Property Acquisitions Exceed $38 Million at 10.6% Lease Rate
Funds From Operations Per Share Increased 9.1%
ESCONDIDO, Calif., Nov. 3 /PRNewswire/ -- Realty Income Corporation
(Realty Income) (NYSE: O) today announced another quarter of strong operating
results for the period ended September 30, 1998. Funds from Operations (FFO)
increased 27.8% to $16.1 million from $12.6 million for the same quarter one
year ago. On a diluted per share basis, FFO increased 9.1% to $0.60 per share
compared to $0.55 for the same quarter in 1997. 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. Net income increased 23.5% to $10.5 million as compared to $8.5 million
for the same quarter in 1997. On a diluted per share basis, this represented
a 5.4% increase to $0.39 per share as compared to $0.37 per share for the same
period one year ago.
THIRD QUARTER HIGHLIGHTS:
* $38 million invested in new properties with an initial lease yield of
10.6%
* Acquisition of 33 properties located in 22 states
* Year- to-date investment in new properties is $140.2 million with an
initial lease yield of 10.4% and average lease term of 14.6 years
* FFO increased by 27.8% to $16.1 million
* FFO per share increased by 9.1% to $0.60 per share
* Net income increased by 23.5% to $10.5 million
* Net income per share increased by 5.4% to $0.39 per share
* Monthly dividend increase to $0.1675 per share was announced in
September, the fourth consecutive quarterly increase
During the third quarter, Realty Income invested $38.2 million in new
properties and properties under development with an initial contractual lease
yield of 10.6%. The Company acquired 33 properties located in 22 states,
containing approximately 392,100 leasable square feet. The properties are
100% leased with an average lease term of 14.5 years. In addition, the
Company further diversified its real estate portfolio by adding properties
from three new industries (Drug Stores, Grocery, and Business Services) and
five new retail chains during the quarter.
Commenting on the Company's performance, Tom A. Lewis, Chief Executive
Officer, stated, "We are very pleased with the Company's strong operating
results for the third quarter. Property acquisitions remain brisk despite a
highly competitive real estate environment so far this year. We anticipate
that, going forward, we may well benefit from the recent turmoil in the
Commercial Mortgage Backed Securities (CMBS) market. Over the next few
quarters, we anticipate pursuing incremental acquisition opportunities with
retailers and developers who had previously relied on CMBS financing. Fueling
these additional acquisition opportunities is our continued access to capital.
As a result of our recent $100 million, 10-year Note offering and funds
available under our acquisition credit facility, we are well funded for future
acquisition activity. We continue to profit from our highly focused real
estate investment strategy which is fundamental to the Company's solid
financial performance and our ability and commitment to provide investors with
dependable monthly income."
For the nine months ended September 30, 1998, FFO increased 23.5% to $46.2
million versus $37.4 million for the same period one year ago. On a diluted
per share basis, FFO increased 6.7% to $1.74 as compared to $1.63 for the same
period in 1997. Net income for the first nine months of the year increased
24.3% to $30.7 million as compared to $24.7 million for the same period in
1997. On a diluted per share basis, net income increased 7.4% to $1.16 as
compared to $1.08 for the same nine month period in 1997.
During 1998, Realty Income has invested $140.2 million in new properties
and properties under development, with an initial contractual lease yield of
10.4%. The Company has acquired 99 properties, containing approximately
1,049,400 leasable square feet, located in 34 states. The properties are 100%
leased with an average lease length of 14.6 years. During the first nine
months of the year, Realty Income added five new industries and 16 new
retailers to its real estate portfolio. The Company's portfolio of properties
now consists of 922 properties leased to 59 separate retail chains doing
business in 18 different retail segments.
Same store rents on 717 properties owned during the entire three months
ended September 30, 1998 and 1997, increased 1.9% to $15.38 million compared
to $15.10 million in 1997. Same store rents on the same 717 properties for
the nine months ended September 30, 1998, increased 1.3% to $45.78 million as
compared to $45.18 million in 1997.
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 922
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, 1997, for
further description and detail of other risk factors.
