exhibit_99-1.htm

Exhibit 99.1

CONTACT:

Tere Miller

Vice President, Corporate Communications

760-741-2111 ext. 1177

REALTY INCOME ANNOUNCES THIRD QUARTER

AND NINE MONTH OPERATING RESULTS

ESCONDIDO, CALIFORNIA, October 29, 2008...Realty Income Corporation (Realty Income), The Monthly Dividend Company® (NYSE: O) today announced operating results for the third quarter ended September 30, 2008. All per share amounts presented in this press release are on a diluted per common share basis, unless stated otherwise.

COMPANY HIGHLIGHTS:

(For the quarter ended September 30, 2008,

as compared to the same quarterly period in 2007)

● Revenue increased 12.2% to $82.5 million

● Funds from Operations (FFO) available to common stockholders decreased 1.9% to $45.7 million

● FFO per share decreased 2.1% to $0.46 per share

● FFO per share before Crest’s contribution was unchanged at $0.45 per share

● Net income available to common stockholders was $0.29 per share

● Portfolio occupancy was 96.9%

● Same store rents increased 1.1% to $65.1 million

● Acquired one property for $400,000 at a 10.1% capitalization rate

● Dividends paid per common share increased 6.6%

● Increased the monthly dividend for the 44th consecutive quarter to an annualized amount of $1.6935 per share

● Issued 2.925 million shares of common stock

Financial Results

Revenue Increases

Realty Income’s revenue for the third quarter ended September 30, 2008, increased 12.2% to $82.5 million as compared to $73.5 million for the same period in 2007.

Revenue, for the nine months ended September 30, 2008, increased 15.5% to $247.5 million as compared to $214.2 million for the same period in 2007.

Net Income Available to Common Stockholders

Net income available to common stockholders, for the quarter ended September 30, 2008, was $28.6 million as compared to $27.9 million for the same period in 2007. Net income per share for the quarter was $0.29 as compared to $0.28 for the same period in 2007.

Net income available to common stockholders, for the nine months ended September 30, 2008, was $79.3 million as compared to $89.0 million for the same period in 2007. Net income per share for the quarter was $0.79 as compared to $0.89 for the same period in 2007.

The calculation to determine net income for a real estate company includes gains from the sales of investment properties and impairments. The amount of gains on property sales and impairments varies from quarter to quarter. This variance can significantly impact net income.

During the third quarter of 2008, income from continuing operations available to common stockholders was $0.22 per share as compared to $0.24 per share for the same period in 2007.

During the first nine months of 2008, income from continuing operations available to common stockholders was $0.68 per share as compared to $0.78 per share for the same period in 2007.

FFO Available to Common Stockholders

FFO, for the third quarter ended September 30, 2008, decreased 1.9% to $45.7 million as compared to $46.6 million for the same period in 2007. FFO per share, for the third quarter ended September 30, 2008, decreased 2.1% to $0.46 per share, as compared to $0.47 per share for the same period in 2007. FFO before Crest’s contribution, for the third quarter ended September 30, 2008, was unchanged at $0.45 per share as compared to the same period in 2007. Crest Net Lease, Inc. (Crest) is a wholly-owned subsidiary of Realty Income.

FFO, for the nine months ended September 30, 2008, decreased 2.4% to $138.5 million as compared to $141.9 million for the same period in 2007. FFO per share, for the nine months ended September 30, 2008, decreased 2.1% to $1.38 per share, as compared to $1.41 per share for the same period in 2007. FFO before Crest’s contribution, for the nine months ended September 30, 2008, increased 2.2% to $1.37 per share as compared to $1.34 per share for the same period in 2007. For a calculation of FFO before Crest’s contribution, see page 7.

The Company considers FFO to be an appropriate supplemental measure of a Real Estate Investment Trust’s (REIT’s) operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. FFO is an alternative, non-GAAP measure that is also considered to be a good indicator of a company’s ability to generate income to pay dividends. Realty Income defines FFO consistent with the National Association of Real Estate Investment Trust’s (NAREIT’s) definition as net income available to common stockholders plus depreciation and amortization of real estate assets, reduced by gains on sales of investment properties and extraordinary items. See reconciliation of net income available to common stockholders to FFO on pages 7 and 8.

Dividend Information

In August 2008, Realty Income increased the amount of the monthly common stock dividend by 1.8% to an annualized amount of $1.686 per share. Then, in September 2008, the Company again increased the amount of the monthly dividend to an annualized amount of $1.6935. The September increase in the monthly dividend was the 44th consecutive quarterly increase and the 51st increase in the amount of the dividend since the Company’s listing on the New York Stock Exchange in 1994. Monthly dividends paid for the nine months ended September 30, 2008, increased 7.6% to $1.239 per share as compared to $1.152 per share in monthly dividends paid for the same period in 2007. Through September 30, 2008, the Company had paid 458 consecutive monthly dividends and continues its 39-year history of declaring and paying dividends every month.

