Realty Income Corporation · NYSE:O
Realty Income — Q3 2023 Earnings Presentation
31 slides from Realty Income's earnings presentation, Nov 6, 2023
Slide 1: Supplemental Operating & Financial Data Q3 2023
SUPPLEMENTAL OPERATING & FINANCIAL DATA Q3 2023 An S&P 500 company S&P 500 Dividend Aristocrats® index member Exhibit 99.2
Slide 2: Table of Contents
Q3 2023 Supplemental Operating & Financial Data 2 Table of Contents Corporate Overview 3 Financial Summary Consolidated Statements of Income 4 Funds From Operations (FFO) and Normalized Funds From Operations (Normalized FFO) 5 Adjusted Funds From Operations (AFFO) 6 Consolidated Balance Sheets 7 Deb
Slide 3: Corporate Overview: One Team
Q3 2023 Supplemental Operating & Financial Data 3 One Team Senior Management Neil M. Abraham, EVP, Chief Strategy Officer, Realty Income International - President Michelle Bushore, EVP, Chief Legal Officer, General Counsel and Secretary Mark E. Hagan, EVP, Chief Investment Officer Shannon Kehle, EVP
Slide 4: Consolidated Statements of Income
Q3 2023 Supplemental Operating & Financial Data 4 Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 REVENUE Rental (including reimbursable) (1) $ 1,008,862 $ 825,946 $ 2,929,440 $ 2,426,311 Other 30,242 11,323 73,268 28,720 Total revenue 1,039,104 837,269 3,002,708
Slide 5: FFO and Normalized FFO
Q3 2023 Supplemental Operating & Financial Data 5 FFO and Normalized FFO (1) (in thousands, except per share amounts) The following is a reconciliation of net income available to common stockholders (which we believe is the most comparable GAAP measure) to FFO and Normalized FFO. Also presented is i
Slide 6: Adjusted Funds From Operations (AFFO)
Q3 2023 Supplemental Operating & Financial Data 6 The following is a reconciliation of net income available to common stockholders (which we believe is the most comparable GAAP measure) to Normalized FFO and AFFO. Also presented is information regarding distributions paid to common stockholders and
Slide 7: Consolidated Balance Sheets
Q3 2023 Supplemental Operating & Financial Data 7 Consolidated Balance Sheets (in thousands, except per share amounts) (unaudited) September 30, 2023 December 31, 2022 ASSETS Real estate held for investment, at cost: Land $ 14,408,324 $ 12,948,835 Buildings and improvements 33,606,951 29,707,751 Tot
Slide 8: Debt Summary
Q3 2023 Supplemental Operating & Financial Data 8 Debt Summary as of September 30, 2023 (dollars in thousands) Maturity Dates Carrying Value (USD) % of Debt Interest Rate Weighted Average Years Until Maturity Credit Facility and Commercial Paper (1) Credit Facility (2) June 2026 $ 481,470 2.4 % 5.86
Slide 9: Senior Unsecured Notes and Bonds
Q3 2023 Supplemental Operating & Financial Data 9 Senior Unsecured Notes and Bonds (dollars in thousands) Maturity Dates Principal Amount (Currency Denomination) Principal Balance (USD) as of September 30, 2023 % of Debt Interest Rate 4.600% Notes due 2024 February 6, 2024 $ 499,999 $ 499,999 2.5 %
Slide 10: Debt Maturities
