Realty Income Announces Operating Results For Third Quarter And First Nine Months Of 2016

SAN DIEGO, Oct. 26, 2016 /PRNewswire/ -- Realty Income Corporation (Realty Income, NYSE: O), The Monthly Dividend Company®, today announced operating results for the third quarter and nine months ended September 30, 2016.  All per share amounts presented in this press release are on a diluted per common share basis unless stated otherwise.

Realty Income Corporation - The Monthly Dividend Company.

COMPANY HIGHLIGHTS:

For the quarter ended September 30, 2016:

  • Net income per share was $0.27
  • AFFO per share increased 2.9% to $0.72, compared to the quarter ended September 30, 2015
  • Invested $410.2 million in 93 new properties and properties under development or expansion
  • Increased the monthly dividend in September for the 88th time and for the 76th consecutive quarter
  • Dividends paid per common share increased 5.4%, compared to the quarter ended September 30, 2015
  • In October, issued $600 million of 3.000% senior unsecured notes due 2027, generating net proceeds of $587.2 million

CEO Comments

"We are pleased with our continued success and the company's position of strength as we enter the fourth quarter," said John P. Case, Realty Income's Chief Executive Officer. "During the third quarter, we completed $410 million in high-quality acquisitions at attractive investment spreads to our cost of capital. Year-to-date, we have completed approximately $1.1 billion in acquisitions and we continue to see an active pipeline of investment opportunities. As a result, we are raising our 2016 acquisitions guidance to approximately $1.5 billion from our prior estimate of $1.25 billion. Our portfolio remains healthy with occupancy in excess of 98%. During the third quarter, we were quite active on the re-leasing front with 47 properties re-leased, recapturing 105% of expiring rent. Based on the positive results from our operating performance, we are tightening and raising the midpoint of our 2016 AFFO per share guidance from $2.85 - $2.90 to $2.87 - $2.89."

"In October, we successfully accessed the capital markets, completing a $600 million, 10-year senior unsecured bond offering at an effective yield to maturity of 3.15%, which is the lowest yield we have achieved in our company's history for a 10-year bond offering. We believe the pricing of the transaction reflects our excellent financial condition and the favorable outlook for our company."   

Financial Results

Revenue

Revenue for the quarter ended September 30, 2016 increased 7.1% to $277.2 million, as compared to $258.9 million for the same quarter in 2015. Revenue for the nine months ended September 30, 2016 increased 7.3% to $815.3 million, as compared to $759.6 million for the same period in 2015.

Net Income Available to Common Stockholders

Net income available to common stockholders for the quarter ended September 30, 2016 was $70.3 million, as compared to $60.7 million for the same quarter in 2015. Net income per share for the quarter ended September 30, 2016 was $0.27, as compared to $0.26 for the same quarter in 2015.

Net income available to common stockholders for the nine months ended September 30, 2016 was $202.8 million, as compared to $180.5 million for the same period in 2015. Net income per share for the nine months ended September 30, 2016 was $0.80, as compared to $0.78 for the same period in 2015.

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 September 30, 2016 increased 16.1% to $188.3 million, as compared to $162.2 million for the same quarter in 2015. FFO per share for the quarter ended September 30, 2016 increased 5.8% to $0.73, as compared to $0.69 for the same quarter in 2015.

FFO for the nine months ended September 30, 2016 increased 12.9% to $535.6 million, as compared to $474.5 million for the same period in 2015. FFO per share for the nine months ended September 30, 2016 increased 2.9% to $2.11, as compared to $2.05 for the same period in 2015. FFO for the nine months ended September 30, 2016 was impacted by a non-cash loss of $5.8 million, or $0.02 per share, resulting from fair value adjustments on our interest rate swaps. FFO for the nine months ended September 30, 2015 was also impacted by a non-cash loss of $7.1 million, or $0.03 per share, resulting from fair value adjustments on our interest rate swaps. Each quarter we adjust the carrying value of our interest rate swaps to fair value. The changes in the fair value of our interest rate swaps are recorded to interest expense.

