2014

Record Operating Results For Fourth Quarter And 2013 Announced By Realty Income

ESCONDIDO, Calif., Feb. 13, 2014 /PRNewswire/ -- Realty Income Corporation (Realty Income), The Monthly Dividend Company® (NYSE: O), today announced record operating results for the fourth quarter ended December 31, 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 December 31, 2013 (as compared to the same quarterly period in 2012):

  • Revenue increased 62.4% to $215.7 million as compared to $132.8 million
  • Net income available to common stockholders per share was $0.26
  • Normalized FFO available to common stockholders increased 68.4% to $124.6 million
  • Normalized FFO per share increased 8.9% to $0.61
  • AFFO available to common stockholders increased 72.4% to $125.7 million
  • AFFO per share increased 12.7% to $0.62
  • Same store rents increased 1.8% to $110.0 million
  • Portfolio occupancy increased to 98.2% from 97.2%
  • Generated net proceeds of approximately $378 million in 9.775 million common share offering
  • Invested $145.3 million in 66 new properties and properties under development or expansion
  • Increased the monthly dividend in December for the 74th time and for the 65th consecutive quarter
  • Dividends paid per common share increased 20.3%
  • Increased credit facility borrowing capacity to $1.5 billion from $1.0 billion

For the year ended December 31, 2013 (as compared to 2012):

  • Revenue increased 61.2% to $778.4 million as compared to $482.8 million
  • Net income available to common stockholders per share was $1.06
  • Normalized FFO available to common stockholders increased 71.9% to $462.0 million
  • Normalized FFO per share increased 19.3% to $2.41
  • AFFO available to common stockholders increased 68.9% to $463.1 million
  • AFFO per share increased 17.0% to $2.41
  • Same store rents increased 1.4% to $435.2 million
  • Invested $1.5 billion in 459 new properties and properties under development or expansion (excluding ARCT)
  • Closed on the $3.2 billion acquisition of ARCT, successfully integrating 515 properties into the company's property portfolio
  • Including ARCT acquisition, invested $4.7 billion in 974 properties
  • Raised gross proceeds of $3.94 billion to fund 2013 real estate acquisitions, ARCT acquisition, and repay borrowings under the credit facility
  • Dividends paid per common share increased 21.2%
  • Paid the 521st consecutive monthly dividend in December 2013

Financial Results

Revenue

Revenue, for the quarter ended December 31, 2013, increased 62.4% to $215.7 million as compared to $132.8 million, for the same quarter in 2012. Revenue for 2013 increased 61.2% to $778.4 million as compared to $482.8 million for 2012.

Net Income Available to Common Stockholders

Net income available to common stockholders, for the quarter ended December 31, 2013, was $53.9 million as compared to $28.5 million for the same quarter in 2012. Net income per share, for the quarter ended December 31, 2013, was $0.26 as compared to $0.21, for the same quarter in 2012.

Net income available to common stockholders, in 2013, was $203.6 million as compared to $114.5 million for 2012. Net income per share, in 2013, was $1.06 as compared to $0.86 for 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 and period to period comparisons.

FFO Available to Common Stockholders

Funds from Operations (FFO), for the quarter ended December 31, 2013, increased 73.9% to $124.5 million as compared to $71.6 million for the same quarter in 2012. FFO per share, for the quarter ended December 31, 2013, increased 13.0% to $0.61 as compared to $0.54, for the same quarter in 2012.

FFO, in 2013, increased 72.1% to $449.0 million as compared to $260.9 million for the same period in 2012. FFO per share, in 2013, increased 19.4% to $2.34 as compared to $1.96 for 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 December 31, 2013, increased 68.4% to $124.6 million as compared to $74.0 million, for the same quarter in 2012. Normalized FFO per share, for the quarter ended December 31, 2013, increased 8.9% to $0.61 as compared to $0.56, for the same quarter in 2012.

Normalized FFO, in 2013, increased 71.9% to $462.0 million as compared to $268.8 million for 2012. Normalized FFO per share, in 2013, increased 19.3% to $2.41 as compared to $2.02 for 2012.

AFFO Available to Common Stockholders

Adjusted Funds from Operations (AFFO), for the quarter ended December 31, 2013, increased 72.4% to $125.7 million as compared to $72.9 million, for the same quarter in 2012. AFFO per share, for the quarter ended December 31, 2013, increased 12.7% to $0.62 as compared to $0.55, for the same quarter in 2012.

