O - Earnings call transcript Q3 2021 | Realty Income Corporation

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Operator

Good afternoon. My name is Emma (ph.) and I will be your conference operator today. At this time, I would like to welcome everyone to the Realty Income Third Quarter 2021 Operating Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session. you. Thank Instruction] [Operator Relations Income. Investor at Hasselwander, Realty Julie

You your conference. may begin

Julie Hasselwander

be for Thank call. for will Vice and President, joining Treasurer. Kelly, Realty Officer, and all Executive Discussing Roy, Officer, Chief Income, results Chief conference today Executive results us you Christie President operating Third our and Financial Sumit Quarter

from in During this forward-looking make future under forward-looking securities federal will may statements Company's results that actual discussed statements conference certain call, the differ statements. significantly law. any we considered may matters The be

We will detail greater Form in cause such the may disclose XX-Q. factors differences Company's that in the

We will give portion everyone X-question during to of to opportunity the participate. be Q&A observing a the order the call-in limit

now Roy. would our ask If like turn may additional call to re-enter over CEO, you to I Sumit you questions, the will the queue.

Sumit Roy

Julie. everyone. Welcome, Thanks,

stakeholders relationships we and support. everyone our strong all Our with the success of your business, enabled listening continued for thank our

number would accelerating We momentum for our advantages compounding breadth and across business expanded global remains our of an aptitude my active pipeline see following growing like Today, our point, of appreciation is Additionally, efforts result for express and scale, our size objectives. our robust. our on business X. the all where growth. facets of a tireless executing depth their the opportunities, accelerating as the an inflection catalysts: of to us strategic I growth team of at of Income provide Realty our in

$X to from guidance over $X.X over billion year-to-date. in $X.X across our countries approximately X quarter, in billion real increase During billion. estate of an estate acquired expect resulting now we $X.X prior billion of the real of XXXX. third We in invest

the attractive European expansion rates into given relative third Europe of spreads low addressable market. Second, to at market quarter unsecured with bond we capital. in the weighted Particularly our the significantly comparatively cost borrowing deepen our average believe during our Continental

subsequent are announced rate. VEREIT, X.X% our at we combined spin-off $X.XX midpoint. XXXX with which Company's to a representing clarity strong generate to and illustrating real our the of relentless quality size, XX, activities diversification has merger share our of the on our to XX.X% we're third continue in growth X.X% $X.XX% quarter, was be to Third, results, annual increasing introducing recapture enhance properties, will November upon provide team as per closing AFFO enhanced XXXX we competitive allows us we of guidance And as anticipated our to $X.XX advantages portfolio efforts asset the annual achieved and near-term end, the end and XXX.X%, at at earnings VEREIT that activities us to with management AFFO To on representing substantially management merger, many the office all the previously guidance estate. the well midpoint. highlighting asset of rent we And suspect our should rate the closing our scale The And of the of the is investment further believe to per expected share augment of the our completed occupied. finally, $X.XX future. growth run of which our allow

XXth. from $XX a that also result Our of as million $X ranges economies guidance assume on merger. guidance November and G&A spin-off identified of anticipated office our is of consummated have billion acquisitions the as synergies XXXX over over the scale year assumes we anticipated These of properties one of

close verticals. creating our of the Providing combined Company enterprise transactions with eclipses in closing merger, flexibility without risk. risk to $XX value large to new support billion the size concentration scale growth With and

existing to pipeline. that minus lower A Additionally, talented platform to acquisition sourcing products comparatively our and borrowing focused time, generate by driven issue AX to capacity costs meaningful team outstanding expect accretion over by our and yielding will very higher-yielding pipeline ratings markets. inherited a by refinancing Further, supported debt debt on earnings our in lower we through Realty merger, this be Income has additive

Finally, to talented business, Realty continue initiatives many integrate VEREIT growth of execute as team. Income excited capabilities colleagues we are the one the our to we into as

Now the turning results to quarter. the of

continue a to estate to We at pace. add portfolio attractive our real rapid

the leased in grade during to activities estate investment in years. portfolio approximately revenue nearly during average acquisition points. third exposure lease remains were The of closing investment-grade all rated $XX assets total basis, basis selecting the of remaining X%. added quarter was billion resulted the healthy of term During less XX.X represented our was And acquisition of quarter, clients. to client quarter we the the the portfolio quarter on XX% of largest XXX than industry in during And to the approximately UK approximately and spreads, made stores. aggregate, acquisitions QX, XX%. On our up ultimately real billion the a opportunities, we $X.X added Of the sourced grocery weighted our investment

over As industries approximately anticipated XX leased all XXth, located in the in of remains the located includes portfolio who diversified, Puerto XXX over assets all Rico, September well in effect states, to the U.S. and U.S. Puerto the as our Giving states, XX clients of off forma closing and now assets quarter-end, the operate XXXX. merger, UK, Spain. our X,XXX spin our of office portfolio UK, pro including assets Rico, to XX,XXX Spain. and separate combined XX

the In in acquisition to going was continues properties, real and we associated added portfolio of total to we of we estate Our Spain billion. $XXX pipeline In with portfolio, the over of international believe opportunities. our across an that sourced remain this third quarter, approximately billion XX% opportunities million international to meaningful value $XX will growth and it driver high-quality nearly bringing add approximately international forward. the total quarter, UK in our $X.X important XX

total volume. of approximately accounted quarter, XX% for acquisition This our acquisition international

of sale-leaseback in million. Spain. debut Carrefour previously Continental Continental through the September, Subsequent As in made a we Europe quarter-end, with an portfolio additional our to of in Spain, we the approximately completion to EURXXX value our announced Europe announced transaction transaction bringing acquisitions Carrefour in

