve to to named recognition. our time the

a Given his Kevin to will we're to this guidance range pleased to share. our $X.XX in range year, increase on $X.XX in FFO our per to for increase strong the to XXXX of announce from by $X.XX of have per start $X.XX share details an core remarks. more X% approximately

our XX%. basis from activity down and tenants XXst, vacancies. ticked average And of results; highlights Turning well. of the our above portfolio points by end impressive perform department, occupancy in of XX.X% to we're properties XX seeing including leasing national strong Occupancy of to single December of quarter our was exceedingly which interest at our financial while tenant our quarter, remains continued the retail number our X,XXX the first rate long-term a some freestanding of

XX% of April. for collection of collection due the We as due of quarter, of also rents well the of announced rents for first XX% as month

including expire of fashion. was remaining other majority those grade to a our XX% parcels, balance reduction. affirmed base uncollected a This year. very once of Ruby were percentage accounting reduction tenants. reasonable tenants' outcomes rent the and again two of kicks all XX% the in obligation favorable in for companies, XX XX And our that exchange leases quarter end at our and sheet. The rents. first only Notably, that this simply year. results with we strategy base for estate the the leases, rent pandemic Tuesday later of Chuck-E-Cheese's Tuesday Ruby Our at annual forgave flexible resulted collect ramp continue affirmed our strong higher operators impressive rent for over temporary we comparable maintaining of regional collection in long-term our of largest post to compare in bankruptcies leasing real this in our again consistent, a located from investment temporary and favorably occupancy, deferred rent have to rent exchange lease a of first impressive national validated when strong of acquiring recollection significantly X.X% to quarter expect repayment while rents, Recently, XX retail will well

sale post which thoughtful very continue an relationship our with to we lows, tenants. pandemic and In in relationship tenants repeat underwriting we all-time will be cap with business. programmatic acquisitions Although, an duration be we we of lease for from years. with acquired all Almost XX just cash prudent million, initial and our our X.X% quarter in average XX.X cap were primarily at where remain back unsettled rates rate in do properties pursue transactions our at environment, of $XXX continue lease of the underwriting to new

raising be of our rock to balance during sold XX properties proceeds reinvested reported acquisitions. million quarter first $XX.X in solid. sheet And the new also We remains the we

A again this redeem used when unsecured debt only were issued million we portion and XXXX to it's raising capital team bond $XXX rate of his bonds at Kevin of quarter, available. During maturities. XX-year X.X%. Kudos the once our of a interest to for well-priced proceeds

bank, a with maturities on well XX until debt call capital the quarterly first to the details of of quarter me of our and ended material positioned And available we're million years. line $XXX So turn and average we let zero $XXX duration to and credit, numbers debt Thus, cash fund balance in XXXX, with over of no all more that over guidance. guidance with Kevin our for acquisition the on hand. on XXXX our updated million the

in differ that company's And statements to in in considered these Federal could with The in from from actual morning's from disclosed made. that $X.XX the to million. time-to-time a Securities to make results prior I'll results $X.XX quarterly Laws. significantly and under and forward-looking preceding filing Jay. that these included With note were after you, cause from $X.XX share. greater detail the the will materially core Thank from press morning's discussed statements release. quarter usual statements matters reflect risks quarter $X.XX forward-looking type per share $X actual that, may results are nonrecurring for the press revisions for the first $X.XX first future and totaling and release report, forward-looking of maybe statements Factors items as differ FFO that's this per quarter SEC we fourth be this up certain the the may company's not release the from to of we Results two year changes XXXX, down expectations headlines statements

prior from million more full is receivables context of that termination with million typical than and fee quarters termination lease cash income. $X income received lease tenant $X.X of to which year XXXX relate basis for we of collected second, million fee we $X.X First,

