REALTY INCOME CORP
S-3, 1999-06-16
REAL ESTATE INVESTMENT TRUSTS
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As filed with the Securities and Exchange Commission on  June 15, 1999

                                          Registration No.



                  SECURITIES AND EXCHANGE COMMISSION
                        WASHINGTON, D.C. 20549
                        ----------------------

                               FORM S-3
                        REGISTRATION STATEMENT
                                UNDER
                      THE SECURITIES ACT OF 1933
                      --------------------------

                       REALTY INCOME CORPORATION
        (Exact name of registrant as specified in its charter)

            Maryland                                 33-0580106
(State or Other Jurisdiction of                   (I.R.S. Employer
Incorporation of Organization)                  Identification Number)
- -------------------------------                 ----------------------

                         220 West Crest Street
                   Escondido, California 92025-1707
                            (760) 741-2111
            (Address, including Zip Code, Telephone Number,
   including Area Code, of Registrant's Principal Executive Offices)
   -----------------------------------------------------------------

                              Copies To:

Michael R. Pfeiffer, Esq.            William J. Cernius, Esq.
c/o Realty Income Corporation        Joseph G. McCarthy, Esq.
220 West Crest Street                Latham & Watkins
Escondido, California 92025-1707     650 Town Center Drive, 20th Floor
(760) 741-2111                       Costa Mesa, California 92626-1925
                                                   (714) 540-1235

       (Name, Address, including Zip Code, and Telephone Number,
              including Area Code, of Agent for Service)
       ---------------------------------------------------------

   Approximate date of commencement of proposed sale to the public:
    From time to time after the effective date of this Registration
             Statement as determined by market conditions.



                                                              Page 1

<PAGE>
If the only securities being registered on this Form S-3 are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box.   [  ]

If any of the securities being offered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), other than
securities offered only in connection with dividend or interest
reinvestment plans, check the following box.   [X]

If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering.   [  ]

If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.   [  ]

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.   [  ]
<TABLE>
                    CALCULATION OF REGISTRATION FEE

Title of                       Proposed     Proposed
each Class of                  Maximum      Maximum
Securities         Amount      Offering     Aggregate     Amount of
to be              to be       Price Per    Offering     Registration
Registered       Registered      Unit         Price         Fee
    (1)            (2)(4)                  (2)(3)(4)        (4)
- -------------    ----------    ---------   ----------    ------------
<S>              <C>           <C>          <C>          <C>
Debt
Securities

Preferred
Stock, $1.00
par value
per share(5)

Common Stock,
$1.00 par
value per
share(6)(7)

Total           $400,000,000      (8)     $400,000,000  $111,200.00(9)
</TABLE>
(1)  This Registration Statement also covers delayed delivery
contracts which may be issued by the Company under which the
counterparty may be required to purchase Debt Securities, Preferred
Stock and/or Common Stock.
                                                              Page 2

(2)  In U.S. Dollars or the equivalent thereof denominated in one or
more foreign currencies or units of two or more foreign currencies or
composite currencies (such as European Currency Units).

(3)  Estimated solely for purposes of calculating the registration
fee.  No separate consideration will be received for common stock or
preferred stock that is issued upon conversion of debt securities or
preferred stock registered hereunder, as the case may be.  The
aggregate maximum public offering price of all Securities issued
pursuant to this Registration Statement will not exceed $400,000,000.

(4)  Pursuant to Rule 429 under the Securities Act, $9,229,241 of the
securities to be registered are being carried forward to this
Registration Statement from Registration Statement No. 33-34311.  Fees
of $2,796.74 were previously paid in connection with $9,229,241 of the
securities originally registered on Registration Statement No.
33-34311 and being carried forward to this Registration Statement,
therefore, $108,403.26 is included herewith.

(5)  Such indeterminate number of shares of preferred stock as may
from time to time be issued at indeterminate prices or issuable upon
conversion of debt securities.

(6)  Such indeterminate number of shares of common stock as may from
time to time be issued at indeterminate prices or issuable upon
conversion of debt securities or preferred stock registered hereunder,
as the case may be.

(7)  Each share of common stock being registered hereunder, if issued
prior to the termination by the Company of its Rights Agreement dated
as of June 25, 1998, will include one Common Share Purchase Right.
Prior to the occurrence of certain events, the Common Share Purchase
Rights will not be exercised or evidenced separately from the Common
Stock.

(8)  Omitted pursuant to General Instruction II.D of Form S-3 under
the Securities Act.

(9)  Calculated pursuant to Rule 457(o) of the rules and regulations
under the Securities Act.

Pursuant to Rule 429 under the Securities Act, the Prospectus included
in this Registration Statement is a combined Prospectus which relates
to Registration Statement No.33-34311, as amended, previously filed by
the Company on Form S-3 pursuant to which $9,229,241 in securities
remain to be issued.

THE REGISTRANT MAY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES
THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN
ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL
                                                              Page 3

<PAGE>
THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.  THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.












































                                                              Page 4

<PAGE>
Subject to completion, dated June 15, 1999.

PROSPECTUS
                             $400,000,000
                       REALTY INCOME CORPORATION
           DEBT SECURITIES, PREFERRED STOCK AND COMMON STOCK
           -------------------------------------------------


Realty Income Corporation, referred to in this prospectus as Realty
Income, the Company, we or our, may from time to time offer in one or
more series (i) our debt securities, (ii) shares of our preferred
stock, $1.00 par value per share, or (iii) shares of our common stock,
$1.00 par value per share, with an aggregate public offering price of
up to $400,000,000 on terms to be determined at the time of the
offering.  Our debt securities, our preferred stock and our common
stock (collectively referred to as our securities), may be offered,
separately or together, in separate series, in amounts, at prices and
on terms that will be set forth in one or more prospectus supplements
to this prospectus.

The specific terms of the securities with respect to which this
prospectus is being delivered will be set forth in the applicable
prospectus supplement and will include, where applicable:

  -  in the case of our debt securities, the specific title, aggregate
     principal amount, currency, form (which may be registered,
     bearer, certificated or global), authorized denominations,
     maturity, rate (or manner of calculating the rate) and time of
     payment of interest, terms for redemption at our option or
     repayment at the holder's option, terms for sinking fund
     payments, terms for conversion into shares of our preferred stock
     or common stock, covenants and any initial public offering price;

  -  in the case of our preferred stock, the specific designation,
     preferences, conversion and other rights, voting powers,
     restrictions, limitations as to transferability, dividends and
     other distributions and terms and conditions of redemption and
     any initial public offering price; and

  -  in the case of our common stock, any initial public offering
     price.

In addition, the specific terms may include limitations on actual,
beneficial or constructive ownership and restrictions on transfer of
the securities, in each case as may be appropriate to preserve our
status as a real estate investment trust, or REIT, for federal income
tax purposes.  The applicable prospectus supplement will also contain
information, where applicable, about United States federal income tax
considerations, and any exchange listing of the securities covered by
the prospectus supplement.


                                                              Page 5

Our common stock is traded on the New York Stock Exchange under the
symbol "O".  On June 14, 1999, the last reported sale price of our
common stock was $23.75 per share.

Our securities may be offered directly, through agents designated from
time to time by us, or to or through underwriters or dealers.  If any
agents or underwriters are involved in the sale of any of our
securities, their names, and any applicable purchase price, fee,
commission or discount arrangement between or among them, will be set
forth in the applicable prospectus supplement.  None of our securities
may be sold without delivery of the applicable prospectus supplement
describing the method and terms of the offering of those securities.

Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities
or determined if this prospectus is truthful or complete.  Any
representation to the contrary is a criminal offense.

The date of this prospectus is                 , 1999.
                               ----------------
































                                                              Page 6

                              PROSPECTUS
<TABLE>
                                                                  Page
                                                                  ----
<S>                                                               <C>
The Company                                                          7
Use of Proceeds                                                      8
Ratios of Earnings to Fixed Charges and Earnings to Combined
  Fixed Charges and Preferred Stock Dividends                        8
Forward-Looking Statements                                           9
Description of Debt Securities                                      10
Description of Common Stock                                         27
Description of Preferred Stock                                      30
Restrictions on Ownership and Transfers of Capital Stock            41
Material Federal Income Tax Considerations to Realty Income
  Corporation                                                       45
Plan of Distribution                                                57
Experts                                                             58
Legal Matters                                                       58
Where You Can Find More Information                                 58
Incorporation of Information We File with the SEC                   59
</TABLE>

                              THE COMPANY

We are organized to operate as an equity real estate investment trust
or 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 March 31, 1999, we owned a diversified portfolio of 1,004
properties located in 45 states with over 8.1 million square feet of
leasable space.  Over 99% of our  properties were leased as of
March 31, 1999.

Our investment strategy is to acquire freestanding, single tenant,
retail properties leased to regional and national retail chains under
long-term, net lease agreements.  We typically acquire, and then lease
back, retail store locations from chain store operators, providing
capital to the operators for continued expansion and other corporate
purposes.  Our net lease agreements generally 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, fixed increases or
additional rent calculated as a percentage of the tenant's gross sales
above a specified level.

Since 1970 and through December 31, 1998, we have acquired and leased
back to regional and national retail chains 944 properties (including
34 properties that have been sold) and have collected in excess of 98%
of the original contractual rent obligations on those properties.  We
believe that the long-term ownership of an actively managed,
                                                              Page 7

<PAGE>
diversified portfolio of retail properties leased under long-term, net
lease agreements produces consistent, predictable income.  We believe
that the income generated under long-term leases coupled with the
tenant's responsibility for property expenses under the net lease
structure generally produce a more predictable income stream than many
other types of real estate portfolios.  Of the 1,004 properties in the
portfolio as of March 31, 1999, 997 were single tenant properties and
the remaining properties were multi-tenant.  As of March 31, 1999, 991
or 99.4% of our 997 single tenant properties were net leased pursuant
to leases with an average remaining lease term (excluding extension
options) of approximately 8.6 years.


                            USE OF PROCEEDS

Unless otherwise described in the applicable prospectus supplement, we
intend to use the net proceeds from the sale of our securities for
general corporate purposes, which may include, among other things, the
repayment of indebtedness, the development and acquisition of
additional properties and other acquisition transactions, and the
expansion and improvement of properties in our portfolio.


     RATIOS OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED
              FIXED CHARGES AND PREFERRED STOCK DIVIDENDS

The following table sets forth ratios of earnings to fixed charges for
the periods shown.  The ratios of earnings to fixed charges were
computed by dividing earnings by fixed charges.  For this purpose,
earnings consist of net income before interest expense.  Fixed charges
consist of interest costs (including capitalized interest) and the
amortization of debt issuance costs.  As of March 31, 1999, we had not
issued any of our preferred stock; therefore, the ratios of earnings
to combined fixed charges and preferred share dividends are the same
as the ratios presented below.  However, on a pro forma basis,
assuming that our 9 3/8% Class B Cumulative Redeemable Preferred Stock
was issued and the proceeds therefrom were used to repay borrowings
under our Credit Facility on January 1, 1998, the ratio of earnings to
combined fixed charges and preferred stock dividends for the year
ended December 31, 1998 would have been 3.4x and the ratio of earnings
to combined fixed charges and preferred stock dividends for the
quarter ended March 31, 1999 would have been 2.4x.
<TABLE>
Three Months Ended March 31             Years Ended December 31
- ---------------------------   ----------------------------------------
     <S>       <C>            <C>      <C>     <C>       <C>     <C>
     1999      1998           1998     1997     1996     1995     1994
     ----      ----           ----     ----    -----     ----    -----
     2.6x      4.8x           3.8x     5.1x    13.7x     9.9x    39.4x
</TABLE>



                                                              Page 8

                      FORWARD-LOOKING STATEMENTS

This prospectus supplement includes forward-looking statements.  We
have based these forward-looking statements on our current
expectations and projections about future events.  These 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.

Additional factors that may cause risks, uncertainties and assumptions
include those discussed in the section entitled "Business-Other Items"
in our Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (the "Annual Report"), including the subheadings
entitled "Competition for Acquisition of Real Estate," "Environmental
Liabilities," "Taxation of the Company," "Effect of Distribution
Requirements," "Real Estate Ownership Risks" and "Dependence on Key
Personnel," and the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the
Annual Report and in our Report on Form 10-Q for the quarter ended
March 31, 1999.

You should rely only on the information contained or incorporated by
reference in this prospectus and in any accompanying prospectus
supplement.  We have not authorized any other person to provide you
with different information.  If anyone provides you with different or
inconsistent information, you should not rely on it.  We are not
making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted.  You should assume that the
information appearing in this prospectus, as well as information we
previously filed with the Securities and Exchange Commission (the
"SEC") and incorporated by reference, is accurate as of its date only.
Our business, financial condition, results of operations and prospects
may have changed since those dates.







                                                              Page 9

                    DESCRIPTION OF DEBT SECURITIES

GENERAL

Our debt securities will be our direct obligations and they may be
secured or unsecured, senior or subordinated indebtedness.  We may
issue our debt securities under one or more indentures and each
indenture will be dated on or before the issuance of the debt
securities to which it relates.  Additionally, each indenture must be
in the form filed as an exhibit to the Registration Statement
containing this prospectus or in a form incorporated by reference to
this prospectus in a post-effective amendment to the Registration
Statement or a Form 8-K.  The form of indenture is subject to any
amendments or supplements that may be adopted from time to time.  We
will enter into each indenture with a trustee and the trustee for each
indenture may be the same.  The indenture will be subject to, and
governed by, the Trust Indenture Act of 1939, as amended.  Because
this description of debt securities is a summary, it does not contain
all the information that may be important to you.  You should read all
provisions of our indenture and our debt securities to assure that you
have all the important information you need to make any required
decisions.  All capitalized terms used, but not defined, in this
section shall have the meanings set forth in the applicable indenture.

TERMS

The particular terms of any series of our debt securities will be
described in a prospectus supplement.  Additionally, any applicable
modifications of or additions to the general terms of our debt
securities described in this prospectus and in the applicable
indenture will also be described in a prospectus supplement.
Accordingly, for a description of the terms of any series of our debt
securities, you must refer to both the prospectus supplement relating
to those debt securities and the description of the debt securities
set forth in this prospectus.  If any particular terms of our debt
securities described in a prospectus supplement differ from any of the
terms described in this prospectus, then those terms shall have the
meaning set forth in the relative prospectus supplement.

