EX-99.1 2 ex991-12312016.htm EXHIBIT 99.1
NEWS RELEASE
For information contact:
Kevin B. Habicht
Chief Financial Officer
(407) 265-7348 FOR IMMEDIATE RELEASE
February 13, 2017
RECORD ANNUAL RESULTS
ANNOUNCED BY NATIONAL RETAIL PROPERTIES, INC.
Orlando, Florida, February 13, 2017 – National Retail Properties, Inc. (NYSE: NNN), a real estate investment trust, today announced operating results for the quarter and year ended December 31, 2016. Highlights include:
Operating Results:

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

| Quarter Ended |  | Year Ended
| December 31, |  | December 31,
| 2016 |  | 2015 |  | 2016 |  | 2015
| (in thousands, except per share data)
Revenues | $ | 141,199 |  |  | $ | 126,377 |  |  | $ | 533,647 |  |  | $ | 482,916 |
Net earnings available to common stockholders | $ | 54,044 |  |  | $ | 33,612 |  |  | $ | 200,877 |  |  | $ | 162,402 |
Net earnings per common share | $ | 0.37 |  |  | $ | 0.24 |  |  | $ | 1.38 |  |  | $ | 1.20 |
FFO available to common stockholders | $ | 88,717 |  |  | $ | 67,319 |  |  | $ | 330,544 |  |  | $ | 289,193 |
FFO per common share | $ | 0.60 |  |  | $ | 0.49 |  |  | $ | 2.28 |  |  | $ | 2.15 |
Core FFO available to common stockholders | $ | 88,717 |  |  | $ | 76,661 |  |  | $ | 340,643 |  |  | $ | 299,171 |
Core FFO per common share | $ | 0.60 |  |  | $ | 0.56 |  |  | $ | 2.35 |  |  | $ | 2.22 |
AFFO available to common stockholders | $ | 90,285 |  |  | $ | 77,953 |  |  | $ | 347,933 |  |  | $ | 304,772 |
AFFO per common share | $ | 0.62 |  |  | $ | 0.57 |  |  | $ | 2.41 |  |  | $ | 2.27 |

• | Portfolio occupancy was 99.0% at December 31, 2016 and September 30, 2016, as compared to 99.1% at December 31, 2015

2016 Highlights:

• | Increased annual net earnings per common share 15.0%

• | Increased annual FFO per common share 6.0%

• | Increased annual Core FFO per common share 5.9%

• | Increased annual AFFO per common share 6.2%

• | Dividend yield of 4.0% at December 31, 2016

• | Annual dividend per common share increased to $1.78 marking the 27th consecutive year of annual dividend increases - making the company one of only four equity REITs and one of only 94 public companies with 27 or more consecutive annual dividend increases

• | Maintained high occupancy levels at or above 99.0% for the entire year with a weighted average remaining lease term of 11.6 years

2016 Highlights (continued):

• | Invested $846.9 million in 313 properties with an aggregate gross leasable area of approximately 2,734,000 square feet at an initial cash yield of 6.9%

• | Sold 38 properties for $103.2 million, producing $27.1 million of gains on sale, net of noncontrolling interests, at a cap rate of 6.8%

• | Raised $950.9 million of new long-term capital at attractive pricing

◦ | Raised $274.0 million in net proceeds from the issuance of 5,903,848 common shares

◦ | Raised $342.8 million in net proceeds from the issuance of 3.60% senior unsecured notes due 2026

◦ | Raised $334.1 million in net proceeds from the issuance of 5.20% Series F preferred stock

• | Entire $650 million availability on bank credit facility at December 31, 2016

• | 99.7% of properties are unencumbered with secured mortgage debt

• | Total shareholder return of 14.5% for 2016 exceeds industry averages and general equity averages

• | Total average annual shareholder return of 14.3% over the past 25 years exceeds industry averages and general equity averages

Selected Highlights for the quarter ended December 31, 2016:

• | Investments:

◦ | $250.4 million in property investments, including the acquisition of 64 properties with an aggregate gross leasable area of approximately 698,000 square feet at an initial cash yield of 6.9%

