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Realty Income (O) Tops Q4 FFO, Makes Record Investments
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Realty Income Corporation’s (O - Free Report) fourth-quarter 2021 adjusted funds from operations (AFFO) per share of 94 cents surpassed the Zacks Consensus Estimate of 93 cents. The reported figure also compares favorably with the prior-year quarter’s 84 cents.
Results reflect a better-than-expected improvement in revenues. This retail REIT is enhancing its global platform and during the fourth quarter, excluding its merger with VEREIT, it invested $2.63 billion in 401 properties and properties under development or expansion, including $1.04 billion in Europe.
According to Sumit Roy, Realty Income's president and chief executive officer, “In addition to closing our merger with VEREIT, we expanded our global platform through our investment in Spain, a new growth vertical in Continental Europe. To that end, we invested a record $2.6 billion in high-quality real estate during the fourth quarter. This brings 2021 property-level acquisitions to $6.4 billion, setting an annual record for the company.”
Total revenues for the reported quarter came in at $685 million, exceeding the Zacks Consensus Estimate of $592.3 million. The top line also jumped 64% year over year.
Realty Income also apprised of its rental receipts through Dec 31, 2021 and noted that it collected 99.5% of the contractual rent due for the fourth quarter across its total portfolio. Further, O collected 99.8% of the contractual rent due for the fourth quarter from the top 20 tenants and 99.8% of the contractual rent from its investment-grade tenants. The company collected 100.0% of the contractual rent due for the fourth quarter from theater clients and 96.7% of the contractual rent from its health and fitness clients.
Quarter in Detail
During the fourth quarter of 2021, same-store rental revenues on 6,046 properties under lease increased 4.9% to $369.4 million from the prior-year period. Portfolio occupancy of 98.5%, as of Dec 31, 2021, shrank 30 basis points (bps) sequentially but rose 60 bps year over year. The company generated a rent recapture rate of 101.8% on re-leasing activity.
During the reported quarter, excluding its merger with VEREIT, Realty Income invested $2.63 billion in 401 properties and properties under development or expansion, including $1.04 billion in Europe.
Around 35% of rental revenues reaped from acquisitions during the December-end quarter came in from investment grade-rated tenants, their subsidiaries or affiliated companies.
The company sold 58 properties, generating net proceeds of $126.8 million with a gain on sales of $20.4 million, during the October-December period.
The theater industry, which represented 3.4% of annualized contractual rental revenues for Realty Income as of Dec 31, 2021, has been subject to disruptions due to the pandemic, raising concerns about the collectability of rents. As of Dec 31, 2021, this REIT was fully reserved for outstanding receivable balances for 34 theater properties. As of Dec 31, 2021, the receivables outstanding for its 81 theater properties aggregated $71.0 million.
Balance Sheet
Realty Income exited 2021 with cash and cash equivalents of $258.6 million, down from $824.5 million witnessed at the end of 2020.
As of Dec 31, 2021, the balance of borrowings outstanding under its revolving credit facility was $650.0 million. Also, as of that date, O had $901.4 million in commercial paper borrowings.
Net debt to annualized pro forma adjusted EBITDAre was 5.3X, while the fixed charge coverage ratio was 5.6.
During the fourth quarter, the company raised $1.72 billion from the sale of common stock at a weighted average price of $69.07 per share, mainly through its At-The-Market Program.
Guidance
Management projects 2022 adjusted FFO per share of $3.84 to $3.97. The Zacks Consensus Estimate for the same is currently pinned at $3.93.
Management’s full-year 2022 projections assume same-store rent growth of 1.5% and occupancy of 98%. O expects full-year acquisition volume of more than $5.0 billion.
Simon Property Group, Inc.’s (SPG - Free Report) fourth-quarter 2021 FFO per share of $3.09 exceeded the Zacks Consensus Estimate of $2.88. Simon Property’s performance was backed by occupancy and NOI growth. However, SPG generated revenues of $1.33 billion during the quarter, lagging the Zacks Consensus Estimate of $1.35 billion.
Kimco Realty Corp.’s (KIM - Free Report) fourth-quarter 2021 NAREIT FFO came in at 39 cents per share, topping the Zacks Consensus Estimate of 37 cents. This figure also compared favorably with the year-ago quarter’s tally of 31 cents. Kimco’s results reflected better-than-anticipated revenues. KIM also issued its 2022 outlook.
Federal Realty Investment Trust’s (FRT - Free Report) fourth-quarter 2021 FFO per share of $1.47 surpassed the Zacks Consensus Estimate of $1.41. This also compared favorably with the year-ago quarter’s tally of $1.14 (excluding the early extinguishment of the debt charge). Federal Realty’s results reflected better-than-anticipated revenues. FRT also raised its guidance for 2022 FFO per share.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Realty Income (O) Tops Q4 FFO, Makes Record Investments
Realty Income Corporation’s (O - Free Report) fourth-quarter 2021 adjusted funds from operations (AFFO) per share of 94 cents surpassed the Zacks Consensus Estimate of 93 cents. The reported figure also compares favorably with the prior-year quarter’s 84 cents.
