Maryland
|
33-0580106
|
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(IRS
Employer Identification Number)
|
PART
I. FINANCIAL INFORMATION
|
Page
|
||||
Item
1:
|
|||||
3 | |||||
4 | |||||
5 | |||||
6 | |||||
Item
2:
|
|||||
18 | |||||
19 | |||||
21 | |||||
23 | |||||
28 | |||||
36 | |||||
38 | |||||
43 | |||||
43 | |||||
43 | |||||
Item
3:
|
43 | ||||
Item
4:
|
44 | ||||
PART
II. OTHER INFORMATION
|
|||||
Item
1A:
|
45 | ||||
Item
4:
|
45 | ||||
Item
6:
|
46 | ||||
48 |
PART
I.
|
Item
1.
|
2008
|
2007
|
|||||||
ASSETS
|
(unaudited)
|
|||||||
Real
estate, at cost:
|
||||||||
Land
|
$ | 1,161,705 | $ | 1,110,897 | ||||
Buildings
and improvements
|
2,250,919 | 2,127,897 | ||||||
3,412,624 | 3,238,794 | |||||||
Less
accumulated depreciation and amortization
|
(512,082 | ) | (470,695 | ) | ||||
Net
real estate held for investment
|
2,900,542 | 2,768,099 | ||||||
Real
estate held for sale, net
|
13,892 | 56,156 | ||||||
Net
real estate
|
2,914,434 | 2,824,255 | ||||||
Cash
and cash equivalents
|
39,373 | 193,101 | ||||||
Accounts
receivable
|
9,130 | 7,142 | ||||||
Goodwill
|
17,206 | 17,206 | ||||||
Other
assets, net
|
62,794 | 35,648 | ||||||
Total
assets
|
$ | 3,042,937 | $ | 3,077,352 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Distributions
payable
|
$ | 16,006 | $ | 15,844 | ||||
Accounts
payable and accrued expenses
|
37,377 | 38,112 | ||||||
Other
liabilities
|
11,233 | 15,304 | ||||||
Lines
of credit payable
|
-- | -- | ||||||
Notes
payable
|
1,470,000 | 1,470,000 | ||||||
Total
liabilities
|
1,534,616 | 1,539,260 | ||||||
Commitments
and contingencies
|
||||||||
Stockholders’
equity:
|
||||||||
Preferred
stock and paid in capital, par value $1.00 per share,
|
||||||||
20,000,000
shares authorized, 13,900,000 shares issued
|
||||||||
and
outstanding in 2008 and 2007
|
337,790 | 337,790 | ||||||
Common
stock and paid in capital, par value $1.00 per share,
|
||||||||
200,000,000
shares authorized, 101,341,289 and 101,082,717
|
||||||||
shares
issued and outstanding in 2008 and 2007, respectively
|
1,548,052 | 1,545,037 | ||||||
Distributions
in excess of net income
|
(377,521 | ) | (344,735 | ) | ||||
Total
stockholders’ equity
|
1,508,321 | 1,538,092 | ||||||
Total
liabilities and stockholders’ equity
|
$ | 3,042,937 | $ | 3,077,352 |
The
accompanying notes to consolidated financial statements are an integral
part of these statements.
|
Three
Months Ended
|
Six
Months Ended
|
|||||||||||||||
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
|||||||||||||
REVENUE
|
||||||||||||||||
Rental
|
$ | 82,352 | $ | 70,112 | $ | 163,948 | $ | 138,895 | ||||||||
Other
|
80 | 213 | 1,529 | 2,365 | ||||||||||||
82,432 | 70,325 | 165,477 | 141,260 | |||||||||||||
EXPENSES
|
||||||||||||||||
Interest
|
23,929 | 13,029 | 47,315 | 25,449 | ||||||||||||
Depreciation
and amortization
|
22,916 | 18,414 | 45,830 | 36,435 | ||||||||||||
General
and administrative
|
5,924 | 5,838 | 11,467 | 10,929 | ||||||||||||
Property
|
1,093 | 958 | 2,354 | 1,816 | ||||||||||||
Income
taxes
|
218 | 353 | 615 | 598 | ||||||||||||
54,080 | 38,592 | 107,581 | 75,227 | |||||||||||||
Income
from continuing operations
|
28,352 | 31,733 | 57,896 | 66,033 | ||||||||||||
Income
from discontinued operations:
|
||||||||||||||||
Real
estate acquired for resale by Crest
|
1,295 | 4,282 | 1,101 | 6,030 | ||||||||||||
Real
estate held for investment
|
3,404 | 921 | 3,816 | 1,197 | ||||||||||||
4,699 | 5,203 | 4,917 | 7,227 | |||||||||||||
Net
income
|
33,051 | 36,936 | 62,813 | 73,260 | ||||||||||||
Preferred
stock cash dividends
|
(6,063 | ) | (6,063 | ) | (12,127 | ) | (12,127 | ) | ||||||||
Net
income available to common stockholders
|
$ | 26,988 | $ | 30,873 | $ | 50,686 | $ | 61,133 | ||||||||
Amounts
available to common stockholders per common share:
|
||||||||||||||||
Income
from continuing operations, basic and diluted
|
$ | 0.22 | $ | 0.26 | $ | 0.46 | $ | 0.54 | ||||||||
Net
income:
|
||||||||||||||||
Basic
|
$ | 0.27 | $ | 0.31 | $ | 0.51 | $ | 0.61 | ||||||||
Diluted
|
$ | 0.27 | $ | 0.31 | $ | 0.50 | $ | 0.61 | ||||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
100,346,512 | 100,133,094 | 100,326,039 | 100,111,734 | ||||||||||||
Diluted
|
100,394,431 | 100,246,112 | 100,420,692 | 100,304,617 |
2008
|
2007
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net
income
|
$ | 62,813 | $ | 73,260 | ||||
Adjustments
to net income:
|
||||||||
Depreciation
and amortization
|
45,830 | 36,435 | ||||||
Income
from discontinued operations:
|
||||||||
Real
estate acquired for resale
|
(1,101 | ) | (6,030 | ) | ||||
Real
estate held for investment
|
(3,816 | ) | (1,197 | ) | ||||
Gain
on sales of land
|
(236 | ) | (1,806 | ) | ||||
Amortization
of share-based compensation
|
2,853 | 2,196 | ||||||
Cash
provided by (used in) discontinued operations:
|
||||||||
Real
estate acquired for resale
|
4 | (536 | ) | |||||
Real
estate held for investment
|
442 | 829 | ||||||
Investment in real estate acquired for resale
|
(8 | ) | -- | |||||
Proceeds from sales of real estate acquired for resale
|
26,920 | 65,786 | ||||||
Change
in assets and liabilities:
|
||||||||
Accounts
receivable and other assets
|
(232 | ) | 990 | |||||
Accounts
payable, accrued expenses and other liabilities
|
(4,277 | ) | 2,330 | |||||
Net
cash provided by operating activities
|
129,192 | 172,257 | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Proceeds
from sales of investment properties:
|
||||||||
Continuing
operations
|
439 | 3,842 | ||||||
Discontinued operations
|
822 | 1,493 | ||||||
Acquisition
of and improvements to investment properties
|
(185,309 | ) | (97,672 | ) | ||||
Intangibles
acquired in connection with acquisitions of
|
||||||||
investment
properties
|
(397 | ) | (319 | ) | ||||
Restricted
escrow funds acquired in connection with
|
||||||||
acquisitions
of investment properties
|
-- | (2,648 | ) | |||||
Net
cash used in investing activities
|
(184,445 | ) | (95,304 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Cash
distributions to common stockholders
|
(83,310 | ) | (76,863 | ) | ||||
Cash
dividends to preferred stockholders
|
(12,127 | ) | (12,457 | ) | ||||
Debt
issuance costs
|
(3,200 | ) | -- | |||||
Borrowings
from lines of credit
|
-- | 135,400 | ||||||
Payments
under lines of credit
|
-- | (125,400 | ) | |||||
Proceeds
from other stock issuances
|
162 | 708 | ||||||
Net
cash used in financing activities
|
(98,475 | ) | (78,612 | ) | ||||
Net
decrease in cash and cash equivalents
|
(153,728 | ) | (1,659 | ) | ||||
Cash
and cash equivalents, beginning of period
|
193,101 | 10,573 | ||||||
Cash
and cash equivalents, end of period
|
$ | 39,373 | $ | 8,914 |
1.
|
Management
Statement
|
2.
