Realty Income Announces Record Second Quarter and Mid-Year Operating Results.ESCONDIDO Escondido (ĕskəndē`dō), city (1990 pop. 108,635), San Diego co., S Calif.; inc. 1888. Located in a grain-, citrus-fruit-, and grape-growing valley, Escondido produces cereal products and has fruit-packing houses and one of the , Calif. -- Realty Income Corporation Realty Income Corporation is a real estate company based in Escondido, California. It is certified as a real estate investment trust by the SEC. Sometimes referred to as the "monthly dividend company" because of its strong history of providing monthly dividends to its shareholders. (Realty realty n. a short form of "real estate." (See: real estate) REALTY. An abstract of real, as distinguished from personalty. Realty relates to lands and tenements, rents or other hereditaments. Vide Real Property. Income), The Monthly Dividend Company(R) (NYSE NYSE See: New York Stock Exchange : O) today announced operating results for the second quarter and six months ended June June: see month. 30, 2006.
COMPANY HIGHLIGHTS:
(For the quarter ended June 30, 2006,
as compared to the same quarterly period in 2005)
-- Revenue increased 19.7% to $56.5 million
-- Funds from Operations (FFO) available to common stockholders
increased 21.7% to $37.6 million
-- FFO per diluted common share increased 10.3% to $0.43 per share
-- Net income available to common stockholders per diluted common
share was $0.27 per share
-- Dividends paid per share increased 5.7%
-- Increased the monthly dividend in June for the 35th consecutive
quarter
-- Same store rents increased 0.5% to $43.79 million
-- Invested $59.7 million in 23 additional properties
Financial Results Revenue Increases Realty Income's revenue for the second quarter ended June 30, 2006, increased 19.7% to $56.5 million as compared to $47.2 million for the same period in 2005. Revenue, for the six months ended June 30, 2006, increased 19.3% to $111.7 million as compared to $93.6 million for the same period in 2005. Net Income Available to Common Stockholders Net income available to common stockholders, for the quarter ended June 30, 2006, was $24.3 million as compared to $22.3 million for the same period in 2005. On a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. per common share basis, net income for the quarter was $0.27 per share as compared to $0.28 per share for the same period in 2005. Net income available to common stockholders, for the six months ended June 30, 2006, was $46.8 million as compared to $43.5 million for the same period in 2005. On a diluted per common share basis, net income was $0.54 per share as compared to $0.55 per share for the same period in 2005. The calculation to determine net income for a real estate company includes gains from the sale of investment properties and impairments. Net income can be significantly impacted by property sales and impairments, which vary from quarter to quarter. During the second quarter of 2006, income from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the available to common stockholders was $0.25 per diluted common share as compared to $0.24 per diluted common share for the same period in 2005. During the first six months of 2006, income from continuing operations available to common stockholders was $0.50 per diluted share as compared to $0.48 per diluted share for the same period in 2005. Funds from Operations Funds From Operations (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations; earnings with depreciation and amortization added back. (FFO FFO See: Funds from operations ) Available to Common Stockholders FFO, for the second quarter ended June 30, 2006, increased 21.7% to $37.6 million as compared to $30.9 million for the same period in 2005. FFO per diluted common share increased 10.3% to $0.43 per share, for the quarter ended June 30, 2006, as compared to $0.39 per share for the same period in 2005. FFO per diluted common share before Crest's contribution, for the quarter ended June 30, 2006, increased 10.5% to $0.42 per share as compared to $0.38 per share for the same period in 2005. For a calculation of FFO before Crest's contributions, see pages 6 and 7. FFO, for the six months ended June 30, 2006, increased 17.6% to $72.9 million as compared to $62.0 million for the same period in 2005. FFO per diluted common share increased 9.0% to $0.85 per share as compared to $0.78 per share for the same period in 2005. FFO per diluted common share before Crest's contribution, for the six months ended June 30, 2006, increased 9.2% to $0.83 per share as compared to $0.76 per share for the same period in 2005. The Company considers FFO to be an appropriate supplemental measure of a Real Estate Investment Trust's (REIT's) operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. FFO is an alternative, non-GAAP, measure that is also considered to be a good indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of a company's ability to generate income to pay dividends. Realty Income defines FFO consistent with the National Association of Real Estate Investment Trust's (NAREIT's) definition as net income available to common stockholders plus depreciation and amortization of real estate assets, reduced by gains on sales of investment properties and extraordinary items. (See the reconciliation of net income available to common stockholders to FFO on page 6). Dividend Information In June 2006, Realty Income announced the 35th consecutive quarterly increase in the amount of