Fitch affirms National Retail Properties

Fitch Ratings said it affirmed the issuer default rating, $490 million senior unsecured notes, $172.5 million senior unsecured convertible notes and unsecured revolving credit facility due 2009 of National Retail Properties, Inc. (formerly Commercial Net Lease Realty, Inc.) at BBB- and its $125 million preferred securities at BB+.

The outlook remains positive.

The agency said the ratings are supported by National Retail's consistent business strategy, which entails acquiring, owning and investing in single-tenant retail properties, generally under long-term commercial net leases, and by the company's ample unencumbered property coverage of unsecured debt, equal to 2.2x as of Sept. 30. Fitch noted that earnings from the company's portfolio of properties occupied by tenants across various lines of trade adequately covered fixed charges by 2.4x for the first three quarters of 2006.

Fitch said its concerns continue to center around the company's taxable REIT subsidiary's development build-for-sale activities and investments in mortgage residual interests. The agency acknowledged that such activities have contributed positively to all-in earnings before interest, taxes depreciation and amortization in excess of debt service requirements, but said it remains cognizant that such earnings from activities exhibit different risk characteristics than those from wholly owned commercial net leased retail properties.

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