|
Summary
of Significant Accounting Policies and Procedures and Recent Accounting
Pronouncements
|
June
30,
|
December
31,
|
|||||||
D. Other
assets consist of the following (dollars in thousands) at:
|
2008
|
2007
|
||||||
Notes
issued in conjunction with Crest property sales
|
$ | 22,338 | $ | 3,132 | ||||
Deferred
bond financing costs, net
|
14,054 | 14,940 | ||||||
Value
of in-place and above-market leases, net
|
11,073 | 11,211 | ||||||
Escrow
deposits for Section 1031 tax-deferred exchanges
|
6,901 | -- | ||||||
Prepaid
expenses
|
3,589 | 3,803 | ||||||
Unamortized
credit facility fees, net
|
3,125 | 434 | ||||||
Corporate
assets, net of accumulated depreciation and amortization
|
1,379 | 1,356 | ||||||
Settlements
on treasury lock agreements
|
324 | 759 | ||||||
Other
items
|
11 | 13 | ||||||
$ | 62,794 | $ | 35,648 |
E. Accounts
payable and accrued expenses consist of the
|
June
30,
|
December
31,
|
||||||
following
(dollars in thousands) at:
|
2008
|
2007
|
||||||
Bond
interest payable
|
$ | 27,049 | $ | 24,987 | ||||
Other
items
|
10,328 | 13,125 | ||||||
$ | 37,377 | $ | 38,112 |
June
30,
|
December
31,
|
|||||||
F. Other
liabilities consist of the following (dollars in thousands)
at:
|
2008
|
2007
|
||||||
Rent
received in advance
|
$ | 5,619 | $ | 10,626 | ||||
Security
deposits
|
3,845 | 2,818 | ||||||
Value
of in-place below-market leases, net
|
1,769 | 1,860 | ||||||
$ | 11,233 | $ | 15,304 |
3.
|
Retail
Properties Acquired
|
4.
|
Credit
Facility
|
5.
|
Notes
Payable
|
8.25%
notes, issued in October 1998 and due in November 2008
|
$ | 100.0 | ||
8%
notes, issued in January 1999 and due in January 2009
|
20.0 | |||
5.375%
notes, issued in March 2003 and due in March 2013
|
100.0 | |||
5.5%
notes, issued in November 2003 and due in November 2015
|
150.0 | |||
5.95%
notes, issued in September 2006 and due in September 2016
|
275.0 | |||
5.375%
notes, issued in September 2005 and due in September 2017
|
175.0 | |||
6.75%
notes, issued in September 2007 and due in August 2019
|
550.0 | |||
5.875%
bonds, issued in March 2005 and due in March 2035
|
100.0 | |||
$ | 1,470.0 |
7.
|
Gain
on Sales of Real Estate Acquired for Resale by
Crest
|
8.
|
Gain
on Sales of Investment Properties by Realty
Income
|
9.
|
Discontinued
Operations
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
Crest’s
income from discontinued operations,
real
estate acquired for resale
|
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
||||||||||||
Gain
on sales of real estate acquired for resale
|
$ | 1,737 | $ | 5,326 | $ | 4,444 | $ | 6,566 | ||||||||
Rental
revenue
|
598 | 2,310 | 1,634 | 5,188 | ||||||||||||
Other
revenue
|
138 | 55 | 208 | 61 | ||||||||||||
Interest
expense
|
(433 | ) | (1,758 | ) | (1,065 | ) | (3,877 | ) | ||||||||
General
and administrative expense
|
(126 | ) | (179 | ) | (287 | ) | (282 | ) | ||||||||
Property
expenses
|
(53 | ) | (9 | ) | (65 | ) | (14 | ) | ||||||||
Provisions
for impairment
|
(953 | ) | -- | (3,347 | ) | -- | ||||||||||
Income
taxes
|
387 | (1,463 | ) | (421 | ) | (1,612 | ) | |||||||||
Income
from discontinued operations,
real
estate acquired for resale by Crest
|
$ | 1,295 | $ | 4,282 | $ | 1,101 | $ | 6,030 |
Three
months ended
|
Six
months ended
|
|||||||||||||||
Realty
Income’s income from discontinued operations,
real
estate held for investment
|
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
||||||||||||
Gain
on sales of investment properties
|
$ | 3,255 | $ | 585 | $ | 3,473 | $ | 585 | ||||||||
Rental
revenue
|
206 | 447 | 474 | 853 | ||||||||||||
Depreciation
and amortization
|
(39 | ) | (104 | ) | (99 | ) | (217 | ) | ||||||||
Property
expenses
|
(18 | ) | (7 | ) | (32 | ) | (24 | ) | ||||||||
Income
from discontinued operations,
real
estate held for investment
|
$ | 3,404 | $ | 921 | $ | 3,816 | $ | 1,197 |
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
|||||||||||||
Real
estate acquired for resale by Crest
|
$ | 1,295 | $ | 4,282 | $ | 1,101 | $ | 6,030 | ||||||||
Real
estate held for investment
|
3,404 | 921 | 3,816 | 1,197 | ||||||||||||
Income
from discontinued operations
|
$ | 4,699 | $ | 5,203 | $ | 4,917 | $ | 7,227 | ||||||||
Per
common share, basic and diluted
|
$ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.07 |
Month
|
2008
|
2007
|
||||||
January
|
$ | 0.136750 | $ | 0.126500 | ||||
February
|
0.136750 | 0.126500 | ||||||
March
|
0.136750 | 0.126500 | ||||||
April
|
0.137375 | 0.127125 | ||||||
May
|
0.137375 | 0.127125 | ||||||
June
|
0.137375 | 0.127125 | ||||||
Total
|
$ | 0.822375 | $ | 0.760875 |
11.
|
Net
Income Per Common Share
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
|||||||||||||
Weighted
average shares used for the basic net income per share
computation
|
100,346,512 | 100,133,094 | 100,326,039 | 100,111,734 | ||||||||||||
Incremental
shares from share-based compensation
|
47,919 | 113,018 | 94,653 | 192,883 | ||||||||||||
Adjusted
weighted average shares used for diluted net income per share
computation
|
100,394,431 | 100,246,112 | 100,420,692 | 100,304,617 | ||||||||||||
Unvested
shares from share-based compensation that were
anti-dilutive
|
620,670 | 267,231 | 620,770 | 600 |
12.
|
Supplemental
Disclosures of Cash Flow
Information
|
2008
|
2007
|
|||||||
Common
stock distributions
|
$ | 13,985 | $ | 13,823 | ||||
Preferred
stock dividends
|
2,021 | 2,021 |
13.
|
Segment
Information
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
Revenue
|
June
30, 2008
|
June
30, 2007
|
June
30, 2008
|
June
30, 2007
|
||||||||||||
Segment
rental revenue(1):
|
||||||||||||||||
Automotive
service
|
$ | 3,958 | $ | 3,709 | $ | 7,959 | $ | 7,409 | ||||||||
Automotive
tire services
|
5,508 | 5,283 | 10,991 | 10,565 | ||||||||||||
Child
care
|
6,182 | 6,066 | 12,491 | 12,117 | ||||||||||||
Convenience
stores
|
13,345 | 9,854 | 25,084 | 19,486 | ||||||||||||
Drug
stores
|
3,481 | 1,941 | 6,360 | 3,882 | ||||||||||||
Health
and fitness
|
4,567 | 3,871 | 9,089 | 6,886 | ||||||||||||
Home
furnishings
|
1,924 | 2,002 | 3,859 | 3,916 | ||||||||||||
Motor
vehicle dealerships
|
2,601 | 2,358 | 5,153 | 4,721 | ||||||||||||
Restaurants
|
17,832 | 13,339 | 37,016 | 26,547 | ||||||||||||
Theaters
|
7,463 | 6,514 | 14,644 | 13,028 | ||||||||||||
21
non-reportable segments
|
15,491 | 15,175 | 31,302 | 30,338 | ||||||||||||
Total
rental revenue
|
82,352 | 70,112 | 163,948 | 138,895 | ||||||||||||
Other
revenue
|
80 | 213 | 1,529 | 2,365 | ||||||||||||
Total
revenue
|
$ | 82,432 | $ | 70,325 | $ | 165,477 | $ | 141,260 |
June
30,
|
December
31,
|
|||||||
Assets,
as of:
|
2008
|
2007
|
||||||
Segment
net real estate:
|
||||||||
Automotive
service
|
$ | 108,555 | $ | 110,100 | ||||
Automotive
tire services
|
211,265 | 212,747 | ||||||
Child
care
|
88,209 | 90,757 | ||||||
Convenience
stores
|
478,788 | 408,119 | ||||||
Drug
stores
|
147,968 | 100,154 | ||||||
Health
and fitness
|
169,270 | 169,109 | ||||||
Home
furnishings
|
53,529 | 54,509 | ||||||
Motor
vehicle dealerships
|
106,505 | 101,887 | ||||||
Restaurants
|
764,809 | 776,973 | ||||||
Theaters
|
304,346 | 267,413 | ||||||
21
non-reportable segments
|
481,190 | 532,487 | ||||||
Total
segment net real estate
|
2,914,434 | 2,824,255 | ||||||
Other
intangible assets – Drug stores
|
7,058 | 6,988 | ||||||
Other
intangible assets – Theaters
|
2,343 | 2,496 | ||||||
Other
intangible assets – Grocery stores
|
937 | 962 | ||||||
Other
intangible assets – Automotive tire services
|
735 | 765 | ||||||
Other
corporate assets
|
117,430 | 241,886 | ||||||
Total
assets
|
$ | 3,042,937 | $ | 3,077,352 |
14.
