EX-99.1 2 a17-18192_1ex99d1.htm EX-99.1

EXHIBIT 99.1

 

 

REALTY INCOME ANNOUNCES OPERATING RESULTS FOR

SECOND QUARTER AND FIRST SIX MONTHS OF 2017

 

SAN DIEGO, CALIFORNIA, July 26, 2017....Realty Income Corporation (Realty Income, NYSE: O), The Monthly Dividend Company®, today announced operating results for the second quarter and six months ended June 30, 2017. 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, 2017:

 

·                  Net income per share was $0.30

·                  AFFO per share increased 7.0% to $0.76, compared to the quarter ended June 30, 2016

·                  Invested $321 million in 73 new properties and properties under development or expansion

·                  Dividends paid per common share increased 6.0%, compared to the quarter ended June 30, 2016

 

Events subsequent to June 30, 2017:

 

·                  Increasing 2017 acquisitions guidance from $1.0 billion to approximately $1.5 billion

·                  Increasing 2017 AFFO per share guidance from $3.00 - $3.06 to $3.03 - $3.07

 

CEO Comments

 

“We achieved another solid quarter of positive operating results and are pleased with our company’s position of strength across all areas of our business,” said John P. Case, Realty Income’s Chief Executive Officer. “During the second quarter, we completed approximately $321 million in acquisitions at attractive investment spreads to our cost of capital, bringing us to nearly $700 million in acquisitions completed during the first half of the year. Our high-quality real estate portfolio now exceeds 5,000 properties and remains healthy with quarter-end occupancy of 98.5%, our highest level in 10 years. Additionally, we recaptured 113% of expiring rent on 53 properties re-leased to existing or new tenants.”

 

“Based on the continued confidence we have in our business, we are increasing our 2017 acquisitions guidance from $1.0 billion to approximately $1.5 billion.  We are also raising and tightening our 2017 AFFO per share guidance from our previous estimate of $3.00 - $3.06 to $3.03 - $3.07, representing annual growth of 5.2% - 6.6%.”

 

Financial Results

 

Revenue

Revenue for the quarter ended June 30, 2017 increased 10.8% to $300.2 million, as compared to $271.0 million for the same quarter in 2016. Revenue for the six months ended June 30, 2017 increased 11.1% to $598.2 million, as compared to $538.2 million for the same period in 2016.

 

Net Income Available to Common Stockholders

Net income available to common stockholders for the quarter ended June 30, 2017 was $81.1 million, as compared to $69.0 million for the same quarter in 2016. Net income per share for the quarter ended June 30, 2017 was $0.30, as compared to $0.27 for the same quarter in 2016.

 

Net income available to common stockholders for the six months ended June 30, 2017 was $152.7 million, as compared to $132.5 million for the same period in 2016. Net income per share for the six months ended June 30, 2017 was $0.57, as compared to $0.53 for the same period in 2016.

 

The calculation to determine net income for a real estate company includes impairments, gains on property sales and/or fair value adjustments on interest rate swaps. These items can vary from quarter to quarter and can significantly impact net income and period to period comparisons.

 

 


 

Funds From Operations Available to Common Stockholders (FFO)

FFO for the quarter ended June 30, 2017 increased 15.1% to $203.3 million, as compared to $176.6 million for the same quarter in 2016. FFO per share for the quarter ended June 30, 2017 increased 7.1% to $0.75, as compared to $0.70 for the same quarter in 2016.

 

FFO for the six months ended June 30, 2017 increased 12.4% to $390.5 million, as compared to $347.3 million for the same period in 2016. FFO per share for the six months ended June 30, 2017 increased 5.8% to $1.46, as compared to $1.38 for the same period in 2016.

 

FFO for the six months ended June 30, 2017 was impacted by the $13.4 million non-cash redemption charge on the 6.625% Monthly Income Class F Preferred Stock that was redeemed in April 2017, which represents $0.05 per share. This charge is based on the excess of redemption value over the carrying value of the 6.625% Monthly Income Class F Preferred Stock that represents the original issuance cost that was paid in 2012.

 

Adjusted Funds From Operations Available to Common Stockholders (AFFO)

AFFO for the quarter ended June 30, 2017 increased 15.2% to $208.4 million, as compared to $180.9 million for the same quarter in 2016. AFFO per share for the quarter ended June 30, 2017 increased 7.0% to $0.76, as compared to $0.71 for the same quarter in 2016.

