Realty Income Corporation · NYSE:O
Realty Income — Q2 2020 Earnings Presentation
31 slides from Realty Income's earnings presentation, Aug 3, 2020
Slide 1: Supplemental Operating & Financial Data Q2 2020
Exhibit 99.2 An S&P 500 SUPPLEMENTAL OPERATING company S&P 500 & FINANCIAL DATA Dividend Aristocrats® Q2 2020 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 Sumit Roy, President & Chief Executive Officer and member of the S&P 500 Dividend Aristocrats® index dedicated to Michael R. Pfeiffer, EVP, Chief Administrative Officer, General
Slide 4: Consolidated Statements of Income
Consolidated Statements Of Income (dollars in thousands, except per share amounts) (unaudited) (unaudited) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 REVENUE Rental (including reimbursable) (1) $ 410,201 $ 364,252 $ 822,358 $ 718,289 Other (2) 4,435 1,198 6,619 1,526 T
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) (unaudited) June 30, 2020 December 31, 2019 ASSETS Real estate held for investment, at cost: Land $ 5,772,734 $ 5,684,034 Buildings and improvements 14,096,997 13,833,882 Total real estate held for investment, at cost 19,8
Slide 8: Debt Summary
Debt Summary (dollars in thousands) Maturity Date as of Principal Balance as of Interest Rate as of Weighted Average June 30, 2020 June 30, 2020 % of Debt June 30, 2020 Years until Maturity Credit Facility (1) (7) Credit Facility March 24, 2023 $ 628,551 7.9 % 0.92 % 2.7 years Unsecured Term Loan Te
Slide 9: Debt Maturities
Debt Maturities as of June 30, 2020 (dollars in millions) Debt Maturities Year of Credit Term Mortgages Senior Unsecured Weighted Average Maturity Facility Loan Payable Notes and Bonds(1) Total Interest Rate(2) 2020 $ — $ — $ 69.5 $ — $ 69.5 4.80% 2021 — — 68.8 — 68.8 5.61% 2022 — — 111.8 950.0 1,06
Slide 10: Capitalization & Financial Ratios
Capitalization & Financial Ratios (dollars in thousands, except per share amounts) Capitalization as of June 30, 2020 Capital Structure as of June 30, 2020 Principal Debt Balance Credit Facility $ 628,551 Unsecured Term Loan 250,000 Senior Unsecured Notes and Bonds (1) 6,640,632 Mortgages Payable 39
Slide 11: Adjusted EBITDAre & Coverage Ratios
Adjusted EBITDAre & Coverage Ratios (dollars in thousands) Reconciliation of Net Income to Adjusted EBITDAre (1) Three Months Ended June 30, 2020 Debt Service & Fixed Charge Coverage Net income $ 108,070 Interest 77,841 Income taxes 2,838 Depreciation and amortization 168,328 Provisions for impairme
Slide 12: Debt Covenants
Debt Covenants As of June 30, 2020 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) Weighted Number of Leasable Initial Average Cash Average Lease Properties Investment Cash Rents Square Feet Lease Yield (1) Term (Years) Q1 Acquisitions - U.S. 54 $ 318,300 $ 20,645 1,423,690 6.5% 14.8 2020 Acquisitions - U.K. 4 165,573 8,400 389,680 5.1% 12
Slide 14: Disposition Summary
Disposition Summary (dollars in thousands) Net Cash Capitalization Number of Properties Initial Investment Net Book Value Net Sales Proceeds Rate (1) Q1 Occupied 4 $ 88,273 $ 79,739 $ 116,082 6.2% 2020 Vacant 13 14,730 7,373 10,151 — Total Real Estate Dispositions 17 $ 103,003 $ 87,112 $ 126,233 The
Slide 15: Development Pipeline
Development Pipeline (dollars in thousands) As of June 30, 2020 Investment Estimated Remaining Retail Number of Properties to Date Investment Total Commitment Percent Leased (2) New development (1) 1 $ — $ 1,566 $ 1,566 100 % Development of existing properties 3 5,669 2,016 7,685 92 % 4 $ 5,669 $ 3,
Slide 16: Tenant Diversification
Tenant Diversification Top 20 Tenants (3) Our 20 largest tenants based on percentage of total portfolio annualized contractual rental Investment Grade Tenants : revenue at June 30, 2020 include the following: Number of Leases 3,477 Percentage of Annualized Rents 48% Investment Grade Number of Rating
Slide 17: Top Industries
Top 10 Industries (1) Percentage of Rental Revenue (excluding reimbursable) For the Quarter Ended For the Year Ended June 30, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2018 2017 2016 2015 Convenience stores 12.0% 11.9 % 11.2 % 9.6 % 8.7 % 9.2 % Drug stores 9.1 9.0 10.2 10.9 11.2 10.6 Dollar
Slide 18: Industry Diversification
