EX-99.1 2 a06-11004_1ex99d1.htm EX-99

Exhibit 99.1

 

CONTACT:

Tere Miller

Vice President, Corporate Communications

760-741-2111 ext. 177

 

REALTY INCOME ANNOUNCES RECORD

FIRST QUARTER OPERATING RESULTS

 

ESCONDIDO, CALIFORNIA, May 3, 2006...Realty Income Corporation (Realty Income), The Monthly Dividend Company® (NYSE: O) today announced operating results for the first quarter ended March 31, 2006.

 

COMPANY HIGHLIGHTS:

(For the quarter ended March 31, 2006,

 as compared to the same quarterly period in 2005)

 

•                                          Revenue increased 18.7% to $55.3 million

•                                          Funds from Operations (FFO) available to common stockholders increased 13.1% to $35.3 million

•                                          FFO per diluted common share increased 7.7% to $0.42 per share

•                                          Net income available to common stockholders per diluted common share was $0.27 per share

•                                          Dividends paid per share increased 5.8%

•                                          Increased the monthly dividend in March for the 34th consecutive quarter

•                                          Same store rents increased 0.7% to $44.13 million

•                                          Invested $95.2 million in 28 additional properties

•                                          Issued 5.2 million common shares for gross proceeds of approximately $126.8 million

 

Financial Results

 

Revenue Increases

 

Realty Income’s revenue for the first quarter ended March 31, 2006, increased 18.7% to $55.3 million as compared to $46.6 million for the same period in 2005.

 

Net Income Available to Common Stockholders

 

Net income available to common stockholders, for the quarter ended March 31, 2006, was $22.5 million as compared to $21.2 million for the same period in 2005. On a diluted per common share basis, net income for the quarter was unchanged at $0.27 per share as compared to the same period in 2005.

 

The calculation to determine net income for a real estate company includes gains from the sale of investment properties and impairments. The amount of gains on property sales and impairments varies from quarter to quarter. This variance can significantly impact net income.

 

During the first quarter of 2006, income from continuing operations available to common stockholders was
$0.25 per diluted common share as compared to $0.24 per diluted common share for the same period in 2005.

 

Funds from Operations (FFO) Available to Common Stockholders

 

FFO for the quarter ended March 31, 2006 increased 13.1% to $35.3 million as compared to $31.2 million for the same period in 2005. FFO per diluted common share increased 7.7% to $0.42 per share, for the quarter ended March 31, 2006, as compared to $0.39 per share for the same period in 2005. Core FFO (FFO before Crest’s contribution) per diluted common share, for the quarter ended March 31, 2006, increased 7.9% to $0.41 per share from $0.38 per share for the same period in 2005. For a calculation of Core FFO, or FFO before Crest’s contributions, see pages 6 and 7.

 

1


 

The Company considers FFO to be an appropriate supplemental measure of a Real Estate Investment Trust’s (REIT’s) operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. FFO is an alternative, non-GAAP, measure that is also considered to be a good indicator 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. (See reconciliation of net income available to common stockholders to FFO on page 6).

 

Dividend Information

 

In March 2006, Realty Income announced the 34th consecutive quarterly increase in the amount of the monthly dividend on its common stock to an annualized amount of $1.4025 per share. This marked the 38th increase in the amount of the dividend since the Company’s listing on the New York Stock Exchange in 1994. On a quarter to quarter basis, dividends paid per share increased 5.8% to $0.349 per share in the first quarter of 2006, as compared to $0.330 per share in the first quarter of 2005. Through March 31, 2006, the Company has paid 428 consecutive monthly dividends and continues its 37-year history of declaring and paying dividends every month.

 

Real Estate Portfolio Update

 

As of March 31, 2006, Realty Income’s portfolio of freestanding, single-tenant, retail properties consisted of 1,667 properties located in 48 states, leased to 103 retail chains doing business in 29 retail industries. The properties are leased under long-term, net leases with a weighted average remaining lease term of approximately 12.4 years.

 

Portfolio Management Activities

 

The Company’s portfolio of retail 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 March 31, 2006, portfolio occupancy was 98.5% with only 25 properties available for lease out of 1,667 properties in the portfolio.

