Realty Income Announces Operating Results for the Three and Six Months Ended June 30, 2023
- Net income of $195.4 million for the three months ended June 30, 2023
- Invested $3.1 billion in 710 properties
- Raised $2.2 billion from the sale of common stock
- Real estate portfolio had a 99.0% occupancy rate
- Announced the 103rd consecutive quarterly dividend increase
- None.
COMPANY HIGHLIGHTS:
For the three months ended June 30, 2023:
- Net income available to common stockholders was
$195.4 million $0.29 - Normalized FFO available to common stockholders was
$688.3 million $1.02 - AFFO available to common stockholders was
$671.7 million $1.00 - Invested
$3.1 billion 6.9% - Raised
$2.2 billion $61.89 - Issued
$400.0 million 4.70% senior unsecured notes due December 2028, and$600.0 million 4.90% senior unsecured notes due July 2033 - Net Debt to Annualized Pro Forma Adjusted EBITDAre was 5.3x
- Completed the previously announced sale-leaseback transaction with EG Group of 414 single-tenant convenience store properties for
$1.5 billion
Events subsequent to June 30, 2023
- In July, issued
€550.0 million of4.875% senior unsecured notes due July 2030, and€550.0 million of5.125% senior unsecured notes due July 2034 - ATM forward agreements for a total of 11.0 million shares remain unsettled with total expected net proceeds of approximately
$651.4 million
CEO Comments
"I am pleased with the results our team delivered in the second quarter," said Sumit Roy, Realty Income's President and Chief Executive Officer. "Our performance continues to be driven by our diverse and high-quality portfolio of leading clients. Our global pipeline of investment opportunities with favorable risk-adjusted return profiles remains active. During the quarter, we closed on
"Our investment efforts are supported by our well-capitalized balance sheet which was further bolstered through a successful debut Euro bond offering in July. In addition, we currently expect over
"Combined with our well-performing real estate portfolio, which finished the quarter with a
Select Financial Results
The following summarizes our select financial results (dollars in millions, except per share data).
Three months ended June 30, | Six months ended June 30, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Total revenue | $ 1,019.2 | $ 810.4 | $ 1,963.6 | $ 1,617.8 | ||||
Net income available to common stockholders (1) | $ 195.4 | $ 223.2 | $ 420.4 | $ 422.6 | ||||
Net income per share | $ 0.29 | $ 0.37 | $ 0.63 | $ 0.71 | ||||
Funds from operations available to common | $ 688.0 | $ 608.8 | $ 1,372.3 | $ 1,210.2 | ||||
FFO per share | $ 1.02 | $ 1.01 | $ 2.05 | $ 2.02 | ||||
Normalized funds from operations available to | $ 688.3 | $ 611.5 | $ 1,373.9 | $ 1,219.5 | ||||
Normalized FFO per share | $ 1.02 | $ 1.02 | $ 2.06 | $ 2.04 | ||||
Adjusted funds from operations available to common | $ 671.7 | $ 583.7 | $ 1,322.5 | $ 1,163.8 | ||||
AFFO per share | $ 1.00 | $ 0.97 | $ 1.98 | $ 1.94 | ||||
(1) | The calculation to determine net income attributable to common stockholders includes provisions for impairment, gain on sales of real estate, and foreign currency gain and loss. These items can vary from quarter to quarter and can significantly impact net income available to common stockholders and period to period comparisons. |
(2) | FFO, Normalized FFO, and AFFO are non-GAAP financial measures. Normalized FFO is based on FFO and adjusted to exclude merger and integration-related costs related to our merger with VEREIT and AFFO further adjusts Normalized FFO for unique revenue and expense items. Please see the Glossary for our definitions and explanations of how we utilize these metrics. Please see pages 9 and 10 herein for reconciliations to the most directly comparable GAAP measure. |
Theater Industry Update
As previously disclosed, Cineworld Group plc and its affiliates ("Cineworld") commenced Chapter 11 reorganization proceedings during September 2022. As of June 30, 2023, we own 35 properties leased to Cineworld, which represent
During the three months ended June 30, 2023, we collected approximately
As of June 30, 2023, we had cumulative reserves of
(1) | We define contractual rent as the monthly aggregate cash amount charged to clients, inclusive of monthly base rent receivables. Charged amounts have not been adjusted for any COVID-19 related rent relief granted and include contractual rent from any clients in bankruptcy. |
Dividend Increases
In June 2023, we announced the 103rd consecutive quarterly dividend increase, which is the 121st increase in the amount of the dividend since our listing on the New York Stock Exchange (NYSE) in 1994. The annualized dividend amount as of June 30, 2023 was
Real Estate Portfolio Update
