ADDING and REPLACING Shareholders Approve Realty Income's Acquisition of American Realty Capital Tru

ADDING and REPLACING Shareholders Approve Realty Income's Acquisition of American Realty Capital Trust

Realty Income to Increase Common Stock Dividend, Provides Updated Earnings Estimates, and Provides Post Acquisition Company Information


ESCONDIDO, Calif.--(BUSINESS WIRE)-- Please note addition of tables after last graph of release.

The entire release reads:

SHAREHOLDERS APPROVE REALTY INCOME'S ACQUISITION OF AMERICAN REALTY CAPITAL TRUST

Realty Income to Increase Common Stock Dividend, Provides Updated Earnings Estimates, and Provides Post Acquisition Company Information

Realty Income Corporation (Realty Income), The Monthly Dividend Company®, (NYS: O) , announced today that Realty Income and American Realty Capital Trust (ARCT) shareholders have approved the acquisition of ARCT by Realty Income. The transaction is expected to close later in January.

When the transaction closes, Realty Income will issue 45.6 million shares of common stock to ARCT shareholders, based on a fixed exchange ratio of 0.2874 shares of Realty Income stock for each share of ARCT common stock owned, and ARCT shareholders will receive a one-time cash payment of $0.35 per share. The transaction will be essentially balance sheet neutral.

Commenting on the approved acquisition, Chief Executive Officer Tom A. Lewis said, "We are very gratified to have received approval from both Realty Income and ARCT shareholders to complete the acquisition of ARCT. As a result of this transaction, we will significantly advance our strategic objective to increase the overall credit quality of the revenue generated by our tenants. We are also pleased that, due to the significant revenue and earnings growth as a result of this acquisition, we are able to substantially increase our dividend."

Common Stock Dividend Increase

Realty Income further announced that it anticipates its Board of Directors will declare an increase in the company's common stock monthly cash dividend to $0.1809167 per share from $0.15175 per share after the transaction closes. When the dividend is increased, it will be the 70th dividend increase since Realty Income was listed on the New York Stock Exchange in 1994. The new monthly dividend amount will represent an annualized dividend of $2.171 per share, as compared to the previous annualized dividend of $1.821 per share, or an increase of 19.2%.

Updated 2013 Earnings Estimates

The ARCT acquisition is anticipated to be immediately accretive to Realty Income's Normalized Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO). Normalized FFO is based on FFO adjusted to add back merger-related costs. Based on the approved ARCT acquisition, combined with the record $1.16 billion in new property acquisitions for 2012, the company is increasing 2013 earnings estimates. The updated 2013 Normalized FFO and AFFO estimates are as follows (excluding the one-time costs associated with the ARCT transaction):

Normalized FFO per share for 2013 should range from $2.32 to $2.38 per share, an increase of 13.7% to 19.0% over the Normalized 2012 FFO per share estimate of $2.00 to $2.04. Normalized FFO per share for 2013 is based on an estimated net income per share range of $1.04 to $1.10, plus estimated real estate depreciation of $1.51 and reduced by potential estimated gains on sales of investment properties of $0.23 per share (in accordance with NAREIT's definition of FFO).

AFFO per share for 2013 should range from $2.33 to $2.39 per share, an increase of 10.4% to 16.0% over the 2012 estimated AFFO per share of $2.06 to $2.11. The AFFO per share estimate for 2013 is based on adding back items to FFO, that reduce net income, totaling approximately $0.10, and deducting capitalized expenditures and straight-line rent revenue items totaling approximately $0.08, for a net increase of $0.01 to $0.02 over Normalized FFO.

Realty Income considers FFO and AFFO to be appropriate supplemental measures of a real estate investment trust's (REIT's) operating performance. Realty Income defines FFO consistent with the National Association of Real Estate Investment Trust's (NAREIT's) definition as net income available to common stockholders plus depreciation and amortization of real estate assets, reduced by gains on sales of investment properties and extraordinary items. AFFO further adjusts FFO for unique revenue and expense items which are not pertinent to the measurement of Realty Income's ongoing operating performance.

