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8-K - 8-K - REALTY INCOME CORPa14-5563_18k.htm

Exhibit 99.1

 

RECORD OPERATING RESULTS FOR FOURTH QUARTER

AND 2013 ANNOUNCED BY REALTY INCOME

 

 

ESCONDIDO, CALIFORNIA, February 13, 2014...Realty Income Corporation (Realty Income), The Monthly Dividend Company® (NYSE: O), today announced record operating results for the fourth quarter ended December 31, 2013. Access to this document is available at www.realtyincome.com. All per share amounts presented in this press release are on a diluted per common share basis unless stated otherwise.

 

COMPANY HIGHLIGHTS:

 

For the quarter ended December 31, 2013 (as compared to the same quarterly period in 2012):

·     Revenue increased 62.4% to $215.7 million as compared to $132.8 million

·     Net income available to common stockholders per share was $0.26

·     Normalized FFO available to common stockholders increased 68.4% to $124.6 million

·     Normalized FFO per share increased 8.9% to $0.61

·     AFFO available to common stockholders increased 72.4% to $125.7 million

·     AFFO per share increased 12.7% to $0.62

·     Same store rents increased 1.8% to $110.0 million

·     Portfolio occupancy increased to 98.2% from 97.2%

·     Generated net proceeds of approximately $378 million in 9.775 million common share offering

·     Invested $145.3 million in 66 new properties and properties under development or expansion

·     Increased the monthly dividend in December for the 74th time and for the 65th consecutive quarter

·     Dividends paid per common share increased 20.3%

·     Increased credit facility borrowing capacity to $1.5 billion from $1.0 billion

 

For the year ended December 31, 2013 (as compared to 2012):

·     Revenue increased 61.2% to $778.4 million as compared to $482.8 million

·     Net income available to common stockholders per share was $1.06

·     Normalized FFO available to common stockholders increased 71.9% to $462.0 million

·     Normalized FFO per share increased 19.3% to $2.41

·     AFFO available to common stockholders increased 68.9% to $463.1 million

·     AFFO per share increased 17.0% to $2.41

·     Same store rents increased 1.4% to $435.2 million

·                  Invested $1.5 billion in 459 new properties and properties under development or expansion (excluding ARCT)

·                  Closed on the $3.2 billion acquisition of ARCT, successfully integrating 515 properties into the company’s property portfolio

·                  Including ARCT acquisition, invested $4.7 billion in 974 properties

·                  Raised gross proceeds of $3.94 billion to fund 2013 real estate acquisitions, ARCT acquisition, and repay borrowings under the credit facility

·     Dividends paid per common share increased 21.2%

·     Paid the 521st consecutive monthly dividend in December 2013

 

Financial Results

 

Revenue

Revenue, for the quarter ended December 31, 2013, increased 62.4% to $215.7 million as compared to $132.8 million, for the same quarter in 2012. Revenue for 2013 increased 61.2% to $778.4 million as compared to $482.8 million for 2012.

 

1



 

Net Income Available to Common Stockholders

Net income available to common stockholders, for the quarter ended December 31, 2013, was $53.9 million as compared to $28.5 million for the same quarter in 2012. Net income per share, for the quarter ended December 31, 2013, was $0.26 as compared to $0.21, for the same quarter in 2012.

 

Net income available to common stockholders, in 2013, was $203.6 million as compared to $114.5 million for 2012. Net income per share, in 2013, was $1.06 as compared to $0.86 for 2012.

 

The calculation to determine net income for a real estate company includes impairments and/or gains from the sales of investment properties. Impairments and/or gains on property sales vary from quarter to quarter. This variance can significantly impact net income and period to period comparisons.

 

FFO Available to Common Stockholders

Funds from Operations (FFO), for the quarter ended December 31, 2013, increased 73.9% to $124.5 million as compared to $71.6 million for the same quarter in 2012. FFO per share, for the quarter ended December 31, 2013, increased 13.0% to $0.61 as compared to $0.54, for the same quarter in 2012.

 

FFO, in 2013, increased 72.1% to $449.0 million as compared to $260.9 million for the same period in 2012. FFO per share, in 2013, increased 19.4% to $2.34 as compared to $1.96 for 2012.

 

Normalized FFO Available to Common Stockholders

Normalized Funds from Operations, which is based on FFO adjusted to add back ARCT merger-related costs, for the quarter ended December 31, 2013, increased 68.4% to $124.6 million as compared to $74.0 million, for the same quarter in 2012. Normalized FFO per share, for the quarter ended December 31, 2013, increased 8.9% to $0.61 as compared to $0.56, for the same quarter in 2012.

 

Normalized FFO, in 2013, increased 71.9% to $462.0 million as compared to $268.8 million for 2012. Normalized FFO per share, in 2013, increased 19.3% to $2.41 as compared to $2.02 for 2012.

 

AFFO Available to Common Stockholders

Adjusted Funds from Operations (AFFO), for the quarter ended December 31, 2013, increased 72.4% to $125.7 million as compared to $72.9 million, for the same quarter in 2012. AFFO per share, for the quarter ended December 31, 2013, increased 12.7% to $0.62 as compared to $0.55, for the same quarter in 2012.

 

AFFO, in 2013, increased 68.9% to $463.1 million as compared to $274.2 million for 2012. AFFO per share, for 2013, increased 17.0% to $2.41 as compared to $2.06 for 2012.

 

The company considers FFO, normalized FFO, and AFFO to be appropriate supplemental measures of a Real Estate Investment Trust’s (REIT’s) operating performance. Realty Income defines FFO consistent with the National Association of Real Estate Investment Trust’s (NAREIT’s) definition, as net income available to common stockholders, plus depreciation and amortization of real estate assets, plus impairments of real estate, reduced by gains on sales of investment properties and extraordinary items. Normalized FFO adds back merger-related costs for the acquisition of ARCT. AFFO further adjusts Normalized 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. See the reconciliation of net income available to common stockholders to FFO, normalized FFO and AFFO on page seven.