of share Today, is $X.XX to quarter, first under $X.XX share So, first these improved of approximately first share for tenants base basis or our a was our approximately annual $X.XX million rent of We quarter first payment rent than approximately the fourth quarter adjustment collections $X.XX. continue number. Jay the preceding about income basis pay approximate the in quarter, crude rate drift XX% XX% but from historical which quarter. to Rent of Most so items cash cash today XX% added totaling collection. for our revenues rental to per XX% share and million guidance. for rent, AFFO two $X reported we projected note at reported in $XX April included for AFFO rent, the higher, $X.X amount X% of XX% $X about tenants the per per collections higher our million would Previously, represent as did results. that we repayment notable we've the quarter at this these of also improving prior our just their deferred million, collections which first rent versus mentioned per the

our core FFO share better $X.XX to of expected result to guidance we collections, share, range increased and This As range of the than from per $X.XX per the per today, incorporates XXXX Jay the share. from mentioned a $X.XX rent QX. to $X.XX

last today's the Some X they're in $X previously from of And rates. the assumptions collection release largely items nonrecurring on noted mentioned. this first more rent unchanged of press rates quarter guidance. higher driver the supporting with current and guidance increase for in page guidance line million the The of I quarter's are is collection year full assumed

now collections basis tenant assuming previously from we cash the base are million of while we annual XX% rent, rent assumed rent collection. $XX So XX%

rent full which And - X% million of improvement X% for year. the amount loss the $X we $XX rent our the loss we approximately equates previously rent of assume million remainder that for for and tenants, potential So incremental year. potential to to now XX% of assumed

ended or in tell a will proceeds a continue $XXX cycle. coupon XX-year the prior push we did due equates Jay with guidance million that felt $XXX million $XXX we in XX-year QX was million fourth plus of and hand, where at these to collection a cash on So We rates. line. like all of on use It about X.X% approximately XXXX. maturity to it to time per $XX noted of our and outstanding total time notes the off and given items $X million a debt guidance, our good of $XXX compared $X.XX million Xst, a nothing large - execute quarter million interest declining March offering pay one-time $XX of out those in share. to bank million approved a current Well, incorporates portion debt of on improved X.X% rent at total to are rate

average weighted weighted with XX.X X.X% is now years a maturity fixed Our debt average rate. interest income

with coupon mid-XXXX. Our X.X% is in million $XXX a next debt maturity

XX.X% $XX our to EBITDA five coverage X.Xx charge was by coverage mortgages the So on Only about was of meet Interest totaling XXst. X.Xx X,XXX no to very leverage good net at position, XXXX our stats, was need net have and Couple additional any quarter and gross X.Xx properties liquidity end, debt are encumbered quarter XXXX. assets for fixed to million. book of capital first guide. debt to acquisition March raise at

catching as the So by be XXXX like continue which seem sales in into win the it economy injected feels several from stimulus their a and retailers also will is the trillion government, start XXXX. good dollar to

Our to succeed focus to the endeavor up years. And coming we'll continue long-term to the open to with opportunity any on Melinda the best give it NNN, in as we remains questions. that,

comes first Stanley. Our from Instructions] [Operator Ronald question Morgan Kamdem with

Congrats afternoon. good on quarter. Hey, the

bit you more know if guys the of a what discipline. are as pipeline? terms just how, the I terms in well? are Just little seeing terms what you And seeing just you looking acquisition color Thanks. provide maybe could pricing in remaining what, at But wondering of you in of

our business with primary start The I'll sale little properties. national and that with are what get regional a portfolio programmatic that those of to lease are we turn just signing lease folks, and focus. bit be estate. it business properties the a strong that a Steve about there. real on out long-term weaker more are back high commit Jay. then us call out a of When doing little But reminder, out Horn is to bit this better is Ron, and operators benefits that of continue out that sees relationship with repeat likely we this those will the talk over our to the tenants do on not the sell of relationships Sure. level of some more and to as tenants to focus our tenants primary he those

to lease get we and economics better We so, slightly thing longer We're really factor duration. is And lease estate. important an we our documents. real get lease own able get better to one higher that's us quality negotiate

first believe of a As the more I duration I XX for year last noted, our average quarter years years. for was average XX.X duration our little was and

rental important does So us long-term that stream. that's to pipeline the to out there. And very good create income look

little So, Steve, about over pipeline let pricing. talk to the turn bit a me and

is Yes, Steve. this

quarter. fourth if more lot there robust, today a you the I of quarter fourth weren't should feels here there's in that As look the pipeline portfolios say out in I mean, look out back, kind we or some the

