ESCONDIDO, CALIFORNIA, FEBRUARY 6, 2001 — Realty Income Corporation (Realty Income), "The Monthly Dividend Company," (NYSE: O) today announced operating results for the fourth quarter and year ended December 31, 2000.

• The monthly dividend amount was increased for the 13th consecutive quarter
• Annualized dividends increased 2.8% from December 1999 to December 2000, to an annualized amount of $2.22 per common share
• Revenue increased 13.2% to $118.3 million
• Funds from Operations (FFO) increased 2.0% to $67.2 million
• FFO per common share increased 2.4% to $2.52 per share
• Crest Net Lease, Realty Income's new subsidiary, achieved profitability
• Realty Income repurchased 298,800 shares of its securities for $6.5 million

Revenue Increases
Realty Income's revenue for the fourth quarter ended December 31, 2000 increased 10.1% to $31.6 million as compared to $28.7 million for the same quarter in 1999.

Revenue for the year ended December 31, 2000 increased 13.2% to $118.3 million from $104.5 million for the same period in 1999.

Funds from Operations
FFO for the quarter ended December 31, 2000 increased 1.7% to $17.8 million as compared to $17.5 million for the same quarter in 1999. On a diluted per common share basis, FFO increased 3.1% to $0.67 per share compared to $0.65 per share for the same period in 1999.

FFO for the year ended December 31, 2000 increased 2.0% to $67.2 million as compared to $65.9 million for the same period one year ago. On a diluted per common share basis, FFO increased 2.4% to $2.52 per share from $2.46 per share for the same period in 1999.

FFO is a widely used measure of REIT performance that excludes non-cash charges for the depreciation of real estate. FFO is one measure of a company's cash flow and of its ability to pay dividends.

Dividend Information
On December 13, 2000, Realty Income announced the 13th consecutive quarterly increase in the amount of the monthly dividend on its common stock. The amount of the dividend was increased to $0.185 per share from $0.18375 per share for an annualized dividend amount of $2.22 per share.

Through December 31, 2000, Realty Income paid twelve monthly dividends totaling $2.1825 per common share. Of the dividends paid during 2000, 19.0%, or $0.41454, is classified for federal income tax purposes as return of capital, with the remaining $1.76796 classified as ordinary income. There are no capital gains associated with these dividends. The Company continues its 31-year policy of declaring and paying common stock dividends on a monthly rather than a quarterly basis.

Realty Income also paid twelve monthly dividends totaling $2.3748 per share on its Class C preferred stock and four quarterly dividends totaling $2.3436 per share on its Class B preferred stock.

Net Income Available to Common Stockholders
Net income available to common stockholders for the quarter ended December 31, 2000 increased to $14.2 million as compared to $10.3 million for the same period in 1999. On a diluted per common share basis, net income increased to $0.54 per share as compared to $0.38 per share for the three months ended December 31, 1999. 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 property sales during the fourth quarter of 2000 was $4.8 million greater than the gain recognized from property sales during the same quarter in 1999. This difference accounted for the increase in fourth quarter net income per share in 2000.

Net income available to common stockholders for the year ended December 31, 2000 increased to $45.1 million as compared to $41.0 million in 1999. On a diluted per common share basis, this represented an increase to $1.69 per share as compared to $1.53 per share for the same period one year ago.

Share Repurchase Activity
On an ongoing basis, Realty Income regularly reviews its investment options to determine the best use of its capital. At certain times during the fourth quarter, the Company's share price justified repurchasing shares since this provided the highest return on the Company's investment capital. During the three months ended December 31, 2000 the Company invested $871,000 to repurchase of 37,900 shares of its common stock at an average price of $22.98 per share and an estimated FFO yield of approximately 11.0%.

During the year ended December 31, 2000, Realty Income repurchased 284,500 shares of common stock at an average price of $21.87 per share and an FFO yield of approximately 11.5% per share. The Company also repurchased 14,300 shares of its Class B preferred stock at an average price of $19.27 per share and a yield of 12.2% per share. The total investment in Realty Income shares during 2000 was $6.5 million. The Company used excess cash flow, after the payment of dividends, to repurchase shares of the Company's securities.