the monthly dividend on its common stock to an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. amount of $1.41 per share. This marked the 39th increase in the amount of the dividend since the Company's listing on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. in 1994. On a quarter to quarter basis, dividends paid per share increased 5.7% to $0.351 per share in the second quarter of 2006, as compared to $0.332 per share in the second quarter of 2005. Through June 30, 2006, the Company has paid 431 consecutive monthly dividends and continues its 37-year history of declaring and paying dividends every month. Real Estate Portfolio Update As of June 30, 2006, Realty Income's portfolio of freestanding free·stand·ing adj. Standing or operating independently of anything else: a freestanding bell tower; a freestanding maternity clinic. , single-tenant, retail properties consisted of 1,684 properties located in 48 states, leased to 102 retail chains doing business in 29 retail industries. The properties are leased under long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , net leases with a weighted average remaining lease term of approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 12.3 years. Portfolio Management Activities The Company's portfolio of retail real estate, owned primarily under 15- to 20-year net leases, continues to perform well and provide dependable lease revenue supporting the payment of monthly dividends. As of June 30, 2006, portfolio occupancy Gaining or having physical possession of real property subject to, or in the absence of, legal right or title. In a fire insurance policy, for example, the term occupancy was 98.7% with only 22 properties available for lease out of 1,684 properties in the portfolio. Rent Increases Same store rents on 1,439 properties under lease, during the three months ended June 30, 2006 and 2005, increased 0.5% to $43.79 million from $43.58 million in 2005. Same store rents on 1,439 properties under lease during the six months ended June 30, 2006 and 2005 increased 0.6% to $87.55 million compared to $87.05 million in 2005. Property Acquisitions During the second quarter, Realty Income and Crest invested $59.7 million in 23 new properties and properties under development. Realty Income invested $58.3 million in 22 new properties and properties under development with an initial average contractual lease yield of 9.0%. The 22 new properties acquired by Realty Income are located in 10 states and are 100% leased under net-lease agreements with an initial average lease length of 17.4 years. They are leased to six different retail chains in five separate industries. During the six months ended June 30, 2006, Realty Income and its wholly-owned subsidiary, Crest Net Lease, Inc., invested $154.9 million in 51 new properties and properties under development. Realty Income invested $146.2 million in 48 new properties and properties under development with an initial average contractual lease yield of 8.8%. The 48 new properties acquired by Realty Income are located in 14 states and are 100% leased under net-lease agreements with an initial average lease length of 18.0 years. They are leased to nine different retail chains in six separate industries. Realty Income maintains a $300 million unsecured Unsecured A loan or equity interest that is given without any guarantee of payment, performance, satisfaction or opportunity for return from the recipient. No property, interest or security is used as collateral in either a guarantee or a pledge. acquisition credit facility, which is used to fund property acquisitions in the near term. The outstanding balance on the Company's acquisition credit facility at the end of the second quarter was $82.3 million with $217.7 million available to fund new property acquisitions. Property Dispositions Realty Income continued to successfully execute To run a program, which causes the computer to carry out its instructions. See executable code, instruction and EXE file. execute - execution its core portfolio asset disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of program. The objective of the program is to sell assets when the Company believes the reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. of the sales proceeds will generate higher returns, enhance the credit quality of the Company's real estate portfolio or increase the average lease length. During the second quarter ended June 30, 2006, Realty Income sold five properties for $4.6 million, which resulted in a gain on sales of $1.4 million. During the first six months of 2006, Realty Income sold 10 properties for $6.7 million, which resulted in a gain on sales of $2.2 million. Other Second Quarter 2006 Activities Crest Net Lease Crest Net Lease, Inc. (Crest), Realty Income's wholly-owned subsidiary, is focused on acquiring and subsequently marketing net-leased properties for sale. During the second quarter ended June 30, 2006, Crest sold one property for $3.8 million and reported a gain on sale of $520,000. Crest also invested $1.4 million in one new property during the second quarter. For the six months ended June 30, 2006, Crest sold five properties for $10.2 million and reported a gain on sales of $1.4 million. During this same period, Crest invested $8.7 million in three new properties and properties under development. As of June 30, 2006, Crest carried an inventory of $45.7 million, which consists of 15 properties that are held for sale. Crest's contribution to