 

AFFO for the six months ended June 30, 2017 increased 14.8% to $409.7 million, as compared to $356.8 million for the same period in 2016. AFFO per share for the six months ended June 30, 2017 increased 7.7% to $1.53, as compared to $1.42 for the same period in 2016.

 

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, a non-GAAP measure, consistent with the National Association of Real Estate Investment Trusts’ (NAREIT’s) definition, as net income available to common stockholders, plus depreciation and amortization of real estate assets, plus impairments of real estate assets, and reduced by gains on property sales. AFFO further adjusts FFO for unique revenue and expense items, which the company believes are not as pertinent to the measurement of the company’s ongoing operating performance. Presentation of the information regarding FFO and AFFO is intended to assist the reader in comparing the operating performance of different REITs, although it should be noted that not all REITs calculate FFO and AFFO in the same way, so comparisons with other REITs may not be meaningful. FFO and AFFO should not be considered as alternatives to reviewing our cash flows from operating, investing, and financing activities. In addition, FFO and AFFO should not be considered as measures of liquidity, our ability to make cash distributions, or our ability to pay interest payments. See the reconciliations of net income available to common stockholders to FFO and AFFO on pages six and seven of this press release.

 

Dividend Increases

In June 2017, Realty Income announced the 79th consecutive quarterly dividend increase, which is the 92nd increase in the amount of the dividend since the company’s listing on the New York Stock Exchange (NYSE) in 1994. The annualized dividend amount as of June 30, 2017 was $2.538 per share. The amount of monthly dividends paid per share increased 6.0% to $0.633 in the second quarter of 2017 from $0.597 in the second quarter of 2016.

 

Real Estate Portfolio Update

 

As of June 30, 2017, Realty Income’s portfolio of freestanding, single-tenant properties consisted of 5,028 properties located in 49 states and Puerto Rico, leased to 250 different commercial tenants doing business in 47 industries. The properties are leased under long-term, net lease agreements with a weighted average remaining lease term of 9.6 years.

 

Portfolio Management Activities

The company’s portfolio of commercial real estate, owned primarily under long-term net leases, continues to perform well and provides dependable rental revenue supporting the payment of monthly dividends. As of June 30, 2017, portfolio occupancy was 98.5% with 76 properties available for lease out of a total of 5,028 properties in the portfolio, as compared to 98.3% as of March 31, 2017, and 98.0% as of June 30, 2016. Economic occupancy, or occupancy as measured by rental revenue, was 99.1% as of June 30, 2017, as compared to 99.0% as of March 31, 2017, and 98.9% as of June 30, 2016.

 

Since March 31, 2017, when the company reported 83 properties available for lease, the company had 58 lease expirations, re-leased 53 properties and sold 12 vacant properties during the quarter ended June 30, 2017.  Of the 53 properties re-leased during the second quarter of 2017, 45 properties were re-leased to the same tenants, two were re-leased to new tenants without vacancy, and six were re-leased to new tenants after a period of vacancy. The annual new rent on these re-leases was $10,692,000, as compared to the previous annual rent of $9,448,000 on the same properties, representing a rent recapture rate of 113.2% on the properties re-leased during the quarter ended June 30, 2017.

 

- 2 -


 

Rent Increases

During the quarter ended June 30, 2017, same store rents on 4,302 properties under lease increased 0.4% to $246.9 million, as compared to $245.9 million for the same quarter in 2016. For the six months ended June 30, 2017, same store rents on 4,302 properties under lease increased 1.0% to $496.5 million, as compared to $491.4 million for the same period in 2016.

 

Investments in Real Estate

During the quarter ended June 30, 2017, Realty Income invested $321.2 million in 73 new properties and properties under development or expansion, located in 27 states. These properties are 100% leased with a weighted average lease term of approximately 13.0 years and an initial average cash lease yield of 6.6%. The tenants occupying the new properties operate in 16 industries, and the property types are 91.4% retail and 8.6% industrial, based on rental revenue. Approximately 33% of the rental revenue generated from acquisitions during the second quarter of 2017 is from investment grade rated tenants.

