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TheStreet Open House

Insider Q&A With CEO of a Dividend Powerhouse

ESCONDIDO, California (TheStreet) -- Recently I had an opportunity to catch up with Tom Lewis, Vice Chairman and CEO, of Realty Income Corp. (O). The Escondido-based REIT just cranked out another consistent quarter of exceptional earnings results.

Highlights of the last quarter include a 17.9% revenue increase and a 6.9% increase in common stock funds from operations (FFO). Occupancy held steady at 96.6% and the dividends paid per common share increased 0.9% (the current dividend yield is 4.5%).

Consistent dividends remain the power behind the monthly dividend company® as the triple-net REIT announced that is has declared its 503 consecutive common stock monthly dividend. Throughout Realty Income's 43-year operating history, the dividend increased 65 times since listing on the New York Stock Exchange in 1994. The monthly dividend is supported by the cash flow from over 2,600 properties owned under long-term lease agreements with regional and national retail chains and other commercial enterprises.

Photo: Tom Lewis (Courtesy of Realty Income Corp.)

Tom Lewis joined Realty Income in 1987 and served in a variety of executive positions before assuming the Chief Executive Officer role in 1997. Prior to joining Realty Income he was an executive with another real estate company, an investment specialist with an investment firm and worked in marketing for Procter & Gamble.

The following is a summary of my interview in question and answer format:

Q: Why is the single tenant net lease sector one of the safest sectors today?

A: I don't know that I would characterize the net lease sector as "one of the safest" sectors necessarily. I do think that properties owned under the net-lease structure are simpler, from a property management perspective, and cost less to own since the tenant typically pays for taxes, maintenance and insurance. I also think that the that the long-term leases on the net-leased real estate that we own can provide a more stable rental revenue stream, which may appeal to investors looking for the dividend income generated by that revenue.

Q: Realty Income has one of the largest net lease portfolios in the US. Is bigger better?

A:The size of our real estate portfolio today is a function of being in business for over 43 years and of consistently increasing the size of our real estate portfolio, since we became a public company in 1994 and gained access to the capital markets. Access to capital, as a REIT, is critical to our ability to grow the company and achieve our mission of providing monthly dividends to our shareholders that increase over time. I think size also is factor in maintaining the diversification of our revenue stream supporting monthly dividends. So we would argue that , Yes, bigger can be better as long as continued growth directly, or getting bigger, supports your mission.

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