 

Dividend Information

In December 2013, Realty Income announced the 65th consecutive quarterly dividend increase, which is the 74th increase in the amount of the dividend since the company’s listing on the New York Stock Exchange in 1994. The annualized dividend amount, as of December 31, 2013, was approximately $2.186 per share. The amount of monthly dividends paid per share increased 21.2% to $2.147 in 2013 compared to $1.772 per share in 2012. In addition, through December 31, 2013, the company has paid 521 consecutive monthly dividends and over $2.7 billion in total dividends since 1969. Realty Income has a dividend reinvestment and stock purchase program that can be accessed at www.realtyincome.com. The program is administered by Wells Fargo Shareowner Services.

 

Real Estate Portfolio Update

 

As of December 31, 2013, Realty Income’s portfolio of freestanding, single-tenant properties consisted of 3,896 properties located in 49 states and Puerto Rico, leased to 205 commercial tenants doing business in 47 industries.

The properties are leased under long-term, net leases with a weighted average remaining lease term of approximately 10.8 years.

 

2



 

Portfolio Management Activities

The company’s portfolio of commercial real estate, owned primarily under 10- to 20-year net leases, continues to perform well and provide dependable lease revenue supporting the payment of monthly dividends. As of December 31, 2013, portfolio occupancy was 98.2% with 70 properties available for lease out of a total of 3,896 properties in the portfolio, as compared to 97.2% portfolio occupancy, or 84 properties available for lease, as of December 31, 2012.

 

Rent Increases

During the quarter ended December 31, 2013, same store rents, on 2,338 properties under lease, increased 1.8% to $110.0 million, as compared to $108.1 million for the same quarter in 2012. During 2013, same store rents, on 2,338 properties under lease, increased 1.4% to $435.2 million, as compared to $429.0 million for 2012.

 

Property Acquisitions

During the fourth quarter of 2013, Realty Income invested $145.3 million in 66 new properties, and properties under development or expansion, located in 28 states. These properties are 100% leased with a weighted average lease term of approximately 12.5 years and an initial average lease yield of 7.3%. The tenants occupying the new properties operate in 16 industries, and the property types consist of 80% retail, 12% office, and 8% industrial and distribution, based on rental revenue.

 

During 2013, Realty Income invested approximately $1.5 billion in 459 new properties and properties under development or expansion. The new properties are located in 40 states and are 100% leased with an average lease term of approximately 14 years and an initial average lease yield of 7.1%. Approximately 65% of the revenue generated from the 2013 acquisitions is from investment grade tenants. The tenants occupying the new properties operate in 23 industries, and the property types consist of 84% retail, 9% office, 5% industrial and distribution, and 2% manufacturing, based on rental revenue. These properties are in addition to the $3.2 billion acquisition of 515 properties added to the company’s real estate portfolio upon the closing of the ARCT transaction during the first quarter of 2013. The combined real estate acquisitions in 2013 were $4.7 billion invested in 974 new properties and properties under development or expansion.

 

Realty Income maintains a $1.5 billion unsecured acquisition credit facility, which is used to fund property acquisitions in the near term. As of December 31, 2013, $1.37 billion was available on the credit facility to fund additional acquisitions.

 

Property Dispositions

Realty Income continued to successfully execute its asset disposition program. During the quarter ended December 31, 2013, Realty Income sold 22 properties for $28.0 million, with a gain on sales of $14.3 million, as compared to 14 properties sold for $16.3 million, with a gain on sales of $1.2 million, during the same quarter in 2012. During 2013, Realty Income sold 75 properties for $134.2 million, with a gain on sales of $64.7 million, as compared to 44 properties sold for $50.6 million, with a gain on sales of $9.9 million, during 2012.

 

Other Quarterly Activities

 

Expansion of Unsecured Credit Facility

On October 29, 2013, Realty Income announced the expansion of the company’s unsecured acquisition credit facility to $1.5 billion from $1.0 billion. The company exercised the $500 million accordion expansion of the existing credit facility with its current bank lending group. All other material business terms of the credit facility remain unchanged. As of December 31, 2013, the company had borrowing capacity of approximately $1.37 billion available on the facility.

 

Issued 9.775 Million Shares In An Upsized Common Share Offering

On October 25, 2013, Realty Income issued 9.775 million common shares priced at $40.63 per share. Net proceeds of approximately $378 million were used to repay a portion of the borrowings under the company’s acquisition credit facility.

 

Realty Income Names Sumit Roy as Chief Investment Officer

On October 16, 2013, Realty Income announced that Sumit Roy assumed the position of Chief Investment Officer.

 

Direct Stock Purchase and Dividend Reinvestment Plan Activities

During the fourth quarter of 2013, Realty Income issued 1,359,164 common shares via its Stock Plan at an average price of $39.36 per share. The Plan generated gross proceeds of $52.0 million during the quarter. For 2013, the company issued 1,449,139 common shares via the Stock Plan, at an average price of $43.04 per share, raising gross proceeds of $55.9 million.

 

3



 

CEO Comments on Operating Results

Commenting on Realty Income’s results and real estate operations, Chief Executive Officer, John P. Case said, “We are pleased to report record results for the fourth quarter and for 2013. Revenue significantly increased to over $778 million in 2013, contributing to a 19.3% increase in normalized FFO per share, to $2.41, and a 17% increase in AFFO per share, to $2.41. Record earnings growth also allowed us to increase the dividends paid per share to our shareholders in 2013 by 21.2%, the largest increase in the company’s history. Additionally, our existing portfolio of 3,896 properties continues to perform well with occupancy increasing to 98.2% at the end of 2013, as compared to 97.2% at the end of 2012. We also realized same store rent increases of 1.8% for the fourth quarter, and 1.4% for 2013.

 

“We completed $1.5 billion in acquisitions for 2013, of which $145.3 million were closed during the fourth quarter. The weighted average remaining lease term of the properties acquired in 2013 was 14 years, and 84% of the acquisitions were retail properties. Including our acquisition of American Realty Capital Trust in January 2013, we invested approximately $4.7 billion in real estate, the highest level of acquisitions in the company’s 45-year history. We funded the 2013 acquisitions by issuing $3.2 billion of common stock, $820 million in unsecured notes with an average maturity of 10 years, and assuming approximately $630 million of existing debt.

 

We also expanded our unsecured credit facility to $1.5 billion from $1.0 billion, providing us with additional liquidity to fund acquisitions. We are currently anticipating approximately $1.2 billion in acquisitions for 2014. As of February 12, 2014, we have borrowing capacity of approximately $917 million on the credit facility to fund additional property investment activities.”

