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
|
|||||
7
|
|||||
Item
2:
|
|||||
18
|
|||||
19
|
|||||
21
|
|||||
24
|
|||||
28
|
|||||
37
|
|||||
39
|
|||||
44
|
|||||
44
|
|||||
44
|
|||||
Item
3:
|
45
|
||||
Item
4:
|
46
|
||||
PART
II. OTHER
INFORMATION
|
|||||
Item
1A:
|
47
|
||||
Item
6:
|
47
|
||||
50
|
PART
I.
|
Item
1.
|
Financial
Statements
|
2007
|
2006
|
|||||||
ASSETS
|
(unaudited)
|
|||||||
Real
estate, at cost:
|
||||||||
Land
|
$ |
1,075,103
|
$ |
958,770
|
||||
Buildings
and improvements
|
2,042,767
|
1,785,203
|
||||||
3,117,870
|
2,743,973
|
|||||||
Less
accumulated depreciation and amortization
|
(450,222 | ) | (396,854 | ) | ||||
Net
real estate held for investment
|
2,667,648
|
2,347,119
|
||||||
Real
estate held for sale, net
|
78,552
|
137,962
|
||||||
Net
real estate
|
2,746,200
|
2,485,081
|
||||||
Cash
and cash equivalents
|
266,644
|
10,573
|
||||||
Accounts
receivable
|
6,098
|
5,953
|
||||||
Goodwill
|
17,206
|
17,206
|
||||||
Other
assets, net
|
40,114
|
27,695
|
||||||
Total
assets
|
$ |
3,076,262
|
$ |
2,546,508
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Distributions
payable
|
$ |
15,780
|
$ |
15,096
|
||||
Accounts
payable and accrued expenses
|
29,242
|
27,004
|
||||||
Other
liabilities
|
9,840
|
8,416
|
||||||
Line
of credit payable
|
--
|
--
|
||||||
Notes
payable
|
1,470,000
|
920,000
|
||||||
Total
liabilities
|
1,524,862
|
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, 101,072,360 and 100,746,226
|
||||||||
shares
issued and outstanding in 2007 and 2006, respectively
|
1,544,117
|
1,540,365
|
||||||
Distributions
in excess of net income
|
(330,507 | ) | (302,154 | ) | ||||
Total
stockholders’ equity
|
1,551,400
|
1,575,992
|
||||||
Total
liabilities and stockholders’ equity
|
$ |
3,076,262
|
$ |
2,546,508
|
The
accompanying notes to consolidated financial statements are an integral
part of these
statements.
|
Three
Months
Ended
9/30/07
|
Three
Months
Ended
9/30/06
|
Nine
Months
Ended
9/30/07
|
Nine
Months
Ended
9/30/06
|
|||||||||||||
REVENUE
|
||||||||||||||||
Rental
|
$ |
72,794
|
$ |
58,919
|
$ |
212,237
|
$ |
169,468
|
||||||||
Other
|
1,295
|
245
|
3,660
|
1,096
|
||||||||||||
74,089
|
59,164
|
215,897
|
170,564
|
|||||||||||||
EXPENSES
|
||||||||||||||||
Depreciation
and amortization
|
19,564
|
14,586
|
56,132
|
42,796
|
||||||||||||
Interest
|
16,163
|
12,530
|
41,612
|
37,657
|
||||||||||||
General
and administrative
|
6,290
|
4,083
|
17,219
|
12,683
|
||||||||||||
Property
|
819
|
787
|
2,652
|
2,331
|
||||||||||||
Income
taxes
|
350
|
96
|
948
|
558
|
||||||||||||
Loss
on extinguishment of debt
|
--
|
1,555
|
--
|
1,555
|
||||||||||||
43,186
|
33,637
|
118,563
|
97,580
|
|||||||||||||
Income
from continuing operations
|
30,903
|
25,527
|
97,334
|
72,984
|
||||||||||||
Income
from discontinued operations:
|
||||||||||||||||
Real
estate acquired for resale by Crest
|
1,937
|
99
|
7,967
|
1,515
|
||||||||||||
Real
estate held for investment
|
1,133
|
932
|
1,932
|
3,586
|
||||||||||||
3,070
|
1,031
|
9,899
|
5,101
|
|||||||||||||
Net
income
|
33,973
|
26,558
|
107,233
|
78,085
|
||||||||||||
Preferred
stock cash dividends
|
(6,063 | ) | (2,351 | ) | (18,190 | ) | (7,052 | ) | ||||||||
Net
income available to common stockholders
|
$ |
27,910
|
$ |
24,207
|
$ |
89,043
|
$ |
71,033
|
||||||||
Amounts
available to common stockholders per common share, basic and
diluted:
|
||||||||||||||||
Income
from continuing operations
|
$ |
0.25
|
$ |
0.26
|
$ |
0.79
|
$ |
0.76
|
||||||||
Net
income
|
$ |
0.28
|
$ |
0.27
|
$ |
0.89
|
$ |
0.82
|
||||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
|
100,187,901
|
89,166,429
|
100,148,993
|
86,936,161
|
||||||||||||
Diluted
|
100,252,953
|
89,267,138
|
100,326,859
|
87,084,545
|
2007
|
2006
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
Net
income
|
$ |
107,233
|
$ |
78,085
|
||||
Adjustments
to net income:
|
||||||||
Depreciation
and amortization
|
56,132
|
42,796
|
||||||
Income
from discontinued operations:
|
||||||||
Real
estate acquired for resale
|
(7,967 | ) | (1,515 | ) | ||||
Real
estate held for investment
|
(1,932 | ) | (3,586 | ) | ||||
Gain
on sales of land and improvements
|
(1,835 | ) |
--
|
|||||
Gain
on reinstatement of property carrying value
|
--
|
(716 | ) | |||||
Amortization
of share-based compensation
|
3,025
|
2,297
|
||||||
Cash
provided by (used in) discontinued operations:
|
||||||||
Real
estate acquired for resale
|
(819 | ) |
84
|
|||||
Real
estate held for investment
|
824
|
797
|
||||||
Investment in real estate acquired for resale
|
(29,892 | ) | (9,937 | ) | ||||
Proceeds from sales of real estate acquired for resale
|
94,106
|
16,807
|
||||||
Collection of mortgage note receivable by Crest
|
25
|
1,333
|
||||||
Change
in assets and liabilities:
|
||||||||
Accounts
receivable and other assets
|
728
|
5,033
|
||||||
Accounts
payable, accrued expenses and other liabilities
|
(773 | ) | (3,636 | ) | ||||
Net
cash provided by operating activities
|
218,855
|
127,842
|
||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Proceeds
from sales of investment properties:
|
||||||||
Continuing
operations
|
4,370
|
--
|
||||||
Discontinued operations
|
3,114
|
9,804
|
||||||
Acquisition
of and improvements to investment properties
|
(377,564 | ) | (244,586 | ) | ||||
