PR Newswire | Nov 2, 2020 04:06PM EST

Months Of 2020

11/02 15:05 CST

Realty Income Announces Operating Results For Third Quarter And First Nine Months Of 2020 SAN DIEGO, Nov. 2, 2020

SAN DIEGO, Nov. 2, 2020 /PRNewswire/ -- Realty Income Corporation (Realty Income, NYSE: O), The Monthly Dividend Company(r), today announced operating results for the third quarter and nine months ended September 30, 2020. All per share amounts presented in this press release are on a diluted per common share basis unless stated otherwise.

COMPANY HIGHLIGHTS

For the quarter ended September 30, 2020

* Net income per share was $0.07 * AFFO per share was $0.81 * Collected 93.1% of contractual rent * Invested $658.6 million in 89 properties and properties under development or expansion, including $230.0 million in seven properties in the U.K. * Issued $350.0 million of 3.250% senior unsecured notes due 2031 * Raised $348.6 million from the sale of common stock, primarily through our At-The-Market (ATM) program * Established $1.0 billion U.S. dollar-denominated commercial paper program

For the month ended October 31, 2020

* Appointed Christie Kelly as Executive Vice President, Chief Financial Officer and Treasurer ("CFO"), effective January 2021 * Collected 92.9% of contractual rent due * Issued 400.0 million through the issuance of 1.625% senior unsecured notes due 2030 in our debut Sterling public offering

CEO Comments

"I appreciate the continued commitment of our dedicated and talented team toward advancing the strategy and objectives of our company, as well as the support from our clients and partners," said Sumit Roy, Realty Income's President and Chief Executive Officer. "Our operating results during the third quarter demonstrate our commitment to judiciously managing through the COVID-19 pandemic while also proactively driving our business forward. During the third quarter, we invested $658.6 million, $230.0 million of which represents investments in the U.K., primarily in high-quality real estate leased to leading operators in essential and resilient industries, like the grocery, home improvement and convenience store industries."

"We continued to have excellent access to well-priced capital, as during the quarter we issued $350.0 million of senior unsecured notes due 2031 with an effective yield to maturity of 2.341% and raised approximately $348.6 million of equity; and we established a $1.0 billion commercial paper program which further enhances our financial flexibility. Subsequent to quarter-end, we completed our debut Sterling-denominated public debt offering, issuing 400.0 million of senior unsecured notes due 2030 at an effective yield to maturity of 1.712%. Given the strength of our financial position and the continued performance of our business, we are increasing our 2020 acquisition guidance to approximately $2.0 billion."

Summarized Financial Results

The following summarizes our select financial results (dollars in millions, except per share data):

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Total $ 404.6 $ 374.2 $1,233.5 $1,094.1 revenue

Net income available to common $ 22.9 $ 101.0 $277.6 $307.2 stockholders ^(1)(2)

Net income $ 0.07 $ 0.32 $0.81 $0.98 per share

Funds from operations available to common $ 283.0 $ 262.0 $848.4 $759.2 stockholders (FFO) ^(2) (3)

FFO per $ 0.82 $ 0.82 $2.48 $2.43 share

Adjusted funds from operations available to$ 282.5 $ 265.4 $875.0 $768.0 common stockholders (AFFO) ^(3)

AFFO per $ 0.81 $ 0.83 $2.55 $2.46 share

The calculation to determine net income attributable to common stockholders^ includes provisions for impairment, gains on sales of real estate, and(1) foreign currency gains and losses. These items can vary from quarter to quarter and can significantly impact net income available to common stockholders and period to period comparisons.

Our financial results in the first nine months of 2020 were impacted by the following transactions: (i) $123.4 million of provisions for impairment in the first nine months of 2020, of which $105.1 million related to the third^ quarter, (ii) $34.4 million in reserves recorded as a reduction of rental(2) revenue in the first nine months of 2020, of which $24.1 million related to the third quarter, (iii) a $9.8 million loss on extinguishment of debt due to the January 2020 early redemption of the 5.750% notes due 2021 recorded in the first quarter of 2020, and (iv) a $3.5 million executive severance charge for our former CFO also recorded in the first quarter of 2020.

