Record Operating Results For First Quarter 2014 Announced By Realty Income

May 01, 2014, 09:15 ET from Realty Income Corporation

ESCONDIDO, Calif., May 1, 2014 /PRNewswire/ -- Realty Income Corporation (Realty Income), The Monthly Dividend Company® (NYSE: O), today announced record operating results for the first quarter ended March 31, 2014. 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.

COMPANY HIGHLIGHTS:

For the quarter ended March 31, 2014 (as compared to the same quarterly period in 2013):

  • Revenue increased 26.3% to $221.6 million as compared to $175.5 million
  • Net income available to common stockholders per share was $0.23
  • FFO available to common stockholders increased 29.7% to $134.5 million
  • FFO per share increased 8.3% to $0.65
  • AFFO available to common stockholders increased 27.6% to $132.7 million
  • AFFO per share increased 6.7% to $0.64
  • Same store rents increased 1.5% to $131.4 million
  • Portfolio occupancy increased to 98.3% from 97.7%
  • Invested $656.7 million in 337 new properties and properties under development or expansion
  • Increased the monthly dividend in March for the 75th time and for the 66th consecutive quarter
  • Dividends paid per common share increased 6.4%
  • Also, generated net proceeds of approximately $528.5 million in 13.8 million common share offering in April

Financial Results

Revenue Revenue, for the quarter ended March 31, 2014, increased 26.3% to $221.6 million as compared to $175.5 million, for the same quarter in 2013.

Net Income Available to Common Stockholders Net income available to common stockholders, for the quarter ended March 31, 2014, was $47.2 million as compared to $62.7 million for the same quarter in 2013. Net income available to common stockholders, for the quarter ended March 31, 2013, was impacted by an unusually large gain on sale of real estate. Net income per share, for the quarter ended March 31, 2014, was $0.23 as compared to $0.36, for the same quarter in 2013. 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 and period to period comparisons.

Funds From Operations Available to Common Stockholders (FFO) FFO, for the quarter ended March 31, 2014, increased 29.7% to $134.5 million as compared to $103.7 million, for the same quarter in 2013. FFO, for the quarter ended March 31, 2013, was normalized to exclude 2013 merger-related costs for Realty Income's acquisition of American Realty Capital Trust, Inc., or ARCT. All references to FFO for the first quarter of 2013 reflect this adjustment for merger-related costs. FFO per share, for the quarter ended March 31, 2014, increased 8.3% to $0.65 as compared to $0.60, for the same quarter in 2013.

Net income, for the quarter ended March 31, 2013, has been adjusted from that previously reported in Realty Income's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013, as a result of measurement period adjustments, previously reported in Realty Income's 2013 Annual Report on Form 10-K, that were recorded during the second half of 2013 upon completion of the real estate valuations for the acquisition of ARCT. As a result of these adjustments to the asset allocation, revisions were made to the consolidated statement of income for the first quarter of 2013 for the impact related to rental revenue and depreciation and amortization. Because of these revisions, net income increased by $1.4 million, with no impact on earnings per share, while FFO decreased by $1.2 million, or $0.01 per share, for the first quarter of 2013.

Adjusted Funds From Operations Available to Common Stockholders (AFFO) AFFO, for the quarter ended March 31, 2014, increased 27.6% to $132.7 million as compared to $104.0 million, for the same quarter in 2013. AFFO per share, for the quarter ended March 31, 2014, increased 6.7% to $0.64 as compared to $0.60, for the same quarter in 2013.

The company considers 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. FFO, for the first quarter of 2013, has also been normalized to add back merger-related costs for the acquisition of ARCT. AFFO further adjusts FFO for unique revenue and expense items, which the company believes are not as pertinent to the measurement of the company's ongoing operating performance. See the reconciliations of net income available to common stockholders to FFO and AFFO on page six. 

