PDF SECOND QUARTER 2019 RETAIL INVESTOR PRESENTATION - s21.q4cdn.com

[Pages:42]SECOND QUARTER 2019

RETAIL INVESTOR PRESENTATION

Contents

Investment Thesis

4

Company Overview

5

Performance Track Record

10

Dependable Dividends

11

Portfolio Diversification

15

Asset Management & Real Estate Operations

22

Investment Strategy

25

Capital Structure and Scalability

28

Business Plan

32

Appendix

33

All data as of June 30, 2019 unless otherwise specified

2

Safe Harbor For Forward-Looking Statements

Statements in this investor presentation that are not strictly historical are "forward-looking" statements. Forward-looking statements involve known and unknown risks, which may cause the company`s actual future results to differ materially from expected results. These risks include, among others, general economic conditions, domestic and foreign real estate conditions, tenant financial health, the availability of capital to finance planned growth, continued volatility and uncertainty in the credit markets and broader financial markets, property acquisitions and the timing of these acquisitions, charges for property impairments, and the outcome of any legal proceedings to which the company is a party, as described in the company's filings with the Securities and Exchange Commission. Consequently, forward-looking statements should be regarded solely as reflections of the company's current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this investor presentation. The company undertakes 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 these statements were made.

3

Investment Thesis

Business model offers attractive total return with minimal cash flow volatility

PROVEN TRACK RECORD OF RETURNS

16.4% 0.4

Compound Average Annual Total Return Since `94 NYSE Listing

Beta vs. S&P 500

PREDICTABLE CASH FLOW

22 of 23

Years with Positive Earnings Per Share Growth(1)

93.7%

Adjusted EBITDAre Margin

POTENTIAL GROWTH OPPORTUNITIES

$12 Trillion Corporate-Owned Real Estate in the US and Europe

$30 Billion

Average Annual Sourced

Acquisition Opportunities Since `13

(1) AFFO / Excludes positive earnings from Crest Net Lease, a subsidiary of Realty Income, as earnings do not reflect recurring business operations

4

Realty Income Company Overview

Business model has generated above-market returns with below-market volatility since 1994

S&P 500 REAL ESTATE COMPANY

$29B

enterprise value

$1.4B

annualized rental revenue

A3 / A-

credit ratings by Moody's and S&P

50

years of operating history

Member of S&P High-Yield Dividend Aristocrats? index

1 of 8 U.S. REITs with at least two A3/A- ratings

1 of only 2 REITs in both categories

DIVERSIFIED, HIGH-QUALITY "NET LEASE" PORTFOLIO

5,951

commercial real estate properties

9.4

years weighted average remaining

lease term

83% 49%

of rent generated of rent from

from retail investment-grade

properties

rated tenants

265 commercial tenants 49 industries 49 states, Puerto Rico,

and the U.K.

TRACK RECORD OF SAFETY AND CONSISTENCY

22 OF 23

years of positive earnings per share(1) growth

5.1%

median earnings per share(1) growth

93.7%

adjusted EBITDAre margin

16.4%

TSR since 1994 NYSE listing

0.4

beta vs. S&P 500 since 1994 NYSE

listing

(1) AFFO through most recent calendar year/ Excludes earnings from Crest Net Lease, a subsidiary of Realty Income, as earnings do not reflect recurring business operations 5

Progression to a Blue-Chip, S&P 500 REIT

Realty Income founded by William and Joan Clark

Received investmentgrade credit ratings from

Moody's, S&P, and

Fitch

Closed acquisition of American

Realty Capital Trust

for $3.2 billion

Added to S&P High

Yield Dividend Aristocrats and S&P 500

Index

Credit rating upgraded to "A3" by Moody's

Completed first

international acquisition (Sainsbury's in the UK)

1969 1994 1996 2011 2013 2014 2015 2016 2017 2018 2019

Began trading on the NYSE under ticker symbol "O"

Completed $1 billion in

annual property acquisitions for first time

Surpassed $3 billion in

common stock

dividends paid to

shareholders

Eclipsed $1 billion in

annual rental revenue

Credit rating upgraded to "A-" by Standard & Poor's

6

Our Approach and 2Q19 Results

1

Acquire well-located commercial properties

~$1.1 billion in acquisitions

2

Remain disciplined in our acquisition underwriting

Acquired ~6% of sourced volume

3

Execute long-term net lease agreements

Recaptured 100.4% of expiring rent

4

Actively manage portfolio to maximize value

Ended quarter at 98.3% occupancy

5

Maintain a conservative balance sheet

Ended quarter with Net Debt/Adjusted EBITDAre ratio of 5.4x

Grow per share earnings and dividends

AFFO/sh growth: +2.5% | Dividend/sh growth: +2.9%

7

Differentiated Business Model from "Traditional" Retail REITs

Lease structure and growth drivers support predictable revenue stream relative to other forms of retail real estate

Unique "net lease" structure drives lower cash flow volatility

Initial Length of Lease Remaining Avg Term Responsibility for Property Expenses Gross Margin Volatility of Rental Revenue Maintenance Capital Expenditures Reliance on Anchor Tenant(s) Average Retail Property Size / Fungibility

Ample external growth opportunities

Target Markets External Acquisition Opportunities Institutional Buyer Competition

15+ Years ~ 10 Years

Tenant > 98%

Low Low None 12k sf / High

Many High Modest

Shopping Centers and Malls

< 10 Years ~ 5-7 Years

Landlord ~ 75% Modest / High Modest / High High 150k?850k sf / Low

Shopping Centers and Malls

Few Low High

8

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