10-QPeriod: Q2 FY2017

REALTY INCOME CORP Quarterly Report for Q2 Ended Jun 30, 2017

Filed July 27, 2017For Securities:O

Summary

Realty Income Corporation (O) reported its financial results for the quarter and six months ended June 30, 2017. The company demonstrated solid performance with increases in rental revenue and net income attributable to common stockholders. Acquisitions continued to drive portfolio growth, with significant investments made in new properties and those under development. The company also successfully managed its capital structure, including issuing new debt and shares, and redeeming preferred stock. Key operational highlights include a high occupancy rate of 98.5% and continued growth in Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO). Realty Income continues to maintain its commitment to monthly dividends, demonstrating consistent increases and a strong dividend yield. The company's investment strategy remains focused on acquiring high-quality, long-term net-leased commercial properties across a diversified tenant and industry base.

Financial Highlights

29 data points
Beta

Revenue

$300.17M

Net Income

$81.14M

27.0% Net Margin

EPS (Diluted)

$0.30

Total Assets

$13.57B

Cash & Equivalents

$10.95M

Free Cash Flow

$245.82M

Financial Statements
Beta
Revenue$300.17M
Interest Expense$63.68M
Net Income$81.14M
EPS (Basic)$0.30
Shares Outstanding (Basic)272.59M
Shares Outstanding (Diluted)273.10M

Key Highlights

  • 1Total revenue increased by 10.7% year-over-year for the second quarter to $300.2 million, and by 11.0% for the six-month period to $598.2 million, driven by property acquisitions.
  • 2Net income available to common stockholders rose by 17.5% to $81.1 million ($0.30 per diluted share) for the second quarter, and by 15.2% to $152.7 million ($0.57 per diluted share) for the six-month period.
  • 3Funds From Operations (FFO) increased by 15.1% to $203.3 million ($0.75 per diluted share) for the second quarter and by 12.4% to $390.5 million ($1.46 per diluted share) for the six-month period.
  • 4The company invested $691.9 million in 126 new properties and properties under development/expansion during the first six months of 2017, reflecting continued portfolio growth.
  • 5Realty Income maintained a high portfolio occupancy rate of 98.5% as of June 30, 2017.
  • 6The company redeemed all outstanding shares of its 6.625% Monthly Income Class F Preferred Stock in April 2017, incurring a $13.4 million charge for original issuance costs.
  • 7In March 2017, Realty Income successfully issued $700 million in new senior unsecured notes (4.650% due 2047 and 4.125% due 2026) to repay borrowings and fund investment opportunities.

Frequently Asked Questions

During the first six months of 2017, Realty Income invested $691.9 million in 126 new properties and properties under development or expansion. These acquisitions had an initial weighted average contractual lease rate of 6.3%, were located across 30 states, and maintained a 100% leased status with a weighted average lease term of 14.8 years. The company focused on retail (95.1%) and industrial (4.9%) property types.

Realty Income raised approximately $705.2 million in net proceeds from the issuance of new senior unsecured notes in March 2017, which were used to repay credit facility borrowings and fund investment opportunities. Additionally, the company raised $704.9 million in net proceeds from issuing common stock in March 2017 for similar purposes. The company also redeemed all outstanding Class F preferred stock in April 2017.

Realty Income continued its policy of paying monthly dividends, increasing the dividend four times during the first half of 2017. Dividends paid per share increased by 6.1% for the first six months of 2017 compared to the same period in 2016. The monthly dividend of $0.2115 per share represented an annualized yield of approximately 4.6% based on the June 30, 2017 stock price.

As of June 30, 2017, Realty Income maintained a high occupancy rate of 98.5%, with 4,952 out of 5,028 properties leased. The portfolio was diversified across 250 tenants in 47 industries and located in 49 states and Puerto Rico, with no single tenant accounting for more than 6.7% of total rental revenue for the quarter.