 

FFO and AFFO Commentary

Realty Income’s FFO and AFFO per share has historically tended to be stable and fairly predictable because of the long-term leases that are the primary source of the company’s revenue. There are, however, several factors that can cause FFO and AFFO per share to vary from levels that have been anticipated by the company. These factors include, but are not limited to, changes in interest rates and occupancy rates, periodically accessing the capital markets, the level and timing of property and entity acquisitions and dispositions, lease rollovers, the general real estate market, and the economy.

 

2014 Earnings Estimates

FFO per share for 2014 should range from $2.53 to $2.58 per share, an increase of 5% to 7% over 2013 FFO per share of $2.41. FFO per share for 2014 is based on a net income per share range of $0.84 to $0.89, plus estimated real estate depreciation of $1.76 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).

 

AFFO per share for 2014 should range from $2.53 to $2.58 per share, an increase of 5% to 7% over the 2013 AFFO per diluted share of $2.41. AFFO further adjusts FFO for unique revenue and expense items, which are not as pertinent to the measurement of the company’s ongoing operating performance.

 

About Realty Income

Realty Income is The Monthly Dividend Company®, a New York Stock Exchange real estate company dedicated to providing shareholders with dependable monthly income. As of December 31, 2013, the company had paid 521 consecutive monthly dividends throughout its 45-year operating history. The monthly income is supported by the cash flows from over 3,800 properties owned under long-term lease agreements with 205 leading regional and national commercial tenants. The company is an active buyer of net-leased properties nationwide. Additional information about the company can be obtained from the corporate website at www.realtyincome.com or www.twitter.com/realtyincome.

 

Forward-Looking Statements

Statements in this press release that are not strictly historical are “forward-looking” statements. Forward-looking statements involve known and unknown risks, which may cause the company’s actual future results to differ materially from expected results. These risks include, among others, general economic conditions, local real estate conditions, tenant financial health, the availability of capital to finance planned growth, continued volatility and uncertainty in the credit markets and broader financial markets, property acquisitions and the timing of these acquisitions, charges for property impairments, 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.

 

4



 

Note to Editors: Realty Income press releases are available via the internet at http://www.realtyincome.com/invest/newsroom-library/press-releases.shtml.

 

Media Contact:

Tere H. Miller, Vice President

Investor Relations & Corporation Communications

(760) 741-2111, x1177

 

5



 

CONSOLIDATED STATEMENTS OF INCOME

For the three months and years ended December 31, 2013 and 2012

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

 

 

 

Three months

 

Three months

 

Year

 

Year

 

 

 

Ended 12/31/13

 

Ended 12/31/12

 

Ended 12/31/13

 

Ended 12/31/12

 

REVENUE

 

 

 

 

 

 

 

 

 

Rental

 

$

204,828

 

$

127,777

 

$

747,570

 

$

466,498

 

Tenant reimbursements

 

9,325

 

4,507

 

24,944

 

14,619

 

Other

 

1,547

 

519

 

5,861

 

1,730

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

215,700

 

132,803

 

778,375

 

482,847

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

85,245

 

41,755

 

306,577

 

147,323

 

Interest

 

50,645

 

35,065

 

180,916

 

122,542

 

General and administrative

 

16,511

 

10,223

 

56,827

 

37,998

 

Property (including reimbursable)

 

13,056

 

6,053

 

38,838

 

21,297

 

Income taxes

 

670

 

215

 

2,734

 

1,430

 

Merger-related costs

 

138

 

2,404

 

13,013

 

7,899

 

Provisions for impairment

 

-

 

3,639

 

290

 

3,639

 

 

 

 

 

 

 

 

 

 

 

Total expenses

 

166,265

 

99,354

 

599,195

 

342,128

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

49,435

 

33,449

 

179,180

 

140,719

 

Income from discontinued operations

 

15,199

 

5,575

 

67,103

 

18,433

 

 

 

 

 

 

 

 

 

 

 

Net income

 

64,634

 

39,024

 

246,283

 

159,152

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to noncontrolling interests

 

(298

)

-

 

(719

)

-

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to the Company

 

64,336

 

39,024

 

245,564

 

159,152

 

Preferred stock dividends

 

(10,482

)

(10,482

)

(41,930

)

(40,918

)

Excess of redemption value over carrying value of

 

 

 

 

 

 

 

 

 

preferred shares redeemed

 

-

 

-

 

-

 

(3,696

)

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

53,854

 

$

28,542

 

$

203,634

 

$

114,538

 

 

 

 

 

 

 

 

 

 

 

Funds from operations available to

 

 

 

 

 

 

 

 

 

common stockholders (FFO)

 

$

124,492

 

$

71,579

 

$

449,017

 

$

260,862

 

Normalized funds from operations available to

 

 

 

 

 

 

 

 

 

common stockholders (normalized FFO)

 

$

124,630

 

$

73,983

 

$

462,030

 

$

268,761

 

Adjusted funds from operations available to

 

 

 

 

 

 

 

 

 

common stockholders (AFFO)

 

$

125,700

 

$

72,892

 

$

463,139

 

$

274,183

 

 

 

 

 

 

 

 

 

 

 

Per share information for common stockholders:

 

 

 

 

 

 

 

 

 

Income from continuing operations,

 

 

 

 

 

 

 

 

 

basic and diluted

 

$

0.19

 

$

0.17

 

$

0.71

 

$

0.72

 

Net income, basic and diluted

 

$

0.26

 

$

0.21

 

$

1.06

 

$

0.86

 

FFO, basic and diluted

 

$

0.61

 

$

0.54

 

$

2.34

 

$

1.96

 

Normalized FFO, basic and diluted

 

$

0.61

 

$

0.56

 

$

2.41

 

$

2.02

 

AFFO:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.62

 

$

0.55

 

$

2.42

 

$

2.06

 

Diluted

 

$

0.62

 

$

0.55

 

$

2.41

 

$

2.06

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid per common share

 

$

0.546

 

$

0.454

 

$

2.147

 

$

1.772

 

 

6



 

FUNDS FROM OPERATIONS (FFO)

(dollars in thousands, except per share amounts)

 

 

 

Three months

 

