Item 7.01 Other Events
On January 11, 2021, Realty Income Corporation (the "Company") distributed a
preliminary prospectus supplement dated January 11, 2021 relating to the
offering of 10,500,000 shares of the Company's common stock (the "Preliminary
Prospectus Supplement"). Set forth below are disclosures that have been included
in the Preliminary Prospectus Supplement (the "Disclosures").
For purposes of the Disclosures, unless context otherwise requires, (a) the
terms "Realty Income," "our," "us" and "we" as used in this prospectus
supplement refer to the Company and its subsidiaries on a consolidated basis,
(b) references to our "$3.0 billion revolving credit facility," our "revolving
credit facility" and similar references mean our $3.0 billion unsecured
revolving credit facility, references to our "$250.0 million term loan
facility," our "term loan facility" and similar references mean our $250.0
million unsecured term loan facility due in March 2024 and references to our
"commercial paper program" mean our $1.0 billion unsecured commercial paper
program, (c) unless otherwise specified, references to our "top 20 tenants"
mean, for any period, our 20 largest tenants based on percentage of total
portfolio annualized contractual rent as of the last day of such period, (d) the
term "annualized contractual rent" at any date means monthly contractual rent in
effect at such date, multiplied by 12, (e) the term "contractual rent" for any
period means the aggregate cash amount charged to tenants, including monthly
base rent receivables but excluding percentage rent and tenant reimbursements,
for such period, (f) the term "contractual rent collected" for any period means
the amount of contractual rent due for such period that is received from
tenants, including amounts received after the end of such period and amounts in
transit for which the tenant has confirmed payment is in process, but excluding
percentage rents and tenant reimbursements, and (g) "investment grade tenants"
means tenants with a credit rating, and tenants that are subsidiaries or
affiliates of companies with a credit rating, of Baa3/BBB- (or the equivalent)
or higher from one of the three major rating agencies (Moody's/S&P/Fitch). For
purposes of determining the aggregate amount of borrowings outstanding under our
revolving credit facility as of any specified date, borrowings denominated in
GBP are translated into U.S. dollars using the applicable exchange rates as in
effect from time to time.As used herein, "GBP" and "£" mean the lawful currency
of the United Kingdom.
***
Percentages of Contractual Rent Collected as of December 31, 2020
As of December 31, 2020, we had collected the following percentages of
contractual rent for the periods set forth below:
Month Ended Month Ended Month Ended Quarter Ended
October 31, November 30, December 31, December 31,
2020 2020 2020 2020
Contractual rent collected(1) across
total portfolio(2) 93.4% 93.7% 93.6% 93.6%
Contractual rent collected(1) from top
20 tenants(2) 89.8% 90.2% 89.7% 89.9%
Contractual rent collected(1) from
investment grade tenants(2) 100.0% 100.0% 100.0% 100.0%
(1) Collection rates are calculated as the aggregate contractual rent collected
for the applicable period from the beginning of that applicable period
through December 31, 2020 divided by the contractual rent charged for the
applicable period. Rent collection percentages are calculated based on
contractual rents (excluding percentage rents and tenant reimbursements).
Charged amounts have not been adjusted for any COVID-19 related rent relief
granted and include contractual rents from any tenants in bankruptcy. Due to
differences in applicable foreign currency conversion rates and rent
conventions, the percentages above may differ from percentages calculated
utilizing our total portfolio annualized contractual rent.
(2) For information on how we define our "contractual rent," "contractual rent
collected," "annualized contractual rent," "top 20 tenants" and "investment
grade tenants," please see the immediately preceding paragraph. For purposes
of the foregoing table, our top 20 tenants and investment grade tenants were
determined as of November 30, 2020 for all periods.
