REALTY INCOME CORP O

Realty Income achieved 4.8% AFFO per share growth in 2024, marking its 14th consecutive year of growth, contributing to a 10.2% total operational return for investors. The company invested $3.9 billion at a 7.4% weighted average initial cash yield, generating a 243 basis point investment spread, significantly above its historical average of 150 basis points.

In Q4, Realty Income invested $1.7 billion at a 7.1% weighted average initial cash yield, which translates to a 7.5% straight-line yield assuming 2% CPI growth. Approximately 57% of the annualized cash income generated from these Q4 investments was from investment-grade clients. These investments were completed at a 155 basis point spread over the short-term weighted average cost of capital, supported by $230 million in adjusted funds from operations after dividend payments.

The diversified portfolio of over 15,600 properties maintained 98.7% occupancy, in line with the prior quarter. The company successfully recaptured rent at 107.4% on 266 lease renewals in Q4, adding $52 million in new annualized cash rent. Strategic dispositions generated $138 million in net proceeds in Q4 from 80 properties, and $589 million for the full year from 294 properties, with capital recycling expected to continue in 2025.

Realty Income strengthened partnerships, notably with a $770 million sale-leaseback with 7-Eleven, making it the top client at 3.5% of annualized rent. The recently announced private capital initiative is a natural extension to leverage the platform, aiming to diversify equity capital sources and expand investment opportunities. The data room for this initiative is now open, and initial marketing meetings have commenced.

The company ended the year with net debt to annualized pro forma adjusted EBITDA of 5.4x and $3.7 billion in liquidity, including $445 million of cash, unsettled forward equity, and unused capacity on its $4.25 billion revolving line of credit. Realty Income increased its monthly dividend by 1.5% for March, marking its 129th increase and 656th consecutive monthly dividend, reinforcing its position as a Dividend Aristocrat.

A $2 billion common stock repurchase program was authorized by the Board, intended to be leverage-neutral and funded by asset dispositions or free cash flow. This tool provides flexibility to deploy capital in volatile market conditions, although the primary focus remains on accretive investment opportunities that leverage the company's platform and pipeline.