ESCONDIDO, Calif., April 25 /PRNewswire/ -- Realty Income Corporation
(Realty Income), "The Monthly Dividend Company," (NYSE: O) today announced
operating results for the first quarter ended March 31, 2001.
COMPANY HIGHLIGHTS:
-- The monthly dividend was increased for the 14th consecutive quarter
-- The annualized dividend increased to $2.235 per share from $2.22 per
share
-- Revenue increased 11.3% to $31.6 million
-- Funds from Operations (FFO) increased 6.7% to $17.6 million
-- FFO per common share increased 6.5% to $0.66 per share
Financial Results
Revenue Increases
Realty Income's revenue for the first quarter ended March 31, 2001
increased 11.3% to $31.6 million as compared to $28.4 million for the same
quarter in 2000.
Funds from Operations
FFO for the quarter ended March 31, 2001 increased 6.7% to $17.6 million
as compared to $16.5 million for the same quarter in 2000. On a diluted per
common share basis, FFO increased 6.5% to $0.66 per share compared to
$0.62 per share for the same period in 2000.
FFO is a widely used measure of REIT performance that excludes non-cash
charges for the depreciation of real estate and gain on sales of investment
properties. FFO is one measure of a company's cash flow and of its ability to
pay dividends.
Dividend Information
On March 15, 2001, Realty Income announced the 14th consecutive quarterly
increase in the amount of the monthly dividend on its common stock. The
amount of the dividend was increased to $0.18625 per share from $0.185 per
share for an annualized dividend amount of $2.235 per share. The Company
continues its 32-year policy of declaring and paying common stock dividends on
a monthly rather than a quarterly basis.
Net Income Available to Common Stockholders
Net income available to common stockholders for the quarter ended
March 31, 2001 increased to $16.0 million as compared to $10.5 million for the
same period in 2000. On a diluted per common share basis, net income
increased to $0.60 per share as compared to $0.39 per share for the three
months ended March 31, 2000. The calculation to determine net income includes
gains and losses from the sale of investment properties. The amount of gains
and losses varies from quarter to quarter based on the timing of property
sales and can significantly impact net income. The gain recognized from
property sales during the first quarter of 2001 was $5.3 million or $0.20 per
common share greater than the gain recognized from property sales during the
same quarter in 2000.
Share Repurchase Activity
On an ongoing basis, Realty Income regularly reviews its investment
options to determine the best use of its capital. At certain times during the
first quarter, the Company's share price justified repurchasing shares since
this provided the highest return on the Company's investment capital. During
the three months ended March 31, 2001, the Company invested $169,000 to
repurchase 6,800 shares of its common stock at an average price of $24.82 per
share and an estimated FFO yield of approximately 10.8%.
Real Estate Portfolio Update
As of March 31, 2001, Realty Income's portfolio of freestanding,
single-tenant retail properties consisted of 1,061 properties located in
46 states, leased to 69 retail chains doing business in 23 retail industries.
Portfolio Management Activities
The Company's portfolio of retail real estate properties owned under
long-term net leases continues to perform well and provide dependable lease
revenue supporting the payment of monthly dividends. As of March 31, 2001,
portfolio occupancy was 97.7% with only 24 properties out of 1,061 available
for lease.
Same store rents on the 999 properties under lease during the three months
ended March 31, 2001 and 2000 increased 1.3% to $26.30 million from
$25.97 million in 2000.
Property Dispositions
During the first quarter of 2001, Realty Income sold 10 properties for
$17.1 million and recorded a gain on sales of $6.0 million. The 10 properties
consisted of seven restaurants, one home improvement store, one home
furnishing store, and one child day care property. The properties were sold
at an average cap rate of 9.3%. The proceeds from the sale of these
properties were used to pay down the Company's acquisition credit facility and
to invest in new properties with an initial contractual lease yield of 11.5%.
The objective of the Company's disposition program is to sell assets when the
Company believes the reinvestment of the sales proceeds will generate higher
returns, enhance the credit quality of the Company's real estate portfolio or
increase the average lease term.