• | Dispositions:

◦ | Sold 14 properties with net proceeds of $20.1 million, producing $4.6 million of gains on sales, net of noncontrolling interests, at a cap rate of 7.2%

• | Long-term capital:

◦ | Raised $965,000 in net proceeds from the issuance of 22,986 common shares

◦ | Raised $342.8 million in net proceeds from the issuance of 3.60% senior unsecured notes due 2026

◦ | Raised $334.1 million in net proceeds from the issuance of 5.20% Series F preferred stock

Craig Macnab, Chief Executive Officer, commented: "We are delighted to report another excellent year at NNN, with per share FFO results and acquisitions activity all being records. We were pleased with our capital market activity in 2016 with well executed debt and preferred offerings which were attractively priced and improved our long term cost of capital. As we head into 2017, our balance sheet positions us well for building shareholder value, growing per share results and continuing our 27 year record of annual increases in our dividend."
National Retail Properties invests primarily in high-quality retail properties subject generally to long-term, net leases. As of December 31, 2016, the company owned 2,535 properties in 48 states with a gross leasable area of approximately 27.2 million square feet and with a weighted average remaining lease term of 11.6 years. For more information on the company, visit www.nnnreit.com.
Management will hold a conference call on February 13, 2017, at 10:30 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. These statements generally are
characterized by the use of terms such as "believe," "expect," "intend," "may," "estimated," or other similar words or expressions. 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 and risks related to the company's status as a REIT. 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 (the “Commission”) 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 Commission. 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 Commission for the quarter and year ended December 31, 2016. In the opinion of management, all adjustments considered necessary for a fair presentation of these reported results have been made.
2

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.
Core Funds From Operations (“Core FFO”) is a non-GAAP measure of operating performance that adjusts FFO to eliminate the impact of certain GAAP income and expense amounts that the company believes are infrequent and unusual in nature and/or not related to its core real estate operations. Exclusion of these items from similar FFO-type metrics is common within the REIT industry, and management believes that presentation of Core FFO provides investors with a potential metric to assist in their evaluation of the company’s operating performance across multiple periods and in comparison to the operating performance of its peers because it removes the effect of unusual items that are not expected to impact the company’s operating performance on an ongoing basis. Core FFO is used by management in evaluating the performance of the company’s core business operations and is a factor in determining management compensation. Items included in calculating FFO that may be excluded in calculating Core FFO may include items like transaction related gains, income or expense, impairments on land or commercial mortgage residual interests, preferred stock redemption costs or other non-core amounts as they occur. The company’s computation of Core FFO may differ from the methodology for calculating Core 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 Core FFO 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.
3

