10-QPeriod: Q2 FY2012

REALTY INCOME CORP Quarterly Report for Q2 Ended Jun 30, 2012

Filed July 26, 2012For Securities:O

Summary

Realty Income Corporation's (O) second quarter and first six months of 2012 results demonstrate continued growth in rental revenue driven by strategic property acquisitions, alongside a stable operational performance. The company's total assets grew to $4.58 billion by June 30, 2012, from $4.42 billion at the end of 2011, reflecting successful expansion of its real estate portfolio. Rental revenue increased by approximately 13.4% and 15.8% for the respective periods, primarily due to acquisitions made in 2011 and 2012. Financially, Realty Income maintained a strong liquidity position, with its new $1 billion unsecured acquisition credit facility providing significant borrowing capacity. The company also continued its long-standing practice of monthly dividend payments to common stockholders, with a slight increase observed in dividend per share. While net income available to common stockholders saw a modest decrease compared to the prior year, this was largely influenced by a one-time charge related to preferred stock redemption and a shift in gains from property sales. Key performance indicators like Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) showed positive year-over-year growth, indicating the operational health and cash-generating capabilities of the company's diversified real estate portfolio.

Financial Highlights

23 data points
Beta

Net Income

$43.41M

EPS (Diluted)

$0.25

Total Assets

$4.58B

Free Cash Flow

$105.61M

Financial Statements
Beta
Operating Income$75.11M
Interest Expense$28.81M
Net Income$43.41M
EPS (Basic)$0.25
EPS (Diluted)$0.25
Shares Outstanding (Basic)132.59M
Shares Outstanding (Diluted)132.83M

Key Highlights

  • 1Total assets increased to $4.58 billion as of June 30, 2012, up from $4.42 billion at the end of 2011, indicating portfolio expansion.
  • 2Rental revenue for the three and six months ended June 30, 2012, increased by 13.4% and 15.8%, respectively, driven by property acquisitions.
  • 3The company successfully replaced its prior credit facility with a new $1 billion unsecured acquisition credit facility, enhancing financial flexibility.
  • 4Funds From Operations (FFO) available to common stockholders increased by 7.1% and 7.0% for the respective three and six-month periods compared to the prior year.
  • 5Adjusted Funds From Operations (AFFO) available to common stockholders also showed positive growth, increasing by 6.6% and 10.1% for the respective three and six-month periods.
  • 6Occupancy rate remained strong at 97.3% as of June 30, 2012, with 2,687 out of 2,762 properties leased.
  • 7Realty Income continued its policy of monthly common stock dividends, with a slight increase in the per-share amount, reflecting consistent cash flow generation.

Frequently Asked Questions

Realty Income demonstrated solid performance with increasing rental revenue driven by property acquisitions. Total assets grew, and key operational metrics like FFO and AFFO showed positive year-over-year growth. While net income available to common stockholders saw a slight decrease, this was influenced by one-time charges and the timing of property sales.

The company secured a new $1 billion unsecured acquisition credit facility, replacing its previous one, which enhances its borrowing capacity and financial flexibility. Realty Income also maintained a conservative capital structure, with total outstanding borrowings representing approximately 24.3% of its total market capitalization. The company has access to significant liquidity through its credit facility and operating cash flows.

Realty Income continues to actively pursue acquisitions, with a 2012 target of $650 million in new property acquisitions, though the timing of remaining acquisitions is weighted towards the end of the year. The company also plans to increase its disposition efforts to enhance portfolio quality and anticipates selling properties from which it expects to receive between $25 million and $70 million in proceeds over the next 12 months.

Realty Income continued its commitment to paying monthly dividends to common stockholders, a policy it has maintained for 43 years. The dividend per share saw a slight increase, and the company expects its funds from operations to be sufficient to support current and future cash distributions, adhering to REIT requirements for distributing at least 90% of taxable income.