|
REALTY INCOME REPORTS RECORD SECOND QUARTER AND
MID-YEAR OPERATING RESULTS
ESCONDIDO, CALIFORNIA, July 27, 2005 — Realty Income Corporation (Realty Income), The Monthly
Dividend Company® (NYSE: O) today announced operating results for the
second quarter and six months ended June 30, 2005.
COMPANY HIGHLIGHTS
(For the quarter ended June 30, 2005)
- Revenue increased 8.4% to $47.5 million
- Funds from Operations (FFO) available to common stockholders increased 5.8% to $30.9 million
- FFO per diluted common share increased 5.4% to $0.39
- Net income available to common stockholders per diluted common share was $0.28 per share
- Portfolio occupancy remained strong at 98.2%
- Same store rents increased 1.0% to $39.62 million
- Invested $74.4 million in 38 additional properties
- Arranged a new $300 million acquisition credit facility
- Increased the monthly dividend amount for the 31st consecutive quarter to an annual rate of $1.335 per common share
Financial Results
Revenue Increases
Realty Income’s revenue for the second quarter ended June 30, 2005 increased 8.4% to $47.5 million as compared to $43.8 million for the same period in 2004.
Revenue for the six months ended June 30, 2005 increased 10.4% to $94.2 million as compared to $85.3 million for the same period in 2004.
Net Income Available to Common Stockholders
Net income available to common stockholders for the quarter ended June 30, 2005 was $22.3 million as compared to
$21.4 million for the same period in 2004. On a diluted per common share basis, net income for the quarter was
$0.28 per share as compared to $0.27 per share for the same period in 2004.
Net income available to common stockholders for the six months ended June 30, 2005 was $43.5 million as compared
to $43.9 million for the same period in 2004. On a diluted per common share basis, net income was
$0.55 per share as compared to $0.56 per share for the same period in 2004.
The calculation to determine net income for a real estate company includes gains from the sale of investment
properties and impairments. The amount of gains on property sales and impairments varies from quarter to
quarter. This variance can significantly impact net income.
During the second quarter of 2005, income from continuing operations available to common stockholders was
$0.24 per diluted share as compared to $0.20 per diluted share for the same period in 2004.
During the first six months of 2005, income from continuing operations available to common stockholders was
$0.48 per diluted share as compared to $0.42 per diluted share for the same period in 2004.
FFO Available to Common Stockholders
FFO for the second quarter ended June 30, 2005 increased 5.8% to $30.9 million as compared to $29.2 million
for the same period in 2004. FFO per diluted common share increased 5.4% to $0.39 per share, for the quarter
ended June 30, 2005, as compared to $0.37 per share for the same period in 2004. Core FFO per share before
Crest Net’s contribution, for the quarter ended June 30, 2005, increased 15.2% to $0.38 per share from $0.33
per share for the same period in 2004.
FFO for the six months ended June 30, 2005 increased 3.5% to $62.0 million as compared to $59.9 million for the
same period in 2004. FFO per diluted common share increased 1.3% to $0.78 per share as compared to $0.77 per
share for the same period in 2004. Core FFO per share before Crest Net Lease contribution, for the six months
ended June 30, 2005, increased 10.1% to $0.76 per diluted share from $0.69 per share for the same period in 2004.
The Company considers FFO to be an appropriate supplemental measure of a Real Estate Investment Trust’s (REITs)
operating performance as it is based on a net income analysis of property portfolio performance that excludes
non-cash items such as depreciation. FFO is an alternative, non-GAAP, measure that is also considered to be a
good indicator of a company’s ability to generate income to pay dividends. Realty Income defines FFO consistent
with the National Association of Real Estate Investment Trust’s (NAREIT) definition as net income available to
common stockholders plus depreciation and amortization of real estate assets, reduced by gains on sales of investment properties and extraordinary items. (See reconciliation of
net income available to common stockholders to FFO in the financial tables below.)
Dividend Information
In June 2005, Realty Income announced the 31st consecutive quarterly increase in the amount of the monthly
dividend on its common stock. This marked the 34th increase in the amount of the dividend since the Company’s
listing on the New York Stock Exchange in 1994. The monthly dividend amount was increased to $0.11125 per share
from $0.110625 per share for an annualized dividend amount of $1.335 per share. Through June 30, 2005, the
Company has paid 419 consecutive monthly dividends and continues its 36-year policy of declaring and paying
dividends every month.
Real Estate Portfolio Update
As of June 30, 2005, Realty Income’s portfolio of freestanding, single-tenant, retail properties consisted of 1,582
properties located in 48 states, leased to 98 retail chains doing business in 30 retail industries. The properties
are leased under long-term, net leases with a weighted average remaining lease term of approximately 12.0 years.
Portfolio Management Activities
The Company’s portfolio of retail real estate, owned primarily under 15- to 20-year net leases, continues to
perform well and provide dependable lease revenue supporting the payment of monthly dividends. As of June 30,
2005, portfolio occupancy was 98.2% with only 29 properties available for lease out of 1,582 properties in
the portfolio.
Rent Increases
Same store rents on 1,283 properties under lease during the three months ended June 30, 2005 and 2004, increased
1.0% to $39.62 million from $39.23 million in 2004. Same store rents on 1,283 properties under lease during the
six months ended June 30, 2005 and 2004 increased 0.9% to $79.17 million compared to $78.50 million in 2004.
