exhibit_99-1.htm

EX-99.1 2 exhibit_99-1.htm EXHIBIT 99.1 EARNINGS PRESS RELEASE exhibit_99-1.htm

Exhibit 99.1

CONTACT:

Tere Miller

Vice President, Corporate Communications

760-741-2111 ext. 1177

REALTY INCOME ANNOUNCES FIRST QUARTER OPERATING RESULTS

ESCONDIDO, CALIFORNIA, April 29, 2009...Realty Income Corporation (Realty Income), The Monthly Dividend Company® (NYSE: O) today announced operating results for the first quarter ended March 31, 2009. 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 March 31, 2009 (as compared to the same quarterly period in 2008):

● Revenue increased 0.2% to $82.9 million

● Funds from Operations (FFO) available to common stockholders increased 1.7% to $46.7 million

● FFO per share decreased 2.2% to $0.45

● Net income available to common stockholders per share was $0.23

● Portfolio occupancy was 96.4%

● Same store rents increased 0.2% to $75.9 million

● Dividends paid per common share increased 3.7%

● The monthly dividend increased for the 46th consecutive quarter to an annualized amount of $1.70475 per share

Financial Results

Revenue Increases

Realty Income’s revenue, for the quarter ended March 31, 2009, increased 0.2% to $82.9 million as compared to $82.7 million for the same quarter in 2008.

Net Income Available to Common Stockholders

Net income available to common stockholders, for the quarter ended March 31, 2009, was $24.0 million as compared to $23.7 million for the same quarter in 2008. Net income per share for the quarter was $0.23 per share as compared to $0.24 per share for the same quarter in 2008.

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

During the first quarter of 2009, income from continuing operations available to common stockholders was $0.23 per share as compared to $0.24 per share for the same quarter in 2008.

FFO Available to Common Stockholders

FFO, for the quarter ended March 31, 2009, increased 1.7% to $46.7 million as compared to $45.9 million for the same quarter in 2008. FFO and FFO per share before Crest’s contribution, for the quarter ended March 31, 2009, decreased 2.2% to $0.45 per share as compared to $0.46 per share for the same quarter in 2008. Crest Net Lease, Inc. (Crest) is a wholly-owned subsidiary of Realty Income.

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 6 and 7.

Dividend Information

In March 2009, Realty Income announced the 46th consecutive quarterly increase and the 53rd increase in the amount of the dividend since the Company’s listing on the New York Stock Exchange in 1994. The annualized dividend amount as of March 31, 2009 was $1.70475 per share. The amount of the monthly dividends paid during the quarter increased 3.7% to $0.425 per share from $0.410 per share for the same quarter in 2008.

Real Estate Portfolio Update

As of March 31, 2009, Realty Income’s portfolio of freestanding, single-tenant, retail properties consisted of 2,347 properties located in 49 states, leased to 117 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 11.8 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 March 31, 2009, portfolio occupancy was 96.4% with 84 properties available for lease out of a total of 2,347 properties in the portfolio.

Rent Increases

During the three months ended March 31, 2009, same store rents on 2,092 properties under lease increased 0.2% to $75.87 million as compared to $75.73 million for the same quarter in 2008. Excluding 104 properties leased to Buffets, Inc. (for which rents were renegotiated in September 2008), for the quarter ended March 31, 2009, same store rents on 1,988 properties under lease increased 1.2% to $71.0 million, as compared to $70.19 million for the same quarter in 2008.

Property Acquisitions

During the first quarter of 2009, Realty Income invested $1.3 million in previously acquired properties. No new properties were acquired by Realty Income or Crest during the first quarter of 2009.

Realty Income maintains a $355 million unsecured acquisition credit facility, which is used to fund property acquisitions in the near term. There is currently no outstanding balance on the Company’s acquisition credit facility, and the full $355 million is available to fund new property acquisitions. In addition, the Company had cash and cash equivalents of $10.4 million at March 31, 2009.

Property Dispositions

Realty Income continued to successfully execute its asset disposition program in 2009. The objective of this 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, increase the average lease length, or decrease tenant or industry concentration.

During the quarter ended March 31, 2009, Realty Income sold one property for $1.1 million, which resulted in a gain on sale of $198,000.

