ESCONDIDO, CALIFORNIA, AUGUST 10, 2000 — 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, 2000.

• The monthly dividend amount was increased for the 11th consecutive quarter
• Annualized dividends increased 4.3% from June 30, 1999 to June 30, 2000, to an annualized amount of $2.19 per share
• Revenue increased 16.2% to $56.8 million
• Funds from Operations (FFO) increased 2.5% to $32.8 million
• FFO per common share increased 3.4% to $1.23
• Realty Income repurchased 195,300 shares of its securities for $4.1 million

Revenue for the six months ended June 30, 2000 increased 16.2% to $56.8 million from $48.9 million for the same period in 1999.

Funds from Operations
FFO for the quarter ended June 30, 2000 increased 1.9% to $16.3 million as compared to $16.0 million for the same quarter in 1999. On a diluted per common share basis, FFO increased 1.7% to $0.61 per share compared to $0.60 per share for the same period in 1999.

FFO for the six months ended June 30, 2000 increased 2.5% to $32.8 million as compared to $32.0 million for the same period one year ago. On a diluted per common share basis, FFO increased 3.4% to $1.23 per share from $1.19 per share for the same period in 1999.

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

Net Income Available to Common Stockholders
Net income available to common stockholders for the quarter ended June 30, 2000 increased 6.1% to $10.4 million as compared to $9.8 million for the same period in 1999. On a diluted per common share basis, net income increased 5.4% to $0.39 per share as compared to $0.37 per share for the three months ended June 30, 1999.

Net income available to common stockholders for the six months ended June 30, 2000 increased 6.1% to $20.9 million as compared to $19.7 million for the same period in 1999. On a diluted per common share basis, this represented a 5.4% increase to $0.78 per share as compared to $0.74 per share for the same period one year ago.

Sources and Uses of Funds for Investment through 6/30/2000
Realty Income primarily utilized excess cash flow, after the payment of dividends, to repurchase shares of the Company's securities. The Company utilized the proceeds from the sale of a property and borrowings under its acquisition credit facility to acquire properties during the quarter. Total investments in new properties and share repurchases as of June 30, 2000 were $20.9 million.

Property Acquisitions and Dispositions

Through June 30, 2000, the Company had invested $16.8 million in 3 new properties and properties under development with an initial contractual lease yield of 10.5%. The new properties are 100% leased with an initial average lease length of 13.2 years. During the second quarter, Realty Income invested $8.2 million in one new property and properties under development with an initial contractual lease yield of 10.4%. The new property is 100% leased with an initial average lease length of 9.7 years.

The Company also initiated its asset disposition program during the first six months of 2000. The objective of this 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. Through June 30, 2000, Realty Income sold six properties for $3.5 million. The Company anticipates selling up to $100 million of properties over the next 12 months for reinvestment into new property acquisitions. The Company's portfolio of retail properties now consists of 1073 properties located in 45 states, leased to 74 retail chains doing business in 23 retail industries.

Share Repurchase Activity

Realty Income continued to repurchase shares of the Company's stock through the second quarter of 2000. As of June 30, 2000, the Company had repurchased 181,000 shares of common stock at an average price of $21.28 per share and 14,300 shares of its Class B preferred stock at an average price of $19.27 per share, for a total investment of $4.1 million.

Dividend Information
On June 15, 2000, Realty Income announced the 11th consecutive quarterly increase in the amount of the monthly dividend on its common stock. The amount of the dividend was increased to $0.1825 per share from $0.18125 per share. This represents annualized dividend amount of $2.19 per share. The Company paid six monthly dividends totaling $1.084 per common share through June 30, 2000.

Realty Income also paid six monthly dividends totaling $1.187 per share on its Class C preferred stock and two quarterly dividends totaling $1.172 per share on its Class B preferred stock.

Portfolio Management Highlights
The Company's portfolio of quality retail real estate 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 June 30, 2000, Realty Income's property portfolio of 1,073 properties was 98.5% leased with only 16 properties available for lease. During the first half of 2000 the Company successfully resolved a situation involving 9 of its properties leased to Econo Lube 'N Tune. This situation had nominal impact on operating results during the first and second quarters of 2000. During the third and fourth quarters of 2000, Realty Income anticipates that it will have 11 properties come available for re-lease resulting from the reorganization of one of its other tenants. The Company anticipates a successful resolution of this situation during the third and fourth quarters of this year. Realty Income anticipates a net impact of less than ½ of 1% on total lease revenue once the situation has been resolved. Same store rents on the 918 properties under lease during the three months ended June 30, 2000 and 1999 increased 0.9% to $23.0 million from $22.8 million in 1999. Same store rents on the 918 properties under lease during the six months ended June 30, 2000 and 1999 increased 1.3% to $46.3 million compared to $45.7 million in 1999.