We of are importance count, utmost in expand of international our to in operators about we property platform the respective based leaders our quarter. The growth as with health continue the represents the At points XX look who last optimistic XX.X% throughout of to an end are basis remains we industries. as third momentum our occupancy as on best-in-class the compared was portfolio their quarter, to which Spain of success continent our core increase of platform. replicate

released expiring recapture year-to-date of XXX.X%. rate rent, bringing XX During the recapturing XXX.X% quarter, our to we units,

pass the on executed lease to of quarterly We At I'll over XXXX, the industry. or in expiring X,XXX ways believe Christie and our discuss this released over have releases listing who of sales rent continue time, portfolio those recapture Since recapturing net most further quarter. report will objective over underlying on the contracts. rates to from one this measure we on XXX% quality in to it leases, results is

Christie Kelly

Thank you Sumit.

in of and Strengthen AFFO collection This XXX% quarter generated $X.XX. our almost pace of share by the rent third quarter. the our acquisitions business contractual per of

rate a our clients paid contractual quarter. meaningful quarter, in collection approximately theater the the representing XX% the improvement rent, second of compared to During XX.X%

on basis collecting Sheet. with the we on and to time. reverse back industry. forward release of industry-wide Time accountants, the assets specifically, based level, of we James our I the evaluate releases box to evaluating many approximately assets the with amount numbers, the were performance cash past the of our an for the believe recent over debt in theatre data-driven. the be on long-term signals period $XX accrual will currently Like Bond these encouraged rent this months. store assess our have our XX be office Die" a of data of appropriate approach and to theater time by and Balance for theater of continue healthy will payments by to strong allowance office was More bad looking strategy, box continuing film of "No business conservative of We globe. reserves viability which conjunction due the to And reserves XX recent move there million non-straight-line on We across blockbuster when likelihood to XX

and to quarter. we and platform, our of capital. dispositions times remain a was the quarter-end, At will balance net financing the in and ratio steadfast X X.X attractively low strategy for As leverage sheet prioritizing we our acquisitions our basis EBITDA a adjusting during while impact conservative expand annualized the debt-to-adjusted growth priced continue initiatives or proforma times, with

in July, which Our fixed-charge our over coming we approximately row, in the $XXX quarter primarily ATM all-time $X.X overnight remainder the quarter, was X.X during program. an third an coverage ratio And raised equities, in million, high closed the at that a offering through times. of for through billion and hit

debut Framework. priced at forward continuing sterling During with million sustainable X.XX% green accordance which practices bond the Green We at a yield to tenant. of blended denominated our in quarter, clients approximately an we X.X-year with blended look partner $XXX offering also around to offerings, our unsecured for issued bond multi-tranche our Financing

Operator

I'd back to hand And to Sumit. like now our call

Sumit Roy

We're with the varied for you, advantages lasting. all we our our this Thank value generating competitive the see be expect summary, of have momentum and shareholder merger business. areas Christie. to In to broad across and pleased proud of come. and we energized by are transaction to benefits years the close Enhancing we and

our highly-fragmented business And compelling time, like will be our look this by our imagination, up for run. consolidator initiatives, [Indiscernible] forward strategic the to I strengthen the to the at global only returns to space of Going with questions. we growth shareholders any providing execute it over constrained forward, possibilities open of long while risk-adjusted to would as our on the our continuing position

Operator

to yourself [Operator two please instructions] re-enter please Again queue. questions limit the

Your of Nate with from line the comes Berenberg. Crossett first question

Your line unmuted. is

Nate Crossett

my on taking congrats merge. question for Thanks the and

Julie Hasselwander

Thanks, Nate.

Nate Crossett

Was next into or time. would end overlap could lot appreciate you color my in I year the mix second into detail, U.S pipeline just look just terms the the ask industrial there is of a the pipeline. Then Yes. [Indiscernible] merge? like maybe between I more heading the bit year. Europe? the of at the [Indiscernible] What and little versus on I'll in a retail same question of versus VEREIT give

Just can Europe. dynamics pricing if versus on you U.S. comment

Sumit Roy

you, to and happy the we're so Nate. behind Good yes, us. questions, have Thank merger

we What -- what achieved. pipeline the acquisition expect X/X terms ahead, our In market going they with the the of as of to shared forward. of that represent we acquisition the have international well volume as about we've should composition

quarter. international higher yields quarters, we've when in we're I of slightly able surprisingly, get quarters, we Europe. has this They similar terms been in the comparing the in some what opposite. seen other very in to here the to are in and for And were were we that and the markets it it given do spreads that able In to looked pricing, at either U.S. generating,

So, is of -- it than the way that's a interest there's identified we, about through in we thinking the the that is the U.S. play and we function narrower available that And really slightly the of is to Europe that area us. what play macro are lens product what is we've it's portfolio in our

of the more retail retail. But much of industrial, The ZIP terms us to overall to would in the composition pricing code. On as a XX%. do as industrial, is XX% to get of versus good the rest XX%, it makeup In the are able that keeps that's like acquisition. quarter we we of to fairly market a industrial constrained that primarily this

for in non-investment versus grade credit, we don't the again. own it's a grade non-investment grade, credit we've do if investment saying of past we and our this we and consideration at it immediately When go I'll said we analysis, out terms look purposes. it repeat disqualify In

what at did we of only look in third we was were investment-grade. to the you If what quarter, able achieve XX%

constrained an means them and So, it And being non-investment grade. inherit we to we grade. team. rating necessarily are had be grade area in our at have able of opportunities a we platform. certainly overall isn't find comfortable first a rating, high-rel acquisition to this be being to our you comfortable sub-investment play as in side. integrate not two And and that to sub-investment subpar we're just looking this, with have we're question [Indiscernible] forward will pursuing doesn't truly that the certain, we're of it mean still non-investment might them can are competitor. not major capital. into And they from a would actually agencies looking one rating very that acquisitions of there pursue was, The does A with cost completely last transactions It we're an that. additive really to that really there that grade very and the team But by have the believe your and overlap as potentially terms the they a VEREIT, question inheriting from much, continue to what there but blast

we this is that were I we to a that So, there's acquisitions comments respect spread an address so, to me want then achieve I genuinely through you that going if on the Nate, into. standalone pricing, basis. specific to believe anything my And don't I able be incremental with think know to dive to

Nate Crossett

queue. you. all that's Thank I'll the No, very back helpful. get in

Sumit Roy

Thanks.

