Greetings, and welcome to the National Retail Properties Fourth Quarter 2008 Earnings Conference Call. At this time all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator’s Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Craig Macnab, Chief Executive Officer for National Retail Properties, Inc. Thank you, Mr. Macnab; you may begin.

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 as we work 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 are currently on 1005 properties leased over 200 different national or regional tenants and 24 states. These tenants operate in other 50 different statements of the retail industry which provides us with a 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 is going I wish that I had a better idea of the depth or the 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 4 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 grades. We are very pleased that the convenience store industry had a strong 2008 in the face of a very…

Thanks, Craig. I need to start off by saying we on this call will make certain statements that may be considered to be forward-looking statements under Federal Securities law. 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 the forward-looking statements to reflect changes after the statements were made. Factors and risks that could cause actual results to differ materially from expectations are disclosed from time to time in greater detail in the Company's filings with the SEC and in this morning’s press release. With that as indicated in the press release we reported fourth quarter 2008, FFO results totaling $37.9 million or $0.49 per share representing an 8.9% increase from 45% per share in the fourth quarter of 2007. For the year 2008 we reported record FFO for $1.99 per share which represents a 6.4% over 2007 at $1.87 per share. We are pleased with these results which were in line with our projections and Street estimates. Our balance sheet is in very good shape with no material debt maturities until September 2011 and with $374 million available on our $400 million credit facility. Let me just quickly go through a few details on the fourth quarter then some comments on our 2009 guidance and then we will take questions. Looking at the income statement total revenues for the fourth quarter increased to $57.2 million as primarily driven by additional rent from net new investments made over the last year. Acquisitions in the core portfolio as Craig mentioned totaled $33 million in the fourth quarter and $355 million for all of 2008. Occupancy at year-end was 96.7% that is down 20 basis points from the immediate prior quarter. Page five of the press release included…

Ron, we had like to take any questions please.

(Operator instruction) Your next question comes from the line of Michael Bilerman with Citigroup.

Can you please review the current impairment issue that you took during the quarter?

Yes, impairment during the fourth quarter totaling $1,563, 000 it surely happened discount investment portfolio. We got a property that we brand our self as an old property and so we decided not to re-lease it and just to go ahead and sell it and we actually had it under contract.

Are you undergoing any impairment test in the inventory portfolio at the moment?

We go through to impairment test every quarter and obviously we did not have anymore to report than that.

And you lose around $25 million or so that is the REIT. Could you talk about that position and how much more you would consider to moving back from the RF into the REIT?

. Last year we talk about our inventory portfolio and if there were a number of properties in there that we have like to sell if we could. The market is suboptimal. These are properties which we are happy to hold and in the inventory portfolio, a holder of them. The actual number is really closer to about $30 million to what is good.

And then on, do you have any change on any specific tenants or sector that you are particularly concerned about at the moment. You talked about all these towards in your conference with that industry. Near approach catching on some of the big industries like the 21:53 high risk strong drives result?

Everyday, since we come to work particularly you guys living up there in the northeast, Manhattan and the media has negative press release. Today the auto sales for January are particular dismal and with the consumer staying at home and not visiting retail stores, a lot of those businesses when you cut through it is in a very high fixed cost phase. We are worried about every single tenant in our universe. What slightly different with these go around is that it extends both to small companies as well as to the bigger public companies. Let us be honest who would have thought two, three years ago that Circuit City would be liquidated and so it is across the board. There is stress in every single retailer. The top line is down and there are higher fixed cost businesses that having said that our portfolio is relatively in good shape vis-à-vis the retail industry. We do not have much exposure, if any, to the high-end expensive merchandise. A lot of our product offering kept in our tenants is value oriented which is where you want to be in this environment. Michael Bilerman – Citigroup: Do you check any forward looking metrics besides looking at the financials and focusing on press reports to gauge on where you could potentially see problems ahead of time?

The best way that we find to do that is our regular interaction with our tenants and as a Company over the last several years we have done a very, very good job of staying in touch with our tenants. What is good yesterday was we had Chief Financial Officer of our tenants in our offices going through their business and in that particular case the stores are doing fine and they are paying rent satisfactorily but I can tell you their sales are not blowing through the top line. So we are paying attention towards as much as we possibly can and in that area we are doing a very good job.

Your next question comes from the line of Dustin Pizzo with BAS-ML

Craig, how much of the reduction your acquisition guidance is just simply related to understandably being cautious on the point any capital today versus the fact that as you guys have done of doing your capital to go out and potentially continue to repurchase those converts, that double digit yield. I mean not only a better use of that top of the year perspective but it also helps remove potential overhang on the shares. Is that something we could continue to see you do or you are really just sitting back here and holding on to every dollar that you can?