|
Common
Stock Incentive Plan
|
For
the six
months
ended
June
30, 2008
|
For
the year ended
December
31, 2007
|
|||||||||||||||
Number
of
shares
|
Weighted
average
price
(1)
|
Number
of
shares
|
Weighted
average
price
(1)
|
|||||||||||||
Outstanding
nonvested
|
||||||||||||||||
shares,
beginning of year
|
994,572 | $ | 19.46 | 868,726 | $ | 17.96 | ||||||||||
Shares
granted
|
248,447 | 26.64 | 276,631 | 27.64 | ||||||||||||
Shares
vested
|
(175,818 | ) | 21.99 | (149,284 | ) | 20.94 | ||||||||||
Shares
forfeited
|
(7,896 | ) | 24.76 | (1,501 | ) | 24.81 | ||||||||||
Outstanding
nonvested
shares,
end of each period
|
1,059,305 | $ | 21.64 | 994,572 | $ | 19.46 |
15.
|
Commitments
and Contingencies
|
16.
|
Subsequent
Event
|
·
|
Our
anticipated growth strategies;
|
·
|
Our
intention to acquire additional properties and the timing of these
acquisitions;
|
·
|
Our
intention to sell properties and the timing of these property
sales;
|
·
|
Our
intention to re-lease vacant
properties;
|
·
|
Anticipated
trends in our business, including trends in the market for long-term
net-leases of freestanding, single-tenant retail
properties;
|
·
|
Future
expenditures for development projects;
and
|
·
|
Profitability
of our subsidiary, Crest Net Lease, Inc.
(“Crest”).
|
·
|
Our
continued qualification as a real estate investment
trust;
|
·
|
General
business and economic conditions;
|
·
|
Competition;
|
·
|
Fluctuating
interest rates;
|
·
|
Access
to debt and equity capital markets;
|
·
|
Continued
uncertainty in the credit markets;
|
·
|
Other
risks inherent in the real estate business including tenant defaults,
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 the tax laws of the United States of
America;
|
·
|
The
outcome of any legal proceedings to which we are a party;
and
|
·
|
Acts
of terrorism and war.
|
·
|
Contractual
rent increases on existing leases;
|
·
|
Rent
increases at the termination of existing leases, when market conditions
permit; and
|
·
|
The
active management of our property portfolio, including re-leasing vacant
properties and selectively selling
properties.
|
·
|
Freestanding,
single-tenant, retail locations;
|
·
|
Leased
to regional and national retail chains;
and
|
·
|
Leased
under long-term, net-lease
agreements.
|
·
|
Of
2,367 retail properties;
|
·
|
With
an occupancy rate of 96.8%, or 2,292 properties occupied of the 2,367
properties in the portfolio;
|
·
|
With
only 75 properties available for
lease;
|
·
|
Leased
to 118 different retail chains doing business in 30 separate retail
industries;
|
·
|
Located
in 49 states;
|
·
|
With
over 19.2 million square feet of leasable space;
and
|
·
|
With
an average leasable retail space per property of approximately 8,100
square feet.
|
·
|
Are
for initial terms of 15 to 20
years;
|
·
|
Require
the tenant to pay minimum monthly rent and property operating expenses
(taxes, insurance and maintenance);
and
|
·
|
Provide
for future rent increases based on increases in the consumer price index,
fixed increases, or to a lesser degree, additional rent calculated as a
percentage of the tenants’ gross sales above a specified
level.
|
·
|
Freestanding,
commercially-zoned property with a single
tenant;
|
·
|
Properties
that are important retail locations for regional and national retail
chains;
|
·
|
Properties
that we deem to be profitable for the
retailers;
|
·
|
Properties
that are located within attractive demographic areas relative to the
business of their tenants, with high visibility and easy access to major
thoroughfares; and
|
·
|
Properties
that can be purchased with the simultaneous execution or assumption of
long-term, net-lease agreements, offering both current income and the
potential for rent increases.
|
·
|
Shares
of our common stock outstanding of 101,340,803 multiplied by the last
reported sales price of our common stock on the NYSE of $24.70 per share
on July 21, 2008, or
$2.5 billion;
|
·
|
Aggregate
liquidation value (par value of $25 per share) of the Class D preferred
stock of $127.5 million;
|
·
|
Aggregate
liquidation value (par value of $25 per share) of the Class E preferred
stock of $220 million; and
|
·
|
Outstanding
notes of $1.47 billion.
|
8.25%
notes, issued in October 1998 and due in November 2008
|
$ | 100.0 | ||
8%
notes, issued in January 1999 and due in January 2009
|
20.0 | |||
5.375%
notes, issued in March 2003 and due in March 2013
|
100.0 | |||
5.5%
notes, issued in November 2003 and due in November 2015
|
150.0 | |||
5.95%
notes, issued in September 2006 and due in September 2016
|
275.0 | |||
5.375%
notes, issued in September 2005 and due in September 2017
|
175.0 | |||
6.75%
notes, issued in September 2007 and due in August 2019
|
550.0 | |||
5.875%
bonds, issued in March 2005 and due in March 2035
|
100.0 | |||
$ | 1,470.0 |
Note
Covenants
|
Required
|
Actual
|
|||
Limitation
on incurrence of total debt
|
≤
60%
|
41.8 | % | ||
Limitation
on incurrence of secured debt
|
≤
40%
|
0.0 | % | ||
Debt
service coverage (trailing 12 months)
|
≥
1.5 x
|
3.6 | x | ||
Maintenance
of total unencumbered assets
|
≥
150% of unsecured debt
|
239 | % |
Ground
|
Ground
|
|||||||||||||||||||||||||||
Leases
|
Leases
|
|||||||||||||||||||||||||||
Paid
by
|
Paid
by
|
|||||||||||||||||||||||||||
Year
of
|
Credit
|
Realty
|
Our
|
|||||||||||||||||||||||||
Maturity
|
Facility
(1)
|
Notes
|
Interest
(2)
|
Income(3)
|
Tenants(4)
|
Other
(5)
|
Totals
|
|||||||||||||||||||||
2008
|
$ | -- | $ | 100.0 | $ | 45.1 | $ | -- | $ | 1.9 | $ | 7.4 | $ | 154.4 | ||||||||||||||
2009
|
-- | 20.0 | 82.5 | 0.1 | 3.6 | -- | 106.2 | |||||||||||||||||||||
2010
|
-- | -- | 82.4 | 0.1 | 3.5 | -- | 86.0 | |||||||||||||||||||||
2011
|
-- | -- | 82.4 | 0.1 | 3.5 | -- | 86.0 | |||||||||||||||||||||
2012
|
-- | -- | 82.4 | 0.1 | 3.4 | -- | 85.9 | |||||||||||||||||||||
Thereafter
|
-- | 1,350.0 | 505.9 | 0.9 | 43.2 | -- | 1,900.0 | |||||||||||||||||||||
Totals
|
$ | -- | $ | 1,470.0 | $ | 880.7 | $ | 1.3 | $ | 59.1 | $ | 7.4 | $ | 2,418.5 |
|
(1)
There was no outstanding credit facility balance on July 21,
2008.
|
|
(2)
Interest on the credit facility and notes has been calculated based on
outstanding balances as of June 30, 2008 through their respective maturity
dates.
|
|
(3)
Realty Income currently pays the ground lessors directly for the rent
under the ground leases. A majority of this rent is reimbursed
to Realty Income as additional rent from our
tenants.
