ESCONDIDO, Calif., July 25 /PRNewswire/ -- Realty Income Corporation
(Realty Income), "The Monthly Dividend Company," (NYSE: O) today announced
operating results for the second quarter and six months ended June 30, 2001.
COMPANY HIGHLIGHTS:
(for the six months ended June 30, 2001)
-- The monthly dividend amount was increased for the 15th consecutive
quarter
-- The annualized dividend amount increased 2.7% from June 30, 2000 to
June 30, 2001, to $2.25 per share
-- Revenue increased 8.3% to $61.5 million
-- Funds from Operations (FFO) increased 9.1% to $35.8 million
-- FFO per common share increased 5.7% to $1.30
-- 2.95 million common shares were issued, generating net proceeds of
$77.6 million
Financial Results
Revenue Increases
Realty Income's revenue for the second quarter ended June 30, 2001
increased 5.3% to $29.9 million as compared to $28.4 million for the same
quarter ended June 30, 2000.
Revenue for the six months ended June 30, 2001 increased 8.3% to
$61.5 million from $56.8 million for the same period in 2000.
Funds from Operations
FFO for the quarter ended June 30, 2001 increased 11.7% to $18.2 million
as compared to $16.3 million for the same quarter in 2000. On a diluted per
common share basis, FFO increased 4.9% to $0.64 per share compared to
$0.61 per share for the same period in 2000.
FFO for the six months ended June 30, 2001 increased 9.1% to $35.8 million
as compared to $32.8 million for the same period one year ago. On a diluted
per common share basis, FFO increased 5.7% to $1.30 per share from $1.23 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 June 14, 2001, Realty Income announced the 15th consecutive quarterly
increase in the amount of the monthly dividend on its common stock. The
amount of the dividend was increased to $0.1875 per share from $0.18625 per
share. This represents an annualized dividend amount of $2.25 per share. The
Company paid six monthly dividends totaling $1.11375 per common share through
June 30, 2001. The Company continues its 32-year history of declaring and
paying common stock dividends on a monthly basis.
Realty Income also paid six monthly dividends totaling $1.1874 per share
on its Class C preferred stock and two quarterly dividends totaling
$1.1718 per share on its Class B preferred stock.
Net Income Available to Common Stockholders
Net income available to common stockholders for the quarter ended June 30,
2001 increased to $11.0 million as compared to $10.4 million for the same
period in 2000. On a diluted per common share basis, net income was $0.39 per
share for each of the three months ended June 30, 2000 and 2001. 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 investment property sales during the second
quarter of 2001 was $164,000. This was $774,000, or $0.03 per common share,
less than the gain recognized from investment property sales during the same
period in 2000.
Net income available to common stockholders for the six months ended June
30, 2001 increased to $27.1 million as compared to $20.9 million for the same
period in 2000. On a diluted per common share basis, net income increased to
$0.98 per share as compared to $0.78 per share for the same period one year
ago. The gain recognized from investment property sales during the six months
ended June 30, 2001 was $6.1 million. This was $4.5 million, or $0.16 per
common share, greater than the gain recognized from investment property sales
during the same period in 2000.
Issuance of Common Stock
During the second quarter, Realty Income issued 2.95 million shares of
common stock priced at $27.80 per share. The net proceeds from the offering,
$77.6 million, were used to repay a portion of the amount outstanding on the
Company's $200 million unsecured acquisition credit facility and for other
general corporate purposes.
Real Estate Portfolio Update
The Company's portfolio of retail properties consists of 1,062 properties
located in 46 states, leased to 72 retail chains doing business in 23 retail
industries.
Property Acquisitions
During the second quarter ended June 30, 2001, Realty Income invested
$8.1 million in four new properties and properties under development with an
initial contractual lease yield of 11.7%. The new properties are 100% leased
with an initial average lease length of 23 years.
During the six months ended June 30, 2001, the Company invested
$15.3 million in seven new properties and properties under development with an
initial contractual lease yield of 11.6%. The seven new properties are 100%
leased with an initial average lease length of 21.7 years.
Property Dispositions
The Company made good progress in its asset disposition program during the
first six months of 2001. The objective of this 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.
During the second quarter ended June 30, 2001, Realty Income sold three
properties for $2.6 million. During the six months ended June 30, 2001,
Realty Income sold 13 properties for $19.7 million.