Three months

 

Year

 

Year

 

 

 

Ended 12/31/13

 

Ended 12/31/12

 

Ended 12/31/13

 

Ended 12/31/12

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

53,854

 

$

28,542

 

$

203,634

 

$

114,538

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

Continuing operations

 

85,245

 

41,755

 

306,577

 

147,323

 

Discontinued operations

 

84

 

730

 

1,818

 

3,984

 

Depreciation allocated to noncontrolling interest

 

(329

)

-

 

(1,009

)

-

 

Depreciation of furniture, fixtures and equipment

 

(86

)

(57

)

(288

)

(249

)

Provisions for impairment on investment properties

 

-

 

4,472

 

3,028

 

5,139

 

Gain on sale of investment properties,

 

 

 

 

 

 

 

 

 

discontinued operations

 

(14,276

)

(3,863

)

(64,743

)

(9,873

)

FFO available to common stockholders

 

124,492

 

71,579

 

449,017

 

260,862

 

Merger-related costs

 

138

 

2,404

 

13,013

 

7,899

 

Normalized FFO available to common stockholders

 

$

124,630

 

$

73,983

 

$

462,030

 

$

268,761

 

 

 

 

 

 

 

 

 

 

 

FFO per common share, basic and diluted

 

$

0.61

 

$

0.54

 

$

2.34

 

$

1.96

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO per common share,

 

 

 

 

 

 

 

 

 

basic and diluted

 

$

0.61

 

$

0.56

 

$

2.41

 

$

2.02

 

 

 

 

 

 

 

 

 

 

 

Distributions paid to common stockholders

 

$

110,678

 

$

60,629

 

$

409,222

 

$

236,348

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO in excess of distributions paid to

 

 

 

 

 

 

 

 

 

common stockholders

 

$

13,952

 

$

13,354

 

$

52,808

 

$

32,413

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares

 

 

 

 

 

 

 

 

 

used for computation per share:

 

 

 

 

 

 

 

 

 

Basic

 

203,303,124

 

132,846,497

 

191,754,857

 

132,817,472

 

Diluted

 

203,326,838

 

132,979,552

 

191,781,622

 

132,884,933

 

 

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

 

ADJUSTED FUNDS FROM OPERATIONS (AFFO)

(dollars in thousands, except per share amounts)

 

Most companies in our industry use a similar measurement to AFFO, but they may use the term “CAD” (for Cash Available for Distribution) or “FAD” (for Funds Available for Distribution).

 

 

 

Three months

 

Three months

 

Year

 

Year

 

 

 

Ended 12/31/13

 

Ended 12/31/12

 

Ended 12/31/13

 

Ended 12/31/12

 

Net income available to common stockholders

 

$

53,854

 

$

28,542

 

$

203,634

 

$

114,538

 

Cumulative adjustments to calculate normalized FFO (1)

 

70,776

 

45,441

 

258,396

 

154,223

 

Normalized FFO available to common stockholders

 

124,630

 

73,983

 

462,030

 

268,761

 

Amortization of share-based compensation

 

6,550

 

2,221

 

20,785

 

10,001

 

Amortization of deferred financing costs (2)

 

1,219

 

948

 

4,436

 

2,786

 

Provisions for impairment on Crest properties

 

308

 

 

308

 

 

Excess of redemption value over carrying value

 

 

 

 

 

 

 

 

 

of Class D preferred share redemption

 

 

 

 

3,696

 

Amortization of net mortgage premiums

 

(2,522

)

(387

)

(9,481

)

(665

)

(Gain) loss on interest rate swaps

 

(188

)

(18

)

(878

)

56

 

Capitalized leasing costs and commissions

 

(137

)

(401

)

(1,280

)

(1,619

)

Capitalized building improvements

 

(2,468

)

(1,652

)

(7,227

)

(4,935

)

Straight-line rent

 

(3,631

)

(2,128

)

(13,742

)

(5,674

)

Amortization of above and below-market lease

 

1,939

 

326

 

8,188

 

1,776

 

Total AFFO available to common stockholders

 

$

125,700

 

$

72,892

 

$

463,139

 

$

274,183

 

AFFO per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.62

 

$

0.55

 

$

2.42

 

$

2.06

 

Diluted

 

$

0.62

 

$

0.55

 

$

2.41

 

$

2.06

 

 

 

 

 

 

 

 

 

 

 

Distributions paid to common stockholders

 

$

110,678

 

$

60,629

 

$

409,222

 

$

236,348

 

 

 

 

 

 

 

 

 

 

 

AFFO in excess of distributions paid to

 

 

 

 

 

 

 

 

 

common stockholders

 

$

15,022

 

$

12,263

 

$

53,917

 

$

37,835

 

 

(1)   See FFO and normalized FFO calculation above for reconciling items.

 

(2)        Includes the amortization of costs incurred and capitalized when our notes were issued in March 2003, November 2003, March 2005, September 2005, September 2006, September 2007, June 2010, June 2011, October 2012 and July 2013. Additionally, this includes the amortization of deferred financing costs incurred and capitalized in connection with our assumption of the mortgages payable and the issuance of our term loan. The deferred financing costs are being amortized over the lives of the respective mortgages and term loan. No costs associated with our credit facility agreements or annual fees paid to credit rating agencies have been included.

 

7



 

HISTORICAL FUNDS FROM OPERATIONS AND ADJUSTED FUNDS FROM OPERATIONS

 

(dollars in thousands, except per share amounts)

 

For the three months ended December 31,

 

2013

 

2012

 

2011

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

53,854

 

$

28,542

 

$

34,941

 

$

31,814

 

$

29,268

 

Depreciation and amortization

 

84,914

 

42,428

 

34,314

 

25,045

 

22,916

 

Provisions for impairment on investment properties

-

 

4,472

 

27

 

42

 

110

 

Gain on sales of investment properties

 

(14,276

)

(3,863

)

(1,205

)

(4,392

)

(3,809

)

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

124,492

 

71,579

 

68,077

 

52,509

 

48,485

 

Merger-related costs

 

138

 

2,404

 

-

 

-

 

-

 

Normalized FFO

 

$

124,630

 

$

73,983

 

$

68,077

 

$

52,509

 

$

48,485

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO per diluted share

 

$

0.61

 

