<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1998
Commission File Number 1-13318
REALTY INCOME CORPORATION
-------------------------
(Exact name of registrant as specified in its charter)
Maryland 33-0580106
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
220 West Crest Street, Escondido, California 92025
---------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (760)741-2111
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Securities registered pursuant to Section 12 (b) of the Act:
Name of Each Exchange
Title of Each Class On Which Registered
----------------------------------- -----------------------
Common Stock, $1.00 Par Value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
8.25% Monthly Income Senior Notes,
due 2008 New York Stock Exchange
----------------------------------- -----------------------
Securities registered pursuant to Section 12 (g) of the Act: None
----
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ X ]
<PAGE>
At March 10, 1999 the aggregate market value of the Registrant's shares of
common stock, $1.00 par value, held by non-affiliates of the Registrant was
$561,716,000, at the New York Stock Exchange closing price of $21.75.
There were 26,822,326 shares of common stock outstanding at March 10, 1999.
Documents incorporated by reference: Part III, Item 10, 11 and 12
incorporate by reference certain specific portions of the definitive proxy
statement for Realty Income Corporation's Annual Meeting to be held on
May 5, 1999, to be filed pursuant to Regulation 14A. Only those portions
of the proxy statement which are specifically incorporated by reference
herein shall constitute a part of this Annual Report.
FORWARD-LOOKING STATEMENTS
- --------------------------
This annual report on Form 10-K (the "Annual Report"), including documents
incorporated herein by reference, contain forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. When used in this Annual Report, the words estimated,
anticipated and similar expressions are intended to identify forward-
looking statements. Such forward-looking statements are subject to risks,
uncertainties, and assumptions about Realty Income Corporation, including,
among other things:
- Our anticipated growth strategies;
- Our intention to acquire additional properties;
- Anticipated trends in our business, including trends in the market
for long-term net leases of freestanding, single tenant retail
properties;
- Future expenditures for development projects; and
- Availability of capital to finance our business.
Future events and actual results, financial and otherwise, may differ
materially from the results discussed in the forward-looking statements.
In particular, among the factors that could cause actual results to differ
materially are the continued qualification as a real estate investment
trust, general business and economic conditions, competition, interest
rates, accessibility of debt and equity capital markets and other risks
inherent in the real estate business including tenant defaults, potential
liability relating to environmental matters and illiquidity of real estate
investments.
Additional factors that may cause risks and uncertainties include those
discussed in the sections entitled "Business" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in this
Annual Report.
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Readers are cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date hereof. The Company undertakes
no obligation to publicly release the results of any revisions to these
forward-looking statements which may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. In light of these risks and uncertainties, the
forward-looking events discussed in this Annual Report might not occur.
<TABLE> REALTY INCOME CORPORATION
Index To Form 10-K
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Page
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<S> <C>
PART I
Item 1: Business......................................... 4
Item 2: Properties....................................... 25
Item 3: Legal Proceedings................................ 26
Item 4: Submission of Matters to a
Vote of Security Holders......................... 26
PART II
Item 5: Market for the Registrant's Common
Equity and Related Stockholder Matters........... 27
Item 6: Selected Financial Data.......................... 28
Item 7: Management's Discussion and Analysis
of Financial Condition and Results of
Operations....................................... 29
Item 7A: Quantitative and Qualitative Disclosures about
Market Risk...................................... 40
Item 8: Financial Statements and Supplementary Data...... 41
Item 9: Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure...........153
PART III
Item 10: Directors and Executive Officers
of the Registrant................................153
Item 11: Executive Compensation...........................153
Item 12: Security Ownership of Certain
Beneficial Owners and Management.................154
Item 13: Certain Relationships and Related
Transactions.....................................154
PART IV
Item 14: Exhibits, Financial Statement Schedules
and Reports on Form 8-K..........................154
SIGNATURES....................................................158
EXHIBIT INDEX.................................................160
</TABLE>
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PART I
======
ITEM 1: BUSINESS
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THE COMPANY
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Realty Income Corporation, a Maryland corporation ("Realty Income", the
"Company", "our" or "we") was organized to operate as an equity real estate
investment trust ("REIT"). We are a fully integrated, self-administered
real estate company with in-house acquisition, leasing, legal, retail and
real estate research, portfolio management and capital markets expertise.
As of December 31, 1998, we owned a diversified portfolio of 970 retail
properties located in 45 states with over 7.8 million square feet of
leasable space. Of the 970 properties in the portfolio, 963 are single-
tenant retail properties with the remainder being multi-tenant properties.
As of December 31, 1998, 958, or 99.5%, of the 963 single-tenant properties
were leased with an average remaining lease term (excluding extension
options) of approximately 8.6 years.
Our primary business objective is to generate dependable monthly dividends
from a consistent and predictable level of funds from operations ("FFO")
per share. Additionally, we generally will seek to increase distributions
to stockholders and FFO per share through both active portfolio management
and the acquisition of additional properties. We also seek to lower the
ratio of distributions to stockholders as a percentage of FFO in order to
allow internal cash flow to be used to fund additional acquisitions and for
other corporate purposes while paying dividends that are sufficient to
maintain our status as a REIT for federal income tax purposes.
Our portfolio management focus includes:
- Contractual rent increases on existing leases;
- Rental increases at the termination of existing leases when market
conditions permit; and
- The active management of the Company's property portfolio,
including selective sales of properties.
Our acquisition of additional properties adheres to a focused strategy of
acquiring primarily:
- Freestanding, single-tenant, retail properties;
- Properties leased to regional and national retail chains; and
- Properties under long-term, net lease agreements with initial
contractual base rent which, at the time of acquisition and as a
percentage of acquisition costs, is in excess of the Company's
estimated cost of capital.
We typically acquire, then lease back, retail store locations from chain
store operators, providing capital to the operators for continued expansion
and other corporate purposes. Our acquisitions and investment activities
are concentrated in well-defined target markets and focus generally on
middle-market retailers providing goods and services that satisfy basic
consumer needs.
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Our net lease agreements usually:
- Are for initial terms of 10 to 20 years;
- Require the tenant to pay a minimum monthly rent and property
operating expenses (taxes, insurance and maintenance); and
- Provide for future rent increases (typically subject to ceilings)
based on increases in the consumer price index, additional rent
calculated as a percentage of the tenant's gross sales above a
specified level or fixed increases.
Realty Income was formed on September 9, 1993 in the State of Delaware and
reincorporated in Maryland in May 1997. Realty Income commenced operations
as a REIT on August 15, 1994 through the merger of 25 public and private
real estate limited partnerships with and into the Company. Each of the
partnerships was formed between 1970 and 1989 for the purpose of acquiring
and managing long-term, net leased properties.
The five senior officers of the Company, who have each managed our
properties and operations for between eight and 13 years, owned 0.9% of the
Company's outstanding common stock with a market value of $5.4 million as
of March 2, 1999. The directors and five senior officers of the Company,
as a group, owned 2.9% of the Company's outstanding common stock with a
market value of $17.6 million as of March 2, 1999.
Realty Income's common stock is listed on the New York Stock Exchange
("NYSE") under the ticker symbol "O", our central index key ("CIK") number
is 726728 and cusip number is 756109-104.
In October 1998, we issued 8.25% Monthly Income Senior Notes due 2008,
which began trading on the NYSE on November 3, 1998 under the ticker symbol
"OUI". The cusip number of these notes is 756109-AA2.
Realty Income has 50 employees as of March 1, 1999.
RECENT DEVELOPMENTS
===================
ACQUISITION OF 149 PROPERTIES DURING 1998. During 1998, we continued
implementing our growth plan, which is intended to increase our funds from
operations per share. As part of our plan, we acquired 149 additional
properties (the "New Properties"), and selectively sold five properties,
increasing the number of properties in the portfolio by 17.4% to 970
properties at December 31, 1998 from 826 properties at December 31, 1997.
During 1998, we invested $193.4 million in New Properties and properties
under development (excluding estimated unfunded development costs on
properties under construction at December 31, 1998 of $19.7 million). The
weighted average annual unleveraged return on the $193.4 million invested
in 1998 is estimated to be 10.4%, computed as estimated contractual net
operating income (which in the case of a net leased property is equal to
the base rent or, in the case of properties under construction, the
estimated base rent under the lease) for the first year of each lease,
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divided by the estimated total costs of each property. Since it is
possible that a tenant could default on the payment of contractual rent, no
assurance can be given that the actual return on the funds invested will
not differ from the foregoing percentage.
The New Properties are located in 38 states, will contain approximately 1.6
million leasable square feet and are 100% leased under net leases, with an
average initial lease term of 14.9 years. Of the New Properties, 133 were
occupied as of March 1, 1999 and the remaining properties were pre-leased
and under construction pursuant to contracts under which the tenants have
agreed to develop the properties (with development costs funded by the
Company) and to begin paying rent when the premises open for business.
INCREASE IN MONTHLY DISTRIBUTION. In April, July and October 1998, and
January 1999, the monthly distributions were increased $0.0025 to $0.1625,
$0.165, $0.1675 and $0.17 per share, respectively. Realty Income continues
its policy of paying distributions monthly. During 1998, the Company paid
three distributions of $0.16 per share, three distributions of $0.1625 per
share, three distributions of $0.165 per share, and three distributions of
$0.1675 per share. Distributions for 1998 totaled $1.965 per share. In
December 1998, January 1999 and February 1999, the Company declared
distributions of $0.17 per share, which were paid on January 18, 1999,
February 16, 1999 and March 15, 1999, respectively. The monthly
distribution of $0.17 per share represents a current annualized
distribution of $2.04 per share, and an annualized distribution yield of
approximately 9.0% based on the last reported sale price of the Company's
Common Stock on the NYSE of $22.5625 on March 2, 1999. Although we expect
to continue our policy of paying monthly distributions, there can be no
assurance that the current level of distributions will be maintained by the
Company or as to the actual distribution yield for any future period.
UNSECURED REVOLVING CREDIT FACILITY. In November 1998, we amended our
revolving credit facility agreement (the "Credit Facility") to:
- Increase the amount available for borrowing from $150 million to
$170 million; and
- Extended the maturity date as to $118 million of credit availability
from December 2000 to December 2001.
The increase in the amount available for borrowing under the revolving
Credit Facility should enable us to continue to implement our growth
strategy of acquiring additional properties and funding expenditures for
development projects. As of March 2, 1999, we had $90.9 million available
for borrowing under the Credit Facility. At that time, the outstanding
balance was $79.1 million with an effective interest rate of 6.0%.
COMMON STOCK OFFERINGS. In March 1998, we issued 372,093 shares of common
stock to a unit investment trust at a net price to the Company of $25.531
per share, based on a 5% discount to the then market price of $26.875 per
share. The net proceeds of $9.5 million were used to repay borrowings of
$7.9 million under the Credit Facility and to acquire additional
properties.
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In February 1998, we issued 751,174 shares of common stock to a unit
investment trust at a net price to the Company of $25.295 per share, based
on a 5% discount to the then market price of $26.625. The net proceeds of
$18.9 million were used to repay borrowings under the Credit Facility.
NOTES OFFERING. In January 1999, we issued $20 million of 8.00% unsecured
senior notes due 2009 (the "1999 Notes"). The 1999 Notes were sold at
98.757% of par to yield 8.10%. The proceeds from the offering were used to
pay down bank borrowings and for other corporate purposes. Currently,
there is no formal trading market for the 1999 Notes and we have not listed
and do not intend to list the 1999 Notes on any securities exchange.
In October 1998, we issued $100 million of 8.25% Monthly Income Senior
Notes due 2008 (the "1998 Notes"). The 1998 Notes are unsecured and were
sold at par ($25.00). After taking into effect the results of an U.S.
Treasury interest rate lock agreement, the effective rate to us is 9.12%.
The proceeds from the offering were used to pay down $96.0 million of our
bank borrowings and will allow us to continue our strategic property
acquisition activities. Interest on the 1998 Notes is payable monthly on
the 15th of each month.
BUSINESS PHILOSOPHY AND STRATEGY
================================
INVESTMENT PHILOSOPHY. We believe that the long-term ownership of an
actively managed, diversified portfolio of retail properties under long-
term, net lease agreements produces consistent, predictable income. Under
a net lease agreement, the tenant agrees to pay a minimum monthly rent and
property operating expenses (taxes, maintenance, and insurance) plus,
typically, future rent increases (generally subject to ceilings) based on
increases in the consumer price index, fixed increases or additional rent
calculated as a percentage of the tenant's gross sales above a specified
level. We believe that long-term leases, coupled with the tenant's
responsibility for property expenses, generally produce a more predictable
income stream than many other types of real estate portfolios, while
continuing to offer the potential for growth in rental income.
INVESTMENT STRATEGY. In identifying new properties for acquisition, we
focus on providing expansion capital to retail chains by acquiring, then
leasing back, their retail store locations. We classify retail tenants
into three categories: venture, middle market, and upper market. Venture
companies are those which typically offer a new retail concept in one
geographic region of the country and operate between five and 50 retail
outlets. Middle market retail chains are those which typically have 50 to
500 retail outlets, operations in more than one geographic region, have
been successful through one or more economic cycles, and have a proven,
replicable concept. The upper market retail chains typically consist of
companies with 500 or more stores, operating nationally in a proven mature
retail concept. Upper market retail chains generally have strong operating
histories and access to several sources of capital.
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Realty Income primarily focuses on acquiring properties leased to middle
market retail chains which we believe are attractive for investment
because:
- They generally have overcome many of the operational and managerial
obstacles that tend to adversely affect venture retailers;
- They typically require capital to fund expansion but have more
limited financing options;
- They generally have provided us with attractive risk-
adjusted returns over time since their financial strength has in
many cases tended to improve as their businesses have matured;
- Their relatively large size allows them to spread corporate expenses
across a greater number of stores; and
- Middle market retailers typically have the critical mass to survive
if a number of locations have to be closed due to underperformance.
In 1998, we expanded our investment focus to include upper market retail
chains and have made some acquisitions on a selective basis. We believe
upper market retail chains can be attractive for investment because:
- They typically are of a higher credit quality;
- They are usually larger brand name, public and private retailers;
- They utilize a larger building ranging in size from 10,000 to 50,000
square feet; and
- Their ability to grow because of access to capital facilitates
larger transaction sizes.
While our investment strategy focuses primarily on acquiring properties
leased to middle and upper market retail chains, we also selectively seek
incremental investment opportunities with venture market retail chains.
Periodically, venture market opportunities arise where we feel that the
real estate used by the tenant is of high quality and can be purchased at
prices that are favorable in the marketplace. To meet our stringent
investment standards, however, venture retail companies must have a well-
defined retailing concept and strong financial prospects. These
opportunities are examined on a case by case basis and we are highly
selective in making investments in this area.
CREDIT STRATEGY. Realty Income principally provides sale leaseback
financing primarily to less than investment grade retail chains. Since
1970 and through December 31, 1998, Realty Income has acquired and leased
back to regional and national retail chains 944 properties (including
34 properties that have been sold) and has collected in excess of 98% of
the original contractual rent obligations on those properties. We believe
that within this market we can achieve an attractive risk adjusted return
on the financing that we provide to retailers.
We believe that the primary financial obligations of most retailers
typically include their bank and other debt, payment obligations to
suppliers and real estate lease obligations. Because we own the land and
buildings on which the tenant conducts its retail business, we believe that
the risk of default on the retailers' lease obligations is less than the
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retailers' unsecured general obligations. It has been our experience that
since retailers must retain their profitable retail locations in order to
survive in the event of reorganization they are less likely to reject a
lease for a profitable location, which would terminate their right to use
the property. Thus, as the property owner, we believe we will fare better
than unsecured creditors of the same retailer in the event of
reorganization. In addition, Realty Income believes that the risk of
default on the real estate leases can be further mitigated by monitoring
the performance of the retailers' individual unit locations and selling
those units that are weaker performers.
In order to qualify for inclusion in our portfolio, new property
acquisitions must meet stringent investment and credit requirements. The
properties must generate attractive current yields, and the tenant must
meet our credit standards. We have established a three-part analysis that
examines each potential investment based on:
- Industry, company, market conditions and credit profile;
- Location profitability, if profitability data is available; and
- Overall real estate characteristics, value, and comparative rental
rates.
Companies that have been approved for acquisitions are generally those with
fifty or more retail stores which are located in highly visible areas, with
easy access to major thoroughfares and attractive demographics.
ACQUISITION STRATEGY. We seek to invest in industries in which several,
well-organized, regional and national chains are capturing market share
through service, quality control, economies of scale, mass media
advertising, and selection of prime retail locations. We execute our
acquisition strategy by acting as a source of capital to regional and
national retail chain stores in a variety of industries by acquiring, then
leasing back, their retail store locations. We undertake thorough research
and analysis to identify appropriate industries, tenants, and property
locations for investment. In selecting real estate for potential
investment, we generally seek to acquire properties that have the following
characteristics:
- Freestanding, commercially zoned property with a single tenant;
- Properties that are important retail locations for regional and
national retail chains;
- Properties that are located within attractive demographic areas
relative to the business of their tenants, with high visibility and
easy access to major thoroughfares; and
- Properties that can be purchased with the simultaneous execution or
assumption of long-term, net lease agreements, providing the
opportunity for both current income and future rent increases.
PORTFOLIO MANAGEMENT STRATEGY. The active management of the property
portfolio is an essential component of our long-term strategy. We
continually monitor our portfolio for changes that could affect the
performance of the industries, tenants, and locations in which we have
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invested. The portfolio is analyzed on an ongoing basis with a view
towards optimizing performance and returns. Realty Income's investment
committee is made up of our Chief Executive Officer, President and three
Senior Vice Presidents. Our investment committee meets weekly to review
industry research, tenant research and property due diligence, and
significant portfolio management activities. This monitoring typically
includes ongoing review and analysis of:
- The performance of various tenant industries;
- The operation, management, business planning, and financial
condition of the tenants; and
- The health of the individual markets in which we own properties,
from both an economic and real estate standpoint.
CAPITAL MARKETS STRATEGY. We have a $170 million revolving, unsecured
acquisition Credit Facility. As of March 2, 1999, the outstanding balance
on the Credit Facility was $79.1 million with an effective interest rate of
approximately 6.0%. A commitment fee of 0.15% per annum accrues on the
total credit commitment. We are and have been in compliance with the
various leverage and interest coverage ratio limitations required by the
Credit Facility. The Credit Facility has been and is expected to be used
to acquire additional retail properties leased to regional and national
retail chains under long term net lease agreements.
We utilize our Credit Facility as a vehicle for the short-term financing of
the acquisition of new properties. When outstanding borrowings under the
Credit Facility reach a certain level (generally in the range of $75 to
$150 million), we intend to refinance those borrowings with the net
proceeds of long-term or permanent financing, which may include the
issuance of common stock, preferred stock, convertible preferred stock,
debt securities or convertible debt securities. However, there can be no
assurance that we will be able to effect any such refinancing or that
market conditions prevailing at the time of refinancing will enable us to
issue equity or debt securities upon acceptable terms. We believe that we
are best served by a conservative capital structure, with a majority of our
capital consisting of equity. As of December 31, 1998, our total
outstanding Credit Facility borrowings and outstanding notes were $294.8
million or approximately 30.6% of our total capitalization (defined as
shares of our common stock outstanding multiplied by the last reported
sales price of the common stock on the NYSE on December 31, 1998 of $24.875
per share plus the outstanding borrowings on the Credit Facility and
outstanding notes at December 31, 1998).
We received investment grade credit ratings from Duff & Phelps Credit
Rating Company, Moody's Investor Service, Inc., and Standard & Poor's
Rating Group in December 1996. Currently, Duff & Phelps has assigned a
rating of BBB, Moody's has assigned a rating of Baa3, and Standard & Poor's
has assigned a rating of BBB- to our senior debt. These ratings could
change based upon, among other things, our results of operations and
financial condition.
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COMPETITIVE STRATEGY. We believe that, to utilize our investment
philosophy and strategy most successfully, we must seek to maintain the
following competitive advantages:
- Size and Type of Investment Properties: We believe that smaller
($500,000 to $10,000,000) retail net leased properties represent an
attractive investment opportunity in today's real estate environment.
Due to the complexities of acquiring and managing a large portfolio of
relatively small assets, we believe that these types of properties have
not experienced significant institutional participation or the
corresponding yield reduction experienced by larger income producing
properties. We believe the less intensive day to day property
management required by net lease agreements, coupled with the active
management of a large portfolio of smaller properties by us, is an
effective investment strategy.
The tenants of our freestanding retail properties generally provide
goods and services which satisfy basic human needs. In order to grow
and expand, they generally need capital. Since the acquisition of
real estate is typically the single largest capital expenditure of many
of these retailers, Realty Income's method of purchasing the property
and then leasing it back under a net lease arrangement allows the retail
chain to free up capital.
- - Investment in New Industries: Though we specialize in single-tenant
properties, we will seek to further diversify our portfolio among a
variety of industries. We believe that diversification will allow us to
invest in industries that are currently growing and have characteristics
we find attractive. These characteristics include, but are not limited
to, industries dominated by local operators where regional and national
chain operators can gain market share and dominance through more
efficient operations, as well as industries taking advantage of major
demographic shifts in the population base. For example, in the early
1970s, Realty Income targeted the fast food industry to take advantage
of the country's increasing desire to dine away from home, and in the
early 1980s, we targeted the child day care industry, responding to the
need for professional child care as more women entered the work force.
During 1998, we added eight new industries to our portfolio. The
eight new industries are Business Services, Craft and Novelty, Drug
Stores, General Merchandise, Grocery Stores, Health and Fitness,
Home Improvement, and Private Education, bringing the total number of
industries in our portfolio to 21.
- - Diversification: Diversification of the portfolio by industry type,
tenant and geographic location is key to our objective of providing
predictable investment results for our stockholders. As we expand we
will seek to further diversify our portfolio. During 1998, 20 new
retail chains and two new states were added to our portfolio, bringing
the total number of retail chains in our portfolio to 65 and the total
number of states to 45.
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- - Management Specialization: We believe that our management's
specialization in single tenant retail properties operated under net
lease agreements is important to meeting our objectives. We plan to
maintain this specialization and will seek to employ and train high
quality professionals in this specialized area of real estate ownership,
finance and management.
- - Technology: We intend to stay at the forefront of technology in our
efforts to efficiently and economically carry out our operations. We
maintain a sophisticated information system that allows us to analyze
our portfolio's performance and actively manage our investments. We
believe that technology and information based systems will play an
increasingly important role in our competitiveness as an investment
manager and source of capital to a variety of industries and tenants.
PROPERTIES
==========
As of January 1, 1999, we owned a diversified portfolio of 970 properties
located in 45 states with over 7.8 million square feet of leasable space.
At January 1, 1999, approximately 99% of the properties were under net
lease agreements. Net leases typically require the tenant to be
responsible for minimum monthly rent and property operating expenses
including property taxes, insurance and maintenance.
Our net leased retail properties are primarily leased to regional and
national retail chain store operators. The average leasable retail space
of the 970 properties is approximately 8,100 square feet on approximately
48,000 square feet of land. Generally, buildings are single-story
properties with adequate parking on site to accommodate peak retail traffic
periods. The properties tend to be on major thoroughfares with relatively
high traffic counts and adequate access, egress and proximity to a
sufficient population base to constitute a suitable market or trade area
for the retailer's business.
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The following table sets forth certain information regarding our properties
as of January 1, 1999, classified according to the business of the
respective tenants:
<TABLE> Approximate
Number of Leasable Annualized
Industry Properties Square Feet Rent (1)
=================== ========== ============ ===========
<S> <C> <C> <C>
Apparel Stores 5 228,900 $ 3,927,000
Automotive Parts 128 733,300 8,693,000
Automotive Service 97 309,200 6,623,000
Book Stores 1 30,000 450,000
Business Services 1 7,500 122,000
Child Care 321 2,064,200 25,640,000
Consumer Electronics 37 559,200 4,431,000
Convenience Stores 61 168,200 5,417,000
Craft and Novelty 1 28,100 152,000
Drug Stores 1 11,300 235,000
General Merchandise 10 222,200 658,000
Grocery Stores 2 67,700 789,000
Health and Fitness 2 70,700 1,202,000
Home Furnishings 35 1,016,300 6,717,000
Home Improvement 26 193,400 3,137,000
Office Supplies 8 198,400 2,476,000
Pet Supplies and Services 7 117,900 1,399,000
Private Education 5 85,400 1,530,000
Restaurants 175 876,500 14,351,000
Shoe Stores 3 44,100 890,000
Video Rental 33 244,500 4,252,000
Other 11 547,100 5,263,000
---------- ------------ ----------
Totals 970 7,824,100 $98,354,000
========== ============ ===========
</TABLE>
[FN]
(1) Annualized rent is calculated by multiplying the monthly contractual
base rent as of January 1, 1999 for each of the properties by 12 and adding
the 1998 historical percentage rent, which totaled $1.7 million (i.e.,
additional rent calculated as a percentage of the tenant's gross sales
above a specified level). For the properties under construction, an
estimated contractual base rent is used based upon the estimated total
costs of each property.
</FN>
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The following table represents Realty Income's rental revenue by industry:
<TABLE> Annualized Rent as For the Year Ended
of January 1, 1999 December 31, 1998
------------------------ -----------------------
Rental(1) Percentage Rental Percentage
Industry Revenue of Total Revenue of Total
- -------------------- ----------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Apparel Stores $ 3,927,000 4.0% $ 3,461,000 4.1%
Automotive Parts 8,693,000 8.8 6,593,000 7.8
Automotive Service 6,623,000 6.7 6,333,000 7.5
Book Stores 450,000 0.5 512,000 0.6
Business Services 122,000 0.1 20,000 *
Child Care 25,640,000 26.1 24,765,000 29.2
Consumer Electronics 4,431,000 4.5 4,616,000 5.4
Convenience Stores 5,417,000 5.5 5,175,000 6.1
Craft and Novelty 152,000 0.2 1,000 *
Drug Stores 235,000 0.2 59,000 0.1
General Merchandise 658,000 0.7 17,000 *
Grocery Stores 789,000 0.8 34,000 *
Health and Fitness 1,202,000 1.2 102,000 0.1
Home Furnishings 6,717,000 6.8 6,629,000 7.8
Home Improvement 3,137,000 3.2 9,000 *
Office Supplies 2,476,000 2.5 2,543,000 3.0
Pet Supplies & Services 1,399,000 1.4 512,000 0.6
Private Education 1,530,000 1.6 759,000 0.9
Restaurants 14,351,000 14.6 13,768,000 16.2
Shoe Stores 890,000 0.9 673,000 0.8
Video Rental 4,252,000 4.3 3,185,000 3.8
Other 5,263,000 5.4 5,110,000 6.0
- -------------------- ----------- --------- ------------ --------
Totals $98,354,000 100.0% $84,876,000 100.0%
==================== =========== ========= ============ ========
* Less than 0.1%
</TABLE>
[FN]
(1) Annualized rent is calculated by multiplying the monthly contractual
base rent as of January 1, 1999 for each of the properties by 12 and adding
the 1998 historical percentage rent, which totaled $1.7 million (i.e.,
additional rent calculated as a percentage of the tenant's gross sales
above a specified level). For the properties under construction, an
estimated contractual base rent is used based upon the estimated total
costs of each property.
</FN>
Page 14
<PAGE>
The following table represents Realty Income's rental revenue by industry:
<TABLE> For the Year Ended For the Year Ended
December 31, 1997 December 31, 1996
---------------------- -----------------------
Rental Percentage Rental Percentage
Industry Revenue of Total Revenue of Total
- -------------------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Apparel Stores $ 496,000 0.7% $ -- --%
Automotive Parts 6,142,000 9.1 5,966,000 10.5
Automotive Service 4,332,000 6.4 2,706,000 4.8
Book Stores 368,000 0.5 -- --
Business Services -- -- -- --
Child Care 24,284,000 35.9 23,854,000 42.0
Consumer Electronics 4,388,000 6.5 507,000 0.9
Convenience Stores 3,738,000 5.5 2,647,000 4.6
Craft and Novelty -- -- -- --
Drug Stores -- -- -- --
General Merchandise -- -- -- --
Grocery Stores -- -- -- --
Health and Fitness -- -- -- --
Home Furnishings 3,812,000 5.6 2,496,000 4.4
Home Improvement -- -- -- --
Office Supplies 1,123,000 1.7 -- --
Pet Supplies & Services 134,000 0.2 -- --
Private Education -- -- -- --
Restaurants 13,416,000 19.8 13,836,000 24.4
Shoe Stores 107,000 0.2 -- --
Video Rental 373,000 0.6 -- --
Other 4,900,000 7.3 4,765,000 8.4
- -------------------- ----------- ------- ----------- -------
Totals $67,613,000 100.0% $56,777,000 100.0%
==================== =========== ======= =========== =======
</TABLE>
[FN]
(1) Annualized rent is calculated by multiplying the monthly contractual
base rent as of January 1, 1999 for each of the properties by 12 and adding
the 1998 historical percentage rent, which totaled $1.7 million (i.e.,
additional rent calculated as a percentage of the tenant's gross sales
above a specified level). For the properties under construction, an
estimated contractual base rent is used based upon the estimated total
costs of each property.
</FN>
Of the 970 properties in the portfolio at January 1, 1999, 963 were single-
tenant properties with the remaining properties being multi-tenant
properties. As of January 1, 1999, 958 of the 963 single-tenant
properties, or 99.5%, were net leased with an average remaining lease term
(excluding extension options) of approximately 8.6 years.
Page 15
<PAGE>
The following table sets forth certain information regarding the timing of
the initial lease term expirations (excluding extension options) on our 958
net leased, single-tenant retail properties as of January 1, 1999.
<TABLE> Percent of
Number of Annualized Annualized
Year Leases Expiring (2) Rent (1)(2) Rent
======== ================== ================ ==========
<S> <C> <C> <C>
1999 31 $ 1,585,000 1.7%
2000 37 2,026,000 2.2
2001 47 3,922,000 4.2
2002 79 6,532,000 7.0
2003 68 5,625,000 6.0
2004 111 9,297,000 9.9
2005 81 5,950,000 6.4
2006 28 2,475,000 2.7
2007 93 6,395,000 6.8
2008 63 5,469,000 5.9
2009 17 1,396,000 1.5
2010 38 2,914,000 3.1
2011 38 5,471,000 5.8
2012 52 5,872,000 6.3
2013 91 14,964,000 16.0
2014 11 1,356,000 1.5
2015 27 3,627,000 3.9
2016 13 1,985,000 2.1
2017 11 4,100,000 4.4
2018 19 1,845,000 2.0
2019 3 579,000 0.6
--------- -------------- --------
Total 958 $93,385,000 100.0%
========= ============== ========
</TABLE>
[FN]
(1) Annualized rent is calculated by multiplying the monthly contractual
base rent as of January 1, 1999 for each of the properties by 12 and adding
the 1998 historic percentage rent, which totaled $1.7 million (i.e.,
additional rent calculated as a percentage of the tenant's gross sales
above a specified level). For the properties under construction, an
estimated contractual base rent is used based upon the estimated total
costs of each property.
(2) This table does not include seven multi-tenant properties and five
vacant, unleased single-tenant properties owned by the Company. The lease
expirations for properties under construction are based on the estimated
date of completion of such properties.
</FN>
The following table sets forth certain state-by-state information regarding
Realty Income's portfolio at January 1, 1999.
Page 16
<PAGE>
<TABLE> Approximate Percent of
Number of Percent Leasable Annualized Annualized
State Properties Leased Square Feet Rent (1) Rent
=========== ========== ======= =========== =========== =========
<S> <C> <C> <C> <C> <C>
Alabama 8 100% 56,600 $ 547,000 0.6%
Arizona 29 99 193,500 2,681,000 2.7
Arkansas 4 100 31,100 551,000 0.6
California 61 95 1,078,600 13,396,000 13.6
Colorado 42 100 250,700 3,543,000 3.6
Connecticut 10 100 223,800 2,976,000 3.0
Delaware 1 100 5,400 72,000 0.1
Florida 69 99 678,600 7,213,000 7.3
Georgia 49 100 306,400 4,351,000 4.4
Idaho 12 100 58,500 847,000 0.9
Illinois 30 100 209,000 2,725,000 2.8
Indiana 24 100 130,000 1,723,000 1.8
Iowa 9 100 60,600 574,000 0.6
Kansas 22 100 231,000 2,438,000 2.5
Kentucky 13 100 43,500 1,089,000 1.1
Louisiana 5 100 39,600 521,000 0.5
Maryland 8 100 48,300 718,000 0.7
Massachusetts 7 100 53,000 981,000 1.0
Michigan 10 100 66,200 931,000 0.9
Minnesota 24 100 260,800 2,374,000 2.4
Mississippi 15 100 148,500 1,137,000 1.2
Missouri 31 100 184,300 2,327,000 2.4
Montana 2 100 30,000 291,000 0.3
Nebraska 9 100 93,700 1,125,000 1.1
Nevada 7 100 86,400 1,316,000 1.3
New Hampshire 1 100 6,400 127,000 0.1
New Jersey 3 100 39,800 354,000 0.4
New Mexico 4 100 23,800 265,000 0.3
New York 10 100 177,200 3,434,000 3.5
North Carolina 31 100 164,800 2,781,000 2.8
North Dakota 1 100 22,000 65,000 0.1
Ohio 66 100 331,200 5,317,000 5.4
Oklahoma 17 100 102,600 1,318,000 1.3
Oregon 17 100 92,400 1,219,000 1.2
Pennsylvania 22 100 161,600 2,195,000 2.2
South Carolina 23 100 93,000 1,538,000 1.6
South Dakota 1 100 6,100 84,000 0.1
Tennessee 22 100 202,600 2,306,000 2.3
Texas 147 99 1,190,700 11,481,000 11.7
Utah 9 100 58,200 805,000 0.8
Virginia 29 100 133,200 2,810,000 2.9
Washington 43 100 252,600 3,369,000 3.4
West Virginia 2 100 16,800 147,000 0.1
Wisconsin 17 100 160,900 2,022,000 2.1
Wyoming 4 100 20,100 270,000 0.3
------ ------ --------- ----------- -------
Totals/Average 970 99% 7,824,100 $98,354,000 100.0%
====== ====== ========= =========== =======
</TABLE> Page 17
<PAGE>
[FN]
(1) Annualized rent is calculated by multiplying the monthly contractual
base rent as of January 1, 1999 for each of the properties by 12 and adding
the 1998 historic percentage rent, which totaled $1.7 million (i.e.,
additional rent calculated as a percentage of the tenant's gross sales
above a specified level). For the properties under construction, an
estimated contractual base rent is used based upon the estimated total
costs of each property.