Property Acquisitions
During the second quarter, Realty Income and its wholly-owned subsidiary, Crest Net Lease, Inc., invested
$74.4 million in 38 new properties and properties under development. Realty Income invested $61.8 million in
29 new properties and properties under development with an initial average contractual lease yield of 8.9%. The
29 new properties acquired by Realty Income are located in seven states and are 100% leased under net-lease
agreements with an initial average lease length of 17.8 years. They are leased to five different retail chains
in five industries: convenience store, drug store, health and fitness, restaurant, and theater.
During the six months ended June 30, 2005, Realty Income and its wholly-owned subsidiary, Crest Net Lease, Inc.,
invested $166.8 million in 72 new properties and properties under development. Realty Income invested
$145.1 million in 60 new properties and properties under development with an initial average contractual
lease yield of 8.8%. The 60 new properties acquired by Realty Income are located in 16 states and are 100%
leased under net-lease agreements with an initial average lease length of 16.9 years. They are leased to six
different retail chains in six industries: convenience store, drug store, health and fitness, motor vehicle
dealership, restaurant and theater.
Realty Income maintains an unsecured acquisition credit facility with borrowing capacity of $250 million,
which is used to fund property acquisitions in the near term. The outstanding balance on the Company’s
acquisition credit facility at the end of the second quarter was $54.8 million with $195.2 million
available to fund new property acquisitions.
Property Dispositions
Realty Income continued to successfully execute its asset disposition program. The objective of the program is to
sell assets when the Company believes the reinvestment of the sales proceeds will generate higher returns, enhance
the credit quality of the Company's real estate portfolio or increase the average lease length.
During the second quarter ended June 30, 2005, Realty Income sold seven properties for $8.0 million, which resulted
in a gain on sales of $2.7 million. The properties sold consisted of: one automotive service location, three child
care locations, one consumer electronics store, one convenience store property, and one private education facility. The
proceeds were, or will be, used to pay down the Company’s acquisition credit facility and invest in new properties.
During the first six months of 2005, Realty Income sold 11 properties for $14.6 million, which resulted in a gain on
sales of $3.5 million. The properties sold consisted of: one automotive service location, one automotive tire service
location, four child care locations, one consumer electronics store, one convenience store, one motor vehicle dealership,
one private eduation facility, and one restaurant.
Other Second Quarter 2005 Activities
New $300 Million Credit Facility
In June 2005, Realty Income entered into a new $300 million acquisition credit facility to replace its existing
$250 million acquisition credit facility that is scheduled to expire in October 2005. Under the terms of the new
credit facility, the borrowing rate was reduced to LIBOR (London Interbank Offered Rate) plus 65 basis points with
a facility fee of 15 basis points, for all-in drawn pricing of 80 basis points over LIBOR. The term of the new
facility will begin in October 2005 and extend through October 2008.
Crest Net Lease
Crest Net Lease Inc. is a wholly-owned subsidiary of Realty Income focused on acquiring and subsequently marketing
net-leased properties for sale. During the second quarter ended June 30, 2005, Crest sold one property for $3.5
million and reported a gain on sales of $422,000. Crest also invested $12.6 million in nine new properties and
properties under development during the second quarter.
For the six months ended June 30, 2005, Crest sold six properties for $11.2 million and reported a gain on sales of
$1.6 million. During this same period, Crest invested $21.7 million in 12 new properties and properties under
development. As of June 30, 2005, Crest carried an inventory of $22.2 million, which consists of 13 properties
held for sale.
Crest’s contribution to Realty Income’s FFO depends on the timing and number of property sales, if any, in a given
quarter. Therefore, Crest’s contribution can fluctuate and add volatility to the Company’s reported FFO and net
income on a comparable quarterly and annualized basis. During the second quarter and six months ended June 30, 2005,
Crest generated $296,000 and $1.1 million, or $0.00 and $0.01 per diluted common share, respectively, in FFO
(and net income) for Realty Income as compared to $2.9 million and $6.2 million, or $0.04 and $0.08 per diluted
common share, respectively, in FFO (and net income) during the same periods in 2004.
CEO Comments on Mid-Year Operating Results
Commenting on Realty Income’s financial results and real estate operations, Tom A. Lewis, Chief Executive Officer,
stated, “The Company enjoyed record operating results during the first half of the year. Revenue continues to grow,
increasing 10.4% year-to-date, while funds from operations per diluted common share in the core portfolio grew 10.1% year-to-date. FFO per
diluted common share, including Crest’s contribution, grew 5.4% during the second quarter and 1.3% during the first
six months of the year. The quarterly and year-to-date comparable numbers are impacted by higher sales in Crest
during the first half of 2004 in comparison to the same period in 2005. During the second quarter, Crest sold
one property, which brings Crest total property sales to seven during the first half of 2005. We have forecast
that Crest’s contribution to Realty Income’s FFO growth will be approximately $0.03 to $0.05, with the majority
of Crest’s property sales occurring during the second half of the year due to inventory re-building that has
been occurring over the past few months.
“Our portfolio of freestanding retail properties continues to perform well with occupancy remaining high at
98.2% and just 29 properties available for lease out of over 1,582 properties in the portfolio. In addition,
same store rents rose 1.0% in the second quarter and 0.9% year-to-date. We also have been focused on
executing net leases with longer lease terms and, as a result, our weighted average remaining lease length
in the portfolio has increased to approximately 12.0 years. Our acquisition pipeline is strong with ample
acquisition opportunities that meet our investment criteria in various stages of review and due diligence.
