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

Realty Income Corporation (Realty Income), The Monthly Dividend Company® (NYSE:O), today announced operating results for the second quarter and six months ended June 30, 2012. Access to this document is available at www.realtyincome.com. All per share amounts presented in this press release are on a diluted per common share basis unless stated otherwise.

COMPANY HIGHLIGHTS:

For the quarter ended June 30, 2012 (as compared to the same quarterly period in 2011):
  • Revenue increased 13.8% to $115.6 million
  • FFO available to common stockholders increased 7.1% to $65.2 million
  • AFFO available to common stockholders increased 6.6% to $66.5 million
  • FFO per share increased 2.1% to $0.49
  • AFFO per share increased 2.0% to $0.50
  • Net income available to common stockholders per share was $0.25
  • Portfolio occupancy was 97.3%
  • Entered into a new $1.0 billion unsecured acquisition credit facility
  • Invested $210.8 million in 145 new properties and properties under development
  • Dividends paid per common share increased 0.9% year-to-date
  • The monthly dividend was increased for the 59th consecutive quarter to an annualized amount of $1.7535 per share

Financial Results

Revenue

Revenue, for the quarter ended June 30, 2012, increased 13.8% to $115.6 million as compared to $101.6 million for the same quarter in 2011. Revenue, for the six months ended June 30, 2012, increased 15.9% to $229.9 million as compared to $198.3 million for the same period in 2011.

Net Income Available to Common Stockholders

Net income available to common stockholders, for the quarter ended June 30, 2012, was $33.0 million as compared to $33.2 million for the same quarter in 2011. Net income per share, for the quarter ended June 30, 2012, was $0.25 as compared to $0.26 for the same quarter in 2011.

Net income available to common stockholders, for the six months ended June 30, 2012, was $59.0 million as compared to $63.1 million for the same period in 2011. Net income per share, for the six months ended June 30, 2012, was $0.44 as compared to $0.51 for the same period in 2011.

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, 2012, increased 7.1% to $65.2 million as compared to $60.9 million for the same quarter in 2011. FFO per share, for the quarter ended June 30, 2012, increased 2.1% to $0.49 as compared to $0.48 for the same quarter in 2011.

FFO, for the six months ended June 30, 2012, increased 7.0% to $125.9 million as compared to $117.7 million for the same period in 2011. FFO per share, for the six months ended June 30, 2012, decreased 1.0% to $0.95 as compared to $0.96 for the same period in 2011. The decrease in FFO per share is due to a one-time, $3.7 million non-cash, redemption charge on the Class D preferred shares that were redeemed in March 2012. Excluding this $3.7 million charge, FFO per share is $0.98 for the first six months of 2012.

AFFO Available to Common Stockholders

Adjusted Funds from Operations (AFFO), for the quarter ended June 30, 2012, increased 6.6% to $66.5 million as compared to $62.4 million for the same quarter in 2011. AFFO per share, for the quarter ended June 30, 2012, increased 2.0% to $0.50 as compared to $0.49 for the same quarter in 2011.

AFFO, for the six months ended June 30, 2012, increased 10.1% to $132.8 million as compared to $120.6 million for the same period in 2011. AFFO per share, for the six months ended June 30, 2012, increased 2.0% to $1.00 as compared to $0.98 for the same period in 2011.

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

Dividend Information

In June 2012, Realty Income announced the 59 th consecutive quarterly dividend increase, which is the 66 th 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, 2012, was $1.7535 per share. The amount of the monthly dividends paid increased 0.9% to $0.874 per share for the six months ended June 30, 2012, from $0.866 per share for the same period in 2011. In addition, through June 30, 2012, the Company has paid 503 consecutive monthly dividends and over $2.2 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, 2012, Realty Income’s portfolio of freestanding, single-tenant properties consisted of 2,762 properties located in 49 states, leased to 136 retail chains and other commercial enterprises doing business in 38 industries. The properties are leased under long-term, net leases with a weighted average remaining lease term of approximately 11.1 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, 2012, portfolio occupancy was 97.3% with 75 properties available for lease out of a total of 2,762 properties in the portfolio, as compared to 96.6% portfolio occupancy as of March 31, 2012.