The company considers FFO and AFFO to be appropriate supplemental measures of a Real Estate Investment Trust's (REIT's) operating performance. Realty Income defines FFO, a non-GAAP measure, consistent with the National Association of Real Estate Investment Trusts' (Nareit's) definition, as net income available to common stockholders, plus depreciation and amortization of real estate assets, plus provisions for impairments of real estate assets, and reduced by gains on property sales. AFFO further adjusts FFO for unique revenue and expense items, which the company believes are not as^ pertinent to the measurement of the company's ongoing operating(3) performance. 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 as alternatives to reviewing our cash flows from operating, investing, and financing activities. In addition, FFO and AFFO should not be considered as measures of liquidity, our ability to make cash distributions, or our ability to pay interest payments. See the reconciliations of net income available to common stockholders to FFO and AFFO on pages nine and ten of this press release.

Impact of COVID-19

Percentages of Contractual Rent Collected as of October 31, 2020

Month EndedMonth EndedMonth Ended Quarter EndedMonth EndedJuly 31, August 31, September 30,September 30,October 31, 2020 2020 2020 2020 2020



Contractual rent collected^ 91.8% 93.3% 94.1% 93.1% 92.9% (1) across total portfolio

Contractual rent collected^ 90.0% 91.6% 91.8% 91.1% 89.9% (1) from top 20 tenants^(2)

Contractual rent collected^ (1) from 100.0% 100.0% 100.0% 100.0% 100.0% investment grade tenants^(3)

Collection rates are calculated as the aggregate cash rent collected for the applicable period from the beginning of that applicable period through October 31, 2020, divided by the contractual cash rent charged for the applicable period. Cash rent collected is defined as amounts received including amounts in transit, where the tenant has confirmed payment is in^ process. Rent collection percentages are calculated based on contractual(1) base rents (excluding percentage rents and tenant reimbursements). Charged amounts have not been adjusted for any COVID-19 related rent relief granted and include contractual base rents from any tenants in bankruptcy. Due to differences in applicable foreign currency conversion rates and rent conventions, the percentages above may differ from percentages calculated utilizing our total portfolio annualized contractual revenue.

^ We define top 20 tenants as our 20 largest tenants based on percentage of(2) total portfolio annualized contractual rental revenue as of the most recent reported period.

We define investment grade tenants as tenants with a credit rating, and^ tenants that are subsidiaries or affiliates of companies with a credit(3) rating, of Baa3/BBB- or higher from one of the three major rating agencies (Moody's/S&P/Fitch).

We have executed deferral agreements or maintain ongoing deferral discussions with tenants that account for a majority of the unpaid contractual rent for each of the periods referenced in the table above. Additional detail on rent collections can be found in our supplemental materials available on our corporate website at www.realtyincome.com/investors/financial-information/quarterly-results.

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 collectability of rent for our 78 theater properties, including the gross receivables outstanding as of September 30, 2020, totaling $44.9 million. Our analysis involved the assignment of quartile rankings for each asset's pre-pandemic EBITDAR relative to each operator's overall footprint. Other criteria utilized included an analysis of the property's pre-pandemic annual EBITDA generation before corporate overhead, and real estate fundamentals.

As a result of this analysis, we determined that for 31 of the 78 theater properties it was no longer probable that we would collect substantially all of contractual rents due. As a conservative measure, we fully reserved for six additional theater properties for which we do not possess unit level financial information. Consequently, we reserved for 100% of the outstanding receivables for 37 theater properties and will account prospectively for these leases on a cash accounting basis. The aggregate reserve associated with outstanding receivables for these properties totaled $17.2 million, approximately $1.6 million of which was a reserve for straight-line rent receivables. The dilution for the third quarter of 2020 as a result of establishing these reserves for our theater portfolio is $0.05 per share to our net income and FFO and $0.04 per share to our AFFO. The monthly contractual rent associated with these properties totals approximately $2.8 million.

Additionally, during the third quarter, we recorded provisions for impairment on 12 of the 37 theater properties for $79.0 million. Impairment charges are not included in Nareit-defined FFO or in our calculation of AFFO.

See "Item 1A--Risk Factors" in Part II of our Quarterly Report on Form 10-Q for quarter ended September 30, 2020 for more information regarding the actual and potential future impacts of the COVID-19 pandemic and the measures taken to limit its spread on our tenants and our business, results of operations, financial condition and liquidity.

Dividend Increases

In September 2020, we announced the 92nd consecutive quarterly dividend increase, which is the 108th increase in the amount of the dividend since the company's listing on the New York Stock Exchange (NYSE) in 1994. The annualized dividend amount as of September 30, 2020 was $2.808 per share. The amount of monthly dividends paid per share increased 3.1% to $0.701 in the third quarter of 2020, as compared to $0.680 in the third quarter of 2019. During the third quarter of 2020, the company distributed $242.2 million in common dividends to stockholders, representing 85.7% of its AFFO of $282.5 million.