Adjusted Funds From Operations Available to Common Stockholders (AFFO)

AFFO for the quarter ended September 30, 2016 increased 12.5% to $186.6 million, as compared to $165.8 million for the same quarter in 2015. AFFO per share for the quarter ended September 30, 2016 increased 2.9% to $0.72, as compared to $0.70 for the same quarter in 2015.

AFFO for the nine months ended September 30, 2016 increased 13.9% to $543.4 million, as compared to $477.0 million for the same period in 2015. AFFO per share for the nine months ended September 30, 2016 increased 3.9% to $2.14, as compared to $2.06 for the same period in 2015.

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, and reduced by gains on sales of investment properties. 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 September 2016, Realty Income announced the 76th consecutive quarterly dividend increase, which is the 88th 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 September 30, 2016 was $2.424 per share. The amount of monthly dividends paid per share increased 5.4% to $0.601 in the third quarter of 2016 from $0.570 in the same quarter in 2015.

Real Estate Portfolio Update

As of September 30, 2016, Realty Income's portfolio of freestanding, single-tenant properties consisted of 4,703 properties located in 49 states and Puerto Rico, leased to 247 commercial tenants doing business in 47 industries. The properties are leased under long-term, net leases with a weighted average remaining lease term of 9.8 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 provides dependable rental revenue supporting the payment of monthly dividends. As of September 30, 2016, portfolio occupancy was 98.3% with 82 properties available for lease out of a total of 4,703 properties in the portfolio, as compared to 98.0% as of June 30, 2016, and 98.3% as of September 30, 2015. Economic occupancy, or occupancy as measured by rental revenue, was 98.8% as of September 30, 2016, as compared to 98.9% as of June 30, 2016, and 99.3% as of September 30, 2015.

Since June 30, 2016, when the company reported 95 properties available for lease, the company had 54 lease expirations, re-leased 47 properties and sold 20 vacant properties.  Of the 47 properties re-leased during the third quarter of 2016, 38 properties were re-leased to the same tenants, three 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 $7,089,000, as compared to the previous annual rent of $6,741,000 on the same properties, representing a rent recapture rate of 105.2% on the properties re-leased for the quarter ended September 30, 2016. Excluding re-lease activity resulting from the redevelopment of properties, the annual new rent on properties re-leased during the quarter ended September 30, 2016 was $4,393,000, as compared to the previous annual rent of $4,755,000 on these same properties, representing a rent recapture rate of 92.4%.

Rent Increases

During the quarter ended September 30, 2016, same store rents on 4,077 properties under lease increased 1.1% to $222.7 million, as compared to $220.3 million for the same quarter in 2015. For the nine months ended September 30, 2016, same store rents on 4,077 properties under lease increased 1.2% to $668.0 million, as compared to $659.9 million for the same period in 2015.

Investments in Real Estate

During the quarter ended September 30, 2016, Realty Income invested $410.2 million in 93 new properties and properties under development or expansion, located in 29 states. These properties are 100% leased with a weighted average lease term of approximately 15.4 years and an initial average cash lease yield of 6.3%. The tenants occupying the new properties operate in 13 industries, and the property types are 85.9% retail and 14.1% industrial, based on rental revenue. Approximately 69% of the rental revenue generated from acquisitions during the third quarter of 2016 is from investment grade rated tenants.

During the nine months ended September 30, 2016, Realty Income invested approximately $1.1 billion in 236 new properties and properties under development or expansion, located in 36 states. These properties are 100% leased with a weighted average lease term of approximately 15.0 years and an initial average cash lease yield of 6.4%. The tenants occupying the new properties operate in 24 industries, and the property types are 80.7% retail and 19.3% industrial, based on rental revenue. Approximately 51% of the rental revenue generated from acquisitions during the first nine months of 2016 is from investment grade rated tenants.

Property Dispositions

During the quarter ended September 30, 2016, Realty Income sold 24 properties for $19.6 million, with a gain on sales of $4.3 million, as compared to eight properties sold for $21.5 million, with a gain on sales of $6.2 million, during the same quarter in 2015.

During the nine months ended September 30, 2016, Realty Income sold 51 properties for $55.2 million, with a gain on sales of $15.3 million, as compared to 22 properties sold for $52.0 million, with a gain on sales of $17.1 million, during the same period in 2015.

