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Record Operating Results For Second Quarter And Six Months Announced By Realty Income



Record Operating Results For Second Quarter And Six Months Announced By Realty
                                    Income

PR Newswire

ESCONDIDO, Calif., July 25, 2013

ESCONDIDO, Calif., July 25, 2013 /PRNewswire/ -- Realty Income Corporation
(Realty Income), The Monthly Dividend Company^® (NYSE: O), today announced
record operating results for the second quarter ended June 30, 2013. Access to
this document is available at www.realtyincome.com. All per share amounts
presented in this press release are on a diluted per common share basis unless
stated otherwise.

(Logo: http://photos.prnewswire.com/prnh/20130507/MM09486LOGO)

COMPANY HIGHLIGHTS:

For the quarter ended June 30, 2013 (as compared to the same quarterly period
in 2012):

  o Revenue increased 63.0% to $184.3 million as compared to $113.1 million
  o Net income available to common stockholders per share was $0.23
  o Normalized FFO available to common stockholders increased 82.8% to $119.2
    million
  o Normalized FFO per share increased 24.5% to $0.61
  o AFFO available to common stockholders increased 73.8% to $115.6 million
  o AFFO per share increased 18.0% to $0.59
  o Same store rents increased 1.1% to $109.9 million
  o Portfolio occupancy increased to 98.2% from 97.3%
  o Invested $738.1 million in 190 new properties and properties under
    development or expansion
  o Increased the monthly dividend in June for the 72^nd time and for the
    63^rd consecutive quarter
  o Dividends paid per common share increased 24.5%

Financial Results

Revenue
Revenue, for the quarter ended June 30, 2013, increased 63.0% to $184.3
million as compared to $113.1 million, for the same quarter in 2012. Revenue,
for the six months ended June 30, 2013, increased 58.1% to $355.5 million as
compared to $224.9 million, for the same period in 2012.

Net Income Available to Common Stockholders
Net income available to common stockholders, for the quarter ended June 30,
2013, was $44.2 million as compared to $33.0 million for the same quarter in
2012. Net income per share, for the quarter ended June 30, 2013, was $0.23 as
compared to $0.25, for the same quarter in 2012.

Net income available to common stockholders, for the six months ended June 30,
2013, was $105.5 million as compared to $59.0 million, for the same period in
2012. Net income per share, for the six months ended June 30, 2013, was $0.57
as compared to $0.44, for the same period in 2012.

The calculation to determine net income for a real estate company includes
impairments and/or gains from the sales of investment properties. Impairments
and/or gains on property sales vary from quarter to quarter. This variance can
significantly impact net income.

FFO Available to Common Stockholders
Funds from Operations (FFO), for the quarter ended June 30, 2013, increased
81.7% to $118.5 million as compared to $65.2 million for the same quarter in
2012. FFO per share, for the quarter ended June 30, 2013, increased 22.4% to
$0.60 as compared to $0.49, for the same quarter in 2012.

FFO, for the six months ended June 30, 2013, increased 67.9% to $211.4 million
as compared to $125.9 million, for the same period in 2012. FFO per share, for
the six months ended June 30, 2013, increased 21.1% to $1.15 as compared to
$0.95, for the same period in 2012.

Normalized FFO Available to Common Stockholders
Normalized Funds from Operations, which is based on FFO adjusted to add back
ARCT merger-related costs, for the quarter ended June 30, 2013, increased
82.8% to $119.2 million as compared to $65.2 million, for the same quarter in
2012. Normalized FFO per share, for the quarter ended June 30, 2013, increased
24.5% to $0.61 as compared to $0.49, for the same quarter in 2012.

Normalized FFO, for the six months ended June 30, 2013, increased 78.0% to
$224.1 million as compared to $125.9 million, for the same period in 2012.
Normalized FFO per share, for the six months ended June 30, 2013, increased
28.4% to $1.22 as compared to $0.95, for the same period in 2012.

AFFO Available to Common Stockholders
Adjusted Funds from Operations (AFFO), for the quarter ended June 30, 2013,
increased 73.8% to $115.6 million as compared to $66.5 million, for the same
quarter in 2012. AFFO per share, for the quarter ended June 30, 2013,
increased 18.0% to $0.59 as compared to $0.50, for the same quarter in 2012.

AFFO, for the six months ended June 30, 2013, increased 65.3% to $219.5
million as compared to $132.8 million, for the same period in 2012. AFFO per
share, for the six months ended June 30, 2013, increased 19.0% to $1.19 as
compared to $1.00, for the same period in 2012.

The company considers FFO, normalized FFO, and AFFO to be appropriate
supplemental measures of a Real Estate Investment Trust's (REIT's) operating
performance. Realty Income defines FFO consistent with the National
Association of Real Estate Investment Trust's (NAREIT's) definition, as net
income available to common stockholders, plus depreciation and amortization of
real estate assets, plus impairments of real estate, reduced by gains on sales
of investment properties and extraordinary items. Normalized FFO adds back
merger-related costs for the acquisition of ARCT. AFFO further adjusts
Normalized FFO for unique revenue and expense items, which are not pertinent
to the measurement of the company's ongoing operating performance. See the
reconciliation of net income available to common stockholders to FFO,
normalized FFO and AFFO on page six. 

Dividend Information
In June 2013, Realty Income announced the 63^rd consecutive quarterly dividend
increase, which is the 72^nd increase in the amount of the dividend since the
company's listing on the New York Stock Exchange in 1994. The annualized
dividend amount, as of June 30, 2013, was approximately $2.179 per share. The
amount of the monthly dividends paid increased 24.5% to $0.544 per share, in
the second quarter of 2013 from $0.437 per share for the same period in 2012.
In addition, through June 30, 2013, the company has paid 515 consecutive
monthly dividends and over $2.5 billion in total dividends since 1969. Realty
Income has a dividend reinvestment and stock purchase program that can be
accessed at www.realtyincome.com. The program is administered by Wells Fargo
Shareowner Services.