AFFO, in 2013, increased 68.9% to $463.1 million as compared to $274.2 million for 2012. AFFO per share, for 2013, increased 17.0% to $2.41 as compared to $2.06 for 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 the company believes are not as 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 seven. 

Dividend Information

In December 2013, Realty Income announced the 65th consecutive quarterly dividend increase, which is the 74th 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 December 31, 2013, was approximately $2.186 per share. The amount of monthly dividends paid per share increased 21.2% to $2.147 in 2013 compared to $1.772 per share in 2012. In addition, through December 31, 2013, the company has paid 521 consecutive monthly dividends and over $2.7 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 December 31, 2013, Realty Income's portfolio of freestanding, single-tenant properties consisted of 3,896 properties located in 49 states and Puerto Rico, leased to 205 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 December 31, 2013, portfolio occupancy was 98.2% with 70 properties available for lease out of a total of 3,896 properties in the portfolio, as compared to 97.2% portfolio occupancy, or 84 properties available for lease, as of December 31, 2012.

Rent Increases

During the quarter ended December 31, 2013, same store rents, on 2,338 properties under lease, increased 1.8% to $110.0 million, as compared to $108.1 million for the same quarter in 2012. During 2013, same store rents, on 2,338 properties under lease, increased 1.4% to $435.2 million, as compared to $429.0 million for 2012.

Property Acquisitions

During the fourth quarter of 2013, Realty Income invested $145.3 million in 66 new properties, and properties under development or expansion, located in 28 states. These properties are 100% leased with a weighted average lease term of approximately 12.5 years and an initial average lease yield of 7.3%. The tenants occupying the new properties operate in 16 industries, and the property types consist of 80% retail, 12% office, and 8% industrial and distribution, based on rental revenue.

During 2013, Realty Income invested approximately $1.5 billion in 459 new properties and properties under development or expansion. The new properties are located in 40 states and are 100% leased with an average lease term of approximately 14 years and an initial average lease yield of 7.1%. Approximately 65% of the revenue generated from the 2013 acquisitions is from investment grade tenants. The tenants occupying the new properties operate in 23 industries, and the property types consist of 84% retail, 9% office, 5% industrial and distribution, and 2% manufacturing, based on rental revenue. These properties are in addition to the $3.2 billion acquisition of 515 properties added to the company's real estate portfolio upon the closing of the ARCT transaction during the first quarter of 2013. The combined real estate acquisitions in 2013 were $4.7 billion invested in 974 new properties and properties under development or expansion.  

Realty Income maintains a $1.5 billion unsecured acquisition credit facility, which is used to fund property acquisitions in the near term. As of December 31, 2013, $1.37 billion was available on the credit facility to fund additional acquisitions.

Property Dispositions

Realty Income continued to successfully execute its asset disposition program. During the quarter ended December 31, 2013, Realty Income sold 22 properties for $28.0 million, with a gain on sales of $14.3 million, as compared to 14 properties sold for $16.3 million, with a gain on sales of $1.2 million, during the same quarter in 2012. During 2013, Realty Income sold 75 properties for $134.2 million, with a gain on sales of $64.7 million, as compared to 44 properties sold for $50.6 million, with a gain on sales of $9.9 million, during 2012.

Other Quarterly Activities

Expansion of Unsecured Credit Facility

On October 29, 2013, Realty Income announced the expansion of the company's unsecured acquisition credit facility to $1.5 billion from $1.0 billion. The company exercised the $500 million accordion expansion of the existing credit facility with its current bank lending group. All other material business terms of the credit facility remain unchanged. As of December 31, 2013, the company had borrowing capacity of approximately $1.37 billion available on the facility.

Issued 9.775 Million Shares In An Upsized Common Share Offering

On October 25, 2013, Realty Income issued 9.775 million common shares priced at $40.63 per share. Net proceeds of approximately $378 million were used to repay a portion of the borrowings under the company's acquisition credit facility.

Realty Income Names Sumit Roy as Chief Investment Officer

On October 16, 2013, Realty Income announced that Sumit Roy assumed the position of Chief Investment Officer.