Dividend Information In March 2014, Realty Income announced the 66th consecutive quarterly dividend increase, which is the 75th 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 March 31, 2014, was approximately $2.19 per share. The amount of monthly dividends paid per share increased 6.4% to $0.547 in the first quarter of 2014 compared to $0.514 for the same period in 2013. In addition, through March 31, 2014, the company has paid 524 consecutive monthly dividends and over $2.9 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 March 31, 2014, Realty Income's portfolio of freestanding, single-tenant properties consisted of 4,208 properties located in 49 states and Puerto Rico, leased to 211 commercial tenants doing business in 47 industries. The properties are leased under long-term, net leases with a weighted average remaining lease term of approximately 10.8 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 March 31, 2014, portfolio occupancy was 98.3% with 73 properties available for lease out of a total of 4,208 properties in the portfolio, as compared to 97.7% portfolio occupancy, or 81 properties available for lease, as of March 31, 2013.

Rent Increases During the quarter ended March 31, 2014, same store rents, on 2,784 properties under lease, increased 1.5% to $131.4 million, as compared to $129.4 million for the same quarter in 2013.

Property Acquisitions During the first quarter of 2014, Realty Income invested $656.7 million in 337 new properties and properties under development or expansion, located in 35 states. These properties are 100% leased with a weighted average lease term of approximately 14.2 years and an initial average lease yield of 7.0%. The tenants occupying the new properties operate in 15 industries, and the property types consist of 88% retail, 8% industrial and distribution and 4% office, based on annualized rental revenue.

Realty Income maintains a $1.5 billion unsecured acquisition credit facility, which is used to fund property acquisitions in the near term. As of April 3, 2014, approximately $1.29 billion was available on the credit facility to fund additional acquisitions, after using stock offering proceeds (discussed below) to pay down the credit facility.

Property Dispositions Realty Income continued to successfully execute its asset disposition program. During the quarter ended March 31, 2014, Realty Income sold 11 properties for $12.7 million, with a gain on sales of $3.9 million, as compared to 17 properties sold for $60.0 million, with a gain on sales of $38.6 million, during the same quarter in 2013.

During the first quarter of 2014, the Financial Accounting Standards Board issued guidance that changes the definition of discontinued operations by limiting discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have, or will have, a major effect on an entity's operations and financial results. Previously, Realty Income had reported all properties sold and held for sale within a period as discontinued operations. The company early adopted the requirements of this accounting pronouncement in the first quarter of 2014. As a result, Realty Income's results of operations for all qualifying disposals and properties classified as held for sale that were not previously reported in discontinued operations in Realty Income's 2013 Annual Report on Form 10-K are presented within income from continuing operations on the consolidated statements of income.

Other Activities

Issued 13.8 Million Shares in an Upsized Common Share Offering On April 1, 2014, Realty Income issued 13.8 million common shares priced at $39.96 per share. Net proceeds of approximately $528.5 million were used to repay a portion of the borrowings under the company's acquisition credit facility.

Realty Income Names Debra Bonebrake Senior Vice President – Industrial, Distribution and Office Properties On March 3, 2014, Realty Income announced that Debra Bonebrake was named Senior Vice President – Industrial, Distribution and Office Properties.

Direct Stock Purchase and Dividend Reinvestment Plan During the first quarter of 2014, Realty Income issued 55,870 common shares via its Stock Plan at an average price of $40.69 per share. The Plan generated gross proceeds of approximately $2.3 million during the quarter.

CEO Comments on Operating Results Commenting on Realty Income's results and real estate operations, Chief Executive Officer, John P. Case, said,  "We are pleased with our operating results for the first quarter of 2014. We achieved record quarterly AFFO per share of $0.64, representing an increase of 6.7% from the same period last year. The portfolio continues to perform quite well, with same store rent rising 1.5% from a year ago and occupancy increasing to 98.3%, the highest it's been since 2007."  