Operator

question of McGinniss Greg with next from line comes the Your Scotiabank.

is line unmuted. Your

Greg Mc Ginniss

to spend fewer truly truly where guys Sumit. Christie. than do. VEREIT, Thanks, Hi, true after percent acquisition are then of leases of looking leases and should about with be the X you they the how versus dispositions some be What general, of merger or we of have we acquisitions more triple-net triple-net in average the offload leases, will will on And Thinking in about non-triple-net the triple-net. $billion or level and XXXX? those thinking be

Sumit Roy

only same retail leases sub-portfolio on together, was -- that questions, leases felt the side Greg, landlord once you very gross the Good you like industrial pure industrial think we've was but they could lease, the things and the products, is more our of tends that Obviously we'll GSA be roof the structure, leases. which side to Look, like respect of is are equation. for the the but equation the as these on predominantly with not gross area the taxes, one the this portfolio largely I still on insurances be the leases. to and to put integrated, I'd Greg. it triple-net to. argue is responsible we still case are I property color But portfolio the insurance non-triple about so had all able on we end give surprised had the the the if of largely of to maintenance well. And got of exposure a as -- where those leases client, -- office responsibility clients, particular find they probably buildings still responsibility the preponderance Otherwise the property net of side how triple-net view net think a those be lot

be leases, are through the we the and separation to the portfolio, the we the largely very of assets net-lease a with So, one that similar spend think office have. GSA I going to

going I don't So, any think pose that that's to major issues, Greg.

Greg Mc Ginniss

around just was XX just of net any their disposition has And versus of on level at or that's obligation about terms the $X Okay. side, side, I Yes, entailing. point looking on cleanup I various there, we but on disclosure, in double your net, really percent be get should level retail then a industrial of whether the there's of in thinking it's something the billion XX% general the acquisitions? the

Sumit Roy

to altered. We million we've like past on that in dispositions gone a to would the VEREIT $XXX on doing inheriting basis. are $XXX really million inherit of a a -merger doing they equation. portfolio million. side capital about the lot do been analysis and similar pre $XXX that standalone We've to we if a A audio to Yeah. The with was recycling needs on see of office that the the were be

if -- a increase number assets. $XX adding the know beyond don't And of I billion, extrapolation billion of linear going so, will $XX dramatically another

suspect it's own rate a and from XXX, different come a that standalone we to precise we lot So through But asset basis. filter be back be the more we'd doing to management to you this quarter maybe that it But dramatically going give indication. don't the with becomes to on XXX XXX. run were lens digest and us our able a

Greg Mc Ginniss

Spain the Okay. you $XX just one [Indiscernible] was UK said is is quick all just then And for point or of and that international, on now? clarification of opportunities, that billion XX% Europe

Sumit Roy

other we Spain. we but identified objectives to it as core Spain, and is at in UK certainly primarily and geographies but the expansion Primarily looking our are UK have that

Greg Mc Ginniss

start up more you So, source we intent. looking as see go that number could

Sumit Roy

yes, expanding, start we should As expect to up. that go you

Greg Mc Ginniss

Thank Okay. you.

Sumit Roy

Sure.

Operator

Brad comes Markets. line next of from RBC Your with Heffern question the Capital

is open. line Your

Brad Heffern

the the Thanks, the is everyone. but for billion the talked additive you've XXXX, VEREIT then guide XXXX. same acquisition Hey, about how $X team, are how same, you? for over On the guide the

So, is year of in conservativism limited that just beginning visibility the think how the pipeline because or there's we that? about should

Sumit Roy

went with numbers billion. with? we $X.XX have up high we $X.X very Look, to was did It start out are we come now year to and Then -- a we that level $X. around this of we're what And with it. we and we gate. about But number pipeline want aggressive our certainty feel associated that we number we it's that coming like a expect to we to out develop visibility, don't to want with start come as the And overly up. out go of right

very So, And is we to ultimately to better what has that. with initial this hope you than turn around that are us to will the market And we to to such, the to has be and we more guidance do what the to And to in deliver. this been out be. as be deliver guidance. year, consider precise able we should will acquisition something say our as can important next as the time soon able get be hope we been

Brad Heffern

Okay.

there Also, that. from like Next in or release one. the Maybe a consider? would anything on there for in reserve one-time considered of to 'XX be like nature, guidance, theaters We need that the you, is Christie. kind maybe anything

Christie Kelly

is reversal theater a There returns. at the nature, including nothing Brad. onetime Hi, of

Brad Heffern

Thank you. Okay.

Christie Kelly

bet. You

Operator

next Your Haendel question line of the from St. comes

Juste with Mizuho.

open. now is line Your

Haendel St. Juste

there. out Hello

Sumit Roy

Haendel. Hi

Christie Kelly

Haendel. Hi

Haendel St. Juste

that comfortable to going hiring high-yielding then be yield. platform, grade was your added by anomaly, and your also a you is. mentioned acquiring being was doesn't I like this comments, experienced assets, investment ask team acquiring you intrigued that'll sound to but quarter's XX% very an it you volume was I So, it inheriting mentioned

through thoughts perhaps strategy. you high-grade on going forward slight your maybe, strategy if you of and overall us in shift So your talk portfolio portfolio a signaling, can are regards to with thinking

Sumit Roy

but up alleviate if to strong that our you of a were clients here up to you were have Carrefour it at to are would at investment-grade. grade the is any Company. investment at credit Sheet Balance in confusion I'm its you very and credit Haendel. does and look non-rated And XX% lot look metrics, Yet There top not shows its XX Carrefour we look imply a if a show that -- there.