Other Activities

Buffets Emerges from Reorganization

On April 28, 2009, Buffets Holdings, Inc. ("Buffets") announced that it had emerged from Chapter 11 reorganization. Buffets noted that "in addition to strengthening its balance sheet and reducing its debt, Buffets has also used the Chapter 11 process to right-size its organization, including streamlining its portfolio of restaurants and reducing operating expenses across the business." Buffets remains Realty Income's largest tenant, representing approximately 6.0% of Realty Income's annualized rental revenues.

Retired $20 million of 8.0% Senior Notes

In January 2009, Realty Income retired all of its $20 million of 8.0% Senior Notes, due January 2009. Repayment of the Notes was made with cash on hand. The Company has no additional debt maturing until 2013.

Crest Net Lease

Crest is focused on acquiring and subsequently marketing net-leased properties for sale. Crest did not acquire or sell any properties during the first quarter of 2009. At March 31, 2009, Crest’s property inventory consisted of five properties valued at $5.7 million.

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 first quarters of 2009 and 2008, Crest did not contribute to Realty Income’s FFO.

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 the current environment in the credit markets and overall economy. We are fortunate to be in a very liquid position with over $10 million of cash on hand at the end of the quarter and no balance on our $355 million credit facility. The Company also has no mortgages on any of its 2,347 properties and no debt maturities for four years, or until 2013. Additionally, we have no properties under development, no joint ventures and no off balance sheet assets or liabilities of any kind. As such, we believe we are well positioned to manage the Company during these difficult times.”

“Our focus during the first quarter continued to be on strengthening our balance sheet, maintaining substantial liquidity and managing our portfolio to maximize current occupancy and ongoing cash flow. During the quarter, we retired $20 million of 8.0% Senior Notes that were due in January 2009. These notes were retired with cash on hand.”

“At March 31st, occupancy remained solid at 96.4% with just 84 of our 2,347 properties available for lease. We were pleased with the emergence of Buffets from reorganization, with the impact on us almost exactly as we had anticipated. In addition, same store rents rose 0.2% during the first quarter. Given the ongoing softness in the retail industry, we are very pleased with this performance.”

“With respect to real estate acquisitions, we have largely remained on the sidelines for the past year as we felt that properties we could have purchased would likely be less expensive in the future. As such, during the first quarter we did not acquire any new properties. We continue to believe that the initial lease yields on potential property acquisitions do not yet fully reflect the tightness in the credit markets and so we are unwilling to invest at the current prices. With that said, we continue to review acquisition opportunities and perform due diligence on a number of potential transactions. Given our substantial liquidity position, we have funds on hand to invest in size should attractively priced acquisitions emerge over the coming months.”

“We continue to operate conservatively in a challenging economic and retail environment, and we were pleased to be able to increase the amount of the monthly dividend for the 46th consecutive quarter to an annualized amount of $1.70475 per share. We have been fortunate to have a strong portfolio of good properties, which have remained profitable to our retailers, and are often the key to the ongoing profitability of our tenant’s business. We believe this has kept occupancy high and, when coupled with our conservative balance sheet and strong liquidity, is serving us very 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.

2009 Estimates

Management estimates that FFO per share for 2009 should range from $1.83 to $1.87, which represents annual FFO per share growth of approximately 0.0% to 2.2%, as compared to 2008 FFO per share of $1.83. FFO for 2009 is based on an estimated net income per share range of $1.00 to $1.04, adjusted (in accordance with NAREIT’s definition of FFO) for estimated real estate depreciation of $0.88 and potential gain on sales of investment properties of $0.05 per share.

Management notes 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. For example, new property acquisition levels could vary depending on the number of opportunities, capitalization rates and the availability of attractively priced permanent financing. As such, management would add that the $1.83 FFO per share estimate assumes no new property acquisitions for 2009. The $1.87 FFO per share estimate assumes property acquisitions of approximately $250 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 March 31, 2009, the Company had paid 464 consecutive monthly dividends throughout its 40-year operating history. The monthly income is supported by the cash flows from 2,347 retail properties owned under long-term lease agreements with leading regional and national retail chains. The Company is a 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 volatility and uncertainty in the credit markets and broader financial 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 months ended March 31, 2009 and 2008

(dollars in thousands, except per share amounts)

	2009			2008
REVENUE
Rental	$	82,140		$	81,241
Other		754			1,448
		82,894			82,689
EXPENSES
Depreciation and amortization		22,951			22,076
Interest		21,410			23,386
General and administrative		5,950			5,544
Property		2,233			1,216
Income taxes		303			398
		52,847			52,620
Income from continuing operations		30,047			30,069
Income (loss) from discontinued operations:
Real estate acquired for resale by Crest		(125	)		(929	)
Real estate held for investment		162			621
		37			(308	)