"Acquisitions again contributed to these positive first quarter results. We completed $656.7 million in acquisitions this quarter, making it our second most acquisitive quarter in our company's history. These acquisitions include $274.3 million of the previously announced $503 million transaction with Inland Diversified Real Estate Trust, Inc. We expect the majority of the remaining properties to close during the second quarter of 2014. The properties acquired during the quarter are leased to 22 different tenants in 15 industries, and located across 35 states. Retail properties comprised the majority of acquisitions accounting for 88%, while industrial and distribution accounted for 8%. Approximately 84% of the revenue generated by these acquisitions is from investment grade-rated tenants. We are pleased to have continued to add to the portfolio's credit quality and diversification through these acquisitions, while achieving a weighted average lease term of 14.2 years and an initial average lease yield of 7.0%."  

"Subsequent to the quarter-end, we successfully accessed the capital markets, raising approximately $529 million in net proceeds in a common stock offering on April 1st. The original offering of 10.5 million shares was upsized to 13.8 million shares, allowing us to pay down our $1.5 billion acquisitions credit facility. We are well positioned with ample liquidity to fund 2014 acquisitions activity."

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, lease rollovers, the general real estate market, and the economy.

2014 Earnings Estimates FFO per share for 2014 should range from $2.53 to $2.58, an increase of 5% to 7% over 2013 FFO (normalized to exclude 2013 ARCT merger-related costs) per share of $2.41. FFO per share for 2014 is based on a net income per share range of $0.86 to $0.91, plus estimated real estate depreciation of $1.72 per share, and reduced by potential estimated gains on sales of investment properties of $0.05 per share (in accordance with NAREIT's definition of FFO). 

AFFO per share for 2014 should range from $2.53 to $2.58, an increase of 5% to 7% over the 2013 AFFO per diluted share of $2.41. AFFO further adjusts FFO for unique revenue and expense items, which are not as pertinent to the measurement of the company's ongoing operating performance.

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 March 31, 2014, the company had paid 524 consecutive monthly dividends throughout its 45-year operating history. The monthly income is supported by the cash flows from over 4,200 properties owned under long-term lease agreements with 211 leading regional and national commercial tenants. 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, 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

(dollars in thousands, except per share amounts - unaudited)

Three months

Three months

Ended 3/31/14

Ended 3/31/13

REVENUE

Rental

$

214,122

$

167,798

Tenant reimbursements

6,427

6,027

Other

1,023

1,697

Total revenue

221,572

175,522

EXPENSES

Depreciation and amortization

89,970

66,749

Interest

51,720

41,599

General and administrative

12,886

11,628

Property (including reimbursable)

10,577

9,572

Income taxes

1,091

577

Merger-related costs

-

12,030

Provisions for impairment

1,683

-

Total expenses

167,927

142,155

Gain on sales of real estate

1,271

-

Income from continuing operations

54,916

33,367

Income from discontinued operations

3,077

39,859

Net income

57,993

73,226

Net income attributable to noncontrolling interests

(332)

(9)

Net income attributable to the Company

57,661

73,217

Preferred stock dividends

(10,482)

(10,482)

Net income available to common stockholders

$

47,179

$

62,735

Funds from operations available to common stockholders (FFO)

$

 

134,520

 

$

 

103,688(1)

Adjusted funds from operations available to common stockholders (AFFO)

$

132,660

$

 

103,972

Per share information for common stockholders:

Income from continuing operations,

basic and diluted

$

0.21

$

0.13

Net income:

Basic

$

0.23

$

0.37

Diluted

$

0.23

$

0.36

FFO, basic and diluted

$

0.65

$

0.60(1)

AFFO:

Basic

$

0.64

$

0.61

Diluted

$

0.64

$

0.60

Cash dividends paid per common share

$

0.547

$

0.514

(1) Normalized to exclude ARCT merger-related costs

 

FUNDS FROM OPERATIONS (FFO)

(dollars in thousands, except per share amounts)

Three months

Three months

Ended 3/31/14

Ended 3/31/13

Net income available to common stockholders

$

47,179

$

62,735

Depreciation and amortization:

Continuing operations

89,970

66,749

Discontinued operations

-

513

Depreciation of furniture, fixtures and equipment

(91)

(61)

