-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EB9MwQ2NprEQjgqmbWYU8RhM0tTY6tRNnAaB1qYI6awXaq1BfUkcpRSLcj1GXroO AH6CWLEp757KCAv8xBH2yQ== 0000726728-96-000009.txt : 19960322 0000726728-96-000009.hdr.sgml : 19960322 ACCESSION NUMBER: 0000726728-96-000009 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960321 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: REALTY INCOME CORP CENTRAL INDEX KEY: 0000726728 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 330580106 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13374 FILM NUMBER: 96536947 BUSINESS ADDRESS: STREET 1: 220 W CREST ST CITY: ESCONDIDO STATE: CA ZIP: 92025 BUSINESS PHONE: 6197412111 MAIL ADDRESS: STREET 1: 220 WEST CREST ST CITY: ESCONDIDO STATE: CA ZIP: 92025 10-K 1 (Note: WORD for DOS; Courier 12; 1" margins) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K ========= ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Year Ended December 31, 1995 Commission File Number 1-13318 REALTY INCOME CORPORATION ------------------------- (Exact name of registrant as specified in its charter) Delaware 33-0580106 -------- ---------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 220 West Crest Street, Escondido, California 92025 --------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (619)741-2111 ------------- Securities registered pursuant to Section 12 (b) of the Act: Name of Each Exchange Title of Each Class On Which Registered - ----------------------------------- ----------------------- Common Stock, $1.00 Par Value New York Stock Exchange Variable Rate Senior Notes Due 2001 New York Stock Exchange - ----------------------------------- ----------------------- Securities registered pursuant to Section 12 (g) of the Act: None ---- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Continued Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] At March 19, 1996 the aggregate market value of the Registrant's shares of common stock, $1.00 par value, held by non-affiliates of the Registrant was $466,043,674, at the New York Stock Exchange closing price of $21.125. There were 22,976,237 shares of common stock outstanding at March 19, 1996. Documents incorporated by reference: Part III, Item 10, 11, 12 and 13 are incorporated by reference to the definitive proxy statement for Realty Income Corporation's Annual Meeting to be held on May 14, 1996, to be filed pursuant to Regulation 14A. Page 1 REALTY INCOME CORPORATION Index To Form 10-K ================== Page PART I ==== Item 1: Business......................................... 3 Item 2: Properties....................................... 22 Item 3: Legal Proceedings................................ 23 Item 4: Submission of Matters to a Vote of Security Holders......................... 23 PART II Item 5: Market for the Registrant's Common Equity and Related Stockholder Matters........... 23 Item 6: Selected Financial Data.......................... 25 Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations....................................... 26 Item 8: Financial Statements and Supplementary Data...... 39 Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...........184 PART III Item 10: Directors and Executive Officers of the Registrant................................184 Item 11: Executive Compensation...........................184 Item 12: Security Ownership of Certain Beneficial Owners and Management.................184 Item 13: Certain Relationships and Related Transactions.....................................184 PART IV Item 14: Exhibits, Financial Statement Schedules and Reports on Form 8-K..........................185 SIGNATURES....................................................188 EXHIBIT INDEX.................................................190 Page 2 PART I ====== ITEM 1: BUSINESS - ----------------- THE COMPANY =========== Realty Income Corporation ("Realty Income" or the "Company") is a fully integrated, self-administered and self-managed Real Estate Investment Trust ("REIT") and the nation's largest publicly-traded owner of freestanding, single-tenant, retail properties diversified geographically and by industry and operated under triple-net lease agreements. As of February 1, 1996, the Company owned a diversified portfolio of 686 properties located in 42 states with over 4.6 million square feet of leasable space. Over 99% of the Company's properties were leased as of February 1, 1996. Unless otherwise indicated, information regarding the Company's properties is as of February 1, 1996. Realty Income adheres to a focused strategy of acquiring freestanding, single-tenant, retail properties leased to national and regional retail chains under long-term, triple-net lease agreements. The Company typically acquires, and then leases back, retail store locations from retail chain store operators, providing capital to the operators for continued expansion and other purposes. The Company's triple-net lease agreements generally are for initial terms of 15 to 25 years, require the tenant to pay a minimum monthly rent and all property operating expenses (taxes, insurance and maintenance), and provide for future rent increases based on increases in the consumer price index or additional rent calculated as a percentage of the tenant's gross sales above a specified level. Since 1970, Realty Income has acquired and leased back to national and regional retail chains over 630 properties (including approximately 20 properties that have been sold) and has collected in excess of 98% of the contractual rent obligations on those properties. Realty Income believes that the long-term ownership of an actively managed, diversified portfolio of retail properties leased under long-term, triple-net lease agreements will produce consistent, predictable income and the potential for long-term capital appreciation. Management believes that long-term leases, coupled with tenants assuming responsibility for property expenses under the triple-net lease structure, generally produce a more predictable income stream than many other types of real estate portfolios. As of February 1, 1996, the Company's single-tenant properties were leased pursuant to leases with an average remaining term (excluding extension options) of approximately 9.2 years. See "Properties." Page 3 The Company was formed on September 9, 1993 in the State of Delaware. Realty Income commenced operations as a REIT on August 15, 1994 through the merger of 25 public and private real estate limited partnerships with and into the Company (the "Consolidation"). Each of the partnerships was formed between 1970 and 1989 for the purpose of acquiring and managing long-term, triple-net leased properties. The partnerships historically made regular monthly cash distributions to investors. Realty Income pays a regular monthly distribution to its stockholders. The Company is a fully integrated real estate company with in-house acquisition, leasing, legal, financial underwriting, portfolio management and capital markets expertise. The seven senior officers of the Company, who have each managed the Company's properties and operations for between five and 26 years, owned approximately 3.9% of the Company's outstanding common stock, par value $1.00 per share (the "Common Stock") as of March 15, 1996. Realty Income has 34 employees as of March 1, 1996. RECENT DEVELOPMENTS =================== Since the Consolidation, the Company has implemented its growth plan, which is intended to increase the Company's revenue and funds from operations ("FFO") per share. FFO is defined in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. As part of its growth plan, from the date of the Consolidation through February 1, 1996, the Company acquired 63 additional triple-net leased retail properties with an aggregate initial annual contractual base rent of approximately $7.9 million. INCREASE IN MONTHLY DISTRIBUTION. In August 1995, the Company increased its monthly distribution to $0.155 per share from $0.15 per share, representing an increase of 3.3%. The Company has paid distributions of $0.155 per share in August 1995 through February 1996. The February 1996 distribution was paid on January 26, 1996 and a special distribution of $0.23 per share was also paid in January 1996. The monthly distribution of $0.155 per share represents a current annualized distribution of $1.86 per share, and an annualized distribution yield of approximately 8.6% based on the last reported sale price of the Company's Common Stock on the New York Stock Exchange ("NYSE") on February 27, 1996. Although the Company expects to continue its policy of paying monthly distributions, there can be no assurance that the current level of distributions will be maintained by the Company or as to the actual distribution yield for any future period. See "Distribution Policy." Page 4 MERGER OF THE ADVISOR COMPANY. Prior to August 17, 1995, the day-to-day operations of the Company were managed by R.I.C. Advisor, Inc. (the "Advisor Company") pursuant to an advisory agreement. In order to create a fully integrated company and more closely align the interests of management with the interests of the Company's stockholders, the Advisor Company was merged with and into Realty Income on August 17, 1995 (the "Merger"). Pursuant to the Agreement and Plan of Merger dated April 28, 1995 (the "Merger Agreement"), the outstanding shares of the Advisor Company's common stock were converted into 990,704 newly issued shares of Realty Income Common Stock. As a result of the Merger, the employees of the Advisor Company became employees of the Company, and the Company became a fully integrated, self-administered and self-managed REIT. ACQUISITION OF 63 TRIPLE-NET LEASED, RETAIL PROPERTIES. Since the Consolidation, the Company has increased the size of its portfolio through a strategic program of acquisitions. The Company has acquired 63 additional properties (the "New Properties"), and selectively sold five properties, increasing the number of properties in its portfolio by 9.2% from 628 properties at August 15, 1994 to 686 properties as of February 1, 1996. Of the New Properties, 61 were occupied as of February 1, 1996 and the remaining two were pre-leased and under construction pursuant to contracts under which the tenants have agreed to develop the properties (with development costs funded by the Company) and to begin paying rent when the premises open for business. The New Properties were acquired for an aggregate cost of approximately $70.7 million (including the estimated development costs of the two properties under construction), are located in 20 states, will contain approximately 655,900 leasable square feet and are 100% leased under triple-net leases, with an average initial lease term of 16.4 years. The weighted average annual unleveraged return on the cost of the New Properties (including the estimated cost of properties under construction) is estimated to be 11.3%, computed as estimated contractual net operating income (which in the case of a triple-net leased property is equal to the base rent or, in the case of properties under construction, the estimated base rent under the lease) for the first year of each lease, divided by total acquisition and estimated development costs. No assurance can be given that the actual return on the cost of the New Properties will not differ from the foregoing percentage. In addition to acquiring the New Properties, at February 1, 1996 the Company had entered into purchase agreements to acquire three additional properties for an aggregate cost of approximately $2.6 million. VARIABLE SENIOR NOTE REDEMPTION. On February 15, 1996, the Company announced its intent to redeem all of its outstanding variable rate senior notes due 2001 (the "Notes"). The Notes will be redeemed at par plus accrued interest to the date of redemption, which is scheduled for March 29, 1996. Page 5 $130 MILLION UNSECURED ACQUISITION CREDIT FACILITY. In November 1994, the Company obtained a $100 million, three-year, revolving, unsecured acquisition credit facility (the "Acquisition Credit Facility") from The Bank of New York, as agent, and several major U.S. and non-U.S. commercial banks. In December 1995, the Company negotiated several modifications to the credit facility including (i) an increase in borrowing capacity to $130 million from $100 million; (ii) a reduction in the initial interest rate to London Interbank Offered Rate ("LIBOR") plus 1.25% from LIBOR plus 1.375%; and (iii) an extension of the credit facility from November 1997 to November 1998. The Acquisition Credit Facility has been used to fund a portion of the property acquisitions completed since the Consolidation and is anticipated to continue to be used to acquire triple-net leased, retail properties. LISTING OF THE COMMON STOCK ON THE NYSE. The Common Stock was authorized for listing on the NYSE under the symbol "O" and commenced trading on the NYSE on October 18, 1994. BUSINESS OBJECTIVES AND STRATEGY ================================ GENERAL. The Company's primary business objective is to generate a consistent and predictable level of FFO per share and distributions to stockholders. Additionally, the Company generally will seek to increase FFO per share and distributions to stockholders through both internal and external growth, while also seeking to lower the ratio of distributions to stockholders as a percentage of FFO in order to allow internal cash flow to be used to fund additional acquisitions and for other corporate purposes. The Company pursues internal growth through (i) contractual rent increases on existing leases; (ii) rental increases at the termination of existing leases when market conditions permit; and (iii) the active management of the Company's property portfolio, including selective sales of properties. The Company generally pursues external growth through the acquisition of additional properties under long-term, triple-net lease agreements with initial contractual base rent which, at the time of acquisition, is in excess of the Company's estimated cost of capital. INVESTMENT PHILOSOPHY. Realty Income believes that the long-term ownership of an actively managed, diversified portfolio of retail properties under long-term, triple-net lease agreements should produce consistent, predictable income and the potential for long-term capital appreciation. Under a triple-net lease agreement, the tenant agrees to pay a minimum monthly rent and all property expenses (taxes, maintenance, and insurance) plus, typically, future rent increases based on increases in the consumer price index or additional rent calculated as a percentage of the tenant's gross sales above a specified level. Page 6 The Company believes that long-term leases, coupled with the tenants assuming responsibility for property expenses, produce a more predictable income stream than many other types of real estate portfolios, while continuing to offer the opportunity for capital appreciation. INVESTMENT STRATEGY. In identifying new properties for acquisition, Realty Income focuses on providing expansion capital to middle market retail chains by acquiring, then leasing back, their retail store locations. The Company classifies retail tenants into three categories: venture, middle market, and upper market. Venture companies are those which typically offer a new retail concept in one geographic region of the country and operate between five and 100 retail outlets. In general, these retail chains are thinly capitalized and are in the process of solving distribution, marketing, concept, geographic adaptation, and other problems associated with a new, growing company. Middle market retail chains are those which typically have 100 to 500 retail outlets, operations in more than one geographic region, success through one or more economic cycles, a proven, replicable concept, and an objective of further expansion. The upper market retail chains typically consist of companies with 500 or more stores which operate nationally in a mature retail concept. They generally have strong operating histories and access to several sources of capital. Realty Income focuses on acquiring properties leased to emerging, middle market retail chains which the Company believes are more attractive for investment because: (i) they generally have overcome many of the operational and managerial obstacles that tend to adversely affect venture retailers; (ii) they typically require capital to fund expansion but have more limited financing options compared to upper market retailers; (iii) historically, they generally have provided attractive risk-adjusted returns to the Company over time, since their financial strength has in many cases tended to improve as their businesses have matured; (iv) their relatively large size compared to venture retailers allows them to spread corporate expenses among a greater number of stores; and (v) compared to venture retailers, middle market retailers typically have the critical mass to survive if a number of locations have to be closed due to underperformance. ACQUISITION STRATEGY. Realty Income seeks to invest in industries that are dominated by independent local operators and in which several well organized regional and national chains are capturing market share through service, quality control, economies of scale, mass media advertising, and selection of prime retail locations. The Company executes its acquisition strategy by acting as a source of capital to regional and national retail chain stores in a variety of industries by acquiring, then leasing back, their retail store locations. Page 7 Relying on executives from its acquisitions, portfolio management, finance, accounting, operations, capital markets, and legal departments, the Company undertakes stringent research and analysis in identifying appropriate industries, tenants, and property locations for investment. In selecting real estate for potential investment, the Company generally will seek to acquire properties that have the following characteristics: * Freestanding, commercially zoned property with a single tenant; * Properties that are important retail locations for national and regional retail chains; * Properties that are located within attractive demographic areas relative to the business of their tenants, with high visibility and easy access to major thoroughfares; * Properties that can be purchased with the simultaneous execution or assumption of long-term, triple-net lease agreements, providing the opportunity for both current income and future rent increases based on increases in the consumer price index or through the payment of additional rent calculated as a percentage of the tenant's gross sales above a specified level; and * Properties that can be acquired at or below their appraised value at prices generally ranging from $300,000 to $10 million. PORTFOLIO MANAGEMENT STRATEGY. The active management of the property portfolio is an essential component of the Company's long-term strategy. The Company continually monitors its portfolio for changes that could affect the performance of the industries, tenants, and locations in which it has invested. Realty Income's executive committee meets at least monthly to review industry and tenant research, due diligence, property operations and portfolio management. This monitoring typically includes ongoing review and analysis of: (i) the performance of various tenant industries; (ii) the operation, management, business planning, and financial condition of the tenants; (iii) the health of the individual markets in which the Company owns properties, from both an economic and real estate standpoint; and (iv) the physical maintenance of the Company's individual properties. The portfolio is analyzed on an ongoing basis with a view towards optimizing performance and returns. While the Company generally intends to hold its triple-net leased properties for long-term investment, the Company believes that opportunities may exist to increase FFO through the active management of its portfolio of triple- net lease properties. The Company intends to pursue a strategy of identifying properties Page 8 that may be sold at attractive prices where the reinvestment of the sales proceeds is expected to generate a higher cash flow to the Company. While the Company intends to pursue such a strategy, it will only do so within the constraints of the rules regarding REIT status. CAPITAL STRATEGY. The Company utilizes its $130 million, unsecured Acquisition Credit Facility as a vehicle for the short-term financing of the acquisition of new properties. When outstanding borrowings under the Acquisition Credit Facility reach a certain level (generally in the range of $50 to $100 million), the Company intends to refinance those borrowings with the net proceeds of long-term or permanent financing, which may include the issuance of Common Stock, Preferred Stock or convertible Preferred Stock, debt securities or convertible debt securities. However, there can be no assurance that the Company will be able to effect any such refinancing or regarding the terms on which any such refinancing may be accomplished. The Company believes that it is best served by a conservative capital structure, with a majority of its capital consisting of equity. As of December 31, 1995, the Company's total indebtedness was approximately 4.9% of its total assets. COMPETITIVE STRATEGY. The Company believes that to utilize its investment philosophy and strategy most successfully, it must seek to maintain the following competitive strategy: * SIZE OF INVESTMENT PROPERTIES: The Company believes that smaller ($300,000 to $10,000,000) retail triple-net leased properties represent an attractive investment opportunity in today's real estate environment. Due to the complexities of acquiring and managing a large portfolio of relatively small assets, the Company believes that these types of properties have not experienced significant institutional participation or the corresponding yield reduction experienced by larger income producing properties. The Company believes the less intensive day to day property management required by triple-net lease agreements, coupled with the active management of a large portfolio of smaller properties by the Company, is an effective investment strategy. * INVESTMENT IN NEW INDUSTRIES: While specializing in smaller properties, the Company will seek to further diversify its portfolio among a variety of industries. The Company believes that diversification will allow it to invest in industries that are currently growing and have characteristics the Company finds potentially profitable. These characteristics include, but are not limited to, industries dominated by local operators where national and regional chain operators can gain substantial market share and dominance through more Page 9 efficient operations, as well as industries taking advantage of major demographic shifts in the population base. For example, in the early 1970s, Realty Income targeted the fast food industry to take advantage of the country's increasing desire to dine away from home, and in the early 1980s, it targeted the child day care industry, responding to the need for professional child care as more women entered the work force. * DIVERSIFICATION: Diversification of the portfolio by industry type, tenant and geographic location is key to the Company's objective of providing predictable investment results for its stockholders. As the Company expands it will seek to further diversify its portfolio. * MANAGEMENT SPECIALIZATION: The Company believes that its management's specialization in small properties operated under triple-net lease agreements is important to meeting its objectives. The Company plans to maintain this specialization and will seek to employ and train high quality professionals in this specialized area of real estate ownership, finance and management. * TECHNOLOGY: The Company intends to stay at the forefront of technology in its efforts to efficiently and economically carry out its operations. The Company maintains a sophisticated information system that allows it to analyze its portfolio's performance and actively manage its investments. In addition, the Company maintains record-keeping on an optical disc storage and retrieval system which gives it ready access to records on a cost efficient and timely basis. The Company believes that technology and information based systems will play an increasingly important role in its competitiveness as an investment manager and source of capital to a variety of industries and tenants. PROPERTIES ========== As of February 1, 1996, the Company owned 686 properties in 42 states consisting of 135 after-market automotive retail locations, 319 child care centers, 36 convenience stores, 4 home furnishings stores, 177 restaurant facilities and 15 other properties. Of the 686 properties, 627 or 91% are leased to national or regional retail chain operators; 35 or 5% are leased to franchisees of retail chain operators; 20 or 3% are leased to other tenant types; and four or less than 1% are available for lease. Over 97% of the properties were under triple-net lease agreements. Triple-net leases typically require the tenant to be responsible for substantially all property operating costs including property taxes, insurance, maintenance and structural repairs. Page 10 The Company's net-leased retail properties are primary retail locations of national and regional retail chain store operators. The properties average approximately 6,800 square feet of leasable retail space on approximately 42,400 square feet of land. Generally, buildings are single-story properties with adequate parking on site to accommodate peak retail traffic periods. The properties tend to be on major thoroughfares with relatively high traffic counts and adequate access, egress and proximity to a sufficient population base to constitute a sufficient market or trade area for the retailer's business. As of February 1, 1996, Realty Income owned a diversified portfolio of 686 properties in 42 states consisting of over 4.6 million square feet of leasable space. The following table sets forth certain geographic diversification information regarding these properties:
Total Number Approx. Percent of Leasable Annualized of Total Proper- Percent Square Base Annualized State ties Leased Feet Rent (1) Base Rent ============ ======= ======= ========= =========== ========= Alabama 4 100% 20,300 $ 160,000 0.3% Arizona 27 98 181,100 2,192,000 4.1 California 51 98 914,000 9,189,000 16.9 Colorado 38 100 222,600 2,686,000 4.9 Connecticut 3 100 7,100 160,000 0.3 Florida 40 100 298,600 2,967,000 5.5 Georgia 36 100 177,500 2,333,000 4.3 Idaho 11 100 52,000 653,000 1.2 Illinois 22 100 153,400 1,816,000 3.3 Indiana 20 100 89,800 1,315,000 2.4 Iowa 7 100 37,700 411,000 0.8 Kansas 13 100 80,500 900,000 1.8 Kentucky 10 100 30,600 727,000 1.3 Louisiana 2 100 10,700 126,000 0.2 Maryland 6 100 34,900 501,000 0.9 Massachusetts 4 100 20,900 431,000 0.8 Michigan 5 100 26,900 343,000 0.6 Minnesota 17 100 118,400 1,670,000 3.1 Mississippi 3 100 17,300 176,000 0.3 Missouri 26 100 161,200 1,906,000 3.5 Montana 1 100 5,400 71,000 0.1 Nebraska 8 100 47,100 509,000 0.9 Nevada 5 100 29,100 350,000 0.6 New Hampshire 1 100 6,400 119,000 0.2 New Jersey 3 67 32,300 344,000 0.6
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Total Number Approx. Percent of Leasable Annualized of Total Proper- Percent Square Base Annualized State ties Leased Feet Rent (1) Base Rent ============ ======= ======= ========= =========== ========= New Mexico 3 100 12,000 102,000 0.2 New York 4 100 24,100 453,000 0.8 North Carolina 18 100 77,100 1,154,000 2.1 Ohio 38 100 170,700 2,547,000 4.7 Oklahoma 9 100 60,200 538,000 1.0 Oregon 19 100 105,200 1,201,000 2.2 Pennsylvania 4 100 28,300 418,000 0.9 South Carolina 19 95 82,000 1,022,000 1.9 South Dakota 1 100 6,100 79,000 0.1 Tennessee 8 100 56,400 784,000 1.4 Texas 123 99 826,900 8,424,000 15.5 Utah 7 100 45,400 586,000 1.1 Virginia 12 100 67,000 886,000 1.6 Washington 41 100 246,900 2,920,000 5.5 West Virginia 1 100 4,600 58,000 0.1 Wisconsin 10 100 55,200 665,000 1.2 Wyoming 6 100 32,100 410,000 0.8 ------- ------- --------- ----------- --------- Total/Average 686 99% 4,676,000 $54,302,000 100.0% ======= ======= ========= =========== =========
(1) Does not include percentage rents (i.e., additional rent calculated as a percentage of the tenant's gross sales above a specified level), if any, that may be payable under leases covering certain of the properties. Annualized base rent is calculated by multiplying the monthly contractual base rent as of February 1, 1996 for each of the properties by 12. Page 12 The following table sets forth certain information regarding the Company's properties as of February 1, 1996, classified according to the business of the respective tenants:
Approx. Realty Total Total Income Approx. Annual- Loca- Owned Leasable ized Industry tions Loca- Square Base Tenant Segment (1) tions Feet Rent (2) ============== ============ ======= ====== ========= =========== AUTOMOTIVE - ---------- Discount Tire Parts 294 18 103,200 $ 1,133,000 Northern Automotive Parts 560 79 409,100 4,176,000 R&S Strauss Parts 107 2 31,200 431,000 Econo Lube N' Tune Service 214 2 5,600 155,000 Jiffy Lube Service 1,212 24 57,000 1,401,000 Q Lube Service 460 4 7,600 177,000 Speedy Muffler King Service 1,032 4 20,200 311,000 Other Automotive -- 2 6,500 89,000 ------ --------- ----------- TOTAL AUTOMOTIVE 135 640,400 7,873,000 CHILD CARE - ---------- Children's World Learning Centers Child Care 500 134 964,000 13,272,000 KinderCare Learning Centers Child Care 1,150 13 79,800 1,055,000 La Petite Academy Child Care 770 171 977,300 8,728,000 Other Child Care -- 1 4,200 -- ------ --------- ----------- TOTAL CHILD CARE 319 2,025,300 23,055,000 CONVENIENCE STORES - ------------------ 7-ELEVEN Convenience 15,000 3 9,700 235,000 Dairy Mart Convenience 871 18 53,600 1,120,000 The Pantry Convenience 391 14 34,400 1,333,000 Other Convenience -- 1 2,100 31,000 ------ --------- ----------- TOTAL CONVENIENCE STORES 36 99,800 2,719,000
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Approx. Realty Total Total Income Approx. Annual- Loca- Owned Leasable ized Industry tions Loca- Square Base Tenant Segment (1) tions Feet Rent (2) ============== ============ ======= ====== ========= =========== HOME FURNISHINGS - ---------------- Levitz Home Furnishings 135 4 376,400 2,496,000 ------ --------- ----------- TOTAL HOME FURNISHINGS 4 376,400 2,496,000 RESTAURANTS - ----------- Don Pablo's Dinner House 46 7 60,700 592,000 Carver's Dinner House 94 2 18,500 330,000 Other Dinner House -- 15 124,700 1,195,000 Golden Corral Family 448 90 528,700 6,956,000 Sizzler Family 597 7 37,600 834,000 Other Family -- 4 23,900 291,000 Hardees Fast Food 3,870 3 10,300 108,000 Taco Bell Fast Food 4,623 24 54,100 1,488,000 Whataburger Fast Food 517 9 23,000 616,000 Other Fast Food -- 16 45,200 950,000 ------ --------- ----------- TOTAL RESTAURANTS 177 926,700 13,360,000 TOTAL OTHER Miscellaneous 15 607,400 4,799,000 ------ --------- ----------- Total 686 4,676,000 $54,302,000 ====== ========= ===========
(1) Approximate total number of retail locations operated by each tenant (including both owned and franchised locations), based on information provided to the Company by the respective tenants. (2) Does not include percentage rents (i.e., additional rent calculated as a percentage of the tenant's gross sales above a specified level), if any, that may be payable under leases covering certain of the properties. Annualized base rent is calculated by multiplying the monthly contractual base rent as of February 1, 1996 for each of the properties by 12. Of the 686 properties, 676 are single-tenant properties with the remaining properties being multi-tenant properties. As of Page 14 February 1, 1996, 672 or over 99% of the single-tenant properties were triple-net leased pursuant to leases with an average remaining lease term (excluding extension options) of approximately 9.2 years. The following table sets forth certain information regarding the timing of lease expirations on the Company's 672 triple-net leased, single tenant retail properties:
Percent Number of of Total Leases Annualized Annualized Year Expiring Base Rent (2) Base Rent ======== ========= ============= ========== 1996 15 $ 572,000 1.1% 1997 15 587,000 1.2 1998 4 168,000 0.3 1999 20 895,000 1.8 2000 27 1,322,000 2.6 2001 46 3,599,000 7.2 2002 74 5,868,000 11.6 2003 70 5,203,000 10.3 2004 78 6,241,000 12.4 2005 88 6,121,000 12.2 2006 31 2,589,000 5.1 2007 78 4,382,000 8.7 2008 41 3,384,000 6.7 2009 11 714,000 1.4 2010 34 2,710,000 5.4 2011 11 926,000 1.8 2012 1 135,000 0.3 2013 0 -- -- 2014 2 265,000 0.5 2015 24 4,624,000 9.2 2016 1 64,000 0.1 2017 0 -- -- 2018 1 39,000 0.1 --------- ------------- ---------- Total 672 (1) $50,408,000 100.0% ========= ============= ==========
