Adding to the broader retail industry's woes, specialty real estate investment trust (REIT) National Retail Properties (NNN 0.89%) missed analyst estimates for a crucial profitability metric in its latest reported quarter.
On Monday, the company unveiled results for the third quarter of fiscal 2020 showing that it booked $158.6 million in revenue -- down by 6% on a year-over-year basis. Adjusted funds from operations (AFFO, considered to be the most significant profitability line item for REITs) fell by almost 9% to just under $106.7 million, or $0.62 per share.
That AFFO figure missed analyst estimates, although not by much. On average, prognosticators following the stock had anticipated the REIT would earn $0.66 per share.
As with other retail sector landlords, National Retail Properties has suffered during the coronavirus pandemic from mandatory store shutdowns. It also had to endure significantly reduced foot traffic even when its stores were open. The company was compelled to provide rent deferrals for many of its tenants; as of Sept. 20, around 6% of its total annual rent had been deferred. Eighty-nine percent of the deferred amount is due by the end of 2021.
Despite the tough conditions of the pandemic, National Retail Properties' tenant occupancy rate is actually holding up quite well. The company said that this figure was 98.4% at the end of September, down only slightly from 98.7% of June 30 and 98.8% as of March 31.
Investors clearly found such numbers encouraging and shrugged off the earnings miss. On Monday, the company's stock closed higher than the S&P 500, rising by 4.3% on the day.