</FN>
The following table sets forth certain information regarding the properties
owned by Realty Income as of January 1, 1999, classified according to the
business of the respective tenants.
<TABLE> Percent of
Number of Annualized Annualized
Properties Rent (1) Rent
---------- ---------- ----------
<S> <C> <C> <C>
TENANTS SELLING GOODS
Apparel Stores 5 $ 3,927,000 4.0%
Automotive Parts 81 4,708,000 4.8
Book Stores 1 450,000 0.5
Consumer Electronics 37 4,431,000 4.5
Craft and Novelty 1 152,000 0.2
Drug Stores 1 235,000 0.2
General Merchandise 10 658,000 0.7
Grocery Stores 2 789,000 0.8
Home Furnishings 35 6,717,000 6.8
Home Improvement 12 1,333,000 1.3
Office Supplies 8 2,476,000 2.5
Pet Supplies 2 455,000 0.5
Shoe Stores 3 890,000 0.9
---------- ---------- ----------
198 27,221,000 27.7
---------- ---------- ----------
TENANTS SELLING GOODS AND SERVICES
Automotive Parts 47 3,985,000 4.1
Business Services 1 122,000 0.1
Convenience Stores 61 5,417,000 5.5
Home Improvement 14 1,805,000 1.8
Pet Supplies and Services 5 943,000 1.0
Restaurants 175 14,351,000 14.6
Video Rental 33 4,252,000 4.3
---------- ---------- ----------
336 30,875,000 31.4
---------- ---------- ----------
(table continued)
Page 18
<PAGE>
(continued) Percent of
Number of Annualized Annualized
Properties Rent (1) Rent
---------- ---------- ----------
TENANTS PROVIDING SERVICES
Automotive Service 97 6,623,000 6.6
Child Care 321 25,640,000 26.1
Health and Fitness 2 1,202,000 1.2
Other 11 5,263,000 5.4
Private Education 5 1,530,000 1.6
---------- ---------- ----------
436 40,258,000 40.9
---------- ---------- ----------
TOTALS 970 $98,354,000 100.0%
========== ========== ==========
</TABLE>
[FN]
(1) Annualized rent is calculated by multiplying the monthly contractual
base rent as of January 1, 1999 for each of the properties by 12 and adding
the 1998 historic percentage rent, which totaled $1.7 million (i.e.,
additional rent calculated as a percentage of the tenant's gross sales
above a specified level). For the properties under construction, an
estimated contractual base rent is used based upon the estimated total
costs of each property.
</FN>
DESCRIPTION OF LEASING STRUCTURE. At January 1, 1998, approximately 99% of
the Company's properties were leased pursuant to net leases. In most
cases, the leases:
- Were for initial terms of from 10 to 20 years and the tenant has an
option to extend the initial term;
- In general, the leases require the tenant to pay property taxes,
insurance, and expenses of maintaining the property;
- Generally provide for a minimum base rent plus future increases
(typically subject to ceilings) based on increases in the consumer
price index, additional rent based upon the tenant's gross sales
above a specified level (i.e., percentage rent) or fixed increases.
Where leases provide for rent increases based on increases in the
consumer price index, generally such increases permanently become
part of the base rent. Where leases provide for percentage rent,
this additional rent is typically payable only if the tenant's gross
sales for a given period (usually one year) exceed a specified
level, and then is typically calculated as a percentage of only the
amount of gross sales in excess of such level.
Matters Pertaining to Certain Properties and Tenants
- ----------------------------------------------------
Five of our properties were vacant as of January 1, 1999 (all of which are
single-tenant properties) and available for lease. Two of the vacant
properties were previously leased to Levitz Furniture (discussed below),
one to a restaurant operator, one to a convenience store operator, and one
Page 19
<PAGE>
to an automotive parts store operator. One of the vacant Levitz Furniture
locations was leased in January 1999. As of January 1, 1999, 32 of our
properties, which were under lease, were vacant and available for sublease
by the tenant. All of these tenants were current with their rent and other
obligations.
Our two largest tenants are Children's World Learning Centers and La Petite
Academy, which accounted for approximately 16.6% and 11.1%, respectively,
of our rental revenue for the year ended December 31, 1998. No other
tenant comprised 10% or more of our rental revenue. In general, a downturn
in the industry represented by these tenants, whether nationwide or limited
to specific sectors of the United States, could adversely affect tenants in
this industry, which in turn could materially adversely affect our
financial position and results of operations and our ability to make
distributions to stockholders and debt service payments. In addition, a
substantial number of our properties are leased to middle market retail
chains which generally have more limited financial and other resources than
certain upper market retail chains, and therefore are more likely to be
adversely affected by a downturn in their respective business or in the
regional or national economy generally.
Our tenants in the child care and restaurant industries accounted for
approximately 29.2% and 16.2%, respectively, of our rental revenue for the
year ended December 31, 1998. A downturn in any of these industries
generally, whether nationwide or limited to specific sectors of the United
States, could adversely affect tenants in those industries, which in turn
could materially adversely affect our financial position and results of
operations and our ability to make distributions to stockholders and debt
service payments.
On September 5, 1997, Levitz Furniture filed a voluntary petition for
reorganization under Chapter 11 of the Federal Bankruptcy Code. Levitz
Furniture had occupied four of our properties: two in California, one in
Texas and one in Florida. Levitz elected to discontinue operations in the
regions that include the states of Texas and Florida. As a result of
leaving those markets, in November 1998 Levitz returned the Texas and
Florida properties to us. In January 1999, two months after we regained
possession, we signed a 10-year lease agreement with Fujitsu Network
Communications on the Texas property. The new lease calls for immediate
commencement of rent and results in a higher rent per square foot and a
higher return on our total investment than the prior Levitz lease had
generated. We believe that the demand in the market for the Florida
property will allow us to find a suitable replacement tenant. The two
California Levitz stores owned by Realty Income are currently open and
operating, and Levitz continues to be current on its rental obligations to
us. While Levitz Furniture has paid its most recent rental payments, there
can be no assurance that Levitz Furniture will continue to pay rent for the
remainder of the lease terms for the two California Levitz properties.
Page 20
<PAGE>
Development of Certain Properties
- ---------------------------------
Of the 149 New Properties we acquired in 1998, 133 were occupied as of
March 1, 1999 and the remaining 16 were pre-leased and under construction
pursuant to contracts under which tenants or developers have agreed to
develop the properties (with development costs funded by us) with rent
commencing when the premises open for business. In the case of development
properties, we either enter into an agreement with a tenant pursuant to
which the tenant retains a contractor to construct the improvements and we
fund the costs of such development or we fund a developer who constructs
the improvements. In either case, there is an executed lease and there is
a requirement to complete the construction on a timely basis, generally
within eight months after we purchase the land. Generally, the tenant or
developer is required to pay construction cost overruns to the extent they
exceed the construction budget by more than a predetermined amount. We
also enter into a lease with the tenant at the time the Company purchases
the land, which generally requires that the tenant begin paying base rent,
calculated as a percentage of our acquisition cost for the property,
including construction costs and capitalized interest, when the premises
open for business. During 1998, the Company acquired 33 development
properties, 17 of which have been completed, were operating and paying rent
as of March 1, 1999. We will continue to seek to acquire land for
development under similar arrangements.
DISTRIBUTION POLICY
===================
Distributions are paid to our stockholders on a monthly basis if, as and
when declared by our Board of Directors. The March 1999 distribution of
$0.17 per share represents a current annualized distribution of $2.04 per
share, and an annualized distribution yield of approximately 9.0% based on
the last reported sale price of $22.5625 of our common stock, on the NYSE
on March 2, 1999. In order to maintain our tax status as a REIT for
federal income tax purposes, we are generally required to distribute
dividends to our stockholders aggregating annually at least 95% of our REIT
taxable income (determined without regard to the dividends paid deduction
and by excluding net capital gains). In 1998, our distributions totaled
104.0% of our REIT taxable income. We intend to continue to make
distributions to our stockholders that are sufficient to meet this
requirement.
Future distributions by us will be at the discretion of our Board of
Directors and will depend on, among other things, our results of
operations, financial condition and capital requirements, the annual
distribution requirements under the REIT provisions of the Internal Revenue
Code of 1986, as amended (the "Code"), our debt service requirements and
such other factors as the Board of Directors may deem relevant. In
addition, the Credit Facility contains financial covenants which could
limit the amount of distributions payable by the Company in the event of a
deterioration in the results of operations or financial condition of the
Page 21
<PAGE>
Company, and which prohibit the payment of distributions on the common
stock in the event that the Company fails to pay when due (subject to any
applicable grace period) any principal or interest on borrowings under the
Credit Facility.
Distributions by us to the extent of our current and accumulated earnings
and profits for federal income tax purposes generally will be taxable to
stockholders as ordinary income. Distributions in excess of such earnings
and profits generally will be treated as a non-taxable reduction in the
stockholders' basis in its stock to the extent of such basis, and
thereafter as a gain from the sale of such stock. Approximately 3.8% of
the distributions made or deemed to have been made in 1998 were classified
as a return of capital for federal income tax purposes. We are unable to
predict the portion of 1999 or future distributions which may be classified
as a return of capital since such amount depends on our taxable income for
the entire year.
OTHER ITEMS
===========
COMPETITION FOR ACQUISITION OF REAL ESTATE. We face competition in the
acquisition, operation and sale of property. We expect such competition
from:
- Businesses;
- Individuals;
- Fiduciary accounts and plans; and
- Other entities engaged in real estate investment.
Some of these competitors are larger than we are and have greater financial
resources. This competition may result in a higher cost for properties
that we wish to purchase.
The tenants leasing our properties generally face significant competition
from other operators. This competition may adversely impact:
- That portion, if any, of the rental stream to be paid to us based on
a tenant's revenues; and
- The tenants' results of operations or financial condition.
ENVIRONMENTAL LIABILITIES. Investments in real property can create a
potential for environmental liability. An owner of property can face
liability for environmental contamination created by the presence or
discharge of hazardous substances on the property. We face such liability
regardless of:
- Our knowledge of the contamination;
- The timing of the contamination;
- The cause of the contamination; or
- The party responsible for the contamination of the property.
We are not aware of any material environmental problems at this time;
however, there may be environmental problems associated with our properties
Page 22
<PAGE>
that we are unaware of. In that regard, a number of our properties are
leased to operators of oil change and tune-up facilities, and convenience
stores that sell petroleum-based fuels. These facilities, or other of our
properties, utilize, or may have utilized in the past, underground tanks
for the storage of petroleum-based or waste products which could create a
potential for release of hazardous substances.
The presence of hazardous substances on a property may adversely affect our
ability to sell such property and we may incur substantial remediation
costs. Although our leases generally require our tenants to operate in
compliance with all applicable federal, state and local laws, ordinances
and regulations and to indemnify us against any environmental liabilities
arising from the tenant's activities on the property, we could nevertheless
be subject to strict liability by virtue of our ownership interest, and
there can be no assurance that our tenants would satisfy their
indemnification obligations under the leases.
We believe that our properties comply in all material respects with all
federal, state and local laws, ordinances and regulations regarding
hazardous or toxic substances or petroleum products.
We have not been notified by any governmental authority, and are not
otherwise aware, of any material noncompliance, liability or claim relating
to hazardous or toxic substances or petroleum products in connection with
any of our present properties. Nevertheless, if environmental
contamination should exist, we could be subject to strict liability by
virtue of our ownership interest.
Since December 1996, the Company has maintained an environmental insurance
policy on the property portfolio. Based upon the 970 properties in the
portfolio at December 31, 1998, the cost of the insurance is expected to be
approximately $90,000 during 1999. The limit of the policy is $10 million
for each loss and $25 million in the aggregate, with a $100,000 deductible.
There is a sublimit on properties with underground storage tanks of $1
million per occurrence and $5 million in the aggregate, with a deductible
of $25,000.
TAXATION OF THE COMPANY. We believe that we have operated, and we intend
to continue to operate, so as to qualify as a REIT under Sections 856
through 860 of the Internal Revenue Code of 1986, as amended (the "Code"),
commencing with our taxable year ended December 31, 1994. Although we
believe that we are in compliance with all REIT qualification rules and we
are organized and operate as a REIT, we can not completely assure you that
we will continue to be so organized or that we will be able to operate in a
manner so as to qualify or remain so qualified.
Qualification as a REIT involves the satisfaction of numerous requirements
under highly technical and complex Code provisions for which there are only
limited judicial and administrative interpretations, and the determination
of various factual matters and circumstances not entirely within our
control.
Page 23
<PAGE>
We cannot assure you that legislation, new regulations, administrative
interpretations or court decisions will leave unchanged the tax laws with
respect to qualification as a REIT or the federal income tax consequences
of such qualifications.
If we were to fail to qualify as a REIT in any taxable year:
- We would be subject to federal income tax (including any applicable
alternative minimum tax) on our taxable income at regular corporate
rates;
- We would not be allowed a deduction in computing our taxable income
for amounts distributed to our stockholders;
- We would be disqualified from treatment as a REIT for the four
taxable years following the year during which qualification is lost.
This treatment would substantially reduce our net earnings available
for investment or distribution to stockholders because of the
additional tax liability for the years involved; and
- We would no longer be required to make distributions to
stockholders.
Even if we qualify for and maintain our REIT status, we are subject to
certain federal, state and local taxes on our income and property. For
example, if we have net income from a prohibited transaction, such income
will be subject to a 100% tax.
EFFECT OF DISTRIBUTION REQUIREMENTS. To maintain our status as a REIT for
federal income tax purposes, we generally are required to distribute to our
stockholders at least 95% of our taxable income each year. This taxable
income is determined without regard to the dividends paid deduction and by
excluding net capital gains.
We are also subject to tax at regular corporate rates to the extent that we
distribute less than 100% of our taxable income (including net capital
gains) each year.
In addition, we are subject to a 4% nondeductible excise tax on the amount,
if any, by which certain distributions paid by us with respect to any
calendar year are less than the sum of 85% of our ordinary income for such
calendar year, 95% of our capital gain net income for the calendar year,
and any amount of such income that was not distributed in prior years.
We intend to continue to make distributions to our stockholders to comply
with the distribution requirements of the Code and to reduce exposure to
federal income taxes and the nondeductible excise tax.
Differences in timing between the receipt of income and the payment of
expenses in arriving at taxable income and the effect of required debt
amortization payments could require us to borrow funds on a short-term
basis to meet the distribution requirements that are necessary to achieve
the tax benefits associated with qualifying as a REIT.
Page 24
<PAGE>
DILUTION OF COMMON STOCK. Our future growth will depend in large part upon
our ability to raise additional capital. If we were to raise additional
capital through the issuance of equity securities, we could dilute the
interests of holders of common stock. Likewise, our Board of Directors is
authorized to cause us to issue preferred stock of any class or series
(with such dividends and voting and other rights as the Board of Directors
may determine). Accordingly, the Board of Directors may authorize the
issuance of preferred stock with voting, dividend and other similar rights
that could dilute, or otherwise adversely affect, the interests of holders
of Common Stock.
REAL ESTATE OWNERSHIP RISKS. We are subject to all of the general risks
associated with the ownership of real estate. In particular we face the
risk that rental revenue from the properties will be insufficient to cover
all corporate operating expenses and debt service payments on indebtedness
we incur. Additional real estate ownership risks include:
- Adverse changes in general or local economic conditions;
- Changes in supply of or demand for similar or competing properties;
- Changes in interest rates and operating expenses;
- Competition for tenants;
- Changes in market rental rates;
- Inability to lease properties upon termination of existing leases;
- Renewal of leases at lower rental rates;
- Inability to collect rents from tenants due to financial hardship,
including bankruptcy;
- Changes in tax, real estate, zoning and environmental laws that may
have an adverse impact upon the value of real estate;
- Uninsured property liability;
- Property damage or casualty losses;
- Unexpected expenditures for capital improvements or to bring
properties into compliance with applicable federal, state and local
laws; and
- Acts of God and other factors beyond the control of our management.
DEPENDENCE ON KEY PERSONNEL. We depend on the efforts of our executive
officers and key employees. The loss of the services of our executive
officers and key employees could have a material adverse effect on our
operations.
ITEM 2: PROPERTIES
- -------------------
Information pertaining to our properties can be found under Item 1.
Page 25
<PAGE>
ITEM 3: LEGAL PROCEEDINGS
- --------------------------
The Company is subject to certain claims and lawsuits, the outcome of which
are not determinable at this time. In the opinion of management, any
liability that might be incurred by the Company upon the resolution of
these claims and lawsuits will not, in the aggregate, have a material
adverse effect on the Company's consolidated financial statements taken as
a whole.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
No matters were submitted to stockholders during the fourth quarter of the
fiscal year.
Page 26
<PAGE>
PART II
=======
ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
- ----------------------------------------------------------
A. The stock of the Company is traded on the New York Stock Exchange under
the ticker symbol "O." The following table shows the high and low sales
prices per share for the Common Stock as reported by the New York Stock
Exchange composite tape, and distributions declared per share of common
stock by Realty Income for the periods indicated.
<TABLE> Price Per Share
of Common Stock
------------------- Distributions
1998 High Low Declared (1)
- -----------------------------------------------------------------
<S> <C> <C> <C>
First quarter $27.1875 $25.2500 $0.4825
Second quarter 27.2500 25.4375 0.4900
Third quarter 27.3750 23.4375 0.4975
Fourth quarter 25.6875 23.9375 0.5050
-------
$1.9750
=======
1997
- -----------------------------------------------------------------
First quarter $26.625 $23.000 $0.4725
Second quarter 26.500 22.625 0.4725
Third quarter 27.813 25.438 0.4725
Fourth quarter 27.438 23.750 0.4775
-------
$1.8950
=======
</TABLE>
[FN]
(1) Distributions currently are declared monthly by the Company based on
financial results for the prior months. At December 31, 1998 a
distribution of $0.17 per share had been declared and was paid on
January 18, 1999.
</FN>
B. There were approximately 14,500 holders of record of Realty Income's
shares of common stock as of March 1, 1999, however, Realty Income believes
the total number of beneficial stockholders of Realty Income to be
approximately 57,000.
Page 27
<PAGE>
ITEM 6: SELECTED FINANCIAL DATA
- --------------------------------
(not covered by Independent Auditors' Report)
<TABLE> As of or for the years ended December 31,
(dollars in thousands, except per share data)
--------------------------------------------------
1998 1997 1996 1995 1994
========== ========== ========== ========== ==========
<S> <C> <C> <C> <C> <C>
Total assets
(book value) $ 759,234 $ 577,021 $ 454,097 $ 417,639 $ 352,768
Cash and cash
equivalents 2,533 2,123 1,559 1,650 11,673
Lines of credit and
notes payable 294,800 132,600 70,000 18,597 12,616
Total
liabilities 309,025 143,706 79,856 36,218 17,352
Stockholders'
equity 450,209 433,315 374,241 381,421 335,416
Net cash provided
by operating
activities 64,645 52,692 48,073 40,312 28,460
Net change in
cash and cash
equivalents 410 564 (91) (10,023) (17,656)
Total revenue 85,132 67,897 56,957 51,555 48,863
Consolidation
costs -- -- -- -- (11,201)
Income from
operations 41,004 33,688 30,768 25,582 14,059
Gain on sales
of properties 526 1,082 1,455 18 1,165
Cumulative effect of
change in accounting
principle (226) -- -- -- --
Net income 41,304 34,770 32,223 25,600 15,224
Distributions
paid to
stockholders/
partners 52,301 44,367 48,079 36,710 44,666
Ratio of earnings to
fixed charges (1) 4:1 5:1 14:1 10:1 39:1
Basic and diluted
net income
per share 1.55 1.48 1.40 1.27 0.78
Distributions
paid per
share (2)(3) 1.965 1.893 2.093 1.825 0.600
Distributions
declared per
share (2)(3) 1.975 1.895 1.710 2.215 0.750
(table continued)
Page 28
<PAGE>
(continued) As of or for the years ended December 31,
(dollars in thousands, except per share data)
--------------------------------------------------
1998 1997 1996 1995 1994
========== ========== ========== ========== ==========
Basic weighted
Average number
of shares
outstanding 26,629,936 23,568,831 22,976,789 20,230,886 19,502,091
Diluted weighted
Average number
of shares
outstanding 26,638,284 23,572,715 22,977,837 20,230,963 19,502,091
</TABLE>
[FN]
(1) Ratio of Earnings to Fixed Charges is calculated by dividing earnings
by fixed charges. For this purpose, earnings consist of net income before
interest expense. Fixed charges are comprised of interest costs (including
capitalized interest) and the amortization of debt issuance costs.
(2) The 1994 amount represents distributions paid or declared, as the case
may be, after the Consolidation (see Note 1 to the consolidated financial
statements).
(3) 1996 distributions paid per share and 1995 distributions declared per
share include a special distribution of $0.23 per share.
</FN>
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- ----------------------------------------------------------
GENERAL
- -------
Realty Income Corporation, a Maryland corporation ("Realty Income", the
"Company", "us", "we" or "our") was organized to operate as an equity real
estate investment trust ("REIT"). We are a fully integrated self-
administered real estate company with in-house acquisition, leasing, legal,
retail research, real estate research, portfolio management and capital
markets expertise. As of December 31, 1998, we owned a diversified
portfolio of 970 retail properties located in 45 states with over 7.8
million square feet of leasable space.
Our primary business objective is to generate dependable monthly dividends
from a consistent and predictable level of funds from operations ("FFO")
per share. Additionally, we generally will seek to increase distributions
to stockholders and FFO per share through both active portfolio management
and the acquisition of additional properties.
Page 29
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
===============================
Cash Reserves
Realty Income is organized for the purpose of operating as an equity REIT
which acquires and leases properties and distributes to stockholders, in
the form of monthly cash distributions, a substantial portion of its net
cash flow generated from leases on its retail properties. We intend to
retain an appropriate amount of cash as working capital reserves. At
December 31, 1998, Realty Income had cash and cash equivalents totaling
$2.5 million.
We believe that our cash and cash equivalents on hand, cash provided from
operating activities and borrowing capacity are sufficient to meet our
liquidity needs for the foreseeable future, however, we intend to utilize
additional sources of capital to fund property acquisitions and to repay
our acquisition credit facility.
Capital Funding
Realty Income has a $170 million, three-year revolving, unsecured
acquisition credit facility of which $118 million expires in December 2001
and $52 million expires in December 2000. The credit facility currently
bears interest at 0.85% over the London Interbank Offered Rate ("LIBOR")
and offers us other interest rate options. As of March 2, 1999, $90.9
million of borrowing capacity was available to us under the acquisition
credit facility. At that time, the outstanding balance was $79.1 million
with an effective interest rate of 6.0%. This credit facility has been and
is expected to be used to acquire additional retail properties leased to
national and regional retail chains under long-term lease agreements. Any
additional borrowings will increase our exposure to interest rate risk.
We expect to meet our long-term capital needs for the acquisition of
properties through the issuance of public or private debt or equity. In
August 1997, we filed a universal shelf registration statement with the
Securities and Exchange Commission covering up to $300 million in value of
common stock, preferred stock and/or debt securities. Through March 2,
1999, $221.4 million in value of common stock and debt securities has been
issued under the universal shelf registration statement.
In March 1998, we issued 372,093 shares of common stock to a unit
investment trust at a net price to the Company of $25.531 per share, based
on the then market price of $26.875 per share. The net proceeds of $9.5
million were used to repay borrowings of $7.9 million under our credit
facility and to acquire additional properties.
In February 1998, we issued 751,174 shares of common stock to a unit
investment trust at a net price to the Company of $25.295 per share, based
on a 5% discount to the then market price of $26.625 per share. The net
proceeds of $18.9 million were used to repay borrowings under our credit
facility.
Page 30
<PAGE>
In January 1999, we issued $20 million of 8.00% senior notes due January
2009 (the "1999 Notes"). The 1999 Notes are unsecured and were sold at
98.757% of par to yield 8.10%. The proceeds from the offering were used to
pay down credit facility borrowings and for other corporate purposes.
Currently, there is no formal trading market for the 1999 Notes and we have
not listed and do not intend to list the 1999 Notes on any securities
exchange.
In October 1998, we issued $100 million of 8.25% unsecured senior notes due
November 2008 (the "1998 Notes"). The 1998 Notes were sold at par
($25.00). After taking into effect the results of a Treasury interest rate
lock agreement, the effective interest rate to us was 9.12%. The proceeds
from the offering were used to pay down $96.0 million of our credit
facility borrowings and will allow us to continue our strategic property
acquisition activities. Interest on the 1998 Notes is payable monthly on
the 15th of each month, commencing in December 1998. The 1998 Notes
commenced trading on the New York Stock Exchange on November 3, 1998 under
the ticker symbol "OUI". The cusip number of the 1998 Notes is 756109-AA2.
In May 1998, we entered into a treasury interest rate lock agreement to
protect against the possibility of rising interest rates applicable to the
1998 Notes. Under the interest rate lock agreement, we were to receive or
make a payment based on the differential between a specified interest rate,
5.726%, and the actual 10-year treasury interest rate on a notional
principal amount of $100 million, at the end of six months. Based on the
10-year treasury interest rate at October 23, 1998 (the interest rate
pricing date), the Company made a payment of $8.7 million in settlement of
the agreement in October 1998. The payment on the agreement is being
amortized over 10 years (the life of the 1998 Notes) as a yield adjustment
to interest expense.
We received investment grade corporate credit ratings from Duff & Phelps
Rating Company, Moody's Investor Service, Inc., and Standard & Poor's
Rating Group in December 1996. Currently, Duff & Phelps has assigned a
rating of BBB, Moody's has assigned a rating of Baa3, and Standard & Poor's
has assigned a rating of BBB- to our senior debt. These ratings could
change based upon, among other things, our results of operations and
financial condition.
Property Acquisitions
During 1998, we continued to increase the size of the portfolio through a
strategic program of real estate acquisitions. We acquired 149 additional
properties (the "New Properties"), and selectively sold 5 properties,
increasing the number of properties in the portfolio by 17.4% to 970
properties at December 31, 1998 from 826 properties at December 31, 1997.
During 1998, we invested $193.4 million in New Properties and properties
under development (excluding estimated unfunded development costs on
properties under construction at December 31, 1998 of $19.7 million). The
weighted average annual unleveraged return on the $193.4 million invested
Page 31
<PAGE>
in 1998 is estimated to be 10.4%, computed as estimated contractual net
operating income (which in the case of a net leased property is equal to
the base rent or, in the case of properties under construction, the
estimated base rent under the lease) for the first year of each lease,
divided by the estimated total costs. Since it is possible that a tenant
could default on the payment of contractual rent, no assurance can be given
that the actual return on the funds invested will not differ from the
foregoing percentage.
The New Properties are located in 38 states, will contain approximately 1.6
million leasable square feet and are 100% leased under net leases, with an
average initial lease term of 14.9 years. During 1998, we also paid
$168,000 for lease commissions and $95,000 for building improvements on
existing properties in our portfolio.
Of the New Properties, 133 were occupied as of March 1, 1999 and the
remaining properties were pre-leased and under construction pursuant to
contracts under which the tenants or developers have agreed to develop the
properties (with development costs funded by the Company) and with the
tenant to begin paying rent when the premises open for business.
During 1997, we invested $142.3 million in 96 properties purchased in 1997
and properties under development (excluding estimated unfunded development
costs on properties under construction at December 31, 1997). The weighted
average annual unleveraged return on the $142.3 million invested in 1997 is
estimated to be 10.4%, computed in the same manner as 1998's estimated
weighted average annual unleveraged return. These 96 properties purchased
in 1997 are located in 27 states, contain approximately 1.1 million
leasable square feet and are 100% leased with an average initial lease term
of 14.4 years.
Distributions
Cash distributions paid during 1998, 1997 and 1996 were $52.3 million,
$44.4 million and $48.1 million, respectively. The 1996 cash distributions
include a special distribution of $5.3 million paid in January 1996.
Realty Income pays distributions monthly. The following is a summary of
the monthly cash distributions for the years ended December 31, 1998, 1997
and 1996, which totaled $1.965, $1.8925 and $2.0925, respectively. The
January 1996 distributions include a special distribution of $0.23 per
share.
In December 1998, January and February 1999, we declared distributions of
$0.17 per share, which were paid on January 18, 1999, February 16, 1999 and
payable on March 15, 1999, respectively. The monthly distribution of $0.17
per share represents a current annualized distribution of $2.04 per share,
and an annualized distribution yield of approximately 9.0% based on the
last reported sale price of the Company's Common Stock on the NYSE of
$22.5625 on March 2, 1999. Although the Company expects to continue its
policy of paying monthly distributions, there can be no assurance that the
current level of distributions will be maintained by the Company or as to
the actual distribution yield for any future period.
Page 32
<PAGE>
FUNDS FROM OPERATIONS ("FFO")
=============================
FFO for 1998 increased by $10.45 million or 20.0% to $62.80 million versus
$52.35 million during 1997. FFO during 1996 was $47.7 million.
We define FFO as net income before gain on sales of properties, plus
provision for impairment losses, plus depreciation and amortization. In
accordance with the recommendations of the National Association of Real
Estate Investment Trusts ("NAREIT"), amortization of deferred financing
costs are not added back to net income to calculate FFO. Amortization of
financing costs are included in interest expense in the consolidated
statements of income.
The following is a reconciliation of net income to FFO and information
regarding distributions paid and the diluted weighted average number of
shares outstanding for 1998, 1997 and 1996 (dollars in thousands):
<TABLE> 1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net income $ 41,304 $ 34,770 $ 32,223
Plus depreciation and amortization 21,935 18,596 16,422
Plus provision for impairment losses -- 165 579
Less depreciation of furniture, fixtures
and equipment and amortization of
organization costs (140) (96) (51)
Less gain on sales of properties (526) (1,082) (1,455)
Plus cumulative effect of change in
accounting principle 226 -- --
-------- -------- --------
Total Funds From Operations $ 62,799 $ 52,353 $ 47,718
======== ======== ========
Regular cash distributions paid $ 52,301 $ 44,367 $ 42,794
FFO in excess of regular
distributions $ 10,498 $ 7,986 $ 4,924
Special cash distributions paid $ -- $ -- $ 5,285
Diluted weighted average
number of shares outstanding 26,638,284 23,572,715 22,977,837
</TABLE>
We consider FFO to be an appropriate measure of the performance of an
equity REIT. FFO is used by financial analysts in evaluating REITs and
can be one measure of a REIT's ability to make cash distribution payments.
Presentation of this information provides the reader with an additional
measure to compare the performance of different REITs, although it should
be noted that not all REITs calculate FFO the same way so comparisons with
such REITs may not be meaningful.
FFO is not necessarily indicative of cash flow available to fund cash needs
and should not be considered as an alternative to net income as an
indication of Realty Income's performance or to cash flows from operating,
Page 33
<PAGE>
investing, and financing activities as a measure of liquidity or ability to
make cash distributions or to pay debt service.
RESULTS OF OPERATIONS
=====================
THE FOLLOWING IS A COMPARISON OF OUR RESULTS OF OPERATIONS FOR THE YEAR
ENDED DECEMBER 31, 1998 TO THE YEAR ENDED DECEMBER 31, 1997.
Rental revenue was $84.9 million for 1998 versus $67.6 million for 1997, an
increase of $17.3 million. The increase in rental revenue was primarily
due to the acquisition of 149 properties during 1998 and 96 properties
during 1997. These properties generated revenue of $22.3 million in 1998
compared to $5.3 million in 1997, an increase of $17.0 million. At
January 1, 1999, annualized contractual lease payments on the funds
invested in properties acquired in 1998 and 1997 are approximately $33.1
million (excluding estimated rent from 19 properties under development and
any percentage rents).
Of the 970 properties in the portfolio as of December 31, 1998, 963 are
single-tenant properties with the remaining properties being multi-tenant
properties. Of the 963 single-tenant properties, 958, or 99.5%, were net
leased with an average remaining lease term (excluding extension options)
of approximately 8.6 years. All of our 958 leased single-tenant properties
were under leases that provide for increases in rents through:
- Base rent increases tied to a consumer price index with
adjustment ceilings;
- Overage rent based on a percentage of the tenants' gross
sales; or
- Fixed increases.
Some leases contain more than one of these clauses. Percentage rent, which
is included in rental revenue, was $1.7 million during 1998 and $1.8
million in 1997. Same store rents generated on 717 properties owned during
all of both 1998 and 1997 increased by $531,000 or 0.9%, to $61.89 million
from $61.36 million.
At December 31, 1998, the Company had five properties that were not under
lease as compared to eight at December 31, 1997 and nine at December 31,
1996. At December 31, 1998, 965, or 99.5%, of the 970 properties in the
portfolio were under lease agreements with third party tenants.
Depreciation and amortization was $21.9 million in 1998 versus $18.6
million in 1997. The increase in 1998 was primarily due to depreciation of
the properties acquired in 1997 and 1998.
Interest expense in 1998 increased by $5.5 million to $13.7 million, as
compared to $8.2 million in 1997. The following is a summary of the five
components of interest expense for 1998 and 1997 (dollars in thousands):
Page 34
<PAGE>
<TABLE> 1998 1997 Net Change
------- ------- ----------
<S> <C> <C> <C>
Interest on outstanding
loans and notes $ 13,666 $ 8,043 $ 5,623
Amortization of settlements
on treasury lock agreements 38 (75) 113
Credit facility commitment fees 232 145 87
Amortization of credit facility
origination costs and deferred
bond financing costs 447 281 166
Interest capitalized (660) (168) (492)
-------- -------- --------
Interest Expense $ 13,723 $ 8,226 $ 5,497
======== ======== ========
Credit facility and notes outstanding
- -------------------------------------
Average outstanding balances $184,728 $108,431 $ 76,297
Average interest rates 7.42% 7.35%
(after taking into effect amortization of
settlements on treasury lock agreements)
</TABLE>
Interest on outstanding loans and notes was $5.6 million higher in 1998
than in 1997 due to an increase in the average outstanding balances and a
higher average interest rate. The higher average interest rate was due to
interest on the notes issued in October 1998 and the effect of the treasury
lock settlement paid in October 1998.
General and administrative expenses increased by $1.2 million to $6.68
million in 1998 versus $5.44 million in 1997. The increase in general and
administrative expenses was primarily due to an increase in property
acquisition expenses and employee costs. General and administrative
expenses as a percentage of revenue decreased to 7.8% in 1998 as compared
to 8.0% in 1997. During 1997, we increased our number of employees to 47
from 35. The majority of the new employees were hired in the third quarter
of 1997 and work primarily on new property acquisitions. As of March 1,
1999, we had 50 employees.