Liquidity and Capital Markets

Capital Raising

In October 2016, Realty Income issued $600 million of 3.000% senior unsecured notes due January 2027. The public offering price for the notes was 98.671% of the principal amount for an effective yield to maturity of 3.153%. The net proceeds of approximately $587.2 million from the offering were used to repay borrowings outstanding under the company's revolving credit facility.

During the quarter ended September 30, 2016, Realty Income raised $2.4 million from the sale of common stock at a weighted average price of $67.96 per share. During the nine months ended September 30, 2016, Realty Income raised $489.6 million from the sale of common stock at a weighted average price of $61.62 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. As of October 12, 2016, following the closing of the October notes offering, Realty Income had a borrowing capacity of $1.53 billion available on its revolving credit facility.

2016 Earnings Guidance

We estimate FFO per share for 2016 of $2.83 to $2.88, an increase of 2.2% to 4.0%, respectively, over 2015 FFO per share of $2.77. FFO per share for 2016 is based on a net income per share range of $1.16 to $1.21, plus estimated real estate depreciation of $1.75 per share, and reduced by potential estimated gains on sales of investment properties of $0.08 per share (in accordance with NAREIT's definition of FFO).

We estimate AFFO per share for 2016 of $2.87 to $2.89, an increase of 4.7% to 5.5%, respectively, over 2015 AFFO per share of $2.74. 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 http://investors.realtyincome.com/quarterly-results.

Conference Call Information

In conjunction with the release of Realty Income's operating results, the company will host a conference call on October 27, 2016 at 11:30 a.m. PT to discuss the results. To access the conference, dial (877) 419-6591. When prompted, provide the access code: 9051193.

A telephone replay of the conference call can also be accessed by calling (888) 203-1112 and entering the access code: 9051193. The telephone replay will be available through November 10, 2016. 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 November 10, 2016. No access code is required for this replay.

Supplemental Materials

Supplemental materials on the third quarter and year-to-date 2016 operating results are available on Realty Income's corporate website at http://investors.realtyincome.com/quarterly-results.

About Realty Income

Realty Income, The Monthly Dividend Company®, is an S&P 500 company dedicated to providing shareholders with dependable monthly income. The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 4,700 real estate properties owned under long-term lease agreements with regional and national commercial tenants. To date, the company has declared 556 consecutive common stock monthly dividends throughout its 47-year operating history and increased the dividend 88 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. 

 


 

CONSOLIDATED STATEMENTS OF INCOME

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

                                       
   

Three Months

     

Three Months

     

Nine Months

     

Nine Months

 
   

Ended 9/30/16

     

Ended 9/30/15

     

Ended 9/30/16

     

Ended 9/30/15

 

REVENUE

                                     

Rental

 

$

265,332

     

$

247,578

     

$

782,189

     

$

724,131

 

Tenant reimbursements

   

11,524

       

10,187

       

31,741

       

31,757

 

Other

   

318

       

1,124

       

1,399

       

3,729

 
                                       

Total revenue

   

277,174

       

258,889

       

815,329

       

759,617

 
                                       

EXPENSES

                                     

Depreciation and amortization

   

113,917

       

104,338

       

332,192

       

303,476

 

Interest

   

52,952

       

63,950

       

171,039

       

181,098

 

General and administrative

   

12,103

       

10,861

       

38,407

       

36,331

 

Property (including reimbursable)

   

15,678

       

13,542

       

45,454

       

42,455

 

Income taxes

   

894

       

745

       

2,812

       

2,448

 

Provisions for impairment

   

8,763

       

3,864

       

16,955

       

9,182

 
                                       

Total expenses

   

204,307

       

197,300

       

606,859

       

574,990

 
                                       

Gain on sales of real estate

   

4,335

       

6,224

       

15,283

       

17,117

 
                                       

Net income

   

77,202

       

67,813

       

223,753

       

201,744

 

Net income attributable to noncontrolling interests

 

(130)

       

(338)

       

(623)

       

(919)

 
                                       

Net income attributable to the Company

77,072

       

67,475

       

223,130

       

200,825

 

Preferred stock dividends

   

(6,770)

       

(6,770)

       

(20,310)

