Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 21, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | REALTY INCOME CORP | |
Entity Central Index Key | 726,728 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 251,091,486 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Real estate, at cost: | ||
Land | $ 3,390,871 | $ 3,286,004 |
Buildings and improvements | 9,243,890 | 9,010,778 |
Total real estate, at cost | 12,634,761 | 12,296,782 |
Less accumulated depreciation and amortization | (1,768,272) | (1,687,665) |
Net real estate held for investment | 10,866,489 | 10,609,117 |
Real estate held for sale, net | 1,778 | 9,767 |
Net real estate | 10,868,267 | 10,618,884 |
Cash and cash equivalents | 8,695 | 40,294 |
Accounts receivable, net | 82,990 | 81,678 |
Acquired lease intangible assets, net | 1,017,411 | 1,034,417 |
Goodwill | 15,283 | 15,321 |
Other assets, net | 44,457 | 54,785 |
Total assets | 12,037,103 | 11,845,379 |
LIABILITIES AND EQUITY | ||
Distributions payable | 52,483 | 50,344 |
Accounts payable and accrued expenses | 86,328 | 115,826 |
Acquired lease intangible liabilities, net | 249,454 | 250,916 |
Other liabilities | 43,250 | 53,965 |
Line of credit payable | 653,000 | 238,000 |
Term loans, net | 318,908 | 318,835 |
Mortgages payable, net | 514,041 | 646,187 |
Notes payable, net | 3,619,149 | 3,617,973 |
Total liabilities | $ 5,536,613 | $ 5,292,046 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock and paid in capital, par value $0.01 per share, 69,900,000 shares authorized, 16,350,000 shares issued and outstanding as of March 31, 2016 and December 31, 2015, liquidation preference $25.00 per share | $ 395,378 | $ 395,378 |
Common stock and paid in capital, par value $0.01 per share, 370,100,000 shares authorized, 251,081,853 shares issued and outstanding as of March 31, 2016 and 250,416,757 shares issued and outstanding as of December 31, 2015 | 7,699,837 | 7,666,428 |
Distributions in excess of net income | (1,616,216) | (1,530,210) |
Total stockholders' equity | 6,478,999 | 6,531,596 |
Noncontrolling interests | 21,491 | 21,737 |
Total equity | 6,500,490 | 6,553,333 |
Total liabilities and equity | $ 12,037,103 | $ 11,845,379 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2016 | Dec. 31, 2015 |
CONSOLIDATED BALANCE SHEETS | ||
Preferred stock and paid in capital, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock and paid in capital, shares authorized | 69,900,000 | 69,900,000 |
Preferred stock and paid in capital, shares issued | 16,350,000 | 16,350,000 |
Preferred stock and paid in capital, shares outstanding | 16,350,000 | 16,350,000 |
Preferred stock liquidation preference (in dollars per share) | $ 25 | $ 25 |
Common stock and paid in capital, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock and paid in capital, shares authorized | 370,100,000 | 370,100,000 |
Common stock and paid in capital, shares issued | 251,081,853 | 250,416,757 |
Common stock and paid in capital, shares outstanding | 251,081,853 | 250,416,757 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
REVENUE | ||
Rental | $ 256,801 | $ 235,122 |
Tenant reimbursements | 9,105 | 9,963 |
Other | 1,210 | 1,782 |
Total revenue | 267,116 | 246,867 |
EXPENSES | ||
Depreciation and amortization | 107,933 | 98,037 |
Interest | 60,678 | 58,468 |
General and administrative | 12,318 | 12,862 |
Property (including reimbursable) | 15,105 | 13,976 |
Income taxes | 964 | 1,074 |
Provisions for impairment | 1,923 | 2,087 |
Total expenses | 198,921 | 186,504 |
Gain on sales of real estate | 2,289 | 7,218 |
Net income | 70,484 | 67,581 |
Net income attributable to noncontrolling interests | (241) | (317) |
Net income attributable to the Company | 70,243 | 67,264 |
Preferred stock dividends | (6,770) | (6,770) |
Net income available to common stockholders | $ 63,473 | $ 60,494 |
Amounts available to common stockholders per common share: | ||
Net income, basic and diluted (in dollars per share) | $ 0.25 | $ 0.27 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 250,173,815 | 225,346,407 |
Diluted (in shares) | 250,698,023 | 225,825,854 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 70,484 | $ 67,581 |
Adjustments to net income: | ||
Depreciation and amortization | 107,933 | 98,037 |
Amortization of share-based compensation | 2,605 | 2,552 |
Non-cash rental adjustments | (3,099) | (2,449) |
Amortization of net premiums on mortgages payable | (1,101) | (1,962) |
Amortization of deferred financing costs | 2,200 | 2,228 |
Loss on interest rate swaps | 5,778 | 1,058 |
Gain on sales of real estate | (2,289) | (7,218) |
Provisions for impairment on real estate | 1,923 | 2,087 |
Change in assets and liabilities | ||
Accounts receivable and other assets | 5,081 | 892 |
Accounts payable, accrued expenses and other liabilities | (53,225) | (44,954) |
Net cash provided by operating activities | 136,290 | 117,852 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Investment in real estate | (313,169) | (202,781) |
Improvements to real estate, including leasing costs | (902) | (1,345) |
Proceeds from sales of real estate | 11,038 | 22,274 |
Collection of loans receivable | 12,428 | |
Restricted escrow deposits for Section 1031 tax-deferred exchanges and pending acquisitions | (4,088) | 18,083 |
Net cash used in investing activities | (294,693) | (163,769) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Cash distributions to common stockholders | (147,345) | (126,682) |
Cash dividends to preferred stockholders | (6,770) | (6,770) |
Borrowings on line of credit | 1,209,000 | 282,000 |
Payments on line of credit | (794,000) | (135,000) |
Principal payments on mortgages payable | (164,339) | (51,296) |
Redemption of preferred units | (6,750) | |
Distributions to noncontrolling interests | (382) | (428) |
Proceeds from dividend reinvestment and stock purchase plan | 3,512 | 102,162 |
Procceds from At-the-Market (ATM) program | 30,547 | |
Other items, including shares withheld upon vesting | (3,419) | (2,981) |
Net cash provided by financing activities | 126,804 | 54,255 |
Net (decrease) increase in cash and cash equivalents | (31,599) | 8,338 |
Cash and cash equivalents, beginning of period | 40,294 | 3,852 |
Cash and cash equivalents, end of period | $ 8,695 | $ 12,190 |
Management Statement
Management Statement | 3 Months Ended |
Mar. 31, 2016 | |
Management Statement | |
Management Statement | 1. Management Statement The consolidated financial statements of Realty Income Corporation (“Realty Income”, the “Company”, “we”, “our” or “us”) were prepared from our books and records without audit and include all adjustments (consisting of only normal recurring accruals) necessary to present a fair statement of results for the interim periods presented. Readers of this quarterly report should refer to our audited consolidated financial statements for the year ended December 31, 2015, which are included in our 2015 Annual Report on Form 10-K, as certain disclosures that would substantially duplicate those contained in the audited financial statements have not been included in this report. At March 31, 2016, we owned 4,615 properties, located in 49 states and Puerto Rico, containing over 77.4 million leasable square feet. |
Summary of Significant Accounti
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | |
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | 2. Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements A. The accompanying consolidated financial statements include the accounts of Realty Income and other entities for which we make operating and financial decisions (i.e., control), after elimination of all material intercompany balances and transactions. We consolidate entities that we control and record a noncontrolling interest for the portion that we do not own. Noncontrolling interest that was created or assumed as part of a business combination was recognized at fair value as of the date of the transaction (see note 9). We have no unconsolidated investments. B. We have elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended. We believe we have qualified and continue to qualify as a REIT. Under the REIT operating structure, we are permitted to deduct dividends paid to our stockholders in determining our taxable income. Assuming our dividends equal or exceed our taxable net income, we generally will not be required to pay federal corporate income taxes on such income. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements, except for federal income taxes of our taxable REIT subsidiaries. The income taxes recorded on our consolidated statements of income represent amounts paid by Realty Income for city and state income and franchise taxes. C. We recognize an allowance for doubtful accounts relating to accounts receivable for amounts deemed uncollectible. We consider tenant specific issues, such as financial stability and ability to pay rent, when determining collectability of accounts receivable and appropriate allowances to record. The allowance for doubtful accounts was $1.3 million at March 31, 2016 and $429,000 at December 31, 2015. D. We assign a portion of goodwill to our applicable property sales, which results in a reduction of the carrying amount of our goodwill. In order to allocate goodwill to the carrying amount of properties that we sell, we utilize a relative fair value approach based on the original methodology for assigning goodwill. As we sell properties, our goodwill will likely continue to gradually decrease over time. E. In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers . This ASU outlines a comprehensive model for companies to use in accounting for revenue arising from contracts with customers, and will apply to transactions such as the sale of real estate. This ASU is effective for interim and annual periods beginning after December 15, 2017. We have not yet adopted this topic and do not expect it to have a material impact on our consolidated financial statements. In February 2015, FASB issued ASU 2015-02, which amends Topic 810, Consolidation . This ASU amended the criteria used to evaluate whether an entity is a variable interest entity, or VIE, resulting in the conclusion that all limited partnerships are considered VIEs, unless substantive kick-out rights or participating rights exist. We adopted this ASU during the quarter ended March 31, 2016 and evaluated our applicable entities. The evaluation did not result in changes to our conclusions regarding consolidation of these entities (see note 9). In April 2015, FASB, issued ASU 2015-03, which amends Topic 835, Other Presentation Matters . The amendments in this ASU require that debt issuance costs be reported on the balance sheet as a direct reduction of the face amount of the debt instrument they relate to, and should not be classified as a deferred charge, as was previously required under the Accounting Standards Codification. We adopted this ASU during the quarter ended March 31, 2016 and, as a result, reclassified deferred financing costs from other assets, net, to the applicable debt caption on the December 31, 2015 balance sheet. In February 2016, FASB issued Topic 842, Leases , which amended Topic 840, Leases. Under this amended topic, the accounting applied by a lessor is largely unchanged from that applied under Topic 840, Leases . The large majority of operating leases should remain classified as operating leases, and lessors should continue to recognize lease income for those leases on a generally straight-line basis over the lease term . The amendments included in this topic are effective, on a retrospective or modified retrospective basis, for interim and annual periods beginning after December 15, 2018. We have not yet adopted this topic and do not expect it to have a material impact on our consolidated financial statements. In March 2016, FASB issued ASU 2016-09, which amends Topic 718, Compensation – Stock Compensation. The FASB issued this ASU to simplify several aspects of the accounting for share-based payment transactions, including classification of awards as either equity or liabilities, estimation of forfeitures, and classification on the statement of cash flows. The ASU is effective for interim and annual periods beginning after December 15, 2016, and early adoption is permitted. We early adopted this ASU during the quarter ended March 31, 2016 and it did not have a material impact on our consolidated financial statements. |