Real Estate Portfolio Update

As of June 30, 2013, Realty Income's portfolio of freestanding, single-tenant
properties consisted of 3,681 properties located in 49 states and Puerto Rico,
leased to 194 commercial enterprises doing business in 46 industries. The
properties are leased under long-term, net leases with a weighted average
remaining lease term of approximately 11.0 years.

Portfolio Management Activities
The company's portfolio of commercial real estate, owned primarily under 10-
to 20-year net leases, continues to perform well and provide dependable lease
revenue supporting the payment of monthly dividends. As of June 30, 2013,
portfolio occupancy was 98.2% with 68 properties available for lease out of a
total of 3,681 properties in the portfolio, as compared to 97.3% portfolio
occupancy for the same period in 2012.

Rent Increases
During the quarter ended June 30, 2013, same store rents, on 2,388 properties
under lease, increased 1.1% to $109.9 million, as compared to $108.7 million
for the same quarter in 2012. For the six months ended June 30, 2013, same
store rents, on 2,388 properties under lease, increased 1.3% to
$220.3 million, as compared to $217.5 million for the same period in 2012.

Property Acquisitions
During the second quarter of 2013, Realty Income invested $738.1 million in
190 new properties and properties under development or expansion located in 32
states. These properties are 100% leased with a weighted average lease term of
approximately 14 years and an initial average lease yield of 6.8%. In
addition, approximately 70% of the revenue generated by these acquisitions is
from investment grade tenants.

During the six months ended June 30, 2013, Realty Income invested
approximately $866.5 million in 206 new properties and properties under
development or expansion. The new properties are located in 35 states and are
100% leased with an average lease term of approximately 14 years and an
initial average lease yield of 7.0%. Approximately 61% of the revenue
generated from the year-to-date 2013 acquisitions is from investment grade
tenants. These property acquisitions are in addition to the $3.2 billion
acquisition of 515 properties resulting from Realty Income's acquisition of
American Realty Capital Trust, which was completed during the first quarter of
2013. 

Realty Income maintains a $1.0 billion unsecured acquisition credit facility,
which is used to fund property acquisitions in the near term. As of July 16,
2013, the company repaid all credit facility borrowings with funds from a
notes offering that closed on that date (see "Other Activities" section of the
press release). The full $1.0 billion credit facility is available to fund
additional acquisitions. 

Property Dispositions
Realty Income continued to successfully execute its asset disposition program
in the second quarter of 2013. The objective of this program is to sell assets
when the company believes the reinvestment of the sales proceeds will generate
higher returns, enhance the credit quality of the company's real estate
portfolio, increase the average lease length, and/or decrease tenant or
industry concentration.

During the quarter ended June 30, 2013, Realty Income sold 17 properties for
$23.7 million, with a gain on sales of $5.7 million, as compared to 14
properties sold for $15.0 million, with a gain on sales of $3.4 million,
during the same quarter in 2012.

During the six months ended June 30, 2013, Realty Income sold 34 properties
for $83.7 million, with a gain on sales of $44.3 million, as compared to 19
properties sold for $18.6 million, with a gain on sales of $4.0 million,
during the same period in 2012.

Other Activities

Investment Grade Debt Ratings Upgraded by Standard & Poor's
In June 2013, Realty Income received a ratings upgrade from Standard & Poor's
Ratings Services to BBB+ from BBB on the company's senior unsecured debt
ratings, and to BBB- from BB+ on its preferred stock ratings, with a stable
outlook.

Issuance of $750 million of 4.65% Senior Unsecured Notes
On July 16, 2013, Realty Income issued $750 million of 4.65% senior unsecured
notes due 2023. The public offering price for the notes was 99.775% of the
principal amount for an effective yield to maturity of 4.678%. The net
proceeds from the offering were used to repay all of the borrowings
outstanding under the company's acquisition credit facility and for other
general corporate purposes and working capital, which may include additional
acquisitions.

Direct Stock Purchase and Dividend Reinvestment Plan (the "Stock Plan")
During the second quarter of 2013, Realty Income issued 26,312 common shares
via its Stock Plan, generating gross proceeds of approximately $1.2 million
and, during the six months ended June 30, 2013, issued 44,549 common shares
generating gross proceeds of approximately $2.0 million. 

CEO Comments on Operating Results
Commenting on Realty Income's financial results and real estate operations,
Chief Executive Officer, Tom A. Lewis said, "The second quarter of 2013 was
another record quarter for us. We are again pleased to report significant
increases in all facets of our operations, including continued strength in the
performance of our real estate portfolio, with occupancy increasing to 98.2%
at the end of the second quarter from 97.7% at the end of the first quarter
and acquisition activities continuing at a brisk pace." 

"The key drivers in our second quarter operating results are: 1) $866 million
in new acquisitions, during the first six months of this year, at an initial
average lease yield of 7.0%; 2) the immediately accretive rental revenue from
our acquisition of ARCT for $3.2 billion, completed in January 2013; and 3)
the continued strength of our existing portfolio of properties. We also now
believe 2013 estimated acquisitions will be at least $1.25 billion versus our
prior estimate of $1.0 billion, as acquisition activities remain robust and
are projected to be immediately accretive to 2013 AFFO. Of note, and
consistent with our strategic focus on continuing to increase the overall
credit quality of our real estate portfolio, the majority, approximately 61%,
of the properties acquired are leased to investment grade-rated tenants."

