8-KRegulation FDExhibits & Filings

REALTY INCOME CORP 8-K Report, Regulation FD Disclosure (Jan 18, 2012)

Filed January 18, 2012For Securities:O

Summary

Realty Income Corporation (O) filed an 8-K on January 18, 2012, reporting on significant 2011 investments and providing updates on two key tenants facing bankruptcy proceedings. In 2011, the Company successfully invested approximately $1 billion in 164 properties across 26 states, demonstrating strong acquisition activity. These new properties were fully leased with an average initial yield of approximately 7.8% to a diversified portfolio of 22 tenants across 17 industries. The report also addresses the Chapter 11 bankruptcies of two tenants: Friendly Ice Cream Corporation and Buffets Holdings, Inc. Friendly's accepted most of its leases, with an estimated recovery of 80% of annualized rent. However, Buffets has filed for Chapter 11, and the Company anticipates rejecting a small portion of leases, with an estimated recovery of 65% of annualized rent from Buffets. Realty Income has updated its earnings guidance to reflect the potential impact of these bankruptcies and possible others, estimating a 2% to 3% impact on portfolio rents.

Key Highlights

  • 1Realty Income invested approximately $1 billion in 164 properties across 26 states during 2011.
  • 2The newly acquired properties are 100% leased to 22 tenants in 17 industries with an average initial lease yield of 7.8%.
  • 3Tenant Friendly Ice Cream Corporation is emerging from Chapter 11 bankruptcy, with Realty Income expecting to recover approximately 80% of annualized rent.
  • 4Tenant Buffets Holdings, Inc. has filed for Chapter 11 bankruptcy.
  • 5Realty Income anticipates rejecting 7 of 86 leases with Buffets, representing approximately $1.8 million in annualized rent.
  • 6The Company estimates an overall recovery of approximately 65% of annualized rent from Buffets post-reorganization.
  • 7Realty Income has updated its 2011 and 2012 earnings guidance to reflect potential impacts from tenant bankruptcies, estimating a 2% to 3% effect on portfolio rents.

Frequently Asked Questions

Realty Income invested approximately $1 billion in 164 properties across 26 states during 2011.

Friendly Ice Cream Corporation is emerging from Chapter 11 bankruptcy. Realty Income accepted 102 of its 121 leases and rejected 19. The Company estimates it will recover approximately 80% of the $16.1 million in annualized rent previously paid by Friendly's.

Buffets Holdings, Inc. has filed for Chapter 11 bankruptcy. The Company anticipates the rejection of 7 of 86 leases, representing approximately $1.8 million in annualized rent. Realty Income estimates an overall recovery of approximately 65% of the $18.2 million in annualized rent previously paid by Buffets, assuming re-lease of rejected properties and rent concessions on others.

Realty Income has updated its 2011 and 2012 earnings guidance to incorporate the anticipated impact of these bankruptcies, as well as potential filings by other tenants. The company estimates this impact could affect approximately 2% to 3% of its total portfolio rents.