During the second quarter Realty Income and Crest Net combined completed 38 new property acquisitions, investing
$74.4 million, which brings us to a total of $166.8 million invested in new property acquisitions year-to-date. This
is in line with our expectations for acquisitions during the first half of the year and we are on track to meet
our 2005 property acquisition goals of approximately $250 million.
“We have also increased the dividend two times this year and have paid 419 consecutive monthly dividends to
our shareholders. As always, our focus is on maintaining a conservative balance sheet, and realizing stable
real estate performance with a high occupancy rate so that we can continue to provide our shareholders with
dependable monthly income that increases over time. Based on the performance thus far, we are optimistic
about our prospects for positive performance in all Company operations for the remainder of the year.”
Earnings Commentary
Realty Income’s FFO per common share has historically tended 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 cause FFO per common share to vary 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 and timing of property acquisitions and dispositions, lease rollovers, the general real estate
market, the economy, charges for property impairments, and the operations of Crest Net Lease.
2005 Estimates
Management estimates that FFO per common share for 2005 should range from $1.59 to $1.62, which would equate to an
increase of approximately 6% to 8% over 2004 FFO per share of $1.50. FFO for 2005 is based on an estimated diluted
net income per share range of $1.10 to $1.13, adjusted (in accordance with NAREIT’s definition of FFO) for estimated
real estate depreciation of $0.55 and potential gain on sales of investment properties of $0.06 per share.
Management further estimates Crest Net Lease could contribute between $0.03 to $0.05 per share to Realty Income’s
FFO (and net income) during 2005 as compared to $0.10 per share in 2004. Crest’s primary business is the purchase
and sale of properties for a profit. These sales may occur at various times during the course of the year, which
could cause FFO, in certain quarters, to fluctuate from normal levels.
The Company does not intend to provide quarterly estimates of FFO. Absent any 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 that are not strictly historical are “forward-looking” statements. Forward-looking
statements involve known and unknown risks, which may cause the Company’s actual future results 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, property acquisitions and the timing of these acquisitions,
charges for property impairments, the outcome of any legal proceedings to which the Company is a party, 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. The Company undertakes no obligation to publicly release
the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances
after the date these statements were made.
Realty Income is The Monthly Dividend Company®, a New York Stock Exchange real estate company dedicated to
providing shareholders with dependable monthly income. As of June 30, 2005, the Company had paid 419 consecutive
monthly dividends throughout its 36-year operating history. The monthly income is supported by the cash flows
from over 1,550 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.
|
CONSOLIDATED STATEMENTS OF INCOME |
For the three and six months ended June 30, 2005 and 2004
(dollars in thousands, except per share amounts)
|
 |
Three Months Ended
6/30/05 |
Three Months Ended
6/30/04 |
Six
Months Ended
6/30/05 |
Six
Months Ended
6/30/04 |
|
| REVENUE |
| Rental |
$ 47,338 |
$ 43,535 |
$ 94,010 |
$ 84,594 |
| Other |
135 |
298 |
172 |
660 |
|
| |
47,473 |
43,833 |
94,182 |
85,254 |
|
| EXPENSES |
| Interest |
9,793 |
8,505 |
18,851 |
16,981 |
Depreciation and
amortization |
11,243 |
10,008 |
22,049 |
19,558 |
General and
administrative |
3,706 |
3,260 |
7,762 |
6,421 |
| Property |
1,019 |
749 |
1,900 |
1,456 |
