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Realty Income Corp. Sees Strength in Investment Pipeline


“I am confident Realty Income can continue to capture opportunities to build and enhance our portfolio and drive value for our stakeholders.” So said Sumit Roy, president and CEO, on the firm’s Q3 earnings call. “We continue to see strength in the current market environment as well as our investment pipeline.”

He explained that “During the third quarter, we invested $609 million in high quality property acquisitions and increased AFFO per share by 5.2%. S&P raised our credit rating to A- during the quarter, which was largely driven by our consistent track record of performance and the stability of our portfolio.”

Given the current strength in the REIT’s business, he said, the company is increasing the low-end of the 2018 AFFO per share guidance by $0.02, from $3.16 to $3.21, to a range of $3.18 to $3.21. “Our portfolio continues to be diversified by tenant, industry, geography, and to a certain extent property type, which contributes to the stability of our cash flow.”

At the end of the quarter, he said, “our properties were leased to 260 commercial tenants in 48 different industries located in 49 states and Puerto Rico. 81% of our rental revenue is from our traditional retail properties. The largest component outside of retail is industrial properties just over 12% of rental revenue.”

Walgreens, he said, “remains our largest tenant at 6.4% of rental revenue. Convenience stores remains our largest industry at 12.1% of rental revenue. Within our overall retail portfolio, over 90% of our rent comes from tenants with the service, non-discretionary and/or low price point component to their business.”

He explained that “We believe these characteristics allow our tenants to compete more effectively with ecommerce and operate in a variety of economic environments. These factors have been particularly relevant in today’s retail climate with the vast majority of recent U.S. retail bankruptcies have been in industries that do not possess these characteristics.”

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