|
|
(4)
Our tenants, who are generally sub-tenants under the ground leases, are
responsible for paying the rent under these ground leases. In
the event a tenant fails to pay the ground lease rent, we are primarily
responsible.
|
|
(5)
“Other” consists of $6.6 million of commitments under construction
contracts and $832,000 of contingent payments for tenant improvements and
leasing costs.
|
·
|
The
107 retail properties acquired by Realty Income in 2008, which generated
$3.9 million of rent in the second quarter of
2008;
|
·
|
The
325 retail properties acquired by Realty Income in 2007, which generated
$10.2 million of rent in the second quarter of 2008 compared to $1.2
million in the second quarter of 2007, an increase of
$9.0 million;
|
·
|
Same
store rents generated on 1,798 properties during the entire second
quarters of 2008 and 2007 increased by $869,000, or 1.4%, to $65.0 million
from $64.1 million; and
|
·
|
An
increase in straight-line rent and other non-cash adjustments to rent of
$54,000 in the second quarter of 2008 as compared to the second quarter of
2007; net of
|
·
|
A
net decrease of $1.5 million relating to the aggregate of (i) development
properties acquired before 2007 that started paying rent in 2007, (ii)
properties that were vacant during part of 2008 or 2007, (iii) properties
sold during 2008 and 2007 and (iv) lease termination
settlements. These items totaled $2.85 million, in aggregate,
in the second quarter of 2008 compared to $4.34 million in the same
quarter of 2007.
|
·
|
The
107 retail properties acquired by Realty Income in 2008, which generated
$5.2 million of rent in the first six months of
2008;
|
·
|
The
325 retail properties acquired by Realty Income in 2007, which generated
$20.06 million of rent in the first six months of 2008 compared to $1.54
million in the first six months of 2007, an increase of
$18.5 million;
|
·
|
Same
store rents generated on 1,798 properties during the entire first six
months of 2008 and 2007 increased by $1.8 million, or 1.4%, to $130.05
million from $128.24 million; and
|
·
|
An
increase in straight-line rent and other non-cash adjustments to rent of
$668,000 in the first six months of 2008 as compared to the first six
months of 2007; net of
|
·
|
A
net decrease of $1.2 million relating to the aggregate of (i) development
properties acquired before 2007 that started paying rent in 2007, (ii)
properties that were vacant during part of 2008 or 2007, (iii) properties
sold during 2008 and 2007 and (iv) lease termination
settlements. These items totaled $7.33 million, in aggregate,
in the first six months of 2008 compared to $8.57 million in the first six
months of 2007.
|
·
|
Primarily
base rent increases tied to a consumer price
index;
|
·
|
Fixed
increases;
|
·
|
To
a lesser degree, overage rent based on a percentage of the tenants’ gross
sales; or
|
·
|
A combination of two or more of the above rent
provisions.
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
|||||||||||||
Interest
on our credit facility and notes
|
$ | 23,061 | $ | 14,178 | $ | 46,122 | $ | 28,090 | ||||||||
Interest
included in discontinued operations
|
||||||||||||||||
from
real estate acquired for resale by Crest
|
(433 | ) | (1,758 | ) | (1,065 | ) | (3,877 | ) | ||||||||
Amortization
of settlements on treasury lock
|
||||||||||||||||
agreement
|
217 | 217 | 435 | 435 | ||||||||||||
Credit
facility commitment fees
|
181 | 114 | 295 | 228 | ||||||||||||
Amortization
of credit facility origination costs
|
||||||||||||||||
and
deferred bond financing costs
|
945 | 523 | 1,583 | 1,043 | ||||||||||||
Interest
capitalized
|
(42 | ) | (245 | ) | (55 | ) | (470 | ) | ||||||||
Interest
expense
|
$ | 23,929 | $ | 13,029 | $ | 47,315 | $ | 25,449 |
Three
months ended
|
Six
months ended
|
|||||||||||||||
Credit
facility and notes outstanding
|
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
||||||||||||
Average
outstanding balances (dollars in
thousands)
|
$ | 1,470,000 | $ | 946,889 | $ | 1,470,000 | $ | 937,979 | ||||||||
Average
interest rates
|
6.28 | % | 5.99 | % | 6.28 | % | 5.99 | % |
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
|||||||||||||
Net
cash provided by operating activities
|
$ | 81,079 | $ | 117,906 | $ | 129,192 | $ | 172,257 | ||||||||
Interest
expense
|
23,929 | 13,029 | 47,315 | 25,449 | ||||||||||||
Interest
expense included in discontinued operations(1)
|
433 | 1,758 | 1,065 | 3,877 | ||||||||||||
Income
taxes
|
218 | 353 | 615 | 598 | ||||||||||||
Income
taxes included in discontinued operations(1)
|
(387 | ) | 1,463 | 421 | 1,612 | |||||||||||
Investment
in real estate acquired for resale(1)
|
8 | -- | 8 | -- | ||||||||||||
Proceeds
from sales of real estate acquired for resale(1)
|
(9,434 | ) | (55,565 | ) | (26,920 | ) | (65,786 | ) | ||||||||
Crest
provisions for impairment(1)
|
(953 | ) | -- | (3,347 | ) | -- | ||||||||||
Gain
on sales of real estate acquired for resale(1)
|
1,737 | 5,326 | 4,444 | 6,566 | ||||||||||||
Amortization
of share-based compensation
|
(1,709 | ) | (1,374 | ) | (2,853 | ) | (2,196 | ) | ||||||||
Changes
in assets and liabilities:
|
||||||||||||||||
Accounts
receivable and other assets
|
61 | (961 | ) | 232 | (990 | ) | ||||||||||
Accounts
payable, accrued expenses and other
liabilities
|
(17,834 | ) | (10,463 | ) | 4,277 | (2,330 | ) | |||||||||
Interest
coverage amount
|
$ | 77,148 | $ | 71,472 | $ | 154,449 | $ | 139,057 | ||||||||
Divided
by interest expense(2)
|
$ | 24,362 | $ | 14,787 | $ | 48,380 | $ | 29,326 | ||||||||
Interest
coverage ratio
|
3.2 | 4.8 | 3.2 | 4.7 |
|
(1) Crest
activities.
|
|
(2) Includes
interest expense recorded to “income from discontinued operations, real
estate acquired for resale by Crest” on our consolidated statements of
income.
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
|||||||||||||
Interest
coverage amount
|
$ | 77,148 | $ | 71,472 | $ | 154,449 | $ | 139,057 | ||||||||
Divided
by interest expense plus preferred stock dividends(1)
|
$ | 30,425 | $ | 20,850 | $ | 60,507 | $ | 41,453 | ||||||||
Fixed
charge coverage ratio
|
2.5 | 3.4 | 2.6 | 3.4 |
|
(1)
Includes interest expense recorded to “income from discontinued
operations, real estate acquired for resale by Crest” on our consolidated
statements of income.