Net income		30,084			29,761
Preferred stock cash dividends		(6,063	)		(6,063	)
Net income available to common stockholders	$	24,021		$	23,698

Funds from operations available to common stockholders (FFO)	$	46,734		$	45,937

Basic and diluted per share information for common stockholders:
Income from continuing operations	$	0.23		$	0.24
Net income	$	0.23		$	0.24

FFO, basic and diluted
FFO before Crest contribution	$	0.45		$	0.46
Crest Net Lease	$	0.00		$	0.00
Total FFO	$	0.45		$	0.46

Cash dividends paid	$	0.425		$	0.410

FUNDS FROM OPERATIONS

(dollars in thousands, except per share amounts)

	Three Months Ended 3/31/09			Three Months Ended 3/31/08

Net income available to common stockholders	$	24,021		$	23,698
Depreciation and amortization:
Continuing operations		22,951			22,076
Discontinued operations		41			897
Depreciation of furniture, fixtures & equipment		(81	)		(77	)
Gain on sales of investment properties: Continuing operations		--			(439	)
Discontinued operations		(198	)		(218	)
Funds from operations available to common stockholders	$	46,734		$	45,937

FFO per common share, basic and diluted	$	0.45		$	0.46

Dividends paid to common stockholders	$	44,362		$	41,554

FFO in excess of dividends paid to common stockholders	$	2,372		$	4,383

Weighted average number of common shares used for computation per share:
Basic		103,439,114			100,280,264
Diluted		103,445,044			100,365,576

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 (loss) from discontinued operations, real estate acquired for resale”.
	Three Months Ended 3/31/09			Three Months Ended 3/31/08
Gain on sales of real estate acquired for resale	$	--		$	2,706
Rental revenue		66			1,036
Other revenue		351			71
Interest expense		(173	)		(632	)
General and administrative expense		(86	)		(162	)
Property expenses		(34	)		(11	)
Provisions for impairment		(311	)		(2,394	)
Income taxes		62			(808	)
Funds from operations contributed by Crest	$	(125	)	$	(194	)

Crest FFO per common share, basic and diluted	$	0.00		$	0.00

Total FFO	$	46,734	$	45,937
Add FFO contributed by Crest		125		194
FFO before Crest contribution	$	46,859	$	46,131

FFO before Crest contribution per common share, basic and diluted	$	0.45	$	0.46

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 March 31,	2009			2008			2007			2006			2005

Net income available to common stockholders	$	24,021		$	23,698		$	30,260		$	22,537		$	21,152
Depreciation and amortization		22,911			22,896			18,085			13,515			10,832
Gain on sales of investment properties		(198	)		(657	)		(1,806	)		(752	)		(822	)
Total FFO	$	46,734		$	45,937		$	46,539		$	35,300		$	31,162

Total FFO per diluted share	$	0.45		$	0.46		$	0.46		$	0.42		$	0.39

Total FFO	$	46,734		$	45,937		$	46,539		$	35,300		$	31,162
Add (less) FFO contributed by Crest		125			194			(1,748	)		(879	)		(833	)
FFO before Crest contribution	$	46,859		$	46,131		$	44,791		$	34,421		$	30,329

FFO components, per diluted share(1):
FFO before Crest contribution	$	0.45		$	0.46		$	0.45		$	0.41		$	0.38
Crest FFO contribution	$	0.00		$	0.00		$	0.02		$	0.01		$	0.01

Total FFO	$	0.45		$	0.46		$	0.46		$	0.42		$	0.39

Cash dividends paid per share	$	0.425		$	0.410		$	0.380		$	0.349		$	0.330
Diluted shares outstanding		103,445,044			100,365,576			100,276,300			83,412,391			79,659,364

(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 March 31, 2009 and December 31, 2008

(dollars in thousands, except per share amounts)

	2009			2008
ASSETS
Real estate, at cost:
Land	$	1,157,731		$	1,157,885
Buildings and improvements		2,247,961			2,251,025
		3,405,692			3,408,910
Less accumulated depreciation and amortization		(573,039	)		(553,417	)
Net real estate held for investment		2,832,653			2,855,493
Real estate held for sale, net		7,725			6,660
Net real estate		2,840,378			2,862,153
Cash and cash equivalents		10,438			46,815
Accounts receivable		10,122			10,624
Goodwill		17,206			17,206
Other assets, net		53,487			57,381
Total assets	$	2,931,631		$	2,994,179