Except as set forth in any prospectus supplement, our debt securities
may be issued without limit as to aggregate principal amount, in one
or more series, in each case as established from time to time by our
Board of Directors, a committee of the Board of Directors or as set
forth in the applicable indenture or one or more supplements to the
indenture.  All of our debt securities of one series need not be
issued at the same time, and unless otherwise provided, a series may
be reopened for issuance of additional debt securities without the
consent of the holders of the debt securities of that series.

Each indenture will provide that we may, but need not, designate more
than one trustee for the indenture, each with respect to one or more

                                                              Page 10

<PAGE>
series of our debt securities.  Any trustee under an indenture may
resign or be removed with respect to one or more series of our debt
securities, and a successor trustee may be appointed to act with
respect to that series.  If two or more persons are acting as trustee
to different series of our debt securities, each trustee shall be a
trustee of a trust under the applicable indenture separate and apart
from the trust administered by any other trustee and, except as
otherwise indicated in this prospectus, any action taken by a trustee
may be taken by that trustee with respect to, and only with respect
to, the one or more series of debt securities for which it is trustee
under the applicable indenture.

This summary sets forth certain general terms and provisions of the
indenture and our debt securities.  For a detailed description of a
specific series of debt securities, you should consult the prospectus
supplement for that series.  The prospectus supplement contains all of
the following information:

1.   the title of those debt securities;

2.   the aggregate principal amount of those debt securities and any
     limit on the aggregate principal amount;

3.   the price (expressed as a percentage of the principal amount of
     those debt securities) at which those debt securities will be
     issued and, if other than the principal amount of those debt
     securities, the portion of the principal amount payable upon
     declaration of acceleration of the maturity thereof, or (if
     applicable) the portion of the principal amount of those debt
     securities that is convertible into common stock or preferred
     stock, or the method by which any convertible portion of those
     debt securities shall be determined;

4.   if those debt securities are convertible, the terms on which they
     are convertible, including the initial conversion price or rate
     and conversion period and, in connection with the preservation of
     our status as a REIT, any applicable limitations on the ownership
     or transferability of the common stock or the preferred stock
     into which those debt securities are convertible;

5.   the date or dates, or the method for determining the date or
     dates, on which the principal of those debt securities will be
     payable;

6.   the rate or rates (which may be fixed or variable), or the method
     by which the rate or rates shall be determined, at which those
     debt securities will bear interest, if any;

7.   the date or dates, or the method for determining the date or
     dates, from which any interest will accrue, the dates upon which
     that interest will be payable, the record dates for payment of
     that interest, or the method by which any of those dates shall be

                                                              Page 11

<PAGE>
     determined, the persons to whom that interest shall be payable,
     and the basis upon which that interest shall be calculated if
     other than that of a 360-day year of twelve 30-day months;

8.   the place or places where the principal of (and premium, if any)
     and interest, if any, on debt securities will be payable, where
     debt securities may be surrendered for conversion or registration
     of transfer or exchange and where notices or demands to or upon
     us relating to debt securities and the indenture may be served;

9.   the period or periods, if any, within which, the price or prices
     at which and the terms and conditions upon which those debt
     securities may be redeemed, as a whole or in part, at our option;

10.  our obligation, if any, to redeem, repay or purchase those debt
     securities pursuant to any sinking fund or analogous provision or
     at the option of a holder of those debt securities, and the
     period or periods within which, the price or prices at which and
     the terms and conditions upon which those debt securities will be
     redeemed, repaid or purchased, as a whole or in part, pursuant to
     this obligation;

11.  if other than U.S. dollars, the currency or currencies in which
     those debt securities are denominated and payable, which may be a
     foreign currency or units of two or more foreign currencies or a
     composite currency or currencies, and the terms and conditions
     relating thereto;

12.  whether the amount of payments of principal of (and premium, if
     any) or interest, if any, on those debt securities may be
     determined with reference to an index, formula or other method
     (which index, formula or method may, but need not, be based on a
     currency, currencies, currency unit or units or composite
     currency or currencies) and the manner in which those amounts
     shall be determined;

13.  whether those debt securities will be issued in certificated
     and/or book-entry form, and, if so, the identity of the
     depositary for those debt securities;

14.  whether those debt securities will be in registered or bearer
     form and, if in registered form, the denominations thereof if
     other than $1,000 and any integral multiple thereof and, if in
     bearer form, the denominations thereof and terms and conditions
     relating thereto;

15.  the applicability, if any, of the defeasance and covenant
     defeasance provisions described herein or set forth in the
     applicable indenture, or any modification of the indenture;

16.  any deletions from, modifications of or additions to the events
     of default or our covenants with respect to those debt
     securities;
                                                              Page 12

17.  whether and under what circumstances we will pay any additional
     amounts on those debt securities in respect of any tax,
     assessment or governmental charge and, if so, whether we will
     have the option to redeem those debt securities in lieu of making
     this payment;

18.  the subordination provisions, if any, relating to those debt
     securities;

19.  the provisions, if any, relating to any security provided for
     those debt securities; and

20.  any other terms of those debt securities.

If the applicable prospectus supplement provides, we may issue the
debt securities at a discount below their principal amount and provide
for less than the entire principal amount of the debt securities to be
payable upon declaration of acceleration of the maturity thereof
("Original Issue Discount Securities").  In those cases, any material
U.S. federal income tax, accounting and other considerations
applicable to Original Issue Discount Securities will be described in
the applicable prospectus supplement.

DENOMINATIONS, INTEREST, REGISTRATION AND TRANSFER

Unless otherwise described in the applicable prospectus supplement,
the debt securities of any series will be issuable in denominations of
$1,000 and integral multiples of $1,000.

Unless otherwise described in the applicable prospectus supplement, we
will pay the principal of (and premium, if any) and interest on any
series of debt securities at the applicable trustee's corporate trust
office, the address of which will be set forth in the applicable
prospectus supplement; provided, however, that, unless otherwise
provided in the applicable prospectus supplement, we may make interest
payments (i) by check mailed to the address of the person entitled to
the payment as that address appears in the applicable register for
those debt securities, or (ii) by wire transfer of funds to the person
at an account maintained within the United States.

Subject to certain limitations imposed on debt securities issued in
book-entry form, the debt securities of any series will be
exchangeable for any authorized denomination of other debt securities
of the same series and of a like aggregate principal amount and tenor
upon surrender of those debt securities at the office of any transfer
agent we designate for that purpose.  In addition, subject to certain
limitations imposed on debt securities issued in book-entry form, the
debt securities of any series may be surrendered for conversion or
registration of transfer thereof at the office of any transfer agent
we designate for that purpose.  Every debt security surrendered for
conversion, registration of transfer or exchange shall be duly

                                                              Page 13

<PAGE>
endorsed or accompanied by a written instrument of transfer and the
person requesting that transfer must provide evidence of title and
identity satisfactory to us and the applicable transfer agent.  No
service charge will be made for any registration of the transfer or
exchange of any debt securities, but we may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith.  We may at any time rescind the designation of
any transfer agent appointed with respect to the debt securities of
any series or approve a change in the location through which any
transfer agent acts, except that we will be required to maintain a
transfer agent in each place of payment for that series.  We may at
any time designate additional transfer agents with respect to any
series of debt securities.

Neither we nor any trustee shall be required to

  -  issue, register the transfer of or exchange debt securities of
     any series if that debt security may be among those selected for
     redemption during a period beginning at the opening of business
     15 days before the mailing or first publication, as the case may
     be, of notice of redemption of those debt securities and ending
     at the close of business on

     1.  the day of mailing of the relevant notice of redemption if
         the debt securities of that series are issuable only in
         registered form, or

     2.  the day of the first publication of the relevant notice of
         redemption if the debt securities of that series are issuable
         (only) in bearer form, or

     3.  the day of mailing of the relevant notice of redemption if
         those debt securities are issuable in registered form (and
         bearer form) and there is no publication; or

  -  register the transfer of or exchange any debt security in
     registered form, or portion thereof, so selected for redemption,
     in whole or in part, except the unredeemed portion of any debt
     security being redeemed in part; or

  -  exchange any debt security in bearer form so selected for
     redemption, except in exchange for a debt security of that series
     in registered form that is simultaneously surrendered for
     redemption; or

  -  issue, register the transfer of or exchange any debt security
     that has been surrendered for repayment at the holder's option,
     except the portion, if any, of that debt security not to be so
     repaid.




                                                              Page 14

MERGER, CONSOLIDATION OR SALE OF ASSETS

Each indenture will provide that we will not consolidate with, sell,
lease or convey all or substantially all of our assets to, or merge
with or into, any person unless

  -  either we shall be the continuing entity, or the successor person
     (if not us) formed by or resulting from the consolidation or
     merger or which shall have received the transfer of the assets
     shall be a corporation organized and existing under the laws of
     the United States or any State or jurisdiction thereof and shall
     expressly assume (1) our obligation to pay the principal of (and
     premium, if any) and interest on all the debt securities issued
     under the indenture and (2) the due and punctual performance and
     observance of all the covenants and conditions contained in the
     indenture and in the debt securities;

  -  immediately after giving effect to the transaction and treating
     any indebtedness that becomes our obligation or the obligation of
     any Subsidiary as a result of the transaction having occurred,
     and treating any liens on any property or assets of ours or any
     Subsidiary that are incurred, created or assumed as a result of
     the transaction having occurred or as having been created,
     incurred or assumed, by us or the Subsidiary (defined below) at
     the time of the transaction, no event of default under the
     indenture, and no event that, after notice or the lapse of time,
     or both, would become an event of default, shall have occurred
     and be continuing; and

  -  an officer's certificate and legal opinion certifying that these
     conditions have been met shall be delivered to the trustee.

CERTAIN COVENANTS

EXISTENCE.  Except as permitted under the heading above, entitled
"-Merger, Consolidation or Sale of Assets," we will be required under
each indenture to do or cause to be done all things necessary to
preserve and keep in full force and effect our corporate existence,
all material rights (by charter, by-laws and statute) and all material
franchises; provided, however, that we shall not be required to
preserve any right or franchise if our Board of Directors determines
that the preservation thereof is no longer desirable in the conduct of
our business.

MAINTENANCE OF PROPERTIES.  Each indenture will require us to cause
all of our material properties used or useful in the conduct of our
business or the business of any Subsidiary to be maintained and kept
in good condition, repair and working order and supplied with all
necessary equipment and will require us to make all necessary repairs,
renewals, replacements, betterments and improvements to those
properties, as in our judgment may be necessary so that the business

                                                              Page 15

<PAGE>
carried on in connection with those properties may be properly and
advantageously conducted at all times; provided, however, that we and
our Subsidiaries shall not be prevented from selling or otherwise
disposing of these properties for value in the ordinary course of
business.

INSURANCE.  Each indenture will require us and each of our
Subsidiaries, to keep in force upon all of our properties and
operations policies of insurance carried with responsible companies in
amounts and covering all risks as shall be customary in the industry
in accordance with prevailing market conditions and availability.

PAYMENT OF TAXES AND OTHER CLAIMS.  Each indenture will require us to
pay or discharge or cause to be paid or discharged, before they shall
become delinquent, (a) all taxes, assessments and governmental charges
levied or imposed on us, our income, profits or property, or any
Subsidiary, its income, profits or property and (b) all lawful claims
for labor, materials and supplies that, if unpaid, might by law become
a lien upon our property or the property of any Subsidiary; provided,
however, that we shall not be required to pay or discharge or cause to
be paid or discharged any tax, assessment, charge or claim the amount,
applicability or validity of which we are contesting in good faith
through appropriate proceedings.

PROVISIONS OF FINANCIAL INFORMATION.  Whether or not we are subject to
Section 13 or 15(d) of the Exchange Act, we will be required by each
indenture, within 15 days after each of the respective dates by which
we would have been required to file annual reports, quarterly reports
and other documents with the Commission if we were subject to those
Sections of the Exchange Act to:

  -  transmit by mail to all holders of debt securities issued under
     the indenture, as their names and addresses appear in the
     applicable register for those debt securities, without cost to
     the holders, copies of the annual reports, quarterly reports and
     other documents that we would have been required to file with the
     Commission pursuant to Section 13 or 15(d) of the Exchange Act if
     we were subject to those Sections;

  -  file with the applicable trustee copies of the annual reports,
     quarterly reports and other documents that we would have been
     required to file with the Commission pursuant to Section 13 or
     15(d) of the Exchange Act if we were subject to those Sections;
     and

  -  supply promptly, upon written request and payment of the
     reasonable cost of duplication and delivery, copies of these
     documents to any prospective holder of the debt securities.

Except as may otherwise be provided in the prospectus supplement
relating to any series of debt securities, the term "Subsidiary", as
used in the indenture means any other Person of which more than 50% of

                                                              Page 16

<PAGE>
(a) the equity or other ownership interests or (b) the total voting
power of shares of capital stock or other ownership interests entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers, trustees or general or managing
partners thereof is at the time owned by us or one or more of our
Subsidiaries or a combination thereof.

ADDITIONAL COVENANTS.  If we make any additional covenants with
respect to any series of debt securities, those covenants will be set
forth in the prospectus supplement relating to those debt securities.

