ESCONDIDO, CALIFORNIA, February 27, 2003—Realty Income Corporation (Realty Income), The Monthly Dividend Company®, (NYSE:O) today announced that Moody's Investor Services upgraded the Company's senior unsecured debt rating to Baa2 from Baa3 and its preferred stock ratings to Baa3 from Ba1, with a stable outlook. Realty Income's Chief Executive Officer, Tom A. Lewis, stated, "We are very pleased with Moody's rating action, and believe the upgrade reflects the Company's solid financial position, the increased diversification of our portfolio of retail properties and the consistent growth of the Company in recent years."

Moody's Investors Service issued the following press release on February 26, 2003:

"Moody's Investors Service has upgraded the ratings of Realty Income Corporation [NYSE: O] (senior debt to Baa2, preferred stock to Baa3) with a stable outlook. According to Moody's, this rating change reflects the REIT's success in increasing its asset base and revenues, sound fixed charge coverage, lack of encumbered assets, consistent performance track record, focus on free-standing single-tenant triple net lease retail property transactions, and reduction in its industry and tenant concentration. The stable rating outlook reflects Moody's belief that the REIT will maintain a conservative capital structure of low leverage with unencumbered assets, consistent operating performance, a staggered lease structure and laddered debt maturity schedule.

"Realty Income maintains a conservative balance sheet (total debt and preferred stock is only 33% of gross assets) and solid fixed charge coverage (3.9x including interest and preferred dividends). Realty Income's occupancy rate has not been below 97.5% since 1969, and its current portfolio occupancy rate remains high at 97.7%, with an average remaining lease term of 10.9 years. At the same time, the REIT has significantly increased its asset base and revenues in recent years. At year-end 2002, Realty Income owned 1,197 properties that generated revenues of $141 million compared to 740 properties generating revenues of $57 million in 1996 when it was first rated.

"Moody's notes that Realty Income has made significant progress in reducing its industry and tenant concentrations. Today, the REIT's top three industries account for 42.4% of annual revenues, which consists of childcare (19.5%), restaurants (12.6%), and convenience stores (10.3%). In 1996, its top three industries accounted for 76.9% of total revenues, with childcare (42.0%), restaurants (24.4%) and automotive parts (10.5%) dominating the mix. Its ten largest tenants account for 46.4% of annual rent, compared to 76.7% in 1995. Realty Income has successfully reduced its tenant exposure — at year-end 2002 only two tenants accounted for over 5% of annualized rent — Children's World (9.9%) and La Petite Academy (8.4%) — compared to five tenants in 1995.

Moody's stated that the REIT has displayed good access to capital markets. Since May 2001 it has raised over $200 million from four equity issuances. Realty Income has a well-laddered debt maturity schedule, with no long term maturities until 2007, other than its recently renegotiated line of credit, which matures in October 2005.

"These positive factors are offset by the REIT's exposure to non-credited tenants, modest size, the single-purpose nature of its portfolio, and tenant and industry concentration. Realty Income provides capital primarily to middle-market retail chain store operators by acquiring and leasing back their retail sites on a triple-net basis. The two largest segments consist of childcare facilities, which represent approximately 20% of Realty Income's annual rental revenue, and restaurant industries, which account for 13%. Although this concentration has consistently diminished over time, Moody's expects further decreases in this concentration, and would deem a more concentrated portfolio as a distinct negative.

"Further rating upgrades will be challenging, and would reflect a maintenance of the REIT's sound balance sheet and coverages, combined with much enhanced industry leadership and diversity.

"The following ratings were upgraded: Realty Income Corporation — Senior unsecured debt to Baa2, from Baa3; senior unsecured debt shelf to (P)Baa2, from (P)Baa3; preferred stock to Baa3, from Ba1; preferred stock shelf to (P)Baa3, from (P)Ba1; and subordinate debt shelf to (P)Baa3, from (P)Ba1."

Realty Income is The Monthly Dividend Company®, a New York Stock Exchange real estate company dedicated to providing shareholders with dependable monthly income. To date the Company has paid 391 consecutive monthly dividend payments throughout its 33-year operating history. The monthly income is supported by the cash flow from approximately 1,200 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.

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