Maryland
|
33-0580106
|
|
(State
or
Other Jurisdiction of
|
(IRS
Employer
|
|
Incorporation
or Organization)
|
Identification
Number)
|
PART
I. FINANCIAL INFORMATION
|
Page
|
|||
Item
1:
|
Financial
Statements
|
|||
3
|
||||
4
|
||||
5
|
||||
6
|
||||
Item
2:
|
Management’s
Discussion and Analysis of Financial Condition
and
Results
of Operations
|
|||
16
|
||||
17
|
||||
19
|
||||
21
|
||||
25
|
||||
33
|
||||
35
|
||||
40
|
||||
40
|
||||
40
|
||||
Item
3:
|
41
|
|||
Item
4:
|
42
|
|||
PART
II. OTHER INFORMATION
|
||||
Item
1A:
|
42
|
|||
Item
4:
|
42
|
|||
Item
6:
|
43
|
|||
45
|
2007
|
2006
|
|||||||
ASSETS
|
(unaudited)
|
|||||||
Real
estate,
at cost:
|
||||||||
Land
|
$ |
989,765
|
$ |
958,770
|
||||
Buildings
and
improvements
|
1,848,271
|
1,785,203
|
||||||
2,838,036
|
2,743,973
|
|||||||
Less
accumulated depreciation and amortization
|
(432,314 | ) | (396,854 | ) | ||||
Net
real
estate held for investment
|
2,405,722
|
2,347,119
|
||||||
Real
estate
held for sale, net
|
74,775
|
137,962
|
||||||
Net
real
estate
|
2,480,497
|
2,485,081
|
||||||
Cash
and cash
equivalents
|
8,914
|
10,573
|
||||||
Accounts
receivable
|
6,019
|
5,953
|
||||||
Goodwill
|
17,206
|
17,206
|
||||||
Other
assets,
net
|
32,256
|
27,695
|
||||||
Total
assets
|
$ |
2,544,892
|
$ |
2,546,508
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Distributions
payable
|
$ |
14,933
|
$ |
15,096
|
||||
Accounts
payable and accrued expenses
|
26,227
|
27,004
|
||||||
Other
liabilities
|
10,724
|
8,416
|
||||||
Line
of
credit payable
|
10,000
|
--
|
||||||
Notes
payable
|
920,000
|
920,000
|
||||||
Total
liabilities
|
981,884
|
970,516
|
||||||
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 2007 and 2006
|
337,790
|
337,781
|
||||||
Common
stock
and paid in capital, par value $1.00 per share,
|
||||||||
200,000,000
shares authorized, 101,070,652 and 100,746,226
|
||||||||
shares
issued
and outstanding in 2007 and 2006, respectively
|
1,543,269
|
1,540,365
|
||||||
Distributions
in excess of net income
|
(318,051 | ) | (302,154 | ) | ||||
Total
stockholders’ equity
|
1,563,008
|
1,575,992
|
||||||
Total
liabilities and stockholders’ equity
|
$ |
2,544,892
|
$ |
2,546,508
|
The
accompanying notes to consolidated financial statements are
an integral
part of these
statements.
|
Three
Months Ended 6/30/07
|
Three
Months Ended 6/30/06
|
Six
Months
Ended
6/30/07
|
Six
Months
Ended
6/30/06
|
|||||||||||||
REVENUE
|
||||||||||||||||
Rental
|
$ |
70,480
|
$ |
55,704
|
$ |
139,629
|
$ |
110,735
|
||||||||
Other
|
213
|
765
|
2,365
|
851
|
||||||||||||
70,693
|
56,469
|
141,994
|
111,586
|
|||||||||||||
EXPENSES
|
||||||||||||||||
Depreciation
and amortization
|
18,518
|
14,782
|
36,643
|
28,285
|
||||||||||||
Interest
|
13,029
|
11,930
|
25,449
|
25,127
|
||||||||||||
General
and
administrative
|
5,838
|
4,354
|
10,929
|
8,600
|
||||||||||||
Property
|
964
|
685
|
1,849
|
1,545
|
||||||||||||
Income
taxes
|
353
|
231
|
598
|
462
|
||||||||||||
38,702
|
31,982
|
75,468
|
64,019
|
|||||||||||||
Income
from
continuing operations
|
31,991
|
24,487
|
66,526
|
47,567
|
||||||||||||
Income
from
discontinued operations:
|
||||||||||||||||
Real
estate
acquired for resale by Crest
|
4,282
|
537
|
6,030
|
1,416
|
||||||||||||
Real
estate
held for investment
|
663
|
1,616
|
704
|
2,545
|
||||||||||||
4,945
|
2,153
|
6,734
|
3,961
|
|||||||||||||
Net
income
|
36,936
|
26,640
|
73,260
|
51,528
|
||||||||||||
Preferred
stock cash dividends
|
(6,063 | ) | (2,351 | ) | (12,127 | ) | (4,702 | ) | ||||||||
Net
income
available to common stockholders
|
$ |
30,873
|
$ |
24,289
|
$ |
61,133
|
$ |
46,826
|
||||||||
Amounts
available to common stockholders per common share:
|
||||||||||||||||
Income
from
continuing operations, basic and diluted
|
$ |
0.26
|
$ | 0.25 | $ | 0.54 | $ |
0.50
|
||||||||
Net
income:
|
||||||||||||||||
Basic
|
$ |
0.31
|
$ |
0.28
|
$ |
0.61
|
$ |
0.55
|
||||||||
Diluted
|
$ |
0.31
|
$ |
0.27
|
$ |
0.61
|
$ |
0.54
|
||||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
100,133,094
|
88,305,175
|
100,111,734
|
85,791,994
|
||||||||||||
Diluted
|
100,246,112
|
88,466,024
|
100,304,617
|
85,988,206
|
2007
|
2006
|
|||||||
CASH
FLOWS
FROM OPERATING ACTIVITIES
|
||||||||
Net
income
|
$ |
73,260
|
$ |
51,528
|
||||
Adjustments
to net income:
|
||||||||
Depreciation
and amortization
|
36,643
|
28,285
|
||||||
Income
from
discontinued operations:
|
||||||||
Real
estate
acquired for resale
|
(6,030 | ) | (1,416 | ) | ||||
Real
estate
held for investment
|
(704 | ) | (2,545 | ) | ||||
Gain
on sales
of land
|
(1,806 | ) |
--
|
|||||
Gain
on
reinstatement of property carrying value
|
--
|
(716 | ) | |||||
Amortization
of share-based compensation
|
2,196
|
1,643
|
||||||
Cash
provided
by (used in) discontinued operations:
|
||||||||
Real
estate
acquired for resale
|
(536 | ) | (10 | ) | ||||
Real
estate
held for investment
|
128
|
448
|
||||||
Investment
in real estate acquired for resale
|
--
|
(8,737 | ) | |||||
Proceeds
from sales of real estate acquired for resale
|
65,778
|
10,195
|
||||||
Collection
of mortgage note receivable by Crest
|
8
|
1,333
|
||||||
Change
in
assets and liabilities:
|
||||||||
Accounts
receivable and other assets
|
990
|
4,528
|
||||||
Accounts
payable, accrued expenses and other liabilities
|
2,330
|
222
|
||||||
Net
cash
provided by operating activities
|
172,257
|
84,758
|
||||||
CASH
FLOWS
FROM INVESTING ACTIVITIES
|
||||||||
Proceeds
from
sales of investment properties:
|
||||||||
Continuing
operations
|
3,842
|
--
|
||||||
Discontinued operations
|
1,493
|
5,423
|
||||||
Acquisition
of and improvements to investment properties
|
(97,672 | ) | (146,392 | ) | ||||
Restricted
escrow funds acquired in connection with
|
||||||||
acquisitions
of investment properties
|
(2,648 | ) |
--
|
|||||
Intangibles
acquired in connection with acquisitions of
|
||||||||
investment
properties
|
(319 | ) |
--
|
|||||
Net
cash used
in investing activities
|
(95,304 | ) | (140,969 | ) | ||||
CASH
FLOWS
FROM FINANCING ACTIVITIES
|
||||||||
Borrowings
from lines of credit
|
135,400
|
166,000
|
||||||
Payments
under lines of credit
|
(125,400 | ) | (220,400 | ) | ||||
Proceeds
from
stock offerings, net of offering costs of $6,278 in 2006
|
--
|
120,550
|
||||||
Cash
distributions to common stockholders
|
(76,863 | ) | (60,496 | ) | ||||
Cash
dividends to preferred stockholders
|
(12,457 | ) | (4,702 | ) | ||||
Proceeds
from
other stock issuances
|
708
|
301
|
||||||
Net
cash
provided by (used in) financing activities
|
(78,612 | ) |
1,253
|
|||||
Net
decrease
in cash and cash equivalents
|
(1,659 | ) | (54,958 | ) | ||||
Cash
and cash
equivalents, beginning of period
|
10,573
|
65,704
|
||||||
Cash
and cash
equivalents, end of period
|
$ |
8,914
|
$ |
10,746
|
1.