Supplemental Detail for Certain
Supplemental Detail for Certain Components of Consolidated Balance Sheets | 3 Months Ended |
Mar. 31, 2016 | |
Supplemental Detail for Certain Components of Consolidated Balance Sheets | |
Supplemental Detail for Certain Components of Consolidated Balance Sheets | 3. Supplemental Detail for Certain Components of Consolidated Balance Sheets A. Acquired lease intangible assets, net, consist of the following March 31, December 31, (dollars in thousands) at: Acquired in-place leases $ $ Accumulated amortization of acquired in-place leases ) Acquired above-market leases Accumulated amortization of acquired above-market leases ) $ $ March 31, December 31, B. Other assets, net, consist of the following (dollars in thousands) at: Prepaid expenses Credit facility origination costs, net Restricted escrow deposits Notes receivable issued in connection with property sales Impounds related to mortgages payable Corporate assets, net Other items $ $ C. Distributions payable consist of the following declared March 31, December 31, distributions (dollars in thousands) at: Common stock distributions $ $ Preferred stock dividends Noncontrolling interests distributions $ $ D. Accounts payable and accrued expenses consist of the March 31, December 31, following (dollars in thousands) at: Notes payable - interest payable $ $ Mortgages, term loans, credit line - interest payable and interest rate swaps Property taxes payable Accrued costs on properties under development Other items $ $ E. Acquired lease intangible liabilities, net, consist of the March 31, December 31, following (dollars in thousands) at: Acquired below-market leases $ $ Accumulated amortization of acquired below-market leases ) $ $ F. Other liabilities consist of the following March 31, December 31, (dollars in thousands) at: Rent received in advance $ $ Security deposits Capital lease obligations $ $ |
Investments in Real Estate
Investments in Real Estate | 3 Months Ended |
Mar. 31, 2016 | |
Investments in Real Estate | |
Investments in Real Estate | 4. Investments in Real Estate We acquire land, buildings and improvements necessary for the successful operations of commercial tenants. A. Acquisitions during the first three months of 2016 and 2015 During the first three months of 2016, we invested $352.6 million in 103 new properties and properties under development or expansion with an initial weighted average contractual lease rate of 6.6%. The 103 new properties and properties under development or expansion are located in 31 states, will contain approximately 1.7 million leasable square feet, and are 100% leased with a weighted average lease term of 15.8 years. The tenants occupying the new properties operate in 18 industries and the property types consist of 85.7% retail and 14.3% industrial, based on rental revenue. None of our investments during 2016 caused any one tenant to be 10% or more of our total assets at March 31, 2016. The $352.6 million invested during 2016 was allocated as follows: $102.2 million to land, $243.1 million to buildings and improvements, $10.0 million to intangible assets related to leases, and $2.0 million to intangible liabilities related to leases and other assumed liabilities. We also recorded mortgage premiums of $692,000. There was no contingent consideration associated with these acquisitions. The properties acquired during the first three months of 2016 generated total revenues of $1.1 million and net income of $408,000. Of the $352.6 million we invested during the first three months of 2016, $348.5 million of the purchase price allocation is based on a preliminary measurement of fair value that is subject to change. The allocation for these properties represents our current best estimate of fair value, and we expect to finalize the valuations and complete the purchase price allocations in 2016. During the first three months of 2016, we finalized the purchase price allocations for $193.6 million invested in the fourth quarter of 2015. There were no material changes to our consolidated balance sheets or income statements as a result of these purchase price allocations being finalized. In comparison, during the first three months of 2015, we invested $209.9 million in 83 new properties and properties under development or expansion with an initial weighted average contractual lease rate of 6.9%. The 83 new properties and properties under development or expansion are located in 24 states, contain approximately 1.6 million leasable square feet, and are 100% leased with a weighted average lease term of 15.5 years. The tenants occupying the new properties operate in 12 industries and the property types consist of 74.2% retail and 25.8% industrial, based on rental revenue. The $209.9 million invested during the first three months of 2015 was allocated as follows: $35.4 million to land, $121.5 million to buildings and improvements, $44.5 million to intangible assets related to leases, $14.1 million to other assets, net, and $5.6 million to intangible liabilities related to leases and other assumed liabilities. There was no contingent consideration associated with these acquisitions. The properties acquired during the first three months of 2015 generated total revenues of $1.5 million and net income of $712,000 for the three months ended March 31, 2015. The estimated initial weighted average contractual lease rate for a property is generally computed as estimated contractual net operating income, which, in the case of a net leased property, is equal to the aggregate base rent for the first full year of each lease, divided by the total cost of the property. Since it is possible that a tenant could default on the payment of contractual rent, we cannot provide assurance that the actual return on the funds invested will remain at the percentages listed above. In the case of a property under development or expansion, the contractual lease rate is generally fixed such that rent varies based on the actual total investment in order to provide a fixed rate of return. When the lease does not provide for a fixed rate of return on a property under development or expansion, the estimated initial weighted average contractual lease rate is computed as follows: estimated net operating income (determined by the lease) for the first full year of each lease, divided by our projected total investment in the property, including land, construction and capitalized interest costs. Of the $352.6 million we invested during the first three months of 2016, $52.1 million was invested in 23 properties under development or expansion with an estimated initial weighted average contractual lease rate of 6.8%. Of the $209.9 million we invested during the first three months of 2015, $15.3 million was invested in 25 properties under development or expansion with an estimated initial weighted average contractual lease rate of 9.0%. B. Acquisition Transaction Costs Acquisition transaction costs of $24,000 and $94,000 were recorded to general and administrative expense on our consolidated statements of income during the first three months of 2016 and 2015, respectively. C. Investments in Existing Properties During the first three months of 2016, we capitalized costs of $1.3 million on existing properties in our portfolio, consisting of $191,000 for re-leasing costs, $72,000 for recurring capital expenditures and $1.0 million for non-recurring building improvements. In comparison, during the first three months of 2015, we capitalized costs of $1.3 million on existing properties in our portfolio. D. Properties with Existing Leases Of the $352.6 million we invested during the first three months of 2016, approximately $26.8 million was used to acquire four properties with existing leases. In comparison, of the $209.9 million we invested during the first three months of 2015, approximately $114.2 million was used to acquire 14 properties with existing leases. The value of the in-place and above-market leases is recorded to acquired lease intangible assets, net on our consolidated balance sheets, and the value of the below-market leases is recorded to acquired lease intangible liabilities, net on our consolidated balance sheets. The values of the in-place leases are amortized as depreciation and amortization expense. The amounts amortized to expense for all of our in-place leases, for the first three months of 2016 and 2015, were $22.6 million and $21.6 million, respectively. The values of the above-market and below-market leases are amortized over the term of the respective leases, including any bargain renewal options, as an adjustment to rental revenue on our consolidated statements of income. The amounts amortized as a net decrease to rental revenue for capitalized above-market and below-market leases for the first three months of 2016 and 2015 were $2.1 million and $1.7 million, respectively. If a lease was to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recorded to revenue or expense as appropriate. The following table presents the estimated impact during the next five years and thereafter related to the amortization of the acquired above-market and below-market lease intangibles and the amortization of the in-place lease intangibles for properties held for investment at March 31, 2016 (in thousands): Net increase Increase to (decrease) to amortization rental revenue expense 2016 $ ) $ 2017 ) 2018 ) 2019 ) 2020 ) Thereafter Totals $ $ |
Credit Facility
Credit Facility | 3 Months Ended |
Mar. 31, 2016 | |
Credit Facility | |
Debt instrument | |
Credit Facility | 5. Credit Facility In June 2015, we entered into a $2.0 billion unsecured revolving credit facility, or our credit facility, which replaced our $1.5 billion credit facility that was scheduled to expire in May 2016. The initial term of our credit facility expires in June 2019 and includes, at our option, two six-month extensions. Our credit facility has a $1.0 billion accordion expansion option. Under our credit facility, our current investment grade credit ratings provide for financing at the London Interbank Offered Rate, commonly referred to as LIBOR, plus 0.90% with a facility commitment fee of 0.15%, for all-in drawn pricing of 1.05% over LIBOR. The borrowing rate is subject to an interest rate floor. We also have other interest rate options available to us under our credit facility. Our credit facility is unsecured and, accordingly, we have not pledged any assets as collateral for this obligation. At March 31, 2016, credit facility origination costs of $9.5 million are included in other assets, net on our consolidated balance sheet. This balance includes $9.1 million of credit facility origination costs incurred during 2015 as a result of entering into our credit facility. These costs, as well as a portion of the costs incurred as a result of entering into our previous credit facilities, are being amortized over the remaining term of our credit facility. At March 31, 2016, we had a borrowing capacity of $1.35 billion available on our credit facility (subject to customary conditions to borrowing) and an outstanding balance of $653.0 million, as compared to an outstanding balance of $238.0 million at December 31, 2015. The weighted average interest rate on outstanding borrowings under our credit facility was 1.5% during the first three months of 2016 and 1.2% during the first three months of 2015 under our previous $1.5 billion credit facility. At March 31, 2016, the effective interest rate was 1.4%. Our credit facility is subject to various leverage and interest coverage ratio limitations, and at March 31, 2016, we remain in compliance with the covenants on our credit facility. |
Mortgages Payable
Mortgages Payable | 3 Months Ended |
Mar. 31, 2016 | |
Mortgages Payable | |
Debt instrument | |