Post Acquisition Company Summary Information

Upon closing, Realty Income will add 515 freestanding commercial properties that are owned by ARCT to the company's real estate portfolio. These properties are freestanding locations, which are net-leased to primarily investment grade rated tenants doing business in 27 industries. After adding these properties, Realty Income will own a total of 3,528 properties leased to 202 tenants doing business in 48 industries. Approximately 34% of the anticipated lease revenue will be generated by investment grade rated tenants, as compared to 19% prior to the ARCT acquisition. In addition, Realty Income will achieve increased diversification by industry, tenant and property type, increasing the number of industries to 48 from 44, the number of tenants to 202 from 150, and diversifying the property types to 77% retail, 11% distribution facility, 6% office, 3% agriculture, 2% manufacturing, and 1% industrial. With the acquisition of ARCT, the company will realize an increase in its portfolio occupancy to 97.6% from 97.2%.

Upon the closing of the ARCT acquisition, Realty Income is expected to have a total enterprise value of approximately $12.4 billion, and an equity market capitalization of $8.4 billion, making the company the largest publicly traded net-lease REIT by a factor of two times. Please see the charts and tables below for more information.

About Realty Income

Realty Income, The Monthly Dividend Company®, is a New York Stock Exchange real estate company dedicated to providing shareholders with dependable monthly income. To date the company has declared 510 consecutive common stock monthly dividends throughout its 44-year operating history and increased the dividend 69 times since Realty Income's listing on the New York Stock Exchange in 1994. The monthly income is supported by the cash flow from over 3,500 properties owned under long-term lease agreements with regional and national retail chains and other commercial enterprises. The company is an active buyer of net-leased properties nationwide. Additional information about the company can be obtained from the corporate website at www.realtyincome.com.

Note to Editors: Realty Income press releases are available on the company's corporate website at: http://www.realtyincome.com/invest/newsroom-library/press-releases.shtml.

Property Type Diversification

The following table sets forth certain property type information regarding Realty Income's property portfolio after the acquisition of American Realty Capital Trust (dollars in thousands):

Annualized

Percentage of

Approximate

Rental

Annualized

Number of

Leasable

Revenue

Rental

Property Type

Properties

Square Feet

at 12/31/12

Revenue

Retail

3,387

32,853,300

$

549,943

77.2

%

Distribution

61

14,189,100

79,258

11.1

Office

40

2,221,700

39,752

5.6

Agriculture

15

184,500

20,551

2.9

Manufacturing

10

3,117,100

16,588

2.3

Industrial

15

850,500

6,320

0.9

Totals

3,528

53,416,200

$

712,412

100.0

%

Tenant Diversification

Largest Tenants based on Percentage of Total Portfolio Rental Revenue at December 31, 2012

FedEx

5.5

%

Regal Cinemas

2.4

%

L.A. Fitness

3.9

%

Dollar General

2.0

%

Family Dollar

3.5

%

The Pantry

2.0

%

AMC Theatres

3.5

%

Rite Aid

1.9

%

Diageo

3.3

%

NPC International/Pizza Hut

1.8

%

BJ's Wholesale Club

3.3

%

Friendly's Ice Cream

1.6

%

Walgreens

2.9

%

CVS

1.6

%

Northern Tier Energy/Super America

2.9

%

Industry Diversification

The following table sets forth certain information regarding Realty Income's property portfolio after the acquisition of American Realty Capital Trust classified according to the business of the respective tenants, expressed as a percentage of our total rental revenue:

Percentage of Rental Revenue(1)