|
Management
Statement
|
2.
|
Summary
of Significant Accounting Policies and
Procedures
|
F. Other
assets consist of the following at:
|
June
30,
|
December
31,
|
||||||
(dollars
in
thousands)
|
2007
|
2006
|
||||||
Value
of
in-place and above-market leases
|
$ |
10,945
|
$ |
10,430
|
||||
Deferred
bond
financing costs
|
10,167
|
10,868
|
||||||
Prepaid
expenses
|
3,033
|
3,271
|
||||||
Settlements
on treasury lock agreements
|
1,194
|
1,629
|
||||||
Unamortized
credit line fees
|
694
|
954
|
||||||
Corporate
assets, net of accumulated depreciation and amortization
|
916
|
463
|
||||||
Other
items
|
5,307
|
80
|
||||||
$ |
32,256
|
$ |
27,695
|
3.
|
Retail
Properties Acquired
|
4.
|
Credit
Facility
|
5.
|
Notes
Payable
|
8
1/4%
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
3/8%
notes, issued in March 2003 and due in March 2013
|
100.0
|
|||
5
1/2%
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
3/8%
notes, issued in September 2005 and due in September 2017
|
175.0
|
|||
5
7/8%
bonds, issued in March 2005 and due in March 2035
|
100.0
|
|||
$ |
920.0
|
6.
|
Gain
on Sales of Real Estate Acquired for Resale by
Crest
|
7.
|
Gain
on Sales of Investment Properties and Land by Realty
Income
|
8.
|
Discontinued
Operations
|
Crest’s
income from discontinued operations,
real
estate acquired for resale
|
Three
months
ended
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
||||||||||||
Gain
on sales
of real estate acquired for resale
|
$ |
5,326
|
$ |
520
|
$ |
6,566
|
$ |
1,426
|
||||||||
Rental
revenue
|
2,365
|
990
|
5,249
|
2,094
|
||||||||||||
Interest
expense
|
(1,758 | ) | (737 | ) | (3,877 | ) | (1,463 | ) | ||||||||
General
and
administrative expense
|
(179 | ) | (75 | ) | (282 | ) | (154 | ) | ||||||||
Property
expenses
|
(9 | ) |
4
|
(14 | ) | (33 | ) | |||||||||
Income
taxes
|
(1,463 | ) | (165 | ) | (1,612 | ) | (454 | ) | ||||||||
Income
from
discontinued operations,
real
estate
acquired for resale by Crest
|
$ |
4,282
|
$ |
537
|
$ |
6,030
|
$ |
1,416
|
Realty
Income’s income from discontinued operations, real estate held for
investment
|
Three
months
ended
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
||||||||||||
Gain
on sales
of investment properties
|
$ |
585
|
$ |
1,441
|
$ |
585
|
$ |
2,193
|
||||||||
Rental
revenue
|
79
|
213
|
119
|
491
|
||||||||||||
Depreciation
and amortization
|
--
|
(39 | ) | (9 | ) | (96 | ) | |||||||||
Property
expenses
|
(1 | ) |
1
|
9
|
(43 | ) | ||||||||||
Income
from
discontinued operations,
real
estate
held for investment
|
$ |
663
|
$ |
1,616
|
$ |
704
|
$ |
2,545
|
Three
months
ended
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
|||||||||||||
Real
estate
acquired for resale by Crest
|
$ |
4,282
|
$ |
537
|
$ |
6,030
|
$ |
1,416
|
||||||||
Real
estate
held for investment
|
663
|
1,616
|
704
|
2,545
|
||||||||||||
Income
from
discontinued operations
|
$ |
4,945
|
$ |
2,153
|
$ |
6,734
|
$ |
3,961
|
||||||||
Per
common
share, basic and diluted
|
$ |
0.05
|
$ |
0.02
|
$ |
0.07
|
$ |
0.05
|
Month
|
2007
|
2006
|
||||||
January
|
$ |
0.126500
|
$ |
0.116250
|
||||
February
|
0.126500
|
0.116250
|
||||||
March
|
0.126500
|
0.116250
|
||||||
April
|
0.127125
|
0.116875
|
||||||
May
|
0.127125
|
0.116875
|
||||||
June
|
0.127125
|
0.116875
|
||||||
Total
|
$ |
0.760875
|
$ |
0.699375
|
10.
|
Net
Income per Common Share
|
Three
months
ended
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
|||||||||||||
Weighted
average shares used for the basic net income per share
computation
|
100,133,094
|
88,305,175
|
100,111,734
|
85,791,994
|
||||||||||||
Incremental
shares from share-based compensation
|
113,018
|
160,849
|
192,883
|
196,212
|
||||||||||||
Adjusted
weighted average shares used for diluted net income per share
computation
|
100,246,112
|
88,466,024
|
100,304,617
|
85,988,206
|
11.
|
Supplemental
Disclosures of Cash Flow
Information
|
6/30/07
|
12/31/06
|
|||||||
Common
stock
distributions
|
$ |
12,912
|
$ |
12,745
|
||||
Preferred
stock dividends
|
2,021
|
2,351
|
12.
