Realty Income Corporation · NYSE:O
Realty Income — Q4 2020 Earnings Presentation
35 slides from Realty Income's earnings presentation, Feb 22, 2021
Slide 1: Supplemental Operating & Financial Data Q4 2020
SUPPLEMENTAL OPERATING & FINANCIAL DATA Q4 2020 An S&P 500 company S&P 500 Dividend Aristocrats ® index member Exhibit 99.2
Slide 2: Table of Contents
Q4 2020 Supplemental Operating & Financial Data 2 Table of Contents Corporate Overview 3 COVID-19 Impact Summary of COVID-19 Impact 4 Rent Collections by Industry 6 Financial Summary Consolidated Statements of Income 8 Funds From Operations (FFO) 9 Adjusted Funds From Operations (AFFO) 10 Consolidat
Slide 3: Corporate Overview
Q4 2020 Supplemental Operating & Financial Data 3 Senior Management Sumit Roy, President & Chief Executive Officer Michael R. Pfeiffer, EVP, Chief Administrative Officer Neil M. Abraham, EVP, Chief Strategy Officer Michelle Bushore, EVP, Chief Legal Officer, General Counsel and Secretary Benjamin N.
Slide 4: Summary of COVID-19 Impact
Q4 2020 Supplemental Operating & Financial Data 4 Summary of COVID-19 Impact The COVID-19 pandemic and the measures taken to limit its spread are negatively impacting the economy, including the industries in which some of our clients operate. These impacts are likely to continue and may increase in
Slide 5: Summary of COVID-19 Impact (Cont'd)
Q4 2020 Supplemental Operating & Financial Data 5 Summary of COVID-19 Impact (Cont'd) Unpaid Contractual Base Rent Summary (1) (in millions) As of Percentage of December 31, 2020 Total Unpaid rent and rent deferred included in AFFO $ 76.4 66.0 % Reserves on contractual base rent (2) 39.0 33.7 Reduct
Slide 6: Rent Collections by Industry
Q4 2020 Supplemental Operating & Financial Data 6 Percentage of Total Contractual Rent Due by Month (1): Percentage of Total Contractual Rent Collected by Month (1): December 2020 November 2020 October 2020 December 2020 November 2020 October 2020 U.S. Aerospace 0.6% 0.6% 0.6% 0.6% 0.6% 0.6% Apparel
Slide 7: Rent Collections by Industry (Cont'd)
Q4 2020 Supplemental Operating & Financial Data 7 Percentage of Total Contractual Rent Due by Month (1): Percentage of Total Contractual Rent Collected by Month (1): December 2020 November 2020 October 2020 December 2020 November 2020 October 2020 U.S. (continued) Health care 1.5% 1.6% 1.6% 1.5% 1.5
Slide 8: Consolidated Statements of Income
Q4 2020 Supplemental Operating & Financial Data 8 (unaudited) (unaudited) Three Months Ended December 31, Year Ended December 31, 2020 2019 2020 2019 REVENUE Rental (including reimbursable) (1) $ 415,306 $ 394,217 $ 1,639,533 $ 1,484,818 Other 2,770 3,312 12,092 6,773 Total revenue 418,076 397,529 1
Slide 9: Funds From Operations
Q4 2020 Supplemental Operating & Financial Data 9 Funds From Operations(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. Also presented is information re
Slide 10: Adjusted Funds From Operations
Q4 2020 Supplemental Operating & Financial Data 10 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 to common stockholders and the weight
Slide 11: Consolidated Balance Sheets
Q4 2020 Supplemental Operating & Financial Data 11 Consolidated Balance Sheets (dollars in thousands , except per share amounts) (unaudited) December 31, 2020 December 31, 2019 ASSETS Real estate held for investment, at cost: Land $ 6,318,926 $ 5,684,034 Buildings and improvements 14,696,712 13,833,
Slide 12: Debt Summary
Q4 2020 Supplemental Operating & Financial Data 12 Debt Summary (dollars in thousands) Maturity Date as of December 31, 2020 Principal Balance as of December 31, 2020 % of Debt Interest Rate as of December 31, 2020 Weighted Average Years Until Maturity Credit Facility and Commercial Paper (1) Credit
Slide 13: Debt Maturities
Q4 2020 Supplemental Operating & Financial Data 13 Debt Maturities as of December 31, 2020 (dollars in millions) Debt Maturities Year of Maturity Credit Facility and Commercial Paper Term Loan Mortgages Payable Senior Unsecured Notes and Bonds (1) Total Weighted Average Expiring Interest Rate 2021 $
Slide 14: Capitalization & Financial Ratios
Q4 2020 Supplemental Operating & Financial Data 14 Capitalization & Financial Ratios (dollars in thousands, except per share amounts) Cash on Hand $ 824,476 Availability under Credit Facility 3,000,000 $ 3,824,476 (3) Liquidity calculation excludes availability under the $1.0 billion commercial pape
Slide 15: Adjusted EBITDAre & Coverage Ratios
Q4 2020 Supplemental Operating & Financial Data 15 Adjusted EBITDAre & Coverage Ratios (dollars in thousands) Reconciliation of Net Income to Adjusted EBITDAre(1) and Pro Forma Adjusted EBITDAre Three Months Ended December 31, 2020 Net income (2) $ 118,150 Interest 78,764 Income taxes 4,500 Deprecia
Slide 16: Debt Covenants
Q4 2020 Supplemental Operating & Financial Data 16 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 17: Investment Summary
Q4 2020 Supplemental Operating & Financial Data 17 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 2020 Acquisitions - U.S. 54 $ 318,300 $ 20,645 1,423,690 6.5% 14.8
Slide 18: Disposition Summary