Real Estate Portfolio Update

As of December 31, 2000 Realty Income's portfolio of freestanding, single-tenant retail properties consisted of 1,068 properties located in 46 states, leased to 72 retail chains doing business in 23 retail industries.

Portfolio Management Activities
The Company's portfolio of retail real estate properties 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 December 31, 2000, portfolio occupancy was 97.7% with only 25 properties out of 1,068 available for lease.

Same store rents on the 894 properties under lease during the three months ended December 31, 2000 and 1999 increased 3.2% to $23.85 million from $23.12 million in 1999. Same store rents on the same 894 properties under lease during the twelve months ended December 31, 2000 and 1999 increased 1.7% to $91.0 million compared to $89.48 million in 1999.

Many of the Company's leases call for rent increases every five years. Over the past four years Realty Income has acquired approximately $587 million in new properties that now represent approximately 54% of the Company's portfolio. These properties are due to generate their initial rent increases from 2002 to 2004.

Property Dispositions
During 2000, Realty Income sold or exchanged 21 properties at a cap rate of 10.2% for net proceeds of $45.2 million. The Company reported a gain on the sale of these properties of $6.7 million. The proceeds from the sale of these properties were reinvested into new properties with an initial contractual lease yield of 10.8%. The objective of the Company's disposition program is to sell assets when the Company believes the reinvestment of the sales proceeds will generate higher returns or enhance the credit quality of the Company's real estate portfolio.

Property Acquisitions
During the fourth quarter, Realty Income invested $2.5 million in properties under development with an initial contractual lease yield of 11.4%. For the year ended December 31, 2000, the Company had invested $70.0 million in 13 new properties and properties under development with an initial contractual lease yield of 10.8%. Properties under development accounted for $24.9 million or 36% of the total invested for the year. The new properties are 100% leased with an initial average lease length of 18.3 years. The Company used the proceeds from the sale of properties, excess cash flow after the payment of dividends and borrowings under its acquisition credit facility to the acquire the additional properties.

Market Overview
Realty Income's acquisition opportunities and the market for freestanding, net-lease, retail properties remains strong. The Company has access to excellent real estate acquisition opportunities at attractive lease yields. While the market for acquisitions remains strong, the Company does not feel that the capital market pricing is currently attractive for the issuance of additional common stock, preferred stock or bonds to fund acquisitions. Further, the Company remains dedicated to maintaining a conservative balance sheet. As such, Realty Income anticipates that internally generated cash flow and the proceeds from property dispositions will be the primary source of funds to generate the growth of its real estate portfolio. The Company also maintains acquisition credit facilities with borrowing capacity of $225 million, which are used to fund acquisitions and the operations of its subsidiary, Crest Net Lease, Inc. The outstanding balance on the Company's acquisition credit facility at year-end was $149.9 million. The outstanding balance on the credit facility used to fund Crest Net Lease, Inc.'s operations was $24.1 million.

Other Activities

Crest Net Lease
During 2000, Crest Net Lease Inc., a subsidiary formed in early 2000 to actively buy and sell properties, achieved profitability. Crest Net Lease, Inc.'s net contribution to Realty Income's Funds from Operations during 2000 was $0.02 per common share.

At the end of the fourth quarter, the subsidiary carried an inventory of $23.6 million in properties held for sale. Management believes that Crest Net Lease, Inc. will carry an average inventory of between $20 to $25 million in properties on an ongoing basis. During 2000 Crest completed $6.2 million in property sales and reported a gain of $766,000. Crest generates an earnings spread on the differential between the lease payments it receives on the properties it holds in inventory and the cost of 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 Net Lease, Inc. 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.