|
Segment
Information
|
Revenue
|
Three
months
ended
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
||||||||||||
Segment
rental revenue(1):
|
||||||||||||||||
Automotive
service
|
$ |
3,709
|
$ |
3,740
|
$ |
7,409
|
$ |
7,474
|
||||||||
Automotive
tire services
|
5,283
|
3,424
|
10,565
|
6,848
|
||||||||||||
Child
care
|
6,119
|
6,169
|
12,224
|
12,320
|
||||||||||||
Convenience
stores
|
9,854
|
9,570
|
19,486
|
19,100
|
||||||||||||
Drug
stores
|
1,941
|
1,628
|
3,882
|
3,257
|
||||||||||||
Health
and
fitness
|
3,871
|
2,402
|
6,886
|
4,804
|
||||||||||||
Home
furnishings
|
1,995
|
1,886
|
3,902
|
3,743
|
||||||||||||
Home
improvement
|
1,750
|
1,741
|
3,515
|
3,418
|
||||||||||||
Motor
vehicle
dealerships
|
2,440
|
2,012
|
4,885
|
3,758
|
||||||||||||
Restaurants
|
13,525
|
5,272
|
26,919
|
10,348
|
||||||||||||
Sporting
goods
|
1,865
|
1,687
|
3,704
|
3,374
|
||||||||||||
Theaters
|
6,514
|
5,462
|
13,028
|
10,923
|
||||||||||||
17
non-reportable segments
|
11,614
|
10,711
|
23,224
|
21,368
|
||||||||||||
Total
rental
|
70,480
|
55,704
|
139,629
|
110,735
|
||||||||||||
Other
revenue
|
213
|
765
|
2,365
|
851
|
||||||||||||
Total
revenue
|
$ |
70,693
|
$ |
56,469
|
$ |
141,994
|
$ |
111,586
|
June
30,
|
December
31,
|
|||||||
Assets,
as of:
|
2007
|
2006
|
||||||
Segment
net
real estate:
|
||||||||
Automotive
service
|
$ |
102,655
|
$ |
104,089
|
||||
Automotive
tire services
|
208,846
|
211,760
|
||||||
Child
care
|
93,658
|
96,263
|
||||||
Convenience
stores
|
355,138
|
334,839
|
||||||
Drug
stores
|
77,114
|
78,347
|
||||||
Health
and fitness
|
151,206
|
102,718
|
||||||
Home
furnishings
|
55,083
|
56,023
|
||||||
Home
improvement
|
70,431
|
71,474
|
||||||
Motor
vehicle dealerships
|
101,687
|
104,122
|
||||||
Restaurants
|
535,142
|
540,093
|
||||||
Sporting
goods
|
57,977
|
56,291
|
||||||
Theaters
|
269,121
|
272,135
|
||||||
Crest
|
74,529
|
137,506
|
||||||
17
other non-reportable segments
|
327,910
|
319,421
|
||||||
Total
segment
net real estate
|
2,480,497
|
2,485,081
|
||||||
Other
intangible assets – Drug stores
|
7,309
|
7,629
|
||||||
Other
intangible assets – Grocery stores
|
987
|
--
|
||||||
Other
intangible assets – Theaters
|
2,725
|
2,801
|
||||||
Other
corporate assets
|
53,374
|
50,997
|
||||||
Total
assets
|
$ |
2,544,892
|
$ |
2,546,508
|
13.
|
Common
Stock Incentive Plan
|
For
the six
months
ended
June
30, 2007
|
For
the year ended
December
31, 2006
|
|||||||||||||||
Number
of
shares
|
Weighted
average price (1)
|
Number
of
shares
|
Weighted
average price (1)
|
|||||||||||||
Outstanding
nonvested
|
||||||||||||||||
shares,
beginning of year
|
868,726
|
$ |
17.96
|
788,722
|
$ |
17.83
|
||||||||||
Shares
granted
|
271,231
|
27.64
|
210,332
|
21.72
|
||||||||||||
Shares
vested
|
(147,752 | ) |
20.90
|
(125,879 | ) |
20.39
|
||||||||||
Shares
forfeited
|
(726 | ) |
23.75
|
(4,449 | ) |
21.35
|
||||||||||
Outstanding
nonvested
shares,
end
of each period
|
991,479
|
$ |
21.06
|
868,726
|
$ |
17.96
|
·
|
Shares
vest
in 33 1/3% increments on each of the first three
anniversaries of the date the shares of stock are granted to
directors
with less than five years of service at the date of
grant;
|
·
|
Shares
vest
in 50% increments on each of the first two anniversaries of
the date the
shares of stock are granted to directors with six years of
service at the
date of grant;
|
·
|
Shares
are
100% vested on the first anniversary of the date the shares
of stock are
granted to directors with seven years of service at the date
of grant;
and
|
·
|
There
is
immediate vesting as of the date the shares of stock are granted
to
directors with eight or more years of service at the date of
grant.
|
·
|
For
employees
age 49 and below at the grant date, shares vest in 10% increments
on each
of the first ten anniversaries of the grant
date;
|
·
|
For
employees
age 50 through 55 at the grant date, shares vest in 20% increments
on each
of the first five anniversaries of the grant
date;
|
·
|
For
employees
age 56 at the grant date, shares vest in 25% increments on
each of the
first four anniversaries of the grant
date;
|
·
|
For
employees
age 57 at the grant date, shares vest in 33 1/3%
increments on each of the first three anniversaries of the
grant
date;
|
·
|
For
employees
age 58 at the grant date, shares vest in 50% increments on
each of the
first two anniversaries of the grant
date;
|
·
|
For
employees
age 59 at the grant date, shares are 100% vested on the first
anniversary
of the grant date; and
|
·
|
For
employees
age 60 and above at the grant date, shares vest immediately
on the grant
date.
|
14.
|
Commitments
and Contingencies
|
Item
2.
|
Management’s
Discussion and Analysis of Financial
Condition
|
|
and
Results of Operations
(MD&A)
|
·
|
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;
|
·
|
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
1,998
retail properties;
|
·
|
With
an
occupancy rate of 98.6%, or 1,971 properties occupied of the
1,998
properties in the portfolio;
|
·
|
Leased
to 108
different retail chains doing business in 29 separate retail
industries;
|
·
|
Located
in 48
states;
|
·
|
With
over
17.2 million square feet of leasable space;
and
|
·
|
With
an
average leasable retail space per property of approximately
8,600 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 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 101,071,994 multiplied by the last
reported
sales price of our common stock on the NYSE of $23.59 per share,
or
$2.38 billion;
|
·
|
Aggregate
liquidation value of the Class D preferred stock of $127.5
million;
|
·
|
Aggregate
liquidation value of the Class E preferred stock of $220 million;
and
|
·
|
Outstanding
notes of $920 million.