Direct Stock Purchase and Dividend Reinvestment Plan Activities

During the fourth quarter of 2013, Realty Income issued 1,359,164 common shares via its Stock Plan at an average price of $39.36 per share. The Plan generated gross proceeds of $52.0 million during the quarter. For 2013, the company issued 1,449,139 common shares via the Stock Plan, at an average price of $43.04 per share, raising gross proceeds of $55.9 million.

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 to report record results for the fourth quarter and for 2013. Revenue significantly increased to over $778 million in 2013, contributing to a 19.3% increase in normalized FFO per share, to $2.41, and a 17% increase in AFFO per share, to $2.41. Record earnings growth also allowed us to increase the dividends paid per share to our shareholders in 2013 by 21.2%, the largest increase in the company's history. Additionally, our existing portfolio of 3,896 properties continues to perform well with occupancy increasing to 98.2% at the end of 2013, as compared to 97.2% at the end of 2012. We also realized same store rent increases of 1.8% for the fourth quarter, and 1.4% for 2013. 

"We completed $1.5 billion in acquisitions for 2013, of which $145.3 million were closed during the fourth quarter. The weighted average remaining lease term of the properties acquired in 2013 was 14 years, and 84% of the acquisitions were retail properties. Including our acquisition of American Realty Capital Trust in January 2013, we invested approximately $4.7 billion in real estate, the highest level of acquisitions in the company's 45-year history. We funded the 2013 acquisitions by issuing $3.2 billion of common stock, $820 million in unsecured notes with an average maturity of 10 years, and assuming approximately $630 million of existing debt.

We also expanded our unsecured credit facility to $1.5 billion from $1.0 billion, providing us with additional liquidity to fund acquisitions. We are currently anticipating approximately $1.2 billion in acquisitions for 2014. As of February 12, 2014, we have borrowing capacity of approximately $917 million on the credit facility to fund additional property investment activities."

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 per share, an increase of 5% to 7% over 2013 FFO per share of $2.41. FFO per share for 2014 is based on a net income per share range of $0.84 to $0.89, plus estimated real estate depreciation of $1.76 per share, and reduced by potential estimated gains on sales of investment properties of $0.07 per share (in accordance with NAREIT's definition of FFO). 

AFFO per share for 2014 should range from $2.53 to $2.58 per share, 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 December 31, 2013, the company had paid 521 consecutive monthly dividends throughout its 45-year operating history. The monthly income is supported by the cash flows from over 3,800 properties owned under long-term lease agreements with 205 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

For the three months and years ended December 31, 2013 and 2012

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
















Three months


Three months


Year


Year



Ended 12/31/13


Ended 12/31/12


Ended 12/31/13


Ended 12/31/12

REVENUE













Rental


$

204,828


$

127,777


$

747,570


$

466,498

Tenant reimbursements



9,325



4,507



24,944



14,619

Other



1,547



519



5,861



1,730














Total revenue



215,700



132,803



778,375



482,847














EXPENSES













Depreciation and amortization



85,245



41,755



306,577



147,323

Interest



50,645



35,065



180,916



122,542

General and administrative



16,511



10,223



56,827



37,998

Property (including reimbursable)



13,056



6,053



38,838



21,297

Income taxes



670



215



2,734



1,430

Merger-related costs



138



2,404



13,013



7,899

Provisions for impairment



-



3,639



290



3,639














Total expenses



166,265



99,354



599,195



342,128














Income from continuing operations



49,435



33,449



179,180



140,719

Income from discontinued operations



15,199



5,575



67,103



18,433














Net income



64,634



39,024



246,283



159,152

Net income attributable to noncontrolling interests



(298)



-



(719)



-














Net income attributable to the Company



64,336



39,024



245,564



159,152

Preferred stock dividends



(10,482)



(10,482)



(41,930)



(40,918)

Excess of redemption value over carrying value of













preferred shares redeemed



-



-



-



(3,696)














Net income available to common stockholders


$

53,854


$

28,542


$

203,634


$

114,538














Funds from operations available to













common stockholders (FFO)


$

124,492


$

71,579


$

449,017


$

260,862

Normalized funds from operations available to













common stockholders (normalized FFO)


$

124,630


$

73,983


$

462,030


$

268,761

Adjusted funds from operations available to













common stockholders (AFFO)


$

125,700


$

72,892


$

463,139


$

274,183














Per share information for common stockholders:













Income from continuing operations,













basic and diluted


$

0.19


$

0.17


$

0.71


$

0.72

Net income, basic and diluted


$

0.26


$

0.21


$

1.06


$

0.86

FFO, basic and diluted


$

0.61


$

0.54


$

2.34


$

1.96

Normalized FFO, basic and diluted


$

0.61


$

0.56


$

2.41


$

2.02

AFFO:













Basic


$

0.62


$

0.55


$

2.42


$

2.06

Diluted


$

0.62


$

0.55


$

2.41


$

2.06














Cash dividends paid per common share


$

0.546


$

0.454


$

2.147


$

1.772

 


FUNDS FROM OPERATIONS (FFO)

(dollars in thousands, except per share amounts)






















Three months



Three months



Year



Year





Ended 12/31/13



Ended 12/31/12



Ended 12/31/13



Ended 12/31/12




















Net income available to common stockholders

$

53,854



$

28,542



$

203,634



$

114,538


Depreciation and amortization:


















Continuing operations



85,245




41,755




306,577




147,323



Discontinued operations



84




730




1,818




3,984


Depreciation allocated to noncontrolling interest

(329)



-




(1,009)



-


Depreciation of furniture, fixtures and equipment

(86)



(57)



(288)



(249)


Provisions for impairment on investment properties

-




4,472




3,028




5,139


Gain on sale of investment properties,


















discontinued operations



(14,276)



(3,863)



(64,743)



(9,873)




















FFO available to common stockholders



124,492




71,579




449,017




260,862


Merger-related costs



138




2,404




13,013




7,899


Normalized FFO available to common stockholders

$

124,630



$

73,983



$

462,030



$

268,761




















FFO per common share, basic and diluted


$

0.61



$

0.54



$

2.34



$

1.96




















Normalized FFO per common share,


















basic and diluted


$

0.61



$

0.56



$

2.41



$

2.02




















Distributions paid to common stockholders


$

110,678



$

60,629



$

409,222



$

236,348




















Normalized FFO in excess of distributions paid to


















common stockholders


$

13,952



$

13,354



$

52,808



$

32,413




















Weighted average number of common shares
















used for computation per share:


















Basic


203,303,124



132,846,497



191,754,857



132,817,472



Diluted


203,326,838



132,979,552



191,781,622



132,884,933




















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



Year



Year





Ended 12/31/13



Ended 12/31/12



Ended 12/31/13



Ended 12/31/12


Net income available to common stockholders

$

53,854



$

28,542



$

203,634



$

114,538


Cumulative adjustments to calculate normalized FFO (1)


70,776




45,441




258,396




154,223


Normalized FFO available to common stockholders

124,630




73,983




462,030




268,761


Amortization of share-based compensation


6,550




2,221




20,785




10,001


Amortization of deferred financing costs (2)


1,219




948




4,436




2,786


Provisions for impairment on Crest properties


308




-




308




-


Excess of redemption value over carrying value
















of Class D preferred share redemption



-




-




-




3,696


Amortization of net mortgage premiums



(2,522)



(387)



(9,481)



(665)


(Gain) loss on interest rate swaps



(188)



(18)



(878)



56


Capitalized leasing costs and commissions



(137)



(401)



(1,280)



(1,619)


Capitalized building improvements



(2,468)



(1,652)



(7,227)



(4,935)


Straight-line rent



(3,631)



(2,128)



(13,742)



(5,674)


Amortization of above and below-market lease

1,939




326




8,188




1,776


Total AFFO available to common stockholders

$

125,700



$

72,892



$

463,139



$

274,183


AFFO per common share:


















Basic


$

0.62



$

0.55



$

2.42



$

2.06



Diluted


$

0.62



$

0.55



$

2.41



$

2.06




















Distributions paid to common stockholders


$

110,678



$

60,629



$

409,222



$

236,348




















AFFO in excess of distributions paid to


















common stockholders


$

15,022



$

12,263



$

53,917



$

37,835




















(1)

See FFO and normalized 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 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.