Restricted
escrow funds acquired in connection with
|
||||||||
acquisitions
of investment properties
|
(2,648 | ) |
--
|
|||||
Intangibles
acquired in connection with acquisitions of
|
||||||||
investment
properties
|
(319 | ) | (937 | ) | ||||
Net
cash used in investing activities
|
(373,047 | ) | (235,719 | ) |
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(CONTINUED)
|
2007
|
2006
|
|||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Borrowings
from lines of credit
|
407,800
|
279,900
|
||||||
Payments
under lines of credit
|
(407,800 | ) | (416,600 | ) | ||||
Proceeds
from stock offerings, net of offering costs of $11,931 in
2006
|
--
|
229,566
|
||||||
Proceeds
from notes issued, net of offering costs of $5,563 in 2007
|
||||||||
and
$3,003 in 2006
|
544,437
|
271,997
|
||||||
Principal
payment on notes
|
--
|
(110,000 | ) | |||||
Cash
distributions to common stockholders
|
(116,382 | ) | (92,605 | ) | ||||
Cash
dividends to preferred stockholders
|
(18,520 | ) | (7,052 | ) | ||||
Proceeds
from other stock issuances
|
728
|
341
|
||||||
Net
cash provided by financing activities
|
410,263
|
155,547
|
||||||
Net
increase in cash and cash equivalents
|
256,071
|
47,670
|
||||||
Cash
and cash equivalents, beginning of period
|
10,573
|
65,704
|
||||||
Cash
and cash equivalents, end of period
|
$ |
266,644
|
$ |
113,374
|
1.
|
Management
Statement
|
2.
|
Summary
of Significant Accounting Policies and
Procedures
|
F. Other
assets consist of the following at:
|
September
30,
|
December
31,
|
||||||
(dollars
in thousands)
|
2007
|
2006
|
||||||
Deferred
bond financing costs, net
|
$ |
15,320
|
$ |
10,868
|
||||
Value
of in-place and above-market leases, net
|
10,695
|
10,430
|
||||||
Prepaid
expenses
|
3,395
|
3,271
|
||||||
Corporate
assets, net of accumulated depreciation and amortization
|
1,376
|
463
|
||||||
Settlements
on treasury lock agreements
|
977
|
1,629
|
||||||
Unamortized
credit line fees, net
|
564
|
954
|
||||||
Other
items
|
7,787
|
80
|
||||||
$ |
40,114
|
$ |
27,695
|
3.
|
Retail
Properties Acquired
|
4.
|
Credit
Facility
|
5.
|
Note
Offering
|
6.
|
Note
Redemption
|
7.
|
Notes
Payable
|
September
30,
|
December
31,
|
|||||||
2007
|
2006
|
|||||||
81/4%
notes, issued in October 1998 and due in November 2008
|
$ |
100.0
|
$ |
100.0
|
||||
8%
notes, issued in January 1999 and due in January 2009
|
20.0
|
20.0
|
||||||
53/8%
notes,
issued in March 2003 and due in March 2013
|
100.0
|
100.0
|
||||||
51/2%
notes,
issued in November 2003 and due in November 2015
|
150.0
|
150.0
|
||||||
5.95%
notes, issued in September 2006 and due in September 2016
|
275.0
|
275.0
|
||||||
53/8%
notes,
issued in September 2005 and due in September 2017
|
175.0
|
175.0
|
||||||
63/4%
notes,
issued in September 2007 and due in August 2019
|
550.0
|
--
|
||||||
57/8%
bonds,
issued in March 2005 and due in March 2035
|
100.0
|
100.0
|
||||||
$ |
1,470.0
|
$ |
920.0
|
8.
|
Gain
on Sales of Real Estate Acquired for Resale by
Crest
|
9.
|
Gain
on Sales of Investment Properties, Improvements and Land by Realty
Income
|
10.
|
Discontinued
Operations
|
Crest’s
income from discontinued operations,
real
estate acquired for resale
|
Three
months
ended
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
||||||||||||
Gain
on sales of real estate acquired for resale
|
$ |
2,219
|
$ |
313
|
$ |
8,786
|
$ |
1,739
|
||||||||
Rental
revenue
|
1,547
|
913
|
6,736
|
2,996
|
||||||||||||
Other
revenue
|
68
|
--
|
128
|
11
|
||||||||||||
Interest
expense
|
(1,239 | ) | (711 | ) | (5,115 | ) | (2,175 | ) | ||||||||
General
and administrative expense
|
(224 | ) | (73 | ) | (507 | ) | (227 | ) | ||||||||
Property
expenses
|
(14 | ) | (17 | ) | (29 | ) | (50 | ) | ||||||||
Provisions
for impairment
|
--
|
(308 | ) |
--
|
(308 | ) | ||||||||||
Income
taxes
|
(420 | ) | (18 | ) | (2,032 | ) | (471 | ) | ||||||||
Income
from discontinued operations,
real
estate acquired for resale by Crest
|
$ |
1,937
|
$ |
99
|
$ |
7,967
|
$ |
1,515
|
Realty
Income’s income from discontinued operations, real estate held for
investment
|
Three
months
ended
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
||||||||||||
Gain
on sales of investment properties
|
$ |
770
|
$ |
843
|
$ |
1,355
|
$ |
3,036
|
||||||||
Rental
revenue
|
529
|
236
|
834
|
914
|
||||||||||||
Depreciation
and amortization
|
(29 | ) | (75 | ) | (113 | ) | (247 | ) | ||||||||
Property
expenses
|
(3 | ) | (72 | ) | (10 | ) | (117 | ) | ||||||||
Provision
for impairment
|
(134 | ) |
--
|
(134 | ) |
--
|
||||||||||
Income
from discontinued operations,
real
estate held for investment
|
$ |
1,133
|
$ |
932
|
$ |
1,932
|
$ |
3,586
|
Three
months
ended
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
|||||||||||||
Real
estate acquired for resale by Crest
|
$ |
1,937
|
$ |
99
|
$ |
7,967
|
$ |
1,515
|
||||||||
Real
estate held for investment
|
1,133
|
932
|
1,932
|
3,586
|
||||||||||||
Income
from discontinued operations
|
$ |
3,070
|
$ |
1,031
|
$ |
9,899
|
$ |
5,101
|
||||||||
Per
common share, basic and diluted
|
$ |
0.03
|
$ |
0.01
|
$ |
0.10
|
$ |
0.06
|
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
|
||||||
July
|
0.127750
|
0.117500
|
||||||
August
|
0.127750
|
0.117500
|
||||||
September
|
0.135500
|
0.125250
|
||||||
Total
|
$ |
1.151875
|
$ |
1.059625
|
12.