 

During the six months ended June 30, 2017, Realty Income invested approximately $691.9 million in 126 new properties and properties under development or expansion, located in 30 states. These properties are 100% leased with a weighted average lease term of approximately 14.8 years and an initial average lease yield of 6.3%. The tenants occupying the new properties operate in 20 industries, and the property types are 95.1% retail and 4.9% industrial, based on rental revenue.  Approximately 51% of the rental revenue generated from acquisitions during the first six months of 2017 is from investment grade rated tenants.

 

Property Dispositions

During the quarter ended June 30, 2017, Realty Income sold 15 properties for $12.8 million, with a gain on sales of $2.8 million, as compared to 16 properties sold for $24.5 million, with a gain on sales of $8.7 million, during the same quarter in 2016.

 

During the six months ended June 30, 2017, Realty Income sold 29 properties for $44.0 million, with a gain on sales of $13.4 million, as compared to 27 properties sold for $35.5 million, with a gain on sales of $10.9 million, during the same period in 2016.

 

Liquidity and Capital Markets

 

Capital Raising

During the quarter ended June 30, 2017, Realty Income raised $55.1 million from the sale of common stock at a weighted average price of $56.08 per share. During the six months ended June 30, 2017, Realty Income raised $846.8 million from the sale of common stock at a weighted average price of $61.37 per share.

 

Credit Facility

Realty Income has a $2.25 billion unsecured credit facility. This credit facility is comprised of a $2.0 billion revolving credit facility and a $250 million five-year unsecured term loan. The credit facility also has a $1.0 billion expansion feature. As of June 30, 2017, Realty Income had a borrowing capacity of $1.35 billion available on its revolving credit facility.

 

Redemption of Preferred Stock

In April 2017, Realty Income redeemed all 16,350,000 outstanding shares of the company’s 6.625% Monthly Income Class F Preferred Stock for $25 per share, plus accrued dividends.

 

2017 Earnings Guidance

 

We estimate FFO per share for 2017 of $2.96 to $3.01. FFO per share for 2017 is impacted by a $13.4 million non-cash redemption charge on the Class F preferred shares that were redeemed in April 2017, which represents $0.05 per share. FFO per share for 2017 is based on a net income per share range of $1.15 to $1.20, plus estimated real estate depreciation and impairments of $1.88 per share, and reduced by potential estimated gains on sales of investment properties of $0.07 per share (in accordance with NAREIT’s definition of FFO).

 

We estimate AFFO per share for 2017 of $3.03 to $3.07. AFFO further adjusts FFO for unique revenue and expense items, which are not as pertinent to the measurement of Realty Income’s ongoing operating performance.

 

Additional earnings guidance detail can be found in Realty Income’s supplemental materials available on Realty Income’s corporate website at https://www.realtyincome.com/investors/financial-information/quarterly-results/default.aspx.

 

Conference Call Information

 

In conjunction with the release of Realty Income’s operating results, the company will host a conference call on

 

- 3 -


 

July 27, 2017 at 11:30 a.m. PT to discuss the results. To access the conference, dial (888) 708-5705. When prompted, provide the access code: 6751298.

 

A telephone replay of the conference call can also be accessed by calling (888) 203-1112 and entering the access code: 6751298. The telephone replay will be available through August 10, 2017. A live webcast will be available in listen-only mode by clicking on the webcast link on the company’s home page or in the investors section at www.realtyincome.com. A replay of the conference call webcast will be available approximately two hours after the conclusion of the live broadcast. The webcast replay will be available through August 10, 2017. No access code is required for this replay.

 

Supplemental Materials

 

Supplemental materials on the second quarter and year-to-date 2017 operating results are available on Realty Income’s corporate website at https://www.realtyincome.com/investors/financial-information/quarterly-results/default.aspx.

 

About Realty Income

 

Realty Income, The Monthly Dividend Company®, is an S&P 500 company dedicated to providing stockholders with dependable monthly income. The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 5,000 real estate properties owned under long-term lease agreements with regional and national commercial tenants. To date, the company has declared 565 consecutive common stock monthly dividends throughout its 48-year operating history and increased the dividend 92 times since Realty Income’s public listing in 1994 (NYSE: O). The company has in-house acquisition, portfolio management, asset management, credit research, real estate research, legal, finance and accounting, information technology, and capital markets capabilities. Additional information about the company can be obtained from the corporate website at www.realtyincome.com.