Real Estate Portfolio Update

As of September 30, 2008, Realty Income’s portfolio of freestanding, single-tenant, retail properties consisted of 2,355 properties located in 49 states, leased to 118 retail chains doing business in 30 retail industries. The properties are leased under long-term, net leases with a weighted average remaining lease term of approximately 12.1 years.

Portfolio Management Activities

The Company’s portfolio of retail real estate, owned primarily under 15- to 20-year net leases, continues to perform well and provide dependable lease revenue supporting the payment of monthly dividends. As of September 30, 2008, portfolio occupancy was 96.9% with 73 properties available for lease out of 2,355 properties in the portfolio.

Rent Increases

Same store rents on 1,782 properties under lease, during the three months ended September 30, 2008, increased 1.1% to $65.1 million compared to $64.4 million for the same quarter in 2007. Same store rents on 1,782 properties under lease, during the nine months ended September 30, 2008, increased 1.3% to $195.0 million compared to $192.5 million for the same period in 2007.

Property Acquisitions

During the third quarter, Realty Income invested $4.3 million in retail properties. The Company invested $400,000 in one new convenience store property, with an initial lease term of 23.0 years and an initial average contractual lease yield of 10.1%, and funded $3.9 million in properties under development based on prior development agreements. All of the properties are 100% leased under net-lease agreements and the initial average contractual lease yield on third quarter real estate investments is 8.5%.

During the nine months ended September 30, 2008, Realty Income invested $188.5 million in 108 new properties and properties under development with an initial average contractual lease yield of 8.7%. The 108 properties are located in 14 states and are 100% leased under net-lease agreements with an initial average lease term of 20.6 years. They are leased to eight different retail chains in seven separate industries. Crest did not acquire any new properties during the first nine months of 2008.

Realty Income maintains a $355 million unsecured acquisition credit facility, which is used to fund property acquisitions in the near term. There was no outstanding balance on the Company’s acquisition credit facility, at the end of the third quarter, and $355 million is available to fund new property acquisitions. In addition, the Company had cash and cash equivalents of $112.6 million.

Property Dispositions

Realty Income continued to successfully execute its asset disposition program. The objective of the program is to sell assets when the Company believes the reinvestment of the sales proceeds will generate higher returns, enhance the credit quality of the Company's real estate portfolio or increase the average lease length.

During the third quarter ended September 30, 2008, Realty Income sold 13 properties for $11.0 million, which resulted in a gain on sales of $5.7 million.

During the nine months ended September 30, 2008, Realty Income sold 22 properties and a portion of land from another property for $19.2 million, which resulted in a gain on sales of $9.4 million.

Other 2008 Activities

Issued 2.925 million Shares of Common Stock

On September 30, 2008, Realty Income issued 2,925,000 shares of common stock, including 225,000 shares purchased by the underwriters upon the exercise of their over-allotment options. Net proceeds from the offering were approximately $74.5 million. These proceeds are expected to be combined with available cash on hand to repay the $100 million outstanding principal amount of the Company’s 8.25% Monthly Income Senior Notes, which come due in November 2008, and to repay the $20 million outstanding principal amount of the Company’s 8% Notes, which come due in January 2009.

Crest Net Lease

Crest is focused on acquiring and subsequently marketing net-leased properties for sale. During the third quarter ended September 30, 2008, Crest sold three properties for $4.6 million and reported a gain on sales of $199,000. Crest did not acquire any new properties during the third quarter.

During the nine months ended September 30, 2008, Crest sold 25 properties for $50.7 million and reported a gain on sales of $4.6 million. As of September 30, 2008, Crest carried an inventory of $6.0 million, which consisted of five properties held for sale. Crest did not acquire any new properties during the nine months ended September 30, 2008.

Crest’s contribution to Realty Income’s FFO (and net income) depends on the timing and number of property sales, if any, in a given quarter. Therefore, Crest’s contribution can fluctuate and add volatility to Realty Income’s reported FFO and net income on a comparable quarterly and annualized basis. During the third quarter of 2008, Crest contributed $238,000 of FFO, which represents $0.00 per share of Realty Income’s FFO, as compared to $1.9 million or $0.02 per share, generated by Crest for Realty Income during the same period in 2007.

During the nine months ended September 30. 2008, Crest generated $1.3 million, or $0.01 per share in FFO for Realty Income as compared to $8.0 million, or $0.08 per share, in FFO for Realty Income for the same period in 2007.

