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    Realty Income Corp (O)

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    Business Description

    Realty Income Corporation, known as "The Monthly Dividend Company®," is a real estate investment trust (REIT) that specializes in owning and leasing commercial properties under long-term net lease agreements . These agreements typically require clients to cover property taxes, insurance, and maintenance costs, providing a predictable income stream for the company . Realty Income's portfolio is highly diversified, with properties leased to clients across 90 different industries, including grocery stores, convenience stores, dollar stores, and drug stores, among others . The company operates across the United States, Puerto Rico, the United Kingdom, and several European countries, focusing on diversification by client, industry, geography, and property type to ensure consistent and predictable income for its stockholders .

    1. Commercial Property Leasing - Owns and leases commercial properties under long-term net lease agreements, requiring clients to cover property taxes, insurance, and maintenance costs.
    2. Geographic Diversification - Operates properties in the United States, Puerto Rico, the United Kingdom, and several European countries, focusing on reducing geographic concentration risks.
    3. Industry Diversification - Leases properties to clients across 90 different industries, including grocery stores, convenience stores, dollar stores, and drug stores, to minimize industry-specific risks.

    Key Metrics

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    Executive Team

    NamePositionStart DateShort Bio
    Sumit RoyPresident and Chief Executive OfficerOctober 2018Sumit Roy has been the President and CEO since October 2018. He joined Realty Income in September 2011 and has held various roles, including Executive Vice President, COO, and CIO. Prior to Realty Income, he worked at UBS Investment Bank, Merrill Lynch, and Cap Gemini Ernst & Young LLP .
    Jonathan PongExecutive Vice President, Chief Financial Officer, and TreasurerJanuary 1, 2024Jonathan Pong became the EVP, CFO, and Treasurer effective January 1, 2024. He joined Realty Income in 2014 and previously led capital markets, investor relations, financial planning, and derivatives functions. Before Realty Income, he was a Vice President in Equity Research at Robert W. Baird .
    Neil M. AbrahamExecutive Vice President, Chief Strategy Officer, and President, Realty Income InternationalJanuary 2022Neil M. Abraham has been EVP, Chief Strategy Officer, and President of Realty Income International since January 2022. He joined Realty Income as EVP, CIO from November 2015 to May 2018. Previously, he was a Portfolio Manager at AllianceBernstein and held positions at McKinsey & Company and Salomon Brothers .
    Michelle BushoreExecutive Vice President, Chief Legal Officer, General Counsel, and SecretaryFebruary 2021Michelle Bushore has been EVP, Chief Legal Officer, General Counsel, and Secretary since February 2021. Before Realty Income, she was EVP, General Counsel, Chief Legal & Risk Officer at Caesars Entertainment and held roles at Monsanto and The Climate Corporation. She was also in private practice with Latham & Watkins LLP .
    Mark E. HaganExecutive Vice President, Chief Investment OfficerMay 2018Mark E. Hagan has been EVP, Chief Investment Officer since May 2018. Before joining Realty Income, he was Managing Director in Real Estate Investment Banking at RBC Capital Markets and held positions at Deutsche Bank Securities and Merrill Lynch & Co., Inc. .
    Shannon KehleExecutive Vice President, Chief People OfficerJanuary 2022Shannon Kehle is the EVP, Chief People Officer since January 2022. She previously served as SVP, Human Resources and VP, Human Resources. Before Realty Income, she worked in senior HR roles across various industries, including clean technology and online gaming .
    Gregory J. WhyteExecutive Vice President, Chief Operating OfficerJanuary 2023Gregory J. Whyte joined as EVP, COO in January 2023. Before Realty Income, he was a Senior Advisor at UBS Securities and Managing Director, Global Head of Real Estate Equity Research at Morgan Stanley. He is also a director at Orion Office REIT Inc. and was an independent director of TIER REIT, Inc. .

    Questions to Ask Management

    1. Given that private arms are becoming bigger players in transactions , how do you plan to maintain your competitive edge in both the U.S. and international markets amidst increasing competition?

    2. With the creation of your private capital investment platform , how will you address potential conflicts of interest when allocating investment opportunities between the public REIT and the private fund to maximize returns for shareholders?

    3. You mentioned cap rate compression in your recent acquisitions, with a 4% cap rate in the third quarter ; can you elaborate on how you reconcile lower initial yields with your long-term cost of capital to ensure investments are accretive?

    4. Considering that you have forward-funded approximately $1.3 billion in fourth quarter investments , and given recent cost of capital volatility , how confident are you in achieving your investment targets without relying on public equity markets?

    5. Regarding your development pipeline, particularly the non-retail properties that are currently not leased , what is your strategy for leasing these up, and how might this impact your yields and risk profile?