Portfolio Management Activities
The Company's portfolio of retail real estate owned under 10- to 20-year
net leases continues to perform well and provide dependable lease revenue
supporting the payment of monthly dividends. As of June 30, 2001, Realty
Income's property portfolio of 1,062 properties was 97.8% leased with
23 properties available for lease.
Same store rents on the 997 properties under lease during the six months
ended June 30, 2001 and 2000 increased 2.0% to $52.61 million compared to
$51.60 million in 2000. Same store rents on the same 997 properties under
lease during the three months ended June 30, 2001 and 2000 increased 2.6% to
$26.33 million from $25.67 million in 2000.
Market Overview
Realty Income's property acquisition opportunities and the market for
freestanding, net-lease, retail properties remain positive. In addition, the
Company continues to uncover ample opportunities to invest its capital in
properties with attractive lease yields. It is anticipated that Realty Income
will generate growth in its real estate portfolio by financing new
acquisitions from internally generated cash flow, proceeds from property
dispositions and the capital from its second quarter common stock offering.
The Company 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 June 30, 2001 was
$57.8 million. The outstanding balance on the credit facility used to fund
Crest operations was $12.4 million.
Other Activities
Crest Net Lease
Crest Net Lease Inc., a subsidiary of Realty Income, is focused on
acquiring and subsequently marketing net-leased properties for sale. During
the second quarter ended June 30, 2001, Crest sold one property for
$1.5 million and reported a gain on sales of $161,000. During the quarter
Crest also invested $668,000 in properties under development.
During the six months ended June 30, 2001, Crest invested $4.5 million in
four properties and properties under development and at June 30, 2001 carried
an inventory of $13.8 million in properties held for sale. During the first
half of the year, Crest sold $15.5 million in properties and reported a gain
on sales of $2.1 million.
Management believes that Crest will carry an average inventory of between
$20 to $25 million in properties. Crest generates an earnings spread on the
difference between the lease payments it receives on the properties held in
inventory and the cost of the 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
second quarter and first half of 2001, Crest generated $0.01 and $0.05,
respectively, per common share in FFO for Realty Income. In May 2001, Realty
Income acquired the outstanding 5% of Crest common stock it did not previously
own for $507,000. Realty Income now owns 100% of Crest.
CEO Comments on Mid-Year Operating Results
Commenting on Realty Income's financial results and real estate
operations, Tom A. Lewis, Chief Executive Officer, stated, "We are pleased
with our operating results for the first half of the year. We began the year
with confidence based upon the solid performance of our real estate portfolio,
an attractive property acquisitions environment, and the generally increasing
price of the Company's common shares. As the first half of the year
progressed we continued to gain momentum in an environment that has been
favorable to both our industry and our company. During the second quarter we
completed an offering of 2.95 million common shares that was very well
received. The $77.6 million in capital received from that offering is being
invested in new properties, with attractive lease yields, that are scheduled
to close during the third and fourth quarters of 2001. In addition, both
revenue and FFO per share increased according to our expectations. This
allowed us to raise the amount of the monthly dividend twice during the first
half of the year. Since August 1995, we have now raised our common stock
dividend 17 times and for the last 15 consecutive quarters. As a result, we
continue to fulfill our mission to provide dependable monthly income to our
shareholders."
Earnings Guidance
Realty Income's FFO per common share tends 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 per common share 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.
2001 Estimates
Management continues to estimate 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.
2002 Estimates
Management estimates that FFO per common share for 2002 should range from
$2.80 to $2.82, which would equate to an increase of approximately 4.9% to
6.4% over 2001 projected FFO per share of $2.65 to $2.67.
In prior years, certain items impacting FFO per share have fluctuated
quarter to quarter. Typically the Company's FFO 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 and acquisitions or
capital markets activities.
Management estimates Crest Net Lease, Inc. will generate between $0.06 to
$0.08 per share of FFO during 2001 and during 2002. Crest's primary business
is the purchase and sale of properties at 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. The Company
undertakes no obligation to publicly release the results of any revisions to
these forward-looking statements that may be made to reflect events or
circumstances after the date these statements were made.
