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OPERATOR: Greetings and welcome to the National Retail Properties Inc. fourth 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 your host, Craig Macnab, Chief Executive Officer for National Retail Properties Inc. Thank you. Sir, you may begin.
CRAIG MACNAB, CEO, NATIONAL RETAIL PROPERTIES, INC.: Thank you, Ryan and good afternoon and welcome to our 2008 year end earnings release call. On this call with me is Kevin Habicht our Chief Financial Officer who will review details of our fourth quarter year end financial results, plus provide details about our revised guidance following my opening comments.
National Retail Properties had a record year in 2008 and we are pleased with this performance, clearly we are operating in a different economic environment this year but we've worked hard to ensure that we have a strong balance sheet with very manageable debt maturities plus we have plenty of unused capacity on our credit facility. As of the end of the year our portfolio is 96.7% leased with very limited leases coming due in this calendar year. We currently own 1,005 properties leased to over 200 different national or regional tenants in 44 states. These tenants operate in over 30 different segments of the retail industry which provides us with very broad diversification. Finally, on average these tenants are contractually obligated to pay us rent for the next 13 years.
As a landlord to retailers we are clearly seeing stress in our portfolio. In terms of where it's going, I wish that I had a better idea of the depth or duration of the recession and when consumers will reopen their pocketbooks. As our press release suggested we are cautious about the outlook and we are projecting a challenging 2009 but our investment plan reflects that conservatism. Over the last four years we have acquired over 350 convenience stores and this category has become our single largest line of trade representing just over 25% of our annualized rent.
We are very pleased that the convenience store industry had a strong 2008 in the face of a very difficult retail environment. One of our two largest tenants, Sussa has prereleased earnings guidance and it appears that their financial performance was strong in 2008. Also this morning The Pantry, which is our largest individual tenant, announced solidly profitable first quarter results with extremely good cash generation. The performance of our two largest tenants, highlights the defensive attribute of the convenience store industry.
We continue to like the real estate attributes of convenience stores which is situated on busy streets at signalized intersections with excellent ingress, egress and versability. Also the investment per property is modest which contributes to very broad geographic and tenant diversification within the C store category.
In terms of our acquisition activity, in the fourth quarter we acquired $33 million of properties for our investment portfolio, and average cap rate of 9.55%. In calendar 2008 our team did a superb job acquired 109 properties for $355 million at an average cap rate of right around 9%. By the way, our acquisition in the fourth quarter was less than half the volume in the third quarter which again was considerably less than the volume in the first and second quarter's. This trend of declining acquisition activity will continue in the next couple of quarters.
Our capital recycling program in 2008 was most successful as we sold a large number of properties in the first half of the year at cap rates that today seem a distant memory. Specifically we sold from both the investment portfolio and our taxable REIT subsidiary, a total of $214 million of properties at an average cap rate of right around 6.9%. We are extremely pleased that our inhouse team of industry leading experts completed these sales on a timely basis at very attractive cap rates.
For 2009 our strategy at NNN is very simple. Number one, maximize the value of our existing assets, our team is focused on releasing space and renewing any leases. At this stage of the economic cycle our occupancy at 96.7% is solid. However, it is our view that this will deteriorate. For example we currently have four Circuit Cities plus one large Value City property that we need to release in a marketplace where there are not many large box retailers opening new locations unless the rent at that location offers a so-called deal. There will be other properties and tenants that we will need to deal with in 2009.
On the acquisition side we are being extremely selective for all the obvious reasons. By the way, in our judgment there continues to be a gap in price expectation between buyers and sellers which will only resolve itself with the passage of time. In addition before committing capital we would like to have further clarity on where our weighted-average cost of capital will settle in. Then thirdly, we are carefully managing our expenses. We already made progress at reducing our expenses this year as earlier this month we went through a reduction in force. We are projecting that this year our G&A will be right around $22 million which is a measurable decrease from the $24.9 million of G&A in 2008. With that I will hand over to Kevin.
KEVIN HABICHT, CFO, NATIONAL RETAIL PROPERTIES, INC.: Thanks, Craig. I need …