As of June 30, 2023, we owned or held interests in 13,118 properties, which were leased to 1,303 clients doing business in 85 industries. Our diversified portfolio of commercial properties under long-term, net lease agreements is actively managed with a weighted average remaining lease term of approximately 9.6 years. Our portfolio of commercial real estate has historically provided dependable rental revenue supporting the payment of monthly dividends. As of June 30, 2023, portfolio occupancy was
Changes in Occupancy
Three months ended June 30, 2023 | |
Properties available for lease at March 31, 2023 | 131 |
Lease expirations (1) | 216 |
Re-leases to same client | (174) |
Re-leases to new client | (8) |
Vacant dispositions | (28) |
Properties available for lease at June 30, 2023 | 137 |
Six months ended June 30, 2023 | |
Properties available for lease at December 31, 2022 | 126 |
Lease expirations (1) | 408 |
Re-leases to same client | (329) |
Re-leases to new client | (14) |
Vacant dispositions | (54) |
Properties available for lease at June 30, 2023 | 137 |
(1) | Includes scheduled and unscheduled expirations (including leases rejected in bankruptcy), as well as future expirations resolved in the periods indicated above. |
During the three months ended June 30, 2023, the new annualized contractual rent on re-leases was
During the six months ended June 30, 2023, the new annualized contractual rent on re-leases was
Investments in Real Estate
The following table summarizes our acquisitions in the
Number of Properties | Leasable Square Feet (in thousands) | Investment ($ in millions) | Weighted Average Lease Term (Years) | Initial Weighted Average Cash Lease Yield (1) | |||||
Three months ended June 30, 2023 | |||||||||
Acquisitions - | 550 | 6,557 | $ 2,360.0 | 18.6 | 6.8 % | ||||
Acquisitions - Europe | 11 | 1,744 | 399.0 | 5.9 | 7.2 % | ||||
Total acquisitions | 561 | 8,301 | $ 2,759.0 | 16.7 | 6.9 % | ||||
Properties under development (2) | 149 | 4,809 | 334.3 | 17.6 | 6.9 % | ||||
Total (3) | 710 | 13,110 | $ 3,093.3 | 16.8 | 6.9 % | ||||
Six months ended June 30, 2023 | |||||||||
Acquisitions - | 747 | 12,483 | $ 3,408.9 | 15.9 | 6.9 % | ||||
Acquisitions - | 31 | 4,181 | 788.7 | 9.3 | 7.4 % | ||||
Total acquisitions | 778 | 16,664 | $ 4,197.6 | 14.6 | 7.0 % | ||||
Properties under development (2) | 219 | 5,635 | 569.9 | 16.5 | 6.5 % | ||||
Total (4) | 997 | 22,299 | $ 4,767.5 | 14.8 | 6.9 % |
(1) | Initial weighted average cash lease yield is a supplemental operating measure. Please see the Glossary for our definition of this metric. Contractual net operating income used in the calculation of initial weighted average cash lease yield for the three and six months ended June 30, 2023 includes |
(2) | The three and six months ended June 30, 2023 includes |
(3) | Our clients occupying the new properties are |
(4) | Our clients occupying the new properties are |
Same Store Rental Revenue
The following summarizes our same store rental revenue for 10,685 properties under lease (dollars in millions):
Three months ended June 30, | Six months ended June 30, | % Increase | |||||||||
2023 | 2022 | 2023 | 2022 | Three Months | Six Months | ||||||
Same store rental revenue | $ 718.8 | $ 704.9 | $ 1,435.3 | $ 1,420.2 | 2.0 % | 1.1 % | |||||
For purposes of comparability, same store rental revenue is presented on a constant currency basis using the exchange rate as of June 30, 2023 of 1.27 GBP/USD and
Liquidity and Capital Markets
Capital Raising
During the three months ended June 30, 2023, we raised
In April 2023, we issued
In July 2023, we issued
Liquidity
As of June 30, 2023, we had
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 | ||||
Real estate depreciation and impairments per share | ||||
Other adjustments per share (2) | ||||
Normalized FFO per share (3) | ||||
AFFO per share (3) | ||||
Same store rent growth | Over | Over | ||
Occupancy | Over | Over | ||
Cash G&A expenses (% of revenues) (4)(5) | ||||
Property expenses (non-reimbursable) (% of revenues) (4) | ||||
Income tax expenses | ||||
Acquisition volume | Over | Over | ||
(1) As issued on May 3, 2023. | ||||
(2) Includes gain on sales of properties and merger and integration-related costs. | ||||
(3) Normalized FFO per share and AFFO per share exclude merger and integration-related costs associated with our merger with VEREIT. | ||||
(4) Revenue excludes contractually obligated reimbursements by our clients. Cash G&A expenses excludes stock-based compensation expense. | ||||
(5) G&A expenses inclusive of stock-based compensation expense as a percentage of rental revenue, excluding reimbursements, is | ||||
Conference Call Information
In conjunction with the release of our operating results, we will host a conference call on August 3, 2023 at 11:30 a.m. PT to discuss the results. To access the conference call, dial (833) 816-1264 (
A telephone replay of the conference call can also be accessed by calling (877) 344-7529 and entering the conference ID 2277986. The telephone replay will be available through August 10, 2023.