| Income taxes |
203 |
191 |
401 |
344 |
|
| |
25,964 |
22,713 |
50,963 |
44,760 |
|
Income from
continuing operations |
21,509 |
21,120 |
43,219 |
40,494 |
|
Income from
discontinued operations: |
|
|
|
|
Real estate acquired for
resale by Crest |
296 |
2,879 |
1,129 |
6,154 |
Real estate held for
investment |
2,861 |
2,789 |
3,821 |
4,990 |
|
| |
3,157 |
5,668 |
4,950 |
11,144 |
|
| Net income |
24,666 |
26,788 |
48,169 |
51,638 |
Preferred stock
cash dividends |
(2,351) |
(2,982) |
(4,702) |
(5,410) |
Excess of redemption value
over carrying value of
preferred shares
redeemed |
-- |
(2,360) |
-- |
(2,360) |
|
Net income available to
common stockholders |
$ 22,315 |
$ 21,446 |
$ 43,467 |
$ 43,868 |
|
Funds from operations
available to common
stockholders (FFO) |
$ 30,874 |
$ 29,151 |
$ 62,036 |
$ 59,910 |
|
Per share information for
common stockholders, |
|
|
|
|
| basic and diluted: |
|
|
|
|
Income from continuing
operations |
$ 0.24 |
$ 0.20 |
$ 0.48 |
$ 0.42 |
| Net income |
$ 0.28 |
$ 0.27 |
$ 0.55 |
$ 0.56 |
| FFO |
|
|
|
|
FFO per basic share
before Crest Net
contribution |
$ 0.38 |
$ 0.33 |
$ 0.77 |
$ 0.69 |
FFO per diluted share
before Crest Net
contribution |
$ 0.38 |
$ 0.33 |
$ 0.76 |
$ 0.69 |
| Crest Net Lease |
0.00 |
0.04 |
0.01 |
0.08 |
| Total FFO |
0.39 |
0.37 |
0.78 |
0.77 |
|
| Cash dividends paid |
$ 0.332 |
$ 0.302 |
$ 0.662 |
$ 0.602 |
|
FUNDS FROM OPERATIONS
For the three and six months ended June 30, 2005 and 2004
(dollars in thousands, except per share amounts)
|
|
|
Three
Months
Ended
6/30/05 |
|
Three
Months
Ended
6/30/04 |
|
Six
Months
Ended
6/30/05 |
|
Six
Months
Ended
6/30/04 |
|
Net income available to
common stockholders |
$ |
22,315 |
$ |
21,446 |
$ |
43,467 |
$ |
43,868 |
Depreciation and
amortization:
Continuing operations |
|
11,243 |
|
10,008 |
|
22,049 |
|
19,558 |
| Discontinued operations |
|
6 |
|
226 |
|
64 |
|
491 |
Depreciation of furniture,
fixtures and equipment |
|
(35) |
|
(29) |
|
(67) |
|
(58) |
Gain on sales of
investment properties: |
|
|
|
|
|
|
|
|
| Continuing operations |
|
(14) |
|
-- |
|
(14) |
|
-- |
| Discontinued operations |
|
(2,641) |
|
(2,500) |
|
(3,463) |
|
(3,949) |
|
Funds from operations
available to
common stockholders |
$ |
30,874 |
$ |
29,151 |
$ |
62,036 |
$ |
59,910 |
|
Dividends paid to
common stockholders |
$ |
26,414 |
$ |
23,922 |
$ |
52,676 |
$ |
46,725 |
| FFO in excess of dividends |
$ |
4,460 |
$ |
5,229 |
$ |
9,360 |
$ |
13,185 |
| FFO per common share, |
|
|
|
|
|
|
|
|
| basic and diluted |
$ |
0.39 |
$ |
0.37 |
$ |
0.78 |
$ |
0.77 |
Weighted average number of
common shares used for
computation per share: |
|
|
|
|
|
|
|
|
| Basic |
|
79,597,321 |
|
79,245,656 |
|
79,589,462 |
|
77,737,000 |
| Diluted |
|
79,676,168 |
|
79,323,180 |
|
79,667,812 |
|
77,822,186 |
|
CONTRIBUTIONS BY CREST NET LEASE TO FUNDS FROM OPERATIONS
(dollars in thousands, except per share amounts)
|
| |
Crest Net acquires properties with the intention of reselling them rather than
holding them as investments and operating the properties. Consequently, we classify properties acquired by Crest Net
as held for sale at the date of acquisition and do not depreciate them. The operations of Crest Net’s properties
are classified as “income from discontinued operations, real estate acquired for resale.” |
|
|
Three
Months
Ended
6/30/05 |
|
Three
Months
Ended
6/30/04 |
|
Six
Months
Ended
6/30/05 |
|
Six
Months
Ended
6/30/04 |
|
Gain on sales of real
estate acquired for resale |
$ |
422 |
$ |
3,883 |
$ |
1,649 |
$ |
7,992 |
| Rental revenue |
|
287 |
|
614 |
|
568 |
|
1,614 |
| Other revenue |
|
-- |
|
-- |
|
1 |
|
-- |
| Interest expense |
|
(163) |
|
(164) |
|
(310) |
|
(399) |
General and administrative
expense |
|
(134) |
|
(122) |
|
(273) |
|
(247) |
| Property expenses |
|
(25) |
|
(7) |
|
(51) |
|
(15) |
| Income taxes |
|
(91) |
|
(1,325) |
|
(455) |
|
(2,791) |
|
Funds from operations
contributed by Crest |
$ |
296 |
$ |
2,879 |
$ |
1,129 |
$ |
6,154 |
|
Crest FFO per common share,
basic and diluted |
$ |