       

(20,310)

 
                                       

Net income available to common stockholders

$

70,302

     

$

60,705

     

$

202,820

     

$

180,515

 
                                       

Funds from operations available to

                                 

common stockholders (FFO)

 

$

188,286

     

$

162,160

     

$

535,563

     

$

474,530

 

Adjusted funds from operations available to

                               

common stockholders (AFFO)

 

$

186,575

     

$

165,790

     

$

543,367

     

$

477,006

 
                                       

Per share information for common stockholders:

                               

Net income, basic and diluted

 

$

0.27

     

$

0.26

     

$

0.80

     

$

0.78

 
                                       

FFO, basic and diluted

 

$

0.73

     

$

0.69

     

$

2.11

     

$

2.05

 
                                       

AFFO, basic and diluted

 

$

0.72

     

$

0.70

     

$

2.14

     

$

2.06

 
                                       

Cash dividends paid per common share

$

0.601

     

$

0.570

     

$

1.786

     

$

1.700

 
                                       

 

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 property sales.

                               
     

Three Months

     

Three Months

     

Nine Months

     

Nine Months

     

Ended 9/30/16

     

Ended 9/30/15

     

Ended 9/30/16

     

Ended 9/30/15

Net income available to common stockholders

 

$

70,302

   

$

60,705

   

$

202,820

   

$

180,515

Depreciation and amortization

   

113,917

     

104,338

     

332,192

     

303,476

Depreciation of furniture, fixtures and equipment

   

(187)

     

(184)

     

(575)

   

(608)

Provisions for impairment on investment properties

   

8,763

     

3,864

     

16,955

     

9,182

Gain on sale of investment properties

   

(4,335)

     

(6,224)

     

(15,283)

   

(17,117)

FFO adjustments allocable to noncontrolling interests

   

(174)

     

(339)

     

(546)

   

(918)

FFO available to common stockholders

 

$

188,286

   

$

162,160

   

$

535,563

   

$

474,530

FFO allocable to dilutive noncontrolling interests

   

-

     

217

     

-

     

-

Diluted FFO (1)

 

$

188,286

   

$

162,377

   

$

535,563

   

$

474,530

                                   

FFO per common share, basic and diluted

 

$

0.73

   

$

0.69

   

$

2.11

   

$

2.05

                                   

Distributions paid to common stockholders

 

$

155,194

   

$

134,489

   

$

453,774

   

$

392,767

                                   

FFO available to common stockholders in excess of

                             

distributions paid to common stockholders

 

$

33,092

   

$

27,671

   

$

81,789

   

$

81,763

                               

Weighted average number of common shares used for FFO:

                             

   Basic

   

258,085,633

     

236,211,706

     

253,953,149

     

231,434,521

   Diluted

   

258,356,892

     

236,739,942

     

254,223,301

     

231,545,745

     

(1)

Diluted FFO for the three months ended September 30, 2015 includes FFO allocable to dilutive noncontrolling interests. Noncontrolling interests were anti-dilutive for all other periods presented.

 

 

 

 

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

     

Nine Months

     

Nine Months

     

Ended 9/30/16

     

Ended 9/30/15

     

Ended 9/30/16

     

Ended 9/30/15

Net income available to common stockholders

 

$

70,302

   

$

60,705

   

$

202,820

   

$

180,515

Cumulative adjustments to calculate FFO (1)

   

117,984

     

101,455

     

332,743

     

294,015

FFO available to common stockholders

   

188,286

     

162,160

     

535,563

     

474,530

Amortization of share-based compensation

   

2,653

     

2,235

     

9,204

     

7,598

Amortization of deferred financing costs (2)

   

1,261

     

1,354

     

3,859

     

3,959

Amortization of net mortgage premiums

   

(814)

     

(1,786)

     

(2,669)

   

(5,608)

(Gain) loss on interest rate swaps

   

(2,051)

     

5,180

     

5,835

     

7,138

Leasing costs and commissions

   

(287)

     

(93)

     

(564)

   

(555)

Recurring capital expenditures

   

(240)

     

(1,811)

     

(486)

   

(3,820)

Straight-line rent

   

(4,779)

     

(3,648)

     