Property expenses are broken down into costs associated with non-net leased
multi-tenant properties, unleased single-tenant properties and general
portfolio expenses. Expenses related to the multi-tenant and unleased
single-tenant properties include, but are not limited to, property taxes,
maintenance, insurance, utilities, property inspections, bad debt expense
and legal fees. General portfolio costs include, but are not limited to,
insurance, legal, property inspections and title search fees. At
December 31, 1998, five properties were available for lease as compared to
eight at December 31, 1997. Property expenses were $1.8 million in 1998
and 1997.
Page 35
<PAGE>
We review long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. In 1997, a $165,000 charge was taken to reduce the net
carrying value on three properties because they became held for sale. All
of these properties have been sold. There was no provision for impairment
taken in 1998.
During 1998, we sold five properties (two child care centers, two
restaurants and one multi-tenant location) for $2.8 million and recognized
a gain of $526,000. During 1997, we sold ten properties (six restaurants,
two child care centers, one automotive parts store and a multi-tenant
location) for a total of $4.4 million and recognized a gain of $1.1
million.
We adopted SOP 98-5, "Reporting on the Costs of Start-Up Activities" ("SOP
98-5") in October 1998. SOP 98-5 requires that costs incurred during
start-up activities, including organization costs, be expensed as incurred.
Prior to October 1998, organization costs were amortized over 60 months.
In October 1998, the unamortized balance of organization costs of $226,000
was expensed. This is reported on the statements of income as a cumulative
effect of a change in accounting principle.
In 1998, Realty Income had net income of $41.3 million versus $34.8 million
in 1997. The $6.5 million increase in net income is primarily due to the
increase in rental revenue from properties acquired in 1998 and 1997 of
$17.0 million, which was partially offset by an increase of $10.1 million
in the following expenses:
- Depreciation and amortization of $3.34 million;
- Interest expense of $5.50 million; and
- General and administrative expense of $1.24 million.
THE FOLLOWING IS A COMPARISON OF OUR RESULTS OF OPERATIONS FOR THE YEAR
ENDED DECEMBER 31, 1997 TO THE YEAR ENDED DECEMBER 31, 1996.
Rental revenue was $67.6 million for 1997 versus $56.8 million for 1996, an
increase of $10.8 million. The increase in rental revenue was primarily
due to the acquisition of 96 properties during 1997 and 62 properties
during 1996. These properties generated revenue of $11.4 million in 1997
compared to $915,000 in 1996, an increase of $10.5 million.
Of the 826 properties in the portfolio as of December 31, 1997, 819 are
single-tenant properties with the remaining properties being multi-tenant
properties. Of the 819 single-tenant properties, 812, or 99.1%, were net
leased with an average remaining lease term (excluding extension options)
of approximately 8.4 years at December 31, 1997. Percentage rent, which is
included in rental revenue, was $1.8 million during 1997 and $1.7 million
in 1996.
Same store rents generated on 667 properties owned during all of both 1997
and 1996 increased by $767,000 or 1.4%, to $55.74 million from $54.97
million.
Page 36
<PAGE>
At December 31, 1997, we had eight properties (one of which is a multi-
tenant property) that were not under lease as compared to nine at
December 31, 1996. At December 31, 1997, 818, or 99.0%, of the 826
properties in the portfolio were under lease agreements with third party
tenants.
Interest and other revenue during 1997 and 1996 totaled $284,000 and
$180,000, respectively, an increase of $104,000. The increase in 1997 was
primarily due to interest earned on the 1997 Note proceeds in excess of the
$93.7 million used to payoff the credit facility in May 1997. These
proceeds were invested in new properties during May and June 1997.
Depreciation and amortization was $18.6 million in 1997 versus $16.4
million in 1996. The increase in 1997 was primarily due to depreciation of
the properties acquired in 1996 and 1997.
Interest expense in 1997 increased by $5.9 million to $8.23 million, as
compared to $2.37 million in 1996. The following is a summary of the five
components of interest expense for 1997 and 1996 (dollars in thousands):
<TABLE> 1997 1996 Net Change
------- ------- ----------
<S> <C> <C> <C>
Interest on outstanding
loans and notes $ 8,043 $ 2,137 $ 5,906
Amortization of settlement
on a treasury lock agreement (75) -- (75)
Credit facility commitment fees 145 156 (11)
Amortization of credit facility
origination costs and deferred
bond financing costs 281 224 57
Interest capitalized (168) (150) (18)
------- ------- -------
Interest Expense $ 8,226 $ 2,367 $ 5,859
======= ======= =======
Credit facility and notes outstanding
- -------------------------------------
Average outstanding balances $108,431 $ 30,704 $ 77,727
Average interest rates 7.35% 6.96%
(after taking into effect amortization of
settlement on a treasury lock agreement)
</TABLE>
Interest on outstanding loans and notes was $5.9 million higher in 1997
than in 1996 due to an increase in the average outstanding balances and a
higher average interest rate. The higher average interest rate was due to
interest on the Notes issued in May 1997.
General and administrative expenses increased by $256,000 to $5.44 million
in 1997 versus $5.18 million in 1996. The increase in general and
administrative expenses was primarily due to an increase in property
Page 37
<PAGE>
acquisition expenses and employee costs. General and administrative
expenses as a percentage of revenue decreased to 8.0% in 1997 as compared
to 9.1% in 1996. During 1997, the Company increased its number of
employees to 47 from 35. The majority of the new employees were hired in
the third quarter of 1997 and work primarily on new property acquisitions.
Property expenses were $1.79 million in 1997 and $1.64 million in 1996, an
increase of $145,000. The increase in property expenses was primarily
attributable to costs of the environmental insurance obtained in December
1996. In 1997, environmental insurance expense totaled $85,000.
We review long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. In 1997, a $165,000 charge was taken to reduce the net
carrying value on three properties because they became held for sale. In
1996, a $579,000 charge was taken to reduce the net carrying value on four
properties because they became held for sale. All of these properties have
been sold.
During 1997, we sold ten properties (six restaurants, two child care
centers, one automotive parts store and one multi-tenant location) for a
total of $4.4 million and recorded a gain of $1.1 million. During 1996, we
sold seven properties (five restaurants and two multi-tenant locations) for
$4.4 million and recognized a gain of $1.5 million.
In 1997, we had net income of $34.77 million versus $32.22 million in 1996.
The $2.55 million increase in net income is primarily due to the increase
in rental revenue from properties acquired in 1996 and 1997 of $10.5
million, which was partially offset by an increase of $8.3 million in the
following expenses:
- Depreciation and amortization of $2.17 million;
- Interest expense of $5.86 million; and
- General and administrative expense of $256,000.
THE YEAR 2000 ISSUE
===================
Some of our existing computer programs identify a year by using only two
digits instead of four. This method of identification could cause these
programs to fail or create erroneous results in the year 2000. This
situation has been referred to generally as the Year 2000 issue.
We believe that the cost of remediation associated with our corporate level
computer systems will be minimal (less than $30,000). We anticipate that
we will complete remediation in the second quarter of 1999.
The second essential component of the Year 2000 issue is to ensure that our
significant tenants are assessed for Year 2000 compliance. We have
initiated discussions with our significant tenants in order to assess
readiness for the Year 2000 issue. Through March 2, 1999, tenants
Page 38
<PAGE>
representing approximately 74% of our revenue have confirmed that they are
Year 2000 compliant or anticipate being compliant by the end of the second
quarter of 1999. Due to the nature of the tenant's businesses, we do not
believe the Year 2000 issue will materially impact the tenant's ability to
pay rent. However, the failure of one or more tenants as a result of the
Year 2000 issue could have a material adverse effect on our results of
operations or financial position.
The third component of our Year 2000 compliance plan is to ensure that our
significant vendors are assessed for Year 2000 compliance. We have
initiated discussions with these significant vendors in order to assess
their ability to successfully resolve the Year 2000 issue. Through
March 2, 1999, 75% of our significant vendors have confirmed that they are
Year 2000 compliant or anticipate being compliant by the end of the second
quarter of 1999. Our transfer agent has advised us it is Year 2000
compliant.
Upon completion of our assessment program, we will consider the necessity
of implementing a contingency plan to mitigate any adverse effects
associated with the Year 2000 issue. Though we do not expect the Year 2000
issue to have a material adverse effect on our results of operations or
financial position, there can be no assurances of that position.
IMPACT OF INFLATION
===================
Tenant leases generally provide for limited increases in rent as a result
of increases in the tenant's sales volumes, increases in the consumer price
index, and/or fixed increases. We expect that inflation will cause these
lease provisions to result in increases in rent over time. However, during
times when inflation is greater than increases in rent as provided for in
the leases, rent increases may not keep up with the rate of inflation.
Approximately 99% of the properties in the portfolio are leased to tenants
under net leases in which the tenant is responsible for property costs and
expenses. These features in the leases reduce our exposure to rising
property expenses due to inflation.
Inflation and increased costs may have an adverse impact on the tenants if
increases in the tenant's operating expenses exceed increases in revenue.
IMPACT OF ACCOUNTING PRONOUNCEMENTS
===================================
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting
for Derivative Instruments and Hedging Activities" ("Statement
No. 133"). Statement No. 133 establishes accounting and
reporting standards for derivative instruments. Statement No.
133 is effective for all fiscal quarters beginning after
June 15, 1999.
Page 39
<PAGE>
We anticipate that the adoption of Statement No. 133 will not have a
material effect on the financial position, results of operations or
liquidity of the Company.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
====================================================================
We are exposed to interest rate changes primarily as a result of our credit
facility and long-term debt used to maintain liquidity and expand our real
estate investment portfolio and operations. Our interest rate risk
management objective is to limit the impact of interest rate changes on
earnings and cash flows and to lower our overall borrowing costs. To
achieve our objectives we borrow primarily at fixed rates and may enter
into derivative financial instruments such as interest rate lock
agreements, interest rate swaps and caps in order to mitigate our interest
rate risk on a related financial instrument. We do not enter into any
transactions for speculative or trading purposes.
Our interest rate risk is monitored using a variety of techniques. The
table below presents the principal amounts, weighted average interest
rates, fair values and other terms required by year of expected maturity to
evaluate the expected cash flows and sensitivity to interest rate changes
(dollars in table in millions).
<TABLE> Expected Maturity Data
----------------------
There- Fair
2001 after Total Value (2)
---- ------ ------ ---------
<S> <C> <C> <C> <C>
Fixed rate debt -- $210.0(1) $210.0 $203.9
Average interest rate 7.99% 7.99%
Variable rate debt $84.8 -- $ 84.8 $ 84.8
Average interest rate 6.27% -- 6.27%
(/TABLE>
<FN>
(1) $110 million matures in 2007 and $100 million matures in 2008.
(2) The fair value of the fixed rate debt is based upon the closing market
price per note (i) at December 31, 1998 for the 1998 Notes and (ii)
December 26, 1998 (date of the last trade made in 1998) for the 1997 Notes.
The fair value of the variable rate debt approximates its carrying value
because its terms are similar to those available in the market place.
</FN>
As the table incorporates only those exposures that exist as of
December 31, 1998, it does not consider those exposures or positions that
could arise after that date. As a result, our ultimate realized gain or
loss with respect to interest rate fluctuations will depend on the
exposures that arise during the period, our hedging strategies at the time,
and interest rates.
Page 40
<PAGE>
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ----------------------------------------------------
</TABLE>
<TABLE>
Table of Contents Page
- ----------------- ----
<S> <C>
A. Independent Auditors' Report...............................42
B. Consolidated Balance Sheets,
December 31, 1998 and 1997...............................43
C. Consolidated Statements of Income,
Years ended December 31, 1998, 1997 and 1996.............45
D. Consolidated Statements of Stockholders' Equity,
Years ended December 31, 1998, 1997 and 1996.............46
E. Consolidated Statements of Cash Flows,
Years ended December 31, 1998, 1997 and 1996.............48
F. Notes to Consolidated Financial Statements.................50
G. Consolidated Quarterly Financial Data,
(unaudited) for 1998 and 1997............................64
H. Schedule III Real Estate and Accumulated
Depreciation.............................................65
</TABLE>
Schedules not Filed: All schedules, other than that indicated in the Table
of Contents, have been omitted as the required information is inapplicable
or the information is presented in the financial statements or related
notes.
Page 41
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors and Stockholders
Realty Income Corporation:
We have audited the consolidated financial statements of Realty Income
Corporation and subsidiaries as listed in the accompanying table of
contents. In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedule III
listed in the accompanying table of contents. These consolidated financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Realty
Income Corporation and subsidiaries as of December 31, 1998 and 1997, and
the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1998, in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule III, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
/s/KPMG LLP
San Diego, California
January 22, 1999
Page 42
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
===========================
December 31, 1998 and 1997
(dollars in thousands, except per share data)
<TABLE>
1998 1997
========= =========
<S> <C> <C>
ASSETS
Real estate, at cost:
Land $ 283,043 $ 214,342
Buildings and improvements 606,792 485,455
--------- ---------
889,835 699,797
Less - accumulated depreciation
and amortization (171,555) (152,206)
--------- ---------
Net real estate 718,280 547,591
Cash and cash equivalents 2,533 2,123
Accounts receivable 2,973 2,888
Due from affiliates -- 348
Goodwill, net 19,977 20,901
Other assets 15,471 3,170
--------- ---------
TOTAL ASSETS $ 759,234 $ 577,021
========= =========
(continued)
Page 43
<PAGE>
(continued)
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
===========================
December 31, 1998 and 1997
(dollars in thousands, except per share data)
1998 1997
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Distributions payable $ 4,559 $ 4,112
Accounts payable and accrued expenses 4,036 2,180
Other liabilities 5,630 4,814
Lines of credit payable 84,800 22,600
Notes payable 210,000 110,000
--------- ---------
TOTAL LIABILITIES 309,025 143,706
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $1.00 per
share, 20,000,000 shares authorized,
no shares issued or outstanding -- --
Common stock, par value $1.00 per share,
100,000,000 shares authorized,
26,817,103 and 25,698,464 shares
issued and outstanding in 1998 and
1997, respectively 26,817 25,698
Paid in capital in excess of par value 609,669 582,450
Accumulated distributions in excess
of net income (186,277) (174,833)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 450,209 433,315
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 759,234 $ 577,021
========= =========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
Page 44
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements Of Income
=================================
Years Ended December 31, 1998, 1997 and 1996
(dollars in thousands, except per share data)
<TABLE>
1998 1997 1996
========== ========== ==========
<S> <C> <C> <C>
REVENUE
Rental $ 84,876 $ 67,613 $ 56,777
Interest and other 256 284 180
---------- ---------- ----------
85,132 67,897 56,957
---------- ---------- ----------
EXPENSES
Depreciation and
amortization 21,935 18,596 16,422
Interest 13,723 8,226 2,367
General and administrative 6,680 5,437 5,181
Property 1,790 1,785 1,640
Provision for impairment
losses -- 165 579
---------- ---------- ----------
44,128 34,209 26,189
---------- ---------- ----------
Income from operations 41,004 33,688 30,768
Gain on sales of properties 526 1,082 1,455
---------- ---------- ----------
Income before cumulative
effect of change in
accounting principle 41,530 34,770 32,223
Cumulative effect of change
in accounting principle (226) -- --
---------- ---------- ----------
NET INCOME $ 41,304 $ 34,770 $ 32,223
========== ========== ==========
Basic and diluted per share amounts:
Income before cumulative
effect of change in
accounting principle $ 1.56 $ 1.48 $ 1.40
Cumulative effect of change
in accounting principle (0.01) -- --
---------- ---------- ----------
Net income per share $ 1.55 $ 1.48 $ 1.40
========== ========== ==========
(/TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
Page 45
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements Of Stockholders' Equity
========================================================
Years Ended December 31, 1998, 1997 and 1996
(dollars in thousands)
</TABLE>
<TABLE>
Accumu-
Paid in lated
Capital Distri-
in butions
Common Stock Excess in Excess
------------------- of Par of Net
Shares Amount Value Income Totals
========== ======= ======== ========= ========
<S> <C> <C> <C> <C> <C>
Balance,
December
31, 1995 22,976,237 $22,976 $516,119 $(157,674) $381,421
Net income -- -- -- 32,223 32,223
Distributions
paid and
payable -- -- -- (39,292) (39,292)
Shares issued 3,300 4 73 -- 77
Stock offering
costs -- -- (188) -- (188)
---------- ------- -------- --------- --------
Balance,
December
31, 1996 22,979,537 22,980 516,004 (164,743) 374,241
Net income -- -- -- 34,770 34,770
Distributions
paid and
payable -- -- -- (44,860) (44,860)
Shares issued
in stock
offering, net
of offering
costs of
$4,193 2,700,000 2,700 66,007 -- 68,707
Shares issued 22,989 22 532 -- 554
Shares
forfeited (4,062) (4) (93) -- (97)
---------- ------- -------- --------- --------
Balance,
December
31, 1997 25,698,464 25,698 582,450 (174,833) 433,315
(continued)
Page 46
<PAGE>
(continued)
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
========================================================
Years Ended December 31, 1998, 1997 and 1996
(dollars in thousands)
Accumu-
Paid in lated
Capital Distri-
in butions
Common Stock Excess in Excess
------------------- of Par of Net
Shares Amount Value Income Totals
========== ======= ======== ========= ========
Net income -- -- -- 41,304 41,304
Distributions
paid and
payable -- -- -- (52,748) (52,748)
Shares issued
in stock
offering, net
of offering
costs of
$122 1,123,267 1,123 27,256 -- 28,379
Shares issued 15,933 16 384 -- 400
Shares
forfeited (20,561) (20) (421) -- (441)
---------- ------- -------- --------- --------
Balance,
December
31, 1998 26,817,103 $26,817 $609,669 $(186,277) $450,209
========== ======= ======== ========= ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
Page 47
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements Of Cash Flows
=====================================
Years Ended December 31, 1998, 1997 and 1996
(dollars in thousands)
<TABLE>
1998 1997 1996
======== ======== ========
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net income $ 41,304 $ 34,770 $ 32,223
Adjustments to net income:
Depreciation and amortization 21,935 18,596 16,422
Provision for impairment losses -- 165 579
Gain on sales of properties (526) (1,082) (1,455)
Cumulative effect of change in
accounting principle 226 -- --
Changes in assets and liabilities:
Accounts receivable and
other assets 144 (844) (646)
Accounts payable, accrued expenses
and other liabilities 1,562 1,087 950
-------- -------- --------
Net cash provided by
operating activities 64,645 52,692 48,073
-------- -------- --------
CASH FLOWS FROM
INVESTING ACTIVITIES
Proceeds from sales of properties 2,770 4,432 4,405
Acquisition of and additions to
properties (192,588) (140,389) (55,705)
-------- -------- --------
Net cash used in
investing activities (189,818) (135,957) (51,300)
-------- -------- --------
(continued)
Page 48
<PAGE>
(continued)
REALTY INCOME CORPORATION AND SUBSIDIARIES
Consolidated Statements Of Cash Flows
=====================================
Years Ended December 31, 1998, 1997 and 1996
(dollars in thousands)
1998 1997 1996
======== ======== ========
CASH FLOWS FROM
FINANCING ACTIVITIES
Proceeds from lines of credit 224,900 117,000 66,700
Payments of lines of credit (162,700) (164,400) (2,700)
Payments of distributions (52,301) (44,367) (48,079)
Proceeds from notes issued,
net of costs of $12,764 and $848
in 1998 and 1997, respectively 87,236 109,152 --
Proceeds from stock offering,
net of offering costs 28,379 68,707 --
Payment of notes payable -- -- (12,597)
Proceeds from other stock issuances 69 246 --
Stock offering costs -- -- (188)
Payments to the defined benefit
pension plan -- (2,223) --
Increase in other assets -- (286) --
-------- -------- --------
Net cash provided by
financing activities 125,583 83,829 3,136
-------- -------- --------
Net increase (decrease) in cash
and cash equivalents 410 564 (91)
Cash and cash equivalents,
beginning of year 2,123 1,559 1,650
-------- -------- --------
Cash and cash equivalents,
end of year $ 2,533 $ 2,123 $ 1,559
======== ======== ========
</TABLE>
For supplemental disclosures, see note 11.
The accompanying notes to consolidated financial statements
are an integral part of these statements.
Page 49
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
Notes To Consolidated Financial Statements
==========================================
December 31, 1998, 1997 and 1996
1. Organization and Operation
Realty Income Corporation ("Realty Income", the "Company", "we" or "our")
was organized in the State of Delaware in September 1993 to facilitate the
merger, which was effected on August 15, 1994 (the "Consolidation"), of 10
private and 15 public real estate limited partnerships with and into the
Company. In August 1995, the Company became self-administered and self-
managed after acquiring R.I.C. Advisor, Inc. (the "Advisor"). In May 1997,
we reincorporated as a Maryland corporation pursuant to a merger of the
Company into a wholly-owned Maryland subsidiary and the conversion of each
outstanding share of common stock of the Company into one share of common
stock of the surviving corporation. We invest in commercial retail real
estate and have elected to be taxed as a real estate investment trust
("REIT"). As of December 31, 1998, we owned 970 properties in 45 states
containing over 7.8 million leasable square feet.
2. Summary of Significant Accounting Policies and Procedures
Principles of Consolidation - The accompanying consolidated financial
statements include the accounts of Realty Income and partnerships we
control (subsidiaries) after elimination of all material intercompany
balances and transactions.
Cash Equivalents - We consider all short-term, highly liquid investments
that are readily convertible to cash and have an original maturity of three
months or less at the time of purchase to be cash equivalents.
Depreciation and Amortization - Depreciation of buildings and improvements,
and amortization of goodwill are computed using the straight-line method
over an estimated useful life of 25 years. Amortization of goodwill for
the years ended December 31, 1998, 1997 and 1996 was $924,000, $924,000 and
$916,000, respectively.
Leases - All leases are accounted for as operating leases. Under this
method, lease payments are recognized as revenue over the term of the lease
on a straight-line basis.
Federal Income Taxes - We have elected to be taxed as a REIT under the
Internal Revenue Code of 1986, as amended. We believe Realty Income has
qualified and continues to qualify as a REIT and therefore will be
permitted to deduct distributions paid to its stockholders, eliminating the
federal taxation of income represented by such distributions at the
Company's level. Accordingly, no provision has been made for federal
income taxes in the accompanying consolidated financial statements.
Distributions Paid and Payable - Realty Income pays distributions monthly.
The following is a summary of the regular monthly cash distributions for
Page 50
<PAGE>
2. Summary of Significant Accounting Policies (continued)
the years ended December 31, 1998, 1997 and 1996. In January 1996, we also
paid a special distribution of $0.23 per share. Including this special
distribution, the 1996 distributions totaled $2.0925 per share.
<TABLE>
Month 1998 1997 1996 (1)
- ----- ------- ------- ------
<S> <C> <C> <C>
January $0.1600 $0.1575 $0.3100 (2)
February 0.1600 0.1575 --
March 0.1600 0.1575 0.1550
April 0.1625 0.1575 0.1550
May 0.1625 0.1575 0.1550
June 0.1625 0.1575 0.1550
July 0.1650 0.1575 0.1550
August 0.1650 0.1575 0.1550
September 0.1650 0.1575 0.1550
October 0.1675 0.1575 0.1550
November 0.1675 0.1575 0.1550
December 0.1675 0.1600 0.1575
------- ------- -------
Total $1.9650 $1.8925 $1.8625
======= ======= =======
</TABLE>
[FN]
(1) Excludes a special distribution of $0.23 per share paid in January
1996.
(2) Two regular distributions of $0.155 per share applicable to each of
January and February 1996 were paid in January 1996.
</FN>
The following presents the federal income tax characterization of
distributions paid or deemed to be paid to stockholders for the years ended
December 31:
<TABLE>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Ordinary income $1.8895 $1.7937 $1.6913
Return of capital 0.0755 0.0988 0.2570
------- ------- -------
Totals $1.9650 $1.8925 $1.9483
======= ======= =======
</TABLE>
For federal income tax purposes, a portion of the distributions payable at
December 31, 1995 and paid in 1996, in the amount of $0.1442 per share, was
deemed to be paid in 1995.
Page 51
<PAGE>
2. Summary of Significant Accounting Policies (continued)
Provision for Impairment Losses - We review long-lived assets, including
goodwill, for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Generally, a provision is made for impairment loss if estimated future
operating cash flows (undiscounted and without interest charges) over a
long-term holding period plus estimated disposition proceeds (undiscounted)
are less than the current book value. If a property is held for sale, it
is carried at the lower of cost or estimated fair value, less costs to
sell. For the years ended December 31, 1998, 1997 and 1996, provisions for
impairment losses of zero, $165,000 and $579,000, respectively, were
charged to operations to reduce the net carrying value of three properties
held for sale in 1997 and four properties held for sale in 1996. All of
these properties have been sold.
Net Income Per Share - Basic net income per share is computed by dividing
net income by the weighted average number of common shares outstanding
during each period. Diluted net income per share is computed by dividing
the amount of net income for the period by each share that would have been
outstanding assuming the issuance of common shares for all dilutive
potential common shares outstanding during the reporting period.
The following is a reconciliation of the denominator of the basic net
income per share computation to the denominator of the diluted net income
per share computation (net income was available to common stockholders for
all periods presented):
<TABLE>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Weighted average shares used for
basic net income per share
computation 26,629,936 23,568,831 22,976,789
Incremental shares from the
assumed conversion of stock
options 8,348 3,884 1,048
---------- ---------- ----------
Adjusted weighted average shares
used for diluted net income
per share computation 26,638,284 23,572,715 22,977,837
========== ========== ==========
</TABLE>
In 1998, 25,000 stock options that were anti-dilutive have been excluded in
calculating the incremental shares from the assumed conversion of stock
options. No stock options were anti-dilutive in 1997 and 1996.
Stock Option Plan - We account for our stock option plan in accordance with
the provisions of Accounting Principles Board ("APB") Opinion No. 25,
Page 52
<PAGE>
2. Summary of Significant Accounting Policies (continued)
"Accounting for Stock Issued to Employees", and related interpretations.
As such, compensation expense would be recorded on the date of grant only
if the current market price of the underlying stock exceeded the exercise
price. Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" ("SFAS No. 123"), permits entities to
recognize as expense over the vesting period the fair value of all stock-
based awards on the date of grant. Alternatively, SFAS No. 123 allows
entities to continue to apply the provisions of APB Opinion No. 25 and
provide pro forma net income and pro forma earnings per share disclosures
for employee stock option grants made in 1995 and future years as if the
fair-value based method defined in SFAS No. 123 had been applied. We have
elected to continue to apply the provisions of APB Opinion No. 25 and
provide the pro forma disclosure provisions of SFAS No. 123.
Derivative Financial Instrument - In two instances, we used interest rate
treasury lock agreements to hedge the effect of interest rate fluctuations.
These instruments each met the requirement for hedge accounting, including
a high correlation to a specific transaction. Accordingly, the amount
received and paid under the terms of the agreements is recognized in income
when interest expense related to the hedge item is recognized.
Change in Accounting Principle - In October 1998, we adopted Statement of
Position 98-5, "Reporting on the Costs of Start-Up Activities" ("SOP 98-
5"). SOP 98-5 requires that costs incurred during start-up activities,
including organization costs, be expensed as incurred. Prior to October
1998, organization costs were amortized over 60 months. In October 1998,
the unamortized balances of organization costs were written off.
Pro forma amounts assuming the adoption of SOP 98-5 is applied as of
January 1, 1996:
<TABLE>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Net income (in thousands) $41,569 $34,528 $32,200
Basic and diluted net income
per share 1.56 1.46 1.40
</TABLE>
Segment Reporting - During 1998, we adopted the provisions of Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS No. 131"). This statement
establishes standards for the way public business enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to stockholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. See note 15 for our segment
disclosures.
Page 53
<PAGE>
2. Summary of Significant Accounting Policies (continued)
Use of Estimates - The preparation of the consolidated financial statements
in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
3. Credit Facility Available for Acquisitions
Realty Income has a $170 million, three-year, revolving, unsecured
acquisition credit facility, of which $52 million expires in December 2000
and $118 million expires in December 2001. The credit facility is from The
Bank of New York, as agent, and several U.S. and non-U.S. banks. As of
December 31, 1998 and 1997, the outstanding balances on the credit facility
and line of credit were $84.8 million and $22.6 million, respectively, with
an effective interest rate of approximately 6.27% and 6.66%, respectively.
The credit facility currently bears interest at 0.85% over the London
Interbank Offered Rate ("LIBOR") and offers us other interest rate options.
A facility fee of 0.15%, per annum, accrues on the total commitment of the
credit facility.
The credit facility is subject to various leverage and interest coverage
ratio limitations. The Company is and has been in compliance with these
limitations.
In 1998, 1997 and 1996, interest of $660,000, $168,000 and $150,000,
respectively, was capitalized on properties under development.
4. Notes Payable
In October 1998, we issued $100 million of 8.25% Monthly Income Senior
Notes due 2008 (the "1998 Notes"). The 1998 Notes are unsecured and were
sold at par ($25.00). After taking into effect the results of a treasury
interest rate lock agreement (see note 5), the effective rate to us on the
1998 Notes is 9.12%. Interest on the 1998 Notes is payable monthly on the
15th of each month, commencing in December 1998. Interest incurred on the
1998 Notes for the year ended December 31, 1998 was $1.4 million.
In May 1997, we issued $110 million of 7.75% senior notes due 2007 (the
"1997 Notes"). The 1997 Notes are unsecured and were sold at 99.929% of
par to yield 7.76%. After taking into effect results of a treasury
interest rate lock agreement (see note 5), the effective interest rate to
us on the 1997 Notes is 7.62%. Interest on the 1997 Notes is payable
semiannually each May and November. Interest incurred on the 1997 Notes
for the year ended December 31, 1998 and 1997 was $8.5 million and $5.5
million, respectively.
On March 29, 1996, we redeemed, at par, the $12.6 million principal amount
of notes issued at the time of the Consolidation to investors in the
Page 54
<PAGE>
4. Notes Payable (continued)
partnerships. Interest incurred on the notes for the year ended
December 31, 1996 was $217,000.
5. Derivative Financial Instruments
In May 1998, we entered into a treasury interest rate lock agreement to
protect against the possibility of rising interest rates applicable to the
1998 Notes (see note 4). Under the interest rate lock agreement, we were
to receive or make a payment based on the differential between a specified
interest rate, (5.726%), and the actual 10-year treasury interest rate on a
notional principal amount of $100 million, at the end of six months. Based
on the 10-year treasury interest rate at October 23, 1998 (the interest
rate pricing date), we made a payment of $8.7 million in settlement of the
agreement in October 1998. The payment on the agreement is being amortized
over 10 years (the life of the 1998 Notes) as a yield adjustment to
interest expense.
In December 1996, we entered into a treasury interest rate lock agreement
to hedge against rising interest rates applicable to the 1997 Notes (see
note 4). Under the terms of the interest rate lock agreement, we were to
receive or make a payment based on the differential between a specified
interest rate (6.537%) and the actual 10-year treasury interest rate on a
notional principal amount of $90 million, at the end of six months. Based
on the 10-year treasury interest rate at May 1, 1997 (the interest rate
pricing date), we received $1.1 million in settlement of the agreement in
June 1997. The payment received on the agreement is being amortized over 10
years (the life of the 1997 Notes) as a yield adjustment to interest
expense.
Our only involvement with derivative financial instruments was the two
aforementioned treasury interest rate lock agreements and we have not used
derivative financial instruments for trading purposes.
6. Common Stock Offerings
A. In March 1998, we issued 372,093 shares of common stock to a unit
investment trust at a net price to us of $25.531 per share, based on a 5%
discount to the then market price of $26.875 per share. The net proceeds
of $9.5 million were used to repay borrowings of $7.9 million under the
acquisition credit facility and to acquire additional properties.
B. In February 1998, we issued 751,174 shares of common stock to a unit
investment trust at a net price to us of $25.295 per share, based on a 5%
discount to the then market price of $26.625 per share. The net proceeds
of $18.9 million were to be used to repay borrowings under the credit
facility.
C. In October 1997, we issued 2.7 million shares of common stock at a
price of $27.00 per share. The net proceeds of $68.7 million were used to
repay borrowings of $62.6 million under the credit facility and to acquire
properties.
Page 55
<PAGE>
7. Operating Leases
A. General - At December 31, 1998, the Company owned 970 properties in 45
states. Of these 970 properties, 963 are single-tenant and the remainder
are multi-tenant. At December 31, 1998, five properties were vacant and
available for lease or sale.
Substantially all leases are net leases whereby the tenant pays property
taxes and assessments, maintains the interior and exterior of the building,
and carries insurance coverage for public liability, property damage, fire,
and extended coverage.
Percentage rent for 1998, 1997 and 1996 was $1.7 million, $1.8 million and
$1.7 million, respectively.
At December 31, 1998, minimum annual rents to be received on the operating
leases are as follows (dollars in thousands):
<TABLE>
Minimum annual rents for the years ending December 31,
======================================================
<S> <C> <C>
1999 $ 93,651
2000 91,319
2001 89,955
2002 85,495
2003 77,438
Thereafter 518,799
---------
TOTAL $ 956,657
=========
</TABLE>
B. Major Tenants - The following schedule presents rental revenue,
including percentage rents, from tenants representing more than 10% of our
total revenue for the years ended December 31, 1998, 1997 or 1996 (dollars
in thousands):
<TABLE>
Tenants 1998 1997 1996
========================= ======= ======= =======
<S> <C> <C> <C>
Children's World, Inc. $14,111 $13,809 $13,460
La Petite Academy, Inc. 9,445 9,311 9,339
Golden Corral Corporation N/A(1) 6,899 7,017
</TABLE>
[FN]
(1) Rental revenue from Golden Corral Corporation represents less than 10%
of our total revenue for 1998.
</FN>
Page 56
<PAGE>
8. Property Acquisitions
During 1998, we invested $193.4 million in 149 new retail properties and
properties under development with an initial contractual lease rate of
10.4%. These 149 properties are located in 38 states, will contain
approximately 1.6 million leasable square feet and are 100% leased with an
average initial lease term of 14.9 years.
During 1997, we invested $142.3 million in 96 new retail properties and
properties under development with an initial contractual lease rate of
10.4%. These 96 properties are located in 27 states, contain approximately
1.1 million leasable square feet and are 100% leased with an average
initial lease term of 14.4 years.