Provisions for impairment on investment properties

Continuing operations

1,683

-

Discontinued operations

-

456

Gain on sale of investment properties,

Continuing operations

(1,271)

-

Discontinued operations

(2,607)

(38,559)

Merger-related costs (1)

-

12,030

FFO adjustments allocable to non-controlling interests

(343)

(175)

FFO available to common stockholders, basic and diluted

$

134,520

$

103,688

FFO per common share, basic and diluted

$

0.65

$

0.60

Distributions paid to common stockholders

$

113,414

$

84,977

FFO in excess of distributions paid to common stockholders, basic and diluted

$

21,106

$

18,711

Weighted average number of common shares used for FFO:

Basic

207,003,950

171,659,191

Diluted

207,007,341

172,053,880

(1)    FFO for the three months ended March 31, 2013, has been normalized to exclude ARCT merger-related costs.

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.

ADJUSTED FUNDS FROM OPERATIONS (AFFO)

(dollars in thousands, except per share amounts)

We define AFFO as FFO adjusted for unique revenue and expense items, which the company believes are not as pertinent to the measurement of the company's ongoing operating performance.  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

Ended 3/31/14

Ended 3/31/13

Net income available to common stockholders

$

47,179

$

62,735

Cumulative adjustments to calculate FFO (1)

87,341

40,953

FFO available to common stockholders

134,520

103,688

Amortization of share-based compensation

2,697

3,845

Amortization of deferred financing costs (2)

1,076

1,006

Amortization of net mortgage premiums

(2,385)

(1,947)

Loss on interest rate swaps

57

452

Capitalized leasing costs and commissions

(192)

(413)

Capitalized building improvements

(1,177)

(1,265)

Straight-line rent

(3,936)

(3,204)

Amortization of above and below-market leases

1,994

1,794

AFFO adjustments allocable to non-controlling interests

6

16

AFFO available to common stockholders, basic and diluted

$

132,660

$

103,972

AFFO per common share:

Basic

$

0.64

$

0.61

Diluted

$

0.64

$

0.60

Distributions paid to common stockholders

$

113,414

$

84,977

AFFO in excess of distributions paid to common stockholders, basic and diluted

$

19,246

$

18,995

Weighted average number of common shares used for AFFO:

Basic

207,003,950

171,659,191

Diluted

207,007,341

172,053,880

(1)

See FFO calculation above for reconciling items.

(2)

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, October 2012 and July 2013. Additionally, this includes the amortization of deferred financing costs incurred and capitalized in connection with our assumption of our 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.

 

HISTORICAL FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

(dollars in thousands, except per share amounts)

For the three months ended March 31,

2014

2013

2012

2011

2010

Net income available to common stockholders

$

47,179

$

62,735

$

26,071

$

29,936

$

24,142

Depreciation and amortization

89,879

67,201

35,235

26,791

23,213

Provisions for impairment on investment properties

1,683

456

-

200

34

Gain on sales of investment properties

(3,878)

(38,559)

(611)

(129)

(703)

Merger-related costs(1)

-

12,030

-

-

-

FFO adjustments allocable to non-controlling interests

(343)

(175)

-

-

-

FFO

134,520

103,688

60,695

56,798

46,686

FFO per diluted share

$

0.65

$

0.60

$

0.46

$

0.48

$

0.45

AFFO

$

132,660

$

103,972

$

66,294

$

58,239

$

47,615

AFFO per diluted share

$

0.64

$

0.60

$

0.50

$

0.49

$

0.46

Cash dividends paid per share

$

0.547

$

0.514

$

0.437

$

0.433

$

0.429

Weighted average diluted shares outstanding

207,007,341

172,053,880

132,703,954

119,109,044

103,686,440

(1)

FFO for the three months ended March 31, 2013, has been normalized to exclude ARCT merger-related costs.

