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$NNN announced the amendment of its unsecured bank credit facility. The amendment increases the available borrowing capacity under the credit facility from $650MM-900MM and reduces pricing from LIBOR plus 92.5 basis points to LIBOR plus 87.5 basis points.
$NNN said its portfolio occupancy rate stands at about 99%. The company has set an acquisition guidance for 2017 of $500-600MM. $NNN is also on track to dispose of about $100MM in assets in 2017. $NNN owns 2,500 single-tenant, broadly diversified retail properties across the US, with an average value of about $2.8MM.
$NNN owns 117 Bob Evans restaurants. Bob Evans is spinning off its entire restaurant division to Golden Gate Capital and there is no effect on $NNN’s leases of any of these properties. $NNN will continue to have a lease guarantee with Bob Evans’ parent company for its restaurants and $NNN considers this spinoff in general as a net positive.
$NNN owns 12 Gander Mountain stores diversified across 9 states in the Midwest and Southeast comprising about 2.2% of annual base rent. Some stores in $NNN’s portfolio are performing well and some are struggling. If Gander were to file for bankruptcy, $NNN’s possible rent loss would be a few million dollars out of a total income of about $550MM.
$NNN said in terms of the transaction market, its pipeline looks good and the company is seeing deal volume in all of its typical categories. The cap rates appear to be flat currently. The company believes there is good volume and opportunities available and the pricing is about flat at present.
$NNN acquired 313 net lease retail properties in 2016 investing $847MM. The average initial cash yield on these acquisitions was 6.9%. The vast majority of the transactions were single property acquisitions throughout the year, many of which are purchased from existing tenants with an average investment per property of $2.7MM.
$NNN said that its Chairman and CEO Craig Macnab will retire and step down as Chairman and member of the Board of Directors effective April 28, 2017. Julian Whitehurst, currently President and COO, will assume the role of President and CEO as of April 28, 2017.
Ross Nussbaum of UBS asks about $NNN's Camping World property. CEO Craig Macnab said they prospered in the gun and ammunition area and in footwear. Sporting goods has been a difficult segment. Camping World is the dominant retailer of new and used RVs and their servicing and its market percentage is high in a fragmented category.
Juan Sanabria of Bank of America Merrill Lynch asks about $NNN's restaurant exposure. CEO Craig Macnab said the restaurant category is around 20%, mixed between full service and quicker service. $NNN's small box retail includes convenience stores and restaurants and risk is dispersed among a large number of properties.
Nick Joseph of Citigroup asks about the Bob Evans transaction. COO Julian Whitehurst said $NNN acquired 117 Bob Evans restaurants for $161MM, the details of which will be released next quarter. The avg. price per property was around $1.35MM and rent is about $75,000 per property on avg.
At 1Q16-end, $NNN had a cash balance of $51MM. The company has no floating rate debt. Weighted avg. debt maturity is 6.7 years on weighted avg. interest rate of 4.5%. Debt to EBITDA was 4.3 times at March 31. Interest coverage was 4.7 times for 1Q16 and fixed charge coverage was 3.4 times.