For the Years Ended

Percentage of
Annualized
Rental
Revenue
at 12/31/2012

Dec 31,
2011

Dec 31,
2010

Dec 31,
2009

Dec 31,
2008

Dec 31,
2007

Dec 31,
2006

Retail Industries

Apparel stores

1.6

%

1.4

%

1.2

%

1.1

%

1.1

%

1.2

%

1.7

%

Automotive collision services

0.8

0.9

1.0

1.1

1.0

1.1

1.3

Automotive parts

1.1

1.2

1.4

1.5

1.6

2.1

2.8

Automotive service

3.0

3.7

4.7

4.8

4.8

5.2

6.9

Automotive tire services

3.2

5.6

6.4

6.9

6.7

7.3

6.1

Book stores

*

0.1

0.1

0.2

0.2

0.2

0.2

Business services

*

*

*

*

*

0.1

0.1

Child care

3.0

5.2

6.5

7.3

7.6

8.4

10.3

Consumer electronics

0.3

0.5

0.6

0.7

0.8

0.9

1.1

Convenience stores

11.6

18.5

17.1

16.9

15.8

14.0

16.1

Crafts and novelties

0.6

0.2

0.3

0.3

0.3

0.3

0.4

Dollar stores

5.6

--

--

--

--

--

--

Drug stores

6.6

3.8

4.1

4.3

4.1

2.7

2.9

Education

0.5

0.7

0.8

0.9

0.8

0.8

0.8

Entertainment

0.6

1.0

1.2

1.3

1.2

1.4

1.6

Equipment services

0.1

0.2

0.2

0.2

0.2

0.2

0.2

Financial services

1.9

0.2

0.2

0.2

0.2

0.2

0.1

General merchandise

1.2

0.6

0.8

0.8

0.8

0.7

0.6

Grocery stores

3.2

1.6

0.9

0.7

0.7

0.7

0.7

Health and fitness

5.2

6.4

6.9

5.9

5.6

5.1

4.3

Home furnishings

1.0

1.1

1.3

1.3

2.4

2.6

3.1

Home improvement

1.6

1.7

2.0

2.2

2.1

2.4

3.4

Jewelry

0.1

--

--

--

--

--

--

Motor vehicle dealerships

1.7

2.2

2.6

2.7

3.2

3.1

3.4

Office supplies

0.5

0.9

0.9

1.0

1.0

1.1

1.3

Pet supplies and services

0.9

0.7

0.9

0.9

0.8

0.9

1.1

Restaurants - casual dining

5.6

10.9

13.4

13.7

14.3

14.9

7.0

Restaurants - quick service

4.6

6.6

7.7

8.3

8.2

6.6

4.9

Shoe stores

0.9

0.2

0.1

--

--

--

--

Sporting goods

1.7

2.7

2.7

2.6

2.3

2.6

2.9

Theaters

6.4

8.8

8.9

9.2

9.0

9.0

9.6

Transportation services

0.1

0.2

0.2

0.2

0.2

0.2

0.3

Video rental

0.0

0.0

0.2

1.0

1.1

1.7

2.1

Wholesale clubs

3.4

0.7

--

--

--

--

--

Other

0.1

0.1

0.1

0.1

0.1

0.1

0.2

Retail Industries

78.7

%

88.6

%

95.4

%

98.3

%

98.2

%

97.8

%

97.5

%

Industry Diversification (continued)

Percentage of Rental Revenue(1)

For the Years Ended

Percentage of Annualized

Rental

Revenue at 12/31/2012

Dec 31,
2011

Dec 31,
2010

Dec 31,
2009

Dec 31,
2008

Dec 31,
2007

Dec 31,
2006

Other Industries

Aerospace

0.9

0.5

--

--

--

--

--

Beverages

3.5

5.6

3.0

--

--

--

--

Consumer appliances

0.7

--

--

--

--

--

--

Consumer goods

1.1

--

--

--

--

--

--

Diversified industrial

0.1

--

--

--

--

--

--

Equipment services

0.3

0.2

--

--

--

--

--

Financial services

0.3

0.3

--

--

--

--

--

Food processing

1.5

0.7

--

--

--

--

--

Government services

1.5

--

--

--

--

--

--

Health care

2.0

--

--

--

--

--

--

Home furnishings