Realty Income Corp.
) offered an update of its portfolio related investments in
third-quarter 2013. Also, this Monthly Dividend Company disclosed
an upsized public offering to reduce its debt level.
Realty income disclosed that it invested around $503 million
in new and under construction assets during third-quarter 2013.
The properties have a weighted average lease term of about 14.7
years and initial weighted average contractual lease rate of
Notably, the investment grade tenants at the assets account
for 72% of the revenue generation. Year-to-date, as of Sep 30,
Realty Income put in roughly $1.37 billion in new and under
construction assets. This is in addition to the company's $3.2
billion worth American Realty Capital Trust, Inc. buyout made in
Upsized Public Offering
In a separate development, Realty Income stated the offering
of upsized 8.5 million common shares at $40.63 per share. The
offering size was increased from the original amount of 6.5
million shares. Notably, to cover any over-allotments, the
company granted a 30-day option to the underwriters to buy up to
1.28 million of additional common shares. The offering is
anticipated to close on Oct 25.
Realty Income expects to reap around $329 million in proceeds,
excluding underwriting discounts and projected offering expenses
with the assumption of no exercise of the over allotment option
by the underwriters. This retail real estate investment trust
(REIT) intends to utilize the net proceeds for the repayment of
outstanding borrowings under its acquisition credit facility
worth $1.0 billion.
A consortium of financial institutions acted as underwriters
for the common shares offering. Of them,
), Wells Fargo Securities of
Wells Fargo & Company
), BofA Merrill Lynch, J.P. Morgan of
JPMorgan Chase & Co.
), RBC Capital Markets, Jefferies, and UBS Investment Bank
assisted Realty Income as joint book-running managers.
The above-mentioned strategic investments bode well for Realty
Income as such efforts will enhance its portfolio quality. Also,
a high proportion in investment grade tenants at these properties
offer scope for the company to enjoy steady rental revenue going
Moreover, though the public offering will result in share
dilution, it will enable Realty Income to attain financial
flexibility and position it well to pursue investment
opportunities and acquisitions. This would facilitate Realty
Income's top-line improvement in the near term.
Realty Income is scheduled to release its third-quarter 2013
results on Oct 31, 2013. The Zacks Consensus Estimate for the
third-quarter 2013 funds from operations (FFO) is currently
pegged at 61 cents, reflecting a year-over-year increase of
Realty Income currently carries a Zacks Rank #3 (Hold).
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