Real Estate Portfolio Update

As of September 30, 2020, our portfolio consisted of 6,588 properties located in 49 U.S. states, Puerto Rico and the U.K., and leased to approximately 600 different tenants doing business in 51 separate industries. The properties are primarily freestanding and leased under long-term, net lease agreements with a weighted average remaining lease term of approximately 9.0 years. The company's portfolio of commercial real estate has historically provided dependable rental revenue supporting the payment of monthly dividends. As of September 30, 2020, portfolio occupancy was 98.6% with 92 properties available for lease or sale out of 6,588, as compared to 98.5% as of June 30, 2020 and 98.3% as of September 30, 2019.

Changes in Occupancy

Three months ended September 30, 2020

Properties available for lease at June 30, 2020 101

Lease expirations 98

Re-leases to same tenant ^(1) (75)

Re-leases to new tenant ^(1)(2) (5)

Vacant dispositions (27)

Properties available for lease at September 30, 202092

^ The annual new rent on these re-leases was $12.3 million, as compared to(1) the previous annual rent of $12.4 million on the same properties, representing a rent recapture rate of 99.2% on the properties re-leased during the quarter ended September 30, 2020.

^ Re-leased two properties to new tenants without a period of vacancy, and(2) three properties to new tenants after a period of vacancy.

Nine months ended September 30, 2020

Properties available for lease at December 31, 2019 94

Lease expirations 288

Re-leases to same tenant ^(1) (225)

Re-leases to new tenant ^(1)(2) (13)

Vacant dispositions (52)

Properties available for lease at September 30, 202092

^ The annual new rent on these re-leases was $45.5 million, as compared to(1) the previous annual rent of $45.6 million on the same properties, representing a rent recapture rate of 99.8% on the properties re-leased during the first nine months of 2020.

^ Re-leased five properties to new tenants without a period of vacancy, and(2) eight properties to new tenants after a period of vacancy.

Investments in Real EstateThe following table summarizes our acquisitions in the U.S. and U.K. for the periods indicated below:

Leasable Weighted Initial Average Number of Square Feet Investment Average Cash Lease Properties(in millions)($ in millions)Lease TermYield (Years)

Three months ended September 30, 2020

Acquisitions - U.S. (in 74 1.2 $409.2 15.2 5.9 % 21 states)

Acquisitions7 0.7 230.0 8.9 7.5 % - U.K. ^(1)

Total 81 1.9 639.2 12.6 6.4 % Acquisitions

Properties under 8 0.7 19.4 18.0 5.9 % Development - U.S.

Total ^(2) 89 2.6 $658.6 12.7 6.4 %



Nine months ended September 30, 2020

Acquisitions - U.S. (in 154 3.0 $821.9 14.8 6.2 % 28 states)

Acquisitions13 1.2 453.7 10.0 6.4 % - U.K. ^(1)

Total 167 4.2 1,275.6 13.1 6.3 % Acquisitions

Properties under 13 0.9 23.3 16.3 6.4 % Development - U.S.

Total ^(3) 180 5.1 $1,298.9 13.1 6.3 %

^ Represents investments of lb176.6 million Sterling during three months(1) ended September 30, 2020 and lb356.7 million Sterling during the nine months ended September 30, 2020 converted at the applicable exchange rate on the date of acquisition.

The tenants occupying the new properties operate in 15 industries, and are^ 97.2% retail and 2.8% industrial, based on rental revenue. Approximately(2) 73% of the rental revenue generated from acquisitions during the third quarter of 2020 is from investment grade rated tenants, their subsidiaries or affiliated companies.

The tenants occupying the new properties operate in 23 industries, and are^ 96.9% retail and 3.1% industrial, based on rental revenue. Approximately(3) 56% of the rental revenue generated from acquisitions during the first nine months of 2020 is from investment grade rated tenants, their subsidiaries or affiliated companies.

Same Store Rental RevenueThe following summarizes our same store rental revenue on 5,511 properties under lease (dollars in millions):

Three Months Ended September 30,Nine Months Ended September 30,Decrease

2020 2019 2020 2019 Three monthsNine months

Rental $ 303.0 $ 316.9 $ 937.2 $ 951.8 (4.4) %(1.5) %Revenue

Our calculation of same store rental revenue includes rent deferred for future payment as a result of lease concessions we granted in response to the COVID-19 pandemic and recognized under the practical expedient provided by the Financial Accounting Standards Board (FASB). Same store rental income was negatively impacted by reserves recorded as reductions of rental revenue of $19.9 million for the three months ended September 30, 2020 compared to $241,000 for the three months ended September 30, 2019, and $26.5 million for the nine months ended September 30, 2020 compared to $1.2 million for the nine months ended September 30, 2019. Our calculation of same store rental revenue also includes uncollected rent for which we have not granted a lease concession. If these applicable amounts of rent deferrals and uncollected rent were excluded from our calculation of same store rental revenue, the decreases for the three and nine months ended September 30, 2020 relative to the comparable periods for 2019 would have been (4.6)% and (5.9)%, respectively.