$

0.56

 

$

0.51

 

$

0.47

 

$

0.47

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO

 

$

125,700

 

$

72,892

 

$

68,524

 

$

53,327

 

$

48,622

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO per diluted share

 

$

0.62

 

$

0.55

 

$

0.52

 

$

0.48

 

$

0.47

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid per share

 

$

0.546

 

$

0.454

 

$

0.436

 

$

0.432

 

$

0.428

 

Weighted average diluted shares outstanding

 

203,326,838

 

132,979,552

 

132,609,319

 

112,067,874

 

103,491,891

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

2013

 

2012

 

2011

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common stockholders

 

$

203,634

 

$

114,538

 

$

132,779

 

$

106,531

 

$

106,874

 

Depreciation and amortization

 

307,098

 

151,058

 

121,941

 

95,858

 

91,629

 

Provisions for impairment on investment properties

3,028

 

5,139

 

405

 

213

 

110

 

Gain on sales of investment properties

 

(64,743

)

(9,873

)

(5,733

)

(8,676

)

(8,059

)

 

 

 

 

 

 

 

 

 

 

 

 

FFO

 

449,017

 

260,862

 

249,392

 

193,926

 

190,554

 

Merger-related costs

 

13,013

 

7,899

 

-

 

-

 

-

 

Normalized FFO

 

$

462,030

 

$

268,761

 

$

249,392

 

$

193,926

 

$

190,554

 

 

 

 

 

 

 

 

 

 

 

 

 

Normalized FFO per diluted share

 

$

2.41

 

$

2.02

 

$

1.98

 

$

1.83

 

$

1.84

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO

 

$

463,139

 

$

274,183

 

$

253,372

 

$

197,256

 

$

192,739

 

 

 

 

 

 

 

 

 

 

 

 

 

AFFO per diluted share

 

$

2.41

 

$

2.06

 

$

2.01

 

$

1.86

 

$

1.86

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid per share

 

$

2.147

 

$

1.772

 

$

1.737

 

$

1.722

 

$

1.707

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

 

191,781,622

 

132,884,933

 

126,189,399

 

105,942,721

 

103,581,053

 

 

8



 

REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

December 31, 2013 and 2012

(dollars in thousands, except per share data)

 

 

 

2013

 

2012

 

ASSETS

 

 

 

 

 

Real estate, at cost:

 

 

 

 

 

Land

 

$

2,791,147

 

$

1,999,820

 

Buildings and improvements

 

7,108,328

 

3,920,865

 

Total real estate, at cost

 

9,899,475

 

5,920,685

 

Less accumulated depreciation and amortization

 

(1,114,888

)

(897,767

)

Net real estate held for investment

 

8,784,587

 

5,022,918

 

Real estate held for sale, net

 

12,022

 

19,219

 

Net real estate

 

8,796,609

 

5,042,137

 

Cash and cash equivalents

 

10,257

 

5,248

 

Accounts receivable, net

 

39,323

 

21,659

 

Acquired lease intangible assets, net

 

935,459

 

242,125

 

Goodwill

 

15,660

 

16,945

 

Other assets, net

 

127,133

 

101,234

 

Total assets

 

$

9,924,441

 

$

5,429,348

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

Distributions payable

 

$

41,452

 

$

23,745

 

Accounts payable and accrued expenses

 

102,511

 

70,426

 

Acquired lease intangible liabilities, net

 

148,250

 

26,471

 

Other liabilities

 

44,030

 

26,059

 

Lines of credit payable

 

128,000

 

158,000

 

Term loan

 

70,000

 

-

 

Mortgages payable, net

 

783,360

 

175,868

 

Notes payable, net

 

3,185,480

 

2,535,985

 

Total liabilities

 

4,503,083

 

3,016,554

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock and paid in capital, par value $0.01 per share,
69,900,000 shares authorized and 25,150,000 shares issued and
outstanding as of December 31, 2013 and December 31, 2012

 

609,363

 

609,363

 

Common stock and paid in capital, par value $0.01 per share,
370,100,000 shares authorized, 207,485,073 shares issued and
outstanding as of December 31, 2013 and 133,452,411 shares issued
and outstanding at December 31, 2012

 

5,767,878

 

2,572,092

 

Distributions in excess of net income

 

(991,794

)

(768,661

)

Total stockholders’ equity

 

5,385,447

 

2,412,794

 

Noncontrolling interests

 

35,911

 

-

 

Total equity

 

5,421,358

 

2,412,794

 

Total liabilities and equity

 

$

9,924,441

 

$

5,429,348

 

 

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%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compounded Average Annual Total Return (5)

 

16.3%

 

 

 

 

 

10.6%

 

 

 

 

 

10.3%

 

 

 

 

 

9.5%

 

 

 

 

 

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.

 

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

 

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

 

(5)       All of these Compounded Average Annual Total Return rates are calculated in the same manner: from Realty Income’s NYSE listing on October 18, 1994 through December 31, 2013, 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



 

Property Type Diversification

 

The following table sets forth certain property type information regarding Realty Income’s property portfolio as of December 31, 2013 (dollars in thousands):

 

 

 

 

 

 

 

Approximate

 

Rental Revenue for

 

Percentage of

 

 

 

Number of

 

Leasable

 

the Quarter Ended

 

Rental

 

Property Type

 

Properties

 

Square Feet

 

December 31, 2013

(1)

 

Revenue

 

Retail

 

3,747

 

39,979,700

 

$

158,804

 

77.4

%

Industrial and distribution

 

79

 

15,661,100

 

22,374

 

10.9

 

Office

 

42

 

3,104,400

 

13,450

 

6.6

 

Manufacturing

 

13

 

3,715,200

 

5,254

 

2.6

 

Agriculture

 

15

 

184,500

 

5,202

 

2.5

 

 

 

 

 

 

 

 

 

 

 

Totals

 

3,896

 

62,644,900

 

$

205,084

 

100.0

%

 

(1)

Includes rental revenue for all properties owned by Realty Income at December 31, 2013, including revenue from properties reclassified as discontinued operations of $279. Excludes revenue of $23 from properties owned by Crest.