EVENTS OF DEFAULT, NOTICE AND WAIVER

Unless otherwise provided in the applicable indenture, each indenture
will provide that the following events are "Events of Default" for any
series of debt securities issued under it:

  -  default for 30 days in the payment of any installment of interest
     on any debt security of that series;

  -  default in the payment of the principal of (or premium, if any,
     on) any debt security of that series when due, whether at stated
     maturity or by declaration of acceleration, notice of redemption,
     notice of option to elect repayment or otherwise;

  -  default in making any sinking fund payment as required for any
     debt security of that series;

  -  default in the performance of any of our other covenants
     contained in the indenture (other than a covenant added to the
     indenture solely for the benefit of a series of debt securities
     issued thereunder other than that series), which continues for 60
     days after we receive written notice from the trustee or the
     holders of at least 25% in principal amount of the outstanding
     debt securities of that series;

  -  default under any bond, debenture, note or other evidence of
     indebtedness for money borrowed by us or any of our subsidiaries
     (including obligations under leases required to be capitalized on
     the balance sheet of the lessee under generally accepted
     accounting principles, but not including any indebtedness or
     obligations for which recourse is limited to property purchased)
     in an aggregate principal amount in excess of $25,000,000 or
     under any mortgage, indenture or instrument under which there may
     be issued or by which there may be secured or evidenced any
     indebtedness for money borrowed by us or any of our Subsidiaries
     (including leases, but not including indebtedness or obligations
     for which recourse is limited to property purchased) in an
     aggregate principal amount in excess of $25,000,000, whether the
     indebtedness exists at the date of the relevant indenture or
     shall thereafter be created, which default shall have resulted in
     the indebtedness becoming or being declared due and payable prior

                                                              Page 17

<PAGE>
     to the date on which it would otherwise have become due and
     payable or which default shall have resulted in the obligation
     being accelerated, without the acceleration having been rescinded
     or annulled;

  -  certain events of bankruptcy, insolvency or reorganization, or
     court appointment of a receiver, liquidator or trustee
     experienced by us or a Significant Subsidiary; and

  -  any other event of default provided with respect to a particular
     series of debt securities.

The term "Significant Subsidiary" as used above has the meaning
ascribed to the term in Regulation S-X promulgated under the
Securities Act, as the Regulation was in effect on January 1, 1999.

If an event of default under any indenture with respect to debt
securities of any series at the time outstanding occurs and is
continuing, then the applicable trustee or the holders of not less
than 25% in principal amount of the outstanding debt securities of
that series may declare the principal amount (or, if the debt
securities of that series are Original Issue Discount Securities or
indexed securities, that portion of the principal amount as may be
specified in the terms thereof) of all the debt securities of that
series to be due and payable immediately by written notice thereof to
us (and to the applicable trustee if given by the holders).  However,
at any time after the declaration of acceleration with respect to debt
securities of a series has been made, but before a judgment or decree
for payment of the money due has been obtained by the applicable
trustee, the holders of not less than a majority of the principal
amount of the outstanding debt securities of that series may rescind
and annul the declaration and its consequences if:

  -  we shall have deposited with the applicable trustee all required
     payments of the principal of (and premium, if any) and interest
     on the debt securities of that series (other than principal and
     premium, if any, and interest which have become due solely as a
     result of the acceleration), plus certain fees, expenses,
     disbursements and advances of the applicable trustee; and

  -  all events of default, other than the nonpayment of accelerated
     principal (or specified portion thereof), premium, if any, and
     interest with respect to debt securities of that series have been
     cured or waived as provided in the indenture.

Each indenture will also provide that the holders of not less than a
majority in principal amount of the outstanding debt securities of any
series may waive any past default with respect to that series and its
consequences, except:

  -  a default in the payment of the principal of (or premium, if any)
     or interest on any debt security of that series; or

                                                              Page 18

  -  a default in respect of a covenant or provision contained in the
     indenture that cannot be modified or amended without the consent
     of the holder of each outstanding debt security of the series
     affected by the default.

Each indenture will require each trustee to give notice of a default
under the indenture to all holders of debt securities within 90 days
unless the default shall have been cured or waived, subject to certain
exceptions; provided, however, that the trustee may withhold notice to
the holders of any series of debt securities of any default with
respect to that series (except a default in the payment of the
principal of (or premium, if any) or interest on any debt security of
that series or in the payment of any sinking fund installment in
respect of any debt security of that series) if specified responsible
officers of the trustee consider withholding the notice to be in that
holders' interest.

Each indenture will provide that no holders of debt securities of any
series may institute any proceedings, judicial or otherwise, with
respect to the indenture or for any remedy thereunder, except in the
case of failure of the trustee, for 60 days, to act after it has
received a written request to institute proceedings in respect of an
event of default from the holders of not less than 25% in principal
amount of the outstanding debt securities of that series, as well as
an offer of indemnity reasonably satisfactory to it, and no direction
inconsistent with the written request has been given to the trustee
during the 60-day period by holders of a majority in principal amount
of the outstanding debt securities of that series.  This provision
will not prevent, however, any holder of debt securities from
instituting suit for the enforcement of payment of the principal of
(and premium, if any) and interest on those debt securities at the
respective due dates thereof.

Each indenture will provide that, subject to provisions in the Trust
Indenture Act of 1939 relating to its duties in case of default, the
trustee is under no obligation to exercise any of its rights or powers
under the indenture at the request or direction of any holders of any
series of the debt securities then outstanding under the indenture,
unless those holders shall have offered to the trustee reasonable
security or indemnity.  The holders of not less than a majority in
principal amount of the outstanding debt securities of any series
shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee, or
of exercising any trust or power conferred upon the trustee; provided
that the direction shall not conflict with any rule of law or the
indenture, and provided further that the trustee may refuse to follow
any direction that may involve the trustee in personal liability or
that may be unduly prejudicial to the holders of debt securities of
that series not joining in the direction to the trustee.



                                                              Page 19

Within 120 days after the close of each fiscal year, we will be
required to deliver to the trustee a certificate, signed by one of
several specified officers, stating whether or not the officer has
knowledge of any default under the indenture and, if so, specifying
each default and the nature and status thereof.

MODIFICATION OF THE INDENTURE

Modifications and amendments of any indenture will be permitted with
the consent of the holders of not less than a majority in principal
amount of all outstanding debt securities of each series issued under
the indenture affected by the modification or amendment; provided,
however, that no modification or amendment may, without the consent of
the holder of each debt security affected thereby,

  -  change the stated maturity of the principal of, or any
     installment of principal, interest (or premium, if any) on, any
     debt security;

  -  reduce the principal amount of, or the rate or amount of interest
     on, or any premium payable on redemption of, any debt security,
     or reduce the amount of principal of an Original Issue Discount
     Security that would be due and payable upon declaration of
     acceleration of the maturity of the Original Issue Discount
     Security or would be provable in bankruptcy, or adversely affect
     any right of repayment at the option of the holder of any debt
     security (or reduce the amount of premium payable upon any
     repayment);

  -  change the place of payment, or the coin or currency, for payment
     of principal of (or premium, if any) or interest on any debt
     security;

  -  impair the right to institute suit for the enforcement of any
     payment on or with respect to any debt security when due;

  -  reduce the above-stated percentage of outstanding debt securities
     of any series necessary to modify or amend the indenture to waive
     compliance with certain provisions of the indenture or certain
     defaults and consequences under the indenture or to reduce the
     quorum or voting requirements set forth in the indenture; or

  -  modify any of the foregoing provisions or any of the provisions
     relating to the waiver of certain past defaults or certain
     covenants, except to increase the required percentage to effect
     the action or to provide that certain other provisions may not be
     modified or waived without the consent of the holder of each
     outstanding debt security affected thereby.

The holders of a majority in aggregate principal amount of outstanding
debt securities of any series may, on behalf of all holders of debt

                                                              Page 20

<PAGE>
securities of that series waive, insofar as that series is concerned,
our compliance with certain restrictive covenants in the applicable
indenture.

We, along with the trustee, shall be permitted to modify and amend an
indenture without the consent of any holder of debt securities for any
of the following purposes:

  -  to evidence the succession of another person to our obligations
     under the indenture;

  -  to add to our covenants for the benefit of the holders of all or
     any series of debt securities or to surrender any right or power
     conferred upon us in the indenture;

  -  to add events of default for the benefit of the holders of all or
     any series of debt securities;

  -  to add or change any provisions of the indenture to facilitate
     the issuance of, or to liberalize certain terms of, debt
     securities in bearer form, or to permit or facilitate the
     issuance of debt securities in uncertificated form, provided that
     this action shall not adversely affect the interests of the
     holders of the debt securities of any series in any material
     respect;

  -  to change or eliminate any provisions of the indenture, provided
     that any change or elimination does not apply to any outstanding
     debt securities of a series created prior to the date of the
     amendment or supplement that are entitled to the benefit of that
     provision;

  -  to secure the debt securities;

  -  to establish the form or terms of debt securities of any series,
     including the provisions and procedures, if applicable, for the
     conversion of debt securities into common stock or preferred
     stock;

  -  to provide for the acceptance of appointment by a successor
     trustee or facilitate the administration of the trusts under the
     indenture by more than one trustee;

  -  to cure any ambiguity, defect or inconsistency in the indenture
     or to make any other provisions with respect to matters or
     questions arising under the indenture, provided, however, that
     this action shall not adversely affect the interests of holders
     of debt securities of any series in any material respect; or

  -  to supplement any of the provisions of the indenture to the
     extent necessary to permit or facilitate defeasance, covenant
     defeasance and discharge of any series of debt securities,

                                                              Page 21

     provided, however, that this action shall not adversely affect
     the interests of the holders of the debt securities of any series
     in any material respect.

Each indenture will provide that in determining whether the holders of
the requisite principal amount of outstanding debt securities of a
series have given any request, demand, authorization, direction,
notice, consent or waiver described in indenture or whether a quorum
is present at a meeting of holders of debt securities,

  -  the principal amount of an Original Issue Discount Security that
     shall be deemed to be outstanding shall be the amount of the
     principal of that security that would be due and payable as of
     the date of the determination upon declaration of acceleration of
     the maturity thereof;

  -  the principal amount of any debt security denominated in a
     foreign currency that shall be deemed outstanding shall be the
     U.S. dollar equivalent, determined on the issue date for the debt
     security, of the principal amount (or, in the case of an Original
     Issue Discount Security, the U.S. dollar equivalent on the issue
     date of the debt security of the amount determined as provided in
     (a) above);

  -  the principal amount of an indexed security that shall be deemed
     outstanding shall be the principal face amount of the indexed
     security at original issuance, unless otherwise provided with
     respect to the indexed security in the applicable indenture; and

  -  debt securities owned by us or any other obligor upon the debt
     securities or any affiliate of ours or of the other obligor shall
     be disregarded.

Each indenture will contain provisions for convening meetings of the
holders of debt securities of a series.  A meeting may be permitted to
be called at any time by the trustee, and also, upon our request or
request of the holders of at least 10% in principal amount of the
outstanding debt securities of a series, in any case upon notice given
as provided in the indenture.  Except for any consent or waiver that
must be given by the holder of each debt security affected by the
indenture, any resolution presented at a meeting at which a quorum is
present, or at such a meeting adjourned and duly reconvened, may be
adopted by the affirmative vote of the holders of a majority in
principal amount of the outstanding debt securities of that series;
provided, however, that, except as referred to above, any resolution
with respect to any request, demand, authorization, direction, notice,
consent, waiver or other action that may be made, given or taken by
the holders of a specified percentage, which is less than a majority,
in principal amount of the outstanding debt securities of the series
may be adopted at a meeting at which a quorum is present, or at such a
meeting adjourned and duly reconvened by the affirmative vote of the

                                                              Page 22

<PAGE>
holders of the specified percentage in principal amount of the
outstanding debt securities of that series.  Any resolution passed or
decision taken at any meeting of holders of debt securities of any
series duly held in accordance with the indenture will be binding on
all holders of debt securities of that series.  The persons holding or
representing a majority in principal amount of the outstanding debt
securities of a series shall constitute a quorum for a meeting of
holders of that series; provided, however, that if any action is to be
taken at a meeting with respect to a consent or waiver that may be
given by the holders of not less than a specified percentage in
principal amount of the outstanding debt securities of that series,
the persons holding or representing the specified percentage in
principal amount of the outstanding debt securities of that series
will constitute a quorum.

Notwithstanding the foregoing provisions, each indenture will provide
that if any action is to be taken at a meeting of holders of debt
securities of any series with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action that
the indenture expressly provides may be made, given or taken by the
holders of that series and one or more additional series:  (a) there
shall be no minimum quorum requirement for the meeting and (b) the
principal amount of the outstanding debt securities of all those
series that are entitled to vote in favor of the request, demand,
authorization, direction, notice, consent, waiver or other action
shall be taken into account in determining whether the request,
demand, authorization, direction, notice, consent, waiver or other
action has been made, given or taken under the indenture.

DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE

Unless otherwise indicated in the applicable prospectus supplement,
upon our request any indenture shall cease to be of further effect
with respect to any series of debt securities issued under the
indenture specified in our request (except as to certain limited
provisions of the indenture which shall survive) when either (a) all
debt securities of that series have been delivered to the trustee for
cancellation or (b) all debt securities of that series have become due
and payable or will become due and payable within one year (or are
scheduled for redemption within one year) and we have irrevocably
deposited with the applicable trustee, in trust, funds in the currency
or currencies, currency unit or units or composite currency or
currencies in which those debt securities are payable an amount
sufficient to pay the entire indebtedness on those debt securities in
respect of principal (and premium, if any) and interest to the date of
the deposit (if those debt securities have become due and payable) or
to the stated maturity or redemption date, as the case may be.

Each indenture will provide that, unless otherwise indicated in the
applicable prospectus supplement, we may elect either to:



                                                              Page 23

  -  defease and be discharged from any and all obligations with
     respect to any series of debt securities (except for the
     obligation to pay additional amounts, if any, upon the occurrence
     of certain events of tax with respect to payments on the debt
     securities and the obligations to register the transfer or
     exchange of the debt securities, to replace temporary or
     mutilated, destroyed, lost or stolen debt securities, to maintain
     an office or agency in respect of the debt securities and to hold
     money for payment in trust) ("defeasance"); or

  -  be released from our obligations with respect to certain
     covenants (which will be described in the relevant prospectus
     supplement) applicable to the debt securities under the
     applicable indenture (which may include, subject to a limited
     exception, the covenants described under "-Certain Covenants"),
     and any omission to comply with these obligations shall not
     constitute a default or an event of default with respect to those
     debt securities ("covenant defeasance"),

in either case upon our irrevocable deposit with the applicable
trustee, in trust, of an amount, in the currency or currencies,
currency unit or units or composite currency or currencies in which
those debt securities are payable at stated maturity, or Government
Obligations (as defined below), or both, applicable to those debt
securities that through the scheduled payment of principal and
interest in accordance with their terms will provide money in an
amount sufficient to pay the principal of (and premium, if any) and
interest on those debt securities, and any mandatory sinking fund or
analogous payments on those debt securities, on the scheduled due
dates.