"We were also successful in accessing the capital markets during July 2013,
issuing $750 million of 10-year, 4.65% senior unsecured notes in an offering
that was upsized from an anticipated $500 million issuance. The proceeds from
the $750 million offering will be used to permanently finance the majority of
our property acquisitions. With an average going in cash cap rate of 7.0%, on
the properties acquired, and a 4.65% coupon on the note offering, the spreads
generated from acquisitions will be very positive for our earnings. As a
result of this offering, we were able to pay off our acquisition credit
facility, and so we begin the second half of the year with all of our $1.0
billion acquisition credit facility available to make additional investments."

"For our shareholders that rely on monthly dividend income, we would note the
24.5% increase in the dividends per share paid during the quarter. This is the
result of a sizable increase in the dividend during the first quarter combined
with the two smaller increases we announced in March and June of this year.
Today, our shareholders enjoy an annualized dividend of $2.179, as compared to
the $1.821 dividend at the end of 2012. Given the difficulty income oriented
investors face in generating adequate yield today, we are pleased that our
operations continue to provide our shareholders with an increasing dividend."

FFO and AFFO Commentary
Realty Income's FFO and AFFO per share has historically tended to be stable
and fairly predictable because of the long-term leases that are the primary
source of the company's revenue. There are, however, several factors that can
cause FFO and AFFO per share to vary from levels that have been anticipated by
the company. These factors include, but are not limited to, changes in
interest rates and occupancy rates, periodically accessing the capital
markets, the level and timing of property and entity acquisitions and
dispositions, integration of the acquired ARCT properties including the
finalization of purchase price allocations, lease rollovers, the general real
estate market, and the economy.

2013 Earnings Estimates
Normalized FFO is based on FFO adjusted to add back ARCT merger-related costs.
The Normalized 2013 FFO and AFFO estimates are as follows (excluding the costs
associated with the ARCT transaction):

Normalized FFO per share for 2013 should range from $2.37 to $2.43 per share,
an increase of 17% to 20% over the Normalized 2012 FFO per share of $2.02.
Normalized FFO per share for 2013 is based on an estimated net income per
share range of $0.93 to $0.99, plus estimated real estate depreciation of
$1.63 plus ARCT merger-related costs of $0.07, and reduced by potential
estimated gains on sales of investment properties of $0.26 per share (in
accordance with NAREIT's definition of FFO). 

AFFO per share for 2013 should range from $2.35 to $2.41 per share, an
increase of 14% to 17% over the 2012 AFFO per share of $2.06. AFFO further
adjusts Normalized FFO for unique revenue and expense items, which are not
pertinent to the measurement of the company's ongoing operating performance.
See the reconciliation of net income available to common stockholders to FFO,
normalized FFO and AFFO on page six. 

About Realty Income
Realty Income is The Monthly Dividend Company^®, a New York Stock Exchange
real estate company dedicated to providing shareholders with dependable
monthly income. As of June 30, 2013, the company had paid 515 consecutive
monthly dividends throughout its 44-year operating history. The monthly income
is supported by the cash flows from over 3,600 properties owned under
long-term lease agreements with 194 leading regional and national commercial
enterprises. The company is an active buyer of net-leased properties
nationwide. Additional information about the company can be obtained from the
corporate website at www.realtyincome.com or www.twitter.com/realtyincome.

Forward-Looking Statements
Statements in this press release that are not strictly historical are
"forward-looking" statements. Forward-looking statements involve known and
unknown risks, which may cause the company's actual future results to differ
materially from expected results. These risks include, among others, general
economic conditions, local real estate conditions, tenant financial health,
the availability of capital to finance planned growth, continued volatility
and uncertainty in the credit markets and broader financial markets, property
acquisitions and the timing of these acquisitions, charges for property
impairments, integration of the ARCT acquisition, and the outcome of any legal
proceedings to which the company is a party, as described in the company's
filings with the Securities and Exchange Commission. Consequently,
forward-looking statements should be regarded solely as reflections of the
company's current operating plans and estimates. Actual operating results may
differ materially from what is expressed or forecast in this press release.
The company undertakes no obligation to publicly release the results of any
revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date these statements were made. 

Note to Editors: Realty Income press releases are available via the internet
at http://www.realtyincome.com/invest/newsroom-library/press-releases.shtml.

 

CONSOLIDATED STATEMENTS OF INCOME
For the three and six months ended June 30, 2013 and 2012
(dollars in thousands, except per share amounts - unaudited)
                            Three months  Three months Six months Six months
                            Ended 6/30/13 Ended        Ended      Ended
                                          6/30/12      6/30/13    6/30/12
REVENUE
Rental                      $     182,354 $            $          $    224,020
                                          112,528      352,104
Other                       1,965         605          3,356      858
     Total revenue          184,319       113,133      355,460    224,878
EXPENSES
Depreciation and            77,698        34,742       147,280    69,093
amortization
Interest                    39,100        28,806       80,567     57,758
General and administrative  12,075        9,273        23,688     18,440
Property                    3,283         1,746        6,899      3,668
Income taxes                722           405          1,393      810
Merger-related costs        605           --           12,635     --
Total expenses              133,483       74,972       272,462    149,769
Income from continuing      50,836        38,161       82,998     75,109
operations
Income from discontinued    3,911         5,246        43,562     7,562
operations
Net income                  54,747        43,407       126,560    82,671
Net income attributable to  (77)          --           (86)       --
noncontrolling interests
Net income attributable to  54,670        43,407       126,474    82,671
the Company
Preferred stock dividends   (10,482)      (10,457)     (20,965)   (19,953)
Excess of redemption value
over carrying value of      --            --           --         (3,696)
preferred shares redeemed
Net income available to     $      44,188 $            $          $      
common stockholders                        32,950      105,509    59,022
Funds from operations                     $            $          $    
available to common         $    118,547   65,167      211,435    125,863
stockholders (FFO)
Normalized funds from
operations available to     $    119,152  $            $          $    
common stockholders                        65,167      224,070    125,863
(normalized FFO)
Adjusted funds from                       $            $          $    
operations available to     $    115,564   66,499      219,521    132,793
common stockholders (AFFO)
Per share information for
common stockholders:
Income from continuing      $             $            $          $        
operations, basic and        0.21          0.21         0.34       0.39
diluted
Net income, basic and       $             $            $          $        
diluted                      0.23          0.25         0.57       0.44
FFO:
           Basic            $             $            $          $ 0.95
                             0.61          0.49         1.15
           Diluted          $             $            $          $ 0.95
                             0.60          0.49         1.15
Normalized FFO, basic and   $             $            $          $        
diluted                      0.61          0.49         1.22       0.95
AFFO, basic and diluted     $             $            $          $        
                             0.59          0.50         1.19       1.00
Cash dividends paid per     $             $            $          $      
common share                 0.544         0.437        1.057      0.874

