National Retail Properties had another steady quarter with its broadly diversified portfolio of 2,984 single-tenant retail properties, which remain healthy with an occupancy rate of 98.2%. That occupancy is consistent with the company’s long-term average of 98%, noted CEO Jay Whitehurst.
Despite the headlines regarding retail store closures, the REIT’s portfolio continues to perform adorably, said Whitehurst. “As we’ve mentioned before, the 400 plus tenants in our portfolio are typically large, regional and national operators that are primarily focused on customer services, customer experiences and e-commerce resistant consumer necessities.”
On the acquisitions front, he says, the company has invested $117 million in 33 new single-tenant retail properties at an initial cash yield of slightly over 7%, and with an average lease term of over 16 years. “As usual, our tenant relationships were the source of a vast majority of our investments. Over 80% of our total dollars invested in the first quarter were with our roster of relationship tenants. We also sold 17 properties during the first quarter generating over $19 million of proceeds at an average 5.9% cap rate.”
As for the company’s disposition strategy, Whitehurst says it continues to reflect a barbell approach. “On one hand selling some properties at low cap rates in situations where we see less long-term value than the buyer and on the other hand selling some vacant properties after concluding that our releasing efforts would generate less shareholder value than simply reinvesting the sale proceeds. With our average disposition cap rate significantly below our average acquisition cap rate, we continue to validate our ability to recycle capital accretively.”
He adds that “Our balance sheet at the end of the quarter remained one of the strongest in our sector. As we’ve discussed previously, we raised a significant volume of well priced capital at the end of 2018 and entered 2019 with $0 outstanding on our line of credit and cash on our balance sheet, all of which continues to position us very well for 2019.”