|
Net
Income per Common Share
|
Three
months
ended
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
|||||||||||||
Weighted
average shares used for the basic net income per share
computation
|
100,187,901
|
89,166,429
|
100,148,993
|
86,936,161
|
||||||||||||
Incremental
shares from share-based compensation
|
65,052
|
100,709
|
177,866
|
148,384
|
||||||||||||
Adjusted
weighted average shares used for diluted net income per share
computation
|
100,252,953
|
89,267,138
|
100,326,859
|
87,084,545
|
||||||||||||
Nonvested
shares from share-based compensation that were
anti-dilutive
|
267,631
|
243,325
|
267,231
|
243,725
|
13.
|
Supplemental
Disclosures of Cash Flow
Information
|
9/30/07
|
12/31/06
|
|||||||
Common
stock distributions
|
$ |
13,759
|
$ |
12,745
|
||||
Preferred
stock dividends
|
2,021
|
2,351
|
14.
|
Segment
Information
|
Revenue
|
Three
months
ended
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
||||||||||||
Segment
rental revenue(1):
|
||||||||||||||||
Automotive
service
|
$ |
3,721
|
$ |
5,331
|
$ |
11,130
|
$ |
12,805
|
||||||||
Automotive
tire services
|
5,283
|
3,424
|
15,848
|
10,272
|
||||||||||||
Child
care
|
6,107
|
6,267
|
18,330
|
18,587
|
||||||||||||
Convenience
stores
|
10,229
|
9,572
|
29,715
|
28,672
|
||||||||||||
Drug
stores
|
1,941
|
1,787
|
5,824
|
5,043
|
||||||||||||
Health
and fitness
|
3,882
|
2,648
|
10,768
|
7,452
|
||||||||||||
Home
furnishings
|
1,931
|
1,929
|
5,864
|
5,702
|
||||||||||||
Home
improvement
|
1,534
|
1,515
|
4,590
|
4,492
|
||||||||||||
Motor
vehicle dealerships
|
2,375
|
2,030
|
7,096
|
5,624
|
||||||||||||
Restaurants
|
15,298
|
5,720
|
42,216
|
16,068
|
||||||||||||
Sporting
goods
|
1,865
|
1,687
|
5,569
|
5,060
|
||||||||||||
Theaters
|
6,514
|
5,574
|
19,543
|
16,497
|
||||||||||||
18
non-reportable segments
|
12,114
|
11,435
|
35,744
|
33,194
|
||||||||||||
Total
rental
|
72,794
|
58,919
|
212,237
|
169,468
|
||||||||||||
Other
revenue
|
1,295
|
245
|
3,660
|
1,096
|
||||||||||||
Total
revenue
|
$ |
74,089
|
$ |
59,164
|
$ |
215,897
|
$ |
170,564
|
September
30,
|
December
31,
|
|||||||
Assets,
as of:
|
2007
|
2006
|
||||||
Segment
net real estate:
|
||||||||
Automotive
service
|
$ |
101,950
|
$ |
104,089
|
||||
Automotive
tire services
|
207,343
|
211,760
|
||||||
Child
care
|
92,400
|
96,263
|
||||||
Convenience
stores
|
353,253
|
334,839
|
||||||
Drug
stores
|
76,497
|
78,347
|
||||||
Health
and fitness
|
160,674
|
102,718
|
||||||
Home
furnishings
|
54,948
|
56,286
|
||||||
Home
improvement
|
59,838
|
61,197
|
||||||
Motor
vehicle dealerships
|
100,767
|
104,122
|
||||||
Restaurants
|
761,299
|
540,093
|
||||||
Sporting
goods
|
57,557
|
56,291
|
||||||
Theaters
|
269,434
|
272,135
|
||||||
Crest
|
78,307
|
137,506
|
||||||
18
other non-reportable segments
|
371,933
|
329,435
|
||||||
Total
segment net real estate
|
2,746,200
|
2,485,081
|
||||||
Other
intangible assets – Drug stores
|
7,148
|
7,629
|
||||||
Other
intangible assets – Theaters
|
2,572
|
2,801
|
||||||
Other
corporate assets
|
320,342
|
50,997
|
||||||
Total
assets
|
$ |
3,076,262
|
$ |
2,546,508
|
15.
|
Common
Stock Incentive Plan
|
For
the nine
months
ended
September
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
|
271,831
|
27.63
|
210,332
|
21.72
|
||||||||||||
Shares
vested
|
(148,955 | ) |
20.93
|
(125,879 | ) |
20.39
|
||||||||||
Shares
forfeited
|
(960 | ) |
23.85
|
(4,449 | ) |
21.35
|
||||||||||
Outstanding
nonvested
shares,
end of each period
|
990,642
|
$ |
20.26
|
868,726
|
$ |
17.96
|
·
|
Shares
vest
in 331/3% 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 331/3% 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.
|
16.
|
Commitments
and Contingencies
|
Item
2.
|
·
|
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
2,181 retail properties;
|
·
|
With
an occupancy rate of 98.3%, or 2,144 properties occupied of the 2,181
properties in the portfolio;
|
·
|
Leased
to 110 different retail chains doing business in 30 separate retail
industries;
|
·
|
Located
in 49 states;
|
·
|
With
over 18.1 million square feet of leasable space;
and
|
·
|
With
an average leasable retail space per property of approximately 8,300
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 101,072,960 multiplied by the
last
reported sales price of our common stock on the NYSE of $28.73 per
share,
or $2.90 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 $1.47 billion.
