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Realty Income's (O) April and May Acquisitions Reach $2.6B
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Realty Income Corporation (O - Free Report) , a prominent retail REIT, has provided an update on its recent property investments, capital raising and liquidity.
In April and May 2023, the company invested around $2.6 billion in properties and properties under development or expansion, with an initial weighted average cash lease yield of approximately 6.8%. These investments are likely to contribute to the company's solid performance and growth strategy.
On the liquidity front, Realty Income noted that as of Jun 26, 2023, it had a cash and cash equivalents balance of approximately $278.8 million, including funds denominated in Sterling and Euro. The company also had outstanding borrowings under its revolving credit facility amounting to $1.6 billion and outstanding borrowings under its commercial paper programs totaling $1.5 billion.
Regarding its capital raising, Realty Income disclosed that under its at-the-market (ATM) program, there were 39.4 million shares of the company’s common stock subject to forward sale agreements as of Jun 26, 2023. This denoted estimated net proceeds of about $2.4 billion that had been executed but not settled.
Since the beginning of the year through Jun 26, 2023, Realty Income settled around 12.7 million shares of common stock previously sold under forward sale agreements through its ATM program, generating approximately $0.8 billion in net proceeds. As of the same date, O had 25.3 million shares available for future issuance under its ATM program.
Realty Income has been actively pursuing external growth opportunities through accretive acquisitions. In the first quarter of 2023, the company invested $1.7 billion in 339 properties and properties under development or expansion, both in the United States and Europe.
Realty Income is well-poised to ride the growth curve with a diversified tenant base and top industries selling essential goods and services. This retail REIT derives the majority of its annualized contractual rents from tenants with a service, non-discretionary and/or a low-price-point component to their business, shielding it from economic downturns. Moreover, accretive acquisitions continue to drive external growth for Realty Income, which recently announced its 121st dividend increase since its listing on the NYSE in 1994.
However, Realty Income has substantial exposure to single-tenant assets, which could be affected by economic uncertainties and consumer spending patterns. Additionally, the current macroeconomic environment, characterized by high interest rates, may lead to increased interest expenses for the company.
To address these challenges, Realty Income remains committed to improving its balance-sheet strength and boosting liquidity. By maintaining a strong financial position, the company can navigate potential headwinds and take advantage of future investment opportunities.
Shares of this Zacks Rank #3 (Hold) company have risen 1.2% so far in the month, underperforming its industry's growth of 4.7%.
The Zacks Consensus Estimate for Kite Realty’s 2023 FFO per share has been revised 1% north over the past month to $1.97.
The Zacks Consensus Estimate for Saul Centers’ 2023 FFO per share has been revised 1.3% north over the past two months to $3.05.
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.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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Realty Income's (O) April and May Acquisitions Reach $2.6B
Realty Income Corporation (O - Free Report) , a prominent retail REIT, has provided an update on its recent property investments, capital raising and liquidity.
In April and May 2023, the company invested around $2.6 billion in properties and properties under development or expansion, with an initial weighted average cash lease yield of approximately 6.8%. These investments are likely to contribute to the company's solid performance and growth strategy.
On the liquidity front, Realty Income noted that as of Jun 26, 2023, it had a cash and cash equivalents balance of approximately $278.8 million, including funds denominated in Sterling and Euro. The company also had outstanding borrowings under its revolving credit facility amounting to $1.6 billion and outstanding borrowings under its commercial paper programs totaling $1.5 billion.
Regarding its capital raising, Realty Income disclosed that under its at-the-market (ATM) program, there were 39.4 million shares of the company’s common stock subject to forward sale agreements as of Jun 26, 2023. This denoted estimated net proceeds of about $2.4 billion that had been executed but not settled.
Since the beginning of the year through Jun 26, 2023, Realty Income settled around 12.7 million shares of common stock previously sold under forward sale agreements through its ATM program, generating approximately $0.8 billion in net proceeds. As of the same date, O had 25.3 million shares available for future issuance under its ATM program.
Realty Income has been actively pursuing external growth opportunities through accretive acquisitions. In the first quarter of 2023, the company invested $1.7 billion in 339 properties and properties under development or expansion, both in the United States and Europe.
Realty Income is well-poised to ride the growth curve with a diversified tenant base and top industries selling essential goods and services. This retail REIT derives the majority of its annualized contractual rents from tenants with a service, non-discretionary and/or a low-price-point component to their business, shielding it from economic downturns. Moreover, accretive acquisitions continue to drive external growth for Realty Income, which recently announced its 121st dividend increase since its listing on the NYSE in 1994.
However, Realty Income has substantial exposure to single-tenant assets, which could be affected by economic uncertainties and consumer spending patterns. Additionally, the current macroeconomic environment, characterized by high interest rates, may lead to increased interest expenses for the company.
To address these challenges, Realty Income remains committed to improving its balance-sheet strength and boosting liquidity. By maintaining a strong financial position, the company can navigate potential headwinds and take advantage of future investment opportunities.
Shares of this Zacks Rank #3 (Hold) company have risen 1.2% so far in the month, underperforming its industry's growth of 4.7%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the retail REIT sector are Kite Realty Group Trust (KRG - Free Report) and Saul Centers (BFS - Free Report) , carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Kite Realty’s 2023 FFO per share has been revised 1% north over the past month to $1.97.
The Zacks Consensus Estimate for Saul Centers’ 2023 FFO per share has been revised 1.3% north over the past two months to $3.05.
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.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.