Dividends Per Share Increased 6.1% and Real Estate Portfolio Grew 10.9%
ESCONDIDO, Calif., Feb. 3 /PRNewswire/ -- Realty Income Corporation
(Realty Income), "The Monthly Dividend Company," (NYSE: O) today announced a
steady increase in the Company's operating results for the fourth quarter and
year ended December 31, 1999.
1999 HIGHLIGHTS:
-- Dividends paid per common share increased 6.1% to $2.09 from $1.97 in
1998.
-- Funds from Operations (FFO) increased 5.0% to $65.92 million.
-- FFO per common share increased by 4.2% to $2.46.
-- Total investment in net-lease retail properties exceeded $181 million.
-- Initial contractual lease yields for 1999 acquisitions increased to
10.5% as compared to 10.4% for 1998 acquisitions.
-- Realty Income's real estate portfolio grew 10.9% to 1,076 properties
from 970 properties at the end of 1998.
-- Initial average lease term on 1999 acquisitions increased to 17.4 years
as compared to 14.9 years for 1998 acquisitions.
Funds from Operations for 1999
For the year ended December 31, 1999, Funds from Operations (FFO)
increased 5.0% to $65.92 million from $62.80 million for the same period one
year ago. On a diluted per common share basis, FFO increased 4.2% to
$2.46 per share in 1999 compared to $2.36 per share for the same period in
1998. Realty Income's FFO was impacted by a one-time charge taken during the
fourth quarter that was associated with the retirement of the Company's former
President. Excluding this one-time charge, FFO per diluted common share for
1999 was $2.47.
FFO is a widely used measure of REIT performance that excludes gains or
losses on the sale of assets and non-cash charges for depreciation of real
estate assets. FFO is one measure of a company's cash flow and of its ability
to pay dividends.
Net Income Available to Common Stockholders for 1999
Net income available to common stockholders for the year ended
December 31, 1999 was $41.0 million as compared to $41.3 million for the same
period in 1998. On a diluted per common share basis, net income for the year
ended December 31, 1999 was $1.53 per share as compared to $1.55 per share for
the same period in 1998. The decrease in net income per share, available to
common stockholders, was primarily due to an increase in the amount of
depreciation on properties recently acquired and the payment of dividends on
preferred stock that was issued for the first time during 1999.
Acquisitions for 1999
During 1999, Realty Income invested $181.4 million in 110 new retail
properties and properties under development with an initial contractual lease
yield of 10.5%. These 110 properties contain approximately 940,700 leasable
square feet and are located in 26 states. The properties are 100% leased with
an initial average lease length of 17.4 years. In addition, the Company added
two new retail industries (Entertainment and Theater) and eight new retail
chains to its retail real estate portfolio during 1999. The Company's
portfolio of properties now consists of 1,076 properties, located in
45 states, leased to 73 retail chains doing business in 23 different retail
industries. During 1999 Realty Income also sold three properties for
$9.4 million and realized a gain of $1.3 million.
Same store rents on properties leased by retail chains during 1999 and
1998 increased 0.8%.
Commenting on the Company's performance, Tom A. Lewis, President and 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 challenging
equity market conditions experienced by the REIT industry during 1999, we were
able to achieve increases in funds from operations, dividends and in the size
of our real estate portfolio. We attribute these accomplishments to our
ability to make accretive investments and the conservative management of the
Company's balance sheet. Our focus continues to be on fulfilling the
conservative, income investment objectives of our shareholders and providing
investment value as The Monthly Dividend Company."
Fourth Quarter Operating Results
For the quarter ended December 31, 1999, FFO increased 5.4% to
$17.5 million versus $16.6 million for the same period in 1998. On a diluted
per common share basis, FFO increased 4.8% to $0.65 per share compared to
$0.62 per share for the same period one year ago. Net income available to
common stockholders for the fourth quarter was $10.3 million as compared to
$10.6 million for the same period in 1998. Net income per common diluted
share was $0.38 as compared to $0.39 per share during the same period in 1998.
During the fourth quarter of 1999, Realty Income invested $23.8 million in
6 new properties and properties under development, with an initial contractual
lease yield of 10.9%. The six new properties are located in 5 states and will
contain approximately 74,000 leasable square feet.
Other Activities
The "REIT Modernization Act" was recently passed, which allows REITs to
become involved in certain real estate-related operations that are separate
from the REIT's core business. In anticipation of this legislation's
effective date of January 1, 2001 Realty Income is reviewing real estate
businesses that could generate after-tax profits which would flow up to Realty
Income for investment in additional properties and other corporate purposes.