 

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, and the outcome of any legal proceedings to which the company is a party, as described in the company’s filings with the Securities and Exchange Commission. Consequently, forward-looking statements should be regarded solely as reflections of the company’s current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this press release. The company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.

 

Investor Contact:

Jonathan Pong, CFA, CPA

VP, Capital Markets

(858) 284-5177

 

- 4 -


 

CONSOLIDATED STATEMENTS OF INCOME

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

 

 

 

Three Months

 

Three Months

 

Six Months

 

Six Months

 

 

 

Ended 6/30/17

 

Ended 6/30/16

 

Ended 6/30/17

 

Ended 6/30/16

 

REVENUE

 

 

 

 

 

 

 

 

 

Rental

 

  $

288,049

 

  $

260,056

 

  $

573,870

 

  $

516,857

 

Tenant reimbursements

 

11,756

 

11,112

 

22,985

 

20,217

 

Other

 

365

 

(129

)

1,340

 

1,081

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

300,170

 

271,039

 

598,195

 

538,155

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

123,089

 

110,342

 

244,186

 

218,275

 

Interest

 

63,679

 

57,409

 

122,985

 

118,088

 

General and administrative

 

15,781

 

13,985

 

29,346

 

26,304

 

Property (including reimbursable)

 

16,486

 

14,671

 

35,561

 

29,776

 

Income taxes

 

441

 

953

 

1,488

 

1,917

 

Provisions for impairment

 

2,274

 

6,269

 

7,706

 

8,192

 

 

 

 

 

 

 

 

 

 

 

Total expenses

 

221,750

 

203,629

 

441,272

 

402,552

 

 

 

 

 

 

 

 

 

 

 

Gain on sales of real estate

 

2,839

 

8,658

 

13,371

 

10,948

 

 

 

 

 

 

 

 

 

 

 

Net income

 

81,259

 

76,068

 

170,294

 

146,551

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

(123

)

(253

)

(288

)

(493

)

 

 

 

 

 

 

 

 

 

 

Net income attributable to the Company

 

81,136

 

75,815

 

170,006

 

146,058

 

Preferred stock dividends

 

-

 

(6,770

)

(3,911

)

(13,540

)

Excess of redemption value over carrying value of

 

 

 

 

 

 

 

 

 

preferred shares redeemed

 

-

 

-

 

(13,373

)

-

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

  $

81,136

 

  $

69,045

 

  $

152,722

 

  $

132,518

 

 

 

 

 

 

 

 

 

 

 

Funds from operations available to

 

 

 

 

 

 

 

 

 

common stockholders (FFO)

 

  $

203,272

 

  $

176,648

 

  $

390,483

 

  $

347,276

 

Adjusted funds from operations available to

 

 

 

 

 

 

 

 

 

common stockholders (AFFO)

 

  $

208,388

 

  $

180,876

 

  $

409,723

 

  $

356,793

 

 

 

 

 

 

 

 

 

 

 

Per share information for common stockholders:

 

 

 

 

 

 

 

 

 

Net income, basic and diluted

 

  $

0.30

 

  $

0.27

 

  $

0.57

 

  $

0.53

 

 

 

 

 

 

 

 

 

 

 

FFO, basic and diluted

 

  $

0.75

 

  $

0.70

 

  $

1.46

 

  $

1.38

 

 

 

 

 

 

 

 

 

 

 

AFFO, basic and diluted

 

  $

0.76

 

  $

0.71

 

  $

1.53

 

  $

1.42

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid per common share

 

  $

0.633

 

  $

0.597

 

  $

1.257

 

  $

1.185

 

 

- 5 -


 

FUNDS FROM OPERATIONS (FFO)

(dollars in thousands, except per share amounts)

 

We define FFO, a non-GAAP measure, consistent with NAREIT’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 real estate sales.