 

FUNDS FROM OPERATIONS (FFO)
(dollars in thousands, except per share amounts)
                     Three Months   Three Months   Six Months    Six Months

                     Ended 6/30/13  Ended 6/30/12  Ended 6/30/13 Ended 6/30/12
Net income available $              $              $             $      
to common             44,188         32,950         105,509      59,022
stockholders
Depreciation and
amortization:
Continuing           77,698         34,742         147,280       69,093
operations
Discontinued         196            896            520           1,848
operations
Depreciation
allocated to         (220)          --             (395)         --
noncontrolling
interest
Depreciation of
furniture, fixtures  (67)           (67)           (127)         (135)
& equipment
Provisions for
impairment on        2,496          --             2,952         --
investment
properties
Gain on sales of
investment
properties,          (5,744)        (3,354)        (44,304)      (3,965)
discontinued
operations
FFO available to     118,547        65,167         211,435       125,863
common stockholders
Merger-related costs 605            --             12,635        --
Normalized FFO                      $      
available to common  $      119,152  65,167        $     224,070 $     125,863
stockholders
FFO per common
share:
    Basic            $              $              $             $        
                     0.61           0.49            1.15          0.95
    Diluted          $              $              $             $        
                     0.60           0.49            1.15          0.95
Normalized FFO per   $              $              $             $        
common share, basic  0.61           0.49            1.22          0.95
and diluted
Dividends paid to    $      106,692 $       58,360 $     191,669 $     116,552
common stockholders
Normalized FFO in
excess of dividends  $              $              $             $      
paid to common        12,460        6,807          32,401         9,311
stockholders
Weighted average
number of common
shares used for
computation per
share:
Basic                195,574,014    132,592,939    183,714,191   132,643,698
Diluted              196,099,610    132,828,540    184,165,700   132,785,213

We define FFO, a non-GAAP measure, consistent with the National Association of
Real Estate Investment Trust's definition, as net income available to common
stockholders, plus depreciation and amortization of real estate assets, plus
impairments of real estate assets, reduced by gains on sales of investment
properties and extraordinary items. We define normalized FFO, a non-GAAP
measure, as FFO excluding the ARCT merger-related costs.

 

ADJUSTED FUNDS FROM OPERATIONS (AFFO)
(dollars in thousands, except per share amounts)
Most companies in our industry use a similar measurement to AFFO, but they may
use the term "CAD" (for Cash Available for Distribution) or "FAD" (for Funds
Available for Distribution).
                           Three Months Three Months Six Months    Six Months

                           Ended        Ended        Ended 6/30/13 Ended
                           6/30/13      6/30/12                    6/30/12
Net income available to    $            $            $             $      
common stockholders        44,188       32,950        105,509      59,022
Cumulative adjustments to
calculate normalized       74,964       32,217       118,561       66,841
FFO^(1)
Normalized FFO available   119,152      65,167       224,070       125,863
to common stockholders
Excess of redemption value
over carrying value of     --           --           --            3,696
preferred share redemption
Amortization of            3,653        2,593        7,498         5,550
share-based compensation
Amortization of deferred   1,015        609          2,021         1,226
financing costs^(2)
Amortization of net        (2,494)      (71)         (4,441)       (168)
mortgage premiums
(Gain) loss on interest    (1,738)      40           (1,286)       53
rate swaps
Capitalized leasing costs  (361)        (431)        (774)         (698)
and commissions
Capitalized building       (1,255)      (914)        (2,520)       (1,707)
improvements
Other adjustments^(3)      (2,408)      (494)        (5,047)       (1,022)
Total AFFO available to    $            $            $             $    
common stockholders        115,564      66,499        219,521      132,793
AFFO per common share,     $            $            $             $          
basic and diluted          0.59         0.50          1.19         1.00
Dividends paid to common   $            $            $             $    
stockholders               106,692      58,360        191,669      116,552
AFFO in excess of          $            $            $             $      
dividends paid to common   8,872        8,139         27,852       16,241
stockholders

^(1) See FFO and normalized FFO calculation above for reconciling items.
     Includes the amortization of costs incurred and capitalized when our
     notes were issued in March 2003, November 2003, March 2005, September
     2005, September 2006, September 2007, June 2010, June 2011 and October
     2012. Additionally, this includes the amortization of deferred financing
^(2) costs incurred and capitalized in connection with our assumption of the
     mortgages payable and the issuance of our term loan. The deferred
     financing costs are being amortized over the lives of the respective
     mortgages and term loan. No costs associated with our credit facility
     agreements or annual fees paid to credit rating agencies have been
     included.
^(3) Includes straight-line rent revenue, and the amortization of above and
     below-market leases.