(14,253)

   

(12,283)

Amortization of above and below-market leases

   

2,476

     

2,125

     

6,670

     

5,821

Other adjustments (3)

   

70

     

74

     

208

     

226

AFFO available to common stockholders

 

$

186,575

   

$

165,790

   

$

543,367

   

$

477,006

AFFO allocable to dilutive noncontrolling interests

   

-

     

219

     

500

     

-

Diluted AFFO (4)

 

$

186,575

   

$

166,009

   

$

543,867

   

$

477,006

                                   

AFFO per common share, basic and diluted

 

$

0.72

   

$

0.70

   

$

2.14

   

$

2.06

                                   

Distributions paid to common stockholders

 

$

155,194

   

$

134,489

   

$

453,774

   

$

392,767

                                   

AFFO available to common stockholders in excess of

                             

distributions paid to common stockholders

 

$

31,381

   

$

31,301

   

$

89,593

   

$

84,239

                               

Weighted average number of common shares used for AFFO:

                             

   Basic

   

258,085,633

     

236,211,706

     

253,953,149

     

231,434,521

   Diluted

   

258,356,892

     

236,739,942

     

254,458,747

     

231,545,745

   

(1)

See FFO calculation above 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.

(4)

Diluted AFFO for the nine months ended September 30, 2016 and the three months ended September 30, 2015 include AFFO allocable to dilutive noncontrolling interests. Noncontrolling interests were anti-dilutive for all other periods presented.

 

 

HISTORICAL FFO AND AFFO

(dollars in thousands, except per share amounts)

                               

For the three months ended September 30,

2016

   

2015

   

2014

   

2013

   

2012

 
                               

Net income available to common stockholders

$

70,302

 

$

60,705

 

$

57,941

 

$

41,089

 

$

26,976

 

Depreciation and amortization

 

113,730

   

104,154

   

95,135

   

81,189

   

37,822

 

Provisions for impairment on investment properties

8,763

   

3,864

   

495

   

76

   

667

 

Gain on sales of investment properties

(4,335)

   

(6,224)

   

(10,975)

   

(6,163)

   

(2,045)

 

Merger-related costs

 

-

   

-

   

-

   

240

   

5,495

 

FFO adjustments allocable to noncontrolling interests

 

(174)

   

(339)

   

(337)

   

(285)

   

-

 
                               

FFO

$

188,286

 

$

162,160

 

$

142,259

 

$

116,146

 

$

68,915

 
                               

FFO per diluted share

$

0.73

 

$

0.69

 

$

0.64

 

$

0.59

 

$

0.52

 
                               

AFFO

$

186,575

 

$

165,790

 

$

142,429

 

$

117,919

 

$

69,496

 
                               

AFFO per diluted share

$

0.72

 

$

0.70

 

$

0.64

 

$

0.60

 

$

0.52

 
                               

Cash dividends paid per share

$

0.601

 

$

0.570

 

$

0.548

 

$

0.545

 

$

0.443

 

Weighted average diluted shares outstanding

258,356,892

 

236,739,942

 

222,236,071

 

196,619,866

 

132,931,813

 
                     
                               

For the nine months ended September 30,

2016

   

2015

   

2014

   

2013

   

2012

 
                               

Net income available to common stockholders

$

202,820

 

$

180,515

 

$

156,540

 

$

149,781

 

$

85,998

 

Depreciation and amortization

 

331,617

   

302,868

   

277,804

   

222,863

   

108,628

 

Provisions for impairment on investment properties

16,955

   

9,182

   

2,676

   

3,028

   

667

 

Gain on sales of investment properties

(15,283)

   

(17,117)

   

(16,818)

   

(50,467)

   

(6,010)

 

Merger-related costs

 

-

   

-

   

-

   

12,875

   

5,495

 

FFO adjustments allocable to noncontrolling interests

 

(546)

   

(918)

   

(1,032)

   

(680)

   

-

 
                               

FFO

$

535,563

 

$

474,530

 

$

419,170

 

$

337,400

 

$

194,778

 
                               

FFO per diluted share

$

2.11

 

$

2.05

 

$

1.93

 

$

1.79

 

$

1.47

 
                               