9. Gain on Sales of Properties
In 1998, we sold five properties (two child care centers, two restaurants
and a multi-tenant location) for $2.8 million and recognized a gain of
$526,000. In 1997, we sold ten properties (six restaurants, two child care
centers, one automotive parts store and a multi-tenant location) for a
total of $4.4 million and recognized a gain of $1.1 million. In 1996, we
sold seven properties (five restaurants and two multi-tenant locations) for
a total of $4.4 million and recognized a gain of $1.5 million.
10. Fair Value of Financial Instruments
We believe that the carrying values reflected in the consolidated balance
sheets at December 31, 1998 and 1997 reasonably approximate the fair values
for cash and cash equivalents, accounts receivable, due from affiliates and
all liabilities except the lines of credit payable and notes payable. In
making such assessments, we utilized estimates. The fair value of the lines
of credit payable approximates its carrying value because its terms are
similar to those available in the market place. The fair value of the notes
payable at December 31, 1998 is estimated to be $203.9 million based upon
the closing market price per note (i) at December 31, 1998 for the 1998
Notes and (ii) December 26, 1998 (date of the last trade made in 1998) for
the 1997 Notes. The fair value of the notes payable at December 31, 1997
approximates their carrying value.
11. Supplemental Disclosure of Cash Flow Information
Interest paid during 1998, 1997 and 1996 was $12.5 million, $6.9 million
and $2.0 million, respectively.
Page 57
<PAGE>
11. Supplemental Disclosure of Cash Flow Information (continued)
The following non-cash investing and financing activities are included in
the accompanying consolidated financial statements:
A. In 1998 and 1997, the acquisition properties resulted in the following
non-cash changes (dollars in thousands):
<TABLE>
1998 1997
------ ------
<S> <C> <C>
Increases in:
Land $ -- $1,724
Building 1,347 227
Other liabilities 1,347 1,951
</TABLE>
B. In 1998, the former shareholders of the Advisor returned 20,279
shares to the Company. This fulfilled the Advisor shareholders obligation
to the Company under an indemnification agreement entered into by both
parties (see note 12A). This transaction resulted in the following non-
cash changes (dollars in thousands):
<TABLE>
<S> <C>
Decrease in:
Due from affiliates $ 350
Common stock 20
Paid in capital in excess of par value 413
Increase in:
Interest revenue $ 83
</TABLE>
C. In 1996, pursuant to the assumption of the defined benefit pension
plan by the Company (see note 12A), the Company recorded a due from
affiliate and a liability (included in other liabilities) of $73,000. This
represents the amount of the increase in the liability to the plan, of
which the Company is indemnified by the former shareholders of the Advisor.
12. Employee Benefit Plan
A. As a result of the merger with the Advisor in 1995 (the "Merger"), the
Company assumed a defined benefit pension plan (the "Plan") covering
substantially all of its employees. The Plan was terminated on January 2,
1996 and final disbursement of the Plan's assets occurred on February 24,
1997.
In connection with the Merger, Realty Income assumed a benefit obligation
of $1.9 million. The Merger agreement provides for indemnification by the
former shareholders of the Advisor with respect to increases in the benefit
obligation. A receivable from the Advisor's former shareholders has been
recorded as of December 31, 1997 for $348,000 and is included as due from
affiliates in the accompanying consolidated balance sheets (see note 11B).
Page 58
<PAGE>
12. Employee Benefit Plan (continued)
B. In August 1996, the Company initiated a 401(k) plan. Under the 401(k)
plan, employees may elect to make contributions to the plan, and the
Company matches 50% of such contributions up to 6% of each participant's
compensation.
13. Stock Incentive Plan
In September 1993, our board of directors approved a stock incentive plan
(the "Stock Plan") designed to attract and retain directors, officers and
employees of the Company by enabling such individuals to participate in the
ownership of the Company. The Stock Plan authorizes the issuance in each
calendar year of up to 3% of the total shares outstanding at the end of
such year. At no time may the total number of shares granted under the
Stock Plan exceed 1,950,308. The Stock Plan provides for the award
(subject to ownership limitations) of a broad variety of stock-based
compensation alternatives such as nonqualified stock options, incentive
stock options, restricted stock and performance awards.
Stock options are granted with an exercise price equal to the underlying
stock's fair market value at the date of grant. Stock options expire 10
years from the date they are granted and vest over service periods of one,
three, four and five years. Prior to December 31, 1998, 495,113 stock
options and 28,600 restricted shares of common stock had been granted under
the Stock Plan.
The following table summarizes our stock option activity for the years
ended December 31, 1998, 1997, and 1996:
<TABLE> 1998 1997
----------------------- -----------------------
Weighted Weighted
Average Average
Number Exercise Number Exercise
of shares Price of Shares Price
- -----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding,
beginning of year 139,500 $23.09 73,000 $21.64
Options granted 305,413 25.54 116,700 24.29
Options exercised (2,933) 23.62 (10,489) 23.47
Options canceled (3,376) 25.44 (39,711) 23.85
--------- ------- --------- -------
Outstanding,
end of year 438,604 $24.77 139,500 $23.09
========= ======= ========= =======
Options exercisable,
end of year 196,397 56,300
Weighted average
fair value of each
option granted
during the year $ 2.58 $2.29
Page 59
<PAGE>
13. Stock Incentive Plan (continued)
(table continued)
1996
-----------------------
Weighted
Average
Options Number Exercise
Outstanding of shares Price
- -----------------------------------------
<S> <C> <C>
Outstanding,
beginning
of year 30,000 $20.00
Options granted 43,000 22.78
Options exercised --
Options canceled --
------ ------
Outstanding,
end of year 73,000 $21.64
====== ======
Options exercisable,
end of year 26,000
Weighted average
fair value of each
option granted
during the year $2.29
</TABLE>
At December 31, 1998, the options exercisable under the Stock Plan had
exercise prices ranging from $20.00 to $25.44 with a weighted average price
of $24.03, and expiration dates ranging from August 2004 to December 2007
with a weighted average remaining term of 8 years.
The fair value of each stock option grant were estimated at the date of
grant using the binomial option-pricing model with the following
assumptions:
<TABLE>
1998 1997 1996
------------- -------- --------
<S> <C> <C> <C>
Expected dividend yield 8.86% 9.71% 9.92%
Risk-free interest rate 5.75% 6.70% 6.50%
Volatility 17.90% 17.40% 18.50%
Expected life of options 10 years 10 years 10 years
</TABLE>
The Company applies APB Opinion No. 25 in accounting for its Stock Plan
and, accordingly, no compensation cost has been recognized for its stock
options in the consolidated financial statements. Had the Company
determined compensation cost based on the fair value at the grant date for
its stock options under SFAS No. 123, the Company's net income and diluted
net income per share would have been as follows:
Page 60
<PAGE>
13. Stock Incentive Plan (continued)
<TABLE> 1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Net income (dollars in thousands)
As reported $ 41,304 $ 34,770 $ 32,223
Pro forma 40,914 34,722 32,206
Diluted net income per share
As reported $ 1.55 $ 1.48 $ 1.40
Pro forma 1.54 1.47 1.40
</TABLE>
14. Stockholder Rights Plan
In June 1998, our board of directors adopted a Stockholder Rights Plan (the
"Rights Plan") that will expire in July 2008. The Rights Plan assigns one
right (a "Right") to purchase one one-hundredth (1/100th) of a share of our
Class A Junior Participating Preferred Stock, par value $1.00 per share
(the "Preferred Stock"), for each share of common stock owned on or issued
after July 1, 1998. Initially, the Rights will not be exercisable and will
not trade separately from our common stock.
Under certain circumstances, stockholders will be able to exercise their
Rights if a person or group initiates an unsolicited takeover of the
Company by acquiring 15% of our common stock or by making a tender offer to
acquire 15% or more of our common stock. If an unsolicited acquirer gains
control of the Company, stockholders other than the acquirer would be able
to purchase either our common stock or the acquirer's stock at a 50%
discount.
The dividend, liquidation, and voting rights, and the non-redemption
feature of the Preferred Stock are designed so that the value of the one
one-hundredth interest in a share of the new Preferred Stock that can be
purchased with each Right will approximate what our board of directors
believes to be the long-term value of one share of our common stock.
15. Segment Information
We evaluate performance and make resource allocation decisions on a
property by property basis. For financial reporting purposes, we have
grouped our operating segments into seven reportable segments. Our
segments combine properties into groups based upon the business of our
tenants. All of the properties have been acquired separately and are
incorporated into one of the applicable segments. Revenue is the only
component of segment profit and loss we measure. Since our revenue is
primarily from net leases, expenditures for additions to long-lived assets
were to acquire additional properties. The accounting policies of the
segments are the same as those described in note 2.
Page 61
<PAGE>
15. Segment Information (continued)
The following tables set forth certain information regarding the properties
owned by us as of December 31, 1998 classified according the business of
the respective tenants (dollars in thousands):
<TABLE>
Revenue
----------------------------------
For the years ended December 31, 1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Segment rental revenue:
Automotive parts $ 6,593 $ 6,142 $ 5,966
Automotive service 6,333 4,332 2,706
Child care 24,765 24,284 23,854
Consumer electronics 4,616 4,388 507
Convenience stores 5,175 3,738 2,647
Home furnishings 6,629 3,812 2,496
Restaurants 13,768 13,416 13,836
Other non-reportable segments 16,997 7,501 4,765
Reconciling items -interest and other 256 284 180
-------- -------- --------
Total revenue $ 85,132 $ 67,897 $ 56,957
======== ======== ========
Assets
---------------------
As of December 31, 1998 1997
-------- --------
Segment net real estate:
Automotive parts $ 65,847 $ 42,880
Automotive service 46,731 45,765
Child care 138,875 139,273
Consumer electronics 40,447 41,652
Convenience stores 43,986 37,430
Home furnishings 76,920 47,528
Restaurants 87,682 85,139
Other non-reportable segments 217,792 107,924
------- -------
Total segment net real estate 718,280 547,591
Reconciling items 40,954 29,430
-------- --------
Total assets $759,234 $577,021
======== ========
</TABLE>
16. Commitments and Contingencies
In the ordinary course of our business, we are party to various legal
actions which we believe are routine in nature and incidental to the
operation of the business of the Company. We believe that the outcome of
the proceedings will not have a material adverse effect upon our
consolidated statements taken as a whole.
Page 62
<PAGE>
17. Subsequent Event
In January 1999, we issued $20 million of 8.00% unsecured senior notes due
2009 (the "1999 Notes"). The 1999 Notes were sold at 98.757% of par to
yield 8.10%. The proceeds from the offering were used to pay down credit
facility borrowings and for other corporate purposes.
Page 63
<PAGE>
REALTY INCOME CORPORATION
AND SUBSIDIARIES
CONSOLIDATED QUARTERLY FINANCIAL DATA
(dollars in thousands, except per share data)
(not covered by Independent Auditors' Report)
<TABLE>
First Second Third Fourth
Quarter Quarter Quarter Quarter Year
======= ======= ======= ======= =======
<S> <C> <C> <C> <C> <C>
1998
====
Total revenue $19,222 $20,367 $21,969 $23,574 $85,132
Depreciation and
amortization
expense 5,084 5,369 5,630 5,852 21,935
Interest expense 2,491 2,864 3,682 4,686 13,723
Other expenses 1,938 2,137 2,164 2,231 8,470
Income from
operations 9,709 9,997 10,493 10,805 41,004
Cumulative effect
of change in
accounting
principle -- -- -- (226) (226)
Net income 9,924 10,308 10,493 10,579 41,304
Basic and diluted
net income
per share 0.38 0.38 0.39 0.40 1.55
Dividends paid
per share 0.4800 0.4875 0.4950 0.5025 1.9650
1997
====
Total revenue $15,480 $16,123 $16,843 $19,451 $67,897
Depreciation and
amortization
expense 4,464 4,484 4,706 4,942 18,596
Provision for
impairment
losses -- 70 70 25 165
Interest expense 1,312 2,009 2,450 2,455 8,226
Other expenses 1,744 1,694 1,747 2,037 7,222
Income from
operations 7,960 7,866 7,870 9,992 33,688
Net income 8,185 8,068 8,466 10,051 34,770
Basic and diluted
net income
per share 0.36 0.35 0.37 0.40 1.48
Dividends paid
per share 0.4725 0.4725 0.4725 0.4750 1.8925
</TABLE>
Page 64
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
<TABLE>
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Apparel Stores
- --------------
<S> <C> <C> <C> <C>
Danbury CT 1,083,296 6,217,688 None None
Manchester CT 771,660 3,653,539 None None
Manchester CT 1,250,464 5,917,037 None None
Staten Island NY 4,202,093 3,385,021 None None
Westbury NY 6,333,590 3,952,773 None None
Automotive Parts
- ----------------
Montgomery AL 254,465 502,293 None None
Blytheville AR 137,913 509,447 None None
Osceola AR 88,759 520,047 None None
Phoenix AZ 231,000 513,057 None None
Phoenix AZ 71,750 159,359 None None
Phoenix AZ 222,950 495,178 None None
Tucson AZ 194,250 431,434 None None
Tucson AZ 178,297 396,005 None None
Yuma AZ 120,750 268,190 None None
Fullerton CA 47,325 66,522 None None
Grass Valley CA 325,000 384,955 None None
Jackson CA 300,000 390,849 None None
Sacramento CA 210,000 466,419 None None
Turlock CA 222,250 493,627 None None
Aurora CO 221,691 492,382 None None
Canon City CO 66,500 147,699 None None
Colorado Springs CO 280,193 622,317 None None
Colorado Springs CO 192,988 433,542 None None
Denver CO 141,400 314,056 None None
Denver CO 315,000 699,623 None None
Denver CO 283,500 629,666 None None
Littleton CO 252,925 561,759 None None
Smyrna DE 232,273 472,855 None None
Lakeland FL 500,000 645,244 None None
Tampa FL 427,395 471,807 None None
Council Bluffs IA 194,355 431,668 None None
Page 65
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Apparel Stores
- --------------
Danbury CT 1,083,296 6,217,688 7,300,984
Manchester CT 771,660 3,653,539 4,425,199
Manchester CT 1,250,464 5,917,037 7,167,501
Staten Island NY 4,202,093 3,385,021 7,587,114
Westbury NY 6,333,590 3,952,773 10,286,363
Automotive Parts
- ----------------
Montgomery AL 254,465 502,293 756,758
Blytheville AR 137,913 509,447 647,360
Osceola AR 88,759 520,047 608,806
Phoenix AZ 231,000 513,057 744,057
Phoenix AZ 71,750 159,359 231,109
Phoenix AZ 222,950 495,178 718,128
Tucson AZ 194,250 431,434 625,684
Tucson AZ 178,297 396,005 574,302
Yuma AZ 120,750 268,190 388,940
Fullerton CA 47,325 66,522 113,847
Grass Valley CA 325,000 384,955 709,955
Jackson CA 300,000 390,849 690,849
Sacramento CA 210,000 466,419 676,419
Turlock CA 222,250 493,627 715,877
Aurora CO 221,691 492,382 714,073
Canon City CO 66,500 147,699 214,199
Colorado Springs CO 280,193 622,317 902,510
Colorado Springs CO 192,988 433,542 626,530
Denver CO 141,400 314,056 455,456
Denver CO 315,000 699,623 1,014,623
Denver CO 283,500 629,666 913,166
Littleton CO 252,925 561,759 814,684
Smyrna DE 232,273 472,855 705,128
Lakeland FL 500,000 645,244 1,145,244
Tampa FL 427,395 471,807 899,202
Council Bluffs IA 194,355 431,668 626,023
Page 66
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Apparel Stores
- --------------
Danbury CT 320,647 09/30/97 300
Manchester CT 115,652 03/26/98 300
Manchester CT 187,312 03/26/98 300
Staten Island NY 107,128 03/26/98 300
Westbury NY 203,551 09/29/97 300
Automotive Parts
- ----------------
Montgomery AL 10,886 06/30/98 300
Blytheville AR 11,041 06/30/98 300
Osceola AR 11,271 06/30/98 300
Phoenix AZ 205,099 11/09/87 300
Phoenix AZ 63,705 11/19/87 300
Phoenix AZ 166,206 11/02/89 300
Tucson AZ 173,703 10/30/87 300
Tucson AZ 129,068 01/19/90 300
Yuma AZ 87,410 01/23/90 300
Fullerton CA 66,522 08/21/72 234
Grass Valley CA 145,452 05/20/88 300
Jackson CA 143,848 05/17/88 300
Sacramento CA 186,454 11/25/87 300
Turlock CA 195,918 12/30/87 300
Aurora CO 160,480 01/29/90 300
Canon City CO 59,044 11/12/87 300
Colorado Springs CO 202,829 01/23/90 300
Colorado Springs CO 100,826 05/20/93 300
Denver CO 125,545 11/18/87 300
Denver CO 267,684 05/16/88 300
Denver CO 240,917 05/27/88 300
Littleton CO 219,746 02/12/88 300
Smyrna DE 7,096 08/07/98 300
Lakeland FL 7,672 06/04/98 12/31/97 300
Tampa FL 5,631 06/12/98 12/05/97 300
Council Bluffs IA 165,162 05/19/88 300
Page 67
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Automotive Parts
- ----------------
Boise ID 158,400 351,813 None None
Boise ID 190,080 422,172 None None
Coeur D'Alene ID 165,900 368,468 None None
Lewiston ID 138,950 308,612 None None
Moscow ID 117,250 260,417 None None
Nampa ID 183,743 408,101 None None
Twin Falls ID 190,080 422,172 None None
Kansas City KS 185,955 413,014 None None
Kansas City KS 222,000 455,881 None None
Lansing MI 132,500 205,412 None None
Sturgis MI 109,558 548,674 None None
Eagan MN 902,443 845,536 None None
Blue Springs MO 222,569 494,334 None None
Grandview MO 347,150 711,024 None None
Independence MO 210,643 467,845 None None
Kansas City MO 210,070 466,571 None None
Kansas City MO 168,350 373,910 None None
Kansas City MO 248,500 551,927 None None
Batesville MS 190,124 485,670 None None
Horn Lakes MS 142,702 514,779 None None
Missoula MT 163,100 362,249 None None
Kearney NE 173,950 344,393 None None
Omaha NE 196,000 435,321 None None
Omaha NE 199,100 412,042 None None
Cherry Hill NJ 1,074,640 1,032,304 None None
Albuquerque NM 80,500 178,794 None None
Rio Rancho NM 211,577 469,923 None None
Sante Fe NM 70,000 155,473 None None
Las Vegas NV 161,000 357,585 None None
Reno NV 456,000 562,344 None None
Canton OH 396,560 597,553 None None
Hamilton OH 91,500 116,315 None None
Hubbard OH 147,043 481,217 None None
Oklahoma City OK 509,370 75,987 None None
Oklahoma City OK 404,815 35,127 None None
Albany OR 152,250 338,153 None None
Page 68
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Automotive Parts
- ----------------
Boise ID 158,400 351,813 510,213
Boise ID 190,080 422,172 612,252
Coeur D'Alene ID 165,900 368,468 534,368
Lewiston ID 138,950 308,612 447,562
Moscow ID 117,250 260,417 377,667
Nampa ID 183,743 408,101 591,844
Twin Falls ID 190,080 422,172 612,252
Kansas City KS 185,955 413,014 598,969
Kansas City KS 222,000 455,881 677,881
Lansing MI 132,500 205,412 337,912
Sturgis MI 109,558 548,674 658,232
Eagan MN 902,443 845,536 1,747,979
Blue Springs MO 222,569 494,334 716,903
Grandview MO 347,150 711,024 1,058,174
Independence MO 210,643 467,845 678,488
Kansas City MO 210,070 466,571 676,641
Kansas City MO 168,350 373,910 542,260
Kansas City MO 248,500 551,927 800,427
Batesville MS 190,124 485,670 675,794
Horn Lakes MS 142,702 514,779 657,481
Missoula MT 163,100 362,249 525,349
Kearney NE 173,950 344,393 518,343
Omaha NE 196,000 435,321 631,321
Omaha NE 199,100 412,042 611,142
Cherry Hill NJ 1,074,640 1,032,304 2,106,944
Albuquerque NM 80,500 178,794 259,294
Rio Rancho NM 211,577 469,923 681,500
Sante Fe NM 70,000 155,473 225,473
Las Vegas NV 161,000 357,585 518,585
Reno NV 456,000 562,344 1,018,344
Canton OH 396,560 597,553 994,113
Hamilton OH 91,500 116,315 207,815
Hubbard OH 147,043 481,217 628,260
Oklahoma City OK 509,370 75,987 585,357
Oklahoma City OK 404,815 35,127 439,942
Albany OR 152,250 338,153 490,403
Page 69
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Automotive Parts
- ----------------
Boise ID 134,608 05/06/88 300
Boise ID 161,527 05/06/88 300
Coeur D'Alene ID 149,408 09/21/87 300
Lewiston ID 125,138 09/16/87 300
Moscow ID 105,595 09/14/87 300
Nampa ID 156,145 05/06/88 300
Twin Falls ID 161,527 05/06/88 300
Kansas City KS 158,025 05/13/88 300
Kansas City KS 174,339 05/16/88 300
Lansing MI 139 In Process 12/03/98 300
Sturgis MI 939 12/30/98 300
Eagan MN 12,790 02/20/98 300
Blue Springs MO 169,490 07/31/89 300
Grandview MO 8,381 08/20/98 02/20/98 300
Independence MO 160,407 07/31/89 300
Kansas City MO 178,516 05/13/88 300
Kansas City MO 143,062 05/26/88 300
Kansas City MO 202,952 10/25/88 300
Batesville MS 8,909 07/27/98 300
Horn Lakes MS 11,157 06/30/98 300
Missoula MT 145,849 10/30/87 300
Kearney NE 108,367 05/01/90 300
Omaha NE 166,559 05/26/88 300
Omaha NE 155,860 05/27/88 300
Cherry Hill NJ 139,361 01/26/95 300
Albuquerque NM 71,986 10/29/87 300
Rio Rancho NM 183,821 02/26/88 300
Sante Fe NM 62,597 10/29/87 300
Las Vegas NV 143,971 10/29/87 300
Reno NV 215,042 05/26/88 300
Canton OH 8,967 08/14/98 300
Hamilton OH 154 In Process 12/03/98 300
Hubbard OH 10,429 06/30/98 300
Oklahoma City OK 137 In Process 09/24/98 300
Oklahoma City OK 124 In Process 10/16/98 300
Albany OR 138,087 08/24/87 300
Page 70
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Automotive Parts
- ----------------
Beaverton OR 210,000 466,419 None None
Corvallis OR 152,250 338,153 None None
Eugene OR 194,880 432,837 None None
Oak Grove OR 180,250 400,336 None None
Portland OR 190,750 423,664 None None
Portland OR 147,000 326,493 None None
Portland OR 210,000 466,412 None None
Salem OR 136,500 303,170 None None
Tigard OR 164,500 365,361 None None
Butler PA 339,929 633,078 None None
Dover PA 265,112 593,341 None None
Enola PA 220,228 546,026 None None
Harrisburg PA 327,781 608,291 None None
Harrisburg PA 283,417 352,473 None None
Lancaster PA 199,899 774,838 None None
New Castle PA 180,009 525,774 None None
Reading PA 189,500 44,054 None None
Sioux Falls SD 332,979 498,102 None None
Memphis TN 197,708 507,647 None None
Amarillo TX 140,000 419,734 None None
Austin TX 185,454 411,899 None None
Dallas TX 191,267 424,811 None None
El Paso TX 66,150 146,922 None None
El Paso TX 56,350 125,156 None None
Garland TX 242,887 539,461 None None
Harlingen TX 134,599 298,948 None None
Houston TX 151,018 335,417 None None
Leon Valley TX 178,221 395,834 None None
Lubbock TX 42,000 93,284 None None
Lubbock TX 49,000 108,831 None None
Midland TX 45,500 101,058 None None
Odessa TX 50,750 112,718 None None
Pasadena TX 107,391 238,518 None None
Plano TX 187,564 417,158 700 None
San Antonio TX 245,164 544,518 None None
Bountiful UT 183,750 408,115 None None
Page 71
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Automotive Parts
- ----------------
Beaverton OR 210,000 466,419 676,419
Corvallis OR 152,250 338,153 490,403
Eugene OR 194,880 432,837 627,717
Oak Grove OR 180,250 400,336 580,586
Portland OR 190,750 423,664 614,414
Portland OR 147,000 326,493 473,493
Portland OR 210,000 466,412 676,412
Salem OR 136,500 303,170 439,670
Tigard OR 164,500 365,361 529,861
Butler PA 339,929 633,078 973,007
Dover PA 265,112 593,341 858,453
Enola PA 220,228 546,026 766,254
Harrisburg PA 327,781 608,291 936,072
Harrisburg PA 283,417 352,473 635,890
Lancaster PA 199,899 774,838 974,737
New Castle PA 180,009 525,774 705,783
Reading PA 189,500 44,054 233,554
Sioux Falls SD 332,979 498,102 831,081
Memphis TN 197,708 507,647 705,355
Amarillo TX 140,000 419,734 559,734
Austin TX 185,454 411,899 597,353
Dallas TX 191,267 424,811 616,078
El Paso TX 66,150 146,922 213,072
El Paso TX 56,350 125,156 181,506
Garland TX 242,887 539,461 782,348
Harlingen TX 134,599 298,948 433,547
Houston TX 151,018 335,417 486,435
Leon Valley TX 178,221 395,834 574,055
Lubbock TX 42,000 93,284 135,284
Lubbock TX 49,000 108,831 157,831
Midland TX 45,500 101,058 146,558
Odessa TX 50,750 112,718 163,468
Pasadena TX 107,391 238,518 345,909
Plano TX 187,564 417,158 605,422
San Antonio TX 245,164 544,518 789,682
Bountiful UT 183,750 408,115 591,865
Page 72
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Automotive Parts
- ----------------
Beaverton OR 190,464 08/26/87 300
Corvallis OR 138,087 08/12/87 300
Eugene OR 169,315 02/10/88 300
Oak Grove OR 163,479 08/06/87 300
Portland OR 173,006 08/12/87 300
Portland OR 133,325 08/26/87 300
Portland OR 189,124 09/01/87 300
Salem OR 123,800 08/20/87 300
Tigard OR 149,198 08/26/87 300
Butler PA 9,501 08/07/98 300
Dover PA 12,858 06/30/98 300
Enola PA 2,741 11/10/98 300
Harrisburg PA 13,183 06/30/98 300
Harrisburg PA 4,124 09/30/98 300
Lancaster PA 11,626 08/14/98 300
New Castle PA 11,394 06/30/98 300
Reading PA 136 In Process 12/04/98 300
Sioux Falls SD 7,531 02/27/98 300
Memphis TN 5,931 09/30/98 300
Amarillo TX 155,519 09/12/88 300
Austin TX 133,088 02/06/90 300
Dallas TX 138,457 01/26/90 300
El Paso TX 59,153 10/27/87 300
El Paso TX 50,390 10/27/87 300
Garland TX 175,824 01/19/90 300
Harlingen TX 97,435 01/17/90 300
Houston TX 109,320 01/25/90 300
Leon Valley TX 129,013 01/17/90 300
Lubbock TX 37,557 10/26/87 300
Lubbock TX 43,818 10/29/87 300
Midland TX 40,687 10/27/87 300
Odessa TX 45,381 10/26/87 300
Pasadena TX 77,740 01/24/90 300
Plano TX 135,793 01/18/90 300
San Antonio TX 175,938 02/14/90 300
Bountiful UT 133,015 01/30/90 300
Page 73
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Automotive Parts
- ----------------
Provo UT 125,395 278,507 None None
Bellevue WA 185,500 411,997 None None
Bellingham WA 168,000 373,133 None None
Bothell WA 199,500 443,098 None None
Everett WA 367,500 816,227 None None
Hazel Dell WA 168,000 373,135 None None
Kennewick WA 161,350 358,365 None None
Kent WA 199,500 443,091 None None
Lacey WA 171,150 380,125 None None
Marysville WA 168,000 373,135 None None
Moses Lake WA 138,600 307,831 None None
Pasco WA 161,700 359,142 None None
Puyallup WA 173,250 384,795 None None
Redmond WA 196,000 435,317 None None
Renton WA 185,500 412,003 None None
Richland WA 161,700 359,142 None None
Seattle WA 162,400 360,697 None None
Silverdale WA 183,808 419,777 None None
Spanaway WA 189,000 419,777 None None
Spokane WA 66,150 146,921 None None
Tacoma WA 191,800 425,996 None None
Tacoma WA 196,000 435,324 None None
Tacoma WA 187,111 415,579 None None
Vancouver WA 180,250 400,343 None None
Walla Walla WA 170,100 377,793 None None
Wenatchee WA 148,400 329,602 None None
Woodinville WA 171,500 380,908 None None
Brown Deer WI 257,408 802,110 None None
Madison WI 452,630 811,964 None None
Oak Creek WI 420,465 852,402 None None
Automotive Service
- ------------------
Flagstaff AZ 144,821 381,432 None None
Chula Vista CA 313,293 409,654 None None
Arvada CO 201,565 339,038 None None
Arvada CO 241,044 344,753 None None
Page 74
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Automotive Parts
- ----------------
Provo UT 125,395 278,507 403,902
Bellevue WA 185,500 411,997 597,497
Bellingham WA 168,000 373,133 541,133
Bothell WA 199,500 443,098 642,598
Everett WA 367,500 816,227 1,183,727
Hazel Dell WA 168,000 373,135 541,135
Kennewick WA 161,350 358,365 519,715
Kent WA 199,500 443,091 642,591
Lacey WA 171,150 380,125 551,275
Marysville WA 168,000 373,135 541,135
Moses Lake WA 138,600 307,831 446,431
Pasco WA 161,700 359,142 520,842
Puyallup WA 173,250 384,795 558,045
Redmond WA 196,000 435,317 631,317
Renton WA 185,500 412,003 597,503
Richland WA 161,700 359,142 520,842
Seattle WA 162,400 360,697 523,097
Silverdale WA 183,808 419,777 603,585
Spanaway WA 189,000 419,777 608,777
Spokane WA 66,150 146,921 213,071
Tacoma WA 191,800 425,996 617,796
Tacoma WA 196,000 435,324 631,324
Tacoma WA 187,111 415,579 602,690
Vancouver WA 180,250 400,343 580,593
Walla Walla WA 170,100 377,793 547,893
Wenatchee WA 148,400 329,602 478,002
Woodinville WA 171,500 380,908 552,408
Brown Deer WI 257,408 802,110 1,059,518
Madison WI 452,630 811,964 1,264,594
Oak Creek WI 420,465 852,402 1,272,867
Automotive Service
- ------------------
Flagstaff AZ 144,821 381,432 526,253
Chula Vista CA 313,293 409,654 722,947
Arvada CO 201,565 339,038 540,603
Arvada CO 241,044 344,753 585,797
Page 75
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Automotive Parts
- ----------------
Provo UT 90,772 01/25/90 300
Bellevue WA 168,240 08/06/87 300
Bellingham WA 152,369 08/20/87 300
Bothell WA 180,942 08/20/87 300
Everett WA 326,292 11/17/87 300
Hazel Dell WA 138,748 05/23/88 300
Kennewick WA 146,341 08/26/87 300
Kent WA 180,937 08/06/87 300
Lacey WA 155,224 08/13/87 300
Marysville WA 152,372 08/20/87 300
Moses Lake WA 125,704 08/12/87 300
Pasco WA 146,657 08/18/87 300
Puyallup WA 156,030 09/15/87 300
Redmond WA 176,516 09/17/87 300
Renton WA 167,060 09/15/87 300
Richland WA 146,657 08/13/87 300
Seattle WA 147,293 08/20/87 300
Silverdale WA 170,213 09/16/87 300
Spanaway WA 171,417 08/25/87 300
Spokane WA 58,732 11/18/87 300
Tacoma WA 173,958 08/18/87 300
Tacoma WA 175,271 10/15/87 300
Tacoma WA 135,448 01/25/90 300
Vancouver WA 163,481 08/20/87 300
Walla Walla WA 154,273 08/06/87 300
Wenatchee WA 134,596 08/25/87 300
