First Quarter FFO Per Share Increases 5.3%
Property Acquisitions Exceed $40 Million at 10.3% Cap Rate
ESCONDIDO, Calif., April 27 /PRNewswire/ -- Realty Income Corporation
(Realty Income), "The Monthly Dividend Company," (NYSE: O) today announced
operating results for the first quarter ended March 31, 1999. Funds from
Operations (FFO) increased 8.1% to $16.0 million from $14.8 million for the
same period one year ago. On a diluted per share basis, FFO increased 5.3% to
$0.60 per share compared to $0.57 for the same period in 1998. 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. FFO measures a company's cash flow and is one
of the indicators of the company's ability to pay dividends. Net income was
$9.9 million for the first quarters ended March 31, 1999 and 1998. On a
diluted per share basis, net income for the quarter ended March 31, 1999 was
$0.37 per share as compared to $0.38 per share for the same period in 1998.
FIRST QUARTER HIGHLIGHTS:
-- 1,000th property acquired
-- Monthly dividend increased, for the sixth consecutive quarter,
to $0.1725 per share or $2.07 on an annualized basis
-- Acquired 34 net-leased retail properties and invested $40.8 million
with an initial lease yield of 10.3%
-- Retail property portfolio was further diversified and now includes
22 different retail industries and 70 separate retail chains
-- FFO increased by 8.1% to $16.0 million
-- FFO per share increased by 5.3% to $0.60 per share
-- Issued $20 million in 10-year senior unsecured notes through a
private placement
Commenting on the Company's performance, Tom A. Lewis, Chief Executive
Officer, stated, "We are very pleased we have been able to continue to
successfully execute our plan for growth. In addition, the climate for
accretive property acquisitions within our freestanding net lease retail
market remains strong. Our objectives continue to be to further diversify our
portfolio, increase revenues and generate higher funds from operations (FFO).
We believe these are the primary drivers in achieving increases in our monthly
dividend."
During the first quarter, Realty Income invested $40.8 million, acquiring
34 new retail properties leased to 11 separate retail chains in 10 different
retail industries. These properties are located in 16 states, will contain
approximately 286,000 square feet and are 100% leased with an average lease
term of 14.6 years and an initial lease yield of 10.3%. The Company continued
to diversify its portfolio with the addition of one new industry segment,
Entertainment, and five new retail chains during the quarter. Realty Income's
portfolio of properties now consists of 1,004 properties leased to
70 separate retail chains doing business in 22 separate retail segments.
Same store rents on 812 properties owned during all of both the three
months ended March 31, 1999 and 1998, increased 0.2% to $19.00 million
compared to $18.96 million in 1998.
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
1,004 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.
This press release contains certain statements that may be considered to
be "forward-looking statements" under federal securities law. The Company's
actual future results may differ significantly from the matters discussed in
any forward-looking statements. We have disclosed in greater detail in the
Company's Annual Report on Form 10-K, factors that may cause such differences.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
For the three months ended March 31, 1999 and 1998
1999 1998
REVENUE
Rental $23,948 $19,168
Interest and other 38 54
23,986 19,222
EXPENSES
Depreciation and
amortization 6,090 5,084
Interest 5,880 2,491
General and
administrative 1,646 1,465
Property 441 473
14,057 9,513
Income from operations 9,929 9,709
Gain on sales
of properties --- 215
Net Income $9,929 $9,924
Funds from
operations $15,998 $14,754
Cash dividends paid 13,679 12,462
Basic and diluted
per share information:
Income from
operations $0.37 $0.37
Net income 0.37 0.38
FFO 0.60 0.57
Cash dividends paid 0.51 0.48
Weighted average number
of shares used for:
Basic per share