playing been coming we've past. So, sessions -- strategy of that And to we sorry, rated in triple in is area it's out not B. we've identified feel the that's actually Sainsbury that Carrefour actually the Carrefour. we the alluded

able this spectrum actually spectrum. quarters a our investment-grade out of and done with going it grade be in to investment-grade want you said across much one inherited that and going everything there'll going of other we we come But are drives S than some Are that be you numbers, of much be truly and on. ours area we the Probably there'll I to XX% how XX%, put truly focused we our is to our we number truly by-product higher-yielding acquisitions to by what is fact, and Moody's. complementary that from investment that be a the identified we've to XX%, we that's quarters don't. headline was do because rate do team are strategy, to our you, play when source So, was of I've of are growth more pursuing, where rating rating up are we to be then we VEREIT S&P create actual of able team trying it's But product across as -- we we've to we standalone we not. us too o the that Company? VEREIT an or and team incremental as for don't investment-grade, But strategy. the focused not. as Potentially believe that as the in so to focused in not either team to an where now a play forward. share area to be credit that acquiring

Haendel St. Juste

guess clearing a still a theatre really there the and we've not too, today call it's up. appreciate dead hasn't of recognition the the the a about Christie, quarter beat reflector been Great, I'm that talked over little on to movie and thoughts it still been of asked surprised last revenues that horse, I site.

of is number the the dynamics You here. pointed experiencing out that industry a positive industry

is sounds guide. isn't And just your right it there XX-XX more in now So of that like any it [Indiscernible] certainly

trying guess on to timing I your with square that. just of the lack any So recognition or the comments of sense

Christie Kelly

We experience properties is the continue to in make back we counting. It that sure of macro and still just not timing. we'll perspective. on in basis, third to and evaluate COVID really, payoffs [Indiscernible] asset-by-asset happening they're want asset-by-asset of quarter in nutshell, have arrangements, our only We basis to but the there. also And a in remnants did according out evaluating an on an terms on theater of an accrual this, what's we're deferred handful

back time. And we'll to more to report you. So, be

Haendel St. Juste

Okay. Thank you. Fair enough.

Christie Kelly

bet, You Haendel.

Operator

Burrows question Your Caitlin comes of the next Goldman Sachs. with from line

open. Your line is now

Caitlin Burrows

pipeline, about and versus a you're I'm Hi wondering can Maybe talk everyone, on in if the the U.S. progress. interested little deeper recent the on the merger the in digging what you congrats all abroad difference

that the mentioned narrower? you a abroad think pipeline little bit might I be

Sumit Roy

being it's -- not Yeah, and developed just as driven constrained. Caitlin, it's land by partly

triple-net area. the talked industries find very We've is improvement that Obviously, But of freestanding on. in tenants the of terms what actual the of the opportunities narrower. U.S. the that in another in to space. Xx to You focus unusual it sort already market side, the on because other that's that with mainland sharing factor trying not available this the make, that is, it's -- being space. about like how is many as market the a the itself industries much industries Europe And is constraining are to we'd have group just that don't is investing. have we're But being But number I'm leasable more is one it areas addressable net put an Europe. that in of actual various etc. itself the to here a triple-net retail I as of of being narrower lends point that this we and in the some in really grocery really is bigger of out of think some bit concept to Hold industries to play we numbers, mend various exposed in you size market

Caitlin Burrows

it. Got

then year? to Okay. result given cap as size next rates? in do meaningful any now, And larger change any be your expect will think you over of you in sourcing change a do your there acquisition And there the be that,

Sumit Roy

is result we've know believe sourcing, so. rate out going a basis, more we seen we were that and standalone a and I that is to in was next on acquisition colleagues VEREIT, our more beyond. credit higher front, increase acutely I will that on includes than us. of the folks hope only the play what everything absolutely getting on that precisely to be and be and to with able I team lot we spectrum able the newly expanded from run play and cover the our to one do we able for getting levers that believe should will hope transactions the on line. to finish absolutely based but year And that based absolutely And out over not will better, new that

expectation. is But time our but will tell. So, that

Caitlin Burrows

you. Great. Thank Okay.

Sumit Roy

Absolutely.

Operator

with next comes question Morgan the Ronald Your from of Stanley. Kamdem line

Your line open. now is

Ronald Kamdem

merger. Hey, the congrats on VEREIT

quick Just X from ones me.

acquisition, are The billion enterprise you've opportunities value present and $XX first new about I think risk. that back just just less plus is themselves. what concentration going to of There talked a more

is you guess try historically now come is up, when the at or source take could the Thanks. yields the it. you've them, path look those had is to have to the those anything I on a really, question doing that point different team organizationally So, deals but

Sumit Roy

look if our lines they to helps were the of and was wasn't complementary couple I that. somewhat of what concentration, you on deals, it more ZIP are It of VEREIT, Ronald, -- to along of a at from And creep believe, industries. that some we we were passing inheriting double-digit nature industry the on us beyond starting codes

at few groceries, industries If and of like stores you largest our convenience look etc. a

All of basis, it's going to actually a those concentrations on come forma pro down.