|
|
|
8
1/4%
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
3/8%
notes, issued in March 2003 and due in March 2013
|
100.0
|
|||
5
1/2%
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
3/8%
notes, issued in September 2005 and due in September 2017
|
175.0
|
|||
5
7/8%
bonds, issued in March 2005 and due in March 2035
|
100.0
|
|||
$ |
920.0
|
Note
Covenants
|
Required
|
Actual
|
|||
Limitation
on
incurrence of total debt
|
≤
60%
|
31.6 | % | ||
Limitation
on
incurrence of secured debt
|
≤
40%
|
0.0 | % | ||
Debt
service
coverage
|
≥
1.5
x
|
4.5
|
x | ||
Maintenance
of total unencumbered assets
|
≥
150%
of
unsecured debt
|
316 | % |
Year
of
Maturity
|
Credit
Facility (1)
|
Notes
|
Interest
(2)
|
Other
(3)
|
Totals
|
|||||||||||||||
2007
|
$ |
--
|
$ |
--
|
$ |
27.9
|
$ |
38.1
|
$ |
66.0
|
||||||||||
2008
|
10.0
|
100.0
|
54.6
|
--
|
164.6
|
|||||||||||||||
2009
|
--
|
20.0
|
45.3
|
--
|
65.3
|
|||||||||||||||
2010
|
--
|
--
|
45.3
|
--
|
45.3
|
|||||||||||||||
2011
|
--
|
--
|
45.3
|
--
|
45.3
|
|||||||||||||||
Thereafter
|
--
|
800.0
|
305.5
|
--
|
1,105.5
|
|||||||||||||||
Totals
|
$ |
10.0
|
$ |
920.0
|
$ |
523.9
|
$ |
38.1
|
$ |
1,492.0
|
|
(1)
There was no outstanding
credit facility balance on July 30,
2007.
|
|
(2) Interest
on credit
facility and notes has been calculated based on outstanding
balances as of
June 30, 2007 through their respective maturity
dates.
|
|
(3)
“Other”
consists
of $37.7
million of estimated unfunded costs on properties under development
and
$397,000 of contingent payments for tenant improvements and
leasing
costs.
|
·
|
The
46 retail
properties acquired by Realty Income in 2007, which generated
$1.2 million
of rent in the second quarter of
2007;
|
·
|
The
322
retail properties acquired by Realty Income in 2006, which
generated $13.2
million of rent in the second quarter of 2007 compared to $1.8
million in
the second quarter of 2006, an increase of
$11.4 million;
|
·
|
Same
store
rents generated on 1,560 properties during the entire second
quarter of
2007 increased by $860,000, or 1.7%, to $52.7 million from
$51.8 million
for the same quarter in 2006;
|
·
|
An
increase
of $1.2 million relating to the aggregate of (i) development
properties
acquired before 2006 that started paying rent in 2006, (ii)
properties
that were vacant during part of 2007 or 2006 and (iii) lease
termination
settlements. These items totaled $3.0 million in aggregate in
the second quarter of 2007 compared to $1.8 million in the
same quarter of
2006; and
|
·
|
An
increase
in straight-line rent and other non-cash adjustments to rent
of $102,000
in the second quarter of 2007 as compared to the second quarter
of
2006.
|
·
|
The
46 retail
properties acquired by Realty Income in 2007, which generated
$1.5 million
in the first six months of 2007;
|
·
|
The
322
retail properties acquired by Realty Income in 2006, which
generated $26.4
million in the first six months of 2007 compared to $3.1 million
in the
first six months of 2006, an increase of
$23.3 million;
|
·
|
Same
store
rents generated on 1,560 properties during the entire first
six months of
2007 increased by $1.7 million, or 1.6%, to $105.2 million
from $103.5
million for the same period in
2006;
|
·
|
An
increase
of $2.7 million relating to the aggregate of (i) development
properties
acquired before 2006 that started paying rent in 2006, (ii)
properties
that were vacant during part of 2007 or 2006 and (iii) lease
termination
settlements. These items totaled $6.0 million in aggregate in
the first six months of 2007 compared to $3.3 million in the
first six
months of 2006; and net of
|
·
|
A
decrease in
straight-line rent and other non-cash adjustments to rent of
$309,000 in
the first six months of 2007 as compared to the first six months
of
2006.
|
·
|
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
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
|||||||||||||
Interest
on
our credit facility and notes
|
$ |
14,178
|
$ |
12,534
|
$ |
28,090
|
$ |
26,132
|
||||||||
Interest
included in discontinued operations
|
||||||||||||||||
from
real
estate acquired for resale by Crest
|
(1,758 | ) | (737 | ) | (3,877 | ) | (1,463 | ) | ||||||||
Amortization
of settlements on treasury lock agreement
|
218
|
189
|
435
|
378
|
||||||||||||
Credit
facility commitment fees
|
114
|
114
|
228
|
228
|
||||||||||||
Amortization
of credit facility origination costs and
|
|
|
|
|
||||||||||||
deferred bond financing costs | 522 | 471 | 1,043 | 941 | ||||||||||||
Interest
capitalized
|
(245 | ) | (641 | ) | (470 | ) | (1,089 | ) | ||||||||
Interest
expense
|
$ |
13,029
|
$ |
11,930
|
$ |
25,449
|
$ |
25,127
|
Credit
facility and notes outstanding
|
Three
months
ended
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
||||||||||||
Average
outstanding balances (in thousands)
|
$ |
946,889
|
$ |
805,253
|
$ |
937,979
|
$ |
849,271
|
||||||||
Average
interest rates
|
5.99 | % | 6.24 | % | 5.99 | % | 6.20 | % |
Three
months
ended
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
|||||||||||||
Net
cash
provided by operating activities
|
$ |
117,906
|
$ |
46,227
|
$ |
172,257
|
$ |
84,758
|
||||||||
Interest
expense
|
13,029
|
11,930
|
25,449
|
25,127
|
||||||||||||
Interest
expense included in discontinued operations(1)
|
1,758
|
737
|
3,877
|
1,463
|
||||||||||||
Income
taxes
|
353
|
231
|
598
|
462
|
||||||||||||
Income
taxes
included in discontinued operations(1)
|
1,463
|
165
|
1,612
|
454
|
||||||||||||
Investment
in
real estate acquired for resale(1)
|
--
|
1,381
|
--
|
8,737
|
||||||||||||
Proceeds
from
sales of real estate acquired for resale(1)
|
(55,557 | ) | (3,819 | ) | (65,778 | ) | (10,195 | ) | ||||||||
Collection
of
a mortgage note receivable by Crest(1)
|
(8 | ) |
--
|
(8 | ) | (1,333 | ) | |||||||||
Gain
on sales
of real estate acquired for resale(1)
|
5,326
|
520
|
6,566
|
1,426
|
||||||||||||
Amortization
of share-based compensation
|
