Realty Income Corporation (Realty Income), The Monthly Dividend Company®
(NYSE: O), today announced operating results for the second quarter
ended June 30, 2010. 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, 2010, as compared to the same quarterly
period in 2009)
-
Revenue increased to $83.5 million as compared to $81.3 million
-
FFO available to common stockholders decreased 0.8% to $46.8 million
-
FFO per share decreased 2.2% to $0.45
-
AFFO per share was unchanged at $0.46
-
Net income available to common stockholders per share was $0.24
-
Portfolio occupancy was 96.2%
-
Same store rents increased 0.1% to $79.0 million
-
Dividends paid per common share increased 0.9%
-
The monthly dividend increased for the 51st consecutive
quarter to an annualized amount of $1.7235 per share
-
Invested $261.2 million in 13 new properties
-
Issued $250 million of 5.75% 10-year notes
Financial Results
Revenue
Realty Income's revenue, for the quarter ended June 30, 2010, increased
2.7% to $83.5 million as compared to $81.3 million for the same quarter
in 2009. Revenue, for the six months ended June 30, 2010, increased 1.8%
to $166.7 million as compared to $163.8 million for the same period in
2009.
Net Income Available to Common Stockholders
Net income available to common stockholders, for the quarter ended June
30, 2010, was $25.0 million as compared to $26.5 million for the same
quarter in 2009. Net income per share for the quarter was $0.24 as
compared to $0.26 for the same quarter in 2009.
Net income available to common stockholders, for the six months ended
June 30, 2010, was $49.1 million as compared to $50.5 million for the
same period in 2009. Net income per share, for the six months ended June
30, 2010, was $0.47 as compared to $0.49 for the same period in 2009.
The calculation to determine net income for a real estate company
includes impairments and/or gains from the sales of investment
properties. The amount of impairments and/or gains on property sales
varies from quarter to quarter. This variance can significantly impact
net income.
During the second quarter of 2010, income from continuing operations
available to common stockholders was unchanged at $0.23 per share as
compared to the same quarter in 2009.
During the first six months of 2010, income from continuing operations
available to common stockholders was $0.45 per share as compared to
$0.46 per share for the same period in 2009.
FFO Available to Common Stockholders
Funds from Operations (FFO), for the quarter ended June 30, 2010,
decreased 0.8% to $46.8 million as compared to $47.2 million for the
same quarter in 2009. FFO per share, for the quarter ended June 30,
2010, decreased 2.2% to $0.45 as compared to $0.46 for the same quarter
in 2009.
FFO, for the six months ended June 30, 2010, decreased 0.5% to $93.4
million as compared to $93.9 million for the same period in 2009. FFO
per share, for the six months ended June 30, 2010, decreased 1.1% to
$0.90 as compared to $0.91 for the same period in 2009.
AFFO Available to Common Stockholders
Adjusted Funds from Operations (AFFO), for the quarter ended June 30,
2010, was $47.7 million as compared to $47.9 million for the same
quarter in 2009. AFFO per share, for the quarter ended June 30, 2010,
was unchanged at $0.46 as compared to the same quarter in 2009.
AFFO, for the six months ended June 30, 2010, was $95.3 million as
compared to $95.6 million for the same period in 2009. AFFO per share,
for the six months ended June 30, 2010, was unchanged at $0.92 as
compared to the same period in 2009.
The Company considers FFO and AFFO to be appropriate supplemental
measures of a Real Estate Investment Trust's (REIT's) operating
performance as they are based on a net income analysis of property
portfolio performance that excludes non-cash items such as depreciation.
FFO and AFFO are alternative, non-GAAP measures that are also considered
to be good indicators of a company's ability to generate income to pay
dividends. 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, reduced by gains on sales of
investment properties and extraordinary items. AFFO further adjusts FFO
by adding back non-cash items that reduce net income in accordance with
GAAP, and deducting such items as capitalized expenditures and
straight-line rent revenue. See our reconciliation of net income
available to common stockholders to FFO and AFFO on page 7.