Debt | 6. Mortgages Payable During the first three months of 2016, we made $164.3 million in principal payments, including the repayment of seven mortgages in full for $146.7 million. Additionally, we assumed mortgages totaling $32.5 million, excluding net premiums. The mortgages are secured by the properties on which the debt was placed. Approximately $9.7 million of the assumed mortgages is considered non-recourse debt with limited customary exceptions for items such as solvency, bankruptcy, misrepresentation, fraud, misapplication of payments, environmental liabilities, failure to pay taxes, insurance premiums, liens on the property, violations of the single purpose entity requirements, and uninsured losses, and the remaining $22.8 million of the assumed mortgages is non-recourse debt without such exceptions. We expect to pay off the mortgages as soon as prepayment penalties make it economically feasible to do so. During the first three months of 2016 , aggregate net premiums totaling $692,000 were recorded upon the assumption of a mortgage with an above-market interest rate. Amortization of our net premiums is recorded as a reduction to interest expense over the remaining term of the respective mortgages, using a method that approximates the effective-interest method. These mortgages contain customary covenants, such as limiting our ability to further mortgage each applicable property or to discontinue insurance coverage without the prior consent of the lender. At March 31, 2016, we remain in compliance with these covenants. During the first three months of 2015, we made $51.3 million in principal payments, including the repayment of three mortgages in full for $49.4 million. No mortgages were assumed during the first three months of 2015. We did not incur any deferred financing costs on our mortgages assumed in 2016. The balance of our deferred financing costs, which are classified as part of mortgages payable, net, on our consolidated balance sheets, was $498,000 at March 31, 2016 and $553,000 at December 31, 2015. These costs are being amortized over the remaining term of each mortgage. The following is a summary of all our mortgages payable as of March 31, 2016 and December 31, 2015, respectively (dollars in thousands): Weighted Weighted Weighted Unamortized Average Average Average Premium Stated Effective Remaining Remaining and Deferred Mortgage Number of Interest Interest Years Until Principal Finance Costs Payable As Of Properties (1) Rate (2) Rate (3) Maturity Balance Balance, net Balance 3/31/16 $ $ $ 12/31/15 $ $ $ (1) At March 31, 2016, there were 39 mortgages on 135 properties, while at December 31, 2015, there were 44 mortgages on 183 properties. The mortgages require monthly payments, with principal payments due at maturity. The mortgages are at fixed interest rates, except for five mortgages on 14 properties totaling $58.4 million at March 31, 2016, including net unamortized discounts. At December 31, 2015, four mortgages on 13 properties totaling $51.1 million, including net unamortized discounts, were at variable interest rates. After factoring in arrangements which limit our exposure to interest rate risk and effectively fix our per annum interest rates, our variable rate mortgage debt includes three mortgages totaling $22.8 million at March 31, 2016, and two mortgages totaling $15.5 million at December 31, 2015. (2) Stated interest rates ranged from 2.3% to 6.9% at March 31, 2016, while stated interest rates ranged from 2.0% to 6.9% at December 31, 2015. (3) Effective interest rates ranged from 2.3% to 8.9% at March 31, 2016, while effective interest rates ranged from 2.2% to 8.9% at December 31, 2015. The following table summarizes the maturity of mortgages payable, excluding net premiums of $8.7 million and deferred finance costs of $498,000, as of March 31, 2016 (dollars in millions): Year of Maturity 2016 $ 2017 2018 2019 2020 Thereafter Totals $ |
Term Loans
Term Loans | 3 Months Ended |
Mar. 31, 2016 | |
Term Loans | |
Term Loans | 7. Term Loans In June 2015, in conjunction with entering into our credit facility, we entered into a $250 million senior unsecured term loan maturing on June 30, 2020. Borrowing under this term loan bears interest at the current one month LIBOR, plus 0.95%. In conjunction with this term loan, we also entered into an interest rate swap which effectively fixes our per annum interest rate on this term loan at 2.67%. In January 2013, in conjunction with our acquisition of American Realty Capital Trust, Inc., or ARCT, we entered into a $70 million senior unsecured term loan maturing January 21, 2018. Borrowing under this term loan bears interest at the current one month LIBOR, plus 1.2%. In conjunction with this term loan, we also entered into an interest rate swap which effectively fixes our per annum interest rate on this term loan at 2.15%. Deferred financing costs of $1.2 million incurred in conjunction with the $250 million term loan and $303,000 incurred in conjunction with the $70 million term loan are being amortized over the remaining terms of each term loan. The net balance of these deferred financing costs, which was $1.1 million at March 31, 2016, and $1.2 million at December 31, 2015, is included within term loans, net on our consolidated balance sheets. |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2016 | |
Notes Payable | |
Debt instrument | |
Debt | 8. Notes Payable Our senior unsecured notes and bonds consist of the following, sorted by maturity date (dollars in millions): March 31, December 31, 5.95% notes, issued in September 2006 and due in September 2016 $ $ 5.375% notes, issued in September 2005 and due in September 2017 2.0% notes, issued in October 2012 and due in January 2018 6.75% notes, issued in September 2007 and due in August 2019 5.75% notes, issued in June 2010 and due in January 2021 3.25% notes, issued in October 2012 and due in October 2022 4.65% notes, issued in July 2013 and due in August 2023 3.875% notes, issued in June 2014 and due in July 2024 4.125% notes, issued in September 2014 and due in October 2026 5.875% bonds, $100 issued in March 2005 and $150 issued in June 2011, both due in March 2035 Total principal amount Unamortized original issuance discounts and deferred financing costs ) ) $ $ The following table summarizes the maturity of our notes and bonds payable as of March 31, 2016, excluding unamortized original issuance discounts and deferred financing costs (dollars in millions): Year of Maturity Principal 2016 $ 2017 2018 2019 2020 - Thereafter Totals $ As of March 31, 2016, the weighted average interest rate on our notes and bonds payable was 4.7% and the weighted average remaining years until maturity was 6.2 years. |
Noncontrolling Interests
Noncontrolling Interests | 3 Months Ended |
Mar. 31, 2016 | |
Noncontrolling Interests. | |
Noncontrolling Interests | 9. Noncontrolling Interests In January 2013, we completed our acquisition of ARCT. Equity issued as consideration for this transaction included common and preferred partnership units issued by Tau Operating Partnership, L.P., or Tau Operating Partnership, the consolidated subsidiary which owns properties acquired through the ARCT acquisition. Realty Income and its subsidiaries hold a 99.4% interest in Tau Operating Partnership, and consolidate the entity. In June 2013, we completed the acquisition of a portfolio of properties by issuing common partnership units in Realty Income, L.P. The units were issued as consideration for the acquisition. At March 31, 2016, the remaining units from this issuance represent a 1.3% ownership in Realty Income, L.P. Realty Income holds the remaining 98.7% interests in this entity and consolidates the entity. A. Neither of the common partnership units have voting rights. Both common partnership units are entitled to monthly distributions equal to the amount paid to common stockholders of Realty Income, and are redeemable in cash or Realty Income common stock, at our option, and at a conversion ratio of one to one, subject to certain exceptions. Noncontrolling interests with redemption provisions that permit the issuer to settle in either cash or common stock, at the option of the issuer, were evaluated to determine whether temporary or permanent equity classification on the balance sheet was appropriate. We determined that the units meet the requirements to qualify for presentation as permanent equity. The following table represents the change in the carrying value of all noncontrolling interests through March 31, 2016 (dollars in thousands): Tau Operating Realty Income, L.P. Partnership units (1) units (2) Total Carrying value at December 31, 2015 $ $ $ Redemptions - ) ) Distributions ) ) ) Allocation of net income Carrying value at March 31, 2016 $ $ $ (1) 317,022 Tau Operating Partnership units were issued on January 22, 2013 and remained outstanding as of March 31, 2016 and December 31, 2015. (2) 534,546 Realty Income, L.P. units were issued on June 27, 2013, 331,364 units were outstanding as of December 31, 2015, and 327,364 remain outstanding as of March 31, 2016. B. The Tau Operating Partnership preferred units were recorded at fair value as of the date of acquisition. Since they were redeemable at a fixed price on a determinable date, we initially classified them in other liabilities on our consolidated balance sheets. Payments on these preferred units were made monthly at a rate of 2% per annum and were included in interest expense. In January 2015, we redeemed all 6,750 Tau Operating Partnership preferred units for $1,000 per unit, plus accrued and unpaid distributions. C. During the first quarter of 2016 we adopted ASU 2015-02, which amends Topic 810, Consolidation . This ASU amended the criteria used to evaluate whether an entity is a variable interest entity, or VIE, resulting in the conclusion that all limited partnerships are considered VIEs, unless substantive kick-out rights or participating rights exist. Accordingly, at March 31, 2016 we determined that both Tau Operating Partnership and Realty Income, L.P. are VIEs. We have concluded that we are the primary beneficiary of these VIEs, based on our controlling financial interests. We evaluated the minority unitholder rights noting that they do not hold substantive kick-out rights or participating rights. Below is a summary of selected financial data of consolidated VIEs for which we are the primary beneficiary included in the consolidated balance sheets at March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Net real estate $ $ Total assets Total debt Total liabilities |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | 10. Fair Value of Financial Instruments Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The disclosure for assets and liabilities measured at fair value requires allocation to a three-level valuation hierarchy. This valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. Categorization within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. We believe that the carrying values reflected in our consolidated balance sheets reasonably approximate the fair values for cash and cash equivalents, accounts receivable, escrow deposits, loans receivable, line of credit payable, term loans and all other liabilities, due to their short-term nature or interest rates and terms that are consistent with market, except for our notes receivable issued in connection with property sales, mortgages payable and our senior notes and bonds payable, which are disclosed below (dollars in millions): Carrying value per Estimated fair At March 31, 2016 balance sheet value Notes receivable issued in connection with property sales $ $ Mortgages payable assumed in connection with acquisitions, net Notes and bonds payable, net Carrying value per Estimated fair At December 31, 2015 balance sheet value Notes receivable issued in connection with property sales $ $ Mortgages payable assumed in connection with acquisitions, net Notes and bonds payable, net The estimated fair values of our notes receivable issued in connection with property sales and our mortgages payable have been calculated by discounting the future cash flows using an interest rate based upon the relevant Treasury yield curve, plus an applicable credit-adjusted spread. Because this methodology includes unobservable inputs that reflect our own internal assumptions and calculations, the measurement of estimated fair values related to our notes receivable and mortgages payable is categorized as level three on the three-level valuation hierarchy. The estimated fair values of our senior notes and bonds payable are based upon indicative market prices and recent trading activity of our senior notes and bonds payable. Because this methodology includes inputs that are less observable by the public and are not necessarily reflected in active markets, the measurement of the estimated fair values, related to our notes and bonds payable, is categorized as level two on the three-level valuation hierarchy. We record interest rate swaps on the consolidated balance sheet at fair value. At March 31, 2016, interest rate swaps valued at $9.7 million were included in accounts payable and accrued expenses on the consolidated balance sheet. The fair value of our interest rate swaps are based on valuation techniques including discounted cash flow analysis on the expected cash flows of each swap, using both observable and unobservable market-based inputs, including interest rate curves. Because this methodology uses observable and unobservable inputs, the measurement of interest rate swaps is categorized as level two on the three-level valuation hierarchy. |
