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Realty Income Corp O

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Morningstar’s Analysis

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Realty Income Reports Third-Quarter Results and 2022 Guidance In Line With Our Expectations

Kevin Brown Equity Analyst

Analyst Note

| Kevin Brown |

Reality Income reported third-quarter earnings that were relatively in line with our expectations for the no-moat company, leading us to reaffirm our $71 fair value estimate. Economic occupancy sequentially improved 40 basis points to 99.2%, matching the company's all-time peak occupancy level. With the return of moviegoers to summer blockbusters, theater tenants were able to pay 99.6% of rent owed in the third quarter. As a result, rent collection for the entire company improved to 99.6% from 95.9% in the second quarter. Realty Income also saw a strong quarter of re-leasing space to new and existing tenants, seeing a blended re-leasing spread of 7.2% for the third quarter. Same-store net operating income was up 6.0% in the quarter, driven by a 7.1% improvement among retail tenants. However, the growth reported this quarter was more a result of a one-time drop in the third quarter of 2020 than an improvement in operations in 2021. Realty Income reported adjusted funds from operations of $0.91 in the third quarter, a penny ahead of our estimate.

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Company Profile

Business Description

Realty Income owns roughly 6,700 properties, most of which are freestanding, single-tenant, triple-net-leased retail properties. Its properties are located in 49 states and Puerto Rico and are leased to 250 tenants from 47 industries. Recent acquisitions have added industrial, office, manufacturing, and distribution properties, which make up roughly 16% of revenue.

11995 El Camino Real
San Diego, CA, 92130
T +1 858 284-5000
Sector Real Estate
Industry REIT - Retail
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Hard Assets
Employees 210