 

HISTORICAL FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS
(dollars in thousands, except per share amounts)
For the three
months ended June  2013        2012        2011        2010        2009
30,
Net income
available to       $           $           $           $           $        
common              44,188      32,950      33,185      24,985     26,497
stockholders
Depreciation and   77,607      35,571      29,000      23,469      22,922
amortization
Provisions for
impairment on
Realty Income      2,496       --          10          53          --
investment
properties
Gain on sales of
investment         (5,744)     (3,354)     (1,251)     (1,663)     (2,239)
properties
FFO                118,547     65,167      60,944      46,844      47,180
Merger-related     605         --          --          --          --
costs
Normalized FFO     $           $           $           $           $      
                    119,152     65,167     60,944       46,844      47,180
Normalized FFO per $           $           $           $           $          
diluted share       0.61        0.49        0.48        0.45         0.46
AFFO               $           $           $           $           $        
                    115,564     66,499      62,370      47,730     47,943
AFFO per diluted   $           $           $           $           $          
share               0.59        0.50        0.49        0.46         0.46
Cash dividends     $           $           $           $           $          
paid per share      0.544       0.437       0.434       0.430      0.426
Weighted average
diluted shares     196,099,610 132,828,540 126,202,047 103,765,828 103,450,457
outstanding

 

For the six months 2013        2012        2011        2010        2009
ended June 30,
Net income
available to       $           $           $           $           $        
common              105,509     59,022      63,120      49,127     50,518
stockholders
Depreciation and   147,278     70,806      55,791      46,682      45,833
amortization
Provisions for
impairment on
Realty Income      2,952       --          210         87          --
investment
properties
Gain on sales of
investment         (44,304)    (3,965)     (1,379)     (2,366)     (2,436)
properties
FFO                211,435     125,863     117,742     93,530      93,915
Merger-related     12,635      --          --          --          --
costs
Normalized FFO     $           $           $           $           $        
                    224,070     125,863     117,742     93,530     93,915
Normalized FFO per $           $           $           $           $          
diluted share       1.22        0.95        0.96        0.90         0.91
AFFO               $           $           $           $           $        
                    219,521     132,793     120,610     95,344     95,619
AFFO per diluted   $           $           $           $           $          
share               1.19        1.00        0.98        0.92         0.92
Cash dividends     $           $           $           $           $          
paid per share      1.057       0.874       0.866       0.859      0.851
Weighted average
diluted shares     184,165,700 132,785,213 122,691,418 103,778,609 103,479,897
outstanding

 

CONSOLIDATED BALANCE SHEETS
As of June 30, 2013 and December 31, 2012
(dollars in thousands)
                                                 2013           2012
                                                 (unaudited)
ASSETS
Real estate, at cost:
      Land                                       $  2,539,628   $   1,999,820
      Buildings and improvements                 6,672,354      3,920,865
      Total real estate, at cost                 9,211,982      5,920,685
      Less accumulated depreciation and          (998,079)      (897,767)
amortization
      Net real estate held for investment        8,213,903      5,022,918
      Real estate held for sale, net             16,808         19,219
            Net real estate                      8,230,711      5,042,137
Cash and cash equivalents                        22,575         5,248
Accounts receivable, net                         27,507         21,659
Acquired lease intangible assets, net            972,049        242,125
Goodwill                                         15,834         16,945
Other assets, net                                146,857        115,249
      Total assets                               $  9,415,533   $  5,443,363
LIABILITIES AND EQUITY
Distributions payable                            $       39,280 $       23,745
Accounts payable and accrued expenses            77,411         70,426
Acquired lease intangible liabilities, net       116,381        26,471
Other liabilities                                29,266         26,059
Lines of credit payable                          701,000        158,000
Mortgages payable, net                           827,109        175,868
Term loan                                        70,000         --
Notes payable                                    2,450,000      2,550,000
      Total liabilities                          4,310,447      3,030,569
Stockholders' equity:
Preferred stock and paid in capital              609,363        609,363
Common stock and paid in capital                 5,329,715      2,572,092
Distributions in excess of net income            (870,199)      (768,661)
      Total stockholders' equity                 5,068,879      2,412,794
Noncontrolling interests                         36,207         --
      Total equity                               5,105,086      2,412,794
      Total liabilities and equity               $ 9,415,533    $  5,443,363

 

