Realty Income (O) Q1 AFFO Meets Estimates, Occupancy Falls Y/Y

Realty Income Corporation’s O first-quarter 2024 adjusted funds from operations (AFFO) per share of $1.03 was in line with the Zacks Consensus Estimate. The reported figure also compared favorably with the prior-year quarter’s 93 cents per share.

Results display better-than-anticipated top-line growth. The company benefited from expansionary effects and a healthy pipeline of opportunities globally. Although the portfolio occupancy remained stable sequentially, it declined year over year, affecting the results to some extent.

Total revenues were $1.26 billion, which outpaced the Zacks Consensus Estimate of $1.19 billion. The top line rose 33.5% year over year.

Quarter in Detail

In the first quarter, same-store rental revenues of $843.5 million from 11,716 properties under lease witnessed a rise of 0.8% from the prior-year period.

The portfolio occupancy of 98.6% as of Mar 31, 2024, remained unchanged sequentially and shrunk 40 bps year over year. In the reported quarter, the company achieved a rent recapture rate of 104.3% on re-leasing activity.

In the reported quarter, O invested $598 million in 155 properties and properties under development or expansion.

Balance Sheet

Realty Income exited first-quarter 2024 with $4 billion of liquidity. This comprised cash and cash equivalents of $680.2 million, unsettled At-The-Market forward equity of $62.9 million, and $3.2 billion of availability under its revolving credit facility after deducting $216 million in commercial paper borrowings.

Net debt to annualized pro-forma adjusted EBITDAre was 5.5X.

In the first quarter, the company raised $550.1 billion from the sale of its common stock at a weighted average price of $56.93 per share, mainly through its At-The-Market program.

2024 Guidance

Realty Income kept its guidance for 2024 unrevised.

Management projects 2024 AFFO per share of $4.13-$4.21. The Zacks Consensus Estimate is pegged at $4.16.

Full-year projections assume same-store rent growth of approximately 1% and occupancy of more than 98%. O expects a full-year acquisition volume of approximately $2 billion.


Realty Income Corporation Price, Consensus and EPS Surprise

Realty Income Corporation Price, Consensus and EPS Surprise

Realty Income Corporation price-consensus-eps-surprise-chart | Realty Income Corporation Quote


Realty Income currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Retail REITs

Federal Realty Investment Trust’s FRT first-quarter 2024 funds from operations (FFO) per share of $1.64 missed the Zacks Consensus Estimate by a whisker. The figure marked a rise of 3.1% from the year-ago quarter’s tally of $1.59.

Results reflect a rise in revenues and healthy leasing activity that aided FRT’s first-quarter performance. However, lower occupancy levels affected the results to some extent.

Kimco Realty Corp. KIM reported first-quarter 2024 FFO per share of 39 cents, which beat the Zacks Consensus Estimate of 38 cents. The figure was in line with the year-ago quarter’s tally.

Though KIM reported growth in revenues, a rise in interest expenses acted as a dampener.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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