A trust may only be established if, among other things, we have
delivered to the applicable trustee an opinion of counsel (as
specified in the applicable indenture) to the effect that the holders
of those debt securities will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of the defeasance or
covenant defeasance and will be subject to U.S. federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if the defeasance or covenant defeasance had not
occurred.  Additionally, in the case of defeasance an opinion of
counsel must refer to and be based on a ruling of the Internal Revenue
Service (the "IRS") or a change in applicable U.S. federal income tax
law occurring after the date of the applicable indenture.  In the
event of defeasance, the holders of those debt securities would
thereafter be able to look only to the trust fund for payment of
principal (and premium, if any) and interest.

"Government Obligations" means securities that are (a) direct
obligations of the United States of America or the government which
issued the foreign currency in which the debt securities of a
particular series are payable, for the payment of which its full faith

                                                              Page 24

<PAGE>
and credit is pledged, or (b) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United
States of America or the government which issued the foreign currency
in which the debt securities of that series are payable, the payment
of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or the other government,
which, in either case, are not callable or redeemable at the option of
the issuer thereof, and shall also include a depository receipt issued
by a bank or trust company as custodian with respect to any Government
Obligation or a specific payment of interest on or principal of any
Government Obligation held by a custodian for the account of the
holder of a depository receipt; provided, however, that (except as
required by law) the custodian is not authorized to make any deduction
from the amount payable to the holder of the depository receipt from
any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of the
Government Obligation evidenced by the depository receipt.

Unless otherwise provided in the applicable prospectus supplement, if
after we have deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to debt securities of
any series,

  -  the holder of a debt security of that series is entitled to
     elect pursuant to the applicable indenture or the terms of
     that debt security to receive payment in a currency, currency
     unit or composite currency other than that in which the deposit
     has been made in respect of that debt security, and so elects, or

  -  a Conversion Event (as defined below) occurs in respect of the
     currency, currency unit or composite currency in which the
     deposit has been made,

then the indebtedness represented by that debt security will be deemed
to have been, and will be, fully discharged and satisfied through the
payment of the principal of (and premium, if any) and interest on that
debt security as they become due out of the proceeds yielded by
converting the amount so deposited in respect of that debt security
into the currency, currency unit or composite currency in which the
debt security becomes payable as a result of the election or
Conversion Event based on the applicable market exchange rate.
"Conversion Event" means the cessation of use of:

  -  a currency, currency unit or composite currency both by the
     government of the country which issued the currency and for the
     settlement of transactions by a central bank or other public
     institution of or within the international banking community;

  -  the ECU both within the European Monetary System and for the
     settlement of transactions by public institutions of or within
     the European Communities; or


                                                              Page 25

  -  any currency unit or composite currency other than the ECU for
     the purposes for which it was established. Unless otherwise
     provided in the applicable prospectus supplement, all payments of
     principal of (and premium, if any) and interest on any debt
     security that is payable in a foreign currency that ceases to be
     used by its government of issuance shall be made in U.S. dollars.

In the event we effect a covenant defeasance with respect to any debt
securities and those debt securities are declared due and payable
because of the occurrence of any event of default, other than the
event of default described in clause 4 under "-Events of Default,
Notice and Waiver" with respect to the specified sections of the
applicable indenture (which sections would no longer be applicable to
those debt securities) or clause 7 thereunder with respect to any
other covenant as to which there has been covenant defeasance, the
amount in currency, currency unit or composite currency in which those
debt securities are payable, and Government Obligations on deposit
with the applicable trustee, may not be sufficient to pay amounts due
on those debt securities at the time of the acceleration resulting
from the event of default.  We would, however, remain liable to make
payment of the amounts due at the time of acceleration.

The applicable prospectus supplement may further describe the
provisions, if any, permitting the defeasance or covenant defeasance,
including any modifications to the provisions described above, with
respect to the debt securities of or within a particular series.

CONVERSION RIGHTS

The terms and conditions, if any, upon which the debt securities are
convertible into common stock or preferred stock will be set forth in
the applicable prospectus supplement relating to those debt
securities.  The terms will include whether the debt securities are
convertible into common stock or preferred stock, the conversion price
(or manner of calculation thereof), the conversion period, provisions
as to whether conversion will be at our option or the option of the
holders, the events requiring an adjustment of the conversion price
and provisions affecting conversion in the event of the redemption of
the debt securities and any restrictions on conversion, including
restrictions directed at maintaining our REIT status.

UNCLAIMED PAYMENTS

We will be repaid for all amounts we pay to a paying agent or a
trustee for the payment of the principal of or any premium or interest
on any debt security that remains unclaimed at the end of two years
after the principal, premium or interest has become due and payable,
and the holder of that debt security may look only to us for payment
of the principal, premium or interest.



                                                              Page 26

GLOBAL SECURITIES

The debt securities of a series may be issued in whole or in part in
the form of one or more global securities (the "Global Securities")
that will be deposited with, or on behalf of, a depositary identified
in the applicable prospectus supplement relating to that series.
Global Securities may be issued in either registered or bearer form
and in either temporary or permanent form.  The specific terms of the
depositary arrangement with respect to a series of debt securities
will be described in the applicable prospectus supplement relating to
that series.


                      DESCRIPTION OF COMMON STOCK

We have authority to issue 100,000,000 shares of our common stock,
$1.00 par value per share. As of June 15, 1999, we had outstanding
26,822,447 shares of our common stock.

GENERAL

The following description of our common stock sets forth certain
general terms and provisions of our common stock to which any
prospectus supplement may relate, including a prospectus supplement
providing that our common stock will be issuable upon conversion of
our debt securities or our preferred stock.  The statements below
describing our common stock are in all respects subject to and
qualified in their entirety by reference to the applicable provisions
of our charter and bylaws.

TERMS

Subject to the preferential rights of any other shares or series of
stock and to the provisions of our charter regarding the restrictions
on transfer of stock, holders of our common stock are entitled to
receive dividends when, as and if authorized and declared by our board
of directors out of assets legally available therefor.  Payment and
authorization of dividends on our common stock and purchases of those
shares by us may be subject to certain restrictions if we fail to pay
dividends on the preferred stock.  If we were to experience
liquidation, dissolution or winding up, holders of our common stock
would be entitled to share equally and ratably in any assets available
for distribution to them, after payment or adequate provision for
payment of our debts and other liabilities and the preferential
amounts owing with respect to any of our outstanding preferred stock.

Subject to the provisions of our charter regarding the restrictions on
transfer of stock, each outstanding share of our common stock entitles
the holder to one vote on all matters submitted to a vote of
stockholders, including the election of directors and, except as
provided with respect to any other class or series of stock, the

                                                              Page 27

<PAGE>
holders of such shares will possess the exclusive voting power.  Our
board of directors is divided into three classes of directors.  The
terms of the Class I, Class II and Class III directors will expire in
2001, 2002 and 2000, respectively.  Each class is chosen for three-
year terms upon the expiration of their current terms and each year
one class of directors will be elected by the stockholders.  The
staggered terms of directors may reduce the possibility of a tender
offer or other attempt to change control of us even though a tender
offer or change in control might be in the best interest of the
stockholders.

Holders of our common stock do not have cumulative voting rights in
the election of directors, which means that holders of more than 50%
of all the shares of our common stock voting for the election of
directors can elect all the directors of the class then standing for
election if they choose to do so and the holders of the remaining
shares cannot elect any directors of that class.  Holders of shares of
common stock do not have preemptive rights, which means they have no
right under the charter, bylaws, or Maryland law to acquire any
additional shares of common stock that may be issued by us at a
subsequent date.  Holders of shares of common stock have no
preference, conversion, exchange, sinking fund, redemption or
appraisal rights.  Under Maryland law, stockholders generally are not
liable for the corporation's debts or obligations.  All shares of
common stock now outstanding are, and additional shares of common
stock offered will be when issued, fully paid and nonassessable.

Under the Maryland General Corporation Law or MGCL, a Maryland
corporation generally cannot dissolve, amend its charter, merge, sell
all or substantially all of its assets, engage in a share exchange or
engage in similar transactions outside the ordinary course of business
unless approved by the affirmative vote of stockholders holding at
least two thirds of the shares entitled to vote on the matter unless a
lesser percentage (but not less than a majority of all of the votes
entitled to be cast on the matter) is set forth in the corporation's
charter.  Our charter provides that any such action shall be effective
if approved by the affirmative vote of holders of shares entitled to
cast a majority of all the votes entitled to be cast on the matter.

Our charter authorizes our board of directors to reclassify any
unissued shares of our common stock into other classes or series of
classes of stock and to establish the number of shares in each class
or series and to set the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends or other
distributions, qualifications or terms or conditions of redemption for
each such class or series.

MARYLAND BUSINESS COMBINATION LAW

Under the MGCL, certain "business combinations" (including a merger,
consolidation, share exchange or, in certain circumstances, an asset
tranfer or issuances or reclassification of equity securities) between

                                                              Page 28

<PAGE>
a Maryland corporation and any person who beneficially owns ten
percent or more of the voting power of the corporation's shares or an
affiliate or associate (as defined in the MGCL) of the corporation
who, at any time within the two-year period prior to the date in
question was the beneficial owner of ten percent or more of the voting
power of the outstanding voting stock of the corporation (an
interested stockholder) or an affiliate of such an interested
stockholder are prohibited for five years after the most recent date
on which the interested stockholder becomes an interested stockholder.
Thereafter, any such business combination must be recommended by the
board of directors of the corporation and approved by two super-
majority stockholder votes unless, among other conditions, the
corporation's common stockholders receive a minimum price (as defined
in the MGCL) for their shares and the consideration is received in
cash or in the same form as previously paid by the interested
stockholder for its common shares.  The business combination
provisions of the MGCL do not apply, however, to business combinations
that are approved or exempted by the Board of Directors prior to the
time that the interested stockholder becomes an interested
stockholder.  These provisions of the MGCL may delay, defer or prevent
a transaction or a change in control of us that might involve a
premium price for the common stock or otherwise be in the best
interests of the stockholders.

MARYLAND CONTROL SHARE ACQUISITIONS LAW

The MGCL provides that "control shares" of a Maryland corporation
acquired in a "control share acquisition" have no voting rights except
to the extent approved by a vote of two-thirds of the votes entitled
to be cast on the matter, excluding shares of stock owned by the
acquiror or by officers or directors who are employees of the
corporation.  "Control Shares" are voting shares of stock which, if
aggregated with all other such shares of stock previously acquired by
the acquiror or in respect of which the acquiror is able to exercise
or direct the exercise of voting power (except solely by virtue of a
revocable proxy), would entitle the acquiror to exercise voting power
in electing directors within one of the following ranges of voting
power; (i) one-fifth or more but less than one third, (ii) one-third
or more but less than a majority, or (iii) a majority or more of all
voting power.  Control shares do not include shares the acquiring
person is then entitled to vote as a result of having previously
obtained stockholder approval.  A "control share acquisition" means
the acquisition of control shares, subject to certain exceptions.

A person who has made or proposes to make a control share acquisition,
upon satisfaction of certain conditions (including an undertaking to
pay expenses), may compel the board of directors of the corporation to
call a special meeting of stockholders to be held within 50 days of
demand to consider the voting rights of the shares.  If no request for
a meeting is made, the corporation may itself present the question at
any stockholders meeting.


                                                              Page 29

If voting rights are not approved at the meeting or if the acquiring
person does not deliver an acquiring person statement as required by
the statute, then, subject to certain conditions and limitations, the
corporation may redeem any and all of the control shares (except those
for which the voting rights have previously been approved) for fair
value determined, without regard to the absence of voting rights for
the control shares, as of the date of the last control share
acquisition by the acquiror or of any meeting of stockholders at which
the voting rights of such shares are considered and not approved.  If
voting rights for control shares are approved at a stockholders
meeting and the acquiror becomes entitled to vote a majority of the
shares entitled to vote, all other stockholders may exercise appraisal
rights.  The fair value of the shares as determined for purposes of
such appraisal rights may not be less than the highest price per share
paid by the acquiror in the control share acquisition.

The control share acquisition statute does not apply (a) to shares
acquired in a merger, consolidation or share exchange if the
corporation is a party to the transaction or (b) to acquisitions
exempted by a provision in the charter or bylaws of the corporation
adopted before the acquisition of the shares.

As permitted by the MGCL, our Bylaws contain a provision exempting
from the control share acquisition statute any and all acquisitions by
any person of the Company's share of stock.  There can be no assurance
that such provision will not be amended or eliminated by the Board of
Directors at any time in the future.

RESTRICTIONS ON OWNERSHIP

For us to qualify as a REIT under the Internal Revenue Code of 1986,
as amended, not more than 50% in value of its outstanding capital
stock may be owned, actually or constructively, by five or fewer
individuals (defined in the Code to include certain entities) during
the last half of a taxable year.  To assist us in meeting this
requirement and certain other requirements relating to our tax status
as a REIT, we may take certain actions to limit the actual, beneficial
or constructive ownership by a single person or entity of our
outstanding equity securities.  See "-Restrictions on Ownership and
Transfers of Capital Stock".

TRANSFER AGENT

The registrar and transfer agent for our common stock is The Bank of
New York.


                    DESCRIPTION OF PREFERRED STOCK

We are authorized to issue 20,000,000 shares of preferred stock,
designated 9 3/8% Cumulative Redeemable Preferred Stock, $1.00 par
value per share, of which 2,760,000 shares were outstanding as of
                                                              Page 30

June 15, 1999 and 1,000,000 shares designated Class A Junior
Participating Preferred Stock were reserved for issuance under our
Stockholder Rights Plan.

GENERAL

The following description of our preferred stock sets forth certain
general terms and provisions of our preferred stock to which any
prospectus supplement may relate.  The statements below describing our
preferred stock are in all respects subject to and qualified in their
entirety by reference to the applicable provisions of our charter
(including any applicable articles supplementary) and our bylaws.