Q3 2023 Supplemental Operating & Financial Data 10 Debt Maturities as of September 30, 2023 (dollars in millions) Principal Due Credit Facility and Commercial Paper (1) Term Loans (2) Mortgages Payable Senior Unsecured Notes and Bonds Total Weighted Average Expiring Interest Rate (3) 2023 $ 376.8 $
Slide 11: Capitalization & Financial Ratios
Q3 2023 Supplemental Operating & Financial Data 11 Capitalization & Financial Ratios (dollars in thousands, except as otherwise noted) Cash on Hand $ 344,129 Availability under Credit Facility 3,768,530 Unsettled ATM Forwards 749,328 Less: Commercial Paper Borrowings (376,790) $ 4,485,197 (4) As app
Slide 12: Adjusted EBITDAre & Coverage Ratios
Q3 2023 Supplemental Operating & Financial Data 12 Adjusted EBITDAre & Coverage Ratios (dollars in thousands) Reconciliation of Net Income to Adjusted EBITDAre and Pro Forma Adjusted EBITDAre (1) Three months ended September 30, 2023 Net income $ 233,877 Interest 184,121 Income taxes 11,336 Deprecia
Slide 13: Debt Covenants
Q3 2023 Supplemental Operating & Financial Data 13 Debt Covenants The following is a summary of the key financial covenants for our senior unsecured notes and bonds, as defined and calculated per their terms. These calculations, which are not based on U.S. GAAP measurements, are presented to investo
Slide 14: Investment Summary
Q3 2023 Supplemental Operating & Financial Data 14 Investment Summary Number of Properties Investment ($ in millions) Cash Rents ($ in millions) Leasable Square Feet (in thousands) Initial Weighted Average Cash Lease Yield (1) Weighted Average Lease Term (Years) Q1 2023 Acquisitions - U.S. 197 $ 1,0
Slide 15: Disposition Summary
Q3 2023 Supplemental Operating & Financial Data 15 Disposition Summary (dollars in thousands) Number of Properties (1) Net Book Value Net Sales Proceeds (1) Net Cash Capitalization Rate (2) Q1 2023 Occupied — $ — $ — — % Vacant 26 24,316 28,595 — Total real estate dispositions 26 $ 24,316 $ 28,595 T
Slide 16: Development Pipeline
Q3 2023 Supplemental Operating & Financial Data 16 Development Pipeline (dollars in thousands) Retail Number of Properties Investment to Date Estimated Remaining Investment Total Commitment Percent Funded Percent Leased (1) New development (2) 243 $ 373,507 $ 608,730 $ 982,237 (3) 38 % 100 % Develop
Slide 17: Our Top Clients: Client Diversification
Q3 2023 Supplemental Operating & Financial Data 17 Our Top 20 Clients Our 20 largest clients based on percentage of total portfolio annualized contractual rent, which does not give effect to deferred rent, at September 30, 2023, include the following: Our Investment Grade Clients (3) Number of Lease
Slide 18: Top 10 Industries
Q3 2023 Supplemental Operating & Financial Data 18 (1)Top 10 Industries Percentage of Total Portfolio Annualized Contractual Rent As of Sept 30, Dec 31, Dec 31, Dec 31, Dec 31, 2023 2022 2021 2020 2019 Grocery 11.4% 10.0% 10.2% 9.8% 7.9% Convenience Stores 10.6 8.6 9.1 11.9 12.3 Dollar Stores 7.2 7.