 

Rent Increases

 

Same store rents on 1,446 properties under lease, during the three months ended March 31, 2006 and 2005, increased 0.7% to $44.13 million from $43.82 million in 2005.

 

Property Acquisitions

 

During the first quarter, Realty Income and Crest invested $95.2 million in 28 new properties and properties under development. Realty Income invested $87.8 million in 26 new properties and properties under development with an initial average contractual lease yield of 8.6%. The 26 new properties acquired by Realty Income are located in 10 states and are 100% leased under net-lease agreements with an initial average lease length of 18.5 years. They are leased to five different retail chains in the home improvement, motor vehicle dealership and restaurant industries.

 

Realty Income maintains a $300 million unsecured acquisition credit facility, which is used to fund property acquisitions in the near term. The outstanding balance on the Company’s acquisition credit facility at the end of the first quarter was $33.6 million with $266.4 million available to fund new property acquisitions.

 

Property Dispositions

 

Realty Income continued to successfully execute its asset disposition program. The objective of the 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 or increase the average lease length. During the first quarter ended March 31, 2006, Realty Income sold five properties for $2.1 million, which resulted in a gain on sales of $752,000. The proceeds were used to pay down the Company’s acquisition credit facility or to invest in new properties.

 

Other 2006 Activities

 

Issued 5.2 Million Common Shares

 

In March 2006, Realty Income issued 5.2 million common shares priced at $24.39 per share. The gross proceeds from the offering were approximately $126.8 million. The net proceeds were used to fund new property acquisitions and for other general corporate purposes.

 

2


 

Three-Year Shelf Registration

 

In April 2006, Realty Income filed a shelf registration statement with the Securities and Exchange Commission, which will be effective for a term of three years. The securities covered by this registration statement include common stock, preferred stock, debt securities or any combination of such securities. The Company may periodically offer one or more of these securities in amounts, prices and on terms to be announced when and if the securities are offered.

 

Crest Net Lease

 

Crest Net Lease, Inc. (Crest), Realty Income’s wholly-owned subsidiary, is focused on acquiring and subsequently marketing net-leased properties for sale. During the first quarter ended March 31, 2006, Crest sold four properties for $6.4 million and reported a gain on sales of $906,000. Crest also invested $7.4 million in two new properties during the first quarter. As of March 31, 2006, Crest carried an inventory of $47.6 million, which consists of 15 properties held for sale.

 

Crest’s contribution to Realty Income’s FFO depends on the timing and number of property sales, if any, in a given quarter. Therefore, Crest’s contribution can fluctuate and add volatility to Realty Income’s reported FFO and net income on a comparable quarterly and annualized basis. During the first quarter ended March 31, 2006, Crest generated $879,000, or $0.01 per diluted common share, in FFO (and net income) for Realty Income as compared to $833,000, or $0.01 per diluted common share, in FFO for the same period in 2005.

 

CEO Comments on Operating Results

 

Commenting on Realty Income’s financial results and real estate operations, Tom A. Lewis, Chief Executive Officer, stated, “The Monthly Dividend Company® ended the first quarter of 2006 with solid operating results in all areas of the business. We are pleased to report continued growth in revenue, funds from operations and dividends, resulting from the ongoing focus on increasing the size and diversification of our retail real estate portfolio. During the first quarter, revenues increased over 18%, primarily as a result of the record number of properties acquired during 2005. This contributed to continued strength in funds from operations and FFO per share, which increased 7.7% during the first quarter. These positive financial results allowed us to increase the dividend for the 38th time since going public in 1994. As such, on a quarterly comparative basis, dividends per share received by shareholders increased 5.8%.

 

“Property portfolio acquisitions were, once again, a highlight of the quarter. Realty Income and Crest invested approximately $95 million in 28 new properties, which provides us with an excellent start towards our property acquisition goals for the year. The average initial lease rate, for the properties acquired by Realty Income, was 8.6%, which produced an attractive spread over our cost of capital. The initial average lease term on properties acquired by Realty Income during the quarter was 18.5 years. We continue to focus primarily on purchasing properties with 15-20 year leases in order to secure the long-term lease revenue needed to support the payment of monthly dividends.