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
Crest’s
income from discontinued
operations,
real estate acquired for resale
|
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
||||||||||||
Gain
on sales of real estate acquired for resale
|
$ | 1,737 | $ | 5,326 | $ | 4,444 | $ | 6,566 | ||||||||
Rental
revenue
|
598 | 2,310 | 1,634 | 5,188 | ||||||||||||
Other
revenue
|
138 | 55 | 208 | 61 | ||||||||||||
Interest
expense
|
(433 | ) | (1,758 | ) | (1,065 | ) | (3,877 | ) | ||||||||
General
and administrative expense
|
(126 | ) | (179 | ) | (287 | ) | (282 | ) | ||||||||
Property
expenses
|
(53 | ) | (9 | ) | (65 | ) | (14 | ) | ||||||||
Provisions
for impairment
|
(953 | ) | -- | (3,347 | ) | -- | ||||||||||
Income
taxes
|
387 | (1,463 | ) | (421 | ) | (1,612 | ) | |||||||||
Income
from discontinued operations,
real
estate acquired for resale by Crest
|
$ | 1,295 | $ | 4,282 | $ | 1,101 | $ | 6,030 | ||||||||
Per
common share, basic and diluted
|
$ | 0.01 | $ | 0.04 | $ | 0.01 | $ | 0.06 |
Three
months ended
|
Six
months ended
|
|||||||||||||||
Realty
Income’s income from discontinued
operations,
real estate held for investment
|
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
||||||||||||
Gain
on sales of investment properties
|
$ | 3,255 | $ | 585 | $ | 3,473 | $ | 585 | ||||||||
Rental
revenue
|
206 | 447 | 474 | 853 | ||||||||||||
Depreciation
and amortization
|
(39 | ) | (104 | ) | (99 | ) | (217 | ) | ||||||||
Property
expenses
|
(18 | ) | (7 | ) | (32 | ) | (24 | ) | ||||||||
Income
from discontinued operations,
real
estate held for investment
|
$ | 3,404 | $ | 921 | $ | 3,816 | $ | 1,197 | ||||||||
Per
common share, basic and diluted
|
$ | 0.03 | $ | 0.01 | $ | 0.04 | $ | 0.01 |
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
|||||||||||||
Real
estate acquired for resale by Crest
|
$ | 1,295 | $ | 4,282 | $ | 1,101 | $ | 6,030 | ||||||||
Real
estate held for investment
|
3,404 | 921 | 3,816 | 1,197 | ||||||||||||
Income
from discontinued operations
|
$ | 4,699 | $ | 5,203 | $ | 4,917 | $ | 7,227 | ||||||||
Per
common share, basic and diluted
|
$ | 0.05 | $ | 0.05 | $ | 0.05 | $ | 0.07 |
Three
months ended
|
Six
months ended
|
|||||||||||||||
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
|||||||||||||
Net
income available to common stockholders
|
$ | 26,988 | $ | 30,873 | $ | 50,686 | $ | 61,133 | ||||||||
Depreciation
and amortization:
|
||||||||||||||||
Continuing
operations
|
22,916 | 18,414 | 45,830 | 36,435 | ||||||||||||
Discontinued
operations
|
39 | 104 | 99 | 217 | ||||||||||||
Depreciation
of furniture, fixtures and
equipment
|
(79 | ) | (46 | ) | (157 | ) | (95 | ) | ||||||||
(Gain)
loss on sales of land and investment properties:
|
||||||||||||||||
Continuing
operations
|
203 | -- | (236 | ) | (1,806 | ) | ||||||||||
Discontinued
operations
|
(3,255 | ) | (585 | ) | (3,473 | ) | (585 | ) | ||||||||
FFO
available to common stockholders
|
$ | 46,812 | $ | 48,760 | $ | 92,749 | $ | 95,299 | ||||||||
FFO
per common share, basic and diluted:
|
$ | 0.47 | $ | 0.49 | $ | 0.92 | $ | 0.95 | ||||||||
Distributions
paid to common stockholders
|
$ | 41,756 | $ | 38,533 | $ | 83,310 | $ | 76,863 | ||||||||
FFO
in excess of distributions paid to
|
||||||||||||||||
common
stockholders
|
$ | 5,056 | $ | 10,227 | $ | 9,439 | $ | 18,436 | ||||||||
Weighted
average number of common shares
|
||||||||||||||||
used
for computation per share:
|
||||||||||||||||
Basic
|
100,346,512 | 100,133,094 | 100,326,039 | 100,111,734 | ||||||||||||
Diluted
|
100,394,431 | 100,246,112 | 100,420,692 | 100,304,617 |
Three
months ended
|
Six
months ended
|
|||||||||||||||
(dollars
in thousands)
|
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
||||||||||||
Amortization
of settlement on treasury lock agreement(1)
|
$ | 217 | $ | 217 | $ | 435 | $ | 435 | ||||||||
Amortization
of deferred note financing costs(2)
|
454 | 336 | 908 | 673 | ||||||||||||
Amortization
of share-based compensation
|
1,709 | 1,374 | 2,853 | 2,196 | ||||||||||||
Capitalized
leasing costs and commissions
|
(270 | ) | (111 | ) | (401 | ) | (238 | ) | ||||||||
Capitalized
building improvements
|
(232 | ) | (216 | ) | (786 | ) | (794 | ) | ||||||||
Straight-line
rent revenue(3)
|
(441 | ) | (370 | ) | (1,195 | ) | (513 | ) | ||||||||
Crest
provisions for impairment
|
953 | -- | 3,347 | -- |
(1)
|
The
settlement on the treasury lock agreement resulted from an interest rate
risk prevention strategy that we used in 1998, which correlated to a
pending issuance of senior note securities. We have not
employed this strategy since 1998.
|
(2)
|
Amortization
of deferred note financing costs includes the amortization of costs
incurred and capitalized when our notes were issued in May 1997, October
1998, January 1999, March 2003, November 2003, March 2005, September 2005,
September 2006 and September 2007. These costs are being amortized over
the lives of these notes. No costs associated with our credit facility
agreements or annual fees paid to credit rating agencies have been
included.
|
(3)
|
A
negative amount indicates that our straight-line rent revenue was greater
than our actual cash rent
collected.
|
·
|
Of
2,367 retail properties;
|
·
|
With
an occupancy rate of 96.8%, or 2,292 properties occupied of the 2,367
properties in the portfolio;
|
·
|
With
only 75 properties available for
lease;
|
·
|
Leased
to 118 different retail chains doing business in 30 separate retail
industries;
|
·
|
Located
in 49 states;
|
·
|
With
over 19.2 million square feet of leasable space;
and
|
·
|
With
an average leasable retail space per property of approximately 8,100
square feet.
|
Percentage
of Rental Revenue(1)
|
||||||||||||||||||||||||||||
For
the Quarter
|
For
the Years Ended
|
|||||||||||||||||||||||||||
Industries
|
Ended
June
30,
2008
|
Dec
31,
2007
|
Dec
31,
2006
|
Dec
31,
2005
|
Dec
31,
2004
|
Dec
31,
2003
|
Dec
31,
2002
|
|||||||||||||||||||||
Apparel
stores
|
1.1 | % | 1.2 | % | 1.7 | % | 1.6 | % | 1.8 | % | 2.1 | % | 2.3 | % | ||||||||||||||
Automotive
collision services
|
1.0 | 1.1 | 1.3 | 1.3 | 1.0 | 0.3 | -- | |||||||||||||||||||||
Automotive
parts
|
1.6 | 2.1 | 2.8 | 3.4 | 3.8 | 4.5 | 4.9 | |||||||||||||||||||||
Automotive
service
|
4.8 | 5.2 | 6.9 | 7.6 | 7.7 | 8.3 | 7.0 | |||||||||||||||||||||
Automotive
tire services
|
6.7 | 7.3 | 6.1 | 7.2 | 7.8 | 3.1 | 2.7 | |||||||||||||||||||||
Book
stores
|
0.2 | 0.2 | 0.2 | 0.3 | 0.3 | 0.4 | 0.4 | |||||||||||||||||||||
Business
services
|
* | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | |||||||||||||||||||||
Child
care
|
7.5 | 8.4 | 10.3 | 12.7 | 14.4 | 17.8 | 20.8 | |||||||||||||||||||||
Consumer
electronics
|
0.8 | 0.9 | 1.1 | 1.3 | 2.1 | 3.0 | 3.3 | |||||||||||||||||||||
Convenience
stores
|
16.2 | 14.0 | 16.1 | 18.7 | 19.2 | 13.3 | 9.1 | |||||||||||||||||||||
Crafts
and novelties
|
0.3 | 0.3 | 0.4 | 0.4 | 0.5 | 0.6 | 0.4 | |||||||||||||||||||||
Distribution
and office
|
1.0 | 0.6 | -- | -- | -- | -- | -- | |||||||||||||||||||||
Drug
stores
|
4.2 | 2.7 | 2.9 | 2.8 | 0.1 | 0.2 | 0.2 | |||||||||||||||||||||
Entertainment
|
1.2 | 1.4 | 1.6 | 2.1 | 2.3 | 2.6 | 2.3 | |||||||||||||||||||||
Equipment
rental services
|
0.2 | 0.2 | 0.2 | 0.4 | 0.3 | 0.2 | -- | |||||||||||||||||||||
Financial
services
|
0.2 | 0.2 | 0.1 | 0.1 | 0.1 | -- | -- | |||||||||||||||||||||
General
merchandise
|
0.7 | 0.7 | 0.6 | 0.5 | 0.4 | 0.5 | 0.5 | |||||||||||||||||||||
Grocery
stores
|
0.6 | 0.7 | 0.7 | 0.7 | 0.8 | 0.4 | 0.5 | |||||||||||||||||||||
Health
and fitness
|
5.5 | 5.1 | 4.3 | 3.7 | 4.0 | 3.8 | 3.8 | |||||||||||||||||||||
Home
furnishings
|
2.3 | 2.6 | 3.1 | 3.7 | 4.1 | 4.9 | 5.4 | |||||||||||||||||||||
Home
improvement
|
1.9 | 2.1 | 3.4 | 1.1 | 1.0 | 1.1 | 1.2 | |||||||||||||||||||||
Motor
vehicle dealerships
|
3.2 | 3.1 | 3.4 | 2.6 | 0.6 | -- | -- | |||||||||||||||||||||
Office
supplies
|
1.0 | 1.1 | 1.3 | 1.5 | 1.6 | 1.9 | 2.1 | |||||||||||||||||||||
Pet
supplies and services
|
0.8 | 0.9 | 1.1 | 1.3 | 1.4 | 1.7 | 1.7 | |||||||||||||||||||||
Private
education
|
0.8 | 0.8 | 0.8 | 0.8 | 1.1 | 1.2 | 1.3 | |||||||||||||||||||||
Restaurants
|
21.7 | 21.2 | 11.9 | 9.4 | 9.7 | 11.8 | 13.5 | |||||||||||||||||||||
Shoe
stores
|
-- | -- | -- | 0.3 | 0.3 | 0.9 | 0.8 | |||||||||||||||||||||
Sporting
goods
|
2.3 | 2.6 | 2.9 | 3.4 | 3.4 | 3.8 | 4.1 | |||||||||||||||||||||
Theaters
|
9.1 | 9.0 | 9.6 | 5.2 | 3.5 | 4.1 | 3.9 | |||||||||||||||||||||
Travel
plazas
|
0.2 | 0.2 | 0.3 | 0.3 | 0.4 | 0.3 | -- | |||||||||||||||||||||
Video
rental
|
1.0 | 1.7 | 2.1 | 2.5 | 2.8 | 3.3 | 3.3 | |||||||||||||||||||||
Other
|
1.9 | 2.3 | 2.7 | 3.0 | 3.4 | 3.8 | 4.4 | |||||||||||||||||||||
Totals
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
(1)
|
Includes
rental revenue for all properties owned by Realty Income at the end of
each period presented, including revenue from properties reclassified as
discontinued operations.