National Retail Properties, Inc. (in thousands, except per share data) (unaudited)
|  | Quarter Ended |  | Year Ended
|  | December 31, |  | December 31,
|  | 2016 |  | 2015 |  | 2016 |  | 2015
Income Statement Summary |  |  |  |  |  |  |  |
Revenues: |  |  |  |  |  |  |  |
R e ntal and earned income |  | $ | 135,947 |  |  | $ | 121,106 |  |  | $ | 515,954 |  |  | $ | 465,282 |
Real estate expense reimbursement from tenants |  | 4,732 |  |  | 4,561 |  |  | 14,984 |  |  | 14,868 |
Interest and other income from real estate transactions |  | 128 |  |  | 264 |  |  | 1,032 |  |  | 988 |
Interest income on commercial mortgage residual interests |  | 392 |  |  | 446 |  |  | 1,677 |  |  | 1,778 |
|  | 141,199 |  |  | 126,377 |  |  | 533,647 |  |  | 482,916 |
Operating expenses: |  |  |  |  |  |  |  |
General and administrative |  | 9,408 |  |  | 9,657 |  |  | 36,508 |  |  | 34,736 |
Real estate |  | 6,555 |  |  | 5,575 |  |  | 20,852 |  |  | 19,776 |
Depreciation and amortization |  | 38,987 |  |  | 34,848 |  |  | 149,101 |  |  | 134,798 |
Impairment – commercial mortgage residual interests valuation |  | — |  |  | 51 |  |  | 6,830 |  |  | 531 |
Impairment losses – real estate and other charges, net of recoveries |  | 338 |  |  | 708 |  |  | 11,287 |  |  | 4,420 |
|  | 55,288 |  |  | 50,839 |  |  | 224,578 |  |  | 194,261 |
Other expenses (revenues): |  |  |  |  |  |  |  |
Interest and other income |  | (62 | ) |  | (42 | ) |  | (170 | ) |  | (109 | )
Interest expense |  | 24,429 |  |  | 24,548 |  |  | 96,352 |  |  | 90,008 |
Real estate acquisition costs |  | 42 |  |  | 33 |  |  | 563 |  |  | 927 |
|  | 24,409 |  |  | 24,539 |  |  | 96,745 |  |  | 90,826 |
Income tax expense |  | — |  |  | (9,827 | ) |  | — |  |  | (10,318 | )
Earnings before gain on disposition of real estate, net of income tax expense |  | 61,502 |  |  | 41,172 |  |  | 212,324 |  |  | 187,511 |
Gain on disposition of real estate, net of income tax expense |  | 4,624 |  |  | 1,305 |  |  | 27,182 |  |  | 10,450 |
Earnings including noncontrolling interests |  | 66,126 |  |  | 42,477 |  |  | 239,506 |  |  | 197,961 |
Earnings from continuing operations attributable to noncontrolling interests: |  | (34 | ) |  | (6 | ) |  | (6 | ) |  | (125 | )
Net earnings attributable to NNN |  | 66,092 |  |  | 42,471 |  |  | 239,500 |  |  | 197,836 |
Series D preferred stock dividends |  | (4,762 | ) |  | (4,762 | ) |  | (19,047 | ) |  | (19,047 | )
Series E preferred stock dividends |  | (4,097 | ) |  | (4,097 | ) |  | (16,387 | ) |  | (16,387 | )
Series F preferred stock dividends |  | (3,189 | ) |  | — |  |  | (3,189 | ) |  | — |
Net earnings available to common stockholders |  | $ | 54,044 |  |  | $ | 33,612 |  |  | $ | 200,877 |  |  | $ | 162,402 |
Weighted average common shares outstanding: |  |  |  |  |  |  |  |
Basic |  | 146,266 |  |  | 137,111 |  |  | 144,176 |  |  | 133,999 |
Diluted |  | 146,763 |  |  | 137,623 |  |  | 144,661 |  |  | 134,489 |
Net earnings per share available to common stockholders: |  |  |  |  |  |  |  |
Basic |  | $ | 0.37 |  |  | $ | 0.24 |  |  | $ | 1.39 |  |  | $ | 1.21 |
Diluted |  | $ | 0.37 |  |  | $ | 0.24 |  |  | $ | 1.38 |  |  | $ | 1.20 |