Dividend Information
In June 2010, Realty Income announced the 51st consecutive
quarterly increase, which is the 58th 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, 2010,
was $1.7235 per share. The amount of the monthly dividends paid during
the first half of 2010 increased 0.9% to $0.859 per share from $0.851
per share compared to the same period in 2009. Through June 30, 2010,
the Company has paid 479 consecutive monthly dividends.
Real Estate Portfolio Update
As of June 30, 2010, Realty Income's portfolio of freestanding,
single-tenant properties consisted of 2,350 properties located in 49
states, leased to 118 commercial enterprises doing business in 32
industries. The properties are leased under long-term, net leases with a
weighted average remaining lease term of approximately 11.4 years.
Portfolio Management Activities
The Company's portfolio of commercial real estate, owned primarily under
15- to 20-year net leases, continues to perform well and provide
dependable lease revenue supporting the payment of monthly dividends. As
of June 30, 2010, portfolio occupancy was 96.2% with 90 properties
available for lease out of a total of 2,350 properties in the portfolio.
Rent Increases
During the quarter ended June 30, 2010, same store rents on 2,167
properties under lease increased 0.1%, as compared to the same quarter
in 2009. During the six months ended June 30, 2010, same store rents on
2,167 properties under lease increased 0.4%, as compared to the same
period in 2009.
Property Acquisitions
During the second quarter of 2010, Realty Income invested $261.2 million
in 13 new properties. The new properties are located in two states and
are 100% leased with an initial average lease term of 19.8 years and an
initial average lease yield of 7.5%. During the six months ended June
30, 2010, Realty Income invested $289.0 million in 21 new properties.
The new properties are located in seven states and are 100% leased with
an initial average lease term of 19.2 years and an initial average lease
yield of 7.6%.
Realty Income maintains a $355 million unsecured acquisition credit
facility, which is used to fund property acquisitions in the near term.
As of June 30, 2010, the outstanding balance on the Company's
acquisition credit facility was $26.9 million, and $328.1 million was
available to fund new property acquisitions.
Property Dispositions
Realty Income continued to successfully execute its asset disposition
program in 2010. 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, 2010, Realty Income sold seven
properties for $6.0 million, which resulted in a gain on sales of
$1.7 million. During the six months ended June 30, 2010, Realty Income
sold ten properties for $7.8 million, which resulted in a gain on sales
of $2.4 million.
Other Activities
Crest Net Lease
Crest is focused on acquiring and subsequently marketing net-leased
properties for sale. Crest did not acquire or sell any properties during
the first half of 2010. At June 30, 2010, Crest's property inventory
consisted of three properties valued at $3.8 million. During the second
quarter of 2010 and 2009, Crest did not contribute to Realty Income's
FFO per share.
Issued $250 Million of 5.75% Senior Unsecured Notes
In June 2010, Realty Income issued $250 million of 5.75% senior
unsecured notes due January 2021. The public offering price for the
notes was 99.404% of the principal amount for an effective yield to
maturity of 5.826%. These securities are rated BBB+ by Fitch Ratings,
Baa1 by Moody's Investors Service and BBB by Standard & Poor's Ratings
Group. The net proceeds from the offering were used to repay borrowings
under our acquisition credit facility, which were incurred to fund a
majority of the Diageo property acquisition that closed during the
second quarter.
Acquired $269 Million of Diageo Chateau & Estate Wines Properties
On June 25, 2010, Realty Income acquired $258 million of winery and
vineyard properties of Diageo Chateau & Estate Wines, with a remaining
property to be acquired for approximately $11 million. The leases are
guaranteed by Diageo plc (NYSE: ADR: DEO), the world's leading premium
drinks company. The company produces and distributes more than 65
consumer brands in 180 markets worldwide and carries investment grade
corporate debt ratings from Fitch Ratings (A-), Moody's Investors
Service (A3) and Standard & Poor's Ratings Group (A-). Diageo's shares
are listed on the London and New York Stock Exchanges.