|
Industry
|
Number
of
Properties
|
Rental
Revenue for the Quarter Ended
June
30, 2008(1)
|
Percentage
of
Rental
Revenue
|
|||||||||
Tenants Providing
Services
|
||||||||||||
Automotive
collision services
|
13 | $ | 831 | 1.0 | % | |||||||
Automotive
service
|
237 | 3,958 | 4.8 | |||||||||
Child
care
|
265 | 6,188 | 7.5 | |||||||||
Entertainment
|
8 | 999 | 1.2 | |||||||||
Equipment
rental services
|
2 | 150 | 0.2 | |||||||||
Financial
services
|
12 | 195 | 0.2 | |||||||||
Health
and fitness
|
26 | 4,567 | 5.5 | |||||||||
Private
education
|
7 | 616 | 0.8 | |||||||||
Theaters
|
34 | 7,463 | 9.1 | |||||||||
Other
|
10 | 1,605 | 1.9 | |||||||||
614 | 26,572 | 32.2 | ||||||||||
Tenants Selling Goods
and Services
|
||||||||||||
Automotive
parts (with installation)
|
30 | 568 | 0.7 | |||||||||
Automotive
tire services
|
155 | 5,508 | 6.7 | |||||||||
Business
services
|
2 | 37 | * | |||||||||
Convenience
stores
|
573 | 13,345 | 16.2 | |||||||||
Distribution
and office
|
3 | 831 | 1.0 | |||||||||
Home
improvement
|
1 | 57 | 0.1 | |||||||||
Motor
vehicle dealerships
|
21 | 2,601 | 3.2 | |||||||||
Pet
supplies and services
|
9 | 606 | 0.7 | |||||||||
Restaurants
|
654 | 17,916 | 21.7 | |||||||||
Travel
plazas
|
1 | 187 | 0.2 | |||||||||
Video
rental
|
32 | 854 | 1.0 | |||||||||
1,481 | 42,510 | 51.5 | ||||||||||
Tenants Selling
Goods
|
||||||||||||
Apparel
stores
|
6 | 902 | 1.1 | |||||||||
Automotive
parts
|
55 | 746 | 0.9 | |||||||||
Book
stores
|
2 | 156 | 0.2 | |||||||||
Consumer
electronics
|
14 | 656 | 0.8 | |||||||||
Crafts
and novelties
|
5 | 226 | 0.3 | |||||||||
Drug
stores
|
51 | 3,481 | 4.2 | |||||||||
General
merchandise
|
31 | 588 | 0.7 | |||||||||
Grocery
stores
|
8 | 540 | 0.6 | |||||||||
Home
furnishings
|
42 | 1,900 | 2.3 | |||||||||
Home
improvement
|
31 | 1,472 | 1.8 | |||||||||
Office
supplies
|
10 | 788 | 1.0 | |||||||||
Pet
supplies
|
3 | 52 | 0.1 | |||||||||
Sporting
goods
|
14 | 1,872 | 2.3 | |||||||||
272 | 13,379 | 16.3 | ||||||||||
Totals
|
2,367 | $ | 82,461 | 100.0 | % |
(1)
|
Includes
rental revenue for all properties owned by Realty Income at June 30, 2008,
including revenue from properties reclassified as discontinued operations
of $109.
|
Total
Portfolio
|
Initial
Expirations(3)
|
Subsequent
Expirations(4)
|
||||||||||||||||||||||||||||||||||
Year
|
Total
Number
of Leases
Expiring(1)
|
Rental
Revenue
for
the
Quarter
Ended
June
30, 2008(2)
|
%
of
Total
Rental
Revenue
|
Number
of
Leases Expiring
|
Rental
Revenue
for
the
Quarter
Ended
June
30, 2008
|
%
of
Total
Rental
Revenue
|
Number
of Leases
Expiring
|
Rental
Revenue
for
the
Quarter
Ended
June
30, 2008
|
%
of
Total
Rental
Revenue
|
|||||||||||||||||||||||||||
2008
|
81 | $ | 1,795 | 2.3 | % | 37 | $ | 769 | 1.0 | % | 44 | $ | 1,026 | 1.3 | % | |||||||||||||||||||||
2009
|
124 | 2,741 | 3.4 | 42 | 914 | 1.1 | 82 | 1,827 | 2.3 | |||||||||||||||||||||||||||
2010
|
81 | 1,668 | 2.1 | 41 | 1,026 | 1.3 | 40 | 642 | 0.8 | |||||||||||||||||||||||||||
2011
|
81 | 2,343 | 2.9 | 30 | 1,283 | 1.6 | 51 | 1,060 | 1.3 | |||||||||||||||||||||||||||
2012
|
114 | 2,704 | 3.4 | 74 | 1,777 | 2.2 | 40 | 927 | 1.2 | |||||||||||||||||||||||||||
2013
|
102 | 3,924 | 4.9 | 84 | 3,526 | 4.4 | 18 | 398 | 0.5 | |||||||||||||||||||||||||||
2014
|
49 | 1,992 | 2.5 | 41 | 1,823 | 2.3 | 8 | 169 | 0.2 | |||||||||||||||||||||||||||
2015
|
90 | 1,807 | 2.3 | 65 | 1,272 | 1.6 | 25 | 535 | 0.7 | |||||||||||||||||||||||||||
2016
|
112 | 1,915 | 2.4 | 103 | 1,700 | 2.1 | 9 | 215 | 0.3 | |||||||||||||||||||||||||||
2017
|
50 | 2,024 | 2.5 | 45 | 1,929 | 2.4 | 5 | 95 | 0.1 | |||||||||||||||||||||||||||
2018
|
27 | 1,094 | 1.4 | 17 | 869 | 1.1 | 10 | 225 | 0.3 | |||||||||||||||||||||||||||
2019
|
95 | 4,691 | 5.9 | 94 | 4,616 | 5.8 | 1 | 75 | 0.1 | |||||||||||||||||||||||||||
2020
|
82 | 2,986 | 3.7 | 79 | 2,922 | 3.6 | 3 | 64 | 0.1 | |||||||||||||||||||||||||||
2021
|
147 | 5,814 | 7.3 | 145 | 5,738 | 7.2 | 2 | 76 | 0.1 | |||||||||||||||||||||||||||
2022
|
104 | 3,226 | 4.1 | 102 | 3,153 | 4.0 | 2 | 73 | 0.1 | |||||||||||||||||||||||||||
2023
|
244 | 7,240 | 9.1 | 243 | 7,195 | 9.0 | 1 | 45 | 0.1 | |||||||||||||||||||||||||||
2024
|
64 | 1,900 | 2.4 | 64 | 1,900 | 2.4 | -- | -- | -- | |||||||||||||||||||||||||||
2025
|
74 | 6,152 | 7.7 | 68 | 5,997 | 7.5 | 6 | 155 | 0.2 | |||||||||||||||||||||||||||
2026
|
210 | 11,020 | 13.8 | 198 | 10,287 | 12.9 | 12 | 733 | 0.9 | |||||||||||||||||||||||||||
2027
|
163 | 5,218 | 6.6 | 162 | 5,147 | 6.5 | 1 | 71 | 0.1 | |||||||||||||||||||||||||||
2028
|
83 | 3,786 | 4.7 | 81 | 3,769 | 4.7 | 2 | 17 | * | |||||||||||||||||||||||||||
2029
|
44 | 1,053 | 1.3 | 44 | 1,053 | 1.3 | -- | -- | -- | |||||||||||||||||||||||||||
2030
|
21 | 939 | 1.2 | 21 | 939 | 1.2 | -- | -- | -- | |||||||||||||||||||||||||||
2031
|
26 | 637 | 0.8 | 26 | 637 | 0.8 | -- | -- | -- | |||||||||||||||||||||||||||
2032
|
2 | 56 | 0.1 | 2 | 56 | 0.1 | -- | -- | -- | |||||||||||||||||||||||||||
2033
|
7 | 423 | 0.5 | 7 | 423 | 0.5 | -- | -- | -- | |||||||||||||||||||||||||||
2034
|
2 | 230 | 0.3 | 2 | 230 | 0.3 | -- | -- | -- | |||||||||||||||||||||||||||
2037
|
2 | 354 | 0.4 | 2 | 354 | 0.4 | -- | -- | -- | |||||||||||||||||||||||||||
2043
|
1 | 13 | * | -- | -- | -- | 1 | 13 | * | |||||||||||||||||||||||||||
Totals
|
2,282 | $ | 79,745 | 100.0 | % | 1,919 | $ | 71,304 | 89.3 | % | 363 | $ | 8,441 | 10.7 | % |
(1)
|
Excludes
ten multi-tenant properties and 75 vacant unleased properties, one of
which is a multi-tenant property. The lease expirations for
properties under construction are based on the estimated date of
completion of those properties.
