Realty Income (O) Beats Q1 FFO Estimates, Revenues Up Y/Y
Zacks Investment Research | Apr 25, 2017 10:38PM ET
Realty Income Corporation’s (NYSE:O) first-quarter 2017 adjusted funds from operations (“FFO”) per share of 76 cents exceeded the Zacks Consensus Estimate by a penny. The figure is also 8.6% higher than the prior-year quarter tally of 70 cents. Results reflect better-than-expected growth in revenue.
Total revenue for the quarter came in at $298.0 million, surpassing the Zacks Consensus estimate of $287.3 million. The revenue figure was also up 11.6% year over year.
Quarter in Detail
During first-quarter 2017, same-store rents on 4,322 properties under lease expanded 1.6% to $250.2 million from the prior-year quarter. Portfolio occupancy of 98.3% as of Mar 31, 2017 remained flat sequentially, but expanded 50 basis points year over year.
Further, the company had 83 properties available for lease, out of a total of 4,980 properties in the portfolio as of Mar 31, 2017, compared with 84 properties as of Dec 31, 2016. Moreover, during the reported quarter, the company re-leased 49 properties to existing and new tenants, recapturing 103.6% of the expiring rent.
Portfolio Activity
During the reported quarter, Realty Income invested $370.7 million in 60 new properties and properties under development or expansion, situated in 18 states. The assets are fully leased, with a weighted average lease term of around 16.4 years and an initial average cash lease yield of 6.1%. Notably, around 68% of the rental revenue reaped from acquisitions during first-quarter 2017 is from investment grade rated tenants.
On the other hand, during the reported quarter, the company sold 14 properties for $31.2 million, with a gain on sales of $10.5 million.
Liquidity
Finally, Realty Income exited first-quarter 2017 with cash and cash equivalents of $27.6 million, up from $9.4 million at the end of the prior year.
However, the company has a $2.25 billion unsecured credit facility, comprising a $2.0 billion revolving credit facility and a $250 million five-year unsecured term loan. The credit facility also had a $1.0 billion expansion feature. Notably, as of Mar 31, 2017, Realty Income had no outstanding balance on its revolving credit facility.
In addition, during the reported quarter, Realty Income raised $791.7 million from the sale of common stock at a weighted average price of $61.77 per share.
Outlook
For 2017, Realty Income projects adjusted FFO per share in the range of $3.00–$3.06, implying year-over-year growth of 4.2–6.3%.
Our Take
Realty Income’s focus on leasing to service, non-discretionary, and low price-based retailers, accretive acquisitions and conservative capital structure augur well. Rising monthly dividend payouts are positive for shareholders. However, substantial exposure to single-tenant assets raises its risks associated with tenant default. Further, generation of notable rental revenue from assets leased to drug stores and rate hike add to its woes.
Get The News You Want
Realty Income currently carries a Zacks Rank #3 (Hold). You can see Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.