4

National Retail Properties, Inc. (in thousands, except per share data) (unaudited)
|  | Quarter Ended |  | Year Ended
|  | December 31, |  | December 31,
|  | 2016 |  | 2015 |  | 2016 |  | 2015
Funds From Operations (FFO) Reconciliation: |  |  |  |  |  |  |  |
Net earnings available to common stockholders |  | $ | 54,044 |  |  | $ | 33,612 |  |  | $ | 200,877 |  |  | $ | 162,402 |
Real estate depreciation and amortization: |  | 38,907 |  |  | 34,754 |  |  | 148,779 |  |  | 134,380 |
Gain on disposition of real estate, net of income tax and noncontrolling interests |  | (4,579 | ) |  | (1,305 | ) |  | (27,137 | ) |  | (10,397 | )
Impairment losses – depreciable real estate, net of recoveries and income tax |  | 345 |  |  | 258 |  |  | 8,025 |  |  | 2,808 |
Total FFO adjustments |  | 34,673 |  |  | 33,707 |  |  | 129,667 |  |  | 126,791 |
FFO available to common stockholders |  | $ | 88,717 |  |  | $ | 67,319 |  |  | $ | 330,544 |  |  | $ | 289,193 |
FFO per common share: |  |  |  |  |  |  |  |
Basic |  | $ | 0.61 |  |  | $ | 0.49 |  |  | $ | 2.29 |  |  | $ | 2.16 |
Diluted |  | $ | 0.60 |  |  | $ | 0.49 |  |  | $ | 2.28 |  |  | $ | 2.15 |
Core Funds from Operations Reconciliation: |  |  |  |  |  |  |  |
Net earnings available to common stockholders |  | $ | 54,044 |  |  | $ | 33,612 |  |  | $ | 200,877 |  |  | $ | 162,402 |
Total FFO adjustments |  | 34,673 |  |  | 33,707 |  |  | 129,667 |  |  | 126,791 |
FFO available to common stockholders |  | 88,717 |  |  | 67,319 |  |  | 330,544 |  |  | 289,193 |
Impairment – commercial mortgage residual interests valuation |  | — |  |  | 51 |  |  | 6,830 |  |  | 531 |
Impairment losses – non-depreciable real estate and other charges |  | — |  |  | — |  |  | — |  |  | 156 |
Bad debt expense – loans |  | — |  |  | — |  |  | 3,269 |  |  | — |
Income tax benefit |  | — |  |  | (316 | ) |  | — |  |  | (316 | )
TRS revocation election |  | — |  |  | 9,607 |  |  | — |  |  | 9,607 |
Total Core FFO adjustments |  | — |  |  | 9,342 |  |  | 10,099 |  |  | 9,978 |
Core FFO available to common stockholders |  | $ | 88,717 |  |  | $ | 76,661 |  |  | $ | 340,643 |  |  | $ | 299,171 |
Core FFO per common share: |  |  |  |  |  |  |  |
Basic |  | $ | 0.61 |  |  | $ | 0.56 |  |  | $ | 2.36 |  |  | $ | 2.23 |
Diluted |  | $ | 0.60 |  |  | $ | 0.56 |  |  | $ | 2.35 |  |  | $ | 2.22 |