LIABILITIES AND STOCKHOLDERS’ EQUITY
Distributions payable	$	16,841		$	16,793
Accounts payable and accrued expenses		17,860			38,027
Other liabilities		11,485			14,698
Line of credit payable		--			--
Notes payable		1,350,000			1,370,000
Total liabilities		1,396,186			1,439,518

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 2009 and 2008		337,790			337,790
Common stock and paid in capital, par value $1.00 per share, 200,000,000 shares authorized, 104,319,051 and 104,211,541 shares issued and outstanding as of March 31, 2009 and December 31, 2008, respectively		1,625,795			1,624,622
Distributions in excess of net income		(428,140	)		(407,751	)
Total stockholders’ equity		1,535,445			1,554,661
Total liabilities and stockholders’ equity	$	2,931,631		$	2,994,179

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 March 31, 2009			Dec 31, 2008			Dec 31, 2007			Dec 31, 2006			Dec 31, 2005			Dec 31, 2004			Dec 31, 2003
Apparel stores		1.1	%		1.1	%		1.2	%		1.7	%		1.6	%		1.8	%		2.1	%
Automotive collision services		1.0			1.0			1.1			1.3			1.3			1.0			0.3
Automotive parts		1.5			1.6			2.1			2.8			3.4			3.8			4.5
Automotive service		5.1			4.8			5.2			6.9			7.6			7.7			8.3
Automotive tire services		7.1			6.7			7.3			6.1			7.2			7.8			3.1
Book stores		0.2			0.2			0.2			0.2			0.3			0.3			0.4
Business services		*			*			0.1			0.1			0.1			0.1			0.1
Child care		7.3			7.6			8.4			10.3			12.7			14.4			17.8
Consumer electronics		0.8			0.8			0.9			1.1			1.3			2.1			3.0
Convenience stores		16.5			15.8			14.0			16.1			18.7			19.2			13.3
Crafts and novelties		0.3			0.3			0.3			0.4			0.4			0.5			0.6
Distribution and office		1.0			1.0			0.6			--			--			--			--
Drug stores		4.2			4.1			2.7			2.9			2.8			0.1			0.2
Entertainment		1.2			1.2			1.4			1.6			2.1			2.3			2.6
Equipment rental services		0.2			0.2			0.2			0.2			0.4			0.3			0.2
Financial services		0.2			0.2			0.2			0.1			0.1			0.1			--
General merchandise		0.8			0.8			0.7			0.6			0.5			0.4			0.5
Grocery stores		0.7			0.7			0.7			0.7			0.7			0.8			0.4
Health and fitness		5.7			5.6			5.1			4.3			3.7			4.0			3.8
Home furnishings		1.4			2.4			2.6			3.1			3.7			4.1			4.9
Home improvement		1.9			1.9			2.1			3.4			1.1			1.0			1.1
Motor vehicle dealerships		3.0			3.1			3.1			3.4			2.6			0.6			--
Office supplies		1.0			1.0			1.1			1.3			1.5			1.6			1.9
Pet supplies and services		0.9			0.8			0.9			1.1			1.3			1.4			1.7
Private education		0.8			0.8			0.8			0.8			0.8			1.1			1.2
Restaurants		21.6			21.8			21.2			11.9			9.4			9.7			11.8
Shoe stores		--			--			--			--			0.3			0.3			0.9
Sporting goods		2.3			2.3			2.6			2.9			3.4			3.4			3.8
Theaters		9.1			9.0			9.0			9.6			5.2			3.5			4.1
Travel plazas		0.2			0.2			0.2			0.3			0.3			0.4			0.3
Video rental		1.0			1.1			1.7			2.1			2.5			2.8			3.3
Other		1.9			1.9			2.3			2.7			3.0			3.4			3.8
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 to 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 2,253 net leased, single-tenant retail properties as of March 31, 2009 (dollars in thousands):

