UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
=========
[X] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended March 31, 2000, or
==================
[ ] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934
COMMISSION FILE NUMBER 1-13318
==============================
REALTY INCOME CORPORATION
=========================
(Exact name of registrant as specified in its charter)
MARYLAND
========
(State or other jurisdiction of incorporation or organization)
33-0580106
==========
(I.R.S. Employer Identification No.)
220 WEST CREST STREET, ESCONDIDO, CALIFORNIA 92025
===================================================
(Address of principal executive offices)
(760) 741-2111
==============
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
There were 26,713,970 shares of common stock outstanding as of
May 9, 2000.
REALTY INCOME CORPORATION
Form 10-Q
March 31, 2000
Table of Contents
-----------------
PART I. FINANCIAL INFORMATION Page
============================== ----
Item 1: Financial Statements
Consolidated Balance Sheets........................ 3
Consolidated Statements of Income.................. 5
Consolidated Statements of Cash Flows.............. 6
Notes to Consolidated Financial Statements......... 8
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations...... 13
Item 3: Quantitative and Qualitative Disclosures About
Market Risk........................................ 29
PART II. OTHER INFORMATION
==========================
Item 6: Exhibits and Reports on Form 8-K................... 30
SIGNATURE................................................... 33
EXHIBIT INDEX............................................... 33
Page 2
PART I. FINANCIAL INFORMATION
==============================
ITEM 1. FINANCIAL STATEMENTS
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
===========================
March 31, 2000 and December 31, 1999
(dollars in thousands, except per share data)
2000 1999
(Unaudited)
========= =========
ASSETS
Real estate, at cost:
Land $ 351,708 $ 350,517
Buildings and improvements 718,416 711,962
--------- ---------
1,070,124 1,062,479
Less accumulated depreciation
and amortization (201,520) (195,386)
--------- ---------
Net real estate 868,604 867,093
Cash and cash equivalents 2,103 773
Accounts receivable 3,180 3,407
Goodwill, net 18,822 19,053
Other assets 19,012 15,078
--------- ---------
Total assets $ 911,721 $ 905,404
========= =========
(table continued next page)
Page 3
(table continued)
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
===========================
March 31, 2000 and December 31, 1999
(dollars in thousands, except per share data)
2000 1999
(Unaudited)
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Distributions payable $ 4,856 $ 4,828
Accounts payable and accrued expenses 6,206 12,792
Other liabilities 3,841 3,753
Lines of credit payable 136,900 119,200
Notes payable 230,000 230,000
--------- ---------
Total liabilities 381,803 370,573
--------- ---------
Stockholders' equity:
Preferred stock and paid in capital,
par value $1.00 per share, 20,000,000
shares authorized, 4,125,700 and
4,140,000 shares issued and outstanding
in 2000 and 1999, respectively 99,403 99,679
Common stock and paid in capital,
par value $1.00 per share, 100,000,000
shares authorized, 26,793,470 and
26,822,164 shares issued and outstanding
in 2000 and 1999, respectively 636,002 636,611
Distributions in excess of net income (205,487) (201,459)
--------- ---------
Total stockholders' equity 529,918 534,831
--------- ---------
Total liabilities and
stockholders' equity $ 911,721 $ 905,404
========= =========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
Page 4
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
=================================
For the three months ended March 31, 2000 and 1999
(dollars in thousands, except per share data)
(Unaudited)
2000 1999
========== ==========
REVENUE
Rental $ 28,330 $ 23,948
Interest and other 25 38
---------- ----------
28,355 23,986
---------- ----------
EXPENSES
Depreciation and amortization 6,748 6,090
Interest 7,158 5,880
General and administrative 1,684 1,646
Property 515 441
---------- ----------
16,105 14,057
---------- ----------
Income from operations 12,250 9,929
Gain on sale of property 662 --
---------- ----------
Net income 12,912 9,929
Preferred stock dividend (2,428) --
---------- ----------
Net income available to common
stockholders $ 10,484 $ 9,929
========== ==========
Basic and diluted net income
available to common stockholders
per common share $ 0.39 $ 0.37
========== ==========
The accompanying notes to consolidated financial statements
are an integral part of these statements.
Page 5
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
=====================================
For the three months ended March 31, 2000 and 1999
(dollars in thousands)
(Unaudited)
2000 1999
========= =========
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 12,912 $ 9,929
Adjustments to net income:
Depreciation and amortization 6,748 6,090
Gain on sales of properties (662) --
Change in assets and liabilities:
Accounts receivable and
other assets 516 1,342
Accounts payable, accrued
expenses and other liabilities 1,754 2,277
--------- ---------
Net cash provided by
operating activities 21,268 19,638
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of properties 1,424 --
Acquisition of and additions
to properties (17,949) (39,685)
Increase in other assets (3,250) --
Payment of other liabilities -- (1,713)
--------- ---------
Net cash used in
investing activities (19,775) (41,398)
--------- ---------
(table continued on next page)
Page 6
(continued)
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements Of Cash Flows
=====================================
For the three months ended March 31, 2000 and 1999
(dollars in thousands)
(Unaudited)
2000 1999
========= =========
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from line of credit 31,800 47,000
Payments under line of credit (14,100) (27,900)
Distributions to common
stockholders (14,484) (13,679)
Distributions to preferred
stockholders (2,428) --
Purchase of common stock (675) --
Purchase of preferred stock (276) --
Proceeds from notes issued,
net of costs of $500 -- 19,500
--------- ---------
Net cash provided by (used in)
financing activities (163) 24,921
--------- ---------
Net increase in cash and
cash equivalents 1,330 3,161
Cash and cash equivalents,
beginning of period 773 2,533
--------- ---------
Cash and cash equivalents,
end of period $ 2,103 $ 5,694
========= =========
For supplemental disclosures, see note 8.
The accompanying notes to consolidated financial statements
are an integral part of these statements.
Page 7
REALTY INCOME CORPORATION AND SUBSIDIARIES
Notes To Consolidated Financial Statements
==========================================
March 31, 2000
(Unaudited)
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 financial
statements for the year ended December 31, 1999, which are included in
our 1999 Annual Report on Form 10-K, as certain disclosures which
would substantially duplicate those contained in such audited
financial statements have been omitted from this report.
2. Property Acquisitions
During the first three months of 2000, we invested $8.7 million in two
new retail properties and properties under development with an initial
aggregate contractual lease rate of 10.7% and an average initial lease
term of 15 years.
