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Realty Income Retail Investor Presentation 1Q2017

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Realty Income Retail Investor Presentation 1Q2017 1Q 2017 RETAIL INVESTOR PRESENTATION Contents Company Overview & Historical Risk/Reward 2 Dependable Dividends 6 Portfolio Diversification 10 Asset and Portfolio Management 16 Investment Strategy 19 Capital Structure & Scalability 23 2017 Guidance & Business Plan 27 Statements in this investor presentation that are not strictly historical are "forward-looking" statements. Forward-looking statements involve known and unknown risks, which may cause the company‘s actual future results to differ materially from expected results. These risks include, among others, general economic conditions, local real estate conditions, tenant financial health, the availability of capital to finance planned growth, continued volatility and uncertainty in the credit markets and broader financial markets, property acquisitions and the timing of these acquisitions, charges for property impairments, and the outcome of any legal proceedings to which the company is a party, as described in the company's filings with the Securities and Exchange Commission. Consequently, forward-looking statements should be regarded solely as reflections of the company's current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this investor presentation. The company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made. All data as of March 31, 2017 unless otherwise specified 1 Company Overview: The Monthly Dividend Company® Leading real estate company: . Largest net lease REIT with 4,980 properties and $22.14 billion enterprise value . Founded in 1969; NYSE listing in 1994 (NYSE ticker “O”) . Member of S&P 500 index . Member of S&P High-Yield Dividend Aristocrats® index (1) Consistent track record: . 16.9% compound average annual shareholder return since NYSE listing in 1994 . 4.2% dividend yield, paid monthly . 4.7% compound average annual growth in dividend since NYSE listing . 78 consecutive quarters of dividend increases (1) The S&P High Yield Dividend Aristocrats® index is designed to measure the performance of companies within the S&P Composite 1500® that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 years. 2 Our Approach as “The Monthly Dividend Company®” Generate lease revenue to support the payment of growing monthly dividends Execute long-term net lease agreements Remain disciplined Actively manage the in our acquisition portfolio to maintain underwriting high occupancy Target well-located, Support and Freestanding, Maintain a grow monthly single-tenant, conservative dividends for commercial balance sheet shareholders properties 3 Differentiated Business Model from “Traditional” Retail REITs Lease structure and growth drivers support predictable revenue stream relative to other forms of retail real estate Shopping Realty Income leases freestanding properties on a “triple-net” Centers and basis (tenant pays for taxes, insurance and maintenance) Malls Initial Length of Lease 15+ Years < 10 Years Remaining Avg Term ~ 10 Years ~ 5-7 Years Responsibility for Property Expenses Tenant Landlord Gross Margin > 98% ~ 75% Volatility of Rental Revenue Low Modest / High Maintenance Capital Expenditures Low Modest / High Reliance on Anchor Tenant(s) None High Average Retail Property Size / Fungibility 11k sf / High 150k–850k sf / Low Shopping Realty Income growth opportunities through acquisitions Centers and Malls Target Markets Many Few External Acquisition Opportunities High Low Institutional Buyer Competition Modest High 4 Safety: Lowest Volatility, Highest Return Relative to Market Indices Long-term performance exceeds widely followed benchmark indices Annualized Total Return Since '94 Since 1994 NYSE listing, Realty Income shares have Standard Deviation of Total Returns Since '94 outperformed benchmark indices while exhibiting lower volatility O Equity REIT Index DJIA S&P 500 Nasdaq Standard deviation of total returns measures deviation from average annual total returns since 1994 and uses annualized total returns for YTD period 5 DEPENDABLE DIVIDENDS 6 Dividends MattertoDividends Long In a low Oct-94 Oct-94 Income Realty Apr-95 Apr-95 Oct-95 S&P 500 500 S&P Oct-95 - Apr-96 growth, low Apr-96 Total Return % Return Total Oct-96 % Return Total Oct-96 Apr-97 Apr-97 Oct-97 Oct-97 Apr-98 Apr-98 Oct-98 Dividends Without and With Returns: Index Oct-98 - (Oct 18, 1994(Oct Apr-99 18, 1994(Oct yield yield environment, consistent dividend growth generates significant value for investors Apr-99 Dividends Without and With Returns: Index Oct-99 Oct-99 Apr-00 Source: SNL Source: (1) Apr-00 Oct-00 October 18, October1994 