Gain on Sales of Real Estate
Gain on Sales of Real Estate | 3 Months Ended |
Mar. 31, 2016 | |
Gain on Sales of Real Estate | |
Gain on Sales of Real Estate | 11. Gain on Sales of Real Estate During the first three months of 2016, we sold 11 investment properties for $11.0 million, which resulted in a gain of $2.3 million. During the first three months of 2015, we sold nine investment properties for $22.3 million, which resulted in a gain of $7.2 million. |
Impairments
Impairments | 3 Months Ended |
Mar. 31, 2016 | |
Impairments | |
Impairments | 12. Impairments We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A provision is made for impairment if estimated future operating cash flows (undiscounted and without interest charges) plus estimated disposition proceeds (undiscounted) are less than the current book value of the property. Key factors that we utilize in this analysis include projected rental rates, estimated holding periods, historical sales and releases, capital expenditures and property sales capitalization rates. If a property is classified as held for sale, it is carried at the lower of carrying cost or estimated fair value, less estimated cost to sell, and depreciation of the property ceases. For the first three months of 2016, we recorded total provisions for impairment of $1.9 million on one property classified as held for sale, one property classified as held for investment, and six sold properties, in the following industries: one in the automotive parts industry, one in the convenience stores industry, one in the furniture stores industry, one in the health and fitness industry, two in the restaurant-casual dining industry, and two in industries we classify as “other.” For the first three months of 2015, we recorded total provisions for impairment of $2.1 million on two sold properties and one property disposed of other than by sale, all of which are in the restaurant-casual dining industry. |
Distributions Paid and Payable
Distributions Paid and Payable | 3 Months Ended |
Mar. 31, 2016 | |
Distributions Paid and Payable | |
Distributions Paid and Payable | 13. Distributions Paid and Payable A. Common Stock We pay monthly distributions to our common stockholders. The following is a summary of monthly distributions paid per common share for the first three months of 2016 and 2015: Month January $ $ February March Total $ $ At March 31, 2016, a distribution of $0.199 per common share was payable and was paid in April 2016. B. Class F Preferred Stock Dividends of $0.138021 per share are paid monthly in arrears on the Class F preferred stock. During each of the first three months of 2016 and 2015, we paid three monthly dividends to holders of our Class F preferred stock totaling $0.414063 per share, or $6.8 million, and at March 31, 2016, a monthly dividend of $0.138021 per share was payable and was paid in April 2016. We are current in our obligations to pay dividends on our Class F preferred stock. |
Net Income Per Common Share
Net Income Per Common Share | 3 Months Ended |
Mar. 31, 2016 | |
Net Income Per Common Share | |
Net Income Per Common Share | 14. Net Income per Common Share Basic net income per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during each period. Diluted net income per common share is computed by dividing net income available to common stockholders, plus income attributable to dilutive shares and convertible common units, for the period by the weighted average number of common shares that would have been outstanding assuming the issuance of common shares for all potentially dilutive common shares outstanding during the reporting period. The following is a reconciliation of the denominator of the basic net income per common share computation to the denominator of the diluted net income per common share computation. Three months ended March 31, Weighted average shares used for the basic net income per share computation Incremental shares from share-based compensation Weighted average partnership common units convertible to common shares that were dilutive Weighted average shares used for diluted net income per share computation Unvested shares from share-based compensation that were anti-dilutive Weighted average partnership common units convertible to common shares that were anti-dilutive |
Supplemental Disclosures of Cas
Supplemental Disclosures of Cash Flow Information | 3 Months Ended |
Mar. 31, 2016 | |
Supplemental Disclosures of Cash Flow Information | |
Supplemental Disclosures of Cash Flow Information | 15. Supplemental Disclosures of Cash Flow Information Cash paid for interest was $84.1 million in the first three months of 2016 and $85.9 million in the first three months of 2015. Interest capitalized to properties under development was $126,000 in the first three months of 2016 and $94,000 the first three months of 2015. Cash paid for income taxes was $1.6 million in the first three months of 2016 and $1.8 million the first three months of 2015. The following non-cash activity is included in the accompanying consolidated financial statements: A. During the first three months of 2016, we assumed mortgages payable to third-party lenders of $32.5 million, and recorded $692,000 of net premiums. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2016 | |
Segment Information | |
Segment Information | 16. Segment Information We evaluate performance and make resource allocation decisions on an industry by industry basis. For financial reporting purposes, we have grouped our tenants into 47 activity segments. All of the properties are incorporated into one of the applicable segments. Because almost all of our leases require the tenant to pay operating expenses, rental revenue is the only component of segment profit and loss we measure. The following tables set forth certain information regarding the properties owned by us, classified according to the business of the respective tenants (dollars in thousands): March 31, December 31, Assets, as of: Segment net real estate: Apparel $ $ Automotive service Automotive tire services Beverages Child care Convenience stores Dollar stores Drug stores Financial services Grocery stores Health and fitness Health care Home improvement Restaurants-casual dining Restaurants-quick service Theaters Transportation services Wholesale club 29 other non-reportable segments Total segment net real estate Intangible assets: Apparel Automotive service Automotive tire services Beverages Convenience stores Dollar stores Drug stores Financial services Grocery stores Health and fitness Health care Home improvement Restaurants-casual dining Restaurants-quick service Theaters Transportation services Wholesale club Other non-reportable segments Goodwill: Automotive service Automotive tire services Child care Convenience stores Restaurants-casual dining Restaurants-quick service Other non-reportable segments Other corporate assets Total assets $ $ Revenue for the three months ended March 31, Segment rental revenue: Apparel $ $ Automotive service Automotive tire services Beverages Child care Convenience stores Dollar stores Drug stores Financial services Grocery stores Health and fitness Health care Home improvement Restaurants-casual dining Restaurants-quick service Theaters Transportation services Wholesale club 29 other non-reportable segments Total rental revenue Tenant reimbursements Other revenue Total revenue $ $ |
Common Stock Incentive Plan
Common Stock Incentive Plan | 3 Months Ended |
Mar. 31, 2016 | |
Common Stock Incentive Plan | |
Common Stock Incentive Plan | 17. Common Stock Incentive Plan In 2012, our Board of Directors adopted and stockholders approved the Realty Income Corporation 2012 Incentive Award Plan, or the 2012 Plan, to enable us to motivate, attract and retain the services of directors and employees considered essential to our long-term success. The 2012 Plan offers our directors and employees an opportunity to own our stock or rights that will reflect our growth, development and financial success. Under the terms of the 2012 plan, the aggregate number of shares of our common stock subject to options, restricted stock, stock appreciation rights, restricted stock units and other awards, will be no more than 3,985,734 shares. The 2012 Plan has a term of ten years from the date it was adopted by our Board of Directors. The amount of share-based compensation costs recognized in general and administrative expense on our consolidated statements of income was $2.6 million during the first three months of 2016 and 2015. A. Restricted Stock During the first three months of 2016, we granted 141,139 shares of common stock under the 2012 Plan. These shares generally vest over a five-year service period. As of March 31, 2016, the remaining unamortized share-based compensation expense related to restricted stock totaled $19.5 million, which is being amortized on a straight-line basis over the service period of each applicable award. The amount of share-based compensation is based on the fair value of the stock at the grant date. We define the grant date as the date the recipient and Realty Income have a mutual understanding of the key terms and condition of the award, and the recipient of the grant begins to benefit from, or be adversely affected by, subsequent changes in the price of the shares. B. Performance Shares and Restricted Stock Units During the first three months of 2016, we granted 58,569 performance shares, as well as dividend equivalent rights, to our executive officers. The performance shares are earned based on our TSR performance relative to select industry indices as well as achievement of certain operating metrics, and vest 50% on the first and second January 1 after the end of the three year performance period, subject to continued service. During the first three months of 2016, we also granted 11,098 restricted stock units that vest over a five year service period and have the same economic rights as shares of restricted stock. As of March 31, 2016, the remaining share-based compensation expense related to the performance shares and restricted stock units totaled $6.2 million. The fair value of the performance share was estimated on the date of grant using a Monte Carlo Simulation model. The performance shares are being recognized on a tranche-by-tranche basis over the service period. The amount of share-based compensation for the restricted stock units is based on the fair value of our common stock at the grant date. The restricted stock units are being recognized on a straight-line basis over the service period. |
Dividend Reinvestment and Stock
Dividend Reinvestment and Stock Purchase Plan | 3 Months Ended |
Mar. 31, 2016 | |
Dividend Reinvestment and Stock Purchase Plan | |
