Realty Income Corporation · NYSE:O
Realty Income — Q3 2021 Earnings Presentation
32 slides from Realty Income's earnings presentation, Nov 1, 2021
Slide 1: Supplemental Operating & Financial Data Q3 2021
SUPPLEMENTAL OPERATING & FINANCIAL DATA Q3 2021 An S&P 500 company S&P 500 Dividend Aristocrats® index member Exhibit 99.2
Slide 2: Table of Contents
Q3 2021 Supplemental Operating & Financial Data 2 Table of Contents Corporate Overview 3 Rent Collections Update 4 Rental Revenue Reserves and Reserve Reversals 5 Financial Summary Consolidated Statements of Income 6 Funds From Operations (FFO) and Normalized Funds From Operations (Normalized FFO) 7
Slide 3: Corporate Overview
Q3 2021 Supplemental Operating & Financial Data 3 One Team Senior Management Neil M. Abraham, EVP, Chief Strategy Officer Michelle Bushore, EVP, Chief Legal Officer, General Counsel and Secretary Mark E. Hagan, EVP, Chief Investment Officer Christie B. Kelly, EVP, Chief Financial Officer and Treasur
Slide 4: Rent Collections Update
Q3 2021 Supplemental Operating & Financial Data 4 Rent Collections Update Percentages of Contractual Rent Collected as of September 30, 2021 (1) Collection rates are calculated as the aggregate contractual rent collected for the applicable period from the beginning of that applicable period through
Slide 5: Rental Revenue Reserves and Reserve Reversals
Q3 2021 Supplemental Operating & Financial Data 5 Rental Revenue Reserves and Reserve Reversals (1) Theater Industry Update As of September 30, 2021, the theater industry represented 5.2% of annualized contractual rental revenue. As of September 30, 2021, we were fully reserved for the outstanding r
Slide 6: Consolidated Statements of Income
Q3 2021 Supplemental Operating & Financial Data 6 (unaudited) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 REVENUE Rental (including reimbursable) (1) $ 486,337 $ 401,869 $ 1,385,958 $ 1,224,227 Other 5,538 2,703 13,003 9,322 Total revenue 491,875
Slide 7: FFO and Normalized FFO
Q3 2021 Supplemental Operating & Financial Data 7 FFO and Normalized FFO (1) (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 Normalized FFO. Also presen
Slide 8: Adjusted Funds From Operations (AFFO)
Q3 2021 Supplemental Operating & Financial Data 8 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 9: Consolidated Balance Sheets
Q3 2021 Supplemental Operating & Financial Data 9 Consolidated Balance Sheets (dollars in thousands, except per share and share count data) (unaudited) September 30, 2021 December 31, 2020 ASSETS Real estate held for investment, at cost: Land $ 7,308,046 $ 6,318,926 Buildings and improvements 16,374
Slide 10: Debt Summary
Q3 2021 Supplemental Operating & Financial Data 10 Debt Summary as of September 30, 2021 (dollars in thousands) Maturity Dates Principal Amount (Currency Denomination) Carrying Value (USD) % of Debt Interest Rate Weighted Average Years Until Maturity Credit Facility and Commercial Paper (1) Credit F
Slide 11: Debt Maturities
Q3 2021 Supplemental Operating & Financial Data 11 Debt Maturities as of September 30, 2021 (dollars in millions) Debt Maturities Year of Maturity Credit Facility and Commercial Paper (1) Term Loan Mortgages Payable Senior Unsecured Notes and Bonds Total Weighted Average Expiring Interest Rate (2) 2
Slide 12: Capitalization & Financial Ratios
Q3 2021 Supplemental Operating & Financial Data 12 Capitalization & Financial Ratios (dollars in thousands, except per share amounts) Cash on Hand $ 516,983 Availability under Credit Facility 3,000,000 Less: Commercial Paper Borrowings (405,000) $ 3,111,983 (2) Liquidity calculation excludes borrowi
Slide 13: Adjusted EBITDAre & Coverage Ratios
Q3 2021 Supplemental Operating & Financial Data 13 Adjusted EBITDAre & Coverage Ratios (dollars in thousands) Reconciliation of Net Income to Adjusted EBITDAre (1) and Pro Forma Adjusted EBITDAre Three Months Ended September 30, 2021 Net income $ 135,276 Interest 76,156 Loss on extinguishment of deb
Slide 14: Debt Covenants
Q3 2021 Supplemental Operating & Financial Data 14 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 15: Investment Summary
Q3 2021 Supplemental Operating & Financial Data 15 Investment Summary (dollars in thousands) Number of Properties Investment Cash Rents Leasable Square Feet Initial Average Cash Lease Yield (1) Weighted Average Lease Term (Years) Q1 2021 Acquisitions - U.S. 77 $ 566,909 $ 31,887 2,298,606 5.6% 13.5
Slide 16: Disposition Summary
Q3 2021 Supplemental Operating & Financial Data 16 Disposition Summary (dollars in thousands) Number of Properties Initial Investment Net Book Value Net Sales Proceeds Net Cash Capitalization Rate (1) Q1 2021 Occupied 4 $ 10,735 $ 9,954 $ 12,592 7.2% Vacant 23 33,166 16,265 22,113 — Total real estat