 

“Another important goal of the Company is to maintain high occupancy. We are pleased to report that our real estate portfolio of 1,667 properties continues to perform well and exhibited a stable occupancy rate of 98.5%. As of March 31, 2006, there were just 25 properties for lease in comparison to 33 properties for lease at the end of the same quarter in 2005.

 

“We were also fortunate to complete a very successful offering of 5.2 million common shares during the first quarter, raising approximately $126.8 million in gross proceeds. This offering allowed us to pay down our acquisition credit facility and supplies us with capital to fund additional acquisitions throughout the year.

 

“In all, this quarter gives us a strong start to the year. We will continue to operate the Company with the income needs of our shareholders as our number one priority, by carefully monitoring both the acquisition and capital markets environment so that our activities are in keeping with the mission of The Monthly Dividend Company®.”

 

FFO Commentary

 

Realty Income’s FFO per diluted common 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 diluted common share to vary from levels that have been anticipated by the Company. These factors include, but are not limited to, changes in interest rates, 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.

 

3


 

2006 Estimates

 

Management estimates that FFO per diluted common share for 2006 should range from $1.68 to $1.72, which would represent annual FFO per diluted common share growth of approximately 3.7% to 6.2%, compared to 2005 FFO per share of $1.62. This represents an increase from the Company’s previous 2006 FFO per share estimates of $1.67 to $1.71. FFO for 2006 is based on an estimated net income per diluted common share range of $1.11 to $1.15, adjusted (in accordance with NAREIT’s definition of FFO) for estimated real estate depreciation of $0.63 and potential gain on sales of investment properties of $0.06 per share.

 

Management further estimates that Crest could contribute between $0.03 to $0.06 per share to Realty Income’s FFO during 2006. Crest’s primary business is the purchase and sale of properties for a profit. These sales may occur at various times during the course of the year, which could cause FFO, in certain quarters, to fluctuate on a comparable quarterly and annualized basis.

 

The Company does not intend to provide quarterly estimates of FFO. Absent changes in annual FFO guidance at the end of each quarter, it may be presumed that the Company’s overall estimates for 2006 have not changed.

 

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, 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, such 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.

 

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 March 31, 2006, the Company had paid 428 consecutive monthly dividends throughout its 37-year operating history. The monthly income is supported by the cash flows from over 1,600 retail properties owned under long-term lease agreements with leading regional and national retail chains. The Company is an active buyer of net-leased retail properties nationwide.

 

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

 

4


 

CONSOLIDATED STATEMENTS OF INCOME

For the three months ended March 31, 2006 and 2005

(dollars in thousands, except per share amounts)

 

 

 

Three Months
Ended 3/31/06

 

Three Months
Ended 3/31/05

 

REVENUE

 

 

 

 

 

Rental

 

$

55,229

 

$

46,516

 

Other

 

86

 

37

 

 

 

 

 

 

 

 

 

55,315

 

46,553

 

EXPENSES

 

 

 

 

 

Interest

 

13,198

 

9,058

 

Depreciation and amortization

 

13,551

 

10,748

 

General and administrative

 

4,245

 

4,056

 

Property

 

839

 

845

 

Income taxes

 

231

 

198

 

 

 

 

 

 

 

 

 

32,064

 

24,905

 

 

 

 

 

 

 

Income from continuing operations

 

23,251

 

21,648

 

Income from discontinued operations:

 

 

 

 

 

Real estate acquired for resale by Crest

 

879

 

833

 

Real estate held for investment

 

758

 

1,022

 

 

 

1,637

 

1,855

 

 

 

 

 

 

 

Net income

 

24,888

 

23,503

 

Preferred stock cash dividends

 

(2,351

)

(2,351

)

 

 

 

 

 

 

Net income available to common stockholders

 

$

22,537

 

$

21,152

 

 

 

 

 

 

 

Funds from operations available to common stockholders (FFO)

 

$

35,300

 

$

31,162

 

 

 

 

 

 

 

Per share information for common stockholders, basic and diluted:

 

 

 

 

 

Income from continuing operations

 

$

0.25

 

$

0.24

 

Net income

 

$

0.27

 

$

0.27

 

 

 