During the first three months of 1999, we invested $40.8 million in 34
new retail properties and properties under development with an initial
aggregate contractual lease rate of 10.3% and an average initial lease
term of 14.6 years.
3. Investment in subsidiary
In January 2000, we formed Crest Net Lease, Inc., of which we own 95%
of the common stock, all of which is non-voting, and certain members
of management own 5% of the common stock, all of which is voting
stock. Crest Net Lease was created to actively buy and sell certain
select properties, primarily to buyers using tax-deferred exchanges,
under Section 1031 of the IRS Code.
During the first quarter of 2000, we invested $2.9 million in Crest
Net Lease common stock, which is included in other assets. In
February 2000, we entered into a $25 million, revolving credit
facility with Crest Net Lease. As of March 31, 2000, our
outstanding loans to Crest Net Lease were $250,000.
Page 8
4. Distributions Paid and Payable
A. Realty Income pays distributions monthly to our common
stockholders. The following is a summary of the monthly cash
distributions per common share for the three months ended March 31,
2000 and 1999. As of March 31, 2000, a distribution of $0.18125 per
common share was declared (and was paid on April 17, 2000).
Month 2000 1999
-------- -------- --------
January $ 0.1800 $ 0.1700
February 0.1800 0.1700
March 0.1800 0.1700
-------- -------- --------
Total $ 0.5400 $ 0.5100
======== ======== ========
B. During the first quarter of 2000, we paid one quarterly
distribution of $0.5859 per share to our 9 3/8% Class B preferred
stockholders.
C. During the first quarter of 2000, we paid three monthly
distributions of $0.1979 per share, totaling $0.5937, to our 9 1/2%
Class C preferred stockholders.
5. Gain on Sales of Properties
For the three months ended March 31, 2000, we sold one restaurant
location for $1.4 million and recognized a gain of $662,000. For the
three months ended March 31, 1999, no properties were sold.
6. 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 the amount of net income
available to common stockholders for the period by the 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 table 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, for the three
months ended March 31, 2000 and 1999.
Page 9
6. Net Income per Common Share (continued)
For the three months ended March 31, 2000 1999
---------- ----------
Weighted average shares used for
the basic net income per share
computation 26,815,391 26,822,382
Incremental shares from the assumed
exercise of stock options 1,537 3,030
---------- ----------
Adjusted weighted average shares
used for diluted net income
per share computation 26,816,928 26,825,412
=========== ==========
For the three months ended March 31, 2000 and 1999, stock options of
275,805 and 161,397, respectively, were anti-dilutive and have been
excluded from the incremental shares from the assumed conversion of
stock options.
7. Purchases of Realty Income Securities
In January 2000, our Board of Directors authorized the purchase of up
to $10 million of our outstanding common and preferred shares and
senior debt securities during the next 12 months. During the first
three months of 2000, we purchased 32,300 shares of our common stock
at an average price of $20.90 and 14,300 shares of our Class B
preferred stock at an average price of $19.27, for a total investment
of $951,000.
8. Supplemental Disclosure of Cash Flow Information
Interest paid during the first three months of 2000 and 1999 was $5.0
million and $2.9 million, respectively.
In the first three months of 2000 and 1999, interest of $357,000 and
$294,000, respectively, was capitalized on properties under
development.
The following non-cash investing activities are included in the
accompanying consolidated financial statements:
In the first three months of 1999, the investment in properties
resulted in an increase in buildings and other liabilities of $1.3
million.
Page 10
9. Segment Information
We evaluate performance and make resource allocation decisions on a
property by property basis. For financial reporting purposes, we have
grouped our tenants into nine reportable segments based upon the
business the tenants are in. All of the properties have been acquired
separately and are incorporated into one of the applicable segments.
Revenue is the only component of segment profit and loss we measure.
Since our revenue is primarily from net leases, expenditures for
additions to long-lived assets were to acquire additional properties.
The following tables set forth certain information regarding the
properties owned by us as of March 31, 2000 classified according to
the business of the respective tenants (dollars in thousands):
Revenue
----------------------
For the quarter ended March 31, 2000 1999
-------- --------
Segment rental revenue:
Automotive parts $ 2,439 $ 2,074
Automotive service 1,675 1,630
Child care 6,929 6,174
Consumer electronics 1,426 1,414
Convenience stores 2,459 1,367
Home furnishings 1,533 1,702
Home improvement 987 841
Restaurants 3,535 3,428
Video rental 1,130 1,072
Other non-reportable segments 6,217 4,246
Reconciling items 25 38
-------- --------
Total revenue $ 28,355 $ 23,986
======== ========
Page 11
9. Segment Information (continued)
Assets
---------------------
March 31, December 31,
2000 1999
-------- --------
Segment net real estate:
Automotive parts $ 77,943 $ 77,075
Automotive service 50,127 50,499
Child care 155,066 156,617
Consumer electronics 48,256 48,593
Convenience stores 83,136 83,228
Home furnishings 63,966 64,408
Home improvement 39,250 39,507
Restaurants 85,661 86,903
Video rental 40,485 40,712
Other non-reportable segments 224,714 219,551
------- -------
Total segment net real estate 868,604 867,093
Reconciling items 43,117 38,311
-------- --------
Total assets $911,721 $905,404
======== ========
Page 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
- --------------------------
This quarterly report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. When used in this quarterly report, the
words estimated, anticipated and similar expressions are intended to
identify forward-looking statements. Forward-looking statements are
subject to risks, uncertainties, and assumptions about Realty Income
Corporation, including, among other things:
- Our anticipated growth strategies;
- Our intention to acquire additional properties;
- Anticipated trends in our business, including trends in the
market for long-term net leases of freestanding, single-tenant
retail properties; and
- Future expenditures for development projects.
Future events and actual results, financial and otherwise, may differ
materially from the results discussed in the forward-looking
statements. In particular, some of the factors that could cause
actual results to differ materially are:
- Our continued qualification as a real estate investment trust;
- General business and economic conditions;
- Competition;
- Interest rates;
- Accessibility of debt and equity capital markets;
- Other risks inherent in the real estate business including
tenant defaults, potential liability relating to environmental
matters; and
- Illiquidity of real estate investments.
Additional factors that may cause risks and uncertainties include
those discussed in the sections entitled "Business" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1999.
Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date that this quarterly report
was filed with the Securities and Exchange Commission. We undertake
no obligation to publicly release the results of any revisions to
these forward-looking statements that may be made to reflect events or
circumstances after the date of this quarterly report or to reflect
the occurrence of unanticipated events. In light of these risks and
uncertainties, the forward-looking events discussed in this quarterly
report might not occur.
Page 13
GENERAL
- -------
Realty Income Corporation, a Maryland corporation ("Realty Income",
the "Company", "us", "our" or "we") is organized to operate as an
equity real estate investment trust, or REIT. We are a fully
integrated, self-administered real estate company with in-house
acquisition, leasing, legal, retail and real estate research,
portfolio management and capital markets expertise. As of March 31,
2000, we owned a diversified portfolio of 1,077 retail properties
located in 45 states with over 8.6 million square feet of leasable
space leased to 72 separate retail chains doing business in 23
separate retail industries. Of the 1,077 properties in the portfolio,
1,070 are single-tenant retail properties with the remainder being
multi-tenant properties. As of March 31, 2000, 1,052, or 98.3%, of
the 1,070 single-tenant properties were leased with an average
remaining lease term (excluding extension options) of approximately
8.5 years.
Our primary business objective is to generate dependable monthly
distributions from a consistent and predictable level of funds from
operations (or FFO) per share. Additionally, we generally will seek
to increase distributions to stockholders and FFO per share through
both active portfolio management and the acquisition of additional
properties.
Our portfolio management focus includes:
- Contractual rent increases on existing leases;
- Rental increases at the termination of existing leases when
market conditions permit; and
- The active management of our property portfolio, including
selective sales of properties.
Our acquisition of additional properties adheres to a focused strategy
of acquiring primarily:
- Freestanding, single-tenant, retail properties;
- Properties leased to regional and national retail chains; and
- Properties under long-term, net lease agreements.
We typically acquire, then lease back, retail store locations from
chain store operators, providing capital to the operators for
continued expansion and other corporate purposes. Our acquisitions
and investment activities are concentrated in well-defined target
markets and focus generally on middle-market retailers providing goods
and services that satisfy basic consumer needs.
Page 14
Our net lease agreements generally:
- Are for initial terms of 10 to 20 years;
- Require the tenant to pay a minimum monthly rent and property
operating expenses (taxes, insurance and maintenance); and
- Provide for future rent increases (typically subject to
ceilings) based on increases in the consumer price index, fixed
increases or additional rent calculated as a percentage of the
tenant's gross sales above a specified level.
We believe that the long-term ownership of an actively managed,
diversified portfolio of retail properties under long-term, net lease
agreements produces consistent, predictable income. Under a net-lease
agreement, the tenant agrees to pay a minimum monthly rent and
property operating expenses (taxes, maintenance, and insurance) plus,
typically, future rent increases (generally subject to ceilings) based
on increases in the consumer price index, fixed increases or
additional rent calculated as a percentage of the tenant's gross sales
above a specified level. We believe that long-term leases, coupled
with the tenant's responsibility for property expenses, generally
produce a more predictable income stream than many other types of real
estate portfolios, while continuing to offer the potential for growth
in rental income.
Since 1970 and through December 31, 1999, Realty Income has acquired
and leased back to regional and national retail chains 1,054
properties (including 36 properties that have been sold) and has
collected in excess of 98% of the original contractual rent
obligations on those properties. We believe that within this market
we can achieve an attractive risk-adjusted return on the financing
that we provide to retailers.
RECENT DEVELOPMENTS
- -------------------
ACQUISITION OF TWO PROPERTIES DURING THE FIRST QUARTER OF 2000.
During the first three months of 2000, we acquired two additional
properties (the "New Properties"). During the first three months of
2000, we invested $8.7 million in the New Properties and properties
under development (including accrued development costs of $800,000 at
March 31, 2000 and excluding estimated unfunded development costs on
properties under construction at March 31, 2000 of $10.7 million). We
also paid $11,000 for lease commissions and $60,000 for building
improvements on existing properties in our portfolio. The weighted
average annual unleveraged return on the $8.7 million invested in the
first three months of 2000 is estimated to be 10.7%, computed as
estimated contractual net operating income (which in the case of a net
leased property is equal to the base rent or, in the case of
properties under construction, the estimated base rent under the
lease) for the first year of each lease, divided by the estimated
total costs of each property. Since it is possible that a tenant
Page 15
could default on the payment of contractual rent, no assurance can be
given that the actual return on the funds invested will not differ
from the foregoing percentage.
The New Properties will contain approximately 14,600 leasable square
feet and are 100% leased under net leases, with an average initial
lease term of 15.0 years. The New Properties are pre-leased and under
construction, pursuant to contracts under which the tenants have
agreed to develop the properties (with development costs funded by
Realty Income) and to begin paying rent when the premises open for
business.
INCREASE IN MONTHLY DISTRIBUTIONS TO COMMON STOCKHOLDERS. Monthly
distributions were increased in January 2000 by $0.0025 to $0.18 per
share and in April 2000 by $0.00125 to $0.18125 per share. We are
committed to our policy of paying distributions monthly to our common
stockholders. During the first three months of 2000, we paid three
distributions of $0.18 per share, totaling $0.54 per common share.
During the first three months of 1999, the Company paid three
distributions of $0.17 per share, totaling $0.51 per common share. In
March and April 2000, we declared distributions of $0.18125 per share,
which were paid on April 17, 2000 and payable on May 15, 2000,
respectively. The monthly distribution of $0.18125 per share
represents a current annualized distribution of $2.175 per share, and
an annualized distribution yield of approximately 10.1% based on the
last reported sale price of the Company's common stock on the NYSE of
$21.5625 on May 4, 2000. Although we expect to continue our policy of
paying monthly distributions, there can be no assurance that the
current level of distributions per share will be maintained by the
Company, that we will continue our pattern of increasing distributions
per share, or as to the actual distribution yield for any future
period.
FORMATION OF SUBSIDIARY. In January 2000, we formed Crest Net Lease,
Inc., of which we own 95% of the common stock, all of which is non-
voting, and certain members of management own 5% of the common stock,
all of which is voting stock. Crest Net Lease was created to actively
buy and sell certain select properties, primarily to buyers using tax-
deferred exchanges, under Section 1031 of the IRS Code.