 

 

 

Three Months

 

Three Months

 

Six Months

 

Six Months

 

 

 

Ended 6/30/17

 

Ended 6/30/16

 

Ended 6/30/17

 

Ended 6/30/16

 

Net income available to common stockholders

 

  $

81,136

 

  $

69,045

 

  $

152,722

 

  $

132,518

 

Depreciation and amortization

 

123,089

 

110,342

 

244,186

 

218,275

 

Depreciation of furniture, fixtures and equipment

 

(150

)

(195

)

(307

)

(388

)

Provisions for impairment

 

2,274

 

6,269

 

7,706

 

8,192

 

Gain on sales of real estate

 

(2,839

)

(8,658

)

(13,371

)

(10,948

)

FFO adjustments allocable to noncontrolling interests

 

(238

)

(155

)

(453

)

(373

)

FFO available to common stockholders

 

  $

203,272

 

  $

176,648

 

  $

390,483

 

  $

347,276

 

FFO allocable to dilutive noncontrolling interests

 

282

 

407

 

438

 

-

 

Diluted FFO (1)

 

  $

203,554

 

  $

177,055

 

  $

390,921

 

  $

347,276

 

 

 

 

 

 

 

 

 

 

 

FFO per common share, basic and diluted

 

  $

0.75

 

  $

0.70

 

  $

1.46

 

  $

1.38

 

 

 

 

 

 

 

 

 

 

 

Distributions paid to common stockholders

 

  $

172,874

 

  $

151,236

 

  $

335,380

 

  $

298,581

 

 

 

 

 

 

 

 

 

 

 

FFO available to common stockholders in excess of

 

 

 

 

 

 

 

 

 

distributions paid to common stockholders

 

  $

30,398

 

  $

25,412

 

  $

55,103

 

  $

48,695

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares used for FFO:

 

 

 

 

 

 

 

 

 

Basic

 

272,588,332

 

253,375,546

 

268,024,691

 

251,792,989

 

Diluted

 

273,187,669

 

254,254,243

 

268,569,855

 

252,073,685

 

 

(1)     Diluted FFO for the quarters ended June 30, 2017 and 2016 and the six months ended June 30, 2017 include FFO allocable to dilutive noncontrolling interests. Noncontrolling interests were anti-dilutive for the six months ended June 30, 2016.

 

- 6 -


 

ADJUSTED FUNDS FROM OPERATIONS (AFFO)

(dollars in thousands, except per share amounts)

 

We define AFFO as FFO adjusted for unique revenue and expense items, which the company believes are not as pertinent to the measurement of the company’s ongoing operating performance. 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 6/30/17

 

Ended 6/30/16

 

Ended 6/30/17

 

Ended 6/30/16

 

Net income available to common stockholders

 

  $

81,136

 

  $

69,045

 

  $

152,722

 

  $

132,518

 

Cumulative adjustments to calculate FFO (1)

 

122,136

 

107,603

 

237,761

 

214,758

 

FFO available to common stockholders

 

203,272

 

176,648

 

390,483

 

347,276

 

Excess of redemption value over carrying value

 

 

 

 

 

 

 

 

 

of Class F preferred share redemption

 

-

 

-

 

13,373

 

-

 

Amortization of share-based compensation

 

4,462

 

3,947

 

7,215

 

6,552

 

Amortization of deferred financing costs (2)

 

1,317

 

1,299

 

2,804

 

2,598

 

Amortization of net mortgage premiums

 

(609

)

(754

)

(1,240

)

(1,855

)

(Gain) loss on interest rate swaps

 

470

 

2,109

 

(859

)

7,886

 

Leasing costs and commissions

 

(349

)

(86

)

(759

)

(277

)

Recurring capital expenditures

 

(24

)

(174

)

(365

)

(246

)

Straight-line rent

 

(4,271

)

(4,323

)

(7,554

)

(9,474

)

Amortization of above and below-market leases

 

4,049

 

2,143

 

6,481

 

4,195

 

Other adjustments (3)

 

71

 

67

 

144

 

138

 

AFFO available to common stockholders

 

  $

208,388

 

  $

180,876

 

  $

409,723

 

  $

356,793

 

AFFO allocable to dilutive noncontrolling interests

 

292

 

189

 

586

 

428

 

Diluted AFFO

 

  $

208,680

 

  $

181,065

 

  $

410,309

 

  $

357,221

 

 

 

 

 

 

 

 

 

 

 

AFFO per common share, basic and diluted

 

  $

0.76

 

  $

0.71

 

  $

1.53

 

  $

1.42

 

 

 

 

 

 

 

 

 

 

 

Distributions paid to common stockholders

 

  $

172,874

 

  $

151,236

 

  $

335,380

 

  $

298,581

 

 

 

 

 

 

 

 

 

 

 

AFFO available to common stockholders in excess of

 

 

 

 

 

 

 

 

 

distributions paid to common stockholders

 

  $

35,514

 

  $

29,640

 

  $

74,343

 

  $

58,212

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares used for AFFO:

 

 

 

 

 

 

 

 

 

Basic

 

272,588,332

 

253,375,546

 

268,024,691

 

251,792,989

 

Diluted

 

273,187,669

 

253,937,221

 

268,658,037

 

252,378,957

 

 

(1)     See FFO calculation on page six for reconciling items.

