10-QPeriod: Q1 FY2020

REALTY INCOME CORP Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 5, 2020For Securities:O

Summary

Realty Income Corporation (O) reported its first quarter 2020 results, showcasing continued revenue growth and operational stability despite the emerging challenges of the COVID-19 pandemic. The company demonstrated resilience with an increase in total revenue to $414.3 million, up 16.9% year-over-year, driven by strategic property acquisitions and steady rental income. Net income available to common stockholders rose by 32.4% to $146.8 million, translating to diluted EPS of $0.44. Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) also saw healthy growth, indicating strong underlying operational performance. While the company acknowledged the potential impacts of COVID-19 on its tenants and the broader economy, it maintained a strong liquidity position, ending the quarter with $41.8 million in cash and cash equivalents and a significant $2.4 billion available on its revolving credit facility. Notably, in a proactive measure due to the pandemic, Realty Income borrowed an additional $1.2 billion in April 2020 to bolster its cash reserves. Rent collections remained robust, with 82.9% of contractual rent collected for April 2020, highlighting the resilience of its diversified tenant base and the mission-critical nature of many of its properties.

Financial Highlights

31 data points
Beta

Revenue

$414.34M

Net Income

$146.83M

35.4% Net Margin

EPS (Diluted)

$0.44

Total Assets

$18.80B

Cash & Equivalents

$41.80M

Free Cash Flow

$265.22M

Financial Statements
Beta
Revenue$414.34M
Interest Expense$75.92M
Net Income$146.83M
EPS (Basic)$0.44
EPS (Diluted)$0.44
Shares Outstanding (Basic)336.62M
Shares Outstanding (Diluted)336.98M

Key Highlights

  • 1Total revenue increased by 16.9% to $414.3 million for the three months ended March 31, 2020.
  • 2Net income available to common stockholders grew by 32.4% to $146.8 million, resulting in diluted EPS of $0.44.
  • 3FFO available to common stockholders increased by 12.8% to $277.1 million, with FFO per share at $0.82.
  • 4AFFO available to common stockholders increased by 19.5% to $297.2 million, with AFFO per share at $0.88.
  • 5The company acquired 58 properties for $483.9 million during the first quarter of 2020.
  • 6As of March 31, 2020, the occupancy rate was 98.5%, with 6,428 properties leased out of 6,525.
  • 7Despite early impacts of COVID-19, April 2020 rent collections were 82.9% of contractual rent across the portfolio.

Frequently Asked Questions

In the first quarter of 2020, Realty Income demonstrated strong financial performance with a 16.9% increase in total revenue to $414.3 million. Net income available to common stockholders rose 32.4% to $146.8 million, leading to diluted EPS of $0.44. Both FFO and AFFO showed significant year-over-year growth, indicating robust operational performance.

Realty Income acknowledges the negative impact of the COVID-19 pandemic on the economy and its tenants. While the company stated that as of March 31, 2020, the pandemic had not materially impacted its consolidated financial statements, it took a proactive measure by borrowing an additional $1.2 billion in April 2020 to increase its cash position. Rent collections for April 2020 were 82.9% of contractual rent, and the company is actively engaging with tenants requesting rent deferrals.

The company maintained a strong liquidity position, ending the quarter with $41.8 million in cash and cash equivalents and $2.4 billion available under its revolving credit facility. To further strengthen its financial position amidst the pandemic uncertainty, Realty Income borrowed $1.2 billion in April 2020. The company's capital strategy historically relies on common stock, preferred stock, and long-term notes/bonds, with debt comprising approximately 30.6% of its total market capitalization as of March 31, 2020.

Revenue growth was primarily driven by the acquisition of 58 new properties for $483.9 million in the first quarter of 2020, as well as continued rental income from previously acquired properties. The company's diversified portfolio across 51 industries and 49 U.S. states plus Puerto Rico and the UK contributed to stable rental revenue.