A live webcast will be available in listen-only mode by clicking on the webcast link on the company's home page or in the investors section at www.realtyincome.com. A replay of the conference call webcast will be available approximately one hour after the conclusion of the live broadcast. No access code is required for this replay.
Supplemental Materials and Sustainability Report
Supplemental Operating and Financial Data for the three and six months ended June 30, 2023 are available on our corporate website at www.realtyincome.com/investors/quarterly-and-annual-results.
The Sustainability Report for the year ended December 31, 2022 is available on our corporate website at esg.realtyincome.com/indicators/sustainability_report. Our Green Financing Framework is also available on our corporate website at esg.realtyincome.com/indicators/green_financing.
About Realty Income
Realty Income, The Monthly Dividend Company®, is an S&P 500 company and member of the S&P 500 Dividend Aristocrats® index. We invest in people and places to deliver dependable monthly dividends that increase over time. The company is structured as a real estate investment trust ("REIT"), and its monthly dividends are supported by the cash flow from over 13,100 real estate properties primarily owned under long-term net lease agreements with commercial clients. To date, the company has declared 637 consecutive monthly dividends on its shares of common stock throughout its 54-year operating history and increased the dividend 121 times since Realty Income's public listing in 1994 (NYSE: O). Additional information about the company can be obtained from the corporate website at www.realtyincome.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. When used in this press release, the words "estimated," "anticipated," "expect," "believe," "intend," "continue," "should," "may," "likely," "plans," and similar expressions are intended to identify forward-looking statements. Forward- looking statements include discussions of our business and portfolio (including our growth strategies and our intention to acquire or dispose of additional domestic and international properties and the timing of these acquisitions and dispositions), re-lease, re-development and speculative development of properties and expenditures related thereto; future operations and results; the announcement of operating results, strategy, plans, settlement of shares of common stock sold pursuant to forward sale confirmations under our ATM program, dividends, guidance, and the intentions of management; and trends in our business, including trends in the market for long-term net leases of freestanding, single-client properties. Forward-looking statements are subject to risks, uncertainties, and assumptions about us, which may cause our actual future results to differ materially from expected results. Some of the factors that could cause actual results to differ materially are, among others, our continued qualification as a REIT; general domestic and foreign business, economic, or financial conditions; competition; fluctuating interest and currency rates; inflation and its impact on our clients and us; access to debt and equity capital markets and other sources of funding; continued volatility and uncertainty in the credit markets and broader financial markets; other risks inherent in the real estate business including our clients' defaults under leases, increased client bankruptcies, potential liability relating to environmental matters, illiquidity of real estate investments, and potential damages from natural disasters; impairments in the value of our real estate assets; changes in domestic and foreign income tax laws and rates; our clients' solvency; property ownership through joint ventures and partnerships which may limit control of the underlying investments; current or future epidemics or pandemics, measures taken to limit their spread, the impacts on us, our business, our clients (including those in the theater and fitness industries), and the economy generally; the loss of key personnel; the outcome of any legal proceedings to which we are a party or which may occur in the future; acts of terrorism and war; any effects of uncertainties regarding whether the anticipated benefits or results of our merger with VEREIT, Inc. will be achieved; and those additional risks and factors discussed in our reports filed with the