Property Acquisitions
During the first quarter, Realty Income invested $7.2 million in three new
properties and properties under development with an initial contractual lease
yield of 11.5%. The new properties are 100% leased with an initial average
lease length of 20 years. The Company used the proceeds from the sale of
properties and excess cash flow to acquire the additional properties.
Market Overview
Realty Income's acquisition opportunities and the market for freestanding,
net-lease, retail properties remains positive and offers attractive lease
yields. The Company anticipates that it will continue to generate growth in
its real estate portfolio by financing the acquisition of new properties from
internally generated cash flow and proceeds from property dispositions during
2001. Realty Income also maintains acquisition credit facilities with
borrowing capacity of $225 million, which are used to fund its acquisitions
and the operations of its subsidiary, Crest Net Lease, Inc. ($200 million line
of credit for Realty Income and $25 million for Crest). The outstanding
balance on the Company's acquisition credit facility at March 31, 2001 was
$134.0 million. The outstanding balance on the credit facility used to fund
Crest operations was $12.3 million. These continue to be important sources of
capital for the Company.
Other Activities
Crest Net Lease
During the first quarter of 2001, Crest Net Lease, Inc. sold four
properties from its inventory for $14.0 million and recorded a gain on sales
of $1.9 million. Crest also invested $3.8 million in four new properties and
properties under development. At the end of the first quarter, Crest carried
an inventory of $14.8 million in properties held for sale. Management
believes that Crest will carry an average inventory of between $20 to
$25 million in properties on an ongoing basis. Crest generates an earnings
spread on the differential between the lease payments it receives on the
properties it holds in inventory and the cost of capital used to acquire the
properties. It is management's belief that at this level of inventory these
earnings will more than cover the ongoing operating expenses of Crest. The
contribution to Realty Income's FFO by the subsidiary will be dependent on the
timing and the number of property sales achieved, if any, in any given
quarter. During the first quarter of 2001, Crest generated $0.04 per common
share in FFO for Realty Income.
Commenting on Realty Income's financial results and real estate
operations, Tom A. Lewis, Chief Executive Officer, stated, "We are pleased
with the progress we have made during the first quarter of 2001. The stable
results from our core portfolio coupled with strong performance from Crest Net
Lease led to solid increases in our FFO during the first quarter. Our
disposition and reinvestment program is gaining momentum, and we believe it
will continue to increase both the quality and overall yield of our real
estate portfolio during 2001. We are also pleased that lease revenues in our
core portfolio continue to increase, benefiting from the substantial growth in
the size of the portfolio over the past several years. This revenue growth is
responsible for the solid cash flow coverage and continued dependability of
the Company's monthly dividend payments."
2001 Earnings Guidance
Realty Income's funds from operations tend to be stable and fairly
predictable because of the long-term leases that are the primary source of the
Company's revenue. There are, however, several factors that can impact
changes in FFO from levels that have been anticipated by the Company. These
factors include, but are not limited to, changes in interest rates, occupancy
rates, periodically accessing the capital markets, the level of property
acquisitions and dispositions, and the operations of Crest Net Lease.
Management estimates that FFO per common share for 2001 should range from
$2.65 to $2.67, which would equate to an increase of 5.2% to 6.0% over 2000
FFO per share of $2.52.
In prior years certain items impacting FFO per share have fluctuated from
quarter to quarter. Typically, the Company's funds from operations has been
generated as follows: 25% in the first quarter, 24% in the second and third
quarters and 27% in the fourth quarter. This fluctuation is primarily due to
the receipt of percentage rents in the first and fourth quarters of the year.
While the Company believes this trend may continue, FFO may fluctuate
additionally in future years based upon the operations of Crest Net Lease.
Management estimates Crest Net Lease will generate between $0.06 to
$0.08 per share of FFO during 2001. Crest's primary business is the purchase
and sale of properties for a profit. These sales may occur at various times
during the course of the year, which could cause FFO in certain quarters to
increase or decrease from normal levels. The Company does not intend to
provide quarterly estimates of FFO. Absent changes in annual FFO guidance, at
the end of each quarter, it may be presumed that the Company's overall
estimate for the year has not changed.
