10-QPeriod: Q2 FY2019

REALTY INCOME CORP Quarterly Report for Q2 Ended Jun 30, 2019

Filed August 6, 2019For Securities:O

Summary

Realty Income Corporation (O) reported its financial results for the quarter and six months ended June 30, 2019. The company demonstrated solid operational performance with continued growth in rental revenue, driven by strategic acquisitions and a high occupancy rate of 98.3% across its diversified portfolio of 5,951 properties. Financially, Realty Income showed an increase in Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) for both the quarter and year-to-date periods compared to 2018, indicating operational efficiency and strong cash flow generation. The company also successfully raised substantial capital through stock offerings and debt issuances, strengthening its balance sheet and funding future growth initiatives. Realty Income continued its track record of increasing monthly dividends, further reinforcing its commitment to shareholder returns.

Financial Highlights

30 data points
Beta

Revenue

$365.45M

Net Income

$95.42M

26.1% Net Margin

EPS (Diluted)

$0.31

Total Assets

$16.75B

Cash & Equivalents

$27.14M

Free Cash Flow

$277.64M

Financial Statements
Beta
Revenue$365.45M
Interest Expense$72.49M
Net Income$95.42M
EPS (Basic)$0.31
Shares Outstanding (Basic)311.03M
Shares Outstanding (Diluted)311.32M

Key Highlights

  • 1Total revenue increased to $365.5 million for the three months ended June 30, 2019, up from $328.9 million in the prior year period.
  • 2Funds From Operations (FFO) increased by 11.2% to $251.5 million for Q2 2019 compared to Q2 2018, with diluted FFO per share rising to $0.81 from $0.79.
  • 3Adjusted Funds From Operations (AFFO) saw a similar increase of 11.9% to $253.9 million for Q2 2019, with diluted AFFO per share up to $0.82 from $0.80.
  • 4The company acquired 90 properties for $1.08 billion in Q2 2019, including 12 properties in the U.K. for $549.2 million, significantly expanding its portfolio.
  • 5Realty Income raised approximately $845.1 million in net proceeds from an overnight underwritten public offering of common stock in May 2019.
  • 6The occupancy rate remained strong at 98.3% as of June 30, 2019, with 5,849 out of 5,951 properties leased.
  • 7The company maintained a conservative capital structure, with total outstanding borrowings of $7.1 billion representing approximately 24.4% of its total market capitalization.

Frequently Asked Questions

For the three months ended June 30, 2019, total revenue was $365.5 million, an increase from $328.9 million in the same period of 2018. Net income available to common stockholders was $95.2 million ($0.31 per diluted share), a slight decrease from $96.4 million ($0.34 per diluted share) in Q2 2018. For the six months ended June 30, 2019, total revenue was $719.8 million, up from $647.2 million in 2018. Net income available to common stockholders increased to $206.1 million ($0.67 per diluted share) from $179.5 million ($0.63 per diluted share) in the prior year period. Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) showed solid growth in both periods.

Realty Income significantly expanded its portfolio through acquisitions. In the second quarter of 2019, the company acquired 90 properties for $1.08 billion, including a substantial investment of $549.2 million in 12 properties in the U.K. For the first six months of 2019, acquisitions totaled 187 properties for $1.59 billion, again including the U.K. investment.

As of June 30, 2019, Realty Income maintained a high occupancy rate of 98.3%, with 5,849 out of its 5,951 properties leased. The portfolio is diversified across 49 states, Puerto Rico, and the U.K., leased to 265 different commercial tenants in 49 industries. The weighted average remaining lease term was approximately 9.4 years.

The company actively managed its capital structure. In May 2019, it raised approximately $845.1 million through a stock offering. It also issued new notes, including £315 million in 2.730% senior unsecured notes due 2034 and $500 million in 3.250% senior unsecured notes due 2029. At June 30, 2019, total outstanding borrowings were $7.1 billion, representing a conservative 24.4% of the total market capitalization, and the company was in compliance with its debt covenants.