CONSOLIDATED STATEMENTS OF INCOME | ||||||||
Three months ended | Six months ended | |||||||
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 | ||||
EXPENSES | ||||||||
Depreciation and amortization | 472,278 | 409,437 | 923,755 | 813,199 | ||||
Interest | 183,857 | 110,121 | 337,989 | 216,524 | ||||
Property (including reimbursable) | 94,703 | 52,180 | 164,100 | 104,522 | ||||
General and administrative | 36,829 | 34,139 | 70,996 | 66,838 | ||||
Provisions for impairment | 29,815 | 7,691 | 42,993 | 14,729 | ||||
Merger and integration-related costs | 341 | 2,729 | 1,648 | 9,248 | ||||
Total expenses | 817,823 | 616,297 | 1,541,481 | 1,225,060 | ||||
Gain on sales of real estate | 7,824 | 40,572 | 12,103 | 50,728 | ||||
Foreign currency and derivative (loss) gain, | (2,552) | 7,480 | 7,770 | 6,890 | ||||
Gain on extinguishment of debt | — | 127 | — | 127 | ||||
Equity in income and impairment of investment | 411 | (6,627) | 411 | (5,673) | ||||
Other income, net | 3,020 | 2,806 | 5,750 | 4,658 | ||||
Income before income taxes | 210,085 | 238,480 | 448,157 | 449,432 | ||||
Income taxes | (12,932) | (14,658) | (24,882) | (25,639) | ||||
Net income | 197,153 | 223,822 | 423,275 | 423,793 | ||||
Net income attributable to noncontrolling interests | (1,738) | (615) | (2,844) | (1,217) | ||||
Net income available to common | $ 195,415 | $ 223,207 | $ 420,431 | $ 422,576 | ||||
Funds from operations available to | $ 687,985 | $ 608,815 | $ 1,372,276 | $ 1,210,231 | ||||
Normalized funds from operations available to | $ 688,326 | $ 611,544 | $ 1,373,924 | $ 1,219,479 | ||||
Adjusted funds from operations available to | $ 671,738 | $ 583,728 | $ 1,322,466 | $ 1,163,826 | ||||
Per share information for common stockholders: | ||||||||
Net income available to common | $ 0.29 | $ 0.37 | $ 0.63 | $ 0.71 | ||||
FFO | ||||||||
Basic | $ 1.02 | $ 1.01 | $ 2.06 | $ 2.02 | ||||
Diluted | $ 1.02 | $ 1.01 | $ 2.05 | $ 2.02 | ||||
Normalized FFO, basic and diluted | $ 1.02 | $ 1.02 | $ 2.06 | $ 2.04 | ||||
AFFO | ||||||||
Basic | $ 1.00 | $ 0.97 | $ 1.98 | $ 1.95 | ||||
Diluted | $ 1.00 | $ 0.97 | $ 1.98 | $ 1.94 | ||||
Cash dividends paid per common share | $ 0.7650 | $ 0.7410 | $ 1.5165 | $ 1.4805 | ||||
(1) | Includes reserve reversals to rental revenue of |
FUNDS FROM OPERATIONS (FFO) AND NORMALIZED FUNDS FROM OPERATIONS (Normalized FFO) | ||||||||
FFO and Normalized FFO are non-GAAP financial measures. Please see the Glossary for our definitions and explanations of how we utilize these metrics. | ||||||||
Three months ended | Six months ended | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Net income available to common stockholders | $ 195,415 | $ 223,207 | $ 420,431 | $ 422,576 | ||||
Depreciation and amortization | 472,278 | 409,437 | 923,755 | 813,199 | ||||
Depreciation of furniture, fixtures and equipment | (297) | (489) | (839) | (967) | ||||
Provisions for impairment | 29,815 | 7,691 | 42,993 | 14,729 | ||||
Gain on sales of real estate | (7,824) | (40,572) | (12,103) | (50,728) | ||||
Proportionate share of adjustments for | (465) | 9,860 | (465) | 12,095 | ||||
FFO adjustments allocable to noncontrolling | (937) | (319) | (1,496) | (673) | ||||
FFO available to common stockholders | $ 687,985 | $ 608,815 | $ 1,372,276 | $ 1,210,231 | ||||
FFO allocable to dilutive noncontrolling interests | 1,371 | 776 | 2,791 | 1,584 | ||||
Diluted FFO | $ 689,356 | $ 609,591 | $ 1,375,067 | $ 1,211,815 | ||||
FFO available to common stockholders | $ 687,985 | $ 608,815 | $ 1,372,276 | $ 1,210,231 | ||||
Merger and integration-related costs | 341 | 2,729 | 1,648 | 9,248 | ||||
Normalized FFO available to common | $ 688,326 | $ 611,544 | $ 1,373,924 | $ 1,219,479 | ||||
Normalized FFO allocable to dilutive | 1,371 | 776 | 2,791 | 1,584 | ||||
Diluted Normalized FFO | $ 689,697 | $ 612,320 | $ 1,376,715 | $ 1,221,063 | ||||
FFO per common share | ||||||||
Basic | $ 1.02 | $ 1.01 | $ 2.06 | $ 2.02 | ||||
Diluted | $ 1.02 | $ 1.01 | $ 2.05 | $ 2.02 | ||||
Normalized FFO per common share, basic | $ 1.02 | $ 1.02 | $ 2.06 | $ 2.04 | ||||
Distributions paid to common stockholders | $ 515,091 | $ 445,829 | $ 1,012,336 | $ 884,109 | ||||
FFO available to common stockholders in | $ 172,894 | $ 162,986 | $ 359,940 | $ 326,122 | ||||