(1) The table does not include ten multi-tenant properties and four vacant, unleased properties owned by the Company. The average remaining lease term for all leases on the Company's properties, excluding the multi-tenant properties, is approximately 9.2 years. The lease expirations for two properties under construction are based on the estimated date of completion of such properties. Page 15 (2) Does not include percentage rents (i.e., additional rent calculated as a percentage of the tenant's gross sales above a specified level), if any, that may be payable under leases covering certain of the properties. Annualized base rent is calculated by multiplying the monthly contractual base rent as of February 1, 1996 for each of the properties by 12. DESCRIPTION OF LEASING STRUCTURE. As of February 1, 1996, over 97% of the Company's properties were leased pursuant to triple-net leases. In most cases, the leases are for initial terms of from 15 to 20 years and the tenant has an option to extend the initial term. The leases generally provide for a minimum base rent plus future increases based on increases in the consumer price index or additional rent based upon the tenant's gross sales above a specified level (i.e., percentage rent). Where leases provide for rent increases based on increases in the consumer price index, such increases permanently become part of the base rent. Where leases provide for percentage rent, this additional rent is typically payable only if the tenant's gross sales for a given period (usually one year) exceed a specified level, and then is typically calculated as a percentage of only the amount of gross sales in excess of such level. In general, the leases require the tenant to pay all real property taxes, insurance, and expenses of maintaining the property. Description of Industries - ------------------------- The Company's investments in properties at February 1, 1996 were concentrated in five major industries: after-market automotive parts and service stores, child care, convenience stores, home furnishings stores and restaurants. In addition, the Company owns three mixed-use light industrial business parks. THE AFTER-MARKET AUTOMOTIVE PARTS AND SERVICE INDUSTRY AND TENANTS. The motor vehicle and parts after- market industry is comprised of various parts producing firms and retail outlets providing parts, service and repair to automobiles throughout the country. The Company has selectively invested in the following sectors of the after-market automotive industry: auto parts and accessories stores, lubrication services and tire stores. Auto Parts and Accessories. The Company believes Northern Automotive is one of the largest operators of retail after-market auto parts stores in the nation based on number of stores. The Company began investing in Northern Automotive stores in 1987 and currently owns 79 Northern Automotive properties located in 14 states. Based on information provided by Northern Automotive, the Company believes it is the largest owner of Northern Automotive properties. Page 16 Lubrication Services. Based upon industry reports, the Company believes that the quick lube market is a growing segment of the motor oil business. The Company began investing in Jiffy Lube International, Inc. ("Jiffy Lube") in 1985 and currently owns 24 Jiffy Lube locations in eight states. Tire Stores. With approximately 294 outlets as of February 1, 1996, the Company believes Discount Tire Stores is one of the largest independent retail tire sales operation in the nation. The Company began investing in Discount Tire Stores in 1990 and currently owns 18 Discount Tire Stores properties located in five states. THE CHILD CARE INDUSTRY AND TENANTS. According to the U.S. Bureau of Labor Statistics, the number of children under age six with mothers in the labor force grew from 6.5 million in 1980 to 9.6 million in 1993. Fueled by the increase in the number of women in the workplace, child care has grown into a national industry. The Company believes that child day care remains a highly fragmented industry, with only three chains operating in excess of 500 centers. The Company's child care properties are geographically diversified, with properties leased to the three largest operators (based on number of locations) of child day care centers in the United States: La Petite Academy in 27 states, Children's World Learning Centers in 18 states, and KinderCare Learning Centers in eight states. THE CONVENIENCE STORE INDUSTRY AND TENANTS. As the supermarket replaced the neighborhood grocery store, the convenience store industry emerged to provide a convenient neighborhood location for the purchase of a limited selection of high use items. The industry today is adapting to a new concept with the combination of a gas station and a traditional convenience store. The integration of the two businesses on one location gives newer convenience stores a competitive advantage over older, single-concept stores. As a result, traditional convenience store chains are beginning to sell gas at their locations while certain petroleum companies are adding convenience stores to their traditional gas stations. The Company currently owns 36 convenience store properties with 18 leased to Dairy Mart Convenience Stores, Inc., 14 leased to The Pantry, three operated as 7-ELEVEN'S, and one to another tenant. The Company is actively seeking to expand its participation in the convenience store industry through additional acquisitions. THE HOME FURNISHINGS INDUSTRY AND TENANT. According to the U.S. Bureau of the Census Current Business Reports, the U.S. furniture stores total estimated retail sales were approximately Page 17 $17.7 billion for the first six months of 1995, a 6.9% increase over estimated retail sales for the last six months of 1994. The industry is segmented into a number of different niches that compete with one another. The Company believes the largest segments include conventional furniture stores, specialty stores, specialty furniture stores, manufacturers' gallery stores, vertically integrated furniture stores, department stores, general merchandise discounters, and catalog retailers. The Company believes that historically, the conventional furniture store segment was dominated by numerous local, independent retailers operating in a fragmented market. The Company believes that in recent years regional and national retail chains have been taking market share from independent operators through more efficient operations, distribution, marketing, advertising and lower prices. The Company owns four home furnishing retail store properties which are leased to Levitz Furniture Corporation, one of the nation's largest home furnishings retailers. THE RESTAURANT INDUSTRY AND TENANTS. According to industry estimates cited in Standard & Poor's Industry Surveys--Leisure Time Basic Analysis, spending for food prepared outside the home has grown steadily for most of the past two decades. The Company currently owns a total of 177 restaurant properties, 133 of them leased to five leading restaurant chains. All five of the Company's major restaurant tenants, Golden Corral, Taco Bell, Sizzler, Hardees and Whataburger, were ranked by NATION'S RESTAURANT NEWS among the top 100 restaurant companies for 1994 based on sales volume. Matters Pertaining to Certain Properties and Tenants - ---------------------------------------------------- As of February 1, 1996, the Company's four largest tenants were Children's World Learning Centers, La Petite Academy, Golden Corral and Northern Automotive, which accounted for approximately 25.6%, 18.0%, 12.8% and 9.1%, respectively, of the Company's rental revenue for the year ended December 31, 1995. Four of the Company's properties were vacant as of February 1, 1996 and available for lease. Three of the vacant properties were previously leased to restaurant operators. One of the vacant properties was formerly leased to a child care operator. As of February 1, 1996, 16 of the Company's properties which were under lease, were vacant and available for sublease by the tenant. Fifteen of these properties (nine restaurants, three automotive stores, two day care and one medical building) were available for sublease and had tenants who were current with their rent and other lease obligations. The other property, a Page 18 restaurant, has a tenant who is delinquent with respect to rent payments. As of February 1, 1996, 17 of the Company's properties had been sublet to tenants in different industries than the original tenant. At February 1, 1996, all of these tenants were current with their rent and other lease obligations. For a nine month period in 1992, the Company granted temporary rent concessions to Northern Automotive with respect to certain of its leases. Northern Automotive resumed paying full rent on all of its leases in December 1992 and is currently repaying the concessions previously granted. Development of Certain Properties - --------------------------------- Of the 63 New Properties acquired by the Company since the Consolidation, 53 were completed properties occupied by the tenant at the time of acquisition while the remaining 10 properties were parcels of undeveloped land acquired for development. In the case of undeveloped land, the Company typically enters into an agreement with a prospective tenant pursuant to which the tenant retains a contractor to construct the improvements on the property and the Company funds the costs of such development. The tenant is contractually obligated to complete the construction on a timely basis, generally within eight months after the Company purchases the land, to pay construction cost overruns to the extent they exceed the construction budget by more than 5% and, in some cases, to obtain a completion bond. The Company also enters into a lease with the prospective tenant at the time the Company purchases the land, which generally requires that the tenant begin paying base rent, calculated as a percentage of the Company's acquisition cost for the property, including construction costs and capitalized interest, when the premises open for business. As of February 1, 1996, eight of the Company's leased and operating New Properties had been developed through Company funding and the Company was funding the development of two additional New Properties. The total acquisition and estimated development costs for these two properties is $1.5 million, of which $1.0 million had not been funded as of February 1, 1996. The Company will continue to seek to acquire land for development under similar arrangements. DISTRIBUTION POLICY =================== Distributions are paid to the Company's stockholders on a monthly basis if, as and when declared by the Company's Board of Directors. In order to maintain its tax status as a REIT, the Company is generally required to distribute annually to its Page 19 stockholders at least 95% of its taxable income (determined without regard to the deduction for dividends paid and by excluding any net capital gain). The Company intends to make distributions to its stockholders which are sufficient to meet this requirement. Future distributions by the Company will be at the discretion of its Board of Directors and will depend on, among other things, its results of operations, financial condition and capital requirements, the annual distribution requirements under the REIT provisions of the Internal Revenue Code of 1986, as amended (the "Code"), its debt service requirements and such other factors as the Board of Directors may deem relevant. In addition, the Acquisition Credit Facility contains financial covenants which could limit the amount of distributions payable by the Company in the event of a deterioration in the results of operations or financial condition of the Company, and which prohibit the payment of distributions on the Common Stock in the event that the Company fails to pay when due (subject to any applicable grace period) any principal of or interest on borrowings under the Acquisition Credit Facility. Distributions by the Company to the extent of its current and accumulated earnings and profits for federal income tax purposes generally will be taxable to stockholders as ordinary income. Distributions in excess of such earnings and profits generally will be treated as a non-taxable reduction in the stockholders basis in its stock to the extent of such basis, and thereafter as a gain from the sale of such stock. Approximately 4.7% of the distributions made or deemed to have been made in 1995 were classified as a return of capital for federal income tax purposes, the Company is unable to predict the portion of 1996 or future distributions which may be classified as a return of capital since such amount depends on the Company's taxable income for the entire year. In connection with the Merger, the Company was treated as having acquired the accumulated earnings and profits of the Advisor Company (the "Acquired Earnings"). In order to maintain its status as a REIT, the Company was required to make or be deemed to have made distributions sufficient to eliminate the Acquired Earnings prior to December 31, 1995. To meet this requirement, the Company declared in December 1995 a $0.155 per share regular distribution paid on January 15, 1996, a $0.155 per share regular distribution paid on January 26, 1996 (in lieu of the regular February distribution) and a $0.23 per share special distribution paid on January 11, 1996. Page 20 OTHER ITEMS =========== COMPETITION FOR ACQUISITION OF REAL ESTATE. The Company will face competition in the acquisition, operation and sale of its properties. Such competition can be expected from other businesses, individuals, fiduciary accounts and plans and other entities engaged in real estate investment. Some of the Company's competitors are larger and have greater financial resources than the Company. This competition may result in a higher cost for properties the Company wishes to purchase. The tenants leasing the Company's properties generally face significant competition from other operators. This may result in an adverse impact on that portion, if any, of the rental stream to be paid to the Company based on a tenant's revenues and may also adversely impact the tenants' results of operations or financial condition. ENVIRONMENTAL MATTERS. Investments in real property create a potential for environmental liability on the part of the owner of such property for contamination resulting from the presence or discharge of hazardous substances on the property. Such liability may be imposed without regard to knowledge of, or the timing, cause or person responsible for the release of such substances onto the property. The Company believes that its properties are in compliance in all material respects with all federal, state and local laws, ordinances and regulations regarding hazardous or toxic substances or petroleum products. The Company has not been notified by any governmental authority, and is not otherwise aware, of any material noncompliance, liability or claim relating to hazardous or toxic substances or petroleum products in connection with any of its present properties. Moreover, the tenants are required to operate in compliance with all applicable federal, state and local laws and regulations. Nevertheless, if environmental contamination should exist, the Company could be subject to strict liability by virtue of its ownership interest. TAXATION OF THE COMPANY. The Company has elected to be taxed as a REIT under the Code, commencing with its taxable year ended December 31, 1994. As long as the Company meets the requirements under the Code for qualification as a REIT each year, the Company will be entitled to a deduction when calculating its taxable income for dividends paid to its stockholders. For the Company to qualify as a REIT, however, certain detailed technical requirements must be met (including certain income, asset and stock ownership tests) under Code provisions for which, in many cases, there are only limited judicial or administrative interpretations. Although the Company intends to operate so that it will continue to qualify as a REIT, the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations and the possibility Page 21 of future changes in the Company's circumstances preclude any assurance that the Company will so qualify in any year. For any taxable year that the Company fails to qualify as a REIT, it would not be entitled to a deduction for dividends paid to its stockholders in calculating its taxable income. Consequently, distributions to stockholders would be substantially reduced and could be eliminated because of the Company's increased tax liability. Should the Company's qualification as a REIT terminate, the Company may not be able to elect to be treated as a REIT for the subsequent five-year period, which would substantially reduce and could eliminate distributions to stockholders for the years involved. EFFECT OF DISTRIBUTION REQUIREMENTS. To maintain its status as a REIT for federal income tax purposes, the Company generally is required each year to distribute to its stockholders at least 95% of its taxable income. In addition, the Company is subject to a 4% nondeductible excise tax on the amount, if any, by which certain distributions paid by it with respect to any calendar year are less than the sum of 85% of its ordinary income for such calendar year, 95% of its capital gain net income for the calendar year and any amount of such income that was not distributed in prior years. ADDITIONAL CAPITAL REQUIREMENTS. The Company's future growth will depend in large part upon its ability to raise additional capital. If the Company were to raise additional capital through the issuance of equity securities, the interests of holders of Common Stock, including the shares of Common Stock offered hereby, could be diluted. Likewise, the Company's Board of Directors is authorized to cause the Company to issue preferred stock in one or more series and entitled to such dividends and voting and other rights as the Board of Directors may determine. Accordingly, the Board of Directors may authorize the issuance of preferred stock with voting, dividend and other similar rights which could be dilutive to or otherwise adversely affect the interests of holders of Common Stock. DEPENDENCE ON KEY PERSONNEL. The Company is dependent on the efforts of its directors and executive officers. The loss of the services of its key employees could have a material adverse effect on the Company's operations. ITEM 2: PROPERTIES - ------------------- Information pertaining to the properties of Realty Income can be found under Item 1. Page 22 ITEM 3: LEGAL PROCEEDINGS - -------------------------- The Company is subject to certain claims and lawsuits, the outcome of which are not determinable at this time. In the opinion of management, any liability that might be incurred by the Company upon the resolution of these claims and lawsuits will not, in the aggregate, have a material adverse effect on the consolidated financial condition or results of operations of the Company. ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------------------------------------------------------------ No matters were submitted to stockholders during the fourth quarter of the fiscal year. PART II ======= ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS - ---------------------------------------------------------- A. Common stock of the Company is listed on the New York Stock Exchange under the symbol "O." The stock initially began trading on The New York Stock Exchange on October 18, 1994. Prior to October 18, 1994, the stock was not publicly traded. Page 23 The following table shows the high, low and closing sales prices per share for the Common Stock as reported by the New York Stock Exchange for the periods indicated:
Price Per Share Distributions of Common Stock Declared (1) -------------------------- ------------- 1994 HIGH LOW CLOSE ==== ======= ======= ======= Third Quarter N/A N/A N/A $0.30 Fourth Quarter (price per share from October 18, 1994) $18.125 $15.25 $17.125 0.45 ------ $0.75 ====== 1995 ==== First Quarter $19.25 $16.50 $18.375 $0.45 Second Quarter 21.50 17.875 21.125 0.45 Third Quarter 22.00 20.25 21.125 0.465 Fourth Quarter 22.50 19.25 22.50 0.85 ------ $2.215 ====== 1996 ==== First Quarter (through March 19, 1996) $23.125 $20.625 $21.125 $0.31 ======
(1) Distributions are currently declared monthly by the Company based on financial results for the prior months. At December 31, 1995, a special distribution of $0.23 per share and two distributions of $0.155 per share had been declared and were paid on January 11, 1996, January 15, 1996 and January 26, 1996, respectively. B. There were 18,557 holders of record of Realty Income's shares of common stock as of March 8, 1996, however, Realty Income believes the total number of beneficial shareholders of Realty Income to be approximately 40,000. Page 24 ITEM 6: SELECTED FINANCIAL DATA - -------------------------------- (not covered by Independent Auditors' Report)
As Of Or For The Years Ended December 31, (dollars in thousands, except per share data) ------------------------------------------------ 1995 1994 1993 1992 1991 ========== ========== ======== ======== ======== Total Assets (Book Value) $ 417,639 $ 352,768 $384,474 $395,671 $409,904 Cash and Cash Equivalents 1,650 11,673 29,329 7,414 5,438 Long Term Obligations 20,457 13,621 1,035 1,041 850 Total Liabilities 36,218 17,352 2,570 2,150 2,858 Stockholders' Equity 381,421 335,416 381,904 393,418 406,942 Net Cash Provided by Operating Activities 40,312 28,460 38,485 41,441 43,360 Net Change in Cash and Cash Equivalents (10,023) (17,656) 21,915 1,976 (5,713) Total Revenue 51,555 48,863 49,018 49,034 49,420 Consolidation Costs -- (11,201) -- -- -- Income from Operations 25,582 14,059 25,735 26,940 27,524 Gain on Sales of Properties 18 1,165 3,583 1,113 279 Net Income 25,600 15,224 29,318 28,053 27,803 Distributions Paid to Stockholders/ Partners 36,710 44,666 40,831 41,567 42,676 Ratio of Earnings to Fixed Charges (1) 10:1 39:1 5,865:1 N/A N/A Book Value Per Share (2) 16.60 17.20 Net Income Per Share (2) 1.27 0.78 Distributions Paid Per Share (2)(3) 1.825 0.60 Total Distribu- tions Declared Per Share (2)(3) 2.215 0.75
Page 25 Continued
As Of Or For The Years Ended December 31, (dollars in thousands, except per share data) ------------------------------------------------ 1995 1994 1993 1992 1991 ========== ========== ======== ======== ======== Weighted Average Number of Shares Outstanding 20,230,963 19,502,091
(1) Ratio of Earnings to Fixed Charges is calculated by dividing net income after adding back interest expense, by fixed charges. Fixed charges are comprised of interest costs. Ratio of Earnings to Fixed Charges is not applicable for 1992 and 1991 because the Company did not have any fixed charges for these periods. (2) Due to the change in the capital structure caused by the Consolidation (see Item 8, Note 1 to the Consolidated Financial Statements), per share information would not be meaningful for 1993 through 1991 and therefore has not been included. (3) The 1994 amount represents distributions paid or declared, as the case may be, after the Consolidation. ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - ---------------------------------------------------------- GENERAL - ------- Realty Income Corporation ("Realty Income" or the "Company") was organized to operate as an equity real estate investment trust ("REIT"). The Company's primary business objective is to generate a consistent and predictable level of funds from operations ("FFO") per share and distributions to stockholders. Additionally, the Company generally will seek to increase FFO per share and distributions to stockholders through both internal and external growth, while also seeking to lower the ratio of distributions to stockholders as a percentage of FFO in order to allow internal cash flow to be used to fund additional acquisitions and for other corporate purposes. Realty Income pursues internal growth through (i) contractual rent increases on existing leases; (ii) rental increases at the termination of existing leases when market conditions permit; and (iii) the active management of the Company's property portfolio, including selective sales of properties. The Company generally pursues Page 26 external growth through the acquisition of additional properties under long-term, triple-net lease agreements with initial contractual base rent which, at the time of acquisition, is in excess of the Company's estimated cost of capital. Realty Income was organized in the state of Delaware on September 9, 1993 to facilitate the merger, which was effective on August 15, 1994 (the "Consolidation"), of 10 private and 15 public real estate limited partnerships (the "Partnerships") with and into Realty Income. The Company's common stock is listed on the New York Stock Exchange (the "NYSE") under the symbol "O" and commenced trading on October 18, 1994. Investors in the Partnerships who elected to invest in the equity of the Company received a total of 19,503,080 shares of common stock. Certain investors elected to receive Variable Rate Senior Notes (the "Notes") totaling $12.6 million. The Notes are due in 2001 and are listed on the NYSE. The Company paid $0.9 million in cash in lieu of issuing promissory notes and $0.5 million in cash in lieu of issuing fractional shares. On February 15, 1996, the Company declared its intent to redeem all of its outstanding Notes at par value, plus accrued interest to the date of redemption. The redemption date is scheduled for March 29, 1996. The Consolidation was accounted for as a reorganization of affiliated entities in a manner similar to a pooling-of- interests. Under this method, the assets and liabilities of the Partnerships were carried over at their historical book values and operations have been recorded on a combined historical cost basis. The pooling-of-interests method of accounting also requires the reporting of the results of operations as though the entities had been combined as of the beginning of the earliest period presented. Accordingly, the results of operations for the year ended December 31, 1994 comprise those of the separate entities combined from the beginning of the period through August 15, 1994 (the date of the Consolidation) and those of the Company from August 16, 1994 through December 31, 1994. Financial information for 1993 has also been restated on a combined basis to provide comparative information. In accordance with the Company's certificate of incorporation and bylaws, the responsibility for the management and control of the Company's operations is vested in its board of directors. Prior to August 18, 1995, the Company's day-to-day affairs were managed by R.I.C. Advisor, Inc. (the "Advisor") which provided advice and assistance regarding acquisitions of properties by the Company and performed the day-to-day management of the Company's properties and business. On August 17, 1995, the Advisor was merged with and into Realty Income (the "Merger") and the advisory agreement between Realty Income and the Advisor was terminated. Realty Income issued 990,704 shares of common Page 27 stock as consideration for the outstanding common stock of the Advisor. The Advisor held 57,547 shares of common stock of the Company which were retired after the Merger. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Realty Income was organized for the purpose of operating as an equity REIT which acquires and leases properties and distributes to stockholders, in the form of monthly cash distributions, a substantial portion of its net cash flow generated from lease revenue. The Company intends to retain an appropriate amount of cash as working capital reserves. At December 31, 1995, the Company had cash and cash equivalents totaling $1.65 million. Capital Funding In November 1994, Realty Income entered into a $100 million three-year, revolving, unsecured acquisition credit facility. In December 1995, the Company negotiated several modifications to the credit facility including (i) an increase in borrowing capacity to $130 million from $100 million; (ii) a reduction in the interest rate to London Interbank Offered Rate ("LIBOR") plus 1.25% from LIBOR plus 1.375%; and (iii) an extension of the credit facility from November 1997 to November 1998. This credit facility has been and is expected to be used to acquire additional retail properties leased to national and regional retail chains under long term lease agreements. As of February 9, 1996, $118 million of borrowing capacity was available to the Company under the acquisition credit facility. As of February 9, 1996, the interest rate on this facility was 6.9%. Realty Income expects to meet its long-term capital needs for the acquisition of properties through the issuance of public or private debt or equity. In August 1995, the Company filed a universal shelf registration statement with the Securities and Exchange Commission covering up to $200 million in value of common stock, preferred stock or debt securities. In November and December 1995, the Company issued a total of 2,540,000 shares of common stock at a price of $19.625 per share. The shares were issued pursuant to the registration statement and a related prospectus supplement. The net proceeds of $46.6 million from this offering were used to repay $44.6 million of outstanding borrowings under the acquisition credit facility with the remainder invested in properties. The Company is not currently involved in any negotiations and has not entered into any arrangements relating to any additional securities issuances. Page 28 Property Acquisitions During 1995, Realty Income purchased 58 properties in 19 states for $65.4 million. Two of the properties are currently under development. All of the above mentioned properties, including the properties under development, are leased with initial terms of ten to 20 years. The properties were purchased with $12.8 million of cash on hand, $50.6 million from the acquisition credit facility and $2.0 million from the stock offering proceeds. Additional stock offering proceeds of $44.6 million were used to repay the credit facility. The Company invested an additional $288,000 in existing properties. 1995 ACQUISITION ACTIVITY
Total Approx. Initial Lease- Lease able Term Square Tenant Industry Location (Years) Feet ============== =============== ================== ======= ======= 1st Qtr - ------- Dairy Mart Convenience Manchester CT 15 2,000 Dairy Mart Convenience Vernon CT 15 2,400 Dairy Mart Convenience Westbrook CT 15 2,700 Dairy Mart Convenience New Albany IN 15 2,500 Dairy Mart Convenience New Albany IN 15 2,800 Dairy Mart Convenience Berea KY 15 2,700 Dairy Mart Convenience Elizabethtown KY 15 2,700 Dairy Mart Convenience Lebanon KY 15 2,700 Dairy Mart Convenience Louisville KY 15 2,700 Dairy Mart Convenience Seekonk MA 15 2,700 Dairy Mart Convenience Atwater OH 15 2,500 Dairy Mart Convenience Columbus OH 15 7,200 Dairy Mart Convenience Cuyahoga Falls OH 15 2,800 Dairy Mart Convenience Galion OH 15 2,700 Dairy Mart Convenience Tiffin OH 15 3,200 Golden Corral Restaurant St. Charles MO 15 11,300 Golden Corral Restaurant Omaha NE 15 11,300 Golden Corral Restaurant Memphis TN 15 11,300 Whataburger Fast Food Ft. Worth TX 20 3,000 Whataburger Fast Food Porter TX 20 2,700 Whataburger Fast Food Temple TX 20 2,200 R&S Strauss Automotive Cherry Hill NJ 20 16,100
Page 29 Continued 1995 ACQUISITION ACTIVITY
Total Approx. Initial Lease- Lease able Term Square Tenant Industry Location (Years) Feet ============== =============== ================== ======= ======= 2nd Qtr - ------- Dairy Mart Convenience Kingston NY 15 2,800 Don Pablo's Restaurant Flint MI 10 7,800 Don Pablo's Restaurant Norman OK 10 9,800 Don Pablo's Restaurant Dallas TX 10 9,800 Golden Corral Restaurant Amherst NY 15 11,300 Levitz Home Furnishing Cathedral City CA 20 40,000 Levitz Home Furnishing Concord CA 20 102,900 Levitz Home Furnishing Winter Park FL 20 122,100 Levitz Home Furnishing Plano TX 20 111,300 3rd Qtr - ------- Dairy Mart(1) Convenience Perrysburg OH 15 2,700 Don Pablo's Restaurant Oklahoma City OK 10 9,900 Econo Lube N' Tune Automotive San Antonio TX 13 2,800 Pantry Convenience Henderson KY 20 2,400 Pantry Convenience Owensboro KY 20 2,400 Pantry Convenience Cary NC 20 2,400 Pantry Convenience Greenville NC 20 2,400 Pantry Convenience Greenville NC 20 2,400 Pantry Convenience Jacksonville NC 20 2,600 Pantry Convenience Columbia SC 20 2,600 Pantry Convenience John's Island SC 20 2,500 Pantry Convenience Lexington SC 20 2,600 Pantry Convenience Myrtle Beach SC 20 2,400 Pantry Convenience N. Charleston SC 20 2,400 Pantry Convenience Summerville SC 20 2,500 Pantry Convenience La Vergne TN 20 2,400 Pantry Convenience Shelbyville TN 20 2,400
Page 30 Continued 1995 ACQUISITION ACTIVITY
Total Approx. Initial Lease- Lease able Term Square Tenant Industry Location (Years) Feet ============== =============== ================== ======= ======= 4th Qtr - ------- Dairy Mart(1) Convenience Louisville KY 15 3,800 Carver's Restaurant Orem UT 20 8,200 Carver's Restaurant Sandy UT 20 10,300 7-ELEVEN Convenience Columbus OH 15 3,200 7-ELEVEN Convenience Flint MI 15 3,200 7-ELEVEN Convenience Groveport OH 15 3,200 Speedy Brake Automotive Columbus OH 15 5,300 Speedy Brake Automotive Eastlake OH 15 5,300 Speedy Brake Automotive Milwaukee WI 15 5,300 Speedy Brake Automotive New Berlin WI 15 4,200 ------- ------- Average/Total 16.7 621,800 ======= =======
