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Realty Income (O) Q3 AFFO and Revenues Surpass Estimates
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Realty Income Corporation’s (O - Free Report) third-quarter 2022 adjusted funds from operations (AFFO) per share of 98 cents surpassed the Zacks Consensus Estimate of 96 cents. The reported figure also compared favorably with the prior-year quarter’s 91 cents.
Results reflect better-than-expected revenues for the quarter. The company benefited from expansionary effects and a healthy pipeline of opportunities globally.
Total revenues for the reported quarter came in at $837.3 million, exceeding the Zacks Consensus Estimate of $828.5 million. The top line also jumped 70.9% year over year.
Realty Income noted that for the third quarter of 2022, it collected around 85% of the contractual rent across its theater portfolio. This is because, Cineworld Group plc, the parent entity of the entities that lease certain of Realty Income’s theater properties, including Regal Cinemas, began Chapter 11 reorganization proceedings in September 2022.
As is customary, it was not yet required to pay the rent for September. However, for October 2022, the company collected all the contractual rent across its theater portfolio.
Quarter in Detail
In the third quarter of 2022, same-store rental revenues from 9,645 properties under lease increased 1.0% to $612.3 million from the prior-year period.
The portfolio occupancy of 98.9% as of Sep 30, 2022, remained unchanged sequentially but increased 10 basis points (bps) year over year. The company achieved a rent recapture rate of 108.5% on re-leasing activity.
During the reported quarter, O invested $1.87 billion in 375 properties and properties under development or expansion, including $613.0 million in Europe.
Around 27% of rental revenues reaped from acquisitions during the September-end quarter came in from investment grade-rated tenants and their subsidiaries or affiliated companies.
The company sold 34 properties, generating net proceeds of $142.2 million, with a gain on sales of $42.6 million, during the July-September period.
Balance Sheet
Realty Income exited the third quarter with $2.5 billion of liquidity. This comprised cash and cash equivalents of $187.7 million and $2.3 billion of availability under its revolving credit facility after deducting $723.8 million in commercial paper borrowings.
Net debt to annualized pro forma adjusted EBITDAre was 5.2X, while the fixed charge coverage ratio was 5.5.
In the third quarter, the company raised $0.7 billion from the sale of its common stock at a weighted average price of $73.05 per share, mainly through its At-The-Market Program.
Guidance
Realty Income revised its 2022 guidance and now projects the normalized FFO per share in the band of $3.99-$4.07 compared with the $3.92-$4.05 band projected earlier.
The AFFO per share is expected in the range of $3.87-$3.94 compared with the $3.84-$3.97 range guided earlier. The Zacks Consensus Estimate for the same is currently pegged at $3.89.
Management’s full-year 2022 projections assume same-store rent growth of 2.0% and occupancy of more than 98%, both unchanged from the prior guidance. Also, the full-year acquisition volume is projected to be more than $6 billion, the same as guided earlier.
Simon Property Group’s (SPG - Free Report) third-quarter 2022 comparable FFO per share of $2.97 exceeded the Zacks Consensus Estimate of $2.93. The figure compared favorably with the year-ago quarter’s $2.92.
Simon Property Group’s quarterly results reflected a healthy operating performance and growth in occupancy levels. Based on the quarterly results, this retail REIT behemoth raised the 2022 FFO per share outlook and announced a hike in the quarterly dividend.
Kimco Realty Corp.’s (KIM - Free Report) third-quarter 2022 FFO per share came in at 41 cents, surpassing the Zacks Consensus Estimate of 39 cents. The figure grew 28.1% from the year-ago quarter’s 32 cents.
Results reflected year-over-year growth in the top line. The rise in occupancy levels and rental rate growth aided Kimco’s performance. KIM raised the 2022 FFO outlook.
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) Q3 AFFO and Revenues Surpass Estimates
Realty Income Corporation’s (O - Free Report) third-quarter 2022 adjusted funds from operations (AFFO) per share of 98 cents surpassed the Zacks Consensus Estimate of 96 cents. The reported figure also compared favorably with the prior-year quarter’s 91 cents.
Results reflect better-than-expected revenues for the quarter. The company benefited from expansionary effects and a healthy pipeline of opportunities globally.
Total revenues for the reported quarter came in at $837.3 million, exceeding the Zacks Consensus Estimate of $828.5 million. The top line also jumped 70.9% year over year.
Realty Income noted that for the third quarter of 2022, it collected around 85% of the contractual rent across its theater portfolio. This is because, Cineworld Group plc, the parent entity of the entities that lease certain of Realty Income’s theater properties, including Regal Cinemas, began Chapter 11 reorganization proceedings in September 2022.
As is customary, it was not yet required to pay the rent for September. However, for October 2022, the company collected all the contractual rent across its theater portfolio.
Quarter in Detail
In the third quarter of 2022, same-store rental revenues from 9,645 properties under lease increased 1.0% to $612.3 million from the prior-year period.
The portfolio occupancy of 98.9% as of Sep 30, 2022, remained unchanged sequentially but increased 10 basis points (bps) year over year. The company achieved a rent recapture rate of 108.5% on re-leasing activity.
During the reported quarter, O invested $1.87 billion in 375 properties and properties under development or expansion, including $613.0 million in Europe.
Around 27% of rental revenues reaped from acquisitions during the September-end quarter came in from investment grade-rated tenants and their subsidiaries or affiliated companies.
The company sold 34 properties, generating net proceeds of $142.2 million, with a gain on sales of $42.6 million, during the July-September period.
Balance Sheet
Realty Income exited the third quarter with $2.5 billion of liquidity. This comprised cash and cash equivalents of $187.7 million and $2.3 billion of availability under its revolving credit facility after deducting $723.8 million in commercial paper borrowings.
Net debt to annualized pro forma adjusted EBITDAre was 5.2X, while the fixed charge coverage ratio was 5.5.
In the third quarter, the company raised $0.7 billion from the sale of its common stock at a weighted average price of $73.05 per share, mainly through its At-The-Market Program.
Guidance
Realty Income revised its 2022 guidance and now projects the normalized FFO per share in the band of $3.99-$4.07 compared with the $3.92-$4.05 band projected earlier.
The AFFO per share is expected in the range of $3.87-$3.94 compared with the $3.84-$3.97 range guided earlier. The Zacks Consensus Estimate for the same is currently pegged at $3.89.
Management’s full-year 2022 projections assume same-store rent growth of 2.0% and occupancy of more than 98%, both unchanged from the prior guidance. Also, the full-year acquisition volume is projected to be more than $6 billion, the same as guided earlier.
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’s (SPG - Free Report) third-quarter 2022 comparable FFO per share of $2.97 exceeded the Zacks Consensus Estimate of $2.93. The figure compared favorably with the year-ago quarter’s $2.92.
Simon Property Group’s quarterly results reflected a healthy operating performance and growth in occupancy levels. Based on the quarterly results, this retail REIT behemoth raised the 2022 FFO per share outlook and announced a hike in the quarterly dividend.
Kimco Realty Corp.’s (KIM - Free Report) third-quarter 2022 FFO per share came in at 41 cents, surpassing the Zacks Consensus Estimate of 39 cents. The figure grew 28.1% from the year-ago quarter’s 32 cents.
Results reflected year-over-year growth in the top line. The rise in occupancy levels and rental rate growth aided Kimco’s performance. KIM raised the 2022 FFO outlook.
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.