Property DispositionsThe following summarizes our property dispositions (dollars in millions):

Three Months Ended Nine Months Ended September 30, 2020 September 30, 2020

Properties sold 37 66

Net sales proceeds $ 51.3 $ 184.9

Gain on sales of real estate$ 13.7 $ 53.6

Liquidity and Capital Markets

Capital RaisingIn July 2020, we issued $350.0 million of 3.250% senior unsecured notes due January 2031, which constituted a further issuance of, and formed a single series with, the $600.0 million senior notes issued in May 2020. The public offering price was 108.241% of the principal amount, for an effective yield to maturity of 2.341%.

During the quarter ended September 30, 2020, we raised $348.6 million from the sale of common stock at a weighted average price of $62.57 per share, primarily through our At-The-Market-Program.

In October 2020, we issued 400.0 million of 1.625% senior unsecured notes due December 2030. The public offering price for these notes was 99.191% of the principal amount, for an effective yield to maturity of 1.712%. The issuance represented our debut public offering of Sterling-denominated notes.

Credit Facility and Commercial Paper ProgramWe have a $3.0 billion unsecured revolving credit facility, with an initial term that expires in March 2023 (subject to two six-month options to extend). The revolving credit facility also has a $1.0 billion accordion feature, which is subject to obtaining lender commitments. As of September 30, 2020, the balance of borrowings outstanding under our revolving credit facility was $556.1 million, consisting entirely of Sterling-denominated borrowings of 430.5 million. In addition, we had a cash balance of $724.8 million.

In August 2020, we established a U.S. dollar-denominated unsecured commercial paper program. Under the terms of this program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding of $1.0 billion, with note proceeds used for general corporate purposes. We expect to use our unsecured revolving credit facility as a liquidity backstop for the repayment of the notes issued under this program. As of September 30, 2020, the balance of our commercial paper program was $300.0 million.

2020 Acquisitions Guidance

Our current guidance relating to our acquisition volume is approximately $2.0 billion for 2020. We continue to evaluate the impacts of the COVID-19 pandemic on our business as the situation continues to evolve.

Conference Call Information

In conjunction with the release of our operating results, we will host a conference call on November 3, 2020 at 11:30 a.m. PT to discuss the results. To access the conference, dial (877) 701-6180 (United States) or (647) 689-4069 (International). When prompted, provide the conference ID 3665185.

A telephone replay of the conference call can also be accessed by calling (800) 585-8367 and entering the passcode 3665185. The telephone replay will be available through November 17, 2020. 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

Supplemental materials on the third quarter and year-to-date 2020 operating results, including reconciliations for non-GAAP measures, are available on our corporate website at www.realtyincome.com/investors/financial-information/quarterly-results.

About Realty Income

Realty Income, The Monthly Dividend Company(r), is an S&P 500 company dedicated to providing stockholders with dependable monthly income. The company is structured as a REIT, and its monthly dividends are supported by the cash flow from over 6,500 real estate properties owned under long-term lease agreements with commercial tenants. To date, the company has declared 604 consecutive common stock monthly dividends throughout its 51-year operating history and increased the dividend 108 times since Realty Income's public listing in 1994 (NYSE: O). The company is a member of the S&P 500 Dividend Aristocrats(r) index. Additional information about the company can be obtained from the corporate website at www.realtyincome.com.

Forward-Looking Statements

Statements in this press release that are not strictly historical are "forward-looking" statements. Forward-looking statements involve known and unknown risks, which may cause the company's actual future results to differ materially from expected results. These risks include, among others, general economic conditions, domestic and foreign real estate conditions, tenant financial health, the availability of capital to finance planned growth, volatility and uncertainty in the credit markets and broader financial markets, changes in foreign currency exchange rates, property acquisitions and the timing of these acquisitions, charges for property impairments, the effects of the COVID-19 pandemic and the measures taken to limit its impact, the effects of pandemics or global outbreaks of contagious diseases or fear of such outbreaks, the company's tenants' ability to adequately manage its properties and fulfill their respective lease obligations to the company, and the outcome of any legal proceedings to which the company is a party, as described in the company's filings with the Securities and Exchange Commission. Consequently, forward-looking statements should be regarded solely as reflections of the company's current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this press release. The company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.