The properties acquired are located throughout the Napa Valley in Napa
County, California, the United States' premier wine producing region.
The properties are comprised of approximately 2,000 acres of vineyard
properties as well as the winery, production, retail and visitor center
buildings of both the Sterling Vineyards winery and the Beaulieu
Vineyards (BV) winery, with combined leasable space of approximately
400,000 square feet. Diageo Chateau & Estate Wines will continue to
manage and operate the properties and will retain ownership and
marketing of their wine brands. The vineyards being acquired in the
transaction have been in production for between 25 to 100 years, and the
premium grapes grown and processed on the properties are used for
several of Diageo's most highly regarded wine brands.
CEO Comments on Operating Results
Commenting on Realty Income's financial results and real estate
operations, Chief Executive Officer Tom A. Lewis said, ?We continue to
enjoy steady performance in our property portfolio and business
operations that support the payment of monthly dividends to our
shareholders. Our focus during the second quarter was on additional
property acquisitions while maintaining a high level of portfolio
occupancy.?
?During the quarter, we reviewed numerous acquisition opportunities and
purchased 13 new properties for $261.2 million, which brought our
year-to-date acquisitions to 21 properties acquired for $289 million.
The properties acquired during the quarter had initial average lease
lengths of just under 20 years and initial yields of 7.5%, which will
increase over time and significantly add to our revenue stream. We were
also successful in permanently financing the majority of these
transactions by issuing $250 million of 5.75%, 10-year senior unsecured
notes, which represented a very attractive spread relative to the
initial average lease yield on the properties. The capital raised also
leaves us in a very liquid position to pursue additional acquisition
opportunities during the balance of the year. We are continuing to see
an increasing flow of potential acquisitions and believe that our recent
additions to staff should allow us to access additional property
acquisitions during the balance of the year.?
?With respect to ongoing real estate portfolio performance, we continue
to enjoy a high level of portfolio occupancy of 96.2%. In addition, same
store rent growth remained slightly positive during the quarter. Over
the last two years, we have dealt with a number of retailers that have
experienced operating and financial challenges, however, our portfolio
management team has continued to do a great job of re-leasing the
impacted properties, which has led to continued high occupancy. Absent
additional unforeseen difficulties in the economy, we believe we may
have seen the worst of the impact of the recession on the portfolio, and
we would anticipate an increased level of occupancy and same store rent
growth over the next year.?
?Finally, our solid operating performance allowed us to increase the
amount of the dividend once again during the second quarter. Providing
monthly dividends that increase over time is our mission, so we remain
focused on operating the business in a manner that supports the payment
of monthly dividends that increase over time to our shareholders.?
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, the economy, charges for property impairments, and the
operations of Crest.
2010 Estimates
Management estimates that FFO per share for 2010 should range from $1.84
to $1.86, which represents annual FFO per share growth of approximately
0% to 1.1%, as compared to 2009 FFO per share of $1.84. FFO for 2010 is
based on an estimated net income per share range of $0.97 to $0.99 plus
(in accordance with NAREIT's definition of FFO) estimated real estate
depreciation of $0.91 and reduced by potential gain on sales of
investment properties of $0.04 per share.
2011 Estimates
Management estimates that FFO per share for 2011 should range between
$1.96 to $2.00 per share, or an increase of 5.4% to 8.7% in annual FFO
growth, compared to its 2010 estimate of $1.84 to $1.86. FFO for 2011 is
based on an estimated net income per share range of $1.08 to $1.12 plus
(in accordance with NAREIT's definition of FFO) estimated real estate
depreciation of $0.92 and reduced by potential gains on sales of
investment properties of $0.04 per share.
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, 2010, the Company had
paid 479 consecutive monthly dividends throughout its 41-year operating
history. The monthly income is supported by the cash flows from over
2,300 properties owned under long-term lease agreements with regional
and national retail chains and other commercial enterprises. The Company
is an active buyer of net-leased properties nationwide.
