Realty Income Acquiring Assets at Record-Breaking Spreads

John Case, CEO of Realty Income Corp. (NYSE: O), joined REIT.com for a CEO Spotlight video interview at REITWorld 2016: NAREIT’s Annual Convention for All Things REIT at the JW Marriott Phoenix Desert Ridge.

Case explained that retail properties constitute 79 percent of the REIT’s property revenue and that they are primarily focused on low-price-point and non-discretionary services.  Realty Income also leases to Fortune 1000 companies with investment-grade credit ratings that are primarily distribution centers. FedEx is the company’s second largest tenant overall, Case said.

Case noted that 2016 has been one of the company’s most active years for acquisitions. Year-to-date, Realty Income has acquired $1.1 billion in assets at “record-breaking investment spreads,” according to Case.

As a result, Realty Income has raised its acquisition guidance for 2016 to $1.5 billion from $1.25 billion, Case said. He added that he continues to see momentum for acquisitions into 2017.

At the same time, the company’s balance sheet has “never been in better shape,” according to Case. In the last two years, Realty Income has financed 85 percent of growth with equity. Today, the company has a net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) ratio of 5.3 times and a debt to total market cap ratio of 23 percent, he said.