CONSOLIDATED STATEMENTS OF INCOME

(dollars in thousands, except per share amounts) (unaudited)



Three Three Nine Months Nine Months Months Months

Ended 9/30Ended 9/30Ended 9/30/ Ended 9/30/ /20 /19 20 19

REVENUE

Rental (including $401,869$372,312$1,224,227$1,090,601reimbursable) ^(1)

Other 2,703 1,935 9,322 3,461

Total revenue 404,572 374,247 1,233,549 1,094,062



EXPENSES

Depreciation and 169,084 149,424 501,997 437,367 amortization

Interest 76,806 73,410 230,572 215,918

Property (including 25,410 20,354 77,468 63,332 reimbursable)

General and 16,514 16,460 56,541 50,153 administrative

Income taxes 4,592 1,822 10,193 4,422

Provisions for impairment105,095 13,503 123,442 31,236

Total expenses 397,501 274,973 1,000,213 802,428

Gain on sales of real 13,736 1,674 53,565 15,828 estate

Foreign currency and 2,336 327 1,274 463 derivative gains, net

Loss on extinguishment of- - (9,819) - debt

Net income 23,143 101,275 278,356 307,925

Net income attributable to noncontrolling (239) (226) (801) (740) interests

Net income available to $22,904 $101,049$277,555 $307,185 common stockholders



Funds from operations available to common $282,978$262,031$848,419 $759,195 stockholders (FFO)

Adjusted funds from operations available to $282,509$265,355$874,972 $768,026 common stockholders (AFFO)



Per share information for common stockholders:

Net income:

Basic $0.07 $0.32 $0.81 $0.99

Diluted $0.07 $0.32 $0.81 $0.98



FFO:

Basic $0.82 $0.82 $2.48 $2.44

Diluted $0.82 $0.82 $2.48 $2.43



AFFO:

Basic $0.82 $0.83 $2.56 $2.47

Diluted $0.81 $0.83 $2.55 $2.46



Cash dividends paid per $0.701 $0.680 $2.092 $2.030 common share

We recorded reserves as a reduction of rental revenue of $24.1 million (of which $2.3 million was related to straight-line rent receivables) for the^ third quarter of 2020, $351,000 (of which $57,000 was related to(1) straight-line receivables) for the third quarter of 2019, $34.4 million (of which $5.1 million was related to straight-line rent receivables) for the nine months ended September 30, 2020, and $2.7 million (of which $1.5 million was related to straight-line receivables) for the nine months ended September 30, 2019.

FUNDS FROM OPERATIONS (FFO)(dollars in thousands, except per share amounts)

We define FFO, a non-GAAP measure, consistent with Nareit's definition, as net income available to common stockholders, plus depreciation and amortization of real estate assets, plus provisions for impairments of real estate assets, reduced by gains on real estate sales.

Three MonthsThree MonthsNine Months Nine Months

Ended 9/30/ Ended 9/30/ Ended 9/30/ Ended 9/30/ 20 19 20 19



Net income available to common $ 22,904 $ 101,049 $ 277,555 $ 307,185 stockholders

Depreciation and 169,084 149,424 501,997 437,367 amortization

Depreciation of furniture, fixtures (157) (136) (435) (438) and equipment

Provisions for 105,095 13,503 123,442 31,236 impairment

Gain on sales of real(13,736) (1,674) (53,565) (15,828) estate

FFO adjustments allocable to (212) (135) (575) (327) noncontrolling interests

FFO available to $ 282,978 $ 262,031 $ 848,419 $ 759,195 common stockholders

FFO allocable to dilutive 345 362 1,063 1,032 noncontrolling interests

Diluted FFO $ 283,323 $ 262,393 $ 849,482 $ 760,227



FFO per common share:

Basic $ 0.82 $ 0.82 $ 2.48 $ 2.44

Diluted $ 0.82 $ 0.82 $ 2.48 $ 2.43



Distributions paid to$ 242,241 $ 216,248 $ 716,535 $ 629,658 common stockholders



FFO available to common stockholders in excess of $ 40,737 $ 45,783 $ 131,884 $ 129,537 distributions paid to common stockholders



Weighted average number of common shares used for FFO:

Basic 346,476,217319,945,932342,214,164311,556,279

Diluted 347,212,593320,726,136342,946,337312,300,391

ADJUSTED FUNDS FROM OPERATIONS (AFFO)(dollars in thousands, except per share amounts)

We define AFFO as FFO adjusted for unique revenue and expense items, which the company believes are not as pertinent to the measurement of the company's 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).