CEO Comments on Operating Results

Commenting on Realty Income’s financial results and real estate operations, Chief Executive Officer, Tom A. Lewis said, “We are pleased with our results given a challenging environment in the overall economy and in the credit markets. During the quarter, we continued to position the Company for the current operating environment by further strengthening our balance sheet and liquidity position. In September we issued 2.925 million shares of common stock that, when combined with cash on hand, will allow us to repay both the outstanding $100 million Senior Notes due in November as well as the $20 million Senior Notes that are due in January 2009. With the repayment of these securities, we will have no further debt obligations maturing until 2013. Additionally, we have no borrowings on our $355 million acquisition credit facility and have no mortgages on any of our properties. With low leverage, no exposure to interest rate fluctuations and no need to access additional capital, we believe we are very well positioned from a liquidity and balance sheet perspective given the current uncertainty in the credit markets.”

"During the third quarter we experienced strong revenue growth of 12.2%. Funds from operation (FFO) per share generated by our core portfolio (or FFO before Crest’s contribution), from which we pay monthly dividends, was unchanged during the third quarter, in comparison to the prior year. During the first nine months of 2008, FFO per share generated by the core portfolio increased 2.2% to $1.37 per share as compared to $1.34 per share. Thus far in 2008, we have increased the dividend four times and we have increased the dividend for 44 consecutive quarters and 51 times since we went public in 1994.”

“We are also pleased with the ongoing stability of our portfolio, given difficult market conditions, and during the quarter we saw a small increase in our portfolio occupancy to 96.9%. In addition, same store rents grew 1.1% for the third quarter and 1.3% for the first nine months of the year.”

“We have also made significant progress in reducing the inventory and activity in our Crest Net Lease subsidiary that buys and subsequently sells property. Crest has been helpful to us in competing for large portfolio transactions so that we can manage tenant level concentration and maintain diversification in our core real estate portfolio. However, since we are currently experiencing less competition for acquisitions, we see a reduced role for Crest in the near term and believe that adding inventory in Crest would present more risk than is advisable in an unstable cap rate environment. We also continue to anticipate a weaker environment for selling properties in the 1031 tax-deferred exchange market, thus, we have felt it prudent to substantially reduce our operations in Crest until cap rates stabilize and the economy strengthens. Crest’s inventory at the end of the third quarter was just five properties valued at $6 million, down from a peak of over $130 million during 2007. Due to this reduction in Crest’s activity, we anticipate that the risks we see in the marketplace of rising cap rates and slow property sales should not have a material impact on Realty Income’s operations or financial position.”

“With respect to real estate acquisitions, we are continuing to be patient as we think cap rates are rising and property prices declining and, therefore, we believe that we will be rewarded with higher cap rates and lower prices in the future. We have previously provided guidance of $250 million in acquisitions for 2008. Through September 30, 2008, we have invested $188.5 million in 108 properties and properties under development with an initial contractual lease yield of 8.7%. However, we have acquired only a few properties in the second and third quarters and anticipate few, if any, additional acquisitions for the balance of the year. We have excellent liquidity and available capital to acquire properties should attractively priced, higher yielding opportunities present themselves in the future.”

“While we continue to operate conservatively in a challenging economic and retail environment, we have been fortunate to own a strong portfolio of good properties that have remained profitable to our retailers and are key to the continued profitability of their businesses. We believe this has kept our occupancy high and, when coupled with our conservative balance sheet and strong liquidity, has served us well during the current economic downturn.”

FFO Commentary

Realty Income’s FFO per share has historically tended to be stable and fairly predictable because of the long-term leases that are the primary source of the Company’s revenue. There are, however, several factors that can cause FFO per share to vary from levels that have been anticipated by the Company. These factors include, but are not limited to, changes in interest rates, occupancy rates, periodically accessing the capital markets, the level and timing of property acquisitions and dispositions, lease rollovers, the general real estate market, the economy, charges for property impairments, and the operations of Crest.

2008 Estimates

Management estimates that FFO per share for 2008 should range from $1.82 to $1.84. This represents a change from the Company’s previous annual FFO per share estimate range of $1.84 to $1.90. FFO for 2008 is based on an estimated net income per share range of $1.00 to $1.02, adjusted (in accordance with NAREIT’s definition of FFO) for estimated real estate depreciation of $0.89 and potential gain on sales of investment properties of $0.07 per share.

