2014

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

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):

  • Revenue increased 63.0% to $184.3 million as compared to $113.1 million
  • Net income available to common stockholders per share was $0.23
  • Normalized FFO available to common stockholders increased 82.8% to $119.2 million
  • Normalized FFO per share increased 24.5% to $0.61
  • AFFO available to common stockholders increased 73.8% to $115.6 million
  • AFFO per share increased 18.0% to $0.59
  • Same store rents increased 1.1% to $109.9 million
  • Portfolio occupancy increased to 98.2% from 97.3%
  • Invested $738.1 million in 190 new properties and properties under development or expansion
  • Increased the monthly dividend in June for the 72nd time and for the 63rd consecutive quarter
  • 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 63rd consecutive quarterly dividend increase, which is the 72nd 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
Ended 6/30/13


Three months
Ended 6/30/12


Six months
Ended 6/30/13


Six months
Ended 6/30/12

REVENUE





Rental

$     182,354

$     112,528

$     352,104

$    224,020

Other

1,965

605

3,356

858


     Total revenue

184,319

113,133

355,460

224,878






EXPENSES





Depreciation and amortization

77,698

34,742

147,280

69,093

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 operations

50,836

38,161

82,998

75,109

Income from discontinued operations

3,911

5,246

43,562

7,562






Net income

54,747

43,407

126,560

82,671

Net income attributable to noncontrolling interests

(77)

--

(86)

--

Net income attributable to the Company

54,670

43,407

126,474

82,671

Preferred stock dividends

(10,482)

(10,457)

(20,965)

(19,953)

Excess of redemption value over carrying value of preferred shares redeemed

--

--

--

(3,696)






Net income available to common stockholders

$      44,188

$      32,950

$     105,509

$       59,022






Funds from operations available to common stockholders (FFO)

$    118,547

$      65,167

$     211,435

$     125,863

Normalized funds from operations available to common stockholders (normalized FFO)

$    119,152

$      65,167

$     224,070

$     125,863

Adjusted funds from operations available to common stockholders (AFFO)

$    115,564

$      66,499

$     219,521

$     132,793






Per share information for common stockholders:





Income from continuing operations, basic and diluted

$          0.21

$          0.21

$          0.34

$          0.39

Net income, basic and diluted

$          0.23

$          0.25

$          0.57

$          0.44

FFO:





           Basic

$          0.61

$          0.49

$          1.15

$ 0.95

           Diluted

$          0.60

$          0.49

$          1.15

$ 0.95

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

Ended 6/30/13

Three Months

Ended 6/30/12

Six Months

Ended 6/30/13

Six Months

Ended 6/30/12

Net income available to common stockholders

$        44,188

$        32,950

$      105,509

$       59,022

Depreciation and amortization:





Continuing operations

77,698

34,742

147,280

69,093

Discontinued operations

196

896

520

1,848

Depreciation allocated to noncontrolling interest

(220)

--

(395)

--

Depreciation of furniture, fixtures & equipment

(67)

(67)

(127)

(135)

Provisions for impairment on investment properties

2,496

--

2,952

--

Gain on sales of investment properties, discontinued operations

(5,744)

(3,354)

(44,304)

(3,965)

FFO available to common stockholders

118,547

65,167

211,435

125,863

Merger-related costs

605

--

12,635

--

Normalized FFO available to common stockholders

$      119,152

$        65,167

$     224,070

$     125,863

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 and diluted

$           0.61

$           0.49

$          1.22

$          0.95

Dividends paid to common stockholders

$      106,692

$       58,360

$     191,669

$     116,552

Normalized FFO in excess of dividends paid to common stockholders

$        12,460

$         6,807

$       32,401

$        9,311

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

Ended 6/30/13

Three Months

Ended 6/30/12

Six Months

Ended 6/30/13

Six Months

Ended 6/30/12

Net income available to common stockholders

$       44,188

$       32,950

$      105,509

$       59,022

Cumulative adjustments to calculate normalized FFO(1)

74,964

32,217

118,561

66,841

Normalized FFO available to common stockholders

119,152

65,167

224,070

125,863

Excess of redemption value over carrying value of preferred share redemption

--

--

--

3,696

Amortization of share-based compensation

3,653

2,593

7,498

5,550

Amortization of deferred financing costs(2)

1,015

609

2,021

1,226

Amortization of net mortgage premiums

(2,494)

(71)

(4,441)

(168)

(Gain) loss on interest rate swaps

(1,738)

40

(1,286)

53

Capitalized leasing costs and commissions

(361)

(431)

(774)

(698)

Capitalized building improvements

(1,255)

(914)

(2,520)

(1,707)

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 stockholders

$         8,872

$         8,139

$        27,852

$       16,241


(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 and October 2012. 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.