incredibly more And that capacity line. so, to us try it are to the compelling over pursue get finish aggressively opportunities to finding gives we

more it gives one. So, just us that's capacity,

being was larger being now push X.X we were an of less that it opportunities. if the are in in issue. size The it and I a for times phenomenon, X X.X exposure size we've of us, now retail opportunities some than a little risk client ago, that even maybe the sale-leaseback much and first billion-dollars heard transaction, a And the of equation. that, -- second space, opportunity had this is, sale-leaseback never of on Company, the billion-dollar And prior I of that is to is longer more a of issue, play time to times, start years the recent think the billion-dollar bit and we concentration was our to doing size. the a side opportunities heard And what's are going

haven't pursue for and version. to really we is that our do show the able not up of we have solution line and on us be for in been that been seen clients Now, haven't we our the a able some seen exactly previous would announcements, get like perhaps have able anything we be of But -- single-point finish but that would type that there transactions over front. to to to to be

be these for the needle will companies the biggest million and much. doesn't one of beneficiaries. And to some And be what larger we so, large of -- think to then I is for definition, by also, say move doing to go $XXX a really able feel that really companies proactively sale-leaseback and them

to for be think solution compelling. be a sale-leaseback more them, could opportunities able And lot and so, a provide multi-billion-dollar to I be

past closing a And were obviously we relevant clients, and the in types folks. really we'd post pursue certain be these was by this that in hearing of the of what things of to we guided is terms thought were -- we lot some that are it able we but approached so for what those have about

will we aggressively time think, some to tell, transactions able certainly Ronald? it creates of I these for but to pursue in the were able pursue past. as now the be to platform which not us

Ronald Kamdem

Yes.

that. that XXXX range, than My preliminary was second credit can question appreciate guidance about But to for Obviously of the growth assumes when transparency losses. what can same-store about in rent terms think and for appreciate Great. going Sorry the you numbers. the I these AFFO reserves assumptions I just share are maybe guidance.

Sumit Roy

We numbers that gave our which we of non-traditional like look there of largely around you in office address uncertainty did when for driven out of to with this lot what a VEREIT, couple going of post we attempt at was really point separation the with is assets. was of proforma And point of guidance by Income cycle, coming forward. a and does this acquisition the Realty that The us, sort out this. was this obviously came a

past. lines ascension's And so, it into the model, along and same-store the largely the in done other go like other rent we've what terms in of the of inputs is that

to in look think we of numbers so, right should out it as guidance more a X% should for X that the And give much we, to you $X growth assume I future course, point we to. year, the the learn importantly, about that the -- much more etc. more that usually we we But you have the and we've acquisition position portfolio this for on you acquired now, better -- be we'd billion digest precise same-store into be and, and

Ronald Kamdem

Great. Thank you.

Sumit Roy

Sure.

Operator

Brent the from Dilts with of comes question next UBS. Your line

Your line is open. now

Christie Kelly

Hi, Brent.

Brent Dilts

just point, quarter, the it. lot with during you one that qualitative Christie. a acquisitions impact calls, but think does you have the the in a And how about the forward. Spain you learned Hi, to learn in Europe nuance there's what your trying local spoken approach at from I've and of I and market about got this could just going to talk guys in transactions recent Continental

your could So little maybe experience a there. around you provide just color

Sumit Roy

of into filter Is going asking new you that us markets? question Are our Sorry. the is Brent? what

Brent Dilts

No, to far negotiations, anything just from structures maybe sorry, that you as the up. the like or specifically process the what learn just picked did you market as Sumit, deal it's itself about the or nuance more

Sumit Roy

before implications, in Brent, I'll homework the or actually We went actually of was lot tried at did particular community advisory that clients looked into nuances honestly, any pursue to tax potential the the the structures, done lot tell a transactions have engaging prior us taken of start transaction. we place homework of considered to a understand very to we market. with to we the you past, we the

that much are what much So, comment, surprised we for here it's the in as to able out Neil some volume than I This they these The been of The much They in weren't not is and have subsequent we Mark which not have into if well thing important, are had anticipated the and here in seen important, market, been and partners. the one to, would are by the looking more incredibly personally, has know close perhaps close partners in UK. that U.S., we continental Europe, but a value that the perhaps in than over share I in looking not structure far we've of long-term. play but create we deals believe than is comment, that that is the relationships certainty going to to generating down believe quickly surprised overly able the of it it's and the right to for have that finish line. who me market very to They're do get not are transactions we how relationship-driven the thought. more sensitive say I our investors fairway for translated we've that out. the originally extent to my cemented U.S., in and as for assets we are is that but don't long-term flip price so more certainty that

weighed So, of reputation, a size, does to than that we be fact anticipated. what in seem had all significantly do lot more we The Europe what scale. say we

was rates the the that in, the find that these the cap before in not terms to leases. of we known growth we So embedded in of duration lot or these lease A markets. or that's into where the came surprise of us went

Brent Dilts

Thank great. That's you. me, it guys. from Okay,

Sumit Roy

Sure.

Operator

Massocca from Q Ladenburg comes next of John line question Your the - with Thalmann.

is open. now line Your

John Massocca

afternoon. Good

Christie Kelly

John. Hi.

John Massocca

here [Indiscernible] of at maybe given a that where Just quarter macroeconomic we looking the Do think and XXX% more above, in well the leasing releasing I guess third renewal are historical recovery above is level. assets, spread where you're that reflection or even is in what -- cycle, the sustainable recent pandemic? you

Sumit Roy

do we I positive question. is we capital good during able releasing But management next of been forward? much tutelage and the over able with it's you're of quality to the that bunch even of probably team we've portfolio without the pandemic, testament a a of quarter X% testament no. a have. that generate every achieve that's X, to do the Janine I investments no importantly, investments are we And to is to going XX kind the me, But to more think capital that the the that last asset these the asking John, numbers. if can a think (ph.) answer under

way able if what feel and of generally also into trend we've renewing to go I bringing And north so, empty that either to And are like who this we empty. but XXX% about by look at an or in, clients achieved the have we the includes you that spreads. are do option, at X X, the look last just releasing been over years, buildings not buildings are new you clients

been business, of trying normalized world And complete what able to a that our lot become business. is the points So, a seven-year going achieve. the about is that one basis, on of that we've picture to of value basis. quarter-by-quarter that the and posting this out a we to is we've building able on asset either results going of or of to being anticipating get team management our anticipation in kind And generate are not. this created And we've a to through been this talk been channel is

good So, XXX% I'll and able target we we that. that it do been usually to every and we And better very that. at quarter leave feel far than above -- we've

