SAN DIEGO, Feb. 22, 2021 /PRNewswire/ -- Realty Income Corporation (Realty Income, NYSE: O), The Monthly Dividend Company^®, today announced operating results for the fourth quarter and year ended December 31, 2020. All per share amounts presented in this press release are on a diluted per common share basis unless stated otherwise. We refer to our tenants as clients because we strive to build mutually beneficial relationships and we believe their success is our success.

COMPANY HIGHLIGHTS:

For the year ended December 31, 2020:

• Net income per share was $1.14
• AFFO per share was $3.39
• Invested $2.31 billion in properties and properties under development or expansion, including $920.9 million in properties in the U.K.
• Dividends paid per common share increased by 3.1%, compared to 2019
• Raised $1.85 billion from the sale of common stock
• Raised $1.69 billion from U.S. dollar-denominated notes and £400.0 million in principal of Sterling-denominated notes

For the quarter ended December 31, 2020:

• Net income per share was $0.33
• AFFO per share was $0.84
• Collected 93.6% of contractual rent
• Invested $1.01 billion in properties and properties under development or expansion, including $467.2 million in properties in the U.K.
• Issued £400.0 million through the issuance of 1.625% senior unsecured notes due 2030 in our debut Sterling-denominated public debt offering
• Issued $325.0 million of 0.750% senior unsecured notes due 2026 and $400.0 million of 1.800% senior unsecured notes due 2033
• Raised $655.0 million from the sale of common stock

Subsequent Events to December 31, 2020

• Christie B. Kelly assumed role of Executive Vice President (EVP), Chief Financial Officer and Treasurer on January 19, 2021
• Michelle Bushore assumed role of EVP, Chief Legal Officer, General Counsel and Secretary on February 8, 2021.
  Michael Pfeiffer, our former EVP, Chief Administrative Officer, General Counsel and Secretary intends to remain with the company through June 30, 2021, serving as EVP, Chief Administrative Officer, to assist with the transition.
• Completed the early redemption on all $950.0 million in principal amount of our outstanding 3.250% notes due October 2022
• Raised $669.6 million in net proceeds from a common stock public offering of 12,075,000 shares, including 1,575,000 shares purchased by the underwriters upon exercise of their option to purchase additional shares

CEO Comments

"We believe the financial and operational resiliency of our business was demonstrated throughout the challenging economic environment in 2020. Our success during the year was largely due to the strength of our partnerships with all stakeholders, including our dedicated and diligent team, our valued clients, and our loyal shareholders," said
Sumit Roy, Realty Income's President and Chief Executive Officer. "During the year, we invested over $2.3 billion in high-quality real estate leased primarily to leading operators in resilient industries, of which approximately $921 million was invested internationally, where we continue to expand our addressable market in alignment with our strategic growth objectives."

"Throughout 2020, we maintained a strong financial position and enhanced our financial flexibility, as we established a $1.0 billion commercial paper program and completed our debut public offering of Sterling-denominated senior unsecured notes. In total, we issued approximately $4.1 billion of long-term and permanent capital, which included record-low USD coupon rates in the REIT sector for the 5-year and 12-year unsecured notes issued in December 2020. Based on the strength of our financial position and investment pipeline, we project 2021 acquisition volume of over $3.25 billion, translating into 2021 AFFO per share guidance of $3.44 to $3.49."

Summarized Financial Results

The following summarizes our select financial results (dollars in millions, except per share data):

Impact of COVID-19

Percentages of Contractual Rent Collected as of January 31, 2021

We either have executed deferral agreements or maintain ongoing deferral discussions with clients that account for a majority of the unpaid contractual rent for each of the periods referenced in the table above. Additional detail on rent collections can be found in our supplemental materials available on our corporate website at www.realtyincome.com/investors/financial-information/quarterly-results.

Theater Industry Update

As of December 31, 2020, our clients in the theater industry represented 5.6% of our annualized contractual rent. Given the ongoing disruption to this industry due to the COVID-19 pandemic, we performed a property-level analysis on the collectability of rent for our theater properties. Our analysis involved the assignment of quartile rankings for each asset's pre-pandemic EBITDAR relative to each operator's overall footprint. Other criteria utilized included an analysis of the property's pre-pandemic annual EBITDA generation before corporate overhead, and real estate fundamentals.