 

 

Tenant Diversification

 

The largest tenants based on percentage of total portfolio rental revenue at December 31, 2013 include the following:

 

FedEx

5.2%

 

Dollar General

2.4%

Walgreens

5.0%

 

Rite Aid

2.2%

Family Dollar

4.8%

 

Regal Cinemas

2.1%

LA Fitness

4.3%

 

CVS Pharmacy

2.1%

AMC Theatres

3.1%

 

The Pantry

1.8%

Diageo

2.9%

 

Circle K

1.7%

BJ’s Wholesale Clubs

2.9%

 

Walmart/Sam’s Club

1.6%

Northern Tier Energy/Super America

2.5%

 

 

 

 

11



 

Industry Diversification

 

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

 

 

Percentage of Rental Revenue(1)

 

For the

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

For the Years Ended

 

 

December 31,

 

Dec 31,

 

Dec 31,

 

Dec 31,

 

Dec 31,

 

Dec 31,

 

Dec 31,

 

 

2013

 

2013

 

2012

 

2011

 

2010

 

2009

 

2008

 

Retail industries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Apparel stores

 

1.7

%

 

1.9

%

 

1.7

%

 

1.4

%

 

1.2

%

 

1.1

%

 

1.1

%

 

Automotive collision services

 

0.8

 

 

0.8

 

 

1.1

 

 

0.9

 

 

1.0

 

 

1.1

 

 

1.0

 

 

Automotive parts

 

1.4

 

 

1.2

 

 

1.0

 

 

1.2

 

 

1.4

 

 

1.5

 

 

1.6

 

 

Automotive service

 

1.9

 

 

2.1

 

 

3.1

 

 

3.7

 

 

4.7

 

 

4.8

 

 

4.8

 

 

Automotive tire services

 

3.3

 

 

3.6

 

 

4.7

 

 

5.6

 

 

6.4

 

 

6.9

 

 

6.7

 

 

Book stores

 

*

 

 

*

 

 

0.1

 

 

0.1

 

 

0.1

 

 

0.2

 

 

0.2

 

 

Child care

 

2.5

 

 

2.8

 

 

4.5

 

 

5.2

 

 

6.5

 

 

7.3

 

 

7.6

 

 

Consumer electronics

 

0.3

 

 

0.3

 

 

0.5

 

 

0.5

 

 

0.6

 

 

0.7

 

 

0.8

 

 

Convenience stores

 

10.6

 

 

11.2

 

 

16.3

 

 

18.5

 

 

17.1

 

 

16.9

 

 

15.8

 

 

Crafts and novelties

 

0.5

 

 

0.5

 

 

0.3

 

 

0.2

 

 

0.3

 

 

0.3

 

 

0.3

 

 

Dollar stores

 

7.1

 

 

6.2

 

 

2.2

 

 

-

 

 

-

 

 

-

 

 

-

 

 

Drug stores

 

9.7

 

 

8.1

 

 

3.5

 

 

3.8

 

 

4.1

 

 

4.3

 

 

4.1

 

 

Education

 

0.4

 

 

0.4

 

 

0.7

 

 

0.7

 

 

0.8

 

 

0.9

 

 

0.8

 

 

Entertainment

 

0.6

 

 

0.6

 

 

0.9

 

 

1.0

 

 

1.2

 

 

1.3

 

 

1.2

 

 

Equipment services

 

0.1

 

 

0.1

 

 

0.1

 

 

0.2

 

 

0.2

 

 

0.2

 

 

0.2

 

 

Financial services

 

1.4

 

 

1.5

 

 

0.2

 

 

0.2

 

 

0.2

 

 

0.2

 

 

0.2

 

 

General merchandise

 

1.2

 

 

1.1

 

 

0.6

 

 

0.6

 

 

0.8

 

 

0.8

 

 

0.8

 

 

Grocery stores

 

2.8

 

 

2.9

 

 

3.7

 

 

1.6

 

 

0.9

 

 

0.7

 

 

0.7

 

 

Health and fitness

 

6.8

 

 

6.3

 

 

6.8

 

 

6.4

 

 

6.9

 

 

5.9

 

 

5.6

 

 

Health care

 

1.0

 

 

1.1

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

Home furnishings

 

0.8

 

 

0.9

 

 

1.0

 

 

1.1

 

 

1.3

 

 

1.3

 

 

2.4

 

 

Home improvement

 

1.5

 

 

1.6

 

 

1.5

 

 

1.7

 

 

2.0

 

 

2.2

 

 

2.1

 

 

Jewelry

 

0.1

 

 

0.1

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

Motor vehicle dealerships

 

1.6

 

 

1.6

 

 

2.1

 

 

2.2

 

 

2.6

 

 

2.7

 

 

3.2

 

 

Office supplies

 

0.4

 

 

0.5

 

 

0.8

 

 

0.9

 

 

0.9

 

 

1.0

 

 

1.0

 

 

Pet supplies and services

 

0.8

 

 

0.8

 

 

0.6

 

 

0.7

 

 

0.9

 

 

0.9

 

 

0.8

 

 

Restaurants - casual dining

 

4.7

 

 

5.1

 

 

7.3

 

 

10.9

 

 

13.4

 

 

13.7

 

 

14.3

 

 

Restaurants - quick service

 

4.3

 

 

4.4

 

 

5.9

 

 

6.6

 

 

7.7

 

 

8.3

 

 

8.2

 

 

Shoe stores

 

0.1

 

 

0.1

 

 

0.1

 

 

0.2

 

 

0.1

 

 

-

 

 

-

 

 

Sporting goods

 

1.6

 

 

1.7

 

 

2.5

 

 

2.7

 

 

2.7

 

 

2.6

 

 

2.3

 

 

Theaters

 

5.6

 

 

6.2

 

 

9.4

 

 

8.8

 

 

8.9

 

 

9.2

 

 

9.0

 

 

Transportation services

 

0.1

 

 

0.1

 

 

0.2

 

 

0.2

 

 

0.2

 

 

0.2

 

 

0.2

 

 

Wholesale clubs

 

4.3

 

 

3.9

 

 

3.2

 

 

0.7

 

 

-

 

 

-

 

 

-

 

 

Other

 

*

 

 

0.1

 

 

0.1

 

 

0.1

 

 

0.3

 

 

1.1

 

 

1.2

 

 

Retail industries

 

80.0

%

 

79.8

%

 