Three MonthsThree MonthsNine Months Nine Months

Ended 9/30/ Ended 9/30/ Ended 9/30/ Ended 9/30/ 20 19 20 19

Net income available to common $ 22,904 $ 101,049 $ 277,555 $ 307,185 stockholders ^(1)

Cumulative adjustments to 260,074 160,982 570,864 452,010 calculate FFO ^(2)

FFO available to 282,978 262,031 848,419 759,195 common stockholders

Executive severance - - 3,463 - charge ^(3)

Loss on extinguishment of - - 9,819 - debt

Amortization of share-based 3,020 3,187 11,644 10,478 compensation

Amortization of deferred financing 956 1,299 3,792 3,471 costs ^(4)

Amortization of net (310) (354) (1,020) (1,061) mortgage premiums

Loss on interest rate1,123 694 3,115 2,058 swaps

Straight-line payments from 614 1,754 1,960 2,553 cross-currency swaps ^(5)

Leasing costs and 98 (851) (1,013) (1,880) commissions

Recurring capital (105) (406) (126) (577) expenditures

Straight-line rent (6,445) (7,642) (20,469) (19,735)

Amortization of above and below-market 2,408 5,486 14,925 13,227 leases, net

Other adjustments ^ (1,828) 157 463 297 (6)

AFFO available to $ 282,509 $ 265,355 $ 874,972 $ 768,026 common stockholders

AFFO allocable to dilutive 347 368 1,079 1,064 noncontrolling interests

Diluted AFFO $ 282,856 $ 265,723 $ 876,051 $ 769,090



AFFO per common share:

Basic $ 0.82 $ 0.83 $ 2.56 $ 2.47

Diluted $ 0.81 $ 0.83 $ 2.55 $ 2.46



Distributions paid to$ 242,241 $ 216,248 $ 716,535 $ 629,658 common stockholders



AFFO available to common stockholders in excess of $ 40,268 $ 49,107 $ 158,437 $ 138,368 distributions paid to common stockholders



Weighted average number of common shares used for AFFO:

Basic 346,476,217319,945,932342,214,164311,556,279

Diluted 347,212,593320,726,136342,946,337312,300,391

As of September 30, 2020, there was $26.5 million of uncollected rent deferred as a result of lease concessions we granted in response to the^ COVID-19 pandemic and recognized under the practical expedient provided by(1) the FASB and $36.4 million of uncollected rent for which we have not granted a lease concession. The collection of the $62.9 million of unpaid rent is probable. Deferrals accounted for as modifications totaling $63,000 and $224,000 for the three and nine months ended September 30, 2020, respectively, have not been added back to AFFO.

^(2) See FFO calculation on page nine for reconciling items.

^ The executive severance charge represents the incremental costs incurred(3) upon our former CFO's departure in March 2020, consisting of $1.6 million of cash, $1.8 million of share-based compensation expense and $58,000 of professional fees.

Includes the amortization of costs incurred and capitalized upon issuance^ of our notes payable, assumption of our mortgages payable and issuance of(4) our term loans. The deferred financing costs are being amortized over the lives of the respective notes payable, mortgages and term loans. No costs associated with our credit facility agreements or annual fees paid to credit rating agencies have been included.

^ Straight-line payments from cross-currency swaps represent quarterly(5) payments in U.S. dollars received by us from counterparties in exchange for associated foreign currency payments. These USD payments are fixed and determinable for the duration of the associated hedging transaction.

^ Includes adjustments allocable to noncontrolling interests, obligations(6) related to financing lease liabilities, and foreign currency gains and losses as a result of intercompany debt and remeasurement transactions.