As a result of this analysis at September 30, 2020, we determined that for 31 of our 78 theater properties it was no longer probable that we would collect substantially all of contractual rents due. We fully reserved for six additional theater properties for which we do not possess unit level financial information. Consequently, we reserved for 100% of the outstanding receivables for 37 theater properties at September 30, 2020. Beginning October 2020, contractual rent from these 37 properties is accounted for on a cash basis. Additionally, during November 2020, one of these properties was sold. We fully reserved for one additional theater property at December 31, 2020. At December 31, 2020, the receivables outstanding for our 77 theater properties totaled $48.6 million, net of $23.7 million of reserves, and includes $7.8 million of straight-line rent receivables, net of $1.8 million of reserves. The monthly contractual rent associated with the 37 properties accounted for under the cash basis totaled approximately $2.8 million at December 31, 2020. The following table summarizes reserves recorded as a reduction of rental revenue for theater properties (dollars in millions):

Additionally, during the third quarter, we recorded provisions for impairment on 12 of the 37 theater properties for $79.0 million. During the fourth quarter, we recorded provisions for impairment on one additional theater property for $4.8 million. Impairment charges are not included in Nareit-defined FFO or in our calculation of AFFO.

See "Item 1A—Risk Factors" in Part I of our Annual Report on Form 10-K for year ended December 31, 2020 for more information regarding the actual and potential future impacts of the COVID-19 pandemic and the measures taken to limit its spread on our clients and our business, results of operations, financial condition and liquidity.

Dividend Increases 

In December 2020, we announced the 93^rd  consecutive quarterly dividend increase, which is the 109^th increase in the amount of the dividend since the company's listing on the New York Stock Exchange (NYSE) in 1994. The annualized dividend amount as of December 31, 2020 was $2.814 per share. The amount of monthly dividends paid per share increased 3.1% to $2.794 in 2020, as compared to $2.711 in 2019. The company distributed $964.2 million in common dividends to stockholders in 2020, representing 82.2% of its AFFO of $1.173 billion.

Real Estate Portfolio Update

As of December 31, 2020, our portfolio consisted of 6,592 properties located in 49 U.S. states, Puerto Rico and the U.K., and leased to approximately 600 different clients doing business in 51 separate industries. The properties are primarily freestanding and leased under long-term net lease agreements with a weighted average remaining lease term of approximately 9.0 years. The company's portfolio of commercial real estate has historically provided dependable rental revenue supporting the payment of monthly dividends. As of December 31, 2020, portfolio occupancy was 97.9% with 140 properties available for lease or sale out of 6,592, as compared to 98.6% at each of September 30, 2020 and December 31, 2019.

Changes in Occupancy

Investments in Real Estate
The following table summarizes our acquisitions in the U.S. and U.K. for the periods indicated below:

Same Store Rental Revenue
The following summarizes our same store rental revenue on 5,403 properties under lease (dollars in millions):

Our calculation of same store rental revenue includes rent deferred for future payment as a result of lease concessions we granted in response to the COVID-19 pandemic and recognized under the practical expedient provided by the Financial Accounting Standards Board (FASB). Same store rental revenue was negatively impacted by reserves recorded as reductions of rental revenue of $13.4 million for the three months ended December 31, 2020 compared to $126,000 for the three months ended December 31, 2019, and $39.9 million for the year ended December 31, 2020 compared to $1.4 million for the year ended December 31, 2019. Our calculation of same store rental revenue also includes uncollected rent for which we have not granted a lease concession. If these applicable amounts of rent deferrals and uncollected rent were excluded from our calculation of same store rental revenue, the decreases for the three months and year ended December 31, 2020 relative to the comparable periods for 2019 would have been (3.6)% and (5.1)%, respectively.

Property Dispositions
The following summarizes our property dispositions (dollars in millions):

Liquidity and Capital Markets

Capital Raising
In December 2020, we issued $325.0 million of 0.750% senior unsecured notes due March 2026 (the "2026 Notes") and $400.0 million of 1.800% senior unsecured notes due March 2033 (the "2033" Notes"). The public offering price for the 2026 Notes was 99.192% of the principal amount, for an effective yield to maturity of 0.908%. The public offering price for the 2033 Notes was 98.470% of the principal amount, for an effective yield to maturity of 1.941%. Combined, the new issues of the 2026 Notes and 2033 Notes have a weighted average term of 9.1 years and a weighted average effective yield to maturity of 1.478%.

In October 2020, we issued £400.0 million of 1.625% senior unsecured notes due December 2030. The public offering price for these notes was 99.191% of the principal amount, for an effective yield to maturity of 1.712%. The issuance represented our debut public offering of Sterling-denominated notes.