During the first quarter of 2000, we invested $2.85 million in Crest
Net Lease common stock. In February 2000, we entered into a $25
million, revolving credit facility with Crest Net Lease. As of
May 10, 2000, our outstanding loans to Crest Net Lease were
$1,250,000.
$25 MILLION UNSECURED REVOLVING CREDIT FACILITY. In February 2000, we
entered into a $25 million, three-year, revolving credit facility with
the Bank of Montreal, which expires in February 2003. This credit
facility can be used for the acquisition of property and for making
capital contributions to subsidiaries for the purpose of acquiring
properties.
Page 16
STOCK AND SENIOR DEBT REPURCHASE PROGRAM. In January 2000, our Board
of Directors authorized the purchase of up to $10 million of our
outstanding common and preferred shares and senior debt securities
during the next 12 months. The purchases will be funded using
available working capital that consists primarily of cash flow from
operations. Through April 30, 2000, we purchased 113,900 shares of
our common stock at an average price of $20.38 and 14,300 shares of
our Class B preferred stock at an average price of $19.27, for a total
investment of $2.6 million.
OTHER INFORMATION
- -----------------
Realty Income's common stock is listed on the New York Stock Exchange
("NYSE") under the symbol "O", our central index key ("CIK") number is
726728 and cusip number is 756109-104.
Realty Income's 8.25% Monthly Income Senior Notes, due 2008, are
listed on the NYSE under the symbol "OUI". The cusip number of these
Monthly Income Senior Notes is 756109-203.
Realty Income's 9 3/8% Class B cumulative redeemable preferred stock
are listed on the New York Stock Exchange ("NYSE") under the symbol
"OprB". The cusip number of the Class B Preferred is 756109-302.
Realty Income's 9 1/2% Class C cumulative redeemable preferred stock
is listed on the NYSE under the symbol "OprC". The cusip number of
the Class C Preferred is 756109-500.
Realty Income has 45 employees as of May 10, 2000.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash and Cash Equivalents
Realty Income is organized for the purpose of operating as an equity
REIT which acquires and leases properties and distributes to
stockholders, in the form of monthly cash distributions, a substantial
portion of its net cash flow generated from leases on its retail
properties. We intend to retain an appropriate amount of cash as a
working capital reserve. At March 31, 2000, Realty Income had cash
and cash equivalents totaling $2.1 million.
We believe that our cash and cash equivalents on hand, cash provided
from operating activities and borrowing capacity are sufficient to
meet our liquidity needs for the foreseeable future. We intend,
however, to use additional sources of capital to fund property
acquisitions and to repay our credit facilities.
Page 17
Capital Funding
We have a $200 million, three-year revolving, unsecured acquisition
credit facility that expires in December 2002 and a $25 million,
three-year revolving, unsecured credit facility that expires in
February 2003. The credit facilities currently bear interest at
1.225% over the London Interbank Offered Rate, or LIBOR, and offers us
other interest rate options. As of April 30, 2000, borrowing capacity
of $65.4 million was available to us under the $200 million credit
facility and $21.9 million was available under the $25 million credit
facility. At that time, the outstanding balances on the $200 million
credit facility was $134.6 million with an effective interest rate of
7.38% and the outstanding balances on the $25 million credit facility
was $3.1 million with an effective interest rate of 7.35%. These
credit facilities have been and are expected to be used to acquire
additional retail properties leased to national and regional retail
chains under long-term lease agreements. Any additional borrowings
will increase our exposure to interest rate risk.
We expect to meet our long-term capital needs for the acquisition of
properties through the issuance of public or private debt or equity.
In June 1999, we filed a universal shelf registration statement with
the Securities and Exchange Commission covering up to $400 million in
value of common stock, preferred stock and debt securities. Through
April 30, 2000, $34.5 million in value of common stock, preferred
stock and debt securities has been issued under the universal shelf
registration statement.
Historically, we have met our long-term capital needs through the
issuance of common stock, preferred stock and investment grade long-
term unsecured debt. We believe that the Company is best served by
having the majority of our future issuances of securities be in the
form of common stock. We will issue common stock when we believe that
the share price of our common stock is at a level that allows for the
proceeds of any offering to be invested on an accretive basis into
additional properties or to pay down any short-term borrowings on our
credit facilities. We do not presently view our price per share as
attractive for additional issuances of common stock. We do not
anticipate issuing additional shares of common stock until we
determine the common stock price has risen to acceptable levels. In
addition, we seek to maintain a conservative debt level on our balance
sheet, which should result in conservative interest and fixed charge
coverage ratios. We do not anticipate issuing significant amounts of
additional debt until additional equity can also be issued to offset
the increase in debt. If the share price levels do not increase and
we do not issue additional equity or debt, we will reduce our level of
property acquisitions. In these circumstances, we intend to achieve
our growth objectives by investing cash flow in excess of
distributions in additional retail properties and purchases of our
outstanding securities, and by strategically selling properties that
have appreciated in value and investing the proceeds in new properties
that will generate rental revenue in excess of those generated by the
properties that were sold.
Page 18
We received investment grade corporate credit ratings on our senior
unsecured debt from Duff & Phelps Rating Company, Moody's Investor
Service, Inc., and Standard & Poor's Rating Group in December 1996.
Currently, Duff & Phelps has assigned a rating of BBB, Moody's has
assigned a rating of Baa3, and Standard & Poor's has assigned a rating
of BBB- to our senior debt. These ratings could change based upon,
among other things, our results of operations and financial condition.
We have also received credit ratings from the same rating agencies on
our preferred stock. Duff & Phelps Rating Company has assigned a
rating of BBB-, Moody's Investor Service, Inc. has assigned a rating
of Ba1, and Standard & Poor's Rating Group has assigned a rating of
BB+. These ratings could change based upon, among other things, our
results of operations and financial condition.
Distributions
We pay monthly distributions to our common stockholders. We paid cash
distributions to our common stockholders of $14.5 million and $13.7
million during the first three months of 2000 and 1999, respectively.
During the first quarter of 2000, we paid cash distribution of $1.6
million to our Class B Preferred stockholders and $819,000 to our
Class C Preferred stockholders. We pay distributions quarterly on our
Class B Preferred and monthly on our Class C Preferred.
FUNDS FROM OPERATIONS ("FFO")
- -----------------------------
For the first quarter of 2000, FFO increased by $539,000 or 3.4% to
$16.5 million versus $16.0 million during the first quarter of 1999.