0.00 |
$ |
0.04 |
$ |
0.01 |
$ |
0.08 |
| |
| Total FFO |
$ |
30,874 |
|
29,151 |
|
62,036 |
|
59,910 |
| Less FFO contributed by Crest |
|
(296) |
|
(2,879) |
|
(1,129) |
|
(6,154) |
|
FFO before Crest
contribution |
$ |
30,578 |
$ |
26,272 |
$ |
60,907 |
$ |
53,756 |
|
FFO before Crest
contribution per
common share:
Basic |
$ |
0.38 |
$ |
0.33 |
$ |
0.77 |
$ |
0.69 |
|
Diluted |
$ |
0.38 |
$ |
0.33 |
$ |
0.76 |
$ |
0.69 |
| |
We define FFO, a non-GAAP measure, consistent with the National
Association of Real Estate Investment Trust’s definition, as net income available to common stockholders, plus
depreciation and amortization of real estate assets, reduced by gains and
increased by losses on sales of investment property and extraordinary items. |
|
FUNDS FROM OPERATIONS
(dollars in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
| For the three months ended June 30, |
2005 |
|
2004 |
|
2003 |
|
2002 |
|
2001 |
|
Net income available to
common stockholders |
$ |
22,315 |
$ |
21,446 |
$ |
18,162 |
$ |
16,017 |
$ |
11,048 |
Depreciation and
amortization |
|
11,214 |
|
10,205 |
|
8,291 |
|
7,605 |
|
7,130 |
Gain on sales of
investment properties |
|
(2,655) |
|
(2,500) |
|
(2,952) |
|
(1,395) |
|
(164) |
|
| Total FFO |
$ |
30,874 |
$ |
29,151 |
$ |
23,501 |
$ |
22,227 |
$ |
18,014 |
|
| Total FFO per diluted share |
$ |
0.39 |
$ |
0.37 |
$ |
0.34 |
$ |
0.33 |
$ |
0.32 |
| Total FFO |
$ |
30,874 |
$ |
29,151 |
$ |
23,501 |
$ |
22,227 |
$ |
18,014 |
| Less FFO contributed by Crest |
$ |
(296) |
$ |
(2,879) |
$ |
(157) |
$ |
(901) |
$ |
(141) |
|
| FFO before Crest contribution |
$ |
30,578 |
$ |
26,272 |
$ |
23,344 |
$ |
21,326 |
$ |
17,873 |
|
FFO components,
per diluted share: |
|
|
|
|
|
|
|
|
|
|
FFO before Crest's
contribution |
$ |
0.38 |
$ |
0.33 |
$ |
0.33 |
$ |
0.32 |
$ |
0.31 |
| Crest FFO contribution |
$ |
0.00 |
$ |
0.04 |
$ |
0.00 |
$ |
0.01 |
$ |
0.00 |
| Total FFO |
$ |
0.39 |
$ |
0.37 |
$ |
0.34 |
$ |
0.33 |
$ |
0.32 |
|
| Cash dividends paid per share |
$ |
0.332 |
$ |
0.302 |
$ |
0.294 |
$ |
0.287 |
$ |
0.279 |
| Diluted shares outstanding |
79,676,168 |
79,323,180 |
70,119,216 |
66,736,718 |
56,937,984 |
|
| For the six months ended June 30, |
|
|
|
|
|
|
|
|
|
|
Net income available to
common stockholders |
$ |
43,467 |
$ |
43,868 |
$ |
33,767 |
$ |
31,883 |
$ |
27,093 |
Depreciation and
amortization |
|
22,046 |
|
19,991 |
|
16,356 |
|
15,076 |
|
14,312 |
Gain on sales of
investment properties |
|
(3,477) |
|
(3,949) |
|
(3,123) |
|
(2,523) |
|
(6,115) |
|
| Total FFO |
$ |
62,036 |
$ |
59,910 |
$ |
47,000 |
$ |
44,436 |
$ |
35,290 |
|
| Total FFO per diluted share |
$ |
0.78 |
$ |
0.77 |
$ |
0.67 |
$ |
0.67 |
$ |
0.64 |
| Total FFO |
$ |
62,036 |
$ |
59,910 |
$ |
47,000 |
$ |
44,436 |
$ |
35,290 |
Less FFO contributed by
Crest |
$ |
(1,129) |
$ |
(6,154) |
$ |
(242) |
$ |
(1,264) |
$ |
(1,303) |
|
| FFO before Crest contribution |
$ |
60,907 |
$ |
53,756 |
$ |
46,758 |
$ |
43,172 |
$ |
33,987 |
|
FFO components,
per diluted share: |
|
|
|
|
|
|
|
|
|
|
FFO before Crest's
contribution |
$ |
0.76 |
$ |
0.69 |
$ |
0.67 |
$ |
0.65 |
$ |
0.62 |
| Crest FFO contribution |
$ |
0.01 |
$ |
0.08 |
$ |
0.00 |
$ |
0.02 |
$ |
0.02 |
| Total FFO |
$ |
0.78 |
$ |
0.77 |
$ |
0.67 |
$ |
0.67 |
$ |
0.64 |
|
| Cash dividends paid per share |
$ |
0.662 |
$ |
0.602 |
$ |
0.587 |
$ |
0.572 |
$ |
0.557 |
| Diluted shares outstanding |
79,667,812 |
77,822,186 |
70,065,888 |
66,461,634 |
55,131,000 |
|
CONSOLIDATED BALANCE SHEETS
As of June 30, 2005 and December 31, 2004
(dollars in thousands, except per share data)
|
|
2005 |
2004 |
|
| ASSETS |
|
|
| Real estate, at cost: |
|
|
| Land |
$ 676,548 |
$ 624,558 |
| Buildings and improvements |
1,142,605 |
1,066,725 |
|
|
1,819,153 |
1,691,283 |
Less accumulated depreciation
and amortization |
(320,031) |
(301,728) |
|
| Net real estate held for investment |
1,499,122 |
1,389,555 |
| Real estate held for sale, net |
23,776 |
17,155 |
|
| Net real estate |
1,522,898 |
1,406,710 |
| Cash and cash equivalents |
