Realty Income Corporation Receives 'BBB+' Credit Rating from Fitch Ratings

Realty Income Corporation has received a 'BBB+' credit rating from Fitch Ratings for its $250 million senior unsecured notes issued at 99.404% of par to yield 5.826%. The company plans to use the proceeds from the offering, along with borrowings under its revolving credit facility, to acquire 13 winery and vineyard properties in Napa, California, valued at $269 million. The properties are subject to 20-year triple-net lease agreements with Diageo Chateau & Estate Wines and are guaranteed by Diageo Plc, which has a 'A-' rating with a Stable Rating Outlook. The transaction will provide capital efficiencies to Diageo and further diversify Realty Income's tenant industry composition.

Key Takeaways:

• Realty Income Corporation has a portfolio of 2,344 properties, located in 49 states, containing over 19.2 million leasable square feet, as of March 31, 2010.
• The company's IDR (Issuer Default Rating) is 'BBB+' and the Rating Outlook is Stable, reflecting the cash flows generated by the retail property portfolio in excess of Realty Income's fixed charges, the company's modest leverage, strong liquidity position, and unencumbered portfolio.
• Realty Income will use the proceeds from the offering to acquire 13 winery and vineyard properties in Napa, California, valued at $269 million, subject to 20-year triple-net lease agreements with Diageo Chateau & Estate Wines.
• Diageo will become Realty Income's second-largest tenant at 5.7% of revenue, providing capital efficiencies and further diversifying Realty Income's tenant industry composition.
• Realty Income's fixed charge coverage ratio was 2.7 times (x) for the trailing 12 months ended March 31, 2010, compared to 2.5x and 2.7x during 2008 and 2009, respectively.
• The company's leverage ratio, defined as net debt to recurring operating EBITDA, was 4.6x as of March 31, 2010, compared to 4.4x and 4.5x as of Dec. 31, 2008 and Dec. 31, 2009, respectively.
• Unencumbered asset coverage of unsecured debt was 253% as of March 31, 2010, compared to 256% and 259%, as of Dec. 31, 2008 and Dec. 31, 2009, respectively.
• Realty Income's liquidity profile is reflected in the company's sources of liquidity (cash, availability under the unsecured revolving credit facility pro forma for the acquisition, projected retained cash flows from operating activities after dividend payments) divided by uses of liquidity (debt maturities and projected capitalized leasing costs and commissions and capitalized building improvements), resulting in a liquidity coverage ratio of 65.0x.

Statistics:

• Realty Income's total market capitalization was $4.9 billion as of March 31, 2010.
• The company owned 2,344 properties, located in 49 states, containing over 19.2 million leasable square feet, as of March 31, 2010.
• Realty Income's leverage ratio was 4.6x as of March 31, 2010.
• The company's fixed charge coverage ratio was 2.7x for the trailing 12 months ended March 31, 2010.
• Realty Income's unencumbered asset coverage of unsecured debt was 253% as of March 31, 2010.
• The company's liquidity coverage ratio was 65.0x as of March 31, 2010.

Sources:

• Fitch Ratings, Criteria for Rating U.S. Equity REITs and REOCs, April 16, 2010
• Fitch Ratings, Equity Credit for Hybrids & Other Capital Securities - Amended, Dec. 29, 2009
• Fitch Ratings, Rating Hybrid Securities, Dec. 29, 2009
• Fitch Ratings, Recovery Rating and Notching Criteria for REITs, Dec. 23, 2009
• Fitch Ratings, Corporate Rating Methodology, Nov. 24, 2009
• Realty Income Corporation's website at www.realtyincome.com

Note: All relevant Fitch criteria are available on the Fitch website at 'www.fitchratings.com'.