Dividend Reinvestment and Stock Purchase Plan | 18. Dividend Reinvestment and Stock Purchase Plan Our Dividend Reinvestment and Stock Purchase Plan, or the DRSPP, provides our common stockholders, as well as new investors, with a convenient and economical method of purchasing our common stock and reinvesting their distributions. The DRSPP also allows our current stockholders to buy additional shares of common stock by reinvesting all or a portion of their distributions. The DRSPP authorizes up to 26,000,000 common shares to be issued. During the first three months of 2016, we issued 61,458 shares and raised approximately $3.5 million under the DRSPP. During the first three months of 2015, we issued 2,023,276 shares and raised approximately $102.2 million under the DRSPP. From the inception of the DRSPP through March 31, 2016, we have issued 12,761,320 shares and raised approximately $585.1 million. We pay for a majority of the plan-related fees related to our DRSPP. Additionally, our DRSPP includes a waiver approval process, allowing larger investors or institutions, per a formal approval process, to purchase shares at a small discount, if approved by us. During the first three months of 2016, we did not issue shares under the waiver approval process. During the first three months of 2015, we issued 1,980,994 shares and raised $100.0 million under the waiver approval process. These shares are included in the total activity for the first three months of 2015 noted in the preceding paragraph. |
At-the-Market (ATM) Program
At-the-Market (ATM) Program | 3 Months Ended |
Mar. 31, 2016 | |
At-the-Market (ATM) Program | |
At-the-Market (ATM) Program | 19. At-the-Market (ATM) Program In September 2015, we established an “at-the-market” equity distribution program, or our ATM program, pursuant to which we can offer and sell up to 12,000,000 shares of common stock to, or through a consortium of banks acting as our sales agents by means of ordinary brokers’ transactions on the NYSE or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. During the first three months of 2016, we issued 500,000 shares and raised approximately $30.5 million under the ATM program. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 20. Commitments and Contingencies In the ordinary course of business, we are party to various legal actions which we believe are routine in nature and incidental to the operation of our business. We believe that the outcome of the proceedings will not have a material adverse effect upon our consolidated financial position or results of operations. At March 31, 2016, we had commitments of $687,000 for re-leasing costs, recurring capital expenditures, and non-recurring building improvements. In addition, as of March 31, 2016, we had committed $19.6 million under construction contracts, which is expected to be paid in the next twelve months. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events | |
Subsequent Events | 21. Subsequent Events In April 2016, we declared the following dividends, which will be paid in May 2016: · $0.199 per share to our common stockholders and · $0.138021 per share to our Class F preferred stockholders. |
Summary of Significant Accoun27
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | |
Principles of Consolidation | A. The accompanying consolidated financial statements include the accounts of Realty Income and other entities for which we make operating and financial decisions (i.e., control), after elimination of all material intercompany balances and transactions. We consolidate entities that we control and record a noncontrolling interest for the portion that we do not own. Noncontrolling interest that was created or assumed as part of a business combination was recognized at fair value as of the date of the transaction (see note 9). We have no unconsolidated investments. |
Federal Income Taxes | B. We have elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended. We believe we have qualified and continue to qualify as a REIT. Under the REIT operating structure, we are permitted to deduct dividends paid to our stockholders in determining our taxable income. Assuming our dividends equal or exceed our taxable net income, we generally will not be required to pay federal corporate income taxes on such income. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements, except for federal income taxes of our taxable REIT subsidiaries. The income taxes recorded on our consolidated statements of income represent amounts paid by Realty Income for city and state income and franchise taxes. |
Accounts Receivable and Allowance for Doubtful Accounts | C. We recognize an allowance for doubtful accounts relating to accounts receivable for amounts deemed uncollectible. We consider tenant specific issues, such as financial stability and ability to pay rent, when determining collectability of accounts receivable and appropriate allowances to record. The allowance for doubtful accounts was $1.3 million at March 31, 2016 and $429,000 at December 31, 2015. |
Goodwill | D. We assign a portion of goodwill to our applicable property sales, which results in a reduction of the carrying amount of our goodwill. In order to allocate goodwill to the carrying amount of properties that we sell, we utilize a relative fair value approach based on the original methodology for assigning goodwill. As we sell properties, our goodwill will likely continue to gradually decrease over time. |
Recent Accounting Pronouncements | E. In May 2014, the Financial Accounting Standards Board, or FASB, issued ASU 2014-09, Revenue from Contracts with Customers . This ASU outlines a comprehensive model for companies to use in accounting for revenue arising from contracts with customers, and will apply to transactions such as the sale of real estate. This ASU is effective for interim and annual periods beginning after December 15, 2017. We have not yet adopted this topic and do not expect it to have a material impact on our consolidated financial statements. In February 2015, FASB issued ASU 2015-02, which amends Topic 810, Consolidation . This ASU amended the criteria used to evaluate whether an entity is a variable interest entity, or VIE, resulting in the conclusion that all limited partnerships are considered VIEs, unless substantive kick-out rights or participating rights exist. We adopted this ASU during the quarter ended March 31, 2016 and evaluated our applicable entities. The evaluation did not result in changes to our conclusions regarding consolidation of these entities (see note 9). In April 2015, FASB, issued ASU 2015-03, which amends Topic 835, Other Presentation Matters . The amendments in this ASU require that debt issuance costs be reported on the balance sheet as a direct reduction of the face amount of the debt instrument they relate to, and should not be classified as a deferred charge, as was previously required under the Accounting Standards Codification. We adopted this ASU during the quarter ended March 31, 2016 and, as a result, reclassified deferred financing costs from other assets, net, to the applicable debt caption on the December 31, 2015 balance sheet. In February 2016, FASB issued Topic 842, Leases , which amended Topic 840, Leases. Under this amended topic, the accounting applied by a lessor is largely unchanged from that applied under Topic 840, Leases . The large majority of operating leases should remain classified as operating leases, and lessors should continue to recognize lease income for those leases on a generally straight-line basis over the lease term . The amendments included in this topic are effective, on a retrospective or modified retrospective basis, for interim and annual periods beginning after December 15, 2018. We have not yet adopted this topic and do not expect it to have a material impact on our consolidated financial statements. In March 2016, FASB issued ASU 2016-09, which amends Topic 718, Compensation – Stock Compensation. The FASB issued this ASU to simplify several aspects of the accounting for share-based payment transactions, including classification of awards as either equity or liabilities, estimation of forfeitures, and classification on the statement of cash flows. The ASU is effective for interim and annual periods beginning after December 15, 2016, and early adoption is permitted. We early adopted this ASU during the quarter ended March 31, 2016 and it did not have a material impact on our consolidated financial statements. |
Supplemental Detail for Certa28
Supplemental Detail for Certain Components of Consolidated Balance Sheets (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Supplemental Detail for Certain Components of Consolidated Balance Sheets | |
Schedule of acquired lease intangible assets, net | A. Acquired lease intangible assets, net, consist of the following March 31, December 31, (dollars in thousands) at: Acquired in-place leases $ $ Accumulated amortization of acquired in-place leases ) Acquired above-market leases Accumulated amortization of acquired above-market leases ) $ $ |
Other assets, net | March 31, December 31, B. Other assets, net, consist of the following (dollars in thousands) at: Prepaid expenses Credit facility origination costs, net Restricted escrow deposits Notes receivable issued in connection with property sales Impounds related to mortgages payable Corporate assets, net Other items $ $ |
Distributions payable | C. Distributions payable consist of the following declared March 31, December 31, distributions (dollars in thousands) at: Common stock distributions $ $ Preferred stock dividends Noncontrolling interests distributions $ $ |
Accounts payable and accrued expenses | D. Accounts payable and accrued expenses consist of the March 31, December 31, following (dollars in thousands) at: Notes payable - interest payable $ $ Mortgages, term loans, credit line - interest payable and interest rate swaps Property taxes payable Accrued costs on properties under development Other items $ $ |
Schedule of acquired lease intangible liabilities, net | E. Acquired lease intangible liabilities, net, consist of the March 31, December 31, following (dollars in thousands) at: Acquired below-market leases $ $ Accumulated amortization of acquired below-market leases ) $ $ |
Other liabilities | F. Other liabilities consist of the following March 31, December 31, (dollars in thousands) at: Rent received in advance $ $ Security deposits Capital lease obligations $ $ |
Investments in Real Estate (Tab
Investments in Real Estate (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Investments in Real Estate | |
Schedule of future impact of above-market, below-market and in-place lease intangibles | The following table presents the estimated impact during the next five years and thereafter related to the amortization of the acquired above-market and below-market lease intangibles and the amortization of the in-place lease intangibles for properties held for investment at March 31, 2016 (in thousands): Net increase Increase to (decrease) to amortization rental revenue expense 2016 $ ) $ 2017 ) 2018 ) 2019 ) 2020 ) Thereafter Totals $ $ |
Mortgages Payable (Tables)
Mortgages Payable (Tables) - Mortgages Payable | 3 Months Ended |
Mar. 31, 2016 | |
Credit facility | |
Summary of Mortgages payable | The following is a summary of all our mortgages payable as of March 31, 2016 and December 31, 2015, respectively (dollars in thousands): Weighted Weighted Weighted Unamortized Average Average Average Premium Stated Effective Remaining Remaining and Deferred Mortgage Number of Interest Interest Years Until Principal Finance Costs Payable As Of Properties (1) Rate (2) Rate (3) Maturity Balance Balance, net Balance 3/31/16 $ $ $ 12/31/15 $ $ $ (1) At March 31, 2016, there were 39 mortgages on 135 properties, while at December 31, 2015, there were 44 mortgages on 183 properties. The mortgages require monthly payments, with principal payments due at maturity. The mortgages are at fixed interest rates, except for five mortgages on 14 properties totaling $58.4 million at March 31, 2016, including net unamortized discounts. At December 31, 2015, four mortgages on 13 properties totaling $51.1 million, including net unamortized discounts, were at variable interest rates. After factoring in arrangements which limit our exposure to interest rate risk and effectively fix our per annum interest rates, our variable rate mortgage debt includes three mortgages totaling $22.8 million at March 31, 2016, and two mortgages totaling $15.5 million at December 31, 2015. (2) Stated interest rates ranged from 2.3% to 6.9% at March 31, 2016, while stated interest rates ranged from 2.0% to 6.9% at December 31, 2015. (3) Effective interest rates ranged from 2.3% to 8.9% at March 31, 2016, while effective interest rates ranged from 2.2% to 8.9% at December 31, 2015. |