1,948 |
2,141 |
| Accounts receivable |
3,539 |
4,075 |
| Goodwill |
17,206 |
17,206 |
| Other assets |
25,992 |
12,183 |
|
| Total assets |
$ 1,571,583 |
$ 1,442,315 |
|
| LIABILITIES AND STOCKHOLDERS' EQUITY |
| Distributions payable |
$ 9,248 |
$ 9,115 |
| Accounts payable and accrued expenses |
14,323 |
9,579 |
| Other liabilities |
7,631 |
6,286 |
| Line of credit payable |
54,800 |
23,600 |
| Notes payable |
580,000 |
480,000 |
|
| Total liabilities |
666,002 |
528,580 |
|
Stockholders’ equity:
Preferred stock and paid in capital, par
value $1.00 per share, 20,000,000
shares authorized, 5,100,000
issued and outstanding |
123,804 |
123,787 |
Common stock and paid in capital, par
value $1.00 per share in 2005 there were
200,000,000 shares
authorized and
79,609,106 issued and outstanding and in
2004 there were 100,000,000
shares authorized, and 79,301,630
shares issued and outstanding |
1,040,144 |
1,038,973 |
| Distributions in excess of net income |
(258,367) |
(249,025)
|
|
| Total stockholders’ equity |
905,581 |
913,735 |
|
| Total liabilities and stockholders’ equity |
$ 1,571,583 |
$ 1,442,315 |
|
|
The following table sets forth certain information regarding our properties classified according to the business of
the respective tenants, expressed as a percentage of our total rental revenue:
|
| |
Percentage of Rental Revenue(1) |
|
| |
For the Quarter Ended June 30, 2005 |
For the Years Ended |
|
|
| Industries (30) |
Dec. 31,
2004 |
Dec. 31,
2003 |
Dec. 31,
2002 |
Dec. 31,
2001 |
Dec. 31,
2000 |
Dec. 31,
1999 |
Dec. 31,
1998 |
|
| Apparel Stores |
1.6% |
1.8% |
2.1% |
2.3% |
2.4% |
2.4% |
3.8% |
4.1% |
| Automotive Collision Services |
1.3 |
1.0 |
0.3 |
-- |
-- |
-- |
-- |
-- |
| Automotive Parts |
3.4 |
3.8 |
4.5 |
4.9 |
5.7 |
6.0 |
6.3 |
6.1 |
| Automotive Service |
7.8 |
7.7 |
8.3 |
7.0 |
5.7 |
5.8 |
6.6 |
7.5 |
| Automotive Tire Services |
7.3 |
7.8 |
3.1 |
2.7 |
2.6 |
2.3 |
2.3 |
1.7 |
| Book Stores |
0.3 |
0.3 |
0.4 |
0.4 |
0.4 |
0.5 |
0.5 |
0.6 |
| Business Services |
0.1 |
0.1 |
0.1 |
0.1 |
0.1 |
0.1 |
0.1 |
* |
| Child Care |
13.2 |
14.4 |
17.8 |
20.8 |
23.9 |
24.7 |
25.3 |
29.2 |
| Consumer Electronics |
1.4 |
2.1 |
3.0 |
3.3 |
4.0 |
4.9 |
4.4 |
5.4 |
| Convenience Stores |
18.8 |
19.2 |
13.3 |
9.1 |
8.4 |
8.4 |
7.2 |
6.1 |
| Crafts and Novelties |
0.4 |
0.5 |
0.6 |
0.4 |
0.4 |
0.4 |
0.4 |
* |
| Drug Stores |
3.3 |
0.1 |
0.2 |
0.2 |
0.2 |
0.2 |
0.2 |
0.1 |
| Entertainment |
2.2 |
2.3 |
2.6 |
2.3 |
1.8 |
2.0 |
1.2 |
-- |
| Equipment Rental Services |
0.3 |
0.3 |
0.2 |
-- |
-- |
-- |
-- |
-- |
| Financial Services |
0.1 |
0.1 |
-- |
-- |
-- |
-- |
-- |
-- |
| General Merchandise |
0.4 |
0.4 |
0.5 |
0.5 |
0.6 |
0.6 |
0.6 |
* |
| Grocery Stores |
0.7 |
0.8 |
0.4 |
0.5 |
0.6 |
0.6 |
0.5 |
* |
| Health and Fitness |
3.8 |
4.0 |
3.8 |
3.8 |
3.6 |
2.4 |
0.6 |
0.1 |
| Home Furnishings |
4.0 |
4.1 |
4.9 |
5.4 |
6.0 |
5.8 |
6.5 |
7.8 |
| Home Improvement |
1.1 |
1.0 |
1.1 |
1.2 |
1.3 |
2.0 |
3.6 |
* |
| Motor Vehicle Dealerships |
2.6 |
0.6 |
-- |
-- |
-- |
-- |
-- |
-- |
| Office Supplies |
1.5 |
1.6 |
1.9 |
2.1 |
2.2 |
2.3 |
2.6 |
3.0 |
| Pet Supplies and Services |
1.4 |
1.4 |
1.7 |
1.7 |
1.6 |
1.5 |
1.1 |
0.6 |
| Private Education |
0.8 |
1.1 |
1.2 |
1.3 |
1.5 |
1.4 |
1.2 |
0.9 |
| Restaurants |
9.1 |
9.7 |
11.8 |
13.5 |
12.2 |
12.3 |
13.3 |
16.2 |
| Shoe Stores |
0.1 |
0.3 |
0.9 |
0.8 |
0.7 |
0.8 |
1.1 |
0.8 |
| Sporting Goods |
3.6 |
3.4 |
3.8 |
4.1 |
0.9 |
-- |
-- |
-- |
| Theaters |
3.2 |
3.5 |
4.1 |
3.9 |
4.3 |
2.7 |
0.6 |
-- |
| Travel Plazas |
0.4 |
0.4 |
0.3 |
-- |
-- |
-- |
-- |
-- |
| Video Rental |
2.6 |
2.8 |
3.3 |
3.3 |
3.7 |
3.9 |
4.3 |
3.8 |
| Other |
3.2 |
3.4 |
3.8 |
4.4 |
5.2 |
6.0 |
5.7 |
6.0 |
|
| Totals |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
100.0% |
|
|
* Less than 0.1%
(1) Includes rental revenue for all properties owned by Realty Income at the end of each period presented (including
revenue from properties reclassified to discontinued operations) and excludes properties owned by our subsidiary,
Crest Net.