(1) The Company acquired these two properties as undeveloped land and is funding construction and other costs relating to the development of the properties by the prospective tenants. The prospective tenants have entered into leases with the Company covering these properties and are contractually obligated to complete construction on a timely basis and to pay construction cost overruns to the extent they exceed the construction budget by more than 5%. As of December 31, 1995, the total acquisition and estimated construction costs for the two development properties was $1.3 million, of which $1.0 million had not been funded. Distributions Cash distributions paid for the years ended December 31, 1995, 1994 and 1993 were $36.7 million, $44.7 million and $40.8 million, respectively. The 1994 distributions were made up of twelve monthly distributions in the aggregate amount of $38.9 million and the final partnership distribution of $5.8 million. The 1994 final partnership distributions were substantially comprised of proceeds from the sales of properties sold during 1993. Page 31 For the year ended December 31, 1995, the Company paid monthly distributions of $0.15 per share from January through July and increased its monthly distributions to $0.155 per share in August. Monthly distributions of $0.155 per share were paid in August through December 1995. The distributions paid for 1995 totaled $1.825 per share. In December 1995, the Company declared two distributions of $0.155 per share which were paid on January 15 and January 26, 1996 and a special distribution of $0.23 per share which was paid on January 11, 1996. For tax purposes, a portion of the special distribution, in the amount of approximately $0.144 per share, is taxable as ordinary income in 1995 and represents the remaining portion of taxable earnings and profits which were assumed by the Company in the Merger with the Advisor. The remaining amount of approximately $0.086 per share of the special distribution will be included in the 1996 distributions for tax purposes. From August 15, 1994, the date of the Consolidation, through December 1994, the Company paid monthly distributions of $0.15 per share, totaling $0.60 per share. Prior to the Consolidation on August 15, 1994, the Company did not have equivalent shares outstanding so no comparative per share information is presented. As a result of the Merger on August 17, 1995, the Company assumed a defined benefit pension plan (the "Plan") covering substantially all of its employees. The board of directors of the Advisor froze the Plan effective May 31, 1995. For each Plan participant, the accrued benefit earned under the Plan as of May 31, 1995 was frozen. In October 1995, the Company declared its intent to terminate the Plan, and the Plan was terminated on January 2, 1996. As part of the Plan's termination, the Company anticipates meeting its obligation to the Plan of approximately $1.7 million in the second half of 1996. Management believes that the Company's cash provided from operating activities and borrowing capacity are sufficient to meet its liquidity needs for the foreseeable future. RESULTS OF OPERATIONS - --------------------- Prior to the Consolidation on August 15, 1994, the capital structure of the Partnerships consisted of limited partner interests with no long term debt. In the Consolidation, limited partners exchanged their partnership units for shares of common stock or Notes of the Company. The general partners did not receive any shares or Notes for their general partner interest. Due to these changes in capital structure, which were caused by the Consolidation, and additional expenses associated with the operations of a publicly traded REIT, the results of operations for the years ended December 31, 1995, 1994 and 1993 are not necessarily comparable. Page 32 Comparison of 1995 to 1994 Rental revenue was $51.2 million for 1995 versus $47.9 million for 1994. The increase in rental revenue was primarily due to the acquisition of 62 properties from December 1994 through December 1995. These properties generated revenue of $3.8 million in 1995. During 1996, the contractual lease payments (not including any percentage rents) on these properties are approximately $7.8 million. Substantially all the Company's leases provide for increases in rents through base rent increases tied to a consumer price index with adjustment ceilings or overage rent based on a percentage of the tenants' gross sales. Some leases contain both types of clauses. Percentage rent, which is included in rental revenue, was $1.6 million for 1995 as compared to $2.6 million in 1994. Vacant properties are a factor in determining gross revenue generated and property costs incurred by the Company. At December 31, 1995 and 1994, the Company had four properties that were not under lease. All of the remaining properties were under lease agreements with third party tenants. The significant portion of the remaining revenue earned during 1995 and 1994 was attributable to interest earned on cash invested in two funds which hold short-term investments in United States government agency securities or direct purchases of short- term United States government agency securities. Interest revenue was $0.3 million for 1995 as compared to $0.9 million during 1994. The interest revenue decreased in 1995 due to a reduction of cash held, which was invested in properties. The Company recorded a net gain on the sale of properties during 1995 of $18,000 as compared to $1.2 million for 1994. During 1995 and 1994 cash proceeds generated from these sales were $0.6 million and $3.8 million, respectively. The Company anticipates a small number of property sales will occur in the normal course of business. Depreciation and amortization was $14.8 million in 1995 versus $13.8 million in 1994. The increase was primarily due to the depreciation of 62 properties acquired from December 1994 through December 31, 1995 and amortization of goodwill recorded in connection with the Merger of the Advisor in 1995. Advisor fees decreased by $1.7 million to $3.7 million in 1995 as compared to $5.4 million in 1994. On August 17, 1995 the Advisor was merged into the Company. The advisor fees for 1995 were calculated in accordance with the terms of the advisory agreement which became effective August 15, 1994 and was terminated on August 17, 1995. Prior to August 16, 1994, advisor Page 33 fees were calculated in accordance with the terms of the Partnership agreements of the Partnerships. General and administrative expenses were $4.8 million in 1995 versus $4.0 million in 1994. The $0.8 million increase in general and administrative expenses was due to a $1.3 million increase in administrative expenses reduced by a $0.5 million decrease in property expenses. The increase in administrative expenses was attributable to costs for management, accounting systems, professional and support personnel and office facilities. Prior to August 17, 1995 these costs were the responsibility of the Advisor. The decline in property expenses during 1995 as compared to 1994 was primarily due to reductions in property taxes, provision for impairment loss and other property costs. Administration expense in 1994 included approximately $0.5 million of one-time expenses primarily associated with the distribution of stock certificates, shareholder informational material and final partnership K-1's to shareholders after the Consolidation had occurred. Other administrative expenses increased in 1995 compared to 1994 due to additional expenses associated with the operation of a publicly traded REIT including, but not limited to, transfer agent fees, NYSE fees, board of directors fees and property acquisition expenses. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. No charge was recorded for impairment loss in 1995. In 1994, a $0.1 million charge was made to general and administrative expenses to reduce the net carrying value of one property. Interest expense was $2.6 million for 1995 as compared to $0.4 million for 1994. Of the $2.2 million increase, $1.6 million was interest paid on the acquisition credit facility in 1995 and $0.6 million was interest paid on the Notes. During 1995, interest of $0.2 million was capitalized. No interest was capitalized in 1994. In 1994, the Company expensed Consolidation costs aggregating $11.2 million which were nonrecurring costs incurred to effect the Consolidation. In a manner similar to the pooling- of-interests method of accounting, the Consolidation costs were charged to expense upon the consummation of the Consolidation. Such costs included, but were not limited to, fees paid to underwriters, attorneys, and accountants, as well as costs associated with obtaining a fairness opinion, soliciting the stockholders, and registering and listing the common stock and the Notes on the NYSE. Page 34 For 1995, the Company had net income of $25.6 million versus $15.2 million in 1994. The net income in 1994 was negatively impacted by one time Consolidation costs of $11.2 million. Net income for 1994, excluding the Consolidation costs, was $26.4 million. Comparison of 1994 to 1993 Rental revenue was $47.9 million for 1994 versus $48.6 million for 1993. The decline in the 1994 rental revenue was mainly due to the sale of four retirement center properties during December 1993. The 1993 rental revenue generated from those properties was $2.4 million. Percentage rent, which is included in rental revenue, was $2.6 million for 1994 as compared to $1.0 million in 1993. Vacant properties are a factor in determining gross revenue generated and property costs incurred by the Company. At December 31, 1994, the Company had four properties that were not under lease as compared to seven properties at December 31, 1993. All of the remaining properties were under lease agreements with third party tenants. The significant portion of the remaining revenue earned during 1994 and 1993 was attributable to interest earned on cash invested in a fund which holds short-term investments in United States government agency securities or direct purchases of short- term United States government agency securities. Interest revenue was $0.9 million for 1994 as compared to $0.3 million during 1993. The interest revenue increased in 1994 due to the increase in cash from the sale of the four retirement centers as well as an increase in short-term interest rates. In the fourth quarter of 1994, portions of the proceeds from the sale of the retirement properties were distributed to the limited partners, used to pay transaction costs associated with the Consolidation and invested in properties. The Company recorded a gain on the sale of properties during 1994 of $1.2 million as compared to $3.6 million for 1993. During 1994 and 1993 cash proceeds generated from these sales were $3.8 million and $26.5 million, respectively. The Company anticipates a small number of property sales will occur in the normal course of business. Depreciation and amortization was $13.8 million in 1994 versus $14.7 million 1993. The decrease in 1994 as compared to 1993 was primarily due to the sale of four retirement center properties during December 1993. Advisor fees increased by $0.3 million to $5.4 million in 1994 as compared to $5.1 million in 1993. The increase in Advisor fees was due to the increase in expense reimbursements to Page 35 the Advisor primarily associated with cost of living increases in salary and general and administrative expenses. Under the terms of the advisory agreement, which became effective August 15, 1994, the fees with respect to the properties included in the Consolidation were based upon the aggregate of all fees, distributions and reimbursements paid to the general partners of the partnerships merged into the Company during the twelve months ended prior to the closing date of the Consolidation. Prior to August 15, 1994, advisor fees were calculated in accordance with the terms of the Partnership agreements of the Partnerships. General and administrative expenses were $4.0 million in 1994 versus $3.5 million in 1993. The $0.5 million increase in general and administrative expenses was due to a $1.1 million increase in administrative expenses reduced by a $0.6 million decrease in property expenses. Of the increase in administrative expenses, approximately $0.5 million was attributable to one-time expenses primarily associated with the distribution of stock certificates, shareholder informational material and final partnership K-1's to shareholders after the Consolidation had occurred. The remainder of the increase was due to additional expenses associated with the operation of a publicly traded REIT. The decline in property expenses during 1994 as compared to 1993 was due to the reduction in the provision for impairment loss. Other property expenses increased due to increases in the cost of living. Interest expense was $0.4 million for 1994 as compared to $5,000 for 1993. Of the $0.4 million increase, $0.3 million was interest paid on the Notes. The remainder of the increased interest expense was attributable to short-term borrowings by certain partnerships to finance their portion of the REIT transaction costs prior to the Consolidation and amortization of deferred acquisition credit facility fees. In 1994, the Company expensed Consolidation costs aggregating $11.2 million which were nonrecurring costs incurred to effect the Consolidation. In a manner similar to the pooling- of-interests method of accounting, the Consolidation costs were charged to expense upon the consummation of the Consolidation. Such costs included, but were not limited to, fees paid to underwriters, attorneys, and accountants, as well as costs associated with obtaining a fairness opinion, soliciting the stockholders, and registering and listing the common stock and the Notes on the NYSE. For 1994, the Company had net income of $15.2 million versus $29.3 million in 1993. The net income in 1994 was negatively impacted by one time Consolidation costs of $11.2 million. Net income for 1994, excluding the Consolidation costs, was $26.4 million. Page 36 FUNDS FROM OPERATIONS - --------------------- Funds from operations ("FFO") for 1995 was $40.4 million versus $39.1 million during 1994 and $40.4 million during 1993. Excluding the one-time cost to disseminate information to investors relating to the Consolidation, the 1994 FFO was approximately $39.6 million. Realty Income defines FFO as net income excluding gains or losses from sales of properties and the one-time expenses of the 1994 Consolidation, plus depreciation and amortization. In accordance with the recommendations of the National Association of Real Estate Investment Trusts ("NAREIT"), amortization of deferred financing costs are not added back to net income to calculate FFO. Amortization of financing costs are included in interest expense on the consolidated statements of income. Management considers FFO to be an appropriate measure of the performance of an equity REIT. FFO is used by financial analysts in evaluating REITs and can be one measure of a REIT's ability to make cash distribution payments. Presentation of this information provides the reader with an additional measure to compare the performance of different REITs. FFO is not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income as an indication of the Company's performance or to cash flow from operating, investing, and financing activities as a measure of liquidity or ability to make cash distributions. Below is reconciliation of net income to funds from operations (dollars in thousands):
1995 1994 1993 ======= ======= ======= Net Income $25,600 $15,224 $29,318 Plus Depreciation and Amortization 14,849 13,790 14,689 Less Depreciation of Furniture, Fixtures and Equipment (17) -- -- Plus Consolidation Costs -- 11,201 -- Less Net Gain on Sales of Properties (18) (1,165) (3,583) ------- ------- ------- Total Funds From Operations $40,414 $39,050 $40,424 ======= ======= =======
Page 37 IMPACT OF INFLATION - ------------------- Tenant leases generally provide for increases in rent as a result of increases in the tenant's sales volumes or increases in the consumer price index. Management expects that inflation will cause these lease provisions to result in increases in rent over time. However, inflation and increased costs may have an adverse impact on the tenants if increases in the tenant's operating expenses exceed increases in revenues. Over 97% of the properties are leased to tenants under triple-net leases in which the tenant is responsible for substantially all property costs and expenses. These features in the leases reduce the Company's exposure to rising expenses due to inflation. IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS - --------------------------------------- Statement of Financial Accounting Standards No. 121 "Accounting for the Impairment of Long-Lived Assets and of Long- Lived Assets to Be Disposed Of" ("Statement 121") was issued in March 1995. Statement 121 provides guidance for recognition and measurement of impairment of long-lived assets, certain identifiable intangibles and goodwill related both to assets to be held and used and assets to be disposed of. Statement 121 is effective for financial statements issued for fiscal years beginning after December 15, 1995. The Company's existing accounting policies comply with Statement 121 and therefore implementing Statement 121 is not expected to have a material effect on the Company's financial position or results of operations. Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("Statement 123") was issued in October 1995. Statement 123 established the fair value based method of accounting for stock-based compensation arrangements, under which compensation cost is determined using the fair value of the stock options at the grant date and the number of options vested, and is recognized over the periods in which the related services are rendered. Statement 123 is effective for fiscal years beginning after December 15, 1995. If the Company were to retain its current intrinsic value based method, as allowed by Statement 123, it will be required to disclose the pro forma effect of adopting the fair value based method. To date, the Company has not made a decision to adopt the fair value based method. Page 38 ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - ---------------------------------------------------- Table of Contents Page ================= ====== A. Independent Auditors' Report........................... 40 B. Consolidated Balance Sheets, December 31, 1995 and 1994........................... 41-42 C. Consolidated Statements of Income, Years ended December 31, 1995, 1994 and 1993......... 43 D. Consolidated Statements of Stockholders' Equity, Years ended December 31, 1995, 1994 and 1993......... 44-46 E. Consolidated Statements of Cash Flows, Years ended December 31, 1995, 1994 and 1993......... 47-48 F. Notes to Consolidated Financial Statements............. 49-60 G. Consolidated Quarterly Financial Data (unaudited) for 1995 and 1994........................ 61 H. Schedule III-Real Estate and Accumulated Depreciation.........................................62-183 Schedules not Filed: All schedules, other than that indicated in the Table of Contents, have been omitted as the required information is inapplicable or the information is presented in the financial statements or related notes. Page 39 Independent Auditors' Report ---------------------------- The Board of Directors and Stockholders Realty Income Corporation: We have audited the consolidated financial statements (Note 1) of Realty Income Corporation and subsidiaries as listed in the accompanying table of contents. In connection with our audits of the consolidated financial statements, we also have audited the financial statement schedule III listed in the accompanying table of contents. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Realty Income Corporation and subsidiaries as of December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1995, in conformity with generally accepted accounting principles. Also in our opinion, the related financial statement schedule III, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. KPMG Peat Marwick LLP San Diego, California January 26, 1996, except as to Note 5B to the consolidated financial statements, which is as of February 15, 1996 Page 40 REALTY INCOME CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets =========================== December 31, 1995 and 1994 (dollars in thousands, except per share data)
1995 1994 ========= ========= ASSETS Real Estate, at Cost: Land $ 147,789 $ 122,059 Buildings and Improvements 367,637 328,644 --------- --------- 515,426 450,703 Less - Accumulated Depreciation and Amortization (126,062) (112,169) --------- --------- Net Real Estate, at Cost 389,364 338,534 Cash and Cash Equivalents 1,650 11,673 Accounts Receivable 1,638 1,266 Due from Affiliates 493 -- Other Assets 1,927 1,295 Goodwill 22,567 -- --------- --------- TOTAL ASSETS $ 417,639 $ 352,768 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Distributions Payable $ 12,407 $ 2,925 Accounts Payable and Accrued Expenses 673 658 Other Liabilities 4,541 1,119 Due to Advisor -- 34 Notes Payable 12,597 12,616 Line of Credit Payable 6,000 -- --------- --------- TOTAL LIABILITIES 36,218 17,352 --------- ---------
Page 41 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES Consolidated Balance Sheets =========================== December 31, 1995 and 1994 (dollars in thousands, except per share data)
1995 1994 ========= ========= Commitments and Contingencies Stockholders' Equity Preferred Stock, Par Value $1.00 Per Share, 5,000,000 Shares Authorized, No Shares Issued or Outstanding -- -- Common Stock, Par Value $1.00 Per Share, 40,000,000 Shares Authorized, 22,976,237 and 19,502,091 Shares Issued and Outstanding in 1995 and 1994, respectively 22,976 19,502 Capital in Excess of Par Value 516,119 452,996 Accumulated Distributions in Excess of Net Income (157,674) (137,082) --------- --------- TOTAL STOCKHOLDERS' EQUITY 381,421 335,416 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 417,639 $ 352,768 ========= =========
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. Page 42 REALTY INCOME CORPORATION AND SUBSIDIARIES Consolidated Statements Of Income ================================= Years Ended December 31, 1995, 1994 and 1993 (dollars in thousands, except per share data)
1994 1993 1995 (Note 1) (Note 1) ========== ========== ========== REVENUE Rental $ 51,185 $ 47,905 $ 48,584 Interest 276 862 279 Other 94 96 155 ---------- ---------- ---------- 51,555 48,863 49,018 ---------- ---------- ---------- EXPENSES Depreciation and Amortization 14,849 13,790 14,689 Advisor Fees 3,661 5,422 5,108 General and Administrative 4,821 3,995 3,481 Interest 2,642 396 5 Consolidation Costs -- 11,201 -- ---------- ---------- ---------- 25,973 34,804 23,283 ---------- ---------- ---------- Income from Operations 25,582 14,059 25,735 Net Gain on Sales of Properties 18 1,165 3,583 ---------- ---------- ---------- NET INCOME $ 25,600 $ 15,224 $ 29,318 ========== ========== ========== Net Income Per Share $ 1.27 $ 0.78 -- ========== ========== ========== Weighted Average Number of Shares Outstanding 20,230,963 19,502,091 -- ========== ========== ==========
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. Page 43 REALTY INCOME CORPORATION AND SUBSIDIARIES Consolidated Statements Of Stockholders' Equity (Note 1) ======================================================== Years Ended December 31, 1995, 1994 and 1993 (dollars in thousands)
Accumu- lated Capital Distri- in butions Common Stock Excess in Excess ------------------- of Par of Net Shares Amount Value Income Total ========== ======= ======== ========= ======== BALANCE, December 31, 1992 -- $ -- $486,620 $ (93,202) $393,418 Net Income -- -- -- 29,318 29,318 Distributions to Partners -- -- -- (40,831) (40,831) Capital Contribution -- -- 200 -- 200 Acquisition of Treasury Units -- -- (201) -- (201) ---------- ------- -------- --------- -------- BALANCE, December 31, 1993 -- -- 486,619 (104,715) 381,904
Page 44 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES Consolidated Statements Of Stockholders' Equity (Note 1) ======================================================== Years Ended December 31, 1995, 1994 and 1993 (dollars in thousands)
Accumu- lated Capital Distri- in butions Common Stock Excess in Excess ------------------- of Par of Net Shares Amount Value Income Total ========== ======= ======== ========= ======== Net Income -- -- -- 15,224 15,224 Distributions to Partners -- -- -- (32,964) (32,964) Distributions Paid and Payable to Stockholders -- -- -- (14,627) (14,627) Shares Issued in Exchange for Limited Partnership Interests 19,502,091 19,502 (19,502) -- -- Payment of Promissory Notes and Fractional Shares in Exchange for Limited Partnership Interests -- -- (1,505) -- (1,505) Notes Payable Issued in Exchange for Limited Partnership Interests -- -- (12,616) -- (12,616) ---------- ------- -------- --------- -------- BALANCE, December 31, 1994 19,502,091 19,502 452,996 (137,082) 335,416
Page 45 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES Consolidated Statements Of Stockholders' Equity (Note 1) ======================================================== Years Ended December 31, 1995, 1994 and 1993 (dollars in thousands)
Accumu- lated Capital Distri- in butions Common Stock Excess in Excess ------------------- of Par of Net Shares Amount Value Income Total ========== ======= ======== ========= ======== Net Income -- -- -- 25,600 25,600 Distributions Paid and Payable to Stockholders -- -- -- (46,192) (46,192) Shares Issued in Exchange for Advisor 990,704 991 20,186 -- 21,177 Shares Retired (57,547) (58) (1,172) -- (1,230) Shares Issued in Stock Offering, net of offering costs of $3,217 2,540,000 2,540 44,090 -- 46,630 Shares Issued in Exchange for Limited Partnership Interests 989 1 19 -- 20 ---------- ------- -------- --------- -------- BALANCE, December 31, 1995 22,976,237 $22,976 $516,119 $(157,674) $381,421 ========== ======= ======== ========= ========
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. Page 46 REALTY INCOME CORPORATION AND SUBSIDIARIES Consolidated Statements Of Cash Flows ===================================== Years Ended December 31, 1995, 1994 and 1993 (dollars in thousands)
1994 1993 1995 (Note 1) (Note 1) ======== ======== ======== CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 25,600 $ 15,224 $ 29,318 Adjustments to Net Income: Depreciation and Amortization 14,849 13,790 14,689 Net Gain on Sales of Properties (18) (1,165) (3,583) Provision for Impairment Loss -- 135 935 Noncash Portion of Lease Settlement -- -- (103) Proceeds from Sale of Equipment -- -- 9 Changes in Assets and Liabilities (net of the Merger with the Advisor): Change in Accounts Receivable and Other Assets (1) 980 (2,933) Change in Other Liabilities (86) 460 (251) Change in Due to Advisor (32) (964) 404 -------- -------- -------- Net Cash Provided by Operating Activities 40,312 28,460 38,485 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from Sales of Properties 617 3,795 26,517 Acquisition of Properties (65,890) (3,485) (2,510) Payment of Advisor Merger Costs (1,629) -- -- Cash Acquired from Advisor Merger 647 -- -- -------- -------- -------- Net Cash Provided by (Used in) Investing Activities (66,255) 310 24,007 -------- -------- --------
Page 47 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES Consolidated Statements Of Cash Flows ===================================== Years Ended December 31, 1995, 1994 and 1993 (dollars in thousands)
1994 1993 1995 (Note 1) (Note 1) ======== ======== ======== CASH FLOWS FROM FINANCING ACTIVITIES: Payments of Distributions (36,710) (44,666) (40,831) Proceeds from Lines of Credit 50,600 625 445 Payments of Lines of Credit (44,600) (880) (190) Proceeds from Stock Offering, Net of Offering Costs of $3,217 46,630 -- -- Payments in Lieu of Promissory Notes and Fractional Shares -- (1,505) -- Capital Contribution -- -- 200 Acquisition and Retirement of Treasury Units -- -- (201) -------- -------- -------- Net Cash Provided by (Used in) Financing Activities 15,920 (46,426) (40,577) -------- -------- -------- Net Increase (Decrease) in Cash and Cash Equivalents (10,023) (17,656) 21,915 Cash and Cash Equivalents, Beginning of Year 11,673 29,329 7,414 -------- -------- -------- Cash and Cash Equivalents, End of Year $ 1,650 $ 11,673 $ 29,329 ======== ======== ========
For supplemental disclosure of noncash investing and financing activities, see Note 9. The accompanying Notes to Consolidated Financial Statements are an integral part of these statements. Page 48 REALTY INCOME CORPORATION AND SUBSIDIARIES Notes To Consolidated Financial Statements ========================================== December 31, 1995, 1994 and 1993 1. Organization and Operation Realty Income Corporation (the "Company") was organized in the state of Delaware on September 9, 1993 to facilitate the merger, which was effected on August 15, 1994 (the "Consolidation"), of 10 private and 15 public real estate limited partnerships (the "Partnerships") with and into the Company. The Company invests in commercial real estate and has elected to be taxed as a real estate investment trust ("REIT"). Investors in the Partnerships who elected to invest in the Company received common stock of the Company totaling 19,503,080 shares. Certain investors elected to receive Variable Rate Senior Notes (the "Notes") totaling $12.6 million. The Consolidation was accounted for as a reorganization of affiliated entities under common control in a manner similar to a pooling-of-interests. Under this method, the assets and liabilities of the Partnerships were carried over at their historical book values and their operations have been recorded on a combined historical cost basis. The pooling-of-interests method of accounting also requires the reporting of the results of operations as though the entities had been combined as of the beginning of the earliest period presented. Accordingly, the results of operations for the year ended December 31, 1994 comprise those of the separate entities combined from January 1, 1994 through August 15, 1994 and those of the Company from August 16, 1994 through December 31, 1994. Financial information for 1993 has also been restated on a combined basis to provide comparative information. Costs incurred to effect the Consolidation and integrate the continuing operations of the separate entities were expenses of the Company in the period the Consolidation was consummated. These expenses include all costs and expenses incurred in structuring and consummating the Consolidation. Such costs included, but were not limited to, fees paid to underwriters, attorneys, and accountants, as well as costs associated with obtaining a fairness opinion, soliciting the shareholders, and registering and listing the common stock and the Notes on the New York Stock Exchange. Prior to the Consolidation, the Company had no significant operations; therefore, the combined operations for the periods prior to the Consolidation represent the operations of the Partnerships. The Consolidation did not require any material adjustments to conform the accounting policies of the separate entities to that of the Company. All intercompany transactions and balances have been eliminated. Page 49 1. Organization and Operation (continued) The results of operations of the previously separate entities for the periods before the Consolidation was consummated that are included in the results of operations for the years ended December 31, 1994 and 1993 follow:
January 1, 1994 through Year Ended August 15, 1994 December 31, 1993 ----------------- ----------------- (dollars in thousands) Net Net Income Entity Income Revenue (Loss) Revenue ====== ======= ======= ======= ======= Northridge Bell, Ltd. $ 15 $ 29 $ 23 $ 44 Tustin Bell, Ltd. 39 47 64 75 Marina Bell, Ltd. 5 7 8 12 Fullerton Commercial Property, Ltd. 70 73 107 125 Chino Commercial Property, Ltd. 49 55 70 79 R.I.C. 76, Ltd. 38 52 62 83 R.I.C. 781, Ltd. 50 75 443 150 Garden Grove BYH, Ltd. 14 19 23 30 R.I.C. Associates #1, Ltd. 7 11 11 18 R.I.C. Associates #2, Ltd. 35 55 200 86 R.I.C. 79, Ltd. 299 451 380 607 R.I.C. 81, Ltd. 451 754 565 1,033 R.I.C. 14, Ltd. 664 1,188 951 1,747 R.I.C. 15, Ltd. 142 898 (150) 1,439 R.I.C. 16, Ltd. 811 1,735 1,238 2,814 R.I.C. 17, Ltd. 1,612 3,490 2,345 5,488 R.I.C. 18, Ltd. 531 1,707 972 2,645 R.I.C. 19, Ltd. 1,638 2,537 2,418 4,138 R.I.C. 20, Ltd. 614 1,789 2,701 3,401 R.I.C. 21, Ltd. 1,841 2,978 3,581 4,978 R.I.C. 22, Ltd. 1,472 2,574 2,485 4,104 R.I.C. 23, Ltd. 2,225 3,463 3,802 5,483 R.I.C. 24, Ltd. 1,731 2,737 2,766 4,278 R.I.C. 25, Ltd. 1,934 2,900 3,337 4,873 R.I.C. 26, Ltd. 571 818 916 1,288 ------- ------- ------- ------- Combined Results $16,858 $30,442 $29,318 $49,018 ======= ======= ======= =======
Page 50 2. Summary of Significant Accounting Policies Principles of Consolidation - The accompanying consolidated financial statements include the accounts of the Company and partnerships more than 50 percent owned (subsidiaries) after elimination of all material intercompany balances and transactions. Cash and Cash Equivalents - The Company considers all short- term, highly liquid investments that are readily convertible to cash and have an original maturity of three months or less at the time of purchase to be cash equivalents. Depreciation and Amortization - Depreciation of buildings and improvements and amortization of goodwill are computed using the straight-line method over an estimated useful life of approximately 25 years. Leases - All leases are accounted for as operating leases. Under this method, lease payments are recognized as revenue over the term of the lease on a straight line basis. Income Taxes - Prior to the Consolidation, the Company's operations were conducted through private and public real estate limited partnerships. In accordance with partnership taxation, each partner was responsible for reporting its share of taxable income. Accordingly, no federal income tax provision has been made in the accompanying consolidated financial statements prior to August 16, 1994. After August 15, 1994, the Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended. Management believes the Company has qualified and continues to qualify as a REIT and therefore will be permitted to deduct distributions paid to its stockholders, eliminating the federal taxation of income represented by such distributions at the Company's level. Accordingly, no provision has been made for federal income taxes in the accompanying consolidated financial statements for the period August 16, 1994 through December 31, 1994 and the year ended December 31, 1995. Distributions Paid and Payable - For the year ended December 31, 1995, cash distributions of $1.825 per share were paid. As of December 31, 1995, three distributions totaling $0.54 per share were declared and payable. In 1995, distributions of $1.876 per share are taxable as ordinary income and $0.093 per share was a return of capital. A portion of the distributions payable at December 31, 1995, in the amount of $0.144 per share, is included in the $1.876 per share taxable as ordinary income and represents the remaining portion of taxable earnings and profits which were assumed by the Company in the merger with R.I.C. Advisor, Inc. (the "Advisor"). For the period Page 51 2. Summary of Significant Accounting Policies (continued) August 16, 1994 through December 31, 1994, cash distributions of $0.60 per share were paid and are taxable as ordinary income. Provision for Impairment Loss - The Company reviews long- lived assets, including goodwill, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Provision is made for impairment loss if estimated future operating cash flows (undiscounted and without interest charges) over a long-term holding period plus estimated disposition proceeds (undiscounted) are less than the current book value. There was no provision for the year ended December 31, 1995. For the years ended December 31, 1994 and 1993, a provision of $135,000 and $935,000, respectively, was charged to operations to reduce the net carrying value of three investment properties. Net Income Per Share - Net income per share for 1995 was calculated based upon the weighted average number of shares outstanding during the year. Net income per share for 1994 was calculated assuming 19,502,091 shares of the Company's common stock were outstanding. Prior to the Consolidation, no shares of common stock were outstanding. Due to the change in the capital structure resulting from the Consolidation, the net income per share information for the year ended December 31, 1993 would not be meaningful and has not been included. Reclassifications - Certain of the 1994 and 1993 balances have been reclassified to conform to 1995 presentation. The reclassifications had no effect on stockholders' equity or net income. Estimates - Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from those estimates. 3. The Merger of R.I.C. Advisor, Inc. On August 17, 1995, the Company merged with the Advisor and issued 990,704 shares of the Company's common stock valued at approximately $21.2 million (the "Merger"). The Merger was accounted for using the purchase method. Accordingly, the purchase price was allocated to assets acquired based on their estimated fair values. This treatment resulted in approximately $22.9 million of goodwill. Amortization of goodwill for the year ended December 31, 1995 was $340,000. Page 52 3. The Merger of R.I.C. Advisor, Inc. (continued) The following unaudited pro forma summary presents information as if the Merger had occurred at the beginning of each period presented. The pro forma information is provided for information purposes only. It is based on historical information and does not necessarily reflect the actual results that would have occurred nor is it necessarily indicative of future results of operations of the combined company. The Advisor had several non-recurring expenses during 1995 and 1994 which negatively impacted net income and net income per share.
