Our Core Values

We believe the core values that have allowed Realty Income to thrive throughout a variety of economic and market conditions during the past thirty years continue to provide us with the resources to successfully execute our business plan.

We remain focused on the fundamental principle on which the Company was founded--providing dependable monthly income to our shareholders. The Company’s corporate strategy and business focus are specifically designed to generate a predictable and consistent cash flow that supports the payment of monthly dividends. We accomplish this by pursuing a clearly defined strategy of owning quality retail real estate under long-term leases with successful retail chains, maintaining a conservative financial structure that supports responsible growth and generating a strong cash flow.

Our goal continues to be to expand the number of properties in our real estate portfolio and increase the lease revenues. We also are striving to increase the quality of the real estate assets we own and widen the diversification of our revenue base. The Company’s objective in pursuing these goals is to increase the revenues and funds from operations that drive periodic dividend increases.

While our goals remain consistent year to year and the plans to achieve them are carefully conceived, we also intend to retain the flexibility to adjust to changes in our industry environment. We believe it is equally important to be nimble and quick, recognizing and acting on opportunities that present themselves during an industry transformation. It is our desire to maintain an experienced management team and solid corporate focus that fosters the freedom to pursue current business opportunities while maintaining congruency with the Company’s core values.

Successful Execution of 1997 Management Initiatives

The Company strives to provide dependable monthly income and an attractive, risk-adjusted total return to its shareholders by pursuing specific corporate objectives that are reviewed and revised on an annual basis. During 1998 we continued to utilize and execute a number of management initiatives that were implemented in the second half of 1997. These initiatives included:

• Expansion of our investment focus aimed at accelerating the Company’s acquisition activities
• Reorganization of our Acquisitions Department, which included hiring additional professional staff, increasing the use of technology and retooling the methods used by the department in generating acquisition opportunities
• Expansion of our Retail Research Department aimed at increasing the volume of our retail research, initiating research productivity standards and creating a research library
• Expansion of our Real Estate Research Department to ensure the continued quality of the properties in our portfolio of retail real estate.

The successful execution of these initiatives resulted in a significant increase in the number of new acquisition prospects from 1997 to 1998. The increase in the number of acquisition officers calling on retail chains provided us with a significantly greater number of investment opportunities for review. Improved real estate research standards contributed to increases in the quality of the real estate in which we invested and additions to the retail research staff provided the Company with an important advantage in uncovering acquisition opportunities ahead of competitors during 1998.