Results reflect a better-than-expected improvement in revenues. This retail REIT is enhancing its global platform and during the fourth quarter, excluding its merger with VEREIT, it invested $2.63 billion in 401 properties and properties under development or expansion, including $1.04 billion in Europe.
According to Sumit Roy, Realty Income's president and chief executive officer, “In addition to closing our merger with VEREIT, we expanded our global platform through our investment in Spain, a new growth vertical in Continental Europe. To that end, we invested a record $2.6 billion in high-quality real estate during the fourth quarter. This brings 2021 property-level acquisitions to $6.4 billion, setting an annual record for the company.”
Total revenues for the reported quarter came in at $685 million, exceeding the Zacks Consensus Estimate of $592.3 million. The top line also jumped 64% year over year.
Realty Income also apprised of its rental receipts through Dec 31, 2021 and noted that it collected 99.5% of the contractual rent due for the fourth quarter across its total portfolio. Further, O collected 99.8% of the contractual rent due for the fourth quarter from the top 20 tenants and 99.8% of the contractual rent from its investment-grade tenants. The company collected 100.0% of the contractual rent due for the fourth quarter from theater clients and 96.7% of the contractual rent from its health and fitness clients.
Quarter in Detail
During the fourth quarter of 2021, same-store rental revenues on 6,046 properties under lease increased 4.9% to $369.4 million from the prior-year period. Portfolio occupancy of 98.5%, as of Dec 31, 2021, shrank 30 basis points (bps) sequentially but rose 60 bps year over year. The company generated a rent recapture rate of 101.8% on re-leasing activity.
During the reported quarter, excluding its merger with VEREIT, Realty Income invested $2.63 billion in 401 properties and properties under development or expansion, including $1.04 billion in Europe.
Around 35% of rental revenues reaped from acquisitions during the December-end quarter came in from investment grade-rated tenants, their subsidiaries or affiliated companies.
The company sold 58 properties, generating net proceeds of $126.8 million with a gain on sales of $20.4 million, during the October-December period.
The theater industry, which represented 3.4% of annualized contractual rental revenues for Realty Income as of Dec 31, 2021, has been subject to disruptions due to the pandemic, raising concerns about the collectability of rents. As of Dec 31, 2021, this REIT was fully reserved for outstanding receivable balances for 34 theater properties. As of Dec 31, 2021, the receivables outstanding for its 81 theater properties aggregated $71.0 million.
Balance Sheet
Realty Income exited 2021 with cash and cash equivalents of $258.6 million, down from $824.5 million witnessed at the end of 2020.
As of Dec 31, 2021, the balance of borrowings outstanding under its revolving credit facility was $650.0 million. Also, as of that date, O had $901.4 million in commercial paper borrowings.
Net debt to annualized pro forma adjusted EBITDAre was 5.3X, while the fixed charge coverage ratio was 5.6.
During the fourth quarter, the company raised $1.72 billion from the sale of common stock at a weighted average price of $69.07 per share, mainly through its At-The-Market Program.
Guidance
Management projects 2022 adjusted FFO per share of $3.84 to $3.97. The Zacks Consensus Estimate for the same is currently pinned at $3.93.
Management’s full-year 2022 projections assume same-store rent growth of 1.5% and occupancy of 98%. O expects full-year acquisition volume of more than $5.0 billion.
Realty Income currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Realty Income Corporation Price, Consensus and EPS Surprise
Realty Income Corporation price-consensus-eps-surprise-chart | Realty Income Corporation Quote
Performance of Retail REITs
Simon Property Group, Inc.’s (SPG - Free Report) fourth-quarter 2021 FFO per share of $3.09 exceeded the Zacks Consensus Estimate of $2.88. Simon Property’s performance was backed by occupancy and NOI growth. However, SPG generated revenues of $1.33 billion during the quarter, lagging the Zacks Consensus Estimate of $1.35 billion.
Kimco Realty Corp.’s (KIM - Free Report) fourth-quarter 2021 NAREIT FFO came in at 39 cents per share, topping the Zacks Consensus Estimate of 37 cents. This figure also compared favorably with the year-ago quarter’s tally of 31 cents. Kimco’s results reflected better-than-anticipated revenues. KIM also issued its 2022 outlook.
Federal Realty Investment Trust’s (FRT - Free Report) fourth-quarter 2021 FFO per share of $1.47 surpassed the Zacks Consensus Estimate of $1.41. This also compared favorably with the year-ago quarter’s tally of $1.14 (excluding the early extinguishment of the debt charge). Federal Realty’s results reflected better-than-anticipated revenues. FRT also raised its guidance for 2022 FFO per share.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.