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OPERATOR: Greetings, ladies and gentlemen. Welcome to the National Retail Properties Incorporated third quarter 2008 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded. It is now my pleasure to introduce you host, Mr Craig Macnab, Chief Executive Officer with National Retail Properties. Thank you, Mr Macnab, you may begin.
CRAIG MACNAB, CEO, NATIONAL RETAIL PROPERTIES, INC.: Thank you, Jen. Good afternoon and welcome to our third quarter 2008 earnings release call. On this call with me is Kevin Habicht, our Chief Financial Officer, who will review details of our third quarter financial results, plus provide guidance for 2009, after brief opening comments from me. We are very pleased with $0.50 of FFO in the third quarter, which is an 8.7% increase over the same period last year. Perhaps more importantly, we are delighted to have access to equity markets, where we sold 3.45 million shares a couple of short weeks ago. Given that we have yet to reinvest this capital, we have tightened our 2008 FFO guidance by a couple of pennies to a range of $1.97 to $1.99 per share. Including the proceeds from our recent equity offering, we have now raised a total of $123 million of equity in 2008 at an average price of a couple of pennies higher than $22 per share.
In addition, so far this year, our capital recycling has resulted in our selling approximately $209 million of properties with approximately three quarters of those coming from our TRS inventory portfolio. In other words, we have raised a lot of capital in 2008 and this time of deleveraging our conservative balance sheet continues to be strong. Kevin will provide the important details and metrics on our balance sheet in a moment. But we are extremely well positioned from both a liquidity and a leverage perspective. In the third quarter National Retail Properties acquired 36 properties for $68.1 million for our investment portfolio at an average cap rate of 9.35%. These properties were acquired from four different tenants and we previously completed sale lease backed transactions with three of these tenants. In this environment, what is perhaps more important is that in our third quarter we sold $71.3 million of properties at an average cap rate of 6.77%.
These properties were sold by our outstanding TRS team off our website without using brokers and you can observe from the excellent pricing that we executed well and the timing was just perfect. Given the environment, our portfolio continues to be in solid shape at the end of the quarter with occupancy at 96.9%, with a modest amount of leases expiring in 2009. Our average lease duration continues to be long and is still at about 13 years. To me it is inevitable that most commercial landlords will see deteriorating occupancy trends in 2009. NNN is no different and we are budgeting that our occupancy will decline by about 2.5%. Believe me, I hope that this guesstimate proves to be a conservative assumption, but given the recessionary environments in which we are operating, aggravated by weak consumer confidence, this appears to be the prudent thing for us to do at present. As most of you are aware, our largest line of trade is convenient stores.
Earlier this month we had a very successful investor day showcasing a number of our properties in Charlotte. For those of you that could not attend, we wanted to showcase the high quality of the real estate locations on which these C-stores are located, plus the breadth of merchandise that is sold inside the stores. Importantly, from a credit perspective, in a challenging retail environment our C-store tenants are currently experiencing exceptional gross margins as the price of oil has come crashing down, which, of course, improves their ability to pay our rent. Let me make a couple of comments about the acquisition and disposition landscape. We are operating in a environment where banks have essentially turned off the spigot in terms of lending money to real estate.
This has meant that A, the vast majority of our competition who are dependant on high amounts of bank debt, have completely disappeared. And secondly, cap rates are trending higher. With the difficulty of obtaining debt financing, cap rates are also clearly rising in the 1031 market. If I were to use one word to summarize our present acquisition posture, it is that we are being very selective. Our underwriting remains rigorous and we are passing on many opportunities. We have zero currently outstanding on our $400 million line of credit., so we are waiting for opportunities to become available that meet both our underwriting criteria as well as are priced appropriately. With that I will hand it over to Kevin.
KEVIN HABICHT, CFO, NATIONAL RETAIL PROPERTIES, INC.: Thanks, Craig. And let me start with our typical cautionary statement that we will make certain statements on this call that might be considered to be forward-looking statements under federal securities laws. The Company's actual future results may differ significantly from the matters discussed in these forward-looking statements and we may not release revisions to these forward-looking statements to reflect changes after we made the statements. Factors and risks that could …