(2)     Includes the amortization of costs incurred and capitalized upon issuance of our notes payable, assumption of our mortgages payable and issuance of our term loans. The deferred financing costs are being amortized over the lives of the respective mortgages and term loans. No costs associated with our credit facility agreements or annual fees paid to credit rating agencies have been included.

(3)     Includes adjustments allocable to both noncontrolling interests and capital lease obligations.

 

- 7 -


 

HISTORICAL FFO AND AFFO

(dollars in thousands, except per share amounts)

 

For the three months ended June 30,

 

2017

 

2016

 

2015

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

81,136

 

$

69,045

 

$

59,317

 

$

51,420

 

$

45,957

 

Depreciation and amortization

 

122,939

 

110,147

 

100,861

 

92,790

 

74,471

 

Provisions for impairment

 

2,274

 

6,269

 

3,230

 

499

 

2,496

 

Gain on sales of real estate

 

(2,839

)

(8,658

)

(3,675

)

(1,964

)

(5,744

)

Merger-related costs

 

-

 

-

 

-

 

-

 

605

 

FFO adjustments allocable to noncontrolling interests

 

(238

)

(155

)

(263

)

(336

)

(220

)

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

$

203,272

 

$

176,648

 

$

159,470

 

$

142,409

 

$

117,565

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per diluted share

 

$

0.75

 

$

0.70

 

$

0.69

 

$

0.64

 

$

0.60

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO

 

$

208,388

 

$

180,876

 

$

159,060

 

$

141,178

 

$

115,584

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO per diluted share

 

$

0.76

 

$

0.71

 

$

0.68

 

$

0.64

 

$

0.59

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid per share

 

$

0.633

 

$

0.597

 

$

0.569

 

$

0.547

 

$

0.544

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding - FFO

 

273,187,669

 

254,254,243

 

232,886,185

 

221,043,619

 

195,759,091

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding - AFFO

 

273,187,669

 

253,937,221

 

232,886,185

 

221,043,619

 

195,759,091

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the six months ended June 30,

 

2017

 

2016

 

2015

 

2014

 

2013

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

152,722

 

$

132,518

 

$

119,810

 

$

98,599

 

$

108,692

 

Depreciation and amortization

 

243,879

 

217,887

 

198,713

 

182,668

 

141,673

 

Provisions for impairment on investment properties

 

7,706

 

8,192

 

5,317

 

2,182

 

2,952

 

Gain on sales of investment properties

 

(13,371

)

(10,948

)

(10,893

)

(5,843

)

(44,304

)

Merger-related costs

 

-

 

-

 

-

 

-

 

12,635

 

FFO adjustments allocable to noncontrolling interests

 

(453

)

(373

)

(577

)

(696

)

(395

)

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

$

390,483

 

$

347,276

 

$

312,370

 

$

276,910

 

$

221,253

 

 

 

 

 

 

 

 

 

 

 

 

 

FFO per diluted share

 

$

1.46

 

$

1.38

 

$

1.36

 

$

1.29

 

$

1.20

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO

 

$

409,723

 

$

356,793

 

$

311,184

 

$

273,822

 

$

219,547

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO per diluted share

 

$

1.53

 

$

1.42

 

$

1.36

 

$

1.28

 

$

1.19

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid per share

 

$

1.257

 

$

1.185

 

$

1.130

 

$

1.094

 

$

1.057

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding - FFO

 

268,569,855

 

252,073,685

 

229,061,762

 

214,089,629

 

183,873,647

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding - AFFO

 

268,658,037

 

252,378,957

 

229,061,762

 

214,089,629

 

183,873,647

 

 

- 8 -


 

REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, 2017 and December 31, 2016

(dollars in thousands, except per share data)

 