Normalized FFO available to common | $ 173,235 | $ 165,715 | $ 361,588 | $ 335,370 | ||||
Weighted average number of common | ||||||||
Basic | 674,109 | 601,672 | 667,357 | 597,778 | ||||
Diluted | 676,388 | 603,091 | 669,903 | 599,201 | ||||
ADJUSTED FUNDS FROM OPERATIONS (AFFO)
| ||||||||
AFFO is a non-GAAP financial measure. Please see the Glossary for our definition and an explanation of how we utilize this metric. | ||||||||
Three months ended | Six months ended | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Net income available to common | $ 195,415 | $ 223,207 | $ 420,431 | $ 422,576 | ||||
Cumulative adjustments to calculate | 492,911 | 388,337 | 953,493 | 796,903 | ||||
Normalized FFO available to common | 688,326 | 611,544 | 1,373,924 | 1,219,479 | ||||
Gain on extinguishment of debt | — | (127) | 0 | (127) | ||||
Amortization of share-based compensation | 7,623 | 6,641 | 13,923 | 11,643 | ||||
Amortization of net debt premiums and | (10,509) | (16,948) | (24,197) | (34,044) | ||||
Non-cash (gain) loss on interest rate swaps | (1,799) | 724 | (3,600) | 1,446 | ||||
Straight-line impact of cash settlement on | 1,797 | — | 3,595 | — | ||||
Leasing costs and commissions | (5,032) | (794) | (5,476) | (3,167) | ||||
Recurring capital expenditures | (85) | (173) | (138) | (186) | ||||
Straight-line rent and expenses, net | (33,963) | (27,554) | (70,448) | (55,376) | ||||
Amortization of above and below-market | 19,670 | 16,402 | 37,028 | 30,044 | ||||
Proportionate share of adjustments for | — | (2,090) | — | (4,154) | ||||
Other adjustments (4) | 5,709 | (3,897) | (2,145) | (1,732) | ||||
AFFO available to common stockholders | $ 671,737 | $ 583,728 | $ 1,322,466 | $ 1,163,826 | ||||
AFFO allocable to dilutive noncontrolling | 1,382 | 787 | 2,813 | 1,607 | ||||
Diluted AFFO | $ 673,119 | $ 584,515 | $ 1,325,279 | $ 1,165,433 | ||||
AFFO per common share | ||||||||
Basic | $ 1.00 | $ 0.97 | $ 1.98 | $ 1.95 | ||||
Diluted | $ 1.00 | $ 0.97 | $ 1.98 | $ 1.94 | ||||
Distributions paid to common stockholders | $ 515,091 | $ 445,829 | $ 1,012,336 | $ 884,109 | ||||
AFFO available to common stockholders in | $ 156,646 | $ 137,899 | $ 310,130 | $ 279,717 | ||||
Weighted average number of common shares used for AFFO: | ||||||||
Basic | 674,109 | 601,672 | 667,357 | 597,778 | ||||
Diluted | 676,388 | 603,091 | 669,903 | 599,201 | ||||
(1) | See Normalized FFO calculations on page 9 for reconciling items. |
(2) | Includes the amortization of net premiums on notes payable and assumption of our mortgages payable, which are being amortized over the life of the applicable debt, and costs incurred and capitalized upon issuance and exchange of our notes payable, assumption of our mortgages payable and issuance of our term loans, which are also being amortized over the lives of the applicable debt. No costs associated with our credit facility agreements or annual fees paid to credit rating agencies have been included. |
(3) | Represents the straight-line amortization of |
(4) | Includes foreign currency gain and loss as a result of intercompany debt and remeasurement transactions, mark-to-market adjustments on investments and derivatives that are non-cash in nature, straight-line payments from cross-currency swaps, obligations related to financing lease liabilities, and adjustments allocable to noncontrolling interests. |
HISTORICAL FFO AND AFFO | ||||||||||
For the three months ended June 30, | 2023 | 2022 | 2021 | 2020 | 2019 | |||||
Net income available to common stockholders | $ 195,415 | $ 223,207 | $ 124,479 | $ 107,824 | $ 95,194 | |||||
Depreciation and amortization, net of furniture, | 471,981 | 408,948 | 187,716 | 168,176 | 150,279 | |||||
Provisions for impairment | 29,815 | 7,691 | 17,246 | 13,869 | 13,061 | |||||
Gain on sales of real estate | (7,824) | (40,572) | (14,901) | (1,323) | (6,891) | |||||
Proportionate share of adjustments for | (465) | 9,860 | — | — | — | |||||
FFO adjustments allocable to noncontrolling interests | (937) | (319) | (165) | (208) | (154) | |||||
FFO available to common stockholders | $ 687,985 | $ 608,815 | $ 314,375 | $ 288,338 | $ 251,489 | |||||
Merger and integration-related costs | 341 | 2,729 | 13,298 | — | — | |||||
Normalized FFO available to common stockholders | $ 688,326 | $ 611,544 | $ 327,673 | $ 288,338 | $ 251,489 | |||||