Rent Increases (Decreases)

During the quarter ended June 30, 2012, same store rents on 2,287 properties under lease decreased 1.1% to $92.14 million, as compared to $93.18 million for the same quarter in 2011. Excluding the impact of Friendly’s and Buffet’s reorganization rent adjustments, same store rental revenue increased 1.1%, during the second quarter of 2012, as compared to the same period in 2011.

For the six months ended June 30, 2012, same store rents on 2,287 properties under lease decreased 1.1% to $184.46 million, as compared to $186.43 million for the same period in 2011. Excluding the impact of Friendly’s and Buffet’s reorganization rent adjustments, same store rental revenue increased 1.1%, during the first six months of 2012, as compared to the same period in 2011.

Property Acquisitions

During the second quarter of 2012, Realty Income invested $210.8 million in 145 new properties and properties under development. The new properties are located in 28 states and are 100% leased with an average lease term of 15 years and an initial average lease yield of 7.1%.

During the six months ended June 30, 2012, Realty Income invested $221.5 million in 147 new properties and properties under development. The new properties are located in 28 states and are 100% leased with an average lease term of 15 years and an initial average lease yield of 7.2%.

Realty Income maintains a $1.0 billion unsecured acquisition credit facility, which is used to fund property acquisitions in the near term. As of June 30, 2012, outstanding borrowings on the Company’s acquisition credit facility were $183.6 million, and borrowing capacity was $816.4 million.

Property Dispositions

Realty Income continued to successfully execute its asset disposition program in the second quarter of 2012. 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, or decrease tenant or industry concentration.

During the quarter ended June 30, 2012, Realty Income sold 14 properties for $15.0 million, with a gain on sales of $3.4 million, as compared to six properties sold for $3.3 million, with a gain on sales of $1.1 million, during the same quarter in 2011.

During the six months ended June 30, 2012, Realty Income sold 19 properties for $18.6 million, with a gain on sales of $4.0 million, as compared to nine properties sold for $4.4 million, with a gain on sales of $1.2 million, during the same period in 2011.

Other Activities

New and Expanded $1.0 Billion Credit Facility

In May 2012, Realty Income entered into a new $1.0 billion unsecured acquisition credit facility to replace its existing $425 million credit facility. Under the terms of the new credit facility, total funds available are $1.0 billion, plus an additional $500 million accordion expansion feature. The initial term of the new facility runs for four years through May 10, 2016, plus a one-year extension option thereafter. Under the new credit facility, the Company’s current investment grade credit ratings provide for a borrowing rate of LIBOR (London Interbank Offer Rate) plus 1.075% with a facility commitment fee of 0.175%, for all-in drawn pricing of 1.25% over LIBOR. This borrowing rate is a significant reduction from the previous all-in drawn pricing of 2.20% over LIBOR.

Direct Stock Purchase and Dividend Reinvestment Plan (the “Stock Plan”)

During the second quarter of 2012, Realty Income issued 20,501 common shares via its Stock Plan at an average price of $39.02 per share, generating gross proceeds of $801,000. During the first six months of 2012, Realty Income issued 41,513 common shares via its Stock Plan at an average price of $37.90 per share, generating gross proceeds of $1.6 million.

Issued 1.4 Million Shares of Class F Preferred Stock

In April 2012, Realty Income issued an additional 1.4 million shares of its 6.625% Monthly Income Class F Cumulative Preferred Stock at $25.2863 per share, generating gross proceeds of $35.4 million.

CEO Comments on Operating Results

Commenting on Realty Income’s financial results and real estate operations, Chief Executive Officer, Tom A. Lewis said, “We are pleased to report increases in rental revenue, funds from operations (FFO) and adjusted funds from operations (AFFO), during the second quarter of 2012. In addition, our net-leased property portfolio continued to exhibit strong performance with occupancy increasing to 97.3%, at the end of the second quarter, as compared to 96.6% at the end of the first quarter of 2012.”

“We also invested $210.8 million in 145 new properties and properties under development, during the second quarter. Importantly, 140 of the 145 properties acquired are leased to investment-grade tenants, consistent with our strategic focus on continuing to increase the overall credit quality of our real estate portfolio.”