Woodinville WA 155,545 08/20/87 300
Brown Deer WI 1,442 12/15/98 07/16/98 300
Madison WI 6,882 10/20/98 04/07/98 300
Oak Creek WI 7,226 08/07/98 03/20/98 300
Automotive Service
- ------------------
Flagstaff AZ 5,977 In Process 08/29/97 300
Chula Vista CA 43,014 05/01/96 01/19/96 300
Arvada CO 32,209 08/28/96 04/09/96 300
Arvada CO 26,629 01/03/97 07/10/96 300
Page 76
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Automotive Service
- ------------------
Broomfield CO 154,930 503,626 None None
Denver CO 341,726 433,341 None None
Denver CO 79,717 369,586 None None
Thornton CO 276,084 415,464 None None
Hartford CT 248,540 482,460 None None
Southington CT 225,882 672,910 None None
Ft. Lauderdale FL 254,090 465,890 None None
Jacksonville FL 76,585 355,066 None None
Lauderdale Lakes FL 65,987 305,931 None None
Seminole FL 68,000 315,266 None None
Sunrise FL 80,253 372,069 None None
Tampa FL 70,000 324,538 None None
Tampa FL 67,000 310,629 None None
Tampa FL 86,502 401,041 None None
Atlanta GA 55,840 258,889 None None
Atlanta GA 78,646 364,625 None None
Bogart GA 66,807 309,732 None None
Duluth GA 222,275 316,925 None None
Gainesville GA 53,589 248,452 None None
Marietta GA 60,900 293,461 None None
Marietta GA 69,561 346,024 None None
Riverdale GA 58,444 270,961 None None
Rome GA 56,454 261,733 None None
Anderson IN 232,170 385,661 None None
Indianapolis IN 231,384 428,307 None None
Olathe KS 217,995 367,055 None None
Louisville KY 56,054 259,881 None None
Newport KY 323,511 289,017 None None
Billerica MA 399,043 462,240 None None
Clinton MD 70,880 328,620 None None
Minneapolis MN 58,000 268,903 None None
Independence MO 297,641 233,152 None None
Concord NC 237,688 357,976 None None
Durham NC 354,676 361,203 None None
Durham NC 55,074 255,336 None None
Fayetteville NC 224,326 257,733 None None
Page 77
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Automotive Service
- ------------------
Broomfield CO 154,930 503,626 658,556
Denver CO 341,726 433,341 775,067
Denver CO 79,717 369,586 449,303
Thornton CO 276,084 415,464 691,548
Hartford CT 248,540 482,460 731,000
Southington CT 225,882 672,910 898,792
Ft. Lauderdale FL 254,090 465,890 719,980
Jacksonville FL 76,585 355,066 431,651
Lauderdale Lakes FL 65,987 305,931 371,918
Seminole FL 68,000 315,266 383,266
Sunrise FL 80,253 372,069 452,322
Tampa FL 70,000 324,538 394,538
Tampa FL 67,000 310,629 377,629
Tampa FL 86,502 401,041 487,543
Atlanta GA 55,840 258,889 314,729
Atlanta GA 78,646 364,625 443,271
Bogart GA 66,807 309,732 376,539
Duluth GA 222,275 316,925 539,200
Gainesville GA 53,589 248,452 302,041
Marietta GA 60,900 293,461 354,361
Marietta GA 69,561 346,024 415,585
Riverdale GA 58,444 270,961 329,405
Rome GA 56,454 261,733 318,187
Anderson IN 232,170 385,661 617,831
Indianapolis IN 231,384 428,307 659,691
Olathe KS 217,995 367,055 585,050
Louisville KY 56,054 259,881 315,935
Newport KY 323,511 289,017 612,528
Billerica MA 399,043 462,240 861,283
Clinton MD 70,880 328,620 399,500
Minneapolis MN 58,000 268,903 326,903
Independence MO 297,641 233,152 530,793
Concord NC 237,688 357,976 595,664
Durham NC 354,676 361,203 715,879
Durham NC 55,074 255,336 310,410
Fayetteville NC 224,326 257,733 482,059
Page 78
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Automotive Service
- ------------------
Broomfield CO 47,845 08/22/96 03/15/96 300
Denver CO 20,854 09/25/97 06/12/97 300
Denver CO 228,097 10/08/85 300
Thornton CO 32,287 12/31/96 10/31/96 300
Hartford CT 44,226 09/30/96 300
Southington CT 41,337 06/06/97 300
Ft. Lauderdale FL 10,136 05/13/98 12/24/97 300
Jacksonville FL 215,154 12/23/85 300
Lauderdale Lakes FL 182,945 02/19/86 300
Seminole FL 191,036 12/23/85 300
Sunrise FL 223,722 02/14/86 300
Tampa FL 196,655 12/27/85 300
Tampa FL 188,227 12/27/85 300
Tampa FL 231,807 07/23/86 300
Atlanta GA 157,904 11/27/85 300
Atlanta GA 220,946 12/18/85 300
Bogart GA 187,684 12/20/85 300
Duluth GA 12,551 10/24/97 06/20/97 300
Gainesville GA 150,549 12/19/85 300
Marietta GA 177,822 12/26/85 300
Marietta GA 202,542 06/03/86 300
Riverdale GA 163,112 01/15/86 300
Rome GA 158,596 12/19/85 300
Anderson IN 16,047 12/19/97 300
Indianapolis IN 39,261 09/27/96 300
Olathe KS 23,854 04/22/97 11/11/96 300
Louisville KY 157,476 12/17/85 300
Newport KY 14,856 09/17/97 300
Billerica MA 31,465 04/02/97 300
Clinton MD 201,512 11/15/85 300
Minneapolis MN 162,943 12/18/85 300
Independence MO 19,041 12/20/96 300
Concord NC 6,615 05/27/98 11/05/97 300
Durham NC 18,587 08/29/97 03/31/97 300
Durham NC 156,576 11/13/85 300
Fayetteville NC 10,692 12/03/97 300
Page 79
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Automotive Service
- ------------------
Garner NC 218,294 319,334 None None
Greensboro NC 287,474 316,108 None None
Matthews NC 295,580 338,472 None None
Pineville NC 254,460 355,606 None None
Raleigh NC 89,145 413,301 None None
Raleigh NC 398,694 263,621 None None
Akron OH 139,126 460,334 None None
Beaver Creek OH 205,000 492,538 None None
Centerville OH 305,000 420,448 None None
Cincinnati OH 293,005 201,340 None None
Columbus OH 71,098 329,626 None None
Columbus OH 75,761 351,246 None None
Columbus OH 245,036 470,468 None None
Dayton OH 70,000 324,538 None None
Eastlake OH 321,347 459,774 None None
Fairfield OH 323,408 235,024 None None
Findlay OH 283,515 397,004 None None
Hamilton OH 252,608 413,279 None None
Huber Heights OH 282,000 449,381 None None
Miamisburg OH 63,996 296,701 None None
Milford OH 353,324 269,997 None None
Mt. Vernon OH 216,115 375,357 None None
Northwood OH 65,978 263,912 None None
Norwalk OH 200,205 366,000 None None
Sandusky OH 264,708 404,011 None None
Springboro OH 191,911 522,902 None None
Toledo OH 91,655 366,621 None None
Toledo OH 73,408 293,632 None None
Midwest City OK 106,312 333,551 None None
The Village OK 143,655 295,422 None None
Bethel Park PA 299,595 331,264 None None
Bethlehem PA 275,328 389,067 None None
Bethlehem PA 229,162 310,526 None None
Philadelphia PA 858,500 877,745 None None
Springfield Twp. PA 82,740 383,601 None None
York PA 249,436 347,424 None None
Page 80
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Automotive Service
- ------------------
Garner NC 218,294 319,334 537,628
Greensboro NC 287,474 316,108 603,582
Matthews NC 295,580 338,472 634,052
Pineville NC 254,460 355,606 610,066
Raleigh NC 89,145 413,301 502,446
Raleigh NC 398,694 263,621 662,315
Akron OH 139,126 460,334 599,460
Beaver Creek OH 205,000 492,538 697,538
Centerville OH 305,000 420,448 725,448
Cincinnati OH 293,005 201,340 494,345
Columbus OH 71,098 329,626 400,724
Columbus OH 75,761 351,246 427,007
Columbus OH 245,036 470,468 715,504
Dayton OH 70,000 324,538 394,538
Eastlake OH 321,347 459,774 781,121
Fairfield OH 323,408 235,024 558,432
Findlay OH 283,515 397,004 680,519
Hamilton OH 252,608 413,279 665,887
Huber Heights OH 282,000 449,381 731,381
Miamisburg OH 63,996 296,701 360,697
Milford OH 353,324 269,997 623,321
Mt. Vernon OH 216,115 375,357 591,472
Northwood OH 65,978 263,912 329,890
Norwalk OH 200,205 366,000 566,205
Sandusky OH 264,708 404,011 668,719
Springboro OH 191,911 522,902 714,813
Toledo OH 91,655 366,621 458,276
Toledo OH 73,408 293,632 367,040
Midwest City OK 106,312 333,551 439,863
The Village OK 143,655 295,422 439,077
Bethel Park PA 299,595 331,264 630,859
Bethlehem PA 275,328 389,067 664,395
Bethlehem PA 229,162 310,526 539,688
Philadelphia PA 858,500 877,745 1,736,245
Springfield Twp. PA 82,740 383,601 466,341
York PA 249,436 347,424 596,860
Page 81
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Automotive Service
- ------------------
Garner NC 12,666 01/05/98 06/20/97 300
Greensboro NC 19,408 06/09/97 01/31/97 300
Matthews NC 2,915 08/28/98 02/27/98 300
Pineville NC 18,304 08/28/97 04/16/97 300
Raleigh NC 253,725 10/28/85 300
Raleigh NC 12,662 10/01/97 300
Akron OH 23,716 09/18/97 300
Beaver Creek OH 35,298 02/13/97 09/09/96 300
Centerville OH 41,344 07/24/96 06/28/96 300
Cincinnati OH 10,305 09/17/97 300
Columbus OH 203,436 10/02/85 300
Columbus OH 215,630 10/24/85 300
Columbus OH 57,240 12/22/95 300
Dayton OH 199,233 10/31/85 300
Eastlake OH 55,939 12/22/95 300
Fairfield OH 12,057 09/17/97 300
Findlay OH 16,519 12/24/97 300
Hamilton OH 25,481 03/31/97 10/04/96 300
Huber Heights OH 35,201 12/03/96 07/18/96 300
Miamisburg OH 183,115 10/08/85 300
Milford OH 13,870 09/18/97 300
Mt. Vernon OH 15,617 12/30/97 300
Northwood OH 216,701 09/12/86 180
Norwalk OH 15,228 12/19/97 300
Sandusky OH 16,812 12/19/97 300
Springboro OH 37,347 03/07/97 300
Toledo OH 301,036 09/12/86 180
Toledo OH 241,104 09/12/86 180
Midwest City OK 5,059 08/06/98 08/08/97 300
The Village OK 8,376 03/06/98 07/29/97 300
Bethel Park PA 13,784 12/19/97 300
Bethlehem PA 16,194 12/19/97 300
Bethlehem PA 12,916 12/24/97 300
Philadelphia PA 237,121 05/19/95 12/05/94 300
Springfield Twp. PA 229,392 02/28/86 300
York PA 14,454 12/30/97 300
Page 82
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Automotive Service
- ------------------
Charleston SC 217,250 294,079 None None
Columbia SC 343,785 295,001 None None
Columbia SC 267,622 298,594 None None
Greenville SC 221,946 315,163 None None
Lexington SC 241,434 201,143 None None
North Charleston SC 174,980 341,466 None None
Brentwood TN 305,546 505,728 None None
Nashville TN 342,960 227,440 None None
Dallas TX 234,604 325,951 None None
Houston TX 285,000 369,694 None None
Houston TX 233,406 154,337 None None
Houston TX 195,000 57,757 None None
Lewisville TX 199,942 324,736 None None
San Antonio TX 198,828 437,422 None None
Richmond VA 149,780 399,415 None None
Roanoke VA 349,628 322,545 None None
Virginia Beach VA 287,675 382,125 None None
Bremerton WA 261,172 373,080 None None
Milwaukee WI 173,005 499,244 None None
Milwaukee WI 152,509 475,480 None None
New Berlin WI 188,491 466,268 None None
Book Stores
- -----------
Tampa FL 998,250 3,696,707 None None
Business Services
- -----------------
Jackson MI 552,972 316,980 None None
Child Care
- ----------
Birmingham AL 63,800 295,791 None None
Huntsville AL 28,600 197,165 None None
Mobile AL 78,400 237,671 None None
Mobile AL 63,000 292,084 None None
Avondale AZ 242,723 9,169 None None
Chandler AZ 144,083 668,080 None None
Chandler AZ 291,720 647,923 None None
Page 83
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Automotive Service
- ------------------
Charleston SC 217,250 294,079 511,329
Columbia SC 343,785 295,001 638,786
Columbia SC 267,622 298,594 566,216
Greenville SC 221,946 315,163 537,109
Lexington SC 241,434 201,143 442,577
North Charleston SC 174,980 341,466 516,446
Brentwood TN 305,546 505,728 811,274
Nashville TN 342,960 227,440 570,400
Dallas TX 234,604 325,951 560,555
Houston TX 285,000 369,694 654,694
Houston TX 233,406 154,337 387,743
Houston TX 195,000 57,757 252,757
Lewisville TX 199,942 324,736 524,678
San Antonio TX 198,828 437,422 636,250
Richmond VA 149,780 399,415 549,195
Roanoke VA 349,628 322,545 672,173
Virginia Beach VA 287,675 382,125 669,800
Bremerton WA 261,172 373,080 634,252
Milwaukee WI 173,005 499,244 672,249
Milwaukee WI 152,509 475,480 627,989
New Berlin WI 188,491 466,268 654,759
Book Stores
- -----------
Tampa FL 998,250 3,696,707 4,694,957
Business Services
- -----------------
Jackson MI 552,972 316,980 869,952
Child Care
- ----------
Birmingham AL 63,800 295,791 359,591
Huntsville AL 28,600 197,165 225,765
Mobile AL 78,400 237,671 316,071
Mobile AL 63,000 292,084 355,084
Avondale AZ 242,723 9,169 251,892
Chandler AZ 144,083 668,080 812,163
Chandler AZ 291,720 647,923 939,643
Page 84
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Automotive Service
- ------------------
Charleston SC 16,096 07/14/97 03/13/97 300
Columbia SC 18,056 05/27/97 02/07/97 300
Columbia SC 8,469 03/31/98 11/05/97 300
Greenville SC 15,178 09/05/97 03/31/97 300
Lexington SC 143 In Process 09/24/98 300
North Charleston SC 5,190 08/06/98 03/12/98 300
Brentwood TN 19,338 03/13/98 05/28/97 300
Nashville TN 11,670 09/17/97 300
Dallas TX 30,965 08/09/96 02/19/96 300
Houston TX 17,783 08/08/97 08/08/97 300
Houston TX 126 In Process 03/26/98 300
Houston TX 120 In Process 06/12/98 300
Lewisville TX 30,850 08/02/96 02/14/96 300
San Antonio TX 57,594 09/15/95 300
Richmond VA 32,619 12/26/96 300
Roanoke VA 13,417 12/19/97 300
Virginia Beach VA 29,680 01/07/97 09/27/96 300
Bremerton WA 31,319 03/19/97 07/24/96 300
Milwaukee WI 60,741 12/22/95 300
Milwaukee WI 43,585 09/27/96 300
New Berlin WI 56,729 12/22/95 300
Book Stores
- -----------
Tampa FL 264,890 03/11/97 300
Business Services
- -----------------
Jackson MI 161 In Process 09/25/98 300
Child Care
- ----------
Birmingham AL 201,975 10/31/84 300
Huntsville AL 197,165 06/15/82 180
Mobile AL 237,671 10/15/82 180
Mobile AL 190,439 04/25/85 300
Avondale AZ 73 In Process 07/28/98 300
Chandler AZ 372,753 12/17/86 300
Chandler AZ 257,110 12/11/87 300
Page 85
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Chandler AZ 271,695 603,446 None None
Glendale AZ 115,000 285,172 None None
Mesa AZ 297,500 660,755 None None
Mesa AZ 276,770 590,417 None None
Peoria AZ 281,750 625,779 None None
Phoenix AZ 318,500 707,397 None None
Phoenix AZ 264,504 587,471 None None
Phoenix AZ 260,719 516,181 None None
Scottsdale AZ 291,993 648,530 None None
Tempe AZ 292,200 648,989 None None
Tempe AZ 294,000 638,977 None None
Tucson AZ 304,500 676,303 None None
Tucson AZ 283,500 546,878 None None
Calabasas CA 156,430 725,248 None None
Carmichael CA 131,035 607,507 None None
Chino CA 155,000 634,071 None None
Chula Vista CA 350,563 778,614 None None
Corona CA 144,856 671,585 None None
El Cajon CA 157,804 731,621 None None
Encinitas CA 320,000 710,729 None None
Escondido CA 276,286 613,638 None None
Folsom CA 281,563 625,363 None None
Mission Viejo CA 353,891 744,367 None None
Moreno Valley CA 304,489 676,214 None None
Oceanside CA 145,568 674,889 None None
Palmdale CA 249,490 554,125 None None
Rancho Cordova CA 276,328 613,733 None None
Rancho Cucamonga CA 471,733 1,047,739 None None
Roseville CA 297,343 660,412 None None
Sacramento CA 290,734 645,731 None None
Santee CA 248,418 551,748 None None
Simi Valley CA 208,585 967,055 None None
Valencia CA 301,295 669,185 None None
Walnut CA 217,365 1,007,753 None None
Aurora CO 141,811 657,497 None None
Aurora CO 287,000 637,440 None None
Page 86
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Chandler AZ 271,695 603,446 875,141
Glendale AZ 115,000 285,172 400,172
Mesa AZ 297,500 660,755 958,255
Mesa AZ 276,770 590,417 867,187
Peoria AZ 281,750 625,779 907,529
Phoenix AZ 318,500 707,397 1,025,897
Phoenix AZ 264,504 587,471 851,975
Phoenix AZ 260,719 516,181 776,900
Scottsdale AZ 291,993 648,530 940,523
Tempe AZ 292,200 648,989 941,189
Tempe AZ 294,000 638,977 932,977
Tucson AZ 304,500 676,303 980,803
Tucson AZ 283,500 546,878 830,378
Calabasas CA 156,430 725,248 881,678
Carmichael CA 131,035 607,507 738,542
Chino CA 155,000 634,071 789,071
Chula Vista CA 350,563 778,614 1,129,177
Corona CA 144,856 671,585 816,441
El Cajon CA 157,804 731,621 889,425
Encinitas CA 320,000 710,729 1,030,729
Escondido CA 276,286 613,638 889,924
Folsom CA 281,563 625,363 906,926
Mission Viejo CA 353,891 744,367 1,098,258
Moreno Valley CA 304,489 676,214 980,703
Oceanside CA 145,568 674,889 820,457
Palmdale CA 249,490 554,125 803,615
Rancho Cordova CA 276,328 613,733 890,061
Rancho Cucamonga CA 471,733 1,047,739 1,519,472
Roseville CA 297,343 660,412 957,755
Sacramento CA 290,734 645,731 936,465
Santee CA 248,418 551,748 800,166
Simi Valley CA 208,585 967,055 1,175,640
Valencia CA 301,295 669,185 970,480
Walnut CA 217,365 1,007,753 1,225,118
Aurora CO 141,811 657,497 799,308
Aurora CO 287,000 637,440 924,440
Page 87
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Chandler AZ 239,550 12/14/87 300
Glendale AZ 283,587 02/08/84 180
Mesa AZ 245,285 09/29/88 300
Mesa AZ 219,177 09/29/88 300
Peoria AZ 243,001 03/30/88 300
Phoenix AZ 262,600 09/29/88 300
Phoenix AZ 183,204 06/29/90 300
Phoenix AZ 152,276 12/26/90 300
Scottsdale AZ 257,397 12/14/87 300
Tempe AZ 252,015 03/10/88 300
Tempe AZ 200,426 09/27/90 300
Tucson AZ 251,058 09/28/88 300
Tucson AZ 203,012 09/29/88 300
Calabasas CA 448,103 09/26/85 300
Carmichael CA 348,716 08/22/86 300
Chino CA 634,071 10/06/83 180
Chula Vista CA 313,486 10/30/87 300
Corona CA 452,911 12/19/84 300
El Cajon CA 443,326 12/19/85 300
Encinitas CA 282,084 12/29/87 300
Escondido CA 243,547 12/31/87 300
Folsom CA 253,053 10/23/87 300
Mission Viejo CA 184,240 06/24/93 300
Moreno Valley CA 287,804 02/11/87 300
Oceanside CA 408,948 12/23/85 300
Palmdale CA 205,702 09/14/88 300
Rancho Cordova CA 217,377 03/22/89 300
Rancho Cucamonga CA 415,842 12/30/87 300
Roseville CA 267,225 10/21/87 300
Sacramento CA 259,983 10/05/87 300
Santee CA 226,893 07/23/87 300
Simi Valley CA 585,990 12/20/85 300
Valencia CA 254,132 06/23/88 300
Walnut CA 578,462 08/22/86 300
Aurora CO 390,555 03/25/86 300
Aurora CO 252,995 12/31/87 300
Page 88
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Aurora CO 301,455 655,609 None None
Broomfield CO 107,000 403,080 None None
Broomfield CO 155,306 344,941 None None
Colorado Springs CO 115,542 535,700 None None
Colorado Springs CO 58,400 271,217 None None
Colorado Springs CO 92,570 241,413 None None
Englewood CO 131,216 608,372 None None
Englewood CO 158,651 735,571 None None
Fort Collins CO 117,105 542,950 None None
Fort Collins CO 137,734 638,594 None None
Fort Collins CO 55,200 256,356 None 3,600
Greeley CO 58,400 270,755 None None
Littleton CO 287,000 637,435 None None
Littleton CO 299,250 664,642 None None
Littleton CO 161,617 358,956 None None
Longmont CO 115,592 535,931 None None
Louisville CO 58,089 269,313 None None
Parker CO 153,551 341,043 None None
Westminster CO 306,387 695,737 None None
Bradenton FL 160,060 355,501 None None
Clearwater FL 42,223 269,380 None None
Jacksonville FL 38,500 228,481 None None
Jacksonville FL 48,000 243,060 None None
Jacksonville FL 184,800 410,447 None None
Jupiter FL 78,000 360,088 None None
Margate FL 66,686 309,183 None None
Melbourne FL 256,439 549,345 None None
Niceville FL 73,696 341,688 None None
Orlando FL 68,001 313,922 None None
Orlando FL 159,177 353,538 None None
Orlando FL 245,249 544,704 None None
Orlando FL 190,050 422,107 None None
Oviedo FL 166,409 369,598 None None
Panama City FL 69,500 244,314 None None
Pensacola FL 147,000 326,492 None None
Royal Palm Beach FL 194,193 431,309 None None
Page 89
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Aurora CO 301,455 655,609 957,064
Broomfield CO 107,000 403,080 510,080
Broomfield CO 155,306 344,941 500,247
Colorado Springs CO 115,542 535,700 651,242
Colorado Springs CO 58,400 271,217 329,617
Colorado Springs CO 92,570 241,413 333,983
Englewood CO 131,216 608,372 739,588
Englewood CO 158,651 735,571 894,222
Fort Collins CO 117,105 542,950 660,055
Fort Collins CO 137,734 638,594 776,328
Fort Collins CO 55,200 259,956 315,156
Greeley CO 58,400 270,755 329,155
Littleton CO 287,000 637,435 924,435
Littleton CO 299,250 664,642 963,892
Littleton CO 161,617 358,956 520,573
Longmont CO 115,592 535,931 651,523
Louisville CO 58,089 269,313 327,402
Parker CO 153,551 341,043 494,594
Westminster CO 306,387 695,737 1,002,124
Bradenton FL 160,060 355,501 515,561
Clearwater FL 42,223 269,380 311,603
Jacksonville FL 38,500 228,481 266,981
Jacksonville FL 48,000 243,060 291,060
Jacksonville FL 184,800 410,447 595,247
Jupiter FL 78,000 360,088 438,088
Margate FL 66,686 309,183 375,869
Melbourne FL 256,439 549,345 805,784
Niceville FL 73,696 341,688 415,384
Orlando FL 68,001 313,922 381,923
Orlando FL 159,177 353,538 512,715
Orlando FL 245,249 544,704 789,953
Orlando FL 190,050 422,107 612,157
Oviedo FL 166,409 369,598 536,007
Panama City FL 69,500 244,314 313,814
Pensacola FL 147,000 326,492 473,492
Royal Palm Beach FL 194,193 431,309 625,502
Page 90
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Aurora CO 269,852 09/27/89 300
Broomfield CO 403,080 01/12/83 180
Broomfield CO 133,948 03/15/88 300
Colorado Springs CO 300,687 12/04/86 300
Colorado Springs CO 271,217 12/22/82 180
Colorado Springs CO 241,413 08/31/83 180
Englewood CO 341,478 12/05/86 300
Englewood CO 410,409 12/29/86 300
Fort Collins CO 322,513 03/25/86 300
Fort Collins CO 379,327 03/25/86 300
Fort Collins CO 256,716 12/22/82 180
Greeley CO 183,785 11/21/84 300
Littleton CO 236,629 09/29/88 300
Littleton CO 246,730 09/29/88 300
Littleton CO 142,464 12/10/87 300
Longmont CO 318,345 03/25/86 300
Louisville CO 188,234 06/22/84 300
Parker CO 137,997 10/19/87 300
Westminster CO 260,849 09/27/89 300
Bradenton FL 136,019 05/05/88 300
Clearwater FL 269,380 12/22/81 180
Jacksonville FL 228,481 12/22/81 180
Jacksonville FL 243,060 12/22/81 180
Jacksonville FL 145,375 03/30/89 300
Jupiter FL 223,628 09/11/85 300
Margate FL 172,509 12/16/86 300
Melbourne FL 137,820 04/16/93 300
Niceville FL 191,782 12/03/86 300
Orlando FL 194,957 09/04/85 300
Orlando FL 145,382 07/02/87 300
Orlando FL 216,187 12/10/87 300
Orlando FL 149,505 03/30/89 300
Oviedo FL 147,742 11/20/87 300
Panama City FL 244,314 06/15/82 180
Pensacola FL 115,640 03/28/89 300
Royal Palm Beach FL 157,660 11/15/88 300
Page 91
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Spring Hill FL 146,939 326,356 None None
St. Augustine FL 44,800 213,040 None None
Sunrise FL 69,400 246,671 None None
Sunrise FL 245,000 533,280 None None
Tallahassee FL 66,000 232,010 None None
Tampa FL 53,385 199,846 None None
Douglasville GA 54,000 250,356 None None
Dunwoody GA 318,500 707,399 None None
Ellenwood GA 119,678 275,414 None None
Fayetteville GA 148,400 329,601 None None
Lawrenceville GA 141,449 314,161 None None
Lilburn GA 116,350 539,488 None None
Lithia Springs GA 187,444 363,358 None None
Lithonia GA 239,715 524,459 None None
Marietta GA 231,000 513,061 None None
Marietta GA 273,000 619,076 None None
Marietta GA 292,250 649,095 None None
Marietta GA 295,750 596,299 None None
Marietta GA 301,000 668,529 None None
Marietta GA 148,620 330,090 None None
Martinez GA 141,153 313,504 None None
Smyrna GA 274,750 610,229 None None
Stockbridge GA 168,700 374,688 None None
Stone Mountain GA 316,750 703,512 None None
Stone Mountain GA 65,000 301,357 None None
Valdosta GA 73,561 341,059 None None
Cedar Rapids IA 194,950 427,085 None None
Iowa City IA 186,900 408,910 None None
Johnston IA 186,996 347,278 None None
Addison IL 125,780 583,146 None None
Algonquin IL 241,500 509,629 None None
Aurora IL 165,679 398,739 None None
Bartlett IL 120,824 560,166 None None
Bolingbrook IL 60,000 409,024 None None
Carol Stream IL 122,831 586,416 None None
Elk Grove VillageIL 126,860 588,175 None None
Page 92
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Spring Hill FL 146,939 326,356 473,295
St. Augustine FL 44,800 213,040 257,840
Sunrise FL 69,400 246,671 316,071
Sunrise FL 245,000 533,280 778,280
Tallahassee FL 66,000 232,010 298,010
Tampa FL 53,385 199,846 253,231
Douglasville GA 54,000 250,356 304,356
Dunwoody GA 318,500 707,399 1,025,899
Ellenwood GA 119,678 275,414 395,092
Fayetteville GA 148,400 329,601 478,001
Lawrenceville GA 141,449 314,161 455,610
Lilburn GA 116,350 539,488 655,838
Lithia Springs GA 187,444 363,358 550,802
Lithonia GA 239,715 524,459 764,174
Marietta GA 231,000 513,061 744,061
Marietta GA 273,000 619,076 892,076
Marietta GA 292,250 649,095 941,345
Marietta GA 295,750 596,299 892,049
Marietta GA 301,000 668,529 969,529
Marietta GA 148,620 330,090 478,710
Martinez GA 141,153 313,504 454,657
Smyrna GA 274,750 610,229 884,979
Stockbridge GA 168,700 374,688 543,388
Stone Mountain GA 316,750 703,512 1,020,262
Stone Mountain GA 65,000 301,357 366,357
Valdosta GA 73,561 341,059 414,620
Cedar Rapids IA 194,950 427,085 622,035
Iowa City IA 186,900 408,910 595,810
Johnston IA 186,996 347,278 534,274
Addison IL 125,780 583,146 708,926
Algonquin IL 241,500 509,629 751,129
Aurora IL 165,679 398,739 564,418
Bartlett IL 120,824 560,166 680,990
Bolingbrook IL 60,000 409,024 469,024
Carol Stream IL 122,831 586,416 709,247
Elk Grove VillageIL 126,860 588,175 715,035
Page 93
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Spring Hill FL 130,456 11/24/87 300
St. Augustine FL 213,040 12/22/81 180
Sunrise FL 246,671 06/15/82 180
Sunrise FL 190,459 05/25/89 300
Tallahassee FL 232,010 06/15/82 180
Tampa FL 199,846 12/22/81 180
Douglasville GA 170,964 10/23/84 300
Dunwoody GA 258,580 11/16/88 300
Ellenwood GA 100,673 11/16/88 300
Fayetteville GA 116,741 03/29/89 300
Lawrenceville GA 118,411 07/07/88 300
Lilburn GA 301,005 12/23/86 300
Lithia Springs GA 125,476 12/28/89 300
Lithonia GA 173,638 08/20/91 300
Marietta GA 199,231 03/18/88 300
Marietta GA 238,631 04/26/88 300
Marietta GA 235,425 12/02/88 300
Marietta GA 216,276 12/30/88 300
Marietta GA 242,472 12/30/88 300
Marietta GA 122,620 09/16/88 300
Martinez GA 124,425 12/31/87 300
Smyrna GA 223,061 11/15/88 300
Stockbridge GA 132,710 03/28/89 300
Stone Mountain GA 257,160 11/16/88 300
Stone Mountain GA 189,773 06/19/85 300
Valdosta GA 191,426 12/03/86 300
Cedar Rapids IA 122,934 09/24/92 300
Iowa City IA 119,748 09/24/92 300
Johnston IA 94,673 08/19/91 300
Addison IL 346,391 03/25/86 300
Algonquin IL 160,757 07/10/90 300
Aurora IL 144,620 12/21/88 300
Bartlett IL 332,740 03/25/86 300
Bolingbrook IL 409,024 10/18/82 180
Carol Stream IL 348,334 03/25/86 300
Elk Grove VillageIL 349,379 03/26/86 300
Page 94
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Elk Grove VillageIL 214,845 477,180 None None
Glendale Heights IL 318,500 707,399 None None
Hoffman Estates IL 318,500 707,399 None None
Hoffman Estates IL 211,082 468,818 None None
Lockport IL 189,477 442,018 None None
O'Fallon IL 141,250 313,722 None None
Orland Park IL 218,499 485,295 None None
Palatine IL 121,911 565,233 None None
Roselle IL 297,541 561,036 None None
Schaumburg IL 218,798 485,956 None None
Vernon Hills IL 132,523 614,430 None None
Westmont IL 124,742 578,330 None None
Carmel IN 217,565 430,742 None None
Fishers IN 212,118 419,959 None None
Highland IN 220,460 436,476 None None
Indianapolis IN 245,000 544,153 None None
Noblesville IN 60,000 278,175 None None
Zionsville IN 127,568 319,770 None None
Lenexa KS 318,500 707,399 None None
Olathe KS 304,500 676,308 None None
Overland Park KS 305,691 707,397 None None
Shawnee KS 315,000 699,629 None None
Shawnee KS 288,246 793,002 None None
Topeka KS 58,000 268,903 None None
Wichita KS 209,890 415,549 None None
Wichita KS 108,569 401,828 None None
Lexington KY 210,427 420,883 None None
Acton MA 315,533 700,813 None None
Marlborough MA 352,765 776,487 None None
Westborough MA 359,412 773,877 None None
Ellicott City MD 219,368 630,839 None None
Frederick MD 203,352 1,017,109 None None
Olney MD 342,500 760,701 None None
Waldorf MD 130,430 604,702 None None
Waldorf MD 237,207 526,844 None None
Canton MI 55,000 378,848 None None
Page 95
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Elk Grove VillageIL 214,845 477,180 692,025
Glendale Heights IL 318,500 707,399 1,025,899
Hoffman Estates IL 318,500 707,399 1,025,899
Hoffman Estates IL 211,082 468,818 679,900
Lockport IL 189,477 442,018 631,495
O'Fallon IL 141,250 313,722 454,972
Orland Park IL 218,499 485,295 703,794
Palatine IL 121,911 565,233 687,144
Roselle IL 297,541 561,036 858,577
Schaumburg IL 218,798 485,956 704,754
Vernon Hills IL 132,523 614,430 746,953
Westmont IL 124,742 578,330 703,072
Carmel IN 217,565 430,742 648,307
Fishers IN 212,118 419,959 632,077
Highland IN 220,460 436,476 656,936
Indianapolis IN 245,000 544,153 789,153
Noblesville IN 60,000 278,175 338,175
Zionsville IN 127,568 319,770 447,338
Lenexa KS 318,500 707,399 1,025,899
Olathe KS 304,500 676,308 980,808
Overland Park KS 305,691 707,397 1,013,088
Shawnee KS 315,000 699,629 1,014,629
Shawnee KS 288,246 793,002 1,081,248
Topeka KS 58,000 268,903 326,903
Wichita KS 209,890 415,549 625,439
Wichita KS 108,569 401,828 510,397
Lexington KY 210,427 420,883 631,310
Acton MA 315,533 700,813 1,016,346
Marlborough MA 352,765 776,487 1,129,252
Westborough MA 359,412 773,877 1,133,289
Ellicott City MD 219,368 630,839 850,207
Frederick MD 203,352 1,017,109 1,220,461
Olney MD 342,500 760,701 1,103,201
Waldorf MD 130,430 604,702 735,132
Waldorf MD 237,207 526,844 764,051
Canton MI 55,000 378,848 433,848
Page 96
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Elk Grove VillageIL 183,937 04/08/88 300
Glendale Heights IL 258,580 11/16/88 300
Hoffman Estates IL 250,552 03/31/89 300
Hoffman Estates IL 154,121 12/08/89 300
Lockport IL 177,955 10/29/87 300
O'Fallon IL 126,300 10/30/87 300
Orland Park IL 195,380 10/28/87 300
Palatine IL 335,750 03/25/86 300
Roselle IL 203,487 12/30/88 300
Schaumburg IL 192,870 12/17/87 300
Vernon Hills IL 364,972 03/25/86 300
Westmont IL 343,529 03/25/86 300
Carmel IN 127,072 12/27/90 300
Fishers IN 123,891 12/27/90 300
Highland IN 128,762 12/26/90 300
Indianapolis IN 169,695 06/29/90 300
Noblesville IN 181,370 04/30/85 300
Zionsville IN 128,736 10/28/87 300
Lenexa KS 250,552 03/31/89 300
Olathe KS 251,059 09/28/88 300
Overland Park KS 262,600 09/28/88 300
Shawnee KS 257,727 10/27/88 300
Shawnee KS 79 In Process 08/24/98 300
Topeka KS 175,325 04/16/85 300
Wichita KS 122,590 12/26/90 300
Wichita KS 206,860 12/16/86 300
