Realty Income Corporation · NYSE:O
Realty Income — Q2 2019 Earnings Presentation
29 slides from Realty Income's earnings presentation, Aug 5, 2019
Slide 1: Supplemental Operating & Financial Data Q2 2019
Exhibit 99.2 An S&P 500 SUPPLEMENTAL OPERATING company S&P High Yield & FINANCIAL DATA Dividend Aristocrats® Q2 2019 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 dedicated to providing stockholders with dependable monthly dividends Paul M. Meurer, Executive VP, Chief Financial Officer and Tr
Slide 4: Consolidated Statements of Income
Consolidated Statements Of Income (dollars in thousands, except per share amounts (1)) (unaudited) (unaudited) Three months ended Six months ended June 30, June 30, 2019 2018 2019 2018 REVENUE Rental (including reimbursable) (2) $ 364,252 $ 325,265 $ 718,289 $ 643,113 Other 1,198 3,621 1,526 4,068 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) June 30, 2019 December 31, 2018 ASSETS (unaudited) Real estate, at cost: Land $ 5,058,572 $ 4,682,660 Buildings and improvements 12,774,967 11,858,806 Total real estate, at cost 17,833,539 16,541,466 Less accumulated depre
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, 2019 June 30, 2019 % of Debt June 30, 2019 Years until Maturity Credit Facility Credit Facility (1) March 24, 2023 $ 8,000 0.1% 3.17% 3.7 years Unsecured Term Loans Term Loan
Slide 9: Debt Maturities
Debt Maturities as of June 30, 2019 (dollars in millions) Debt Maturities Year of Credit Term Mortgages Senior Unsecured Weighted Average Maturity Facility Loans Payable Notes and Bonds Total Interest Rate (1) 2019 $ — $ — $ 18.2 $ — $ 18.2 4.38% 2020 — 250.0 82.4 — 332.4 3.21% 2021 — — 67.0 250.0 3
Slide 10: Capitalization & Financial Ratios
Capitalization & Financial Ratios (dollars in thousands, except per share amounts) Capitalization as of June 30, 2019 Capital Structure as of June 30, 2019 Principal Debt Balance Credit Facility $ 8,000 Unsecured Term Loans 500,000 Senior Unsecured Notes and Bonds 6,299,924 Mortgages Payable 295,886
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, 2019 Debt Service & Fixed Charge Coverage (4) Net income $ 95,420 Interest 72,488 Income taxes 1,155 Depreciation and amortization 150,426 Provisions for impai
Slide 12: Debt Covenants
Debt Covenants As of June 30, 2019 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) Initial Average Weighted Leasable Cash Average Lease First Quarter 2019 Number of Properties Investment Cash Rents Square Feet Lease Yield (1) Term (Years) Acquisitions - U.S. 97 $ 508,573 $ 33,905 1,908,385 6.7% 17.0 Properties under Development (2) 8 10,91
Slide 14: Disposition Summary
Disposition Summary (dollars in thousands) Cash Capitalization First Quarter 2019 Number of Properties Original Investment Net Book Value Net Proceeds (1) Rate (2) Occupied 4 $ 7,309 $ 5,550 $ 11,542 9.5% Vacant 14 22,654 8,764 9,813 — Total Real Estate Dispositions 18 $ 29,963 $ 14,314 $ 21,355 The
Slide 15: Development Pipeline
Development Pipeline (dollars in thousands) Investment Retail Number of Properties to Date Remaining Investment Total Commitment Percent Leased (2) New development (1) 6 $ 8,523 $ 15,966 $ 24,489 100% Development of existing properties 2 2,770 3,756 6,526 64% 8 $ 11,293 $ 19,722 $ 31,015 Investment
Slide 16: Tenant Diversification
Tenant Diversification Top 20 Tenants Investment Grade Tenants (2): Our 20 largest tenants based on percentage of total portfolio annualized rental revenue at June 30, 2019 include the following: Number of Leases 3,132 Percentage of Annualized Rents 49% Investment Grade Weighted Average Annual Growt
Slide 17: Top Industries
Top 10 Industries 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, 2019 (1) 2018 2017 2016 2015 2014 Convenience stores 11.9% 11.2% 9.6% 8.7% 9.2% 10.1% Drug stores 9.3 10.2 10.9 11.2 10.6 9.5 Health and f
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, 2019 2018 2017 2016 2015 2014 U.S. Aerospace 0.8% 0.8% 0.9% 1.0% 1.1% 1.2% Apparel stores 1.2 1.3 1.6 1.9 2.0 2.0 Automotive collis
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, 2019 2018 2017 2016 2015 2014 Health and fitness 7.5 7.4 7.5 8.1 7.7 7.0 Health care 1.4 1.5 1.4 1.5 1.7 1.8 Home furnishi
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, 2019 (1) Revenue Alabama 170 97 1,594,400 $ 6,015 1.7% Alaska 3 100 274,600 536 0.2 Arizona 119 100 1,825
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, 2019 (1) Revenue Montana 11 100 87,000 $ 498 0.1 Nebraska 42 100 687,800 1,714 0.5 Nevada 24 96
Slide 22: Property Type Composition
Property Type Composition (dollars in thousands) Percentage of Rental Percentage of Rental Revenue for Revenue for the Annualized Revenue Approximate Leasable the Quarter Ended Quarter Ended from Investment Property Type Number of Properties Square Feet June 30, 2019 (1) June 30, 2019 Grade Tenants
Slide 23: Same Store Rental Revenue
Same Store Rental Revenue (dollars in thousands) Second Quarter 2019 Same Store Rental Revenue Top 3 Industries Contributing to the Change Number of Properties 4,863 Quarter ended Quarter ended Net % Change Square Footage 80,321,973 Industry June 30, 2019 June 30, 2018 Change by Industry Q2 2019 $ 2
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 2019 Quarter ended Quarter ended Net % Change by Property Type June 30, 2019 June 30, 2018 Change Property Type Retail $ 239,440 $ 235,580 $ 3,860 1.6 % Industrial 36,215 35,554 661 1.
Slide 25: Occupancy
Occupancy By Property Change in Occupancy Occupied Properties 5,849 Vacant Properties at 3/31/2019 102 Total Properties 5,951 Occupancy 98.3% Expiration Activity (1) + 102 Leasing Activity (2) - 86 By Square Footage Vacant Disposition Activity (3) - 16 Occupied Square Footage 96,264,785 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 2019 Same Tenant Vacancy of Vacancy Totals Prior Cash Rents $ 23,120 $ — $ 567 $ 23,687 New Cash Rents* $ 23,334 $ — $ 458 $ 23,792 Recapture Rate 10
Slide 27: Lease Expirations
Lease Expirations (dollars in thousands) Our leases have a weighted average remaining lease term of approximately 9.4 years. Total Portfolio (1) Approx. % of Expiring Leases Leasable Rental Rental Year Retail Non-Retail Sq. Feet Revenue Revenue 2019 77 5 871,100 $ 3,188 0.9% 2020 213 11 3,041,400 10
Slide 28: Earnings Guidance
Earnings Guidance We estimate FFO per share for 2019 of $3.26 to $3.31. We estimate AFFO per share for 2019 of $3.28 to $3.33, an increase of 3% to 4% over 2018 AFFO per share of $3.19. Summarized below are approximate estimates of the key components of the company’s 2019 earnings guidance: 2019 Gui
Slide 29: 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 BTIG Michael Gorman mgorman@btig.com (212) 738-6138 James Sullivan jsullivan@btig.com (212) 738-6139 Capital One Chris Lu