|
81/4%
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
|
|||
53/8%
notes,
issued in March 2003 and due in March 2013
|
100.0
|
|||
51/2%
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
|
|||
53/8%
notes,
issued in September 2005 and due in September 2017
|
175.0
|
|||
63/4%
notes,
issued in September 2007 and due in August 2019
|
550.0
|
|||
57/8%
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%
|
42.1 | % | ||
Limitation
on incurrence of secured debt
|
≤
40%
|
0.0 | % | ||
Debt
service coverage
|
≥
1.5 x
|
4.6
|
x | ||
Maintenance
of total unencumbered assets
|
≥
150% of unsecured debt
|
238 | % |
Year
of Maturity
|
Credit
Facility (1)
|
Notes
|
Interest
(2)
|
Other
(3)
|
Totals
|
|||||||||||||||
2007
|
$ |
--
|
$ |
--
|
$ |
23.1
|
$ |
19.4
|
$ |
42.5
|
||||||||||
2008
|
--
|
100.0
|
91.2
|
--
|
191.2
|
|||||||||||||||
2009
|
--
|
20.0
|
82.5
|
--
|
102.5
|
|||||||||||||||
2010
|
--
|
--
|
82.4
|
--
|
82.4
|
|||||||||||||||
2011
|
--
|
--
|
82.4
|
--
|
82.4
|
|||||||||||||||
Thereafter
|
--
|
1,350.0
|
588.5
|
--
|
1,938.5
|
|||||||||||||||
Totals
|
$ |
--
|
$ |
1,470.0
|
$ |
950.1
|
$ |
19.4
|
$ |
2,439.5
|
|
(1) There
was no
outstanding credit facility balance on October 25,
2007.
|
|
(2) Interest
on the
credit facility and notes has been calculated based on outstanding
balances as of September 30, 2007 through their respective maturity
dates.
|
|
(3)
“Other”
consists
of $18.6
million of estimated unfunded costs on properties under development
and
$776,000 of contingent payments for tenant improvements and leasing
costs.
|
·
|
The
232 retail properties acquired by Realty Income in 2007, which generated
$3.7 million of rent in the third quarter of
2007;
|
·
|
The
322 retail properties acquired by Realty Income in 2006, which generated
$13.4 million of rent in the third quarter of 2007 compared to $2.9
million in the third quarter of 2006, an increase of
$10.5 million;
|
·
|
Same
store rents generated on 1,536 properties during the entire third
quarter
of 2007 increased by $738,000, or 1.4%, to $52.28 million from $51.54
million for the same quarter in 2006; net
of
|
·
|
A
decrease of $806,000 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 $2.4 million in
aggregate in the third quarter of 2007 compared to $3.2 million in
the
same quarter of 2006; and
|
·
|
A
decrease in straight-line rent and other non-cash adjustments to
rent of
$162,000 in the third quarter of 2007 as compared to the third quarter
of
2006.
|
·
|
The
232 retail properties acquired by Realty Income in 2007, which generated
$5.2 million in the first nine months of
2007;
|
·
|
The
322 retail properties acquired by Realty Income in 2006, which generated
$39.8 million in the first nine months of 2007 compared to $6.0
million in the first nine months of 2006, an increase of
$33.8 million;
|
·
|
Same
store rents generated on 1,536 properties during the entire first
nine
months of 2007 increased by $2.4 million, or 1.6%, to $156.4 million
from
$154.0 million for the same period in
2006;
|
·
|
An
increase of $1.9 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 $7.6 million in
aggregate in the first nine months of 2007 compared to $5.7 million
in the
first nine months of 2006; and net
of
|
·
|
A
decrease in straight-line rent and other non-cash adjustments to
rent of
$470,000 in the first nine months of 2007 as compared to the first
nine
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
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
|||||||||||||
Interest
on our credit facility and notes
|
$ |
16,812
|
$ |
13,235
|
$ |
44,902
|
$ |
39,367
|
||||||||
Interest
included in discontinued operations
|
||||||||||||||||
from
real estate acquired for resale by Crest
|
(1,239 | ) | (711 | ) | (5,115 | ) | (2,175 | ) | ||||||||
Amortization
of settlements on treasury lock
|
||||||||||||||||
agreement
|
218
|
121
|
653
|
499
|
||||||||||||
Credit
facility commitment fees
|
114
|
114
|
342
|
342
|
||||||||||||
Amortization
of credit facility origination costs and
|
||||||||||||||||
deferred bond financing costs
|
554
|
552
|
1,597
|
1,494
|
||||||||||||
Interest
capitalized
|
(296 | ) | (781 | ) | (767 | ) | (1,870 | ) | ||||||||
Interest
expense
|
$ |
16,163
|
$ |
12,530
|
$ |
41,612
|
$ |
37,657
|
Credit
facility and notes outstanding
|
Three
months
ended
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
||||||||||||
Average
outstanding balances (in thousands)
|
$ |
1,101,810
|
$ |
847,580
|
$ |
992,605
|
$ |
848,377
|
||||||||
Average
interest rates
|
6.10 | % | 6.19 | % | 6.03 | % | 6.20 | % |
Three
months
ended
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
|||||||||||||
Net
cash provided by operating activities
|
$ |
46,598
|
$ |
43,085
|
$ |
218,855
|
$ |
127,842
|
||||||||
Interest
expense
|
16,163
|
12,530
|
41,612
|
37,657
|
||||||||||||
Interest
expense included in discontinued operations(1)
|
1,239
|
711
|
5,115
|
2,175
|
||||||||||||
Income
taxes
|
350
|
96
|
948
|
558
|
||||||||||||
Income
taxes included in discontinued operations(1)
|
420
|
18
|
2,032
|
471
|
||||||||||||
Investment
in real estate acquired for resale(1)
|
29,892
|
1,200
|
29,892
|
9,937
|
||||||||||||
Proceeds
from sales of real estate acquired for resale(1)
|
(28,328 | ) | (6,612 | ) | (94,106 | ) | (16,807 | ) | ||||||||
Collection
of a mortgage note receivable by Crest(1)
|
(17 | ) |
--
|
(25 | ) | (1,333 | ) | |||||||||
Provision
for impairment included in property expenses
|
--
|
--
|
138
|
--
|
||||||||||||
Crest
provisions for impairment(1)
|
--
|
(308 | ) |
--
|
(308 | ) | ||||||||||
Gain
on sales of real estate acquired for resale(1)
|
2,219
|
313
|
8,786
|
1,739
|
||||||||||||
Amortization
of share-based compensation
|
(828 | ) | (654 | ) | (3,025 | ) | (2,297 | ) | ||||||||
Changes