Management further estimates that Crest could contribute $0.01 per share to Realty Income’s FFO during 2008, as compared to $0.11 per share contribution to Realty Income’s FFO during 2007. Crest’s primary business is the purchase and sale of properties for a profit. These sales may occur at various times during the course of the year, which could cause FFO, in certain quarters, to fluctuate on a comparable quarterly and annualized basis. The Company does not intend to provide quarterly estimates of FFO.

2009 Estimates

Management estimates that FFO per share for 2009 should range from $1.86 to $1.96, which represents annual FFO per share growth of approximately 1.1% to 7.7%, as compared to an estimated 2008 FFO per share of $1.82 to $1.84. FFO for 2009 is based on an estimated net income per share range of $1.04 to $1.14, adjusted (in accordance with NAREIT’s definition of FFO) for estimated real estate depreciation of $0.87 and potential gain on sales of investment properties of $0.05 per share.

Management would note that, given the volatility in the markets, it is more challenging than usual to estimate a number of factors that will impact the Company's future results. Specifically, new property acquisition levels could vary depending on the number of opportunities, cap rates and the availability of attractively priced permanent financing. As such, management would add that the $1.86 FFO per share estimate assumes no new property acquisitions for 2009. The $1.96 FFO per share estimate assumes property acquisitions of approximately $500 million in 2009.

Management further estimates that Crest could contribute between $0.00 and $0.01 per share to Realty Income’s FFO during 2009. Crest’s primary business is the purchase and sale of properties for a profit. These sales may occur at various times during the course of the year and could cause FFO, in certain quarters, to fluctuate on a comparable quarterly and annualized basis.

About Realty Income

Realty Income is The Monthly Dividend Company®, a New York Stock Exchange real estate company dedicated to providing shareholders with dependable monthly income. As of September 30, 2008, the Company had paid 458 consecutive monthly dividends throughout its 39-year operating history. The monthly income is supported by the cash flows from 2,355 retail properties owned under long-term lease agreements with leading regional and national retail chains. The Company is an active buyer of net-leased retail properties nationwide.

Forward-Looking Statements

Statements in this press release that are not strictly historical are “forward-looking” statements. Forward-looking statements involve known and unknown risks, which may cause the Company’s actual future results to differ materially from expected results. These risks include, among others, general economic conditions, local real estate conditions, the availability of capital to finance planned growth, continued uncertainty in the credit markets, property acquisitions and the timing of these acquisitions, charges for property impairments, the outcome of any legal proceedings to which the Company is a party, and the profitability of Crest, the Company’s subsidiary, as described in the Company’s filings with the Securities and Exchange Commission. Consequently, such forward-looking statements should be regarded solely as reflections of the Company’s current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this press release. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.

Note to Editors: Realty Income press releases are available at no charge by calling our toll-free investor hotline number: 888-811-2001, or via the internet at http://www.realtyincome.com/Investing/News.html.

CONSOLIDATED STATEMENTS OF INCOME

For the three and nine months ended September 30, 2008 and 2007

(dollars in thousands, except per share amounts)

	Three Months Ended 9/30/08			Three Months Ended 9/30/07			Nine Months Ended 9/30/08			Nine Months Ended 9/30/07
REVENUE
Rental	$	82,213		$	72,229		$	245,681		$	210,525
Other		322			1,293			1,851			3,659
		82,535			73,522			247,532			214,184
EXPENSES
Interest		23,915			16,163			71,230			41,612
Depreciation and amortization		22,869			19,433			67,798			55,740
General and administrative		5,097			6,290			16,564			17,219
Property		1,778			815			4,105			2,630
Income taxes		308			350			922			948
		53,967			43,051			160,619			118,149
Income from continuing operations		28,568			30,471			86,913			96,035
Income from discontinued operations:
Real estate acquired for resale by Crest		238			1,937			567			7,967
Real estate held for investment		5,891			1,565			10,030			3,231
		6,129			3,502			10,597			11,198

Net income		34,697			33,973			97,510			107,233
Preferred stock cash dividends		(6,063	)		(6,063	)		(18,190	)		(18,190	)
Net income available to common stockholders	$	28,634		$	27,910		$	79,320		$	89,043

Funds from operations available to common stockholders (FFO)	$	45,748		$	46,625		$	138,497		$	141,924

Per share information for common stockholders:
Income from continuing operations: Basic and diluted	$	0.22		$	0.24		$	0.68		$	0.78
Net income: Basic and diluted	$	0.29		$	0.28		$	0.79		$	0.89
FFO, basic(1)
FFO before Crest contribution	$	0.45		$	0.45		$	1.37		$	1.34
Crest Net Lease	$	0.00		$	0.02		$	0.01		$	0.08
Total FFO	$	0.46		$	0.47		$	1.38		$	1.42
FFO, diluted(1)
FFO before Crest contribution	$	0.45		$	0.45		$	1.37		$	1.34
Crest Net Lease	$	0.00		$	0.02		$	0.01		$	0.08
Total FFO	$	0.46		$	0.47		$	1.38		$	1.41

Cash dividends paid	$	0.417		$	0.391		$	1.239		$	1.152

( (1) The above FFO per share amounts have been rounded to the nearest two decimals and, as such, the individual amounts may not add up to the “Total FFO” amount.

