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Realty Income (O) Q1 FFO and Revenues Surpass Estimates

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Realty Income Corporation’s (O - Free Report) first-quarter 2020 adjusted funds from operations (AFFO) per share of 88 cents surpassed the Zacks Consensus Estimate of 85 cents. The reported figure is also up 7.3% from the prior-year quarter’s 82 cents.

Results were driven by improvement in same-store rent and healthy occupancy level, which aided top-line expansion.

Total revenues for the reported quarter came in at $414.3 million, up 16.9% year over year. The revenue figure also exceeded the Zacks Consensus Estimate of $412.1 million.

The company also apprised of its rental receipts for April, with 82.9% of the contractual rent collected for the month across its total portfolio. It has collected 82.9% of contractual rent due for April from the top 20 tenants and 99.9% of contractual rent for the month from its investment-grade tenants.

Quarter in Detail

During first-quarter 2020, same-store rents on 5,535 properties under lease inched up 0.2% to $321.5 million from the prior-year quarter. Portfolio occupancy of 98.5% as of Mar 31, 2020, expanded 20 basis points year over year. Further, the company generated a rent recapture rate of 99% on re-leasing activity.

During the reported quarter, Realty Income invested $486 million in 65 properties and properties under development or expansion. This also includes $165.6 million in four properties in the U.K.

Around 36% of the rental revenues from acquisitions reported during the quarter came in from investment grade-rated tenants, their subsidiaries or affiliated companies.

The company sold 17 properties, generating net proceeds of $126.2 million, with a gain on sales of $38.5 million, during the January-March period.

Balance Sheet

Realty Income exited first-quarter 2020 with cash and cash equivalents of $41.8 million, down from the $54 million witnessed at the end of 2019. Furthermore, the company raised $752.4 million from the sale of common stock, at a weighted average price of $77.37 per share, during the quarter.

The company also completed the early redemption of its $250 million 5.750% notes due on January 2021 in the first quarter. This resulted in a $9.8-million loss on extinguishment of debt.

Moreover, the company has a $3-billion unsecured revolving credit facility.The revolving credit facility also has a $1-billion expansion feature. As of Mar 31, 2020, the company had balance of borrowings outstanding under its revolving credit facility of $615.2 million.

However, as a precautionary measure against the uncertainties prevailing due to the coronavirus pandemic, on Apr 9, the company raised an additional $1.2 billion on its credit facility to increase its cash position to $1.25 billion.

Outlook

In light of the coronavirus pandemic, the company withdrew its 2020 guidance on Apr 9. The company had earlier projected 2020 adjusted FFO per share of $3.50-$3.56, indicating annual growth of 5.4-7.2%. It is now of the opinion to not provide a revised guidance for the year during these uncertain times.

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 and EPS Surprise

Realty Income Corporation price-consensus-eps-surprise-chart | Realty Income Corporation Quote

We, now, look forward to the earnings releases of other REITs likeInnovative Industrial Properties, Inc. (IIPR - Free Report) , Welltower Inc. (WELL - Free Report) and Extra Space Storage Inc. (EXR - Free Report) , all of which are slated to report quarterly numbers on May 6

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.

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