(1,374 | ) | (1,005 | ) | (2,196 | ) | (1,643 | ) | ||||||||
Changes
in
assets and liabilities:
|
||||||||||||||||
Accounts
receivable and other assets
|
(961 | ) | (1,423 | ) | (990 | ) | (4,528 | ) | ||||||||
Accounts
payable, accrued expenses and other liabilities
|
(10,463 | ) | (2,577 | ) | (2,330 | ) | (222 | ) | ||||||||
Interest
coverage amount
|
$ |
71,472
|
$ |
52,367
|
$ |
139,057
|
$ |
104,506
|
||||||||
Divided
by
interest expense (2)
|
$ |
14,787
|
$ |
12,667
|
$ |
29,326
|
$ |
26,590
|
||||||||
Interest
coverage ratio
|
4.8
|
4.1
|
4.7
|
3.9
|
(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
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
|||||||||||||
Interest
coverage amount
|
$ |
71,472
|
$ |
52,367
|
$ |
139,057
|
$ |
104,506
|
||||||||
Divided
by
interest expense plus
preferred
stock dividends(1)
|
$ |
20,850
|
$ |
15,018
|
$ |
41,453
|
$ |
31,292
|
||||||||
Fixed
charge
coverage ratio
|
3.4
|
3.5
|
3.4
|
3.3
|
Crest’s
income from discontinued operations, real estate acquired for
resale
|
Three
months
ended
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
||||||||||||
Gain
on sales
of real estate acquired for resale
|
$ |
5,326
|
$ |
520
|
$ |
6,566
|
$ |
1,426
|
||||||||
Rental
revenue
|
2,365
|
990
|
5,249
|
2,094
|
||||||||||||
Interest
expense
|
(1,758 | ) | (737 | ) | (3,877 | ) | (1,463 | ) | ||||||||
General
and
administrative expense
|
(179 | ) | (75 | ) | (282 | ) | (154 | ) | ||||||||
Property
expenses
|
(9 | ) |
4
|
(14 | ) | (33 | ) | |||||||||
Income
taxes
|
(1,463 | ) | (165 | ) | (1,612 | ) | (454 | ) | ||||||||
Income
from
discontinued operations,
real
estate acquired for resale by Crest
|
$ |
4,282
|
$ |
537
|
$ |
6,030
|
$ |
1,416
|
||||||||
Per
common
share, basic and diluted
|
$ |
0.04
|
$ |
0.01
|
$ |
0.06
|
$ |
0.02
|
Realty
Income’s income from discontinued operations, real estate held for
investment
|
Three
months
ended
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
||||||||||||
Gain
on sales
of investment properties
|
$ |
585
|
$ |
1,441
|
$ |
585
|
$ |
2,193
|
||||||||
Rental
revenue
|
79
|
213
|
119
|
491
|
||||||||||||
Depreciation
and amortization
|
--
|
(39 | ) | (9 | ) | (96 | ) | |||||||||
Property
expenses
|
(1 | ) |
1
|
9
|
(43 | ) | ||||||||||
Income
from
discontinued operations,
real
estate held for investment
|
$ |
663
|
$ |
1,616
|
$ |
704
|
$ |
2,545
|
||||||||
Per
common
share, basic and diluted
|
$ |
0.01
|
$ |
0.02
|
$ |
0.01
|
$ |
0.03
|
Three
months
ended
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
|||||||||||||
Real
estate
acquired for resale by Crest
|
$ |
4,282
|
$ |
537
|
$ |
6,030
|
$ |
1,416
|
||||||||
Real
estate
held for investment
|
663
|
1,616
|
704
|
2,545
|
||||||||||||
Income
from
discontinued operations
|
$ |
4,945
|
$ |
2,153
|
$ |
6,734
|
$ |
3,961
|
||||||||
Per
common
share, basic and diluted
|
$ |
0.05
|
$ |
0.02
|
$ |
0.07
|
$ |
0.05
|
Three
months
ended
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
|||||||||||||
Net
income
available to common stockholders
|
$ |
30,873
|
$ |
24,289
|
$ |
61,133
|
$ |
46,826
|
||||||||
Depreciation
and amortization:
|
||||||||||||||||
Continuing
operations
|
18,518
|
14,782
|
36,643
|
28,285
|
||||||||||||
Discontinued
operations
|
--
|
39
|
9
|
96
|
||||||||||||
Depreciation
of furniture, fixtures and equipment
|
(46 | ) | (47 | ) | (95 | ) | (92 | ) | ||||||||
Gain
on sales
of land and investment properties:
|
||||||||||||||||
Continuing
operations
|
--
|
--
|
(1,806 | ) |
--
|
|||||||||||
Discontinued
operations
|
(585 | ) | (1,441 | ) | (585 | ) | (2,193 | ) | ||||||||
FFO
available
to common stockholders
|
$ |
48,760
|
$ |
37,622
|
$ |
95,299
|
$ |
72,922
|
||||||||
FFO
per
common share, basic and diluted
|
$ |
0.49
|
$ |
0.43
|
$ |
0.95
|
$ |
0.85
|
||||||||
Distributions
paid to common stockholders
|
$ |
38,533
|
$ |
31,242
|
$ |
76,863
|
$ |
60,496
|
||||||||
FFO
in excess
of distributions paid to
|
||||||||||||||||
common
stockholders
|
$ |
10,227
|
$ |
6,380
|
$ |
18,436
|
$ |
12,426
|
||||||||
Weighted
average number of common shares
|
||||||||||||||||
used
for
computation per share:
|
||||||||||||||||
Basic
|
100,133,094
|
88,305,175
|
100,111,734
|
85,791,994
|
||||||||||||
Diluted
|
100,246,112
|
88,466,024
|
100,304,617
|
85,988,206
|
(dollars
in
thousands)
|
Three
months
ended
6/30/07
|
Three
months
ended
6/30/06
|
Six
months
ended
6/30/07
|
Six
months
ended
6/30/06
|
||||||||||||
Amortization
of settlements on treasury lock agreements(1)
|
$ |
217
|
$ |
189
|
$ |
435
|
$ |
378
|
||||||||
Amortization
of deferred note financing costs(2)
|
336
|
290
|
673
|
579
|
||||||||||||
Amortization
of share-based compensation
|
1,374
|
1,005
|
2,196
|
1,643
|
||||||||||||
Capitalized
leasing costs and commissions
|
(111 | ) | (12 | ) | (238 | ) | (134 | ) | ||||||||
Capitalized
building improvements
|
(216 | ) | (57 | ) | (794 | ) | (104 | ) | ||||||||
Straight
line
rent(3)
|
(389 | ) | (287 | ) | (533 | ) | (841 | ) | ||||||||
Crest
gain on
sale, previously reported as impairment
|
--
|
--
|
(271 | ) |
--
|
|||||||||||
Gain
on
reinstatement of property carrying value
|
--
|
(716 | ) |
--
|
(716 | ) |
|
(1)
The
settlements on the treasury lock agreements resulted from an
interest rate
risk prevention strategy that was used by us in 1997 and 1998,
which
correlated to pending issuances 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 and September 2006. 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 was greater than
our actual
cash rent collected.
|
·
|
Of
1,998
retail properties;
|
·
|
With
an
occupancy rate of 98.6%, or 1,971 properties occupied of the
1,998
properties in the portfolio;
|
·
|
Leased
to 108
different retail chains doing business in 29 separate retail
industries;
|
·
|
Located
in 48
states;
|
·
|
With
over
17.2 million square feet of leasable space;
and
|
·
|
With
an
average leasable retail space per property of approximately
8,600 square
feet.
