ESCONDIDO, Calif., Feb. 2 /PRNewswire/ -- Realty Income Corporation
(Realty Income), "The Monthly Dividend Company," (NYSE: O) today announced
operating results for the fourth quarter and year ended December 31, 1998.
For the year ended December 31, 1998, Funds from Operations (FFO) increased
19.8% to $62.8 million from $52.4 million for the same period one year ago.
On a diluted per share basis, FFO increased 6.3% to $2.36 per share in 1998
compared to $2.22 per share for the same period in 1997. Industry analysts
generally consider FFO, as defined by the National Association of Real Estate
Investment Trusts (NAREIT), to be an appropriate measure of performance for an
equity REIT. Net income for the year ended December 31, 1998 rose 18.7% to
$41.3 million from $34.8 million for the same period in 1997. On a diluted
per share basis net income for the year ended December 31, 1998 rose 4.7% to
$1.55 per share as compared to $1.48 per share for the same period in 1997.
1998 HIGHLIGHTS:
* Total investment in 1998 of $193.4 million in 149 retail properties
located in 38 states
* 35.9% increase in 1998 acquisition dollar volume and 55.2% increase in
the number of properties acquired
* FFO increased 19.8% to $62.8 million in 1998
* FFO per share increased by 6.3% to $2.36 per share in 1998
* Dividends per share increased 6.3%, from $1.92 in January 1998 to $2.04
in December 1998 on an annualized basis
For the quarter ended December 31, 1998, FFO increased 11.4% to
$16.6 million versus $14.9 million for the same period in 1997. On a diluted
per share basis, FFO increased 5.1% to $0.62 per share compared to $0.59 per
share for the same period one year ago. Net income for the fourth quarter
increased 5.0% to $10.6 million as compared to $10.1 million for the same
period in 1997. Net income per share decreased to $0.39, on a diluted basis
from $0.40 per share during the same period in 1997.
Same store rents on 717 properties owned during all of both 1998 and 1997
increased 0.9% to $61.89 million in 1998 as compared to $61.36 million in
1997. Same store rents on the same 717 properties during the three months
ended December 31, 1998 and 1997, decreased 0.4% to $16.11 million compared to
$16.17 million in 1997.
During 1998, Realty Income invested $193.4 million in 149 new properties,
and properties under development, with an initial contractual lease yield of
10.4%. These 149 properties contain approximately 1.6 million leasable square
feet and are located in 38 states. The properties are 100% leased with an
initial average lease length of 14.9 years. In addition, the Company added
eight new industries (Business Services, Craft and Novelty, Drug Stores,
General Merchandise, Grocery Stores, Health and Fitness, Home Improvement, and
Private Education) and 20 new retailers to its retail real estate portfolio
during 1998. The Company's portfolio of properties now consists of
970 properties leased to 65 retail chains doing business in 21 different
retail industries.
During the fourth quarter of 1998, Realty Income invested $53.3 million in
50 new properties, and properties under development, with an initial
contractual lease yield of 10.4%. The 50 new properties are located in
20 states and will contain approximately 529,000 leasable square feet. In
addition, the Company further diversified its real estate portfolio by adding
properties from three new industries (Craft and Novelty, General Merchandise
and Home Improvement) and four new retail chains during the quarter.
Commenting on the Company's performance, Tom A. Lewis, Chief Executive
Officer stated, "We are pleased to report another year of solid progress in
achieving our objective of providing dependable monthly income and an
attractive risk-adjusted return for investors. Despite the difficult market
and economic conditions experienced by the REIT industry during 1998, we were
able to make strong gains in our acquisition expansion program, obtain record
financial results, raise our dividend four consecutive quarters and generate a
positive total return for our shareholders. We attribute this success to our
proactive retail and real estate research into new industries and markets
ahead of the competition, a conservative capital markets strategy, and our
highly focused acquisition activities."
Realty Income is "The Monthly Dividend Company," a New York Stock Exchange
real estate company dedicated to providing shareholders with dependable
monthly income. The monthly dividend is supported by the cash flows from
970 retail properties under long-term lease agreements with leading regional
and national retail chains. The Company is an active buyer of net-leased
retail properties nationwide.