 

 

 

 

FFO, basic and diluted

 

 

 

 

 

FFO before Crest’s contribution

 

$

0.41

 

$

0.38

 

Crest’s contribution

 

0.01

 

0.01

 

Total FFO

 

0.42

 

0.39

 

 

 

 

 

 

 

Cash dividends paid

 

$

0.349

 

$

0.330

 

 

5


 

FUNDS FROM OPERATIONS

(dollars in thousands, except per share amounts)

 

 

 

Three Months
Ended 3/31/06

 

Three Months
Ended 3/31/05

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

22,537

 

$

21,152

 

Depreciation and amortization:

 

 

 

 

 

Continuing operations

 

13,551

 

10,748

 

Discontinued operations

 

9

 

116

 

Depreciation of furniture, fixtures & equipment

 

(45

)

(32

)

Gain on sales of investment properties reported in discontinued operations

 

(752

)

(822

)

 

 

 

 

 

 

Funds from operations available to common stockholders

 

$

35,300

 

$

31,162

 

 

 

 

 

 

 

Dividends paid to common stockholders

 

$

29,255

 

$

26,262

 

 

 

 

 

 

 

FFO in excess of dividends

 

$

6,045

 

$

4,900

 

 

 

 

 

 

 

FFO per common share, basic and diluted

 

$

0.42

 

$

0.39

 

Weighted average number of common shares used for computation per share:

 

 

 

 

 

Basic

 

83,208,660

 

79,581,517

 

Diluted

 

83,412,391

 

79,659,364

 

 

CONTRIBUTIONS BY CREST TO FUNDS FROM OPERATIONS

(dollars in thousands, except per share amounts)

 

Crest acquires properties with the intention of reselling them rather than holding them as investments and operating the properties. Consequently, we classify properties acquired by Crest as held for sale at the date of acquisition and do not depreciate them. The operations of Crest’s properties are classified as “income from discontinued operations, real estate acquired for resale.”

 

 

 

Three Months
Ended 3/31/06

 

Three Months
Ended 3/31/05

 

Gain on sales of real estate acquired for resale

 

$

906

 

$

1,226

 

Rental revenue

 

1,103

 

282

 

Interest expense

 

(726

)

(147

)

General and administrative expense

 

(79

)

(139

)

Property expenses

 

(36

)

(25

)

Income taxes

 

(289

)

(364

)

Funds from operations contributed by Crest

 

$

879

 

$

833

 

 

 

 

 

 

 

Crest FFO per common share, basic and diluted

 

$

0.01

 

$

0.01

 

 

 

 

 

 

 

Total FFO

 

$

35,300

 

$

31,162

 

Less FFO contributed by Crest

 

(879

)

(833

)

FFO before Crest’s contribution

 

$

34,421

 

$

30,329

 

FFO before Crest’s contribution per common share, basic and diluted

 

$

0.41

 

$

0.38

 

 

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, reduced by gains on sales of investment property and extraordinary items.

 

6


 

HISTORICAL FUNDS FROM OPERATIONS

(dollars in thousands, except per share amounts)

 

For the three months ended March 31,

 

2006

 

2005

 

2004

 

2003

 

2002

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

22,537

 

$

21,152

 

$

22,423

 

$

15,606

 

$

15,866

 

Depreciation and amortization

 

13,515

 

10,832

 

9,787

 

8,063

 

7,471

 

Gain on sales of investment properties

 

(752

)

(822

)

(1,450

)

(171

)

(1,127

)

 

 

 

 

 

 

 

 

 

 

 

 

Total FFO

 

$

35,300

 

$

31,162

 

$

30,760

 

$

23,498

 

$

22,210

 

 

 

 

 

 

 

 

 

 

 

 

 

Total FFO per diluted share

 

$

0.42

 

$

0.39

 

$

0.40

 

$

0.34

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

 

 

Total FFO

 

$

35,300

 

$

31,162

 

$

30,760

 

$

23,498

 

$

22,210

 

Less FFO contributed by Crest

 

(879

)

(833

)

(3,276

)

(85

)

(363

)

FFO before Crest’s contribution

 

$

34,421

 

$

30,329

 

$

27,484

 