|
Percentage
of Rental Revenue(1)
|
||||||||||||||||||||||||||||
For
the Quarter Ended
June
30,
2007
|
For
the Years Ended
|
|||||||||||||||||||||||||||
Industries
|
Dec
31,
2006
|
Dec
31,
2005
|
Dec
31,
2004
|
Dec
31,
2003
|
Dec
31,
2002
|
Dec
31,
2001
|
||||||||||||||||||||||
Apparel
stores
|
1.3 | % | 1.7 | % | 1.6 | % | 1.8 | % | 2.1 | % | 2.3 | % | 2.4 | % | ||||||||||||||
Automotive
collision services
|
1.2
|
1.3
|
1.3
|
1.0
|
0.3
|
--
|
--
|
|||||||||||||||||||||
Automotive
parts
|
2.3
|
2.8
|
3.4
|
3.8
|
4.5
|
4.9
|
5.7
|
|||||||||||||||||||||
Automotive
service
|
5.3
|
6.9
|
7.6
|
7.7
|
8.3
|
7.0
|
5.7
|
|||||||||||||||||||||
Automotive
tire services
|
7.5
|
6.1
|
7.2
|
7.8
|
3.1
|
2.7
|
2.6
|
|||||||||||||||||||||
Book
stores
|
0.2
|
0.2
|
0.3
|
0.3
|
0.4
|
0.4
|
0.4
|
|||||||||||||||||||||
Business
services
|
*
|
0.1
|
0.1
|
0.1
|
0.1
|
0.1
|
0.1
|
|||||||||||||||||||||
Child
care
|
8.7
|
10.3
|
12.7
|
14.4
|
17.8
|
20.8
|
23.9
|
|||||||||||||||||||||
Consumer
electronics
|
1.0
|
1.1
|
1.3
|
2.1
|
3.0
|
3.3
|
4.0
|
|||||||||||||||||||||
Convenience
stores
|
14.0
|
16.1
|
18.7
|
19.2
|
13.3
|
9.1
|
8.4
|
|||||||||||||||||||||
Crafts
and
novelties
|
0.3
|
0.4
|
0.4
|
0.5
|
0.6
|
0.4
|
0.4
|
|||||||||||||||||||||
Drug
stores
|
2.8
|
2.9
|
2.8
|
0.1
|
0.2
|
0.2
|
0.2
|
|||||||||||||||||||||
Entertainment
|
1.4
|
1.6
|
2.1
|
2.3
|
2.6
|
2.3
|
1.8
|
|||||||||||||||||||||
Equipment
rental services
|
0.2
|
0.2
|
0.4
|
0.3
|
0.2
|
--
|
--
|
|||||||||||||||||||||
Financial
services
|
0.1
|
0.1
|
0.1
|
0.1
|
--
|
--
|
--
|
|||||||||||||||||||||
General
merchandise
|
0.7
|
0.6
|
0.5
|
0.4
|
0.5
|
0.5
|
0.6
|
|||||||||||||||||||||
Grocery
stores
|
0.7
|
0.7
|
0.7
|
0.8
|
0.4
|
0.5
|
0.6
|
|||||||||||||||||||||
Health
and
fitness
|
5.5
|
4.3
|
3.7
|
4.0
|
3.8
|
3.8
|
3.6
|
|||||||||||||||||||||
Home
furnishings
|
2.7
|
3.1
|
3.7
|
4.1
|
4.9
|
5.4
|
6.0
|
|||||||||||||||||||||
Home
improvement
|
2.5
|
3.4
|
1.1
|
1.0
|
1.1
|
1.2
|
1.3
|
|||||||||||||||||||||
Motor
vehicle
dealerships
|
3.5
|
3.4
|
2.6
|
0.6
|
--
|
--
|
--
|
|||||||||||||||||||||
Office
supplies
|
1.1
|
1.3
|
1.5
|
1.6
|
1.9
|
2.1
|
2.2
|
|||||||||||||||||||||
Pet
supplies
and services
|
0.9
|
1.1
|
1.3
|
1.4
|
1.7
|
1.7
|
1.6
|
|||||||||||||||||||||
Private
education
|
0.8
|
0.8
|
0.8
|
1.1
|
1.2
|
1.3
|
1.5
|
|||||||||||||||||||||
Restaurants
|
19.2
|
11.9
|
9.4
|
9.7
|
11.8
|
13.5
|
12.2
|
|||||||||||||||||||||
Shoe
stores
|
--
|
--
|
0.3
|
0.3
|
0.9
|
0.8
|
0.7
|
|||||||||||||||||||||
Sporting
goods
|
2.6
|
2.9
|
3.4
|
3.4
|
3.8
|
4.1
|
0.9
|
|||||||||||||||||||||
Theaters
|
9.2
|
9.6
|
5.2
|
3.5
|
4.1
|
3.9
|
4.3
|
|||||||||||||||||||||
Travel
plazas
|
0.2
|
0.3
|
0.3
|
0.4
|
0.3
|
--
|
--
|
|||||||||||||||||||||
Video
rental
|
1.8
|
2.1
|
2.5
|
2.8
|
3.3
|
3.3
|
3.7
|
|||||||||||||||||||||
Other
|
2.3
|
2.7
|
3.0
|
3.4
|
3.8
|
4.4
|
5.2
|
|||||||||||||||||||||
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
to
discontinued operations.
|
|
|||||||
Rental
Revenue for the
|
Percentage
of
|
||||||
Number
of
|
Quarter
Ended
|
Rental
|
|||||
Industry
|
Properties
|
June
30, 2007(1)
|
Revenue
|
||||
Tenants
Providing Services
|
|||||||
Automotive
collision services
|
13
|
$
825
|
1.2%
|
||||
Automotive
service
|
219
|
3,709
|
5.3
|
||||
Child
care
|
268
|
6,119
|
8.7
|
||||
Entertainment
|
8
|
967
|
1.4
|
||||
Equipment
rental services
|
2
|
150
|
0.2
|
||||
Financial
services
|
4
|
85
|
0.1
|
||||
Health
and
fitness
|
26
|
3,871
|
5.5
|
||||
Private
education
|
6
|
576
|
0.8
|
||||
Theaters
|
31
|
6,514
|
9.2
|
||||
Other
|
11
|
1,600
|
2.3
|
||||
588
|
24,416
|
34.7
|
|||||
Tenants
Selling Goods and Services
|
|||||||
Automotive
parts (with installation)
|
30
|
583
|
0.8
|
||||
Automotive
tire services
|
149
|
5,283
|
7.5
|
||||
Business
services
|
1
|
32
|
*
|
||||
Convenience
stores
|
425
|
9,854
|
14.0
|
||||
Home
improvement
|
1
|
57
|
0.1
|
||||
Motor
vehicle
dealerships
|
22
|
2,495
|
3.5
|
||||
Pet
supplies
and services
|
9
|
607
|
0.9
|
||||
Restaurants
|
472
|
13,525
|
19.2
|
||||
Travel
plazas
|
1
|
170
|
0.2
|
||||
Video
rental
|
34
|
1,263
|
1.8
|
||||
1,144
|
33,869
|
48.0
|
|||||
Tenants
Selling Goods
|
|||||||
Apparel
stores
|
6
|
883
|
1.3
|
||||
Automotive
parts
|
74
|
1,063
|
1.5
|
||||
Book
stores
|
2
|
156
|
0.2
|
||||
Consumer
electronics
|
17
|
679
|
1.0
|
||||
Crafts
and
novelties
|
4
|
215
|
0.3
|
||||
Drug
stores
|
34
|
1,941
|
2.8
|
||||
General
merchandise
|
24
|
482
|
0.7
|
||||
Grocery
stores
|
8
|
531
|
0.7
|
||||
Home
furnishings
|
41
|
1,932
|
2.7
|
||||
Home
improvement
|
31
|
1,693
|
2.4
|
||||
Office
supplies
|
10
|
788
|
1.1
|
||||
Pet
supplies
|
2
|
37
|
*
|
||||
Sporting
goods
|
13
|
1,810
|
2.6
|
||||
266
|
12,210
|
17.3
|
|||||
Totals
|
1,998
|
$
70,495
|
100.0%
|
(1)
|
Includes
rental revenue for all properties owned by Realty Income at
June 30, 2007,
including revenue from properties reclassified to discontinued
operations
of $15.