5

National Retail Properties, Inc. (in thousands, except per share data) (unaudited)
|  | Quarter Ended |  | Year Ended
|  | December 31, |  | December 31,
|  | 2016 |  | 2015 |  | 2016 |  | 2015
Adjusted Funds From Operations (AFFO) Reconciliation: |  |  |  |  |  |  |  |
Net earnings available to common stockholders |  | $ | 54,044 |  |  | $ | 33,612 |  |  | $ | 200,877 |  |  | $ | 162,402 |
Total FFO adjustments |  | 34,673 |  |  | 33,707 |  |  | 129,667 |  |  | 126,791 |
Total Core FFO adjustments |  | — |  |  | 9,342 |  |  | 10,099 |  |  | 9,978 |
Core FFO available to common stockholders |  | 88,717 |  |  | 76,661 |  |  | 340,643 |  |  | 299,171 |
Straight-line accrued rent |  | (273 | ) |  | (529 | ) |  | (252 | ) |  | (368 | )
Net capital lease rent adjustment |  | 309 |  |  | 331 |  |  | 1,364 |  |  | 1,277 |
Below market rent amortization |  | (662 | ) |  | (671 | ) |  | (2,842 | ) |  | (3,046 | )
Stock based compensation expense |  | 2,689 |  |  | 2,461 |  |  | 10,758 |  |  | 9,671 |
Capitalized interest expense |  | (495 | ) |  | (750 | ) |  | (1,738 | ) |  | (2,383 | )
Loss on sale of mortgage receivable |  | — |  |  | 450 |  |  | — |  |  | 450 |
Total AFFO adjustments |  | 1,568 |  |  | 1,292 |  |  | 7,290 |  |  | 5,601 |
AFFO available to common stockholders |  | $ | 90,285 |  |  | $ | 77,953 |  |  | $ | 347,933 |  |  | $ | 304,772 |
AFFO per common share: |  |  |  |  |  |  |  |
Basic |  | $ | 0.62 |  |  | $ | 0.57 |  |  | $ | 2.41 |  |  | $ | 2.27 |
Diluted |  | $ | 0.62 |  |  | $ | 0.57 |  |  | $ | 2.41 |  |  | $ | 2.27 |
Other Information: |  |  |  |  |  |  |  |
Percentage rent |  | $ | 776 |  |  | $ | 802 |  |  | $ | 1,735 |  |  | $ | 1,430 |
Amortization of debt costs |  | $ | 810 |  |  | $ | 773 |  |  | $ | 3,086 |  |  | $ | 2,915 |
Scheduled debt principal amortization (excluding maturities) |  | $ | 129 |  |  | $ | 378 |  |  | $ | 656 |  |  | $ | 1,587 |
Non-real estate depreciation expense |  | $ | 83 |  |  | $ | 77 |  |  | $ | 333 |  |  | $ | 418 |
2017 Earnings Guidance: |  |  |  |  |  |  |
Core FFO guidance for 2017 is $2.42 to $2.48 per share. The 2017 AFFO is estimated to be $2.46 to $2.52 per share. The FFO guidance equates to net earnings of $1.37 to $1.43 per share, plus $1.05 per share of expected real estate depreciation and amortization and excludes any gains from the sale of real estate and any charges for impairments, severance costs, or preferred stock redemption charges. The guidance is based on current plans and assumptions and subject to risks and uncertainties more fully described in this press release and the company's reports filed with the Securities and Exchange Commission.
|  | 2017 Guidance
Net earnings per common share excluding any gains on sale of real estate, impairment charges, severance charges or charges in connection with preferred stock redemption |  | $1.37 - $1.43 per share
Real estate depreciation and amortization per share |  | $1.05 per share
Core FFO per share |  | $2.42 - $2.48 per share
AFFO per share |  | $2.46 - $2.52 per share
G&A expenses (excluding severance charges) |  | $34 - $35 Million
Real estate expenses, net of tenant reimbursements |  | $6.0 - $6.5 Million
Acquisition volume |  | $500 - $600 Million
Disposition volume |  | $80 - $120 Million

6

National Retail Properties, Inc. (in thousands) (unaudited)
|  | December 31, 2016 |  | December 31, 2015
Balance Sheet Summary |  |  |  |
Assets: |  |  |  |
Real estate: |  |  |  |
Accounted for using the operating method, net of accumulated depreciation and amortization |  | $ | 5,881,280 |  |  | $ | 5,231,413 |
Accounted for using the direct financing method |  | 11,230 |  |  | 14,518 |
Real estate held for sale |  | 23,850 |  |  | 57,527 |
Cash and cash equivalents |  | 294,540 |  |  | 13,659 |
Restricted cash and cash held in escrow |  | — |  |  | 601 |
Receivables, net of allowance |  | 3,418 |  |  | 3,344 |
Mortgages, notes and accrued interest receivable, net of allowance |  | 1,252 |  |  | 8,688 |
Accrued rental income, net of allowance |  | 25,101 |  |  | 25,529 |
Debt costs, net of accumulated amortization |  | 2,715 |  |  | 4,003 |
Commercial mortgage residual interests |  | 36 |  |  | 11,115 |
Other assets |  | 90,729 |  |  | 89,647 |
Total assets |  | $ | 6,334,151 |  |  | $ | 5,460,044 |
Liabilities: |  |  |  |
Line of credit payable |  | $ | — |  |  | $ | — |
Mortgages payable, including unamortized premium and net of unamortized debt cost |  | 13,878 |  |  | 23,964 |
Notes payable, net of unamortized discount and unamortized debt costs |  | 2,297,811 |  |  | 1,951,980 |
Accrued interest payable |  | 19,665 |  |  | 20,113 |
Other liabilities |  | 85,869 |  |  | 121,594 |
Total liabilities |  | 2,417,223 |  |  | 2,117,651 |
Stockholders’ equity of NNN |  | 3,916,799 |  |  | 3,342,134 |
Noncontrolling interests |  | 129 |  |  | 259 |
Total equity |  | 3,916,928 |  |  | 3,342,393 |
Total liabilities and equity |  | $ | 6,334,151 |  |  | $ | 5,460,044 |
Common shares outstanding |  | 147,150 |  |  | 141,008 |
Gross leasable area, Property Portfolio (square feet) |  | 27,204 |  |  | 24,964 |