$

23,413

 

$

21,847

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO components, per diluted share(1):

 

 

 

 

 

 

 

 

 

 

 

FFO before Crest’s contribution

 

$

0.41

 

$

0.38

 

$

0.36

 

$

0.33

 

$

0.33

 

Crest’s FFO contribution

 

$

0.01

 

$

0.01

 

$

0.04

 

$

0.00

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

Total FFO

 

$

0.42

 

$

0.39

 

$

0.40

 

$

0.34

 

$

0.34

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid per share

 

$

0.349

 

$

0.330

 

$

0.300

 

$

0.293

 

$

0.285

 

Diluted shares outstanding

 

83,412,391

 

79,659,364

 

76,321,278

 

70,011,970

 

66,183,494

 

 

(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.

 

7


 

CONSOLIDATED BALANCE SHEETS

As of March 31, 2006 and December 31, 2005

(dollars in thousands, except per share amounts)

 

 

 

2006

 

2005

 

ASSETS

 

 

 

 

 

Real estate, at cost:

 

 

 

 

 

Land

 

$

773,597

 

$

746,016

 

Buildings and improvements

 

1,408,687

 

1,350,140

 

 

 

2,182,284

 

2,096,156

 

Less accumulated depreciation and amortization

 

(353,399

)

(341,193

)

 

 

 

 

 

 

Net real estate held for investment

 

1,828,885

 

1,754,963

 

Real estate held for sale, net

 

48,379

 

47,083

 

Net real estate

 

1,877,264

 

1,802,046

 

Cash and cash equivalents

 

4,107

 

65,704

 

Accounts receivable

 

4,593

 

5,044

 

Goodwill

 

17,206

 

17,206

 

Other assets

 

26,762

 

30,988

 

 

 

 

 

 

 

Total assets

 

$

1,929,932

 

$

1,920,988

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

Distributions payable

 

$

10,804

 

$

10,121

 

Accounts payable and accrued expenses

 

17,406

 

20,391

 

Other liabilities

 

9,937

 

9,562

 

Line of credit payable

 

33,600

 

136,700

 

Notes payable

 

755,000

 

755,000

 

 

 

 

 

 

 

Total liabilities

 

826,747

 

931,774

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock and paid in capital, par value $1.00 per share, 20,000,000 shares authorized, 5,100,000 issued and outstanding

 

123,804

 

123,804

 

Common stock and paid in capital, par value $1.00 per share, 200,000,000 shares authorized, 89,089,114 and 83,696,647 issued and outstanding in 2006 and 2005, respectively

 

1,255,671

 

1,134,300

 

Distributions in excess of net income

 

(276,290

)

(268,890

)

 

 

 

 

 

 

Total stockholders’ equity

 

1,103,185

 

989,214

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

1,929,932

 

$

1,920,988

 

 

8


 

The following table sets forth certain information regarding Realty Income’s property portfolio (excluding properties owned by Crest) classified according to the business of the respective tenants, expressed as a percentage of our total rental revenue:

 

 

 

Percentage of Rental Revenue (1)

 

Industries

 

For the
Quarter
Ended
Mar. 31,
2006

 

For the Years Ended

 

 

 

Dec 31,
2005

 

Dec 31,
2004

 

Dec 31,
2003

 

Dec 31,
2002

 

Dec 31,
2001

 

Dec 31,
2000

 

Apparel stores

 

1.4

%

1.6

%

1.8

%

2.1

%

2.3

%

2.4

%

2.4

%

Automotive collision services

 

1.3

 

1.3

 

1.0

 

0.3

 

—

 

—

 

—

 

Automotive parts

 

3.0

 

3.4

 

3.8

 

4.5

 

4.9

 

5.7

 

6.0

 

Automotive service

 

6.7

 

7.6

 

7.7

 

8.3

 

7.0

 

5.7

 

5.8

 

Automotive tire services

 

6.3

 

7.2

 

7.8

 

3.1

 

2.7

 

2.6

 

2.3

 

Book stores

 

0.3

 

0.3

 

0.3

 

0.4

 

0.4

 

0.4

 

0.5

 

Business services

 

0.1

 

0.1

 

0.1

 