Realty Income's FFO depends on the timing and number of property sales, if any, in a given quarter. Therefore, Crest's contribution can fluctuate and add volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the to Realty Income's reported FFO and net income on a comparable quarterly and annualized basis. During the second quarter ended June 30, 2006, Crest generated $537,000, or $0.01 per diluted common share, in FFO (and net income) for Realty Income as compared to $296,000, or $0.00 per diluted common share, in FFO for the same period in 2005. During the six months ended June 30, 2006, Crest generated $1.4 million, or $0.02 per diluted common share, in FFO (and net income) for Realty Income as compared to $1.1 million, or $0.01 per diluted common share, in FFO (and net income) for Realty Income for the same period in 2005. CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Comments on Operating Results Commenting on Realty Income's financial results and real estate operations, Tom A. Lewis, Chief Executive Officer, stated, "The Monthly Dividend Company(R) ended the second quarter and first six months of 2006 with solid operating results in all areas of the business. Revenues for the second quarter increased 19.7%, and rose 19.3% for the six months ended June 30, 2006. Revenue increases for both the quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. are the result of strong acquisition volume in the first six months of 2006, record property acquisitions in 2005 and continued increases in same store rents on our existing portfolio. Revenue increases contributed to a record increase in FFO per share, which increased over 10% during the quarter and 9% for the first six months of the year. In addition, our property portfolio continued to perform well with portfolio occupancy at 98.7% and just 22 properties available for lease as of the end of the second quarter. Continued strong financial results also allowed us to increase the amount of the monthly dividend for the 39th time since going public in 1994 and for the 35th consecutive quarter. Shareholders enjoyed an increase in dividends paid of 5.6% during the first six months of 2006. "Property acquisitions continue to be substantial and we are benefiting from a pipeline that continues to yield attractive acquisition opportunities. Realty Income and Crest combined invested $59.7 million in 23 properties during the second quarter and had invested about $155 million in 51 properties as of the six months ended June 30, 2006. The average initial lease rate for the properties acquired by Realty Income during the second quarter was approximately 9.0% and for the first six months the average initial lease rate was 8.8%, both of which represent excellent yields and a positive spread over our cost of capital. The initial average lease term on properties acquired during the first six months of the year was 18.0 years. This reflects our continued focus on acquiring properties with 15- to 20-year leases that support the payment of monthly dividends. "In terms of access to capital to fund acquisitions, since we funded the majority of acquisitions made during the first six months of the year with a common stock offering during the first quarter, we have approximately $218 million available on our $300 million acquisition credit facility. Thus we have ample funding available for future acquisitions. "We are pleased with the results of the first half of the year and we continue to place the income needs of our shareholders as our highest priority when making capital allocation The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as and property investment decisions. This focus, we believe, is important to fulfilling our mission as The Monthly Dividend Company(R)." FFO Commentary Realty Income's FFO per diluted common share has historically tended to be stable and fairly predictable because of the long-term leases that are the primary source of the Company's revenue. There are, however, several factors that can cause FFO per diluted common share to vary from levels that have been anticipated by the Company. These factors include, but are not limited to, changes in interest rates, occupancy rates Noun 1. occupancy rate - the percentage of all rental units (as in hotels) are occupied or rented at a given time pct, per centum, percent, percentage - a proportion in relation to a whole (which is usually the amount per hundred) , periodically accessing the capital markets, the level and timing of property acquisitions and dispositions, lease rollovers, the general real estate market, the economy, charges for property impairments, and the operations of Crest. 2006 Estimates Management estimates that FFO per diluted common share for 2006 should range from $1.69 to $1.72, which would represent annual FFO per diluted common share growth of approximately 4.3% to 6.2%, compared to 2005 FFO per share of $1.62. This represents an increase from the Company's previous 2006 FFO per share estimates of $1.68 to $1.72. FFO for 2006 is based on an estimated net income per diluted common share range of $1.09 to $1.12, adjusted (in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with NAREIT's definition of FFO) for estimated real estate depreciation of $0.65 and potential gain on sales of investment properties of $0.05 per share. Management further estimates that Crest could contribute between $0.03 to $0.06 per share to Realty Income's FFO during 2006. Crest's primary business is the purchase and sale of properties for a profit. These sales may occur at various times during the course of the year, which could cause FFO, in certain quarters, to fluctuate on a comparable quarterly and annualized basis. The Company does not intend to provide quarterly estimates of FFO. Absent changes in annual FFO guidance at the end of each quarter, it may be presumed that the Company's overall estimates for 2006 have not changed. Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. Statements in this press release that are not strictly historical are "forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. " 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, local real estate conditions, the availability of capital to finance planned growth, property acquisitions and the timing of these acquisitions, charges for property impairments, the outcome of any legal proceedings All actions that are authorized or sanctioned by law and instituted in a court or a tribunal for the acquisition of rights or the enforcement of remedies. to which the Company is a party, and the profitability of Crest, the Company's subsidiary, as described in the Company's filings with the Securities and Exchange Commission. Consequently, such 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 ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to these forward-looking statements that may be made to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date these statements were made. Realty Income is The Monthly Dividend Company(R), a New York Stock Exchange real estate company dedicated to providing shareholders with dependable monthly income. As of June 30, 2006, the Company had paid 431 consecutive monthly dividends throughout its 37-year operating history. The monthly income is supported by the cash flows from over 1,600 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. Note to Editors: Realty Income press releases are available at no charge by calling our toll-free investor hotline 1. (company) Hotline - Hotline Communications Ltd.. 2. (messaging) Hotline - Hotline Connect. number: 888-811-2001, or via the internet at http://www.realtyincome.com/Investing/News.html
CONSOLIDATED STATEMENTS OF INCOME
For the three and six months ended June 30, 2006 and 2005
(dollars in thousands, except per share amounts)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
6/30/06 6/30/05 6/30/06 6/30/05
---------- ---------- ---------- ----------
REVENUE
Rental $55,738 $47,080 $110,803 $93,470
Other 766 135 852 172
---------- ---------- ---------- ----------
56,504 47,215 111,655 93,642
---------- ---------- ---------- ----------
EXPENSES
Interest 11,930 9,793 25,127 18,851
Depreciation and
amortization 14,801 11,163 28,324 21,888
General and administrative 4,355 3,706 8,600 7,762
Property 685 1,008 1,545 1,875
Income taxes 231 203 462 401
---------- ---------- ---------- ----------
32,002 25,873 64,058 50,777
---------- ---------- ---------- ----------
Income from continuing
operations 24,502 21,342 47,597 42,865
---------- ---------- ---------- ----------
Income from discontinued
operations:
Real estate acquired for
resale by Crest 537 296 1,416 1,129
Real estate held for
investment 1,601 3,028 2,515 4,175
---------- ---------- ---------- ----------
2,138 3,324 3,931 5,304
---------- ---------- ---------- ----------
Net income 26,640 24,666 51,528 48,169
Preferred stock cash
dividends (2,351) (2,351) (4,702) (4,702)
---------- ---------- ---------- ----------
Net income available to
common stockholders $ 24,289 $ 22,315 $ 46,826 $ 43,467
========== ========== ========== ==========
Funds from operations
available to common
stockholders (FFO) $37,622 $ 30,874 $ 72,922 $62,036
Per share information for
common stockholders:
Income from continuing
operations:
Basic and diluted $0.25 $0.24 $0.50 $0.48
Net income:
Basic $0.28 $0.28 $0.55 $0.55
Diluted $0.27 $0.28 $0.54 $0.55
FFO before Crest
contribution per common
share:
Basic $0.42 $0.38 $0.83 $0.77
Diluted $0.42 $0.38 $0.83 $0.76
Crest $0.01 $0.00 $0.02 $0.01
Total FFO $0.43 $0.39 $0.85 $0.78
Cash dividends paid $0.351 $0.332 $0.699 $0.662
FUNDS FROM OPERATIONS
(dollars in thousands, except per share amounts)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
6/30/06 6/30/05 6/30/06 6/30/05
----------- ----------- ----------- -----------
Net income available to
common stockholders $24,289 $22,315 $46,826 $43,467
Depreciation and
amortization:
Continuing
operations 14,801 11,163 28,324 21,888
Discontinued
operations 20 86 57 225
Depreciation of
furniture, fixtures &
equipment (47) (35) (92) (67)
Gain on sales of
investment properties:
Continuing
operations -- (14) -- (14)
Discontinued
operations (1,441) (2,641) (2,193) (3,463)
----------- ----------- ----------- -----------
Funds from operations
available to common
stockholders $ 37,622 $ 30,874 $ 72,922 $ 62,036
=========== =========== =========== ===========
Dividends paid to
common stockholders $31,242 $26,414 $60,496 $52,676
FFO in excess of
dividends $6,380 $4,460 $12,426 $9,360
FFO per common share,
basic and diluted $0.43 $0.39 $0.85 $0.78
Weighted average number
of common shares used
for computation per
share:
Basic 88,305,175 79,597,321 85,791,994 79,589,462
Diluted 88,466,024 79,676,168 85,988,206 79,667,812
CONTRIBUTIONS BY CREST NET LEASE TO FUNDS FROM OPERATIONS
(dollars in thousands, except per share amounts)
Crest Net acquires properties with the intention of reselling them
rather than holding them as investments and operating the properties.