    Debt Maturity Schedule

    YearAmount Due (in millions)Debt TypeInterest Rate% of Total Debt
    2024114.2 Mortgages Payable4.600%, 3.875% 0.4% = (114.2 / 26,437.0) * 100
    20251,896.0 Senior Unsecured Notes, Loans3.875%, 4.625% 7.2% = (1,896.0 / 26,437.0) * 100
    20262,375.0 Senior Unsecured Notes5.050%, 0.750%, 4.875%, 4.450%, 4.125% 9.0% = (2,375.0 / 26,437.0) * 100
    20272,371.1 Senior Unsecured Notes1.875%, 3.000%, 3.200%, 1.125%, 3.950% 9.0% = (2,371.1 / 26,437.0) * 100
    20282,499.8 Senior Unsecured Notes3.400%, 2.100%, 2.200%, 4.700%, 3.650% 9.5% = (2,499.8 / 26,437.0) * 100
    Thereafter15,085.8 Senior Unsecured NotesVarious (e.g., 5.375%, 6.000%, 4.650%) 57.1% = (15,085.8 / 26,437.0) * 100

    Customer Concentration

    CustomerRelationshipSegmentDetails
    Dollar General
    Tenant (net lease)
    All
    3.8% of total portfolio annualized contractual rent
    Walgreens
    Tenant (net lease)
    All
    3.8% of total portfolio annualized contractual rent
    Dollar Tree/Family Dollar
    Tenant (net lease)
    All
    3.3% of total portfolio annualized contractual rent
    7-Eleven
    Tenant (net lease)
    All
    3.0% of total portfolio annualized contractual rent
    EG Group Limited
    Tenant (net lease)
    All
    2.5% of total portfolio annualized contractual rent
    Wynn Resorts
    Tenant (net lease)
    All
    2.5% of total portfolio annualized contractual rent
    FedEx
    Tenant (net lease)
    All
    2.2% of total portfolio annualized contractual rent
    B&Q (Kingfisher)
    Tenant (net lease)
    All
    1.9% of total portfolio annualized contractual rent
    Asda
    Tenant (net lease)
    All
    1.9% of total portfolio annualized contractual rent
    Sainsbury's
    Tenant (net lease)
    All
    1.8% of total portfolio annualized contractual rent
    LA Fitness
    Tenant (net lease)
    All
    1.6% of total portfolio annualized contractual rent
    BJ's Wholesale Clubs
    Tenant (net lease)
    All
    1.5% of total portfolio annualized contractual rent
    Lifetime Fitness
    Tenant (net lease)
    All
    1.5% of total portfolio annualized contractual rent
    MGM (Bellagio)
    Tenant (net lease)
    All
    1.4% of total portfolio annualized contractual rent
    CVS Pharmacy
    Tenant (net lease)
    All
    1.4% of total portfolio annualized contractual rent
    Walmart / Sam's Club
    Tenant (net lease)
    All
    1.4% of total portfolio annualized contractual rent
    Tractor Supply
    Tenant (net lease)
    All
    1.3% of total portfolio annualized contractual rent
    Tesco
    Tenant (net lease)
    All
    1.3% of total portfolio annualized contractual rent
    AMC Theaters
    Tenant (net lease)
    All
    1.2% of total portfolio annualized contractual rent
    Red Lobster
    Tenant (net lease)
    All
    1.2% of total portfolio annualized contractual rent

    Auditor

    NameStart DateEnd DateReason for Change
    KPMG LLP1993 PresentCurrent auditor

    Latest news

    Recent developments and announcements about O.

    Financial Actions

      Dividend Policy

      ·
      Jan 24, 2024, 12:00 AM

      Realty Income Corporation Announces Dividend Policy Changes

      Realty Income Corporation has announced the classification and designation of 6,900,000 shares of its authorized capital stock as Realty Income Series A Preferred Stock. Holders of these shares are entitled to cumulative cash dividends at the rate of 6.000% per annum of the $25.00 liquidation preference per share, equivalent to an annual rate of $1.50 per share. Dividends are payable quarterly in arrears on or about the last day of March, June, September, and December of each year, beginning on March 29, 2024. Dividends will accrue and be cumulative from and including January 1, 2024 .**

      Dividend Policy

      ·
      Oct 30, 2023, 12:00 AM

      Realty Income Announces No Change to Dividend Policy Following Merger with Spirit Realty Capital

      Realty Income Corporation has announced that it does not intend to change its regular dividend as a result of its merger with Spirit Realty Capital. Realty Income remains committed to its longstanding track record of delivering consistent monthly dividends and quarterly dividend increases to its shareholders .