Realty Income CEO Says Balance Sheet in Best Shape Ever
11/30/2015 | by Sarah Borchersen-Keto

John Case, CEO of Realty Income Corp. (NYSE: O), joined REIT.com for a CEO Spotlight video interview at REITWorld 2015: NAREIT’s Annual Convention for All Things REIT at the Wynn Las Vegas.

Realty Income purchases commercial real estate leased to tenants under long-term net lease agreements. The properties are generally freestanding buildings.

Case discussed the state of the company’s balance sheet. Year-to-date, Realty Income has raised $1.2 billion in equity, Case said. In general the company has financial flexibility heading into 2016, according to Case.

“Our balance sheet has really never been in better shape than it is today," he said.

Turning to fundamentals, Case said occupancy levels are now at 98.3 percent and should stay around that point going into next year. The company has been able to retain 90 percent of tenants at a 104 percent rent recapture rate this year, he added.

Case explained that 2015 has seen fairly heavy tenant rollover, while next year will be light, representing only about 1.5 percent of revenues. “I think we’ll continue to see excellent tenant retention with an upside on the revenues from higher rents,” he noted.

Meanwhile, Case said Realty Income expects to book $1.25 billion in acquisitions this year. The company has released an initial acquisitions estimate of $750 million for 2016, although Case noted that the figure doesn’t include any large portfolio transactions.

“We continue to see a lot of momentum in the acquisitions area. We have sourced to date about $24 billion in investment opportunities, so there is still really good acquisition opportunity flow and we see that going into 2016,” Case observed.

Case added that Realty Income expects capitalization rates for the types of properties it focuses on to be in the high 6 percent range next year.