Realty Income Corporation · NYSE:O
Realty Income — Q3 2020 Earnings Presentation
32 slides from Realty Income's earnings presentation, Nov 2, 2020
Slide 1: Supplemental Operating & Financial Data Q3 2020
Exhibit 99.2 An S&P 500 SUPPLEMENTAL OPERATING company S&P 500 & FINANCIAL DATA Dividend Aristocrats® Q3 2020 index member
Slide 2: Table Of Contents
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 Consolidated Balance Sheets 11 Debt Summary 12 Debt Maturiti
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: 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 5: Summary of COVID-19 Impact (Cont'd)
Summary of COVID-19 Impact (Cont'd) Theater Industry Update As of September 30, 2020, the theater industry represented 5.7% of annualized contractual rental revenue. Given the ongoing disruption to the industry due to the COVID-19 pandemic, we performed a property-level analysis on the collectabilit
Slide 6: Rent Collections by Industry
Rent Collections by Industry Percentage of Total Contractual Rent Due By Month (1) Percentage of Total Contractual Rent Collected By Month (1) October 2020 September 2020 August 2020 July 2020 October 2020 September 2020 August 2020 July 2020 U.S. Aerospace 0.6% 0.7% 0.7% 0.7% 0.6% 0.7% 0.7% 0.7% Ap
Slide 7: Rent Collections by Industry (Cont'd)
Rent Collections by Industry (Cont'd) Percentage of Total Contractual Rent Due By Month (1) Percentage of Total Contractual Rent Collected By Month (1): October 2020 September 2020 August 2020 July 2020 October 2020 September 2020 August 2020 July 2020 U.S. (continued) Health care 1.6% 1.6% 1.6% 1.6
Slide 8: Consolidated Statements Of Income
Consolidated Statements Of Income (dollars in thousands, except per share amounts) (unaudited) (unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 REVENUE Rental (including reimbursable) (1) $ 401,869 $ 372,312 $ 1,224,227 $ 1,090,601 Other 2,703 1,935 9,
Slide 9: 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 10: 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 11: Consolidated Balance Sheets
Consolidated Balance Sheets (dollars in thousands , except per share amounts) (unaudited) September 30, 2020 December 31, 2019 ASSETS Real estate held for investment, at cost: Land $ 5,982,495 $ 5,684,034 Buildings and improvements 14,203,277 13,833,882 Total real estate held for investment, at cost
Slide 12: Debt Summary
Debt Summary (dollars in thousands) Maturity Date as of Principal Balance as of Interest Rate as of Weighted Average September 30, 2020 September 30, 2020 % of Debt September 30, 2020 Years until Maturity Credit Facility and Commercial Paper Credit Facility (1) March 24, 2023 $ 556,142 6.6 % 0.84 %
Slide 13: Debt Maturities
Debt Maturities as of September 30, 2020 (dollars in millions) Debt Maturities Credit Facility and Year of Commercial Term Mortgages Senior Unsecured Weighted Average Maturity Paper (1) Loan Payable Notes and Bonds (2) Total Interest Rate(3) 2020 $ 300.0 $ — $ 10.5 $ — $ 310.5 5.07% 2021 — — 68.8 —
Slide 14: Capitalization & Financial Ratios
Capitalization & Financial Ratios (dollars in thousands, except per share amounts) Capitalization as of September 30, 2020 Capital Structure as of September 30, 2020 Principal Debt Balance Credit Facility and Commercial Paper (1) $ 856,142 Unsecured Term Loan 250,000 Senior Unsecured Notes and Bonds
Slide 15: Adjusted EBITDAre & Coverage Ratios
Adjusted EBITDAre & Coverage Ratios (dollars in thousands) Reconciliation of Net Income to Adjusted EBITDAre (1) and Pro Forma Adjusted EBITDAre Three Months Ended Debt Service & Fixed Charge Coverage September 30, 2020 Net income (2) $ 23,143 Interest 76,806 Income taxes 4,592 Depreciation and amor
Slide 16: Debt Covenants
Debt Covenants As of September 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
Slide 17: 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 18: Disposition Summary
Disposition Summary (dollars in thousands) Net Cash Capitalization Number of Properties Initial Investment Net Book Value Net Sales Proceeds (1) Rate (2) 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
Slide 19: Development Pipeline