(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 30,

2013

2012

2011

2010

2009







Net income available to common stockholders

$        44,188

$        32,950

$        33,185

$        24,985

$         26,497

Depreciation and amortization

77,607

35,571

29,000

23,469

22,922

Provisions for impairment on Realty Income investment properties

2,496

--

10

53

--

Gain on sales of investment properties

(5,744)

(3,354)

(1,251)

(1,663)

(2,239)







FFO

118,547

65,167

60,944

46,844

47,180

Merger-related costs

605

--

--

--

--

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 outstanding

196,099,610

132,828,540

126,202,047

103,765,828

103,450,457







 







For the six months ended June 30,

2013

2012

2011

2010

2009







Net income available to common stockholders

$      105,509

$        59,022

$        63,120

$        49,127

$         50,518

Depreciation and amortization

147,278

70,806

55,791

46,682

45,833

Provisions for impairment on Realty Income investment properties

2,952

--

210

87

--

Gain on sales of investment properties

(44,304)

(3,965)

(1,379)

(2,366)

(2,436)







FFO

211,435

125,863

117,742

93,530

93,915

Merger-related costs

12,635

--

--

--

--

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 outstanding

184,165,700

132,785,213

122,691,418

103,778,609

103,479,897







 


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 amortization

(998,079)

(897,767)




      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 Income      

         REIT Index(1)       

  Industrial Average 

            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 12/31/94

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%

YTD Q2 2013

5.2%

6.9%

3.5%

5.8%

2.5%

15.2%

2.2%

13.8%

1.4%

12.7%

Compounded Average Annual Total Return(5)


17.3%


11.1%


9.9%


8.9%


8.3%













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.

(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. Sources: 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 June 30, 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 June 30, 2013 (dollars in thousands):
















Approximate

Rental Revenue for

Percentage of


Number of


Leasable

the Quarter Ended

Rental

Property Type

Properties


Square Feet

June 30, 2013(1)

Revenue

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%







(1)

Includes rental revenue for all properties owned by Realty Income at June 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 Ended

For the Years Ended



June 30,

Dec 31,


Dec 31,


Dec 31,


Dec 31,


Dec 31,


Dec 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 collision services

0.8


1.1


0.9


1.0


1.1


1.0


1.1



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 services

3.9


4.7


5.6


6.4


6.9


6.7


7.3



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 electronics

0.3


0.5


0.5


0.6


0.7


0.8


0.9



Convenience stores

11.4


16.3


18.5


17.1


16.9


15.8


14.0



Crafts and novelties

0.5


0.3


0.2


0.3


0.3


0.3


0.3



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 merchandise

1.1


0.6


0.6


0.8


0.8


0.8


0.7



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 dealerships

1.6


2.1


2.2


2.6


2.7


3.2


3.1



Office supplies

0.5


0.8


0.9


0.9


1.0


1.0


1.1



Pet supplies and services

0.9


0.6


0.7


0.9


0.9


0.8


0.9



Restaurants - casual dining

5.5


7.3


10.9


13.4


13.7


14.3


14.9



Restaurants - quick service

4.4


5.9


6.6


7.7


8.3


8.2


6.6



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 services

0.1


0.2


0.2


0.2


0.2


0.2


0.2



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 Ended

For the Years Ended



June 30,

   Dec 31,


   Dec 31,


   Dec 31,


   Dec 31,


   Dec 31,


   Dec 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 industrial

0.1


0.1


-


-


-


-


-



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 services

5.8


2.2


1.6


-


-


-


-



Other

*


1.0


1.2


1.5


1.6


1.8


2.2



Non-retail industries

22.3

%

13.3

%

11.4

%

4.6

%

1.7

%

1.8

%

2.2

%

     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 3,597 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 Leases

Leasable


June 30,

Rental

 of Leases


June 30,

Rental

 of Leases


June 30,

Rental

Year

Expiring (1)

Sq. Feet


2013(2)

Revenue

Expiring


2013

Revenue

Expiring


2013

Revenue



















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 - 2043

465

11,192,500


40,567

22.4


458


40,420

22.3


7


147

0.1


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%



















(1)

Excludes 16 multi-tenant properties and 68 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 $392 from properties reclassified as 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 Quarter

Percentage of



Number of

Percent


Leasable


Ended

Rental

State

Properties

Leased


Square Feet


June 30, 2013 (1)

Revenue












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%












(1)

Includes rental revenue for all properties owned by Realty Income at June 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



RELATED LINKS
http://www.realtyincome.com

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