Realty Income Performance vs. Major Stock Indices
                               Equity              Dow Jones                               NASDAQ
                  Realty                REIT         Industrial                    S&P        
           Income              Index(1)            Average             500                        Composite        
           Dividend Total      Dividend Total      Dividend Total      Dividend Total      Dividend    Total
           Yield    Return^(2) Yield    Return^(3) Yield    Return^(3) Yield    Return^(3) Yield       Return^(4)
10/18 to   10.5%    10.8%      7.7%     0.0%       2.9%     (1.6%)     2.9%     (1.2%)     0.5%        (1.7%)
12/31/94
1995       8.3%     42.0%      7.4%     15.3%      2.4%     36.9%      2.3%     37.6%      0.6%        39.9%
1996       7.9%     15.4%      6.1%     35.3%      2.2%     28.9%      2.0%     23.0%      0.2%        22.7%
1997       7.5%     14.5%      5.5%     20.3%      1.8%     24.9%      1.6%     33.4%      0.5%        21.6%
1998       8.2%     5.5%       7.5%     (17.5%)    1.7%     18.1%      1.3%     28.6%      0.3%        39.6%
1999       10.5%    (8.7%)     8.7%     (4.6%)     1.3%     27.2%      1.1%     21.0%      0.2%        85.6%
2000       8.9%     31.2%      7.5%     26.4%      1.5%     (4.7%)     1.2%     (9.1%)     0.3%        (39.3%)
2001       7.8%     27.2%      7.1%     13.9%      1.9%     (5.5%)     1.4%     (11.9%)    0.3%        (21.1%)
2002       6.7%     26.9%      7.1%     3.8%       2.6%     (15.0%)    1.9%     (22.1%)    0.5%        (31.5%)
2003       6.0%     21.0%      5.5%     37.1%      2.3%     28.3%      1.8%     28.7%      0.6%        50.0%
2004       5.2%     32.7%      4.7%     31.6%      2.2%     5.6%       1.8%     10.9%      0.6%        8.6%
2005       6.5%     (9.2%)     4.6%     12.2%      2.6%     1.7%       1.9%     4.9%       0.9%        1.4%
2006       5.5%     34.8%      3.7%     35.1%      2.5%     19.0%      1.9%     15.8%      0.8%        9.5%
2007       6.1%     3.2%       4.9%     (15.7%)    2.7%     8.8%       2.1%     5.5%       0.8%        9.8%
2008       7.3%     (8.2%)     7.6%     (37.7%)    3.6%     (31.8%)    3.2%     (37.0%)    1.3%        (40.5%)
2009       6.6%     19.3%      3.7%     28.0%      2.6%     22.6%      2.0%     26.5%      1.0%        43.9%
2010       5.1%     38.6%      3.5%     27.9%      2.6%     14.0%      1.9%     15.1%      1.2%        16.9%
2011       5.0%     7.3%       3.8%     8.3%       2.8%     8.3%       2.3%     2.1%       1.3%        (1.8%)
2012       4.5%     20.1%      3.5%     19.7%      3.0%     10.2%      2.5%     16.0%      2.6%        15.9%
YTD Q2     5.2%     6.9%       3.5%     5.8%       2.5%     15.2%      2.2%     13.8%      1.4%        12.7%
2013
Compounded
Average
Annual              17.3%               11.1%               9.9%                8.9%                   8.3%
Total
Return^(5)

Note: All of these dividend yields are calculated as annualized dividends
based on last dividend paid in applicable time period divided by the closing
price as of period end. Dividend yield sources: NAREIT website and Bloomberg,
except for the 1994 NASDAQ dividend yield which was sourced from
Datastream/Thomson Financial.

^(1)        FTSE NAREIT US Equity REIT Index, as per NAREIT website.
            Calculated as the difference between the closing stock price as of
            period end, less the closing stock price as of previous period,
^(2)        plus dividends paid in period, divided by closing stock price as
            of end of previous period. Does not include reinvestment of
            dividends.
^(3)        Includes reinvestment of dividends. Sources: NAREIT website and
            Factset.
^(4)        Price only index, does not include dividends. Source: Factset.
            ^ All of these Compounded Average Annual Total Return rates are
            calculated in the same manner: from Realty Income's NYSE listing
            on October 18, 1994 through June 30, 2013, and (except for NASDAQ)
^(5)        assuming reinvestment of dividends. Past performance does not
            guarantee future performance. Realty Income presents this data for
            informational purposes only and makes no representation about its
            future performance or how it will compare in performance to other
            indices in the future.

 

Property Type Diversification
The following table sets forth certain property type information regarding
Realty Income's property portfolio as of June 30, 2013 (dollars in thousands):
                                   Approximate   Rental        Percentage of
                                                 Revenue for
                 Number of         Leasable      the Quarter   Rental
                                                 Ended
Property Type    Properties        Square Feet   June 30,      Revenue
                                                 2013^(1)
Retail           3,543             36,740,700    $ 141,914     77.7%
Distribution     64                15,302,300    21,350        11.7
Office           36                2,277,800     9,691         5.3
Agriculture      15                184,500       5,145         2.8
Manufacturing    11                3,457,500     4,267         2.3
Industrial       12                383,200       355           0.2
Totals           3,681             58,346,000    $ 182,722     100.0%

     Includes rental revenue for all properties owned by Realty Income at June
^(1) 30, 2013, including revenue from properties reclassified as discontinued
     operations of $392. Excludes revenue of $24 from properties owned by
     Crest.

 

Tenant Diversification
The largest tenants based on percentage of total portfolio rental revenue at
June 30, 2013 include the following:
FedEx                                5.3%        Rite Aid              2.3%
LA Fitness                           4.5%        Regal Cinemas         2.2%
Walgreens                            4.1%        Dollar General        2.1%
Family Dollar                        3.5%        CVS Pharmacy          2.0%
AMC Theatres                         3.3%        The Pantry            1.9%
Diageo                               3.1%        Circle K              1.8%
BJ's Wholesale Clubs                 3.0%        Walmart/Sam's Club    1.7%
Northern Tier Energy/Super America   2.7%

 