Development Pipeline (dollars in thousands) As of September 30, 2020 Investment Estimated Remaining Retail Number of Properties to Date Investment Total Commitment Percent Leased (2) New development (1) 1 $ 2,024 $ 2,653 $ 4,677 100 % Development of existing properties 5 7,120 4,876 11,996 80 % 6 $
Slide 20: 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 September 30, 2020 include the following: Number of Leases 3,532 Percentage of Percentage of Annualized Contractual Rental Reven
Slide 21: Top Industries
Top 10 Industries (1) Percentage of Total Portfolio Annualized Contractual Rental Revenue As of the Quarter Ended As of September 30, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2018 2017 2016 2015 Convenience stores 12.1% 12.3 % 12.6 % 9.3 % 10.0 % 8.9 % Drug stores 8.4 8.8 9.4 10.2 10.8 10.8
Slide 22: Industry Diversification
Industry Diversification Percentage of Total Portfolio Annualized Contractual Rental Revenue As of As of September 30, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2018 2017 2016 2015 U.S. Aerospace 0.6% 0.8 % 0.9 % 1.0 % 1.1 % 1.2 % Apparel stores 1.3 1.1 1.2 1.4 1.7 1.9 Automotive collision s
Slide 23: Industry Diversification (Cont'd)
Industry Diversification (Cont'd) Percentage of Total Portfolio Annualized Contractual Rental Revenue As of As of September 30, Dec 31, Dec 31, Dec 31, Dec 31, Dec 31, 2020 2019 2018 2017 2016 2015 Health and fitness 7.1% 7.0 % 7.1 % 7.7 % 7.6 % 8.3 % Health care 1.6 1.6 1.6 1.4 1.5 1.6 Home furnish
Slide 24: Geographic Diversification
Geographic Diversification (dollars in thousands) Percentage of Total Portfolio Total Portfolio Approximate Annualized Contractual Annualized Number of Percent Leasable Rental Revenue as of Contractual Rental Location Properties Leased Square Feet September 30, 2020 Revenue Alabama 228 98 % 2,203,40
Slide 25: Geographic Diversification (Cont'd)
Geographic Diversification (Cont'd) (dollars in thousands) Percentage of Total Portfolio Total Portfolio Approximate Annualized Contractual Annualized Number of Percent Leasable Rental Revenue as of Contractual Rental Location Properties Leased Square Feet September 30, 2020 Revenue Montana 12 100 %
Slide 26: Property Type Composition
Property Type Composition (dollars in thousands) Total Portfolio Percentage of Total Annualized Portfolio Annualized Percentage of Contractual Rental Contractual Rental Annualized Revenue Approximate Leasable Revenue as of Revenue as of from Investment Grade Property Type Number of Properties Square
Slide 27: Same Store Rental Revenue
Same Store Rental Revenue (dollars in thousands) Third Quarter 2020 Top 3 Industries Contributing to the Change (1) Same Store Rental Revenue Quarter Ended Quarter Ended Net % Change Number of Properties 5,511 Industry September 30, 2020 September 30, 2019 Change by Industry Square Footage 86,200,20
Slide 28: Same Store Rental Revenue (Cont'd)
Same Store Rental Revenue (Cont'd) (dollars in thousands) Same Store Rental Revenue by Property Type Third Quarter Quarter Ended Quarter Ended Net % Change by Property Type September 30, 2020 September 30, 2019 Change Property Type Retail $ 247,526 $ 261,797 $ (14,271) (5.5) % Industrial 36,442 36,3
Slide 29: Occupancy
Occupancy By Property Change in Occupancy Occupied Properties 6,496 Vacant Properties at 6/30/2020 101 Total Properties 6,588 Occupancy 98.6 % Expiration Activity (1) + 98 Leasing Activity (2) - 80 By Square Footage Vacant Disposition Activity (3) - 27 Occupied Square Footage 106,443,343 Total Squar
Slide 30: 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 Q3 2020 Same Tenant Vacancy of Vacancy Totals Prior Cash Rents $ 11,856 $ 201 $ 371 $ 12,428 New Cash Rents* $ 11,705 $ 235 $ 388 $ 12,328 Recapture Rat
Slide 31: Lease Expirations
Lease Expirations (dollars in thousands) Our leases have a weighted average remaining lease term of approximately 9.0 years Total Portfolio (1) Percentage of Total Portfolio Total Portfolio Approx. Annualized Contractual Annualized Expiring Leases Leasable Rental Revenue as of Contractual Rental Yea
Slide 32: Analyst Coverage
Analyst Coverage Equity Research 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 Capital One Chris Lucas christopher.lucas@capitalone.co