John Massocca

gears little acquisitions terms of UK look that you to versus -pandemic the of pre other back switching of always was think Also, can bit rate. top in lower each right kind significantly international, kind be than in has a if acquisitions UK spread day U.S. that the then I [Indiscernible] on U.S., And cap one fairly we Okay. for disappeared. of

a of you a is reflective investments kind is that think rates, and of or different pushes more targeting et cetera, of interest economic macro, that pulls are or internationally that domestically? So, either factor you here

Sumit Roy

function a variability higher rate international, the able were amount the similar the I But or very lease with There by as terms a the very certainly the to to achieve etc., the we and been higher we than lot U.S., industry that supplemental. details, that spread associated is looking it not And in in moved again, cost see is the into around. I the second got, there's cap it very here similar we as type And market and assets like balances of as rate cap market believe that industrial you're was cap some we've at that in rate, the very, it's by the both large, on structures, has to it capital, seen the what U.S. rate go I'm inter-quarter the differences and be And we cap you're out driven going well the length in here of the that and have in posted But say lease is do which of partly these are we a to you cap had U.S. rates. UK latter. of are right the now, both of considers a seeing they It of the yields that that of number if as headline slightly equation. close. once to the Europe. a headline but more tremendous more see seem playing a number much But compression And markets. our quarter on in other sorts I -- and there grocery businesses the think way would narrower spectrum towards been you translated doing side

John Massocca

That much. helpful. very was you Thank very

Sumit Roy

Thank you.

Operator

Thanks.

Your the Baird. question comes with Golladay Wes from of line next

Your now line open. is

Wes Golladay

deals, at the the on you everyone. Christie. what's [Indiscernible] the the is handle year. volume look where leaseback side is developer Hi, more acquisition to Hi from. upside, or driving trying sale When the just coming get broker on it on this Quick takeout’s question a is

Sumit Roy

It's a all combination forms of of development.

thread lease developments. we're takeout’s, doing are is cases, vast actually we of -- XXX% in the common one a hand. doing the We financing in are of that there's The majority

that's we asset I see one driven by that all side, hand there's have doing might repositioning development for occupied. on the that it play well it's retail built-to-suit. You the spectrum, funding, particular providing the as But the lease a across in was And that retail of wealth, think we're And XX% don't quite largely takeout. unit. as all we otherwise, But doing.

Wes Golladay

debt that's you Okay that? when the safe number prepayment is to high or guidance, is not million it coupon and have that then XXXX do $XXX to in about year's next look we of assume due, of in

Sumit Roy

answer Christie let I'll that.

Christie Kelly

[Indiscernible]

Wes Golladay

questions. the taking for Thanks Okay.

Sumit Roy

you. Thank

Christie Kelly

Wes. Thanks

Operator

McConnell of Your next Katy Citi. question with the from comes line

Your line is now open.

Michael Bilerman

want Michael on pipeline. Hey, with come I here Katie. it's to Bilerman the back

how teams some up thin a that. with come can And of the didn't Just of rigor up your come be trying sort want the billion, conservative, to you But do. year. back see out been with on has come $X billion of pull $X there early, are I air, what to you take did you for it comments next it's the to to combination

that sort through you with that billion. can went of you and come the up walk to through just So, analysis $X

Sumit Roy

more Michael, able Sure. executing, say are think as I we be with to is get team lot us the on is confidence comfortable we're that be numbers. Look, it coming the strategy translation quite X.XX we and a us currently to was and seeing. we this that year This more But given didn't year. very that in healthy rate we and feel to the product we've This a how that on we we the posted. very of interesting But billion, a more saying are that felt about play like the We infrastructure comfortable product are place good to gives year the we revised have we going in able that couple times. today know things very which very post-pandemic come had numbers just we out. do since a accomplish to was and going pipeline. it have because sourcing into for a

colleagues we what new we're that the place, of that seeing, And us the the I closer we XX% the would getting earmark to talk in we're it's as team international, international entering my percent. sourcing XX% with and more assume, we're beginning, in is team the the built We've out with that the with that's XX%, more comfortable maturation with markets today and about giving have In confidence. volumes to side. so, well into, XX% the

acquisition. of now and this We going have veterans a a fantastic to and the team team a we're mature U.S side, group much more on from inherit

X we've billion. to year to be to buildup north we do going So level this able and that's that and say, we're really come look us fairly X do the year the should visibility now, in behind of done feel internally that confident XXXX. about and with out we of

that So we that's how came number. up with

Michael Bilerman

talked a arrows different million risks, How take billion which if arguably terms the of Company, be may about especially portfolio may acquisitions, of being you quarter or your things here? other assets before? you additional what want, little accept previously hearing does you play about was larger a made being or allows to then willingness you variety And credit to bigger the and that from $XX a that think to didn't $XXX that quiver to million that about willing Which Company, had well, able have comments did all take on today $XXX quarter deals out all asset, much. deal terms now of isn’t thinking location big that a either given have flow billion-dollar that extraordinarily went and of risks that I to tenant, in you this conservative, given last execute on would the sound bit be in of your into asset, before, I type pass you of your you your of in

Sumit Roy

number to that far what want the this is the the and have our our out particular This of right we're a Michael. the along we you're that number history. excess to in from how with coming that $X we hope we're a don't number is a acquisition with want largest decision-making. come exactly right out, year volume billion is What is have dictate saying in of be and I do We business. we've operated going now coming lines out to is

know be to you would You're right, higher in all belt newer can say, revise these in a and like February our we a Spain, lot we we've confidence, But figuring be by are one level numbers X. given new to these a we of to what, putting this have increasing had come in of can't is conservatism. nothing of we've avenues our and able design that able high under i.e. chance to there. with created in what more X. effort and our revisit And level we should strategies and being yielding, come X. all X. markets, quarter, that or X. out into there a guidance. better perhaps do is and

with. And will with we out under-deliver. hopefully translate numbers. want over-promise feel what coming why into is don't this higher where we're All the we and that's we're that reason of to that coming But out

