Realty Income's Q4 AFFO Report and Future Outlook

Realty Income Corporation (ticker: O) experienced a decline in its stock price on Tuesday following its recent earnings report released on Monday. The company announced a year-over-year growth of 4.0% in its fourth-quarter adjusted funds from operations (AFFO), reaching $1.05 per share. However, this figure fell short of the market expectations, which anticipated earnings of $1.07 per share.

During the reported quarter, Realty Income disclosed that its new annualized contractual rent from re-leases amounted to $52.5 million, an increase from the previous annual rent of $48.9 million. This indicates a healthy rent recapture rate of 107.4% for the re-leased properties.

As of December 31, 2024, Realty Income’s portfolio comprised 15,621 properties leased to 1,565 clients across 89 different industries. The company's occupancy rate stood impressively at 98.7%, maintaining this level from September 30, 2024, and a slight decline from 98.6% reported on December 31, 2023. There were also 205 properties available for lease or sale, reflecting the firm’s strategic management of its portfolio.

In February 2025, the Board of Directors approved an extensive share repurchase program that allows for the buying back of up to $2.0 billion of the company’s shares. This decision aims to enhance shareholder value amid ongoing market dynamics.

Moreover, Realty Income announced a 1.5% increase in its monthly dividend, which will rise to $0.268. This dividend is scheduled to be payable on March 14, 2025, to shareholders who are on record as of March 3, 2025.

Additionally, in the fourth quarter, the company raised $947.8 million through the sale of common stock, primarily utilizing its At-The-Market (ATM) program, which had a weighted average price of $58.12.

Realty Income’s liquidity position is strong, with total liquidity of $3.7 billion as of the end of 2024. This includes $445.0 million in cash, $91.8 million in unsettled ATM forward equity transactions, and $67.3 million in borrowings made under commercial paper programs.

President and CEO Sumit Roy remarked on the company's disciplined capital deployment strategy throughout the year, emphasizing a successful fourth quarter marked by high-quality investment activities that were prefunded at attractive investment spreads. He highlighted the advantages of Realty Income's business model, which include access to capital, the ability to seek exclusive acquisition opportunities on a global scale, and proficiency in employing predictive analytics for portfolio management.

Future Outlook: For the fiscal year 2025, Realty Income has projected net income per share to be between $1.52 and $1.58, alongside an expected same-store rent growth of approximately 1%. Importantly, the company anticipates adjusted AFFO per share to fall within the range of $4.22 to $4.28, which is below the consensus estimate of $4.38.

Investors looking to gain exposure to Realty Income can consider investing through the Janus Henderson U.S. Real Estate ETF (JRE) and the Columbia ETF Trust I Columbia Research Enhanced Real Estate ETF (CRED).

Price Action: Following the earnings announcement, shares of Realty Income slipped 3.25% to $55.45.

Next Steps:

• Investors should consider the increasing volatility and explore must-have stocks to navigate market changes.

Realty, Income, Earnings