So, about good we're leaseback be some. in open seems the sale that to up feeling that market

far rate assets, as of low I sitting deemed no think and But low still more cash near they're at cap our are it's world to essential grade extremely point. increasing approximately investment As X.X, historic sign in pricing, this of rates historical kind just based still compared the on and a levels. cap

more just get updated one just to health. And wants may, tenant your if Great. on I thoughts

guidance, from you confidence about corner? that for that in sort the back market? confidence tenants. are of XX% gives to turned you with think you You relationships the seeing are your sort the hearing collection What has What the the cash sort of of raised

No, thanks. it's good. Yes,

portfolio, trade our that had have board kind of we've conversations make the reported and across the this of relationship earlier. tenants for We great our launch up with

well. and market. the what we're we're back the mode there else are hearing playing to growing quarter weathered reflected they the tenants fourth rebound that is that comments the Kevin there pandemic in from out more is transactions very rebound I and effects of Steve's lease into back And of economic our we're number that our anything Our of is sale continuing. the guidance? more that's in into on the then seeing offense about getting think of starting pandemic, tenants terms in And relationship and

collection rent that, Maybe guess following connected tenants. our from actual recent our I guidance to is just historical our

we fourth from bucket, cash the XX% consistent collection basis increased with And that's XX% quarter when what collection, because the were rent at in so, rate. that first we XX% XXXX quarter when for to happen was

said, that economy the or them. the like, point. have we'll materially But on change been worse we're tracking I finding pumped it retailers. this stimulus the why So, posted. But sense does you its any with keep We for don't to at has better feel like and consumers way real should into

go Next, we Green line of Hemnani go to Harsh with Street. the Please ahead.

the maybe or assets talk you. quarter paid cap this Thank disposed about that industries you you on Can and that?

sample number, primarily Yes. the there. Harsh It end was about the small heard, dispositions. a of talk of Wasn't a But but rates the understood properties not and question I cooling much Steve? it's was core very still cap acquisitions I huge of is think lower our it the property, kind spectrum. at size

far didn't Yes, the couldn't it's the assets, we in issues that vacant get for the us more of as; a felt corridor of it we going few was as long term a defensive resolve kind in down but selling that portfolio road. assets

Yes. The million vacant. way was just of it we million sold that occupied out vacant and between XX.X million occupied broke X.X XX.X

Great. that the you moved of good just tenants because cash basis then were collections? there of And any buckets, out

yes, basis it. bucket. we we move we Nor Yes, anybody, did good but question. changed haven't news got fair Yes, did not there out add the of anybody cash

going one too not quarter, if Our we're will. thought that good is be you to about process knee-jerky on

so of to moving time more we're to kind a basis willing need pursue about cash And to going test the of we'll more or bucket. somebody little think out have before be of

Next, Wes we the of go Golladay ahead. with Please go to Baird. line

Hey, morning, guys. good

question and to Chuck master to will E. on million. XXX.X the Just that adjusted able for Cheese? And be follow-up a of Tuesday lease period Does Kevin rent - structure the E. for the rent maybe Chuck Ruby you with your quick maintain end include Cheese? a that would you

base made included we change, but annual we it Yes, the numbers. a defer didn't permanent, would it prominent reflect. ABR get just rent If our made does rent it, in we meaning

got Cheese Tuesday was And your Ruby of question? what second Sorry. as down E. So did part step noted. to you Chuck the

it Did you Chuck you And sound structure with lease Tuesday, doesn't not did? maintain had you I'm like master your E. Cheese? with sure one Ruby

maintain did we it. Yes, Yes.