computation 26,822,382 26,028,589
Diluted per share
computation 26,825,412 26,037,595
CONSOLIDATED BALANCE SHEETS
March 31, 1999 and December 31, 1998
(dollars in thousands, except per share data)
1999 1998
ASSETS
Real estate, at cost:
Land $301,949 $283,043
Buildings and improvements 628,833 606,792
930,782 889,835
Less - accumulated depreciation
and amortization (177,367) (171,555)
Net real estate 753,415 718,280
Cash and cash equivalents 5,694 2,533
Accounts receivable 2,064 2,973
Goodwill, net 19,746 19,977
Other assets 15,620 15,471
Total Assets $796,539 $759,234
LIABILITIES AND STOCKHOLDERS' EQUITY
Distributions payable $4,627 $4,559
Accounts payable and accrued expenses 7,996 4,036
Other liabilities 3,495 5,630
Line of credit payable 103,900 84,800
Notes payable 230,000 210,000
Total Liabilities 350,018 309,025
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, 26,822,326
and 26,817,103 shares issued
and outstanding in 1999 and
1998, respectively 26,822 26,817
Paid in capital in excess of par value 609,794 609,669
Accumulated distributions in
excess of net income (190,095) (186,277)
Total Stockholders' Equity 446,521 450,209
Total Liabilities and
Stockholders' Equity $796,539 $759,234
The following table represents Realty Income's rental revenue by industry
(dollars in thousands):
1998 1997 1996
Annualized (1) Percentage Percentage Percentage
Rent as of April 1, 1999 of Total of Total of Total
Rental Percentage Rental Rental Rental
Revenue of Total Revenue Revenue Revenue
Industry
Apparel
Stores $3,927 3.8% 4.1% 0.7% ---%
Automotive
Parts 9,350 9.0 7.8 9.1 10.5
Automotive
Service 7,176 6.9 7.5 6.4 4.8
Book Stores 450 0.4 0.6 0.5 ---
Business
Services 120 0.1 * --- ---
Child Care 26,311 25.4 29.2 35.9 42.0
Consumer
Electronics 4,431 4.3 5.4 6.5 0.9
Convenience
Stores 5,429 5.2 6.1 5.5 4.6
Crafts &
Novelties 425 0.4 * --- ---
Drug Stores 235 0.2 0.1 --- ---
Entertainment 940 0.9 --- --- ---
General
Merchandise 687 0.7 * --- ---
Grocery Stores 789 0.8 * --- ---
Health &
Fitness 1,202 1.2 0.1 --- ---
Home
Furnishings 6,872 6.6 7.8 5.6 4.4
Home
Improvement 4,059 3.9 * --- ---
Office
Supplies 2,476 2.4 3.0 1.7 ---
Pet Supplies
& Services 1,537 1.5 0.6 0.2 ---
Private
Education 1,497 1.5 0.9 --- ---
Restaurants 14,170 13.7 16.2 19.8 24.4
Shoe Stores 890 0.9 0.8 0.2 ---
Video Rental 4,501 4.3 3.8 0.6 ---
Other 6,148 5.9 6.0 7.3 8.4
Totals $103,622 100.0% 100.0% 100.0% 100.0%
* Less than 0.1%
(1) Annualized Rent is calculated by multiplying the monthly contractual
base rent as of April 1, 1999 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.
The following table provides the breakdown of the Company's real estate
portfolio as of April 1, 1999 according to retail segment types (dollars
in thousands):
Number of Percentage of
Industry Properties Annualized Rent(1) Annualized Rent
TENANTS SELLING GOODS
Apparel Stores 5 $3,927 3.8%
Automotive Parts 81 4,705 4.5
Book Stores 1 450 0.4
Consumer Electronics 37 4,431 4.3
Craft and Novelty 2 425 0.4
Drug Stores 1 235 0.2
General Merchandise 11 687 0.7
Grocery Stores 2 789 0.8
Home Furnishings 35 6,872 6.6
Home Improvement 12 1,333 1.3
Office Supplies 8 2,476 2.4
Pet Supplies 2 455 0.4
Shoe Stores 3 890 0.9
200 27,675 26.7
TENANTS SELLING GOODS AND SERVICES
Automotive Parts 55 4,645 4.5
Business Services 1 120 0.1
Convenience Stores 61 5,429 5.2
Home Improvement 21 2,726 2.6
Pet Supplies
and Services 6 1,082 1.1
Restaurants 175 14,170 13.7
Video Rental 35 4,501 4.3
354 32,673 31.5
TENANTS PROVIDING SERVICES
Automotive Service 105 7,176 6.9
Child Care 324 26,311 25.4
Entertainment 2 940 0.9
Health and Fitness 2 1,202 1.2
Private Education 5 1,497 1.5
Other 12 6,148 5.9
450 43,274 41.8
Totals 1,004 $103,622 100.0%
(1) Annualized Rent is calculated by multiplying the monthly contractual
base rent as of April 1, 1999 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
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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
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 .
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