Q4 2020 Supplemental Operating & Financial Data 18 Disposition Summary (dollars in thousands) Number of Properties Initial Investment Net Book Value Net Sales Proceeds (1) Net Cash Capitalization Rate (2) Q1 2020 Occupied 4 $ 88,273 $ 79,739 $ 116,082 6.2% Vacant 13 14,730 7,373 10,151 — Total real
Slide 19: Development Pipeline
Q4 2020 Supplemental Operating & Financial Data 19 Development Pipeline (dollars in thousands) Retail Number of Properties Investment to Date Estimated Remaining Investment Total Commitment Percent Funded Percent Leased (2) New development (1) 3 $ 8,287 $ 4,117 $ 12,404 67 % 100 % Development of exi
Slide 20: Client Diversification
Q4 2020 Supplemental Operating & Financial Data 20 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 December 31, 2020 include the following: Our Investment Grade Clients(2): Number of Leases
Slide 21: Top 10 Industries
Q4 2020 Supplemental Operating & Financial Data 21 (1)Top 10 Industries Percentage of Total Portfolio Annualized Contractual Rent As of Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2018 2017 2016 Convenience stores 11.9% 12.3% 12.6% 9.3% 10.0% Grocery stores 9.8 7.9 5.0 5.3 3.5 Drug stores 8.2
Slide 22: Industry Diversification
Q4 2020 Supplemental Operating & Financial Data 22 Percentage of Total Portfolio Annualized Contractual Rent As of Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2018 2017 2016 U.S. Aerospace 0.6% 0.8% 0.9% 1.0% 1.1% Apparel stores 1.3 1.1 1.2 1.4 1.7 Automotive collision services 1.1 1.0 0.9 1.0
Slide 23: Industry Diversification (Cont'd)
Q4 2020 Supplemental Operating & Financial Data 23 Industry Diversification (Cont'd) Percentage of Total Portfolio Annualized Contractual Rent As of Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2018 2017 2016 Health and fitness 6.7% 7.0% 7.1% 7.7% 7.6% Health care 1.5 1.6 1.6 1.4 1.5 Home furni
Slide 24: Geographic Diversification
Q4 2020 Supplemental Operating & Financial Data 24 Geographic Diversification (dollars in thousands) Total Portfolio Percentage of Approximate Annualized Contractual Total Portfolio Number of Percent Leasable Rent as of Annualized Location Properties Leased Square Feet December 31, 2020 Contractual
Slide 25: Geographic Diversification (Cont'd)
Q4 2020 Supplemental Operating & Financial Data 25 Geographic Diversification (Cont'd) (dollars in thousands) Total Portfolio Percentage of Approximate Annualized Contractual Total Portfolio Number of Percent Leasable Rent as of Annualized Location Properties Leased Square Feet December 31, 2020 Con
Slide 26: Property Type Composition
Q4 2020 Supplemental Operating & Financial Data 26 Property Type Composition (dollars in thousands) Property Type Number of Properties Approximate Leasable Square Feet (1) Total Portfolio Annualized Contractual Rent as of December 31, 2020 Percentage of Total Portfolio Annualized Contractual Rent as
Slide 27: Same Store Rental Revenue
Q4 2020 Supplemental Operating & Financial Data 27 Top 3 Industries Contributing to the Change (2) Year Ended Year Ended Net % Change Industry December 31, 2020 December 31, 2019 Change by Industry Theaters - U.S. $ 44,375 $ 62,437 $ (18,062) (28.9) % Health and fitness 82,862 87,703 (4,841) (5.5) %
Slide 28: Same Store Rental Revenue (Cont'd)
Q4 2020 Supplemental Operating & Financial Data 28 Same Store Rental Revenue(1) (Cont'd) (dollars in thousands) Q4 2020 Three Months Ended Three Months Ended Net % Change by Property Type December 31, 2020 December 31, 2019 Change Property Type Retail $ 254,597 $ 263,613 $ (9,016) (3.4) % Industrial
Slide 29: Occupancy
Q4 2020 Supplemental Operating & Financial Data 29 By Property Occupied properties 6,452 Total properties 6,592 Occupancy 97.9 % By Square Footage Occupied square footage 108,598,250 Total square footage 110,794,283 Occupancy 98.0 % By Rental Revenue (Economic Occupancy) Quarterly cash rental revenu
Slide 30: Leasing Activity
Q4 2020 Supplemental Operating & Financial Data 30 Allocation Based on Number of Leases Leasing Activity (dollars in thousands) Q4 2020 Re-leased to New Client Re-leased to Without After a Period Re-leasing Same Client Vacancy of Vacancy Totals Prior cash rents $ 19,442 $ — $ 1,509 $ 20,951 New cash
Slide 31: Lease Expirations
Q4 2020 Supplemental Operating & Financial Data 31 (1) This table sets forth the timing of remaining lease terms expirations in our portfolio and their contributions to annualized contractual rent as of December 31, 2020. Leases on our multi-client properties are counted separately in the table abov
Slide 32: Earnings Guidance
Q4 2020 Supplemental Operating & Financial Data 32 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%
Slide 33: Analyst Coverage
Q4 2020 Supplemental Operating & Financial Data 33 Analyst Coverage Equity Research Baird Wes Golladay wgolladay@rwbaird.com (216) 737-7510 Bank of America Merrill Lynch Joshua Dennerlein joshua.dennerlein@baml.com (646) 855-1681 Berenberg Nate Crossett nate.crossett@berenberg-us.com (646) 949-9030
Slide 34: Glossary
Q4 2020 Supplemental Operating & Financial Data 34 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 35: Glossary (Cont'd)
Q4 2020 Supplemental Operating & Financial Data 35 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