Schedule of maturity mortgages payable, excluding net premiums | The following table summarizes the maturity of mortgages payable, excluding net premiums of $8.7 million and deferred finance costs of $498,000, as of March 31, 2016 (dollars in millions): Year of Maturity 2016 $ 2017 2018 2019 2020 Thereafter Totals $ |
Notes Payable (Tables)
Notes Payable (Tables) - Note payable | 3 Months Ended |
Mar. 31, 2016 | |
Credit facility | |
Schedule of Notes payable | Our senior unsecured notes and bonds consist of the following, sorted by maturity date (dollars in millions): March 31, December 31, 5.95% notes, issued in September 2006 and due in September 2016 $ $ 5.375% notes, issued in September 2005 and due in September 2017 2.0% notes, issued in October 2012 and due in January 2018 6.75% notes, issued in September 2007 and due in August 2019 5.75% notes, issued in June 2010 and due in January 2021 3.25% notes, issued in October 2012 and due in October 2022 4.65% notes, issued in July 2013 and due in August 2023 3.875% notes, issued in June 2014 and due in July 2024 4.125% notes, issued in September 2014 and due in October 2026 5.875% bonds, $100 issued in March 2005 and $150 issued in June 2011, both due in March 2035 Total principal amount Unamortized original issuance discounts and deferred financing costs ) ) $ $ |
Summary of maturity of notes and bonds payable excluding unamortized original issuance discounts | The following table summarizes the maturity of our notes and bonds payable as of March 31, 2016, excluding unamortized original issuance discounts and deferred financing costs (dollars in millions): Year of Maturity Principal 2016 $ 2017 2018 2019 2020 - Thereafter Totals $ |
Noncontrolling Interests (Table
Noncontrolling Interests (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Noncontrolling Interests. | |
Schedule of the change in the carrying value of all noncontrolling interests | The following table represents the change in the carrying value of all noncontrolling interests through March 31, 2016 (dollars in thousands): Tau Operating Realty Income, L.P. Partnership units (1) units (2) Total Carrying value at December 31, 2015 $ $ $ Redemptions - ) ) Distributions ) ) ) Allocation of net income Carrying value at March 31, 2016 $ $ $ (1) 317,022 Tau Operating Partnership units were issued on January 22, 2013 and remained outstanding as of March 31, 2016 and December 31, 2015. (2) 534,546 Realty Income, L.P. units were issued on June 27, 2013, 331,364 units were outstanding as of December 31, 2015, and 327,364 remain outstanding as of March 31, 2016. |
Summary selected financial data of consolidated VIEs | Below is a summary of selected financial data of consolidated VIEs for which we are the primary beneficiary included in the consolidated balance sheets at March 31, 2016 and December 31, 2015 (in thousands): March 31, 2016 December 31, 2015 Net real estate $ $ Total assets Total debt Total liabilities |
Fair Value of Financial Instr33
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value of Financial Instruments | |
Schedule of fair value by balance sheet groupings | We believe that the carrying values reflected in our consolidated balance sheets reasonably approximate the fair values for cash and cash equivalents, accounts receivable, escrow deposits, loans receivable, line of credit payable, term loans and all other liabilities, due to their short-term nature or interest rates and terms that are consistent with market, except for our notes receivable issued in connection with property sales, mortgages payable and our senior notes and bonds payable, which are disclosed below (dollars in millions): Carrying value per Estimated fair At March 31, 2016 balance sheet value Notes receivable issued in connection with property sales $ $ Mortgages payable assumed in connection with acquisitions, net Notes and bonds payable, net Carrying value per Estimated fair At December 31, 2015 balance sheet value Notes receivable issued in connection with property sales $ $ Mortgages payable assumed in connection with acquisitions, net Notes and bonds payable, net |
Distributions Paid and Payable
Distributions Paid and Payable (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Common stock | |
Issuance of common stock | |
Schedule of Stock by Class and Dividends Paid or Payable | Month January $ $ February March Total $ $ |
Net Income Per Common Share (Ta
Net Income Per Common Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Net Income Per Common Share | |
Schedule of reconciliation of the denominator of the basic net income per common share computation to the denominator of the diluted net income per common share computation | Three months ended March 31, Weighted average shares used for the basic net income per share computation Incremental shares from share-based compensation Weighted average partnership common units convertible to common shares that were dilutive Weighted average shares used for diluted net income per share computation Unvested shares from share-based compensation that were anti-dilutive Weighted average partnership common units convertible to common shares that were anti-dilutive |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Information | |
Schedule of reconciliation of assets from segment to consolidated | The following tables set forth certain information regarding the properties owned by us, classified according to the business of the respective tenants (dollars in thousands): March 31, December 31, Assets, as of: Segment net real estate: Apparel $ $ Automotive service Automotive tire services Beverages Child care Convenience stores Dollar stores Drug stores Financial services Grocery stores Health and fitness Health care Home improvement Restaurants-casual dining Restaurants-quick service Theaters Transportation services Wholesale club 29 other non-reportable segments Total segment net real estate Intangible assets: Apparel Automotive service Automotive tire services Beverages Convenience stores Dollar stores Drug stores Financial services Grocery stores Health and fitness Health care Home improvement Restaurants-casual dining Restaurants-quick service Theaters Transportation services Wholesale club Other non-reportable segments Goodwill: Automotive service Automotive tire services Child care Convenience stores Restaurants-casual dining Restaurants-quick service Other non-reportable segments Other corporate assets Total assets $ $ |
Schedule of reconciliation of revenue from segments to consolidated | Revenue for the three months ended March 31, Segment rental revenue: Apparel $ $ Automotive service Automotive tire services Beverages Child care Convenience stores Dollar stores Drug stores Financial services Grocery stores Health and fitness Health care Home improvement Restaurants-casual dining Restaurants-quick service Theaters Transportation services Wholesale club 29 other non-reportable segments Total rental revenue Tenant reimbursements Other revenue Total revenue $ $ |
Management Statement (Details)
Management Statement (Details) ft² in Millions | Mar. 31, 2016ft²stateproperty |
Management Statement | |
Properties owned | property | 4,615 |
Number of U.S. states where properties are owned | state | 49 |
Leasable square feet | ft² | 77.4 |
Summary of Significant Accoun38
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements (Details) - USD ($) | Mar. 31, 2016 | Dec. 31, 2015 |
Summary of Significant Accounting Policies and Procedures and Recent Accounting Pronouncements | ||
Allowance for doubtful accounts | $ 1,300,000 | $ 429,000 |
Supplemental Detail for Certa39
Supplemental Detail for Certain Components of Consolidated Balance Sheets - Acquired Lease Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Acquired lease intangible assets, net | ||
Acquired in-place leases | $ 1,063,600 | $ 1,056,715 |
Accumulated amortization of acquired in-place leases | (287,011) | (264,399) |
Acquired above-market leases | 309,384 | 304,548 |
Accumulated amortization of acquired above-market leases | (68,562) | (62,447) |
Acquired lease intangible assets | $ 1,017,411 | $ 1,034,417 |
Supplemental Detail for Certa40
Supplemental Detail for Certain Components of Consolidated Balance Sheets - Other Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Other assets, net | ||
Prepaid expenses | $ 16,004 | $ 14,258 |
Restricted escrow deposits | 8,247 | 4,179 |
Notes receivable issued in connection with property sales | 5,477 | 17,905 |
Impounds related to mortgages payable | 2,703 | 5,860 |
Corporate assets, net | 2,192 | 2,313 |
Other items | 361 | 44 |
Total other assets | 44,457 | 54,785 |
Credit Facility | ||
Other assets, net | ||
Credit facility origination costs, net | $ 9,473 | $ 10,226 |
Supplemental Detail for Certa41
Supplemental Detail for Certain Components of Consolidated Balance Sheets - Distributions Payable (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Distributions payable | ||
Declared distributions | $ 52,483 | $ 50,344 |
Noncontrolling interests | ||
Distributions payable | ||
Declared distributions | 128 | 124 |
Common stock | ||
Distributions payable | ||
Declared distributions | 50,098 | 47,963 |
Preferred stock | ||
Distributions payable | ||
Declared distributions | $ 2,257 | $ 2,257 |
Supplemental Detail for Certa42
Supplemental Detail for Certain Components of Consolidated Balance Sheets - Accounts Payable, Acquired Lease Intangibles, and Other Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Accounts payable and accrued expenses | ||
Property taxes payable | $ 11,347 | $ 13,354 |
Accrued costs on properties under development | 6,327 | 9,976 |
Other items | 25,564 | 24,197 |
Total accounts payable and accrued expenses | 86,328 | 115,826 |
Acquired lease intangible liabilities, net | ||
Acquired below-market leases | 291,013 | 288,412 |
Accumulated amortization of acquired below-market leases | (41,559) | (37,496) |
Acquired lease intangible liabilities | 249,454 | 250,916 |
Other liabilities | ||
Rent received in advance | 31,920 | 42,840 |
Security deposits | 6,546 | 6,418 |
Capital lease obligations | 4,784 | 4,707 |
Total other liabilities | 43,250 | 53,965 |
Note payable | ||
Accounts payable and accrued expenses | ||
Interest payable | 30,872 | 61,486 |
Mortgages, term loans, credit line, interest payable, and interest rate swaps | ||
Accounts payable and accrued expenses | ||
Interest payable | $ 12,218 | $ 6,813 |
Investments in Real Estate (Det
Investments in Real Estate (Details) ft² in Millions | 3 Months Ended | |
Mar. 31, 2016USD ($)ft²item | Mar. 31, 2015USD ($)ft²item | |
Real estate properties | ||
Leasable square feet | ft² | 77.4 | |
Number of investments in properties that caused any tenant to be 10% of more of total assets | item | 0 | |
Total revenue | $ 267,116,000 | $ 246,867,000 |
In-place lease, depreciation and amortization to expense | 22,600,000 | 21,600,000 |
Net Decrease to Rental Income for Capitalized above Market and below Market Leases | 2,100,000 | 1,700,000 |
Net increase (decrease) to rental revenue | ||
2,016 | (6,167,000) | |
2,017 | (8,170,000) | |
2,018 | (7,922,000) | |
2,019 | (6,933,000) | |
2,020 | (6,260,000) | |
Thereafter | 44,084,000 | |
Totals | 8,632,000 | |
Increase to amortization expense | ||
2,016 | 67,900,000 | |
2,017 | 89,367,000 | |
2,018 | 86,872,000 | |
2,019 | 76,808,000 | |
2,020 | 71,590,000 | |
Thereafter | 384,052,000 | |
Totals | $ 776,589,000 | |
Maximum | ||
Real estate properties | ||
Investments to any one tenant as a percentage of total assets | 10.00% | |
New properties and properties under development | ||
Real estate properties | ||
Real estate acquired | $ 352,600,000 | $ 209,900,000 |
Number of properties | item | 103 | 83 |
Initial weighted average contractual lease rate of properties acquired (as a percent) | 6.60% | 6.90% |
Number of states in which properties are located | item | 31 | 24 |
Leasable square feet | ft² | 1.7 | 1.6 |
Leased area (as a percent) | 100.00% | 100.00% |
Weighted average lease term | 15 years 9 months 18 days | 15 years 6 months |