0.1

 

0.1

 

0.1

 

0.1

 

Child care

 

11.2

 

12.7

 

14.4

 

17.8

 

20.8

 

23.9

 

24.7

 

Consumer electronics

 

1.2

 

1.3

 

2.1

 

3.0

 

3.3

 

4.0

 

4.9

 

Convenience stores

 

17.3

 

18.7

 

19.2

 

13.3

 

9.1

 

8.4

 

8.4

 

Crafts and novelties

 

0.4

 

0.4

 

0.5

 

0.6

 

0.4

 

0.4

 

0.4

 

Drug stores

 

2.9

 

2.8

 

0.1

 

0.2

 

0.2

 

0.2

 

0.2

 

Entertainment

 

1.8

 

2.1

 

2.3

 

2.6

 

2.3

 

1.8

 

2.0

 

Equipment rental services

 

0.3

 

0.4

 

0.3

 

0.2

 

—

 

—

 

—

 

Financial services

 

0.1

 

0.1

 

0.1

 

—

 

—

 

—

 

—

 

General merchandise

 

0.4

 

0.5

 

0.4

 

0.5

 

0.5

 

0.6

 

0.6

 

Grocery stores

 

0.6

 

0.7

 

0.8

 

0.4

 

0.5

 

0.6

 

0.6

 

Health and fitness

 

4.4

 

3.7

 

4.0

 

3.8

 

3.8

 

3.6

 

2.4

 

Home furnishings

 

3.3

 

3.7

 

4.1

 

4.9

 

5.4

 

6.0

 

5.8

 

Home improvement

 

3.0

 

1.1

 

1.0

 

1.1

 

1.2

 

1.3

 

2.0

 

Motor vehicle dealerships

 

3.2

 

2.6

 

0.6

 

—

 

—

 

—

 

—

 

Office supplies

 

1.4

 

1.5

 

1.6

 

1.9

 

2.1

 

2.2

 

2.3

 

Pet supplies and services

 

1.1

 

1.3

 

1.4

 

1.7

 

1.7

 

1.6

 

1.5

 

Private education

 

0.7

 

0.8

 

1.1

 

1.2

 

1.3

 

1.5

 

1.4

 

Restaurants

 

9.3

 

9.4

 

9.7

 

11.8

 

13.5

 

12.2

 

12.3

 

Shoe stores

 

—

 

0.3

 

0.3

 

0.9

 

0.8

 

0.7

 

0.8

 

Sporting goods

 

3.1

 

3.4

 

3.4

 

3.8

 

4.1

 

0.9

 

—

 

Theaters

 

9.9

 

5.2

 

3.5

 

4.1

 

3.9

 

4.3

 

2.7

 

Travel plazas

 

0.3

 

0.3

 

0.4

 

0.3

 

—

 

—

 

—

 

Video rental

 

2.2

 

2.5

 

2.8

 

3.3

 

3.3

 

3.7

 

3.9

 

Other

 

2.8

 

3.0

 

3.4

 

3.8

 

4.4

 

5.2

 

6.0

 

Totals

 

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

 

(1)        Includes rental revenue for all properties owned by Realty Income at the end of each period presented, including revenue from properties reclassified to discontinued operations.

 

9


 

The following table sets forth certain information regarding Realty Income’s property portfolio (excluding properties owned by Crest) regarding the timing of the initial lease term expirations (excluding extension options) on our 1,636 net leased, single-tenant and certain other retail properties as of March 31, 2006 (dollars in thousands):

 

Lease Expiration Schedule

 

 

 

Total Portfolio

 

Initial Expirations (3)

 

Subsequent Expirations (4)

 

Year

 

Total
Number of
Leases
Expiring (1)

 

Rental
Revenue for
the Quarter
Ended
3/31/06 (2)

 

% of
Rental
Revenue

 

Number of
Leases
Expiring

 

Rental
Revenue for
the Quarter
Ended
3/31/06

 

% of
Total
Rental
Revenue

 

Number of
Leases
Expiring

 

Rental
Revenue for
the Quarter
Ended
3/31/06

 

% of
Total
Rental
Revenue

 

2006

 

87

 

$

1,862

 