in assets and liabilities:
|
||||||||||||||||
Accounts
receivable and other assets
|
262
|
(505 | ) | (728 | ) | (5,033 | ) | |||||||||
Accounts
payable, accrued expenses and other liabilities
|
3,103
|
3,857
|
773
|
3,636
|
||||||||||||
Interest
coverage amount
|
$ |
71,073
|
$ |
53,731
|
$ |
210,267
|
$ |
158,237
|
||||||||
Divided
by interest expense (2)
|
$ |
17,402
|
$ |
13,241
|
$ |
46,727
|
$ |
39,832
|
||||||||
Interest
coverage ratio
|
4.1
|
4.1
|
4.5
|
4.0
|
|
(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
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
|||||||||||||
Interest
coverage amount
|
$ |
71,073
|
$ |
53,731
|
$ |
210,267
|
$ |
158,237
|
||||||||
Divided
by interest expense plus
preferred
stock dividends(1)
|
$ |
23,465
|
$ |
15,592
|
$ |
64,917
|
$ |
46,884
|
||||||||
Fixed
charge coverage ratio
|
3.0
|
3.4
|
3.2
|
3.4
|
Crest’s
income from discontinued operations, real estate acquired for
resale
|
Three
months
ended
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
||||||||||||
Gain
on sales of real estate acquired for resale
|
$ |
2,219
|
$ |
313
|
$ |
8,786
|
$ |
1,739
|
||||||||
Rental
revenue
|
1,547
|
913
|
6,736
|
2,996
|
||||||||||||
Other
revenue
|
68
|
--
|
128
|
11
|
||||||||||||
Interest
expense
|
(1,239 | ) | (711 | ) | (5,115 | ) | (2,175 | ) | ||||||||
General
and administrative expense
|
(224 | ) | (73 | ) | (507 | ) | (227 | ) | ||||||||
Property
expenses
|
(14 | ) | (17 | ) | (29 | ) | (50 | ) | ||||||||
Provisions
for impairment
|
--
|
(308 | ) |
--
|
(308 | ) | ||||||||||
Income
taxes
|
(420 | ) | (18 | ) | (2,032 | ) | (471 | ) | ||||||||
Income
from discontinued operations,
real
estate acquired for resale by Crest
|
$ |
1,937
|
$ |
99
|
$ |
7,967
|
$ |
1,515
|
||||||||
Per
common share, basic and diluted
|
$ |
0.02
|
$ |
0.00
|
$ |
0.08
|
$ |
0.02
|
Realty
Income’s income from discontinued operations, real estate held for
investment
|
Three
months
ended
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
||||||||||||
Gain
on sales of investment properties
|
$ |
770
|
$ |
843
|
$ |
1,355
|
$ |
3,036
|
||||||||
Rental
revenue
|
529
|
236
|
834
|
914
|
||||||||||||
Depreciation
and amortization
|
(29 | ) | (75 | ) | (113 | ) | (247 | ) | ||||||||
Property
expenses
|
(3 | ) | (72 | ) | (10 | ) | (117 | ) | ||||||||
Provision
for impairment
|
(134 | ) |
--
|
(134 | ) |
--
|
||||||||||
Income
from discontinued operations,
real
estate held for investment
|
$ |
1,133
|
$ |
932
|
$ |
1,932
|
$ |
3,586
|
||||||||
Per
common share, basic and diluted
|
$ |
0.01
|
$ |
0.01
|
$ |
0.02
|
$ |
0.04
|
Three
months
ended
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
|||||||||||||
Real
estate acquired for resale by Crest
|
$ |
1,937
|
$ |
99
|
$ |
7,967
|
$ |
1,515
|
||||||||
Real
estate held for investment
|
1,133
|
932
|
1,932
|
3,586
|
||||||||||||
Income
from discontinued operations
|
$ |
3,070
|
$ |
1,031
|
$ |
9,899
|
$ |
5,101
|
||||||||
Per
common share, basic and diluted
|
$ |
0.03
|
$ |
0.01
|
$ |
0.10
|
$ |
0.06
|
Three
months
ended
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
|||||||||||||
Net
income available to common stockholders
|
$ |
27,910
|
$ |
24,207
|
$ |
89,043
|
$ |
71,033
|
||||||||
Depreciation
and amortization:
|
||||||||||||||||
Continuing
operations
|
19,564
|
14,586
|
56,132
|
42,796
|
||||||||||||
Discontinued
operations
|
29
|
75
|
113
|
247
|
||||||||||||
Depreciation
of furniture, fixtures and equipment
|
(79 | ) | (49 | ) | (174 | ) | (142 | ) | ||||||||
Gain
on sales of land and investment properties:
|
||||||||||||||||
Continuing
operations
|
(29 | ) |
--
|
(1,835 | ) |
--
|
||||||||||
Discontinued
operations
|
(770 | ) | (843 | ) | (1,355 | ) | (3,036 | ) | ||||||||
FFO
available to common stockholders
|
$ |
46,625
|
$ |
37,976
|
$ |
141,924
|
$ |
110,898
|
||||||||
FFO
per common share:
|
||||||||||||||||
Basic
|
$ |
0.47
|
$ |
0.43
|
$ |
1.42
|
$ |
1.28
|
||||||||
Diluted
|
$ |
0.47
|
$ |
0.43
|
$ |
1.41
|
$ |
1.27
|
||||||||
Distributions
paid to common stockholders
|
$ |
39,519
|
$ |
32,109
|
$ |
116,382
|
$ |
92,605
|
||||||||
FFO
in excess of distributions paid to
|
||||||||||||||||
common
stockholders
|
$ |
7,106
|
$ |
5,867
|
$ |
25,542
|
$ |
18,293
|
||||||||
Weighted
average number of common shares
|
||||||||||||||||
used
for computation per share:
|
||||||||||||||||
Basic
|
100,187,901
|
89,166,429
|
100,148,993
|
86,936,161
|
||||||||||||
Diluted
|
100,252,953
|
89,267,138
|
100,326,859
|
87,084,545
|
(dollars
in thousands)
|
Three
months
ended
9/30/07
|
Three
months
ended
9/30/06
|
Nine
months
ended
9/30/07
|
Nine
months
ended
9/30/06
|
||||||||||||
Amortization
of settlements on treasury lock agreements(1)
|
$ |
218
|
$ |
121
|
$ |
653
|
$ |
499
|
||||||||
Amortization
of deferred note financing costs(2)
|
369
|
371
|
1,042
|
950
|
||||||||||||
Amortization
of share-based compensation
|
828
|
654
|
3,025
|
2,297
|
||||||||||||
Capitalized
leasing costs and commissions
|
(155 | ) | (247 | ) | (393 | ) | (382 | ) | ||||||||
Capitalized
building improvements
|
(201 | ) | (76 | ) | (995 | ) | (179 | ) | ||||||||
Straight
line rent(3)
|
(249 | ) | (411 | ) | (782 | ) | (1,252 | ) | ||||||||
Provisions
for impairment
|
134
|
--
|
272
|
--
|
||||||||||||
Crest
provisions for impairment
|
--
|
308
|
--
|
308
|
||||||||||||
Crest
gain on sale, previously reported as impairment
|
--
|
--
|
(271 | ) |
--
|
|||||||||||
Gain
on reinstatement of property carrying value
|
--
|
--
|
--
|
(716 | ) |
|
(1)
The settlements on the treasury lock agreements resulted from an
interest
rate risk prevention strategy that we used 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, 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 was greater
than
our actual cash rent collected.