For the Years Ended December 31 (dollars in thousands, except per share data) ------------------------------- Pro Forma Pro Forma 1995 1994 (unaudited) (unaudited) =========== =========== Revenue $ 51,765 $ 49,244 Net Income $ 24,751 $ 12,932 Net Income Per Share $ 1.22 $ 0.66
4. Credit Facility Available for Acquisitions In November 1994, the Company obtained a $100 million, three-year, revolving, unsecured acquisition credit facility from The Bank of New York, as agent, and several major U.S. and non- U.S. banks. In December 1995, the credit facility was modified to (i) increase the borrowing capacity to $130 million from $100 million; (ii) reduce the interest rate to London Interbank Offered Rate ("LIBOR") plus 1.25% from LIBOR plus 1.375%; and (iii) extend the credit facility from November 1997 to November 1998. The credit facility is subject to various leverage and interest coverage ratio limitations, all of which the Company was in compliance with as of December 31, 1995 and 1994. As of December 31, 1995 and 1994, the outstanding balance on the credit facility was $6 million and $0, respectively. The effective interest rate at December 31, 1995 was 7.19%. A commitment fee of 0.35% or less, per annum, accrues on the average amount of the unused available credit commitment. Interest of $217,000 was capitalized on properties under construction in 1995. No interest was capitalized in 1994. Page 53 5. Notes Payable A. In connection with the Consolidation, certain investors elected to receive Notes totaling $12.6 million. The Notes mature on June 30, 2001, and the interest rate is adjusted quarterly. Interest payments are due quarterly and principal is due at maturity. Interest incurred for the years ended December 31, 1995 and 1994 was $997,000 and $332,000, respectively. The interest rate on the Notes at December 31, 1995 and 1994, was 7.44% and 6.94%, respectively. On January 2, 1996 the interest rate adjusted to 7.13%. B. On February 15, 1996, the Company announced its plan to redeem all of its outstanding Notes. The Notes will be redeemed at par plus accrued interest to the date of redemption. The redemption date is scheduled for March 29, 1996. 6. Operating Leases A. General At December 31, 1995, the Company owned 685 properties in 42 states. Of the Company's properties, 675 are single-tenant locations and the remainder are multi-tenant. At December 31, 1995, four single-tenant properties were vacant and available for lease. Substantially all leases are triple-net leases whereby the tenant pays all property taxes and assessments, fully maintains the interior and exterior of the building, and carries insurance coverage for public liability, property damage, fire, and extended coverage. The Company's leases are primarily for initial terms of 15 to 20 years and provide for cost of living increases and/or increased rent based upon a percentage of the tenant's sales. Percentage rent for 1995, 1994 and 1993 was $1.6 million, $2.6 million and $1.0 million respectively. Page 54 6. Operating Leases (continued) Minimum annual rents to be received on the operating leases as of December 31, 1995 are as follows (dollars in thousands):
Years Ending December 31, ========================= 1996 $ 50,828 1997 49,351 1998 48,752 1999 48,363 2000 47,209 2001-2018 261,726 -------- TOTAL $506,229 ========
B. Major Tenants The following schedule presents rental income, including percentage rents, from tenants representing more than 10% of the Company's total revenue for at least one of the years ended December 31, 1995, 1994 or 1993 (dollars in thousands):
Tenant 1995 1994 1993 =============================== ======= ======= ======= Children's World, Inc. $13,121 $12,907 $12,442 La Petite Academy, Inc. 9,189 9,574 8,924 Golden Corral Corporation 6,550 6,362 6,278 Northern Automotive Corporation 4,677 4,931 4,340
7. Net Gain on Sales of Properties In 1995, the Company sold three properties for a total of $617,000 and recognized a net gain of $18,000. In 1994, the Company sold five properties and had three land easement transactions for a total of $3.8 million and recognized a net gain of $1.2 million. In 1993, the Company sold six properties, exchanged one property and had seven land easement transactions for a total of $26.5 million and recognized a net gain of $3.6 million. Page 55 8. Financial Instruments Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments," requires that the Company disclose estimated fair values for its financial instruments, as well as the methods and significant assumptions used to estimate fair values. Management of the Company believes that the carrying values reflected in the balance sheets at December 31, 1995 and 1994 reasonably approximate the fair values for cash and cash equivalents, accounts receivable, due from affiliates and all liabilities. In making such assessments, the Company utilized estimates and quoted market prices. 9. Supplemental Disclosure of Cash Flow Information Interest paid during 1995, 1994 and 1993 was $2,186,000, $354,000 and $5,000, respectively. The following non-cash investing and financing activities are included in the accompanying financial statements: A. Distributions payable totaled $12.4 million and $2.9 million at December 31, 1995 and 1994, respectively. B. The Merger of the Advisor into the Company on August 17, 1995 resulted in the following:
(dollars in thousands) Increases in: Other Assets $ (1,143) Goodwill (21,184) Common Stock retired after the Merger (1,230) Increases/(Decrease) in: Other Liabilities 3,029 Due to Advisor (2) Common Stock 991 Capital in Excess of Par Value 20,186 -------- Cash Acquired from Merger $ 647 ========
In 1995, other assets of $95,000 were reclassified to goodwill. Common stock retired after the Merger includes par value of common stock and capital in excess of par value of $58,000 and $1,172,000, respectively. Page 56 9. Supplemental Disclosure of Cash Flow Information (continued) C. In 1995, the following increases (decreases) occurred resulting from exchanges of Notes Payable for Common Stock (dollars in thousands): Notes Payable $ (19) Common Stock 1 Capital in Excess of Par Value 19 D. In 1995, pursuant to the assumption of the defined benefit pension plan by the Company (Note 11), the Company recorded a due from affiliate and a liability (included in other liabilities) of $493,000. This represents the amount of the increase in the liability to the plan, of which the Company is indemnified by the former shareholders of the Advisor. E. In 1994, the following increases occurred resulting from exchanges of limited partnership units for Notes payable and Common Stock (dollars in thousands): Notes Payable $ 12,616 Common Stock 19,502 Capital in Excess of Par Value 452,996 F. In October 1993, the Company regained possession of a property through foreclosure. The Company held a note on the property with a net balance of $1.5 million. 10. Related Party Transactions A. Advisory Agreement In August 1994, in connection with the Consolidation, the Company entered into an advisory agreement under which R.I.C. Advisor, Inc. advised the Company with respect to its investments and assumed day-to-day management of the Company (the "Advisory Agreement"). The Advisory Agreement provided for a monthly advisor fee equal to 0.1189% of the appraised value of the real estate properties as of the Consolidation date plus the current book value of the non-real estate assets of the Company. Amounts incurred under the Advisory Agreement for the period from January 1, 1995 through August 17, 1995 and August 15, 1994 through December 31, 1994 were $3.7 million and $2.2 million, respectively. Prior to the Consolidation, the general partners of the Partnerships received management fees and reimbursements from the Partnerships (Note 10B). On August 17, 1995, the Advisor was merged into the Company (Note 3). As part of the Merger, the Advisory Agreement was terminated. Page 57 10. Related Party Transactions (continued) B. Related Party Transactions Prior to the Consolidation Cash Distributions - The Advisor and William E. and Evelyn J. Clark, the former general partners of the Partnerships, collectively, received approximately 1.0% of the Partnerships' distributions. For the period from January 1, 1994 through August 15, 1994 and the year ended December 31, 1993, the general partners' distributions totaled $342,000 and $436,000, respectively. Management Fees - The Advisor received management fees of approximately 1.5% of gross receipts of the Partnerships. For the period from January 1, 1994 through August 15, 1994 and the year ended December 31, 1993, management fees totaled $432,000 and $762,000, respectively. Administrative Expenses - The Advisor received reimbursements for personnel and overhead costs incurred to administer the operations of the Partnerships. For the period from January 1, 1994 through August 15, 1994 and the year ended December 31, 1993, reimbursements totaled $2.8 million and $4.3 million, respectively. The administrative expenses and management fees described in the preceding paragraphs are included in advisor fees in the accompanying consolidated statements of income. 11. Employee Benefit Plan As a result of the Merger on August 17, 1995, the Company assumed a defined benefit pension plan (the "Plan") covering substantially all of its employees. The Plan's benefit formulas generally based payments to retired employees upon their length of service and a percentage of qualifying compensation during the final years of employment. The Company's funding policy was to contribute annually the amount necessary to satisfy the Internal Revenue Service's funding standards. The Plan did not provide for funding of prior service costs. The board of directors of the Advisor froze the Plan effective May 31, 1995. No additional employees were entitled to enter the Plan after May 31, 1995. For each Plan participant, the accrued benefit earned under the Plan was frozen as of May 31, 1995. In October 1995, the Company declared its intent to terminate the Plan, and the Plan was terminated on January 2, 1996. Page 58 11. Employee Benefit Plan (continued) The following table sets forth the Plan's funded status and amounts recognized in the Company's financial statements as of December 31, 1995 (dollars in thousands): Actuarial Present Value of Benefit Obligations: Accumulated Benefit Obligation, All Vested $(7,526) Plan Assets at Fair Value, Primarily Listed Stock and Cash and Cash Equivalents 5,319 ------- Benefit Obligation in Excess of Plan Assets (Included in Other Liabilities) $(2,207) ======= Assumptions Used: Discount Rates 6.0% Rates of Increase in Compensation Levels N/A Expected Long-Term Rates of Return on Assets 8.0% At December 31, 1995, the benefit obligation in excess of plan assets is included in other liabilities in the accompanying balance sheet. In connection with the Merger, the Company assumed a benefit obligation of $1,714,000. The Merger agreement provides for indemnification by the former shareholders of the Advisor with respect to increases in the benefit obligation. Pursuant to the Merger agreement, an escrow was established to satisfy certain contingencies, including any potential increases in the benefit obligation. Therefore, a receivable from the Advisor's former shareholders has been recorded for $493,000, and is included as due from affiliates in the accompanying consolidated balance sheets as of December 31, 1995. 12. Stock Incentive Plan On September 9, 1993, the board of directors and the original stockholder of the Company approved a stock incentive plan (the "Stock Plan") designed to attract and retain directors, officers and employees of the Company by enabling such individuals to participate in the ownership of the Company. The Stock Plan provides for the award (subject to ownership limitations) of a broad variety of stock-based compensation alternatives such as nonqualified stock options, incentive stock options, restricted stock and performance awards. In August 1994, options were granted to each of the three independent directors to purchase 10,000 shares of the Company's stock at an exercise price of $20 per share (the estimated value of the shares at the date of grant). These options vest during the directors' continued service periods at a rate of 2,500 shares per year. At December 31, 1995, options to acquire 7,500 shares were vested. Page 59 13. Commitments and Contingencies As of December 31, 1995, the Company had entered into agreements with unrelated parties to acquire two properties to be purchased under sale/leaseback agreements for an estimated aggregate amount of $2.3 million and to fund two buildings under construction on land owned by the Company for an estimated aggregate amount of $1.3 million. In the ordinary course of its business, the Company is a party to various legal actions which the Company believes are routine in nature and incidental to the operation of the business of the Company. The Company believes that the outcome of the proceedings will not have a material adverse effect upon its operations or financial condition. Page 60 REALTY INCOME CORPORATION AND SUBSIDIARIES CONSOLIDATED QUARTERLY FINANCIAL DATA (dollars in thousands, except per share data) (not covered by Independent Auditors' Report)
First Second Third Fourth 1995 Quarter Quarter Quarter Quarter Year ==== ======= ======= ======= ======= ======= Total Revenue $11,928 $12,243 $13,102 $14,282 $51,555 Depreciation and Amortization Expense 3,345 3,586 3,863 4,055 14,849 Other Expenses 2,659 2,863 3,098 2,504 11,124 Income from Operations 5,924 5,794 6,141 7,723 25,582 Net Income 6,001 5,794 6,120 7,685 25,600 Net Income Per Share 0.31 0.30 0.31 0.35 1.27 1994 ==== Total Revenue $12,251 $11,760 $12,177 $12,675 $48,863 Depreciation and Amortization Expense 3,464 3,449 3,449 3,428 13,790 Other Expenses (except Con- solidation Costs) 1,959 2,135 2,822 2,897 9,813 Consolidation Costs (1) -- -- 11,201 -- 11,201 Income (Loss) from Operations 6,828 6,176 (5,295) 6,350 14,059 Net Income (Loss) 6,643 6,727 (5,295) 7,149 15,224 Net Income (Loss) Per Share 0.34 0.34 (0.27) 0.37 0.78
(1) The Consolidation costs expensed in the third quarter of 1994 represent the costs of the Consolidation of the Company and 25 private and public partnerships on August 15, 1994. The Consolidation was accounted for in a manner similar to a pooling- of-interests. Page 61 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== La Petite Academy Birmingham AL $ 63,800 $ 295,791 None None La Petite Academy Huntsville AL 28,600 197,165 None None La Petite Academy Mobile AL 78,400 237,671 None None La Petite Academy Mobile AL 63,000 292,084 None None Children's World Chandler AZ 144,083 668,080 None None Children's World Chandler AZ 291,720 647,923 None None Children's World Chandler AZ 271,695 603,446 None None Burger King Douglas AZ 75,000 347,719 None None Auto Mall Glendale AZ 92,709 429,821 None None La Petite Academy Glendale AZ 115,000 285,172 None None Auto Mall Mesa AZ 271,754 1,259,910 None None Children's World Mesa AZ 276,770 590,417 None None Children's World Mesa AZ 297,500 660,755 None None Children's World Peoria AZ 281,750 625,779 None None Auto Mall Phoenix AZ 162,658 754,122 None None Auto Mall Phoenix AZ 322,708 1,496,143 185,465 10,462 Checker Autoworks Phoenix AZ 231,000 513,057 None None Checker Autoworks Phoenix AZ 71,750 159,359 None None
Page 62 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ La Petite Academy Birmingham AL $ 63,800 $ 295,791 $ 359,591 La Petite Academy Huntsville AL 28,600 197,165 225,765 La Petite Academy Mobile AL 78,400 237,671 316,071 La Petite Academy Mobile AL 63,000 292,084 355,084 Children's World Chandler AZ 144,083 668,080 812,163 Children's World Chandler AZ 291,720 647,923 939,643 Children's World Chandler AZ 271,695 603,446 875,141 Burger King Douglas AZ 75,000 347,719 422,719 Auto Mall Glendale AZ 92,709 429,821 522,530 La Petite Academy Glendale AZ 115,000 285,172 400,172 Auto Mall Mesa AZ 271,754 1,259,910 1,531,664 Children's World Mesa AZ 276,770 590,417 867,187 Children's World Mesa AZ 297,500 660,755 958,255 Children's World Peoria AZ 281,750 625,779 907,529 Auto Mall Phoenix AZ 162,658 754,122 916,780 Auto Mall Phoenix AZ 322,708 1,692,070 2,014,778 Checker Autoworks Phoenix AZ 231,000 513,057 744,057 Checker Autoworks Phoenix AZ 71,750 159,359 231,109
Page 63 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== La Petite Academy Birmingham AL $ 175,794 N/A 10/31/84 300 La Petite Academy Huntsville AL 178,542 N/A 06/15/82 180 La Petite Academy Mobile AL 209,942 N/A 10/15/82 180 La Petite Academy Mobile AL 163,334 N/A 04/25/85 300 Children's World Chandler AZ 304,160 N/A 12/17/86 300 Children's World Chandler AZ 172,863 N/A 12/11/87 300 Children's World Chandler AZ 161,104 N/A 12/14/87 300 Burger King Douglas AZ 177,696 N/A 11/27/85 300 Auto Mall Glendale AZ 215,970 N/A 01/30/86 300 La Petite Academy Glendale AZ 226,542 N/A 02/08/84 180 Auto Mall Mesa AZ 606,057 N/A 06/30/86 300 Children's World Mesa AZ 143,242 N/A 09/29/88 300 Children's World Mesa AZ 160,303 N/A 09/29/88 300 Children's World Peoria AZ 161,943 N/A 03/30/88 300 Auto Mall Phoenix AZ 378,923 N/A 01/30/86 300 Auto Mall Phoenix AZ 723,075 N/A 06/30/86 300 Checker Autoworks Phoenix AZ 138,312 N/A 11/09/87 300 Checker Autoworks Phoenix AZ 42,960 N/A 11/19/87 300
Page 64 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Checker Autoworks Phoenix AZ 222,950 495,178 None None Children's World Phoenix AZ 318,500 707,397 None None Kinder-Care Phoenix AZ 264,504 587,471 None None Kinder-Care Phoenix AZ 260,719 516,181 None None Children's World Scottsdale AZ 291,993 648,530 None None Children's World Tempe AZ 292,200 648,989 None None Children's World Tempe AZ 294,000 638,977 None None Checker Autoworks Tucson AZ 194,250 431,434 None None Children's World Tucson AZ 304,500 676,303 None None Children's World Tucson AZ 283,500 546,878 None None Discount Tire Store Tucson AZ 178,297 396,005 None None Taco Bell Tucson AZ 107,393 497,904 None None Discount Tire Store Yuma AZ 120,750 268,190 None None Children's World Calabasas CA 156,430 725,248 None None Children's World Carmichael CA 131,035 607,507 None None Levitz Furniture Cathedral City CA 1,006,923 2,293,077 None None
Page 65 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Checker Autoworks Phoenix AZ 222,950 495,178 718,128 Children's World Phoenix AZ 318,500 707,397 1,025,897 Kinder-Care Phoenix AZ 264,504 587,471 851,975 Kinder-Care Phoenix AZ 260,719 516,181 776,900 Children's World Scottsdale AZ 291,993 648,530 940,523 Children's World Tempe AZ 292,200 648,989 941,189 Children's World Tempe AZ 294,000 638,977 932,977 Checker Autoworks Tucson AZ 194,250 431,434 625,684 Children's World Tucson AZ 304,500 676,303 980,803 Children's World Tucson AZ 283,500 546,878 830,378 Discount Tire Store Tucson AZ 178,297 396,005 574,302 Taco Bell Tucson AZ 107,393 497,904 605,297 Discount Tire Store Yuma AZ 120,750 268,190 388,940 Children's World Calabasas CA 156,430 725,248 881,678 Children's World Carmichael CA 131,035 607,507 738,542 Levitz Furniture Cathedral City CA 1,006,923 2,293,077 3,300,000
Page 66 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Checker Autoworks Phoenix AZ 103,390 N/A 11/02/89 300 Children's World Phoenix AZ 171,619 N/A 09/29/88 300 Kinder-Care Phoenix AZ 109,327 N/A 06/29/90 300 Kinder-Care Phoenix AZ 87,741 N/A 12/26/90 300 Children's World Scottsdale AZ 173,080 N/A 12/14/87 300 Children's World Tempe AZ 167,950 N/A 03/10/88 300 Children's World Tempe AZ 121,487 N/A 09/27/90 300 Checker Autoworks Tucson AZ 117,471 N/A 10/30/87 300 Children's World Tucson AZ 164,076 N/A 09/28/88 300 Children's World Tucson AZ 132,676 N/A 09/29/88 300 Discount Tire Store Tucson AZ 79,018 N/A 01/19/90 300 Taco Bell Tucson AZ 250,615 N/A 01/17/86 300 Discount Tire Store Yuma AZ 53,514 N/A 01/23/90 300 Children's World Calabasas CA 376,837 N/A 09/26/85 300 Children's World Carmichael CA 287,017 N/A 08/22/86 300 Levitz Furniture Cathedral City CA 57,327 N/A 05/26/95 300
Page 67 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Children's World Chino CA 155,000 634,071 None None Chino Commercial Center Chino CA 80,000 154,303 None None Children's World Chula Vista CA 350,563 778,614 None None Levitz Furniture Concord CA 4,162,500 3,037,500 None None Children's World Corona CA 144,856 671,585 None None Pizza Hut Diamond Bar CA 76,117 183,052 None 15,000 Children's World El Cajon CA 157,804 731,621 None None Children's World Encinitas CA 320,000 710,729 None None La Petite Academy Escondido CA 276,286 613,638 None None The Fitness Club & More Escondido CA 332,500 904,690 135,826 61,140 La Petite Academy Folsom CA 281,563 625,363 None None Medical 21 Fresno CA 428,900 3,434,562 None None Fullerton Commer- cial Center Fullerton CA 112,791 158,545 None 26,561 Kragen Autoworks Grass Valley CA 325,000 384,955 None None Der Wiener- schnitzel Hemet CA 106,164 199,179 None None Kragen Autoworks Jackson CA 300,000 390,849 None None
Page 68 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Children's World Chino CA 155,000 634,071 789,071 Chino Commercial Center Chino CA 80,000 154,303 234,303 Children's World Chula Vista CA 350,563 778,614 1,129,177 Levitz Furniture Concord CA 4,162,500 3,037,500 7,200,000 Children's World Corona CA 144,856 671,585 816,441 Pizza Hut Diamond Bar CA 76,117 198,052 274,169 Children's World El Cajon CA 157,804 731,621 889,425 Children's World Encinitas CA 320,000 710,729 1,030,729 La Petite Academy Escondido CA 276,286 613,638 889,924 The Fitness Club & More Escondido CA 332,500 1,101,656 1,434,156 La Petite Academy Folsom CA 281,563 625,363 906,926 Medical 21 Fresno CA 428,900 3,434,562 3,863,462 Fullerton Commer- cial Center Fullerton CA 112,791 185,106 297,897 Kragen Autoworks Grass Valley CA 325,000 384,955 709,955 Der Wiener- schnitzel Hemet CA 106,164 199,179 305,343 Kragen Autoworks Jackson CA 300,000 390,849 690,849
Page 69 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Children's World Chino CA 517,715 N/A 10/06/83 180 Chino Commercial Center Chino CA 151,689 N/A 06/23/75 300 Children's World Chula Vista CA 212,003 N/A 10/30/87 300 Levitz Furniture Concord CA 75,938 N/A 05/31/95 300 Children's World Corona CA 392,817 N/A 12/19/84 300 Pizza Hut Diamond Bar CA 159,733 N/A 09/25/78 300 Children's World El Cajon CA 370,748 N/A 12/19/85 300 Children's World Encinitas CA 189,681 N/A 12/29/87 300 La Petite Academy Escondido CA 163,767 N/A 12/31/87 300 The Fitness Club & More Escondido CA 281,106 N/A 01/11/84 180 La Petite Academy Folsom CA 171,821 N/A 10/23/87 300 Medical 21 Fresno CA 3,017,477 N/A 10/29/82 180 Fullerton Commer- cial Center Fullerton CA 164,563 N/A 11/08/72 300 Kragen Autoworks Grass Valley CA 95,324 N/A 05/20/88 300 Der Wiener- schnitzel Hemet CA 176,724 N/A 04/15/77 300 Kragen Autoworks Jackson CA 92,150 N/A 05/17/88 300
Page 70 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== La Petite Academy Mission Viejo CA 353,891 744,367 None None Children's World Moreno Valley CA 304,489 676,214 None None Children's World Oceanside CA 145,568 674,889 None None La Petite Academy Palmdale CA 249,490 554,125 None None Pay N Play Paramount CA 86,400 278,827 None None La Petite Academy R. Cordova CA 276,328 613,733 None None Children's World R. Cucamonga CA 471,733 1,047,739 None None Sizzler R. Cucamonga CA 230,733 481,225 None None Taco Bell R. Cucamonga CA 95,192 441,334 None None Golden Corral Red Bluff CA 136,740 633,984 None None Der Wiener- schnitzel Riverside CA 90,000 170,394 None None Vacant Riverside CA 225,795 534,679 None 21,560 La Petite Academy Roseville CA 297,343 660,412 None None Children's World Sacramento CA 290,734 645,731 None None Kragen Autoworks Sacramento CA 210,000 466,419 None None Empire Business Center San Diego CA 5,797,411 15,311,772 None 122,143 R.I.C. Trade Ctr San Diego CA 3,745,000 8,777,176 None 62,826
Page 71 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ La Petite Academy Mission Viejo CA 353,891 744,367 1,098,258 Children's World Moreno Valley CA 304,489 676,214 980,703 Children's World Oceanside CA 145,568 674,889 820,457 La Petite Academy Palmdale CA 249,490 554,125 803,615 Pay N Play Paramount CA 86,400 278,827 365,227 La Petite Academy R. Cordova CA 276,328 613,733 890,061 Children's World R. Cucamonga CA 471,733 1,047,739 1,519,472 Sizzler R. Cucamonga CA 230,733 481,225 711,958 Taco Bell R. Cucamonga CA 95,192 441,334 536,526 Golden Corral Red Bluff CA 136,740 633,984 770,724 Der Wiener- schnitzel Riverside CA 90,000 170,394 260,394 Vacant Riverside CA 225,795 556,239 782,034 La Petite Academy Roseville CA 297,343 660,412 957,755 Children's World Sacramento CA 290,734 645,731 936,465 Kragen Autoworks Sacramento CA 210,000 466,419 676,419 Empire Business Center San Diego CA 5,797,411 15,433,915 21,231,326 R.I.C. Trade Ctr San Diego CA 3,745,000 8,840,002 12,585,002
Page 72 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== La Petite Academy Mission Viejo CA 94,597 N/A 06/24/93 300 Children's World Moreno Valley CA 198,741 N/A 02/11/87 300 Children's World Oceanside CA 341,999 N/A 12/23/85 300 La Petite Academy Palmdale CA 134,434 N/A 09/14/88 300 Pay N Play Paramount CA 224,993 N/A 11/22/83 180 La Petite Academy R. Cordova CA 138,977 N/A 03/23/89 300 Children's World R. Cucamonga CA 279,624 N/A 12/30/87 300 Sizzler R. Cucamonga CA 467,814 N/A 04/03/81 180 Taco Bell R. Cucamonga CA 223,646 N/A 12/20/85 300 Golden Corral Red Bluff CA 288,639 N/A 12/18/86 300 Der Wiener- schnitzel Riverside CA 153,582 N/A 12/09/76 300 Vacant Riverside CA 168,049 N/A 10/01/81 180 La Petite Academy Roseville CA 181,439 N/A 10/22/87 300 Children's World Sacramento CA 175,820 N/A 10/05/87 300 Kragen Autoworks Sacramento CA 125,738 N/A 11/25/87 300 Empire Business Center San Diego CA 3,899,649 01/20/89 08/05/87 300 R.I.C. Trade Ctr San Diego CA 4,208,641 03/08/86 03/25/86 300
Page 73 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Silverton Business Center San Diego CA 2,485,160 8,595,722 None 52,100 Sizzler San Dimas CA 240,562 445,521 None None Garcia's San Ramon CA 406,000 1,126,930 None None La Petite Academy Santee CA 248,418 551,748 None None Children's World Simi Valley CA 208,585 967,055 None None Kragen Autoworks Turlock CA 222,250 493,627 None None La Petite Academy Valencia CA 301,295 669,185 None None Children's World Walnut CA 217,365 1,007,753 None None Children's World Aurora CO 141,811 657,497 None None Children's World Aurora CO 287,000 637,440 None None Children's World Aurora CO 301,455 655,609 None None Discount Tire Store Aurora CO 221,691 492,382 None None Wrangler 2 Boulder CO 426,675 822,676 18,000 None Children's World Broomfield CO 107,000 403,080 None None La Petite Academy Broomfield CO 155,306 344,941 None None Checker Autoworks Canon City CO 66,500 147,699 None None Children's World Co. Springs CO 115,542 535,700 None None
Page 74 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Silverton Business Center San Diego CA 2,485,160 8,647,822 11,132,982 Sizzler San Dimas CA 240,562 445,521 686,083 Garcia's San Ramon CA 406,000 1,126,930 1,532,930 La Petite Academy Santee CA 248,418 551,748 800,166 Children's World Simi Valley CA 208,585 967,055 1,175,640 Kragen Autoworks Turlock CA 222,250 493,627 715,877 La Petite Academy Valencia CA 301,295 669,185 970,480 Children's World Walnut CA 217,365 1,007,753 1,225,118 Children's World Aurora CO 141,811 657,497 799,308 Children's World Aurora CO 287,000 637,440 924,440 Children's World Aurora CO 301,455 655,609 957,064 Discount Tire Store Aurora CO 221,691 492,382 714,073 Wrangler 2 Boulder CO 426,675 840,676 1,267,351 Children's World Broomfield CO 107,000 403,080 510,080 La Petite Academy Broomfield CO 155,306 344,941 500,247 Checker Autoworks Canon City CO 66,500 147,699 214,199 Children's World Co. Springs CO 115,542 535,700 651,242
