Realty Income Q3 FFO Up, Beats Estimates; Updates FY09 FFO View

10/28/2009 8:09 PM ET

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(RTTNews) - Real estate investment trust Realty Income Corp. (O: News ) Wednesday, after the bell, reported an increase in funds from operations or FFO for the third quarter, beating the Wall Street expectations. In addition, the company updated its fiscal 2009 FFO outlook and provided outlook for fiscal 2010.

FFO for the quarter increased 5.5% year-on-year to $48.2 million from $45.7 million. FFO per share for the quarter increased 2.2% or one cent to $0.47, beating the $0.46 per share consensus estimate of 11 analysts polled by Thomson Reuters. Analysts' estimates typically exclude one-time items.

The Escondido, California based firm announced that its third-quarter net income available to common stockholders was $27.1 million, down from $28.6 million for the year-ago period. Net income per share was $0.26 compared with $0.29 for the same quarter in 2008. The recent quarter included a gain from discontinued operations of $2.10 million, compared with $6.23 million in the year-ago period.

Realty Income's revenue for the quarter was $81.96 million, compared with $82.2 million for the same quarter in 2008, of which rental income contributed moderately higher at $81.53 million, compared with $81.95 in the previous year.

Geographically, the contribution from properties was led by Texas, which earned 9.6% of revenues for the quarter, followed by Florida representing 7.9% of net sales in the third quarter.

The company noted that its occupancy increased to 96.8% compared with 96.6%, at the end of the second quarter and same store rents increased 0.4% compared with the same period one year ago, despite the "ongoing softness in retail industry".

For the nine-month period ended September 30, FFO increased to $142.07 million or $1.37 per share, from $138.5 million or $1.38 per share in the year-ago period. Total revenues were marginally higher at $246.18 million, compared with $246.5 million last year.

Looking ahead for the full year 2009, the company now expects FFO per share to be in the range of $1.83 to $1.84. This compares with its prior outlook range of $1.83 - $1.86, provided during the second-quarter results. Eleven analysts, on average, expect the company's FFO to be $1.83 per share for 2009.

The company also estimates that FFO per share for 2010 will lie between $1.86 and $1.92, which represents annual FFO per share growth of approximately 1.1% to 4.9% from the year-ago. Analysts anticipate FFO of $1.88 per share for the year 2010.