|
|
LEASE EXPIRATION SCHEDULE
The following table sets forth certain information regarding the timing of the initial
lease term expirations (excluding extension options) on our 1,549 net leased, single-tenant retail properties as of
June 30, 2005 (dollars in thousands):
|
|
Total Portfolio |
|
Initial Expirations(3) |
|
Subsequent Expirations(4) |
|
|
|
|
|
|
Year |
Total
Number of
Leases Expiring(1)
|
Rental
Revenue
for the
Quarter Ended
6/30/05(2) |
% of Rental Revenue |
|
Number of Leases Expiring |
Rental
Revenue
for the
Quarter Ended
6/30/05 |
% of Total Rental Revenue |
|
Number of Leases Expiring |
Rental
Revenue
for the
Quarter Ended
6/30/05 |
% of Total Rental Revenue |
|
|
|
|
|
| 2005 |
65 |
$ 1,277 |
2.8 |
% |
|
49 |
$ 1,023 |
2.2 |
% |
|
16 |
$ 254 |
0.6 |
% |
| 2006 |
84 |
1,828 |
4.0 |
|
|
31 |
714 |
1.6 |
|
|
53 |
1,114 |
2.4 |
|
| 2007 |
123 |
2,175 |
4.8 |
|
|
87 |
1,539 |
3.4 |
|
|
36 |
636 |
1.4 |
|
| 2008 |
99 |
2,093 |
4.6 |
|
|
60 |
1,418 |
3.1 |
|
|
39 |
675 |
1.5 |
|
| 2009 |
90 |
1,929 |
4.2 |
|
|
30 |
684 |
1.5 |
|
|
60 |
1,245 |
2.7 |
|
| 2010 |
53 |
1,198 |
2.6 |
|
|
37 |
909 |
2.0 |
|
|
16 |
289 |
0.6 |
|
| 2011 |
41 |
1,438 |
3.1 |
|
|
33 |
1,239 |
2.7 |
|
|
8 |
199 |
0.4 |
|
| 2012 |
44 |
1,375 |
3.0 |
|
|
42 |
1,324 |
2.9 |
|
|
2 |
51 |
0.1 |
|
| 2013 |
74 |
3,357 |
7.3 |
|
|
66 |
3,145 |
6.8 |
|
|
8 |
212 |
0.5 |
|
| 2014 |
48 |
2,018 |
4.4 |
|
|
36 |
1,781 |
3.9 |
|
|
12 |
237 |
0.5 |
|
| 2015 |
46 |
1,248 |
2.7 |
|
|
29 |
820 |
1.8 |
|
|
17 |
428 |
0.9 |
|
| 2016 |
17 |
505 |
1.1 |
|
|
15 |
423 |
0.9 |
|
|
2 |
82 |
0.2 |
|
| 2017 |
22 |
1,482 |
3.2 |
|
|
18 |
1,415 |
3.1 |
|
|
4 |
67 |
0.1 |
|
| 2018 |
23 |
1,028 |
2.2 |
|
|
23 |
1,028 |
2.2 |
|
|
-- |
-- |
-- |
|
| 2019 |
95 |
4,487 |
9.8 |
|
|
94 |
4,294 |
9.4 |
|
|
1 |
193 |
0.4 |
|
| 2020 |
67 |
2,128 |
4.6 |
|
|
66 |
2,117 |
4.6 |
|
|
1 |
11 |
* |
|
| 2021 |
125 |
4,082 |
8.9 |
|
|
125 |
4,082 |
8.9 |
|
|
-- |
-- |
-- |
|
| 2022 |
96 |
2,596 |
5.7 |
|
|
95 |
2,582 |
5.7 |
|
|
1 |
14 |
* |
|
| 2023 |
234 |
6,423 |
14.0 |
|
|
233 |
6,398 |
13.9 |
|
|
1 |
25 |
0.1 |
|
| 2024 |
58 |
1,704 |
3.7 |
|
|
58 |
1,704 |
3.7 |
|
|
-- |
-- |
-- |
|
| 2025 |
33 |
475 |
1.0 |
|
|
33 |
475 |
1.0 |
|
|
-- |
-- |
-- |
|
| 2026 |
2 |
93 |
0.2 |
|
|
2 |
93 |
0.2 |
|
|
-- |
-- |
-- |
|
| 2028 |
2 |
54 |
0.1 |
|
|
2 |
54 |
0.1 |
|
|
-- |
-- |
-- |
|
| 2033 |
3 |
357 |
0.8 |
|
|
3 |
357 |
0.8 |
|
|
-- |
-- |
-- |
|
| 2034 |
2 |
230 |
0.5 |
|
|
2 |
230 |
0.5 |
|
|
-- |
-- |
-- |
|
| 2037 |
2 |
325 |
0.7 |
|
|
2 |
325 |
0.7 |
|
|
-- |
-- |
-- |
|
| 2043 |
1 |
13 |
* |
|
|
-- |
-- |
-- |
|
|
1 |
13 |
* |
|
|
|
|
|
|
| Totals |
1,549 |
$ 45,918 |
100.0 |
% |
|
1,271 |
$ 40,173 |
87.6 |
% |
|
278 |
$ 5,745 |
12.4 |
% |
|
|
|
|
|
| |
|
* Less than 0.1%
(1) Excludes four multi-tenant properties, 29 vacant and unleased properties, one of which is a multi-tenant property,
and properties owned by our subsidiary, Crest Net. The lease expirations for properties under construction are based
on the estimated date of completion of those properties.