The following is a reconciliation of net income available to common
stockholders to FFO, and information regarding distributions paid and
diluted weighted average number of common shares outstanding for the
first quarter of 2000 and 1999 (dollars in thousands):
Page 19
2000 1999
-------- --------
Net income available to
common stockholders $ 10,484 $ 9,929
Plus depreciation and amortization 6,748 6,090
Less:
Depreciation of furniture,
fixtures and equipment (33) (21)
Gain on sale of property (662) --
-------- --------
Total funds from operations $ 16,537 $ 15,998
======== ========
Distributions paid to
common stockholders $ 14,484 $ 13,679
FFO in excess of distributions
to common stockholders $ 2,053 $ 2,319
Diluted weighted average number
of common shares outstanding 26,816,928 26,825,412
We consider FFO to be an appropriate measure of the performance of an
equity REIT. Financial analysts use FFO in evaluating REITs and FFO
can be one measure of a REIT's ability to make cash distribution
payments. Presentation of this information provides the reader with
an additional measure to compare the performance of different REITs,
although it should be noted that not all REITs calculate FFO the same
way so comparisons with other REITs may not be meaningful.
We define FFO as net income available to common stockholders, plus
depreciation and amortization of assets uniquely significant to the
real estate industry, reduced by gains and increased by losses on (i)
sales of property and (ii) extraordinary and "unusual items".
FFO is not necessarily indicative of cash flow available to fund cash
needs and should not be considered as an alternative to net income as
an indication of Realty Income's performance or to cash flows from
operating, investing, and financing activities as a measure of
liquidity or ability to make cash distributions or to pay debt
service.
Page 20
RESULTS OF OPERATIONS
- ---------------------
The following is a comparison of our results of operations for the
three months ended March 31, 2000 to the three months ended March 31,
1999.
Rental revenue was $28.3 million for the first quarter of 2000 versus
$23.9 million for the comparable quarter of 1999, an increase of $4.4
million or 18.4%. The increase in rental revenue was primarily due to
the acquisition of 110 properties during 1999. These properties
generated revenue of $3.75 million in 2000 compared to $150,000 in
1999, an increase of $3.6 million.
Of the 1,077 properties in the portfolio as of March 31, 2000, 1,070
are single-tenant properties with the remaining properties being
multi-tenant properties. Of the 1,070 single-tenant properties,
1,052, or 98.3%, were net leased with an average remaining lease term
(excluding extension options) of approximately 8.5 years. Of our
1,052 leased single-tenant properties, 1,044 or 99.2% were under
leases that provide for increases in rents through:
- Base rent increases tied to a consumer price index with
adjustment ceilings;
- Overage rent based on a percentage of the tenants' gross
sales; or
- Fixed increases.
Some leases contain more than one of these clauses. Percentage rent,
which is included in rental revenue, was $306,000 during the first
quarter of 2000 and $214,000 in the comparable quarter of 1999. Same
store rents generated on the 923 leased properties owned during all of
both the first quarters of 2000 and 1999 increased by $328,000 or
1.4%, to $23.34 million from $23.02 million.
Approximately 52% of our annualized rental revenue is attributable to
properties that were acquired over the last four and one-quarter
years. A majority of the leases on these acquisitions provide for
rent increases after the fifth year of the lease. We anticipate
rental increases on some of these acquisitions to start in the second
half of the year 2000.
At March 31, 2000, 1,059 or 98.3% of the 1,077 properties in the
portfolio were under lease agreements with third party tenants. At
March 31, 2000, we had 18 properties that were not under lease, as
compared to 17 at December 31, 1999 and six at March 31, 1999. Of the
18 properties not leased at March 31, 2000, we sold one location in
April 2000 and we have issued letters of intent to sell five locations
and lease four other vacant locations. We anticipate these nine
locations to be leased or sold during the second or third quarter of
2000, although we cannot assure you that all of these properties can
be sold or leased within this period.
Page 21
Depreciation and amortization was $6.7 million in the first quarter of
2000 versus $6.1 million in the first quarter of 1999. The increase
in 2000 was primarily due to depreciation of the 110 properties
acquired during 1999.
Interest expense in the first quarter of 2000 increased by $1.3
million to $7.2 million, as compared to $5.9 million in the first
quarter of 1999. The following is a summary of the five components of
interest expense for the first quarter of 2000 and 1999 (dollars in
thousands):
2000 1999 Net Change
------- ------- ----------
Interest on outstanding
loans and notes $ 6,939 $ 5,715 $ 1,224
Amortization of settlements
on treasury lock agreements 189 189 -
Credit facility commitment fees 123 65 58
Amortization of credit facility
origination costs and deferred
bond financing costs 264 205 59
Interest capitalized (357) (294) (63)
-------- -------- --------
Interest expense $ 7,158 $ 5,880 $ 1,278
======== ======== ========
Credit facilities and notes outstanding (dollars in thousands)
- ------------------------------------------------------------
Three months ended March 31, 2000 1999 Net Change
------- ------- ----------
Average outstanding balances $354,163 $306,549 $ 47,614
Average interest rates 7.76% 7.56%
Interest on outstanding loans and notes was $1.2 million higher in the
first quarter of 2000 than in 1999 primarily due to an increase of
$47.6 million in the average outstanding balances and a higher average
interest rate. During the first four months of 2000 LIBOR has
increased, which has increased the interest rates on our credit
facilities and our cost of short-term borrowings. It is possible that
economic conditions may lead to further increases in LIBOR.
Property expenses are broken down into costs associated with non-net
leased multi-tenant properties, unleased single-tenant properties and
general portfolio expenses. Expenses related to the multi-tenant and
unleased single-tenant properties include, but are not limited to,
property taxes, maintenance, insurance, utilities, property
inspections, bad debt expense and legal fees. General portfolio costs
include, but are not limited to, insurance, legal and title search
fees. At March 31, 2000, 18 properties were available for lease as
compared to 17 at December 31, 1999 and six at March 31, 1999.
Page 22
Property expenses were $515,000 in the first quarter of 2000 and
$441,000 in 1999. The $74,000 increase in property expenses is
primarily attributable to costs associated with vacant properties. We
anticipate property expenses to increase as we acquire additional
properties.
During the three months ended March 31, 2000, we sold one restaurant
location for $1.4 million and realized a gain of $662,000. We sold no
properties during the first quarter of 1999.
In the first quarter of 2000, we paid preferred stock dividends of
$2.4 million. No preferred stock was outstanding during the first
quarter of 1999.