 


HISTORICAL FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

(dollars in thousands, except per share amounts)

















For the three months ended December 31,


2013



2012



2011



2010



2009


















Net income available to common stockholders

$

53,854


$

28,542


$

34,941


$

31,814


$

29,268


Depreciation and amortization


84,914



42,428



34,314



25,045



22,916


Provisions for impairment on investment properties


-



4,472



27



42



110


Gain on sales of investment properties


(14,276)



(3,863)



(1,205)



(4,392)



(3,809)


















FFO


124,492



71,579



68,077



52,509



48,485


Merger-related costs


138



2,404



-



-



-


Normalized FFO

$

124,630


$

73,983


$

68,077


$

52,509


$

48,485


















Normalized FFO per diluted share

$

0.61


$

0.56


$

0.51


$

0.47


$

0.47


















AFFO

$

125,700


$

72,892


$

68,524


$

53,327


$

48,622


















AFFO per diluted share

$

0.62


$

0.55


$

0.52


$

0.48


$

0.47


















Cash dividends paid per share

$

0.546


$

0.454


$

0.436


$

0.432


$

0.428


Weighted average diluted shares outstanding

203,326,838


132,979,552


132,609,319


112,067,874


103,491,891


















For the year ended December 31,


2013



2012



2011



2010



2009


















Net income available to common stockholders

$

203,634


$

114,538


$

132,779


$

106,531


$

106,874


Depreciation and amortization


307,098



151,058



121,941



95,858



91,629


Provisions for impairment on investment properties


3,028



5,139



405



213



110


Gain on sales of investment properties


(64,743)



(9,873)



(5,733)



(8,676)



(8,059)


















FFO


449,017



260,862



249,392



193,926



190,554


Merger-related costs


13,013



7,899



-



-



-


Normalized FFO

$

462,030


$

268,761


$

249,392


$

193,926


$

190,554


















Normalized FFO per diluted share

$

2.41


$

2.02


$

1.98


$

1.83


$

1.84


















AFFO

$

463,139


$

274,183


$

253,372


$

197,256


$

192,739


















AFFO per diluted share

$

2.41


$

2.06


$

2.01


$

1.86


$

1.86


















Cash dividends paid per share

$

2.147


$

1.772


$

1.737


$

1.722


$

1.707


Weighted average diluted shares outstanding

191,781,622


132,884,933


126,189,399


105,942,721


103,581,053


 


 

REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2013 and 2012

(dollars in thousands, except per share data)









2013



2012

ASSETS






Real estate, at cost:






Land

$

2,791,147


$

1,999,820

Buildings and improvements


7,108,328



3,920,865

Total real estate, at cost


9,899,475



5,920,685

Less accumulated depreciation and amortization


(1,114,888)



(897,767)

Net real estate held for investment


8,784,587



5,022,918

Real estate held for sale, net


12,022



19,219

Net real estate


8,796,609



5,042,137

Cash and cash equivalents


10,257



5,248

Accounts receivable, net


39,323



21,659

Acquired lease intangible assets, net


935,459



242,125

Goodwill


15,660



16,945

Other assets, net


127,133



101,234

Total assets

$

9,924,441


$

5,429,348







LIABILITIES AND EQUITY






Distributions payable

$

41,452


$

23,745

Accounts payable and accrued expenses


102,511



70,426

Acquired lease intangible liabilities, net


148,250



26,471

Other liabilities


44,030



26,059

Lines of credit payable


128,000



158,000

Term loan


70,000



-

Mortgages payable, net


783,360



175,868

Notes payable, net


3,185,480



2,535,985

Total liabilities


4,503,083



3,016,554







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 December 31, 2013 and December 31, 2012


609,363



609,363

Common stock and paid in capital, par value $0.01 per share, 370,100,000 shares authorized, 207,485,073 shares issued and outstanding as of December 31, 2013 and 133,452,411 shares issued and outstanding at December 31, 2012


5,767,878



2,572,092

Distributions in excess of net income


(991,794)



(768,661)

Total stockholders' equity


5,385,447



2,412,794

Noncontrolling interests


35,911



-

Total equity


5,421,358



2,412,794

Total liabilities and equity

$

9,924,441


$

5,429,348







 



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%





















Compounded Average Annual Total Return (5)


16.3%




10.6%




10.3%




9.5%




9.2%


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.