Our charter authorizes our board of directors to classify any unissued
shares of preferred stock and to reclassify any previously classified
but unissued shares of any class or series, as authorized by our board
of directors.  Prior to issuance of shares of each series, our board
is required by the MGCL and our charter to set, subject to the
provisions of our charter regarding the restrictions on transfer of
stock, the terms, preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends or other
distributions, qualifications and terms or conditions of redemption
for each such series.  Thus, the board could authorize the issuance of
shares of preferred stock with terms and conditions which could have
the effect of delaying, deferring or preventing a transaction or a
change in control of us that might involve a premium price for holders
of our common stock or otherwise be in their best interest.  Our
preferred stock will, when issued, be fully paid and nonassessable and
will have no preemptive rights.

You should refer to the prospectus supplement relating to the
preferred stock offered thereby for specific terms of and other
information concerning the preferred stock, including:

(1)  the title of the preferred stock;

(2)  the number of shares of the preferred stock offered, the
     liquidation preference per share and the offering price of the
     preferred stock;

(3)  the dividend rate(s), period(s) and/or payment date(s) or
     method(s) of calculation thereof applicable to the preferred
     stock;

(4)  whether the preferred stock is cumulative or not and, if
     cumulative, the date from which dividends on the preferred stock
     shall accumulate;

(5)  the procedures for any auction and remarketing, if any, for the
     preferred stock;


                                                              Page 31

(6)  the provision for a sinking fund, if any, for the preferred
     stock;

(7)  any voting rights of the preferred stock;

(8)  the provision for redemption, if applicable, of the preferred
     stock;

(9)  any listing of the preferred stock on any securities exchange;

(10) the terms and conditions, if applicable, upon which the preferred
     stock will be convertible into common stock, including the
     conversion price (or manner of calculation thereof);

(11) a discussion of federal income tax considerations applicable to
     the preferred stock;

(12) any limitations on actual, beneficial or constructive ownership
     and restrictions on transfer, in each case as may be appropriate
     to preserve our REIT status;

(13) the relative ranking and preferences of the preferred stock as to
     dividend rights and rights upon liquidation, dissolution or
     winding up of our affairs;

(14) whether liquidation preferences on preferred stock will be
     counted as liabilities of ours in determining whether
     distributions to junior stockholders can be made under the MGCL;

(15) any limitations on issuance of any series or class of preferred
     stock ranking senior to or on a parity with such series or class
     of preferred stock as to dividend rights and rights upon
     liquidation, dissolution or winding up of our affairs; and

(16) any other specific terms, preferences, rights, limitations or
     restrictions of the preferred stock.

RANK

Unless otherwise specified in the applicable prospectus supplement,
the preferred stock will rank, with respect to rights to the payment
of dividends and distribution of our assets and rights upon our
liquidation, dissolution or winding up:

  -  senior to all classes or series of common stock and to all equity
     securities ranking junior to the preferred stock rights to the
     payment of dividends and distribution of our assets and rights
     upon our liquidation, dissolution or winding up;

  -  on a parity with all equity securities issued by us with terms
     specifically providing that those equity securities rank on a

                                                              Page 32

     parity with the preferred stock with respect to rights to the
     payment of dividends and distribution of our assets and rights
     upon our liquidation, dissolution or winding up; and

  -  junior to all equity securities issued by us with terms
     specifically providing that those equity securities rank senior
     to the preferred stock with respect to rights to the payment of
     dividends and distribution of our assets and rights upon our
     liquidation, dissolution or winding up.

For these purposes, the term "equity securities" does not include
convertible debt securities.

DIVIDENDS

Holders of shares of our preferred stock of each series or class shall
be entitled to receive, when, as and if authorized and declared by our
board of directors, out of our assets legally available for payment,
dividends at rates and on dates and terms as will be set forth in the
applicable prospectus supplement.  Each dividend shall be payable to
holders of record as they appear on our stock transfer books on the
record dates as shall be fixed by our board of directors.

Dividends on any series or class of our preferred stock may be
cumulative or noncumulative, as provided in the applicable prospectus
supplement.  Dividends, if cumulative, will be cumulative from and
after the date set forth in the applicable prospectus supplement.  If
our board of directors fails to authorize a dividend payable on a
dividend payment date on any series or class of preferred stock for
which dividends are noncumulative, then the holders of such series or
class of preferred stock will have no right to receive a dividend in
respect of the dividend period ending on that dividend payment date,
and we will have no obligation to pay the dividend accrued for such
period, whether or not dividends on such series or class are declared
or paid for any future period.

If any shares of preferred stock of any series or class are
outstanding, no full dividends shall be authorized or paid or set
apart for payment on the preferred stock of any other series or class
ranking, as to dividends, on a parity with or junior to the preferred
stock of that series or class for any period unless:

  -  the series or class of preferred stock has a cumulative dividend,
     then full cumulative dividends have been or contemporaneously are
     authorized and paid or authorized and a sum sufficient for the
     payment thereof is set apart for such payment on the preferred
     stock of such series or class for all past dividend periods and
     the then current dividend period; or

  -  the series or class of preferred stock does not have a cumulative
     dividend, then full dividends for the then current dividend

                                                              Page 33

     period have been or contemporaneously are authorized and paid or
     authorized and a sum sufficient for the payment thereof is set
     apart for the payment on the preferred stock of such series or
     class.

When dividends are not paid in full (or a sum sufficient for the full
payment thereof is not set apart) upon the shares of preferred stock
of any series or class and the shares of any other series or class of
preferred stock ranking on a parity as to dividends with the preferred
stock of that series or class, then all dividends authorized on shares
of preferred stock of that series or class and any other series or
class of preferred stock ranking on a parity as to dividends with that
preferred stock shall be authorized pro rata so that the amount of
dividends authorized per share on the preferred stock of that series
or class and such other series or class of preferred stock shall in
all cases bear to each other the same ratio that accrued and unpaid
dividends per share on the shares of preferred stock of such series or
class (which shall not include any accumulation in respect of unpaid
dividends for prior dividend periods if the preferred stock does not
have a cumulative dividend) and such other series or class of
preferred stock bear to each other.  No interest, or sum of money in
lieu of interest, shall be payable in respect of any dividend payment
or payments on preferred stock of such series or class that may be in
arrears.

Except as provided in the immediately preceding paragraph, unless:  if
that series or class of preferred stock has a cumulative dividend,
full cumulative dividends on the preferred stock of such series or
class have been or contemporaneously are authorized and paid or
authorized and a sum sufficient for the payment thereof is set apart
for payment for all past dividend periods and the then current
dividend period; and if that series or class of preferred stock does
not have a cumulative dividend, full dividends on the preferred stock
of such series or class have been or contemporaneously are authorized
and paid or authorized and a sum sufficient for the payment thereof is
set apart for payment for the then current dividend period, then no
dividends (other than in the common stock or other stock of ours
ranking junior to the preferred stock of that series or class as to
dividends and as to the distribution of assets upon liquidation,
dissolution or winding up of the Company) shall be authorized or paid
or set aside for payment nor shall any other distribution be
authorized or made on the common stock or any other class or series of
stock of ours ranking junior to or on a parity with the preferred
stock of that series or class as to dividends or as to the
distribution of assets upon liquidation, dissolution or winding up of
the Company, nor shall any shares of the common stock or any other
stock of ours ranking junior to or on a parity with the preferred
stock of that series or class as to dividends or as to the
distribution of assets upon liquidation, dissolution or winding up of
the Company be redeemed, purchased or otherwise acquired for any
consideration (or any amounts be paid to or made available for a

                                                              Page 34

<PAGE>
sinking fund for the redemption of any shares of any such stock) by us
(except by conversion into or exchange for other stock of ours ranking
junior to the preferred stock of that series or class as to dividends
and as to the distribution of assets upon liquidation, dissolution or
winding up of the Company); provided, however, that the foregoing
shall not prevent the purchase or acquisition of shares of our stock
to preserve our status as a REIT for federal and/or state income tax
purposes.

Any dividend payment made on shares of a series or class of preferred
stock shall first be credited against the earliest accrued but unpaid
dividend due with respect to shares of that series or class that
remains payable.

If we properly designate any portion of a dividend as a "capital gain
dividend," a holder's share of such capital gain dividend will be an
amount which bears the same ratio to the total amount of dividends (as
determined for Federal income tax purposes) paid to such holder for
the year as the aggregate amount designated as a capital gain dividend
bears to the aggregate amount of all dividends (as determined for
Federal income tax purposes) paid on all classes of our stock for the
year.

REDEMPTION

If the applicable prospectus supplement so states, the shares of
preferred stock will be subject to mandatory redemption or redemption
at our option, in whole or in part, in each case on the terms, at the
times and at the redemption prices set forth in that prospectus
supplement.

The prospectus supplement relating to a series or class of preferred
stock that is subject to mandatory redemption will specify the number
of shares of that preferred stock that shall be redeemed by us in each
year commencing after a date to be specified, at a redemption price
per share to be specified, together with an amount equal to all
accumulated and unpaid dividends thereon (which shall not, if such
preferred stock does not have a cumulative dividend, include any
accumulation in respect of unpaid dividends for prior dividend
periods) to the date of redemption.  The redemption price may be
payable in cash or other property, as specified in the applicable
prospectus supplement.  If the redemption price for preferred stock of
any series or class is payable only from the net proceeds of the
issuance of our stock, the terms of that preferred stock may provide
that, if no such stock shall have been issued or to the extent the net
proceeds from any issuance are insufficient to pay in full the
aggregate redemption price then due, that preferred stock shall
automatically and mandatorily be converted into shares of our
applicable stock pursuant to conversion provisions specified in the
applicable prospectus supplement.

Notwithstanding the foregoing, unless:

                                                              Page 35

  -  if the series or class of preferred stock has a cumulative
     dividend, full cumulative dividends on all outstanding shares of
     such series or class of preferred stock have been or
     contemporaneously are authorized and paid or authorized and a sum

     sufficient for the payment thereof is set apart for payment for
     all past dividend periods and the then current dividend period;
     and

  -  if the series or class of preferred stock does not have a
     cumulative dividend, full dividends on the preferred stock of
     that series or class have been or contemporaneously are
     authorized and paid or authorized and a sum sufficient for the
     payment thereof is set apart for payment for the then current
     dividend period, then no shares of that series or class of
     preferred stock shall be redeemed unless all outstanding shares
     of preferred stock of that series or class are simultaneously
     redeemed; provided, however, that the foregoing shall not prevent
     the purchase or acquisition of shares of preferred stock of that
     series or class to preserve our REIT status or pursuant to a
     purchase or exchange offer made on the same terms to holders of
     all outstanding shares of preferred stock of that series or
     class; or

  -  if the series or class of preferred stock has a cumulative
     dividend, full cumulative dividends on all outstanding shares of
     that series or class of preferred stock have been or
     contemporaneously are authorized and paid or authorized and a sum
     sufficient for the payment thereof is set apart for payment for
     all past dividend periods and the then current dividend period;
     and

  -  if that series or class of preferred stock does not have a
     cumulative dividend, full dividends on the preferred stock of
     that series or class have been or contemporaneously are
     authorized and paid or authorized and a sum sufficient for the
     payment thereof is set apart for payment for the then current
     dividend period, we shall not purchase or otherwise acquire
     directly or indirectly any shares of preferred stock of such
     series or class (then except by conversion into or exchange for
     stock of ours ranking junior to the preferred stock of that
     series or class as to dividends and upon liquidation,
     dissolution and winding up of the Company); provided, however,
     that the foregoing shall not prevent the purchase or acquisition
     of shares of preferred stock of such series or class to preserve
     our REIT status or pursuant to a purchase or exchange offer made
     on the same terms to holders of all outstanding shares of
     preferred stock of that series or class.

If fewer than all the outstanding shares of preferred stock of any
series or class are to be redeemed, the number of shares to be

                                                              Page 36

<PAGE>
redeemed will be determined by us and those shares may be redeemed pro
rata from the holders of record of those shares in proportion to the
number of those shares held by such holders (with adjustments to avoid
redemption of fractional shares) or any other equitable method
determined by us.

Notice of redemption will be mailed at least 30, but not more than 60,
days before the redemption date to each holder of record of a share of
preferred stock of any series or class to be redeemed at the address
shown on our stock transfer books, and notice of redemption will also
be given by publication in The Wall Street Journal or, if such
newspaper is not then being published, another newspaper of general
circulation in The City of New York, such publication to be made at
least once a week for two successive weeks commencing not less than 30
nor more than 60 days prior to the redemption date.  Each notice shall
state:

  -  The redemption date;

  -  The number of shares and series or class of the preferred stock
     to be redeemed;

  -  The redemption price;

  -  The place or places (which shall include a place in the Borough
     of Manhattan, The City of New York) where certificates for the
     preferred stock are to be surrendered for payment of the
     redemption price;

  -  That dividends on the shares to be redeemed will cease to
     accumulate on the redemption date; and

  -  The date on which the holder's conversion rights, if any, as to
     those shares shall terminate.

If fewer than all the shares of preferred stock of any series or class
are to be redeemed, the notice mailed to each holder thereof shall
also specify the number of shares of preferred stock to be redeemed
from each holder and, upon redemption, a new certificate shall be
issued representing the unredeemed shares without cost to the holder
thereof.  If notice of redemption of any shares of preferred stock has
been given and if the funds necessary for the redemption have been
irrevocably set aside by us in trust for the benefit of the holders of
any shares of preferred stock so called for redemption, then from and
after the redemption date dividends will cease to accrue on the shares
of preferred stock, the shares of preferred stock shall no longer be
deemed outstanding and all rights of the holders of the shares will
terminate, except the right to receive the redemption price.  In order
to facilitate the redemption of shares of preferred stock of any
series or class, the board of directors may fix a record date for the
determination of shares of the series or class of preferred stock to
be redeemed.

                                                              Page 37

Notwithstanding the foregoing, the persons who were holders of record
of shares of any class or series of preferred stock at the close of
business on a record date for the payment of dividends will be
entitled to receive the dividend payable on the corresponding dividend
payment date notwithstanding the redemption of those shares after the
record date and on or prior to the dividend payment date or our
default in the payment of the dividend due on that dividend payment
date.  In that case, the amount payable on the redemption of those
shares of preferred stock will not include that dividend.  Except as
provided in the preceding sentence and except to the extent that
accrued and unpaid dividends are payable as part of the redemption
price, we will make no payment or allowance for unpaid dividends,
whether or not in arrears, on shares of preferred stock called for
redemption.