Page 75 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Silverton Business Center San Diego CA 2,415,097 01/23/89 09/19/86 300 Sizzler San Dimas CA 436,610 N/A 03/12/81 180 Garcia's San Ramon CA 907,734 N/A 12/08/83 180 La Petite Academy Santee CA 154,703 N/A 07/23/87 300 Children's World Simi Valley CA 490,058 N/A 12/20/85 300 Kragen Autoworks Turlock CA 131,741 N/A 12/30/87 300 La Petite Academy Valencia CA 167,762 N/A 06/23/88 300 Children's World Walnut CA 476,114 N/A 08/22/86 300 Children's World Aurora CO 324,734 N/A 03/25/86 300 Children's World Aurora CO 170,120 N/A 12/31/87 300 Children's World Aurora CO 185,180 N/A 09/27/89 300 Discount Tire Store Aurora CO 98,249 N/A 01/29/90 300 Wrangler 2 Boulder CO 667,125 N/A 01/05/84 180 Children's World Broomfield CO 349,205 N/A 01/12/83 180 La Petite Academy Broomfield CO 89,267 N/A 03/15/88 300 Checker Autoworks Canon City CO 39,817 N/A 11/12/87 300 Children's World Co. Springs CO 246,103 N/A 12/04/86 300
Page 76 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Discount Tire Store Co. Springs CO 280,193 622,317 None None Discount Tire Store Co. Springs CO 192,988 433,542 None None Hardee's Co. Springs CO 152,000 704,736 None None Hardee's Co. Springs CO 313,250 695,730 None None La Petite Academy Co. Springs CO 58,400 271,217 None None La Petite Academy Co. Springs CO 92,570 241,413 None None Checker Autoworks Denver CO 141,400 314,056 None None Checker Autoworks Denver CO 315,000 699,623 None None Checker Autoworks Denver CO 283,500 629,666 None None Jiffy Lube Denver CO 79,717 369,586 None None Children's World Englewood CO 131,216 608,372 None None Children's World Englewood CO 158,651 735,571 None None Children's World Fort Collins CO 117,105 542,950 None None Children's World Fort Collins CO 137,734 638,594 None None La Petite Academy Fort Collins CO 55,200 256,356 None None La Petite Academy Greeley CO 58,400 270,755 None None Checker Autoworks Littleton CO 252,925 561,759 None None
Page 77 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Discount Tire Store Co. Springs CO 280,193 622,317 902,510 Discount Tire Store Co. Springs CO 192,988 433,542 626,530 Hardee's Co. Springs CO 152,000 704,736 856,736 Hardee's Co. Springs CO 313,250 695,730 1,008,980 La Petite Academy Co. Springs CO 58,400 271,217 329,617 La Petite Academy Co. Springs CO 92,570 241,413 333,983 Checker Autoworks Denver CO 141,400 314,056 455,456 Checker Autoworks Denver CO 315,000 699,623 1,014,623 Checker Autoworks Denver CO 283,500 629,666 913,166 Jiffy Lube Denver CO 79,717 369,586 449,303 Children's World Englewood CO 131,216 608,372 739,588 Children's World Englewood CO 158,651 735,571 894,222 Children's World Fort Collins CO 117,105 542,950 660,055 Children's World Fort Collins CO 137,734 638,594 776,328 La Petite Academy Fort Collins CO 55,200 256,356 311,556 La Petite Academy Greeley CO 58,400 270,755 329,155 Checker Autoworks Littleton CO 252,925 561,759 814,684
Page 78 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Discount Tire Store Co. Springs CO 124,175 N/A 01/23/90 300 Discount Tire Store Co. Springs CO 47,645 N/A 05/20/93 300 Hardee's Co. Springs CO 329,925 N/A 09/30/86 300 Hardee's Co. Springs CO 202,596 N/A 03/10/87 300 La Petite Academy Co. Springs CO 234,335 N/A 12/22/82 180 La Petite Academy Co. Springs CO 199,744 N/A 08/31/83 180 Checker Autoworks Denver CO 84,663 N/A 11/18/87 300 Checker Autoworks Denver CO 177,277 N/A 05/16/88 300 Checker Autoworks Denver CO 159,551 N/A 05/27/88 300 Jiffy Lube Denver CO 191,972 N/A 10/08/85 300 Children's World Englewood CO 279,489 N/A 12/05/86 300 Children's World Englewood CO 334,887 N/A 12/29/86 300 Children's World Fort Collins CO 268,158 N/A 03/25/86 300 Children's World Fort Collins CO 315,397 N/A 03/25/86 300 La Petite Academy Fort Collins CO 221,829 N/A 12/22/82 180 La Petite Academy Greeley CO 159,701 N/A 11/21/84 300 Checker Autoworks Littleton CO 146,891 N/A 02/12/88 300
Page 79 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Children's World Littleton CO 287,000 637,435 None None Children's World Littleton CO 299,250 664,642 None None La Petite Academy Littleton CO 161,617 358,956 None None Children's World Longmont CO 115,592 535,931 None None La Petite Academy Louisville CO 58,089 269,313 None None Golden Corral Montrose CO 217,595 483,284 None None La Petite Academy Parker CO 153,551 341,043 None None Discount Tire Store Pueblo CO 196,994 437,530 None None Hardee's Security CO 150,000 695,463 None None Golden Corral Sterling CO 95,320 441,928 None None Children's World Westminster CO 306,387 695,737 None None La Estrellita Enterprises Westminster CO 338,940 1,571,401 20,000 13,440 Dairy Mart Manchester CT 118,262 305,510 None None Dairy Mart Vernon CT 179,646 319,372 None None Dairy Mart Westbrook CT 98,247 373,340 None None La Petite Academy Bradenton FL 160,060 355,501 None None Sizzler Casselberry FL 403,900 897,075 None None
Page 80 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Children's World Littleton CO 287,000 637,435 924,435 Children's World Littleton CO 299,250 664,642 963,892 La Petite Academy Littleton CO 161,617 358,956 520,573 Children's World Longmont CO 115,592 535,931 651,523 La Petite Academy Louisville CO 58,089 269,313 327,402 Golden Corral Montrose CO 217,595 483,284 700,879 La Petite Academy Parker CO 153,551 341,043 494,594 Discount Tire Store Pueblo CO 196,994 437,530 634,524 Hardee's Security CO 150,000 695,463 845,463 Golden Corral Sterling CO 95,320 441,928 537,248 Children's World Westminster CO 306,387 695,737 1,002,124 La Estrellita Enterprises Westminster CO 338,940 1,604,841 1,943,781 Dairy Mart Manchester CT 118,262 305,510 423,772 Dairy Mart Vernon CT 179,646 319,372 499,018 Dairy Mart Westbrook CT 98,247 373,340 471,587 La Petite Academy Bradenton FL 160,060 355,501 515,561 Sizzler Casselberry FL 403,900 897,075 1,300,975
Page 81 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Children's World Littleton CO 154,646 N/A 09/29/88 300 Children's World Littleton CO 161,247 N/A 09/29/88 300 La Petite Academy Littleton CO 95,795 N/A 12/10/87 300 Children's World Longmont CO 264,693 N/A 03/25/86 300 La Petite Academy Louisville CO 164,883 N/A 06/22/84 300 Golden Corral Montrose CO 128,979 N/A 12/16/87 300 La Petite Academy Parker CO 93,696 N/A 10/19/87 300 Discount Tire Store Pueblo CO 87,303 N/A 01/26/90 300 Hardee's Security CO 325,585 N/A 09/30/86 300 Golden Corral Sterling CO 258,685 N/A 12/27/84 300 Children's World Westminster CO 175,366 N/A 09/27/89 300 La Estrellita Enterprises Westminster CO 974,497 N/A 06/28/84 300 Dairy Mart Manchester CT 9,675 N/A 03/03/95 300 Dairy Mart Vernon CT 10,113 N/A 03/09/95 300 Dairy Mart Westbrook CT 11,822 N/A 03/09/95 300 La Petite Academy Bradenton FL 90,082 N/A 05/05/88 300 Sizzler Casselberry FL 172,779 N/A 12/20/89 300
Page 82 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== La Petite Academy Clearwater FL 42,223 269,380 None None La Petite Academy Fort Myers FL 66,100 210,462 None None Golden Corral Green Cove Springs FL 86,240 399,828 None None Arby's Jacksonville FL 150,210 693,446 None None Arby's Jacksonville FL 143,299 664,373 None None Jiffy Lube Jacksonville FL 76,585 355,066 None None La Petite Academy Jacksonville FL 38,500 228,481 None None La Petite Academy Jacksonville FL 48,000 243,060 None None La Petite Academy Jacksonville FL 184,800 410,447 None None La Petite Academy Jupiter FL 78,000 360,088 None None Jiffy Lube Lauderdale Lakes FL 65,987 305,931 None None La Petite Academy Margate FL 66,686 309,183 None None La Petite Academy Melbourne FL 256,439 549,345 None None La Petite Academy Niceville FL 73,696 341,688 None None La Petite Academy Orange Park FL 45,000 208,986 None None La Petite Academy Orlando FL 68,001 313,922 None None La Petite Academy Orlando FL 159,177 353,538 None None
Page 83 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ La Petite Academy Clearwater FL 42,223 269,380 311,603 La Petite Academy Fort Myers FL 66,100 210,462 276,562 Golden Corral Green Cove Springs FL 86,240 399,828 486,068 Arby's Jacksonville FL 150,210 693,446 843,656 Arby's Jacksonville FL 143,299 664,373 807,672 Jiffy Lube Jacksonville FL 76,585 355,066 431,651 La Petite Academy Jacksonville FL 38,500 228,481 266,981 La Petite Academy Jacksonville FL 48,000 243,060 291,060 La Petite Academy Jacksonville FL 184,800 410,447 595,247 La Petite Academy Jupiter FL 78,000 360,088 438,088 Jiffy Lube Lauderdale Lakes FL 65,987 305,931 371,918 La Petite Academy Margate FL 66,686 309,183 375,869 La Petite Academy Melbourne FL 256,439 549,345 805,784 La Petite Academy Niceville FL 73,696 341,688 415,384 La Petite Academy Orange Park FL 45,000 208,986 253,986 La Petite Academy Orlando FL 68,001 313,922 381,923 La Petite Academy Orlando FL 159,177 353,538 512,715
Page 84 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== La Petite Academy Clearwater FL 251,422 N/A 12/22/81 180 La Petite Academy Fort Myers FL 190,585 N/A 06/15/82 180 Golden Corral Green Cove Springs FL 234,041 N/A 12/19/84 300 Arby's Jacksonville FL 363,087 N/A 09/13/85 300 Arby's Jacksonville FL 339,403 N/A 12/13/85 300 Jiffy Lube Jacksonville FL 179,932 N/A 12/23/85 300 La Petite Academy Jacksonville FL 213,249 N/A 12/22/81 180 La Petite Academy Jacksonville FL 226,856 N/A 12/22/81 180 La Petite Academy Jacksonville FL 92,944 N/A 03/30/89 300 La Petite Academy Jupiter FL 188,539 N/A 09/11/85 300 Jiffy Lube Lauderdale Lakes FL 152,411 N/A 02/19/86 300 La Petite Academy Margate FL 140,765 N/A 12/16/86 300 La Petite Academy Melbourne FL 71,143 N/A 04/16/93 300 La Petite Academy Niceville FL 156,965 N/A 12/03/86 300 La Petite Academy Orange Park FL 189,247 N/A 06/15/82 180 La Petite Academy Orlando FL 164,366 N/A 09/04/85 300 La Petite Academy Orlando FL 99,126 N/A 07/02/87 300
Page 85 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== La Petite Academy Orlando FL 245,249 544,704 None None La Petite Academy Orlando FL 190,050 422,107 None None Sizzler Orlando FL 230,000 1,066,339 None None Sizzler Orlando FL 209,800 972,679 None None Taco Bell Orlando FL 339,500 746,333 None None La Petite Academy Oviedo FL 166,409 369,598 None None La Petite Academy Panama City FL 69,500 244,314 None None La Petite Academy Pensacola FL 147,000 326,492 None None La Petite Academy Royal Palm Beach FL 194,193 431,309 None None Jiffy Lube Seminole FL 68,000 315,266 None None La Petite Academy Spring Hill FL 146,939 326,356 None None La Petite Academy St. Augustine FL 44,800 213,040 None None Jiffy Lube Sunrise FL 80,253 372,069 None None La Petite Academy Sunrise FL 69,400 246,671 None None La Petite Academy Sunrise FL 245,000 533,280 None None La Petite Academy Tallahassee FL 66,000 232,010 None None Jiffy Lube Tampa FL 67,000 310,629 None None
Page 86 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ La Petite Academy Orlando FL 245,249 544,704 789,953 La Petite Academy Orlando FL 190,050 422,107 612,157 Sizzler Orlando FL 230,000 1,066,339 1,296,339 Sizzler Orlando FL 209,800 972,679 1,182,479 Taco Bell Orlando FL 339,500 746,333 1,085,833 La Petite Academy Oviedo FL 166,409 369,598 536,007 La Petite Academy Panama City FL 69,500 244,314 313,814 La Petite Academy Pensacola FL 147,000 326,492 473,492 La Petite Academy Royal Palm Beach FL 194,193 431,309 625,502 Jiffy Lube Seminole FL 68,000 315,266 383,266 La Petite Academy Spring Hill FL 146,939 326,356 473,295 La Petite Academy St. Augustine FL 44,800 213,040 257,840 Jiffy Lube Sunrise FL 80,253 372,069 452,322 La Petite Academy Sunrise FL 69,400 246,671 316,071 La Petite Academy Sunrise FL 245,000 533,280 778,280 La Petite Academy Tallahassee FL 66,000 232,010 298,010 Jiffy Lube Tampa FL 67,000 310,629 377,629
Page 87 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== La Petite Academy Orlando FL 145,369 N/A 12/10/87 300 La Petite Academy Orlando FL 95,584 N/A 03/30/89 300 Sizzler Orlando FL 544,935 N/A 11/18/85 300 Sizzler Orlando FL 463,553 N/A 08/15/86 300 Taco Bell Orlando FL 195,154 N/A 02/03/88 300 La Petite Academy Oviedo FL 99,629 N/A 11/20/87 300 La Petite Academy Panama City FL 221,239 N/A 06/15/82 180 La Petite Academy Pensacola FL 73,933 N/A 03/28/89 300 La Petite Academy Royal Palm Beach FL 102,315 N/A 11/15/88 300 Jiffy Lube Seminole FL 159,762 N/A 12/23/85 300 La Petite Academy Spring Hill FL 87,971 N/A 11/24/87 300 La Petite Academy St. Augustine FL 198,838 N/A 12/22/81 180 Jiffy Lube Sunrise FL 186,891 N/A 02/14/86 300 La Petite Academy Sunrise FL 223,373 N/A 06/15/82 180 La Petite Academy Sunrise FL 123,385 N/A 05/25/89 300 La Petite Academy Tallahassee FL 210,097 N/A 06/15/82 180 Jiffy Lube Tampa FL 157,412 N/A 12/27/85 300
Page 88 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Jiffy Lube Tampa FL 70,000 324,538 None None Jiffy Lube Tampa FL 86,502 401,041 None None La Petite Academy Tampa FL 53,385 199,846 None None Levitz Furniture Winter Park FL 2,404,598 3,382,402 None None Jiffy Lube Atlanta GA 55,840 258,889 None None Jiffy Lube Atlanta GA 78,646 364,625 None None Minit Lube Bogart GA 66,807 309,732 None None La Petite Academy Douglasville GA 54,000 250,356 None None Children's World Dunwoody GA 318,500 707,399 None None La Petite Academy Ellenwood GA 119,678 275,414 None None La Petite Academy Fayetteville GA 148,400 329,601 None None Minit Lube Gainesville GA 53,589 248,452 None None Taco Bell Garden City GA 197,225 438,043 None None Golden Corral Hinesville GA 89,220 413,644 None None Taco Bell Hinesville GA 172,611 383,376 None None La Petite Academy Lawrenceville GA 141,449 314,161 None None Children's World Lilburn GA 116,350 539,488 None None La Petite Academy Lithia Springs GA 187,444 363,358 None None
Page 89 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Jiffy Lube Tampa FL 70,000 324,538 394,538 Jiffy Lube Tampa FL 86,502 401,041 487,543 La Petite Academy Tampa FL 53,385 199,846 253,231 Levitz Furniture Winter Park FL 2,404,598 3,382,402 5,787,000 Jiffy Lube Atlanta GA 55,840 258,889 314,729 Jiffy Lube Atlanta GA 78,646 364,625 443,271 Minit Lube Bogart GA 66,807 309,732 376,539 La Petite Academy Douglasville GA 54,000 250,356 304,356 Children's World Dunwoody GA 318,500 707,399 1,025,899 La Petite Academy Ellenwood GA 119,678 275,414 395,092 La Petite Academy Fayetteville GA 148,400 329,601 478,001 Minit Lube Gainesville GA 53,589 248,452 302,041 Taco Bell Garden City GA 197,225 438,043 635,268 Golden Corral Hinesville GA 89,220 413,644 502,864 Taco Bell Hinesville GA 172,611 383,376 555,987 La Petite Academy Lawrenceville GA 141,449 314,161 455,610 Children's World Lilburn GA 116,350 539,488 655,838 La Petite Academy Lithia Springs GA 187,444 363,358 550,802
Page 90 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Jiffy Lube Tampa FL 164,460 N/A 12/27/85 300 Jiffy Lube Tampa FL 191,191 N/A 07/23/86 300 La Petite Academy Tampa FL 186,523 N/A 12/22/81 180 Levitz Furniture Winter Park FL 84,560 N/A 05/31/95 300 Jiffy Lube Atlanta GA 132,302 N/A 11/27/85 300 Jiffy Lube Atlanta GA 184,775 N/A 12/18/85 300 Minit Lube Bogart GA 156,959 N/A 12/20/85 300 La Petite Academy Douglasville GA 148,808 N/A 10/23/84 300 Children's World Dunwoody GA 167,808 N/A 11/16/88 300 La Petite Academy Ellenwood GA 65,333 N/A 11/16/88 300 La Petite Academy Fayetteville GA 74,637 N/A 03/29/89 300 Minit Lube Gainesville GA 125,902 N/A 12/19/85 300 Taco Bell Garden City GA 98,013 N/A 04/20/89 300 Golden Corral Hinesville GA 242,125 N/A 12/20/84 300 Taco Bell Hinesville GA 102,317 N/A 12/22/87 300 La Petite Academy Lawrenceville GA 77,911 N/A 07/07/88 300 Children's World Lilburn GA 245,616 N/A 12/23/86 300 La Petite Academy Lithia Springs GA 79,629 N/A 12/28/89 300
Page 91 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Golden Corral Lithonia GA 89,220 413,647 None None La Petite Academy Lithonia GA 239,715 524,459 None None Children's World Marietta GA 231,000 513,061 None None Children's World Marietta GA 273,000 619,076 None None Children's World Marietta GA 292,250 649,095 None None Children's World Marietta GA 295,750 596,299 None None Children's World Marietta GA 301,000 668,529 None None Jiffy Lube Marietta GA 60,900 293,461 None None Jiffy Lube Marietta GA 69,561 346,024 None None La Petite Academy Marietta GA 148,620 330,090 None None La Petite Academy Martinez GA 141,153 313,504 None None Minit Lube Riverdale GA 58,444 270,961 None None Minit Lube Rome GA 56,454 261,733 None None Taco Bell Savannah GA 143,993 345,548 None None Taco Bell Savannah GA 165,409 367,379 None None Children's World Smyrna GA 274,750 610,229 None None Taco Bell Statesboro GA 201,250 446,983 None None La Petite Academy Stockbridge GA 168,700 374,688 None None
Page 92 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Golden Corral Lithonia GA 89,220 413,647 502,867 La Petite Academy Lithonia GA 239,715 524,459 764,174 Children's World Marietta GA 231,000 513,061 744,061 Children's World Marietta GA 273,000 619,076 892,076 Children's World Marietta GA 292,250 649,095 941,345 Children's World Marietta GA 295,750 596,299 892,049 Children's World Marietta GA 301,000 668,529 969,529 Jiffy Lube Marietta GA 60,900 293,461 354,361 Jiffy Lube Marietta GA 69,561 346,024 415,585 La Petite Academy Marietta GA 148,620 330,090 478,710 La Petite Academy Martinez GA 141,153 313,504 454,657 Minit Lube Riverdale GA 58,444 270,961 329,405 Minit Lube Rome GA 56,454 261,733 318,187 Taco Bell Savannah GA 143,993 345,548 489,541 Taco Bell Savannah GA 165,409 367,379 532,788 Children's World Smyrna GA 274,750 610,229 884,979 Taco Bell Statesboro GA 201,250 446,983 648,233 La Petite Academy Stockbridge GA 168,700 374,688 543,388
Page 93 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Golden Corral Lithonia GA 242,058 N/A 01/04/85 300 La Petite Academy Lithonia GA 111,296 N/A 08/20/91 300 Children's World Marietta GA 132,773 N/A 03/18/88 300 Children's World Marietta GA 158,538 N/A 04/26/88 300 Children's World Marietta GA 152,228 N/A 12/02/88 300 Children's World Marietta GA 139,847 N/A 12/30/88 300 Children's World Marietta GA 156,785 N/A 12/30/88 300 Jiffy Lube Marietta GA 148,710 N/A 12/26/85 300 Jiffy Lube Marietta GA 167,875 N/A 06/03/86 300 La Petite Academy Marietta GA 80,103 N/A 09/16/88 300 La Petite Academy Martinez GA 83,665 N/A 12/31/87 300 Minit Lube Riverdale GA 136,149 N/A 01/15/86 300 Minit Lube Rome GA 132,632 N/A 12/20/85 300 Taco Bell Savannah GA 92,221 N/A 12/22/87 300 Taco Bell Savannah GA 98,048 N/A 12/22/87 300 Children's World Smyrna GA 144,758 N/A 11/15/88 300 Taco Bell Statesboro GA 91,594 N/A 11/14/89 300 La Petite Academy Stockbridge GA 84,846 N/A 03/28/89 300
Page 94 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Children's World Stone Mtn. GA 316,750 703,512 None None Golden Corral Stone Mtn. GA 215,940 1,001,188 None None La Petite Academy Stone Mtn. GA 65,000 301,357 None None La Petite Academy Valdosta GA 73,561 341,059 None None Golden Corral Ankeny IA 100,000 349,218 None None Golden Corral Boone IA 76,000 386,170 None None La Petite Academy Cedar Rapids IA 194,950 427,085 None None Checker Autoworks Council Bluffs IA 194,355 431,668 None None Golden Corral Indianola IA 155,000 370,252 None None La Petite Academy Iowa City IA 186,900 408,910 None None La Petite Academy Johnston IA 186,996 347,278 None None Schuck's Autoworks Boise ID 158,400 351,813 None None Schuck's Autoworks Boise ID 190,080 422,172 None None Taco Bell Boise ID 190,894 423,981 None None Taco Bell Boise ID 161,352 334,041 None None Schuck's Autoworks Coeur D'Alene ID 165,900 368,468 None None Schuck's Autoworks Lewiston ID 138,950 308,612 None None Schuck's Autoworks Moscow ID 117,250 260,417 None None
Page 95 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Children's World Stone Mtn. GA 316,750 703,512 1,020,262 Golden Corral Stone Mtn. GA 215,940 1,001,188 1,217,128 La Petite Academy Stone Mtn. GA 65,000 301,357 366,357 La Petite Academy Valdosta GA 73,561 341,059 414,620 Golden Corral Ankeny IA 100,000 349,218 449,218 Golden Corral Boone IA 76,000 386,170 462,170 La Petite Academy Cedar Rapids IA 194,950 427,085 622,035 Checker Autoworks Council Bluffs IA 194,355 431,668 626,023 Golden Corral Indianola IA 155,000 370,252 525,252 La Petite Academy Iowa City IA 186,900 408,910 595,810 La Petite Academy Johnston IA 186,996 347,278 534,274 Schuck's Autoworks Boise ID 158,400 351,813 510,213 Schuck's Autoworks Boise ID 190,080 422,172 612,252 Taco Bell Boise ID 190,894 423,981 614,875 Taco Bell Boise ID 161,352 334,041 495,393 Schuck's Autoworks Coeur D'Alene ID 165,900 368,468 534,368 Schuck's Autoworks Lewiston ID 138,950 308,612 447,562 Schuck's Autoworks Moscow ID 117,250 260,417 377,667
Page 96 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Children's World Stone Mtn. GA 166,886 N/A 11/16/88 300 Golden Corral Stone Mtn. GA 464,415 N/A 10/30/86 300 La Petite Academy Stone Mtn. GA 160,452 N/A 06/19/85 300 La Petite Academy Valdosta GA 156,672 N/A 12/03/86 300 Golden Corral Ankeny IA 289,512 N/A 07/28/83 180 Golden Corral Boone IA 309,471 N/A 12/27/83 180 La Petite Academy Cedar Rapids IA 71,901 N/A 09/24/92 300 Checker Autoworks Council Bluffs IA 109,381 N/A 05/19/88 300 Golden Corral Indianola IA 300,810 N/A 10/28/83 180 La Petite Academy Iowa City IA 71,038 N/A 09/24/92 300 La Petite Academy Johnston IA 51,574 N/A 08/19/91 300 Schuck's Autoworks Boise ID 89,146 N/A 05/06/88 300 Schuck's Autoworks Boise ID 106,974 N/A 05/06/88 300 Taco Bell Boise ID 107,433 N/A 05/17/88 300 Taco Bell Boise ID 80,139 N/A 10/07/88 300 Schuck's Autoworks Coeur D'Alene ID 101,321 N/A 09/21/87 300 Schuck's Autoworks Lewiston ID 84,863 N/A 09/09/87 300 Schuck's Autoworks Moscow ID 71,609 N/A 09/14/87 300
Page 97 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Schuck's Autoworks Nampa ID 183,743 408,101 None None Sizzler Nampa ID 74,156 343,821 None None Golden Corral Rexburg ID 90,760 420,787 None None Schuck's Autoworks Twin Falls ID 190,080 422,172 None None Children's World Addison IL 125,780 583,146 None None Kinder-Care Algonquin IL 241,500 509,629 None None Golden Corral Alton IL 225,785 419,315 None None La Petite Academy Aurora IL 165,679 398,739 None None Children's World Bartlett IL 120,824 560,166 None None Children's World Bolingbrook IL 60,000 409,024 None None Children's World Carol Stream IL 122,831 586,416 None None Golden Corral Dixon IL 230,090 511,036 None None Children's World Elk Grove Village IL 126,860 588,175 None None La Petite Academy Elk Grove Village IL 214,845 477,180 None None Children's World Glendale Hghts IL 318,500 707,399 None None Children's World Hoffman Estates IL 318,500 707,399 None None
Page 98 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Schuck's Autoworks Nampa ID 183,743 408,101 591,844 Sizzler Nampa ID 74,156 343,821 417,977 Golden Corral Rexburg ID 90,760 420,787 511,547 Schuck's Autoworks Twin Falls ID 190,080 422,172 612,252 Children's World Addison IL 125,780 583,146 708,926 Kinder-Care Algonquin IL 241,500 509,629 751,129 Golden Corral Alton IL 225,785 419,315 645,100 La Petite Academy Aurora IL 165,679 398,739 564,418 Children's World Bartlett IL 120,824 560,166 680,990 Children's World Bolingbrook IL 60,000 409,024 469,024 Children's World Carol Stream IL 122,831 586,416 709,247 Golden Corral Dixon IL 230,090 511,036 741,126 Children's World Elk Grove Village IL 126,860 588,175 715,035 La Petite Academy Elk Grove Village IL 214,845 477,180 692,025 Children's World Glendale Hghts IL 318,500 707,399 1,025,899 Children's World Hoffman Estates IL 318,500 707,399 1,025,899
Page 99 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Schuck's Autoworks Nampa ID 103,410 N/A 05/06/88 300 Sizzler Nampa ID 156,534 N/A 12/31/86 300 Golden Corral Rexburg ID 215,038 N/A 11/25/85 300 Schuck's Autoworks Twin Falls ID 106,974 N/A 05/06/88 300 Children's World Addison IL 288,014 N/A 03/25/86 300 Kinder-Care Algonquin IL 97,326 N/A 07/10/90 300 Golden Corral Alton IL 100,599 N/A 10/18/88 300 La Petite Academy Aurora IL 93,511 N/A 12/21/88 300 Children's World Bartlett IL 276,662 N/A 03/25/86 300 Children's World Bolingbrook IL 359,857 N/A 10/18/82 180 Children's World Carol Stream IL 289,628 N/A 03/25/86 300 Golden Corral Dixon IL 136,365 N/A 12/28/87 300 Children's World Elk Grove Village IL 290,497 N/A 03/26/86 300 La Petite Academy Elk Grove Village IL 122,201 N/A 04/08/88 300 Children's World Glendale Hghts IL 167,808 N/A 11/16/88 300 Children's World Hoffman Estates IL 160,186 N/A 03/31/89 300
Page 100 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== La Petite Academy Hoffman Estates IL 211,082 468,818 None None La Petite Academy Lockport IL 189,477 442,018 None None La Petite Academy O'Fallon IL 141,250 313,722 None None La Petite Academy Orland Park IL 218,499 485,295 None None Children's World Palatine IL 121,911 565,233 None None Children's World Roselle IL 297,541 561,036 None None Golden Corral Salem IL 213,815 474,892 None None La Petite Academy Schaumburg IL 218,798 485,956 None None Children's World Vernon Hills IL 132,523 614,430 None None Children's World Westmont IL 124,742 578,330 None None Taco Bell Anderson IN 197,523 438,707 None None Golden Corral Bedford IN 311,815 692,543 None None Kinder-Care Carmel IN 217,565 430,742 None None Golden Corral Decatur IN 181,020 385,618 None None Kinder-Care Fishers IN 212,118 419,959 None None Rax Goshen IN 115,000 533,165 None None Kinder-Care Highland IN 220,460 436,476 None None
Page 101 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ La Petite Academy Hoffman Estates IL 211,082 468,818 679,900 La Petite Academy Lockport IL 189,477 442,018 631,495 La Petite Academy O'Fallon IL 141,250 313,722 454,972 La Petite Academy Orland Park IL 218,499 485,295 703,794 Children's World Palatine IL 121,911 565,233 687,144 Children's World Roselle IL 297,541 561,036 858,577 Golden Corral Salem IL 213,815 474,892 688,707 La Petite Academy Schaumburg IL 218,798 485,956 704,754 Children's World Vernon Hills IL 132,523 614,430 746,953 Children's World Westmont IL 124,742 578,330 703,072 Taco Bell Anderson IN 197,523 438,707 636,230 Golden Corral Bedford IN 311,815 692,543 1,004,358 Kinder-Care Carmel IN 217,565 430,742 648,307 Golden Corral Decatur IN 181,020 385,618 566,638 Kinder-Care Fishers IN 212,118 419,959 632,077 Rax Goshen IN 115,000 533,165 648,165 Kinder-Care Highland IN 220,460 436,476 656,936
Page 102 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== La Petite Academy Hoffman Estates IL 94,806 N/A 12/08/89 300 La Petite Academy Lockport IL 120,342 N/A 10/29/87 300 La Petite Academy O'Fallon IL 85,408 N/A 10/30/87 300 La Petite Academy Orland Park IL 132,126 N/A 10/29/87 300 Children's World Palatine IL 279,165 N/A 03/25/86 300 Children's World Roselle IL 131,578 N/A 12/30/88 300 Golden Corral Salem IL 129,305 N/A 10/30/87 300 La Petite Academy Schaumburg IL 129,690 N/A 12/17/87 300 Children's World Vernon Hills IL 303,462 N/A 03/25/86 300 Children's World Westmont IL 285,633 N/A 03/25/86 300 Taco Bell Anderson IN 109,981 N/A 06/02/88 300 Golden Corral Bedford IN 194,178 N/A 07/15/87 300 Kinder-Care Carmel IN 73,218 N/A 12/27/90 300 Golden Corral Decatur IN 112,289 N/A 03/31/87 300 Kinder-Care Fishers IN 71,386 N/A 12/27/90 300 Rax Goshen IN 256,378 N/A 07/07/86 300 Kinder-Care Highland IN 74,192 N/A 12/26/90 300
Page 103 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Kinder-Care Indianapolis IN 245,000 544,153 None None Golden Corral Martinsville IN 100,000 463,642 None None Rax Muncie IN 136,400 632,380 None None Taco Bell Muncie IN 67,156 149,157 None None Dairy Mart New Albany IN 181,459 289,353 None None Dairy Mart New Albany IN 262,465 331,796 None None Golden Corral New Albany IN 271,215 602,377 None None Taco Bell New Castle IN 144,349 320,572 None None La Petite Academy Noblesville IN 60,000 278,175 None None Golden Corral Shelbyville IN 128,820 597,263 None None Fazolis Restaurant South Bend IN 133,200 617,545 None 19,211 Taco Bell Westfield IN 213,341 477,300 None None La Petite Academy Zionsville IN 127,568 319,770 None None Golden Corral Derby KS 96,060 445,359 None None Golden Corral El Dorado KS 87,400 405,206 None None Golden Corral Great Bend KS 95,800 444,154 None None Checker Autoworks Kansas City KS 185,955 413,014 None None Checker Autoworks Kansas City KS 222,000 455,881 None None
Page 104 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Kinder-Care Indianapolis IN 245,000 544,153 789,153 Golden Corral Martinsville IN 100,000 463,642 563,642 Rax Muncie IN 136,400 632,380 768,780 Taco Bell Muncie IN 67,156 149,157 216,313 Dairy Mart New Albany IN 181,459 289,353 470,812 Dairy Mart New Albany IN 262,465 331,796 594,261 Golden Corral New Albany IN 271,215 602,377 873,592 Taco Bell New Castle IN 144,349 320,572 464,921 La Petite Academy Noblesville IN 60,000 278,175 338,175 Golden Corral Shelbyville IN 128,820 597,263 726,083 Fazolis Restaurant South Bend IN 133,200 636,756 769,956 Taco Bell Westfield IN 213,341 477,300 690,641 La Petite Academy Zionsville IN 127,568 319,770 447,338 Golden Corral Derby KS 96,060 445,359 541,419 Golden Corral El Dorado KS 87,400 405,206 492,606 Golden Corral Great Bend KS 95,800 444,154 539,954 Checker Autoworks Kansas City KS 185,955 413,014 598,969 Checker Autoworks Kansas City KS 222,000 455,881 677,881