|
·
|
Of
2,181 retail properties;
|
·
|
With
an occupancy rate of 98.3%, or 2,144 properties occupied of the 2,181
properties in the portfolio;
|
·
|
Leased
to 110 different retail chains doing business in 30 separate retail
industries;
|
·
|
Located
in 49 states;
|
·
|
With
over 18.1 million square feet of leasable space;
and
|
·
|
With
an average leasable retail space per property of approximately 8,300
square feet.
|
Percentage
of Rental Revenue(1)
|
||||||||||||||||||||||||||||
For
the Quarter
|
For
the Years Ended
|
|||||||||||||||||||||||||||
Industries
|
Ended
September
30,
2007
|
Dec
31,
2006
|
Dec
31,
2005
|
Dec
31,
2004
|
Dec
31,
2003
|
Dec
31,
2002
|
Dec
31,
2001
|
|||||||||||||||||||||
Apparel
stores
|
1.2 | % | 1.7 | % | 1.6 | % | 1.8 | % | 2.1 | % | 2.3 | % | 2.4 | % | ||||||||||||||
Automotive
collision services
|
1.1
|
1.3
|
1.3
|
1.0
|
0.3
|
--
|
--
|
|||||||||||||||||||||
Automotive
parts
|
2.1
|
2.8
|
3.4
|
3.8
|
4.5
|
4.9
|
5.7
|
|||||||||||||||||||||
Automotive
service
|
5.2
|
6.9
|
7.6
|
7.7
|
8.3
|
7.0
|
5.7
|
|||||||||||||||||||||
Automotive
tire services
|
7.3
|
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
|
8.3
|
10.3
|
12.7
|
14.4
|
17.8
|
20.8
|
23.9
|
|||||||||||||||||||||
Consumer
electronics
|
0.9
|
1.1
|
1.3
|
2.1
|
3.0
|
3.3
|
4.0
|
|||||||||||||||||||||
Convenience
stores
|
14.1
|
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
|
|||||||||||||||||||||
Distribution
and office
|
0.6
|
--
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||||||||
Drug
stores
|
2.7
|
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
|
0.2
|
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
|
5.3
|
4.3
|
3.7
|
4.0
|
3.8
|
3.8
|
3.6
|
|||||||||||||||||||||
Home
furnishings
|
2.6
|
3.1
|
3.7
|
4.1
|
4.9
|
5.4
|
6.0
|
|||||||||||||||||||||
Home
improvement
|
2.1
|
3.4
|
1.1
|
1.0
|
1.1
|
1.2
|
1.3
|
|||||||||||||||||||||
Motor
vehicle dealerships
|
3.3
|
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
|
21.0
|
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
|
8.9
|
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
|
1.7
|
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 | % |
|
*
Less than 0.1%
|
|
(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.
|
Industry
|
Number
of
Properties
|
Rental
Revenue for
the
Quarter Ended
September
30, 2007(1)
|
Percentage
of
Rental
Revenue
|
|||||||||
Tenants
Providing Services
|
||||||||||||
Automotive
collision services
|
13
|
$ |
825
|
1.1 | % | |||||||
Automotive
service
|
237
|
3,782
|
5.2
|
|||||||||
Child
care
|
268
|
6,072
|
8.3
|
|||||||||
Entertainment
|
8
|
986
|
1.4
|
|||||||||
Equipment
rental services
|
2
|
150
|
0.2
|
|||||||||
Financial
services
|
5
|
113
|
0.2
|
|||||||||
Health
and fitness
|
26
|
3,882
|
5.3
|
|||||||||
Private
education
|
6
|
576
|
0.8
|
|||||||||
Theaters
|
31
|
6,514
|
8.9
|
|||||||||
Other
|
11
|
1,642
|
2.3
|
|||||||||
607
|
24,542
|
33.7
|
||||||||||
Tenants
Selling Goods and Services
|
||||||||||||
Automotive
parts (with installation)
|
30
|
583
|
0.8
|
|||||||||
Automotive
tire services
|
149
|
5,283
|
7.3
|
|||||||||
Business
services
|
1
|
32
|
*
|
|||||||||
Convenience
stores
|
425
|
10,229
|
14.1
|
|||||||||
Distribution
and office
|
3
|
446
|
0.6
|
|||||||||
Home
improvement
|
1
|
57
|
0.1
|
|||||||||
Motor
vehicle dealerships
|
20
|
2,375
|
3.3
|
|||||||||
Pet
supplies and services
|
9
|
607
|
0.8
|
|||||||||
Restaurants
|
639
|
15,313
|
21.0
|
|||||||||
Travel
plazas
|
1
|
170
|
0.2
|
|||||||||
Video
rental
|
34
|
1,254
|
1.7
|
|||||||||
1,312
|
36,349
|
49.9
|
||||||||||
Tenants
Selling Goods
|
||||||||||||
Apparel
stores
|
6
|
883
|
1.2
|
|||||||||
Automotive
parts
|
70
|
958
|
1.3
|
|||||||||
Book
stores
|
2
|
156
|
0.2
|
|||||||||
Consumer
electronics
|
16
|
683
|
0.9
|
|||||||||
Crafts
and novelties
|
4
|
215
|
0.3
|
|||||||||
Drug
stores
|
34
|
1,941
|
2.7
|