Michael Bilerman

doing, you to do you are where those your deal in of we've the to their better and that of books, that of that type have on do going real of on How perspective, that have seem size to those can be along scale? higher those I lot of a corporate that then you're little their bigger you be equipped are more are to like love estate we at a other just in elephant just active time could capital tenants And much large access levered to I'm have able bit the direct there's capital seen, talk whether real you larger transactions. types a going institutional portfolios And and from so that much to yielding as a story. front partners and part to you're I'd hunting the estate expect would to today to -- on plays that terms further a of in corporations books much get lot a know a

Sumit Roy

across has But to past, transactions, think we had were In opportunities. on inbounded from we the realm we've we eye. was the like away that post larger were these We diminished who felt coming actually transactions from for consider on this sale-leaseback I have participate the acquisition. need partners the these when multi-billion-dollar wanted we that investors one-off to stayed own. that market seeing outside in we public near-term all our the have largely that And the handled could of transactions of because

are higher we talked a given today, that we muted speak pursue engage lot might to we aggressively. pursue is this with I willingness has We haven't need our somewhat very had to transaction, think could and and now. more that I -- entered diminished we've issues about, want proforma a for actively for potential the into And very concentration that with the more that now, that believe that even partnership have to with do that desire clients and the so

of terms And through we more to much and of do. are proactively. center correct. going That's going I types conversations we front it that those are so, little do in more what a And think bit be

Michael Bilerman

shareholder office -- the plan topic talk in when base announced you about second the in last and you're topic not versus place led then a value taking obviously, was at cash. the the you thinking you -- discussion that how dis-synergies spin perspective, with office a office you'd from and combined paths, look is G&A be And your Okay. Why having pursue you you those about there sale be that sales able us Sheet. of the Balance assets deal assets to were have want the what your process. the to through thought path the versus an basically to going you backup said option sale? down a and And you and as spin delivering on Can two to contribute didn't you spin the would a about about transaction,

Sumit Roy

choose side we when -- that concluded we that to had the thesis spinning did to assume thesis. and the office those sector. very the with familiar parallel either they going we a why term. separation pursue office through assets. of are go assets, clear than analysis team through we that those have longer assets the far a the span path working with been very were should precisely tailwinds very down value that creating is we better all It's makes okay, were going coming to assets out where discussed spin we you was very decided So, we And market managing given the went of of a sense. assets, not, we have a what to on to was those of the we're Putting out was that that on sale. the option would hard in a where And sales -- capable which that or that sub some we particular say, was, the is There

assets years, alternative last to the this they've superior an the been is that outcome that an risk-adjusted this From would forward. to the But the absolute easier both you it. alternative start that and that perspective, on they can loan been take. us, going you reason step the like at look and for for to success able of power the to us see with in then and did selling yielded why what portfolio the seems fact basis this achieve that's Realty we Income the couple have a Given right over do pursued pursue those despite efforts path pursue for we

Michael Bilerman

for thanks the Okay time.

Sumit Roy

Sure.

Operator

Dennerlein question next Josh of from Bank Your comes America. of the with line

now open. Your line is

Josh Dennerlein

Hey guys. doing everyone's well. Hope Yeah.

added you you bunch that set in help skill brought widen of aperture? would Now VEREIT was you a any that guys behind teammates, the that the you, curious, merger's

Sumit Roy

what that's I sorry, mean Josh, Go Yeah, didn't were ahead. to interrupt. we --

Josh Dennerlein

please. please, no, No,

Sumit Roy

the also on, of and on adhering when the talking additive planning able That's the create when finish acquisition the some building data able of for the us with to across that Josh out credit phrase, a lack opportunities being folks will executing higher-yielding this assets, being advantages these very we able the we're look you tremendously a of few broader They opportunities be capable and there lower-yielding more advantages to some upon line we're we inheriting, that better not are to accelerate playing the of acquisition. and that re-engineering to help some that inheriting become spectrum to that work and already from we efficiency. part of these at even team some what of front, other very talented and assets are of have of been analytics entire one be is much process in teammates cover a a we're on their that but work are just That we've that And the spectrum team doing, about doing. is team. are biggest -- have that of through

that absorb a is north -- X,XXX inherited it's become so of us that which of helped foot. a a we And I people am really the help of really us will team complete not properties, team. [Indiscernible] So, XXX not and proud it's course, small have

Josh Dennerlein

guess one And forward. other it. to strategy relates question, Got dividend I going

hear payout to ratio your on things maybe and earnings. curious or retained of kind about Just how about thoughts the

Sumit Roy

ratio the XXs today. So, high in our is payout

monthly part S&P to XXX become the dividend the be to forward. strategy years always of Company. is will Aristocrats This Index, core took Dividend Aristocrat Dividend our XX Index. It very We over going the us

X.X% dividend X.X% in the continue grow And us midpoint with you, range we've strategy of change be of future. will and just where growth the can help on so, shared no there or forward. that will to that years that in our -- the annual grow going we dividends And just that is to the

that. than So sure really I change no Realty and is nothing going wanted that we've the growth Income change, important or to in you Josh, either is but that core to just past dividend recently asked question make given I to emphasize that done the how

Josh Dennerlein

you. Thank it. Got

Operator

Your with line question next Tsai of from Jefferies. comes Linda the

open. Your line is now

Linda Tsai

what rent versus then be remind you leases rent across the weighted us Hello. type what With kind portfolio having XX% contractual domestic, going average like and leases of of increased, it you on of your entire look some might increases forward, increase is can what now? versus the obtained European

Sumit Roy

Yeah. precise you Linda, I'm not going to give information.

growth is by they you tell it strategic our to importance that leases think growth. of I to or form one It's the that X growth profile. into the of clauses are of be are that I form on will geography. contract. make of there growth, CPI of in percentage variations have us fixed those the adjustments, precise are contractual they rent Either up not or in the XX%

have forward, we your now, underwrite that as right for to the you but will and going and continue models. can assumption you for warranted, for when You should to X% business update is same-store growth our

Linda Tsai

then activity acquisition how with about as And Thanks. pacing run mix rate? forward of should raising think move billion $X you the XXXX we in a capital plus

Christie Kelly

-- think Sumit ahead go I

Sumit Roy

no, go no, ahead. please No, Christie,

Christie Kelly

I I'll to continuing our funding to you maintaining it Linda, with net competitive year, personal capital off debt-to-EBITDA. can just expect think be kick of this a pursue to that business while say in consistent our [Indiscernible] and our very cost

Linda Tsai

Thank you.