86.7

%

 

88.6

%

 

95.4

%

 

98.3

%

 

98.2

%

 

 

12



 

Industry Diversification (continued)

 

 

 

Percentage of Rental Revenue(1)

 

 

For the

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

For the Years Ended

 

 

December 31,

 

Dec 31,

 Dec 31,

 Dec 31,

 Dec 31,

 Dec 31,

 Dec 31,

 

 

2013

 

2013

 2012

 2011

 2010

 2009

 2008

Non-retail industries

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aerospace

 

1.3

 

1.2

 

0.9

 

0.5

 

-

 

-

 

-

 

Beverages

 

3.0

 

3.3

 

5.1

 

5.6

 

3.0

 

-

 

-

 

Consumer appliances

 

0.6

 

0.6

 

0.1

 

-

 

-

 

-

 

-

 

Consumer goods

 

1.0

 

1.0

 

0.1

 

-

 

-

 

-

 

-

 

Crafts and novelties

 

0.1

 

0.1

 

-

 

-

 

-

 

-

 

-

 

Diversified industrial

 

0.2

 

0.2

 

0.1

 

-

 

-

 

-

 

-

 

Electric Utilities

 

0.1

 

*

 

-

 

-

 

-

 

-

 

-

 

Equipment services

 

0.5

 

0.4

 

0.3

 

0.2

 

-

 

-

 

-

 

Financial services

 

0.5

 

0.5

 

0.4

 

0.3

 

-

 

-

 

-

 

Food processing

 

1.4

 

1.5

 

1.3

 

0.7

 

-

 

-

 

-

 

Government services

 

1.3

 

1.4

 

0.1

 

0.1

 

0.1

 

0.1

 

-

 

Health care

 

0.8

 

0.8

 

*

 

*

 

-

 

-

 

-

 

Home furnishings

 

0.2

 

0.2

 

-

 

-

 

-

 

-

 

-

 

Insurance

 

0.1

 

0.1

 

*

 

-

 

-

 

-

 

-

 

Machinery

 

0.2

 

0.2

 

0.1

 

-

 

-

 

-

 

-

 

Other manufacturing

 

0.6

 

0.6

 

-

 

-

 

-

 

-

 

-

 

Packaging

 

0.9

 

0.9

 

0.7

 

0.4

 

-

 

-

 

-

 

Paper

 

0.1

 

0.2

 

0.1

 

0.1

 

-

 

-

 

-

 

Shoe stores

 

0.8

 

0.9

 

-

 

-

 

-

 

-

 

-

 

Telecommunications

 

0.6

 

0.7

 

0.8

 

0.7

 

-

 

-

 

-

 

Transportation services

 

5.3

 

5.3

 

2.2

 

1.6

 

-

 

-

 

-

 

Other

 

0.4

 

0.1

 

1.0

 

1.2

 

1.5

 

1.6

 

1.8

 

Non-retail industries

 

20.0%

 

20.2

%

13.3

%

11.4

%

4.6

%

1.7

%

1.8

%

Totals

 

100.0%

 

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

 

*          Less than 0.1%

 

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

 

13



 

Lease Expirations

 

The following table sets forth certain information regarding Realty Income’s property portfolio regarding the timing of the lease term expirations (excluding rights to extend a lease at the option of the tenant) on our 3,807 net leased, single-tenant properties as of December 31, 2013 (dollars in thousands):

 

 

Total Portfolio

 

Initial Expirations(3)

 

Subsequent Expirations(4)

 

 

 

 

 

 

 

Rental

 

 

 

 

 

Rental

 

 

 

 

 

Rental

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

Revenue

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

for the

 

 

 

 

 

for the

 

 

 

 

 

for the

 

 

 

 

 

 

 

 

 

Quarter

 

% of

 

 

 

Quarter

 

% of

 

 

 

Quarter

 

% of

 

 

 

Number

 

Approx.

 

Ended

 

Total

 

Number

 

Ended

 

Total

 

Number

 

Ended

 

Total

 

 

 

of Leases

 

Leasable

 

Dec 31,

 

Rental

 

of Leases

 

Dec 31,

 

Rental

 

of Leases

 

Dec 31,

 

Rental

 

Year

 

Expiring

(1)

Sq. Feet

 

2013

(2)

Revenue

 

Expiring

 

2013

 

Revenue

 

Expiring

 

2013

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

157

 

1,116,500

 

$

4,005

 

2.0

%

56

 

$

1,960

 

1.0

%

101

 

$

2,045

 

1.0

%

2015

 

174

 

961,500

 

4,111

 

2.0

 

67

 

1,808

 

0.9

 

107

 

2,303

 

1.1

 

2016

 

200

 

1,214,900

 

4,618

 

2.3

 

121

 

2,807

 

1.4

 

79

 

1,811

 

0.9

 

2017

 

177

 

2,038,400

 

6,058

 

3.0

 

46

 

3,052

 

1.5

 

131

 

3,006

 

1.5

 

2018

 

278

 

3,621,900

 

11,276

 

5.6

 

162

 

7,920

 

3.9

 

116

 

3,356

 

1.7

 

2019

 

193

 

3,017,500

 

10,496

 

5.1

 

161

 

9,599

 

4.7

 

32

 

897

 

0.4

 

2020

 

110

 

3,404,600

 

8,844

 

4.4

 

99

 

8,468

 

4.2

 

11

 

376

 

0.2

 

2021

 

189

 

5,314,200

 

13,616

 

6.7

 

181

 

13,105

 

6.4

 

8

 

511

 

0.3

 

2022

 

224

 

7,270,400

 

14,508

 

7.2

 

216

 

14,273

 

7.1

 

8

 

235

 

0.1

 

2023

 

355

 

6,133,200

 

19,731

 

9.7

 

342

 

19,076

 

9.4

 

13

 

655

 

0.3

 

2024

 

140

 

2,105,200

 

7,016

 

3.5

 

140

 

7,016

 

3.5

 

-

 

-

 

-

 

2025

 

288

 

3,734,800

 

16,633

 

8.3

 

283

 

16,510

 

8.2

 

5

 

123

 

0.1

 

2026

 

231

 

3,396,200

 

12,133

 

6.0

 

228

 

12,049

 

6.0

 

3

 