3.5

%

27

 

$

645

 

1.2

%

60

 

$

1,217

 

2.3

%

2007

 

121

 

2,218

 

4.1

 

87

 

1,615

 

3.0

 

34

 

603

 

1.1

 

2008

 

106

 

2,306

 

4.3

 

63

 

1,509

 

2.8

 

43

 

797

 

1.5

 

2009

 

89

 

1,938

 

3.6

 

29

 

671

 

1.3

 

60

 

1,267

 

2.3

 

2010

 

74

 

1,537

 

2.9

 

36

 

877

 

1.6

 

38

 

660

 

1.3

 

2011

 

50

 

1,591

 

3.0

 

36

 

1,293

 

2.4

 

14

 

298

 

0.6

 

2012

 

44

 

1,382

 

2.6

 

42

 

1,331

 

2.5

 

2

 

51

 

0.1

 

2013

 

74

 

3,201

 

6.0

 

66

 

2,989

 

5.6

 

8

 

212

 

0.4

 

2014

 

48

 

1,998

 

3.7

 

36

 

1,756

 

3.3

 

12

 

242

 

0.4

 

2015

 

90

 

1,778

 

3.3

 

65

 

1,220

 

2.3

 

25

 

558

 

1.0

 

2016

 

18

 

526

 

1.0

 

14

 

406

 

0.7

 

4

 

120

 

0.3

 

2017

 

22

 

1,532

 

2.9

 

19

 

1,478

 

2.8

 

3

 

54

 

0.1

 

2018

 

23

 

1,020

 

1.9

 

23

 

1,020

 

1.9

 

—

 

—

 

—

 

2019

 

95

 

4,703

 

8.8

 

94

 

4,510

 

8.4

 

1

 

193

 

0.4

 

2020

 

82

 

2,920

 

5.5

 

80

 

2,887

 

5.4

 

2

 

33

 

0.1

 

2021

 

131

 

4,456

 

8.3

 

131

 

4,456

 

8.3

 

—

 

—

 

—

 

2022

 

96

 

2,605

 

4.9

 

95

 

2,592

 

4.9

 

1

 

13

 

*

 

2023

 

233

 

6,430

 

12.0

 

232

 

6,404

 

12.0

 

1

 

26

 

*

 

2024

 

57

 

1,727

 

3.2

 

57

 

1,727

 

3.2

 

—

 

—

 

—

 

2025

 

64

 

5,537

 

10.3

 

60

 

5,474

 

10.2

 

4

 

63

 

0.1

 

2026

 

21

 

1,091

 

2.0

 

20

 

1,066

 

2.0

 

1

 

25

 

*

 

2028

 

2

 

54

 

0.1

 

2

 

54

 

0.1

 

—

 

—

 

—

 

2030

 

1

 

186

 

0.4

 

1

 

186

 

0.4

 

—

 

—

 

—

 

2033

 

3

 

357

 

0.7

 

3

 

357

 

0.7

 

—

 

—

 

—

 

2034

 

2

 

230

 

0.4

 

2

 

230

 

0.4

 

—

 

—

 

—

 

2037

 

2

 

325

 

0.6

 

2

 

325

 

0.6

 

—

 

—

 

—

 

2043

 

1

 

13

 

*

 

—

 

—

 

—

 

1

 

13

 

*

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

1,636

 

$

53,523

 

100.0

%

1,322

 

$

47,078

 

88.0

%

314

 

$

6,445

 

12.0

%

 

*Less than 0.1%

(1)   Excludes six multi-tenant properties and 25 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 $46 from properties reclassified to discontinued operations and excludes revenue of $1,752 from six multi-tenant properties and from 25 vacant and unleased properties at March 31, 2006.

(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.

