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ORLANDO-Commercial Net Lease Realty Inc., one of the country’s most aggressive retail investment REITs, reported Q1 net earnings of $9.1 million or 23 cents per share compared to $11.6 million or 29 cents per share for the comparable 2002 period.

Included in the earnings was a $2.4 million non-recurring charge the locally based firm took in settling a lawsuit on appraisal rights related to the 2001 acquisition of Captec Net Lease Realty. The charge lowered funds from operations to $11.8 million or 29 cents per share from a reported gross $14.2 million or 35 cents per share. FFO in Q1 of 2002 was $14.1 million.

In a prepared statement, CNLR president and chief operating officer Gary M. Ralston says the settlement “approximated the current value of the original merger consideration (which included cash, common shares, preferred shares and subsequent dividends).” He says the company considers the settlement a prudent action because it “will be able to avoid the cost of continued litigation.”

Rental and earned income totaled $450,000 versus $887,000 in the same period last year. Total revenue was $525,000 against $887,000 in the 2002 quarter.

“Our portfolio of well-located, single-tenant properties net-leased to creditworthy tenants, continues to generate stable cash flow,” Ralston says. CNLR has $4.9 million in cash and cash equivalents, up from the $1.7 million in Q1 of 2002.

“We are pleased to be one of only 228 public companies that have paid increased annual dividends to shareholders for 13 or more consecutive years,” Ralston says. “Protecting and growing the dividend is our main priority.”

The company owns, either directly or through investment interests, 345 properties in 39 states with total gross leasable area of about 6.7 million sf. Occupancy at March 31, the end of the REIT’s first fiscal quarter, was 95.8%. Total assets, including real estate, mortgages, receivables and notes, are $955.1 million versus $954.1 million in Q1 of 2002.

CNLR’s common was trading on the New York Stock Exchange May 7 in the $16.25 per-share range on volume of 5.2 million. The company has 40 million common shares outstanding.

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