During the three months ended December 31, 2020, we raised $655.0 million from the sale of common stock at a weighted average price of $61.14 per share, primarily through our At-The-Market (ATM) Program.

In January 2021, we raised $669.6 million from the issuance of 12,075,000 shares of common stock in an underwritten public offering, including 1,575,000 shares purchased by the underwriters upon the exercise of their option to purchase additional shares.

Revolving Credit Facility and Commercial Paper Program
We have a $3.0 billion unsecured revolving credit facility, with an initial term that expires in March 2023 (subject to two six-month options to extend). The revolving credit facility also has a $1.0 billion accordion feature, which is subject to obtaining lender commitments. As of December 31, 2020, there were no borrowings on our revolving credit facility. In addition, we had a cash balance of $824.5 million.

Additionally, we have a U.S. dollar-denominated unsecured commercial paper program. Under the terms of this program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding of $1.0 billion, with proceeds used for general corporate purposes. We use our unsecured revolving credit facility as a liquidity backstop for the repayment of the notes issued under this program. As of December 31, 2020, we had no commercial paper borrowings.

Early Redemption of 3.250% Notes Due 2022
In January 2021, we completed the early redemption on all $950.0 million in principal amount of our outstanding 3.250% notes due October 2022, plus accrued and unpaid interest. As a result of the early redemption, we will recognize a loss on extinguishment of debt of approximately $46 million, or approximately $0.12 per diluted common share, to net income available to common stockholders and Nareit-defined FFO in the three months ended March 31, 2021. Loss on extinguishment of debt is excluded in our calculation of AFFO.

2021 Earnings Guidance

We estimate FFO per share for 2021 of $3.26 to $3.34, inclusive of a $0.12 per share loss due to the early redemption of the 3.250% Notes due 2022. We estimate AFFO per share for 2021 of $3.44 to $3.49, an increase of 1.5% to 2.9% over 2020 AFFO per share of $3.39. Summarized below are approximate estimates of the key components of the company's 2021 earnings guidance:

Conference Call Information

In conjunction with the release of our operating results, we will host a conference call on February 23, 2021 at 11:30 a.m. PT to discuss the results. To access the conference, dial (877) 701-6180 (United States) or (647) 689-4069 (International). When prompted, provide the conference ID 6481184.

A telephone replay of the conference call can also be accessed by calling (800) 585-8367 and entering the conference ID 6481184. The telephone replay will be available through March 9, 2021.

A live webcast will be available in listen-only mode by clicking on the webcast link on the company's home page or in the investors section at www.realtyincome.com. A replay of the conference call webcast will be available approximately one hour after the conclusion of the live broadcast. No access code is required for this replay.

Supplemental Materials

Supplemental materials on our operating results for the three months and year ended December 31, 2020, including reconciliations for non-GAAP measures within the Glossary, are available on our corporate website at www.realtyincome.com/investors/financial-information/quarterly-results.

About Realty Income

Realty Income, The Monthly Dividend Company^®, is an S&P 500 company dedicated to providing stockholders with dependable monthly income. The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 6,500 real estate properties owned under long-term lease agreements with our commercial clients. To date, the company has declared 608 consecutive common stock monthly dividends throughout its 52-year operating history and increased the dividend 109 times since Realty Income's public listing in 1994 (NYSE: O). The company is a member of the S&P 500 Dividend Aristocrats^® index. Additional information about the company can be obtained from the corporate website at www.realtyincome.com.

Forward-Looking Statements

Statements in this press release that are not strictly historical are "forward-looking" statements. Forward-looking statements involve known and unknown risks, which may cause the company's actual future results to differ materially from expected results. These risks include, among others, general economic conditions, domestic and foreign real estate conditions, client financial health, the availability of capital to finance planned growth, volatility and uncertainty in the credit markets and broader financial markets, changes in foreign currency exchange rates, property acquisitions and the timing of these acquisitions, charges for property impairments, the effects of the COVID-19 pandemic and the measures taken to limit its impact, the effects of pandemics or global outbreaks of contagious diseases or fear of such outbreaks, our clients' ability to adequately manage their properties and fulfill their respective lease obligations to us, and the outcome of any legal proceedings to which the company is a party, as described in the company's filings with the Securities and Exchange Commission. Consequently, 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. The company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made. 

View original content:http://www.prnewswire.com/news-releases/realty-income-announces-operating-results-for-fourth-quarter-and-2020-301232751.html

SOURCE Realty Income Corporation