In the first quarter of 2000 and 1999, our net income available to
common stockholders increased $555,000 or 5.6% to $10.5 million versus
$9.9 million in 1999. Rental revenue represented $4.4 million of the
increase and gain on sale of property represented $662,000. The
increase in rental revenue was due to an increase in rental revenue
from properties acquired in 1999 of $3.6 million. These increases
were substantially offset by an increase of $4.4 million in the
following expenses:
- Depreciation and amortization of $658,000; and
- Interest expense of $1.3 million; and
- Preferred stock dividends of $2.4 million.
PROPERTIES
- ----------
As of March 31, 2000, we owned a diversified portfolio of 1,077
properties located in 45 states with over 8.6 million square feet of
leasable space. At March 31, 2000, 1,052 or 98.3% of the 1,077
properties were under net lease agreements. Net leases typically
require the tenant to be responsible for minimum monthly rent and
property operating expenses including property taxes, insurance and
maintenance plus, typically, future rent increases (generally subject
to ceilings) based on increases in the consumer price index, fixed
increases or additional rent calculated as a percentage of the
tenant's gross sales above a specified level.
Our net-leased retail properties are primarily leased to regional and
national retail chain store operators. The average leasable retail
space of the 1,077 properties is approximately 8,000 square feet on
approximately 56,400 square feet of land. Generally, buildings are
single-story properties with adequate parking on site to accommodate
peak retail traffic periods. The properties tend to be on major
thoroughfares with relatively high traffic counts and adequate access,
egress and proximity to a sufficient population base to constitute a
suitable market or trade area for the retailer's business.
Page 23
The following table sets forth certain information regarding our 1,077
properties classified according to the business of the respective
tenants (dollars in thousands):
Annualized Percentage of Total
Rent as of Rental Revenue
Number April 1, 2000(1) for the Year
of ------------------- -------------------
Prop- Rental Percentage
Industry erties Revenue of Total 1999 1998 1997
- -------------------- ------ -------- ---------- ------ ------ ------
Apparel Stores 4 $ 2,799 2.4% 3.8% 4.1% 0.7%
Automotive Parts 144 10,107 8.6 8.6 7.8 9.1
Automotive Service 104 6,645 5.7 6.6 7.5 6.4
Book Stores 1 450 0.4 0.5 0.6 0.5
Business Services 1 124 0.1 0.1 * --
Child Care 336 28,323 24.2 25.3 29.2 35.9
Consumer Electronics 37 5,717 4.9 4.4 5.4 6.5
Convenience Stores 104 9,815 8.4 7.2 6.1 5.5
Craft and Novelty 2 425 0.4 0.4 * --
Drug Stores 1 235 0.2 0.2 0.1 --
Entertainment 6 2,293 2.0 1.2 -- --
General Merchandise 11 687 0.6 0.6 * --
Grocery Stores 2 719 0.6 0.5 * --
Health and Fitness 7 3,966 3.4 0.6 0.1 --
Home Furnishings 34 6,085 5.2 6.5 7.8 5.6
Home Improvement 34 4,274 3.6 3.6 * --
Office Supplies 8 2,476 2.1 2.6 3.0 1.7
Pet Supplies and
Services 8 1,673 1.4 1.1 0.6 0.2
Private Education 6 1,695 1.4 1.2 0.9 --
Restaurants 176 14,349 12.2 13.3 16.2 19.8
Shoe Stores 4 890 0.8 1.1 0.8 0.2
Theaters 2 2,406 2.1 0.6 -- --
Video Rental 35 4,510 3.8 4.3 3.8 0.6
Other 10 6,501 5.5 5.7 6.0 7.3
- -------------------- ------ -------- ------ ------ ------ ------
Totals 1,077 $117,164 100.0% 100.0% 100.0% 100.0%
==================== ====== ======== ====== ====== ====== ======
* Less than 0.1%
[FN]
(1) Annualized rental revenue is calculated by multiplying the
monthly contractual base rent as of April 1, 2000 for each of the
properties by 12 and adding the previous 12 month's historic
percentage rent, which totaled $1.7 million (i.e., additional rent
calculated as a percentage of the tenant's gross sales above a
specified level.) For properties under construction, an estimated
contractual base rent is used based upon the estimated total costs of
each property.
</FN>
Page 24
Of the 1,077 properties in the portfolio at April 1, 2000, 1,070 were
single-tenant properties with the remaining properties being multi-
tenant properties. As of April 1, 2000, 1,052 of the 1,070 single-
tenant properties, or 98.3%, were leased with an average remaining
lease term (excluding extension options) of approximately 8.5 years.
During the first quarter of 2,000, nine of our leases expired. Of
these leases, eight remain occupied by the same tenant and one
location is being marketed for lease or sale.
The following table sets forth certain information regarding the
timing of the lease term expirations (excluding extension options) on
our 1,052 net leased, single-tenant retail properties as of
March 31, 2000 (dollars in thousands).
Number of Percent of
Leases Annualized) Annualized
Year Expiring (2) Rent (1) (2) Rent
- ------ ------------ -------------- ----------
2000 39 $ 2,059 1.8%
2001 48 3,965 3.5
2002 82 6,553 5.8
2003 71 5,891 5.2
2004 118 9,894 8.8
2005 82 6,126 5.5
2006 28 2,535 2.3
2007 95 6,564 5.9
2008 66 5,685 5.1
2009 29 3,273 2.9
2010 42 3,380 3.0
2011 35 5,324 4.8
2012 50 5,761 5.1
2013 92 14,977 13.3
2014 42 7,078 6.3
2015 35 3,890 3.5
2016 13 2,015 1.8
2017 11 4,130 3.7
2018 16 1,614 1.4
2019 52 9,324 8.3
2024 2 605 0.5
2033 2 1,118 1.0
2034 2 570 0.5
- ------ ------- ---------- -------
Totals 1,052 $112,331 100.0%
====== ======= ========== =======
[FN]
(1) Annualized rent is calculated by multiplying the monthly
contractual base rent as of April 1, 2000 for each of the properties
by 12 and adding the previous 12 month's historic percentage rent,
Page 25
which totaled $1.7 million (i.e., additional rent calculated as a
percentage of the tenant's gross sales above a specified level). For
the properties under construction, an estimated contractual base rent
is used based upon the estimated total costs of each property.
