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Realty Income's (O) Q1 FFO and Revenues Outpace Estimates

Realty Income Corporation’s O first-quarter 2022 adjusted funds from operations (AFFO) per share of 98 cents marginally surpassed the Zacks Consensus Estimate of 97 cents. The reported figure increased 14% from the prior-year quarter’s 86 cents.

Results reflect a better-than-expected improvement in revenues. The company benefited from expansionary effects and a healthy pipeline of opportunities globally.

Total revenues in the reported quarter came in at $807.3 million, exceeding the Zacks Consensus Estimate of $761.2 million. The top line also jumped 82.5% year over year.

Quarter in Detail

During first-quarter 2022, same-store rental revenues on 9,728 properties under lease increased 4.1% to $629.9 million from the prior-year period. Portfolio occupancy was 98.6%, with 156 properties available for lease or sale, expanding 60 basis points (bps) year over year. The company generated a rent recapture rate of 106.2% on re-leasing activity. Its leases have a weighted average remaining lease term of approximately 8.9 years.

During the reported quarter, Realty Income invested $1.56 billion in 213 properties and properties under development or expansion, including $796.4 million in Europe.

Around 26% of rental revenues from acquisitions during the March-ended quarter came in from investment grade-rated tenants, their subsidiaries or affiliated companies.

The company sold 34 properties, generating net proceeds of $122.2 million with a gain on sales of $10.2 million during the quarter.

During the first quarter, Realty Income entered an agreement with Wynn Resorts to acquire the Encore Boston Harbor Resort and Casino for $1.7 billion through a sale-leaseback transaction.

Also, the company carried out dispositions of 34 properties generating net sale proceeds of $122.2 million.

Balance Sheet

Realty Income exited the first quarter with cash and cash equivalents of $151.6 million, down from $258.6 million witnessed as of Dec 31, 2021.

As of Mar 31, 2022, the balance of borrowings outstanding under its revolving credit facility was $569.6 million. Also, as of that date, O had $950 million in commercial paper borrowings with maturity between April and December 2022.

Net debt to annualized adjusted EBITDAre was 5.4X, while the fixed charge coverage ratio was 5.6.

During the first quarter, the company raised $663 million from the sale of common stock at a weighted average price of $65.55 per share, mainly through its At-The-Market Program.


Management reaffirmed its 2022 guidance. The adjusted FFO per share is expected to lie between $3.84 and $3.97. The Zacks Consensus Estimate for the same is currently pegged at $3.94.

Management’s full-year 2022 projections assume same-store rent growth of 1.5% and occupancy of 98%. Full-year acquisition volume is projected to be more than $5 billion.

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 and EPS Surprise

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

Performance of Other REITs

Extra Space Storage Inc. EXR reported first-quarter 2022 core FFO per share of $2.01, beating the Zacks Consensus Estimate of $1.86. The figure also came in 34% higher than the prior-year quarter’s $1.50.

EXR’s results reflect strong top-line growth backed by higher average rates for new and existing customers and higher late fees, partly muted by lower occupancy. The company also raised its 2022 guidance.

Quarterly revenues of were $443.6 million, up 23.6% year over year. The top line also exceeded the Zacks Consensus Estimate of $432 million.

Extra Space Storage currently carries a Zacks Rank of 2 (Buy).

Boston Properties, Inc.’s BXP first-quarter 2022 FFO per share of $1.82 beat the Zacks Consensus Estimate of $1.74. The figure also compared favorably with the year-ago quarter’s $1.56.

BXP’s quarterly results reflect decent growth in lease revenues. Also, it experienced strong leasing activity during the quarter.

Quarterly revenues from lease came in at $718.1 million, up 4.7% from $685.8 million in the year-ago quarter. Moreover, the figure surpassed the consensus mark of $700.6 million.

Boston Properties currently carries a Zacks Rank of 3 (Hold).

Vornado Realty Trust’s VNO first-quarter 2022 FFO plus assumed conversions as adjusted per share of 79 cents topped the Zacks Consensus Estimate of 76 cents.

Vornado’s results display year-over-year growth in the same-store net operating income (NOI) in its New York, theMART and 555 California Street portfolios.

VNO’s total revenues came in at $442.1 million in the reported quarter, surpassing the Zacks Consensus Estimate of $422.3 million.
Further, on a year-over-year basis, both FFO per share and revenues grew 21.5% and 16.4%, respectively.

Vornado currently carries a Zacks Rank of 4 (Sell).

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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