Subject to applicable law and the limitation on purchases when
dividends on a series or class of preferred stock are in arrears, we
may, at any time and from time to time, purchase any shares of such
series or class of preferred stock in the open market, by tender or by
private agreement.

LIQUIDATION PREFERENCE

Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs, then, before any distribution or payment will be
made to the holders of common stock or any other series or class of
stock ranking junior to any series or class of the preferred stock in
the distribution of assets upon any liquidation, dissolution or
winding up of our affairs, the holders of that series or class of
preferred stock shall be entitled to receive, out of our assets but
subject to the preferential rights of the holders of shares of any
class or series of our stock ranking senior to such series or class of
preferred stock with respect to our distribution of assets of
liquidation, dissolution or winding up legally available for
distribution to shareholders, liquidating distributions in the amount
of the liquidation preference per share (set forth in the applicable
prospectus supplement), plus an amount equal to all dividends accrued
and unpaid thereon (which shall not include any accumulation in
respect of unpaid dividends for prior dividend periods if the
preferred stock does not have a cumulative dividend).  After payment
of the full amount of the liquidating distributions to which they are
entitled, the holders of preferred stock will have no right or claim
to any of our remaining assets.  If, upon any such voluntary or
involuntary liquidation, dissolution or winding up, the legally
available assets are insufficient to pay the amount of the liquidating
distributions on all outstanding shares of any series or class of
preferred stock and the corresponding amounts payable on all shares of
other classes or series of stock of the Company ranking on a parity
with that series or class of preferred stock in the distribution of
assets upon liquidation, dissolution or winding up, then the holders


                                                              Page 38

<PAGE>
of that series or class of preferred stock and all other such classes
or series of capital stock shall share ratably in any such
distribution of assets in proportion to the full liquidating
distributions to which they would otherwise be respectively entitled.

If liquidating distributions shall have been made in full to all
holders of any series or class of preferred stock, our remaining
assets will be distributed among the holders of any other classes or
series of stock ranking junior to that series or class of preferred
stock upon liquidation, dissolution or winding up, according to their
respective rights and preferences and in each case according to their
respective number of shares.  For those purposes, the consolidation or
merger of us with or into any other entity, or the sale, lease,
transfer or conveyance of all or substantially all of our property or
business, shall not be deemed to constitute a liquidation, dissolution
or winding up of our affairs.

VOTING RIGHTS

Except as may be set forth in the applicable prospectus supplement,
whenever dividends on any shares of preferred stock shall be in
arrears for six or more quarterly dividend periods, whether or not
consecutive, the number of directors constituting our Board of
Directors will be automatically increased by two and the holders of
such series or class of preferred stock (voting separately as a class
with all other classes or series of preferred stock upon which like
voting rights have been conferred and are exercisable in the election
of those two directors) will be entitled to vote for the election of a
total of two additional directors to our Board of Directors at a
special meeting called by Realty Income at the request of the holders
of record of at least 10% of the outstanding shares of any class or
series of preferred stock upon which voting rights have been conferred
and are exercisable (unless the request is received less than 90 days
before the date fixed for the next annual or special meeting of
shareholders, in which case the vote will be held at the earlier of
the next annual or special meeting of shareholders), and at each
subsequent annual meeting until all dividends accumulated on those
shares of preferred stock for all past dividend periods and the then
current dividend period shall have been fully paid or declared and a
sum sufficient for the payment thereof set aside for payment.  In that
case, the right of the preferred stock to elect those two directors
will cease and the term of office of the two directors will
automatically terminate and the number of directors constituting the
Board of Directors will be reduced accordingly.

If a special meeting is not called by us within 30 days after a request
from the holders of preferred stock as described above, then the
holders of record of at least 10% of the outstanding shares of any
class or series of preferred stock upon which voting rights have been
conferred and are exercisable may designate a holder to call the
meeting at our expense.


                                                              Page 39

So long as any shares of any class or series of preferred stock remain
outstanding, we shall not, without the consent or the affirmative vote
of the holders of at least two-thirds of the shares of any class or
series of preferred stock outstanding that is affected by the
following at the time given in person or by proxy, either in writing
or at a meeting (with each series or class of preferred stock that is
affected by the following voting separately as a class):

  -  Authorize, create or issue, or increase the authorized or issued
     amount of, any class or series of stock ranking prior to that
     series or class of preferred stock with respect to payment of
     dividends or the distribution of assets on liquidation,
     dissolution or winding up, or reclassify any of our authorized
     stock into any such shares, or create, authorize or issue any
     obligation or security convertible into, exchangeable or
     exerciseable for, or evidencing the right to purchase any such
     shares;

  -  Amend, alter or repeal any of the provisions of our charter,
     including the articles supplementary for such series or class of
     preferred stock, so as to materially and adversely affect any
     right, preference, privilege or voting power of such series or
     class of preferred stock or the holders thereof; or

  -  Enter into any share exchange that affects such series or class
     of preferred stock or consolidate with or merge into any other
     entity, or permit any other entity to consolidate with or merge
     into us, unless in each such case described in this clause each
     share of such series or class of preferred stock remains
     outstanding without a material adverse change to its terms and
     rights or is converted into or exchanged for preferred stock of
     the surviving or resulting entity having preferences, rights,
     dividends, voting powers, restrictions, limitations as to
     dividends, qualifications and terms and conditions of redemption
     identical to those of such series or class of preferred stock;

provided that any amendment to our charter to authorize any increase
in the amount of the authorized preferred stock or common stock or the
creation or issuance of any other class or series of preferred stock
or any increase in the amount of authorized or outstanding shares of
such series or class or any other series or class of preferred stock
in each case ranking on a parity with or junior to the preferred stock
of such series or class with respect to payment of dividends and the
distribution of assets upon liquidation, dissolution and winding up,
shall not be deemed to materially and adversely affect any right,
preference, privilege or voting power of the series or class of
preferred stock or the holders thereof.

The foregoing voting provisions will not apply if, at or prior to the
time when the act with respect to which the vote would otherwise be
required shall be effected, all outstanding shares of such series or

                                                              Page 40

<PAGE>
class of preferred stock shall have been redeemed or called for
redemption upon proper notice and sufficient funds shall have been
deposited in trust to effect the redemption.

CONVERSION RIGHTS

The terms and conditions, if any, upon which shares of any series or
class of preferred stock are convertible into shares of common stock
will be set forth in the applicable prospectus supplement.  The terms
will include the number of shares of common stock into which the
preferred stock is convertible, the conversion price (or manner of
calculation thereof), the conversion period, provisions as to whether
conversion will be at the option of the holders of the preferred stock
or us, the events requiring an adjustment of the conversion price and
provisions affecting conversion in the event of the redemption of the
preferred stock.

RESTRICTIONS ON OWNERSHIP

For us to qualify as a REIT under the Code, not more than 50% in value
of our outstanding capital stock may be owned, actually or
constructively, by five or fewer individuals (defined in the Code to
include certain entities) during the last half of a taxable year.  To
assist us in meeting this requirement and certain other requirements
relating to our tax status as a REIT, we may take certain actions to
limit the actual, beneficial or constructive ownership by a single
person or entity of our outstanding equity securities.  See
"-Restrictions on Ownership and Transfers of Capital Stock".

TRANSFER AGENT

The transfer agent and registrar for any series or class of preferred
stock will be set forth in the applicable prospectus supplement.


       RESTRICTIONS ON OWNERSHIP AND TRANSFERS OF CAPITAL STOCK

INTERNAL REVENUE CODE REQUIREMENTS

To maintain our REIT status under the Code, no more than 50% in value
of our outstanding shares of stock may be owned, actually or
constructively, by five or fewer individuals (as defined in the Code
to include certain entities) during the last half of a taxable year.
In addition, if we, or an owner of 10% or more of us, actually or
constructively owns 10% or more of a tenant of ours (or a tenant of
any partnership in which we are a partner), the rent received by us
(either directly or through any such partnership) from that tenant
will not be qualifying income for purposes of the REIT gross income
tests of the Code.  A REIT's stock must also be beneficially owned by
100 or more persons during at least 335 days of a taxable year of
twelve months or during a proportionate part of a shorter taxable
year.

                                                              Page 41

TRANSFER RESTRICTIONS IN CHARTER

Because we expect to continue to qualify as a REIT, our charter
contains restrictions on the ownership and transfer of common stock
which are intended to assist us in complying with applicable Code
requirements.  Our charter provides that, subject to certain specified
exceptions, no person or entity may own, or be deemed to own by virtue
of the applicable constructive ownership provisions of the Code, more
than 9.8% (by number or value, whichever is more restrictive) of the
outstanding shares of common stock, appropriately referred to as the
ownership limit.  The constructive ownership rules of the Code are
complex, and may cause shares of common stock owned actually or
constructively by a group of related individuals and/or entities to be
constructively owned by one individual or entity. As a result, the
acquisition of less than 9.8% of the shares of common stock (or the
acquisition of an interest in an entity that owns, actually or
constructively, common stock) by an individual or entity, could,
nevertheless cause that individual or entity, or another individual or
entity, to constructively own more than 9.8% of our outstanding common
stock and thus violate the ownership limit, or any other limit as
provided in our charter or as otherwise permitted by our board of
directors.  Our board of directors may, but in no event is required
to, waive the ownership limit with respect to a particular stockholder
if it determines that such ownership will not jeopardize our status as
a REIT.  As a condition of such waiver, the board of directors may
require an opinion of counsel satisfactory to it and/or undertakings
or representations from the applicant with respect to preserving our
REIT status.

Our charter further prohibits (i) any person from actually or
constructively owning shares of our common stock that would result in
our being "closely held" under Section 856(h) of the Code or otherwise
cause us to fail to qualify as a REIT, and (ii) any person from
transferring shares of our common stock if such transfer would result
in shares of our stock being beneficially owned by fewer than 100
persons (determined without reference to any rules of attribution).

Any person who acquires or attempts to acquire actual or constructive
ownership of shares of our common stock that will violate any of the
foregoing restrictions on transferability and ownership is required to
give notice to us immediately and provide us with such other
information as we may request in order to determine the effect of such
transfer on our status as a REIT.  The foregoing restrictions on
transferability and ownership will not apply if our Board of Directors
determines that it is no longer in our best interest to attempt to
qualify, or to continue to qualify, as a REIT and such determination
is approved by a two thirds vote of our stockholders as required by
our charter.  Except as otherwise described above, any change in the
ownership limit would require an amendment to the charter.



                                                              Page 42

EFFECT OF VIOLATION OF TRANSFER PROVISIONS

According to our charter, if any purported transfer of common stock or
any other event would otherwise result in any person violating the
ownership limit or such other limit as provided in the charter or as
otherwise permitted by our board of directors, or result in our being
"closely held" under Section 856(h) of the Code or otherwise cause us
to fail to qualify as a REIT, then any such purported transfer will be
void and of no force or effect with respect to the purported
transferee, referred to as the prohibited transferee, as to that
number of shares in excess of the ownership limit or such other limit,
and the prohibited transferee shall acquire no right or interest (or,
in the case of any event other than a purported transfer, the person
or entity holding record title to any such excess shares, the
prohibited owner, shall cease to own any right or interest) in such
excess shares.  Any such excess shares described above will be
transferred automatically, by operation of law, to a trust, the
beneficiary of which will be a qualified charitable organization
selected by us as beneficiary.  Such automatic transfer shall be
deemed to be effective as of the close of business on the business day
prior to the date of such violative transfer.  Within 20 days of
receiving notice from us of the transfer of shares to the trust, the
trustee of the trust (who shall be designated by us and be
unaffiliated with us and any prohibited transferee or prohibited
owner) will be required to sell such excess shares to a person or
entity who could own the shares without violating the ownership limit,
or any other limit as provided in our charter or as otherwise
permitted by our board of directors, and distribute to the prohibited
transferee or prohibited owner, as applicable, an amount equal to the
lesser of the price paid by the prohibited transferee or prohibited
owner for such excess shares or the net sales proceeds received by the
trust for such excess shares.

In the case of any excess shares resulting from any event other than a
transfer or from a transfer for no consideration (such as a gift), the
trustee will be required to sell such excess shares to a qualified
person or entity and distribute to the prohibited owner an amount
equal to the lesser of the market price (described in our charter) of
such excess shares as of the date of such event or the net sales
proceeds received by the trust for such excess shares. In either case,
any proceeds in excess of the amount distributable to the prohibited
transferee or prohibited owner, as applicable, will be distributed to
the beneficiary.  Prior to a sale of any such excess shares by the
trust, the trustee will be entitled to receive, in trust for the
beneficiary, all dividends and other distributions paid by us with
respect to such excess shares, and also will be entitled to exercise
all voting rights with respect to such excess shares.

Subject to Maryland law, effective as of the date that such shares
have been transferred to the trust, the trustee shall have the
authority (at the trustee's sole discretion) (i) to rescind as void

                                                              Page 43

<PAGE>
any vote cast by a prohibited transferee or prohibited owner, as
applicable, prior to the discovery by us that such shares have been
transferred to the trust and (ii) to recast such vote in accordance
with the desires of the trustee acting for the benefit of the
beneficiary.  However, if we have already taken irreversible corporate
action, then the trustee shall not have the authority to rescind and
recast that vote.  Any dividend or other distribution paid to the
prohibited transferee or prohibited owner (prior to the discovery by
us that such shares had been automatically transferred to a trust as
described above) will be required to be repaid to the trustee upon
demand for distribution to the beneficiary.  In the event that the
transfer to the trust as described above is not automatically
effective (for any reason) to prevent violation of the ownership limit
or any other limit as provided in our charter or as otherwise
permitted by our board of directors, then our charter provides that
the transfer of the excess shares will be void.

In addition, shares of our stock held in the trust shall be deemed to
have been offered for sale to us, or our designee, at a price per
share equal to the lesser of (i) the price per share in the
transaction that resulted in such transfer to the trust (or, in the
case of a devise or gift, the market price at the time of such devise
or gift) and (ii) the market price on the date we, or our designee,
accepts such offer.  We shall have the right to accept such offer
until the trustee has sold the shares of stock held in the trust.
Upon such a sale to us, the interest of the beneficiary in the shares
sold shall terminate and the trustee shall distribute the net proceeds
of the sale to the prohibited transferee or prohibited owner.