 

REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

March 31, 2014 and December 31, 2013

(dollars in thousands, except per share data)

2014

2013

ASSETS

(unaudited)

Real estate, at cost:

Land

$

2,917,117

$

2,791,147

Buildings and improvements

7,603,513

7,108,328

Total real estate, at cost

10,520,630

9,899,475

Less accumulated depreciation and amortization

(1,179,550)

(1,114,888)

Net real estate held for investment

9,341,080

8,784,587

Real estate held for sale, net

12,145

12,022

Net real estate

9,353,225

8,796,609

Cash and cash equivalents

14,142

10,257

Accounts receivable, net

40,329

39,323

Acquired lease intangible assets, net

986,063

935,459

Goodwill

15,598

15,660

Other assets, net

71,424

127,133

Total assets

$

10,480,781

$

9,924,441

LIABILITIES AND EQUITY

Distributions payable

$

41,543

$

41,452

Accounts payable and accrued expenses

70,340

102,511

Acquired lease intangible liabilities, net

155,195

148,250

Other liabilities

40,769

44,030

Line of credit payable

740,100

128,000

Term loan

70,000

70,000

Mortgages payable, net

822,270

783,360

Notes payable, net

3,185,796

3,185,480

Total liabilities

5,126,013

4,503,083

Commitments and contingencies

Stockholders' equity:

Preferred stock and paid in capital, par value $0.01 per share, 69,900,000 shares authorized and 25,150,000 shares issued and outstanding as of March 31, 2014 and December 31, 2013

 

609,363

 

609,363

Common stock and paid in capital, par value $0.01 per share, 370,100,000 shares authorized, 207,631,143 shares issued and outstanding as of March 31, 2014 and 207,485,073 shares issued and outstanding at December 31, 2013

 

5,774,395

 

5,767,878

Distributions in excess of net income

(1,058,120)

(991,794)

Total stockholders' equity

5,325,638

5,385,447

Noncontrolling interests

29,130

35,911

Total equity

5,354,768

5,421,358

Total liabilities and equity

$

10,480,781

$

9,924,441

 

Realty Income Performance vs. Major Stock Indices

Equity

NASDAQ

Realty Income

REIT Index (1)

DJIA

S&P 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 12/31/1994

10.5%

10.8%

7.7%

0.0%

2.9%

(1.6%)

2.9%

(1.2%)

0.5%

(1.7%)

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%

2013

5.8%

(1.8%)

3.9%

2.9%

2.3%

29.6%

2.0%

32.4%

1.4%

38.3%

Q1 YTD 2014

5.3%

10.9%

3.6%

3.3%

2.2%

(0.1%)

2.0%

1.8%

1.2%

0.5%

Compounded Average Annual Total Return (5)

16.7%

10.9%

10.1%

9.4%

9.1%

 Note:   All of these dividend yields are calculated as annualized dividends based on the 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.

(2)

Calculated as the difference between the closing stock price as of period end less the closing stock price as of previous period, plus dividends paid in period, divided by closing stock price as of end of previous period.  Does not include reinvestment of dividends for the annual percentages.

(3)

Includes reinvestment of dividends.  Source:  NAREIT website and Factset.

(4)

Price only index, does not include dividends.  Source:  Factset.

(5)

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 March 31, 2014, and (except for NASDAQ) 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 March 31, 2014 (dollars in thousands):

   Approximate

Rental Revenue for

Percentage of

Number of

      Leasable

the Quarter Ended

Rental

Property Type

Properties

   Square Feet

March 31, 2014(1)

Revenue

Retail

4,056

43,720,800

$

166,573

77.9%

Industrial and distribution

81

16,007,300

22,962

10.7

Office

43

3,240,300

13,975

6.5

Manufacturing

13

3,715,200

5,278

2.5

Agriculture

15

184,500

5,209

2.4

Totals

4,208

66,868,100

$

213,997

100.0%

(1)

Includes rental revenue for all properties owned by Realty Income at March 31, 2014, including revenue from properties reclassified as discontinued operations of $13.  Excludes revenue of $44 from properties owned by Crest and $94 from sold properties that were included in continuing operations.