	Total Portfolio							Initial Expirations(3)							Subsequent Expirations(4)
Year	Number of Leases Expiring(1)		Rental Revenue for the Quarter Ended March 31, 2009(2)		% of Total Rental Revenue			Number of Leases Expiring		Rental Revenue for the Quarter Ended March 31, 2009		% of Total Rental Revenue			Number of Leases Expiring		Rental Revenue for the Quarter Ended March 31,2009		% of Total Rental Revenue
2009		132	$	2,684		3.4	%		29	$	598		0.8	%		103	$	2,086		2.6	%
2010		98		2,043		2.6			47		1,074		1.4			51		969		1.2
2011		105		3,447		4.4			59		2,361		3.0			46		1,086		1.4
2012		115		2,721		3.4			74		1,846		2.3			41		875		1.1
2013		140		5,068		6.4			98		4,059		5.1			42		1,009		1.3
2014		61		2,250		2.8			36		1,806		2.3			25		444		0.5
2015		109		3,040		3.8			85		2,499		3.1			24		541		0.7
2016		114		2,040		2.6			112		1,995		2.5			2		45		0.1
2017		47		1,619		2.0			39		1,469		1.8			8		150		0.2
2018		42		1,789		2.3			34		1,617		2.0			8		172		0.3
2019		96		4,836		6.1			91		4,500		5.7			5		336		0.4
2020		76		2,894		3.6			73		2,821		3.5			3		73		0.1
2021		180		7,668		9.7			179		7,614		9.6			1		54		0.1
2022		100		2,923		3.7			99		2,875		3.6			1		48		0.1
2023		246		7,944		10.0			244		7,871		9.9			2		73		0.1
2024		61		1,726		2.2			61		1,726		2.2			--		--		--
2025		70		5,437		6.9			66		5,369		6.8			4		68		0.1
2026		120		6,815		8.6			118		6,757		8.5			2		58		0.1
2027		152		4,612		5.8			151		4,595		5.8			1		17		*
2028		82		4,002		5.0			80		3,953		4.9			2		49		0.1
2029		46		1,124		1.4			45		1,109		1.4			1		15		*
2030		20		921		1.2			20		921		1.2			--		--		--
2031		27		648		0.8			27		648		0.8			--		--		--
2032		2		57		0.1			2		57		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		2,253	$	79,327		100.0	%		1,880	$	71,146		89.5	%		373	$	8,181		10.5	%

*Less than 0.1%

(1)	Excludes ten multi-tenant properties and 84 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 $50 from properties reclassified as discontinued operations and excludes revenue of $2,863 from ten multi-tenant properties and from 84 vacant and unleased properties at March 31, 2009.

(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 March 31, 2009 (dollars in thousands):

						Approximate		Rental Revenue for		Percentage of
	Number of		Percent			Leasable		the Quarter Ended		Rental
State	Properties		Leased			Square Feet		March 31, 2009(1)		Revenue
Alabama		63		98	%		425,300	$	1,924		2.4	%
Alaska		2		100			128,500		277		0.3
Arizona		80		98			395,800		2,411		2.9
Arkansas		18		94			98,500		393		0.5
California		64		98			1,160,700		4,474		5.5
Colorado		53		96			486,300		1,839		2.2
Connecticut		24		96			276,600		1,181		1.4
Delaware		17		100			33,300		429		0.5
Florida		168		95			1,449,300		6,600		8.0
Georgia		132		97			926,900		3,998		4.9
Idaho		13		92			85,400		331		0.4
Illinois		74		97			877,800		4,175		5.1
Indiana		82		96			689,600		3,228		3.9
Iowa		22		95			296,100		1,010		1.2
Kansas		33		91			573,500		1,101		1.3
Kentucky		22		100			110,600		675		0.8
Louisiana		33		97			190,400		888		1.1
Maine		3		100			22,500		160		0.2
Maryland		29		97			271,200		1,581		1.9
Massachusetts		66		100			580,400		2,616		3.2
Michigan		52		98			257,300		1,246		1.5
Minnesota		21		100			392,100		1,547		1.9
Mississippi		71		97			347,600		1,505		1.8
Missouri		62		97			640,100		2,193		2.7
Montana		2		100			30,000		76		0.1
Nebraska		19		95			196,300		473		0.6
Nevada		15		93			191,000		749		0.9
New Hampshire		14		100			109,900		563		0.7
New Jersey		33		100			261,300		1,929		2.4
New Mexico		8		100			56,400		178		0.2
New York		40		93			502,300		2,332		2.8
North Carolina		96		98			548,300		2,827		3.4
North Dakota		6		100			36,600		57		0.1
Ohio		137		95			852,700		3,675		4.5
Oklahoma		25		96			145,900		584		0.7
Oregon		18		100			297,300		870		1.1
Pennsylvania		99		99			683,800		3,542		4.3
Rhode Island		3		100			11,000		57		0.1
South Carolina		100		99			374,400		2,176		2.7
South Dakota		9		100			24,900		102		0.1
Tennessee		135		95			635,500		2,907		3.5
Texas		213		92			2,234,300		8,002		9.7
Utah		5		80			30,600		87		0.1
Vermont		4		100			12,700		124		0.2
Virginia		104		99			637,100		3,484		4.2
Washington		35		91			230,300		697		0.9
West Virginia		2		100			23,000		121		0.1
Wisconsin		20		90			248,100		778		1.0
Wyoming		1		100			4,200		18		*
Totals/Average		2,347		96	%		19,093,700	$	82,190		100.0	%