AFFO

$

543,367

 

$

477,006

 

$

416,255

 

$

337,439

 

$

201,290

 
                               

AFFO per diluted share

$

2.14

 

$

2.06

 

$

1.92

 

$

1.79

 

$

1.52

 
                               

Cash dividends paid per share

$

1.786

 

$

1.700

 

$

1.642

 

$

1.602

 

$

1.317

 
                               

Weighted average diluted shares outstanding - FFO

254,223,301

 

231,545,745

 

216,830,013

 

188,399,848

 

132,845,970

 
                     

Weighted average diluted shares outstanding - AFFO

254,458,747

 

231,545,745

 

216,830,013

 

188,399,848

 

132,845,970

 
                               

 

REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

September 30, 2016 and December 31, 2015

(dollars in thousands, except per share data)

             
   

2016

   

2015(1)

 

ASSETS

 

(unaudited)

       

Real estate, at cost:

           

Land

$

3,527,734

 

$

3,286,004

 

Buildings and improvements

 

9,624,689

   

9,010,778

 

Total real estate, at cost

 

13,152,423

   

12,296,782

 

Less accumulated depreciation and amortization

 

(1,913,580)

   

(1,687,665)

 

Net real estate held for investment

 

11,238,843

   

10,609,117

 

Real estate held for sale, net

 

24,815

   

9,767

 

Net real estate

 

11,263,658

   

10,618,884

 

Cash and cash equivalents

 

29,801

   

40,294

 

Accounts receivable, net

 

94,498

   

81,678

 

Acquired lease intangible assets, net

 

1,087,648

   

1,034,417

 

Goodwill

 

15,165

   

15,321

 

Other assets, net

 

45,683

   

54,785

 

Total assets

$

12,536,453

 

$

11,845,379

 
             

LIABILITIES AND EQUITY

           

Distributions payable

$

54,768

 

$

50,344

 

Accounts payable and accrued expenses

 

97,541

   

115,826

 

Acquired lease intangible liabilities, net

 

265,045

   

250,916

 

Other liabilities

 

97,905

   

53,965

 

Line of credit payable

 

1,082,000

   

238,000

 

Term loans, net

 

319,054

   

318,835

 

Mortgages payable, net

 

503,201

   

646,187

 

Notes payable, net

 

3,346,442

   

3,617,973

 

Total liabilities

 

5,765,956

   

5,292,046

 
             

Commitments and contingencies

           
             

Stockholders' equity:

           

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

           

69,900,000 shares authorized, 16,350,000 shares issued and

           

outstanding as of September 30, 2016 and December 31, 2015,

           

liquidation preference $25.00 per share

 

395,378

   

395,378

 

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

           

370,100,000 shares authorized, 258,592,608 shares issued and

           

outstanding as of September 30, 2016 and 250,416,757 shares issued

           

and outstanding as of December 31, 2015

 

8,144,983

   

7,666,428

 

Distributions in excess of net income

 

(1,785,630)

   

(1,530,210)

 

Total stockholders' equity

 

6,754,731

   

6,531,596

 

Noncontrolling interests

 

15,766

   

21,737

 

Total equity

 

6,770,497

   

6,553,333

 

Total liabilities and equity

$

12,536,453

 

$

11,845,379

 
   

(1)

During the first quarter of 2016, we adopted ASU 2015-03, which requires that debt issuance costs be reported on the balance sheet as a direct reduction of the face amount of the debt instrument they relate to. As a result, we have reclassified certain items on the December 31, 2015 balance sheet within the following financial statement captions: Other assets, net, Term loans, net, Mortgages payable, net, and Notes payable, net.

 

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%

YTD Q3 2016

3.6%

 

33.1%

 

3.7%

 

12.3%

 

2.6%

 

7.2%

 

2.1%

 

7.8%

 

1.2%

 

6.1%

                                                             

Compound Average
Annual Total Return (5)

17.9%

       

11.2%

       

9.8%

       

9.3%

       

9.2%

 

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)

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 September 30, 2016, 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.

 

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SOURCE Realty Income Corporation

For further information: Jonathan Pong, CFA, CPA, VP, Capital Markets, (858) 284-5177


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