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 flow from
1,062 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 via the
internet at http://www.realtyincome.com/Investing/News.html
CONSOLIDATED STATEMENTS OF INCOME
For the three and six months ended June 30, 2001 and 2000
(dollars in thousands, except per share amounts)
Three Months Three Months Six Months Six Months
Ended 6/30/01 Ended 6/30/00 Ended 6/30/01 Ended 6/30/00
REVENUE
Rental $29,586 $28,349 $59,082 $56,679
Gain on sales
of real estate
acquired for
resale 161 -- 2,089 --
Interest and
other 179 92 320 117
29,926 28,441 61,491 56,796
EXPENSES
Interest 6,587 7,471 14,646 14,629
Depreciation and
amortization 7,158 6,844 14,368 13,592
General and
administrative 1,866 1,699 3,906 3,273
Property 564 466 1,188 981
Other 439 36 1,549 146
16,614 16,516 35,657 32,621
Income from
operations 13,312 11,925 25,834 24,175
Gain on sales of
investment
properties 164 938 6,115 1,600
Net income 13,476 12,863 31,949 25,775
Preferred stock
dividends (2,428) (2,428) (4,856) (4,856)
Net income
available to
common
stockholders $11,048 $10,435 $27,093 $20,919
Funds from
operations
(FFO) $18,214 $16,306 $35,820 $32,843
Basic and diluted
per share
information
for common
stockholders:
Income from
operations $0.38 $0.36 $0.76 $0.72
Net income 0.39 0.39 0.98 0.78
FFO 0.64 0.61 1.30 1.23
Cash dividends
paid 0.5588 0.5438 1.1138 1.0838
FUNDS FROM OPERATIONS
For the three and six months ended June 30, 2001 and 2000
(dollars in thousands, except per share amounts)
Three Months Three Months Six Months Six Months
Ended 6/30/01 Ended 6/30/00 Ended 6/30/01 Ended 6/30/00
Net income
available to
common
stockholders $11,048 $10,435 $27,093 $20,919
Plus:
Depreciation
and
amortization 7,158 6,844 14,368 3,592
Provision for
impairment
losses on
properties held
for sale 200 -- 530 --
Less:
Depreciation of
furniture,
fixtures and
equipment (28) (35) (56) (68)
Gain on sales of
investment
properties (164) (938) (6,115) (1,600)
Funds from
operations $18,214 $16,306 $35,820 $32,843
Dividends paid to
common
stockholders $15,419 $14,534 $30,189 $29,018
FFO in excess of
dividends $2,795 $1,772 $5,631 $3,825
Basic and diluted
FFO per common
share $0.64 $0.61 $1.30 $1.23
Weighted average
number of
common shares
used for:
Basic per
share
computation 28,393,227 26,703,319 27,507,539 26,759,355
Diluted per
share
computation 28,468,992 26,717,992 27,565,500 26,768,843
CONSOLIDATED BALANCE SHEETS
As of June 30, 2001 and December 31, 2000
(dollars in thousands, except per share data)
2001 2000
ASSETS
Real estate, at cost:
Land $375,893 $368,057
Buildings and improvements 705,957 705,470
1,081,850 1,073,527
Less accumulated depreciation
and amortization (224,291) (212,379)
Net real estate held for investment 857,559 861,148
Real estate held for sale, net 15,675 33,130
Net real estate 873,234 894,278
Cash and cash equivalents 1,180 3,815
Accounts receivable 3,270 5,053
Goodwill, net 17,668 18,130
Other assets 13,973 13,490
Total assets $909,325 $934,766
LIABILITIES AND STOCKHOLDERS' EQUITY
Distributions payable $7,434 $4,914
Accounts payable and accrued expenses 5,957 5,969
Other liabilities 3,956 4,314
Lines of credit payable 70,200 174,000
Notes payable 230,000 230,000
Total liabilities 317,547 419,197
Stockholders' equity:
Preferred stock and paid in capital, par value
$1.00 per share, 20,000,000 shares
authorized, 4,125,700 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, 29,611,375 and 26,563,519
shares issued and outstanding in 2001
and 2000, respectively 710,875 630,932
Distributions in excess of net income (218,465) (214,731)
Total stockholders' equity 591,778 515,569
Total liabilities and
stockholders' equity $909,325 $934,766
The following table sets forth rental revenue from our properties
classified according to the business of the respective tenants, expressed as a
percentage of our total rental revenue:
Percentage of Rental Revenue(1)
Annualized
Rent as of For the Years Ended
June 30 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31
2001 2000 1999 1998 1997 1996 1995
(1)(2)
Industry
Apparel Stores 2.3% 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 5.9 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 23.9 24.7 25.3 29.2 35.9 42.0 45.6
Consumer
Electronics 4.2 4.9 4.4 5.4 6.5 0.9 --
Convenience
Stores 8.5 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 2.0 2.0 1.2 -- -- -- --
General
Merchandise 0.6 0.6 0.6 * -- -- --
Grocery Stores 0.6 0.6 0.5 * -- -- --
Health & Fitness 4.6 2.4 0.6 0.1 -- -- --
Home Furnishings 6.0 5.8 6.5 7.8 5.6 4.4 2.9
Home Improvement 1.3 2.0 3.6 * -- -- --
Office Supplies 2.1 2.3 2.6 3.0 1.7 -- --
Pet Supplies &
Services 1.4 1.5 1.1 0.6 0.2 -- --
Private
Education 1.5 1.4 1.2 0.9 -- -- --
Restaurants 11.5 12.3 13.3 16.2 19.8 24.4 24.7
Shoe Stores 0.7 0.8 1.1 0.8 0.2 -- --
Theaters 4.4 2.7 0.6 -- -- -- --
Video Rental 3.7 3.9 4.3 3.8 0.6 -- --
Other 5.1 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 rental revenue from properties owned by
Crest Net Lease, which are held for sale.
