FINANCIAL PERFORMANCE Revenue for 2001 increased 6.8% to $126.3 million as compared to revenue of $118.3 million during 2000.

Funds from Operations (FFO) increased 15.8% to $77.8 million, as compared to $67.2 million during 2000. On a diluted per common share basis, FFO increased 5.6% to $2.66 per share as compared to $2.52 per share for 2000. (FFO is a widely used measure of a company’s ability to pay dividends.)

RETURNS TO SHAREHOLDERS The Company’s stock price increased from a closing price on December 31, 2000 of $24.88 to a closing price of $29.40 on December 31, 2001. Dividends paid increased to $2.2425 per share in 2001 from $2.1825 per share in 2000. Based on an opening price of $24.88 and a dividend of $2.2425 per share, shareholders realized a 9% average dividend yield in 2001. The total return from share price growth and dividends paid to our shareholders in 2001 was 27.2%.

Since 1970 your Company has paid 377 consecutive monthly dividends. Since Realty Income’s listing on the New York Stock Exchange in October 1994, the amount of the annualized dividend has risen from $1.80 per share to $2.28, an increase of 26.7%, and the stock price has increased from $16.00 to $29.40, an increase of 83.8%. This represents an average annual return to shareholders of 24.5% since the Company went public in 1994.

To summarize our 2001 results:

• Our highly focused investment strategy continues to work well in a recessionary environment.
• Occupancy remained high at 98%.
• Same store rents rose 1.8%.
• We achieved excellent growth in the size of our real estate portfolio with the acquisition of 91 properties at 11.0% average lease yields, investing $131.8 million.
• We accessed over $157 million in equity capital.
• Dispositions provided $39.5 million of additional proceeds for investments.
• The dividend was increased four times during the year.