Forward-Looking Statements
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,
general economic conditions, local real estate conditions, the availability of
capital to finance planned growth, and the profitability of the Company's
subsidiary, Crest Net Lease, 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.
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 income is supported by the cash flows from 1,061
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.
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/Investing/News.html
CONSOLIDATED STATEMENTS OF INCOME
For the three months ended March 31, 2001 and 2000
(dollars in thousands, except per share amounts)
2001 2000
REVENUE
Rental $29,496 $28,330
Gain on sale of real estate
acquired for resale 1,928 --
Interest and other 141 25
31,565 28,355
EXPENSES
Interest 8,059 7,158
Depreciation and
amortization 7,210 6,748
General and
administrative 2,040 1,561
Property 624 515
Other 1,110 123
19,043 16,105
Income from operations 12,522 12,250
Gain on sales of
investment properties 5,951 662
Net income 18,473 12,912
Preferred stock dividends (2,428) (2,428)
Net income available to
common stockholders $16,045 $10,484
Funds from operations (FFO) $17,606 $16,537
Basic and diluted
per share information for
common stockholders:
Income from
operations $0.38 $0.37
Net income 0.60 0.39
FFO 0.66 0.62
Cash dividends paid 0.555 0.540
FUNDS FROM OPERATIONS
For the three months ended March 31, 2001 and 2000
(dollars in thousands, except per share amounts)
2001 2000
Net income available to
common stockholders $16,045 $10,484
Plus:
Depreciation and
amortization 7,210 6,748
Provision for impairment loss
on a property held for sale 330 --
Less:
Depreciation of furniture,
fixtures and equipment (28) (33)
Gain on sales of
investment properties (5,951) (662)
Funds from operations $17,606 $16,537
Dividends paid to
common stockholders $14,770 $14,484
FFO in excess of dividends $2,836 $2,053
Basic and diluted
FFO per common share $0.66 $0.62
Weighted average number
of common shares used for:
Basic per share
computation 26,612,009 26,815,391
Diluted per share
computation 26,655,676 26,816,928
CONSOLIDATED BALANCE SHEETS
As of March 31, 2001 and December 31, 2000
(dollars in thousands)
2001 2000
ASSETS
Real estate, at cost:
Land $370,462 $368,057
Buildings and improvements 705,989 705,470
1,076,451 1,073,527
Less accumulated depreciation
and amortization (218,246) (212,379)
Net real estate held for investment 858,205 861,148
Real estate held for sale, net 16,954 33,130
Net real estate 875,159 894,278
Cash and cash equivalents 1,992 3,815
Accounts receivable 3,696 5,053
Goodwill, net 17,899 18,130
Other assets 14,082 13,490
Total assets $912,828 $934,766
LIABILITIES AND STOCKHOLDERS' EQUITY
Distributions payable $6,837 $4,914
Accounts payable and accrued expenses 7,544 5,969
Other liabilities 4,254 4,314
Lines of credit payable 146,300 174,000
Notes payable 230,000 230,000
Total liabilities 394,935 419,197
Stockholders' equity:
Preferred stock and paid in capital, par value
$1.00 per share, 20,000,000 shares
authorized, 4,125,000 shares issued
and outstanding 99,368 99,368
Common stock and paid in capital, par value
$1.00 per share, 100,000,000 shares
authorized, 26,607,645 and 26,563,519
shares issued and outstanding in 2001
and 2000, respectively 632,023 630,932
Distributions in excess of net income (213,498) (214,731)
Total stockholders' equity 517,893 515,569