(2) Annualized Rent is calculated by multiplying the monthly contractual
base rent as of June 30, 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.
The following table sets forth certain information regarding the
properties owned by Realty Income as of June 30, 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 $6,992 5.9%
Child Care 332 28,514 23.9
Entertainment 8 2,360 2.0
Health & Fitness 9 5,426 4.6
Private Education 6 1,817 1.5
Theaters 10 5,209 4.4
Other 8 6,128 5.1
474 56,446 47.4
TENANTS SELLING GOODS AND SERVICES
Automotive Parts 63 5,610 4.7
Business Services 1 124 0.1
Convenience Stores 105 10,111 8.5
Home Improvement 2 187 0.2
Pet Supplies & Services 6 1,241 1.0
Restaurants 165 13,677 11.5
Video Rental 35 4,443 3.7
377 35,393 29.7
TENANTS SELLING GOODS
Apparel Stores 4 2,799 2.3
Automotive Parts 77 4,463 3.7
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 7,100 6.0
Home Improvement 23 1,377 1.2
Office Supplies 8 2,476 2.1
Pet Supplies 2 467 0.4
Shoe Stores 4 890 0.7
211 27,276 22.9
Totals 1,062 $119,115 100.0%
(1) The table does not include rental revenue from properties owned by
Crest Net Lease, which are held for sale.
(2) Annualized Rent is calculated by multiplying the monthly contractual
base rent as of June 30, 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.
The following table sets forth certain information regarding the timing of
the lease term expirations (excluding extension options) on our 1,034 net
leased, single-tenant retail properties as of June 30, 2001 (dollars in
thousands):
Year Number of Annualized Percent of
Leases Expiring(1) Rent(1)(2) Annualized Rent
2001 73 $5,487 4.8%
2002 81 6,658 5.9
2003 73 6,158 5.4
2004 117 9,980 8.8
2005 84 6,517 5.7
2006 28 2,567 2.3
2007 93 6,385 5.6
2008 66 5,844 5.2
2009 29 2,521 2.2
2010 45 3,880 3.4
2011 38 5,712 5.0
2012 47 5,531 4.9
2013 74 12,700 11.2
2014 39 6,643 5.9
2015 37 4,349 3.8
2016 13 1,390 1.2
2017 11 4,130 3.6
2018 16 1,626 1.4
2019 50 8,705 7.7
2020 9 2,920 2.6
2021 4 1,666 1.5
2023 1 159 0.1
2026 2 372 0.3
2033 2 1,118 1.0
2034 2 570 0.5
Totals 1,034 $113,588 100.0%
(1) This table does not include five multi-tenant properties and
23 vacant, unleased single-tenant properties owned by the Company and
properties owned by Crest Net Lease. The lease expirations for
properties under construction are based on the estimated date of
completion of such properties.
(2) Annualized rent is calculated by multiplying the monthly contractual
base rent as of June 30, 2001 for each of the properties by 12 and
adding the previous 12 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 Miller, Vice President, Corporate
Communications of Realty Income Corporation, +1-760-741-2111 ext.
177
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