Other Activities
Crest Net Lease Inc., a newly formed subsidiary focused on marketing net-leased properties for sale, acquired 6 properties for $17.4 million during the second quarter. Through June 30, 2000, Crest has invested $20.5 million in properties held for sale. Those properties are now being actively marketed for sale.

Tom A. Lewis, Chief Executive Officer, stated, "We continue to make steady progress towards achieving our business objectives for 2000. We have initiated an asset disposition program to sell in excess of $100 million of real estate assets to strategically re-deploy in new net-leased properties. At the same time we have made excellent progress with our new subsidiary, Crest Net Lease, in acquiring assets to be marketed during the second half of the year. We anticipate that Crest Net Lease will positively contribute to Realty Income's FFO growth in 2000 and 2001. We believe these activities will allow us to continue to grow our revenue, FFO and dividends in a capital constrained environment."

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, the profitability of the Company's subsidiary, Crest Net Lease, general economic conditions, local real estate conditions, and the availability of capital to finance planned growth 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 1,073 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.

REALTY INCOME CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME

For the three and six months ended June 30, 2000 and 1999 (dollars in thousands, except per share data) (unaudited)

	Three months ended 6/30/00	Three months ended 6/30/99	Six months ended 6/30/00	Six months ended 6/30/99
REVENUE
Rental	$ 28,349	$ 24,864	$ 56,679	$ 48,812
Interest and other	92	38	117	76
	28,441	24,902	56,796	48,888
EXPENSES
Interest	7,471	6,045	14,629	11,925
Depreciation and amortization	6,844	6,237	13,592	12,327
General and administrative	1,735	1,755	3,419	3,401
Property	466	437	981	878
	16,516	14,474	32,621	28,531
Income from operations	11,925	10,428	24,175	20,357
Gain on sales of properties	938	--	1,600	--
Net Income	12,863	10,428	25,775	20,357
Preferred stock dividends	(2,428)	(629)	(4,856)	(629)
Net income available to common stockholders	$ 10,435	$ 9,799	$ 20,919	$ 19,728
Funds from operations (FFO)	$ 16,306	$ 16,014	$ 32,843	$ 32,012
Basic and diluted per share information for common stockholders:
Income from operations	$ .36	$ .37	$ .72	$ .74
Net Income	$ .39	$ .37	$ .78	$ .74
FFO	0.61	0.60	1.23	1.19
Cash dividends paid	0.5438	0.5175	1.0838	1.0275
Weighted average number of shares used for:
Basic per share computation	26,703,319	26,822,370	26,759,355	26,822,376
Diluted per share computation	26,717,992	26,827,338	26,768,843	26,826,291

 

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

	Three months ended 6/30/00	Three months ended 6/30/99	Six months ended 6/30/00	Six months ended 6/30/99
Net income available to common stockholders	$ 10,435	$ 9,799	$ 20,919	$ 19,728
Plus depreciation and amortization	6,844	6,237	13,592	12,327
Less:
Depreciation of furniture, fixtures and equipment and amoritization of organization costs	(35)	(22)	(68)	(43)
Gain on sale of property	(938)	--	1,600	--
Funds from operations	$ 16,306	$ 16,014	$ 32,843	$ 32,012
Divideneds paid to common stockholders	$ 14,534	$ 13,881	$ 29,018	$ 27,560
FFO in excess of dividends	$ 1,772	$ 2,133	$ 3,825	$ 4,452

 

CONSOLIDATED BALANCE SHEETS As of June 30, 2000 And December 31, 1999 (dollars in thousands, except per share data) 2000 (Unaudited) 1999   ASSETS     Real estate, at cost:         Land $ 340,875 $ 338,489     Buildings and improvements 690,771 678,763 1,031,646 1,017,252     Less accumulated depreciation and amortization (191,831) (179,421)       Net real estate held for investment 839,815 837,831   Real estate held for sale, net 49,812 29,262     Net real estate 889,627 867,093 Cash and cash equivalents 2,449 773 Accounts receivable 3,048 3,407 Goodwill, net 18,591 19,053 Other assets 14,677 15,078        Total assets $ 928,392 $ 905,404   LIABILITIES AND STOCKHOLDERS' EQUITY Distributions payable $ 4,865 $ 4,828 Accounts payable and accrued expenses 4,845 12,792 Other liabilities 3,526 3,753 Line of credit payable 162,300 119,200 Notes payable 230,000 230,000       Total liabilities 405,536 370,573   Stockholders’ equity     Preferred stock and paid in capital, par value $1.00 per share, 20,000,000 shares authorized, 4,125,700 and 4,140,000 shares issued and outstanding in 2000 and 1999, respectively 99,368 99,679 Common stock and paid in capital, par value $1.00 per share, 00,000,000 shares authorized, 26,656,870 and 26,822,164 shares issued and outstanding in 2000 and 1999, respectively 633,083 636,611 Distributions in excess of net income (209,595) (201,459)       Total stockholders’ equity 522,856 534,831       Total liabilities and stockholders’ equity $ 928,392 $ 905,404