Industry Diversification Percentage of Rental Revenue (excluding reimbursable) For the Quarter Ended For the Year Ended June 30, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2018 2017 2016 2015 U.S. Aerospace 0.7% 0.8 % 0.8 % 0.9 % 1.0 % 1.1 % Apparel stores 1.4 1.1 1.3 1.6 1.9 2.0 Automotive c
Slide 19: Industry Diversification (Cont'd)
Industry Diversification (Cont'd) Percentage of Rental Revenue (excluding reimbursable) For the Quarter Ended For the Year Ended June 30, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2018 2017 2016 2015 Health and fitness 7.1% 7.5 % 7.4 % 7.5 % 8.1 % 7.7 % Health care 1.6 1.4 1.5 1.4 1.5 1.7 Ho
Slide 20: Geographic Diversification
Geographic Diversification (dollars in thousands) Approximate Rental Revenue for Percentage of Number of Percent Leasable the Quarter Ended Rental Location Properties Leased Square Feet June 30, 2020 (1) Revenue Alabama 227 98 % 2,148,400 $ 7,796 2.0 % Alaska 3 100 274,600 536 0.1 Arizona 153 99 2,0
Slide 21: Geographic Diversification (Cont'd)
Geographic Diversification (Cont'd) (dollars in thousands) Approximate Rental Revenue for Percentage of Number of Percent Leasable the Quarter Ended Rental Location Properties Leased Square Feet June 30, 2020 (1) Revenue Montana 12 100 % 89,100 $ 536 0.1 % Nebraska 62 97 866,400 2,274 0.6 Nevada 24
Slide 22: Property Type Composition
Property Type Composition (dollars in thousands) Percentage of Rental Percentage of Rental Revenue for the Revenue for the Annualized Revenue Approximate Leasable Quarter Ended Quarter Ended from Investment Grade Property Type Number of Properties Square Feet (1) June 30, 2020 (2) June 30, 2020 Tena
Slide 23: Same Store Rental Revenue
Same Store Rental Revenue (dollars in thousands) Second Quarter 2020 Top 3 Industries Contributing to the Change Same Store Rental Revenue Quarter Ended Quarter Ended Net % Change Number of Properties 5,539 Industry June 30, 2020 June 30, 2019 Change by Industry Square Footage 86,741,825 Restaurants
Slide 24: Same Store Rental Revenue (Cont'd)
Same Store Rental Revenue (Cont'd) (dollars in thousands) Same Store Rental Revenue by Property Type Second Quarter 2020 Quarter Ended Quarter Ended Net % Change by Property Type June 30, 2020 June 30, 2019 Change Property Type Industrial $ 36,563 $ 36,403 $ 160 0.4 % Retail 260,275 262,310 (2,035)
Slide 25: Occupancy
Occupancy By Property Change in Occupancy Occupied Properties 6,440 Vacant Properties at 3/31/2020 97 Total Properties 6,541 Occupancy 98.5 % Expiration Activity (1) + 81 Leasing Activity (2) - 65 By Square Footage Vacant Disposition Activity (3) - 12 Occupied Square Footage 104,396,090 Total Square
Slide 26: 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 2020 Same Tenant Vacancy of Vacancy Totals Prior Cash Rents $ 13,977 $ 331 $ 820 $ 15,128 New Cash Rents* $ 14,478 $ 235 $ 621 $ 15,334 Recapture Rat
Slide 27: Lease Expirations
Lease Expirations (dollars in thousands) Our leases have a weighted average remaining lease term of approximately 9.0 years. Total Portfolio (1) Approx. Rental Revenue for % of Expiring Leases Leasable the Quarter Ended Rental Year Retail Non-Retail Sq. Feet June 30, 2020 Revenue 2020 66 8 1,433,500
Slide 28: Summary of COVID-19 Impact
Summary of COVID-19 Impact The COVID-19 pandemic and the measures taken to limit the spread are negatively impacting the economy, including the industries in which some of our tenants operate. These impacts are likely to continue and may increase in severity as the duration of the pandemic lengthens
Slide 29: Rent Collections by Industry
Rent Collections by Industry Percentage of Total Contractual Rent Due Percentage of Total Contractual Rent Collected as of: July 2020 (1) June 2020 (1) May 2020 (1) April 2020 (1) July 2020 (1) June 2020 (1) May 2020 (1) April 2020 (1) U.S. Aerospace 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% Apparel s
Slide 30: Rent Collections by Industry (cont'd)
Rent Collections by Industry (cont'd) Percentage of Total Contractual Rent Due Percentage of Total Contractual Rent Collected as of: July 2020 (1) June 2020 (1) May 2020 (1) April 2020 (1) July 2020 (1) June 2020 (1) May 2020 (1) April 2020 (1) U.S. (continued) Health care 1.6% 1.6% 1.6% 1.6% 1.6% 1
Slide 31: Analyst Coverage
Analyst Coverage Equity Research Baird RJ Milligan rjmilligan@rwbaird.com (813) 273-8252 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 BTIG Michael Gorman mgorman@btig.com (212) 738-6138