HISTORICAL FFO AND AFFO

(dollars in thousands, except per share amounts)



For the three months ended 2020 2019 2018 2017 2016 September 30,



Net income available to $22,904 $101,049 $98,999 $87,940 $70,302 common stockholders

Depreciation and amortization, net of 168,927 149,288 136,801 127,436 113,730 furniture, fixtures and equipment

Provisions for105,095 13,503 6,862 365 8,763 impairment

Gain on sales (13,736) (1,674) (7,813) (4,319) (4,335) of real estate

FFO adjustments allocable to (212) (135) (299) (230) (174) noncontrolling interests



FFO $282,978 $262,031 $234,550 $211,192 $188,286



FFO per $0.82 $0.82 $0.81 $0.77 $0.73 diluted share



AFFO $282,509 $265,355 $236,195 $213,601 $186,575



AFFO per $0.81 $0.83 $0.81 $0.77 $0.72 diluted share



Cash dividends$0.701 $0.680 $0.660 $0.635 $0.601 paid per share



Weighted average diluted shares347,212,593320,726,136291,207,186276,050,671258,356,892outstanding - FFO



Weighted average diluted shares347,212,593320,726,136291,207,186276,138,853258,356,892outstanding - AFFO





For the nine months ended 2020 2019 2018 2017 2016 September 30,



Net income available to $277,555 $307,185 $278,542 $240,662 $202,820 common stockholders

Depreciation and amortization, net of 501,562 436,929 401,576 371,315 331,617 furniture, fixtures and equipment

Provisions for123,442 31,236 25,034 8,072 16,955 impairment

Gain on sales (53,565) (15,828) (18,818) (17,689) (15,283) of real estate

FFO adjustments allocable to (575) (327) (820) (683) (546) noncontrolling interests



FFO $848,419 $759,195 $685,514 $601,677 $535,563



FFO per $2.48 $2.43 $2.39 $2.22 $2.11 diluted share



AFFO $874,972 $768,026 $687,744 $623,327 $543,367



AFFO per $2.55 $2.46 $2.40 $2.30 $2.14 diluted share



Cash dividends$2.092 $2.030 $1.969 $1.891 $1.786 paid per share



Weighted average diluted shares342,946,337312,300,391287,105,285271,126,114254,223,301outstanding - FFO



Weighted average diluted shares342,946,337312,300,391287,105,285271,214,296254,458,747outstanding - AFFO

REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except per share and share count data) (unaudited)

September 30, 2020 December 31, 2019

ASSETS

Real estate held for investment, atcost:

Land $ 5,982,495 $ 5,684,034

Buildings and improvements 14,203,277 13,833,882

Total real estate held for investment, 20,185,772 19,517,916at cost

Less accumulated depreciation and (3,444,099) (3,117,919)amortization

Real estate held for investment, net 16,741,673 16,399,997

Real estate and lease intangibles held 41,093 96,775for sale, net

Cash and cash equivalents 724,750 54,011

Accounts receivable 261,752 181,969

Lease intangible assets, net 1,610,457 1,493,383

Other assets, net 405,645 328,661

Total assets $ 19,785,370 $ 18,554,796

LIABILITIES AND EQUITY

Distributions payable $ 82,980 $ 76,728

Accounts payable and accrued expenses 206,626 177,039

Lease intangible liabilities, net 318,690 333,103

Other liabilities 241,425 262,221

Line of credit payable and commercial 856,142 704,335paper

Term loans, net 249,308 499,044

Mortgages payable, net 335,594 410,119

Notes payable, net 6,994,817 6,288,049

Total liabilities 9,285,582 8,750,638

Commitments and contingencies

Stockholders' equity:

Common stock and paid in capital, parvalue $0.01 per share, 740,200,000shares authorized, 350,595,869 and 14,050,494 12,873,849333,619,106 shares issued andoutstanding as of September 30, 2020 andDecember 31, 2019, respectively

Distributions in excess of net income (3,527,521) (3,082,291)

Accumulated other comprehensive loss (52,446) (17,102)

Total stockholders' equity 10,470,527 9,774,456

Noncontrolling interests 29,261 29,702

Total equity 10,499,788 9,804,158

Total liabilities and equity $ 19,785,370 $ 18,554,796

Realty Income Performance vs. Major Stock Indices



Equity NASDAQ

Realty Income REIT Index^ (1) DJIA S&P 500 Composite

DividendTotal DividendTotal DividendTotal DividendTotal DividendTotal

yield return yield return yield return yield return yield return ^(2) ^(3) ^(3) ^(3) ^(4)



10/18 to 12/31/199410.5% 10.8% 7.7% 0.0% 2.9% (1.6%) 2.9% (1.2%) 0.5% (1.7%)

1995 8.3% 42.0% 7.4% 15.3% 2.4% 36.9% 2.3% 37.6% 0.6% 39.9%

1996 7.9% 15.4% 6.1% 35.3% 2.2% 28.9% 2.0% 23.0% 0.2% 22.7%

1997 7.5% 14.5% 5.5% 20.3% 1.8% 24.9% 1.6% 33.4% 0.5% 21.6%

1998 8.2% 5.5% 7.5% (17.5%)1.7% 18.1% 1.3% 28.6% 0.3% 39.6%

1999 10.5% (8.7%) 8.7% (4.6%) 1.3% 27.2% 1.1% 21.0% 0.2% 85.6%

2000 8.9% 31.2% 7.5% 26.4% 1.5% (4.7%) 1.2% (9.1%) 0.3% (39.3%)