84

 

*

 

2027

 

443

 

4,177,700

 

14,591

 

7.2

 

441

 

14,551

 

7.2

 

2

 

40

 

*

 

2028

 

283

 

5,758,000

 

15,911

 

7.8

 

281

 

15,858

 

7.8

 

2

 

53

 

*

 

2029 - 2043

 

365

 

7,951,300

 

38,832

 

19.2

 

358

 

38,652

 

19.1

 

7

 

180

 

0.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Totals

 

3,807

 

61,216,300

 

$

202,379

 

100.0

%

3,182

 

$

186,704

 

92.3

%

625

 

$

15,675

 

7.7

%

 

*          Less than 0.1%

 

(1)       Excludes 19 multi-tenant properties and 70 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 $279 from properties reclassified as discontinued operations and excludes revenue of $2,705 from 19 multi-tenant properties and from 70 vacant and unleased properties at December 31, 2013.  Excludes revenue of $23 from properties owned by Crest.

 

(3)       Represents leases to the initial tenant of the property that are expiring for the first time.

 

(4)       Represents lease expirations on properties in the portfolio, which have previously been renewed, extended or re-tenanted.

 

14



 

Geographic Diversification

 

The following table sets forth certain state-by-state information regarding Realty Income’s property portfolio as of December 31, 2013 (dollars in thousands):

 

 

 

 

 

 

 

Approximate

 

Rental Revenue for

 

Percentage of

 

 

 

Number of

 

Percent

 

Leasable

 

the Quarter Ended

 

Rental

 

State

 

Properties

 

Leased

 

Square Feet

 

December 31, 2013

(1)

Revenue

 

Alabama

 

104

 

97

%

791,800

 

$

2,846

 

1.4

%

Alaska

 

2

 

100

 

128,500

 

307

 

0.1

 

Arizona

 

110

 

96

 

1,187,400

 

5,510

 

2.7

 

Arkansas

 

36

 

94

 

619,200

 

1,180

 

0.6

 

California

 

161

 

99

 

4,705,200

 

22,672

 

11.1

 

Colorado

 

69

 

99

 

792,100

 

2,969

 

1.4

 

Connecticut

 

22

 

95

 

462,100

 

2,071

 

1.0

 

Delaware

 

16

 

100

 

29,500

 

418

 

0.2

 

Florida

 

279

 

99

 

2,951,000

 

12,029

 

5.9

 

Georgia

 

209

 

97

 

2,689,400

 

8,368

 

4.1

 

Hawaii

 

--

 

--

 

--

 

--

 

--

 

Idaho

 

13

 

100

 

91,800

 

456

 

0.2

 

Illinois

 

155

 

100

 

4,215,700

 

12,244

 

6.0

 

Indiana

 

100

 

98

 

1,055,400

 

4,954

 

2.4

 

Iowa

 

35

 

97

 

2,751,700

 

3,301

 

1.6

 

Kansas

 

76

 

99

 

1,583,300

 

3,370

 

1.6

 

Kentucky

 

45

 

98

 

808,700

 

2,920

 

1.4

 

Louisiana

 

75

 

97

 

836,700

 

2,456

 

1.2

 

Maine

 

9

 

100

 

126,400

 

837

 

0.4

 

Maryland

 

32

 

100

 

654,100

 

3,711

 

1.8

 

Massachusetts

 

82

 

96

 

728,200

 

3,205

 

1.6

 

Michigan

 

103

 

98

 

938,600

 

3,229

 

1.6

 

Minnesota

 

155

 

100

 

1,153,300

 

7,416

 

3.6

 

Mississippi

 

96

 

97

 

1,307,200

 

3,177

 

1.5

 

Missouri

 

122

 

98

 

2,307,000

 

7,343

 

3.6

 

Montana

 

2

 

50

 

30,000

 

13

 

*

 

Nebraska

 

30

 

100

 

660,200

 

1,296

 

0.6

 

Nevada

 

22

 

100

 

413,000

 

1,279

 

0.6

 

New Hampshire

 

18

 

100

 

290,900

 

1,224

 

0.6

 

New Jersey

 

62

 

98

 

452,700

 

2,608

 

1.3

 

New Mexico

 

24

 

100

 

184,600

 

589

 

0.3

 

New York

 

81

 

95

 

2,007,900

 

10,153

 

5.0

 

North Carolina

 

129

 

99

 

1,259,300

 

4,795

 

2.3

 

North Dakota

 

7

 

100

 

66,000

 

138

 

0.1

 

Ohio

 

200

 

98

 

4,795,700

 

11,294

 

5.5

 

Oklahoma

 

112

 

100

 

1,467,200

 

3,601

 

1.8

 

Oregon

 

24

 

100

 

455,200

 

1,620

 

0.8

 

Pennsylvania

 

147

 

99

 

1,745,400

 

6,957

 

3.4

 

Rhode Island

 

3

 

100

 

21,300

 

107

 

*

 

South Carolina

 

127

 

98

 

897,500

 

4,140

 

2.0

 

South Dakota

 

11

 

100

 

133,500

 

244

 

0.1

 

Tennessee

 

156

 

97

 

2,653,200

 

5,145

 

2.5

 

Texas

 

393

 

98

 

6,760,200

 

19,493

 

9.5

 

Utah

 

13

 

100

 

749,000

 

1,326

 

0.6

 

Vermont

 

6

 

100

 

100,700

 

522

 

0.3

 

Virginia

 

127

 

97

 

2,531,900

 

6,465

 

3.2

 

Washington

 

38

 

100

 

415,300

 

1,609

 

0.8

 

West Virginia

 

12

 

100

 

261,200

 

883

 

0.4

 

Wisconsin

 

39

 

95

 

1,329,300

 

2,382

 

1.2

 

Wyoming

 

3

 

100

 

21,100

 

63

 

*

 

Puerto Rico

 

4

 

100

 

28,300

 

149

 

0.1

 

Totals\Average

 

3,896

 

98

%

62,644,900

 

$

205,084

 

100.0

%

 

*  Less than 0.1%

 

(1)    Includes rental revenue for all properties owned by Realty Income at December 31, 2013, including revenue from properties reclassified as discontinued operations of $279.  Excludes revenue of $23 from properties owned by Crest.

 

15