 

Tenant Diversification

The largest tenants based on percentage of total portfolio rental revenue at March 31, 2014 include the following:

Walgreens

5.4%

Northern Tier Energy/Super America

2.3%

FedEx

5.2%

Rite Aid

2.0%

Dollar General

5.0%

Regal Cinemas

2.0%

Family Dollar

4.7%

CVS Pharmacy

2.0%

LA Fitness

4.6%

The Pantry

1.7%

AMC Theatres

2.9%

Circle K

1.6%

Diageo

2.8%

Walmart/Sam's Club

1.5%

BJ's Wholesale Clubs

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 Ended

For the Years Ended

March 31,

Dec 31,

Dec 31,

Dec 31,

Dec 31,

Dec 31,

Dec 31,

2014

2013

2012

2011

2010

2009

2008

Retail industries

Apparel stores

1.8%

1.9%

1.7%

1.4%

1.2%

1.1%

1.1%

Automotive collision services

0.8

0.8

1.1

0.9

1.0

1.1

1.0

Automotive parts

1.2

1.2

1.0

1.2

1.4

1.5

1.6

Automotive service

1.8

2.1

3.1

3.7

4.7

4.8

4.8

Automotive tire services

3.3

3.6

4.7

5.6

6.4

6.9

6.7

Book stores

*

*

0.1

0.1

0.1

0.2

0.2

Child care

2.3

2.8

4.5

5.2

6.5

7.3

7.6

Consumer electronics

0.3

0.3

0.5

0.5

0.6

0.7

0.8

Convenience stores

10.3

11.2

16.3

18.5

17.1

16.9

15.8

Crafts and novelties

0.5

0.5

0.3

0.2

0.3

0.3

0.3

Dollar stores

9.1

6.2

2.2

-

-

-

-

Drug stores

9.5

8.1

3.5

3.8

4.1

4.3

4.1

Education

0.4

0.4

0.7

0.7

0.8

0.9

0.8

Entertainment

0.6

0.6

0.9

1.0

1.2

1.3

1.2

Equipment services

0.1

0.1

0.1

0.2

0.2

0.2

0.2

Financial services

1.4

1.5

0.2

0.2

0.2

0.2

0.2

General merchandise

1.1

1.1

0.6

0.6

0.8

0.8

0.8

Grocery stores

2.8

2.9

3.7

1.6

0.9

0.7

0.7

Health and fitness

6.9

6.3

6.8

6.4

6.9

5.9

5.6

Health care

1.1

1.1

-

-

-

-

-

Home furnishings

0.8

0.9

1.0

1.1

1.3

1.3

2.4

Home improvement

1.3

1.6

1.5

1.7

2.0

2.2

2.1

Jewelry

0.1

0.1

-

-

-

-

-

Motor vehicle dealerships

1.7

1.6

2.1

2.2

2.6

2.7

3.2

Office supplies

0.4

0.5

0.8

0.9

0.9

1.0

1.0

Pet supplies and services

0.8

0.8

0.6

0.7

0.9

0.9

0.8

Restaurants - casual dining

4.5

5.1

7.3

10.9

13.4

13.7

14.3

Restaurants - quick service

4.0

4.4

5.9

6.6

7.7

8.3

8.2

Shoe stores

0.1

0.1

0.1

0.2

0.1

-

-

Sporting goods

1.6

1.7

2.5

2.7

2.7

2.6

2.3

Theaters

5.4

6.2

9.4

8.8

8.9

9.2

9.0

Transportation services

0.1

0.1

0.2

0.2

0.2

0.2

0.2

Wholesale clubs

4.1

3.9

3.2

0.7

-

-

-

Other

0.1

0.1

0.1

0.1

0.3

1.1

1.2

Retail industries

80.3%

79.8%

86.7%

88.6%

95.4%

98.3%

98.2%

 

Industry Diversification (continued)

Percentage of  Rental Revenue(1)

