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Realty Income (O) Closes Common Stock Offering, Raises $735M

Zacks Equity Research

Realty Income Corporation O recently closed a common stock offering of 11 million shares. Further, the underwriters have been granted a 30-day option to purchase up to an additional 1.65 million common shares.The company raised $735 million in net proceeds from the offering. This is after considering underwriting discounts and offering expenses payable by the company.

The share offering was announced on May 6 and the company priced the offering at $69.25 per common share.

It plans to use the net proceeds to repay all or portion of outstanding debt under its $3-billion unsecured revolving credit facility. Remaining proceeds are anticipated to be used for funding potential investment opportunities along with other general corporate purposes.

The common stock offering is a strategic fit as it boosts the company's financial flexibility and helps reduce financial obligations efficiently. Moreover, it provides ample scope for deploying capital in long-term growth opportunities and rewarding higher returns to stockholders, at the same time.

Further, it helps the company maintain a conservative capital structure and take advantage of its accessibility to attractively priced equity. Proceeds from the stock offering are anticipated to improve liquidity and reduce Realty Income’s leverage.

Notably, the company remains focused on external growth measures to drive long-term value. Continuing with this strategy, in first-quarter 2019, Realty Income invested $519.5 million in 105 new properties and properties under development or expansion.

Additionally, it posted first-quarter 2019 adjusted funds from operations (FFO) per share of 82 cents, outpacing the Zacks Consensus Estimate of 80 cents. The reported figure also came in 3.8% higher than the prior-year quarter’s reported tally of 79 cents.

Shares of this Zacks #2 (Buy) Ranked company have outperformed its industry over the past year, gaining 27.1% compared to the industry’s rally of 9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The trend in estimate revisions of the current-year FFO per share indicates an impressive outlook for the company. In fact, the stock has seen the Zacks Consensus Estimate for current-year FFO per share being revised marginally upward in a month’s time.

Other Key Picks

American Assets Trust, Inc’s AAT FFO per share estimates for the current year have been revised 1.4% upward in the past 60 days. Currently, it carries a Zacks Rank of 2.

Kimco Realty Corporation’s KIM FFO per share estimate for the ongoing year remained unchanged at $1.46 over the past 30 days. The stock carries a Zacks Rank of 2, at present.

STOR Capital Corporation’s STOR 2019 FFO per share estimate remained unrevised at $1.88 over the past 30 days. It carries a Zacks Rank of 2, currently.

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