FUNDS FROM OPERATIONS

(dollars in thousands, except per share amounts)

	Three Months Ended 9/30/08			Three Months Ended 9/30/07			Nine Months Ended 9/30/08			Nine Months Ended 9/30/07

Net income available to common stockholders	$	28,634		$	27,910		$	79,320		$	89,043
Depreciation and amortization:
Continuing operations		22,869			19,433			67,798			55,740
Discontinued operations		56			160			1,056			505
Depreciation of furniture, fixtures & equipment		(81	)		(79	)		(238	)		(174	)
Gain on sales of investment properties: Continuing operations		--			(29	)		(236	)		(1,835	)
Discontinued operations		(5,730	)		(770	)		(9,203	)		(1,355	)
Funds from operations available to common stockholders	$	45,748		$	46,625		$	138,497		$	141,924

FFO per common share:
Basic	$	0.46		$	0.47		$	1.38		$	1.42
Diluted	$	0.46		$	0.47		$	1.38		$	1.41

Dividends paid to common stockholders	$	42,209		$	39,519		$	125,519		$	116,382

FFO in excess of dividends paid to common stockholders	$	3,539		$	7,106		$	12,978		$	25,542

Weighted average number of common shares used for computation per share:
Basic		100,362,872			100,187,901			100,400,212			100,148,993
Diluted		100,420,070			100,252,953			100,462,396			100,326,859

CONTRIBUTIONS BY CREST TO FUNDS FROM OPERATIONS

(dollars in thousands, except per share amounts)

Crest acquires properties with the intention of reselling them rather than holding them as investments and operating the properties. Consequently, we typically classify properties acquired by Crest as held for sale at the date of acquisition and do not depreciate them. The operations of Crest’s properties are classified as “income from discontinued operations, real estate acquired for resale”.

	Three Months Ended 9/30/08			Three Months Ended 9/30/07			Nine Months Ended 9/30/08			Nine Months Ended 9/30/07
Gain on sales of real estate acquired for resale	$	199		$	2,219		$	4,642		$	8,786
Rental revenue		129			1,547			1,764			6,736
Other revenue		353			68			561			128
Interest expense		(359	)		(1,239	)		(1,424	)		(5,115	)
General and administrative expense		(110	)		(224	)		(397	)		(507	)
Property expenses		(41	)		(14	)		(106	)		(29	)
Provisions for impairment		(27	)		--			(3,374	)		--
Income taxes		94			(420	)		(328	)		(2,032	)
Funds from operations contributed by Crest	$	238		$	1,937		$	1,338		$	7,967

Crest FFO per common share, basic and diluted	$	0.00		$	0.02		$	0.01		$	0.08

Total FFO	$	45,748		$	46,625		$	138,497		$	141,924
Less FFO contributed by Crest		(238	)		(1,937	)		(1,338	)		(7,967	)
FFO before Crest contribution	$	45,510		$	44,688		$	137,159		$	133,957

FFO before Crest contribution per common share, basic and diluted	$	0.45		$	0.45		$	1.37		$	1.34

We define FFO, a non-GAAP measure, consistent with the National Association of Real Estate Investment Trust’s definition, as net income available to common stockholders, plus depreciation and amortization of real estate assets reduced by gains on sales of investment properties and extraordinary items.

HISTORICAL FUNDS FROM OPERATIONS

(dollars in thousands, except per share amounts)



For the three months ended September 30,	2008			2007			2006			2005			2004

Net income available to common stockholders	$	28,634		$	27,910		$	24,207		$	20,771		$	21,988
Depreciation and amortization		22,844			19,514			14,612			11,280			10,321
Gain on sales of investment properties		(5,730	)		(799	)		(843	)		(303	)		(2,831	)
Total FFO	$	45,748		$	46,625		$	37,976		$	31,748		$	29,478

Total FFO per diluted share	$	0.46		$	0.47		$	0.43		$	0.40		$	0.37

Total FFO	$	45,748		$	46,625		$	37,976		$	31,748		$	29,478
Less FFO contributed by Crest		(238	)		(1,937	)		(99	)		(566	)		(1,095	)
FFO before Crest contribution	$	45,510		$	44,688		$	37,877		$	31,182		$	28,383

