PROPERTY ACQUISITIONS During 2003 Realty Income's new property acquisitions significantly exceeded the property acquisitions made in any prior year.

In summary, Realty Income and its Crest Net Lease subsidiary acquired 302 retail properties in 34 separate transactions for $371.6 million.

Of the 302 properties purchased, Realty Income invested $284.0 million in 242 properties to be held for long-term investment in the Company's core portfolio. These properties are located in 20 states, have an initial average lease rate of 9.8% and an average lease term of 19.9 years. They are leased to 15 different retail chains in 10 retail segments. Crest Net Lease acquired 60 properties for $87.6 million and these properties will be marketed for resale.

These acquisitions will increase our earnings and further diversify our portfolio of real estate assets, adding to the consistency of the revenue generated by our property portfolio. This record level of new property acquisitions was achieved in the face of the toughest market conditions we've seen in many years. Had we solely pursued our traditional methods to acquire new properties, I believe we would have had only a moderate level of acquisitions this year. Fortunately we identified another source of acquisition opportunities in the area of real estate investment banking.

Typically these are large transactions (in excess of $50 million) resulting from either a balance sheet restructuring, merger, or acquisition of one or more large retail chains. In these cases a retail chain is using the untapped value of its real estate as an additional source of capital. Our role is to introduce the idea of using their real estate in this way and, in doing so, provide an additional source of capital by acquiring the retailer's real estate.