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Realty Income (O) Q4 AFFO and Revenues Surpass Estimates
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Realty Income Corporation’s (O - Free Report) fourth-quarter 2022 adjusted funds from operations (AFFO) per share of $1.00 surpassed the Zacks Consensus Estimate of 98 cents. The reported figure also compared favorably with the prior-year quarter’s 94 cents.
Results reflect better-than-expected revenues in the quarter. The company benefited from expansionary effects and a healthy pipeline of opportunities globally. It issued an upbeat outlook for 2023.
Total revenues in the reported quarter came in at $888.7 million, exceeding the Zacks Consensus Estimate of $853.3 million. The top line also rose 29.7% year over year.
In 2022, Realty Income reported AFFO per share of $3.92, up from $3.59 in the year-ago period. The figure, however, missed the Zacks Consensus Estimate of $3.95. Revenues of $3.34 billion jumped 60.7% year over year and outpaced the consensus mark of $3.30 billion.
Realty Income noted that it collected all contractual rent across its theater portfolio from October 2022 to Feb 21, 2023.
Concurrent with its fourth-quarter earnings release, Realty Income announced that it has entered a strategic real estate alliance with Plenty Unlimited Inc. to support the development of the latter’s indoor vertical farms. Per the terms of the agreement, O will acquire and provide development funding for properties to be leased under long-term net leases that will house Plenty's indoor farms. The agreement gives provision for up to $1 billion of development opportunities.
Quarter in Detail
In the fourth quarter of 2022, same-store rental revenues of $608 million from 9,615 properties under lease witnessed a marginal fall from the prior-year period.
The portfolio occupancy of 99% as of Dec 31, 2022, improved 10 basis points (bps) sequentially and 50 bps year over year. It also marked the highest in more than 20 years. In the quarter, the company achieved a rent recapture rate of 103.8% on re-leasing activity.
During the reported quarter, O invested $3.9 billion in 578 properties and properties under development or expansion, of which $387.9 million was in Europe. This was also inclusive of the company’s first investment in Italy for seven properties aggregating $166.6 million.
Investment grade-rated tenants and their subsidiaries or affiliated companies attributed around 14% of rental revenues reaped from acquisitions during the fourth quarter.
In the October-December quarter, O closed the earlier announced acquisition of the land and real estate assets of Encore Boston Harbor Resort and Casino from Wynn Resorts, Limited for $1.7 billion.
Balance Sheet
Realty Income exited fourth-quarter 2022 with $1.7 billion of liquidity. This comprised cash and cash equivalents of $171.1 million and $1.5 billion of availability under its revolving credit facility after deducting $701.8 million in commercial paper borrowings.
Net debt to annualized pro forma adjusted EBITDAre was 5.3X, while the fixed charge coverage ratio was 5.2.
In the fourth quarter, the company raised $2.2 billion from the sale of its common stock at a weighted average price of $65.71 per share, mainly through its At-The-Market (ATM) program.
2023 Guidance
Realty Income issued its outlook for 2023
Management projects 2023 AFFO per share in the range of $3.93 to $4.03. The Zacks Consensus Estimate for the same is currently pegged at $4.06.
Full-year 2022 projections assume same-store rent growth of more than 1.25% and occupancy of more than 98%. O expects a full-year acquisition volume of more than $5.0 billion.
Realty Income currently carries a Zacks Rank #4 (Sell).
Simon Property Group, Inc.’s (SPG - Free Report) fourth-quarter 2022 comparable FFO per share of $3.15 exceeded the Zacks Consensus Estimate of $3.14. The figure compares favorably with the year-ago quarter’s $3.11.
This performance was backed by a better-than-expected top line. SPG’s results reflected a healthy operating performance and growth in occupancy levels. However, the retail REIT behemoth’s 2023 comparable FFO per share projection was lower than expected.
Federal Realty Investment Trust’s (FRT - Free Report) fourth-quarter 2022 FFO per share of $1.58 surpassed the Zacks Consensus Estimate of $1.57. This also compares favorably with the year-ago quarter’s tally of $1.47.
FRT’s results reflected healthy leasing activity and better-than-anticipated revenues. This retail REIT provided an upbeat outlook for 2023, with FFO per share projection exceeding the consensus mark.
Kimco Realty Corp.’s (KIM - Free Report) fourth-quarter 2022 FFO per share came in at 38 cents, missing the Zacks Consensus Estimate of 39 cents. The figure also compared unfavorably with the year-ago quarter’s 39 cents.
Though Kimco reported growth in revenues, a rise in interest expenses acted as a dampener. This retail REIT provided an initial outlook for 2023, which is below the consensus mark.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.