|
(2)
|
Includes
rental revenue of $109 from properties reclassified as discontinued
operations and excludes revenue of $2,716 from ten multi-tenant properties
and from 75 vacant and unleased properties at June 30,
2008.
|
(3)
|
Represents
leases to the initial tenant of the property that are expiring for the
first time.
|
(4)
|
Represents
lease expirations on properties in the portfolio, which have previously
been renewed, extended or
re-tenanted.
|
State
|
Number
of
Properties
|
Percent
Leased
|
Approximate
Leasable
Square
Feet
|
Rental
Revenue for
the
Quarter Ended
June
30, 2008(1)
|
Percentage
of
Rental
Revenue
|
|||||||||||||||
Alabama
|
63 | 98 | % | 425,400 | $ | 1,872 | 2.3 | % | ||||||||||||
Alaska
|
2 | 100 | 128,500 | 277 | 0.3 | |||||||||||||||
Arizona
|
80 | 98 | 395,800 | 2,413 | 2.9 | |||||||||||||||
Arkansas
|
18 | 100 | 98,500 | 460 | 0.6 | |||||||||||||||
California
|
65 | 100 | 1,167,300 | 4,512 | 5.5 | |||||||||||||||
Colorado
|
53 | 96 | 486,300 | 1,862 | 2.3 | |||||||||||||||
Connecticut
|
26 | 100 | 282,300 | 1,351 | 1.6 | |||||||||||||||
Delaware
|
17 | 100 | 33,300 | 427 | 0.5 | |||||||||||||||
Florida
|
168 | 97 | 1,451,000 | 6,688 | 8.1 | |||||||||||||||
Georgia
|
132 | 98 | 926,900 | 3,946 | 4.8 | |||||||||||||||
Idaho
|
14 | 71 | 90,200 | 348 | 0.4 | |||||||||||||||
Illinois
|
74 | 96 | 870,300 | 4,207 | 5.1 | |||||||||||||||
Indiana
|
82 | 96 | 692,400 | 3,190 | 3.9 | |||||||||||||||
Iowa
|
22 | 95 | 296,200 | 999 | 1.2 | |||||||||||||||
Kansas
|
33 | 94 | 573,500 | 1,113 | 1.4 | |||||||||||||||
Kentucky
|
22 | 100 | 111,500 | 698 | 0.8 | |||||||||||||||
Louisiana
|
33 | 97 | 190,400 | 912 | 1.1 | |||||||||||||||
Maine
|
3 | 100 | 22,500 | 160 | 0.2 | |||||||||||||||
Maryland
|
29 | 100 | 271,200 | 1,607 | 2.0 | |||||||||||||||
Massachusetts
|
67 | 100 | 582,800 | 2,561 | 3.1 | |||||||||||||||
Michigan
|
52 | 98 | 257,300 | 1,323 | 1.6 | |||||||||||||||
Minnesota
|
21 | 100 | 392,100 | 1,516 | 1.8 | |||||||||||||||
Mississippi
|
72 | 96 | 359,600 | 1,441 | 1.7 | |||||||||||||||
Missouri
|
62 | 97 | 640,100 | 2,098 | 2.5 | |||||||||||||||
Montana
|
2 | 100 | 30,000 | 74 | 0.1 | |||||||||||||||
Nebraska
|
19 | 100 | 196,300 | 649 | 0.8 | |||||||||||||||
Nevada
|
15 | 93 | 191,000 | 858 | 1.0 | |||||||||||||||
New
Hampshire
|
14 | 100 | 109,900 | 544 | 0.7 | |||||||||||||||
New
Jersey
|
35 | 100 | 266,300 | 1,922 | 2.3 | |||||||||||||||
New
Mexico
|
8 | 100 | 56,400 | 176 | 0.2 | |||||||||||||||
New
York
|
42 | 95 | 503,200 | 2,514 | 3.1 | |||||||||||||||
North
Carolina
|
97 | 99 | 551,100 | 2,951 | 3.6 | |||||||||||||||
North
Dakota
|
6 | 100 | 36,600 | 57 | 0.1 | |||||||||||||||
Ohio
|
137 | 98 | 850,900 | 3,453 | 4.2 | |||||||||||||||
Oklahoma
|
25 | 96 | 145,900 | 593 | 0.7 | |||||||||||||||
Oregon
|
18 | 100 | 297,300 | 846 | 1.0 | |||||||||||||||
Pennsylvania
|
101 | 100 | 688,800 | 3,512 | 4.3 | |||||||||||||||
Rhode
Island
|
4 | 100 | 14,500 | 87 | 0.1 | |||||||||||||||
South
Carolina
|
100 | 99 | 374,400 | 2,223 | 2.7 | |||||||||||||||
South
Dakota
|
9 | 100 | 24,900 | 102 | 0.1 | |||||||||||||||
Tennessee
|
135 | 95 | 635,500 | 2,928 | 3.6 | |||||||||||||||
Texas
|
216 | 92 | 2,317,100 | 7,668 | 9.3 | |||||||||||||||
Utah
|
6 | 67 | 35,100 | 87 | 0.1 | |||||||||||||||
Vermont
|
4 | 100 | 12,700 | 122 | 0.2 | |||||||||||||||
Virginia
|
104 | 99 | 637,100 | 3,504 | 4.2 | |||||||||||||||
Washington
|
36 | 89 | 235,100 | 673 | 0.8 | |||||||||||||||
West
Virginia
|
3 | 67 | 35,100 | 145 | 0.2 | |||||||||||||||
Wisconsin
|
20 | 95 | 248,100 | 774 | 0.9 | |||||||||||||||
Wyoming
|
1 | 100 | 4,200 | 18 | * | |||||||||||||||
Totals/Average
|
2,367 | 97 | % | 19,242,900 | $ | 82,461 | 100.0 | % |
(1)
|
Includes
rental revenue for all properties owned by Realty Income at June 30, 2008,
including revenue from properties reclassified as discontinued operations
of $109.
|
Year
of maturity
|
Fixed
rate
debt
|
Average
interest rate
on
fixed rate debt
|
Variable
rate
debt
|
Average
interest rate
on
variable rate debt
|
||||||||||||
2008(1)
|
$ | 100.0 | 8.25 | % | $ | -- | -- | % | ||||||||
2009(2)
|
20.0 | 8.00 | -- | -- | ||||||||||||
2010
|
-- | -- | -- | -- | ||||||||||||
2011(3)
|
-- | -- | -- | -- | ||||||||||||
2012
|
-- | -- | -- | -- | ||||||||||||
Thereafter(4)
|
1,350.0 | 6.10 | -- | -- | ||||||||||||
Totals
|
$ | 1,470.0 | 6.28 | % | $ | -- | -- | % | ||||||||
Fair
Value(5)
|
$ | 1,349.2 | $ | -- |
(1)
|
$100
million matures in November 2008.