7

National Retail Properties, Inc. Debt Summary As of December 31, 2016 (in thousands) (unaudited)
Unsecured Debt |  | Principal |  | Principal, Net of Unamortized Discount |  | Stated Rate |  | Effective Rate |  | Maturity Date
Line of credit payable |  | $ | — |  |  | $ | — |  |  | L + 92.5 bps |  | — |  |  | January 2019
Unsecured notes payable: |  |  |  |  |  |  |  |  |  |
2017 |  | 250,000 |  |  | 249,907 |  |  | 6.875% |  | 6.924% |  | October 2017
2021 |  | 300,000 |  |  | 297,764 |  |  | 5.500% |  | 5.689% |  | July 2021
2022 |  | 325,000 |  |  | 321,917 |  |  | 3.800% |  | 3.985% |  | October 2022
2023 |  | 350,000 |  |  | 348,269 |  |  | 3.300% |  | 3.388% |  | April 2023
2024 |  | 350,000 |  |  | 349,451 |  |  | 3.900% |  | 3.924% |  | June 2024
2025 |  | 400,000 |  |  | 399,131 |  |  | 4.000% |  | 4.029% |  | November 2025
2026 |  | 350,000 |  |  | 346,153 |  |  | 3.600% |  | 3.733% |  | December 2026
Total |  | 2,325,000 |  |  | 2,312,592 |  |  |  |  |  |  |
Total unsecured debt (1) |  | $ | 2,325,000 |  |  | $ | 2,312,592 |  |  |  |  |  |  |
Debt costs |  | (21,157 | ) |  |  |  |  |  |
Accumulated amortization |  | 6,376 |  |  |  |  |  |  |
Debt costs, net of accumulated amortization |  | (14,781 | ) |  |  |  |  |  |
Notes payable, net of unamortized discount and unamortized debt costs |  | $ | 2,297,811 |  |  |  |  |  |  |
(1) Unsecured notes payable have a weighted average interest rate of 4.4% and a weighted average maturity of 6.6 years

Mortgages Payable |  | Principal Balance |  | Interest Rate |  | Maturity Date
Mortgage(1) |  | $ | 13,987 |  |  | 5.230% |  | July 2023
Debt costs |  | (147 | ) |  |  |  |
Accumulated amortization |  | 38 |  |  |  |  |
Debt costs, net of accumulated amortization |  | (109 | ) |  |  |  |
Mortgages payable, including unamortized premium and net of unamortized debt costs |  | $ | 13,878 |  |  |  |  |
(1) Includes unamortized premium |  |  |  |  |  |

8

National Retail Properties, Inc.
Property Portfolio
Top 20 Lines of Trade

|  |  |  | As of December 31,
|  | Line of Trade |  | 2016(1) |  | 2015(2)
1. |  | Convenience stores |  | 16.9 | % |  | 16.7 | %
2. |  | Restaurants - full service |  | 11.8 | % |  | 11.0 | %
3. |  | Restaurants - limited service |  | 7.5 | % |  | 7.2 | %
4. |  | Automotive service |  | 6.6 | % |  | 7.0 | %
5. |  | Family entertainment centers |  | 5.8 | % |  | 5.6 | %
6. |  | Health and fitness |  | 5.7 | % |  | 3.8 | %
7. |  | Theaters |  | 4.9 | % |  | 5.2 | %
8. |  | Automotive parts |  | 3.9 | % |  | 4.2 | %
9. |  | Recreational vehicle dealers, parts and accessories |  | 3.4 | % |  | 3.6 | %
10. |  | Banks |  | 3.1 | % |  | 3.4 | %
11. |  | Sporting goods |  | 2.5 | % |  | 3.3 | %
12. |  | Medical service providers |  | 2.4 | % |  | 2.2 | %
13. |  | Wholesale clubs |  | 2.4 | % |  | 2.6 | %
14. |  | Drug stores |  | 2.1 | % |  | 2.3 | %
15. |  | Consumer electronics |  | 2.0 | % |  | 2.2 | %
16. |  | Travel plazas |  | 1.9 | % |  | 2.1 | %
17. |  | Furniture |  | 1.9 | % |  | 1.1 | %
18. |  | General merchandise |  | 1.8 | % |  | 1.9 | %
19. |  | Home improvement |  | 1.8 | % |  | 1.8 | %
20. |  | Home furnishings |  | 1.7 | % |  | 1.9 | %
|  | Other |  | 9.9 | % |  | 10.9 | %
|  | Total |  | 100.0 | % |  | 100.0 | %

