Realty Income Corporation · NYSE:O
Realty Income — Q2 2023 Earnings Presentation
31 slides from Realty Income's earnings presentation, Aug 2, 2023
Slide 1: Supplemental Operating & Financial Data Q2 2023
SUPPLEMENTAL OPERATING & FINANCIAL DATA Q2 2023 An S&P 500 company S&P 500 Dividend Aristocrats® index member Exhibit 99.2
Slide 2: Table of Contents
Q2 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
Q2 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
Q2 2023 Supplemental Operating & Financial Data 4 Three months ended June 30, Six months ended June 30, 2023 2022 2023 2022 REVENUE Rental (including reimbursable) (1) $ 995,289 $ 800,800 $ 1,920,578 $ 1,600,365 Other 23,916 9,619 43,026 17,397 Total revenue 1,019,205 810,419 1,963,604 1,617,762 EXP
Slide 5: FFO and Normalized FFO
Q2 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)
Q2 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
Q2 2023 Supplemental Operating & Financial Data 7 Consolidated Balance Sheets (in thousands, except per share amounts) (unaudited) June 30, 2023 December 31, 2022 ASSETS Real estate held for investment, at cost: Land $ 14,011,325 $ 12,948,835 Buildings and improvements 32,652,912 29,707,751 Total re
Slide 8: Debt Summary
Q2 2023 Supplemental Operating & Financial Data 8 Debt Summary as of June 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 $ 867,522 4.4 % 5.60 % 3.
Slide 9: Senior Unsecured Notes and Bonds
Q2 2023 Supplemental Operating & Financial Data 9 Senior Unsecured Notes and Bonds (dollars in thousands) Maturity Dates Principal Amount (Currency Denomination) (1) Principal Balance (USD) as of June 30, 2023 (1) % of Debt Interest Rate 4.600% Notes due 2024 February 6, 2024 $ 499,999 $ 499,999 2.6
Slide 10: Debt Maturities
Q2 2023 Supplemental Operating & Financial Data 10 Debt Maturities as of June 30, 2023 (dollars in millions) Principal Due Credit Facility and Commercial Paper (1) Term Loans (2) Mortgages Payable Senior Unsecured Notes and Bonds (3) Total Weighted Average Expiring Interest Rate (4) 2023 $ 122.7 $ —
Slide 11: Capitalization & Financial Ratios
Q2 2023 Supplemental Operating & Financial Data 11 Capitalization & Financial Ratios (dollars in thousands, except as otherwise noted) Cash on Hand $ 253,693 Availability under Credit Facility 3,382,478 Less: Commercial Paper Borrowings (122,735) $ 3,513,436 (5) As applicable, liquidity calculation
Slide 12: Adjusted EBITDAre & Coverage Ratios
Q2 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 June 30, 2023 Net income $ 197,153 Interest 183,857 Income taxes 12,932 Depreciation
Slide 13: Debt Covenants
Q2 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
Q2 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
Q2 2023 Supplemental Operating & Financial Data 15 Disposition Summary (dollars in thousands) Number of Properties Net Book Value Net Sales Proceeds Net Cash Capitalization Rate (1) Q1 2023 Occupied — $ — $ — — % Vacant 26 24,316 28,595 — Total real estate dispositions 26 $ 24,316 $ 28,595 The unlev
Slide 16: Development Pipeline
Q2 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) 215 $ 306,359 $ 573,780 $ 880,139 (3) 35 % 100 % Develop
Slide 17: Client Diversification: Our Top Clients
Q2 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 June 30, 2023, include the following: Our Investment Grade Clients (3) Number of Leases 6,1
Slide 18: Top 10 Industries
Q2 2023 Supplemental Operating & Financial Data 18 (1)Top 10 Industries Percentage of Total Portfolio Annualized Contractual Rent As of Jun 30, Dec 31, Dec 31, Dec 31, Dec 31, 2023 2022 2021 2020 2019 Convenience Stores 11.1% 8.6 9.1 11.9 12.3 Grocery 9.9 10.0 10.2 9.8 7.9 Dollar Stores 7.1 7.4 7.5
Slide 19: Industry Diversification
Q2 2023 Supplemental Operating & Financial Data 19 Percentage of Total Portfolio Annualized Contractual Rent As of Jun 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 1.5 1.4 1.5 1.3 1.1 Automotive collision services 1.1 0.
Slide 20: Industry Diversification (continued)
Q2 2023 Supplemental Operating & Financial Data 20 Percentage of Total Portfolio Annualized Contractual Rent As of Jun 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
Q2 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 10.5% Texas 10.1% California 5.6% Florida 5.3% I
Slide 22: Property Type Composition
Q2 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 June 30, 2023 Percentage of Total Portfolio Annualized Contractual Rent as of
Slide 23: Same Store Rental Revenue
Q2 2023 Supplemental Operating & Financial Data 23 Q2 2023 Same Store Rental Revenue Number of properties 10,685 Square footage 190,150,496 Q2 2023 $ 718,768 Q2 2022 $ 704,886 Change (in dollars) $ 13,882 Change (percent) 2.0 % YTD 2023 Same Store Rental Revenue Number of properties 10,685 Square fo
Slide 24: Same Store Rental Revenue (Cont'd)
Q2 2023 Supplemental Operating & Financial Data 24 Same Store Rental Revenue (1) (Cont'd) (dollars in thousands) Three months ended June 30, Six months ended June 30, Property Type 2023 2022 $ Change % Change 2023 2022 $ Change % Change Retail $ 608,913 $ 597,409 $ 11,504 1.9 % $ 1,215,950 $ 1,204,6
Slide 25: Occupancy
Q2 2023 Supplemental Operating & Financial Data 25 By Property Occupied properties 12,981 Total properties 13,118 Occupancy (1) 99.0 % By Square Footage Occupied square footage 252,586,155 Total square footage 255,469,446 Occupancy 98.9 % By Rental Revenue (Economic Occupancy) Quarterly cash rental
Slide 26: Leasing Activity
Q2 2023 Supplemental Operating & Financial Data 26 Leasing Activity (dollars in thousands) Q2 2023 Re-leased to New Client Re-leased to Without After a Period Re-leasing Same Client Vacancy of Vacancy Totals Prior cash rents $ 46,075 $ 326 $ 3,625 $ 50,026 New cash rents* $ 48,651 $ 327 $ 2,745 $ 51
Slide 27: Lease Expirations
Q2 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 June 30, 2023. Leases on our mult
Slide 28: Earnings Guidance
Q2 2023 Supplemental Operating & Financial Data 28 Earnings Guidance Summarized below are approximate estimates of the key components of our 2023 earnings guidance: Prior 2023 Guidance (1) Revised 2023 Guidance Net income per share $1.22 to $1.32 $1.20 to $1.28 Real estate depreciation and impairmen
Slide 29: Analyst Coverage
Q2 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
Q2 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)
Q2 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