The Company's first effort in this area is the formation of Crest Net Lease,
Inc., an affiliated company that is being created to take advantage of the
demand for net-lease properties in the tax-deferred exchange market. It is
anticipated that Crest Net Lease will acquire and actively market certain
select properties to a well-established 1031 tax-deferred exchange market of
buyers and ultimately generate a profit from these transactions that would
contribute to the earnings growth of Realty Income. Crest Net Lease should
begin doing business during 2000 and the goal is for it to achieve
profitability by the end of its first year of operations.
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
1,076 retail properties owned under long-term lease agreements with leading
regional and national retail chains. The Company is an active buyer of
net-leased retail properties nationwide.
Statements in this press release, which are not strictly historical, are
"forward-looking" statements. Forward-looking statements involve known and
unknown risks, which may cause the company's actual results in the future to
differ materially from expected results. These risks include, among others,
the profitability of the company's subsidiary, Crest Net Lease, general
economic conditions, local real estate conditions, and the availability of
capital to finance planned growth, as described in the company's filings with
the Securities and Exchange Commission. Consequently, such forward-looking
statements should be regarded solely as reflections of the company's current
operating plans and estimates. Actual operating results may differ materially
from what is expressed or forecast in this press release.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
Three Three
Months Months Year Year
Ended Ended Ended Ended
12/31/99 12/31/98 12/31/99 12/31/98
REVENUE
Rental $28,588 $23,551 $104,270 $84,876
Interest and other 134 23 240 256
28,722 23,574 104,510 85,132
EXPENSES
Depreciation and
amortization 6,965 5,852 25,952 21,935
Interest 6,448 4,686 24,473 13,723
General and
administrative 1,813 1,837 6,968 6,680
Property 466 394 1,822 1,790
15,692 12,769 59,215 44,128
Income from operations 13,030 10,805 45,295 41,004
Gain on sales
of properties 65 -- 1,301 526
Income before
extraordinary item
and cumulative
effect of change in
accounting principle 13,095 10,805 46,596 41,530
Extraordinary item (355) -- (355) --
Cumulative effect
of change in
accounting principle -- (226) -- (226)
Net income 12,740 10,579 46,241 41,304
Preferred stock
dividends (2,437) -- (5,229) --
Net income available
to common
stockholders $10,303 $10,579 $41,012 $41,304
Basic and diluted
per share
information for
common stockholders:
Income from
operations $0.39 $0.40 $1.49 $1.54
Net income 0.38 0.39 1.53 1.55
FFO 0.65 0.62 2.46 2.36
Cash dividends paid 0.533 0.503 2.085 1.965
Weighted average
number of common
shares used for:
Basic per share
computation 26,822,171 26,817,016 26,822,285 26,629,936
Diluted per share
Computation 26,824,979 26,824,920 26,826,090 26,638,284
FUNDS FROM OPERATIONS
(dollars in thousands)
Three Three
Months Months Year Year
Ended Ended Ended Ended
12/31/99 12/31/98 12/31/99 12/31/98
Net income $12,740 $10,579 $ 46,241 $41,304
Plus:
Depreciation and
amortization 6,965 5,852 25,952 21,935
Extraordinary item 355 -- 355 --
Cumulative effect of
change in accounting
principal -- 226 -- 226
Less:
Preferred stock
dividends (2,437) -- (5,229) --
Depreciation of
furniture,
fixtures and
equipment
and amortization
of organization
costs (33) (21) (101) (140)
Gain on sales of
properties (65) -- (1,301) (526)
Funds from
operations $ 17,525 $16,636 $65,917 $62,799
Distributions paid
to common
stockholders $14,283 $13,475 $55,925 $52,301
FFO in excess of
distributions $3,242 $3,161 $9,992 $10,498
CONSOLIDATED BALANCE SHEETS
December 31, 1999 and 1998
(dollars in thousands, except per share data)
1999 1998
ASSETS
Real estate, at cost:
Land $350,517 $283,043
Buildings and improvements 711,962 606,792
1,062,479 889,835
Less - accumulated
depreciation
and amortization (195,386) (171,555)
Net real estate 867,093 718,280
Cash and cash equivalents 773 2,533
Accounts receivable 3,407 2,973