Top 10 States

| State |  |  | % of Total(1) |  |  | State |  |  | % of Total(1)
1. | Texas |  |  | 18.4 | % |  | 6. | Georgia |  |  | 4.3 | %
2. | Florida |  |  | 9.1 | % |  | 7. | Indiana |  |  | 4.2 | %
3. | Illinois |  |  | 5.7 | % |  | 8. | Virginia |  |  | 3.5 | %
4. | Ohio |  |  | 5.7 | % |  | 9. | Alabama |  |  | 3.0 | %
5. | North Carolina |  |  | 4.7 | % |  | 10. | Tennessee |  |  | 2.8 | %

(1) | Based on the annualized base rent for all leases in place as of December 31, 2016.

(2) | Based on the annualized base rent for all leases in place as of December 31, 2015.

9

National Retail Properties, Inc.
Property Portfolio
Top Tenants (≥ 2.0%)

|  |  | Properties |  | % of Total (1)
| Sunoco |  | 125 |  | 5.4%
| Mister Car Wash |  | 90 |  | 4.0%
| LA Fitness |  | 29 |  | 3.8%
| AMC Theatres |  | 20 |  | 3.5%
| Camping World |  | 32 |  | 3.4%
| Couche-Tard (Pantry) |  | 86 |  | 3.3%
| 7-Eleven |  | 77 |  | 3.3%
| SunTrust |  | 121 |  | 3.0%
| Bell American (Taco Bell) |  | 115 |  | 2.8%
| Chuck E. Cheese's |  | 53 |  | 2.5%
| BJ's Wholesale Club |  | 8 |  | 2.4%
| Frisch's Restaurant |  | 74 |  | 2.2%
| Gander Mountain |  | 12 |  | 2.2%
| Bob Evans |  | 117 |  | 2.0%

Lease Expirations(2)

|  | % of Total(1) |  | # of Properties |  | Gross Leasable Area (3) |  |  |  | % of Total(1) |  | # of Properties |  | Gross Leasable Area (3)
2017 |  | 1.2% |  | 27 |  | 502,000 |  |  | 2023 |  | 2.5% |  | 85 |  | 1,014,000 |
2018 |  | 3.2% |  | 90 |  | 1,153,000 |  |  | 2024 |  | 2.6% |  | 50 |  | 883,000 |
2019 |  | 3.0% |  | 76 |  | 1,122,000 |  |  | 2025 |  | 5.0% |  | 132 |  | 1,116,000 |
2020 |  | 3.8% |  | 132 |  | 1,571,000 |  |  | 2026 |  | 6.0% |  | 181 |  | 1,830,000 |
2021 |  | 4.4% |  | 122 |  | 1,320,000 |  |  | 2027 |  | 9.0% |  | 190 |  | 2,842,000 |
2022 |  | 6.1% |  | 111 |  | 1,456,000 |  |  | Thereafter |  | 53.2% |  | 1,305 |  | 11,891,000 |

(1) | Based on the annual base rent of $543,446,000, which is the annualized base rent for all leases in place as of December 31, 2016.

(2) | As of December 31, 2016, the weighted average remaining lease term is 11.6 years.

(3) | Square feet.

10