If any purported transfer of shares of common stock would cause us to
be beneficially owned by fewer than 100 persons, such transfer will be
null and void in its entirety and the intended transferee will acquire
no rights to the stock.

All certificates representing shares of our common stock will bear a
legend referring to the restrictions described above.  The foregoing
ownership limitations could delay, defer or prevent a transaction or a
change in control of Realty Income that might involve a premium price
for the common stock or otherwise be in the best interest of
stockholders.

COMPLIANCE WITH TREASURY REGULATIONS

As set forth in the Treasury Regulations, every owner of a specified
percentage (or more) of the outstanding shares of our common stock
must file a completed questionnaire with us containing information
regarding their ownership of such shares.  Under current Treasury
Regulations, the percentage will be set between 0.5% and 5.0%,
depending upon the number of record holders of our shares of common
stock.  Under our charter, each stockholder shall upon demand be
required to disclose to us in writing such information as we may
request in order to determine the effect, if any, of such

                                                              Page 44

<PAGE>
stockholder's actual and constructive ownership of common stock on our
status as a REIT and to ensure compliance with the ownership limit, or
any other limit as provided in our charter or as otherwise permitted
by our board of directors.

We expect that any shares of preferred stock we issue would be subject
to restrictions similar to those described above with respect to our
common stock.


             MATERIAL FEDERAL INCOME TAX CONSIDERATIONS TO
                       REALTY INCOME CORPORATION

The following is a summary of the federal income tax considerations to
us which are anticipated to be material to purchasers of our
securities.  This summary is based on current law, is for general
information only and is not tax advice.  The tax treatment of a holder
of any of our securities will vary depending upon the terms of the
specific securities acquired by such holder, as well as the holder's
particular situation.  This discussion does not attempt to address any
aspects of federal income taxation relating to holders of the
securities.  Federal income tax considerations relevant to holders of
the securities may be provided in the applicable prospectus supplement
relating thereto.   You are urged to review the applicable prospectus
supplement in connection with the purchase of any of our securities.

The information in this section is based on:

  -  the Internal Revenue Code,

  -  current, temporary and proposed treasury regulations promulgated
     under the Internal Revenue Code,

  -  the legislative history of the Internal Revenue Code,

  -  current administrative interpretations and practices of the
     Internal Revenue Service, and

  -  court decisions,

all as of the date of this prospectus.  In addition, the administra-
tive interpretations and practices of the Internal Revenue Service
include its practices and policies as expressed in private letter
rulings which are not binding on the Internal Revenue Service, except
with respect to the particular taxpayers who requested and received
such rulings.  Future legislation, treasury regulations,
administrative interpretations and practices and/or court decisions
may adversely affect, perhaps retroactively, the tax considerations
contained in this discussion.  Any change could apply retroactively to
transactions preceding the date of the change.  We have not requested,
and do not plan to request, any rulings from the Internal Revenue
Service concerning our tax treatment and the statements in this

                                                              Page 45

<PAGE>
prospectus are not binding on the Internal Revenue Service or a court.
Thus, we can provide no assurance that the tax considerations
contained in this discussion will not be challenged by the Internal
Revenue Service or sustained by a court if challenged by the Internal
Revenue Service.

YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO YOU OF:

  -  THE ACQUISITION, OWNERSHIP AND SALE OR OTHER DISPOSITION OF OUR
     SECURITIES, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND
     OTHER TAX CONSEQUENCES;

  -  OUR ELECTION TO BE TAXED AS A REAL ESTATE INVESTMENT TRUST FOR
     FEDERAL INCOME TAX PURPOSES; AND

  -  POTENTIAL CHANGES IN THE TAX LAWS.

TAXATION OF REALTY INCOME CORPORATION

General

We elected to be taxed as a real estate investment trust under
Sections 856 through 860 of the Internal Revenue Code, commencing with
our taxable year ended December 31, 1994.  We believe we have been
organized and have operated in a manner which allows us to qualify for
taxation as a real estate investment trust under the Internal Revenue
Code commencing with our taxable year ended December 31, 1994.  We
intend to continue to operate in this manner.  However, no assurance
can be given that we have operated or will continue to operate in a
manner so as to qualify or remain qualified as a real estate
investment trust.  See "-Failure to Qualify" on page 56.

The sections of the Internal Revenue Code that relate to the
qualification and operation as a real estate investment trust are
highly technical and complex.  The following describes the material
aspects of these sections of the Internal Revenue Code that govern the
federal income tax treatment of a real estate investment trust.  This
summary is qualified in its entirety by the Internal Revenue Code,
relevant rules and treasury regulations promulgated under the Internal
Revenue Code, and administrative and judicial interpretations of the
Internal Revenue Code, and these rules and treasury regulations.

Unless we specify otherwise in the applicable prospectus supplement,
as a condition of the closing of each offering of equity securities
under this prospectus, our tax counsel will render an opinion to the
underwriters of the offering to the effect that, commencing with our
taxable year ended December 31, 1994, we have been organized and have
operated in conformity with the requirements for qualification and
taxation as a real estate investment trust under the Internal Revenue
Code, and our proposed method of operation will enable us to continue
to meet the requirements for qualification and taxation as a real

                                                              Page 46

<PAGE>
estate investment trust under the Internal Revenue Code.  It must be
emphasized that this opinion will be based on various assumptions and
representations made by us as to factual matters, including
representations made by us in this prospectus, the applicable
prospectus supplement and a factual certificate provided by one of our
officers.  Our counsel will have no obligation to update its opinion
subsequent to its date.  Moreover, such qualification and taxation as
a real estate investment trust depends upon our ability to meet the
various qualification tests imposed under the Internal Revenue Code
and discussed below, relating to our actual annual operating results,
asset diversification, distribution levels and diversity of stock
ownership, the results of which have not been and will not be reviewed
by our tax counsel.  Accordingly, no assurance can be given that the
actual results of our operation for any particular taxable year will
satisfy such requirements. See "-Failure to Qualify" on page 56.

If we qualify for taxation as a real estate investment trust, we
generally will not be required to pay federal corporate income taxes
on our net income that is currently distributed to our stockholders.
This treatment substantially eliminates the "double taxation" that
generally results from investment in a corporation.  Double taxation
means taxation once at the corporate level when income is earned and
once again at the stockholder level when such income is distributed.
We will be required to pay federal income taxes, however, as follows:

  -  We will be required to pay tax at regular corporate rates on any
     undistributed "real estate investment trust taxable income,"
     including undistributed net capital gains.

  -  We may be required to pay the "alternative minimum tax" on our
     items of tax preference.

  -  If we have (a) net income from the sale or other disposition of
     "foreclosure property," which is held primarily for sale to
     customers in the ordinary course of business or (b) other
     nonqualifying income from foreclosure property, we will be
     required to pay tax at the highest corporate rate on this income.
     Foreclosure property is generally defined as property acquired
     through foreclosure or after a default on a loan secured by the
     property or on a lease of the property.

  -  We will be required to pay a 100% tax on any net income from
     prohibited transactions.  Prohibited transactions are, in
     general, sales or other taxable dispositions of property, other
     than foreclosure property, held primarily for sale to customers
     in the ordinary course of business.

  -  If we fail to satisfy the 75% or 95% gross income test, as
     described below, but have maintained our qualification as a real
     estate investment trust, we will be required to pay a 100% tax on
     an amount equal to (a) the gross income attributable to the


                                                              Page 47

     greater of the amount by which we fail the 75% or 95% gross
     income test multiplied by (b) a fraction intended to reflect our
     profitability.

  -  We will be required to pay a 4% excise tax on the excess of the
     required distribution over the amounts actually distributed if we

     fail to distribute during each calendar year at least the sum of
     (a) 85% of our ordinary income for the year, (b) 95% of our real
     estate investment trust capital gain net income for the year, and
     (c) any undistributed taxable income from prior periods.

  -  If we acquire any asset from a corporation which is or has been a
     C corporation in a transaction in which the basis of the asset in
     our hands is determined by reference to the basis of the asset in
     the hands of the C corporation, and we subsequently recognize
     gain on the disposition of the asset during the ten-year period
     beginning on the date on which we acquired the asset, then under
     treasury regulations not yet promulgated we will be required to
     pay tax at the highest regular corporate tax rate on this gain to
     the extent of the excess of (a) the fair market value of the
     asset over (b) our adjusted basis in the asset, in each case
     determined as of the date on which we acquired the asset.  A C
     corporation is generally defined as a corporation required to pay
     full corporate-level tax.  The results described in this
     paragraph with respect to the recognition of such gain assume
     that we will make an election under Internal Revenue Service
     Notice 88-19 and that the availability or nature of such election
     is not modified as proposed in President Clinton's Year 2000
     Federal Budget Proposal.

Requirements for Qualification as a Real Estate Investment Trust

The Internal Revenue Code defines a real estate investment trust as a
corporation, trust or association:

(1)  that is managed by one or more trustees or directors;

(2)  that issues transferable shares or transferable certificates to
     evidence beneficial ownership;

(3)  that would be taxable as a domestic corporation, but for Sections
     856 through 860 of the Internal Revenue Code;

(4)  that is not a financial institution or an insurance company
     within the meaning of the Internal Revenue Code;

(5)  that is beneficially owned by 100 or more persons;

(6)  not more than 50% in value of the outstanding stock of which is
     owned, actually or constructively, by five or fewer individuals,

                                                              Page 48

     including specified entities, during the last half of each
     taxable year; and

(7)  that meets other tests, described below, regarding the nature of
     its income and assets and the amount of its distributions.

The Internal Revenue Code provides that conditions (1) to (4),
inclusive, must be met during the entire taxable year and that
condition (5) must be met during at least 335 days of a taxable year
of twelve months, or during a proportionate part of a taxable year of
less than twelve months.  Conditions (5) and (6) do not apply until
after the first taxable year for which an election is made to be taxed
as a real estate investment trust.  For purposes of condition (6),
specified tax-exempt entities, including pension funds, generally are
treated as individuals, except a "look-through" exception applies with
respect to pension funds.

We believe that we have satisfied conditions (1) through (7)
inclusive.  In addition, our charter provides for restrictions
regarding the ownership and transfer of our shares.  These
restrictions are intended to assist us in continuing to satisfy the
share ownership requirements described in (5) and (6) above.  These
stock ownership and transfer restrictions are described in
"Restrictions on Ownership and Transfer of Capital Stock" on page 41.
These restrictions, however, may not ensure that we will, in all
cases, be able to satisfy the share ownership requirements described
in (5) and (6) above.  If we fail to satisfy these share ownership
requirements, our status as a real estate investment trust will
terminate.  If, however, we comply with the rules contained in the
treasury regulations that require us to ascertain the actual ownership
of our shares and we do not know, or would not have known through the
exercise of reasonable diligence, that we failed to meet the
requirement described in condition (6) above, we will be treated as
having met this requirement.  See "-Failure to Qualify" on page 56.

In addition, a corporation may not elect to become a real estate
investment trust unless its taxable year is the calendar year.  We
have and will continue to have a calendar taxable year.

Ownership of a Partnership Interest

We own an interest in a partnership and may acquire interests in one
or more new partnerships or limited liability companies.  Income tax
regulations provide that if we are a partner in a partnership or
member of a limited liability company, we will be deemed to own our
proportionate share of the assets of the partnership or limited
liability company.  Also, we will be deemed to be entitled to our
proportionate share of the income of the partnership or limited
liability company, as the case may be.  The character of the assets
and gross income of the partnership or limited liability company, as
the case may be, retains the same character in our hands for purposes

                                                              Page 49

of Section 856 of the Internal Revenue Code, including satisfying the
gross income tests and the asset tests.  Thus, our proportionate share
of the assets, liabilities and items of income of the partnership in
which we own an interest are treated as our assets, liabilities and
items of income for purposes of applying the requirements described in
this prospectus, including the income and asset tests described below.
We have included a brief summary of the rules governing the federal
income taxation of the partnerships and their partners below in "-Tax
Aspects of the Partnerships" on page 55.

Qualified Real Estate Investment Trust Subsidiaries

We own a number of properties through wholly owned subsidiaries that
we believe will be treated as "qualified REIT subsidiaries" under
Internal Revenue Code Section 856(i).  A qualified rust REIT
subsidiary will not be treated as a separate corporation, and all
assets, liabilities, and items of income, deduction, and credit of a
qualified REIT subsidiary shall be treated as assets, liabilities and
such items, as the case may be, of the real estate investment trust.
Thus, in applying the requirements described in this prospectus, our
qualified REIT subsidiaries will be ignored, and all assets,
liabilities and items of income, deduction and credit of such
subsidiaries will be treated as our assets, liabilities and such
items.  A qualified REIT subsidiary will not be subject to federal
income tax, and our ownership of the voting stock of a qualified REIT
subsidiary will not violate the restrictions against ownership of
securities of any one issuer which constitutes more than 10% of such
issuer's voting securities or more than 5% of the value of our total
assets.

Income Tests

We must satisfy two gross income requirements annually to maintain our
qualification as a real estate investment trust.

  -  First, each taxable year we must derive directly or indirectly at
     least 75% of our gross income, excluding gross income from
     prohibited transactions, from (a) investments relating to real
     property or mortgages on real property, including "rents from
     real property" and, in some circumstances, interest, or (b)
     specified types of temporary investments.

  -  Second, each taxable year we must derive at least 95% of our
     gross income, excluding gross income from prohibited
     transactions, from (a) the real property investments described
     above, (b) dividends, interest and gain from the sale or
     disposition of stock or securities, or (c) any combination of the
     foregoing.

For these purposes, the term "interest" generally does not include any
amount received or accrued, directly or indirectly, if the termination

                                                              Page 50

<PAGE>
of all or some of the amount depends in any way on the income or
profits of any person.  An amount received or accrued generally will
not be excluded from the term "interest," however, solely by reason of
being based on a fixed percentage or percentages of receipts or sales.