FFO per diluted share | $ 1.02 | $ 1.01 | $ 0.84 | $ 0.84 | $ 0.81 | |||||
Normalized FFO per diluted share | $ 1.02 | $ 1.02 | $ 0.88 | $ 0.84 | $ 0.81 | |||||
AFFO available to common stockholders | $ 671,738 | $ 583,728 | $ 327,647 | $ 295,241 | $ 253,935 | |||||
AFFO per diluted share | $ 1.00 | $ 0.97 | $ 0.88 | $ 0.86 | $ 0.82 | |||||
Cash dividends paid per share | $ 0.7650 | $ 0.7410 | $ 0.7050 | $ 0.6990 | $ 0.6780 | |||||
Weighted average diluted shares outstanding - FFO, | 676,388 | 603,091 | 374,804 | 344,148 | 311,785 | |||||
For the six months ended June 30, | 2023 | 2022 | 2021 | 2020 | 2019 | |||||
Net income available to common stockholders | $ 420,431 | $ 422,576 | $ 220,419 | $ 254,651 | $ 206,136 | |||||
Depreciation and amortization, net of furniture, | 922,916 | 812,232 | 365,330 | 332,635 | 287,641 | |||||
Provisions for impairment | 42,993 | 14,729 | 19,966 | 18,347 | 17,733 | |||||
Gain on sales of real estate | (12,103) | (50,728) | (23,302) | (39,829) | (14,154) | |||||
Proportionate share of adjustments for | (465) | 12,095 | — | — | — | |||||
FFO adjustments allocable to noncontrolling interests | (1,496) | (673) | (331) | (363) | (192) | |||||
FFO available to common stockholders | $ 1,372,276 | $ 1,210,231 | $ 582,082 | $ 565,441 | $ 497,164 | |||||
Merger and integration-related costs | 1,648 | 9,248 | 13,298 | — | — | |||||
Normalized FFO available to common stockholders | $ 1,373,924 | $ 1,219,479 | $ 595,380 | $ 565,441 | $ 497,164 | |||||
FFO per diluted share | $ 2.05 | $ 2.02 | $ 1.56 | $ 1.66 | $ 1.62 | |||||
Normalized FFO per diluted share | $ 2.06 | $ 2.04 | $ 1.60 | $ 1.66 | $ 1.62 | |||||
AFFO available to common stockholders | $ 1,322,466 | $ 1,163,826 | $ 645,869 | $ 592,463 | $ 502,669 | |||||
AFFO per diluted share | $ 1.98 | $ 1.94 | $ 1.73 | $ 1.74 | $ 1.63 | |||||
. | ||||||||||
Cash dividends paid per share | $ 1.5165 | $ 1.4805 | $ 1.4085 | $ 1.3915 | $ 1.3500 | |||||
Weighted average diluted shares outstanding - | 669,903 | 599,201 | 373,435 | 340,744 | 308,001 |
ADJUSTED EBITDAre | ||||
Adjusted EBITDAre, Annualized Adjusted EBITDAre, Pro Forma Adjusted EBITDAre, Annualized Pro Forma Adjusted EBITDAre, Net Debt/Annualized Adjusted EBITDAre and Net Debt/Annualized Pro Forma Adjusted EBITDAre are non-GAAP financial measures. Please see the Glossary for our definition and an explanation of how we utilize these metrics. | ||||
Three months ended | ||||
2023 | 2022 | |||
Net income | $ 197,153 | $ 223,822 | ||
Interest | 183,857 | 110,121 | ||
Gain on extinguishment of debt | — | (127) | ||
Income taxes | 12,932 | 14,658 | ||
Depreciation and amortization | 472,278 | 409,437 | ||
Provisions for impairment | 29,815 | 7,691 | ||
Merger and integration-related costs | 341 | 2,729 | ||
Gain on sales of real estate | (7,824) | (40,572) | ||
Foreign currency and derivative losses (gains), net | 2,552 | (7,480) | ||
Gain on settlement of foreign currency forwards | — | 2,106 | ||
Proportionate share of adjustments from unconsolidated entities | (411) | 9,049 | ||
Quarterly Adjusted EBITDAre | $ 890,693 | $ 731,434 | ||
Annualized Adjusted EBITDAre (1) | $ 3,562,772 | $ 2,925,736 | ||
Annualized Pro Forma Adjustments | $ 87,712 | $ 55,756 | ||
Annualized Pro Forma Adjusted EBITDAre | $ 3,650,484 | $ 2,981,492 | ||
Total debt per the consolidated balance sheet, excluding deferred financing | $ 19,538,466 | $ 15,738,383 | ||
Proportionate share for unconsolidated entities debt, excluding deferred | — | 86,006 | ||
Less: Cash and cash equivalents | (253,693) | (172,849) | ||
Net Debt (2) | $ 19,284,773 | $ 15,651,540 | ||
Net Debt/Annualized Adjusted EBITDAre | 5.4x | 5.3x | ||
Net Debt/Annualized Pro Forma Adjusted EBITDAre | 5.3x | 5.2x | ||
(1) | We calculate Annualized Adjusted EBITDAre by multiplying the Quarterly Adjusted EBITDAre by four. |
(2) | Net Debt is total debt per our consolidated balance sheets, excluding deferred financing costs and net premiums and discounts, but including our proportionate share on debt from unconsolidated entities, less cash and cash equivalents. |
The Annualized Pro Forma Adjustments, which include transaction accounting adjustments in accordance with
Three months ended June 30, | ||||
2023 | 2022 | |||
Annualized pro forma adjustments from properties acquired or stabilized | $ 87,510 | $ 56,048 | ||