 

10


 

The following table sets forth certain state-by-state information regarding Realty Income’s property portfolio (excluding properties owned by Crest) as of March 31, 2006 (dollars in thousands):

 

Geographic Diversification

 

State

 

Number of
Properties

 

Percent
Leased

 

Approximate
Leasable
Square Feet

 

Rental Revenue
For the Quarter
Ended March 31,
2006 (1)

 

Percentage of
Rental
Revenue

 

Alabama

 

17

 

94

%

146,600

 

$

416

 

0.8

%

Alaska

 

2

 

100

 

128,500

 

259

 

0.5

 

Arizona

 

70

 

100

 

335,500

 

1,908

 

3.5

 

Arkansas

 

8

 

88

 

48,800

 

139

 

0.2

 

California

 

62

 

100

 

1,106,900

 

4,024

 

7.3

 

Colorado

 

46

 

100

 

385,700

 

1,788

 

3.2

 

Connecticut

 

16

 

100

 

245,600

 

940

 

1.7

 

Delaware

 

15

 

100

 

27,700

 

316

 

0.6

 

Florida

 

128

 

99

 

1,252,600

 

4,969

 

9.0

 

Georgia

 

104

 

98

 

716,100

 

2,782

 

5.0

 

Idaho

 

14

 

100

 

91,900

 

361

 

0.7

 

Illinois

 

55

 

98

 

696,200

 

3,220

 

5.8

 

Indiana

 

39

 

95

 

357,900

 

1,599

 

2.9

 

Iowa

 

13

 

92

 

67,700

 

210

 

0.4

 

Kansas

 

22

 

86

 

486,500

 

747

 

1.4

 

Kentucky

 

15

 

100

 

51,900

 

381

 

0.7

 

Louisiana

 

14

 

100

 

65,200

 

284

 

0.5

 

Maryland

 

24

 

100

 

218,800

 

1,132

 

2.0

 

Massachusetts

 

37

 

100

 

203,100

 

994

 

1.8

 

Michigan

 

13

 

100

 

81,600

 

296

 

0.5

 

Minnesota

 

20

 

100

 

337,100

 

1,260

 

2.3

 

Mississippi

 

38

 

92

 

205,200

 

738

 

1.3

 

Missouri

 

41

 

95

 

478,500

 

1,383

 

2.5

 

Montana

 

2

 

100

 

30,000

 

76

 

0.1

 

Nebraska

 

15

 

100

 

145,400

 

535

 

1.0

 

Nevada

 

15

 

100

 

191,000

 

827

 

1.5

 

New Hampshire

 

10

 

100

 

89,600

 

368

 

0.7

 

New Jersey

 

26

 

100

 

200,100

 

1,056

 

1.9

 

New Mexico

 

7

 

100

 

53,300

 

140

 

0.3

 

New York

 

29

 

97

 

430,900

 

1,874

 

3.4

 

North Carolina

 

50

 

100

 

322,800

 

1,494

 

2.7

 

North Dakota

 

5

 

100

 

31,900

 

54

 

0.1

 

Ohio

 

105

 

100

 

661,500

 

2,528

 

4.6

 

Oklahoma

 

21

 

100

 

105,400

 

413

 

0.7

 

Oregon

 

17

 

100

 

253,300

 

573

 

1.0

 

Pennsylvania

 

81

 

100

 

481,300

 

2,273

 

4.1

 

Rhode Island

 

1

 

100

 

3,500

 

29

 

0.1

 

South Carolina

 

55

 

100

 

215,800

 

1,416

 

2.6

 

South Dakota

 

7

 

100

 

18,300

 

76

 

0.1

 

Tennessee

 

98

 

100

 

451,400

 

2,210

 

4.0

 

Texas

 

183

 

98

 

1,893,700

 

5,607

 

10.1

 

Utah

 

6

 

83

 

35,100

 

103

 

0.2

 

Vermont

 

1

 

100

 

2,500

 

22

 

*

 

Virginia

 

62

 

100

 

431,900

 

2,313

 

4.2

 

Washington

 

37

 

100

 

243,900

 

721

 

1.3

 

West Virginia

 

2

 

0

 

16,800

 

—

 

0.0

 

Wisconsin

 

17

 

94

 

157,400

 

390

 

0.7

 

Wyoming

 

2

 

100

 

9,300

 

31

 

*

 

Totals/Average

 

1,667

 

99

%

14,211,700

 

$

55,275

 

100.0

%

 

* Less than 0.1%

(1)   Includes rental revenue for all properties owned by Realty Income at March 31, 2006, including revenue from properties reclassified to discontinued operations of $46.

 

11