“We had previously disclosed that we had entered into agreements to acquire $514 million in properties, which we anticipated would likely close by the end of the second quarter. During the second quarter, we closed on approximately $198 million of those properties and acquired an additional $13 million of other properties. The remaining $316 million of previously announced potential acquisitions were terminated during the due diligence period. Transaction flow remains strong, and we continue to believe we will meet or exceed our previously stated target of $650 million in new property acquisitions. While the total amount of acquisitions for 2012 will likely be higher than previously anticipated, the timing of the remaining acquisitions will now be weighted more heavily towards the end of the year. As a result, we adjusted our 2012 FFO and AFFO guidance by $0.02 per share.”

“We have also been active in the capital markets, entering into a new and expanded $1.0 billion credit facility at a reduction in pricing, as compared to our previous credit facility. We are pleased with this expansion of our acquisition credit facility as it provides us with immediate access to short-term capital to take advantage of acquisition opportunities as they arise.”

“Given the continued strength in our operating performance, during the second quarter, we were once again able to increase the amount of the monthly dividend. In addition, our revenue outlook bodes well for further increases in the amount of the dividend, based on acquisitions we anticipate closing during the next two quarters. Since our mission is to provide monthly dividends that increase over time, we remain focused on operating the business in a manner that supports the payment of increasing dividends over time.”

FFO Commentary

Realty Income’s FFO 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 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 acquisitions and dispositions, lease rollovers, the general real estate market, and the economy.

2012 Estimates

The Company estimates that 2012 FFO per share should range from $2.00 to $2.04 per share, an increase of 1.0% to 3.0% over 2011 FFO per share of $1.98. The FFO per share estimates for 2012 are based on an estimated net income per share range of $0.97 to $1.01, plus estimated real estate depreciation of $1.12, and reduced by potential gains on sales of investment properties of $0.09 per share (in accordance with NAREIT’s definition of FFO).

The Company estimates that 2012 Adjusted Funds from Operations (AFFO) should range from $2.06 to $2.11 per share, an increase of 2.5% to 5.0% over 2011 AFFO per share of $2.01. The AFFO per share estimates for 2012 are based on adding back items to FFO totaling $0.12 to $0.13 that reduce net income, and deducting capitalized expenditures and straight-line rent revenue items totaling approximately $0.06, for a net increase of $0.06 to $0.07 over FFO.

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, 2012, the Company had paid 503 consecutive monthly dividends throughout its 43-year operating history. The monthly income is supported by the cash flows from over 2,700 properties owned under long-term lease agreements with 136 leading regional and national retail chains and other 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, 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, 2012 and 2011

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

Three Months
     

Three Months
     

Six Months
     

Six Months

 

Ended 6/30/12

Ended 6/30/11

Ended 6/30/12

Ended 6/30/11
REVENUE
Rental $ 115,038 $ 101,361 $ 229,060 $ 197,934
Other   605     259     858     398  
 

Total revenue

 

115,643
 

 

101,620
 

 

229,918
 

 

198,332
 
 
EXPENSES
Depreciation and amortization 35,475 28,673 70,560 55,104
Interest 28,806 25,647 57,758 50,769
General and administrative 9,273 7,987 18,441 15,857
Property 2,090 1,597 4,536 3,281
Income taxes   405     368     810     735  
 
Total expenses   76,049     64,272     152,105     125,746  
 
Income from continuing operations 39,594 37,348 77,813 72,586
Income from discontinued operations   3,813     1,900     4,858     2,661  
 
Net income 43,407 39,248 82,671 75,247
Preferred stock dividends (10,457 ) (6,063 ) (19,953 ) (12,127 )
Excess of redemption value over carrying value of preferred shares redeemed

 

--
   

--
   

(3,696

)
 

--
 
 
Net income available to common stockholders $ 32,950   $ 33,185   $ 59,022   $ 63,120  
 

Funds from operations available to common stockholders (FFO)

$

65,167

$

60,944

$

125,863

$

117,742

Adjusted funds from operations available to common stockholders (AFFO)

$

66,499

$

62,370

$

132,793

$

120,610
 
Per share information for common stockholders:
 

Income from continuing operations, basic and diluted

$

0.22

$

0.25

$

0.41

$

0.49

Net income:

Basic

$

0.25

$

0.26

$

0.44

$

0.52

Diluted

$

0.25

$

0.26

$

0.44

$

0.51
 
FFO, basic and diluted $ 0.49 $ 0.48 $ 0.95 $ 0.96
 

AFFO:

