ESCONDIDO, Calif., Nov. 2 /PRNewswire/ -- Realty Income Corporation
(Realty Income), "The Monthly Dividend Company," (NYSE: O) today announced
solid operating results for the third quarter ended September 30, 1999. Funds
from Operations (FFO) increased 1.9% to $16.4 million from $16.1 million for
the same quarter one year ago. On a diluted per common share basis, FFO
increased 1.7% to $0.61 per share compared to $0.60 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 increased 4.8% to $11.0 million as compared
to $10.5 million for the same quarter in 1998. On a diluted per share basis,
this represented a 5.1% increase to $0.41 per share as compared to $0.39 per
share for the same period one year ago.
For the nine months ended September 30, 1999, FFO increased 4.8% to
$48.4 million versus $46.2 million for the same period one year ago. On a
diluted per share basis, FFO increased 3.4% to $1.80 as compared to $1.74 for
the same period in 1998. Net income available to common stockholders for the
first nine months of the year remained unchanged from the same period in 1998
at $30.7 million. On a diluted per share basis, net income decreased 1.7% to
$1.14 as compared to $1.16 for the same nine month period in 1998.
THIRD QUARTER HIGHLIGHTS:
-- The amount of the monthly dividend was increased to $0.1775 per share
which was the eighth consecutive quarterly increase.
-- The Company reported record acquisitions, acquiring 38 properties
located in 5 states, investing $68.7 million.
-- The initial contractual lease yield on third quarter acquisitions was
10.5%.
-- FFO increased by 1.9% to $16.4 million.
-- FFO per share increased by 1.7% to $0.61 per share.
During the third quarter, Realty Income invested $68.7 million in new
properties and properties under development with an initial contractual lease
yield of 10.5%. The Company acquired 38 properties located in 5 states,
containing approximately 243,600 leasable square feet. The properties are
100% leased with an initial average lease term of 20.8 years. In addition,
the Company further diversified its real estate portfolio by adding properties
from one new industry, Theaters, and one new retail chain during the quarter.
Commenting on the Company's performance, Tom A. Lewis, Chief Executive
Officer, stated, "We are always pleased to report increased operating and
acquisition results. Our third quarter FFO was somewhat impacted by the
earlier and higher level of issuance of preferred shares, during the second
and third quarter, to finance recent property acquisitions. The 38 properties
acquired during the third quarter further increase the contractual lease
revenue generated by our property portfolio which has consistently grown in
size. This portfolio growth has lead to a steadily increasing cash flow which
has allowed us to regularly increase the amount of our monthly dividend. In
October, we raised the amount of our monthly dividend for the eighth
consecutive quarter. Achieving the financial and real estate portfolio growth
that contributes to dividend increases and a rising income stream for our
shareholders remains a focus of Realty Income."
During 1999, Realty Income has invested $157.5 million in new properties
and properties under development, with an initial contractual lease yield of
10.5%. The Company has acquired 104 properties, containing approximately
866,600 leasable square feet, located in 24 states. The properties are 100%
leased with an initial average lease length of 17.6 years. During the first
nine months of the year, Realty Income added two new industries, Entertainment
and Theaters, and eight new retailers to its real estate portfolio. The
Company's portfolio of properties now consists of 1,072 properties leased to
73 separate retail chains doing business in 23 different retail segments.
Same store rents on properties leased by retail chains during the nine
months ended September 30, 1999 and 1998, increased 1.3%. For the three
months ended September 30, 1999, same store rents on the same properties
increased 1.1%.
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
1,072 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.
Certain statements in this release constitute "forward-looking statements"
and involve risks, uncertainties and other factors which may cause the actual
performance of Realty Income to be materially different from the performance
expressed or implied by such statements. These risks include interest rates
and other general economic conditions, and the general health of the retail
real estate in general. Please refer to the Company's "Business" section of
the Annual Report on Form 10-K for the year ended December 31, 1998, for
further description and detail of other risk factors.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
Three Months Three Months Nine Months Nine Months
Ended 9/30/99 Ended 9/30/98 Ended 9/30/99 Ended 9/30/98
REVENUE
Rental $26,870 $21,814 $75,682 $61,325
Interest and other 30 155 106 233
26,900 21,969 75,788 61,558
EXPENSES
Depreciation and
amortization 6,660 5,630 18,987 16,083
Interest 6,100 3,682 18,025 9,037
General and
administrative 1,754 1,667 5,155 4,843
Property 478 497 1,356 1,396
14,992 11,476 43,523 31,359