For the

Quarter Ended

For the Years Ended

March 31,

Dec 31,

Dec 31,

Dec 31,

Dec 31,

Dec 31,

Dec 31,

2014

2013

2012

2011

2010

2009

2008

Non-retail industries

Aerospace

1.2

1.2

0.9

0.5

-

-

-

Beverages

2.9

3.3

5.1

5.6

3.0

-

-

Consumer appliances

0.5

0.6

0.1

-

-

-

-

Consumer goods

1.0

1.0

0.1

-

-

-

-

Crafts and novelties

0.1

0.1

-

-

-

-

-

Diversified industrial

0.2

0.2

0.1

-

-

-

-

Electric utilities

0.1

*

-

-

-

-

-

Equipment services

0.5

0.4

0.3

0.2

-

-

-

Financial services

0.5

0.5

0.4

0.3

-

-

-

Food processing

1.4

1.5

1.3

0.7

-

-

-

General merchandise

0.2

-

-

-

-

-

-

Government services

1.3

1.4

0.1

0.1

0.1

0.1

-

Health care

0.8

0.8

*

*

-

-

-

Home furnishings

0.2

0.2

-

-

-

-

-

Insurance

0.1

0.1

*

-

-

-

-

Machinery

0.2

0.2

0.1

-

-

-

-

Other manufacturing

0.6

0.6

-

-

-

-

-

Packaging

0.8

0.9

0.7

0.4

-

-

-

Paper

0.1

0.2

0.1

0.1

-

-

-

Shoe stores

0.8

0.9

-

-

-

-

-

Telecommunications

0.6

0.7

0.8

0.7

-

-

-

Transportation services

5.2

5.3

2.2

1.6

-

-

-

Other

0.4

0.1

1.0

1.2

1.5

1.6

1.8

Non-retail industries

19.7%

20.2%

13.3%

11.4%

4.6%

1.7%

1.8%

Totals

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

*

Less than 0.1%

(1)

Includes rental revenue for all properties owned by Realty Income at the end of each period presented, including revenue from properties reclassified as discontinued operations. Excludes revenue from properties owned by Crest Net Lease, Inc., or 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 4,116 net leased, single-tenant properties as of March 31, 2014 (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 Leases

Leasable

Mar 31,

Rental

of Leases

Mar 31,

Rental

of Leases

Mar 31,

Rental

Year

Expiring(1)

Sq. Feet

2014(2)

Revenue

Expiring

2014

Revenue

Expiring

2014

Revenue

2014

119

846,900

$

2,952

1.4%

39

$

1,348

0.6%

80

$

1,604

0.8%

2015

173

876,600

3,950

1.8

66

1,767

0.8

107

2,183

1.0

2016

204

1,231,400

4,947

2.3

121

2,812

1.3

83

2,135

1.0

2017

181

2,069,900

6,040

2.9

47

3,194

1.5

134

2,846

1.4

2018

284

3,576,000

11,155

5.3

166

7,890

3.7

118

3,265

1.6

2019

208

3,123,200

11,024

5.3

163

9,832

4.7

45

1,192

0.6

2020

113

3,513,000

9,137

4.3

101

8,461

4.0

12

676

0.3

2021

192

5,340,500

13,803

6.5

184

13,291

6.3

8

512

0.2

2022

226

7,250,700

14,780

7.0

217

14,500

6.9

9

280

0.1

2023

362

6,341,400

20,510

9.7

349

19,847

9.4

13

663

0.3

2024

148

2,407,900

7,647

3.6

148

7,647

3.6

-

-

-

2025

299

4,120,200

17,583

8.4

294

17,456

8.3

5

127

0.1

2026

237

3,471,200

12,524

5.9

234

12,441

5.9

3

83

*

2027

461

4,755,500

15,346

7.3

459

15,306

7.3

2

40

*

2028

288

5,913,900

15,833

7.5

286

15,780

7.5

2

53

*

2029 - 2043

621

10,567,600

43,800

20.8

613

43,592

20.7

8

208

0.1

Totals

4,116

65,405,900

$

211,031

100.0%

3,487

$

195,164

92.5%

629

$

15,867

7.5%

*

Less than 0.1%

(1)

Excludes 19 multi-tenant properties and 73 vacant unleased properties, 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.