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, 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, and the profitability of Crest, the Company's
subsidiary, 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 at no
charge by calling our toll-free investor hotline number: 888-811-2001,
or via the internet at http://www.realtyincome.com/Investing/News.html.
|
|
|
CONSOLIDATED STATEMENTS OF INCOME
|
|
For the three and six months ended June 30, 2010 and 2009
|
|
(dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
Three Months
|
|
Six Months
|
|
Six Months
|
|
|
|
Ended 6/30/10
|
|
Ended 6/30/09
|
|
Ended 6/30/10
|
|
Ended 6/30/09
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
Rental
|
|
$
|
82,802
|
|
|
$
|
81,216
|
|
|
$
|
165,884
|
|
|
$
|
162,928
|
|
|
Other
|
|
|
664
|
|
|
|
85
|
|
|
|
770
|
|
|
|
839
|
|
|
Total revenue
|
|
|
83,466
|
|
|
|
81,301
|
|
|
|
166,654
|
|
|
|
163,767
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
23,524
|
|
|
|
22,782
|
|
|
|
46,755
|
|
|
|
45,529
|
|
|
Interest
|
|
|
21,576
|
|
|
|
21,367
|
|
|
|
42,971
|
|
|
|
42,777
|
|
|
General and administrative
|
|
|
6,650
|
|
|
|
5,006
|
|
|
|
13,360
|
|
|
|
10,956
|
|
|
Property
|
|
|
1,684
|
|
|
|
1,786
|
|
|
|
3,798
|
|
|
|
3,921
|
|
|
Income taxes
|
|
|
277
|
|
|
|
308
|
|
|
|
555
|
|
|
|
610
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
53,711
|
|
|
|
51,249
|
|
|
|
107,439
|
|
|
|
103,793
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
|
29,755
|
|
|
|
30,052
|
|
|
|
59,215
|
|
|
|
59,974
|
|
|
Income from discontinued operations:
|
|
|
|
|
|
|
|
|
|
Real estate acquired for resale by Crest
|
|
|
158
|
|
|
|
226
|
|
|
|
365
|
|
|
|
102
|
|
|
Real estate held for investment
|
|
|
1,135
|
|
|
|
2,282
|
|
|
|
1,674
|
|
|
|
2,569
|
|
|
Total income from discontinued operations
|
|
|
1,293
|
|
|
|
2,508
|
|
|
|
2,039
|
|
|
|
2,671
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
31,048
|
|
|
|
32,560
|
|
|
|
61,254
|
|
|
|
62,645
|
|
|
Preferred stock cash dividends
|
|
|
(6,063
|
)
|
|
|
(6,063
|
)
|
|
|
(12,127
|
)
|
|
|
(12,127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net income available to common stockholders
|
|
$
|
24,985
|
|
|
$
|
26,497
|
|
|
$
|
49,127
|
|
|
$
|
50,518
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations available to common stockholders (FFO)
|
|
$
|
46,791
|
|
|
$
|
47,180
|
|
|
$
|
93,443
|
|
|
$
|
93,915
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share information for common stockholders:
|
|
|
|
|
|
|
|
|
|
Income from continuing operations:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
0.23
|
|
|
$
|
0.23
|
|
|
$
|
0.45
|
|
|
$
|
0.46
|
|
|
Net income:
|
|
|
|
|
|
|
|
|
|
Basic and diluted
|
|
$
|
0.24
|
|
|
$
|
0.26
|
|
|
$
|
0.47
|
|
|
$
|
0.49
|
|
|
FFO, basic and diluted(1):
|
|
|
|
|
|
|
|
|
|
FFO before Crest contribution
|
|
$
|
0.45
|
|
|
$
|
0.45
|
|
|
$
|
0.90
|
|
|
$
|
0.91
|
|
|
Crest Net Lease
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
© Business Wire 2010
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