 

 

2017

 

2016

 

ASSETS

 

(unaudited)

 

 

 

Real estate, at cost:

 

 

 

 

 

Land

 

$

3,916,218

 

$

3,752,204

 

Buildings and improvements

 

10,446,765

 

10,112,212

 

Total real estate, at cost

 

14,362,983

 

13,864,416

 

Less accumulated depreciation and amortization

 

(2,168,248

)

(1,987,200

)

Net real estate held for investment

 

12,194,735

 

11,877,216

 

Real estate held for sale, net

 

12,463

 

26,575

 

Net real estate

 

12,207,198

 

11,903,791

 

Cash and cash equivalents

 

10,945

 

9,420

 

Accounts receivable, net

 

107,147

 

104,584

 

Acquired lease intangible assets, net

 

1,180,182

 

1,082,320

 

Goodwill

 

15,001

 

15,067

 

Other assets, net

 

53,643

 

37,689

 

Total assets

 

$

13,574,116

 

$

13,152,871

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Distributions payable

 

$

58,284

 

$

55,235

 

Accounts payable and accrued expenses

 

115,595

 

121,156

 

Acquired lease intangible liabilities, net

 

266,365

 

264,206

 

Other liabilities

 

124,772

 

85,616

 

Line of credit payable

 

648,000

 

1,120,000

 

Term loans, net

 

319,273

 

319,127

 

Mortgages payable, net

 

378,352

 

466,045

 

Notes payable, net

 

4,642,423

 

3,934,433

 

Total liabilities

 

6,553,064

 

6,365,818

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock and paid in capital, par value $0.01 per share,

 

 

 

 

 

69,900,000 shares authorized, no shares issued and outstanding

 

 

 

 

 

as of June 30, 2017 and 16,350,000 issued and outstanding

 

 

 

 

 

as of December 31, 2016, liquidation preference $25.00 per share

 

-

 

395,378

 

Common stock and paid in capital, par value $0.01 per share,

 

 

 

 

 

370,100,000 shares authorized, 274,064,985 shares issued and

 

 

 

 

 

outstanding as of June 30, 2017 and 260,168,259 shares issued

 

 

 

 

 

and outstanding as of December 31, 2016

 

9,046,533

 

8,228,594

 

Distributions in excess of net income

 

(2,045,127

)

(1,857,168

)

Total stockholders’ equity

 

7,001,406

 

6,766,804

 

Noncontrolling interests

 

19,646

 

20,249

 

Total equity

 

7,021,052

 

6,787,053

 

Total liabilities and equity

 

$

13,574,116

 

$

13,152,871

 

 

- 9 -


 

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/18 to 12/31/1994

 

10.5%

 

10.8%

 

7.7%

 

0.0%

 

2.9%

 

(1.6%)

 

2.9%

 

(1.2%)

 

0.5%

 

(1.7%)

1995

 

8.3%

 

42.0%

 

7.4%

 

15.3%

 

2.4%

 

36.9%

 

2.3%

 

37.6%

 

0.6%

 

39.9%

1996

 

7.9%

 

15.4%

 

6.1%

 

35.3%

 

2.2%

 

28.9%

 

2.0%

 

23.0%

 

0.2%

 

22.7%

1997

 

7.5%

 

14.5%

 

5.5%

 

20.3%

 

1.8%

 

24.9%

 

1.6%

 

33.4%

 

0.5%

 

21.6%

1998

 

8.2%

 

5.5%

 

7.5%

 

(17.5%)

 

1.7%

 

18.1%

 

1.3%

 

28.6%

 

0.3%

 

39.6%

1999

 

10.5%

 

(8.7%)

 

8.7%

 

(4.6%)

 

1.3%

 

27.2%

 

1.1%

 

21.0%

 

0.2%

 

85.6%

2000

 

8.9%

 

31.2%

 

7.5%

 

26.4%

 

1.5%

 

(4.7%)

 

1.2%

 

(9.1%)

 

0.3%

 

(39.3%)

2001

 

7.8%

 

27.2%

 

7.1%

 

13.9%

 

1.9%

 

(5.5%)

 

1.4%

 

(11.9%)

 

0.3%

 

(21.1%)

2002

 

6.7%

 

26.9%

 

7.1%

 

3.8%

 

2.6%

 

(15.0%)