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Realty Income (O) Q4 AFFO and Revenues Surpass Estimates
Realty Income Corporation’s (O - Free Report) fourth-quarter 2022 adjusted funds from operations (AFFO) per share of $1.00 surpassed the Zacks Consensus Estimate of 98 cents. The reported figure also compared favorably with the prior-year quarter’s 94 cents.
Results reflect better-than-expected revenues in the quarter. The company benefited from expansionary effects and a healthy pipeline of opportunities globally. It issued an upbeat outlook for 2023.
Total revenues in the reported quarter came in at $888.7 million, exceeding the Zacks Consensus Estimate of $853.3 million. The top line also rose 29.7% year over year.
In 2022, Realty Income reported AFFO per share of $3.92, up from $3.59 in the year-ago period. The figure, however, missed the Zacks Consensus Estimate of $3.95. Revenues of $3.34 billion jumped 60.7% year over year and outpaced the consensus mark of $3.30 billion.
Realty Income noted that it collected all contractual rent across its theater portfolio from October 2022 to Feb 21, 2023.
Concurrent with its fourth-quarter earnings release, Realty Income announced that it has entered a strategic real estate alliance with Plenty Unlimited Inc. to support the development of the latter’s indoor vertical farms. Per the terms of the agreement, O will acquire and provide development funding for properties to be leased under long-term net leases that will house Plenty's indoor farms. The agreement gives provision for up to $1 billion of development opportunities.
Quarter in Detail
In the fourth quarter of 2022, same-store rental revenues of $608 million from 9,615 properties under lease witnessed a marginal fall from the prior-year period.
The portfolio occupancy of 99% as of Dec 31, 2022, improved 10 basis points (bps) sequentially and 50 bps year over year. It also marked the highest in more than 20 years. In the quarter, the company achieved a rent recapture rate of 103.8% on re-leasing activity.
During the reported quarter, O invested $3.9 billion in 578 properties and properties under development or expansion, of which $387.9 million was in Europe. This was also inclusive of the company’s first investment in Italy for seven properties aggregating $166.6 million.
Investment grade-rated tenants and their subsidiaries or affiliated companies attributed around 14% of rental revenues reaped from acquisitions during the fourth quarter.
In the October-December quarter, O closed the earlier announced acquisition of the land and real estate assets of Encore Boston Harbor Resort and Casino from Wynn Resorts, Limited for $1.7 billion.
Balance Sheet
Realty Income exited fourth-quarter 2022 with $1.7 billion of liquidity. This comprised cash and cash equivalents of $171.1 million and $1.5 billion of availability under its revolving credit facility after deducting $701.8 million in commercial paper borrowings.
Net debt to annualized pro forma adjusted EBITDAre was 5.3X, while the fixed charge coverage ratio was 5.2.
In the fourth quarter, the company raised $2.2 billion from the sale of its common stock at a weighted average price of $65.71 per share, mainly through its At-The-Market (ATM) program.
2023 Guidance
Realty Income issued its outlook for 2023
Management projects 2023 AFFO per share in the range of $3.93 to $4.03. The Zacks Consensus Estimate for the same is currently pegged at $4.06.
Full-year 2022 projections assume same-store rent growth of more than 1.25% and occupancy of more than 98%. O expects a full-year acquisition volume of more than $5.0 billion.
Realty Income currently carries a Zacks Rank #4 (Sell).
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 Other REITs
Simon Property Group, Inc.’s (SPG - Free Report) fourth-quarter 2022 comparable FFO per share of $3.15 exceeded the Zacks Consensus Estimate of $3.14. The figure compares favorably with the year-ago quarter’s $3.11.
This performance was backed by a better-than-expected top line. SPG’s results reflected a healthy operating performance and growth in occupancy levels. However, the retail REIT behemoth’s 2023 comparable FFO per share projection was lower than expected.
Federal Realty Investment Trust’s (FRT - Free Report) fourth-quarter 2022 FFO per share of $1.58 surpassed the Zacks Consensus Estimate of $1.57. This also compares favorably with the year-ago quarter’s tally of $1.47.
FRT’s results reflected healthy leasing activity and better-than-anticipated revenues. This retail REIT provided an upbeat outlook for 2023, with FFO per share projection exceeding the consensus mark.
Kimco Realty Corp.’s (KIM - Free Report) fourth-quarter 2022 FFO per share came in at 38 cents, missing the Zacks Consensus Estimate of 39 cents. The figure also compared unfavorably with the year-ago quarter’s 39 cents.
Though Kimco reported growth in revenues, a rise in interest expenses acted as a dampener. This retail REIT provided an initial outlook for 2023, which is below the consensus mark.
Note: Anything related to earnings presented in this write-up represents FFO — a widely used metric to gauge the performance of REITs.