Consequently, we classify properties acquired by Crest Net as held
for sale at the date of acquisition and do not depreciate them. The
operations of Crest Net's properties are classified as "income from
discontinued operations, real estate acquired for resale."
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
6/30/06 6/30/05 6/30/06 6/30/05
-------- -------- -------- --------
Gain on sales of real estate
acquired for resale $520 $422 1,426 $1,649
Rental revenue 990 287 2,094 569
Interest expense (737) (163) (1,463) (310)
General and administrative expense (75) (134) (154) (273)
Property expenses 4 (25) (33) (51)
Income taxes (165) (91) (454) (455)
-------- -------- -------- --------
Funds from operations contributed
by Crest $537 $296 $1,416 $1,129
======== ======== ======== ========
Crest FFO per common share, basic
and diluted $0.01 $0.00 $0.02 $0.01
Total FFO $37,622 $30,874 $72,922 $62,036
Less FFO contributed by Crest (537) (296) (1,416) (1,129)
-------- -------- -------- --------
FFO before Crest contribution $37,085 $30,578 $71,506 $60,907
======== ======== ======== ========
FFO before Crest contribution per
common share:
Basic $0.42 $0.38 $0.83 $0.77
Diluted $0.42 $0.38 $0.83 $0.76
We define FFO, a non-GAAP measure, consistent with the National
Association of Real Estate Investment Trust's definition, as net
income available to common stockholders, plus depreciation and
amortization of real estate assets, reduced by gains on sales of
investment property and extraordinary items.
HISTORICAL FUNDS FROM OPERATIONS
(dollars in thousands, except per share amounts)
For the three months ended June 30, 2006 2005 2004
----------------------------------- ------ ------ ------
Net income available to common
stockholders $ 24,289 $ 22,315 $21,446
Depreciation and amortization 14,774 11,214 10,205
Gain on sales of investment
properties (1,441) (2,655) (2,500)
----------- ----------- -----------
Total FFO $37,622 $30,874 $29,151
=========== =========== ===========
Total FFO per diluted share $0.43 $0.39 $0.37
Total FFO $37,622 $30,874 $29,151
Less FFO contributed by Crest (537) (296) (2,879)
----------- ----------- -----------
FFO before Crest contribution $37,085 $30,578 $26,272
=========== =========== ===========
FFO components, per diluted
share:(1)
FFO before Crest's contribution $0.42 $0.38 $0.33
Crest FFO contribution $0.01 $0.00 $0.04
Total FFO $0.43 $0.39 $0.37
=========== =========== ===========
Cash dividends paid per share $0.351 $0.332 $0.302
Diluted shares outstanding 88,466,024 79,676,168 79,323,180
For the six months ended June 30,
---------------------------------
Net income available to common
stockholders $ 46,826 $ 43,467 $43,868
Depreciation and amortization 28,289 22,046 19,991
Gain on sales of investment
properties (2,193) (3,477) (3,949)
----------- ----------- -----------
Total FFO $72,922 $62,036 $59,910
=========== =========== ===========
Total FFO per diluted share $0.85 $0.78 $0.77
Total FFO $72,922 $62,036 $59,910
Less FFO contributed by Crest (1,416) (1,129) (6,154)
----------- ----------- -----------
FFO before Crest contribution $71,506 $60,907 $53,756
=========== =========== ===========
FFO components, per diluted
share:(1)
FFO before Crest's contribution $0.83 $0.76 $0.69
Crest FFO contribution $0.02 $0.01 $0.08
Total FFO $0.85 $0.78 $0.77
=========== =========== ===========
Cash dividends paid per share $0.699 $0.662 $0.602
Diluted shares outstanding 85,988,206 79,667,812 77,822,186
For the three months ended June 30, 2003 2002
----------------------------------- ------ ------
Net income available to common stockholders $18,162 $16,017
Depreciation and amortization 8,291 7,605
Gain on sales of investment properties (2,952) (1,395)
----------- -----------
Total FFO $23,501 $22,227
=========== ===========
Total FFO per diluted share $0.34 $0.33
Total FFO $23,501 $22,227
Less FFO contributed by Crest (157) (901)
----------- -----------
FFO before Crest contribution $23,344 $21,326
=========== ===========
FFO components, per diluted share:(1)
FFO before Crest's contribution $0.33 $0.32
Crest FFO contribution $0.00 $0.01
Total FFO $0.34 $0.33
=========== ===========
Cash dividends paid per share $0.294 $0.287
Diluted shares outstanding 70,119,216 66,736,718
For the six months ended June 30,
---------------------------------
Net income available to common stockholders $33,767 $31,883
Depreciation and amortization 16,356 15,076
Gain on sales of investment properties (3,123) (2,523)
----------- -----------
Total FFO $47,000 $44,436
=========== ===========
Total FFO per diluted share $0.67 $0.67
Total FFO $47,000 $44,436
Less FFO contributed by Crest (242) (1,264)
----------- -----------
FFO before Crest contribution $46,758 $43,172
=========== ===========
FFO components, per diluted share:(1)
FFO before Crest's contribution $0.67 $0.65
Crest FFO contribution $0.00 $0.02
Total FFO $0.67 $0.67
=========== ===========
Cash dividends paid per share $0.587 $0.572
Diluted shares outstanding 70,065,888 66,461,634
(1) The above FFO per share amounts have been rounded to the nearest
two decimals and, as such, the individual amounts may not add up
to the "Total FFO" amount.