Dustin first, congratulations on your new position. We are a conservative group of folks here. We have been bearish on the outlook for the last couple of years. It is not just good luck that we did to where we are all with the strong balance sheet. We worked very hard at it. We know that we have a near term debt maturity with those convertible bonds coming due in 2011. We have been selective on pricing. The best time to buy those is when there is sale in the market and we executed pretty well where the bond is currently trading at and it is very, very little activity in them. I think in the last ten days or so there are 60,000 bonds traded. We did not like the prices which they currently have. There is a movement on that we will probably take a look at that. It is our nearest term debt maturity. It's clearly a very accretive opportunity. I think our guidance does not really reflect that if it happens but we did not really see the market clearly hit the level that we can make reasonable forecasts on before we deploy any capital.

Fair enough and then last quarters, just looking at the guidance, you guys were baking in I think that you have said 250 basis point of occupancy losses in the portfolio so is the 150, Kevin that you mentioned today, are we looking at $400 or is it?

Yes that is on top and that is additional vacancy. I think about that in economic terms based on our $200 plus million of base - rent basis, a $3 million kind of economic hit.

Given where the portfolio ended in the year, have you seen any of them in the first month here or is that just something that you are…, based on looking at this financials and meeting with people that you are expecting to.

Just at the margin we have experienced it. We had Uni-Mart that was a hit to us in 2008 and three additional Uni-Marts came back to us in January. We can see somebody wrote us a question about forward looking data. Our forward looking data is pretty good and pretty accurate. We can see where there are problems coming down the pipes and that number is happening.

Okay and then I may have missed this in the opening comments. What is the EBITDA or the rent coverage for the portfolio today?

I can talk maybe more at length about this but some of our tenants we have calculated rent coverage and we have looked at that. A good portion of our tenants are national tier tenants, the Best Buy, CVS, and Barnes & Noble. We are focused purely at the corporate level because they are not giving out store level P&L data to anyone but for example which you can tract, our largest tenants Pantry and SaSa for example, the Pantry just put out numbers and if you look at the rent coverage we marked that at about a 3 or 4 kind of rent coverage and a 2006 charge coverage because frankly I think fixed charge is more relevant than rent in some respects but again this is a long discussion about how we mitigate risks and how we under write and rent coverage is a good metric but it is only a piece and not the biggest piece in our minds. We are under writing and evaluating tenants and invest potential investments. So I do not have the number to tell you, for the portfolio we do not do that and I can say a number of our tenants do not even provide that kind of data. On the smaller second tier tenants obviously you get more data and are able to grind through that piece of the risk analysis.

Your next question comes from the line of David Pick with Stifel Nicolaus & Company, Inc. David Pick - Stifel Nicolaus & Company, Inc.: Can you guys address, you talked a lot about your tenants and in general terms, where your concerns are and can you specifically address the C store performance over the last quarter as you are able to define it from your tenants?

The industry benefited from declining oil prices and so gasoline margins were very high. And the operators prospered from that and had very, very strong results so the convenience stores sector which was our single biggest category simply on a trailing twelve month basis performed extremely well where retail in the aggregate had a weak year. David Pick - Stifel Nicolaus & Company, Inc.: Your dividend, obviously this is the quarter dividend adjustment even for some of the industry bellwethers whether they are an alternative form of payment or cutting cash and you are clearly signaling here that you do not expect that it will be going down that route I am wondering given that some others who have positive cash flow and very strong balance sheet has made a different decision. Is that might be something that you would even consider reviewing or is it part of your franchising and you are going to maintain that increased track record no matter what?

David, it is a topical question for sure and we have a board meeting here in a couple of weeks and I am sure will be talking about it so I do not want to get too far ahead of myself but I think certainly sitting here in this building before getting the input of our Board of Directors I will tell you that we think that is over the long term, one of the reasons investors purchased REIT stocks is because the total retailing space needed to pay a great deal of attention to the income that they get from the dividend and I think we have to be very thoughtful about flying in the face of that. We are in the position where our balance sheet is good too. We have very modest near-term maturities and three we have access to capital and by the way our dividend coverage is very strong against AFFO. So I think… David Pick - Stifel Nicolaus & Company, Inc.: Just to challenge you one more time on that, some of the REITs that we talked to who have all the same characteristics are saying, “Look I cannot assume that my line of credit coming due in 2011 or even 2012 will be renewable and then I will have to pay it off in cash. I must run my business very conservatively.”

Yes. David Pick - Stifel Nicolaus & Company, Inc.: You are a conservative company. You have always been conservative on how you structure yourselves, why shouldn’t we all be thinking in those terms in these extraordinary times?

When you look at the price action of the stocks of regional banks etcetera you got to ask yourself –“Are any of that is going to be in business.” Today some of them are getting pounded. We do have a bank facility that needs to be renewed in the next 12, 13, 14; months and we will have some real time data to help us make that decision. As you are suggesting we are being realistic that the pricing on the bank facility is going to change, probably the terms and conditions are going to change as well. That is inevitable that a couple of smaller bank participants are going to drop out. So we are going to have this access to it for sure. I think, we will see whether we are just looking at the eye of the storm now or weather how long it is going to last. That is David in the near term I think that is payment of cash dividends is very important to NNN’s shareholders and our board is also relying on this so. David Pick - Stifel Nicolaus & Company, Inc.: Obviously, we agree with that in terms of your stated piece in the industry is attracting to investors. I am just wondering if perhaps you need to start reflecting a bit more realistic view of the capital markets’ willingness to provide capitals to REITS going forward and wait for the next couple of years.