|
Total
Portfolio
|
Initial
Expirations(3)
|
Subsequent
Expirations(4)
|
||||||||||||||||||||||||||||||||||
Year
|
Total
Number
of Leases Expiring(1)
|
Rental
Revenue for the Quarter Ended 6/30/07(2)
|
%
of
Total
Rental Revenue
|
Number
of
Leases Expiring
|
Rental
Revenue
for
the Quarter Ended 6/30/07
|
%
of
Total
Rental Revenue
|
Number
of Leases Expiring
|
Rental
Revenue
for
the Quarter Ended 6/30/07
|
%
of
Total
Rental Revenue
|
|||||||||||||||||||||||||||
2007
|
87
|
$ |
1,566
|
2.3 | % |
52
|
$ |
967
|
1.4 | % |
35
|
$ |
599
|
0.9 | % | |||||||||||||||||||||
2008
|
120
|
2,581
|
3.7
|
64
|
1,520
|
2.2
|
56
|
1,061
|
1.5
|
|||||||||||||||||||||||||||
2009
|
108
|
2,319
|
3.4
|
32
|
734
|
1.1
|
76
|
1,585
|
2.3
|
|||||||||||||||||||||||||||
2010
|
74
|
1,564
|
2.3
|
34
|
833
|
1.2
|
40
|
731
|
1.1
|
|||||||||||||||||||||||||||
2011
|
81
|
2,467
|
3.6
|
36
|
1,422
|
2.1
|
45
|
1,045
|
1.5
|
|||||||||||||||||||||||||||
2012
|
89
|
2,262
|
3.3
|
75
|
1,968
|
2.9
|
14
|
294
|
0.4
|
|||||||||||||||||||||||||||
2013
|
76
|
3,435
|
5.0
|
67
|
3,201
|
4.7
|
9
|
234
|
0.3
|
|||||||||||||||||||||||||||
2014
|
48
|
2,000
|
2.9
|
35
|
1,739
|
2.5
|
13
|
261
|
0.4
|
|||||||||||||||||||||||||||
2015
|
90
|
1,848
|
2.7
|
65
|
1,284
|
1.9
|
25
|
564
|
0.8
|
|||||||||||||||||||||||||||
2016
|
112
|
1,902
|
2.7
|
111
|
1,877
|
2.7
|
1
|
25
|
*
|
|||||||||||||||||||||||||||
2017
|
25
|
1,686
|
2.5
|
21
|
1,615
|
2.4
|
4
|
71
|
0.1
|
|||||||||||||||||||||||||||
2018
|
24
|
1,018
|
1.5
|
24
|
1,018
|
1.5
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2019
|
94
|
4,652
|
6.8
|
93
|
4,456
|
6.5
|
1
|
196
|
0.3
|
|||||||||||||||||||||||||||
2020
|
81
|
3,087
|
4.5
|
78
|
3,024
|
4.4
|
3
|
63
|
0.1
|
|||||||||||||||||||||||||||
2021
|
148
|
5,597
|
8.2
|
147
|
5,543
|
8.1
|
1
|
54
|
0.1
|
|||||||||||||||||||||||||||
2022
|
98
|
2,852
|
4.2
|
98
|
2,852
|
4.2
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2023
|
234
|
6,452
|
9.4
|
233
|
6,426
|
9.4
|
1
|
26
|
*
|
|||||||||||||||||||||||||||
2024
|
60
|
1,882
|
2.7
|
60
|
1,882
|
2.7
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2025
|
67
|
6,308
|
9.2
|
63
|
6,243
|
9.1
|
4
|
65
|
0.1
|
|||||||||||||||||||||||||||
2026
|
193
|
10,969
|
16.0
|
191
|
10,915
|
15.9
|
2
|
54
|
0.1
|
|||||||||||||||||||||||||||
2027
|
27
|
782
|
1.1
|
27
|
782
|
1.1
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2028
|
5
|
148
|
0.2
|
5
|
148
|
0.2
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2029
|
13
|
127
|
0.2
|
13
|
127
|
0.2
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2030
|
2
|
240
|
0.3
|
2
|
240
|
0.3
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2033
|
3
|
357
|
0.5
|
3
|
357
|
0.5
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2034
|
2
|
230
|
0.3
|
2
|
230
|
0.3
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2037
|
2
|
322
|
0.5
|
2
|
322
|
0.5
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2043
|
1
|
13
|
*
|
--
|
--
|
--
|
1
|
13
|
*
|
|||||||||||||||||||||||||||
Totals
|
1,964
|
$ |
68,666
|
100.0 | % |
1,633
|
$ |
61,725
|
90.0 | % |
331
|
$ |
6,941
|
10.0 | % |
(1)
|
Excludes
seven multi-tenant properties and 27 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 $15 from properties reclassified to discontinued
operations and excludes revenue of $1,829 from seven multi-tenant
properties and from 27 vacant and unleased properties at June
30,
2007.
|
(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.