CONSOLIDATED BALANCE SHEETS
As of June 30, 2006 and December 31, 2005
(dollars in thousands, except per share amounts)
2006 2005
----------- -----------
ASSETS
Real estate, at cost:
Land $790,040 $746,016
Buildings and improvements 1,444,747 1,350,140
----------- -----------
2,234,787 2,096,156
Less accumulated depreciation and
amortization (366,053) (341,193)
----------- -----------
Net real estate held for investment 1,868,734 1,754,963
Real estate held for sale, net 47,943 47,083
----------- -----------
Net real estate 1,916,677 1,802,046
Cash and cash equivalents 10,746 65,704
Accounts receivable 4,814 5,044
Goodwill 17,206 17,206
Other assets 26,154 30,988
----------- -----------
Total assets $1,975,597 $1,920,988
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Distributions payable $10,865 $10,121
Accounts payable and accrued expenses 19,879 20,391
Other liabilities 10,259 9,562
Line of credit payable 82,300 136,700
Notes payable 755,000 755,000
----------- -----------
Total liabilities 878,303 931,774
----------- -----------
Stockholders' equity:
Preferred stock and paid in capital, par value
$1.00 per share, 20,000,000 shares authorized,
5,100,000 issued and outstanding 123,804 123,804
Common stock and paid in capital, par value
$1.00 per share, 200,000,000 shares
authorized, 89,129,472 and 83,696,647 issued
and outstanding in 2006 and 2005, respectively 1,256,793 1,134,300
Distributions in excess of net income (283,303) (268,890)
----------- -----------
Total stockholders' equity 1,097,294 989,214
----------- -----------
Total liabilities and stockholders' equity $1,975,597 $1,920,988
=========== ===========
The following table sets forth certain information regarding Realty
Income's property portfolio (excluding properties owned by Crest)
classified according to the business of the respective tenants,
expressed as a percentage of our total rental revenue:
Percentage of Rental Revenue (1)
--------------------------------------------------
For the For the Years Ended
Quarter -----------------------------------------
Ended Dec Dec Dec Dec Dec Dec
June 30, 31, 31, 31, 31, 31, 31,
Industries 2006 2005 2004 2003 2002 2001 2000
---------------------------- ------ ------ ------ ------ ------ ------
Apparel stores 1.4% 1.6% 1.8% 2.1% 2.3% 2.4% 2.4%
Automotive collision
services 1.4 1.3 1.0 0.3 -- -- --
Automotive parts 2.9 3.4 3.8 4.5 4.9 5.7 6.0
Automotive service 6.6 7.6 7.7 8.3 7.0 5.7 5.8
Automotive tire
services 6.2 7.2 7.8 3.1 2.7 2.6 2.3
Book stores 0.3 0.3 0.3 0.4 0.4 0.4 0.5
Business services 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Child care 11.1 12.7 14.4 17.8 20.8 23.9 24.7
Consumer electronics 1.2 1.3 2.1 3.0 3.3 4.0 4.9
Convenience stores 17.2 18.7 19.2 13.3 9.1 8.4 8.4
Crafts and novelties 0.4 0.4 0.5 0.6 0.4 0.4 0.4
Drug stores 2.9 2.8 0.1 0.2 0.2 0.2 0.2
Entertainment 1.8 2.1 2.3 2.6 2.3 1.8 2.0
Equipment rental
services 0.3 0.4 0.3 0.2 -- -- --
Financial services 0.1 0.1 0.1 -- -- -- --
General merchandise 0.5 0.5 0.4 0.5 0.5 0.6 0.6
Grocery stores 0.6 0.7 0.8 0.4 0.5 0.6 0.6
Health and fitness 4.3 3.7 4.0 3.8 3.8 3.6 2.4
Home furnishings 3.3 3.7 4.1 4.9 5.4 6.0 5.8
Home improvement 3.1 1.1 1.0 1.1 1.2 1.3 2.0
Motor vehicle
dealerships 3.6 2.6 0.6 -- -- -- --
Office supplies 1.4 1.5 1.6 1.9 2.1 2.2 2.3
Pet supplies and
services 1.1 1.3 1.4 1.7 1.7 1.6 1.5
Private education 0.7 0.8 1.1 1.2 1.3 1.5 1.4