Industry Diversification
The following table sets forth certain information regarding Realty Income's
property portfolio classified according to the business of the respective
tenants, expressed as a percentage of our total rental revenue:
                      Percentage of  Rental Revenue^(1)
                      For the
                      Quarter    For the Years Ended
                      Ended
                      June 30,   Dec      Dec      Dec    Dec    Dec    Dec
                                 31,      31,      31,    31,    31,    31,
                      2013       2012     2011     2010   2009   2008   2007
Retail industries
   Apparel stores     1.9     %  1.7   %  1.4   %  1.2  % 1.1  % 1.1  % 1.2  %
   Automotive         0.8        1.1      0.9      1.0    1.1    1.0    1.1
   collision services
   Automotive parts   1.1        1.0      1.2      1.4    1.5    1.6    2.1
   Automotive service 2.2        3.1      3.7      4.7    4.8    4.8    5.2
   Automotive tire    3.9        4.7      5.6      6.4    6.9    6.7    7.3
   services
   Book stores        0.1        0.1      0.1      0.1    0.2    0.2    0.2
   Child care         3.0        4.5      5.2      6.5    7.3    7.6    8.4
   Consumer           0.3        0.5      0.5      0.6    0.7    0.8    0.9
   electronics
   Convenience stores 11.4       16.3     18.5     17.1   16.9   15.8   14.0
   Crafts and         0.5        0.3      0.2      0.3    0.3    0.3    0.3
   novelties
   Dollar stores      5.6        2.2      -        -      -      -      -
   Drug stores        6.9        3.5      3.8      4.1    4.3    4.1    2.7
   Education          0.5        0.7      0.7      0.8    0.9    0.8    0.8
   Entertainment      0.7        0.9      1.0      1.2    1.3    1.2    1.4
   Equipment services 0.1        0.1      0.2      0.2    0.2    0.2    0.2
   Financial services 1.7        0.2      0.2      0.2    0.2    0.2    0.2
   General            1.1        0.6      0.6      0.8    0.8    0.8    0.7
   merchandise
   Grocery stores     3.2        3.7      1.6      0.9    0.7    0.7    0.7
   Health and fitness 5.9        6.8      6.4      6.9    5.9    5.6    5.1
   Health care        *          -        -        -      -      -      -
   Home furnishings   0.9        1.0      1.1      1.3    1.3    2.4    2.6
   Home improvement   1.3        1.5      1.7      2.0    2.2    2.1    2.4
   Jewelry            0.1        -        -        -      -      -      -
   Motor vehicle      1.6        2.1      2.2      2.6    2.7    3.2    3.1
   dealerships
   Office supplies    0.5        0.8      0.9      0.9    1.0    1.0    1.1
   Pet supplies and   0.9        0.6      0.7      0.9    0.9    0.8    0.9
   services
   Restaurants -      5.5        7.3      10.9     13.4   13.7   14.3   14.9
   casual dining
   Restaurants -      4.4        5.9      6.6      7.7    8.3    8.2    6.6
   quick service
   Shoe stores        0.1        0.1      0.2      0.1    -      -      -
   Sporting goods     1.8        2.5      2.7      2.7    2.6    2.3    2.6
   Theaters           6.3        9.4      8.8      8.9    9.2    9.0    9.0
   Transportation     0.1        0.2      0.2      0.2    0.2    0.2    0.2
   services
   Wholesale clubs    3.3        3.2      0.7      -      -      -      -
   Other              *          0.1      0.1      0.3    1.1    1.2    1.9
   Retail industries  77.7    %  86.7  %  88.6  %  95.4 % 98.3 % 98.2 % 97.8 %

 

Industry Diversification (continued)
                      Percentage of  Rental Revenue^(1)
                      For the
                      Quarter  For the Years Ended
                      Ended
                                                                         
                      June 30, Dec     Dec     Dec     Dec     Dec     Dec
                               31,     31,     31,     31,     31,     31,
                      2013     2012    2011    2010    2009    2008    2007
Non-retail industries
 Aerospace            0.9      0.9     0.5     -       -       -       -
 Beverages            3.4      5.1     5.6     3.0     -       -       -
 Consumer appliances  0.6      0.1     -       -       -       -       -
 Consumer goods       1.1      0.1     -       -       -       -       -
 Crafts and novelties 0.1      -       -       -       -       -       -
 Diversified          0.1      0.1     -       -       -       -       -
 industrial
 Equipment services   0.3      0.3     0.2     -       -       -       -
 Financial services   0.5      0.4     0.3     -       -       -       -
 Food processing      1.6      1.3     0.7     -       -       -       -
 Government services  1.5      0.1     0.1     0.1     0.1     -       -
 Health care          2.2      *       *       -       -       -       -
 Home furnishings     0.2      -       -       -       -       -       -
 Home improvement     0.3      -       -       -       -       -       -
 Insurance            0.1      *       -       -       -       -       -
 Machinery            0.2      0.1     -       -       -       -       -
 Other manufacturing  0.6      -       -       -       -       -       -
 Packaging            1.0      0.7     0.4     -       -       -       -
 Paper                0.2      0.1     0.1     -       -       -       -
 Shoe stores          0.9      -       -       -       -       -       -
 Telecommunications   0.7      0.8     0.7     -       -       -       -
 Transportation       5.8      2.2     1.6     -       -       -       -
 services
 Other                *        1.0     1.2     1.5     1.6     1.8     2.2
 Non-retail           22.3   % 13.3  % 11.4  % 4.6   % 1.7   % 1.8   % 2.2   %
 industries
     Totals           100.0  % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

*    Less than 0.1%
     Includes rental revenue for all properties owned by Realty Income at the
^(1) end of each period presented, including revenue from properties
     reclassified as discontinued operations. Excludes revenue from properties
     owned by Crest.

 

