• AFFO Per Share Growth: 4.8% for 2024.
• Dividend Yield: 5.4% for 2024.
• Total Operational Return: 10.2% for 2024.
• Fourth Quarter AFFO Per Share: $1.05, representing 4% growth.
• Investments: $3.9 billion in 2024 at a 7.4% weighted average initial cash yield.
• Fourth Quarter Investments: $1.7 billion at a 7.1% weighted average initial cash yield.
• Portfolio Occupancy: 98.7% at the end of the fourth quarter.
• Rent Recapture Rate: 107.4% on 266 lease renewals.
• Property Dispositions: 80 properties sold in Q4 for $138 million; 294 properties sold in 2024 for $589 million.
• Net Debt to Annualized Pro Forma Adjusted EBITDA: 5.4 times at year-end.
• Fixed Charge Coverage Ratio: 4.7 times.
• Liquidity: $3.7 billion, including $445 million of cash.
• Dividend Increase: 1.5% increase for March monthly dividend, 4.5% increase over the year-ago period.
• Common Stock Repurchase Program: Authorized up to $2 billion.

• Warning! GuruFocus has detected 7 Warning Signs with O.

Release Date: February 25, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Realty Income Corp (NYSE:O) achieved AFFO per share growth of 4.8% in 2024, marking the 14th consecutive year of growth.
• The company delivered a total operational return of 10.2% for the year, with a 5.4% dividend yield.
• Realty Income Corp (NYSE:O) invested $3.9 billion at a 7.4% weighted average initial cash yield, exceeding historical investment spread averages.
• The company maintained a high portfolio occupancy rate of 98.7% and a rent recapture rate of 107.4% on lease renewals.
• Realty Income Corp (NYSE:O) has a diversified portfolio of over 15,600 properties, providing stability and resilience through various economic cycles.

Negative Points

• The company anticipates a provision for 75 basis points of potential rent loss in 2025, impacting AFFO.
• There is an expected $0.04 negative effect on AFFO due to the move out of a large office tenant.
• Realty Income Corp (NYSE:O) recognized $21 million in non-recurring lease termination fees in 2024, which will not repeat in 2025.
• The company faces potential headwinds from tenant credit issues and macroeconomic uncertainties.
• Cap rates are expected to remain consistent with 2024 levels, potentially impacting investment spreads.

Q & A Highlights

Q: How are cap rates trending, and how does this relate to your cost of capital? A: Based on our current pipeline, we expect cap rates to remain around the same level as in 2024.

Q: Can you provide more details on your share repurchase program and its potential impact on your capital allocation? A: The share repurchase program is a tool for us to deploy capital in an agile manner, should market conditions warrant it. We intend to use free cash flow from operations and disposition proceeds for buybacks on a leverage-neutral basis. This option is available for the next three years, but we hope not to rely on it heavily.

Q: What is your outlook on the transaction market, particularly the split between US and Europe investments? A: We ended 2024 with a 50:50 split between international and US investments. We expect a similar distribution in 2025, although it's early to predict precisely. Our platform's flexibility allows us to adapt quickly to market changes.

Q: How do you view the competition in the private fund space, and what is the appetite for net lease assets? A: The entry of other REITs into the private fund space reaffirms our strategy. We believe we have a place in the core+ arena and have just launched our marketing process. The private capital market is vast, and we are confident in our ability to secure our share.

Q: Can you discuss your plans for addressing upcoming debt maturities? A: We have staggered our debt maturities intentionally. For 2025, we have $1.9 billion maturing at an average rate of 4.2%. We have options to refinance in different currencies, and our $4.25 billion revolver provides flexibility. We aim to manage our maturity risk effectively.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.