Basic

$

0.50

$

0.50

$

1.00

$

0.98

Diluted

$

0.50

$

0.49

$

1.00

$

0.98
 
Cash dividends paid per common share $ 0.437 $ 0.434 $ 0.874 $ 0.866
 
 

FUNDS FROM OPERATIONS (FFO)

(dollars in thousands, except per share amounts)
 
      Three Months

Ended 6/30/12
      Three Months

Ended 6/30/11
      Six Months

Ended 6/30/12
      Six Months

Ended 6/30/11
 
Net income available to common stockholders $ 32,950 $ 33,185 $ 59,022 $ 63,120
Depreciation and amortization:
Continuing operations 35,475 28,673 70,560 55,104
Discontinued operations 163 386 381 807
Depreciation of furniture, fixtures & equipment (67 ) (59 ) (135 ) (120 )

Provisions for impairment on Realty Income investment properties

--

10

--

210
Gain on sales of investment properties:
Continuing operations -- (155 ) -- (155 )
Discontinued operations   (3,354 )   (1,096 )   (3,965 )   (1,224 )
 

Funds from operations available to common stockholders
$ 65,167   $ 60,944   $ 125,863   $ 117,742  

 
FFO per common share, basic and diluted $ 0.49 $ 0.48 $ 0.95 $ 0.96
 
Dividends paid to common stockholders $ 58,360 $ 55,008 $ 116,552 $ 106,131
 
FFO in excess of dividends paid to common stockholders $ 6,807 $ 5,936 $ 9,311 $ 11,611
 

Weighted average number of common shares used for computation per share:
Basic 132,592,939 125,999,323 132,643,698 122,547,027
Diluted 132,828,540 126,202,047 132,785,213 122,691,418

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

ADJUSTED FUNDS FROM OPERATIONS (AFFO)

(dollars in thousands, except per share amounts)
 
Most companies in our industry use a similar measurement to AFFO, but they may use the term "CAD" (for Cash Available for Distribution) or "FAD" (for Funds Available for Distribution).
 
      Three Months       Three Months       Six Months       Six Months
Ended 6/30/12 Ended 6/30/11 Ended 6/30/12 Ended 6/30/11
 
Net income available to common stockholders $ 32,950 $ 33,185 $ 59,022 $ 63,120
Cumulative adjustments to calculate FFO(1)   32,217     27,759     66,841     54,622  
 
FFO available to common stockholders 65,167 60,944 125,863 117,742

Excess of redemption value over carrying value of preferred share redemption
-- -- 3,696 --
Amortization of share-based compensation 2,593 2,167 5,550 4,347
Amortization of deferred financing costs(2) 578 474 1,111 850
Capitalized leasing costs and commissions (431 ) (380 ) (698 ) (649 )
Capitalized building improvements (914 ) (535 ) (1,707 ) (1,209 )
Other adjustments(3)   (494 )   (300 )   (1,022 )   (471 )
 
Total AFFO available to common stockholders $ 66,499   $ 62,370   $ 132,793   $ 120,610  
 
AFFO per common share:
Basic

$
0.50

$
0.50

$
1.00

$
0.98
Diluted $ 0.50 $ $ 0.49 $

1.00
$

0.98
 
Dividends paid to common stockholders $ 58,360 $ 55,008 $ 116,552 $ 106,131
 

AFFO in excess of dividends paid to common stockholders
$ 8,139 $ 7,362 $ 16,241 $ 14,479
(1)       See FFO calculation above for reconciling items.
(2) Includes the amortization of costs incurred and capitalized when our senior notes were issued in March 2003, November 2003, March 2005, September 2005, September 2006, September 2007, June 2010 and June 2011. Additionally, this includes the amortization of deferred financing costs incurred and capitalized in connection with our assumption of the mortgages payable in 2011. These costs are being amortized over the lives of the respective mortgages. 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,
        2012           2011           2010           2009           2008  
 
Net income available to common stockholders $ 32,950 $ 33,185 $ 24,985 $ 26,497 $ 26,988
Depreciation and amortization 35,571 29,000 23,469 22,922 22,876
Provisions for impairment on Realty Income investment properties

--

10

53

--

--
Gain on sales of investment properties   (3,354 )   (1,251 )   (1,663 )   (2,239 )   (3,052 )
 