Lexington KY 133,110 08/20/91 300
Acton MA 260,157 09/30/88 300
Marlborough MA 283,833 11/04/88 300
Westborough MA 282,877 11/01/88 300
Ellicott City MD 228,801 12/19/88 300
Frederick MD 18,651 07/06/98 300
Olney MD 301,916 12/18/87 300
Waldorf MD 415,353 09/26/84 300
Waldorf MD 209,098 12/31/87 300
Canton MI 378,848 10/06/82 180
Page 97
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Apple Valley MN 113,523 526,319 None None
Bloomington MN 124,113 575,416 None None
Brooklyn Park MN 118,111 547,586 None None
Brooklyn Park MN 112,823 523,073 None None
Eagan MN 112,127 519,844 None None
Eden Prairie MN 124,286 576,243 None None
Maple Grove MN 111,691 517,822 None None
Maple Grove MN 313,250 660,149 None None
Minnetonka MN 146,847 680,842 None None
Plymouth MN 134,221 622,350 None None
W. Bloomington MN 40,000 468,484 None None
White Bear Lake MN 260,750 579,133 None None
White Bear Lake MN 242,165 537,855 None None
Florissant MO 318,500 707,399 None None
Florissant MO 181,300 402,672 None None
Gladstone MO 294,000 652,987 None None
Lee's Summit MO 239,627 532,220 None None
Liberty MO 65,400 303,211 None None
Manchester MO 287,000 637,435 None None
North Kansas CityMO 307,784 738,647 None None
St. Charles MO 259,000 575,246 None None
Pearl MS 121,801 270,525 None None
Cary NC 75,200 262,973 None None
Chapel Hill NC 77,000 356,992 None None
Charlotte NC 27,551 247,000 None None
Charlotte NC 134,582 268,222 None None
Concord NC 32,441 190,859 None None
Durham NC 220,728 429,380 None None
Durham NC 238,000 471,201 None None
Hendersonville NC 32,748 186,152 None None
Kernersville NC 162,216 316,299 None None
Morrisville NC 175,700 390,234 None None
Bellevue NE 60,568 280,819 None None
Omaha NE 60,500 280,491 None None
Omaha NE 53,000 245,720 None None
Omaha NE 142,867 317,315 None None
Page 98
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Apple Valley MN 113,523 526,319 639,842
Bloomington MN 124,113 575,416 699,529
Brooklyn Park MN 118,111 547,586 665,697
Brooklyn Park MN 112,823 523,073 635,896
Eagan MN 112,127 519,844 631,971
Eden Prairie MN 124,286 576,243 700,529
Maple Grove MN 111,691 517,822 629,513
Maple Grove MN 313,250 660,149 973,399
Minnetonka MN 146,847 680,842 827,689
Plymouth MN 134,221 622,350 756,571
W. Bloomington MN 40,000 468,484 508,484
White Bear Lake MN 260,750 579,133 839,883
White Bear Lake MN 242,165 537,855 780,020
Florissant MO 318,500 707,399 1,025,899
Florissant MO 181,300 402,672 583,972
Gladstone MO 294,000 652,987 946,987
Lee's Summit MO 239,627 532,220 771,847
Liberty MO 65,400 303,211 368,611
Manchester MO 287,000 637,435 924,435
North Kansas CityMO 307,784 738,647 1,046,431
St. Charles MO 259,000 575,246 834,246
Pearl MS 121,801 270,525 392,326
Cary NC 75,200 262,973 338,173
Chapel Hill NC 77,000 356,992 433,992
Charlotte NC 27,551 247,000 274,551
Charlotte NC 134,582 268,222 402,804
Concord NC 32,441 190,859 223,300
Durham NC 220,728 429,380 650,108
Durham NC 238,000 471,201 709,201
Hendersonville NC 32,748 186,152 218,900
Kernersville NC 162,216 316,299 478,515
Morrisville NC 175,700 390,234 565,934
Bellevue NE 60,568 280,819 341,387
Omaha NE 60,500 280,491 340,991
Omaha NE 53,000 245,720 298,720
Omaha NE 142,867 317,315 460,182
Page 99
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Apple Valley MN 312,636 03/26/86 300
Bloomington MN 341,800 03/27/86 300
Brooklyn Park MN 325,268 03/26/86 300
Brooklyn Park MN 310,708 03/27/86 300
Eagan MN 308,789 03/31/86 300
Eden Prairie MN 342,291 03/27/86 300
Maple Grove MN 307,589 03/26/86 300
Maple Grove MN 209,113 07/11/90 300
Minnetonka MN 382,154 12/12/86 300
Plymouth MN 349,321 12/12/86 300
W. Bloomington MN 468,484 06/18/82 180
White Bear Lake MN 229,853 12/23/87 300
White Bear Lake MN 164,708 08/30/90 300
Florissant MO 250,552 03/30/89 300
Florissant MO 142,621 03/29/89 300
Gladstone MO 242,403 09/29/88 300
Lee's Summit MO 178,333 09/27/89 300
Liberty MO 190,939 06/18/85 300
Manchester MO 252,993 12/22/87 300
North Kansas CityMO 1,226 In Process 08/21/98 300
St. Charles MO 228,312 12/23/87 300
Pearl MS 99,044 11/15/88 300
Cary NC 262,973 01/25/84 180
Chapel Hill NC 232,759 04/17/85 300
Charlotte NC 247,000 12/23/81 180
Charlotte NC 98,042 11/16/88 300
Concord NC 190,859 12/23/81 180
Durham NC 152,368 12/29/89 300
Durham NC 128,457 08/20/91 300
Hendersonville NC 186,152 12/23/81 180
Kernersville NC 114,079 12/14/89 300
Morrisville NC 138,215 03/29/89 300
Bellevue NE 156,682 12/16/86 300
Omaha NE 194,920 08/01/84 300
Omaha NE 168,613 10/11/84 300
Omaha NE 125,937 12/09/87 300
Page 100
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Londonderry NH 335,467 745,082 None None
Clementon NJ 279,851 554,060 None None
Henderson NV 82,000 380,173 None None
Las Vegas NV 201,250 446,983 None None
Sparks NV 244,752 543,604 None None
Beavercreek OH 179,552 398,786 None None
Centerville OH 174,519 387,613 None None
Cincinnati OH 165,910 368,486 None None
Dublin OH 84,000 389,446 None None
Englewood OH 74,000 343,083 None None
Forest Park OH 170,778 379,305 None None
Gahanna OH 86,000 398,718 None None
Huber Heights OH 245,000 544,153 None None
Loveland OH 206,136 457,829 None None
Maineville OH 173,105 384,469 None None
Pickerington OH 87,580 406,055 None None
Westerville OH 294,350 646,557 None None
Westerville OH 82,000 380,173 None None
Broken Arrow OK 78,705 220,434 None None
Midwest City OK 67,800 314,338 None None
Oklahoma City OK 50,800 214,474 None None
Oklahoma City OK 79,000 366,261 None None
Yukon OK 61,000 282,812 None None
Beaverton OR 135,148 626,647 None None
Beaverton OR 115,232 534,301 None None
Charleston SC 125,593 278,946 None None
Charleston SC 140,700 312,498 None None
Columbia SC 58,160 269,643 None None
Elgin SC 160,831 313,600 None None
Goose Creek SC 61,635 192,905 None None
Ladson SC 31,543 177,457 None None
Lexington SC 55,869 274,742 None None
Mt. Pleasant SC 40,700 180,400 None None
Summerville SC 44,400 174,500 None None
Sumter SC 56,010 268,903 None None
Memphis TN 238,263 504,897 None None
Page 101
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Londonderry NH 335,467 745,082 1,080,549
Clementon NJ 279,851 554,060 833,911
Henderson NV 82,000 380,173 462,173
Las Vegas NV 201,250 446,983 648,233
Sparks NV 244,752 543,604 788,356
Beavercreek OH 179,552 398,786 578,338
Centerville OH 174,519 387,613 562,132
Cincinnati OH 165,910 368,486 534,396
Dublin OH 84,000 389,446 473,446
Englewood OH 74,000 343,083 417,083
Forest Park OH 170,778 379,305 550,083
Gahanna OH 86,000 398,718 484,718
Huber Heights OH 245,000 544,153 789,153
Loveland OH 206,136 457,829 663,965
Maineville OH 173,105 384,469 557,574
Pickerington OH 87,580 406,055 493,635
Westerville OH 294,350 646,557 940,907
Westerville OH 82,000 380,173 462,173
Broken Arrow OK 78,705 220,434 299,139
Midwest City OK 67,800 314,338 382,138
Oklahoma City OK 50,800 214,474 265,274
Oklahoma City OK 79,000 366,261 445,261
Yukon OK 61,000 282,812 343,812
Beaverton OR 135,148 626,647 761,795
Beaverton OR 115,232 534,301 649,533
Charleston SC 125,593 278,946 404,539
Charleston SC 140,700 312,498 453,198
Columbia SC 58,160 269,643 327,803
Elgin SC 160,831 313,600 474,431
Goose Creek SC 61,635 192,905 254,540
Ladson SC 31,543 177,457 209,000
Lexington SC 55,869 274,742 330,611
Mt. Pleasant SC 40,700 180,400 221,100
Summerville SC 44,400 174,500 218,900
Sumter SC 56,010 268,903 324,913
Memphis TN 238,263 504,897 743,160
Page 102
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Londonderry NH 253,355 08/18/89 300
Clementon NJ 149,497 09/09/91 300
Henderson NV 247,872 04/17/85 300
Las Vegas NV 139,392 06/29/90 300
Sparks NV 214,198 01/29/88 300
Beavercreek OH 165,136 06/30/87 300
Centerville OH 159,396 07/23/87 300
Cincinnati OH 154,709 04/29/87 300
Dublin OH 240,353 10/08/85 300
Englewood OH 210,617 10/23/85 300
Forest Park OH 154,804 09/28/87 300
Gahanna OH 243,188 11/26/85 300
Huber Heights OH 165,108 09/27/90 300
Loveland OH 193,537 03/20/87 300
Maineville OH 162,525 03/06/87 300
Pickerington OH 227,908 12/11/86 300
Westerville OH 202,075 09/26/90 300
Westerville OH 234,630 10/08/85 300
Broken Arrow OK 220,434 01/27/83 180
Midwest City OK 196,705 08/14/85 300
Oklahoma City OK 214,474 06/15/82 180
Oklahoma City OK 249,852 11/14/84 300
Yukon OK 183,236 05/02/85 300
Beaverton OR 349,634 12/17/86 300
Beaverton OR 298,111 12/22/86 300
Charleston SC 106,728 05/26/88 300
Charleston SC 110,684 03/28/89 300
Columbia SC 183,941 11/14/84 300
Elgin SC 113,105 12/14/89 300
Goose Creek SC 192,905 12/22/81 180
Ladson SC 177,457 12/22/81 180
Lexington SC 187,418 11/13/84 300
Mt. Pleasant SC 180,400 12/22/81 180
Summerville SC 174,500 12/22/81 180
Sumter SC 169,337 06/18/85 300
Memphis TN 187,426 09/29/88 300
Page 103
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Memphis TN 238,000 528,608 None None
Memphis TN 221,501 491,962 None None
Nashville TN 274,298 609,223 None None
Allen TX 177,637 394,537 None None
Arlington TX 82,109 380,678 None None
Arlington TX 238,000 528,604 None None
Arlington TX 241,500 550,559 None None
Arlington TX 70,000 324,538 None None
Arlington TX 195,650 387,355 None None
Austin TX 134,383 623,103 None None
Austin TX 236,733 528,608 None None
Austin TX 238,000 528,604 None None
Austin TX 103,600 230,532 None None
Austin TX 88,872 222,684 None None
Austin TX 188,144 417,872 None None
Austin TX 191,636 425,629 None None
Austin TX 224,878 499,461 None None
Austin TX 217,878 483,913 None None
Bedford TX 241,500 550,559 None None
Carrollton TX 277,850 617,113 None None
Cedar Park TX 168,857 375,036 None None
Colleyville TX 68,000 315,266 None None
Converse TX 217,000 481,963 None None
Coppell TX 139,224 645,551 None None
Coppell TX 208,641 463,398 None None
Desoto TX 86,000 398,715 None None
Duncanville TX 93,000 431,172 None None
Euless TX 234,111 519,962 None None
Flower Mound TX 202,773 442,846 None None
Fort Worth TX 238,000 528,608 None None
Fort Worth TX 85,518 396,495 None None
Fort Worth TX 210,007 444,460 None None
Fort Worth TX 216,160 427,962 None None
Garland TX 211,050 468,749 None None
Grand Prairie TX 167,164 371,275 None None
Houston TX 219,100 486,631 None None
Page 104
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Memphis TN 238,000 528,608 766,608
Memphis TN 221,501 491,962 713,463
Nashville TN 274,298 609,223 883,521
Allen TX 177,637 394,537 572,174
Arlington TX 82,109 380,678 462,787
Arlington TX 238,000 528,604 766,604
Arlington TX 241,500 550,559 792,059
Arlington TX 70,000 324,538 394,538
Arlington TX 195,650 387,355 583,005
Austin TX 134,383 623,103 757,486
Austin TX 236,733 528,608 765,341
Austin TX 238,000 528,604 766,604
Austin TX 103,600 230,532 334,132
Austin TX 88,872 222,684 311,556
Austin TX 188,144 417,872 606,016
Austin TX 191,636 425,629 617,265
Austin TX 224,878 499,461 724,339
Austin TX 217,878 483,913 701,791
Bedford TX 241,500 550,559 792,059
Carrollton TX 277,850 617,113 894,963
Cedar Park TX 168,857 375,036 543,893
Colleyville TX 68,000 315,266 383,266
Converse TX 217,000 481,963 698,963
Coppell TX 139,224 645,551 784,775
Coppell TX 208,641 463,398 672,039
Desoto TX 86,000 398,715 484,715
Duncanville TX 93,000 431,172 524,172
Euless TX 234,111 519,962 754,073
Flower Mound TX 202,773 442,846 645,619
Fort Worth TX 238,000 528,608 766,608
Fort Worth TX 85,518 396,495 482,013
Fort Worth TX 210,007 444,460 654,467
Fort Worth TX 216,160 427,962 644,122
Garland TX 211,050 468,749 679,799
Grand Prairie TX 167,164 371,275 538,439
Houston TX 219,100 486,631 705,731
Page 105
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Memphis TN 196,230 09/30/88 300
Memphis TN 150,654 08/31/90 300
Nashville TN 215,779 03/30/89 300
Allen TX 144,212 11/21/88 300
Arlington TX 258,148 12/13/84 300
Arlington TX 196,228 09/26/88 300
Arlington TX 253,298 09/22/89 300
Arlington TX 210,270 05/08/85 300
Arlington TX 112,101 02/07/91 300
Austin TX 347,658 12/23/86 300
Austin TX 196,230 09/27/88 300
Austin TX 185,728 04/06/89 300
Austin TX 230,532 10/29/82 180
Austin TX 222,684 01/12/83 180
Austin TX 159,883 05/11/88 300
Austin TX 154,372 12/22/88 300
Austin TX 179,736 01/03/89 300
Austin TX 167,285 06/22/89 300
Bedford TX 253,298 09/22/89 300
Carrollton TX 244,928 12/11/87 300
Cedar Park TX 137,084 11/21/88 300
Colleyville TX 204,263 05/01/85 300
Converse TX 178,914 09/28/88 300
Coppell TX 360,182 12/17/86 300
Coppell TX 183,919 12/11/87 300
Desoto TX 272,252 10/24/84 300
Duncanville TX 279,357 05/08/85 300
Euless TX 216,811 05/08/87 300
Flower Mound TX 185,927 04/20/87 300
Fort Worth TX 196,230 09/26/88 300
Fort Worth TX 222,543 12/03/86 300
Fort Worth TX 146,273 02/01/90 300
Fort Worth TX 123,852 02/07/91 300
Garland TX 154,099 12/12/89 300
Grand Prairie TX 134,658 12/13/88 300
Houston TX 180,648 09/30/88 300
Page 106
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
Houston TX 219,100 486,628 None None
Houston TX 149,109 323,314 None None
Houston TX 58,000 268,901 None None
Houston TX 60,000 278,175 None None
Houston TX 102,000 472,898 None None
Houston TX 139,125 308,997 None None
Houston TX 139,125 308,997 None None
Houston TX 141,296 313,824 None None
Houston TX 294,582 385,334 None None
Katy TX 309,898 857,102 None None
Lewisville TX 192,777 428,121 None None
Lewisville TX 192,218 426,922 None None
Lewisville TX 79,000 366,264 None None
Mansfield TX 181,375 402,838 None None
Mesquite TX 85,000 394,079 None None
Mesquite TX 139,466 326,525 None None
Missouri City TX 221,025 437,593 None None
N. Richland HillsTX 238,000 528,608 None None
Pasadena TX 60,000 278,173 None None
Plano TX 261,912 581,658 None None
Plano TX 250,514 556,399 None None
Plano TX 259,000 575,246 None None
Round Rock TX 80,525 373,347 None None
Round Rock TX 186,380 413,957 None None
San Antonio TX 130,833 606,595 None None
San Antonio TX 234,500 520,831 None None
San Antonio TX 217,000 481,967 None None
San Antonio TX 220,500 447,108 None None
San Antonio TX 102,512 475,289 None None
San Antonio TX 81,530 378,007 None None
San Antonio TX 139,125 308,997 None None
San Antonio TX 181,412 402,923 None None
San Antonio TX 162,161 360,166 None None
San Antonio TX 182,868 406,155 None None
Southlake TX 228,279 511,750 None None
Sugarland TX 193,800 430,436 None None
Page 107
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
Houston TX 219,100 486,628 705,728
Houston TX 149,109 323,314 472,423
Houston TX 58,000 268,901 326,901
Houston TX 60,000 278,175 338,175
Houston TX 102,000 472,898 574,898
Houston TX 139,125 308,997 448,122
Houston TX 139,125 308,997 448,122
Houston TX 141,296 313,824 455,120
Houston TX 294,582 385,334 679,916
Katy TX 309,898 857,102 1,167,000
Lewisville TX 192,777 428,121 620,898
Lewisville TX 192,218 426,922 619,140
Lewisville TX 79,000 366,264 445,264
Mansfield TX 181,375 402,838 584,213
Mesquite TX 85,000 394,079 479,079
Mesquite TX 139,466 326,525 465,991
Missouri City TX 221,025 437,593 658,618
N. Richland HillsTX 238,000 528,608 766,608
Pasadena TX 60,000 278,173 338,173
Plano TX 261,912 581,658 843,570
Plano TX 250,514 556,399 806,913
Plano TX 259,000 575,246 834,246
Round Rock TX 80,525 373,347 453,872
Round Rock TX 186,380 413,957 600,337
San Antonio TX 130,833 606,595 737,428
San Antonio TX 234,500 520,831 755,331
San Antonio TX 217,000 481,967 698,967
San Antonio TX 220,500 447,108 667,608
San Antonio TX 102,512 475,289 577,801
San Antonio TX 81,530 378,007 459,537
San Antonio TX 139,125 308,997 448,122
San Antonio TX 181,412 402,923 584,335
San Antonio TX 162,161 360,166 522,327
San Antonio TX 182,868 406,155 589,023
Southlake TX 228,279 511,750 740,029
Sugarland TX 193,800 430,436 624,236
Page 108
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
Houston TX 177,881 11/16/88 300
Houston TX 126,780 06/26/89 300
Houston TX 184,521 10/11/84 300
Houston TX 180,231 05/01/85 300
Houston TX 306,392 05/01/85 300
Houston TX 128,842 05/22/87 300
Houston TX 128,842 05/22/87 300
Houston TX 129,053 07/24/87 300
Houston TX 72 In Process 08/14/98 300
Katy TX 74 In Process 08/21/98 300
Lewisville TX 183,095 01/07/87 300
Lewisville TX 154,843 12/29/88 300
Lewisville TX 230,647 06/26/85 300
Mansfield TX 132,432 12/20/89 300
Mesquite TX 269,088 10/24/84 300
Mesquite TX 116,023 10/08/92 300
Missouri City TX 129,092 12/13/90 300
N. Richland HillsTX 196,230 09/26/88 300
Pasadena TX 189,945 10/23/84 300
Plano TX 249,236 01/06/87 300
Plano TX 220,830 12/10/87 300
Plano TX 213,543 09/27/88 300
Round Rock TX 208,308 12/16/86 300
Round Rock TX 145,445 04/19/89 300
San Antonio TX 360,320 03/24/86 300
San Antonio TX 206,713 12/29/87 300
San Antonio TX 177,547 10/14/88 300
San Antonio TX 158,361 03/30/89 300
San Antonio TX 266,770 12/03/86 300
San Antonio TX 212,166 12/11/86 300
San Antonio TX 128,842 05/22/87 300
San Antonio TX 165,691 07/07/87 300
San Antonio TX 148,110 07/07/87 300
San Antonio TX 147,310 12/06/88 300
Southlake TX 148,141 03/10/93 300
Sugarland TX 177,007 07/31/87 300
Page 109
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Child Care
- ----------
The Woodlands TX 193,801 430,441 None None
Watauga TX 165,914 368,502 None None
Layton UT 136,574 269,009 None None
Sandy UT 168,089 373,330 None None
Centreville VA 371,000 824,003 None None
Chesapeake VA 190,050 422,107 None None
Glen Allen VA 74,643 346,060 None None
Portsmouth VA 171,575 381,072 None None
Richmond VA 269,500 598,567 None None
Richmond VA 71,001 327,771 None None
Virginia Beach VA 124,988 579,496 None None
Virginia Beach VA 69,080 320,270 None None
Woodbridge VA 358,050 795,239 None None
Everett WA 120,000 540,363 None None
Federal Way WA 150,785 699,100 None None
Federal Way WA 261,943 581,782 None None
Kent WA 128,300 539,141 None None
Kent WA 140,763 678,809 None None
Kirkland WA 301,000 668,534 None None
Puyallup WA 195,552 434,327 None None
Redmond WA 279,830 621,512 None None
Renton WA 111,183 515,490 None None
Appleton WI 196,000 424,038 None None
Brookfield WI 233,100 461,500 None None
Waukesha WI 215,950 427,546 None None
Cheyenne WY 59,856 277,506 None None
Consumer Electronics
- --------------------
Oxford AL 323,085 406,655 None None
Tuscaloosa AL 204,790 585,115 None None
Thousand Oaks CA 2,703,726 6,125,829 None None
Bradenton FL 174,948 240,928 None None
MaryEsther FL 149,696 363,263 None None
Melbourne FL 269,697 522,414 None None
Merritt Island FL 309,652 482,459 None None
Ocala FL 339,690 543,504 None None
Page 110
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Child Care
- ----------
The Woodlands TX 193,801 430,441 624,242
Watauga TX 165,914 368,502 534,416
Layton UT 136,574 269,009 405,583
Sandy UT 168,089 373,330 541,419
Centreville VA 371,000 824,003 1,195,003
Chesapeake VA 190,050 422,107 612,157
Glen Allen VA 74,643 346,060 420,703
Portsmouth VA 171,575 381,072 552,647
Richmond VA 269,500 598,567 868,067
Richmond VA 71,001 327,771 398,772
Virginia Beach VA 124,988 579,496 704,484
Virginia Beach VA 69,080 320,270 389,350
Woodbridge VA 358,050 795,239 1,153,289
Everett WA 120,000 540,363 660,363
Federal Way WA 150,785 699,100 849,885
Federal Way WA 261,943 581,782 843,725
Kent WA 128,300 539,141 667,441
Kent WA 140,763 678,809 819,572
Kirkland WA 301,000 668,534 969,534
Puyallup WA 195,552 434,327 629,879
Redmond WA 279,830 621,512 901,342
Renton WA 111,183 515,490 626,673
Appleton WI 196,000 424,038 620,038
Brookfield WI 233,100 461,500 694,600
Waukesha WI 215,950 427,546 643,496
Cheyenne WY 59,856 277,506 337,362
Consumer Electronics
- --------------------
Oxford AL 323,085 406,655 729,740
Tuscaloosa AL 204,790 585,115 789,905
Thousand Oaks CA 2,703,726 6,125,829 8,829,555
Bradenton FL 174,948 240,928 415,876
MaryEsther FL 149,696 363,263 512,959
Melbourne FL 269,697 522,414 792,111
Merritt Island FL 309,652 482,459 792,111
Ocala FL 339,690 543,504 883,194
Page 111
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Child Care
- ----------
The Woodlands TX 175,772 08/11/87 300
Watauga TX 151,536 07/07/87 300
Layton UT 96,136 02/01/90 300
Sandy UT 120,626 02/01/90 300
Centreville VA 277,864 09/29/89 300
Chesapeake VA 149,505 03/28/89 300
Glen Allen VA 241,874 06/20/84 300
Portsmouth VA 138,213 12/21/88 300
Richmond VA 212,004 03/28/89 300
Richmond VA 203,559 09/04/85 300
Virginia Beach VA 344,223 03/25/86 300
Virginia Beach VA 218,479 11/15/84 300
Woodbridge VA 295,210 09/29/88 300
Everett WA 540,363 11/22/82 180
Federal Way WA 390,061 12/17/86 300
Federal Way WA 212,656 11/21/88 300
Kent WA 539,141 06/03/83 180
Kent WA 378,740 12/17/86 300
Kirkland WA 259,604 03/31/88 300
Puyallup WA 157,526 12/06/88 300
Redmond WA 255,582 07/27/87 300
Renton WA 306,202 03/24/86 300
Appleton WI 135,031 07/10/90 300
Brookfield WI 136,144 12/13/90 300
Waukesha WI 126,129 12/13/90 300
Cheyenne WY 188,367 11/20/84 300
Consumer Electronics
- --------------------
Oxford AL 34,566 11/26/96 300
Tuscaloosa AL 49,735 11/26/96 300
Thousand Oaks CA 561,531 09/27/96 300
Bradenton FL 20,479 11/26/96 300
MaryEsther FL 30,877 11/26/96 300
Melbourne FL 44,405 11/26/96 300
Merritt Island FL 41,009 11/26/96 300
Ocala FL 46,198 11/26/96 300
Page 112
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Consumer Electronics
- --------------------
Pensacola FL 419,842 1,899,287 None None
Tallahassee FL 319,807 502,697 None None
Titusville FL 176,459 579,793 None None
Venice FL 259,686 362,562 None None
Rome GA 254,902 486,812 None None
Smyrna GA 1,094,058 3,090,236 None None
Council Bluffs IA 255,217 117,792 None None
Des Moines IA 188,520 367,614 None None
Peoria IL 193,868 387,737 None None
Rockford IL 159,587 618,398 None None
Springfield IL 219,859 630,595 None None
Anderson IN 180,628 653,038 None None
Muncie IN 148,901 645,235 None None
Richmond IN 93,999 193,753 None None
Topeka KS 974,960 3,472,226 None None
Columbus MS 144,908 463,707 None None
Greenville MS 144,588 433,764 None None
Gulfport MS 299,464 502,326 None None
Hattiesburg MS 198,659 457,379 None None
Jackson MS 405,360 656,296 None None
Meridian MS 181,156 515,598 None None
Tupelo MS 121,697 637,691 None None
Vicksburg MS 494,532 174,541 None None
Lakewood NY 144,859 526,301 None None
Defiance OH 97,978 601,863 None None
Kettering OH 229,246 488,393 None None
Bristol TN 344,365 468,719 None None
Clarksville TN 290,775 395,870 None None
Vienna WV 324,797 526,670 None None
Convenience Stores
- ------------------
Fullerton CA 29,170 41,003 None 11,934
Manchester CT 118,262 305,510 None None
Vernon CT 179,646 319,372 None None
Westbrook CT 98,247 373,340 None None
Dunwoody GA 545,462 724,254 None None
Page 113
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Consumer Electronics
- --------------------
Pensacola FL 419,842 1,899,287 2,319,129
Tallahassee FL 319,807 502,697 822,504
Titusville FL 176,459 579,793 756,252
Venice FL 259,686 362,562 622,248
Rome GA 254,902 486,812 741,714
Smyrna GA 1,094,058 3,090,236 4,184,294
Council Bluffs IA 255,217 117,792 373,009
Des Moines IA 188,520 367,614 556,134
Peoria IL 193,868 387,737 581,605
Rockford IL 159,587 618,398 777,985
Springfield IL 219,859 630,595 850,454
Anderson IN 180,628 653,038 833,666
Muncie IN 148,901 645,235 794,136
Richmond IN 93,999 193,753 287,752
Topeka KS 974,960 3,472,226 4,447,186
Columbus MS 144,908 463,707 608,615
Greenville MS 144,588 433,764 578,352
Gulfport MS 299,464 502,326 801,790
Hattiesburg MS 198,659 457,379 656,038
Jackson MS 405,360 656,296 1,061,656
Meridian MS 181,156 515,598 696,754
Tupelo MS 121,697 637,691 759,388
Vicksburg MS 494,532 174,541 669,073
Lakewood NY 144,859 526,301 671,160
Defiance OH 97,978 601,863 699,841
Kettering OH 229,246 488,393 717,639
Bristol TN 344,365 468,719 813,084
Clarksville TN 290,775 395,870 686,645
Vienna WV 324,797 526,670 851,467
Convenience Stores
- ------------------
Fullerton CA 29,170 52,937 82,107
Manchester CT 118,262 305,510 423,772
Vernon CT 179,646 319,372 499,018
Westbrook CT 98,247 373,340 471,587
Dunwoody GA 545,462 724,254 1,269,716
Page 114
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Consumer Electronics
- --------------------
Pensacola FL 161,439 11/26/96 300
Tallahassee FL 42,729 11/26/96 300
Titusville FL 49,283 11/26/96 300
Venice FL 30,818 11/26/96 300
Rome GA 41,379 11/26/96 300
Smyrna GA 190,349 06/09/97 300
Council Bluffs IA 10,012 11/26/96 300
Des Moines IA 31,247 11/26/96 300
Peoria IL 32,958 11/26/96 300
Rockford IL 52,564 11/26/96 300
Springfield IL 53,601 11/26/96 300
Anderson IN 55,508 11/26/96 300
Muncie IN 54,845 11/26/96 300
Richmond IN 16,469 11/26/96 300
Topeka KS 283,559 12/27/96 300
Columbus MS 39,415 11/26/96 300
Greenville MS 36,870 11/26/96 300
Gulfport MS 42,698 11/26/96 300
Hattiesburg MS 38,877 11/26/96 300
Jackson MS 55,785 11/26/96 300
Meridian MS 43,826 11/26/96 300
Tupelo MS 54,204 11/26/96 300
Vicksburg MS 14,836 11/26/96 300
Lakewood NY 44,736 11/26/96 300
Defiance OH 51,158 11/26/96 300
Kettering OH 41,513 11/26/96 300
Bristol TN 39,841 11/26/96 300
Clarksville TN 33,649 11/26/96 300
Vienna WV 44,767 11/26/96 300
Convenience Stores
- ------------------
Fullerton CA 48,163 11/08/72 234
Manchester CT 46,336 03/03/95 300
Vernon CT 48,438 03/09/95 300
Westbrook CT 56,623 03/09/95 300
Dunwoody GA 44,555 06/27/97 300
Page 115
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Convenience Stores
- ------------------
Lithonia GA 386,784 776,436 None None
Mabelton GA 491,069 355,957 None None
Norcross GA 384,162 651,273 None None
Stone Mountain GA 529,383 532,429 None None
Godfrey IL 374,586 733,190 None None
Granite City IL 362,287 737,255 None None
Madison IL 173,812 625,030 None None
New Albany IN 181,459 289,353 None None
New Albany IN 262,465 331,796 None None
Berea KY 252,077 360,815 None None
Elizabethtown KY 286,106 286,106 None None
Henderson KY 225,000 515,000 None None
Lebanon KY 158,052 316,105 None None
Louisville KY 198,926 368,014 None None
Louisville KY 216,849 605,697 None None
Mt. Washington KY 327,245 479,593 None None
Owensboro KY 360,000 590,000 None None
Seekonk MA 298,354 268,518 None None
Flint MI 194,492 476,504 None None
Cary NC 450,000 825,000 None None
Greenville NC 330,000 515,000 None None
Greenville NC 225,000 405,000 None None
Jacksonville NC 150,000 530,000 None None
Kinston NC 550,000 1,057,833 None None
Kingston NY 257,763 456,042 None None
Atwater OH 118,555 266,748 None None
Columbus OH 147,296 304,411 None None
Columbus OH 273,085 471,693 None None
Cuyahoga Falls OH 297,982 357,579 None None
Galion OH 138,981 327,597 None None
Groveport OH 277,198 445,497 None None
Perrysburg OH 211,678 390,680 None None
Streetsboro OH 402,988 484,716 None None
Tipp City OH 355,009 588,111 None None
Triffin OH 117,017 273,040 None None
Wadsworth OH 266,507 496,917 None None
Page 116
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Convenience Stores
- ------------------
Lithonia GA 386,784 776,436 1,163,220
Mabelton GA 491,069 355,957 847,026
Norcross GA 384,162 651,273 1,035,435
Stone Mountain GA 529,383 532,429 1,061,812
Godfrey IL 374,586 733,190 1,107,776
Granite City IL 362,287 737,255 1,099,542
Madison IL 173,812 625,030 798,842
New Albany IN 181,459 289,353 470,812
New Albany IN 262,465 331,796 594,261
Berea KY 252,077 360,815 612,892
Elizabethtown KY 286,106 286,106 572,212
Henderson KY 225,000 515,000 740,000
Lebanon KY 158,052 316,105 474,157
Louisville KY 198,926 368,014 566,940
Louisville KY 216,849 605,697 822,546
Mt. Washington KY 327,245 479,593 806,838
Owensboro KY 360,000 590,000 950,000
Seekonk MA 298,354 268,518 566,872
Flint MI 194,492 476,504 670,996
Cary NC 450,000 825,000 1,275,000
Greenville NC 330,000 515,000 845,000
Greenville NC 225,000 405,000 630,000
Jacksonville NC 150,000 530,000 680,000
Kinston NC 550,000 1,057,833 1,607,833
Kingston NY 257,763 456,042 713,805
Atwater OH 118,555 266,748 385,303
Columbus OH 147,296 304,411 451,707
Columbus OH 273,085 471,693 744,778
Cuyahoga Falls OH 297,982 357,579 655,561
Galion OH 138,981 327,597 466,578
Groveport OH 277,198 445,497 722,695
Perrysburg OH 211,678 390,680 602,358
Streetsboro OH 402,988 484,716 887,704
Tipp City OH 355,009 588,111 943,120
Triffin OH 117,017 273,040 390,057
Wadsworth OH 266,507 496,917 763,424
Page 117
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Convenience Stores
- ------------------
Lithonia GA 47,791 06/27/97 300
Mabelton GA 21,876 06/27/97 300
Norcross GA 40,069 06/27/97 300
Stone Mountain GA 32,738 06/27/97 300
Godfrey IL 45,113 06/27/97 300
Granite City IL 45,366 06/27/97 300
Madison IL 38,475 06/27/97 300
New Albany IN 43,885 03/03/95 300
New Albany IN 50,323 03/06/95 300
Berea KY 54,724 03/08/95 300
Elizabethtown KY 43,393 03/03/95 300
Henderson KY 69,525 08/25/95 300
Lebanon KY 47,942 03/03/95 300
Louisville KY 55,815 03/03/95 300
Louisville KY 61,445 06/18/96 11/17/95 300
Mt. Washington KY 40,811 10/28/96 05/31/96 300
Owensboro KY 79,650 08/25/95 300
Seekonk MA 40,725 03/03/95 300
Flint MI 57,975 12/21/95 300
Cary NC 111,375 08/25/95 300
Greenville NC 69,525 08/25/95 300
Greenville NC 54,675 08/25/95 300
Jacksonville NC 71,550 08/25/95 300
Kinston NC 50,988 10/24/97 300
Kingston NY 67,646 04/06/95 300
Atwater OH 40,457 03/03/95 300
Columbus OH 46,169 03/03/95 300
Columbus OH 57,389 12/21/95 300
Cuyahoga Falls OH 54,233 03/03/95 300