FFO components, per diluted share(1):
FFO before Crest contribution	$	0.45		$	0.45		$	0.42		$	0.39		$	0.36
Crest FFO contribution	$	0.00		$	0.02		$	0.00		$	0.01		$	0.01

Total FFO	$	0.46		$	0.47		$	0.43		$	0.40		$	0.37

Cash dividends paid per share	$	0.417		$	0.391		$	0.360		$	0.338		$	0.311
Diluted shares outstanding		100,420,070			100,252,953			89,267,138			79,843,553			79,349,986

For the nine months ended September 30,

Net income available to common stockholders	$	79,320		$	89,043		$	71,033		$	64,239		$	65,856
Depreciation and amortization		68,616			56,071			42,901			33,326			30,313
Gain on sales of investment properties		(9,439	)		(3,190	)		(3,036	)		(3,781	)		(6,780	)
Total FFO	$	138,497		$	141,924		$	110,898		$	93,784		$	89,389

Total FFO per diluted share	$	1.38		$	1.41		$	1.27		$	1.18		$	1.14

Total FFO	$	138,497		$	141,924		$	110,898		$	93,784		$	89,389
Less FFO contributed by Crest		(1,338	)		(7,967	)		(1,515	)		(1,695	)		(7,249	)
FFO before Crest contribution	$	137,159		$	133,957		$	109,383		$	92,089		$	82,140

FFO components, per diluted share(1):
FFO before Crest contribution	$	1.37		$	1.34		$	1.26		$	1.16		$	1.05
Crest FFO contribution	$	0.01		$	0.08		$	0.02		$	0.02		$	0.09

Total FFO	$	1.38		$	1.41		$	1.27		$	1.18		$	1.14

Cash dividends paid per share	$	1.239		$	1.152		$	1.060		$	0.999		$	0.913
Diluted shares outstanding		100,462,396			100,326,859			87,084,545			79,727,036			78,335,150

(1) The above FFO per share amounts have been rounded to the nearest two decimals and, as such, the individual amounts may not add up to the “Total FFO” amount.

CONSOLIDATED BALANCE SHEETS

As of September 30, 2008 and December 31, 2007

(dollars in thousands, except per share amounts)

	2008			2007
ASSETS
Real estate, at cost:
Land	$	1,158,618		$	1,110,897
Buildings and improvements		2,249,003			2,127,897
		3,407,621			3,238,794
Less accumulated depreciation and amortization		(530,586	)		(470,695	)
Net real estate held for investment		2,877,035			2,768,099
Real estate held for sale, net		10,085			56,156
Net real estate		2,887,120			2,824,255
Cash and cash equivalents		112,562			193,101
Accounts receivable		8,858			7,142
Goodwill		17,206			17,206
Other assets, net		64,385			35,648
Total assets	$	3,090,131		$	3,077,352

LIABILITIES AND STOCKHOLDERS’ EQUITY
Distributions payable	$	16,735		$	15,844
Accounts payable and accrued expenses		21,913			38,112
Other liabilities		11,859			15,304
Lines of credit payable		--			--
Notes payable		1,470,000			1,470,000
Total liabilities		1,520,507			1,539,260

Stockholders’ equity:
Preferred stock and paid in capital, par value $1.00 per share, 20,000,000 shares authorized, 13,900,000 issued and outstanding in 2008 and 2007		337,790			337,790
Common stock and paid in capital, par value $1.00 per share, 200,000,000 shares authorized, 104,266,403 and 101,082,717 shares issued and outstanding in 2008 and 2007, respectively		1,623,659			1,545,037
Distributions in excess of net income		(391,825	)		(344,735	)
Total stockholders’ equity		1,569,624			1,538,092
Total liabilities and stockholders’ equity	$	3,090,131		$	3,077,352

Industry Diversification

The following table sets forth certain information regarding Realty Income’s property portfolio (excluding properties owned by Crest) classified according to the business of the respective tenants, expressed as a percentage of our total rental revenue:

	Percentage of Rental Revenue(1)
	For the Quarter			For the Years Ended
Industries	Ended Sept. 30, 2008			Dec 31, 2007			Dec 31, 2006			Dec 31, 2005			Dec 31, 2004			Dec 31, 2003			Dec 31, 2002
Apparel stores		1.1	%		1.2	%		1.7	%		1.6	%		1.8	%		2.1	%		2.3	%
Automotive collision services		1.0			1.1			1.3			1.3			1.0			0.3			--
Automotive parts		1.5			2.1			2.8			3.4			3.8			4.5			4.9
Automotive service		4.8			5.2			6.9			7.6			7.7			8.3			7.0
Automotive tire services		6.7			7.3			6.1			7.2			7.8			3.1			2.7
Book stores		0.2			0.2			0.2			0.3			0.3			0.4			0.4
Business services		*			0.1			0.1			0.1			0.1			0.1			0.1
Child care		7.7			8.4			10.3			12.7			14.4			17.8			20.8
Consumer electronics		0.8			0.9			1.1			1.3			2.1			3.0			3.3
Convenience stores		16.3			14.0			16.1			18.7			19.2			13.3			9.1
Crafts and novelties		0.3			0.3			0.4			0.4			0.5			0.6			0.4
Distribution and office		1.0			0.6			--			--			--			--			--
Drug stores		4.2			2.7			2.9			2.8			0.1			0.2			0.2
Entertainment		1.2			1.4			1.6			2.1			2.3			2.6			2.3
Equipment rental services		0.2			0.2			0.2			0.4			0.3			0.2			--
Financial services		0.2			0.2			0.1			0.1			0.1			--			--
General merchandise		0.7			0.7			0.6			0.5			0.4			0.5			0.5
Grocery stores		0.7			0.7			0.7			0.7			0.8			0.4			0.5
Health and fitness		5.6			5.1			4.3			3.7			4.0			3.8			3.8
Home furnishings		2.4			2.6			3.1			3.7			4.1			4.9			5.4
Home improvement		1.8			2.1			3.4			1.1			1.0			1.1			1.2
Motor vehicle dealerships		3.2			3.1			3.4			2.6			0.6			--			--
Office supplies		1.0			1.1			1.3			1.5			1.6			1.9			2.1
Pet supplies and services		0.8			0.9			1.1			1.3			1.4			1.7			1.7
Private education		0.7			0.8			0.8			0.8			1.1			1.2			1.3
Restaurants		21.4			21.2			11.9			9.4			9.7			11.8			13.5
Shoe stores		--			--			--			0.3			0.3			0.9			0.8
Sporting goods		2.3			2.6			2.9			3.4			3.4			3.8			4.1
Theaters		9.1			9.0			9.6			5.2			3.5			4.1			3.9
Travel plazas		0.2			0.2			0.3			0.3			0.4			0.3			--
Video rental		1.0			1.7			2.1			2.5			2.8			3.3			3.3
Other		1.9			2.3			2.7			3.0			3.4			3.8			4.4
Totals		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

* Less than 0.1%

(1)	Includes rental revenue for all properties owned by Realty Income at the end of each period presented, including revenue from properties reclassified as discontinued operations.

Lease Expirations

The following table sets forth certain information regarding Realty Income’s property portfolio (excluding properties owned by Crest) regarding the timing of the lease term expirations (excluding extension options) on our 2,272 net leased, single-tenant retail properties as of September 30, 2008 (dollars in thousands):

	Total Portfolio							Initial Expirations(3)							Subsequent Expirations(4)
Year	Total Number of Leases Expiring(1)		Rental Revenue for the Quarter Ended September 30, 2008(2)		% of Total Rental Revenue			Number of Leases Expiring		Rental Revenue for the Quarter Ended September 30, 2008		% of Total Rental Revenue			Number of Leases Expiring		Rental Revenue for the Quarter Ended September 30, 2008		% of Total Rental Revenue
2008		44	$	807		1.0	%		16	$	297		0.4	%		28	$	510		0.6	%
2009		121		2,645		3.3			37		802		1.0			84		1,843		2.3
2010		91		1,982		2.5			40		1,027		1.3			51		955		1.2
2011		81		2,396		3.0			35		1,332		1.7			46		1,064		1.3
2012		113		2,680		3.4			80		1,921		2.4			33		759		1.0
2013		125		4,483		5.6			91		3,760		4.7			34		723		0.9
2014		52		2,182		2.7			38		1,874		2.3			14		308		0.4
2015		89		1,826		2.3			66		1,278		1.6			23		548		0.7
2016		112		1,902		2.4			111		1,877		2.4			1		25		*
2017		50		2,022		2.5			45		1,934		2.4			5		88		0.1
2018		31		1,149		1.4			26		1,092		1.3			5		57		0.1
2019		98		4,728		5.9			94		4,499		5.6			4		229		0.3
2020		82		2,987		3.8			79		2,923		3.7			3		64		0.1
2021		139		5,672		7.1			138		5,617		7.0			1		55		0.1
2022		103		3,049		3.8			102		3,001		3.7			1		48		0.1
2023		245		7,707		9.7			244		7,682		9.7			1		25		*
2024		63		1,860		2.3			63		1,860		2.3			--		--		--
2025		70		5,468		6.9			66		5,402		6.8			4		66		0.1
2026		211		11,460		14.4			209		11,403		14.3			2		57		0.1
2027		163		5,216		6.5			163		5,216		6.5			--		--		--
2028		83		3,875		4.9			81		3,826		4.8			2		49		0.1
2029		45		1,088		1.4			45		1,088		1.4			--		--		--
2030		20		912		1.1			20		912		1.1			--		--		--
2031		27		641		0.8			27		641		0.8			--		--		--
2032		2		56		0.1			2		56		0.1			--		--		--
2033		7		422		0.5			7		422		0.5			--		--		--
2034		2		230		0.3			2		230		0.3			--		--		--
2037		2		354		0.4			2		354		0.4			--		--		--
2043		1		13		*			--		--		--			1		13		*
Totals		2,272	$	79,812		100.0	%		1,929	$	72,326		90.5	%		343	$	7,486		9.5	%

