Realty Income: Revenue Up, EPS Misses

Core Viewpoint - Realty Income reported mixed results for Q2 2024, showcasing strong revenue growth but earnings per share (EPS) falling short of analyst expectations [2][3]. Financial Performance - Revenue for Q2 2024 reached $1.34 billion, exceeding analyst estimates of $1.22 billion, representing a year-over-year increase of 31.4% [3][7]. - EPS was reported at $0.29, missing the expected $0.36, with no change year-over-year [3][7]. - Funds from operations (FFO) grew by 35% to $929 million, while adjusted funds from operations (AFFO) surged by 37% to $921.1 million [3][7]. Dividend and Occupancy - The company increased its dividend by 1.6% year-over-year to $0.777 per share, marking 107 consecutive quarterly increases [6][12]. - Portfolio occupancy improved to 98.8%, up from 98.6% in Q1 2024, though slightly down from 99% in Q2 2023 [8]. Strategic Focus - Realty Income achieved a rent recapture rate of 105.7% and focused on maintaining a strong, diversified real estate portfolio [5][9]. - The company invested $805.8 million in strategic acquisitions at an average cash yield of 7.9%, enhancing its portfolio in the U.S. and Europe [9][10]. Client and Credit Quality - Approximately 39.6% of annualized rental revenue comes from investment-grade clients, indicating strong tenant quality [9]. - However, specific tenants like Rite Aid and Red Lobster present potential credit risks [9]. Future Outlook - Management lowered its full-year 2024 earnings guidance, now expecting net income per share between $1.21 and $1.30 [11]. - The company maintained its per-share FFO and AFFO estimates, with expected AFFO per share ranging from $4.15 to $4.21 for the year [12].