Galion OH 49,686 03/06/95 300
Groveport OH 54,202 12/21/95 300
Perrysburg OH 32,255 01/10/96 09/01/95 300
Streetsboro OH 18,056 01/27/97 09/03/96 300
Tipp City OH 22,524 01/31/97 06/27/96 300
Triffin OH 41,411 03/07/95 300
Wadsworth OH 25,845 11/26/96 07/01/96 300
Page 118
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Convenience Stores
- ------------------
Tulsa OK 126,545 508,266 None None
Columbia SC 150,000 450,000 None None
John's Isle SC 170,000 350,000 None None
Lexington SC 255,000 545,000 None None
Myrtle Beach SC 140,000 590,000 None None
N. Charleston SC 400,000 650,000 None None
Summerville SC 115,000 515,000 None None
La Vergne TN 340,000 650,000 None None
Shelbyville TN 200,000 465,000 None None
Hampton VA 433,985 459,108 None None
Midlothian VA 325,000 302,872 None None
Newport News VA 490,616 205,304 None None
Richmond VA 700,000 400,740 None None
Richmond VA 700,000 440,965 None None
Richmond VA 400,000 250,875 None None
Richmond VA 1,000,000 740 None None
Richmond VA 700,000 100,695 None None
Stafford VA 271,865 601,997 None None
Warrenton VA 515,971 649,125 None None
Yorktown VA 309,435 447,144 None None
Crafts and Novelties
- --------------------
Cutler Ridge FL 743,498 657,485 None None
Drug Stores
- -----------
Casselberry FL -- 1,664,284 None None
General Merchandise
- -------------------
Monte Vista CO 47,652 582,159 None None
Garnett KS 59,690 518,121 None None
Caledonia MN 89,723 559,300 None None
Long Prairie MN 88,892 553,997 None None
Paynesville MN 49,483 525,406 None None
Spring Valley MN 69,785 579,238 None None
Warroad MN 70,000 580,000 None None
Mayville ND 59,333 565,558 None None
Page 119
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Convenience Stores
- ------------------
Tulsa OK 126,545 508,266 634,811
Columbia SC 150,000 450,000 600,000
John's Isle SC 170,000 350,000 520,000
Lexington SC 255,000 545,000 800,000
Myrtle Beach SC 140,000 590,000 730,000
N. Charleston SC 400,000 650,000 1,050,000
Summerville SC 115,000 515,000 630,000
La Vergne TN 340,000 650,000 990,000
Shelbyville TN 200,000 465,000 665,000
Hampton VA 433,985 459,108 893,093
Midlothian VA 325,000 302,872 627,872
Newport News VA 490,616 205,304 695,920
Richmond VA 700,000 400,740 1,100,740
Richmond VA 700,000 440,965 1,140,965
Richmond VA 400,000 250,875 650,875
Richmond VA 1,000,000 740 1,000,740
Richmond VA 700,000 100,695 800,695
Stafford VA 271,865 601,997 873,862
Warrenton VA 515,971 649,125 1,165,096
Yorktown VA 309,435 447,144 756,579
Craft and Novelties
- -------------------
Cutler Ridge FL 743,498 657,485 1,400,983
Drug Stores
- -----------
Casselberry FL -- 1,664,284 1,664,284
General Merchandise
- -------------------
Monte Vista CO 47,652 582,159 629,811
Garnett KS 59,690 518,121 577,811
Caledonia MN 89,723 559,300 649,023
Long Prairie MN 88,892 553,997 642,889
Paynesville MN 49,483 525,406 574,889
Spring Valley MN 69,785 579,238 649,023
Warroad MN 70,000 580,000 650,000
Mayville ND 59,333 565,558 624,891
Page 120
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Convenience Stores
- ------------------
Tulsa OK 31,278 06/27/97 300
Columbia SC 60,750 08/25/95 300
John's Isle SC 47,250 08/25/95 300
Lexington SC 73,575 08/25/95 300
Myrtle Beach SC 79,650 08/25/95 300
N. Charleston SC 87,750 08/25/95 300
Summerville SC 69,525 08/25/95 300
La Vergne TN 87,750 08/25/95 300
Shelbyville TN 62,775 08/25/95 300
Hampton VA 13,009 04/17/98 300
Midlothian VA 16,587 08/21/97 300
Newport News VA 5,818 04/17/98 300
Richmond VA 11,354 04/17/98 300
Richmond VA 12,495 04/17/98 300
Richmond VA 7,108 04/17/98 300
Richmond VA 21 04/17/98 300
Richmond VA 2,853 04/17/98 300
Stafford VA 49,162 12/20/96 300
Warrenton VA 53,012 12/20/96 300
Yorktown VA 12,670 04/17/98 300
Craft and Novelties
- -------------------
Cutler Ridge FL 1,120 12/31/98 300
Drug Stores
- -----------
Casselberry FL 19,488 09/30/98 300
General Merchandise
- -------------------
Monte Vista CO 992 12/23/98 300
Garnett KS 885 12/23/98 300
Caledonia MN 960 12/23/98 300
Long Prairie MN 948 12/23/98 300
Paynesville MN 900 12/23/98 300
Spring Valley MN 994 12/23/98 300
Warroad MN 967 12/23/98 300
Mayville ND 994 12/23/98 300
Page 121
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
General Merchandise
- -------------------
Bloomfield NM 59,559 616,252 None None
Colorado City TX 92,535 505,276 None None
Grocery
- -------
Boulder CO 426,675 1,199,508 18,000 91,455
Sheboygan WI 1,513,216 392,928 None None
Health and Fitness
- ------------------
Diamond Bar CA 3,038,879 276,637 None None
Coral Springs FL 891,496 2,789,489 None None
Home Furnishings
- ----------------
Cathedral City CA 1,006,923 2,293,077 None None
Concord CA 4,162,500 3,037,500 None None
Danbury CT 630,171 3,621,163 None None
Brandon FL 430,000 1,020,608 None None
Tampa FL 685,000 885,624 None None
Winter Park FL 2,404,598 3,382,402 None None
Davenport IA 270,000 930,689 None None
Joilet IL 440,000 910,689 None None
Wichita KS 430,000 740,725 None None
Alexandria LA 400,000 810,608 None None
Monroe LA 450,000 835,608 None None
Shreveport LA 525,000 725,642 None None
Battle Creek MI 485,000 895,689 None None
Hattiesburg MS 300,000 660,608 None None
Ridgeland MS 281,867 769,890 None None
Omaha NE 1,956,296 3,949,402 None None
Henderson NV 1,268,655 3,109,995 None None
Staten Island NY 3,190,883 2,569,802 None None
Lancaster OH 250,000 830,689 None None
Altoona PA 455,000 745,694 None None
Erie PA 510,000 900,689 None None
Muncy PA 315,000 835,648 None None
Whitehall PA 515,525 1,146,868 None None
Columbia SC 600,000 900,725 None None
Page 122
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
General Merchandise
- -------------------
Bloomfield NM 59,559 616,252 675,811
Colorado City TX 92,535 505,276 597,811
Grocery
- -------
Boulder CO 426,675 1,308,963 1,735,638
Sheboygan WI 1,513,216 392,928 1,906,144
Health and Fitness
- ------------------
Diamond Bar CA 3,038,879 276,637 3,315,516
Coral Springs FL 891,496 2,789,489 3,680,985
Home Furnishings
- ----------------
Cathedral City CA 1,006,923 2,293,077 3,300,000
Concord CA 4,162,500 3,037,500 7,200,000
Danbury CT 630,171 3,621,163 4,251,334
Brandon FL 430,000 1,020,608 1,450,608
Tampa FL 685,000 885,624 1,570,624
Winter Park FL 2,404,598 3,382,402 5,787,000
Davenport IA 270,000 930,689 1,200,689
Joilet IL 440,000 910,689 1,350,689
Wichita KS 430,000 740,725 1,170,725
Alexandria LA 400,000 810,608 1,210,608
Monroe LA 450,000 835,608 1,285,608
Shreveport LA 525,000 725,642 1,250,642
Battle Creek MI 485,000 895,689 1,380,689
Hattiesburg MS 300,000 660,608 960,608
Ridgeland MS 281,867 769,890 1,051,757
Omaha NE 1,956,296 3,949,402 5,905,698
Henderson NV 1,268,655 3,109,995 4,378,650
Staten Island NY 3,190,883 2,569,802 5,760,685
Lancaster OH 250,000 830,689 1,080,689
Altoona PA 455,000 745,694 1,200,694
Erie PA 510,000 900,689 1,410,689
Muncy PA 315,000 835,648 1,150,648
Whitehall PA 515,525 1,146,868 1,662,393
Columbia SC 600,000 900,725 1,500,725
Page 123
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
General Merchandise
- -------------------
Bloomfield NM 1,049 12/23/98 300
Colorado City TX 864 12/23/98 300
Grocery
- -------
Boulder CO 844,058 01/05/84 180
Sheboygan WI 1,072 In Process 08/24/98 300
Health and Fitness
- ------------------
Diamond Bar CA 956 In Process 09/29/98 300
Coral Springs FL 22,745 In Process 03/30/98 300
Home Furnishings
- ----------------
Cathedral City CA 332,496 05/26/95 300
Concord CA 440,438 05/31/95 300
Danbury CT 186,656 09/30/97 300
Brandon FL 22,118 06/26/98 300
Tampa FL 19,193 06/26/98 300
Winter Park FL 490,448 05/31/95 300
Davenport IA 20,170 06/26/98 300
Joilet IL 19,737 06/26/98 300
Wichita KS 16,054 06/26/98 300
Alexandria LA 17,568 06/26/98 300
Monroe LA 18,110 06/26/98 300
Shreveport LA 15,727 06/26/98 300
Battle Creek MI 19,412 06/26/98 300
Hattiesburg MS 14,318 06/26/98 300
Ridgeland MS 47,344 06/27/97 300
Omaha NE 269,656 04/04/97 300
Henderson NV 160,309 09/26/97 300
Staten Island NY 81,330 03/26/98 300
Lancaster OH 18,003 06/26/98 300
Altoona PA 16,162 06/26/98 300
Erie PA 19,520 06/26/98 300
Muncy PA 18,111 06/26/98 300
Whitehall PA 24,854 06/30/98 300
Columbia SC 19,521 06/26/98 300
Page 124
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Home Furnishings
- ----------------
Jackson TN 380,000 750,608 None None
Memphis TN 804,262 1,432,520 None None
Abilene TX 400,000 680,616 None None
Arlington TX 475,069 1,374,167 None None
Cedar Park TX 253,591 827,237 None None
Houston TX 867,767 687,042 None None
Plano TX 565,000 5,835,000 None None
Spring TX 1,794,872 1,810,069 None None
Webster TX 283,604 538,002 None None
Eau Claire WI 260,000 820,689 None None
La Crosse WI 372,883 877,812 None None
Home Improvement
- ----------------
Lawndale CA 667,007 1,238,755 None None
Los Angeles CA 902,494 1,676,089 None None
Los Angeles CA 163,668 303,982 None None
Van Nuys CA 750,293 1,393,430 None None
West Covina CA 311,040 577,674 None None
Clearwater FL 476,179 724,497 None None
Jacksonville FL 478,314 617,822 None None
Seminole FL 593,304 766,658 None None
Tampa FL 494,763 767,211 None None
Tampa FL 347,794 904,591 None None
West Palm Beach FL 698,664 1,222,978 None None
West Palm Beach FL 347,651 705,555 None None
Broadview IL 345,166 641,705 None None
Baltimore MD 171,320 318,850 None None
Matthews NC 768,222 842,875 None None
Pineville NC 567,864 839,758 None None
Albuquerque NM 684,036 873,882 None None
Rochester NY 158,168 294,424 None None
Reading PA 201,569 375,024 None None
Pasadena TX 147,535 274,359 None None
Plano TX 363,851 676,087 None None
San Antonio TX 367,890 683,588 None None
San Antonio TX 432,389 815,755 None None
Page 125
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Home Furnishings
- ----------------
Jackson TN 380,000 750,608 1,130,608
Memphis TN 804,262 1,432,520 2,236,782
Abilene TX 400,000 680,616 1,080,616
Arlington TX 475,069 1,374,167 1,849,236
Cedar Park TX 253,591 827,237 1,080,828
Houston TX 867,767 687,042 1,554,809
Plano TX 565,000 5,835,000 6,400,000
Spring TX 1,794,872 1,810,069 3,604,941
Webster TX 283,604 538,002 821,606
Eau Claire WI 260,000 820,689 1,080,689
La Crosse WI 372,883 877,812 1,250,695
Home Improvement
- ----------------
Lawndale CA 667,007 1,238,755 1,905,762
Los Angeles CA 902,494 1,676,089 2,578,583
Los Angeles CA 163,668 303,982 467,650
Van Nuys CA 750,293 1,393,430 2,143,723
West Covina CA 311,040 577,674 888,714
Clearwater FL 476,179 724,497 1,200,676
Jacksonville FL 478,314 617,822 1,096,136
Seminole FL 593,304 766,658 1,359,962
Tampa FL 494,763 767,211 1,261,974
Tampa FL 347,794 904,591 1,252,385
West Palm Beach FL 698,664 1,222,978 1,921,642
West Palm Beach FL 347,651 705,555 1,053,206
Broadview IL 345,166 641,705 986,871
Baltimore MD 171,320 318,850 490,170
Matthews NC 768,222 842,875 1,611,097
Pineville NC 567,864 839,758 1,407,622
Albuquerque NM 684,036 873,882 1,557,918
Rochester NY 158,168 294,424 452,592
Reading PA 201,569 375,024 576,593
Pasadena TX 147,535 274,359 421,894
Plano TX 363,851 676,087 1,039,938
San Antonio TX 367,890 683,588 1,051,478
San Antonio TX 432,389 815,755 1,248,144
Page 126
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Home Furnishings
- ----------------
Jackson TN 16,268 06/26/98 300
Memphis TN 88,128 06/30/97 300
Abilene TX 14,751 06/26/98 300
Arlington TX 98,353 03/26/97 300
Cedar Park TX 59,203 03/10/97 300
Houston TX 50,025 03/07/97 300
Plano TX 846,075 05/26/95 300
Spring TX 93,198 09/29/97 300
Webster TX 33,091 06/12/97 300
Eau Claire WI 17,787 06/26/98 300
La Crosse WI 19,024 06/26/98 300
Home Improvement
- ----------------
Lawndale CA 2,066 12/31/98 300
Los Angeles CA 2,794 12/31/98 300
Los Angeles CA 508 12/31/98 300
Van Nuys CA 2,323 12/31/98 300
West Covina CA 964 12/31/98 300
Clearwater FL 1,216 12/31/98 300
Jacksonville FL 1,030 12/31/98 300
Seminole FL 1,286 12/31/98 300
Tampa FL 1,287 12/31/98 300
Tampa FL 1,516 12/31/98 300
West Palm Beach FL 2,047 12/31/98 300
West Palm Beach FL 1,184 12/31/98 300
Broadview IL 1,088 12/31/98 300
Baltimore MD 550 12/31/98 300
Matthews NC 1,413 12/31/98 300
Pineville NC 1,408 12/31/98 300
Albuquerque NM 1,459 12/31/98 300
Rochester NY 510 12/31/98 300
Reading PA 644 12/31/98 300
Pasadena TX 468 12/31/98 300
Plano TX 1,137 12/31/98 300
San Antonio TX 1,150 12/31/98 300
San Antonio TX 1,362 12/31/98 300
Page 127
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Home Improvement
- ----------------
San Antonio TX 323,451 637,214 None None
Layton UT 408,989 662,311 None None
Riverdale UT 346,861 693,835 None None
Office Supplies
- ---------------
Lakewood CA 1,398,387 3,098,607 None None
Riverside CA 1,410,177 1,659,850 None None
Hutchinson KS 269,964 1,704,013 None None
Salina KS 240,423 1,829,837 None None
Helena MT 564,241 1,503,118 None None
Asheboro NC 465,557 2,175,829 None None
Westbury NY 3,808,076 2,377,932 None None
New Philadelphia OH 726,636 1,650,672 None None
Pet Supplies and Services
- -------------------------
Duluth GA 254,100 841,329 None None
Marrietta GA 350,000 604,520 None None
Sudbury MA 385,000 430,258 None None
Tyngsborough MA 312,204 1,222,522 None None
Matthews NC 610,177 1,394,743 None None
North Plainfield NJ -- 1,038,855 None None
Dickson City PA 659,790 1,880,722 None None
Private Education
- -----------------
Coconut Creek FL 310,111 8,118 None None
North Lauderdale FL 1,050,000 2,567,224 None None
Las Vegas NV 1,080,444 3,346,772 None None
Centerville VA 688,917 1,208,993 None None
University Place WA 255,000 718,614 25,362 24,142
Restaurants
- -----------
Siloam Springs AR 190,000 352,808 None None
Douglas AZ 75,000 347,719 None None
Glendale AZ 624,761 895,976 None None
Tucson AZ 107,393 497,904 None None
Yuma AZ 236,121 541,651 None None
Page 128
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Home Improvement
- ----------------
San Antonio TX 323,451 637,214 960,665
Layton UT 408,989 662,311 1,071,300
Riverdale UT 346,861 693,835 1,040,696
Office Supplies
- ---------------
Lakewood CA 1,398,387 3,098,607 4,496,994
Riverside CA 1,410,177 1,659,850 3,070,027
Hutchinson KS 269,964 1,704,013 1,973,977
Salina KS 240,423 1,829,837 2,070,260
Helena MT 564,241 1,503,118 2,067,359
Asheboro NC 465,557 2,175,829 2,641,386
Westbury NY 3,808,076 2,377,932 6,186,008
New Philadelphia OH 726,636 1,650,672 2,377,308
Pet Supplies and Services
- -------------------------
Duluth GA 254,100 841,329 1,095,429
Marrietta GA 350,000 604,520 954,520
Sudbury MA 385,000 430,258 815,258
Tyngsborough MA 312,204 1,222,522 1,534,726
Matthews NC 610,177 1,394,743 2,004,920
North Plainfield NJ -- 1,038,855 1,038,855
Dickson City PA 659,790 1,880,722 2,540,512
Private Education
- -----------------
Coconut Creek FL 310,111 8,118 318,229
North Lauderdale FL 1,050,000 2,567,224 3,617,224
Las Vegas NV 1,080,444 3,346,772 4,427,216
Centerville VA 688,917 1,208,993 1,897,910
University Place WA 255,000 768,118 1,023,118
Restaurants
- -----------
Siloam Springs AR 190,000 352,808 542,808
Douglas AZ 75,000 347,719 422,719
Glendale AZ 624,761 895,976 1,520,737
Tucson AZ 107,393 497,904 605,297
Yuma AZ 236,121 541,651 777,772
Page 129
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Home Improvement
- ----------------
San Antonio TX 1,065 12/31/98 300
Layton UT 1,107 12/31/98 300
Riverdale UT 1,159 12/31/98 300
Office Supplies
- ---------------
Lakewood CA 242,663 01/29/97 300
Riverside CA 85,621 09/17/97 300
Hutchinson KS 104,949 06/25/97 300
Salina KS 112,697 06/25/97 300
Helena MT 92,485 06/09/97 300
Asheboro NC 68,880 03/27/98 300
Westbury NY 122,424 09/29/97 300
New Philadelphia OH 107,135 05/30/97 300
Pet Supplies and Services
- -------------------------
Duluth GA 176 In Process 09/29/98 300
Marrietta GA 199 In Process 09/29/98 300
Sudbury MA 239 In Process 09/30/98 300
Tyngsborough MA 26,504 06/12/98 300
Matthews NC 25,598 07/17/98 300
North Plainfield NJ 12,284 09/24/98 300
Dickson City PA 115,626 06/20/97 300
Private Education
- -----------------
Coconut Creek FL 187 In Process 12/01/98 300
North Lauderdale FL 81,276 03/30/98 300
Las Vegas NV 105,962 03/04/98 300
Centerville VA 245 In Process 09/30/98 300
University Place WA 492,228 11/06/84 300
Restaurants
- -----------
Siloam Springs AR 15,836 11/20/97 300
Douglas AZ 212,083 11/27/85 300
Glendale AZ 100,051 03/06/96 300
Tucson AZ 301,469 01/17/86 300
Yuma AZ 13,544 05/28/98 300
Page 130
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Restaurants
- -----------
Barstow CA 689,842 690,204 None None
Chino CA 26,729 51,555 None None
Diamond Bar CA 76,117 183,052 None 15,000
Fullerton CA 36,296 51,020 None 14,628
Hemet CA 106,164 199,179 None None
Livermore CA 662,161 823,242 None None
Rancho Cucamonga CA 230,733 481,225 None None
Rancho Cucamonga CA 95,192 441,334 None None
Red Bluff CA 136,740 633,984 None None
Riverside CA 90,000 170,394 None None
Sacramento CA 386,793 417,290 None None
San Dimas CA 240,562 445,521 None None
San Ramon CA 406,000 1,126,930 None None
Colorado Springs CO 152,000 704,736 None None
Colorado Springs CO 313,250 695,730 None None
Montrose CO 217,595 483,284 None None
Sterling CO 95,320 441,928 None None
Westminster CO 338,940 1,571,401 20,000 13,440
Casselberry FL 403,900 897,075 None None
Green Cove Sprgs FL 86,240 399,828 None None
Jacksonville FL 143,299 664,373 None None
Jacksonville FL 150,210 693,446 None None
Orlando FL 230,000 1,066,339 None None
Orlando FL 209,800 972,679 None None
Orlando FL 339,500 746,333 None None
Orlando FL 600,000 128,343 None None
Palm Bay FL 330,000 231,584 None None
Garden City GA 197,225 438,043 None None
Hinesville GA 89,220 413,644 None None
Hinesville GA 172,611 383,376 None None
Lithonia GA 89,220 413,647 None None
Savannah GA 143,993 345,548 None None
Savannah GA 165,409 367,379 None None
Statesboro GA 201,250 446,983 None None
Stone Mountain GA 215,940 1,001,188 None None
Ankeny IA 100,000 349,218 None None
Page 131
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Restaurants
- -----------
Barstow CA 689,842 690,204 1,380,046
Chino CA 26,729 51,555 78,284
Diamond Bar CA 76,117 198,052 274,169
Fullerton CA 36,296 65,648 101,944
Hemet CA 106,164 199,179 305,343
Livermore CA 662,161 823,242 1,485,403
Rancho Cucamonga CA 230,733 481,225 711,958
Rancho Cucamonga CA 95,192 441,334 536,526
Red Bluff CA 136,740 633,984 770,724
Riverside CA 90,000 170,394 260,394
Sacramento CA 386,793 417,290 804,083
San Dimas CA 240,562 445,521 686,083
San Ramon CA 406,000 1,126,930 1,532,930
Colorado Springs CO 152,000 704,736 856,736
Colorado Springs CO 313,250 695,730 1,008,980
Montrose CO 217,595 483,284 700,879
Sterling CO 95,320 441,928 537,248
Westminster CO 338,940 1,604,841 1,943,781
Casselberry FL 403,900 897,075 1,300,975
Green Cove Sprgs FL 86,240 399,828 486,068
Jacksonville FL 143,299 664,373 807,672
Jacksonville FL 150,210 693,446 843,656
Orlando FL 230,000 1,066,339 1,296,339
Orlando FL 209,800 972,679 1,182,479
Orlando FL 339,500 746,333 1,085,833
Orlando FL 600,000 128,343 728,343
Palm Bay FL 330,000 231,584 561,584
Garden City GA 197,225 438,043 635,268
Hinesville GA 89,220 413,644 502,864
Hinesville GA 172,611 383,376 555,987
Lithonia GA 89,220 413,647 502,867
Savannah GA 143,993 345,548 489,541
Savannah GA 165,409 367,379 532,788
Statesboro GA 201,250 446,983 648,233
Stone Mountain GA 215,940 1,001,188 1,217,128
Ankeny IA 100,000 349,218 449,218
Page 132
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Restaurants
- -----------
Barstow CA 8,058 09/24/98 300
Chino CA 51,286 06/23/75 300
Diamond Bar CA 176,285 09/25/78 300
Fullerton CA 57,846 11/08/72 234
Hemet CA 187,502 04/15/77 300
Livermore CA 9,614 09/23/98 300
Rancho Cucamonga CA 481,225 04/03/81 180
Rancho Cucamonga CA 267,427 12/20/85 300
Red Bluff CA 353,731 12/18/86 300
Riverside CA 162,065 12/09/76 300
Sacramento CA 7,654 07/31/98 300
San Dimas CA 445,521 03/12/81 180
San Ramon CA 1,126,930 12/08/83 180
Colorado Springs CO 401,698 09/30/86 300
Colorado Springs CO 294,105 03/10/87 300
Montrose CO 191,811 12/17/87 300
Sterling CO 298,186 12/27/84 300
Westminster CO 1,127,475 06/28/84 300
Casselberry FL 287,645 12/29/89 300
Green Cove Sprgs FL 269,780 12/19/84 300
Jacksonville FL 404,760 12/13/85 300
Jacksonville FL 430,660 09/13/85 300
Orlando FL 650,388 11/18/85 300
Orlando FL 561,566 08/15/86 300
Orlando FL 291,947 02/03/88 300
Orlando FL 199 In Process 12/18/98 300
Palm Bay FL 145 In Process 12/29/98 300
Garden City GA 153,909 04/20/89 300
Hinesville GA 279,099 12/20/84 300
Hinesville GA 152,160 12/22/87 300
Lithonia GA 278,827 01/04/85 300
Savannah GA 137,146 12/22/87 300
Savannah GA 145,811 12/22/87 300
Statesboro GA 148,205 11/14/89 300
Stone Mountain GA 566,658 10/30/86 300
Ankeny IA 349,218 07/28/83 180
Page 133
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Restaurants
- -----------
Boone IA 76,000 386,170 None None
Boise ID 190,894 423,981 None None
Boise ID 161,352 334,041 None None
Nampa ID 74,156 343,821 None None
Rexburg ID 90,760 420,787 None None
Alton IL 225,785 419,315 None None
Dixon IL 230,090 511,036 None None
Salem IL 213,815 474,892 None None
Anderson IN 197,523 438,707 None None
Bedford IN 311,815 692,543 None None
Decatur IN 181,020 385,618 None None
Goshen IN 115,000 533,165 None None
Muncie IN 136,400 632,380 8,000 13,335
Muncie IN 67,156 149,157 None None
New Castle IN 246,192 320,572 None None
Shelbyville IN 128,820 597,263 None None
South Bend IN 133,200 617,545 None 19,211
Westfield IN 213,341 477,300 None None
Derby KS 96,060 445,359 None None
El Dorado KS 87,400 405,206 None None
Great Bend KS 95,800 444,154 None None
Wichita KS 98,000 454,350 None None
Lexington KY 122,200 490,200 None None
Alexandria LA 143,000 662,985 None 15,000
Jennings LA 107,120 496,636 None None
La Plata MD 120,140 557,000 None None
Albion MI 143,280 694,578 None 12,341
Flint MI 827,853 -- None None
Sturgis MI 210,560 467,659 None None
Albert Lea MN 213,150 473,412 None None
Red Wing MN 248,325 551,541 None None
Roseville MN 281,600 1,305,560 None None
Belton MO 89,328 418,187 None None
Blue Springs MO 111,440 516,665 None None
Carthage MO 85,020 394,175 None None
Chillicothe MO 81,080 375,908 None None
Page 134
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Restaurants
- -----------
Boone IA 76,000 386,170 462,170
Boise ID 190,894 423,981 614,875
Boise ID 161,352 334,041 495,393
Nampa ID 74,156 343,821 417,977
Rexburg ID 90,760 420,787 511,547
Alton IL 225,785 419,315 645,100
Dixon IL 230,090 511,036 741,126
Salem IL 213,815 474,892 688,707
Anderson IN 197,523 438,707 636,230
Bedford IN 311,815 692,543 1,004,358
Decatur IN 181,020 385,618 566,638
Goshen IN 115,000 533,165 648,165
Muncie IN 136,400 653,715 790,115
Muncie IN 67,156 149,157 216,313
New Castle IN 246,192 320,572 566,764
Shelbyville IN 128,820 597,263 726,083
South Bend IN 133,200 636,756 769,956
Westfield IN 213,341 477,300 690,641
Derby KS 96,060 445,359 541,419
El Dorado KS 87,400 405,206 492,606
Great Bend KS 95,800 444,154 539,954
Wichita KS 98,000 454,350 552,350
Lexington KY 122,200 490,200 612,400
Alexandria LA 143,000 677,985 820,985
Jennings LA 107,120 496,636 603,756
La Plata MD 120,140 557,000 677,140
Albion MI 143,280 706,919 850,199
Flint MI 827,853 -- 827,853
Sturgis MI 210,560 467,659 678,219
Albert Lea MN 213,150 473,412 686,562
Red Wing MN 248,325 551,541 799,866
Roseville MN 281,600 1,305,560 1,587,160
Belton MO 89,328 418,187 507,515
Blue Springs MO 111,440 516,665 628,105
Carthage MO 85,020 394,175 479,195
Chillicothe MO 81,080 375,908 456,988
Page 135
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Restaurants
- -----------
Boone IA 386,170 12/27/83 180
Boise ID 162,221 05/17/88 300
Boise ID 123,053 10/07/88 300
Nampa ID 191,834 12/31/86 300
Rexburg ID 256,650 11/25/85 300
Alton IL 154,467 10/18/88 300
Dixon IL 202,809 12/28/87 300
Salem IL 191,201 10/30/87 300
Anderson IN 166,604 03/25/88 300
Bedford IN 284,790 07/15/87 300
Decatur IN 163,010 03/31/87 300
Goshen IN 309,949 07/07/86 300
Muncie IN 377,661 03/18/86 300
Muncie IN 57,921 03/30/88 300
New Castle IN 135,753 01/07/87 300
Shelbyville IN 333,241 12/18/86 300
South Bend IN 375,085 04/28/86 300
Westfield IN 154,751 12/21/89 300
Derby KS 273,404 10/29/85 300
El Dorado KS 240,418 04/10/86 300
Great Bend KS 299,686 12/26/84 300
Wichita KS 262,313 08/08/86 300
Lexington KY 275,148 12/03/86 300
Alexandria LA 409,850 01/17/86 300
Jennings LA 304,884 10/17/85 300
La Plata MD 339,345 12/03/85 300
Albion MI 422,900 03/06/86 300
Flint MI -- 04/13/95 300
Sturgis MI 186,949 11/12/87 300
Albert Lea MN 187,909 12/16/87 300
Red Wing MN 218,875 12/30/87 300
Roseville MN 880,908 12/18/84 300
Belton MO 282,167 12/18/84 300
Blue Springs MO 348,613 12/28/84 300
Carthage MO 240,145 12/03/85 300
Chillicothe MO 253,640 12/26/84 300
Page 136
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Restaurants
- -----------
Fulton MO 210,199 466,861 None None
Hannibal MO 266,011 590,822 None None
Hazelwood MO 157,117 725,327 None 12,930
Jackson MO 210,199 466,860 None None
Mt. Vernon MO 160,000 282,586 None None
Nevada MO 222,552 494,296 None None
Ozark MO 140,000 292,482 None None
Sedalia MO 269,798 599,232 None None
St. Charles MO 695,121 1,001,878 None None
St. Charles MO 175,413 809,790 None 10,000
St. Joseph MO 107,648 496,958 None None
Sullivan MO 85,500 396,400 None None
Clinton MS 100,000 337,371 None None
Southaven MS 263,900 582,303 None None
Fayetteville NC 116,240 538,919 None None
Wilkesboro NC 183,050 406,562 None None
Omaha NE 629,592 1,051,244 None None
Amherst NY 935,355 896,819 None None
Fulton NY 294,009 653,006 None None
Watertown NY 139,199 645,355 None None
Akron OH 723,347 17 None None
Ashland OH 120,740 559,801 None None
Celina OH 207,060 459,841 None None
Lebanon OH 210,134 466,717 None None
Stow OH 317,546 712,455 None None
Troy OH 130,540 605,238 None None
Wash. Courthouse OH 123,120 570,836 None None
Wilmington OH 119,320 553,217 None None
Broken Arrow OK 245,000 369,002 None None
Norman OK 734,335 -- None None
Oklahoma City OK 759,826 -- None None
Owasso OK 247,450 549,597 None None
Ponca City OK 234,990 521,923 None None
Corvallis OR 172,788 383,766 None None
Hermiston OR 85,560 396,675 None None
Lake Oswego OR 175,899 815,509 None None
Page 137
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Restaurants
- -----------
Fulton MO 210,199 466,861 677,060
Hannibal MO 266,011 590,822 856,833
Hazelwood MO 157,117 738,257 895,374
Jackson MO 210,199 466,860 677,059
Mt. Vernon MO 160,000 282,586 442,586
Nevada MO 222,552 494,296 716,848
Ozark MO 140,000 292,482 432,482
Sedalia MO 269,798 599,232 869,030
St. Charles MO 695,121 1,001,878 1,696,999
St. Charles MO 175,413 819,790 995,203
St. Joseph MO 107,648 496,958 604,606
Sullivan MO 85,500 396,400 481,900
Clinton MS 100,000 337,371 437,371
Southaven MS 263,900 582,303 846,203
Fayetteville NC 116,240 538,919 655,159
Wilkesboro NC 183,050 406,562 589,612
Omaha NE 629,592 1,051,244 1,680,836
Amherst NY 935,355 896,819 1,832,174
Fulton NY 294,009 653,006 947,015
Watertown NY 139,199 645,355 784,554
Akron OH 723,347 17 723,364
Ashland OH 120,740 559,801 680,541
Celina OH 207,060 459,841 666,901
Lebanon OH 210,134 466,717 676,851
Stow OH 317,546 712,455 1,030,001
Troy OH 130,540 605,238 735,778
Wash. Courthouse OH 123,120 570,836 693,956
Wilmington OH 119,320 553,217 672,537
Broken Arrow OK 245,000 369,002 614,002
Norman OK 734,335 -- 734,335
Oklahoma City OK 759,826 -- 759,826
Owasso OK 247,450 549,597 797,047
Ponca City OK 234,990 521,923 756,913
Corvallis OR 172,788 383,766 556,554
Hermiston OR 85,560 396,675 482,235
Lake Oswego OR 175,899 815,509 991,408
Page 138
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Restaurants
- -----------
Fulton MO 191,985 07/30/87 300
Hannibal MO 242,960 07/30/87 300
Hazelwood MO 452,577 08/28/85 300
Jackson MO 191,985 07/30/87 300
Mt. Vernon MO 12,679 11/20/97 300
Nevada MO 203,267 07/30/87 300
Ozark MO 13,126 11/20/97 300
Sedalia MO 209,445 07/31/89 300
St. Charles MO 121,191 12/22/95 03/16/95 300
St. Charles MO 505,640 08/28/85 300
St. Joseph MO 308,627 09/04/85 300
Sullivan MO 267,464 12/27/84 300
Clinton MS 337,371 07/28/83 180
Southaven MS 242,805 05/11/87 300
Fayetteville NC 363,628 12/20/84 300
Wilkesboro NC 167,189 07/24/87 300
Omaha NE 148,926 06/02/95 02/24/95 300
Amherst NY 111,056 12/21/95 05/31/95 300
Fulton NY 258,240 12/24/87 300
Watertown NY 370,441 08/18/86 300
Akron OH 1 12/22/94 300
Ashland OH 312,339 12/19/86 300
Celina OH 197,039 01/02/87 300
Lebanon OH 191,925 07/31/87 300
Stow OH 281,990 12/31/87 300
Troy OH 339,718 12/05/86 300
Wash. Courthouse OH 318,496 12/19/86 300
Wilmington OH 308,667 12/31/86 300
Broken Arrow OK 15,330 12/12/97 300
Norman OK -- 09/29/95 06/05/95 300
Oklahoma City OK -- 07/06/95 300
Owasso OK 218,132 12/28/87 300
Ponca City OK 207,148 12/30/87 300
Corvallis OR 152,314 12/22/87 300
Hermiston OR 267,650 12/18/84 300
Lake Oswego OR 573,264 05/16/84 300
Page 139
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Restaurants
- -----------
Milwaukie OR 179,174 830,689 None None
Salem OR 198,540 440,964 None None
Connellsville PA 264,670 587,843 None None