Restaurants 9.5 9.4 9.7 11.8 13.5 12.2 12.3
Shoe stores -- 0.3 0.3 0.9 0.8 0.7 0.8
Sporting goods 3.0 3.4 3.4 3.8 4.1 0.9 --
Theaters 9.8 5.2 3.5 4.1 3.9 4.3 2.7
Travel plazas 0.3 0.3 0.4 0.3 -- -- --
Video rental 2.2 2.5 2.8 3.3 3.3 3.7 3.9
Other 2.7 3.0 3.4 3.8 4.4 5.2 6.0
---------------------------- ------ ------ ------ ------ ------ ------
Totals 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
============================ ====== ====== ====== ====== ====== ======
(1) Includes rental revenue for all properties owned by Realty Income
at the end of each period presented, including revenue from
properties reclassified to discontinued operations.
The following table sets forth certain information regarding Realty
Income's property portfolio (excluding properties owned by Crest)
regarding the timing of the initial lease term expirations (excluding
extension options) on our 1,656 net leased, single-tenant and certain
other retail properties as of June 30, 2006 (dollars in thousands):
Lease Expiration Schedule
Total Portfolio Initial Expirations (3)
-------------------------------- -------------------------------
Rental
Revenue Rental
Total for the Revenue
Number of Quarter for the % of
Year Leases Ended % of Number of Quarter Total
Expiring 6/30/06 Rental Leases Ended Rental
(1) (2) Revenue Expiring 6/30/06 Revenue
-------------------------------------- -------------------------------
2006 67 $1,415 2.6% 19 $492 0.9%
2007 121 2,193 4.0 86 1,581 2.9
2008 107 2,309 4.3 63 1,486 2.8
2009 94 2,032 3.8 32 753 1.4
2010 73 1,533 2.9 36 896 1.7
2011 63 1,942 3.6 37 1,314 2.4
2012 45 1,400 2.6 43 1,349 2.5
2013 74 3,201 5.9 66 2,989 5.5
2014 48 1,997 3.6 36 1,755 3.2
2015 90 1,786 3.3 65 1,227 2.3
2016 18 537 1.0 16 449 0.8
2017 22 1,531 2.8 18 1,464 2.7
2018 23 1,014 1.9 23 1,014 1.9
2019 94 4,647 8.6 93 4,451 8.2
2020 83 3,068 5.7 81 3,035 5.6
2021 142 4,520 8.3 141 4,492 8.3
2022 93 2,521 4.7 93 2,521 4.7
2023 233 6,432 11.9 232 6,406 11.9
2024 58 1,741 3.2 58 1,741 3.2
2025 65 5,648 10.4 61 5,585 10.3
2026 32 1,476 2.8 31 1,437 2.7
2028 2 54 0.1 2 54 0.1
2030 1 186 0.3 1 186 0.3
2033 3 357 0.7 3 357 0.7
2034 2 230 0.4 2 230 0.4
2037 2 325 0.6 2 325 0.6
2043 1 13 (a) -- -- --
----------------------------------------------------------------------
Totals 1,656 $54,108 100.0% 1,340 $47,589 88.0%
======================================================================
Subsequent Expirations (4)
--------------------------------
Rental
Revenue % of
Number of for the Total
Leases Quarter Rental
Year Expiring Ended Revenue
6/30/06
------ --------------------------------
2006 48 $923 1.7%
2007 35 612 1.1
2008 44 823 1.5
2009 62 1,279 2.4
2010 37 637 1.2
2011 26 628 1.2
2012 2 51 0.1
2013 8 212 0.4
2014 12 242 0.4
2015 25 559 1.0
2016 2 88 0.2
2017 4 67 0.1
2018 -- -- --
2019 1 196 0.4
2020 2 33 0.1
2021 1 28 --
2022 -- -- --
2023 1 26 (a)
2024 -- -- --
2025 4 63 0.1
2026 1 39 0.1
2028 -- -- --
2030 -- -- --
2033 -- -- --
2034 -- -- --
2037 -- -- --
2043 1 13 (a)
---------------------------------------
Totals 316 $6,519 12.0%
=======================================
(a) Less than 0.1%
(1) Excludes six multi-tenant properties and 22 vacant unleased
properties, one of which is a multi-tenant property. The lease
expirations for properties under construction are based on the
estimated date of completion of those properties.