Page 105 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Kinder-Care Indianapolis IN 101,265 N/A 06/29/90 300 Golden Corral Martinsville IN 211,084 N/A 12/23/86 300 Rax Muncie IN 312,329 N/A 03/18/86 300 Taco Bell Muncie IN 38,600 N/A 03/30/88 300 Dairy Mart New Albany IN 9,163 N/A 03/03/95 300 Dairy Mart New Albany IN 10,507 N/A 03/06/95 300 Golden Corral New Albany IN 121,816 N/A 12/26/89 300 Taco Bell New Castle IN 94,682 N/A 01/07/87 300 La Petite Academy Noblesville IN 155,555 N/A 04/30/85 300 Golden Corral Shelbyville IN 271,920 N/A 12/18/86 300 Fazolis Restaurant South Bend IN 307,317 N/A 04/28/86 300 Taco Bell Westfield IN 93,956 N/A 12/21/89 300 La Petite Academy Zionsville IN 87,055 N/A 10/28/87 300 Golden Corral Derby KS 229,501 N/A 10/29/85 300 Golden Corral El Dorado KS 200,062 N/A 04/10/86 300 Golden Corral Great Bend KS 259,984 N/A 12/26/84 300 Checker Autoworks Kansas City KS 104,655 N/A 05/13/88 300 Checker Autoworks Kansas City KS 115,411 N/A 05/16/88 300
Page 106 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Children's World Lenexa KS 318,500 707,399 None None Children's World Olathe KS 304,500 676,308 None None Children's World Overland Park KS 305,691 707,397 None None Children's World Shawnee KS 315,000 699,629 None None La Petite Academy Topeka KS 58,000 268,903 None None Burger King Wichita KS 98,000 454,350 None None Kinder-Care Wichita KS 209,890 415,549 None None La Petite Academy Wichita KS 108,569 401,828 None None Dairy Mart Berea KY 252,077 360,815 None None Dairy Mart Elizabethtown KY 286,106 286,106 None None The Pantry Inc. Henderson KY 225,000 515,000 None None Dairy Mart Lebanon KY 158,052 316,105 None None La Petite Academy Lexington KY 210,427 420,883 None None Taco Bell Lexington KY 122,200 490,200 None None Dairy Mart Louisville KY 198,926 368,014 None None Dairy Mart Louisville KY 216,849 1,928 None None Jiffy Lube Louisville KY 56,054 259,881 None None The Pantry Inc. Owensboro KY 360,000 590,000 None None
Page 107 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Children's World Lenexa KS 318,500 707,399 1,025,899 Children's World Olathe KS 304,500 676,308 980,808 Children's World Overland Park KS 305,691 707,397 1,013,088 Children's World Shawnee KS 315,000 699,629 1,014,629 La Petite Academy Topeka KS 58,000 268,903 326,903 Burger King Wichita KS 98,000 454,350 552,350 Kinder-Care Wichita KS 209,890 415,549 625,439 La Petite Academy Wichita KS 108,569 401,828 510,397 Dairy Mart Berea KY 252,077 360,815 612,892 Dairy Mart Elizabethtown KY 286,106 286,106 572,212 The Pantry Inc. Henderson KY 225,000 515,000 740,000 Dairy Mart Lebanon KY 158,052 316,105 474,157 La Petite Academy Lexington KY 210,427 420,883 631,310 Taco Bell Lexington KY 122,200 490,200 612,400 Dairy Mart Louisville KY 198,926 368,014 566,940 Dairy Mart Louisville KY 216,849 1,928 218,777 Jiffy Lube Louisville KY 56,054 259,881 315,935 The Pantry Inc. Owensboro KY 360,000 590,000 950,000
Page 108 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Children's World Lenexa KS 160,186 N/A 03/31/89 300 Children's World Olathe KS 164,077 N/A 09/28/88 300 Children's World Overland Park KS 171,619 N/A 09/28/88 300 Children's World Shawnee KS 167,848 N/A 10/27/88 300 La Petite Academy Topeka KS 150,370 N/A 04/16/85 300 Burger King Wichita KS 216,530 N/A 08/08/86 300 Kinder-Care Wichita KS 70,636 N/A 12/26/90 300 La Petite Academy Wichita KS 163,339 N/A 12/16/86 300 Dairy Mart Berea KY 11,426 N/A 03/08/95 300 Dairy Mart Elizabethtown KY 9,060 N/A 03/03/95 300 The Pantry Inc. Henderson KY 7,725 N/A 08/25/95 300 Dairy Mart Lebanon KY 10,010 N/A 03/03/95 300 La Petite Academy Lexington KY 82,359 N/A 08/20/91 180 Taco Bell Lexington KY 225,200 N/A 12/03/86 300 Dairy Mart Louisville KY 11,654 N/A 03/03/95 300 Dairy Mart In Louisville KY 0 Process 11/17/95 300 Jiffy Lube Louisville KY 131,695 N/A 12/17/85 300 The Pantry Inc. Owensboro KY 8,850 N/A 08/25/95 300
Page 109 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== El Chico Alexandria LA 143,000 662,985 None 15,000 Golden Corral Jennings LA 107,120 496,636 None None Children's World Acton MA 315,533 700,813 None None Children's World Marlborough MA 352,765 776,487 None None Dairy Mart Seekonk MA 298,354 268,518 None None Children's World Westborough MA 359,412 773,877 None None Jiffy Lube Clinton MD 70,880 328,620 None None La Petite Academy Ellicott City MD 219,368 630,839 None None Golden Corral La Plata MD 120,140 557,000 None None Children's World Olney MD 342,500 760,701 None None Children's World Waldorf MD 130,430 604,702 None None La Petite Academy Waldorf MD 237,207 526,844 None None Ponderosa Albion MI 143,280 694,578 None 12,341 Children's World Canton MI 55,000 378,848 None None 7-Eleven Flint MI 194,492 476,504 None None Don Pablo's Flint MI 827,853 0 None None Golden Corral Sturgis MI 210,560 467,659 None None Golden Corral Albert Lea MN 213,150 473,412 None None
Page 110 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ El Chico Alexandria LA 143,000 677,985 820,985 Golden Corral Jennings LA 107,120 496,636 603,756 Children's World Acton MA 315,533 700,813 1,016,346 Children's World Marlborough MA 352,765 776,487 1,129,252 Dairy Mart Seekonk MA 298,354 268,518 566,872 Children's World Westborough MA 359,412 773,877 1,133,289 Jiffy Lube Clinton MD 70,880 328,620 399,500 La Petite Academy Ellicott City MD 219,368 630,839 850,207 Golden Corral La Plata MD 120,140 557,000 677,140 Children's World Olney MD 342,500 760,701 1,103,201 Children's World Waldorf MD 130,430 604,702 735,132 La Petite Academy Waldorf MD 237,207 526,844 764,051 Ponderosa Albion MI 143,280 706,919 850,199 Children's World Canton MI 55,000 378,848 433,848 7-Eleven Flint MI 194,492 476,504 670,996 Don Pablo's Flint MI 827,853 0 827,853 Golden Corral Sturgis MI 210,560 467,659 678,219 Golden Corral Albert Lea MN 213,150 473,412 686,562
Page 111 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== El Chico Alexandria LA 340,878 N/A 01/17/86 300 Golden Corral Jennings LA 255,925 N/A 10/17/85 300 Children's World Acton MA 170,022 N/A 09/30/88 300 Children's World Marlborough MA 184,195 N/A 11/04/88 300 Dairy Mart Seekonk MA 8,503 N/A 03/03/95 300 Children's World Westborough MA 183,573 N/A 11/01/88 300 Jiffy Lube Clinton MD 169,288 N/A 11/15/85 300 La Petite Academy Ellicott City MD 147,945 N/A 12/19/88 300 Golden Corral La Plata MD 284,551 N/A 12/03/85 300 Children's World Olney MD 203,016 N/A 12/18/87 300 Children's World Waldorf MD 362,098 N/A 09/26/84 300 La Petite Academy Waldorf MD 140,602 N/A 12/31/87 300 Ponderosa Albion MI 346,781 N/A 03/06/86 300 Children's World Canton MI 334,644 N/A 10/06/82 180 7-Eleven Flint MI 794 N/A 12/21/95 300 Don Pablo's Flint MI 0 N/A 04/13/95 300 Golden Corral Sturgis MI 126,072 N/A 11/12/87 300 Golden Corral Albert Lea MN 126,363 N/A 12/16/87 300
Page 112 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Children's World Apple Valley MN 113,523 526,319 None None Children's World Bloomington MN 124,113 575,416 None None Children's World Brooklyn Park MN 112,823 523,073 None None Children's World Brooklyn Park MN 118,111 547,586 None None Children's World Eagan MN 112,127 519,844 None None Children's World Eden Prairie MN 124,286 576,243 None None Children's World Maple Grove MN 111,691 517,822 None None Kinder-Care Maple Grove MN 313,250 660,149 None None Automax Minneapolis MN 58,000 268,903 None None Children's World Minnetonka MN 146,847 680,842 None None Children's World Plymouth MN 134,221 622,350 None None Golden Corral Red Wing MN 248,325 551,541 None None Joe Sensor's Bar & Grill Roseville MN 281,600 1,305,560 None None Children's World W. Bloomington MN 40,000 468,484 None None Children's World White Bear Lake MN 260,750 579,133 None None Kinder-Care White Bear Lake MN 242,165 537,855 None None
Page 113 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Children's World Apple Valley MN 113,523 526,319 639,842 Children's World Bloomington MN 124,113 575,416 699,529 Children's World Brooklyn Park MN 112,823 523,073 635,896 Children's World Brooklyn Park MN 118,111 547,586 665,697 Children's World Eagan MN 112,127 519,844 631,971 Children's World Eden Prairie MN 124,286 576,243 700,529 Children's World Maple Grove MN 111,691 517,822 629,513 Kinder-Care Maple Grove MN 313,250 660,149 973,399 Automax Minneapolis MN 58,000 268,903 326,903 Children's World Minnetonka MN 146,847 680,842 827,689 Children's World Plymouth MN 134,221 622,350 756,571 Golden Corral Red Wing MN 248,325 551,541 799,866 Joe Sensor's Bar & Grill Roseville MN 281,600 1,305,560 1,587,160 Children's World W. Bloomington MN 40,000 468,484 508,484 Children's World White Bear Lake MN 260,750 579,133 839,883 Kinder-Care White Bear Lake MN 242,165 537,855 780,020
Page 114 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Children's World Apple Valley MN 259,947 N/A 03/27/86 300 Children's World Bloomington MN 284,196 N/A 03/27/86 300 Children's World Brooklyn Park MN 258,343 N/A 03/27/86 300 Children's World Brooklyn Park MN 270,449 N/A 03/27/86 300 Children's World Eagan MN 256,748 N/A 03/27/86 300 Children's World Eden Prairie MN 284,604 N/A 03/27/86 300 Children's World Maple Grove MN 255,751 N/A 03/27/86 300 Kinder-Care Maple Grove MN 127,107 N/A 07/11/90 300 Automax Minneapolis MN 136,268 N/A 12/18/85 300 Children's World Minnetonka MN 312,781 N/A 12/12/86 300 Children's World Plymouth MN 285,908 N/A 12/12/86 300 Golden Corral Red Wing MN 147,163 N/A 12/30/87 300 Joe Sensor's Bar & Grill Roseville MN 764,210 N/A 12/18/84 300 Children's World W. Bloomington MN 422,432 N/A 06/18/82 180 Children's World White Bear Lake MN 154,560 N/A 12/23/87 300 Kinder-Care White Bear Lake MN 97,204 N/A 08/30/90 300
Page 115 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Golden Corral Belton MO 89,328 418,187 None None Checker Autoworks Blue Springs MO 222,569 494,334 None None Golden Corral Blue Springs MO 111,440 516,665 None None Golden Corral Carthage MO 85,020 394,175 None None Golden Corral Chillicothe MO 81,080 375,908 None None Children's World Florissant MO 318,500 707,399 None None La Petite Academy Florissant MO 181,300 402,672 None None Golden Corral Fulton MO 210,199 466,861 None None Children's World Gladstone MO 294,000 652,987 None None Golden Corral Hannibal MO 266,011 590,822 None None Po Folks Hazelwood MO 157,117 725,327 None None Checker Autoworks Independence MO 210,643 467,845 None None Golden Corral Jackson MO 210,199 466,860 None None Checker Autoworks Kansas City MO 210,070 466,571 None None Checker Autoworks Kansas City MO 168,350 373,910 None None Checker Autoworks Kansas City MO 248,500 551,927 None None Children's World Lee'S Summit MO 239,627 532,220 None None La Petite Academy Liberty MO 65,400 303,211 None None
Page 116 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Golden Corral Belton MO 89,328 418,187 507,515 Checker Autoworks Blue Springs MO 222,569 494,334 716,903 Golden Corral Blue Springs MO 111,440 516,665 628,105 Golden Corral Carthage MO 85,020 394,175 479,195 Golden Corral Chillicothe MO 81,080 375,908 456,988 Children's World Florissant MO 318,500 707,399 1,025,899 La Petite Academy Florissant MO 181,300 402,672 583,972 Golden Corral Fulton MO 210,199 466,861 677,060 Children's World Gladstone MO 294,000 652,987 946,987 Golden Corral Hannibal MO 266,011 590,822 856,833 Po Folks Hazelwood MO 157,117 725,327 882,444 Checker Autoworks Independence MO 210,643 467,845 678,488 Golden Corral Jackson MO 210,199 466,860 677,059 Checker Autoworks Kansas City MO 210,070 466,571 676,641 Checker Autoworks Kansas City MO 168,350 373,910 542,260 Checker Autoworks Kansas City MO 248,500 551,927 800,427 Children's World Lee'S Summit MO 239,627 532,220 771,847 La Petite Academy Liberty MO 65,400 303,211 368,611
Page 117 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Golden Corral Belton MO 244,787 N/A 12/18/84 300 Checker Autoworks Blue Springs MO 106,616 N/A 07/31/89 300 Golden Corral Blue Springs MO 302,431 N/A 12/28/84 300 Golden Corral Carthage MO 201,369 N/A 12/03/85 300 Golden Corral Chillicothe MO 220,039 N/A 12/26/84 300 Children's World Florissant MO 160,186 N/A 03/30/89 300 La Petite Academy Florissant MO 91,182 N/A 03/29/89 300 Golden Corral Fulton MO 130,901 N/A 07/30/87 300 Children's World Gladstone MO 158,419 N/A 09/29/88 300 Golden Corral Hannibal MO 165,657 N/A 07/30/87 300 Po Folks Hazelwood MO 379,902 N/A 08/28/85 300 Checker Autoworks Independence MO 100,903 N/A 07/31/89 300 Golden Corral Jackson MO 130,901 N/A 07/30/87 300 Checker Autoworks Kansas City MO 118,225 N/A 05/13/88 300 Checker Autoworks Kansas City MO 94,745 N/A 05/26/88 300 Checker Autoworks Kansas City MO 131,973 N/A 10/25/88 300 Children's World Lee'S Summit MO 110,568 N/A 09/27/89 300 La Petite Academy Liberty MO 161,437 N/A 06/18/85 300
Page 118 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Children's World Manchester MO 287,000 637,435 None None Golden Corral Nevada MO 222,552 494,296 None None Golden Corral Sedalia MO 269,798 599,232 None None Children's World St. Charles MO 259,000 575,246 None None Golden Corral St. Charles MO 695,121 790,560 None None Po Folks St. Charles MO 175,413 809,790 None None Golden Corral St. Joseph MO 107,648 496,958 None None Golden Corral Sullivan MO 85,500 396,400 None None Golden Corral Clinton MS 100,000 337,371 None None La Petite Academy Pearl MS 121,801 270,525 None None Golden Corral Southaven MS 263,900 582,303 None None Checker Autoworks Missoula MT 163,100 362,249 None None La Petite Academy Cary NC 75,200 262,973 None None The Pantry Inc. Cary NC 450,000 825,000 None None La Petite Academy Chapel Hill NC 77,000 356,992 None None La Petite Academy Charlotte NC 27,551 247,000 None None La Petite Academy Charlotte NC 134,582 268,222 None None La Petite Academy Concord NC 32,441 190,859 None None
Page 119 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Children's World Manchester MO 287,000 637,435 924,435 Golden Corral Nevada MO 222,552 494,296 716,848 Golden Corral Sedalia MO 269,798 599,232 869,030 Children's World St. Charles MO 259,000 575,246 834,246 Golden Corral St. Charles MO 695,121 790,560 1,485,681 Po Folks St. Charles MO 175,413 809,790 985,203 Golden Corral St. Joseph MO 107,648 496,958 604,606 Golden Corral Sullivan MO 85,500 396,400 481,900 Golden Corral Clinton MS 100,000 337,371 437,371 La Petite Academy Pearl MS 121,801 270,525 392,326 Golden Corral Southaven MS 263,900 582,303 846,203 Checker Autoworks Missoula MT 163,100 362,249 525,349 La Petite Academy Cary NC 75,200 262,973 338,173 The Pantry Inc. Cary NC 450,000 825,000 1,275,000 La Petite Academy Chapel Hill NC 77,000 356,992 433,992 La Petite Academy Charlotte NC 27,551 247,000 274,551 La Petite Academy Charlotte NC 134,582 268,222 402,804 La Petite Academy Concord NC 32,441 190,859 223,300
Page 120 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Children's World Manchester MO 170,120 N/A 12/22/87 300 Golden Corral Nevada MO 138,594 N/A 07/30/87 300 Golden Corral Sedalia MO 134,002 N/A 07/31/89 300 Children's World St. Charles MO 153,524 N/A 12/23/87 300 Golden Corral St. Charles MO 1,318 12/15/95 03/16/95 300 Po Folks St. Charles MO 424,139 N/A 08/28/85 300 Golden Corral St. Joseph MO 260,200 N/A 09/04/85 300 Golden Corral Sullivan MO 232,032 N/A 12/27/84 300 Golden Corral Clinton MS 279,683 N/A 07/28/83 180 La Petite Academy Pearl MS 64,363 N/A 11/15/88 300 Golden Corral Southaven MS 166,418 N/A 05/11/87 300 Checker Autoworks Missoula MT 98,634 N/A 10/30/87 300 La Petite Academy Cary NC 209,285 N/A 01/25/84 180 The Pantry Inc. Cary NC 12,375 N/A 08/25/95 300 La Petite Academy Chapel Hill NC 199,630 N/A 04/17/85 300 La Petite Academy Charlotte NC 230,534 N/A 12/23/81 180 La Petite Academy Charlotte NC 63,624 N/A 11/16/88 300 La Petite Academy Concord NC 178,135 N/A 12/23/81 180
Page 121 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Jiffy Lube Durham NC 55,074 255,336 None None La Petite Academy Durham NC 220,728 429,380 None None La Petite Academy Durham NC 238,000 471,201 None None Golden Corral Fayetteville NC 116,240 538,919 None None The Pantry Inc. Greenville NC 330,000 515,000 None None The Pantry Inc. Greenville NC 225,000 405,000 None None La Petite Academy Hendersonville NC 32,748 186,152 None None The Pantry Inc. Jacksonville NC 150,000 530,000 None None La Petite Academy Kernersville NC 162,216 316,299 None None La Petite Academy Morrisville NC 175,700 390,234 None None Jiffy Lube Raleigh NC 89,145 413,301 None None Taco Bell Wilkesboro NC 183,050 406,562 None None La Petite Academy Bellevue NE 60,568 280,819 None None Checker Autoworks Kearney NE 173,950 344,393 None None Checker Autoworks Omaha NE 196,000 435,321 None None Checker Autoworks Omaha NE 199,100 412,042 None None Golden Corral Omaha NE 629,592 1,051,244 None None La Petite Academy Omaha NE 60,500 280,491 None None
Page 122 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Jiffy Lube Durham NC 55,074 255,336 310,410 La Petite Academy Durham NC 220,728 429,380 650,108 La Petite Academy Durham NC 238,000 471,201 709,201 Golden Corral Fayetteville NC 116,240 538,919 655,159 The Pantry Inc. Greenville NC 330,000 515,000 845,000 The Pantry Inc. Greenville NC 225,000 405,000 630,000 La Petite Academy Hendersonville NC 32,748 186,152 218,900 The Pantry Inc. Jacksonville NC 150,000 530,000 680,000 La Petite Academy Kernersville NC 162,216 316,299 478,515 La Petite Academy Morrisville NC 175,700 390,234 565,934 Jiffy Lube Raleigh NC 89,145 413,301 502,446 Taco Bell Wilkesboro NC 183,050 406,562 589,612 La Petite Academy Bellevue NE 60,568 280,819 341,387 Checker Autoworks Kearney NE 173,950 344,393 518,343 Checker Autoworks Omaha NE 196,000 435,321 631,321 Checker Autoworks Omaha NE 199,100 412,042 611,142 Golden Corral Omaha NE 629,592 1,051,244 1,680,836 La Petite Academy Omaha NE 60,500 280,491 340,991
Page 123 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Jiffy Lube Durham NC 131,538 N/A 11/13/85 300 La Petite Academy Durham NC 99,541 N/A 12/29/89 300 La Petite Academy Durham NC 69,979 N/A 08/20/91 300 Golden Corral Fayetteville NC 315,457 N/A 12/20/84 300 The Pantry Inc. Greenville NC 7,725 N/A 08/25/95 300 The Pantry Inc. Greenville NC 6,075 N/A 08/25/95 300 La Petite Academy Hendersonville NC 173,742 N/A 12/23/81 180 The Pantry Inc. Jacksonville NC 7,950 N/A 08/25/95 300 La Petite Academy Kernersville NC 75,964 N/A 12/14/89 300 La Petite Academy Morrisville NC 88,365 N/A 03/29/89 300 Jiffy Lube Raleigh NC 212,982 N/A 10/28/85 300 Taco Bell Wilkesboro NC 113,995 N/A 07/24/87 300 La Petite Academy Bellevue NE 127,850 N/A 12/16/86 300 Checker Autoworks Kearney NE 65,016 N/A 05/01/90 300 Checker Autoworks Omaha NE 110,307 N/A 05/26/88 300 Checker Autoworks Omaha NE 102,241 N/A 05/27/88 300 Golden Corral Omaha NE 22,777 06/02/95 02/24/95 300 La Petite Academy Omaha NE 170,471 N/A 08/01/84 300
Page 124 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== La Petite Academy Omaha NE 53,000 245,720 None None La Petite Academy Omaha NE 142,867 317,315 None None Children's World Londonderry NH 335,467 745,082 None None R & S Strauss Cherry Hill NJ 1,074,640 1,032,304 None None La Petite Academy Clementon NJ 279,851 554,060 None None Vacant Eatontown NJ 302,595 1,402,898 None 210,000 Checker Autoworks Albuquerque NM 80,500 178,794 None None Checker Autoworks Rio Rancho NM 211,577 469,923 None None Checker Autoworks Sante Fe NM 70,000 155,473 None None La Petite Academy Henderson NV 82,000 380,173 None None Checker Autoworks Las Vegas NV 161,000 357,585 None None Kinder-Care Las Vegas NV 201,250 446,983 None None Checker Autoworks Reno NV 456,000 562,344 None None La Petite Academy Sparks NV 244,752 543,604 None None Golden Corral Amherst NY 935,355 739,896 None None Golden Corral Fulton NY 294,009 653,006 None None Dairy Mart Kingston NY 257,763 456,042 None None Wendy's Watertown NY 139,199 645,355 None None
Page 125 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ La Petite Academy Omaha NE 53,000 245,720 298,720 La Petite Academy Omaha NE 142,867 317,315 460,182 Children's World Londonderry NH 335,467 745,082 1,080,549 R & S Strauss Cherry Hill NJ 1,074,640 1,032,304 2,106,944 La Petite Academy Clementon NJ 279,851 554,060 833,911 Vacant Eatontown NJ 302,595 1,612,898 1,915,493 Checker Autoworks Albuquerque NM 80,500 178,794 259,294 Checker Autoworks Rio Rancho NM 211,577 469,923 681,500 Checker Autoworks Sante Fe NM 70,000 155,473 225,473 La Petite Academy Henderson NV 82,000 380,173 462,173 Checker Autoworks Las Vegas NV 161,000 357,585 518,585 Kinder-Care Las Vegas NV 201,250 446,983 648,233 Checker Autoworks Reno NV 456,000 562,344 1,018,344 La Petite Academy Sparks NV 244,752 543,604 788,356 Golden Corral Amherst NY 935,355 739,896 1,675,251 Golden Corral Fulton NY 294,009 653,006 947,015 Dairy Mart Kingston NY 257,763 456,042 713,805 Wendy's Watertown NY 139,199 645,355 784,554
Page 126 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== La Petite Academy Omaha NE 147,095 N/A 10/11/84 300 La Petite Academy Omaha NE 84,682 N/A 12/09/87 300 Children's World Londonderry NH 158,691 N/A 08/18/89 300 R & S Strauss Cherry Hill NJ 15,485 08/02/95 01/26/95 300 La Petite Academy Clementon NJ 80,798 N/A 09/09/91 300 Vacant Eatontown NJ 1,122,325 N/A 01/11/84 180 Checker Autoworks Albuquerque NM 48,683 N/A 10/29/87 300 Checker Autoworks Rio Rancho NM 122,877 N/A 02/26/88 300 Checker Autoworks Sante Fe NM 42,333 N/A 10/29/87 300 La Petite Academy Henderson NV 212,592 N/A 04/17/85 300 Checker Autoworks Las Vegas NV 97,364 N/A 10/29/87 300 Kinder-Care Las Vegas NV 83,182 N/A 06/29/90 300 Checker Autoworks Reno NV 142,351 N/A 05/26/88 300 La Petite Academy Sparks NV 143,610 N/A 01/28/88 300 Golden Corral Amherst NY 3,699 11/06/95 05/31/95 300 Golden Corral Fulton NY 173,140 N/A 12/24/87 300 Dairy Mart Kingston NY 12,921 N/A 04/06/95 300 Wendy's Watertown NY 304,898 N/A 08/18/86 300
Page 127 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Don Pablo's Akron OH 723,347 0 None None Golden Corral Ashland OH 120,740 559,801 None None Dairy Mart Atwater OH 118,555 266,748 None None Children's World Beavercreek OH 179,552 398,786 None None Golden Corral Celina OH 207,060 459,841 None None Children's World Centerville OH 174,519 387,613 None None La Petite Academy Cincinnati OH 165,910 368,486 None None 7-Eleven Columbus OH 273,085 471,693 None None Dairy Mart Columbus OH 147,296 304,411 None None Jiffy Lube Columbus OH 71,098 329,626 None None Jiffy Lube Columbus OH 75,761 351,246 None None Speedy Brake & Muffler Columbus OH 245,036 470,468 None None Dairy Mart Cuyahoga Falls OH 297,982 357,579 None None Jiffy Lube Dayton OH 70,000 324,538 None None La Petite Academy Dublin OH 84,000 389,446 None None Speedy Brake & Muffler Eastlake OH 321,347 459,774 None None La Petite Academy Englewood OH 74,000 343,083 None None
Page 128 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Don Pablo's Akron OH 723,347 0 723 347 Golden Corral Ashland OH 120,740 559,801 680,541 Dairy Mart Atwater OH 118,555 266,748 385,303 Children's World Beavercreek OH 179,552 398,786 578,338 Golden Corral Celina OH 207,060 459,841 666,901 Children's World Centerville OH 174,519 387,613 562,132 La Petite Academy Cincinnati OH 165,910 368,486 534,396 7-Eleven Columbus OH 273,085 471,693 744,778 Dairy Mart Columbus OH 147,296 304,411 451,707 Jiffy Lube Columbus OH 71,098 329,626 400,724 Jiffy Lube Columbus OH 75,761 351,246 427,007 Speedy Brake & Muffler Columbus OH 245,036 470,468 715,504 Dairy Mart Cuyahoga Falls OH 297,982 357,579 655,561 Jiffy Lube Dayton OH 70,000 324,538 394,538 La Petite Academy Dublin OH 84,000 389,446 473,446 Speedy Brake & Muffler Eastlake OH 321,347 459,774 781,121 La Petite Academy Englewood OH 74,000 343,083 417,083
Page 129 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Don Pablo's Akron OH 0 N/A 12/22/94 300 Golden Corral Ashland OH 254,863 N/A 12/19/86 300 Dairy Mart Atwater OH 8,447 N/A 03/03/95 300 Children's World Beavercreek OH 112,891 N/A 06/30/87 300 Golden Corral Celina OH 136,392 N/A 01/02/87 300 Children's World Centerville OH 108,681 N/A 07/23/87 300 La Petite Academy Cincinnati OH 106,306 N/A 04/13/87 300 7-Eleven Columbus OH 786 N/A 12/21/95 300 Dairy Mart Columbus OH 9,640 N/A 03/03/95 300 Jiffy Lube Columbus OH 171,217 N/A 10/02/85 300 Jiffy Lube Columbus OH 181,005 N/A 10/24/85 300 Speedy Brake & Muffler Columbus OH 784 N/A 12/22/95 300 Dairy Mart Cuyahoga Falls OH 11,323 N/A 03/03/95 300 Jiffy Lube Dayton OH 167,240 N/A 10/30/85 300 La Petite Academy Dublin OH 202,286 N/A 10/08/85 300 Speedy Brake & Muffler Eastlake OH 766 N/A 12/22/95 300 La Petite Academy Englewood OH 176,796 N/A 10/23/85 300
Page 130 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Children's World Forest Park OH 170,778 379,305 None None La Petite Academy Gahanna OH 86,000 398,718 None None Dairy Mart Galion OH 138,981 327,597 None None 7-Eleven Groveport OH 277,198 445,497 None None Children's World Huber Heights OH 245,000 544,153 None None Golden Corral Lebanon OH 210,134 466,717 None None Children's World Loveland OH 206,136 457,829 None None Children's World Maineville OH 173,105 384,469 None None Jiffy Lube Miamisburg OH 63,996 296,701 None None Jiffy Lube Northwood OH 65,978 263,912 None None Dairy Mart Perrysburg OH 211,678 81,601 None None La Petite Academy Pickerington OH 87,580 406,055 None None Golden Corral Stow OH 317,546 712,455 None None Jiffy Lube Toledo OH 73,408 293,632 None None Jiffy Lube Toledo OH 91,655 366,621 None None Dairy Mart Triffin OH 117,017 273,040 None None Golden Corral Troy OH 130,540 605,238 None None
Page 131 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Children's World Forest Park OH 170,778 379,305 550,083 La Petite Academy Gahanna OH 86,000 398,718 484,718 Dairy Mart Galion OH 138,981 327,597 466,578 7-Eleven Groveport OH 277,198 445,497 722,695 Children's World Huber Heights OH 245,000 544,153 789,153 Golden Corral Lebanon OH 210,134 466,717 676,851 Children's World Loveland OH 206,136 457,829 663,965 Children's World Maineville OH 173,105 384,469 557,574 Jiffy Lube Miamisburg OH 63,996 296,701 360,697 Jiffy Lube Northwood OH 65,978 263,912 329,890 Dairy Mart Perrysburg OH 211,678 81,601 293,279 La Petite Academy Pickerington OH 87,580 406,055 493,635 Golden Corral Stow OH 317,546 712,455 1,030,001 Jiffy Lube Toledo OH 73,408 293,632 367,040 Jiffy Lube Toledo OH 91,655 366,621 458,276 Dairy Mart Triffin OH 117,017 273,040 390,057 Golden Corral Troy OH 130,540 605,238 735,778
Page 132 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Children's World Forest Park OH 105,524 N/A 09/28/87 300 La Petite Academy Gahanna OH 203,758 N/A 11/26/85 300 Dairy Mart Galion OH 10,374 N/A 03/06/95 300 7-Eleven Groveport OH 743 N/A 12/21/95 300 Children's World Huber Heights OH 96,880 N/A 09/27/90 300 Golden Corral Lebanon OH 130,860 N/A 07/31/87 300 Children's World Loveland OH 133,318 N/A 03/20/87 300 Children's World Maineville OH 111,956 N/A 03/06/87 300 Jiffy Lube Miamisburg OH 154,114 N/A 10/08/85 300 Jiffy Lube Northwood OH 163,589 N/A 09/12/86 180 Dairy Mart In Perrysburg OH 0 Process 09/01/95 300 La Petite Academy Pickerington OH 186,532 N/A 12/11/86 300 Golden Corral Stow OH 189,195 N/A 12/31/87 300 Jiffy Lube Toledo OH 182,010 N/A 09/12/86 180 Jiffy Lube Toledo OH 227,253 N/A 09/12/86 180 Dairy Mart Triffin OH 8,646 N/A 03/07/95 300 Golden Corral Troy OH 278,049 N/A 12/05/86 300
Page 133 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Golden Corral Washington Courthouse OH 123,120 570,836 None None Children's World Westerville OH 294,350 646,557 None None La Petite Academy Westerville OH 82,000 380,173 None None Golden Corral Wilmington OH 119,320 553,217 None None La Petite Academy Broken Arrow OK 78,705 220,434 None None La Petite Academy Midwest City OK 67,800 314,338 None None Don Pablo's Norman OK 734,335 0 None None Don Pablo's Oklahoma City OK 759,826 0 None None La Petite Academy Oklahoma City OK 50,800 214,474 None None La Petite Academy Oklahoma City OK 79,000 366,261 None None Golden Corral Owasso OK 247,450 549,597 None None Golden Corral Ponca City OK 234,990 521,923 None None La Petite Academy Yukon OK 61,000 282,812 None None Schuck's Autoworks Albany OR 152,250 338,153 None None Children's World Beaverton OR 135,148 626,647 None None Children's World Beaverton OR 115,232 534,301 None None Schuck's Autoworks Beaverton OR 210,000 466,419 None None