Number of industries in which tenants operate | item | 18 | 12 |
Acquisition transaction costs | $ 24,000 | $ 94,000 |
New properties and properties under development | Retail properties | ||
Real estate properties | ||
Property type- percentage of properties acquired | 85.70% | 74.20% |
New properties and properties under development | Industrial and distribution properties | ||
Real estate properties | ||
Property type- percentage of properties acquired | 14.30% | 25.80% |
Properties under development or expansion | ||
Real estate properties | ||
Number of properties | item | 23 | 25 |
Initial weighted average contractual lease rate of properties acquired (as a percent) | 6.80% | 9.00% |
Investments in properties | $ 52,100,000 | $ 15,300,000 |
Aggregate acquisitions | ||
Real estate properties | ||
Real estate acquired | 352,600,000 | 209,900,000 |
Land recorded related to acquisition | 102,200,000 | 35,400,000 |
Buildings and improvements recorded | 243,100,000 | 121,500,000 |
Intangible assets related to leases recorded | 10,000,000 | 44,500,000 |
Other assets recorded | 14,100,000 | |
Intangible liabilities related to leases and other assumed liabilities recorded | 2,000,000 | 5,600,000 |
Premiums recorded upon acquisition of mortgages | 692,000 | |
Contingent consideration associated with acquisition | 0 | 0 |
Total revenue | 1,100,000 | 1,500,000 |
Net income | 408,000 | 712,000 |
Amount of investment allocated by estimate | 348,500,000 | |
Amount of investment previously allocated by estimate finalized during the period | 193,600,000 | |
Investments in Existing Properties | ||
Real estate properties | ||
Total capitalized costs on existing properties | 1,300,000 | 1,300,000 |
Re-leasing costs and real estate improvements included in capitalized costs on existing properties | 191,000 | |
Recurring Capital Expenditures Real Estate Improvements | 72,000 | |
Nonrecurring Building Real Estate Improvements | 1,000,000 | |
Real estate investments with existing leases | ||
Real estate properties | ||
Real estate acquired | $ 26,800,000 | $ 114,200,000 |
Number of properties | item | 4 | 14 |
Credit Facility (Details)
Credit Facility (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2016USD ($)item | Mar. 31, 2015USD ($) | Dec. 31, 2015USD ($) | Jun. 30, 2015USD ($) | |
Credit facility | ||||
Outstanding balance | $ 653,000 | $ 238,000 | ||
Credit Facility | ||||
Credit facility | ||||
Maximum borrowing capacity | $ 1,500,000 | |||
Credit Facility | Unsecured debt | ||||
Credit facility | ||||
Maximum borrowing capacity | $ 2,000,000 | |||
Number of extensions available | item | 2 | |||
Term of extension option | 6 months | |||
Variable reference rate | LIBOR | |||
Variable interest rate, basis points spread over variable reference rate (as a percent) | 0.90% | |||
Line of credit facility, commitment fee basis points (as a percent) | 0.15% | |||
Line of credit facility, all-in drawn variable interest rate (as a percent) | 1.05% | |||
Unamortized debt issuance costs | $ 9,500 | |||
Credit facility origination costs incurred | 9,100 | |||
Current borrowing capacity available | 1,350,000 | |||
Outstanding balance | $ 653,000 | $ 238,000 | ||
Average borrowing rate during the period (as a percent) | 1.50% | 1.20% | ||
Effective interest rate (as a percent) | 1.40% | |||
Increase in the maximum borrowing capacity after amendment | $ 1,000,000 |
Mortgages Payable (Details)
Mortgages Payable (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2016USD ($)item | Mar. 31, 2015USD ($)item | Dec. 31, 2015USD ($)item | |
Debt instrument | |||
Assumed mortgages payable | $ 32,500,000 | $ 0 | |
Assumed non-recourse mortgage debt | 9,700,000 | ||
Assumed recourse mortgage debt | 22,800,000 | ||
Mortgage Payable Balance | 514,041,000 | $ 646,187,000 | |
Maturity mortgages payable, excluding net premiums | |||
2,016 | 275,000,000 | ||
2,017 | 175,000,000 | ||
2,018 | 350,000,000 | ||
2,019 | 550,000,000 | ||
Thereafter | 2,300,000,000 | ||
Totals | $ 3,650,000,000 | ||
Minimum | |||
Debt instrument | |||
Weighted Average Stated Interest Rate (as a percent) | 2.30% | 2.00% | |
Weighted Average Effective Interest Rate (as a percent) | 2.30% | 2.20% | |
Maximum | |||
Debt instrument | |||
Weighted Average Stated Interest Rate (as a percent) | 6.90% | 6.90% | |
Weighted Average Effective Interest Rate (as a percent) | 8.90% | 8.90% | |
Mortgages Payable | |||
Debt instrument | |||
Amount repaid | $ 164,300,000 | 51,300,000 | |
Net premiums recorded upon acquisition of mortgages | 692,000 | ||
Remaining balance of deferred financing costs at period end | $ 498,000 | $ 553,000 | |
Number of Properties | item | 135 | 183 | |
Weighted Average Stated Interest Rate (as a percent) | 5.00% | 4.90% | |
Weighted Average Effective Interest Rate (as a percent) | 4.30% | 4.10% | |
Weighted Average Remaining Years Until Maturity | 4 years 3 months 18 days | 3 years 7 months 6 days | |
Principal Balance | $ 505,864,000 | $ 637,658,000 | |
Unamortized Premium Balance | 8,177,000 | 8,529,000 | |
Mortgage Payable Balance | $ 514,041,000 | $ 646,187,000 | |
Number of mortgages | item | 39 | 44 | |
Number of properties with mortgages | item | 135 | 183 | |
Maturity mortgages payable, excluding net premiums | |||
2,016 | $ 21,700,000 | ||
2,017 | 149,800,000 | ||
2,018 | 15,500,000 | ||
2,019 | 26,300,000 | ||
2,020 | 82,400,000 | ||
Thereafter | 210,200,000 | ||
Totals | 505,900,000 | ||
Mortgages repaid in full | |||
Debt instrument | |||
Amount repaid | $ 146,700,000 | $ 49,400,000 | |
Maturity mortgages payable, excluding net premiums | |||
Number of mortgages repaid | item | 7 | 3 | |
Variable rate mortgages | |||
Debt instrument | |||
Principal Balance | $ 58,400,000 | $ 51,100,000 | |
Number of mortgages | item | 5 | 4 | |
Number of properties with mortgages | item | 14 | 13 | |
Variable Rate Mortgages After Interest Rate Arrangements | |||
Debt instrument | |||
Principal Balance | $ 22,800,000 | $ 15,500,000 | |
Number of mortgages | item | 3 | 2 |
Term Loans (Details)
Term Loans (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Jun. 30, 2015 | Jan. 31, 2013 | Mar. 31, 2016 | Dec. 31, 2015 | |
Credit facility | ||||
Term loans | $ 318,908,000 | $ 318,835,000 | ||
Unsecured debt | ||||
Credit facility | ||||
Term loans | $ 250,000,000 | $ 70,000,000 | ||
Variable reference rate | one month LIBOR | one month LIBOR | ||
Variable interest rate, basis points spread over variable reference rate (as a percent) | 0.95% | 1.20% | ||
Maximum interest rate (as a percent) | 2.67% | 2.15% | ||
Deferred finance costs | 1,100,000 | $ 1,200,000 | ||
$250 million senior unsecured term loan | ||||
Credit facility | ||||
Deferred financing costs incurred | 1,200,000 | |||
$70 million senior unsecured term loan | ||||
Credit facility | ||||
Deferred financing costs incurred | $ 303,000 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2016 | Dec. 31, 2015 | |
Debt instrument | ||
Total principal amount | $ 3,650,000 | $ 3,650,000 |
Unamortized original issuance discounts and deferred financing costs | (31,000) | (32,000) |
Notes payable, net | 3,619,149 | 3,617,973 |
Maturity of notes and bonds payable | ||
2,016 | 275,000 | |
2,017 | 175,000 | |
2,018 | 350,000 | |
2,019 | 550,000 | |
Thereafter | 2,300,000 | |
Totals | 3,650,000 | |
5.95% notes, issued in September 2006 and due in September 2016 | ||
Debt instrument | ||
Total principal amount | $ 275,000 | $ 275,000 |
Interest rate (as a percent) | 5.95% | 5.95% |
5.375% notes, issued in September 2005 and due in September 2017 | ||
Debt instrument | ||
Total principal amount | $ 175,000 | $ 175,000 |
Interest rate (as a percent) | 5.375% | 5.375% |
2.0% notes, issued in October 2012 and due in January 2018 | ||
Debt instrument | ||
Total principal amount | $ 350,000 | $ 350,000 |
Interest rate (as a percent) | 2.00% | 2.00% |
6.75% notes, issued in September 2007 and due in August 2019 | ||
Debt instrument | ||
Total principal amount | $ 550,000 | $ 550,000 |
Interest rate (as a percent) | 6.75% | 6.75% |
5.75% notes, issued in June 2010 and due in January 2021 | ||
Debt instrument | ||
Total principal amount | $ 250,000 | $ 250,000 |
Interest rate (as a percent) | 5.75% | 5.75% |
3.25% notes, issued in October 2012 and due in October 2022 | ||
Debt instrument | ||
Total principal amount | $ 450,000 | $ 450,000 |
Interest rate (as a percent) | 3.25% | 3.25% |
4.65% notes, issued in July 2013 and due in August 2023 | ||
Debt instrument | ||
Total principal amount | $ 750,000 | $ 750,000 |
Interest rate (as a percent) | 4.65% | 4.65% |
3.875% notes, issued in June 2014 and due in July 2024 | ||
Debt instrument | ||
Total principal amount | $ 350,000 | $ 350,000 |
Interest rate (as a percent) | 3.875% | 3.875% |
4.125% notes, issued in September 2014 and due in October 2026 | ||
Debt instrument | ||
Total principal amount | $ 250,000 | $ 250,000 |
Interest rate (as a percent) | 4.125% | 4.125% |
5.875% bonds, $100 issued in March 2005 and $150 issued in June 2011, both due in March 2035 | ||
Debt instrument | ||
Total principal amount | $ 250,000 | $ 250,000 |
Interest rate (as a percent) | 5.875% | 5.875% |
5.875% bonds, issued in March 2005 and due in March 2035 | ||
Debt instrument | ||
Issuance of Debt | $ 100,000 | $ 100,000 |
5.875% bonds, issued in June 2011 and due in March 2035 | ||
Debt instrument | ||
Issuance of Debt | $ 150,000 | $ 150,000 |
Notes and bonds payable | ||
Debt instrument | ||
Weighted average interest rate | 4.70% | |
Weighted average remaining years until maturity | 6 years 2 months 12 days |
Noncontrolling Interests (Detai
Noncontrolling Interests (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||||
Jan. 31, 2015$ / sharesshares | Mar. 31, 2016USD ($)shares | Mar. 31, 2015USD ($) | Dec. 31, 2015shares | Jun. 27, 2013shares | Jan. 22, 2013shares | |
Noncontrolling interests | ||||||
Conversion ratio | 1 | |||||
Change in the carrying value of all noncontrolling interests | ||||||
Carrying value at beginning of the period | $ 21,737 | |||||
Redemptions | (101) | |||||
Distributions | (386) | |||||
Net income attributable to noncontrolling interests | 241 | $ 317 | ||||
Carrying value at end of the period | $ 21,491 | |||||
Tau Operating Partnership, L.P. | ||||||
Noncontrolling interests | ||||||
Realty Income partnership units, ownership interest (as a percent) | 99.40% | |||||
Change in the carrying value of all noncontrolling interests | ||||||
Carrying value at beginning of the period | $ 13,410 | |||||
Distributions | (189) | |||||
Net income attributable to noncontrolling interests | 64 | |||||
Carrying value at end of the period | $ 13,285 | |||||
Units held by third party | shares | 317,022 | 317,022 | 317,022 | |||
Payment rate per annum (as a percent) | 2.00% | |||||
Partnership preferred units redeemed (in shares) | shares | 6,750 | |||||
Partnership preferred units redemption price (in dollars per unit) | $ / shares | $ 1,000 | |||||
Realty Income, L.P. | ||||||
Noncontrolling interests | ||||||
Realty Income partnership units, ownership interest (as a percent) | 98.70% | |||||
Third party partnership units, ownership interest (as a percent) | 1.30% | |||||
Change in the carrying value of all noncontrolling interests | ||||||
Carrying value at beginning of the period | $ 8,327 | |||||
Redemptions | (101) | |||||
Distributions | (197) | |||||
Net income attributable to noncontrolling interests | 177 | |||||
Carrying value at end of the period | $ 8,206 | |||||
Units held by third party | shares | 327,364 | 331,364 | 534,546 |
Noncontrolling Interests - Vari
Noncontrolling Interests - Variable interest entity (Details) - Accounting Standards Update ("ASU") 2015-02 - Consolidation (Topic 810): Amendments to the Consolidation Analysis - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Variable interest entity | ||
Net real estate | $ 3,041,765 | $ 3,033,180 |
Total assets | 3,525,643 | 3,529,667 |
Total debt | 241,044 | 389,105 |
Total liabilities | $ 342,149 | $ 478,955 |
Fair Value of Financial Instr50
Fair Value of Financial Instruments (Details) - USD ($) $ in Millions | Mar. 31, 2016 | Dec. 31, 2015 |
Level 2 | Accounts payable and accrued expenses | Interest rate swaps | ||