Total FFO $ 65,167   $ 60,944   $ 46,844   $ 47,180   $ 46,812  
 
Total FFO per diluted share $ 0.49 $ 0.48 $ 0.45 $ 0.46 $ 0.47
 
Total FFO $ 65,167 $ 60,944 $ 46,844 $ 47,180 $ 46,812
Less FFO contributed by Crest   (185 )   (189 )   (158 )   (226 )   (1,295 )
 
FFO before Crest contribution $ 64,982   $ 60,755   $ 46,686   $ 46,954   $ 45,517  
 
FFO components, per diluted share(1):
FFO before Crest contribution $ 0.49 $ 0.48 $ 0.45 $ 0.45 $ 0.45
Crest FFO contribution $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.01
 
Total FFO $ 0.49   $ 0.48   $ 0.45   $ 0.46   $ 0.47  
 
AFFO $ 66,499 $ 62,370 $ 47,730 $ 47,943 $ 49,202
 
AFFO per diluted share $ 0.50 $ 0.49 $ 0.46 $ 0.46 $ 0.49
 
Cash dividends paid per share $ 0.437 $ 0.434 $ 0.430 $ 0.426 $ 0.412
Weighted average diluted shares outstanding 132,828,540 126,202,047 103,765,828 103,450,457 100,394,431
 
 

For the six months ended June 30,
  2012     2011     2010     2009     2008  
 
Net income available to common stockholders $ 59,022 $ 63,120 $ 49,127 $ 50,518 $ 50,686
Depreciation and amortization 70,806 55,791 46,682 45,833 45,772
Provisions for impairment on Realty Income investment properties

--

210

87

--

--
Gain on sales of investment properties   (3,965 )   (1,379 )   (2,366 )   (2,436 )   (3,709 )
 
Total FFO $ 125,863   $ 117,742   $ 93,530   $ 93,915   $ 92,749  
 
Total FFO per diluted share $ 0.95 $ 0.96 $ 0.90 $ 0.91 $ 0.92
 
Total FFO $ 125,863 $ 117,742 $ 93,530 $ 93,915 $ 92,749
Less FFO contributed by Crest   (346 )   (369 )   (365 )   (102 )   (1,101 )
 
FFO before Crest contribution $ 125,517   $ 117,373   $ 93,165   $ 93,813   $ 91,648  
 
FFO components, per diluted share:
FFO before Crest contribution $ 0.95 $ 0.96 $ 0.90 $ 0.91 $ 0.91
Crest FFO contribution $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.01
 
Total FFO $ 0.95   $ 0.96   $ 0.90   $ 0.91   $ 0.92  
 
AFFO $ 132,793 $ 120,610 $ 95,344 $ 95,619 $ 97,910
 
AFFO per diluted share $ 1.00 $ 0.98 $ 0.92 $ 0.92 $ 0.97
 
Cash dividends paid per share $ 0.874 $ 0.866 $ 0.859 $ 0.851 $ 0.822
Weighted average diluted shares outstanding 132,785,213 122,691,418 103,778,609 103,479,897 100,420,692
(1)       The above FFO per share amounts have been rounded to the nearest two decimals and, as such, the individual amounts may not add up to the “Total FFO” amount.
 

CONSOLIDATED BALANCE SHEETS

As of June 30, 2012 and December 31, 2011

(dollars in thousands, except per share amounts)
 
        2012           2011  
(unaudited)
ASSETS
Real estate, at cost:
Land $ 1,807,891 $ 1,749,378
Buildings and improvements   3,347,490     3,222,603  
Total real estate, at cost 5,155,381 4,971,981
Less accumulated depreciation and amortization   (870,165 )   (814,126 )
 
Net real estate held for investment 4,285,216 4,157,855
Real estate held for sale, net   18,965     2,153  
Net real estate 4,304,181 4,160,008
Cash and cash equivalents 6,064 4,165
Accounts receivable, net 17,600 15,375
Goodwill 17,094 17,206
Other assets, net   231,620     222,635  
 
Total assets $ 4,576,559   $ 4,419,389  
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Distributions payable $ 22,993 $ 21,405
Accounts payable and accrued expenses 59,497 58,770
Other liabilities 30,925 29,179
Lines of credit payable 183,600 237,400
Mortgages payable, net 56,661 67,781
Notes payable   1,750,000     1,750,000  
 
