Property Acquisitions Exceed $48 Million at 10.5% Lease Rate
Second Quarter FFO Per Share Increases 5.3%
ESCONDIDO, Calif., Aug. 5 /PRNewswire/ -- Realty Income Corporation
(Realty Income), "The Monthly Dividend Company," (NYSE: O) today announced
operating results for the second quarter ended June 30, 1999. Funds from
operations (FFO) for the quarter increased to $16.0 million from
$15.3 million for the same quarter one year ago. On a diluted per common
share basis, FFO increased 5.3% to $0.60 per share compared to $0.57 for the
same quarter 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 its ability to pay
dividends. Net income available to common stockholders decreased $9.8 million
as compared to $10.3 million for the same quarter in 1998. On a diluted per
share basis this represented a 2.6% decrease to $0.37 per share as compared to
$0.38 per share for the same period one year ago.
COMPANY HIGHLIGHTS:
-- Increases in the amount of the monthly dividend were announced in March
and June, 1999
-- Annualized dividends increased 6.1% from June 30, 1998 to June 30,
1999, to an annualized amount of $2.10 per share
-- Invested $88.9 million in 66 net-leased retail properties with an
initial lease yield of 10.4%
-- Further diversified the Company's retail real estate portfolio which
now includes 22 different retail industries and 72 separate retail
chains
-- Second quarter FFO increased by 5.3% to $0.60 per share
-- Issued $69.0 million of 9.375% cumulative preferred stock at $25 per
share in May
-- Issued $34.5 million of 9.5% cumulative preferred stock at $25 per
share in July
During the second quarter, Realty Income invested $48.0 million in new
properties and properties under development with an initial contractual lease
yield of 10.5%. The Company acquired 32 properties, located in 12 states,
containing approximately 337,300 leasable square feet. The properties are
100% leased with an average lease term of 16.9 years. In addition, the
Company further diversified its real estate portfolio by adding properties
from two new retail chains during the quarter.
Commenting on the Company's performance, Tom A. Lewis, Chief Executive
Officer, stated, "The first half of 1999 has been a productive period for us.
We are benefiting from our unique retail and real estate research capabilities
that have facilitated the discovery of new industry and retail opportunities
over the past 18 months. We look forward to completing a strong year of
acquisitions and solid financial performance."
For the six months ended June 30, 1999, FFO increased to $32.0 million
versus $30.1 million for the same period one year ago. On a diluted per share
basis, FFO increased 4.4% to $1.19 as compared to $1.14 for the same period in
1998. Net income available to common stockholders for the first half of the
year decreased to $19.7 million as compared to $20.2 million for the same
period in 1998. On a diluted per share basis, net income decreased 3.9% to
$0.74 as compared to $0.77 for the same six month period in 1998.
Year-to-date, Realty Income has invested $88.9 million in new properties
and properties under development, with an initial contractual lease yield of
10.4%. The Company has acquired 66 properties, located in 23 states,
containing approximately 623,100 leasable square feet. The properties are
100% leased with an average lease length of 15.7 years. During the first half
of the year Realty Income added one new industry and seven new retailers to
its real estate portfolio. The Company's portfolio of properties as of June
30, 1999, consists of 1,036 properties leased to 72 separate retail chains
doing business in 22 different retail segments, as compared to 895 properties
leased to 55 retail chains in 15 different retail segments as of June 30,
1998.
Same store rents on properties leased by retail chains during both the
three months ended June 30, 1999 and 1998 increased 1.0%. For the six months
ended June 30, 1999, same store rents on the same properties increased 1.2%.
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 1,036
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.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
For the three and six months ended June 30, 1999 and 1998
Three Months Three Months Six Months Six Months
Ended 6/30/99 Ended 6/30/98 Ended 6/30/99 Ended 6/30/98
REVENUE
Rental $24,864 $20,343 $48,812 $39,511
Interest and other 38 24 76 78
24,902 20,367 48,888 39,589
EXPENSES
Depreciation and
amortization 6,237 5,369 12,327 10,453
Interest 6,045 2,864 11,925 5,355
General and
administrative 1,755 1,711 3,401 3,176
Property 437 426 878 899
14,474 10,370 28,531 19,883
Income from
operations 10,428 9,997 20,357 19,706
Gain on sales
of properties -- 311 -- 526
Net income 10,428 10,308 20,357 20,232
Class B preferred stock
dividends (629) -- (629) --
Net income available to
stockholders $9,799 $10,308 $19,728 $20,232
Basic and diluted
per share information for
common stockholders:
Income from
operations $ 0.37 $ 0.37 $ 0.74 $ 0.75