We have either executed deferral agreements or maintain ongoing deferral
discussions with tenants that account for a majority of the unpaid contractual
rent for the quarter ended December 31, 2020 and for each of the months of
October, November and December 2020. We are still in the preliminary stages of
collecting rent for the month of January 2021. As a result, we cannot predict
the number of tenants that will not pay rent for the month of January 2021, nor
can we predict whether tenants who made contractual rent payments during the
quarter ended December 31, 2020 or the months of October, November or December
2020 will pay rent or request rent deferrals thereafter. In addition, as the
adverse impacts of the COVID-19 pandemic and the measures taken to limit its
spread continue to evolve, the ability of our tenants to continue to pay rent to
us may further diminish, and therefore we cannot assure you that our rental
collections for the quarter ended December 31, 2020 or the months of October,
November or December 2020 are indicative of our rental collections in January
2021 or thereafter. In addition, the foregoing information does not purport to
reflect our results of operations or financial condition for the fourth quarter
of 2020 or for any future period. As a result of the impacts of the COVID-19
pandemic and the measures taken to limit its spread, our revenues in the fourth
quarter of 2020 may decline relative to the third quarter of 2020, and that
decline may continue or increase in subsequent periods as long as such impacts
continue to exist. We continue to evaluate the impacts of the COVID-19 pandemic
on our business as the situation continues to evolve.
Recent Investments in Real Estate and Pending Acquisitions
During the year ended December 31, 2020, we invested approximately $2.3 billion
in properties and properties under development or expansion. Of such properties,
as of December 31, 2020, approximately 61% (based on annualized contractual
rent) are leased to investment grade tenants (as defined above).
From January 1 through January 8, 2021, we have acquired properties with an
aggregate purchase price of approximately $130.7 million. Moreover, as of
January 8, 2021, we had entered into agreements or letters of intent to acquire
additional U.S. and U.K. properties with an aggregate estimated purchase price
of approximately $676.8 million, consisting of approximately $91.8 million
aggregate estimated purchase price for properties as to which we had entered
into acquisition agreements and approximately $585.1 million aggregate estimated
purchase price for properties as to which we have entered into letters of
intent. The total purchase price for properties already acquired from January 1
through January 8, 2021, and the estimated purchase price of properties that as
of January 8, 2021 were under contract or letters of intent to be acquired, is
approximately $807.5 million. The foregoing acquisition totals exclude
investments in properties under development or expansion.
The acquisition of properties is subject to numerous uncertainties, including
various closing conditions, and there can be no assurance that the properties
for which we have entered into letters of intent (which are non-binding and
therefore can be terminated by the buyer or the seller) or acquisition
agreements will be acquired at the prices or on the timetable or other terms
currently contemplated, or at all, or that we will enter into binding agreements
to acquire properties as to which we have entered into letters of intent.
Liquidity and Capital Markets
Equity Capital Raising
During the quarter ended December 31, 2020, we raised approximately $655.0
million from the sale of common stock at a weighted average price of $61.14 per
share, primarily through our At-The-Market Program.
Liquidity
As of January 8, 2021, after giving effect to the redemption of the $950.0
million aggregate principal amount of our outstanding 3.250% Notes due 2022 on
January 8, 2021 at a redemption price of approximately $1,004.3 million,
consisting of the principal, call premium of $47.2 million and accrued interest
of $7.1 million, we had a cash and cash equivalents balance of approximately
$66.0 million. In addition, we had no borrowings outstanding under our $3.0
billion unsecured revolving credit facility and $300.0 million outstanding under
our $1.0 billion commercial paper program as of January 8, 2021. The foregoing
information does not purport to reflect our results of operations or financial
condition for the quarter and year ended December 31, 2020 or for any future
period.
***
The foregoing information in this Current Report on Form 8-K shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended, and is not incorporated by reference into any of the Company's filings
under the Securities Act of 1933, as amended, whether made before or after the
date hereof, regardless of any general incorporation language in any such
filing.
The foregoing information does not constitute an offer to sell or the
solicitation of an offer to buy any shares of common stock or other securities.
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