Realty Income Corporation · NYSE:O
Realty Income — Q2 2018 Earnings Presentation
26 slides from Realty Income's earnings presentation, Aug 1, 2018
Slide 1: Supplemental Operating & Financial Data Q2 2018
Exhibit 99.2 an S&P 500 company SUPPLEMENTAL OPERATING S&P High Yield & FINANCIAL DATA Dividend Aristocrats® Q2 2018 index member
Slide 2: Table Of Contents
Table Of Contents Corporate Overview 3 Financial Summary Consolidated Statements Of Income 4 Funds From Operations (FFO) 5 Adjusted Funds From Operations (AFFO) 6 Consolidated Balance Sheets 7 Debt Summary 8 Debt Maturities 9 Capitalization & Financial Ratios 10 Adjusted EBITDAre & Coverage Ratios 1
Slide 3: Corporate Overview
Corporate Overview Corporate Profile Senior Management Realty Income, The Monthly Dividend Company®, is an S&P 500 company John P. Case, Chief Executive Officer dedicated to providing stockholders with dependable monthly dividends Sumit Roy, President and Chief Operating Officer that increase over t
Slide 4: Consolidated Statements Of Income
Consolidated Statements Of Income (dollars in thousands, except per share amounts) (unaudited) (unaudited) Three months ended Six months ended June 30, June 30, 2018 2017 2018 2017 REVENUE Rental $ 313,870 $ 288,049 $ 620,418 $ 573,870 Tenant reimbursements 11,395 11,756 22,695 22,985 Other 3,621 36
Slide 5: Funds From Operations (FFO)
Funds From Operations (FFO) (dollars 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. Also presented is information regarding distributions paid to common stockholde
Slide 6: Adjusted Funds From Operations (AFFO)
Adjusted Funds From Operations (AFFO) (dollars 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 AFFO. Also presented is information regarding distributions paid t
Slide 7: Consolidated Balance Sheets
Consolidated Balance Sheets (dollars in thousands , except per share amounts) June 30, 2018 December 31, 2017 ASSETS (unaudited) Real estate, at cost: Land $ 4,355,454 $ 4,080,400 Buildings and improvements 11,313,624 10,936,069 Total real estate, at cost 15,669,078 15,016,469 Less accumulated depre
Slide 8: Debt Summary
Debt Summary (dollars in thousands) Principal Interest Weighted Maturity Date as of Balance as of Rate as of Average Years June 30, 2018 June 30, 2018 % of Debt June 30, 2018 until Maturity Credit Facility Credit Facility (1) June 30, 2019 $ 534,000 8.1% 2.90% 1.0 years Unsecured Term Loans Term Loa
Slide 9: Debt Maturities
Debt Maturities (dollars in millions) Debt Maturities Year of Credit Term Mortgages Senior Unsecured Weighted Average Maturity Facility Loans Payable Notes and Bonds Total Interest Rate (1) 2018 $ — $ — $ 8.5 $ — $ 8.5 4.98% 2019 534.0 70.0 20.7 — 624.7 3.69% 2020 — 250.0 82.4 — 332.4 4.05% 2021 — —
Slide 10: Capitalization & Financial Ratios
Capitalization & Financial Ratios (dollars in thousands, except per share amounts) Capitalization as of June 30, 2018 Capital Structure as of June 30, 2018 Principal Debt Balance Credit Facility $ 534,000 Unsecured Term Loans 320,000 Senior Unsecured Notes and Bonds 5,400,000 Mortgages Payable 306,8
Slide 11: Adjusted EBITDAre & Coverage Ratios
Adjusted EBITDAre & Coverage Ratios (dollars in thousands) Reconciliation of Net Income to Adjusted EBITDAre (1) Three months ended Debt Service & Fixed Charge Coverage (3) June 30, 2018 Net income $ 96,697 Interest 66,628 Income taxes 1,208 Depreciation and amortization 133,999 Impairment loss 3,95
Slide 12: Debt Covenants
Debt Covenants As of June 30, 2018 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 investors to show our ability to incur
Slide 13: Investment Summary
Investment Summary (dollars in thousands) Cash Weighted Number of Leasable Capitalization Average Lease First Quarter 2018 Properties Investment Cash Rents Square Feet Rate (1) Term (Years) New Property Acquisitions 168 $ 506,040 $ 31,268 851,528 6.2% 14.0 Properties under Development (2) 6 3,767 25
Slide 14: Disposition Summary
Disposition Summary (dollars in thousands) Cash Capitalization First Quarter 2018 Number of Properties Original Investment Net Book Value Net Proceeds Rate (1) Occupied 3 $ 6,635 $ 5,651 $ 8,448 6.6% Vacant 11 $ 15,405 $ 4,875 $ 5,331 — Total Real Estate Dispositions 14 $ 22,040 $ 10,526 $ 13,779 Th