Certain statements in this news release constitute "forward-looking
statements" and involve risks, uncertainties and other factors which may cause
the actual performance of Realty Income to be materially different from the
performance expressed or implied by such statements. These risks include
interest rates and other general economic conditions, and the general health
of retail real estate in general. Please refer to the Company's "Business"
section of the Annual Report on Form 10-K for the year ended December 31, 1997
for further description and detail of other risk factors and the risk factors
in the Current Report on Form 8-K filed on October 16, 1998.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
Three Three
Months Months Year Year
Ended Ended Ended Ended
12/31/98 12/31/97 12/31/98 12/31/97
REVENUE
Rental $23,551 $19,357 $84,876 $67,613
Interest and other 23 94 256 284
23,574 19,451 85,132 67,897
EXPENSES
Depreciation and
amortization 5,852 4,942 21,935 18,596
Interest 4,686 2,455 13,723 8,226
General and administrative 1,837 1,514 6,680 5,437
Property 394 523 1,790 1,785
Provision for
impairment losses -- 25 -- 165
12,769 9,459 44,128 34,209
Income from operations 10,805 9,992 41,004 33,688
Gain on sales of properties -- 59 526 1,082
Income before cumulative
effect of change in
accounting principle 10,805 10,051 41,530 34,770
Cumulative effect of change
in accounting principle (226) -- (226) --
NET INCOME $10,579 $10,051 $41,304 $34,770
Funds from operations $16,636 $14,923 $62,799 $52,353
Cash dividends paid 13,475 11,781 52,301 44,367
Basic and diluted
per share information:
Income from operations $0.40 $0.40 $1.54 $1.43
Net income 0.39 0.40 1.55 1.48
FFO 0.62 0.59 2.36 2.22
Cash dividends paid 0.503 0.475 1.965 1.893
Weighted average number
of shares used for:
Basic per share
computation 26,817,016 25,287,690 26,629,936 23,568,831
Diluted per share
computation 26,824,920 25,293,670 26,638,284 23,572,715
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and 1997
(dollars in thousands, except per share data)
1998 1997
ASSETS
Real estate, at cost:
Land $283,043 $214,342
Buildings and improvements 606,792 485,455
889,835 699,797
Less - accumulated depreciation
and amortization (171,555) (152,206)
Net real estate 718,280 547,591
Cash and cash equivalents 2,533 2,123
Accounts receivable 2,973 2,888
Due from affiliates -- 348
Goodwill, net 19,977 20,901
Other assets 15,471 3,170
TOTAL ASSETS $759,234 $577,021
LIABILITIES AND STOCKHOLDERS' EQUITY
Distributions payable $4,559 $4,112
Accounts payable and accrued expenses 4,036 2,180
Other liabilities 5,630 4,814
Lines of credit payable 84,800 22,600
Notes payable 210,000 110,000
TOTAL LIABILITIES 309,025 143,706
Stockholders' equity:
Preferred stock, par value
$1.00 per share, 20,000,000 shares
authorized, no shares issued or outstanding -- --
Common stock, par value
$1.00 per share, 100,000,000 shares
authorized, 26,817,103 and 25,698,464 shares
issued and outstanding in 1998
and 1997, respectively 26,817 25,698
Paid in capital in excess of par value 609,669 582,450
Accumulated distributions in
excess of net income (186,277) (174,833)
TOTAL STOCKHOLDERS' EQUITY 450,209 433,315
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $759,234 $577,021
The following table represents Realty Income's rental revenue by industry
(dollars in thousands):
1998 1997 1996
Annualized (a) Percentage Percentage Percentage
Rent as of of Total of Total of Total
January 1, 1999
Rental Percentage Rental Rental Rental
Industry Revenue of Total Revenue Revenue Revenue
Apparel Stores $3,927 4.0% 4.1% 0.7% --%
Automotive Parts 8,693 8.8 7.8 9.1 10.5
Automotive Service 6,623 6.7 7.5 6.4 4.8
Book Stores 450 0.5 0.6 0.5 --
Business Services 122 0.1 * -- --
Child Care 25,640 26.1 29.2 35.9 42.0
Consumer Electronics 4,431 4.5 5.4 6.5 0.9
Convenience Stores 5,417 5.5 6.1 5.5 4.7
Crafts & Novelties 152 0.2 * -- --
Drug Stores 235 0.2 0.1 -- --
General Merchandise 658 0.7 * -- --
Grocery Stores 789 0.8 * -- --
Health & Fitness 1,202 1.2 0.1 -- --
Home Furnishings 6,717 6.8 7.8 5.6 4.4
Home Improvement 3,137 3.2 * -- --
Office Supplies 2,476 2.5 3.0 1.7 --
Pet Supplies & Services 1,399 1.4 0.6 0.2 --
Private Education 1,530 1.6 0.9 -- --
Restaurants 14,351 14.6 16.2 19.8 24.4
Shoe Stores 890 0.9 0.8 0.2 --
Video Rental 4,252 4.3 3.8 0.6 --
Other 5,263 5.4 6.0 7.3 8.3
Totals $98,354 100.0% 100.0% 100.0% 100.0%
The following table provides the breakdown of the Company's real estate
portfolio according to retail segment types (dollars in thousands):
Category Number of Properties Annualized Rent (a) % of Revenue
Goods 198 $27,221 27.7%
Goods with Services 336 30,875 31.4
Services 436 40,258 40.9
Totals 970 $98,354 100.0%
* Less than 0.1%
(a) Annualized rent is calculated by multiplying the monthly contractual
base rent as of January 1, 1999 for each of the properties by 12, and
adding the previous twelve month's historical percentage rent, which
totaled $1.7 million (i.e., additional rent calculated as a percentage
of the tenant's gross sales above a specific level). For properties
under construction, an estimated contractual base rent is used based
upon the estimated total costs of each property.
SOURCE Realty Income Corporation
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Related links:
http://www.realtyincome.com
CONTACT:
Gary Malino, Sr. Vice President, Chief
Financial Officer, 760-741-2111, ext. 142, or Tere Miller, Vice
President, Investor Relations, 760-741-2111, ext. 177, both of
Realty Income Corporation
NOTE TO EDITORS: Realty Income press releases are available at no
charge by calling our toll-free investor hotline number:
888-811-2001, or through the internet at
http://www.prnewswire.com or http://www.realtyincome.com.
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