10-KPeriod: FY2009

REALTY INCOME CORP Annual Report, Year Ended Dec 31, 2009

Filed February 11, 2010For Securities:O

Summary

Realty Income Corporation's 2009 10-K filing highlights a resilient business model in the retail real estate sector, particularly amidst the economic conditions of that year. The company continued its consistent strategy of acquiring and owning freestanding, single-tenant retail properties leased under long-term, net-lease agreements. Despite a slight decrease in net income available to common stockholders compared to 2008, Funds From Operations (FFO) per share saw a modest increase, underscoring the stable cash flow generation from its diversified portfolio. The company demonstrated its commitment to its 'Monthly Dividend Company' brand by continuing its policy of monthly distributions, with a modest increase in January 2010, marking its 49th consecutive quarterly increase. While acquisitions slowed in 2008 and 2009 due to market conditions, Realty Income strategically re-entered the acquisition market in late 2009, sensing more attractive opportunities. The company maintained a conservative capital structure with a debt-to-market capitalization ratio of approximately 30.8% and strong credit ratings, positioning it well for future growth and financial stability.

Financial Highlights

22 data points
Beta

Revenue

$322.55M

Net Income

$131.13M

40.7% Net Margin

Total Assets

$2.91B

Free Cash Flow

$226.71M

Financial Statements
Beta
Revenue$322.55M
Operating Income$116.08M
Interest Expense$85.53M
Net Income$131.13M
Shares Outstanding (Basic)103.58M
Shares Outstanding (Diluted)103.58M

Key Highlights

  • 1Consistent 40-year policy of paying monthly dividends, with the 49th consecutive quarterly increase in January 2010.
  • 2Diversified portfolio of 2,339 retail properties across 49 states, leased to 118 retail chains in 30 industries, with an occupancy rate of 96.8% as of December 31, 2009.
  • 3Primarily focuses on acquiring single-tenant, net-leased retail properties with long-term leases (average remaining lease term of 11.2 years for single-tenant properties).
  • 4Acquired 16 new properties for $57.9 million in 2009, strategically resuming acquisition activity in late 2009 after a slower pace in 2008.
  • 5Maintained a conservative capital structure with total debt of $1.355 billion representing approximately 30.8% of market capitalization.
  • 6Generated $190.4 million in Funds From Operations (FFO) in 2009, an increase of 2.6% from 2008, with FFO per diluted share of $1.84.
  • 7Held investment grade corporate credit ratings from Fitch, Moody's, and Standard & Poor's, with stable outlooks.

Frequently Asked Questions

Realty Income primarily operates as an equity real estate investment trust (REIT) by acquiring and owning freestanding, single-tenant retail properties. Revenue is generated from rental income derived from long-term, net-lease agreements with regional and national retail chains. The net-lease structure typically obligates tenants to pay property operating expenses such as taxes, insurance, and maintenance.

As of December 31, 2009, Realty Income owned 2,339 retail properties with an occupancy rate of 96.8%, meaning 2,264 properties were occupied and 75 were available for lease. The portfolio is diversified across 118 retail chains and 30 industries, located in 49 states. For the 2,254 single-tenant net-leased properties, the weighted average remaining lease term was approximately 11.2 years, indicating stability and predictability of future rental income.

Realty Income made fewer acquisitions in 2008 and 2009, prioritizing capital preservation and liquidity due to market conditions. However, the company strategically re-entered the acquisition market in late 2009, believing market conditions had become more attractive. They invested $57.9 million in 16 new properties during 2009, acquiring them on long-term net leases with an initial weighted average contractual lease rate of 9.7%.

Realty Income maintains a conservative capital structure, with total debt of $1.355 billion representing approximately 30.8% of its total market capitalization as of December 31, 2009. The company holds investment-grade credit ratings from major agencies (Fitch, Moody's, S&P) with stable outlooks. They have a $355 million unsecured credit facility, with minimal borrowings outstanding at year-end 2009, and have no mortgage debt on their properties.