Slide 15: Development Pipeline
Development Pipeline (dollars in thousands) Investment Retail Number of Properties to Date Remaining Investment Total Commitment Percent Leased (2) New development (1) 2 $ 7,120 $ 10,582 $ 17,702 100% Development of existing properties 1 $ 1,056 $ 1,088 $ 2,144 100% 3 $ 8,176 $ 11,670 $ 19,846 Inves
Slide 16: Tenant Diversification
Tenant Diversification Top 20 Tenants Investment Grade Tenants(2): Our 20 largest tenants based on percentage of total portfolio annualized rental revenue at June 30, 2018 include the following: Number of Leases 2,932 Percentage of Annualized Rents 51% Weighted Average Annual Growth Rate on 1.0% Inv
Slide 17: Industry Diversification
Industry Diversification Percentage of Rental Revenue For the Quarter Ended For the Year Ended June 30, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2018 2017 2016 2015 2014 2013 Aerospace 0.9% 0.9% 1.0% 1.1% 1.2% 1.2% Apparel stores 1.3 1.6 1.9 2.0 2.0 1.9 Automotive collision services 0.9 1.0 1.0 1.0 0
Slide 18: Geographic Diversification
Geographic Diversification (dollars in thousands) Approximate Rental Revenue for Percentage of Number of Percent Leasable the Quarter Ended Rental State Properties Leased Square Feet June 30, 2018 (1) Revenue Alabama 167 98% 1,585,200 $ 6,019 1.9% Alaska 3 100 422,000 604 0.2 Arizona 115 100 1,801,1
Slide 19: Property Type Composition
Property Type Composition (dollars in thousands) Percentage of Rental Percentage of Rental Revenue for Revenue for the Annualized Revenue Approximate Leasable the Quarter Ended Quarter Ended from Investment Property Type Number of Properties Square Feet June 30, 2018 (1) June 30, 2018 Grade Tenants
Slide 20: Same Store Rental Revenue
Same Store Rental Revenue (dollars in thousands) Second Quarter 2018 Same Store Rental Revenue Top 3 Industries Contributing to the Change Number of Properties 4,731 Quarter ended Quarter ended Net % Change Square Footage 79,076,021 Industry June 30, 2018 June 30, 2017 Change by Industry Q2 2018 $ 2
Slide 21: Same Store Rental Revenue by Property Type
Same Store Rental Revenue (dollars in thousands) Same Store Rental Revenue by Property Type Second Quarter 2018 Quarter ended Quarter ended Net % Change by Property Type June 30, 2018 June 30, 2017 Change Property Type Retail $ 218,786 $ 216,721 $ 2,065 1.0% Industrial 35,873 35,621 252 0.7% Office
Slide 22: Occupancy
Occupancy By Property Change in Occupancy Occupied Properties 5,414 Vacant Properties at 3/31/18 75 Total Properties 5,483 Occupancy 98.7% Expiration Activity (1) + 57 Leasing Activity (2) - 47 By Square Footage Vacant Property Sales Activity (3) - 16 Occupied Square Footage 90,884,760 Total Square
Slide 23: Leasing Activity
Leasing Activity (dollars in thousands) Re-leased to New Tenant Allocation Based on Number of Leases Re-leased to Without After a Period Re-leasing Q2 2018 Same Tenant Vacancy of Vacancy Totals Prior Cash Rents $ 15,565 $ — $ 96 $ 15,661 New Cash Rents* $ 16,767 $ — $ 87 $ 16,854 Recapture Rate 107.
Slide 24: Lease Expirations
Lease Expirations (dollars in thousands) Our leases have a weighted average remaining lease term of approximately 9.3 years. Total Portfolio (1) Approx. % of Expiring Leases Leasable Rental Rental Year Retail Non-Retail Sq. Feet Revenue Revenue 2018 118 6 704,300 $ 3,148 1.0% 2019 269 9 3,548,200 13
Slide 25: Earnings Guidance
Earnings Guidance We estimate FFO per share for 2018 of $3.13 to $3.20. We estimate AFFO per share for 2018 of $3.16 to $3.21, an increase of 3% to 5% over 2017 AFFO per share of $3.06. Summarized below are approximate estimates of the key components of the company’s 2018 earnings guidance: 2018 Gui
Slide 26: Analyst Coverage
Analyst Coverage Equity Research Baird RJ Milligan rjmilligan@rwbaird.com (813) 273-8252 William Harman wharman@rwbaird.com (414) 298-2337 Bank of America Merrill Lynch Joshua Dennerlein joshua.dennerlein@baml.com (646) 855-1681 BTIG Michael Gorman mgorman@btig.com (212) 738-6138 James Sullivan jsul