Annualized pro forma adjustments from properties disposed | 202 | (292) | ||
Annualized Pro forma Adjustments | $ 87,712 | $ 55,756 | ||
CONSOLIDATED BALANCE SHEETS | ||||
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 real estate held for investment, at cost | 46,664,237 | 42,656,586 | ||
Less accumulated depreciation and amortization | (5,485,766) | (4,904,165) | ||
Real estate held for investment, net | 41,178,471 | 37,752,421 | ||
Real estate and lease intangibles held for sale, net | 17,324 | 29,535 | ||
Cash and cash equivalents | 253,693 | 171,102 | ||
Accounts receivable, net | 620,599 | 543,237 | ||
Lease intangible assets, net | 5,238,400 | 5,168,366 | ||
Goodwill | 3,731,478 | 3,731,478 | ||
Other assets, net | 2,940,701 | 2,276,953 | ||
Total assets | $ 53,980,666 | $ 49,673,092 | ||
LIABILITIES AND EQUITY | ||||
Distributions payable | $ 182,855 | $ 165,710 | ||
Accounts payable and accrued expenses | 559,383 | 399,137 | ||
Lease intangible liabilities, net | 1,439,968 | 1,379,436 | ||
Other liabilities | 855,496 | 774,787 | ||
Line of credit payable and commercial paper | 990,257 | 2,729,040 | ||
Term loan, net | 1,324,285 | 249,755 | ||
Mortgages payable, net | 841,690 | 853,925 | ||
Notes payable, net | 16,475,589 | 14,278,013 | ||
Total liabilities | 22,669,523 | 20,829,803 | ||
Stockholders' equity: | ||||
Common stock and paid in capital, par value | 37,149,380 | 34,159,509 | ||
Distributions in excess of net income | (6,102,226) | (5,493,193) | ||
Accumulated other comprehensive income | 96,057 | 46,833 | ||
Total stockholders' equity | 31,143,211 | 28,713,149 | ||
Noncontrolling interests | 167,932 | 130,140 | ||
Total equity | 31,311,143 | 28,843,289 | ||
Total liabilities and equity | $ 53,980,666 | $ 49,673,092 | ||
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 measure to help make investment decisions among certain REITs. Our definition of "Adjusted EBITDAre" is generally consistent with the Nareit definition, other than our adjustment to remove foreign currency and derivative gain and loss, excluding the gain and loss from the settlement of foreign currency forwards not designated as hedges (which is consistent with our previous calculations of "Adjusted EBITDAre"). We define Adjusted EBITDAre, a non-GAAP financial measure, for the most recent quarter as earnings (net income) before (i) interest expense, including non-cash loss (gain) on swaps, (ii) income and franchise taxes, (iii) gain on extinguishment of debt, (iv) real estate depreciation and amortization, (v) provisions for impairment, (vi) merger and integration-related costs, (vii) gain on sales of real estate, (viii) foreign currency and derivative gain and loss, net, (ix) gain on settlement of foreign currency forwards, and (x) our proportionate share of adjustments from unconsolidated entities. Our Adjusted EBITDAre may not be comparable to Adjusted EBITDAre reported by other companies or as defined by Nareit, and other companies may interpret or define Adjusted EBITDAre differently than we do. Management believes Adjusted EBITDAre to be a meaningful measure of a REIT's performance because it provides a view of our operating performance, analyzes our ability to meet interest payment obligations before the effects of income tax, depreciation and amortization expense, provisions for impairment, gain on sales of real estate and other items, as defined above, that affect comparability, including the removal of non-recurring and non-cash items that industry observers believe are less relevant to evaluating the operating performance of a company. In addition, EBITDAre is widely followed by industry analysts, lenders, investors, rating agencies, and others as a means of evaluating the operational cash generating capacity of a company prior to servicing debt obligations. Management also believes the use of an annualized quarterly Adjusted EBITDAre metric is meaningful because it represents our current earnings run rate for the period presented. The ratio of our total debt to our annualized quarterly Adjusted EBITDAre is also used to determine vesting of performance share awards granted to our executive officers. Adjusted EBITDAre should be considered along with, but not as an alternative to, net income as a measure of our operating performance.