I will take your input into the decision as well.

Your next question comes from the line of Unidentified Analyst

This is a follow-up to the previous question, your line of credit that comes due May 2010, a year from now I also understand that you do not have much outstanding on that but what from I hear from following other REITs, it is taking awhile nowadays to negotiate things with the banks. One of the REIT’s told me it took them 6 months. Do you guys have a timeframe in mind as to what you want to do or you just have other things on your priority list? If you can you just give us some color on that?

Sabina, it is an important question and certainly something we are much focused on. We do have a timeline in place. We are not going to talk about that on this call but historically we have renewed our line of credit several months if not well in advance of when it comes due. So we will be working on it during the course and it is certainly a key objective of Kevin and myself for calendar 2009.

Right. It will be nice to have that liquidity even though you guys have not used much of those.

(Operator instruction) Your next question comes from the line of Philip Martin of Cantor Fitzgerald Philip Martin – Cantor Fitzgerald: Maybe you can talk a little bit about the retailers in the portfolio for a moment. Are you hearing any of the retailers talking about locations in your portfolio are already looking to take advantage of any potential vacancy that you may see there in 2009 because they like your locations better than existing locations elsewhere in their respective market? And I guess retail is looking to take advantage on some of the retail vacancies in order to improved existing locations if ever?

Philip, there is a lot of GLA on the market, whether it is coming out of Linens 'n Things, Circuit City, Mervyn's, whatever and for retailers that are looking to expand and the good news is several of them, whether it is Pete’s, Groceries For Less etcetera they are clearly evaluating all their options. What has changed in the last couple of months is that the types of tenants, the decisions are really getting made closer to the corner office by the CFO and the CEO. Obviously they have a real state committee involved with the key decision makers and these retailers have been looking to open new locations. In our experience they are only looking at this if there is a so-called “deal available.” As a landlord we have very little pricing leverage right now if any and we need to have an A+ location if we plan to give leases. And you are going to struggle to get the existing rent. Let me just add one other thing exactly related to that, we do not have a lot of lease renewals coming up in calendar 2009.It is just right around 2010 but our team had done a very good job on renewing these. Early advantage going quite well that we will be picking numbers of 4 or 5 of those that we expect will not be renewed by the way. Philip Martin – Cantor Fitzgerald : And if you look at those leases that you expect to potentially not get renewed and that is obviously being reflected in your vacancy or occupancy guidance going forward. The locations you expect to have trouble renewing, the location quality I mean are these C locations or are they mixed tag of AB and some C or…

It is a low number of properties I talk to them. One of them is a very, very small tenant, not to knit the needle either way. One of them is a tenant who is interested in renewing but once we are in introduction we think the market range is higher than what is clearly what they are offering. We are going to take it back and release it. We are prepared to have a couple of months of vacancy and then if some of the others we deal it. Philip Martin – Cantor Fitzgerald: So in that market that you just spoke of, you feel that there is a sufficient demand for that location? It may take a few months but there is a retailer demand at the rent that you believe to be market?

Some of it we do and that location is fairly a strong location as the tenants who, over the duration of that lease 15 years the financial portfolio has deteriorated. It is a small public company today. It was a bigger public company and we hoped we can get an upgrade all the way round in terms of rent and in credit. That will, it will take us some months. We need to get closer to the Christmas Season for the tenants to step back.

Just to clarify, in total we have plenty properties but its .9% of our base rentals expiring in 2009, small number. Philip Martin – Cantor Fitzgerald : And the vacancy Kevin that you are forecasting here in the guidance, is that primarily related to renewals as opposed to retailers shutting down?

It is a combination of both. We have probably more new vacancy rather than the lack of renewal but it is a combination. Philip Martin – Cantor Fitzgerald: And Kevin, one other thing here on the assets sales, 6.9% cap rates, how is that trending? I mean certainly you have made 19 of this connect between buyers and sellers out there and the gap that remains and having said that, you are selling properties at 69 cap rate. I know it is a specific type of a property and it is a specific type of a buyer but where do you see that cap rates going and what your estimate on buying? I may have missed that in some of the opening remarks but what is the estimate in assets so far in 2009?

Let me just talk a little bit to the cap rates. Our disposition volume in the full cost is $40 to $50 million and this is a small number but we do not have to sell any of them and if we do not get the pricing that we want, we are not going to do it and by the way you can go to our website and you can see what we are looking to sell. The overall transaction volume is way down because to the extent a buyer is looking to get any date as well as it is possible to fund, number one. Number two is the terms of the date including amortization of principal are very, very onerous so transaction volume is way down which effectively means that the supply of product on the market is considerably higher today than it was in the past and cap rates are up. Those 6.90 numbers, I have no idea what it would be but it is picking on a hundred basis points higher today.

There are no further questions and I would like to turn it over to management for any concluding remarks.

Thank you very much. We appreciate all of you listening and encourage you to call Kevin and myself with any follow-up question. Thank you very much. We will be talking to you all. Good afternoon.