Page 134 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Golden Corral Washington Courthouse OH 123,120 570,836 693,956 Children's World Westerville OH 294,350 646,557 940,907 La Petite Academy Westerville OH 82,000 380,173 462,173 Golden Corral Wilmington OH 119,320 553,217 672,537 La Petite Academy Broken Arrow OK 78,705 220,434 299,139 La Petite Academy Midwest City OK 67,800 314,338 382,138 Don Pablo's Norman OK 734,335 0 734 335 Don Pablo's Oklahoma City OK 759,826 0 759 826 La Petite Academy Oklahoma City OK 50,800 214,474 265,274 La Petite Academy Oklahoma City OK 79,000 366,261 445,261 Golden Corral Owasso OK 247,450 549,597 797,047 Golden Corral Ponca City OK 234,990 521,923 756,913 La Petite Academy Yukon OK 61,000 282,812 343,812 Schuck's Autoworks Albany OR 152,250 338,153 490,403 Children's World Beaverton OR 135,148 626,647 761,795 Children's World Beaverton OR 115,232 534,301 649,533 Schuck's Autoworks Beaverton OR 210,000 466,419 676,419
Page 135 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Golden Corral Washington Courthouse OH 259,888 N/A 12/19/86 300 Children's World Westerville OH 122,068 N/A 09/26/90 300 La Petite Academy Westerville OH 197,470 N/A 10/08/85 300 Golden Corral Wilmington OH 251,868 N/A 12/31/86 300 La Petite Academy Broken Arrow OK 190,227 N/A 01/27/83 180 La Petite Academy Midwest City OK 166,018 N/A 08/14/85 300 Don Pablo's Norman OK 0 09/29/95 06/05/95 300 Don Pablo's Oklahoma City OK 0 N/A 07/06/95 300 La Petite Academy Oklahoma City OK 194,215 N/A 06/15/82 180 La Petite Academy Oklahoma City OK 217,616 N/A 11/14/84 300 Golden Corral Owasso OK 146,679 N/A 12/28/87 300 Golden Corral Ponca City OK 139,292 N/A 12/30/87 300 La Petite Academy Yukon OK 156,877 N/A 05/02/85 300 Schuck's Autoworks Albany OR 93,900 N/A 08/24/87 300 Children's World Beaverton OR 285,296 N/A 12/17/86 300 Children's World Beaverton OR 243,254 N/A 12/22/86 300 Schuck's Autoworks Beaverton OR 129,517 N/A 08/26/87 300
Page 136 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Schuck's Autoworks Corvallis OR 152,250 338,153 None None Taco Bell Corvallis OR 172,788 383,766 None None Schuck's Autoworks Eugene OR 194,880 432,837 None None Golden Corral Hermiston OR 85,560 396,675 None None The Keg Lake Oswego OR 175,899 815,509 None None Golden Corral McMinnville OR 227,780 505,905 None None The Keg Milwaukie OR 179,174 830,689 None None Schuck's Autoworks Oak Grove OR 180,250 400,336 None None Schuck's Autoworks Portland OR 190,750 423,664 None None Schuck's Autoworks Portland OR 147,000 326,493 None None Schuck's Autoworks Portland OR 210,000 466,412 None None El Presidente Salem OR 161,656 749,474 20,000 29,125 Schuck's Autoworks Salem OR 136,500 303,170 None None Taco Bell Salem OR 198,540 440,964 None None Schuck's Autoworks Tigard OR 164,500 365,361 None None Golden Corral Connellsville PA 264,670 587,843 None None R & S Strauss Philadelphia PA 858,500 877,745 None None
Page 137 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Schuck's Autoworks Corvallis OR 152,250 338,153 490,403 Taco Bell Corvallis OR 172,788 383,766 556,554 Schuck's Autoworks Eugene OR 194,880 432,837 627,717 Golden Corral Hermiston OR 85,560 396,675 482,235 The Keg Lake Oswego OR 175,899 815,509 991,408 Golden Corral McMinnville OR 227,780 505,905 733,685 The Keg Milwaukie OR 179,174 830,689 1,009,863 Schuck's Autoworks Oak Grove OR 180,250 400,336 580,586 Schuck's Autoworks Portland OR 190,750 423,664 614,414 Schuck's Autoworks Portland OR 147,000 326,493 473,493 Schuck's Autoworks Portland OR 210,000 466,412 676,412 El Presidente Salem OR 161,656 798,599 960,255 Schuck's Autoworks Salem OR 136,500 303,170 439,670 Taco Bell Salem OR 198,540 440,964 639,504 Schuck's Autoworks Tigard OR 164,500 365,361 529,861 Golden Corral Connellsville PA 264,670 587,843 852,513 R & S Strauss Philadelphia PA 858,500 877,745 1,736,245
Page 138 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Schuck's Autoworks Corvallis OR 93,900 N/A 08/12/87 300 Taco Bell Corvallis OR 102,421 N/A 12/22/87 300 Schuck's Autoworks Eugene OR 113,180 N/A 02/10/88 300 Golden Corral Hermiston OR 232,192 N/A 12/18/84 300 The Keg Lake Oswego OR 502,935 N/A 05/16/84 300 Golden Corral McMinnville OR 136,382 N/A 11/12/87 300 The Keg Milwaukie OR 515,877 N/A 05/08/84 300 Schuck's Autoworks Oak Grove OR 111,167 N/A 08/06/87 300 Schuck's Autoworks Portland OR 117,646 N/A 08/12/87 300 Schuck's Autoworks Portland OR 90,662 N/A 08/26/87 300 Schuck's Autoworks Portland OR 128,256 N/A 09/01/87 300 El Presidente Salem OR 476,586 N/A 05/16/84 300 Schuck's Autoworks Salem OR 84,184 N/A 08/20/87 300 Taco Bell Salem OR 94,422 N/A 05/23/89 300 Schuck's Autoworks Tigard OR 101,456 N/A 08/26/87 300 Golden Corral Connellsville PA 163,235 N/A 08/17/87 300 R & S Strauss Philadelphia PA 124,330 05/19/95 12/05/94 300
Page 139 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Jiffy Lube Springfield Township PA 82,740 383,601 None None Golden Corral Waynesburg PA 222,285 493,704 None None La Petite Academy Charleston SC 125,593 278,946 None None La Petite Academy Charleston SC 140,700 312,498 None None La Petite Academy Columbia SC 58,160 269,643 None None The Pantry Inc. Columbia SC 150,000 450,000 None None La Petite Academy Elgin SC 160,831 313,600 None None La Petite Academy Goose Creek SC 61,635 192,905 None None Vacant Greenville SC 500,000 1,273,648 20,000 None The Pantry Inc. John's Isle SC 170,000 350,000 None None La Petite Academy Ladson SC 31,543 177,457 None None La Petite Academy Lexington SC 55,869 274,742 None None Long John Silver's Lexington SC 176,774 392,619 None None The Pantry Inc. Lexington SC 255,000 545,000 None None La Petite Academy Mt. Pleasant SC 40,700 180,400 None None The Pantry Inc. Myrtle Beach SC 140,000 590,000 None None The Pantry Inc. N. Charleston SC 400,000 650,000 None None
Page 140 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Jiffy Lube Springfield Township PA 82,740 383,601 466,341 Golden Corral Waynesburg PA 222,285 493,704 715,989 La Petite Academy Charleston SC 125,593 278,946 404,539 La Petite Academy Charleston SC 140,700 312,498 453,198 La Petite Academy Columbia SC 58,160 269,643 327,803 The Pantry Inc. Columbia SC 150,000 450,000 600,000 La Petite Academy Elgin SC 160,831 313,600 474,431 La Petite Academy Goose Creek SC 61,635 192,905 254,540 Vacant Greenville SC 500,000 1,293,648 1,793,648 The Pantry Inc. John's Isle SC 170,000 350,000 520,000 La Petite Academy Ladson SC 31,543 177,457 209,000 La Petite Academy Lexington SC 55,869 274,742 330,611 Long John Silver's Lexington SC 176,774 392,619 569,393 The Pantry Inc. Lexington SC 255,000 545,000 800,000 La Petite Academy Mt. Pleasant SC 40,700 180,400 221,100 The Pantry Inc. Myrtle Beach SC 140,000 590,000 730,000 The Pantry Inc. N. Charleston SC 400,000 650,000 1,050,000
Page 141 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Jiffy Lube Springfield Township PA 191,105 N/A 02/28/86 300 Golden Corral Waynesburg PA 137,093 N/A 08/17/87 300 La Petite Academy Charleston SC 70,682 N/A 05/26/88 300 La Petite Academy Charleston SC 70,764 N/A 03/28/89 300 La Petite Academy Columbia SC 160,208 N/A 11/14/84 300 The Pantry Inc. Columbia SC 6,750 N/A 08/25/95 300 La Petite Academy Elgin SC 75,316 N/A 12/14/89 300 La Petite Academy Goose Creek SC 180,115 N/A 12/22/81 180 Vacant Greenville SC 1,074,976 N/A 06/15/83 180 The Pantry Inc. John's Isle SC 5,250 N/A 08/25/95 300 La Petite Academy Ladson SC 165,626 N/A 12/22/81 180 La Petite Academy Lexington SC 163,237 N/A 11/13/84 300 Long John Silver's Lexington SC 97,369 N/A 07/06/88 300 The Pantry Inc. Lexington SC 8,175 N/A 08/25/95 300 La Petite Academy Mt. Pleasant SC 168,374 N/A 12/22/81 180 The Pantry Inc. Myrtle Beach SC 8,850 N/A 08/25/95 300 The Pantry Inc. N. Charleston SC 9,750 N/A 08/25/95 300
Page 142 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== La Petite Academy Summerville SC 44,400 174,500 None None The Pantry Inc. Summerville SC 115,000 515,000 None None La Petite Academy Sumter SC 56,010 268,903 None None Long John Silver's West Columbia SC 147,735 328,123 None None Golden Corral Pierre SD 251,790 559,232 None None The Pantry Inc. La Vergne TN 340,000 650,000 None None Children's World Memphis TN 238,263 504,897 None None Children's World Memphis TN 238,000 528,608 None None Golden Corral Memphis TN 405,274 1,060,680 None None Kinder-Care Memphis TN 221,501 491,962 None None Children's World Nashville TN 274,298 609,223 None None Sante Fe Cantina Nashville TN 484,975 1,192,627 20,000 31,098 The Pantry Inc. Shelbyville TN 200,000 465,000 None None La Petite Academy Allen TX 177,637 394,537 None None Checker Autoworks Amarillo TX 140,000 419,734 None None Children's World Arlington TX 82,109 380,678 None None Children's World Arlington TX 238,000 528,604 None None Children's World Arlington TX 241,500 550,559 None None
Page 143 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ La Petite Academy Summerville SC 44,400 174,500 218,900 The Pantry Inc. Summerville SC 115,000 515,000 630,000 La Petite Academy Sumter SC 56,010 268,903 324,913 Long John Silver's West Columbia SC 147,735 328,123 475,858 Golden Corral Pierre SD 251,790 559,232 811,022 The Pantry Inc. La Vergne TN 340,000 650,000 990,000 Children's World Memphis TN 238,263 504,897 743,160 Children's World Memphis TN 238,000 528,608 766,608 Golden Corral Memphis TN 405,274 1,060,680 1,465,954 Kinder-Care Memphis TN 221,501 491,962 713,463 Children's World Nashville TN 274,298 609,223 883,521 Sante Fe Cantina Nashville TN 484,975 1,243,725 1,728,700 The Pantry Inc. Shelbyville TN 200,000 465,000 665,000 La Petite Academy Allen TX 177,637 394,537 572,174 Checker Autoworks Amarillo TX 140,000 419,734 559,734 Children's World Arlington TX 82,109 380,678 462,787 Children's World Arlington TX 238,000 528,604 766,604 Children's World Arlington TX 241,500 550,559 792,059
Page 144 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== La Petite Academy Summerville SC 162,866 N/A 12/22/81 180 The Pantry Inc. Summerville SC 7,725 N/A 08/25/95 300 La Petite Academy Sumter SC 143,173 N/A 06/18/85 300 Long John Silver's West Columbia SC 86,686 N/A 01/13/88 300 Golden Corral Pierre SD 149,248 N/A 12/01/87 300 The Pantry Inc. La Vergne TN 9,750 N/A 08/25/95 300 Children's World Memphis TN 122,489 N/A 09/29/88 300 Children's World Memphis TN 128,244 N/A 09/30/88 300 Golden Corral Memphis TN 19,446 06/30/95 03/17/95 300 Kinder-Care Memphis TN 88,910 N/A 08/30/90 300 Children's World Nashville TN 137,954 N/A 03/30/89 300 Sante Fe Cantina Nashville TN 1,012,195 N/A 05/20/83 180 The Pantry Inc. Shelbyville TN 6,975 N/A 08/25/95 300 La Petite Academy Allen TX 93,584 N/A 11/21/88 300 Checker Autoworks Amarillo TX 101,475 N/A 09/12/88 300 Children's World Arlington TX 224,475 N/A 12/13/84 300 Children's World Arlington TX 128,242 N/A 09/26/88 300 Children's World Arlington TX 175,963 N/A 09/22/89 300
Page 145 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== La Petite Academy Arlington TX 70,000 324,538 None None La Petite Academy Arlington TX 195,650 387,355 None None Golden Corral Athens TX 245,245 544,700 None None Children's World Austin TX 134,383 623,103 None None Children's World Austin TX 236,733 528,608 None None Children's World Austin TX 238,000 528,604 None None Discount Tire Store Austin TX 185,454 411,899 None None La Petite Academy Austin TX 103,600 230,532 None None La Petite Academy Austin TX 88,872 222,684 None None La Petite Academy Austin TX 188,144 417,872 None None La Petite Academy Austin TX 191,636 425,629 None None La Petite Academy Austin TX 224,878 499,461 None None La Petite Academy Austin TX 217,878 483,913 None None Children's World Bedford TX 241,500 550,559 None None Don Pablo's Bedford TX 919,303 98,231 None None Golden Corral Beeville TX 250,490 556,349 None None Golden Corral Brownwood TX 288,225 640,160 None None
Page 146 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ La Petite Academy Arlington TX 70,000 324,538 394,538 La Petite Academy Arlington TX 195,650 387,355 583,005 Golden Corral Athens TX 245,245 544,700 789,945 Children's World Austin TX 134,383 623,103 757,486 Children's World Austin TX 236,733 528,608 765,341 Children's World Austin TX 238,000 528,604 766,604 Discount Tire Store Austin TX 185,454 411,899 597,353 La Petite Academy Austin TX 103,600 230,532 334,132 La Petite Academy Austin TX 88,872 222,684 311,556 La Petite Academy Austin TX 188,144 417,872 606,016 La Petite Academy Austin TX 191,636 425,629 617,265 La Petite Academy Austin TX 224,878 499,461 724,339 La Petite Academy Austin TX 217,878 483,913 701,791 Children's World Bedford TX 241,500 550,559 792,059 Don Pablo's Bedford TX 919,303 98,231 1,017,534 Golden Corral Beeville TX 250,490 556,349 806,839 Golden Corral Brownwood TX 288,225 640,160 928,385
Page 147 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== La Petite Academy Arlington TX 180,022 N/A 05/08/85 300 La Petite Academy Arlington TX 63,763 N/A 02/07/91 300 Golden Corral Athens TX 145,371 N/A 12/01/87 300 Children's World Austin TX 283,684 N/A 12/26/86 300 Children's World Austin TX 128,244 N/A 09/27/88 300 Children's World Austin TX 118,276 N/A 04/06/89 300 Discount Tire Store Austin TX 81,082 N/A 02/06/90 300 La Petite Academy Austin TX 202,823 N/A 10/29/82 180 La Petite Academy Austin TX 192,994 N/A 01/12/83 180 La Petite Academy Austin TX 105,885 N/A 05/11/88 300 La Petite Academy Austin TX 99,818 N/A 12/22/88 300 La Petite Academy Austin TX 115,791 N/A 01/03/89 300 La Petite Academy Austin TX 105,670 N/A 06/22/89 300 Children's World Bedford TX 175,965 N/A 09/22/89 300 Don Pablo's Bedford TX 83,950 N/A 12/27/94 300 Golden Corral Beeville TX 155,993 N/A 07/31/87 300 Golden Corral Brownwood TX 170,702 N/A 12/28/87 300
Page 148 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Children's World Carrollton TX 277,850 617,113 None None La Petite Academy Cedar Park TX 168,857 375,036 None None La Petite Academy Colleyville TX 68,000 315,266 None None Children's World Converse TX 217,000 481,963 None None Children's World Coppell TX 139,224 645,551 None None Children's World Coppell TX 208,641 463,398 None None Golden Corral Crockett TX 90,780 420,880 None None Discount Tire Store Dallas TX 191,267 424,811 None None Don Pablo's Dallas TX 742,507 0 None None Whataburger Dallas TX 242,025 479,170 None None La Petite Academy Desoto TX 86,000 398,715 None None La Petite Academy Duncanville TX 93,000 431,172 None None Golden Corral El Campo TX 98,060 454,631 None None Checker Autoworks El Paso TX 66,150 146,922 None None Checker Autoworks El Paso TX 56,350 125,156 None None Kentucky Fried Chicken Ennis TX 173,250 384,793 None None Children's World Euless TX 234,111 519,962 None None
Page 149 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Children's World Carrollton TX 277,850 617,113 894,963 La Petite Academy Cedar Park TX 168,857 375,036 543,893 La Petite Academy Colleyville TX 68,000 315,266 383,266 Children's World Converse TX 217,000 481,963 698,963 Children's World Coppell TX 139,224 645,551 784,775 Children's World Coppell TX 208,641 463,398 672,039 Golden Corral Crockett TX 90,780 420,880 511,660 Discount Tire Store Dallas TX 191,267 424,811 616,078 Don Pablo's Dallas TX 742,507 0 742 507 Whataburger Dallas TX 242,025 479,170 721,195 La Petite Academy Desoto TX 86,000 398,715 484,715 La Petite Academy Duncanville TX 93,000 431,172 524,172 Golden Corral El Campo TX 98,060 454,631 552,691 Checker Autoworks El Paso TX 66,150 146,922 213,072 Checker Autoworks El Paso TX 56,350 125,156 181,506 Kentucky Fried Chicken Ennis TX 173,250 384,793 558,043 Children's World Euless TX 234,111 519,962 754,073
Page 150 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Children's World Carrollton TX 164,696 N/A 12/11/87 300 La Petite Academy Cedar Park TX 88,958 N/A 11/21/88 300 La Petite Academy Colleyville TX 174,879 N/A 05/01/85 300 Children's World Converse TX 116,927 N/A 09/28/88 300 Children's World Coppell TX 293,902 N/A 12/18/86 300 Children's World Coppell TX 123,672 N/A 12/11/87 300 Golden Corral Crockett TX 213,283 N/A 12/17/85 300 Discount Tire Store Dallas TX 84,765 N/A 01/26/90 300 Don Pablo's Dallas TX 0 N/A 04/13/95 300 Whataburger Dallas TX 73,733 N/A 06/25/91 300 La Petite Academy Desoto TX 236,959 N/A 10/23/84 300 La Petite Academy Duncanville TX 239,171 N/A 05/08/85 300 Golden Corral El Campo TX 232,332 N/A 11/25/85 300 Checker Autoworks El Paso TX 40,004 N/A 10/27/87 300 Checker Autoworks El Paso TX 34,077 N/A 10/27/87 300 Kentucky Fried Chicken Ennis TX 102,695 N/A 12/28/87 300 Children's World Euless TX 148,601 N/A 05/08/87 300
Page 151 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Children's World Flowermound TX 202,773 442,846 None None Children's World Fort Worth TX 238,000 528,608 None None La Petite Academy Fort Worth TX 85,518 396,495 None None La Petite Academy Fort Worth TX 210,007 444,460 None None La Petite Academy Fort Worth TX 216,160 427,962 None None Whataburger Fort Worth TX 223,195 492,067 None None Whataburger Ft. Worth TX 423,281 382,059 None None Golden Corral Gainesville TX 89,220 413,644 None None Discount Tire Store Garland TX 242,887 539,461 None None La Petite Academy Garland TX 211,050 468,749 None None La Petite Academy Grand Prairie TX 167,164 371,275 None None Discount Tire Store Harlingen TX 134,599 298,948 None None Golden Corral Hillsboro TX 75,992 352,316 None None Children's World Houston TX 219,100 486,631 None None Children's World Houston TX 219,100 486,628 None None Children's World Houston TX 149,109 323,314 None None
Page 152 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Children's World Flowermound TX 202,773 442,846 645,619 Children's World Fort Worth TX 238,000 528,608 766,608 La Petite Academy Fort Worth TX 85,518 396,495 482,013 La Petite Academy Fort Worth TX 210,007 444,460 654,467 La Petite Academy Fort Worth TX 216,160 427,962 644,122 Whataburger Fort Worth TX 223,195 492,067 715,262 Whataburger Ft. Worth TX 423,281 382,059 805,340 Golden Corral Gainesville TX 89,220 413,644 502,864 Discount Tire Store Garland TX 242,887 539,461 782,348 La Petite Academy Garland TX 211,050 468,749 679,799 La Petite Academy Grand Prairie TX 167,164 371,275 538,439 Discount Tire Store Harlingen TX 134,599 298,948 433,547 Golden Corral Hillsboro TX 75,992 352,316 428,308 Children's World Houston TX 219,100 486,631 705,731 Children's World Houston TX 219,100 486,628 705,728 Children's World Houston TX 149,109 323,314 472,423
Page 153 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Children's World Flowermound TX 127,757 N/A 04/20/87 300 Children's World Fort Worth TX 128,244 N/A 09/26/88 300 La Petite Academy Fort Worth TX 182,141 N/A 12/03/86 300 La Petite Academy Fort Worth TX 90,111 N/A 02/01/90 300 La Petite Academy Fort Worth TX 70,448 N/A 02/07/91 300 Whataburger Fort Worth TX 84,482 N/A 06/26/91 300 Whataburger Ft. Worth TX 13,372 N/A 02/10/95 300 Golden Corral Gainesville TX 242,125 N/A 12/18/84 300 Discount Tire Store Garland TX 107,642 N/A 01/19/90 300 La Petite Academy Garland TX 94,793 N/A 12/12/89 300 La Petite Academy Grand Prairie TX 87,071 N/A 12/13/88 300 Discount Tire Store Harlingen TX 59,651 N/A 01/17/90 300 Golden Corral Hillsboro TX 214,126 N/A 08/01/84 300 Children's World Houston TX 118,061 N/A 09/30/88 300 Children's World Houston TX 115,438 N/A 11/16/88 300 Children's World Houston TX 88,535 N/A 06/26/89 300
Page 154 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Discount Tire Store Houston TX 151,018 335,417 None None La Petite Academy Houston TX 58,000 268,901 None None La Petite Academy Houston TX 102,000 472,898 None None La Petite Academy Houston TX 60,000 278,175 None None La Petite Academy Houston TX 139,125 308,997 None None La Petite Academy Houston TX 139,125 308,997 None None La Petite Academy Houston TX 141,296 313,824 None None Whataburger Houston TX 184,175 364,636 None None Whataburger Houston TX 194,994 386,056 None None Artesian Center Humble TX 106,000 545,518 None None Vacant Irving TX 63,853 296,034 None None Taco Bell Killeen TX 262,500 583,014 None 14,398 Golden Corral League City TX 126,822 588,000 None None Discount Tire Store Leon Valley TX 178,221 395,834 None None Children's World Lewisville TX 192,777 428,121 None None Children's World Lewisville TX 192,218 426,922 None None La Petite Academy Lewisville TX 79,000 366,264 None None
Page 155 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Discount Tire Store Houston TX 151,018 335,417 486,435 La Petite Academy Houston TX 58,000 268,901 326,901 La Petite Academy Houston TX 102,000 472,898 574,898 La Petite Academy Houston TX 60,000 278,175 338,175 La Petite Academy Houston TX 139,125 308,997 448,122 La Petite Academy Houston TX 139,125 308,997 448,122 La Petite Academy Houston TX 141,296 313,824 455,120 Whataburger Houston TX 184,175 364,636 548,811 Whataburger Houston TX 194,994 386,056 581,050 Artesian Center Humble TX 106,000 545,518 651,518 Vacant Irving TX 63,853 296,034 359,887 Taco Bell Killeen TX 262,500 597,412 859,912 Golden Corral League City TX 126,822 588,000 714,822 Discount Tire Store Leon Valley TX 178,221 395,834 574,055 Children's World Lewisville TX 192,777 428,121 620,898 Children's World Lewisville TX 192,218 426,922 619,140 La Petite Academy Lewisville TX 79,000 366,264 445,264
Page 156 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Discount Tire Store Houston TX 66,928 N/A 01/25/90 300 La Petite Academy Houston TX 160,973 N/A 10/11/84 300 La Petite Academy Houston TX 262,316 N/A 05/01/85 300 La Petite Academy Houston TX 154,305 N/A 05/01/85 300 La Petite Academy Houston TX 88,307 N/A 05/22/87 300 La Petite Academy Houston TX 88,307 N/A 05/22/87 300 La Petite Academy Houston TX 87,992 N/A 07/24/87 300 Whataburger Houston TX 56,109 N/A 06/25/91 300 Whataburger Houston TX 59,405 N/A 06/25/91 300 Artesian Center Humble TX 388,039 N/A 03/19/86 300 Vacant Irving TX 144,942 N/A 04/23/86 300 Taco Bell Killeen TX 167,168 N/A 05/29/87 300 Golden Corral League City TX 267,701 N/A 12/30/86 300 Discount Tire Store Leon Valley TX 78,984 N/A 01/17/90 300 Children's World Lewisville TX 126,896 N/A 01/07/87 300 Children's World Lewisville TX 100,123 N/A 12/29/88 300 La Petite Academy Lewisville TX 195,010 N/A 06/26/85 300
Page 157 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Checker Autoworks Lubbock TX 42,000 93,284 None None Checker Autoworks Lubbock TX 49,000 108,831 None None Golden Corral Lufkin TX 105,904 490,998 None None La Petite Academy Mansfield TX 181,375 402,838 None None Don Pablo's Mesquite TX 729,596 120,820 None None Golden Corral Mesquite TX 134,940 625,612 None None La Petite Academy Mesquite TX 85,000 394,079 None None La Petite Academy Mesquite TX 139,466 326,525 None None Golden Corral Mexia TX 93,620 434,046 None None Checker Autoworks Midland TX 45,500 101,058 None None La Petite Academy Missouri City TX 221,025 437,593 None None Children's World North Richland Hills TX 238,000 528,608 None None Taco Bell New Braunfels TX 185,500 411,997 None None Checker Autoworks Odessa TX 50,750 112,718 None None Golden Corral Orange TX 93,560 433,768 None None Discount Tire Store Pasadena TX 107,391 238,518 None None La Petite Academy Pasadena TX 60,000 278,173 None None
Page 158 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Checker Autoworks Lubbock TX 42,000 93,284 135,284 Checker Autoworks Lubbock TX 49,000 108,831 157,831 Golden Corral Lufkin TX 105,904 490,998 596,902 La Petite Academy Mansfield TX 181,375 402,838 584,213 Don Pablo's Mesquite TX 729,596 120,820 850,416 Golden Corral Mesquite TX 134,940 625,612 760,552 La Petite Academy Mesquite TX 85,000 394,079 479,079 La Petite Academy Mesquite TX 139,466 326,525 465,991 Golden Corral Mexia TX 93,620 434,046 527,666 Checker Autoworks Midland TX 45,500 101,058 146,558 La Petite Academy Missouri City TX 221,025 437,593 658,618 Children's World North Richland Hills TX 238,000 528,608 766,608 Taco Bell New Braunfels TX 185,500 411,997 597,497 Checker Autoworks Odessa TX 50,750 112,718 163,468 Golden Corral Orange TX 93,560 433,768 527,328 Discount Tire Store Pasadena TX 107,391 238,518 345,909 La Petite Academy Pasadena TX 60,000 278,173 338,173
Page 159 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Checker Autoworks Lubbock TX 25,398 N/A 10/26/87 300 Checker Autoworks Lubbock TX 29,633 N/A 10/29/87 300 Golden Corral Lufkin TX 255,036 N/A 10/08/85 300 La Petite Academy Mansfield TX 81,465 N/A 12/20/89 300 Don Pablo's Mesquite TX 104,039 N/A 12/23/94 300 Golden Corral Mesquite TX 308,987 N/A 03/20/86 300 La Petite Academy Mesquite TX 234,207 N/A 10/23/84 300 La Petite Academy Mesquite TX 76,803 N/A 10/08/92 300 Golden Corral Mexia TX 219,956 N/A 12/18/85 300 Checker Autoworks Midland TX 27,515 N/A 10/27/87 300 La Petite Academy Missouri City TX 74,383 N/A 12/13/90 300 Children's World North Richland Hills TX 128,244 N/A 09/26/88 300 Taco Bell New Braunfels TX 119,972 N/A 03/26/87 300 Checker Autoworks Odessa TX 30,690 N/A 10/26/87 300 Golden Corral Orange TX 221,595 N/A 12/10/85 300 Discount Tire Store Pasadena TX 47,594 N/A 01/24/90 300 La Petite Academy Pasadena TX 165,323 N/A 10/23/84 300
Page 160 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Golden Corral Plainview TX 125,000 350,767 None None Children's World Plano TX 261,912 581,658 None None Children's World Plano TX 250,514 556,399 None None Children's World Plano TX 259,000 575,246 None None Discount Tire Store Plano TX 187,564 416,586 None None Levitz Furniture Plano TX 565,000 5,835,000 None None Golden Corral Port Lavaca TX 244,759 543,619 None None Whataburger Porter TX 227,067 333,031 None None La Petite Academy Round Rock TX 80,525 373,347 None None La Petite Academy Round Rock TX 186,380 413,957 None None Golden Corral Rowlett TX 126,933 585,986 None None Children's World San Antonio TX 130,833 606,595 None None Children's World San Antonio TX 234,500 520,831 None None Children's World San Antonio TX 217,000 481,967 None None Children's World San Antonio TX 220,500 447,108 None None Discount Tire Store San Antonio TX 245,164 544,518 None None Econo Lube N' Tune San Antonio TX 198,828 437,422 None None
Page 161 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Golden Corral Plainview TX 125,000 350,767 475,767 Children's World Plano TX 261,912 581,658 843,570 Children's World Plano TX 250,514 556,399 806,913 Children's World Plano TX 259,000 575,246 834,246 Discount Tire Store Plano TX 187,564 416,586 604,150 Levitz Furniture Plano TX 565,000 5,835,000 6,400,000 Golden Corral Port Lavaca TX 244,759 543,619 788,378 Whataburger Porter TX 227,067 333,031 560,098 La Petite Academy Round Rock TX 80,525 373,347 453,872 La Petite Academy Round Rock TX 186,380 413,957 600,337 Golden Corral Rowlett TX 126,933 585,986 712,919 Children's World San Antonio TX 130,833 606,595 737,428 Children's World San Antonio TX 234,500 520,831 755,331 Children's World San Antonio TX 217,000 481,967 698,967 Children's World San Antonio TX 220,500 447,108 667,608 Discount Tire Store San Antonio TX 245,164 544,518 789,682 Econo Lube N' Tune San Antonio TX 198,828 437,422 636,250
Page 162 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Golden Corral Plainview TX 279,162 N/A 01/24/84 180 Children's World Plano TX 172,523 N/A 01/06/87 300 Children's World Plano TX 148,492 N/A 12/10/87 300 Children's World Plano TX 139,559 N/A 09/27/88 300 Discount Tire Store Plano TX 83,124 N/A 01/18/90 300 Levitz Furniture Plano TX 145,875 N/A 05/26/95 300 Golden Corral Port Lavaca TX 152,424 N/A 07/30/87 300 Whataburger Porter TX 11,656 N/A 02/09/95 300 La Petite Academy Round Rock TX 169,977 N/A 12/16/86 300 La Petite Academy Round Rock TX 92,623 N/A 04/19/89 300 Golden Corral Rowlett TX 306,816 N/A 09/06/85 300 Children's World San Antonio TX 299,594 N/A 03/24/86 300 Children's World San Antonio TX 139,000 N/A 12/29/87 300 Children's World San Antonio TX 115,631 N/A 10/14/88 300 Children's World San Antonio TX 101,246 N/A 03/30/89 300 Discount Tire Store San Antonio TX 107,187 N/A 02/14/90 300 Econo Lube N' Tune San Antonio TX 5,103 N/A 09/15/95 300