(2) This table does not include seven multi-tenant properties and 18
vacant, unleased single-tenant properties owned by the Company. The
lease expirations for properties under construction are based on the
estimated date of completion of such properties.
</FN>
The following table sets forth certain state-by-state information
regarding Realty Income's property portfolio as of April 1, 2000
(dollars in thousands).
Approximate Percent of
Number of Percent Leasable Annualized Annualized
State Properties Leased Square Feet Rent (1) Rent
- ------------ ---------- ------- ----------- ---------- ----------
Alabama 9 100% 63,300 $ 624 0.5%
Arizona 31 100 211,800 3,106 2.7
Arkansas 5 100 36,700 614 0.5
California 61 95 1,032,200 13,811 11.8
Colorado 46 96 295,100 4,124 3.5
Connecticut 10 100 223,800 2,979 2.5
Delaware 1 100 5,400 72 0.1
Florida 86 99 944,100 12,535 10.7
Georgia 59 97 330,900 5,520 4.7
Idaho 11 100 52,000 762 0.7
Illinois 35 100 258,300 3,644 3.1
Indiana 29 100 170,400 2,278 2.0
Iowa 10 100 67,900 694 0.6
Kansas 23 100 240,400 2,622 2.2
Kentucky 13 100 43,500 1,107 1.0
Louisiana 5 100 39,600 500 0.4
Maryland 8 100 48,300 731 0.6
Massachusetts 8 100 57,500 1,072 0.9
Michigan 10 100 68,100 974 0.8
Minnesota 25 96 261,500 2,510 2.1
Mississippi 16 100 152,100 1,285 1.1
Missouri 33 100 203,800 2,603 2.2
Montana 2 100 30,000 288 0.3
Nebraska 10 100 98,700 1,258 1.1
Nevada 7 100 86,400 1,322 1.1
New Hampshire 1 100 6,400 130 0.1
New Jersey 4 75 45,400 589 0.5
New Mexico 5 100 46,000 336 0.3
New York 20 95 253,300 4,723 4.0
North Carolina 33 91 174,200 2,939 2.5
(table continued next page)
Page 26
(table continued)
Annualized
Approximate Rent (1) Percent of
Number of Percent Leasable (in thou- Annualized
State Properties Leased Square Feet sands) Rent
- ------------ ---------- ------- ----------- ---------- ----------
North Dakota 1 100 22,000 65 0.1
Ohio 67 100 341,200 5,413 4.6
Oklahoma 17 100 102,200 1,299 1.1
Oregon 17 100 92,400 1,232 1.1
Pennsylvania 23 100 168,600 2,310 2.0
South Carolina 48 98 147,000 3,983 3.4
South Dakota 2 100 12,600 170 0.2
Tennessee 25 96 221,300 2,652 2.3
Texas 155 99 1,288,700 13,994 11.9
Utah 8 100 51,700 703 0.6
Virginia 30 93 142,000 2,891 2.5
Washington 43 100 252,600 3,326 2.8
West Virginia 2 100 16,800 156 0.1
Wisconsin 19 100 231,900 2,952 2.5
Wyoming 4 100 20,100 266 0.2
- -------------- -------- ------- ----------- ---------- ---------
Totals/Average 1,077 98% 8,658,200 $117,164 100.0%
============== ======== ======= =========== ========== =========
[FN]
(1) Annualized rent is calculated by multiplying the monthly
contractual base rent as of April 1, 2000 for each of the properties
by 12 and adding the previous 12 month's historic percentage rent,
which totaled $1.7 million (i.e., additional rent calculated as a
percentage of the tenant's gross sales above a specified level). For
the properties under construction, an estimated contractual base rent
is used based upon the estimated total costs of each property.
</FN>
The following table sets forth certain information regarding the
properties owned by Realty Income as of April 1, 2000, classified
according to the retail business types and the level of services they
provide (dollars in thousands).
Page 27
Percent of
Number of Annualized Annualized
Industry Properties Rent (1) Rent
- -------- ---------- ---------- ----------
Tenants providing services
- --------------------------
Automotive Service 104 $ 6,645 5.7%
Child Care 336 28,323 24.2
Entertainment 6 2,293 2.0
Health and Fitness 7 3,966 3.4
Private Education 6 1,695 1.4
Theaters 2 2,406 2.0
Other 10 6,502 5.5
---------- ---------- ----------
471 51,830 44.2
---------- ---------- ----------
Tenants selling goods and services
- ----------------------------------
Automotive Parts 62 5,404 4.6
Business Services 1 124 0.1
Convenience Stores 104 9,815 8.4
Home Improvement 20 2,619 2.2
Pet Supplies and Services 6 1,205 1.0
Restaurants 176 14,349 12.3
Video Rental 35 4,510 3.9
---------- ---------- ----------
404 38,026 32.5
---------- ---------- ----------
Tenants selling goods
- ---------------------
Apparel Stores 4 2,799 2.4
Automotive Parts 82 4,703 4.0
Book Stores 1 450 0.4
Consumer Electronics 37 5,717 4.9
Craft and Novelty 2 425 0.4
Drug Stores 1 235 0.2
General Merchandise 11 687 0.6
Grocery Stores 2 719 0.6
Home Furnishings 34 6,085 5.2
Home Improvement 14 1,655 1.4
Office Supplies 8 2,476 2.1
Pet Supplies 2 467 0.4
Shoe Stores 4 890 0.7
---------- ---------- ----------
202 27,308 23.3
---------- ---------- ----------
TOTALS 1,077 $ 117,164 100.0%
========== ========== ==========
Page 28
[FN]
(1) Annualized rent is calculated by multiplying the monthly
contractual base rent as of April 1, 2000 for each of the properties
by 12 and adding the previous 12 month's historic percentage rent,
which totaled $1.7 million (i.e., additional rent calculated as a
percentage of the tenant's gross sales above a specified level). For
the properties under construction, an estimated contractual base rent
is used based upon the estimated total costs of each property.
</FN>
IMPACT OF INFLATION
===================
Tenant leases generally provide for limited increases in rent as a
result of increases in the tenant's sales volumes, increases in the
consumer price index, and/or fixed increases. We expect that
inflation will cause these lease provisions to result in increases in
rent over time. However, during times when inflation is greater than
increases in rent as provided for in the leases, rent increases may
not keep up with the rate of inflation.
