Realty Income Corporation · NYSE:O
Realty Income — Q1 2023 Earnings Presentation
31 slides from Realty Income's earnings presentation, May 3, 2023
Slide 1: Supplemental Operating & Financial Data Q1 2023
SUPPLEMENTAL OPERATING & FINANCIAL DATA Q1 2023 An S&P 500 company S&P 500 Dividend Aristocrats® index member Exhibit 99.2
Slide 2: Table of Contents
Q1 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
Q1 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
Q1 2023 Supplemental Operating & Financial Data 4 Three Months Ended March 31, 2023 2022 REVENUE Rental (including reimbursable) (1) $ 925,289 $ 799,565 Other 19,110 7,778 Total revenue 944,399 807,343 EXPENSES Depreciation and amortization 451,477 403,762 Interest 154,132 106,403 Property (includin
Slide 5: FFO and Normalized FFO
Q1 2023 Supplemental Operating & Financial Data 5 FFO and Normalized FFO (1) (in thousands, except per share and share count data) 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 p
Slide 6: Adjusted Funds From Operations (AFFO)
Q1 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
Q1 2023 Supplemental Operating & Financial Data 7 Consolidated Balance Sheets (in thousands, except per share and share count data) (unaudited) March 31, 2023 December 31, 2022 ASSETS Real estate held for investment, at cost: Land $ 13,324,929 $ 12,948,835 Buildings and improvements 30,803,410 29,70
Slide 8: Debt Summary
Q1 2023 Supplemental Operating & Financial Data 8 Debt Summary as of March 31, 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 $ 1,147,316 6.1 % 5.40 %
Slide 9: Senior Unsecured Notes and Bonds
Q1 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 March 31, 2023 (1) % of Debt Interest Rate 4.600% Notes due 2024 February 6, 2024 $ 499,999 $ 499,999 2.
Slide 10: Debt Maturities
Q1 2023 Supplemental Operating & Financial Data 10 Debt Maturities as of March 31, 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 $ 157.5 $
Slide 11: Capitalization & Financial Ratios
Q1 2023 Supplemental Operating & Financial Data 11 Capitalization & Financial Ratios (dollars in thousands, except as otherwise noted) Cash on Hand $ 164,576 Availability under Credit Facility 3,102,684 Less: Commercial Paper Borrowings (157,542) $ 3,109,718 (5) Liquidity calculation excludes borrow
Slide 12: Adjusted EBITDAre & Coverage Ratios
Q1 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 March 31, 2023 Net income $ 226,122 Interest 154,132 Income taxes 11,950 Depreciation
Slide 13: Debt Covenants
Q1 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
Q1 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
Q1 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 28,594 — Total real estate dispositions 26 $ 24,316 $ 28,594 The unleve
Slide 16: Development Pipeline
Q1 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) 186 $ 165,801 $ 433,422 $ 599,223 (3) 28 % 100 % Develop
Slide 17: Client Diversification: Our Top Clients
Q1 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 March 31, 2023, include the following: Our Investment Grade Clients (3) Number of Leases 6,
Slide 18: Top 10 Industries
Q1 2023 Supplemental Operating & Financial Data 18 (1)Top 10 Industries Percentage of Total Portfolio Annualized Contractual Rent As of Mar 31, Dec 31, Dec 31, Dec 31, Dec 31, 2023 2022 2021 2020 2019 Grocery stores 10.2% 10.0% 10.2% 9.8% 7.9% Convenience stores 8.7 8.6 9.1 11.9 12.3 Dollar stores 7
Slide 19: Industry Diversification
Q1 2023 Supplemental Operating & Financial Data 19 Percentage of Total Portfolio Annualized Contractual Rent As of Mar 31, Dec 31, Dec 31, Dec 31, Dec 31, 2023 2022 2021 2020 2019 United States Aerospace 0.4% 0.4% 0.4% 0.6% 0.8% Apparel stores 1.5 1.4 1.5 1.3 1.1 Automotive collision services 1.0 0.
Slide 20: Industry Diversification (continued)
Q1 2023 Supplemental Operating & Financial Data 20 Percentage of Total Portfolio Annualized Contractual Rent As of Mar 31, 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
Q1 2023 Supplemental Operating & Financial Data 21 Geographic Diversification Balanced presence in 50 states, Puerto Rico, the United Kingdom, Spain and Italy Top Ten Regions Based on Total Portfolio Annualized Contractual Rent Texas 10.3% United Kingdom 10.3% California 5.7% Illinois 5.2% Florida 5
Slide 22: Property Type Composition
Q1 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 March 31, 2023 Percentage of Total Portfolio Annualized Contractual Rent as of
Slide 23: Same Store Rental Revenue
Q1 2023 Supplemental Operating & Financial Data 23 Q1 2023 Same Store Rental Revenue Number of properties 10,728 Square footage 191,114,310 Q1 2023 $ 719,701 Q1 2022 $ 718,088 Change (in dollars) $ 1,613 Change (percent) 0.2 % Same Store Rental Revenue (1) (dollars in thousands) Top 3 Industries Con
Slide 24: Same Store Rental Revenue (Cont'd)
Q1 2023 Supplemental Operating & Financial Data 24 Same Store Rental Revenue (1) (Cont'd) (dollars in thousands) Q1 2023 Three Months Ended Net % Change by Property Type March 31, 2023 March 31, 2022 Change Property Type Retail $ 609,977 $ 609,921 $ 56 — % Industrial 99,604 98,125 1,479 1.5 % Other
Slide 25: Occupancy
Q1 2023 Supplemental Operating & Financial Data 25 By Property Occupied properties 12,361 Total properties 12,492 Occupancy (1) 99.0 % By Square Footage Occupied square footage 244,178,292 Total square footage 246,728,411 Occupancy 99.0 % By Rental Revenue (Economic Occupancy) Quarterly cash rental
Slide 26: Leasing Activity
Q1 2023 Supplemental Operating & Financial Data 26 Leasing Activity (dollars in thousands) Q1 2023 Re-leased to New Client Re-leased to Without After a Period Re-leasing Same Client Vacancy of Vacancy Totals Prior cash rents $ 33,795 $ 556 $ 1,168 $ 35,519 New cash rents* $ 34,526 $ 646 $ 951 $ 36,1
Slide 27: Lease Expirations
Q1 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 March 31, 2023. Leases on our mul
Slide 28: Earnings Guidance
Q1 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 Revised 2023 Guidance Net income per share $1.20 to $1.32 $1.22 to $1.32 Real estate depreciation and impairments p
Slide 29: Analyst Coverage
Q1 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
Q1 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)
Q1 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