Page 163 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== La Petite Academy San Antonio TX 102,512 475,289 None None La Petite Academy San Antonio TX 81,530 378,007 None None La Petite Academy San Antonio TX 139,125 308,997 None None La Petite Academy San Antonio TX 162,161 360,166 None None La Petite Academy San Antonio TX 181,412 402,923 None None La Petite Academy San Antonio TX 182,868 406,155 None None Whataburger Sealy TX 197,871 391,754 None None La Petite Academy Southlake TX 228,279 511,750 None None Stone Meadow Ctr Spring TX 143,980 722,247 None None Whataburger Stafford TX 214,024 423,732 None None La Petite Academy Sugarland TX 193,800 430,436 None None Whataburger Temple TX 302,505 291,414 None None La Petite Academy Texas City TX 48,000 222,918 None None La Petite Academy The Woodlands TX 193,801 430,441 None None Golden Corral Vidor TX 90,618 420,124 None None La Petite Academy Watauga TX 165,914 368,502 None None Golden Corral Waxahachie TX 326,935 726,137 None None
Page 164 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ La Petite Academy San Antonio TX 102,512 475,289 577,801 La Petite Academy San Antonio TX 81,530 378,007 459,537 La Petite Academy San Antonio TX 139,125 308,997 448,122 La Petite Academy San Antonio TX 162,161 360,166 522,327 La Petite Academy San Antonio TX 181,412 402,923 584,335 La Petite Academy San Antonio TX 182,868 406,155 589,023 Whataburger Sealy TX 197,871 391,754 589,625 La Petite Academy Southlake TX 228,279 511,750 740,029 Stone Meadow Ctr Spring TX 143,980 722,247 866,227 Whataburger Stafford TX 214,024 423,732 637,756 La Petite Academy Sugarland TX 193,800 430,436 624,236 Whataburger Temple TX 302,505 291,414 593,919 La Petite Academy Texas City TX 48,000 222,918 270,918 La Petite Academy The Woodlands TX 193,801 430,441 624,242 Golden Corral Vidor TX 90,618 420,124 510,742 La Petite Academy Watauga TX 165,914 368,502 534,416 Golden Corral Waxahachie TX 326,935 726,137 1,053,072
Page 165 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== La Petite Academy San Antonio TX 218,339 N/A 12/03/86 300 La Petite Academy San Antonio TX 173,648 N/A 12/11/86 300 La Petite Academy San Antonio TX 88,307 N/A 05/22/87 300 La Petite Academy San Antonio TX 100,986 N/A 07/07/87 300 La Petite Academy San Antonio TX 112,973 N/A 07/07/87 300 La Petite Academy San Antonio TX 95,252 N/A 12/06/88 300 Whataburger Sealy TX 60,282 N/A 06/25/91 300 La Petite Academy Southlake TX 87,945 N/A 03/11/93 300 Stone Meadow Ctr Spring TX 489,523 N/A 12/18/85 300 Whataburger Stafford TX 65,203 N/A 06/26/91 300 La Petite Academy Sugarland TX 120,689 N/A 07/31/87 300 Whataburger Temple TX 10,199 N/A 02/09/95 300 La Petite Academy Texas City TX 201,862 N/A 06/15/82 180 La Petite Academy The Woodlands TX 119,527 N/A 08/11/87 300 Golden Corral Vidor TX 255,333 N/A 08/01/84 300 La Petite Academy Watauga TX 103,321 N/A 07/07/87 300 Golden Corral Waxahachie TX 193,715 N/A 12/30/87 300
Page 166 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Discount Tire Store Bountiful UT 183,750 408,115 None None Golden Corral Cedar City UT 130,000 296,544 None None La Petite Academy Layton UT 136,574 269,009 None None Carver's Orem UT 516,129 1,004,608 None None Discount Tire Store Provo UT 125,395 278,507 None None Carver's Sandy UT 635,945 884,792 None None La Petite Academy Sandy UT 168,089 373,330 None None Children's World Centreville VA 371,000 824,003 None None Color Tile Chesapeake VA 144,014 649,869 None 11,754 La Petite Academy Chesapeake VA 190,050 422,107 None None La Petite Academy Glen Allen VA 74,643 346,060 None None Hot N Now Norfolk VA 251,207 575,250 None 12,983 La Petite Academy Portsmouth VA 171,575 381,072 None None Children's World Richmond VA 269,500 598,567 None None La Petite Academy Richmond VA 71,001 327,771 None None Children's World Virginia Bch VA 124,988 579,496 None None Golden Corral Virginia Bch VA 314,790 699,161 None None
Page 167 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Discount Tire Store Bountiful UT 183,750 408,115 591,865 Golden Corral Cedar City UT 130,000 296,544 426,544 La Petite Academy Layton UT 136,574 269,009 405,583 Carver's Orem UT 516,129 1,004,608 1,520,737 Discount Tire Store Provo UT 125,395 278,507 403,902 Carver's Sandy UT 635,945 884,792 1,520,737 La Petite Academy Sandy UT 168,089 373,330 541,419 Children's World Centreville VA 371,000 824,003 1,195,003 Color Tile Chesapeake VA 144,014 661,623 805,637 La Petite Academy Chesapeake VA 190,050 422,107 612,157 La Petite Academy Glen Allen VA 74,643 346,060 420,703 Hot N Now Norfolk VA 251,207 588,233 839,440 La Petite Academy Portsmouth VA 171,575 381,072 552,647 Children's World Richmond VA 269,500 598,567 868,067 La Petite Academy Richmond VA 71,001 327,771 398,772 Children's World Virginia Bch VA 124,988 579,496 704,484 Golden Corral Virginia Bch VA 314,790 699,161 1,013,951
Page 168 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Discount Tire Store Bountiful UT 81,434 N/A 01/30/90 300 Golden Corral Cedar City UT 245,382 N/A 08/04/83 180 La Petite Academy Layton UT 62,323 N/A 02/01/90 300 Carver's Orem UT 1,674 N/A 12/13/95 300 Discount Tire Store Provo UT 55,572 N/A 01/25/90 300 Carver's Sandy UT 1,475 N/A 12/22/95 300 La Petite Academy Sandy UT 73,489 N/A 02/01/90 300 Children's World Centreville VA 173,284 N/A 09/29/89 300 Color Tile Chesapeake VA 309,936 N/A 12/22/86 300 La Petite Academy Chesapeake VA 95,584 N/A 03/27/89 300 La Petite Academy Glen Allen VA 211,868 N/A 06/20/84 300 Hot N Now Norfolk VA 159,516 N/A 10/15/87 300 La Petite Academy Portsmouth VA 89,369 N/A 12/21/88 300 Children's World Richmond VA 135,541 N/A 03/28/89 300 La Petite Academy Richmond VA 171,618 N/A 09/04/85 300 Children's World Virginia Bch VA 286,211 N/A 03/25/86 300 Golden Corral Virginia Bch VA 192,259 N/A 09/03/87 300
Page 169 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== La Petite Academy Virginia Bch VA 69,080 320,270 None None Children's World Woodbridge VA 358,050 795,239 None None Golden Corral Auburn WA 301,595 669,852 None None Schuck's Autoworks Bellevue WA 185,500 411,997 None None Schuck's Autoworks Bellingham WA 168,000 373,133 None None Schuck's Autoworks Bothell WA 199,500 443,098 None None Children's World Everett WA 120,000 540,363 None None Schuck's Autoworks Everett WA 367,500 816,227 None None Children's World Federal Way WA 150,785 699,100 None None La Petite Academy Federal Way WA 261,943 581,782 None None Schuck's Autoworks Hazel Dell WA 168,000 373,135 None None Schuck's Autoworks Kennewick WA 161,350 358,365 None None Children's World Kent WA 128,300 539,141 None None Children's World Kent WA 140,763 678,809 None None Schuck's Autoworks Kent WA 199,500 443,091 None None Children's World Kirkland WA 301,000 668,534 None None Schuck's Autoworks Lacey WA 171,150 380,125 None None Golden Corral Marysville WA 276,273 613,613 None None
Page 170 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ La Petite Academy Virginia Bch VA 69,080 320,270 389,350 Children's World Woodbridge VA 358,050 795,239 1,153,289 Golden Corral Auburn WA 301,595 669,852 971,447 Schuck's Autoworks Bellevue WA 185,500 411,997 597,497 Schuck's Autoworks Bellingham WA 168,000 373,133 541,133 Schuck's Autoworks Bothell WA 199,500 443,098 642,598 Children's World Everett WA 120,000 540,363 660,363 Schuck's Autoworks Everett WA 367,500 816,227 1,183,727 Children's World Federal Way WA 150,785 699,100 849,885 La Petite Academy Federal Way WA 261,943 581,782 843,725 Schuck's Autoworks Hazel Dell WA 168,000 373,135 541,135 Schuck's Autoworks Kennewick WA 161,350 358,365 519,715 Children's World Kent WA 128,300 539,141 667,441 Children's World Kent WA 140,763 678,809 819,572 Schuck's Autoworks Kent WA 199,500 443,091 642,591 Children's World Kirkland WA 301,000 668,534 969,534 Schuck's Autoworks Lacey WA 171,150 380,125 551,275 Golden Corral Marysville WA 276,273 613,613 889,886
Page 171 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== La Petite Academy Virginia Bch VA 190,290 N/A 11/15/84 300 Children's World Woodbridge VA 192,931 N/A 09/29/88 300 Golden Corral Auburn WA 178,771 N/A 12/16/87 300 Schuck's Autoworks Bellevue WA 114,404 N/A 08/06/87 300 Schuck's Autoworks Bellingham WA 103,611 N/A 08/20/87 300 Schuck's Autoworks Bothell WA 123,042 N/A 08/20/87 300 Children's World Everett WA 472,374 N/A 11/23/82 180 Schuck's Autoworks Everett WA 220,040 N/A 11/17/87 300 Children's World Federal Way WA 318,285 N/A 12/17/86 300 La Petite Academy Federal Way WA 138,001 N/A 11/21/88 300 Schuck's Autoworks Hazel Dell WA 89,690 N/A 05/23/88 300 Schuck's Autoworks Kennewick WA 99,513 N/A 08/26/87 300 Children's World Kent WA 452,036 N/A 06/03/83 180 Children's World Kent WA 309,046 N/A 12/17/86 300 Schuck's Autoworks Kent WA 123,038 N/A 08/06/87 300 Children's World Kirkland WA 173,007 N/A 03/31/88 300 Schuck's Autoworks Lacey WA 105,553 N/A 08/13/87 300 Golden Corral Marysville WA 170,391 N/A 08/27/87 300
Page 172 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Schuck's Autoworks Marysville WA 168,000 373,135 None None Schuck's Autoworks Moses Lake WA 138,600 307,831 None None Golden Corral Oak Harbor WA 275,940 612,874 None None Schuck's Autoworks Pasco WA 161,700 359,142 None None La Petite Academy Puyallup WA 195,552 434,327 None None Schuck's Autoworks Puyallup WA 173,250 384,795 None None Azteca Restaurant Redmond WA 610,334 1,262,103 None None La Petite Academy Redmond WA 279,830 621,512 None None Schuck's Autoworks Redmond WA 196,000 435,317 None None Children's World Renton WA 111,183 515,490 None None Schuck's Autoworks Renton WA 185,500 412,003 None None Schuck's Autoworks Richland WA 161,700 359,142 None None Schuck's Autoworks Seattle WA 162,400 360,697 None None Schuck's Autoworks Silverdale WA 183,808 419,777 None None Schuck's Autoworks Spanaway WA 189,000 419,777 None None Schuck's Autoworks Spokane WA 66,150 146,921 None None 27th Street Bar & Grill Tacoma WA 255,000 718,614 None None
Page 173 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Schuck's Autoworks Marysville WA 168,000 373,135 541,135 Schuck's Autoworks Moses Lake WA 138,600 307,831 446,431 Golden Corral Oak Harbor WA 275,940 612,874 888,814 Schuck's Autoworks Pasco WA 161,700 359,142 520,842 La Petite Academy Puyallup WA 195,552 434,327 629,879 Schuck's Autoworks Puyallup WA 173,250 384,795 558,045 Azteca Restaurant Redmond WA 610,334 1,262,103 1,872,437 La Petite Academy Redmond WA 279,830 621,512 901,342 Schuck's Autoworks Redmond WA 196,000 435,317 631,317 Children's World Renton WA 111,183 515,490 626,673 Schuck's Autoworks Renton WA 185,500 412,003 597,503 Schuck's Autoworks Richland WA 161,700 359,142 520,842 Schuck's Autoworks Seattle WA 162,400 360,697 523,097 Schuck's Autoworks Silverdale WA 183,808 419,777 603,585 Schuck's Autoworks Spanaway WA 189,000 419,777 608,777 Schuck's Autoworks Spokane WA 66,150 146,921 213,071 27th Street Bar & Grill Tacoma WA 255,000 718,614 973,614
Page 174 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Schuck's Autoworks Marysville WA 103,615 N/A 08/20/87 300 Schuck's Autoworks Moses Lake WA 85,479 N/A 08/12/87 300 Golden Corral Oak Harbor WA 171,840 N/A 07/16/87 300 Schuck's Autoworks Pasco WA 99,728 N/A 08/18/87 300 La Petite Academy Puyallup WA 101,857 N/A 12/06/88 300 Schuck's Autoworks Puyallup WA 105,813 N/A 09/15/87 300 Azteca Restaurant Redmond WA 1,100,832 N/A 12/10/82 180 La Petite Academy Redmond WA 174,264 N/A 07/27/87 300 Schuck's Autoworks Redmond WA 119,706 N/A 09/17/87 300 Children's World Renton WA 254,597 N/A 03/24/86 300 Schuck's Autoworks Renton WA 113,293 N/A 09/15/87 300 Schuck's Autoworks Richland WA 99,728 N/A 08/13/87 300 Schuck's Autoworks Seattle WA 100,161 N/A 08/20/87 300 Schuck's Autoworks Silverdale WA 115,431 N/A 09/16/87 300 Schuck's Autoworks Spanaway WA 116,564 N/A 08/25/87 300 Schuck's Autoworks Spokane WA 39,607 N/A 11/18/87 300 27th Street Bar & Grill Tacoma WA 426,966 N/A 11/06/84 300
Page 175 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Discount Tire Store Tacoma WA 187,111 415,579 None None Schuck's Autoworks Tacoma WA 191,800 425,996 None None Schuck's Autoworks Tacoma WA 196,000 435,324 None None Sea Galley Tacoma WA 198,857 921,947 None None Schuck's Autoworks Vancouver WA 180,250 400,343 None None Schuck's Autoworks Walla Walla WA 170,100 377,793 None None Schuck's Autoworks Wenatchee WA 148,400 329,602 None None Schuck's Autoworks Woodinville WA 171,500 380,908 None None Kinder-Care Appleton WI 196,000 424,038 None None La Petite Academy Brookfield WI 233,100 461,500 None None Taco Bell Grafton WI 149,778 332,664 None None Car-X Muffler & Brake Milwaukee WI 173,005 499,244 None None Golden Corral Monroe WI 193,130 428,947 None None Car-X Muffler & Brake New Berlin WI 188,491 466,268 None None Golden Corral Portage WI 199,605 443,328 None None Golden Corral Shawano WI 205,730 456,932 None None
Page 176 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Discount Tire Store Tacoma WA 187,111 415,579 602,690 Schuck's Autoworks Tacoma WA 191,800 425,996 617,796 Schuck's Autoworks Tacoma WA 196,000 435,324 631,324 Sea Galley Tacoma WA 198,857 921,947 1,120,804 Schuck's Autoworks Vancouver WA 180,250 400,343 580,593 Schuck's Autoworks Walla Walla WA 170,100 377,793 547,893 Schuck's Autoworks Wenatchee WA 148,400 329,602 478,002 Schuck's Autoworks Woodinville WA 171,500 380,908 552,408 Kinder-Care Appleton WI 196,000 424,038 620,038 La Petite Academy Brookfield WI 233,100 461,500 694,600 Taco Bell Grafton WI 149,778 332,664 482,442 Car-X Muffler & Brake Milwaukee WI 173,005 499,244 672,249 Golden Corral Monroe WI 193,130 428,947 622,077 Car-X Muffler & Brake New Berlin WI 188,491 466,268 654,759 Golden Corral Portage WI 199,605 443,328 642,933 Golden Corral Shawano WI 205,730 456,932 662,662
Page 177 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Discount Tire Store Tacoma WA 82,923 N/A 01/25/90 300 Schuck's Autoworks Tacoma WA 118,293 N/A 08/18/87 300 Schuck's Autoworks Tacoma WA 118,531 N/A 10/15/87 300 Sea Galley Tacoma WA 568,576 N/A 05/29/84 300 Schuck's Autoworks Vancouver WA 111,168 N/A 08/20/87 300 Schuck's Autoworks Walla Walla WA 104,906 N/A 08/06/87 300 Schuck's Autoworks Wenatchee WA 91,527 N/A 08/25/87 300 Schuck's Autoworks Woodinville WA 105,772 N/A 08/20/87 300 Kinder-Care Appleton WI 82,485 N/A 07/10/90 300 La Petite Academy Brookfield WI 78,446 N/A 12/13/90 300 Taco Bell Grafton WI 90,579 N/A 10/29/87 300 Car-X Muffler & Brake Milwaukee WI 832 N/A 12/22/95 300 Golden Corral Monroe WI 114,477 N/A 12/17/87 300 Car-X Muffler & Brake New Berlin WI 777 N/A 12/22/95 300 Golden Corral Portage WI 118,295 N/A 12/23/87 300 Golden Corral Shawano WI 121,928 N/A 12/17/87 300
Page 178 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized Subsequent Initial Cost to Company to Acquisition -------------------------- ------------------ Buildings, Improvements and Description Acquisition Improve- Carrying (Note 1) Land Fees ments Costs ================= ============ ============ ======== ======== Golden Corral Sturgeon Bay WI 214,865 477,221 None None La Petite Academy Waukesha WI 215,950 427,546 None None Golden Corral Oak Hill WV 85,860 398,069 None None C. B. Potts Cheyenne WY 220,764 790,772 None 13,500 La Petite Academy Cheyenne WY 59,856 277,506 None None Golden Corral Gillette WY 126,660 587,228 None None Sizzler Laramie WY 210,000 466,417 None None Golden Corral Riverton WY 216,685 481,267 None None Golden Corral Sheridan WY 117,160 543,184 None None Other None 398,234 None 28,079 ------------ ------------ -------- -------- $147,788,835 $366,434,701 $419,291 $782,721 ============ ============ ======== ========
Page 179 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried at Close of Period (Notes 2, 3 and 5) ---------------------------------------- Buildings, Improvements and Description Acquisition (Note 1) Land Fees Total ================= ============ ============ ============ Golden Corral Sturgeon Bay WI 214,865 477,221 692,086 La Petite Academy Waukesha WI 215,950 427,546 643,496 Golden Corral Oak Hill WV 85,860 398,069 483,929 C. B. Potts Cheyenne WY 220,764 804,272 1,025,036 La Petite Academy Cheyenne WY 59,856 277,506 337,362 Golden Corral Gillette WY 126,660 587,228 713,888 Sizzler Laramie WY 210,000 466,417 676,417 Golden Corral Riverton WY 216,685 481,267 697,952 Golden Corral Sheridan WY 117,160 543,184 660,344 Other None 426,313 426,313 ------------ ------------ ------------ $147,788,835 $367,636,713 $515,425,548 ============ ============ ============
Page 180 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on which De- preciation in latest Income Statement Accumulated Date of is Com- Description Depreciation Constr- Date uted (in (Note 1) (Note 4) uction Acquired Months) ================= ============ ======== ========== ========== Golden Corral Sturgeon Bay WI 127,362 N/A 12/01/87 300 La Petite Academy Waukesha WI 72,675 N/A 12/13/90 300 Golden Corral Oak Hill WV 233,010 N/A 12/28/84 300 C. B. Potts Cheyenne WY 634,269 N/A 01/12/84 180 La Petite Academy Cheyenne WY 163,682 N/A 11/20/84 300 Golden Corral Gillette WY 295,064 N/A 01/29/86 300 Sizzler Laramie WY 88,720 N/A 03/12/90 300 Golden Corral Riverton WY 128,441 N/A 12/01/87 300 Golden Corral Sheridan WY 275,261 N/A 12/31/85 300 Other 236,588 N/A Various Various ------------ $126,062,055 ============
Page 181 REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Note 1. Six hundred eighty two of the properties are single unit retail outlets. Trade Center, Silverton Business Center and Empire Business Center properties are multi-tenant commercial properties. All properties were acquired on an all cash basis, no encumbrances were outstanding for the periods presented. Note 2. The aggregate cost for federal income tax purposes is $446,365,567. Note 3. Reconciliation of total real estate carrying value for the three years ended December 31, 1995 are as follows:
1995 1994 1993 ============ ============ ============ Balance at Beginning of Period $450,703,481 $451,738,008 $476,962,037 Additions During Period: Acquisitions -Foreclosure 0 0 950,000 Other Acquisitions 65,392,559 3,285,413 2,948,312 Equipment 0 0 70,000 Improvements, Etc. 447,720 83,571 11,800 Other (Leasing Costs) 50,126 115,977 102,047 ------------ ------------ ------------ Total Additions 65,890,405 3,484,961 4,082,159 ------------ ------------ ------------ Deductions During Period: Cost of Real Estate Sold (1,162,098) (4,326,985) (28,293,498) Cost of Equipment Sold 0 (1,500) (8,500) Other (Fully Amortized Commissions) (6,240) (56,003) (69,190) Other (Provision for Impairment Losses) 0 (135,000) (935,000) ------------ ------------ ------------ Total Deductions (1,168,338) (4,519,488) (29,306,188) ------------ ------------ ------------ Balance at Close of Period $515,425,548 $450,703,481 $451,738,008 ============ ============ ============
Page 182 Continued REALTY INCOME CORPORATION AND SUBSIDIARIES SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION Note 4. Reconciliation of accumulated depreciation for the three years ended December 31, 1995 are as follows:
1995 1994 1993 ============ ============ ============ Balance at Beginning of Period $112,168,982 $100,133,571 $ 90,878,109 Additions During Period-Provision for Depreciation 14,462,491 13,788,354 14,686,439 Deductions During Period-Accumulated Depreciation of Real Estate Sold (563,178) (1,696,940) (5,361,787) Deductions During Period -Fully Amortized Commissions (6,240) (56,003) (69,190) ------------ ------------ ------------ Balance at Close of Period $126,062,055 $112,168,982 $100,133,571 ============ ============ ============
Note 5. Provision is made for impairment loss if estimated undiscounted future cash flow over a long term holding period plus estimated undiscounted disposition value is less than current book value. A provision for impairment loss was made on the Stone Meadow Center in Spring, TX and the Artesian Center in Humble, TX in 1993 and on the Automall property in Mesa, AZ in 1994 and 1993. Page 183 ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE - --------------------------------------------------------- The corporation has had no disagreements with its independent auditors' on accountancy or financial disclosure. PART III ======== ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT - ------------------------------------------------------------ This item is incorporated by reference from the definitive proxy statement for the Annual Meeting of Shareholders presently scheduled to be held on May 14, 1996, to be filed pursuant to Regulation 14A. ITEM 11: EXECUTIVE COMPENSATION - -------------------------------- This item is incorporated by reference from the definitive proxy statement for the Annual Meeting of Shareholders presently scheduled to be held on May 14, 1996, to be filed pursuant to Regulation 14A. ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - ------------------------------------------------------------- This item is incorporated by reference from the definitive proxy statement for the Annual Meeting of Shareholders presently scheduled to be held on May 14, 1996, to be filed pursuant to Regulation 14A. ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS - -------------------------------------------------------- This item is incorporated by reference from the definitive proxy statement for the Annual Meeting of Shareholders presently scheduled to be held on May 14, 1996, to be filed pursuant to Regulation 14A. Page 184 PART IV ======= ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K - ---------------------------------------------------------------- A. The following documents are filed as part of this report. 1. Financial Statements (see Item 8) a. Independent Auditors' Report b. Consolidated Balance Sheets, December 31, 1995 and 1994 c. Consolidated Statements of Income, Years ended December 31, 1995, 1994 and 1993 d. Consolidated Statements of Stockholders' Equity, Years ended December 31, 1995, 1994 and 1993 e. Consolidated Statements of Cash Flows, Years ended December 31, 1995, 1994 and 1993 f. Notes to Consolidated Financial Statements g. Consolidated Quarterly Financial Data (unaudited) for 1995 and 1994 2. Financial Statement Schedule (see Item 8) Schedule III - Real Estate and Accumulated Depreciation Schedules not Filed: All schedules, other than those indicated in the Table of Contents, have been omitted as the required information is inapplicable or the information is presented in the financial statements or related notes. 3. Exhibits 2.1 Agreement and Plan of Merger between Realty Income Corporation and R.I.C. Advisor, Inc. dated as of April 28, 1995 (incorporated by reference to Appendix A to the Company's definitive Proxy Statement filed June 30, 1995) Page 185 3.1 Amended and Restated Certificate of Incorporation of Realty Income Corporation (filed as Exhibit 3.1 to the Company's 10-Q for the quarter ended September 30, 1994 and incorporated herein by reference) 3.2 Amended and Restated Bylaws of Realty Income Corporation (filed as Exhibit 3.2 to the Company's 10-Q for the quarter ended September 30, 1995 and incorporated herein by reference) 4.1 Indenture between the Company and Chemical Trust Company as Trustee, including the Variable Rate Senior Note Due 2001 (filed as Exhibit 4.05 to the Company's Registration Statement on Form S-4 (Registration No. 33-69410) and incorporated herein by reference) 4.2 Form of Note (attached as Exhibit A to Exhibit 4.1 above) 4.3 Form of Stock Certificate (filed as Exhibit 4.04 to the Company's Registration Statement on S-4 (Registration Statement No. 33-69410) and incorporated herein by reference) 4.4 Form of Indenture (filed as Exhibit 4.3 to the Company's Registration Statement on Form S-3 (Registration No. 33-95374) and incorporated herein by reference) 4.5 Form of Debt Security (filed and included as Exhibit 4.3 to the Company's Registration Statement on Form S-3 (Registration No. 33-95374) and incorporated herein by reference) 10.1 Revolving Credit Agreement (filed as Exhibit 99.2 to the Company's 8-K dated December 16, 1994 and incorporated herein by reference) 10.2 Stock Incentive Plan (filed as Exhibit 4.1 to the Company's Registration Statement on Form S-8 (Registration No. 33-95708) and incorporated by reference) 21.1 Subsidiaries of the Company as of January 1, 1996, filed herewith Page 186 24.1 Consent of KPMG Peat Marwick LLP 27 Financial Data Schedule (electronically filed with the Securities and Exchange Commission only) B. Four reports on Form 8-K were filed by registrant during the last quarter of the period covered by this report. The reports were dated September 29, 1995; October 30, 1995; October 31, 1995 and December 19, 1995. Page 187 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. REALTY INCOME CORPORATION By: /s/ William E. Clark ----------------------------------------------------------- William E. Clark Chairman and Chief Executive Officer Date: March 19, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ William E. Clark ----------------------------------------------------------- William E. Clark Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer) Date: March 19, 1996 By: /s/ Thomas A. Lewis ----------------------------------------------------------- Thomas A. Lewis Vice Chairman of the Board of Directors and Vice President, Capital Markets Date: March 19, 1996 Page 188 SIGNATURES (continued) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ Donald R. Cameron ----------------------------------------------------------- Donald R. Cameron Director Date: March 19, 1996 By: /s/ Roger P. Kuppinger ----------------------------------------------------------- Roger P. Kuppinger Director Date: March 19, 1996 By: /s/ Michael D. McKee ----------------------------------------------------------- Michael D. McKee Director Date: March 19, 1996 By: /s/ Gary Malino ----------------------------------------------------------- Gary Malino Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer) Date: March 19, 1996 By: /s/ Gregory J. Fahey ----------------------------------------------------------- Gregory J. Fahey Controller Date: March 19, 1996 Page 189 EXHIBIT INDEX =============
Exhibit No. Description Page - ----------- ----------- ---- 21.1 Subsidiaries of the Company as of January 1, 1996...............................191 24.1 Consent of KPMG Peat Marwick LLP..............192 27 Financial Data Schedule (electronically filed with the Securities and Exchange Commission only)..............................193
Page 190 EX-21 2 Exhibit 21.1 ============ Subsidiaries of the Company as of January 1, 1996 - ------------------------------------------------- R.I.C. Trade Center, Ltd., a California Limited Partnership Silverton Business Center, Ltd., a California Limited Partnership Empire Business Center, Ltd., a California Limited Partnership Realty Income Texas Properties, L.P., a Delaware limited partnership Realty Income Texas Properties, Inc., a Delaware corporation Page 191 EX-24 3 Exhibit 24.1 ============ The Board of Directors Realty Income Corporation: We consent to incorporation by reference in Amendment No. 1 to the Registration Statement No. 33-95374 on Form S-3 of Realty Income Corporation and to incorporation by reference in Registration Statement No. 33-95708 on Form S-8 of Realty Income Corporation, of our report relating to the consolidated balance sheets of Realty Income Corporation as of December 31, 1995 and 1994, and the related consolidated statements of income, stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 1995, and the related Schedule III. Such report is dated January 26, 1996, except as to Note 5B to the consolidated financial statements, which is as of February 15, 1996, and appears in the December 31, 1995 annual report on Form 10-K of Realty Income Corporation. KPMG Peat Marwick LLP San Diego, California March 18, 1996 Page 192 EX-27 4
5 1 12-MOS DEC-31-1995 DEC-31-1995 1,650,000 0 2,131,000 0 0 4,734,000 515,426,000 126,062,000 417,639,000 15,761,000 20,457,000 22,976,237 0 0 358,445,000 417,639,000 0 51,555,000 0 0 23,198,000 133,000 2,642,000 25,600,000 0 25,600,000 0 0 0 25,600,000 1.27 1.27
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