(2) Includes rental revenue of $60 from properties reclassified to discontinued operations and excludes revenue of
$1,480 from four multi-tenant properties and from 29 vacant and unleased properties at June 30, 2005.
(3) Represents leases that are expiring for the first time to the initial tenant of the property.
(4) Represents lease expirations on properties in the portfolio, which have previously been renewed, extended or re-tenanted.
|
|
The following table sets forth certain state-by-state information
regarding Realty Income’s property portfolio as of June 30, 2005 (dollars in thousands):
GEOGRAPHIC DIVERSIFICATION |
| State |
Number
of
Properties(1) |
Percent Leased |
Approximate Leasable Square
Feet(1) |
Rental Revenue for the Quarter Ended June 30, 2005(2) |
Percentage of Rental
Revenue |
|
| Alabama |
18 |
94% |
156,600 |
$ 427 |
0.9% |
| Alaska |
2 |
100 |
128,500 |
251 |
0.5 |
| Arizona |
71 |
99 |
338,100 |
1,890 |
4.0 |
| Arkansas |
8 |
88 |
48,800 |
139 |
0.3 |
| California |
61 |
100 |
1,057,100 |
3,967 |
8.4 |
| Colorado |
48 |
98 |
399,100 |
1,686 |
3.6 |
| Connecticut |
16 |
100 |
245,600 |
927 |
2.0 |
| Delaware |
16 |
100 |
29,100 |
338 |
0.7 |
| Florida |
126 |
98 |
1,253,400 |
4,847 |
10.2 |
| Georgia |
99 |
99 |
645,100 |
2,455 |
5.2 |
| Idaho |
14 |
100 |
91,900 |
369 |
0.8 |
| Illinois |
45 |
100 |
395,700 |
1,486 |
3.1 |
| Indiana |
26 |
92 |
147,700 |
498 |
1.1 |
| Iowa |
9 |
89 |
57,000 |
144 |
0.3 |
| Kansas |
20 |
90 |
188,300 |
510 |
1.1 |
| Kentucky |
12 |
100 |
41,200 |
262 |
0.6 |
| Louisiana |
14 |
100 |
65,200 |
294 |
0.6 |
| Maryland |
24 |
100 |
207,600 |
1,139 |
2.4 |
| Massachusetts |
37 |
100 |
203,100 |
997 |
2.1 |
| Michigan |
13 |
100 |
81,600 |
299 |
0.6 |
| Minnesota |
18 |
100 |
211,600 |
538 |
1.1 |
| Mississippi |
33 |
88 |
194,400 |
309 |
0.6 |
| Missouri |
32 |
97 |
222,900 |
707 |
1.5 |
| Montana |
2 |
100 |
30,000 |
74 |
0.2 |
| Nebraska |
13 |
100 |
104,500 |
473 |
1.0 |
| Nevada |
15 |
100 |
191,000 |
823 |
1.7 |
| New Hampshire |
10 |
100 |
89,600 |
369 |
0.8 |
| New Jersey |
26 |
100 |
200,100 |
1,062 |
2.2 |
| New Mexico |
7 |
100 |
53,300 |
109 |
0.2 |
| New York |
27 |
100 |
339,600 |
1,664 |
3.5 |
| North Carolina |
50 |
98 |
325,000 |
1,397 |
2.9 |
| North Dakota |
1 |
100 |
22,000 |
16 |
* |
| Ohio |
105 |
100 |
661,500 |
2,476 |
5.2 |
| Oklahoma |
17 |
100 |
94,300 |
358 |
0.8 |
| Oregon |
17 |
100 |
253,300 |
534 |
1.1 |
| Pennsylvania |
81 |
100 |
481,300 |
2,271 |
4.8 |
| Rhode Island |
1 |
100 |
3,500 |
29 |
0.1 |
| South Carolina |
55 |
100 |
215,600 |
1,414 |
3.0 |
| South Dakota |
1 |
100 |
6,500 |
24 |
* |
| Tennessee |
97 |
99 |
459,500 |
2,183 |
4.6 |
| Texas |
175 |
97 |
1,653,000 |
4,291 |
9.1 |
| Utah |
6 |
100 |
35,100 |
142 |
0.3 |
| Vermont |
1 |
100 |
2,500 |
22 |
* |
| Virginia |
55 |
100 |
410,800 |
2,073 |
4.4 |
| Washington |
37 |
100 |
243,900 |
694 |
1.5 |
| West Virginia |
2 |
0 |
16,800 |
8 |
* |
| Wisconsin |
16 |
88 |
153,700 |
360 |
0.8 |
| Wyoming |
3 |
100 |
14,900 |
53 |
0.1 |
|
| Totals/Average |
1,582 |
98% |
12,470,900 |
$ 47,398 |
100.0% |
|
|
* Less than 0.1%
(1) Excludes properties owned by our subsidiary, Crest Net.
(2) Includes rental revenue for all properties owned by Realty Income at June 30, 2005 (including revenue from properties reclassified to discontinued operations of $60).
|
|
|
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