Goodwill, net 19,053 19,977
Other assets 15,078 15,471
Total assets $905,404 $759,234
LIABILITIES AND STOCKHOLDERS' EQUITY
Distributions payable $4,828 $4,559
Accounts payable and
accrued expenses 12,792 4,036
Other liabilities 3,753 5,630
Lines of credit payable 119,200 84,800
Notes payable 230,000 210,000
Total liabilities 370,573 309,025
Stockholders' equity:
Preferred stock and
paid in capital, par
value $1.00 per share,
20,000,000 shares
authorized, 4,140,000 shares
issued and outstanding 99,679 --
Common stock and paid in capital,
par value $1.00 per share,
100,000,000 shares
authorized, 26,822,164 and
26,817,103 shares issued and
outstanding in 1999 and 1998,
respectively 636,611 636,486
Distributions in excess of
net income (201,459) (186,277)
Total stockholders' equity 534,831 450,209
Total liabilities and
stockholders' equity $905,404 $759,234
The following table sets forth certain information regarding our
properties classified according to the business of the respective tenants
(dollars in thousands):
Annualized (1)
Rent as of January 1, 2000 Percentage of
Rental Percentage Total Revenue
Industry Revenue of Total 1999 1998 1997
Apparel Stores $3,927 3.4% 3.8% 4.1% 0.7%
Automotive Parts 9,707 8.3 8.6 7.8 9.1
Automotive Service 6,723 5.7 6.6 7.5 6.4
Book Stores 450 0.4 0.5 0.6 0.5
Business Services 124 0.1 0.1 * --
Child Care 28,275 24.2 25.3 29.2 35.9
Consumer Electronics 4,659 4.0 4.4 5.4 6.5
Convenience Stores 9,759 8.3 7.2 6.1 5.5
Crafts & Novelties 425 0.4 0.4 * --
Drug Stores 235 0.2 0.2 0.1 --
Entertainment 2,293 2.0 1.2 -- --
General Merchandise 687 0.6 0.6 * --
Grocery Stores 719 0.6 0.5 * --
Health & Fitness 3,930 3.4 0.6 0.1 --
Home Furnishings 6,107 5.2 6.5 7.8 5.6
Home Improvement 4,281 3.7 3.6 * --
Office Supplies 2,476 2.1 2.6 3.0 1.7
Pet Supplies & Services 1,612 1.4 1.1 0.6 0.2
Private Education 1,695 1.4 1.2 0.9 --
Restaurants 14,355 12.3 13.3 16.2 19.8
Shoe Stores 1,234 1.0 1.1 0.8 0.2
Theaters 2,406 2.1 0.6 -- --
Video Rental 4,510 3.8 4.3 3.8 0.6
Other 6,331 5.4 5.7 6.0 7.3
Totals $116,920 100.0% 100.0% 100.0% 100.0%
* Less than 0.1%
(1) Annualized rent is calculated by multiplying the monthly contractual
base rent as of January 1, 2000 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.
The following table sets forth certain information regarding our
properties as of December 31, 1999, classified according to the retail
business types and the level of services they provide (dollars in
thousands):
Number of Percentage of
Industry Properties Annualized Rent(1) Annualized Rent
TENANTS PROVIDING SERVICES
Automotive Service 105 $6,723 5.8%
Child Care 336 28,275 24.2
Entertainment 6 2,293 2.0
Health & Fitness 7 3,930 3.4
Other 9 6,331 5.3
Private Education 6 1,695 1.4
Theaters 2 2,406 2.1
471 51,653 44.2
TENANTS SELLING GOODS AND SERVICES
Automotive Parts 60 5,100 4.4
Business Services 1 124 0.1
Convenience Stores 104 9,759 8.2
Home Improvement 21 2,903 2.5
Pet Supplies & Services 6 1,146 1.0
Restaurants 177 14,355 12.3
Video Rental 35 4,510 3.9
404 37,897 32.4
TENANTS SELLING GOODS
Apparel Stores 5 3,927 3.4
Automotive Parts 81 4,606 3.9
Book Stores 1 450 0.4
Consumer Electronics 37 4,659 4.0
Craft & Novelty 2 425 0.3
Drug Stores 1 235 0.2
General Merchandise 11 687 0.6
Grocery Stores 2 719 0.6
Home Furnishings 34 6,107 5.2
Home Improvement 13 1,378 1.2
Office Supplies 8 2,476 2.1
Pet Supplies 2 467 0.4
Shoe Stores 4 1,234 1.1
201 27,370 23.4
Totals 1,076 $116,920 100.0%
(1) Annualized Rent is calculated by multiplying the monthly contractual
base rent as of January 1, 2000 for each of the properties by 12, and
adding the previous twelve month's historic percentage rent, which totaled
$1.7 million, (i.e., additional rent calculated as a percentage of the
tenant's gross sales above a specified level).For the properties under
construction, an estimated contractual base rent is used based upon the
estimated total costs of each property.
SOURCE Realty Income Corporation
 back to top
Related links:
http://www.realtyincome.com
CONTACT:
Tere Miller, Vice President, Investor
Relations of Realty Income Corporation, 760-741-2111, ext. 177
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.realtyincome.com.
|