Listing NYSE = Realty Income Oct-00 Apr-01 Apr-01 Price Change % Change Price Oct-01 % Change Price Oct-01 Apr-02 Apr-02 (1) (1) Oct-02 Oct-02 – – March 31,2017) March March 31,2017) March Apr-03 Apr-03 Oct-03 Oct-03 Apr-04 Apr-04 Oct-04 Oct-04 Apr-05 Apr-05 Oct-05 Oct-05 Apr-06 Apr-06 Oct-06 Oct-06 - Apr-07 Apr-07 InvestorReturns Term Oct-07 Oct-07 Apr-08 Apr-08 Oct-08 Oct-08 Apr-09 Apr-09 Oct-09 Oct-09 Apr-10 Apr-10 Oct-10 Oct-10 Apr-11 Apr-11 Oct-11 Oct-11 Apr-12 Apr-12 Oct-12 Oct-12 Apr-13 Apr-13 Oct-13 Oct-13 Apr-14 Apr-14 Oct-14 Oct-14 Apr-15 Apr-15 Oct-15 Oct-15 Apr-16 679% Apr-16 Oct-16 Oct-16 3181% Apr-17 405% Apr-17 644% attributed attributed to dividends 1Q17were throughlisting returns from NYSE 1994 80% attributed to dividends through 1Q17were returns from 1994 40% of Realty of Realty Income of S&P Index 500 7 Consistent Dividends That Grow Over Time Steady dividend track record supported by inherently stable business model, disciplined execution Strong Dividend Track Record 78 consecutive quarterly increases 91 total increases since 1994 NYSE listing $2.532 ~83.5% Annualized AFFO payout (midpoint of 2017 guidance) $2.43 4.7% compound average annualized growth rate since NYSE listing $2.29 $2.19 $2.20 0 dividend cuts since 1994 NYSE listing ® $1.82 One of only five REITs included in S&P High Yield Dividend Aristocrats index $1.75 $1.70 $1.72 $1.73 $1.64 $1.52 $1.40 $1.32 $1.20 $1.14 $1.17 $1.08 $1.11 $1.02 $0.90 $0.93 $0.945 $0.96 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD As of April 2017 dividend declaration Annualized dividend amount reflects the December declared dividend per share annualized, with the exception of 2017, which reflects the April 2017 declared dividend annualized 8 The “Magic” of Rising Dividends: Yield on Cost, Dividend Payback Long-term, yield-oriented investors have been rewarded with consistent income 31.7% Yield on Cost 29.6% Reflects yield on cost as of 3/31/2017 assuming shareholder bought shares 24.6% 22.5% at end of each corresponding year 21.2% 19.9% 20.4% 20.4% 17.2% 14.5% 12.7% 11.7% 10.9% 10.0% 9.1% 9.4% 9.8% 7.4% 7.2% 6.3% 6.8% 5.3% 4.9% 4.4% 420% 389% Dividend Payback Reflects percentage of original investment made at each corresponding 288% year-end period paid back through dividends (as of 3/31/2017) 262% 275% 239% 236% 219% 178% 143% 119% 89% 98% 71% 67% 72% 57% 38% 33% 24% 20% 11% 6% 1% 9 PORTFOLIO DIVERSIFICATION 10 Portfolio Diversification: Tenant Diverse tenant roster, investment grade concentration reduces overall portfolio risk 6.8% Top 20 Tenants represent: 5.4% 4.1% 3.8% 53% 3.7% of annualized rental 2.6% revenue 2.6% 2.3% 2.3% 2.2% 11 1.9% Investment different industries 1.9% grade rated (1) 1.9% 1.9% (1) Investment grade tenants are defined as tenants with a credit rating of Baa3/BBB- or 1.8% higher from one of the three major rating agencies (Moody’s/S&P/Fitch). 45% of our annualized rental revenue is generated Nine 1.8% from properties leased to investment grade tenants, including approximately 8% from Investment grade rated 1.8% properties leased to subsidiaries of investment grade companies. tenants 1.6% 1.2% 1.2% 11 Top Tenant Exposure: 2009 vs. Today Top 15 tenants represent higher quality credit, less cyclical industries and greater diversification vs. 2009 Top 15 Tenants as of YE 2009 Top 15 Tenants as of 1Q 2017 Tenant Industry % of Rent Tenant Industry % of Rent Hometown Buffet Casual Dining 6.0% Walgreens Drug Stores 6.8% Kerasotes Showplace Theatres Theatres 5.3% FedEx Transportation 5.4% L.A. Fitness Health & Fitness 5.3% Dollar General Dollar Stores 4.1% The Pantry Convenience Stores 4.3% L.A. Fitness Health & Fitness 3.8% Friendly’s Casual Dining 4.1% Dollar Tree / Family Dollar Dollar Stores 3.7% Rite Aid Drug Stores 3.4% AMC Theatres Theatres 2.6% La Petite Academy Child Care 3.3% Circle K / The Pantry Convenience Stores 2.6% TBC Corporation Auto Tire Services 3.2% Walmart / Sam’s Club Grocery / Wholesale 2.3% Boston Market QSR 3.1% BJ’s Wholesale Club Wholesale Clubs 2.3% Couche-Tard / Circle K Convenience Stores 3.0% Treasury Wine Estates Beverages 2.2% NPC / Pizza Hut QSR 2.6% Super America / Western Refining Convenience Stores 1.9% FreedomRoads / Camping World Sporting Goods 2.6% CVS Pharmacy Drug Stores 1.9% KinderCare Child Care 2.5% GPM Investments / Fas Mart Convenience Stores 1.9% Regal Cinemas Theatres 2.3% Regal Cinemas Theatres 1.9% Sports Authority Sporting Goods 2.0% Rite Aid Drug Stores 1.8% Total % of Rent - Top 15 Tenants 53.0% Total % of Rent - Top 15 Tenants 45.2% Investment Grade % - Top 15 Tenants 3.2% Investment Grade % - Top 15 Tenants 23.1% #1 Industry – Restaurants 21.3% #1 Industry – Drug Stores 11.1% #2 Industry
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