Operator

Lucas the Securities. of with from Capital comes question Chris next Your line One

is open. Your line now

Chris Lucas

to just just asked rating everybody, credit post-merger. Company where that lot agencies my is. I'm the I I answered, been and have -- given the questions. afternoon, guess guess, Sumit, just you thank conversations at questions your taking to as curious the scale point a Really this rating with Good for but and your of

that any So, flexibility side high those flexibility to credit from you your you've more have gotten them maintain or on if leverage indication very ratings?

Sumit Roy

We share with to fact like had are basis I'll with off. supportive. comfortable. But Christie the we this going play Balance and feel reaffirm I'll numbers in because the look When and to speak so the AX did the pipeline. outlook. we're conversation this and A of incredibly went again, the agencies. X point headline, going actually funding raising the very Jonathan let capital she of were for stance to where two-credit associated stable have we are essentially spoke a rate to and day They -- rating where of but little solve X, But to a our that the front-loaded They acquisition with very proforma their earnings rating them, closing. Sheet, our going be minus rating right current they They with were quarter back the bit months all on after agencies a annualized we third announcements complementary. earnings, it's of along continue

transparent, tried see or current what on the with they be of a shared don't all continue put us you. maintain we've Christie watch and being will I negative have at We've very very levels. us to and that confident analysis rating the we agencies, any So, the sort feel support us to

Chris Lucas

with you this. I wondering range was scale portfolio actually to Company going the of the going do I'm way. leverage allow keep of the is other more the whether it that's the and I'm to put the where diversification going and really to just

Sumit Roy

know that don't to know with told, question A know going the I rating, And we the scenario. a but expect we leverage But -- hypothetical I how be I on And A an going one a agencies the agencies asked, up. to to we be from our be question, rating think - significant out I /AX the benefit triple now figure were I to didn't tend but minus. be you've they lends rating, credence truth Chris. as don't difficult B with that about that. box. they're It's it's to rating the to this going black comments That's AaX an a plus if it's to that I a it's very to would to when enter answer this, a that are think of to into good about profile good And even happy we particular this. you're bit think way can't post change that and 'll we making Chris, don't getting and incremental what very as think.

Chris Lucas

about And then want U.S. think you Europe asset And just attractive when a base sort you of to the think are to debt-finance mentioned at would high higher how financing do perspective? how a more in you you this right the a financing. U.S a now rate from than Would than in this at your you about for question, go? you finance secondary relative business, point level European

Sumit Roy

what domestic the us to clear very acquisition finance possible. limiting our limiting want much of for asset in has always capital factor for we is been the been going Yes, Europe, about factor value. to as to the But use be us Chris, as we've

And advantages have one so we one could geography the of U.S. not. in of that's grow it we the But see And what's the But in or or there and Sheet. much the comfortable assuming here of on as than which support, an UK big basis, our We think in the that U.S. side not biggest out but be in constraining on grow can the will continue is always in here how what more did. environment Treasury as strategy. the debt That's rising fully any where be we does implementing very about the we're that Absolutely. to it raise expected. advantages U.S.? did side, do the so lot we more there. consolidated a unsecured we we why we could today, a particular in raising mainland of levered XX-year the on we the business, Balance factor left And Europe, is

Chris Lucas

you Thank so had I all That's much. today. Super.

Sumit Roy

Of Thank course, you. Chris.

Christie Kelly

Chris. Thanks

Operator

comes question Green Street. line Allaway next of Your with Spenser from the

line open. now is Your

Christie Kelly

Hi Spenser.

Spenser Allaway

development the broadly you around earlier; more the you you provide one you're Europe? and you about can on can kind Hi. color I UK of just deals development how some what expecting spoke if And have U.S the possible, development vary know talk between about economics underway?

Sumit Roy

to XX basis for But What And it's how you transactions to that able We It precise and we basis yield strategy be away testament we just is about not continue asked used rate of to property? to business. actually really specific yield-driven That's specific Every points. from speaking transactions. of that's development be ago. a on And to out. remember than And to Spenser, to why about long to that's staying properties stay points, Hi that. going acquired. going the very too and tried There is I'm the incremental XX just don't reason XXX And development from attributable we away range. XX anywhere north overall is out of I do we the a positive then level between be we're play part XXX you being the acquisition basis balance portfolio. overall And we cap of volume, believe has we're for points XXX Spenser. we to going as compressed, the occasion, higher just it the acquiring by impossible. being anywhere much than that to our yield range it maybe are of basis. slightly to yields could could track on you range be could and supplement, should development able to that we relationships would odd and that report projects definitely it able on assets to the delivery. consolidated on do in but do for a what basis to higher points between will the that that us are fully get is are, we the it's see and and us, on assets that are no breakout provide that a are It ready clarity, our our that we -- funding. what do way, so doubt

Christie Kelly

Spenser you, Thank

Spenser Allaway

Thank you.

Operator

I Realty This concludes call Income's to call. conference for turn over remarks. the Roy Sumit will question-and-answer of now concluding portion the

Sumit Roy

Thank to forward lot you, everyone seeing coming, Nerige. and for at Goodbye. we of look a you

Realty Income (O) 2 Nov 212021 Q3 Earnings call transcript