The following table sets forth certain information regarding our properties classified according to the business of the respective tenants (dollars in thousands):

Annualized(1) Rent
(As of June 30, 2000)
Industry	Rental Revenue	% of Total	% of Total Revenue
			1999	1998	1997
Apparel Stores	$2,799	2.4%	3.8%	4.1%	0.7%
Automotive Parts	10,114	8.8	8.6	7.8	9.1
Automotive Service	6,781	5.9	6.6	7.5	6.4
Book Stores	450	0.4	0.5	0.6	0.5
Business Services	124	0.1	0.1	*	--
Child Care	28,124	24.6	25.3	29.2	35.9
Consumer Electronics	5,699	5.0	4.4	5.4	6.5
Convenience Stores	9,815	8.6	7.2	6.1	5.5
Crafts & Novelties	425	0.4	0.4	*	--
Drug Stores	235	0.2	0.2	0.1	--
Entertainment	2,293	2.0	1.2	--	--
General Merchandise	687	0.6	0.6	*	--
Grocery Stores	719	0.6	0.5	*	--
Health & Fitness	3,950	3.4	0.6	0.1	--
Home Furnishings	6,614	5.8	6.5	7.8	5.6
Home Improvement	4,033	3.5	3.6	*	--
Office Supplies	2,476	2.2	2.6	3.0	1.7
Pet Supplies & Services	1,631	1.4	1.1	0.6	0.2
Private Education	1,698	1.5	1.2	0.9	--
Restaurants	14,268	12.5	13.3	16.2	19.8
Shoe Stores	890	0.8	1.1	0.8	0.2
Theaters	2,406	2.1	0.6	--	--
Video Rental	4,510	3.9	4.3	3.8	0.6
Other	3,771	3.3	5.7	6.0	7.3
Totals	$114,512	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 June 30 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 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 June 30, 2000, classified according to the retail business types and the level of services they provide (dollars in thousands):

REALTY INCOME CORPORATION
Lease Revenue by Goods and Services
(As of June 30, 2000)
Industry	Number of Properties	Annualized Rent (1)	Percent of Annualized Rent
TENANTS PROVIDING SERVICES
Automotive Service	101	$ 6,715	5.9%
Child Care	336	28,124	24.6%
Entertainment	6	2,293	2.0%
Health and Fitness	7	3,950	3.4%
Private Education	6	1,698	1.5%
Theaters	2	2,406	2.1%
Other	10	3,773	3.3%
	468	48,959	42.8%
TENANTS SELLING GOODS AND SERVICES
Automotive Parts	64	5,505	4.8%
Business Services	1	124	0.1%
Convenience Stores	103	9,815	8.6%
Home Improvement	21	2,655	2.3%
Pet Supplies and Services	6	1,163	1.0%
Restaurants	175	14,268	12.5%
Video Rental	35	4,510	3.9%
	405	38,040	33.2%
TENANTS SELLING GOODS
Apparel Stores	4	$ 2,799	2.4%
Automotive Parts	80	4,675	4.0%
Book Stores	1	450	0.4%
Consumer Electronics	37	5,699	5.0%
Craft and Novelty	2	425	0.4%
Drug Stores	1	235	0.2%
General Merchandise	11	687	0.6%
Grocery Stores	2	719	0.6%
Home Furnishings	35	6,614	5.8%
Home Improvement	13	1,377	1.2%
Office Supplies	8	2,476	2.2%
Pet Supplies	2	467	0.4%
Shoe Stores	4	890	0.8%
	200	27,513	24.0%
Totals	1,073	$ 114,512	100.0%
(1) Annualized Rent is calculated by multiplying the monthly contractual base rent as of June 30 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 specified level). For the properties under construction, an estimated contractual base rent is used based upon the estimated total costs of each property.