Realty Income, the Monthly Dividend Company

We purchase commercial real estate for cash leased to tenants that have a good business and operating track records.

We purchase commercial real estate for cash leased to tenants that have a good business and operating track record. The leases are typically for 10 to 20 years, which provides us with dependable lease payments each month that are used to support monthly dividend payments to our shareholders.

Learn more about What We Do and What We Own by clicking on each section below.

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What We Own
  • We own over 4,200 properties, diversified across 47 industries and 231 companies, located throughout 49 states in the US and Puerto Rico.

    Typical Property Types
    • Freestanding buildings (not attached to any other structure)
    • Prime locations with good access and visibility
    Our Tenants

    The majority of our tenants fall into the retail industry category as they generally operate retail stores providing non-discretionary goods and services. In terms of the highest percentage of lease revenue generated from our properties, distribution centers are number one, followed by health and fitness, drug store, and dollar store locations. Properties leased to investment grade-rated tenants account for approximately 46% of our total annualized rental revenue as of 10/31/14.

    Preferred Lease Agreements

    The leases with our tenants are usually net leases, which means that besides paying us rent every month, the tenant is responsible for the majority of the property's operating expenses (taxes, maintenance and/or insurance). This reduces the risk to us of rising property operating expenses and frees up more of the rent to pay monthly dividends.

Characteristics of our Business
  • Real Estate
    • 10 to 20-year leases have tended to be reliable generators of cash to pay dividends
    • Properties owned under net leases tend to eliminate the costly upkeep and tax costs usually associated with owning real estate as these costs are generally paid for by our tenants.
    Financial
    • Funds to acquire new properties generally come from cash on hand or from our $1.5 billion acquisition credit facility led by Wells Fargo. We permanently fund property purchases with the proceeds from common stock, bonds, or preferred stock offerings.
    • Access to capital to fund growth is important - REIT tax status limits the amount of retained earnings that can be used to grow our business
    • Our balance sheet has historically been considered to be one of the healthiest in our industry.
    Growth
    • Rent increases built into leases have historically provided same store rental increases of 0.2% to 2% every year
    • Additional growth has traditionally come by acquiring new properties thereby increasing our lease revenue base
How We Grow Our Earnings
  • We generally increase our earnings in two primary ways:

    1. Increasing the size of our real estate portfolio
      • We are able to generate increasing cash flow from our new property acquisitions based on the "spread", or difference, we achieve between the "Cost of the Capital" we use to acquire the property and the return, or "Lease Yield", we receive from the property we buy.
        For example:
        Lease Yield - Cost of Capital = Spread
      • The "Lease Yield" is the return we receive based on rental or lease payments relative to the price we paid for the property.
      • The "Cost of Capital" is the cost of the capital we receive when we issue common stock, preferred stock, or bonds.
    2. Regular rent increases on the real estate we already own
      • Typically, we have negotiated rent increases on our portfolio
Our Tax Status
  • When we became a public company in 1994, we elected to be taxed as a "real estate investment trust" (or REIT, pronounced "reet") because; 1.) our primary assets are the properties that we own, and 2.) and because the REIT tax status provides us with a tax treatment favorable to the payment of dividends.

    As long as we meet certain operating metrics and pay out 90% of our taxable income as dividends to shareholders, we pay no federal income tax. This eliminates the "double taxation" of the dividends our shareholders receive.

View Information on Our Properties
Key Take-Aways
  • Acquire commercial real estate for cash
  • Hold properties to generate long-term revenue supporting monthly dividends
  • Well-diversified real estate portfolio of over 4,200 locations
  • Earnings growth through rent increases and additional property acquisitions
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Questions & Answers
How has Realty Income performed as an investment?
Realty Income Property Example
WaWa Convenience Store
Realty Income Property Example
Texas Instruments Office and Manufacturing
Realty Income Property Example
Walgreens Drug Store
Realty Income Property Example
Super Stop & Shop
Realty Income Property Example
PNC Bank
Realty Income Property Example
Jack in the Box
Realty Income Property Example
Home Depot Distribution
Realty Income Property Example
FedEx Distribution Center
Realty Income Property Example
CVS Drug Store
Realty Income Property Example
Firestone Auto Center
Realty Income Property Example
Reckitt-Benckiser Office and Distribution
BJs Wholesale Club
BJ's Wholesale Club
One of our health and fitness tenants
One of our tenant locations
Sterling Vineyards
One of our theater locations
Another of our theater locations
FedEx, Orem, Utah