Slide 19: Industry Diversification
Q3 2023 Supplemental Operating & Financial Data 19 Percentage of Total Portfolio Annualized Contractual Rent As of Sept 30, Dec 31, Dec 31, Dec 31, Dec 31, 2023 2022 2021 2020 2019 United States Aerospace 0.3% 0.4% 0.4% 0.6% 0.8% Apparel stores 1.4 1.4 1.5 1.3 1.1 Automotive collision services 1.1 0
Slide 20: Industry Diversification (continued)
Q3 2023 Supplemental Operating & Financial Data 20 Percentage of Total Portfolio Annualized Contractual Rent As of Sept 30, Dec 31, Dec 31, Dec 31, Dec 31, 2023 2022 2021 2020 2019 Motor vehicle dealerships 1.5 1.4 1.3 1.6 1.6 Other manufacturing 0.5 0.5 0.5 0.4 0.6 Packaging 0.6 0.5 0.6 0.9 0.8 Pet
Slide 21: Geographic Diversification
Q3 2023 Supplemental Operating & Financial Data 21 Geographic Diversification Balanced presence in 50 states, Puerto Rico, the United Kingdom, Spain, Italy and Ireland Top Ten Regions Based on Total Portfolio Annualized Contractual Rent United Kingdom 12.3% Texas 10.1% California 5.4% Florida 5.2% I
Slide 22: Property Type Composition
Q3 2023 Supplemental Operating & Financial Data 22 Property Type Composition (dollars in thousands) Property Type Number of Properties Approximate Leasable Square Feet (1) Total Portfolio Annualized Contractual Rent as of September 30, 2023 Percentage of Total Portfolio Annualized Contractual Rent a
Slide 23: Same Store Rental Revenue
Q3 2023 Supplemental Operating & Financial Data 23 Q3 2023 Same Store Rental Revenue Number of properties 10,577 Square footage 189,332,155 Q3 2023 $ 716,015 Q3 2022 $ 700,869 Change (in dollars) $ 15,146 Change (percent) 2.2 % YTD 2023 Same Store Rental Revenue Number of properties 10,577 Square fo
Slide 24: Same Store Rental Revenue (Cont'd)
Q3 2023 Supplemental Operating & Financial Data 24 Same Store Rental Revenue (1) (Cont'd) (dollars in thousands) Three months ended September 30, Nine months ended September 30, Property Type 2023 2022 $ Change % Change 2023 2022 $ Change % Change Retail $ 604,694 $ 591,603 $ 13,091 2.2 % $ 1,808,75
Slide 25: Occupancy
Q3 2023 Supplemental Operating & Financial Data 25 By Property Occupied properties 13,071 Total properties 13,230 Occupancy 98.8 % By Square Footage Occupied square footage 259,791,079 Total square footage 262,419,272 Occupancy 99.0 % By Rental Revenue (Economic Occupancy) Quarterly cash rental reve
Slide 26: Leasing Activity
Q3 2023 Supplemental Operating & Financial Data 26 Leasing Activity (dollars in thousands) Q3 2023 Re-leased to New Client Re-leased to Without After a Period Re-leasing Same Client Vacancy of Vacancy Totals Prior cash rents $ 49,400 $ 564 $ 3,933 $ 53,897 New cash rents* $ 52,023 $ 491 $ 5,089 $ 57
Slide 27: Lease Expirations
Q3 2023 Supplemental Operating & Financial Data 27 (1) This table sets forth the timing of remaining lease term expirations in our portfolio (excluding rights to extend a lease at the option of the client) and their contributions to annualized contractual rent as of September 30, 2023. Leases on our
Slide 28: Earnings Guidance
Q3 2023 Supplemental Operating & Financial Data 28 Earnings Guidance Summarized below are approximate estimates of the key components of our 2023 earnings guidance, which do not give effect to the announced merger between us and Spirit that is expected to close in the first quarter of 2024: Prior 20
Slide 29: Analyst Coverage
Q3 2023 Supplemental Operating & Financial Data 29 Analyst Coverage Equity Research Baird Wes Golladay wgolladay@rwbaird.com (216) 737-7510 Bank of America Securities Joshua Dennerlein joshua.dennerlein@bofa.com (646) 855-1681 BNP Paribas Exane Nate Crossett nate.crossett@exanebnpparibas.com (646) 7
Slide 30: Glossary
Q3 2023 Supplemental Operating & Financial Data 30 Glossary Adjusted EBITDAre. The National Association of Real Estate Investment Trusts (Nareit) established an EBITDA metric for real estate companies (i.e., EBITDA for real estate, or EBITDAre) it believed would provide investors with a consistent m
Slide 31: Glossary (Cont'd)
Q3 2023 Supplemental Operating & Financial Data 31 Glossary (Cont'd) Funds From Operations (FFO), a non-GAAP financial measure, consistent with the Nareit definition, is net income available to common stockholders, plus depreciation and amortization of real estate assets, plus provisions for impairm