Total liabilities and
stockholders' equity $912,828 $934,766
The following table sets forth certain information regarding our
properties classified according to the business of the respective tenants
(dollars in thousands):
Percentage of Rental Revenue(1)
For the
Quarter
Ended For the Years Ended
Industry Mar 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31,
2001 2000 1999 1998 1997 1996 1995
Apparel Stores 2.4% 2.4% 3.8% 4.1% 0.7% --% --%
Automotive Parts 8.5 8.3 8.6 7.8 9.1 10.5 11.4
Automotive
Service 6.0 5.8 6.6 7.5 6.4 4.8 3.7
Book Stores 0.5 0.5 0.5 0.6 0.5 -- --
Business
Services 0.1 0.1 0.1 * -- -- --
Child Care 23.6 24.7 25.3 29.2 35.9 42.0 45.6
Consumer
Electronics 4.3 4.9 4.4 5.4 6.5 0.9 --
Convenience
Stores 8.7 8.4 7.2 6.1 5.5 4.6 2.4
Crafts &
Novelties 0.4 0.4 0.4 * -- -- --
Drug Stores 0.2 0.2 0.2 0.1 -- -- --
Entertainment 1.5 2.0 1.2 -- -- -- --
General
Merchandise 0.6 0.6 0.6 * -- -- --
Grocery Stores 0.6 0.6 0.5 * -- -- --
Health & Fitness 3.4 2.4 0.6 0.1 -- -- --
Home Furnishings 6.2 5.8 6.5 7.8 5.6 4.4 2.9
Home Improvement 1.3 2.0 3.6 * -- -- --
Office Supplies 2.2 2.3 2.6 3.0 1.7 -- --
Pet Supplies &
Services 1.5 1.5 1.1 0.6 0.2 -- --
Private
Education 1.5 1.4 1.2 0.9 -- -- --
Restaurants 11.9 12.3 13.3 16.2 19.8 24.4 24.7
Shoe Stores 0.8 0.8 1.1 0.8 0.2 -- --
Theaters 4.5 2.7 0.6 -- -- -- --
Video Rental 3.9 3.9 4.3 3.8 0.6 -- --
Other 5.4 6.0 5.7 6.0 7.3 8.4 9.3
Totals 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
* Less than 0.1%
(1) The table does not include the properties owned and held for sale by
the company's subsidiary, Crest Net Lease.
The following table sets forth certain information regarding our
properties as of March 31, 2001, classified according to the retail business
types and the level of services they provide (dollars in thousands):
Industry Number of Annualized Percentage of
Properties(1) Rent(1)(2) Annualized Rent
TENANTS PROVIDING SERVICES
Automotive Service 101 $7,018 6.0%
Child Care 332 28,541 24.3
Entertainment 6 1,928 1.6
Health & Fitness 8 4,602 3.9
Private Education 6 1,817 1.6
Theaters 10 5,209 4.4
Other 8 5,972 5.1
471 55,087 46.9
TENANTS SELLING GOODS
AND SERVICES
Automotive Parts 62 5,432 4.6
Business Services 1 124 0.1
Convenience Stores 105 10,111 8.6
Home Improvement 2 187 0.2
Pet Supplies & Services 6 1,231 1.1
Restaurants 165 13,568 11.5
Video Rental 35 4,443 3.8
376 35,096 29.9
TENANTS SELLING GOODS
Apparel Stores 4 2,799 2.4
Automotive Parts 78 4,509 3.8
Book Stores 2 572 0.5
Consumer Electronics 37 4,982 4.2
Craft & Novelty 2 502 0.4
Drug Stores 1 235 0.2
General Merchandise 11 687 0.6
Grocery Stores 2 726 0.6
Home Furnishings 38 7,074 6.0
Home Improvement 25 1,377 1.2
Office Supplies 8 2,476 2.1
Pet Supplies 2 467 0.4
Shoe Stores 4 890 0.8
214 27,296 23.2
Totals 1,061 $117,479 100.0%
(1)The table does not include properties owned and held for sale by the
company's subsidiary, Crest Net Lease.
(2)Annualized Rent is calculated by multiplying the monthly contractual
base rent as of March 31, 2001 for each of the properties by 12, and
adding the previous twelve month's historic percentage rent, which
totaled $1.8 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
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Related links:
http://www.realtyincome.com
CONTACT:
Tere H. Miller, Vice President, Corporate
Communications of Realty Income Corporation, 760-741-2111 ext.
177
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