* Less than 0.1%

(1)

Includes rental revenue for all properties owned by Realty Income at March 31, 2009, including revenue from properties reclassified as discontinued operations of $50.

Realty Income Performance vs. Major Stock Indices

							Equity																		NASDAQ
	Realty Income						REIT Index(1)						DJIA						S&P 500						Composite
	Dividend			Total			Dividend			Total			Dividend			Total			Dividend			Total			Dividend			Total
	yield			return(2)			yield			return(3)			yield			return(3)			yield			return(3)			yield			return(4)

1995		8.3	%		42.0	%		7.4	%		15.3	%		2.4	%		36.9	%		2.3	%		37.6	%		0.6	%		39.9	%
1996		7.9	%		15.4	%		6.1	%		35.3	%		2.2	%		28.9	%		2.0	%		23.0	%		0.2	%		22.7	%
1997		7.5	%		14.5	%		5.5	%		20.3	%		1.8	%		24.9	%		1.6	%		33.4	%		0.5	%		21.6	%
1998		8.2	%		5.5	%		7.5	%		(17.5	%)		1.7	%		18.1	%		1.3	%		28.6	%		0.3	%		39.6	%
1999		10.5	%		(8.7	%)		8.7	%		(4.6	%)		1.3	%		27.2	%		1.1	%		21.0	%		0.2	%		85.6	%
2000		8.9	%		31.2	%		7.5	%		26.4	%		1.5	%		(4.7	%)		1.2	%		(9.1	%)		0.3	%		(39.3	%)
2001		7.8	%		27.2	%		7.1	%		13.9	%		1.9	%		(5.5	%)		1.4	%		(11.9	%)		0.3	%		(21.1	%)
2002		6.7	%		26.9	%		7.1	%		3.8	%		2.6	%		(15.0	%)		1.9	%		(22.1	%)		0.5	%		(31.5	%)
2003		6.0	%		21.0	%		5.5	%		37.1	%		2.3	%		28.3	%		1.8	%		28.7	%		0.6	%		50.0	%
2004		5.2	%		32.7	%		4.7	%		31.6	%		2.2	%		5.6	%		1.8	%		10.9	%		0.6	%		8.6	%
2005		6.5	%		(9.2	%)		4.6	%		12.2	%		2.6	%		1.7	%		1.9	%		4.9	%		0.9	%		1.4	%
2006		5.5	%		34.8	%		3.7	%		35.1	%		2.5	%		19.0	%		1.9	%		15.8	%		0.8	%		9.5	%
2007		6.1	%		3.2	%		4.9	%		(15.7	%)		2.7	%		8.8	%		2.1	%		5.5	%		0.8	%		9.8	%
2008		7.3	%		(8.2	%)		7.6	%		(37.7	%)		3.6	%		(31.8	%)		3.2	%		(37.0	%)		1.3	%		(40.5	%)
1Q 2009		9.1	%		(16.9	%)		9.0	%		(31.9	%)		3.9	%		(12.4	%)		3.0	%		(11.7	%)		1.1	%		(3.1	%)

Compounded Average Annual Total Return(5)					14.5	%					5.5	%					7.0	%					5.7	%					4.9	%

Note: All of these Dividend yields are calculated as annualized dividend based on last dividend paid in applicable time period divided by closing price as of period end. Dividend yield sources: NAREIT website and Bloomberg.

(1) FTSE NAREIT US Equity REIT Index, as per NAREIT website.

(2) Calculated as closing stock price as of period end plus dividends paid in period divided by closing stock price as of end of previous period. Does not include reinvestment of dividends.

(3) Includes reinvestment of dividends. Sources: NAREIT website and Factset.

(4) Price only index, does not include dividends. Source: Factset.

(5) All of these Compounded Average Annual Total Return rates are calculated in the same manner: from Realty Income's NYSE listing on October 18, 1994 through March 31, 2009, and assuming reinvestment of dividends.