Total liabilities   2,103,676     2,164,535  
 
Stockholders’ equity:

Preferred stock and paid in capital, par value $0.01per share 69,900,000 shares authorized and 25,150,000 sharesissued and outstanding as of June 30, 2012, and20,000,000 shares authorized and 13,900,000 sharesissued and outstanding as of December 31, 2011

609,363

337,790

Common stock and paid in capital, par value $0.01 per share370,100,000 shares authorized and 133,439,028 sharesissued and outstanding as of June 30, 2012, and200,000,000 shares authorized and 133,223,338 sharesissued and outstanding as of December 31, 2011

2,567,148

2,563,048
Distributions in excess of net income   (703,628 )   (645,984 )
 
Total stockholders’ equity   2,472,883     2,254,854  
 
Total liabilities and stockholders’ equity $ 4,576,559   $ 4,419,389  
 
 

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)
 
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 %)
YTD Q2 2012 4.2 % 22.0 % 3.3 % 14.9 % 2.7 % 6.8 % 2.2 % 9.5 % 1.3 % 12.7 %
Compounded Average Annual Total Return(5) 18.1 % 11.1 % 9.4 % 8.2 % 7.9 %

Note: All of these Dividend Yields are calculated as annualized dividend based on last dividend paid in applicable time period divided by closing price as of period end. Dividend Yield sources: NAREIT website and Bloomberg.
(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 onOctober 18, 1994 through June 30, 2012, and assuming reinvestment of dividends, except for NASDAQ. 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, 2012 (dollars in thousands):
 
            Approximate       Rental Revenue for       Percentage of
Number of Leasable the Quarter Ended Rental
Property Type Properties   Square Feet June 30, 2012(1) Revenue
Retail 2,704 23,337,700 $ 99,344 86.1 %
Agriculture 15 184,500 5,082 4.4
Distribution 14 2,196,200 4,003 3.5
Office 8 778,500 2,934 2.6
Manufacturing 6 1,418,600 2,469 2.1
Industrial 15   850,500   1,540 1.3  
Totals 2,762   28,766,000 $ 115,372 100.0 %
 
(1)       Includes rental revenue for all properties owned by Realty Income at June 30, 2012, including revenue from properties reclassified as discontinued operations of $357. Excludes revenue of $23 from properties owned by Crest.
 

Industry Diversification
 

The following table sets forth certain information regarding Realty Income’s property portfolio classified according to the business of the respective tenants, expressed as a percentage of our total rental revenue:
 
      Percentage of Rental Revenue(1)

For the Quarter
      For the Years Ended
Ended                              
June 30, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31,
Industries       2012         2011       2010       2009       2008       2007       2006
Apparel stores

1.3

%
1.4 % 1.2 % 1.1 % 1.1 % 1.2 % 1.7 %
Automotive collision services 1.1 0.9 1.0 1.1 1.0 1.1 1.3
Automotive parts 1.0 1.2 1.4 1.5 1.6 2.1 2.8
Automotive service 3.2 3.7 4.7 4.8 4.8 5.2 6.9
Automotive tire services 4.9 5.6 6.4 6.9 6.7 7.3 6.1
Aviation 0.8 0.5 -- -- -- -- --
Beverages 5.3 5.6 3.0 -- -- -- --
Book stores 0.1 0.1 0.1 0.2 0.2 0.2 0.2
Business services * * * * * 0.1 0.1
Child care 4.7 5.2 6.5 7.3 7.6 8.4 10.3
Consumer electronics 0.5 0.5 0.6 0.7 0.8 0.9 1.1
Convenience stores 16.9 18.5 17.1 16.9 15.8 14.0 16.1
Crafts and novelties 0.2 0.2 0.3 0.3 0.3 0.3 0.4
Drug stores 3.5 3.8 4.1 4.3 4.1 2.7 2.9
Education 0.7 0.7 0.8 0.9 0.8 0.8 0.8
Entertainment 0.9 1.0 1.2 1.3 1.2 1.4 1.6
Equipment services 0.4 0.4 0.2 0.2 0.2 0.2 0.2
Financial services 0.6 0.5 0.2 0.2 0.2 0.2 0.1
Food processing 1.2 0.7 -- -- -- -- --
General merchandise 1.5 0.6 0.8 0.8 0.8 0.7 0.6
Grocery stores 3.8 1.6 0.9 0.7 0.7 0.7 0.7
Health and fitness 6.9 6.4 6.9 5.9 5.6 5.1 4.3
Home furnishings 1.0 1.1 1.3 1.3 2.4 2.6 3.1
Home improvement 1.6 1.7 2.0 2.2 2.1 2.4 3.4
Motor vehicle dealerships 2.2 2.2 2.6 2.7 3.2 3.1 3.4
Office supplies 0.8 0.9 0.9 1.0 1.0 1.1 1.3
Packaging 0.6 0.4 -- -- -- -- --
Paper 0.2 0.1 -- -- -- -- --
Pet supplies and services 0.6 0.7 0.9 0.9 0.8 0.9 1.1
Restaurants - casual dining 7.5 10.9 13.4 13.7 14.3 14.9 7.0
Restaurants - quick service 6.3 6.6 7.7 8.3 8.2 6.6 4.9
Shoe stores 0.2 0.2 0.1 -- -- -- --
Sporting goods 2.6 2.7 2.7 2.6 2.3 2.6 2.9
Telecommunications 0.9 0.7 -- -- -- -- --
Theaters 9.6 8.8 8.9 9.2 9.0 9.0 9.6
Transportation services 2.5 1.8 0.2 0.2 0.2 0.2 0.3
Video rental 0.0 0.0 0.2 1.0 1.1 1.7 2.1
Wholesale clubs 2.6 0.7 -- -- -- -- --
Other       1.3         1.4         1.7         1.8         1.9         2.3         2.7  
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.
 

