Realty Income Corp. (O) recently announced that it has made a public offering of 6 million shares. In a bid to cover over-allotments, the company will provide a 30-day option to the underwriters for purchasing an additional 900,000 shares.
Realty Income expects to use the net proceeds from the offering to repay borrowings under its $425 million acquisition credit facility, which helps the company to fund real estate acquisitions.
This public offering will enable the company to attain financial flexibility and seize investment opportunities and acquisitions, which go a long way in enhancing top-line growth. As of June 30, 2011, Realty Income’s cash position stood at $155.7 million.
Realty Income reported second quarter 2011 FFO (fund from operations) of $60.9 million or 48 cents per share compared with $46.8 million or 45 cents per share in the year-earlier quarter. Fund from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
Realty Income primarily engages in the acquisition and ownership of commercial retail real estate properties in the United States. The company leases its retail properties primarily to regional and national retail chain store operators. As of June 30, 2011, Realty Income’s portfolio of single-tenant properties consisted of 2,523 properties located in 49 states, leased to 131 retail chains and other commercial enterprises belonging to 37 different industries.
Realty Income currently retains a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating. We are also maintaining our long-term “Neutral” recommendation on the stock. One of its competitors, Kimco Realty Corporation (KIM) also holds a Zacks #3 Rank.
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REALTY INCOME (O): Free Stock Analysis Report
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