(2) Includes rental revenue of $116 from properties reclassified to
discontinued operations and excludes revenue of $1,746 from six
multi-tenant properties and from 22 vacant and unleased properties
at June 30, 2006.
(3) Represents leases to the initial tenant of the property that are
expiring for the first time.
(4) Represents lease expirations on properties in the portfolio, which
have previously been renewed, extended or re-tenanted.
The following table sets forth certain state-by-state information
regarding Realty Income's property portfolio (excluding properties
owned by Crest) as of June 30, 2006 (dollars in thousands):
Geographic Diversification
Rental
Revenue
For the
Quarter Percentage
Approximate Ended of
Number of Percent Leasable June 30, Rental
State Properties Leased Square Feet 2006 (1) Revenue
----------------------------------------------------------------------
Alabama 18 94% 187,000 $417 0.7%
Alaska 2 100 128,500 259 0.5
Arizona 71 100 344,500 1,909 3.4
Arkansas 8 88 48,800 139 0.2
California 61 100 1,101,900 3,987 7.1
Colorado 46 100 385,800 1,791 3.2
Connecticut 16 100 245,600 943 1.7
Delaware 15 100 27,700 316 0.6
Florida 131 99 1,276,500 5,086 9.1
Georgia 102 99 712,800 2,810 5.0
Idaho 14 100 91,900 364 0.7
Illinois 55 98 696,200 3,223 5.8
Indiana 39 95 357,900 1,668 3.0
Iowa 14 93 97,700 231 0.4
Kansas 24 83 531,000 781 1.4
Kentucky 15 100 51,900 390 0.7
Louisiana 14 100 65,200 284 0.5
Maryland 24 100 218,800 1,131 2.0
Massachusetts 37 100 203,100 996 1.8
Michigan 13 100 81,600 300 0.5
Minnesota 20 100 337,100 1,258 2.3
Mississippi 38 92 205,200 749 1.3
Missouri 42 98 500,800 1,433 2.6
Montana 2 100 30,000 74 0.1
Nebraska 17 100 190,100 565 1.0
Nevada 15 100 191,000 826 1.5
New Hampshire 10 100 89,600 373 0.7
New Jersey 26 100 200,100 1,056 1.9
New Mexico 7 100 53,300 136 0.2
New York 28 96 419,400 1,976 3.5
North Carolina 52 100 348,200 1,542 2.8
North Dakota 5 100 31,900 54 0.1
Ohio 105 100 661,500 2,544 4.6
Oklahoma 22 100 110,600 447 0.8
Oregon 17 100 253,300 561 1.0
Pennsylvania 81 100 481,300 2,272 4.1
Rhode Island 1 100 3,500 29 0.1
South Carolina 55 100 215,800 1,416 2.5
South Dakota 7 100 18,300 76 0.1
Tennessee 98 100 451,400 2,215 4.0
Texas 191 99 2,056,100 5,667 10.1
Utah 6 83 35,100 95 0.2
Vermont 1 100 2,500 22 (a)
Virginia 62 100 431,900 2,313 4.1
Washington 37 100 243,900 707 1.3
West Virginia 1 0 12,200 -- 0.0
Wisconsin 17 94 157,400 392 0.7
Wyoming 2 100 9,300 31 0.1
----------------------------------------------------------------------
Totals/Average 1,684 99% 14,595,200 $55,854 100.0%
======================================================================
(a) Less than 0.1%
(1) Includes rental revenue for all properties owned by Realty Income
at June 30, 2006, including revenue from properties reclassified
to discontinued operations of $116.
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