Tenant Diversification
 
Largest Tenants based on Percentage of Total Portfolio Rental Revenue at June 30, 2012
AMC Theatres       5.2%           Hometown Buffet       2.7%
L.A. Fitness 5.0% NPC International/Pizza Hut 2.6%
Diageo 4.9% BJ’s Wholesale Club 2.5%
Northern Tier Energy/Super America 4.3% Rite Aid 2.5%
Regal Cinemas 3.3% Smart & Final 2.3%
Friendly’s Ice Cream 3.1% FreedomRoads/Camping World 2.2%
The Pantry 3.0% TBC Corporation 2.2%
Family Dollar 2.7%
 

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 2,672 net leased, single-tenant properties as of June 30, 2012 (dollars in thousands):
 
      Total Portfolio      

Initial Expirations(3)
      Subsequent Expirations(4)

 

Year
     

Number of Leases Expiring(1)
     

Approx. Leasable Sq. Feet
     

Rental Revenue for the Quarter Ended June 30, 2012(2)
     

% of Total Rental Revenue
     

Number of Leases Expiring
     

Rental Revenue for the Quarter Ended June 30, 2012
     

% of Total Rental Revenue
     

Number of Leases Expiring
     

Rental Revenue for the Quarter Ended June 30, 2012
     

% of Total Rental Revenue
2012 117       906,000       $ 2,445       2.2 %       44       $ 903       0.8 %       73       $ 1,542       1.4 %
2013 151 1,162,200 3,867 3.4 45 1,566 1.4 106 2,301 2.0
2014 135 1,006,500 3,637 3.2 31 1,538 1.4 104 2,099 1.8
2015 155 832,800 3,561 3.1 69 1,809 1.6 86 1,752 1.5
2016 172 868,800 3,693 3.3 112 2,297 2.0 60 1,396 1.3
2017 118 1,122,000 3,850 3.4 41 2,341 2.1 77 1,509 1.3
2018 87 1,300,300 3,954 3.5 73 3,372 3.0 14 582 0.5
2019 142 1,527,200 7,342 6.5 132 6,882 6.1 10 460 0.4
2020 85 1,597,400 5,018 4.4 75 4,665 4.1 10 353 0.3
2021 178 1,903,600 8,175 7.2 170 7,665 6.8 8 510 0.4
2022 108 1,055,600 4,880 4.3 105 4,794 4.2 3 86 0.1
2023 254 2,174,900 10,497 9.3 251 10,147 9.0 3 350 0.3
2024 61 549,500 2,274 2.0 61 2,274 2.0 -- -- --
2025 208 1,724,400 11,733 10.4 203 11,615 10.3 5 118 0.1
2026 110 1,876,500 7,629 6.7 107 7,547 6.6 3 82 0.1
2027-2043       591       7,579,800         30,746       27.1         582         30,557       27.0         9         189       0.1  
Totals       2,672       27,187,500       $ 113,301       100.0 %       2,101       $ 99,972       88.4 %       571       $ 13,329       11.6 %
(1)       Excludes 15 multi-tenant properties and 75 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 $357 from properties reclassified as discontinued operations and excludes revenue of $2,071 from 15 multi-tenant properties and from 75 vacant and unleased properties at June 30, 2012. Excludes revenue of $23 from three 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, 2012 (dollars in thousands):
 