Lease Expirations
The following table sets forth certain information regarding Realty Income's property portfolio
regarding the timing of the lease term expirations (excluding rights to extend a lease at the
option of the tenant) on our 3,597 net leased, single-tenant properties as of June 30, 2013
(dollars in thousands):
       Total Portfolio                        Initial Expirations^(3)    Subsequent
                                                                         Expirations^(4)
                             Rental                      Rental                     Rental
                             Revenue                     Revenue                    Revenue
                             for the                     for the                    for the
                             Quarter   % of              Quarter  % of              Quarter  % of
       Number   Approx.      Ended    Total   Number     Ended   Total   Number     Ended   Total
       of       Leasable     June 30, Rental   of        June    Rental   of        June    Rental
       Leases                                 Leases     30,             Leases     30,
Year   Expiring Sq. Feet     2013^(2) Revenue Expiring   2013    Revenue Expiring   2013    Revenue
       ^(1)
2013   107      828,000    $ 2,642    1.5   % 31       $ 977     0.6   % 76       $ 1,665   0.9   %
2014   155      1,074,200    3,834    2.1     53         1,753   1.0     102        2,081   1.1
2015   169      911,500      3,868    2.1     67         1,779   1.0     102        2,089   1.1
2016   187      1,110,300    4,094    2.3     119        2,492   1.4     68         1,602   0.9
2017   171      1,978,900    5,690    3.1     45         2,954   1.6     126        2,736   1.5
2018   243      3,244,300    10,022   5.5     162        7,670   4.2     81         2,352   1.3
2019   168      2,787,200    9,645    5.3     156        9,147   5.0     12         498     0.3
2020   107      3,358,200    8,238    4.5     96         7,869   4.3     11         369     0.2
2021   187      5,164,600    13,130   7.2     179        12,611  6.9     8          519     0.3
2022   209      7,563,800    14,051   7.8     201        13,794  7.6     8          257     0.2
2023   328      4,436,600    16,865   9.3     317        16,268  9.0     11         597     0.3
2024   137      2,065,500    6,145    3.4     137        6,145   3.4     0          0       0.0
2025   288      3,702,200    16,113   8.9     283        15,992  8.8     5          121     0.1
2026   232      3,326,200    11,476   6.4     229        11,394  6.3     3          82      0.1
2027   444      4,371,300    14,920   8.2     442        14,880  8.2     2          40      *
2028 - 465      11,192,500   40,567   22.4    458        40,420  22.3    7          147     0.1
2043
Totals 3,597    57,115,300 $ 181,300  100.0 % 2,975    $ 166,145 91.6  % 622      $ 15,155  8.4   %

*    Less than 0.1%
     Excludes 16 multi-tenant properties and 68 vacant unleased properties,
^(1) one of which is a multi-tenant property. The lease expirations for
     properties under construction are based on the estimated date of
     completion of those properties.
     Includes rental revenue of $392 from properties reclassified as
^(2) discontinued operations and excludes revenue of $1,422 from 16
     multi-tenant properties and from 68 vacant and unleased properties at
     June 30, 2013.  Excludes revenue of $24 from four properties owned by
     Crest.
^(3) Represents leases to the initial tenant of the property that are expiring
     for the first time.
^(4) Represents lease expirations on properties in the portfolio, which have
     previously been renewed, extended or re-tenanted.

 

Geographic Diversification
The following table sets forth certain state-by-state information regarding
Realty Income's property portfolio as of June 30, 2013 (dollars in thousands):
                                                          Rental
                                                          Revenue
                                             Approximate  for the   Percentage
                                                          Quarter   of
                      Number of   Percent    Leasable     Ended     Rental
                                                          June 30,
State                 Properties  Leased     Square Feet  2013 ^    Revenue
                                                          (1)
Alabama               88          97       % 665,800      $ 2,545   1.4     %
Alaska                2           100        128,500        307     0.2
Arizona               105         97         1,141,000      4,895   2.7
Arkansas              30          93         559,200        1,122   0.6
California            148         100        3,998,100      19,288  10.6
Colorado              67          99         729,200        2,474   1.4
Connecticut           24          100        468,000        2,107   1.2
Delaware              16          100        29,500         418     0.2
Florida               239         99         2,564,000      10,322  5.6
Georgia               180         96         2,396,400      7,259   4.0
Hawaii                --          --         --             --      --
Idaho                 13          100        91,800         473     0.3
Illinois              140         100        3,463,000      9,493   5.2
Indiana               96          98         978,500        4,274   2.3
Iowa                  34          91         2,675,600      3,026   1.7
Kansas                76          100        1,564,400      3,105   1.7
Kentucky              39          97         754,500        2,668   1.5
Louisiana             66          100        756,500        2,268   1.2
Maine                 9           100        126,400        489     0.3
Maryland              32          100        1,113,500      3,715   2.0
Massachusetts         82          94         723,900        3,117   1.7
Michigan              101         100        923,200        2,866   1.6
Minnesota             155         100        1,152,000      7,198   3.9
Mississippi           90          96         1,233,900      2,274   1.2
Missouri              122         99         2,311,000      6,466   3.5
Montana               2           50         30,000         3       *
Nebraska              26          100        381,800        1,253   0.7
Nevada                19          100        372,400        1,189   0.7
New Hampshire         19          100        295,000        1,187   0.6
New Jersey            63          97         403,900        2,608   1.4
New Mexico            24          100        182,500        516     0.3
New York              80          99         1,970,300      9,942   5.4
North Carolina        119         97         1,105,200      4,284   2.3
North Dakota          7           100        66,000         117     0.1
Ohio                  188         97         4,689,700      9,977   5.5
Oklahoma              110         100        1,448,800      2,330   1.3
Oregon                24          100        455,200        1,517   0.8
Pennsylvania          149         99         1,712,600      6,988   3.8
Rhode Island          3           100        11,000         37      *
South Carolina        121         97         776,800        3,949   2.2
South Dakota          11          100        133,500        263     0.1
Tennessee             148         97         1,921,300      4,649   2.5
Texas                 382         98         6,523,300      17,472  9.6
Utah                  11          100        731,000        1,191   0.7
Vermont               5           100        78,200         432     0.2
Virginia              122         97         2,488,900      6,285   3.4
Washington            38          100        404,000        1,268   0.7
West Virginia         11          100        252,000        864     0.5
Wisconsin             38          95         1,315,300      1,956   1.1
Wyoming               3           100        21,100         63      *
Puerto Rico           4           100        28,300         213     0.1
Totals\Average        3,681       98       % 58,346,000   $ 182,722 100.0   %

*    Less than 0.1%
     Includes rental revenue for all properties owned by Realty Income at June
^(1) 30, 2013, including revenue from properties reclassified as discontinued
     operations of $392.  Excludes revenue of $24 from properties owned By
     Crest.

 

SOURCE Realty Income Corporation

Website: http://www.realtyincome.com
Contact: Tere H. Miller, Vice President, Corporation Communications, (760)
741-2111, x1177
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