Waynesburg PA 222,285 493,704 None None
Pierre SD 251,790 559,232 None None
Memphis TN 405,274 1,060,680 None None
Nashville TN 484,975 1,192,627 20,000 31,098
Athens TX 245,245 544,700 None None
Bedford TX 919,303 98,231 None None
Beeville TX 250,490 556,349 None None
Brownwood TX 288,225 640,160 None None
Crockett TX 90,780 420,880 None None
Dallas TX 742,507 -- None None
Dallas TX 242,025 479,170 None None
El Campo TX 98,060 454,631 None None
Ennis TX 173,250 384,793 None None
Fort Worth TX 223,195 492,067 None None
Ft. Worth TX 423,281 382,059 None None
Gainesville TX 89,220 413,644 None None
Hillsboro TX 75,992 352,316 None None
Houston TX 194,994 386,056 None None
Houston TX 184,175 364,636 None None
Killeen TX 262,500 583,014 None 14,398
League City TX 126,822 588,000 None None
Lufkin TX 105,904 490,998 None None
Mesquite TX 729,596 120,820 None None
Mesquite TX 134,940 625,612 None None
Mexia TX 93,620 434,046 None None
New Braunfels TX 185,500 411,997 None None
Orange TX 93,560 433,768 None None
Plainview TX 125,000 350,767 None None
Port Lavaca TX 244,759 543,619 None None
Porter TX 227,067 333,031 None None
Rowlett TX 126,933 585,986 None None
Santa Fe TX 304,414 623,331 None None
Sealy TX 197,871 391,754 None None
Page 140
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Restaurants
- -----------
Milwaukie OR 179,174 830,689 1,009,863
Salem OR 198,540 440,964 639,504
Connellsville PA 264,670 587,843 852,513
Waynesburg PA 222,285 493,704 715,989
Pierre SD 251,790 559,232 811,022
Memphis TN 405,274 1,060,680 1,465,954
Nashville TN 484,975 1,243,725 1,728,700
Athens TX 245,245 544,700 789,945
Bedford TX 919,303 98,231 1,017,534
Beeville TX 250,490 556,349 806,839
Brownwood TX 288,225 640,160 928,385
Crockett TX 90,780 420,880 511,660
Dallas TX 742,507 -- 742,507
Dallas TX 242,025 479,170 721,195
El Campo TX 98,060 454,631 552,691
Ennis TX 173,250 384,793 558,043
Fort Worth TX 223,195 492,067 715,262
Ft. Worth TX 423,281 382,059 805,340
Gainesville TX 89,220 413,644 502,864
Hillsboro TX 75,992 352,316 428,308
Houston TX 194,994 386,056 581,050
Houston TX 184,175 364,636 548,811
Killeen TX 262,500 597,412 859,912
League City TX 126,822 588,000 714,822
Lufkin TX 105,904 490,998 596,902
Mesquite TX 729,596 120,820 850,416
Mesquite TX 134,940 625,612 760,552
Mexia TX 93,620 434,046 527,666
New Braunfels TX 185,500 411,997 597,497
Orange TX 93,560 433,768 527,328
Plainview TX 125,000 350,767 475,767
Port Lavaca TX 244,759 543,619 788,378
Porter TX 227,067 333,031 560,098
Rowlett TX 126,933 585,986 712,919
Santa Fe TX 304,414 623,331 927,745
Sealy TX 197,871 391,754 589,625
Page 141
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Restaurants
- -----------
Milwaukie OR 586,709 05/08/84 300
Salem OR 151,129 05/23/89 300
Connellsville PA 240,049 08/17/87 300
Waynesburg PA 201,605 08/17/87 300
Pierre SD 221,955 12/01/87 300
Memphis TN 146,728 06/30/95 03/17/95 300
Nashville TN 1,220,991 05/20/83 180
Athens TX 216,188 12/01/87 300
Bedford TX 98,231 12/27/94 300
Beeville TX 228,785 07/31/87 300
Brownwood TX 253,956 12/28/87 300
Crockett TX 255,035 12/17/85 300
Dallas TX -- 04/13/95 300
Dallas TX 133,307 06/25/91 300
El Campo TX 277,292 11/25/85 300
Ennis TX 152,722 12/28/87 300
Fort Worth TX 146,101 06/26/91 300
Ft. Worth TX 59,219 02/10/95 300
Gainesville TX 279,099 12/18/84 300
Hillsboro TX 244,834 08/01/84 300
Houston TX 107,403 06/25/91 300
Houston TX 101,443 06/25/91 300
Killeen TX 245,845 05/29/87 300
League City TX 328,072 12/30/86 300
Lufkin TX 303,028 10/08/85 300
Mesquite TX 120,820 12/23/94 300
Mesquite TX 371,616 03/20/86 300
Mexia TX 263,013 12/18/85 300
New Braunfels TX 174,162 03/26/87 300
Orange TX 264,267 12/10/85 300
Plainview TX 350,767 01/24/84 180
Port Lavaca TX 223,551 07/30/87 300
Porter TX 51,620 02/09/95 300
Rowlett TX 363,919 09/06/85 300
Santa Fe TX 19,727 03/23/98 300
Sealy TX 108,988 06/25/91 300
Page 142
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Restaurants
- -----------
Stafford TX 214,024 423,732 None None
Temple TX 302,505 291,414 None None
Vidor TX 90,618 420,124 None None
Waxahachie TX 326,935 726,137 None None
Cedar City UT 130,000 296,544 None None
Orem UT 516,129 1,004,608 None None
Sandy UT 635,945 884,792 None None
Norfolk VA 251,207 575,250 None 12,983
Virginia Beach VA 314,790 699,161 None None
Auburn WA 301,595 669,852 None None
Marysville WA 276,273 613,613 None None
Oak Harbor WA 275,940 612,874 None None
Redmond WA 610,334 1,262,103 None None
Spokane WA 479,531 646,719 None None
Tacoma WA 198,857 921,947 None None
Grafton WI 149,778 332,664 None None
Monroe WI 193,130 428,947 None None
Portage WI 199,605 443,328 None None
Shawano WI 205,730 456,932 None None
Sturgeon Bay WI 214,865 477,221 None None
Oak Hill WV 85,860 398,069 None None
Laramie WY 210,000 466,417 None None
Riverton WY 216,685 481,267 None None
Sheridan WY 117,160 543,184 None None
Shoe Stores
- -----------
Little Rock AR 1,079,232 2,594,956 None None
Houston TX 1,096,376 2,300,690 None None
Midland TX 544,075 1,322,431 None None
Video Rental
- ------------
Birmingham AL 392,795 865,115 None None
Southington CT 399,562 1,009,125 None None
Port St. Lucie FL 612,695 701,730 None None
Tampa FL 401,874 933,768 None None
Atlanta GA 652,551 763,360 None None
Page 143
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Restaurants
- -----------
Stafford TX 214,024 423,732 637,756
Temple TX 302,505 291,414 593,919
Vidor TX 90,618 420,124 510,742
Waxahachie TX 326,935 726,137 1,053,072
Cedar City UT 130,000 296,544 426,544
Orem UT 516,129 1,004,608 1,520,737
Sandy UT 635,945 884,792 1,520,737
Norfolk VA 251,207 588,233 839,440
Virginia Beach VA 314,790 699,161 1,013,951
Auburn WA 301,595 669,852 971,447
Marysville WA 276,273 613,613 889,886
Oak Harbor WA 275,940 612,874 888,814
Redmond WA 610,334 1,262,103 1,872,437
Spokane WA 479,531 646,719 1,126,250
Tacoma WA 198,857 921,947 1,120,804
Grafton WI 149,778 332,664 482,442
Monroe WI 193,130 428,947 622,077
Portage WI 199,605 443,328 642,933
Shawano WI 205,730 456,932 662,662
Sturgeon Bay WI 214,865 477,221 692,086
Oak Hill WV 85,860 398,069 483,929
Laramie WY 210,000 466,417 676,417
Riverton WY 216,685 481,267 697,952
Sheridan WY 117,160 543,184 660,344
Shoe Stores
- -----------
Little Rock AR 1,079,232 2,594,956 3,674,188
Houston TX 1,096,376 2,300,690 3,397,066
Midland TX 544,075 1,322,431 1,866,506
Video Rental
- ------------
Birmingham AL 392,795 865,115 1,257,910
Southington CT 399,562 1,009,125 1,408,687
Port St. Lucie FL 612,695 701,730 1,314,425
Tampa FL 401,874 933,768 1,335,642
Atlanta GA 652,551 763,360 1,415,911
Page 144
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Restaurants
- -----------
Stafford TX 117,885 06/26/91 300
Temple TX 45,169 02/09/95 300
Vidor TX 291,953 08/01/84 300
Waxahachie TX 288,135 12/29/87 300
Cedar City UT 296,544 08/04/83 180
Orem UT 122,227 12/13/95 300
Sandy UT 107,650 12/22/95 300
Norfolk VA 237,089 10/15/87 300
Virginia Beach VA 283,501 09/03/87 300
Auburn WA 265,859 12/16/87 300
Marysville WA 250,572 08/27/87 300
Oak Harbor WA 252,028 07/16/87 300
Redmond WA 1,262,104 12/10/82 180
Spokane WA 20,469 03/27/98 300
Tacoma WA 648,084 05/29/84 300
Grafton WI 133,937 10/29/87 300
Monroe WI 170,245 12/17/87 300
Portage WI 175,937 12/23/87 300
Shawano WI 181,338 12/17/87 300
Sturgeon Bay WI 189,406 12/01/87 300
Oak Hill WV 268,592 12/28/84 300
Laramie WY 147,838 03/12/90 300
Riverton WY 191,011 12/01/87 300
Sheridan WY 329,145 12/31/85 300
Shoe Stores
- -----------
Little Rock AR 47,576 07/21/98 300
Houston TX 118,695 09/05/97 300
Midland TX 46,244 02/02/98 300
Video Rental
- ------------
Birmingham AL 44,581 09/30/97 300
Southington CT 1,688 12/29/98 300
Port St. Lucie FL 257 12/09/98 09/08/98 300
Tampa FL 38,844 12/23/97 300
Atlanta GA 1,306 12/18/98 300
Page 145
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Video Rental
- ------------
Brunswick GA 290,369 788,880 None None
Norcross GA 431,284 724,037 None None
Plainfield IN 453,645 908,485 None None
Topeka KS 285,802 966,286 None None
Wichita KS 289,714 797,856 None None
Winchester KY 355,474 929,177 None None
Warren MI 356,348 903,351 None None
Centerville OH 601,408 758,192 None None
Dayton OH 401,723 698,872 None None
Forest Park OH 328,187 921,232 None None
Franklin OH 337,572 777,943 None None
Springboro OH 261,916 897,489 None None
Oklahoma City OK 307,658 474,071 None None
Tulsa OK 318,441 1,004,663 None None
Clarksville TN 499,885 840,869 None None
Columbia TN 466,469 716,723 None None
Hendersonville TN 333,677 938,592 None None
Jackson TN 381,076 857,261 None None
Memphis TN 381,265 900,580 None None
Murfreesboro TN 406,056 886,293 None None
Smyrna TN 302,372 836,214 None None
Austin TX 407,910 885,113 None None
Beaumont TX 293,919 832,154 None None
Hurst TX 373,084 871,163 None None
Lubbock TX 266,805 857,492 None None
Woodway TX 372,487 835,198 None None
Hampton VA 373,499 836,071 None None
Virginia Beach VA 551,588 797,260 None None
Other
- -----
Mesa AZ 271,754 1,259,910 27,961 7,173
Phoenix AZ 322,708 1,496,143 203,268 10,462
Chino CA 53,271 102,748 None None
Fresno CA 428,900 3,434,562 None None
Paramount CA 86,400 278,827 None None
San Diego CA 3,745,000 8,885,351 None 26,544
Page 146
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Video Rental
- ------------
Brunswick GA 290,369 788,880 1,079,249
Norcross GA 431,284 724,037 1,155,321
Plainfield IN 453,645 908,485 1,362,130
Topeka KS 285,802 966,286 1,252,088
Wichita KS 289,714 797,856 1,087,570
Winchester KY 355,474 929,177 1,284,651
Warren MI 356,348 903,351 1,259,699
Centerville OH 601,408 758,192 1,359,600
Dayton OH 401,723 698,872 1,100,595
Forest Park OH 328,187 921,232 1,249,419
Franklin OH 337,572 777,943 1,115,515
Springboro OH 261,916 897,489 1,159,405
Oklahoma City OK 307,658 474,071 781,729
Tulsa OK 318,441 1,004,663 1,323,104
Clarksville TN 499,885 840,869 1,340,754
Columbia TN 466,469 716,723 1,183,192
Hendersonville TN 333,677 938,592 1,272,269
Jackson TN 381,076 857,261 1,238,337
Memphis TN 381,265 900,580 1,281,845
Murfreesboro TN 406,056 886,293 1,292,349
Smyrna TN 302,372 836,214 1,138,586
Austin TX 407,910 885,113 1,293,023
Beaumont TX 293,919 832,154 1,126,073
Hurst TX 373,084 871,163 1,244,247
Lubbock TX 266,805 857,492 1,124,297
Woodway TX 372,487 835,198 1,207,685
Hampton VA 373,499 836,071 1,209,570
Virginia Beach VA 551,588 797,260 1,348,848
Other
- -----
Mesa AZ 271,754 1,259,044 1,566,798
Phoenix AZ 322,708 1,709,873 2,032,581
Chino CA 53,271 102,748 156,019
Fresno CA 428,900 3,434,562 3,863,462
Paramount CA 86,400 278,827 365,227
San Diego CA 3,745,000 8,911,895 12,656,895
Page 147
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Video Rental
- ------------
Brunswick GA 32,810 12/31/97 300
Norcross GA 34,866 10/01/97 300
Plainfield IN 34,772 01/30/98 300
Topeka KS 40,217 12/19/97 300
Wichita KS 4,017 11/23/98 300
Winchester KY 20,140 06/30/98 300
Warren MI 34,578 01/09/98 300
Centerville OH 16,435 06/30/98 300
Dayton OH 15,146 06/29/98 300
Forest Park OH 41,380 11/14/97 300
Franklin OH 32,339 12/30/97 300
Springboro OH 10,492 09/21/98 300
Oklahoma City OK 13,434 04/23/98 300
Tulsa OK 51,797 09/26/97 300
Clarksville TN 7,023 10/02/98 300
Columbia TN 36,931 09/26/97 300
Hendersonville TN 39,060 12/10/97 300
Jackson TN 44,195 09/26/97 300
Memphis TN 28,506 03/31/98 300
Murfreesboro TN 45,689 09/26/97 300
Smyrna TN 43,105 09/02/97 300
Austin TX 36,820 12/01/97 300
Beaumont TX 42,904 09/05/97 300
Hurst TX 15,995 07/29/98 300
Lubbock TX 47,048 08/29/97 300
Woodway TX 34,753 12/16/97 300
Hampton VA 34,780 12/19/97 300
Virginia Beach VA 27,868 02/23/98 300
Other
- -----
Mesa AZ 743,716 06/30/86 300
Phoenix AZ 899,852 06/30/86 300
Chino CA 102,213 01/07/75 300
Fresno CA 3,434,562 10/29/82 180
Paramount CA 278,827 11/22/83 180
San Diego CA 5,110,470 03/08/86 03/25/86 300
Page 148
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Cost Capitalized
Subsequent
Initial Cost to Company to Acquisition
----------------------- ----------------------
Buildings,
Improvements
and
Description Acquisition Carrying
(Note 1) Land Fees Improvements Costs
- ------------------- --------- ----------- ------------ ------
Other
- -----
San Diego CA 2,485,160 8,697,822 None 20,213
San Diego CA 5,797,411 15,473,497 None 42,170
Humble TX 106,000 545,518 10,422 5,990
Chesapeake VA 144,014 649,869 None 11,754
Other -- 398,427 None 28,079
----------- ----------- ------- -------
283,043,253 605,990,855 333,713 467,880
=========== =========== ======= =======
Page 149
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Gross Amount at Which Carried
at Close of Period (Notes 2, 3 and 5)
Buildings,
Improvements
and
Description Acquisition
(Note 1) Land Fees Total
- ------------------- ------------ ------------ ----------
Other
- -----
San Diego CA 2,485,160 8,718,035 11,203,195
San Diego CA 5,797,411 15,515,667 21,313,078
Humble TX 106,000 561,930 667,930
Chesapeake VA 144,014 661,623 805,637
Other -- 426,506 426,506
----------- ----------- -----------
283,043,253 606,792,448 889,835,701
=========== =========== ===========
Page 150
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Life on
which
in latest
Income
Accumulated Statement
Description Depreciation Date of Date is Computed
(Note 1) (Note 4) Construction Acquired (in Months)
- ------------------- ------------ ------------ -------- -----------
Video Rental
- ------------
Other
- -----
San Diego CA 3,599,709 01/23/89 09/19/86 300
San Diego CA 5,959,553 01/20/89 08/05/87 300
Humble TX 420,969 03/25/86 300
Chesapeake VA 375,603 12/22/86 300
Other 291,251
-----------
171,555,267
===========
</TABLE>
Page 151
<PAGE>
REALTY INCOME CORPORATION AND SUBSIDIARIES
SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
Note 1. Nine hundred sixty six of the properties are single unit retail
outlets. One grocery property located in Sheboygan, WI and three other
properties located in San Diego, CA are multi-tenant commercial properties.
All properties were acquired on an all cash basis except one; no
encumbrances were outstanding for the periods presented.
Note 2. The aggregate cost for federal income tax purposes is
$825,315,627.
Note 3. Reconciliation of total real estate carrying value for the three
years ended December 31, 1998 are as follows:
<TABLE>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Balance at beginning of period 699,797,446 564,539,993 515,425,548
Additions during period:
Acquisitions 193,436,163 142,286,618 55,667,447
Equipment 14,685 -- 58,000
Improvements, etc. 79,790 16,683 37,303
Other (leasing costs) 168,425 36,266 --
----------- ----------- -----------
Total additions 193,699,063 142,339,567 55,762,750
----------- ----------- -----------
Deductions during period:
Cost of real estate sold 3,520,108 6,917,114 6,054,238
Cost of equipment sold 58,000 -- --
Other (fully amortized
commissions) 82,700 -- 15,067
Other (provision for
impairment losses) -- 165,000 579,000
----------- ----------- -----------
Total deductions 3,660,808 7,082,114 6,648,305
----------- ----------- -----------
Balance at close of period: 889,835,701 699,797,446 564,539,993
=========== =========== ===========
Note 4. Reconciliation of accumulated depreciation for the three years
ended December 31, 1998 are as follows:
(table continued)
Page 152
<PAGE>
(continued)
1998 1997 1996
----------- ----------- -----------
Balance at beginning of period: 152,206,136 138,307,408 126,062,055
Additions during period -
provision for depreciation 20,766,430 17,465,979 15,364,936
Deductions during period:
Accumulated depreciation
of real estate and
equipment sold 1,334,599 3,567,251 3,104,516
Other (fully amortized
commissions) 82,700 -- 15,067
----------- ----------- -----------
Balance at close of period 171,555,267 152,206,136 138,307,408
=========== =========== ===========
</TABLE>
Note 5. In 1997, a provision for impairment loss was made on two vacant
properties in Riverside, CA and Irving, TX and a restaurant property in
McMinnville, OR which was sold in 1997. In 1996, a provision for
impairment loss was made on a restaurant property in Lexington, SC, and on
other properties located in Phoenix, AZ; Glendale, AZ and Spring, TX.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
- ---------------------------------------------------------
The corporation has had no disagreements with its independent auditors' on
accountancy or financial disclosure.
PART III
========
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
The information set forth under the captions Director Nominees and Officers
Of The Company and Compliance With Federal Securities Laws in the
definitive proxy statement for the Annual Meeting of Stockholders presently
scheduled to be held on May 5, 1999, to be filed pursuant to Regulation
14A.
ITEM 11: EXECUTIVE COMPENSATION
- --------------------------------
The information set forth under the caption Executive Compensation in the
definitive proxy statement for the Annual Meeting of Stockholders presently
Page 153
<PAGE>
scheduled to be held on May 5, 1999, to be filed pursuant to Regulation
14A.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
- -------------------------------------------------------------
The information set forth under the caption Security Ownership Of Certain
Beneficial Owners And Management in the definitive proxy statement for the
Annual Meeting of Stockholders presently scheduled to be held on May 5,
1999, to be filed pursuant to Regulation 14A.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
Not applicable.
PART IV
=======
ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
- ----------------------------------------------------------------
A. The following documents are filed as part of this report.
1. Financial Statements (see Item 8)
a. Independent Auditors' Report
b. Consolidated Balance Sheets,
December 31, 1998 and 1997
c. Consolidated Statements of Income,
Years ended December 31, 1998, 1997 and 1996
d. Consolidated Statements of
Stockholders' Equity,
Years ended December 31, 1998, 1997 and 1996
e. Consolidated Statements of Cash Flows,
Years ended December 31, 1998, 1997 and 1996
f. Notes to Consolidated Financial Statements
g. Consolidated Quarterly Financial Data,
(unaudited) for 1998 and 1997
2. Financial Statement Schedule (see Item 8)
Schedule III - Real Estate and Accumulated Depreciation
Schedules not Filed: All schedules, other than those
indicated in the Table of Contents, have been omitted as the
required information is inapplicable or the information is
presented in the financial statements or related notes.
Page 154
<PAGE>
3. Exhibits
2.1 Agreement and Plan of Merger dated as of May 15, 1997
between Realty Income Corporation, a Delaware
corporation, and Realty Income Maryland, Inc., a
Maryland corporation (incorporated by reference to
the Company's Form 8-B12B dated July 29, 1997
("Form 8-B") and incorporated herein by reference).
3.1 Articles of Incorporation of the Company (filed
as Appendix B to the Company's Proxy Statement
dated March 28, 1997 ("1997 Proxy Statement")
and incorporated herein by reference).
3.2 Bylaws of the Company (filed as Appendix C to the
Company's 1997 Proxy Statement and incorporated
herein by reference).
3.3 Articles Supplementary of the Class A Junior
Participating Preferred Stock of Realty Income
Corporation (filed as an exhibit to Realty Income's
registration statement on Form 8-A, dated June 26,
1998, and incorporated herein by reference).
4.1 Pricing Committee Resolutions and Form of 7.75%
Notes due 2007 (filed as Exhibit 4.2 to the Company's
Form 8-K dated May 5, 1997 and incorporated herein by
reference).
4.2 Indenture dated as of May 6, 1997 between the Company
and The Bank of New York (filed as Exhibit 4.1 to the
Company's Form 8-K dated May 5, 1997 and incorporated
herein by reference).
4.3 First Supplemental Indenture dated as of May 28, 1997,
between the Company and The Bank of New York (filed as
Exhibit 4.3 to the Company's Form 8-B and incorporated
herein by reference).
4.4 Rights Agreement, dated as of June 25, 1998, between
Realty Income Corporation and The Bank of New York
(filed as an exhibit to the Company's registration
statement on Form 8-A, dated June 26, 1998, and
incorporated herein by reference).
4.5 Pricing Committee Resolutions (filed as an exhibit
to Realty Income's Form 8-K, dated October 27, 1998
and incorporated herein by reference).
4.6 Form of 8.25% Notes due 2008 (filed as an exhibit to
Realty Income's Form 8-K, dated October 27, 1998
and incorporated herein by reference).
Page 155
<PAGE>
4.7 Indenture dated as of October 28, 1998 between
Realty Income and The Bank of New York (filed)
as an exhibit to Realty Income's Form 8-K,
dated October 27, 1998 and incorporated herein by
reference).
10.1 Revolving Credit Agreement (filed as Exhibit
99.2 to the Company's Form 8-K dated
December 16, 1994 and incorporated herein by
reference).
10.2 First Amendment to the Revolving Credit
Agreement (filed as Exhibit 10.2 to the
Company's Form 10-Q for the quarter ended
September 30, 1996 and incorporated herein
by reference).
10.3 Second Amendment to the Revolving Credit
Agreement (filed as Exhibit 99.2 to the
Company's Form 8-K dated December 19, 1995
and incorporated herein by reference).
10.4 Third Amendment to the Revolving Credit
Agreement(filed as Exhibit 10.4 to the
Company's Form 10-K dated December 31, 1996
and incorporated herein by reference).
10.5 Fourth Amendment to the Revolving Credit
Agreement(filed as Exhibit 10.5 to the
Company's Form 10-Q dated March 31, 1997
and incorporated herein by reference).
10.6 Amended and Restated Revolving Credit Agreement,
dated as of November 29, 1994 and restated as of
December 30, 1997 (filed as Exhibit 10.1 to the Company's
Form 10-Q dated June 30, 1998 and incorporated herein by
Reference).
10.7 1994 Stock Option and Incentive Plan (filed as Exhibit
4.1 to the Company's Registration Statement on Form S-8
(registration number 33-95708) and incorporated herein
by reference).
10.8 First Amendment to the 1994 Stock Option and Incentive
Plan, dated June 12, 1997 (filed as Exhibit 10.9 to the
Company's Form 8-B and incorporated herein by reference).
10.9 Second Amendment to the 1994 Stock Option and Incentive
Plan, dated December 16, 1997, (filed as Exhibit 10.9 to the
Company's Form 10-K dated December 31, 1997 and incorporated
herein by reference).
Page 156
<PAGE>
10.10 Management Incentive Plan, filed as Exhibit 10.10 to the
Company's Form 10-K dated December 31, 1997 and incorporated
herein by reference).
10.11 Form of Nonqualified Stock Option Agreement for
Independent Directors, (filed as Exhibit 10.11 to the
Company's Form 10-K dated December 31, 1997 and incorporated
herein by reference).
10.12 Form of Indemnification Agreement entered into between
the Company and the executive officers of the Company
(filed as Exhibit 10.1 to the Company's Form 8-K dated
November 21, 1997 and incorporated herein by reference).
10.13 Form of Indemnification Agreement entered into between
the Company and each director on the board of directors
of the Company (filed as Exhibit 10.2 to the Company's
Form 8-K dated November 21, 1997 and incorporated herein
by reference).
10.14 Form of Employment Agreement between the Company and its
Executive Officers (incorporated by reference to the
Company's Form 8-B12B dated July 29, 1997 and
incorporated herein by reference).
12.1 Statement re computation of ratios, filed herein.
21.1 Subsidiaries of the Company as of January 1, 1998, filed
herein.
23.1 Consent of KPMG LLP, filed herein.
27 Financial Data Schedule, filed herein.
B. The Registrant two reports on Form 8-K during the last quarter of the
period covered by this report.
A report on Form 8-K was dated October 27, 1998 and filed on October 28,
1998 reporting the issuance of $100.0 million, 8.25%, 10-year notes due in
November 2008.
A report on Form 8-K was dated October 15, 1998 and filed on October 16,
1998 setting forth risks associated with the Company.
Page 157
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
REALTY INCOME CORPORATION
By: /s/THOMAS A. LEWIS
------------------------------------
Thomas A. Lewis
Vice Chairman of the Board of Directors and
Chief Executive Officer
Date: March 17, 1999
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/WILLIAM E. CLARK
------------------------------------
William E. Clark
Chairman of the Board of Directors
Date: March 17, 1999
By: /s/THOMAS A. LEWIS
------------------------------------
Thomas A. Lewis
Vice Chairman of the Board of Directors and
Chief Executive Officer
(Principal Executive Officer)
Date: March 17, 1999
By: /s/DONALD R. CAMERON
------------------------------------
Donald R. Cameron
Director
SIGNATURES (continued)
Date: March 19, 1999
Page 158
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
By: /s/ROGER P. KUPPINGER
------------------------------------
Roger P. Kuppinger
Director
Date: March 17, 1999
By: /s/MICHAEL D. MCKEE
------------------------------------
Michael D. McKee
Director
Date: March 17, 1999
By: /s/WILLARD H. SMITH JR
------------------------------------
Willard H. Smith Jr
Director
Date: March 17, 1999
By: /s/RICHARD J. VANDERHOFF
------------------------------------
Richard J. VanDerhoff
Director, President and Chief Operating Officer
Date: March 17, 1999
By: /s/GARY MALINO
------------------------------------
Gary Malino
Senior Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer)
Date: March 17, 1999
Page 159
<PAGE>
SIGNATURES (continued)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated.
By: /s/GREGORY J. FAHEY
------------------------------------
Gregory J. Fahey
Vice President, Controller
Date: March 17, 1999
EXHIBIT INDEX
=============
Exhibit No. Description
- ----------- -----------
12.1 Statement re computation of ratios
21.1 Subsidiaries of the Company as of
January 1, 1999
23.1 Consent of KPMG LLP
27 Financial Data Schedule
Page 160
<PAGE>
<PAGE>
Exhibit 12.1
REALTY INCOME CORPORATION
STATEMENT OF COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(dollars in thousands)
<TABLE>
Years ended December 31,
-----------------------------------------------
1998 1997 1996 1995 1994
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net income $41,304 $34,770 $32,223 $25,600 $15,224
------- ------- ------- ------- -------
Fixed Charges:
Interest 13,044 7,800 1,987 2,186 354
Amortization of fees 679 426 380 456 42
Interest capitalized 660 168 150 217 --
------- ------- ------- ------- -------
Fixed charges 14,383 8,394 2,517 2,859 396
------- ------- ------- ------- -------
Net income before
fixed charges 55,027 42,996 34,590 28,242 15,620
Divided by fixed
charges 14,383 8,394 2,517 2,859 396
------- ------- ------- ------- -------
Ratio of earnings to
fixed charges 4 5 14 10 39
======= ======= ======= ======= =======
</TABLE>
Page 1
<PAGE>
<PAGE>
Exhibit 21.1
============
Subsidiaries of the Company as of January 1, 1999
- -------------------------------------------------
Realty Income Texas Properties, L.P.
a Delaware limited partnership
Realty Income Texas Properties, Inc.
a Delaware corporation
Page 1
<PAGE>
<PAGE>
EXHIBIT 23.1
The Board of Directors
Realty Income Corporation:
We consent to incorporation by reference in Registration
Statement Nos. 333-10431 and 333-34311, each on Form S-3 of Realty
Income Corporation and to incorporation by reference in Registration
Statement No. 33-95708 on Form S-8 of Realty Income Corporation, of
our report dated January 22, 1999, with respect to the consolidated
balance sheets of Realty Income Corporation as of December 31, 1998
and 1997, and the related consolidated statements of income,
stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1998, and the related Schedule
III, which report appears in the December 31, 1998, annual report on
Form 10-K of Realty Income Corporation.
/s/ KPMG LLP
San Diego, California
March 22, 1999
Page 1
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE>5
<LEGEND>
This Schedule contains summary financial information extracted
from the registrant's Balance Sheet as of December 31, 1998 and
Income Statement for the 12 months ended December 31, 1998 and
is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER>1
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 2,533,000
<SECURITIES> 0
<RECEIVABLES> 2,973,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> <F1> 0
<PP&E> 889,835,000
<DEPRECIATION> 171,555,000
<TOTAL-ASSETS> 759,234,000
<CURRENT-LIABILITIES> <F1> 0
<BONDS> 294,800,000
<COMMON> 26,817,000
0
0
<OTHER-SE> 423,392,000
<TOTAL-LIABILITY-AND-EQUITY> 759,234,000
<SALES> 0
<TOTAL-REVENUES> 85,132,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 30,405,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,723,000
<INCOME-PRETAX> 41,530,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 41,530,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> (226,000)
<NET-INCOME> 41,304,000
<EPS-PRIMARY> 1.55
<EPS-DILUTED> 1.55
<FN> Current assets and current liabilities are not applicable to
the Company under current industry standards.
</FN>
<PAGE>
</TABLE>