State       Number of

Properties
      Percent

Leased
      Approximate

Leasable

Square Feet
      Rental Revenue for

the Quarter Ended

June 30, 2012(1)
Percentage of

Rental

Revenue
Alabama       65       95 %       450,500       $ 1,774 1.5 %
Alaska 2 100 128,500 307 0.3
Arizona 96 98 699,100 3,133 2.7
Arkansas 17 94 105,100 273 0.2
California 123 99 2,670,100 15,318 13.3
Colorado 60 93 514,800 1,902 1.6
Connecticut 23 96 269,100 1,126 1.0
Delaware 17 100 33,300 433 0.4
Florida 191 96 1,998,100 7,878 6.8
Georgia 144 95 1,270,100 4,950 4.3
Hawaii -- -- -- -- --
Idaho 12 100 80,700 333 0.3
Illinois 104 99 1,367,300 5,983 5.2
Indiana 84 96 830,600 3,683 3.2
Iowa 25 100 312,300 1,059 0.9
Kansas 38 95 650,900 1,366 1.2
Kentucky 24 96 142,600 655 0.6
Louisiana 39 100 384,600 1,276 1.1
Maine 3 100 22,500 139 0.1
Maryland 29 100 384,000 2,188 1.9
Massachusetts 64 92 575,400 2,307 2.0
Michigan 64 100 374,700 1,282 1.1
Minnesota 150 100 1,003,600 6,756 5.8
Mississippi 75 99 392,700 1,525 1.3
Missouri 77 99 1,047,300 3,754 3.3
Montana 2 100 30,000 89 0.1
Nebraska 20 95 204,100 509 0.4
Nevada 16 100 333,700 1,045 0.9
New Hampshire 15 93 217,200 947 0.8
New Jersey 32 94 258,000 1,922 1.7
New Mexico 17 100 139,000 266 0.2
New York 43 95 784,100 4,212 3.7
North Carolina 94 100 577,900 2,956 2.6
North Dakota 6 100 36,600 59 0.1
Ohio 142 96 1,350,500 4,241 3.7
Oklahoma 38 95 776,500 1,407 1.2
Oregon 20 100 384,200 1,238 1.1
Pennsylvania 103 98 907,200 4,103 3.5
Rhode Island 3 100 11,000 41 *
South Carolina 98 98 371,400 2,292 2.0
South Dakota 10 100 89,800 186 0.2
Tennessee 132 97 779,300 2,868 2.5
Texas 256 97 3,483,300 10,331 8.9
Utah 8 100 137,900 376 0.3
Vermont 4 100 12,700 136 0.1
Virginia 106 97 1,540,200 4,570 4.0
Washington 35 94 298,100 1,040 0.9
West Virginia 2 100 23,000 125 0.1
Wisconsin 31 94 291,300 992 0.9
Wyoming       3       100         21,100         21       *  
Totals/Average       2,762       97 %       28,766,000       $ 115,372       100.0 %

*Less than 0.1%
(1)       Includes rental revenue for all properties owned by Realty Income at June 30, 2012, including revenue from properties reclassified as discontinued operations of $357. Excludes revenue of $23 from properties owned by Crest.

Copyright Business Wire 2010

More from Press Releases

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

NFL Pushes for Regulation Following Supreme Court's Sports Gambling Ruling

21st Century Fox Scoops Up Local News Stations

21st Century Fox Scoops Up Local News Stations

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Walmart CEO: 'We Are Transforming Globally' With Flipkart

Three-Part FREE Webinar Series

Three-Part FREE Webinar Series

March 24 Full-Day Course Offering: Professional Approach to Trading SPX

March 24 Full-Day Course Offering: Professional Approach to Trading SPX