2001 7.8% 27.2% 7.1% 13.9% 1.9% (5.5%) 1.4% (11.9%)0.3% (21.1%)

2002 6.7% 26.9% 7.1% 3.8% 2.6% (15.0%)1.9% (22.1%)0.5% (31.5%)

2003 6.0% 21.0% 5.5% 37.1% 2.3% 28.3% 1.8% 28.7% 0.6% 50.0%

2004 5.2% 32.7% 4.7% 31.6% 2.2% 5.6% 1.8% 10.9% 0.6% 8.6%

2005 6.5% (9.2%) 4.6% 12.2% 2.6% 1.7% 1.9% 4.9% 0.9% 1.4%

2006 5.5% 34.8% 3.7% 35.1% 2.5% 19.0% 1.9% 15.8% 0.8% 9.5%

2007 6.1% 3.2% 4.9% (15.7%)2.7% 8.8% 2.1% 5.5% 0.8% 9.8%

2008 7.3% (8.2%) 7.6% (37.7%)3.6% (31.8%)3.2% (37.0%)1.3% (40.5%)

2009 6.6% 19.3% 3.7% 28.0% 2.6% 22.6% 2.0% 26.5% 1.0% 43.9%

2010 5.1% 38.6% 3.5% 27.9% 2.6% 14.0% 1.9% 15.1% 1.2% 16.9%

2011 5.0% 7.3% 3.8% 8.3% 2.8% 8.3% 2.3% 2.1% 1.3% (1.8%)

2012 4.5% 20.1% 3.5% 19.7% 3.0% 10.2% 2.5% 16.0% 2.6% 15.9%

2013 5.8% (1.8%) 3.9% 2.9% 2.3% 29.6% 2.0% 32.4% 1.4% 38.3%

2014 4.6% 33.7% 3.6% 28.0% 2.3% 10.0% 2.0% 13.7% 1.3% 13.4%

2015 4.4% 13.0% 3.9% 2.8% 2.6% 0.2% 2.2% 1.4% 1.4% 5.7%

2016 4.2% 16.0% 4.0% 8.6% 2.5% 16.5% 2.1% 12.0% 1.4% 7.5%

2017 4.5% 3.6% 3.9% 8.7% 2.2% 28.1% 1.9% 21.8% 1.1% 28.2%

2018 4.2% 15.2% 4.4% (4.0%) 2.5% (3.5%) 2.2% (4.4%) 1.4% (3.9%)

2019 3.7% 21.1% 3.7% 28.7% 2.4% 25.3% 1.9% 31.5% 1.1% 35.2%

YTD 2020 4.6% (14.7%)3.8% (12.3%)2.2% (0.9%) 1.7% 5.6% 0.8% 24.5%





Compound Average 15.3% 9.9% 10.4% 10.0% 10.9% Annual Total Return^ (5)

Note: All of these dividend yields are calculated as annualized dividendsbased on the last dividend paid in applicable time period divided by theclosing price as of period end. Dividend yield sources: Nareit website andBloomberg, except for the 1994 NASDAQ dividend yield which was sourced fromDatastream / Thomson Financial.

^ FTSE Nareit US Equity REIT Index, as per Nareit website.(1)

Calculated as the difference between the closing stock price as of period^ end less the closing stock price as of previous period, plus dividends paid(2) in period, divided by closing stock price as of end of previous period. Does not include reinvestment of dividends for the annual percentages.

^(3) Includes reinvestment of dividends. Source: Nareit website and Factset.

^ Price only index, does not include dividends as NASDAQ did not report total(4) return metrics for the entirety of the measurement period. Source: Factset.

All of these Compound Average Annual Total Return rates are calculated in the same manner for each period from Realty Income's NYSE listing on^ October 18, 1994 through September 30, 2020, and (except for NASDAQ) assume(5) reinvestment of dividends. Past performance does not guarantee future performance. Realty Income presents this data for informational purposes only and makes no representation about its future performance or how it will compare in performance to other indices in the future.

View original content to download multimedia: http://www.prnewswire.com/news-releases/realty-income-announces-operating-results-for-third-quarter-and-first-nine-months-of-2020-301165252.html

SOURCE Realty Income Corporation