*Less than 0.1%

(1)	Excludes ten multi-tenant properties and 73 vacant unleased properties, one of which is a multi-tenant property. The lease expirations for properties under construction are based on the estimated date of completion of those properties.

(2)	Includes rental revenue of $156 from properties reclassified as discontinued operations and excludes revenue of $2,557 from ten multi-tenant properties and from 73 vacant and unleased properties at September 30, 2008.

(3) Represents leases to the initial tenant of the property that are expiring for the first time.

(4) Represents lease expirations on properties in the portfolio, which have previously been renewed, extended or re-tenanted.

Geographic Diversification

The following table sets forth certain state-by-state information regarding Realty Income’s property portfolio (excluding properties owned by Crest) as of September 30, 2008 (dollars in thousands):

State	Number of Properties		Percent Leased			Approximate Leasable Square Feet		Rental Revenue for the Quarter Ended September 30, 2008(1)		Percentage of Rental Revenue
Alabama		63		98	%		425,400	$	1,893		2.3	%
Alaska		2		100			128,500		277		0.3
Arizona		80		99			395,800		2,409		2.9
Arkansas		18		100			98,500		452		0.6
California		65		100			1,167,300		4,596		5.6
Colorado		53		96			486,300		1,891		2.3
Connecticut		25		100			279,200		1,323		1.6
Delaware		17		100			33,300		427		0.5
Florida		168		98			1,449,300		6,703		8.1
Georgia		132		98			926,900		3,933		4.8
Idaho		14		71			90,200		318		0.4
Illinois		74		96			877,800		4,202		5.1
Indiana		82		96			689,600		3,211		3.9
Iowa		22		95			296,100		1,018		1.2
Kansas		33		94			579,100		1,112		1.4
Kentucky		22		100			111,500		697		0.8
Louisiana		33		97			190,400		915		1.1
Maine		3		100			22,500		160		0.2
Maryland		29		97			271,200		1,600		1.9
Massachusetts		66		100			580,400		2,551		3.1
Michigan		52		98			257,300		1,311		1.6
Minnesota		21		100			392,100		1,534		1.9
Mississippi		71		97			347,600		1,450		1.8
Missouri		62		97			640,100		2,104		2.6
Montana		2		100			30,000		74		0.1
Nebraska		19		100			196,300		645		0.8
Nevada		15		100			191,000		858		1.0
New Hampshire		14		100			109,900		544		0.7
New Jersey		33		100			261,300		1,909		2.3
New Mexico		8		100			56,400		177		0.2
New York		40		95			502,700		2,486		3.0
North Carolina		97		99			551,100		2,937		3.6
North Dakota		6		100			36,600		57		0.1
Ohio		137		97			852,200		3,421		4.2
Oklahoma		25		96			145,900		587		0.7
Oregon		18		100			297,300		848		1.0
Pennsylvania		99		100			683,800		3,557		4.3
Rhode Island		4		100			14,500		87		0.1
South Carolina		100		98			374,400		2,208		2.7
South Dakota		9		100			24,900		102		0.1
Tennessee		135		95			635,500		2,901		3.5
Texas		215		92			2,309,700		7,569		9.2
Utah		5		80			30,600		87		0.1
Vermont		4		100			12,700		122		0.2
Virginia		104		99			637,100		3,483		4.2
Washington		35		91			230,300		687		0.8
West Virginia		3		67			35,100		140		0.2
Wisconsin		20		90			248,100		778		0.9
Wyoming		1		100			4,200		18		*
Totals/Average		2,355		97	%		19,208,000	$	82,369		100.0	%

* Less than 0.1%

(1)

Includes rental revenue for all properties owned by Realty Income at September 30, 2008, including revenue from properties reclassified as discontinued operations of $156.