Slide 17: Development Pipeline
Q3 2021 Supplemental Operating & Financial Data 17 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) 69 $ 39,022 $ 177,872 $ 216,894 18 % 100 % Development o
Slide 18: Our Top Clients
Q3 2021 Supplemental Operating & Financial Data 18 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, 2021 include the following: Our Investment Grade Clients (3) Number of Leases
Slide 19: Top 10 Industries
Q3 2021 Supplemental Operating & Financial Data 19 (1)Top 10 Industries Percentage of Total Portfolio Annualized Contractual Rent As of Sept 30, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2021 2020 2019 2018 2017 2016 Convenience stores 11.6% 11.9% 12.3% 12.6% 9.3% 10.0% Grocery stores 10.9 9.8 7.9 5.0
Slide 20: Industry Diversification
Q3 2021 Supplemental Operating & Financial Data 20 Percentage of Total Portfolio Annualized Contractual Rent As of Sept 30, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2021 2020 2019 2018 2017 2016 U.S. Aerospace 0.6% 0.6% 0.8% 0.9% 1.0% 1.1% Apparel stores 1.2 1.3 1.1 1.2 1.4 1.7 Automotive collision s
Slide 21: Industry Diversification (Cont'd)
Q3 2021 Supplemental Operating & Financial Data 21 Industry Diversification (Cont'd) Percentage of Total Portfolio Annualized Contractual Rent As of Sept 30, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2021 2020 2019 2018 2017 2016 Home furnishings 0.8% 0.7% 0.8% 0.8% 0.9% 0.9% Home improvement 3.2 3.1
Slide 22: Geographic Diversification
Q3 2021 Supplemental Operating & Financial Data 22 Geographic Diversification Balanced presence in 50 states, Puerto Rico, the United Kingdom and Spain
Slide 23: Property Type Composition
Q3 2021 Supplemental Operating & Financial Data 23 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, 2021 Percentage of Total Portfolio Annualized Contractual Rent a
Slide 24: Q3 2021 Same Store Rental Revenue
Q3 2021 Supplemental Operating & Financial Data 24 Q3 2021 Same Store Rental Revenue Number of properties 6,099 Square footage 96,727,907 Q3 2021 $ 380,341 Q3 2020 $ 358,861 Increase (in dollars) $ 21,480 Increase (percent) 6.0 % Same Store Rental Revenue (1) (dollars in thousands) Top 3 Industries
Slide 25: Same Store Rental Revenue (Cont'd)
Q3 2021 Supplemental Operating & Financial Data 25 Same Store Rental Revenue (1) (Cont'd) (dollars in thousands) Q3 2021 Three Months Ended Three Months Ended Net % Change by Property Type September 30, 2021 September 30, 2020 Change Property Type Retail $ 322,286 $ 300,972 $ 21,314 7.1 % Industrial
Slide 26: Occupancy
Q3 2021 Supplemental Operating & Financial Data 26 By Property Occupied properties 6,932 Total properties 7,018 Occupancy 98.8 % By Square Footage Occupied square footage 123,923,410 Total square footage 124,980,593 Occupancy 99.2 % By Rental Revenue (Economic Occupancy) Quarterly cash rental revenu
Slide 27: Leasing Activity
Q3 2021 Supplemental Operating & Financial Data 27 Allocation Based on Number of Leases Leasing Activity Q3 2021 Re-leased to New Client Re-leased to Without After a Period Re-leasing Same Client Vacancy of Vacancy Totals Prior cash rents $ 12,470,231 $ 267,705 $ 4,210,034 $ 16,947,970 New cash rent
Slide 28: Lease Expirations
Q3 2021 Supplemental Operating & Financial Data 28 (1) This table sets forth the timing of remaining lease terms 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, 2021. Leases on ou
Slide 29: Earnings Guidance
Q3 2021 Supplemental Operating & Financial Data 29 Earnings Guidance Normalized FFO per share and AFFO per share exclude the merger-related costs associated with the VEREIT merger. Net income and Normalized FFO guidance does not include any one-time charges associated with future debt redemptions. S
Slide 30: Analyst Coverage
Q3 2021 Supplemental Operating & Financial Data 30 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 Berenberg Nate Crossett nate.crossett@berenberg-us.com (646) 949-9030 BTI
Slide 31: Glossary
Q3 2021 Supplemental Operating & Financial Data 31 Glossary T Adjusted EBITDAre. The National Association of Real Estate Investment Trusts (Nareit) came to the conclusion that a Nareit-defined EBITDA metric for real estate companies (i.e., EBITDA for real estate, or EBITDAre) would provide investors
Slide 32: Glossary (Cont'd)
Q3 2021 Supplemental Operating & Financial Data 32 Glossary (Cont'd) Initial Average Cash Lease Yield (acquisitions) is computed as contractual cash net operating income for the first twelve months following the acquisition date, divided by the total cost of the property (including all expenses born