Net income 0.37 0.38 0.74 0.77
FFO 0.60 0.57 1.19 1.14
Dividends paid 0.5175 0.4875 1.0275 0.9675
Weighted average number
of common shares used for:
Basic per share
computation 26,822,370 26,836,730 26,822,376 26,434,892
Diluted per share
computation 26,827,338 26,845,091 26,826,291 26,442,519
FUNDS FROM OPERATIONS
(dollars in thousands)
Three Months Three Months Six Months Six Months
Ended 6/30/99 Ended 6/30/98Ended 6/30/98 Ended 6/30/99
Net income $10,428 $10,308 $20,357 $20,232
Plus depreciation and
amortization 6,237 5,369 12,327 10,453
Less:
Class B preferred
stock dividends (629) -- (629) --
Depreciation of furniture,
fixtures and equipment
and amortization of
organization costs (22) (40) (43) (79)
Gain on sales of
properties -- (311) -- (526)
Funds from
operations $16,014 $15,326 $32,012 $30,080
Distributions
paid to common
stockholders $13,881 $13,083 $27,560 $25,545
Distributions
paid to preferred
stockholders 629 -- 629 --
CONSOLIDATED BALANCE SHEETS
As of June 30, 1999 and December 31, 1998
(dollars in thousands, except per share data)
1999 1998
ASSETS
Real estate, at cost:
Land $323,542 $283,043
Buildings and improvements 655,430 606,792
978,972 889,835
Less - accumulated depreciation
and amortization (183,325) (171,555)
Net real estate 795,647 718,280
Cash and cash equivalents 16,818 2,533
Accounts receivable 2,320 2,973
Goodwill, net 19,515 19,977
Other assets 15,166 15,471
Total assets $849,466 $759,234
LIABILITIES AND STOCKHOLDERS' EQUITY
Distributions payable $4,694 $4,559
Accounts payable and accrued expenses 9,242 4,036
Other liabilities 3,296 5,630
Line of credit payable 93,300 84,800
Notes payable 230,000 210,000
Total liabilities 340,532 309,025
Stockholders' equity:
Preferred stock, par value $1.00 per
share, 20,000,000 shares authorized,
2,760,000 shares issued and
outstanding 2,760 --
Common stock, par value $1.00 per
share, 100,000,000 shares authorized,
26,822,447 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 673,596 609,669
Distributions in excess of net income (194,244) (186,277)
Total stockholders' equity 508,934 450,209
Total liabilities and
stockholders' equity $849,466 $759,234
The following table sets forth certain information regarding our
properties classified according to the business of the respective tenants
(dollars in thousands):
1998 1997 1996
Annualized (1) Percentage PercentagePercentage
Rent as of June 30, 1999 of Total of Total of Total
Rental Percentage Rental Rental Rental
Industy Revenue of Total Revenue Revenue Revenue
Apparel Stores $3,927 3.6% 4.1% 0.7% --%
Automotive Parts 9,541 8.7 7.8 9.1 10.5
Automotive Service 7,202 6.5 7.5 6.4 4.8
Book Stores 450 0.4 0.6 0.5 --
Business Services 124 0.1 * -- --
Child Care 27,927 25.4 29.2 35.9 42.0
Consumer Electronics 4,431 4.0 5.4 6.5 0.9
Convenience Stores 6,435 5.9 6.1 5.5 4.6
Crafts & Novelties 425 0.4 * -- --
Drug Stores 235 0.2 0.1 -- --
Entertainment 1,545 1.4 -- -- --
General Merchandise 687 0.6 * -- --
Grocery Stores 771 0.7 * -- --
Health & Fitness 3,329 3.0 0.1 -- --
Home Furnishings 6,872 6.2 7.8 5.6 4.4
Home Improvement 4,381 4.0 * -- --
Office Supplies 2,476 2.3 3.0 1.7 --
Pet Supplies &
Services 1,549 1.4 0.6 0.2 --
Private Education 1,497 1.4 0.9 -- --
Restaurants 14,464 13.1 16.2 19.8 24.4
Shoe Stores 1,234 1.1 0.8 0.2 --
Video Rental 4,501 4.1 3.8 0.6 --
Other 6,054 5.5 6.0 7.3 8.4
Totals $110,057 100.0% 100.0% 100.0% 100.0%
* Less than 0.1%
(1) Annualized Rent is calculated by multiplying the monthly contractual
base rent as of June 30, 1999 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 our properties
as of June 30, 1999, classified according to the retail business types and the
level of services they provide (dollars in thousands):
Industry Number of Annualized Percentage of
Properties Rent (1) Annualized Rent
TENANTS SELLING GOODS
Apparel Stores 5 $3,927 3.6%
Automotive Parts 81 4,738 4.3
Book Stores 1 450 0.4
Consumer Electronics 37 4,431 4.0
Craft & Novelty 2 425 0.4
Drug Stores 1 235 0.2
General Merchandise 11 687 0.6
Grocery Stores 2 771 0.7
Home Furnishings 35 6,872 6.2
Home Improvement 13 1,377 1.3
Office Supplies 8 2,476 2.3
Pet Supplies 2 467 0.4
Shoe Stores 4 1,234 1.1
202 28,090 25.5
TENANTS SELLING GOODS AND SERVICES
Automotive Parts 57 4,803 4.4
Business Services 1 124 0.1
Convenience Stores 70 6,435 5.9
Home Improvement 22 3,004 2.7
Pet Supplies & Services 6 1,082 1.0
Restaurants 177 14,464 13.1
Video Rental 35 4,501 4.1
368 34,413 31.3
TENANTS PROVIDING SERVICES
Automotive Service 105 7,202 6.5
Child Care 336 27,927 25.4
Entertainment 4 1,545 1.4
Health & Fitness 6 3,329 3.0
Private Education 10 6,054 5.5
Other 5 1,497 1.4
466 47,554 43.2
Totals 1,036 $110,057 100.0%
(1) Annualized Rent is calculated by multiplying the monthly contractual
base rent as of June 30, 1999 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 Miller, Vice President, Corporate
Communications of Realty Income, 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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