|||||||||
General
merchandise
|
24
|
481
|
0.7
|
|||||||||
Grocery
stores
|
8
|
536
|
0.7
|
|||||||||
Home
furnishings
|
42
|
1,895
|
2.6
|
|||||||||
Home
improvement
|
30
|
1,477
|
2.0
|
|||||||||
Office
supplies
|
10
|
791
|
1.1
|
|||||||||
Pet
supplies
|
2
|
37
|
0.1
|
|||||||||
Sporting
goods
|
14
|
1,865
|
2.6
|
|||||||||
262
|
11,918
|
16.4
|
||||||||||
Totals
|
2,181
|
$ |
72,809
|
100.0 | % |
|
*
Less than 0.1%
|
|
(1)
Includes rental revenue for all properties owned by Realty Income
at
September 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
9/30/07(2)
|
%
of
Total
Rental Revenue
|
Number
of
Leases Expiring
|
Rental
Revenue
for
the Quarter Ended 9/30/07
|
%
of
Total
Rental Revenue
|
Number
of Leases Expiring
|
Rental
Revenue
for
the Quarter Ended 9/30/07
|
%
of
Total
Rental Revenue
|
|||||||||||||||||||||||||||
2007
|
55
|
$ |
971
|
1.4 | % |
33
|
$ |
605
|
0.9 | % |
22
|
$ |
366
|
0.5 | % | |||||||||||||||||||||
2008
|
115
|
2,436
|
3.5
|
60
|
1,386
|
2.0
|
55
|
1,050
|
1.5
|
|||||||||||||||||||||||||||
2009
|
119
|
2,601
|
3.7
|
37
|
886
|
1.3
|
82
|
1,715
|
2.4
|
|||||||||||||||||||||||||||
2010
|
75
|
1,561
|
2.2
|
33
|
817
|
1.2
|
42
|
744
|
1.0
|
|||||||||||||||||||||||||||
2011
|
80
|
2,356
|
3.3
|
36
|
1,365
|
1.9
|
44
|
991
|
1.4
|
|||||||||||||||||||||||||||
2012
|
94
|
2,290
|
3.2
|
74
|
1,919
|
2.7
|
20
|
371
|
0.5
|
|||||||||||||||||||||||||||
2013
|
79
|
3,494
|
5.0
|
70
|
3,270
|
4.7
|
9
|
224
|
0.3
|
|||||||||||||||||||||||||||
2014
|
48
|
2,039
|
2.9
|
35
|
1,738
|
2.5
|
13
|
301
|
0.4
|
|||||||||||||||||||||||||||
2015
|
90
|
1,818
|
2.6
|
65
|
1,237
|
1.8
|
25
|
581
|
0.8
|
|||||||||||||||||||||||||||
2016
|
112
|
1,905
|
2.7
|
111
|
1,880
|
2.7
|
1
|
25
|
*
|
|||||||||||||||||||||||||||
2017
|
45
|
1,795
|
2.5
|
40
|
1,708
|
2.4
|
5
|
87
|
0.1
|
|||||||||||||||||||||||||||
2018
|
24
|
1,023
|
1.5
|
24
|
1,023
|
1.5
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2019
|
94
|
4,650
|
6.6
|
93
|
4,456
|
6.3
|
1
|
194
|
0.3
|
|||||||||||||||||||||||||||
2020
|
81
|
3,087
|
4.4
|
78
|
3,024
|
4.3
|
3
|
63
|
0.1
|
|||||||||||||||||||||||||||
2021
|
149
|
5,648
|
8.0
|
148
|
5,594
|
7.9
|
1
|
54
|
0.1
|
|||||||||||||||||||||||||||
2022
|
99
|
2,933
|
4.2
|
99
|
2,933
|
4.2
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2023
|
238
|
6,493
|
9.2
|
237
|
6,468
|
9.2
|
1
|
25
|
*
|
|||||||||||||||||||||||||||
2024
|
63
|
1,838
|
2.6
|
63
|
1,838
|
2.6
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2025
|
76
|
6,409
|
9.1
|
72
|
6,344
|
9.0
|
4
|
65
|
0.1
|
|||||||||||||||||||||||||||
2026
|
216
|
11,208
|
15.9
|
214
|
11,151
|
15.8
|
2
|
57
|
0.1
|
|||||||||||||||||||||||||||
2027
|
96
|
1,626
|
2.3
|
96
|
1,626
|
2.3
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2028
|
36
|
514
|
0.7
|
35
|
506
|
0.7
|
1
|
8
|
*
|
|||||||||||||||||||||||||||
2029
|
27
|
454
|
0.6
|
27
|
454
|
0.6
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2030
|
13
|
411
|
0.6
|
13
|
411
|
0.6
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2031
|
1
|
18
|
*
|
1
|
18
|
*
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2032
|
1
|
6
|
*
|
1
|
6
|
*
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2033
|
3
|
357
|
0.5
|
3
|
357
|
0.5
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2034
|
2
|
230
|
0.3
|
2
|
230
|
0.3
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2037
|
2
|
341
|
0.5
|
2
|
341
|
0.5
|
--
|
--
|
--
|
|||||||||||||||||||||||||||
2043
|
1
|
13
|
*
|
--
|
--
|
--
|
1
|
13
|
*
|
|||||||||||||||||||||||||||
Totals
|
2,134
|
$ |
70,525
|
100.0 | % |
1,802
|
$ |
63,591
|
90.4 | % |
332
|
$ |
6,934
|
9.6 | % |
|
(1)
Excludes ten multi-tenant properties and 37 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 $2,284 from ten
multi-tenant properties and from 37 vacant and unleased properties
at
September 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.
