Sumit Roy, president and CEO of Realty Income Corp. (NYSE: O), participated in a video interview in conjunction with Nareit’s REITweek: 2022 Investor Conference in New York on June 7-9.
Roy gave a status update on the integration efforts regarding the VEREIT, Inc. merger. The transaction closed on February 1, “and we are right on target to achieve the synergies that we laid out.”
Turning to ways in which Realty Income’s tenants can pass along inflation pressures to their customers, Roy noted that the REIT has constructed its portfolio by focusing on clients “that have the operational and financial wherewithal to be able to pass through a lot of the increases that we’re seeing due to inflation onto their clients.”
Those clients that can’t pass on higher costs have the financial wherewithal to absorb some of the increases, he added.
As for the health of Realty Income’s operators in the U.K. and Continental Europe, Roy noted that the REIT has targeted industries that are very defensive in nature, including grocers and home improvement stores, with good financial strength. In fact, these operators actually experienced tailwinds during the downturn, so there are “no concerns there,” he said.
Roy also emphasized the company’s strong dividend, noting that when future earnings are being discounted at higher rates, given the inflationary environment, “being able to push out 25% of our earnings as dividend on a monthly basis is something that allows us to stand apart.”