Approximately 97.7% or 1,052 of the properties in the portfolio are
leased to tenants under net leases in which the tenant is responsible
for property costs and expenses. These features in the leases reduce
our exposure to rising property expenses due to inflation. Inflation
and increased costs may have an adverse impact on the tenants if
increases in the tenant's operating expenses exceed increases in
revenue.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
====================================================================
We are exposed to interest rate changes primarily as a result of our
credit facilities and long-term debt used to maintain liquidity and
expand our real estate investment portfolio and operations. Our
interest rate risk management objective is to limit the impact of
interest rate changes on earnings and cash flows and to lower our
overall borrowing costs. To achieve our objectives we borrow
primarily at fixed rates and may selectively enter into derivative
financial instruments such as interest rate lock agreements, interest
rate swaps and caps in order to mitigate our interest rate risk on a
related financial instrument. We are not a party to any derivative
financial instruments at March 31, 2000. We do not enter into any
transactions for speculative or trading purposes.
Our interest rate risk is monitored using a variety of techniques.
The table below presents the principal amounts, weighted average
interest rates, fair values and other terms required by year of
expected maturity to evaluate the expected cash flows and sensitivity
to interest rate changes (dollars in table in millions).
Page 29
Expected Maturity Data
-----------------------
There- Fair
2002 2003 after Total Value (2)
---- ---- ------ ------ ---------
Fixed rate
debt -- -- $230.0(1) $230.0 $205.2
Average
interest rate -- -- 7.99% 7.99%
Variable
rate debt $133.8 $3.1 -- $136.9 $136.9
Average
interest rate 7.34% 7.35 -- 7.34%
[FN]
(1) $110 million matures in 2007, $100 million matures in 2008 and $20
million matures in 2009.
(2) We base the fair value of the fixed rate debt at March 31, 2000
on the closing market price or indicative price per each note. The
fair value of the variable rate debt approximates its carrying value
because its terms are similar to those available in the market place.
</FN>
The table incorporates only those exposures that exist as of
March 31, 2000, it does not consider those exposures or positions that
could arise after that date. As a result, our ultimate realized gain
or loss with respect to interest rate fluctuations would depend on the
exposures that arise during the period, our hedging strategies at the
time, and interest rates.
PART II. OTHER INFORMATION
- ---------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits:
Exhibit No. Description
=========== ===========
3.1 Articles of Incorporation of the Company (filed as
Appendix B to the Company's Proxy Statement dated
March 28, 1997 ("1997 Proxy Statement") and
incorporated herein by reference).
3.2 Articles Supplementary of the Class A Junior
Participating Preferred Stock of Realty Income
Corporation (filed as exhibit A of exhibit 1 to Realty
Income's registration statement on Form 8-A, dated
June 26, 1998, and incorporated herein by reference).
Page 30
Exhibit No. Description
=========== ===========
3.3 Bylaws of the Company (filed as Appendix C to the
Company's 1997 Proxy Statement and incorporated
herein by reference).
3.4 Articles Supplementary to the Articles of Incorporation
of Realty Income Corporation classifying and designating
the Class B Preferred Stock (filed as exhibit 4.1 to the
Company's Form 8-K dated May 24, 1999 and incorporated
herein by reference).
3.5 Articles Supplementary to the Articles of Incorporation
of Realty Income Corporation classifying and designating
the Class C Preferred Stock (filed as exhibit 4.1 to the
Company's Form 8-K dated July 29, 1999 and incorporated
herein by reference).
4.1 Pricing Committee Resolutions and Form of 7.75%
Notes due 2007 (filed as Exhibit 4.2 to the
Company's Form 8-K dated May 5, 1997 and
incorporated herein by reference).
4.2 Indenture dated as of May 6, 1997 between the
Company and The Bank of New York (filed as Exhibit
4.1 to the Company's Form 8-K dated May 5, 1997 and
incorporated herein by reference).
4.3 First Supplemental Indenture dated as of
May 28, 1997, between the Company and The Bank of
New York (filed as Exhibit 4.3 to the Company's
Form 8-B and incorporated herein by reference).
4.4 Rights Agreement, dated as of June 25, 1998, between
Realty Income Corporation and The Bank of New York
(filed as an exhibit 1 to the Company's registration
statement on Form 8-A, dated June 26, 1998, and
incorporated herein by reference).
4.5 Pricing Committee Resolutions (filed as an exhibit 4.2
to Realty Income's Form 8-K, dated October 27, 1998
and incorporated herein by reference).
4.6 Form of 8.25% Notes due 2008 (filed as an exhibit 4.3 to
Realty Income's Form 8-K, dated October 27, 1998
and incorporated herein by reference).
4.7 Indenture dated as of October 28, 1998 between
Realty Income and The Bank of New York (filed as exhibit
4.1 to Realty Income's Form 8-K, dated October 27, 1998
and incorporated herein by reference).
Page 31
Exhibit No. Description
=========== ===========
4.8 Pricing Committee Resolutions and Form of 8% Notes due
2009 (filed as exhibit 4.2 to Realty Income's Form 8-K,
dated January 21, 1999 and incorporated herein by
reference).
10.1 $25 million Demand Promissory Note dated February 1,
2000 between Realty Income Corporation and Crest Net
Lease, Inc. filed herein.
10.2 Master Management Agreement dated January 1, 2000
between Realty Income Corporation and Crest Net Lease,
Inc. filed herein.
10.3 First Amendment dated March 24, 2000 to the $25 million
Revolving Credit Agreement dated February 1, 2000 (filed
herein).
27 Financial Data Schedule, filed herein
B. No reports on Form 8-K were filed by registrant during the
quarter for which this report is filed.
Page 32
SIGNATURE
==========
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
REALTY INCOME CORPORATION
(Signature and Title) /s/ GARY M. MALINO
Date: May 12, 2000 -------------------------------------
Gary M. Malino, Senior Vice President
Chief Financial Officer (Principal
Financial and Accounting Officer)
EXHIBIT INDEX
=============
Exhibit No. Description
- ----------- ------------
10.1 $25 million Demand Promissory Note dated February 1,
2000 between Realty Income Corporation and Crest Net
Lease, Inc. filed herein.
10.2 Master Management Agreement dated January 1, 2000
between Realty Income Corporation and Crest Net Lease,
Inc. filed herein.
10.3 First Amendment dated March 24, 2000 to the $25 million
Revolving Credit Agreement dated February 1, 2000 (filed
herein).
27 Financial Data Schedule
Page 33