|
State
|
Number
of
Properties
|
Percent
Leased
|
Approximate
Leasable
Square
Feet
|
Rental
Revenue for the Quarter Ended September 30, 2007(1)
|
Percentage
of
Rental
Revenue
|
|||||||||||||||
Alabama
|
60
|
100 | % |
410,900
|
$ |
1,898
|
2.6 | % | ||||||||||||
Alaska
|
2
|
100
|
128,500
|
277
|
0.4
|
|||||||||||||||
Arizona
|
79
|
99
|
394,100
|
2,168
|
3.0
|
|||||||||||||||
Arkansas
|
15
|
100
|
94,500
|
411
|
0.6
|
|||||||||||||||
California
|
62
|
98
|
1,107,200
|
3,990
|
5.5
|
|||||||||||||||
Colorado
|
54
|
98
|
451,000
|
1,787
|
2.5
|
|||||||||||||||
Connecticut
|
25
|
100
|
278,900
|
1,132
|
1.6
|
|||||||||||||||
Delaware
|
16
|
100
|
31,500
|
332
|
0.5
|
|||||||||||||||
Florida
|
167
|
99
|
1,451,700
|
6,342
|
8.7
|
|||||||||||||||
Georgia
|
131
|
98
|
924,200
|
3,941
|
5.4
|
|||||||||||||||
Idaho
|
14
|
100
|
91,900
|
387
|
0.5
|
|||||||||||||||
Illinois
|
71
|
100
|
853,300
|
3,787
|
5.2
|
|||||||||||||||
Indiana
|
80
|
98
|
683,200
|
2,868
|
3.9
|
|||||||||||||||
Iowa
|
19
|
95
|
138,700
|
449
|
0.6
|
|||||||||||||||
Kansas
|
33
|
94
|
573,500
|
1,036
|
1.4
|
|||||||||||||||
Kentucky
|
22
|
100
|
111,500
|
687
|
0.9
|
|||||||||||||||
Louisiana
|
33
|
100
|
190,400
|
965
|
1.3
|
|||||||||||||||
Maine
|
2
|
100
|
8,000
|
13
|
*
|
|||||||||||||||
Maryland
|
28
|
100
|
256,200
|
1,417
|
1.9
|
|||||||||||||||
Massachusetts
|
68
|
100
|
585,400
|
1,581
|
2.2
|
|||||||||||||||
Michigan
|
22
|
100
|
165,200
|
696
|
1.0
|
|||||||||||||||
Minnesota
|
21
|
100
|
392,100
|
1,263
|
1.7
|
|||||||||||||||
Mississippi
|
70
|
97
|
353,800
|
1,453
|
2.0
|
|||||||||||||||
Missouri
|
62
|
98
|
640,100
|
2,116
|
2.9
|
|||||||||||||||
Montana
|
2
|
100
|
30,000
|
74
|
0.1
|
|||||||||||||||
Nebraska
|
19
|
100
|
196,300
|
615
|
0.8
|
|||||||||||||||
Nevada
|
15
|
100
|
191,000
|
838
|
1.2
|
|||||||||||||||
New
Hampshire
|
14
|
100
|
109,900
|
447
|
0.6
|
|||||||||||||||
New
Jersey
|
35
|
100
|
261,700
|
1,747
|
2.4
|
|||||||||||||||
New
Mexico
|
8
|
100
|
56,400
|
154
|
0.2
|
|||||||||||||||
New
York
|
44
|
98
|
508,100
|
2,288
|
3.1
|
|||||||||||||||
North
Carolina
|
61
|
98
|
441,100
|
2,032
|
2.8
|
|||||||||||||||
North
Dakota
|
6
|
100
|
36,600
|
55
|
0.1
|
|||||||||||||||
Ohio
|
128
|
100
|
813,900
|
3,045
|
4.2
|
|||||||||||||||
Oklahoma
|
25
|
100
|
145,900
|
600
|
0.8
|
|||||||||||||||
Oregon
|
18
|
94
|
289,100
|
805
|
1.1
|
|||||||||||||||
Pennsylvania
|
94
|
100
|
592,800
|
2,730
|
3.7
|
|||||||||||||||
Rhode
Island
|
4
|
100
|
14,500
|
52
|
0.1
|
|||||||||||||||
South
Carolina
|
59
|
98
|
250,700
|
1,522
|
2.1
|
|||||||||||||||
South
Dakota
|
9
|
100
|
24,900
|
97
|
0.1
|
|||||||||||||||
Tennessee
|
126
|
99
|
608,800
|
2,961
|
4.1
|
|||||||||||||||
Texas
|
217
|
96
|
2,287,600
|
7,760
|
10.7
|
|||||||||||||||
Utah
|
6
|
67
|
35,100
|
93
|
0.1
|
|||||||||||||||
Vermont
|
4
|
100
|
12,700
|
59
|
0.1
|
|||||||||||||||
Virginia
|
74
|
100
|
511,300
|
2,689
|
3.7
|
|||||||||||||||
Washington
|
37
|
89
|
240,800
|
693
|
1.0
|
|||||||||||||||
West
Virginia
|
2
|
50
|
23,200
|
44
|
0.1
|
|||||||||||||||
Wisconsin
|
17
|
94
|
157,400
|
395
|
0.5
|
|||||||||||||||
Wyoming
|
1
|
100
|
4,200
|
18
|
*
|
|||||||||||||||
Totals/Average
|
2,181
|
98 | % |
18,159,800
|
$ |
72,809
|
100.0 | % |
|
(1)
Includes rental revenue for all properties owned by Realty Income
at
September 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 | % |
--
|
--
|
|||||||||||
2009(3)
|
20.0
|
8.00 | % |
--
|
--
|
|||||||||||
2010
|
--
|
--
|
--
|
--
|
||||||||||||
2011
|
--
|
--
|
--
|
--
|
||||||||||||
Thereafter(4)
|
1,350.0
|
6.10 | % |
--
|
--
|
|||||||||||
Totals
|
$ |
1,470.0
|
6.28 | % | $ |
--
|
-- | % | ||||||||
Fair
Value(5)
|
$ |
1,425.3
|
$ |
--
|
|
(1)
$100 million matures in November
2008.
|
|
(2)
The credit facility expires in October 2008. There was no
outstanding credit facility balance as of September 30, 2007 and
October
25, 2007.
|
|
(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, $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 September 30, 2007
on the
closing market price or indicative price per each
note.
|
Item
4.
|
PART
II.
|
Item
1A.
|
Item
6.
|
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 (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 73/8% 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 73/8% 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 63/4% 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 to the Company’s Form 8-K,
dated October 27, 1998 and incorporated herein by
reference).
|
||
4.2
|
Form
of
81/4% 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
53/8% 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 53/8%
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
51/2% 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 51/2%
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
57/8% 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
57/8%
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
53/8% 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 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 53/8%
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 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
63/4% 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
63/4% 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
|
Amendment
dated May 15, 2007 to our Amended and Restated 2003 Stock Incentive
Award
Plan of Realty Income Corporation (filed as exhibit 10.1 to the
Company’s
Form 10-Q, dated June 30, 2007 and incorporated herein by
reference).
|
||
10.2
|
Form
of Restricted Stock Agreement (filed as exhibit 10.2 to the Company’s Form
10-Q, dated June 30, 2007 and incorporated herein by
reference).
|
*
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
|
REALTY
INCOME CORPORATION
|
|
Date:
October 31, 2007
|
/s/
GREGORY J. FAHEY
|
Gregory
J. Fahey
|
|
Vice
President, Controller
|
|
(Principal
Accounting Officer)
|