Adjusted Funds From Operations (AFFO), a non-GAAP financial measure, is defined as FFO adjusted for unique revenue and expense items, which we believe are not as pertinent to the measurement of our ongoing operating performance. Most companies in our industry use a similar measurement to AFFO, but they may use the term "CAD" (for Cash Available for Distribution) or "FAD" (for Funds Available for Distribution). We believe AFFO provides useful information to investors because it is a widely accepted industry measure of the operating performance of real estate companies that is used by industry analysts and investors who look at and compare those companies. In particular, AFFO provides an additional measure to compare the operating performance of different REITs without having to account for differing depreciation assumptions and other unique revenue and expense items which are not pertinent to measuring a particular company's ongoing operating performance. Therefore, we believe that AFFO is an appropriate supplemental performance metric, and that the most appropriate GAAP performance metric to which AFFO should be reconciled is net income available to common stockholders.
Annualized Adjusted EBITDAre, a non-GAAP financial measure, is calculated by annualizing Adjusted EBITDAre.
Annualized Contractual Rent is the monthly aggregate cash amount charged to clients, inclusive of monthly base rent receivables, as of the balance sheet date, multiplied by 12, excluding percentage rent. We believe annualized contractual rent is a useful supplemental operating measure, as it excludes properties that were no longer owned at the balance sheet date and includes the annualized rent from properties acquired during the quarter. Annualized contractual rent has not been reduced to reflect reserves recorded as reductions to GAAP rental revenue in the periods presented. Annualized contractual rent excludes unconsolidated entities.
Annualized Pro Forma Adjusted EBITDAre, a non-GAAP financial measure, is defined as Adjusted EBITDAre, which includes transaction accounting adjustments in accordance with
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 impairments of depreciable real estate assets, and reduced by gain on property sales. Presentation of the information regarding FFO and AFFO is intended to assist the reader in comparing the operating performance of different REITs, although it should be noted that not all REITs calculate FFO and AFFO in the same way, so comparisons with other REITs may not be meaningful. FFO and AFFO should not be considered alternatives to reviewing our cash flows from operating, investing, and financing activities. In addition, FFO and AFFO should not be considered measures of liquidity, of our ability to make cash distributions, or of our ability to pay interest payments. We consider FFO to be an appropriate supplemental measure of a REIT's operating performance as it is based on a net income analysis of property portfolio performance that adds back items such as depreciation and impairments for FFO. The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time. Since real estate values historically rise and fall with market conditions, presentations of operating results for a REIT using historical accounting for depreciation could be less informative. The use of FFO is recommended by the REIT industry as a supplemental performance measure. In addition, FFO is used as a measure of our compliance with the financial covenants of our credit facility.
Initial Weighted Average Cash Lease Yield is computed as contractual cash net operating income for the first twelve months following the acquisition date, divided by the total cost of the property (including all expenses borne by us).
Investment Grade Clients are our clients with a credit rating, and our clients that are subsidiaries or affiliates of companies with a credit rating, as of the balance sheet date, of Baa3/BBB- or higher from one of the three major rating agencies (Moody's/S&P/Fitch).
Net Debt/Annualized Adjusted EBITDAre, a ratio used by management as a measure of leverage, is calculated as net debt (which we define as total debt per our consolidated balance sheet, excluding deferred financing costs and net premiums and discounts, less cash and cash equivalents), divided by Annualized Adjusted EBITDAre.
Net Debt/Annualized Pro Forma Adjusted EBITDAre, a ratio used by management as a measure of leverage, is calculated as net debt (which we define as total debt per our consolidated balance sheet, excluding deferred financing costs and net premiums and discounts, less cash and cash equivalents), divided by Annualized Pro Forma Adjusted EBITDAre.
Normalized Funds from Operations Available to Common Stockholders (Normalized FFO), a non-GAAP financial measure, is FFO excluding merger and integration-related costs associated with our merger with VEREIT.
Same Store Pool, for purposes of determining the properties used to calculate our same store rental revenue, includes all properties that we owned for the entire year-to-date period, for both the current and prior year except for properties during the current or prior year that were: (i) vacant at any time,(ii) under development or redevelopment, or (iii) involved in eminent domain and rent was reduced.
Same Store Rental Revenue excludes straight-line rent, the amortization of above-and below-market leases, and reimbursements from clients for recoverable real estate taxes and operating expenses. For purposes of comparability, same store rental revenue is presented on a constant currency basis by applying the exchange rate as of the balance sheet date to base currency rental revenue.
View original content to download multimedia:https://www.prnewswire.com/news-releases/realty-income-announces-operating-results-for-the-three-and-six-months-ended-june-30-2023-301891994.html
SOURCE Realty Income Corporation
FAQ
What is the net income reported by Realty Income Corporation for the three months ended June 30, 2023?
How much did Realty Income Corporation invest in properties for the three months ended June 30, 2023?
What was the occupancy rate of Realty Income Corporation's real estate portfolio as of June 30, 2023?
How many consecutive quarterly dividend increases has Realty Income Corporation announced?