|
Rental
Revenue
|
||||||||||||||||||||
Approximate
|
For
the Quarter
|
Percentage
of
|
||||||||||||||||||
Number
of
|
Percent
|
Leasable
|
Ended
June 30,
|
Rental
|
||||||||||||||||
State
|
Properties
|
Leased
|
Square
Feet
|
2007(1)
|
Revenue
|
|||||||||||||||
Alabama
|
61
|
98 | % |
422,900
|
$ |
1,885
|
2.7 | % | ||||||||||||
Alaska
|
2
|
100
|
128,500
|
277
|
0.4
|
|||||||||||||||
Arizona
|
72
|
97
|
372,800
|
2,075
|
2.9
|
|||||||||||||||
Arkansas
|
15
|
100
|
94,500
|
411
|
0.6
|
|||||||||||||||
California
|
61
|
98
|
1,103,800
|
3,924
|
5.6
|
|||||||||||||||
Colorado
|
47
|
98
|
419,400
|
1,776
|
2.5
|
|||||||||||||||
Connecticut
|
16
|
100
|
245,600
|
1,028
|
1.5
|
|||||||||||||||
Delaware
|
15
|
100
|
27,700
|
316
|
0.4
|
|||||||||||||||
Florida
|
152
|
99
|
1,421,400
|
6,203
|
8.8
|
|||||||||||||||
Georgia
|
127
|
99
|
910,700
|
3,919
|
5.6
|
|||||||||||||||
Idaho
|
14
|
100
|
91,900
|
393
|
0.6
|
|||||||||||||||
Illinois
|
64
|
100
|
830,800
|
3,709
|
5.3
|
|||||||||||||||
Indiana
|
78
|
96
|
677,100
|
2,517
|
3.6
|
|||||||||||||||
Iowa
|
19
|
100
|
138,700
|
450
|
0.6
|
|||||||||||||||
Kansas
|
29
|
90
|
562,200
|
1,001
|
1.4
|
|||||||||||||||
Kentucky
|
22
|
95
|
111,500
|
678
|
1.0
|
|||||||||||||||
Louisiana
|
33
|
100
|
190,400
|
946
|
1.3
|
|||||||||||||||
Maryland
|
26
|
98
|
251,400
|
1,394
|
2.0
|
|||||||||||||||
Massachusetts
|
37
|
100
|
203,100
|
1,032
|
1.5
|
|||||||||||||||
Michigan
|
20
|
100
|
158,300
|
680
|
1.0
|
|||||||||||||||
Minnesota
|
21
|
100
|
392,100
|
1,267
|
1.8
|
|||||||||||||||
Mississippi
|
70
|
97
|
353,800
|
1,445
|
2.0
|
|||||||||||||||
Missouri
|
61
|
98
|
634,800
|
2,079
|
2.9
|
|||||||||||||||
Montana
|
2
|
100
|
30,000
|
74
|
0.1
|
|||||||||||||||
Nebraska
|
17
|
100
|
190,200
|
603
|
0.9
|
|||||||||||||||
Nevada
|
15
|
100
|
191,000
|
838
|
1.2
|
|||||||||||||||
New
Hampshire
|
10
|
100
|
95,400
|
394
|
0.6
|
|||||||||||||||
New
Jersey
|
26
|
100
|
235,600
|
1,642
|
2.3
|
|||||||||||||||
New
Mexico
|
7
|
100
|
53,300
|
142
|
0.2
|
|||||||||||||||
New
York
|
29
|
97
|
427,400
|
2,147
|
3.0
|
|||||||||||||||
North
Carolina
|
60
|
100
|
438,100
|
2,014
|
2.9
|
|||||||||||||||
North
Dakota
|
5
|
100
|
31,900
|
54
|
0.1
|
|||||||||||||||
Ohio
|
111
|
100
|
751,800
|
2,864
|
4.1
|
|||||||||||||||
Oklahoma
|
24
|
100
|
134,300
|
597
|
0.8
|
|||||||||||||||
Oregon
|
19
|
100
|
294,800
|
816
|
1.2
|
|||||||||||||||
Pennsylvania
|
85
|
100
|
558,700
|
2,635
|
3.7
|
|||||||||||||||
Rhode
Island
|
1
|
100
|
3,500
|
32
|
*
|
|||||||||||||||
South
Carolina
|
59
|
100
|
250,700
|
1,533
|
2.2
|
|||||||||||||||
South
Dakota
|
8
|
100
|
21,000
|
96
|
0.1
|
|||||||||||||||
Tennessee
|
126
|
100
|
607,800
|
3,020
|
4.3
|
|||||||||||||||
Texas
|
202
|
97
|
2,242,100
|
7,719
|
10.9
|
|||||||||||||||
Utah
|
6
|
83
|
35,100
|
96
|
0.1
|
|||||||||||||||
Vermont
|
1
|
100
|
2,500
|
24
|
*
|
|||||||||||||||
Virginia
|
67
|
100
|
485,900
|
2,589
|
3.7
|
|||||||||||||||
Washington
|
36
|
100
|
237,800
|
706
|
0.9
|
|||||||||||||||
West
Virginia
|
2
|
50
|
23,200
|
44
|
0.1
|
|||||||||||||||
Wisconsin
|
17
|
94
|
157,400
|
393
|
0.6
|
|||||||||||||||
Wyoming
|
1
|
100
|
4,200
|
18
|
*
|
|||||||||||||||
Totals/Average
|
1,998
|
99 | % |
17,247,100
|
$ |
70,495
|
100.0 | % |
(1)
|
Includes
rental revenue for all properties owned by Realty Income at
June 30, 2007,
including revenue from properties reclassified to discontinued
operations
of $15.
|
Year
of maturity
|
Fixed
rate
debt
|
Average
interest rate
on
fixed rate debt
|
Variable
rate
debt
|
Average
interest rate
on
variable rate debt
|
||||||||||||
2007
|
$ |
--
|
--
|
$ |
--
|
--
|
||||||||||
2008(1)(2)
|
100.0
|
8.25 | % |
10.0
|
5.92 | % | ||||||||||
2009(3)
|
20.0
|
8.00 | % |
--
|
--
|
|||||||||||
2010
|
--
|
--
|
--
|
--
|
||||||||||||
2011
|
--
|
--
|
--
|
--
|
||||||||||||
Thereafter(4)
|
800.0
|
5.66 | % |
--
|
--
|
|||||||||||
Totals
|
$ |
920.0
|
5.99 | % | $ |
10.0
|
5.92 | % | ||||||||
Fair
Value(5)
|
$ |
887.7
|
$ |
10.0
|
(1)
|
$100
million
matures in November 2008.
|
(2)
|
The
credit
facility expires in October 2008. The credit facility balance
as of June 30, 2007 was $10.0 million and as of July 30, 2007
was
zero.
|
(3)
|
$20
million
matures in January 2009.
|
(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 and
$100 million matures in March
2035.
|
(5)
|
We
base the
fair value of the fixed rate debt at June 30, 2007 on the closing
market
price or indicative price per each
note.
|
Shares
Voted
For
|
Votes
Withheld
|
|||||||
Kathleen
R.
Allen
|
83,740,735
|
819,760
|
||||||
Donald
R.
Cameron
|
83,862,417
|
698,078
|
||||||
William
E.
Clark
|
83,811,566
|
748,929
|
||||||
Roger
P.
Kuppinger
|
82,981,720
|
1,578,775
|
||||||
Thomas
A.
Lewis
|
83,871,596
|
688,899
|
||||||
Michael
D.
McKee
|
83,881,948
|
678,547
|
||||||
Ronald
L.
Merriman
|
82,943,201
|
1,617,294
|
||||||
Willard
H.
Smith Jr.
|
83,677,193
|
883,302
|
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 (filed as exhibit 3.2 to the
Company’s Form 10-Q dated June 30, 2005, and incorporated herein by
reference).
|
3.3
|
Articles
Supplementary to the Articles of Incorporation of the Company
classifying
and designating the 7 3/8% 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 3/8%
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 3/4% 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 the Company’s Form 8-K, dated
October 27, 1998 and incorporated herein by
reference).
|
4.2
|
Form
of 8
1/4% 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
3/8% 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
3/8% 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
1/2% 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
1/2% 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
7/8% 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 301 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
7/8% 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
3/8% 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 section 301 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
3/8% 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 section 301 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).
|
* 10.1
|
Amendment
dated May 15, 2007 to our Amended and Restated 2003 Stock
Incentive Award
Plan of Realty Income Corporation
|
*
10.2
|
Form
of
Restricted Stock Agreement
|
*
31.1
|
Section
302
Certifications as filed by the Chief Executive Officer
pursuant to SEC
release No. 33-8212 and 34-47551.
|
*
31.2
|
Section
302
Certifications as filed by the Chief Financial Officer
pursuant to SEC
release No. 33-8212 and 34-47551.
|
*
32
|
Section
906
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
|
|
Gregory
J.
Fahey
|