(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 December 31, 2013, 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 December 31, 2013 (dollars in thousands):

















   Approximate


Rental Revenue for



Percentage of




Number of


      Leasable


the Quarter Ended



Rental

Property Type


Properties


   Square Feet


December 31, 2013(1)


Revenue

Retail


3,747


39,979,700


$

158,804



77.4%

Industrial and distribution


79


15,661,100



22,374



10.9

Office


42


3,104,400



13,450



6.6

Manufacturing


13


3,715,200



5,254



2.6

Agriculture


15


184,500



5,202



2.5

Totals


3,896


62,644,900


$

205,084



100.0%













(1)

Includes rental revenue for all properties owned by Realty Income at December 31, 2013, including revenue from properties reclassified as discontinued operations of $279.  Excludes revenue of $23 from properties owned by Crest.

 

Tenant Diversification





The largest tenants based on percentage of total portfolio rental revenue at December 31, 2013 include the following:








FedEx



5.2%


Dollar General

2.4%

Walgreens



5.0%


Rite Aid

2.2%

Family Dollar



4.8%


Regal Cinemas

2.1%

LA Fitness



4.3%


CVS Pharmacy

2.1%

AMC Theatres



3.1%


The Pantry

1.8%

Diageo



2.9%


Circle K

1.7%

BJ's Wholesale Clubs



2.9%


Walmart/Sam's Club

1.6%

Northern Tier Energy/Super America


2.5%




 


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


December 31,


Dec 31,


Dec 31,


Dec 31,


Dec 31,


Dec 31,


Dec 31,


2013


2013


2012


2011


2010


2009


2008

Retail industries














Apparel stores

1.7%


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

1.4


1.2


1.0


1.2


1.4


1.5


1.6

Automotive service

1.9


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

2.5


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

10.6


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

7.1


6.2


2.2


-


-


-


-

Drug stores

9.7


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

1.2


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

6.8


6.3


6.8


6.4


6.9


5.9


5.6

Health care

1.0


1.1


-


-


-


-


-

Home furnishings

0.8


0.9


1.0


1.1


1.3


1.3


2.4

Home improvement

1.5


1.6


1.5


1.7


2.0


2.2


2.1

Jewelry

0.1


0.1


-


-


-


-


-

Motor vehicle dealerships

1.6


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

4.7


5.1


7.3


10.9


13.4


13.7


14.3

Restaurants - quick service

4.3


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

5.6


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

4.3


3.9


3.2


0.7


-


-


-

Other

*


0.1


0.1


0.1


0.3


1.1


1.2

Retail industries

80.0%


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


December 31,


Dec 31,


Dec 31,


Dec 31,


Dec 31,


Dec 31,


Dec 31,


2013


2013


2012


2011


2010


2009


2008

Non-retail industries














Aerospace

1.3


1.2


0.9


0.5


-


-


-

Beverages

3.0


3.3


5.1


5.6


3.0


-


-

Consumer appliances

0.6


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


-


-


-

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

0.9


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

5.3


5.3


2.2


1.6


-


-


-

Other

0.4


0.1


1.0


1.2


1.5


1.6


1.8

Non-retail industries

20.0%


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.

 

 


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 3,807 net leased, single-tenant properties as of December 31, 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 Leases


Leasable


Dec 31,


Rental


of Leases


Dec 31,


Rental


of Leases


Dec 31,


Rental


Year

Expiring(1)


Sq. Feet


2013(2)


Revenue


Expiring


2013


Revenue


Expiring


2013


Revenue




























2014


157


1,116,500


$

4,005


2.0

%

56


$

1,960


1.0

%

101


$

2,045


1.0

%

2015


174


961,500



4,111


2.0


67



1,808


0.9


107



2,303


1.1


2016


200


1,214,900



4,618


2.3


121



2,807


1.4


79



1,811


0.9


2017


177


2,038,400



6,058


3.0


46



3,052


1.5


131



3,006


1.5


2018


278


3,621,900



11,276


5.6


162



7,920


3.9


116



3,356


1.7


2019


193


3,017,500



10,496


5.1


161



9,599


4.7


32



897


0.4


2020


110


3,404,600



8,844


4.4


99



8,468


4.2


11



376


0.2


2021


189


5,314,200



13,616


6.7


181



13,105


6.4


8



511


0.3


2022


224


7,270,400



14,508


7.2


216



14,273


7.1


8



235


0.1


2023


355


6,133,200



19,731


9.7


342



19,076


9.4


13



655


0.3


2024


140


2,105,200



7,016


3.5


140



7,016


3.5


-



-


-


2025


288


3,734,800



16,633


8.3


283



16,510


8.2


5



123


0.1


2026


231


3,396,200



12,133


6.0


228



12,049


6.0


3



84


*


2027


443


4,177,700



14,591


7.2


441



14,551


7.2


2



40


*


2028


283


5,758,000



15,911


7.8


281



15,858


7.8


2



53


*


2029 - 2043


365


7,951,300



38,832


19.2


358



38,652


19.1


7



180


0.1


Totals


3,807


61,216,300


$

202,379


100.0

%

3,182


$

186,704


92.3

%

625


$

15,675


7.7

%



























*

Less than 0.1%

(1)