|
(2)
|
$20
million matures in January 2009.
|
(3)
|
The
credit facility expires in May 2011. There was no outstanding
credit facility balance as of July 21,
2008.
|
(4)
|
$100
million matures in March 2013, $150 million matures in November 2015, $275
million matures in September 2016, $175 million matures in September 2017,
$550 million matures in August 2019 and $100 million matures in March
2035.
|
(5)
|
We
base the fair value of the fixed rate debt at June 30, 2008 on the closing
market price or indicative price per each
note.
|
Item
4.
|
PART
II.
|
Shares
Voted
For
|
Votes
Withheld
|
|||||||
Kathleen
R. Allen
|
87,985,210 | 721,063 | ||||||
Donald
R. Cameron
|
87,815,624 | 890,649 | ||||||
William
E. Clark
|
87,781,753 | 924,520 | ||||||
Priya
Cherian Huskins
|
87,927,890 | 778,383 | ||||||
Roger
P. Kuppinger
|
87,822,858 | 883,415 | ||||||
Thomas
A. Lewis
|
87,844,712 | 861,561 | ||||||
Michael
D. McKee
|
87,879,976 | 826,297 | ||||||
Gregory
T. McLaughlin
|
87,887,571 | 818,702 | ||||||
Ronald
L. Merriman
|
87,628,375 | 1,077,898 | ||||||
Willard
H. Smith Jr
|
87,780,498 | 925,775 |
Item
6.
|
Exhibits
|
Exhibit
No.
|
Description
|
3.1
|
Articles
of Incorporation of the Company, as amended by amendment No. 1 dated
May 10, 2005 and amendment No. 2 dated May 10, 2005 (filed as
exhibit 3.1 to the Company’s Form 10-Q dated June 30, 2005, and
incorporated herein by reference).
|
3.2
|
Bylaws
of the Company, as amended by amendment No. 1 dated March 20, 2000
and amendment No. 2 dated June 15, 2005, and as amended and
restated on December 12, 2007 and amended and restated on May 13, 2008
(filed as exhibit 3.1 to the Company’s Form 8-K dated May 13, 2008, and
incorporated herein by reference).
|
3.3
|
Articles
Supplementary to the Articles of Incorporation of the Company classifying
and designating the 7.375% Monthly Income Class D Cumulative Redeemable
Preferred Stock (filed as exhibit 3.8 to the Company’s Form 8-A filed on
May 25, 2004 and incorporated herein by reference).
|
3.4
|
Articles
Supplementary to the Articles of Incorporation of the Company classifying
and designating additional shares of the 7.375% Monthly Income Class D
Cumulative Redeemable Preferred Stock (filed as exhibit 3.2 to the
Company’s Form 8-K filed on October 19, 2004 and incorporated herein by
reference).
|
3.5
|
Articles
Supplementary to the Articles of Incorporation of the Company classifying
and designating the 6.75% Class E Cumulative Redeemable Preferred Stock
(filed as exhibit 3.5 to the Company’s Form 8-A filed on December 5, 2006
and incorporated herein by
reference).
|
4.1
|
Pricing
Committee Resolutions (filed as exhibit 4.2 to the Company’s Form
8-K, dated October 27, 1998 and incorporated herein by
reference).
|
4.2
|
Form
of 8.25% Notes due 2008 (filed as exhibit 4.3 to Company’s Form 8-K, dated
October 27, 1998 and incorporated herein by
reference).
|
4.3
|
Indenture
dated as of October 28, 1998 between the Company and The Bank of New York
(filed as exhibit 4.1 to the Company’s Form 8-K, dated October
27, 1998 and incorporated herein by reference).
|
4.4
|
Pricing
Committee Resolutions and Form of 8% Notes due 2009 (filed as exhibit 4.2
to the Company’s Form 8-K, dated January 21, 1999 and incorporated herein
by reference).
|
4.5
|
Form
of 5.375% Senior Notes due 2013 (filed as exhibit 4.2 to the Company’s
Form 8-K, dated March 5, 2003 and incorporated herein by
reference).
|
4.6
|
Officer’s
Certificate pursuant to sections 201, 301 and 303 of the Indenture dated
October 28, 1998 between the Company and The Bank of New York, as
Trustee, establishing a series of securities entitled 5.375% Senior Notes
due 2013 (filed as exhibit 4.3 to the Company’s Form 8-K, dated
March 5, 2003 and incorporated herein by
reference).
|
4.7
|
Form
of 5.50% Senior Notes due 2015 (filed as exhibit 4.2 to the Company’s Form
8-K, dated November 19, 2003 and incorporated herein by
reference).
|
4.8
|
Officer’s
Certificate pursuant to sections 201, 301 and 303 of the Indenture dated
October 28, 1998 between the Company and The Bank of New York, as
Trustee, establishing a series of securities entitled 5.50% Senior Notes
due 2015 (filed as exhibit 4.3 to the Company’s Form 8-K, dated
November 19, 2003 and incorporated herein by
reference).
|
4.9
|
Form
of 5.875% Senior Notes due 2035 (filed as exhibit 4.2 to the Company’s
Form 8-K, dated March 8, 2005 and incorporated herein by
reference).
|
4.10
|
Officer’s
Certificate pursuant to section 201, 301 and 303 of the Indenture dated
October 28, 1998 between the Company and The Bank of New York, as
Trustee, establishing a series of securities entitled 5.875% Senior
Debentures due 2035 (filed as exhibit 4.3 to the Company’s Form 8-K,
dated March 8, 2005 and incorporated herein by
reference).
|
4.11
|
Form
of 5.375% Senior Notes due 2017 (filed as exhibit 4.2 to the Company’s
Form 8-K, dated September 8, 2005 and incorporated herein by
reference).
|
4.12
|
Officer’s
Certificate pursuant to sections 201, 301 and 303 of the Indenture dated
October 28, 1998 between the Company and The Bank of New York, as
Trustee, establishing a series of securities entitled 5.375% Senior Notes
due 2017 (filed as exhibit 4.3 to the Company’s Form 8-K, dated
September 8, 2005 and incorporated herein by
reference).
|
4.13
|
Form
of 5.95% Senior Notes due 2016 (filed as exhibit 4.2 to the Company’s Form
8-K, dated September 6, 2006 and incorporated herein by
reference).
|
4.14
|
Officer’s
Certificate pursuant to sections 201, 301 and 303 of the Indenture dated
October 28, 1998 between the Company and The Bank of New York, as
Trustee, establishing a series of securities entitled 5.95% Senior Notes
due 2016 (filed as exhibit 4.3 to the Company’s Form 8-K, dated
September
6, 2006 and incorporated herein by reference).
|
4.15
|
Form
of 6.75% Notes due 2019 (filed as exhibit 4.2 to Company’s Form 8-K, dated
August 30, 2007 and incorporated herein by
reference).
|
4.16
|
Officer’s
Certificate pursuant to sections 201, 301 and 303 of the Indenture dated
October 28, 1998 between the Company and The Bank of New York Trust
Company, N.A., as Trustee, establishing a series of securities entitled
6.75% Senior Notes due 2019 (filed as exhibit 4.3 to the Company’s
Form
8-K, dated August 30, 2007 and incorporated herein by
reference).
|
10.1
|
$355
million Credit Agreement dated May 15, 2008 (filed as exhibit 10.1 to the
Company’s Form 8-K filed on May 16, 2008 and incorporated herein by
reference).
|
*
31.1
|
Rule
13a-14(a) Certifications as filed by the Chief Executive Officer pursuant
to SEC release No. 33-8212 and 34-47551.
|
*
31.2
|
Rule
13a-14(a) Certifications as filed by the Chief Financial Officer pursuant
to SEC release No. 33-8212 and 34-47551.
|
*
32
|
Section
1350 Certifications as furnished by the Chief Executive Officer and the
Chief Financial Officer pursuant to SEC release No. 33-8212 and
34-47551.
|
*
Filed herewith
|
REALTY
INCOME CORPORATION
|
|
Date:
July 30, 2008
|
/s/ GREGORY J.
FAHEY
|
Gregory
J. Fahey
|
|
Vice
President, Controller
|
|
(Principal
Accounting Officer)
|
|