(2)

Includes rental revenue of $13 from properties reclassified as discontinued operations and excludes revenue of $2,965 from 19 multi-tenant properties and from 73 vacant and unleased properties at March 31, 2014, $94 from sold properties included in continuing operations and $44 from 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 March 31, 2014 (dollars in thousands):

Approximate

Rental Revenue for

Percentage of

Number of

Percent

Leasable

 the Quarter Ended

Rental

State

Properties

Leased

Square Feet

March 31, 2014(1)

Revenue

Alabama            

127

98%

1,029,300

$

3,252

1.5%

Alaska             

2

100

128,500

307

0.1

Arizona            

114

96

1,235,000

5,564

2.6

Arkansas           

54

96

793,200

1,556

0.7

California         

161

98

4,780,800

22,716

10.6

Colorado           

69

99

792,100

2,885

1.4

Connecticut        

24

96

490,500

2,061

1.0

Delaware           

16

100

29,500

420

0.2

Florida            

320

99

3,363,700

12,995

6.1

Georgia            

229

98

2,917,600

8,976

4.2

Hawaii             

--

--

--

--

*

Idaho              

12

100

87,000

427

0.2

Illinois           

158

99

4,249,400

12,283

5.7

Indiana            

105

99

1,166,100

4,950

2.3

Iowa               

35

97

2,751,700

3,353

1.6

Kansas             

82

99

1,638,200

3,404

1.6

Kentucky           

54

98

886,900

3,046

1.4

Louisiana          

88

97

954,300

2,700

1.3

Maine

9

100

126,400

837

0.4

Maryland           

32

100

654,100

3,709

1.7

Massachusetts      

84

96

761,000

3,192

1.5

Michigan           

105

98

955,200

3,221

1.5

Minnesota          

155

100

1,153,200

7,346

3.4

Mississippi        

121

98

1,551,500

3,677

1.7

Missouri           

131

98

2,554,000

7,788

3.6

Montana            

1

100

5,400

13

*

Nebraska           

31

100

708,700

1,663

0.8

Nevada             

22

95

413,000

1,287

0.6

New Hampshire      

20

100

320,100

1,238

0.6

New Jersey         

65

98

497,000

2,642

1.2

New Mexico         

26

100

208,000

563

0.3

New York           

85

95

2,048,900

10,185

4.8

North Carolina     

147

99

1,496,900

5,548

2.6

North Dakota       

7

100

66,000

117

0.1

Ohio               

211

98

5,004,600

11,840

5.5

Oklahoma           

124

100

1,583,700

3,777

1.8

Oregon             

25

100

525,400

1,747

0.8

Pennsylvania       

146

99

1,747,500

6,943

3.3

Rhode Island       

4

100

157,200

459

0.2

South Carolina     

133

99

963,700

4,368

2.1

South Dakota       

11

100

133,500

244

0.1

Tennessee          

191

97

2,994,700

5,995

2.8

Texas              

415

98

7,369,800

20,892

9.8

Utah               

13

100

749,000

1,337

0.6

Vermont            

6

100

100,700

499

0.2

Virginia           

140

97

2,628,600

6,883

3.2

Washington         

38

100

415,300

1,556

0.7

West Virginia      

12

100

261,200

882

0.4

Wisconsin          

41

95

1,370,600

2,442

1.1

Wyoming            

3

100

21,100

63

*

Puerto Rico

4

100

28,300

149

0.1

Totals\Average

4,208

98%

66,868,100

$

213,997

100.0%

*

Less than 0.1%

(1)

Includes rental revenue for all properties owned by Realty Income at March 31, 2014, including revenue from properties reclassified as discontinued operations of $13.  Excludes revenue of $44 from properties owned by Crest and $94 from sold properties that were included in continuing operations.

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SOURCE Realty Income Corporation



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