2017 annual shareholder meeting€¦ · no tenant represents more than 6.8% of revenue • 250...
TRANSCRIPT
COMPANY OVERVIEW
• S&P 500 Real Estate Investment Trust (NYSE “O”)
• The Monthly Dividend Company®
• Acquire and manage freestanding, single tenant, commercial, net-lease properties
• Seasoned senior management team
• 4,980 properties diversified by tenant, industry, geography, and to a certain extent, property type
COMPANY OVERVIEW – PORTFOLIO GROWTH
0
1,000
2,000
3,000
4,000
5,000
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
1Q 2
017
Num
ber
of P
rope
rtie
s
4,980
630
• No tenant represents more than 6.8% of revenue
• 250 commercial tenants
• 45% investment-grade rated, including 9 of our top 20 tenants
TENANT DIVERSIFICATION
6.8%
5.4%
4.1%
3.7%
3.8%
2.6%
2.6%
2.3%
2.3%
2.2%
1.9%
1.9%
1.9%
1.9%
1.8%
*
*
*
1.8%
1.8%
1.6%
1.2%
1.2%
*Investment-grade credit rating
*
*
*
*
*
*
As of 03/31/17
INDUSTRY DIVERSIFICATION
3%
4%
4%
5%
5%
5%
8%
8%
10%
11%
Wholesale Clubs
Grocery Stores
Casual Dining Restaurants
Theaters
Quick-Service Restaurants
Transportation Services
Health and Fitness
Dollar Stores
Convenience Stores
Drug Stores
• 47 industries
• No industry represents more than 11% of revenue
As of 03/31/17
• 4,980 Properties located in 49 states and Puerto Rico
1.0
<1
<1
<1
<1 <1
<1
<1
<1
<1
9.4
1.6 1.7
<12.3
9.7
1.6
3.1
3.5
1.4
<1
1.41.6
3.1
5.5
2.3
3.05.2
2.2
1.4
1.9 4.5
5.9
2.1
2.8
2.8<1
2.6
4.4
<1<1
1.4
<1<1
1.7
1.4 <1
<1
<1
Represents percentage of rental revenue%
<1
PUERTO RICO
% of Rental Revenue
Texas 9.7%
California 9.4%
Florida 5.9%
Illinois 5.5%
Ohio 5.2%
Georgia 4.5%
As of 03/31/17
• 4 property types
• Non-retail – 2% in 2009 20% in 2017
• Retail and industrial properties remain our principal focus
PROPERTY TYPE COMPOSITION
Retail 79.5%
Industrial 12.9%
Office 5.3%
Agriculture2.3%
As of 03/31/17
COMPANY PHILOSOPHY
Support and grow monthly dividends for shareholders
Target well-located,freestanding,single-tenant,
commercialproperties
Execute long-term, net-lease
agreements
Hold properties for long-term income
production
Manage theportfolio actively
Maintain a conservative
balance sheet
CAPITAL STRUCTURE – CONSERVATIVE BALANCE SHEET
31%
8%
61%
28%
72%
Common Stock: $15 billion
Debt: $6 billion
Total Capitalization: $21 billion
Investment Grade Ratings: Baa1 / BBB+
Interest Coverage 4.5x
Fixed Charge Coverage 4.5x
• Tenants:– Reliable cash flow from multiple sources
– Attractive industries relative to the economic environment
– Retail: Businesses with service, non-discretionary, and/or low price point orientation
– Non-Retail: Fortune 1000, primarily investment-grade rated companies
INVESTMENT STRATEGY
Quick Service Restaurants – Boise, ID
INVESTMENT STRATEGY
• Real estate:– Locations in significant markets and strategic locations critical to
generating revenue
– Property valuations near replacement cost
– Rental or lease payments at or below market rents
• Attractive spread over our cost of capital
• Favorable risk-adjusted returns
Consumer Goods – Chicago, IL
INVESTMENT STRATEGYDrug Stores – Columbus, OH
Convenience Stores – Fort Worth, TX
2016 PERFORMANCE
$1 billion in annual rental
revenue
5.1% AFFO per share growth
$1.86 billion acquisitions
5.3% dividend per share increase
98.3% occupancy
$91 million dispositions
2016 PERFORMANCE
• $1.86 billion acquisitions– 505 properties– 40 states– 51 commercial tenants– 28 industries– 86% retail properties– 64% investment-grade rated tenants
• $91 million selective dispositions– 77 properties– Redeploy capital into properties that better meet our investment
strategy
• 98.3% occupancy rate
Dividend amounts reflects the December declared dividend rate per share annualized, except for 2017, which reflects the April 2017 declared dividend annualized
HISTORICAL DIVIDEND INCREASES
$0.90 $0.93 $0.945 $0.96 $1.02 $1.08 $1.11 $1.14 $1.17 $1.20$1.32
$1.395$1.518
$1.641$1.701$1.716$1.731$1.746$1.821
$2.186 $2.201$2.292
$2.430$2.532
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD2017
• 91 Dividend Increases Since 1994 NYSE Listing
• 561 Consecutive Monthly Dividends Paid
• 4.7% Compound Average Annual Growth Rate
• Member of S&P High Yield Dividend Aristocrats® index $2.532
• Shareholder Total Return versus Market since public listing in 1994
(1) Since Realty Income’s public listing on 10/18/94 through 03/31/17, assuming reinvestment of dividends
SHAREHOLDER RESULTS
Realty Income
EquityREITs DOW S&P 500 NASDAQ
Compound Average Annual
Total Return(1) 16.9% 10.9% 10.2% 9.6% 9.5%
1Q 2017 RESULTS
• $370.7 million acquisitions– 60 properties– 18 states – 16.4 years average lease term– 6.1% initial yield– 98% retail– 68% investment-grade rated tenants
• Raised $1.5 billion of favorably priced permanent and long-term capital
• 98.3% occupancy• 9.7 years weighted average lease term
AFFO per share grew 8.6% to 76¢
Dividend per share growth
6.1%
Acquisitions
Capital Raising
Portfolio
2017 OUTLOOK
• Approximately $1 billion in acquisitions at attractive investment spreads
• $75-$100 million dispositions
• 1.0%-1.2% same store rent growth
• Earnings growth:• AFFO per share: $3.00 to $3.06
% Growth: 4.2% to 6.3%
• Pay monthly dividends that grow over time