Shares of Realty Income (NYSE:O) raised the lower end of its 2023 earnings guidance, after both Q3 earnings and revenue beat Wall Street consensus estimates. The company also raised its acquisition guidance for the year, given the volume it has achieved so far in 2023.
The net-lease REIT raised the low end of its 2023 normalised FFO per share guidance range by a penny to $4.08-$4.15, compared with its previous outlook of $4.07-$4.15 and the consensus of $4.11. Guidance for same-store rental growth of over 1.5% increased from the previous outlook of over 1.25%. Its acquisition volume guidance increased to ~$9 billion from over $7.0 billion previously. Its occupancy outlook was unchanged at over 98%.
“During the quarter, we invested $2.0 billion in high quality properties at a cash cap rate of 6.9%, delivered attractive same-store rental growth of 2.2%, and achieved a 106.9% rent recapture rate on re-leased properties,” said President and CEO Sumit Roy.
Q3 normalised FFO per share of $1.04 exceeded the average analyst estimate of $1.02, up from $1.02 in Q2 and $0.97 in the year-ago quarter.
Revenue of $1.04 billion, versus the consensus of $955.8 million, was up from $1.02 billion in Q2 and $837 million in the year-ago quarter.
Same store rental revenue was $716.0m compared to $718.8m in the previous quarter and $700.9m a year ago.
Total expenses of $805.9m increased from $817.8m in Q2 and $628.6m in Q3 2022.
Portfolio occupancy of 98.8% at 30 September 2023 compared with 99.0% at 30 June 2023.
Immediately after the end of Q3, Realty Income (O) entered into a restructuring agreement with Cineworld for the 35 properties owned by Realty Income. Under the terms of the agreement, Cineworld is committed to long-term leases on 28 of these properties with a weighted average lease term of ~10 years and remains on short-term leases of one year or less on seven of the properties. Of the 28 properties with long-term leases, the base rent recovery rate is 75%, which does not include the percentage rent that has been added to all properties, and there have been no tenant improvements or additional capital commitments.
Conference call on 7 November at 2.30 pm ET.