 

1.9%

 

(22.1%)

 

0.5%

 

(31.5%)

2003

 

6.0%

 

21.0%

 

5.5%

 

37.1%

 

2.3%

 

28.3%

 

1.8%

 

28.7%

 

0.6%

 

50.0%

2004

 

5.2%

 

32.7%

 

4.7%

 

31.6%

 

2.2%

 

5.6%

 

1.8%

 

10.9%

 

0.6%

 

8.6%

2005

 

6.5%

 

(9.2%)

 

4.6%

 

12.2%

 

2.6%

 

1.7%

 

1.9%

 

4.9%

 

0.9%

 

1.4%

2006

 

5.5%

 

34.8%

 

3.7%

 

35.1%

 

2.5%

 

19.0%

 

1.9%

 

15.8%

 

0.8%

 

9.5%

2007

 

6.1%

 

3.2%

 

4.9%

 

(15.7%)

 

2.7%

 

8.8%

 

2.1%

 

5.5%

 

0.8%

 

9.8%

2008

 

7.3%

 

(8.2%)

 

7.6%

 

(37.7%)

 

3.6%

 

(31.8%)

 

3.2%

 

(37.0%)

 

1.3%

 

(40.5%)

2009

 

6.6%

 

19.3%

 

3.7%

 

28.0%

 

2.6%

 

22.6%

 

2.0%

 

26.5%

 

1.0%

 

43.9%

2010

 

5.1%

 

38.6%

 

3.5%

 

27.9%

 

2.6%

 

14.0%

 

1.9%

 

15.1%

 

1.2%

 

16.9%

2011

 

5.0%

 

7.3%

 

3.8%

 

8.3%

 

2.8%

 

8.3%

 

2.3%

 

2.1%

 

1.3%

 

(1.8%)

2012

 

4.5%

 

20.1%

 

3.5%

 

19.7%

 

3.0%

 

10.2%

 

2.5%

 

16.0%

 

2.6%

 

15.9%

2013

 

5.8%

 

(1.8%)

 

3.9%

 

2.9%

 

2.3%

 

29.6%

 

2.0%

 

32.4%

 

1.4%

 

38.3%

2014

 

4.6%

 

33.7%

 

3.6%

 

28.0%

 

2.3%

 

10.0%

 

2.0%

 

13.7%

 

1.3%

 

13.4%

2015

 

4.4%

 

13.0%

 

3.9%

 

2.8%

 

2.6%

 

0.2%

 

2.2%

 

1.4%

 

1.4%

 

5.7%

2016

 

4.2%

 

16.0%

 

4.0%

 

8.6%

 

2.5%

 

16.5%

 

2.1%

 

12.0%

 

1.4%

 

7.5%

YTD 2017

 

4.6%

 

(1.8%)

 

3.9%

 

4.9%

 

2.4%

 

9.3%

 

2.0%

 

9.3%

 

1.3%

 

14.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compound Average
Annual Total Return (5)

 

 

 

16.4%

 

 

 

10.8%

 

 

 

10.3%

 

 

 

9.6%

 

 

 

9.6%

 

Note:   All of these dividend yields are calculated as annualized dividends based on the last dividend paid in applicable time period divided by the closing price as of period end.  Dividend yield sources: NAREIT website and Bloomberg, except for the 1994 NASDAQ dividend yield which was sourced from Datastream / Thomson Financial.

 

(1)  FTSE NAREIT US Equity REIT Index, as per NAREIT website.

 

(2)  Calculated as the difference between the closing stock price as of period end less the closing stock price as of previous period, plus dividends paid in period, divided by closing stock price as of end of previous period.  Does not include reinvestment of dividends for the annual percentages.

 

(3)  Includes reinvestment of dividends.  Source:  NAREIT website and Factset.

 

(4)  Price only index, does not include dividends.  Source:  Factset.

 

(5)  Price only index, does not include dividends.  Source:  Factset.  All of these Compound Average Annual Total Return rates are calculated in the same manner: from Realty Income’s NYSE listing on October 18, 1994 through June 30, 2017, and (except for NASDAQ) assuming reinvestment of dividends. Past performance does not guarantee future performance.  Realty Income presents this data for informational purposes only and makes no representation about its future performance or how it will compare in performance to other indices in the future.

 

- 10 -