Income from operations 11,908 10,493 32,265 30,199
Gain on sales
of properties 1,236 -- 1,236 526
Net income 13,144 10,493 33,501 30,725
Preferred stock
dividends (2,163) -- (2,792) --
Net income available to
common stockholders $10,981 $10,493 $30,709 $30,725
Basic and diluted
per share information for
common stockholders:
Income from
operations $0.36 $0.39 $1.10 $1.14
Net income 0.41 0.39 1.14 1.16
FFO 0.61 0.60 1.80 1.74
Dividends paid 0.525 0.495 1.553 1.463
Weighted average number
of common shares
used for:
Basic per share
computation 26,822,244 26,826,584 26,822,323 26,566,891
Diluted per share
computation 26,827,291 26,834,618 26,826,405 26,575,926
FUNDS FROM OPERATIONS
(dollars in thousands)
Three Months Three Months Nine Months Nine Months
Ended 9/30/99 Ended 9/30/98 Ended 9/30/99 Ended 9/30/98
Net income $13,144 $10,493 $33,501 $30,725
Plus depreciation and 6,660 5,630 18,987 16,083
amortization
Less:
Preferred stock
dividends (2,163) -- (2,792) --
Depreciation of furniture,
fixtures and equipment
and amortization of
organization costs (25) (40) (69) (119)
Gain on sales of
properties (1,236) -- (1,236) (526)
Funds from operations $16,380 $16,083 $48,391 $46,163
Distributions paid to
common stockholders $14,082 $13,281 $41,642 $38,826
CONSOLIDATED BALANCE SHEETS
As of September 30, 1999 and December 31, 1998
(dollars in thousands, except per share data)
1999 1998
ASSETS
Real estate, at cost:
Land $345,663 $283,043
Buildings and improvements 694,872 606,792
1,040,535 889,835
Less - accumulated depreciation
and amortization (189,177) (171,555)
Net real estate 851,358 718,280
Cash and cash equivalents 2,897 2,533
Accounts receivable 2,268 2,973
Goodwill, net 19,284 19,977
Other assets 14,535 15,471
Total assets $890,342 $759,234
LIABILITIES AND STOCKHOLDERS' EQUITY
Distributions payable $4,761 $4,559
Accounts payable and accrued expenses 10,737 4,036
Other liabilities 3,467 5,630
Line of credit payable 102,500 84,800
Notes payable 230,000 210,000
Total liabilities 351,465 309,025
Stockholders' equity:
Preferred stock, par value $1.00 per
share, 20,000,000 shares authorized,
4,140,000 shares issued and
outstanding 4,140 --
Common stock, par value $1.00 per
share, 100,000,000 shares authorized,
26,822,131 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 705,327 609,669
Distributions in excess of net income (197,412) (186,277)
Total stockholders' equity 538,877 450,209
Total liabilities and
stockholders' equity $890,342 $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 Percentage Percentage of
Rent as of September 30, 1999 of Total of Total Total
Rental Percentage Rental Rental Rental
Industry Revenue of Total Revenue Revenue Revenue
Apparel Stores $3,927 3.3% 4.1% 0.7% --%
Automotive Parts 9,467 8.1 7.8 9.1 10.5
Automotive Service 7,220 6.2 7.5 6.4 4.8
Book Stores 450 0.4 0.6 0.5 --
Business Services 124 0.1 * -- --
Child Care 28,264 24.1 29.2 35.9 42.0
Consumer Electronics4,647 4.0 5.4 6.5 0.9
Convenience Stores 9,597 8.2 6.1 5.5 4.6
Crafts & Novelties 425 0.4 * -- --
Drug Stores 235 0.2 0.1 -- --
Entertainment 2,115 1.8 -- -- --
General Merchandise 687 0.6 * -- --
Grocery Stores 694 0.6 * -- --
Health & Fitness 3,329 2.8 0.1 -- --
Home Furnishings 6,080 5.2 7.8 5.6 4.4
Home Improvement 5,698 4.8 * -- --
Office Supplies 2,476 2.1 3.0 1.7 --
Pet Supplies &
Services 1,595 1.4 0.6 0.2 --
Private Education 1,507 1.3 0.9 -- --
Restaurants 14,367 12.3 16.2 19.8 24.4
Shoe Stores 1,234 1.0 0.8 0.2 --
Theaters 2,406 2.1
Video Rental 4,510 3.8 3.8 0.6 --
Other 6,145 5.2 6.0 7.3 8.4
Totals $117,199 100.0% 100.0% 100.0% 100.0%
* Less than 0.1%
(1) Annualized Rent is calculated by multiplying the monthly contractual
base rent as of September 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 September 30, 1999, classified according to the retail
business types and the level of services they provide (dollars in thousands):
Industry Number of Percentage of
Properties Annualized Rent(1) Annualized Rent
TENANTS SELLING GOODS
Apparel Stores 5 $3,927 3.3%
Automotive Parts 81 4,677 4.0
Book Stores 1 450 0.4
Consumer Electronics 37 4,647 4.0
Craft & Novelty 2 425 0.4
Drug Stores 1 235 0.2
General Merchandise 11 687 0.6
Grocery Stores 2 694 0.6
Home Furnishings 34 6,106 5.2
Home Improvement 13 1,377 1.2
Office Supplies 8 2,476 2.1
Pet Supplies 2 467 0.4
Shoe Stores 4 1,234 1.0
201 27,402 23.4
TENANTS SELLING GOODS AND
SERVICES
Automotive Parts 57 4,790 4.1
Business Services 1 124 0.1
Convenience Stores 103 9,597 8.2
Home Improvement 22 4,321 3.6
Pet Supplies & Services 6 1,128 1.0
Restaurants 178 14,367 12.3
Video Rental 35 4,510 3.8
402 38,837 33.1
TENANTS PROVIDING SERVICES
Automotive Service 105 7,220 6.2
Child Care 336 28,264 24.1
Entertainment 6 2,115 1.8
Health & Fitness 6 3,329 2.8
Other 9 6,119 5.2
Private Education 5 1,507 1.3
Theaters 2 2,406 2.1
469 50,960 43.5
Totals 1,072 $117,199 100.0%
(1) Annualized Rent is calculated by multiplying the monthly
contractual base rent as of September 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, Investor
Relations of Realty Income Corporation, 760-317-2977
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 the Company's website:
http://www.realtyincome.com
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