CONSOLIDATED STATEMENTS OF INCOME
For the three and nine months ended September 30, 1998 and 1997
(dollars in thousands, except per share data)
Three Three Nine Nine
Months Months Months Months
Ended Ended Ended Ended
9/30/98 9/30/97 9/30/98 9/30/97
REVENUE
Rental $21,814 $16,801 $61,325 $48,256
Interest and other 155 42 233 190
21,969 16,843 61,558 48,446
EXPENSES
Depreciation and
amortization 5,630 4,706 16,083 13,654
General and
administrative 1,667 1,338 4,843 3,923
Property 497 409 1,396 1,262
Interest 3,682 2,450 9,037 5,771
Provision for
impairment losses -- 70 -- 140
11,476 8,973 31,359 24,750
Income from
operations 10,493 7,870 30,199 23,696
Gain on sales
of properties -- 596 526 1,023
NET INCOME $10,493 $8,466 $30,725 $24,719
FFO $16,083 $12,610 $46,163 $37,430
Dividends Paid 13,281 10,864 38,826 32,586
Basic and Diluted
Per Share Information
Income from
Operations $0.39 $0.34 $1.14 $1.03
Net Income 0.39 0.37 1.16 1.08
FFO 0.60 0.55 1.74 1.63
Cash Dividends Paid 0.495 0.473 1.463 1.418
Weighted average
number of shares
used for basic per
share computation 26,826,584 22,994,321 26,566,891 22,989,582
Weighted average
number of shares
used for diluted per
share computation 26,834,618 22,999,536 26,575,926 22,993,205
CONSOLIDATED BALANCE SHEETS
September 30, 1998 and December 31, 1997
(dollars in thousands, except per share data)
1998 1997
ASSETS
Real estate, at cost:
Land $265,865 $214,342
Buildings and improvements 570,563 485,455
836,428 699,797
Less accumulated depreciation
and amortization (165,980) (152,206)
Net real estate 670,448 547,591
Cash and cash equivalents 2,788 2,123
Accounts receivable 1,374 2,888
Due from affiliates -- 348
Other assets 2,781 3,170
Goodwill, net 20,208 20,901
TOTAL ASSETS $697,599 $577,021
LIABILITIES AND STOCKHOLDERS' EQUITY
Distributions payable $4,492 $4,112
Accounts payable and accrued expenses 8,294 2,180
Other liabilities 4,632 4,814
Lines of credit payable 117,000 22,600
Notes payable 110,000 110,000
TOTAL LIABILITIES 244,418 143,706
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, 26,816,885
and 25,698,464 shares issued and
outstanding in 1998 and 1997,
respectively 26,817 25,698
Paid in capital in excess of par value 609,678 582,450
Accumulated distributions in
excess of net income (183,314) (174,833)
TOTAL STOCKHOLDERS' EQUITY 453,181 433,315
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $697,599 $577,021
The following table represents Realty Income's rental revenue by industry
(dollars in thousands):
Annualized (a)
Rent as of Nine Months Ended Nine Months Ended
Sept. 30, 1998 Sept. 30, 1998 Sept. 30, 1997
Rental Percentage Rental Percentage Rental Percentage
Industry Revenue of Total Revenue of Total Revenue of Total
Apparel Stores $3,927 4.2% $2,479 4.0% $14 --%
Automotive Parts 8,268 8.9 4,391 7.2 4,295 8.9
Automotive Service 6,845 7.4 4,680 7.6 3,008 6.2
Book Stores 450 0.5 338 0.5 273 0.6
Business Services 120 0.1 -- -- -- --
Child Care 25,298 27.2 18,023 29.4 17,776 36.8
Consumer
Electronics 4,431 4.8 3,468 5.7 3,262 6.8
Convenience Stores 5,390 5.8 3,732 6.1 2,650 5.5
Drug Stores 235 0.2 1 -- -- --
Grocery Stores 742 0.8 -- -- -- --
Health and Fitness 1,239 1.3 -- -- -- --
Home Furnishings 8,064 8.7 4,768 7.8 2,529 5.2
Office Supplies 2,476 2.7 1,897 3.1 596 1.2
Pet Supplies
& Services 1,375 1.5 289 0.5 71 0.1
Private Education 1,296 1.4 502 0.8 -- --
Restaurants 14,304 15.4 10,283 16.8 10,066 20.9
Shoe Stores 890 0.9 451 0.7 24 0.1
Video Rental 3,707 4.0 2,222 3.6 36 0.1
Other 3,878 4.2 3,801 6.2 3,656 7.6
Total $92,935 100% $61,325 100% $48,256 100%
(a) Annualized rent is calculated by multiplying the monthly contracted
base rent as of October 1, 1998 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 specific level). For 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:
Gary Malino, Sr. Vice President, Chief
Financial Officer, 760-741-2111, ext. 142, or Tere Miller, Vice
President, Investor Relations, 760-741-2111, ext. 177, both of
Realty Income Corporation
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.prnewswire.com or http://www.realtyincome.com.
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