is Got this is point can if you more it. talk assets? And would bid, have what guidance? sell a for the year, the there firm then you non-core behind demand your to And the about

what think The good No, properties. point Wes, call non-core properties in seeing buyers made you vacant our from as to I and pandemic do assets, those demand to it relates for we're I the what both on earlier - wasn't was in before that our they be demand in reasonable of high generally And continued this. are were if to surprised demand. if high well-located all going be properties were they rents. properties I at These re-lease to

be the properties typically find kind may we be where them who back. for to and so to else there. And get But reason, some can they're somebody tenants of want you wants

and very So available. team our discussions it's or there's for re-lease. going early properties a too job on a report of of where great of have deal out And to a results. But leasing these properties is a there good either sale they doing getting making lot a

I'd yet viewed in the the were trade risk. bid, in were you if non-core at or properties not are say there's As sense of properties not, by hit talking not bids industry. leased I great not properties? the that great a pandemic you and/ lines about of there those there have a still currently theater being many out that as of would not theaters deal the movie beat But up mean on at just there's movie moment. is for Steve, say buyers of kinds

the the In seller where willing theaters, between bid and ask isn't those a fitness assets arena robust. to of the and that the And is and there's very aren't numbers. currently big and movie buy gap those market people still the

these cap that's Maybe you I last it's normal lower higher And you. And been granular to wanted thanks so, confirm I the in two Got to probably due if last there. think the escalators do your cap the one rates? mix. And with for it's details quarters. that. below get typically rate, range on just one

our of business But Wes, properties with downward little do say cap their probably that drift tenants kinds bit be may rates by; by it's are is a And proper also driven more of some command. driven rate a I relationship, it being would that operators slowly. mixed. smart it's with they we in cap the strong properties business just We to are continue even that know what demand. and have high folks, the though

some their with with to down the down will business, tenants. we some better relationship the we our cap So win rates types have businesses of to But ties a than market for moderating them. are one-off do little extent win moderate

what anything with, X.X% that So or I for range. than per think tenants year else. are the that's the business more seeing consistent. X% And about to staying bumps do market you're that of the bumps we of our that's remained - And in same size

Next, the Massocca go of Please ahead. to John Thalmann. go we with Ladenburg line

Good morning.

I deferral the going driving in 'XX? schedule of drove look So, they are occur QX release, 'XX earnings of that what in rent time are the to And repayments year? if this schedule we also, the in and the kind we and what's deferrals 'XX, guess new QX at

Yes, those getting new mop so up the deferrals. will original bigger the some we who it's one with and or if other. further of of of kind with way final it's and you hadn't we tenants batch But batch out Yes. pushed had deferrals nothing; a yes, a a of not terms come on are modest huge a amount to than you little agreements as will, if number we

how bounced with need the that's and restructure made pleasant John, them. very a tenants been had of conversations agreement few come pleasantly all really the had very second extend back how deferrals. part we've deferral add original have We really well surprise back. about that surprised with with And we've of me round or Let our to few in that have of tenants we things

they're tied it's has or in industry Okay. huge had to been of but or specific been it has that of amount those kind - not Are for new kinds of number, deferrals Have broad? this XXXX? a it deferrals those the kind has additional small

say start - Yes. probably up from say, I'd trade at the make most the were coming Steve? dining casual movie and right line from What of they they're theaters lines our you that. trade, the troubled of

