Realty Income Posts Upbeat Q3 Results; Ups Guidance


Realty Income Corporation (O) has reported better-than-expected earnings and revenues for the third quarter of 2021. The real estate investment trust company engages in generating dependable monthly cash dividends from a consistent and predictable level of cash flow from operations.

Adjusted funds from operations (AFFO) of $0.91 per share increased 12.3% from the year-ago quarter and surpassed the Street’s expectations of $0.81 per share.

Revenue in the third quarter climbed 21.6% year-over-year to $491.9 million. Also, it surpassed the analyst’s expectations of $471.6 million. The upside can be attributed to a 21% rise in rental income and more than double other income. (See Realty Income stock charts on TipRanks)

During the third quarter, the company invested $1.61 billion in 308 properties and properties under development or expansion, including $532.5 million in Europe.

The President and CEO of Realty Income, Sumit Roy, said, “Our position as a global consolidator continues to build as we invested a record $3.78 billion year to date across three countries, including our debut transaction in Continental Europe. In addition, we are proud to announce today’s closing of our merger with VEREIT, further establishing ourselves as a leading net lease REIT and we look forward to integrating the capabilities of many talented colleagues into our ‘One Team’.”

Realty Income has raised its guidance for 2021 AFFO to $3.55 to $3.60, representing 5.5% annual growth based on the midpoint. The previous guidance stood at $3.53 to $3.59. Also, it introduced 2022 AFFO per share target of $3.84 to $3.97, representing 9.2% annual growth based on the midpoint. Same store rent is expected to grow at 1.5% to 2%, down from 2%.

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Last month, UBS analyst Brent Dilts maintained a Buy rating on Realty Income and raised the price target to $80 (12.9% upside potential) from $79.

The rest of the Street is cautiously optimistic about the stock and has a Moderate Buy consensus rating based on 4 Buys and 2 Holds. The average Realty Income price target of $77.20 implies 9% upside potential from current levels.

Furthermore, Realty Income scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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