Commenting on Realty Income's financial results and real estate operations, Tom A. Lewis, Chief Executive Officer stated, "We are pleased to report another year of progress in achieving our objective of providing dependable monthly income and an attractive risk-adjusted total return for our investors. Despite the absence of attractively priced capital during 2000 we were able to achieve increases in funds from operations and the amount of the dividends paid to our shareholders. The continued growth in our funds from operations during 2000 was moderated by higher interest rates and a small increase in vacant properties during the year. While we were able to achieve increases in both FFO per share and dividends this year, we believe that the Company's ongoing FFO growth should generally exceed the rate of growth for 2000. We are pleased that lease revenues in our core portfolio continue to increase, benefiting from the substantial growth in the size of the portfolio over the past several years. We have also been successful in selectively selling a number of properties providing us with capital to recycle into higher-yielding properties. This revenue growth is responsible for the solid cash flow coverage and continued dependability of the Company's monthly dividend payments."

2001 Earnings Guidance

Realty Income's funds from operations tend 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 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.

Management estimates 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.

In prior years certain items impacting FFO per share have fluctuated from quarter to quarter. Typically the Company's funds from operations 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.

Management estimates Crest Net Lease, Inc. will generate between $0.05 to $0.07 per share of FFO during 2001. Crest's primary business is the purchase and sale of properties at a profit. These sales may occur at various of 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.

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 1,068 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 through the internet at http://www.realtyincome.com/Investing/News.html

	Three Months Ended 12/31/00	Three Months Ended 12/31/99	Year Ended 12/31/00	Year Ended 12/31/99
REVENUE
Rental	$ 31,331	$ 28,588	$ 117,190	$ 104,270
Gain on sale of real estate held for sale	208	--	766	--
Interest and other	90	134	354	240
	31,629	28,722	118,310	104,510
EXPENSES
Interest	8,734	6,448	31,547	24,473
Depreciation and amortization	8,498	6,965	29,003	25,952
General and administrative	1,847	1,715	6,839	6,538
Property	515	466	2,032	1,822
Other	254	98	813	430
	19,848	15,692	70,234	59,215
Income from operations	11,781	13,030	48,076	45,295
Gain on sales of investment properties	4,881	65	6,712	1,301
Income before extraordinary item	16,662	13,095	54,788	46,596
Extraordinary item		(355)		(355)
Net Income	16,662	12,740	54,788	46,241
Preferred stock dividends	(2,428)	(2,437)	(9,712)	(5,229)
Net income available to common stockholders	$ 14,234	$10,303	$ 45,076	$ 41,012
Funds from operations (FFO)	$ 17,822	$ 17,525	$ 67,239	$ 65,917
Basic and diluted per share information for common stockholders:
Income from operations	$0.35	$0.39	$1.44	$1.49
Net Income	0.54	0.38	1.69	1.53
FFO	0.67	0.65	2.52	2.46
Cash dividends paid	0.551	0.533	2.183	2.085

 

FUNDS FROM OPERATIONS (dollars in thousands, except per share data)

	Three Months Ended 12/31/00	Three Months Ended 12/31/99	Year Ended 12/31/00	Year Ended 12/31/99
Net income available to common stockholders	$ 14,234	$ 10,303	$ 45,076	$ 41,012
Plus:
Depreciation and amortization	8,498	6,965	29,003	25,952
Extraordinary Item
Less:		355		355
Depreciation of furniture, fixtures and equipment	(29)	(33)	(128)	(101)
Gain on sale of investment properties	(4,881)	(65)	(6,712)	(1,301)
Funds from operations	$ 17,822	$ 17,525	$ 67,239	$ 65,917
Dividends paid to common stockholders	$ 14,650	$ 14,283	$ 58,262	$ 55,925
FFO in excess of dividends	$ 3,172	$ 3,242	$ 8,977	$ 9,992
Basic and diluted FFO per common share	$ 0.67	$ 0.65	$ 2.52	$ 2.46
Weighted average number of common shares used for:
Basic per share computation	26,571,992	26,822,171	26,684,598	26,822,285
Diluted per share computation	26,595,574	26,824,979	26,700,806	26,826,090