Excludes 19 multi-tenant properties and 70 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 $279 from properties reclassified as discontinued operations and excludes revenue of $2,705 from 19 multi-tenant properties and from 70 vacant and unleased properties at December 31, 2013.  Excludes revenue of $23 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 December 31, 2013 (dollars in thousands):












Approximate

Rental Revenue for

Percentage of



Number of

Percent

Leasable

 the Quarter Ended

Rental

State

Properties

Leased

Square Feet

December 31, 2013(1)

Revenue

Alabama            

104

97%

791,800

$

2,846

1.4%

Alaska             

2

100

128,500


307

0.1

Arizona            

110

96

1,187,400


5,510

2.7

Arkansas           

36

94

619,200


1,180

0.6

California         

161

99

4,705,200


22,672

11.1

Colorado           

69

99

792,100


2,969

1.4

Connecticut        

22

95

462,100


2,071

1.0

Delaware           

16

100

29,500


418

0.2

Florida            

279

99

2,951,000


12,029

5.9

Georgia            

209

97

2,689,400


8,368

4.1

Hawaii             

--

--

--


--

--

Idaho              

13

100

91,800


456

0.2

Illinois           

155

100

4,215,700


12,244

6.0

Indiana            

100

98

1,055,400


4,954

2.4

Iowa               

35

97

2,751,700


3,301

1.6

Kansas             

76

99

1,583,300


3,370

1.6

Kentucky           

45

98

808,700


2,920

1.4

Louisiana          

75

97

836,700


2,456

1.2

Maine

9

100

126,400


837

0.4

Maryland           

32

100

654,100


3,711

1.8

Massachusetts      

82

96

728,200


3,205

1.6

Michigan           

103

98

938,600


3,229

1.6

Minnesota          

155

100

1,153,300


7,416

3.6

Mississippi        

96

97

1,307,200


3,177

1.5

Missouri           

122

98

2,307,000


7,343

3.6

Montana            

2

50

30,000


13

*

Nebraska           

30

100

660,200


1,296

0.6

Nevada             

22

100

413,000


1,279

0.6

New Hampshire      

18

100

290,900


1,224

0.6

New Jersey         

62

98

452,700


2,608

1.3

New Mexico         

24

100

184,600


589

0.3

New York           

81

95

2,007,900


10,153

5.0

North Carolina     

129

99

1,259,300


4,795

2.3

North Dakota       

7

100

66,000


138

0.1

Ohio               

200

98

4,795,700


11,294

5.5

Oklahoma           

112

100

1,467,200


3,601

1.8

Oregon             

24

100

455,200


1,620

0.8

Pennsylvania       

147

99

1,745,400


6,957

3.4

Rhode Island       

3

100

21,300


107

*

South Carolina     

127

98

897,500


4,140

2.0

South Dakota       

11

100

133,500


244

0.1

Tennessee          

156

97

2,653,200


5,145

2.5

Texas              

393

98

6,760,200


19,493

9.5

Utah               

13

100

749,000


1,326

0.6

Vermont            

6

100

100,700


522

0.3

Virginia           

127

97

2,531,900


6,465

3.2

Washington         

38

100

415,300


1,609

0.8

West Virginia      

12

100

261,200


883

0.4

Wisconsin          

39

95

1,329,300


2,382

1.2

Wyoming            

3

100

21,100


63

*

Puerto Rico

4

100

28,300


149

0.1

Totals\Average

3,896

98%

62,644,900

$

205,084

100.0%









*

Less than 0.1%



(1)

Includes rental revenue for all properties owned by Realty Income at December 31, 2013, including revenue from properties reclassified as discontinued operations of $279.  Excludes revenue of $23 from properties owned by Crest.

 

SOURCE Realty Income Corporation



RELATED LINKS
http://www.realtyincome.com

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