Fair value of financial assets and liabilities | ||
Fair value of interest rate swaps | $ 9.7 | |
Carrying value per balance sheet | ||
Fair value of financial assets and liabilities | ||
Notes receivable issued in connection with property sales | 5.5 | $ 17.9 |
Mortgages payable assumed in connection with acquisitions, net | 514 | 646.2 |
Notes and bonds payable, net | 3,619.1 | 3,618 |
Estimated fair value | ||
Fair value of financial assets and liabilities | ||
Notes receivable issued in connection with property sales | 5.7 | 19.4 |
Mortgages payable assumed in connection with acquisitions, net | 511.1 | 651.5 |
Notes and bonds payable, net | $ 3,832.6 | $ 3,828.1 |
Gain on Sales of Real Estate (D
Gain on Sales of Real Estate (Details) - New properties and properties under development $ in Millions | 3 Months Ended | |
Mar. 31, 2016USD ($)property | Mar. 31, 2015USD ($)property | |
Sales of investment properties | ||
Number of properties sold | property | 11 | 9 |
Sales proceeds | $ 11 | $ 22.3 |
Gain on sales of investment properties | $ 2.3 | $ 7.2 |
Impairments (Details)
Impairments (Details) $ in Millions | 3 Months Ended | |
Mar. 31, 2016USD ($)property | Mar. 31, 2015USD ($)property | |
Impairments | ||
Total Provisions for impairment | $ | $ 1.9 | $ 2.1 |
Number of impaired properties held-for-sale | 1 | |
Number of impaired properties held-for-investment | 1 | |
Number of impaired properties sold | 6 | 2 |
Number of impaired properties disposed from other than sale | 1 | |
Automotive parts | ||
Impairments | ||
Number of properties impaired | 1 | |
Convenience stores | ||
Impairments | ||
Number of properties impaired | 1 | |
Furniture Stores | ||
Impairments | ||
Number of properties impaired | 1 | |
Health and fitness | ||
Impairments | ||
Number of properties impaired | 1 | |
Restaurants - casual dining industry | ||
Impairments | ||
Number of properties impaired | 2 | |
Other non-reportable segments | ||
Impairments | ||
Number of properties impaired | 2 |
Distributions Paid and Payabl53
Distributions Paid and Payable (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 3 Months Ended | ||||||
Mar. 31, 2016$ / shares | Feb. 29, 2016$ / shares | Jan. 31, 2016$ / shares | Mar. 31, 2015$ / shares | Feb. 28, 2015$ / shares | Jan. 31, 2015$ / shares | Mar. 31, 2016USD ($)item$ / shares | Mar. 31, 2015USD ($)item$ / shares | |
Common stock | ||||||||
Issuance of common stock | ||||||||
Dividends paid per common share (in dollars per share) | $ 0.1985000 | $ 0.1985000 | $ 0.1910000 | $ 0.1890000 | $ 0.1890000 | $ 0.1834167 | $ 0.5880000 | $ 0.5614167 |
Monthly distributions payable (in dollars per share) | 0.199 | 0.199 | ||||||
Class F Preferred Stock | ||||||||
Issuance of common stock | ||||||||
Monthly distributions payable (in dollars per share) | $ 0.138021 | $ 0.138021 | ||||||
Period for which dividends are paid | item | 3 | 3 | ||||||
Dividends paid per preferred share (in dollars per share) | $ 0.414063 | $ 0.414063 | ||||||
Preferred stock dividends paid | $ | $ 6.8 | $ 6.8 |
Net Income Per Common Share (De
Net Income Per Common Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Net Income Per Common Share | ||
Weighted average shares used for the basic net income per share computation | 250,173,815 | 225,346,407 |
Incremental shares from share-based compensation | 207,186 | 162,425 |
Weighted average shares used for diluted net income per share computation | 250,698,023 | 225,825,854 |
Unvested Shares | ||
Net Income Per Common Share | ||
Unvested shares from share-based compensation that were anti-dilutive | 400 | 111,338 |
Convertible Partnership Units | ||
Net Income Per Common Share | ||
Weighted average partnership common units convertible to common shares that were dilutive | 317,022 | 317,022 |
Unvested shares from share-based compensation that were anti-dilutive | 330,045 | 440,546 |
Supplemental Disclosures of C55
Supplemental Disclosures of Cash Flow Information (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Supplemental Disclosures of Cash Flow Information | ||
Cash paid for interest | $ 84,100,000 | $ 85,900,000 |
Interest capitalized to properties under development | 126,000 | 94,000 |
Cash paid for income taxes | 1,600,000 | $ 1,800,000 |
Non-cash investing and financing activities | ||
Loans Assumed | 32,500,000 | |
Net premiums recorded on mortgages assumed | $ 692,000 |
Segment Information - Assets (D
Segment Information - Assets (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016USD ($)segment | Dec. 31, 2015USD ($)segment | |
Segment Information | ||
Number of activity segments | segment | 47 | |
Reconciliation of assets from segment to consolidated | ||
Net real estate | $ 10,868,267 | $ 10,618,884 |
Goodwill | 15,283 | 15,321 |
Other corporate assets | 136,142 | 176,757 |
Total assets | 12,037,103 | 11,845,379 |
Apparel | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 178,727 | 180,175 |
Intangible assets | 47,033 | 48,116 |
Automotive service | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 128,335 | 129,328 |
Intangible assets | 18,831 | 19,131 |
Goodwill | 445 | 448 |
Automotive tire services | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 244,978 | 247,200 |
Intangible assets | 12,784 | 13,202 |
Goodwill | 863 | 865 |
Beverages | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 296,655 | 297,724 |
Intangible assets | 2,474 | 2,538 |
Child care | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 51,898 | 52,391 |
Goodwill | 5,027 | 5,034 |
Convenience stores | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 717,540 | 723,092 |
Intangible assets | 15,475 | 15,843 |
Goodwill | 2,008 | 2,009 |
Dollar stores | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 1,148,793 | 1,158,948 |
Intangible assets | 55,436 | 56,420 |
Drug stores | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 1,395,454 | 1,386,387 |
Intangible assets | 187,249 | 189,631 |
Financial services | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 252,094 | 254,022 |
Intangible assets | 33,391 | 34,626 |
Grocery stores | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 328,963 | 331,565 |
Intangible assets | 41,785 | 42,823 |
Health and fitness | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 841,726 | 839,872 |
Intangible assets | 63,720 | 65,037 |
Health care | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 220,103 | 220,018 |
Intangible assets | 28,684 | 29,950 |
Home improvement | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 266,969 | 268,974 |
Intangible assets | 41,188 | 42,630 |
Restaurants - casual dining | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 554,255 | 421,235 |
Intangible assets | 9,078 | 9,392 |
Goodwill | 2,196 | 2,215 |
Restaurants - quick service | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 506,212 | 466,802 |
Intangible assets | 35,243 | 32,612 |
Goodwill | 1,080 | 1,082 |
Theaters | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 369,587 | 371,617 |
Intangible assets | 16,710 | 17,673 |
Transportation services | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 715,050 | 686,041 |
Intangible assets | 89,349 | 92,602 |
Wholesale clubs | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 449,311 | 452,563 |
Intangible assets | 35,342 | 36,215 |
Other non-reportable segments | ||
Reconciliation of assets from segment to consolidated | ||
Net real estate | 2,201,617 | 2,130,930 |
Intangible assets | 283,639 | 285,976 |
Goodwill | $ 3,664 | $ 3,668 |
Number of non-reportable segments | segment | 29 | 29 |
Segment Information - Revenue (
Segment Information - Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Segment revenue information | ||
Rental revenue | $ 256,801 | $ 235,122 |
Tenant reimbursements | 9,105 | 9,963 |
Other revenue | 1,210 | 1,782 |
Total revenue | 267,116 | 246,867 |
Apparel | ||
Segment revenue information | ||
Rental revenue | 4,875 | 4,931 |
Automotive service | ||
Segment revenue information | ||
Rental revenue | 4,677 | 4,322 |
Automotive tire services | ||
Segment revenue information | ||
Rental revenue | 7,264 | 7,090 |
Beverages | ||
Segment revenue information | ||
Rental revenue | 6,404 | 6,328 |
Child care | ||
Segment revenue information | ||
Rental revenue | 5,092 | 5,020 |
Convenience stores | ||
Segment revenue information | ||
Rental revenue | 22,864 | 22,517 |
Dollar stores | ||
Segment revenue information | ||
Rental revenue | 22,595 | 21,947 |
Drug stores | ||
Segment revenue information | ||
Rental revenue | 28,421 | 22,598 |
Financial services | ||
Segment revenue information | ||
Rental revenue | 4,313 | 4,264 |
Grocery stores | ||
Segment revenue information | ||
Rental revenue | 7,645 | 7,356 |
Health and fitness | ||
Segment revenue information | ||
Rental revenue | 21,304 | 16,015 |
Health care | ||
Segment revenue information | ||
Rental revenue | 4,016 | 4,017 |
Home improvement | ||
Segment revenue information | ||
Rental revenue | 6,054 | 5,178 |
Restaurants - casual dining | ||
Segment revenue information | ||
Rental revenue | 9,835 | 9,449 |
Restaurants - quick service | ||
Segment revenue information | ||
Rental revenue | 12,794 | 10,361 |
Theaters | ||
Segment revenue information | ||
Rental revenue | 13,449 | 12,190 |
Transportation services | ||
Segment revenue information | ||
Rental revenue | 13,091 | 12,951 |
Wholesale clubs | ||
Segment revenue information | ||
Rental revenue | 9,370 | 9,341 |
Other non-reportable segments | ||
Segment revenue information | ||
Rental revenue | $ 52,738 | $ 49,247 |
Common Stock Incentive Plan (De
Common Stock Incentive Plan (Details) - 2012 Plan - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Plan disclosures | ||
Plan term from the date of adoption | 10 years | |
Share-based compensation costs recognized | $ 2.6 | $ 2.6 |
Maximum | ||
Plan disclosures | ||
Authorized shares | 3,985,734 | |
Restricted Stock | ||
Number of shares | ||
Shares granted | 141,139 | |
Additional disclosures | ||
Remaining unamortized share-based compensation expense | $ 19.5 | |
Vesting period | 5 years | |
Performance Shares | ||
Additional disclosures | ||
Awards vesting on the first and second January1 after the end of the three year performance period (as a percent) | 50.00% | |
Performance Shares | Executive officers | ||
Number of shares | ||
Shares granted | 58,569 | |
Restricted Stock Units | ||
Number of shares | ||
Shares granted | 11,098 | |
Additional disclosures | ||
Vesting period | 5 years | |
Performance Shares and Restricted Stock Units | ||
Additional disclosures | ||
Remaining unamortized share-based compensation expense | $ 6.2 |
Dividend Reinvestment and Sto59
Dividend Reinvestment and Stock Purchase Plan (Details) - USD ($) $ in Millions | 3 Months Ended | 61 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2016 | |
Dividend Reinvestment and Stock Purchase Plan | |||
Authorized common shares to be issued | 26,000,000 | ||
Number of common shares issued | 61,458 | 2,023,276 | 12,761,320 |
Amount raised from shares issued | $ 3.5 | $ 102.2 | $ 585.1 |
Number of common shares issued under the waiver approval process | 1,980,994 | ||
Amount raised from share issued under the waiver approval process | $ 100 |
At-the-Market (ATM) Program (De
At-the-Market (ATM) Program (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended |
Sep. 30, 2015 | Mar. 31, 2016 | |
Procceds from At-the-Market (ATM) program | $ 30,547 | |
ATM | ||
Shares authorized | 12,000,000 | |
Shares issued in stock offerings, net of offering costs (in shares) | 500,000 | |
Procceds from At-the-Market (ATM) program | $ 30,500 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Mar. 31, 2016USD ($) |
Commitments and Contingencies. | |
Amount of commitments for re-leasing costs, recurring capital expenditures and non-recurring building improvements | $ 687,000 |
Amount of commitments for construction contracts, which is expected to be paid in next twelve months | $ 19,600,000 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event | 1 Months Ended |
Apr. 30, 2016$ / shares | |
Common stock | |
Subsequent events | |
Common stock, dividends declared (in dollars per share) | $ 0.199 |
Class F Preferred Stock | |
Subsequent events | |
Preferred stock, dividends declared (in dollars per share) | $ 0.138021 |