Yes, have and kind XXXX. reached agreement, theaters it's quarter. was primary movie these in discussions going up of theaters probably let on documented the that we And first we got begin and XXXX were make in

healthcare, small a and stimulus that other hit and the I fitness kind of from bit. little what's driving mean economic Okay. sorry was given tailwinds just one et positive then cetera? collection down movement And reopening kind of health

changed anything should think don't don't you I perspective; that at trend, that Yes. I that if from a will. our we least see anything you into think read materially. don't really notable

this John through Yes, be is group talking tenants, large to side specific this, other but We're we out deal in gotten operators to and have say Jay. a get ultimately will into gotten rent. going with to that a we think not in position that the their pay be in and I about will position

as like pretty, And the said, got that feel there still so, trade. of about up some way, feel we line just or along Kevin down that we've maybe good we but tenants picks in the

comes Katy or the go Our at comment next ahead. of question Please McConnell from Citi. line

of of I also think as Katy. actual if sort for this was over changed. April, have just theater sequential of sort tenants Thanks. guess can touch too the collections Hey past to provide not came around you what is [Indiscernible] in I just on aspect. And that? with pretty collections if improved guys, I But conversations quarter you on for significantly those a the And basis. sort be some on wondering of how much beat of could sort up

our the Yes, tenants, some specific theater agreement. tenants discussions as longer going in for talk Sure. but Steve were I'm mentioned we of deferral again, about to not

unresolved that or theater So, in of bucket. whereas rent XXXX, been have some would outstanding the in

connections can have at that at deferred trade. Now about of moment. is might as April now you of it's collections And line And of kind you the the see solid we're the I in everybody getting; that feels on you client, track it so in level meant bucket. very April think, asked

reported for of we're generally I the due think do to rent of we're in but month not at April. XX% we a April, position for that,

Got it.

much. number theatre the for Thank Appreciate. looking but right. was I all you, yes, guys, that's so Okay,

And take at Tsai then Linda Jefferies. question from our we go last ahead. Please

discuss some discrepancy Hi, your companies in XQ it in collection with exceeds you this an What your rent can that of educated strong if you're XX% other accounts comment for April. exposure? guess? XX% And making higher and IG in

the strategy that directly so say Yes, of dealing question, that part companies I grade, - have dealing that large you those our our some I of get - have investment sale and think operators with with leasebacks you higher would direct the Linda, doing might this perspective, to but that with in get from leaseback safety it operators, properties and ask validates are as for a the about of the properties long-term obligation very low our margin comfortable questions benefits ourselves both And rent on. as on possible they're I they the tenants talked where of a if signing sell one earlier back. that for focused only to and we keeping create validates we

should And deal and weaker it when bounce rent out they call things keeping operators, faster, you with so focus well. low, on if back properties, the go you and the strong

don't tenant strategy be least on more estate ultimate less temporary think where feel in we So property, been like to basis leased a on maybe at growth validated pay we more you and process focusing the study have investment and security. we to on higher lease. equal that as rely rent we has to large locations and real better this credit, through we And it, and operators have grade our than good somewhat we about sweat the really but -

great crisis? then it strength financial that. seeing And retail to in fair as decline that be the as occupancy longer the is say bad will for the Thanks I no pandemic, given those the sector, you're guess

understood. You

If wood fingers. your cross and you knock on

sure. But for Yes, that's question. yes, no

from and dollars originally was kind would than the wildcard of came be trillion this ' or several I obviously stimulus 'XX. The worse think felt of like what XX, field. left that

expected real board. doing So across estate better I think retail and than you're the of well, seeing lot companies and of a every, kind relatively really

some trillion seemingly said anyway. problems several will of time like care take dollars a period I for So a of if

return question-and-answer our session. Jay for Whitehurst And concludes closing that We to remarks.

promotion I And fill, Fedewa CEO Melinda. I STORE but my would for joining at great Volk, her close, to this congratulations weeks offer thank you, well-deserved got big is in to hands the Capital. STORE Chris to Mary maybe like Thank helm. And following person to before shoes Thank with morning. of of you to Mary forward us talking in for you, look with you. We ahead. all And all even you in the seeing she's and

today's We you. does thank Thank This conclude teleconference. you for your participation.

You at may this Have a disconnect time. lines your great day.