Rents we receive will qualify as "rents from real property" in
satisfying the gross income requirements for a real estate investment
trust described above only if the following conditions are met:

  -  the amount of rent must not be based in any way on the income or
     profits of any person.  An amount received or accrued generally
     will not be excluded from the term "rents from real property,"
     however, solely by reason of being based on a fixed percentage or
     percentages of receipts or sales;

  -  the Internal Revenue Code provides that rents received from a
     tenant will not qualify as "rents from real property" in
     satisfying the gross income tests if we, or an actual or
     constructive owner of 10% or more of our capital stock, actually
     or constructively owns 10% or more of the interests in such
     tenant;

  -  if rent attributable to personal property, leased in connection
     with a lease of real property, is greater than 15% of the total
     rent received under the lease, then the portion of rent
     attributable to personal property will not qualify as "rents from
     real property"; and

  -  for rents received to qualify as "rents from real property," we
     generally must not operate or manage the property or furnish or
     render services to the tenants of the property, subject to a 1%
     de minimis exception, other than through an independent
     contractor from whom we derive no revenue.  We may, however,
     directly perform services that are "usually or customarily
     rendered" in connection with the rental of space for occupancy
     only and are not otherwise considered "rendered to the occupant"
     of the property.  Examples of such services include the provision
     of light, heat, or other utilities, trash removal and general
     maintenance of common areas.

We do not intend to receive rent which fails to qualify as "rents from
real property."  However, we may have failed to satisfy, and may
continue to fail to satisfy, some of the conditions described above to
the extent these failures will not, based on the advice of our tax
counsel, jeopardize our status as a real estate investment trust.

If we fail to satisfy one or both of the 75% or 95% gross income tests
for any taxable year, we may nevertheless qualify as a real estate
investment trust for the year if we are entitled to relief under the
Internal Revenue Code.  Generally, we may avail ourselves of the
relief provisions if:


                                                              Page 51

  -  our failure to meet these tests was due to reasonable cause and
     not due to willful neglect;

  -  we attach a schedule of the sources of our income to our federal
     income tax return; and

  -  any incorrect information on the schedule was not due to fraud
     with intent to evade tax.

It is not possible, however, to state whether in all circumstances we
would be entitled to the benefit of these relief provisions.  For
example, if we fail to satisfy the gross income tests because
nonqualifying income that we intentionally accrue or receive exceeds
the limits on nonqualifying income, the Internal Revenue Service could
conclude that our failure to satisfy the tests was not due to
reasonable cause.  If these relief provisions do not apply to a
particular set of circumstances, we will not qualify as a real estate
investment trust.  As discussed above in "-Taxation of Realty Income
Corporation--General" on page 46, even if these relief provisions
apply, and we retain our status as a real estate investment trust, a
tax would be imposed with respect to our nonqualifying income.  We may
not always be able to maintain compliance with the gross income tests
for real estate investment trust qualification despite our periodic
monitoring of our income.

Prohibited Transaction Income

Any gain realized by us on the sale of any property held as inventory
or other property held primarily for sale to customers in the ordinary
course of business will be treated as income from a prohibited
transaction that is subject to a 100% penalty tax.  Our gain includes
our share of any such gain realized by any partnerships or limited
liability companies in which we own an interest or by our qualified
REIT subsidiaries.  This prohibited transaction income may also
adversely affect our ability to satisfy the income tests for
qualification as a real estate investment trust.  Under existing law,
whether property is held as inventory or primarily for sale to
customers in the ordinary course of a trade or business depends on all
the facts and circumstances surrounding the particular transaction.
We intend to hold our properties for investment with a view to long-
term appreciation, to engage in the business of acquiring, developing
and owning our properties and other properties.  We intend to make
occasional sales of our properties as are consistent with our
investment objectives.  The Internal Revenue Service may contend,
however, that one or more of these sales is subject to the 100%
penalty tax.

Asset Tests

At the close of each quarter of our taxable year, we also must satisfy
three tests relating to the nature and diversification of our assets:

                                                              Page 52

  -  First, at least 75% of the value of our total assets, including
     assets held by our qualified REIT subsidiaries and our allocable
     share of the assets held by any partnerships and limited
     liability companies in which we own an interest, must be
     represented by real estate assets, cash, cash items and
     government securities.  For purposes of this test, real estate
     assets include stock or debt instruments that are purchased with
     the proceeds of a stock offering or a public debt offering with a
     term of at least five years, but only for the one year period
     beginning on the date we received such proceeds.

  -  Second, not more than 25% of our total assets may be represented
     by securities, other than those securities includable in the 75%
     asset test.

  -  Third, of the investments included in the 25% asset class, the
     value of any one issuer's securities may not exceed 5% of the
     value of our total assets and we may not own more than 10% of any
     one issuer's outstanding voting securities.

After initially meeting the asset tests at the close of any quarter,
we will not lose our status as a real estate investment trust for
failure to satisfy the asset tests at the end of a later quarter
solely by reason of changes in asset values.  If we fail to satisfy
the asset tests because we acquire securities or other property during
a quarter, we can cure this failure by disposing of sufficient
nonqualifying assets within 30 days after the close of that quarter.
For this purpose, an increase in our interests in a partnership or
limited liability company will be treated as an acquisition of a
portion of the securities or other property owned by the partnership
or limited liability company.  We believe we have maintained and
intend to continue to maintain adequate records of the value of our
assets to ensure compliance with the asset tests.  In addition, we
intend to take such other actions within the 30 days after the close
of any quarter as may be required to cure any noncompliance.  If we
fail to cure noncompliance with the asset tests within this time
period, we would cease to qualify as a real estate investment trust.

Annual Distribution Requirements

To maintain our qualification as a real estate investment trust, we
are required to distribute dividends, other than capital gain
dividends, to our stockholders in an amount at least equal to the sum
of:

  -  95% of our "REIT taxable income"; and

  -  95% of our after tax net income, if any, from foreclosure
     property; minus



                                                              Page 53

  -  the excess of the sum of specified items of noncash income over
     5% of "REIT taxable income" as described above.  Our "REIT
     taxable income" is computed without regard to the dividends paid
     deduction and our net capital gain.  For purposes of this test,
     non-cash income means income attributable to leveled stepped
     rents, original issue discount on purchase money debt, or a like-
     kind exchange that is later determined to be taxable.

In addition, if we dispose of any asset we acquired from a corporation
which is or has been a C corporation in a transaction in which our
basis in the asset is determined by reference to the basis of the
asset in the hands of the C corporation within the ten-year period
following our acquisition of such asset, we would be required,
pursuant to treasury regulations which have not yet been promulgated,
to distribute at least 95% of the after-tax gain, if any, recognized
by us on the disposition of the asset, to the extent such gain does
not exceed the excess of (a) the fair market value of the asset on the
date we acquired the asset over (b) our adjusted basis in the asset on
the date we acquired the asset.

These distributions must be paid in the taxable year to which they
relate, or in the following taxable year if they are declared before
we timely file our tax return for such year and if paid on or before
the first regular dividend payment after such declaration.  The amount
distributed must not be preferential.  To avoid this treatment, every
shareholder of the class of stock to which a distribution is made must
be treated the same as every other shareholder of that class, and no
class of stock may be treated other than according to its dividend
rights as a class.  To the extent that we do not distribute all of our
net capital gain or distribute at least 95%, but less than 100%, of
our "REIT taxable income," as adjusted, we will be required to pay tax
on this income at regular ordinary and capital gain corporate tax
rates.  We believe we have made and intend to continue to make timely
distributions sufficient to satisfy these annual distribution
requirements.

We expect that our "REIT taxable income" will be less than our cash
flow due to the allowance for depreciation and other non-cash charges
in computing "REIT taxable income."  Accordingly, we anticipate that
we will generally have sufficient cash or liquid assets to enable us
to satisfy the distribution requirements described above.  However, it
is possible that we may not have sufficient cash or other liquid
assets to meet these distribution requirements due to timing
differences between the actual receipt of income and actual payment of
deductible expenses, and the inclusion of income and deduction of
expenses in arriving at our taxable income.  If these timing
differences occur, in order to meet the distribution requirements, we
may need to arrange for short-term, or possibly long-term, borrowings
or need to pay dividends in the form of taxable stock dividends.



                                                              Page 54

We may be able to rectify an inadvertent failure to meet the
distribution requirement for a year by paying "deficiency dividends"
to stockholders in a later year, which may be included in our
deduction for dividends paid for the earlier year.  Thus, we may be
able to avoid being subject to tax on amounts distributed as
deficiency dividends.  We will be required, however, to pay interest
to the Internal Revenue Service based upon the amount of any deduction
claimed for deficiency dividends.

Furthermore, we would be required to pay a 4% excise tax on the excess
of the required distribution over the amount, if any, by which our
actual annual distributions during a calendar year are less than the
sum of 85% of our ordinary income for the year, 95% of our capital
gain income for the year and any undistributed taxable income from
prior periods.  Distributions with declaration and record dates
falling in the last three months of the calendar year, which are made
by the end of January immediately following such year, will be treated
as made on December 31 of the prior year.  Any taxable income and net
capital gain on which this excise tax is imposed for any year is
treated as an amount distributed during that year for purposes of
calculating such tax.

Distribution Of Acquired Earnings

In addition to the above annual distribution requirements, a real
estate investment trust is not allowed to have, at the end of any
taxable year, accumulated earnings and profits attributable to non-
real estate investment trust years.  In 1995, R.I.C. Advisor, Inc., a
California corporation ("R.I.C. Advisor"), merged with and into us
(the "Merger").  As a result of the Merger, we were treated as having
acquired the earnings and profits of R.I.C. Advisor.  We were required
to distribute such earnings and profits prior to the close of 1995.
We believe that we made, or were deemed to make, distributions to our
stockholders which were sufficient to timely distribute such earnings
and profits.  However, if the Internal Revenue Service determines that
we did not distribute all of such earnings and profits prior to the
end of 1995, we would fail to qualify as a real estate investment
trust for 1995 and perhaps for subsequent years.  See "-Failure to
Qualify" on page 56.

Tax Aspects of the Partnerships

In general, partnerships and limited liability companies which are
taxed as partnerships are "pass-through" entities which are not
required to pay federal income tax.  Rather, partners or members are
allocated their proportionate shares of the items of income, gain,
loss, deduction and credit of a partnership or limited liability
company, as the case may be.  Partners or members are potentially
required to pay tax on such income, without regard to whether the
partners or members receive a distribution from the partnership or
limited liability company.  If the partnership or limited liability

                                                              Page 55

<PAGE>
company was treated as an association taxable as a corporation for
federal income tax purposes, the partnership or limited liability
company would be treated as a taxable entity and, depending upon or
our interests in the partnership or limited liability company, this
could jeopardize our ability to qualify as a real estate investment
trust. See "-Failure to Qualify" below for a discussion of the effect
of our failure to meet such tests for a taxable year.  We believe that
the partnership in which we own an interest will be treated for
federal income tax purposes as a partnership, rather than an
association taxable as a corporation.  No assurance can be given that
the Internal Revenue Service will not successfully challenge the
federal income tax status as a partnership of any partnership or
limited liability company in which we own an interest.

Failure to Qualify

If we fail to qualify for taxation as a real estate investment trust
in any taxable year, and the relief provisions of the Internal Revenue
Code do not apply, we will be required to pay tax, including any
alternative minimum tax and possibly increased state and local taxes,
on our taxable income at regular corporate rates.  Distributions to
stockholders in any year in which we fail to qualify as a real estate
investment trust will not be deductible by us and we will not be
required to distribute any amounts to our stockholders.  As a result,
we anticipate that our failure to qualify as a real estate investment
trust would reduce the cash available for distribution by us to our
stockholders.  In addition, if we fail to qualify as a real estate
investment trust, stockholders will be required to pay tax on all
distributions to them at ordinary income rates to the extent of our
current and accumulated earnings and profits.  In this event,
corporate distributees may be eligible for the dividends received
deduction.  Unless entitled to relief under specific statutory
provisions, we will also be disqualified from taxation as a real
estate investment trust for the four taxable years following the year
during which we lost our qualification.  It is not possible to state
whether in all circumstances we would be entitled to this statutory
relief.  In addition, President Clinton's Year 2000 Federal Budget
Proposal contains a provision which, if enacted in its present form,
would result in the immediate taxation of all gain inherent in a C
corporation's assets upon an election by the corporation to become a
real estate investment trust in taxable years beginning after
January 1, 2000.  If enacted, this provision could impose a
substantial tax upon our reelection to be taxed as a real estate
investment trust.

Other Tax Consequences

We may be required to pay state or local taxes in various state or
local jurisdictions, including those in which we transact business.
Our state and local tax treatment may not conform to the federal
income tax consequences summarized above.  Consequently, you should
consult your tax advisor regarding the effect of state and local tax
laws on an investment in our shares.
                                                              Page 56

                          PLAN OF DISTRIBUTION

We may sell the securities to one or more underwriters for public
offering and sale by them or may sell the securities to investors
directly or through agents. Any such underwriter or agent involved in
the offer and sale of the Securities will be named in the applicable
prospectus supplement.

Underwriters may offer and sell the securities at a fixed price or
prices, which may be changed, at prices relating to the prevailing
market prices at the time of sale or at negotiated prices. We also
may, from time to time, authorize underwriters acting as our agents to
offer and sell the securities upon the terms and conditions as are set
forth in the applicable prospectus supplement.  In connection with the
sale of securities, underwriters may be deemed to have received
compensation from us in the form of underwriting discounts or
commissions and may also receive commissions from purchasers of
securities for whom they may act as agent.  Underwriters may sell
securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they
may act as agent.  Any underwriting compensation paid by us to
underwriters or agents in connection with the offering of Securities,
and any discounts, concessions or commissions allowed by underwriters
to participating dealers, will be set forth in the applicable
prospectus supplement.  Underwriters, dealers and agents participating
in the distribution of the securities may be deemed to be
underwriters, and any discounts and commissions received by them and
any profit realized by them on resale of the securities may be deemed
to be underwriting discounts and commissions, under the Securities
Act.  Any such underwriter or agent will be identified, and such
compensation received from us will be described, in the applicable
prospectus supplement.

Underwriters, dealers and agents may be entitled, under agreements
entered into with us, to indemnification against and contribution
toward certain civil liabilities, including liabilities under the
Securities Act.

Certain of the underwriters, dealers and agents and their affiliates
may be customers of, engage in transactions with and perform services
for us and our subsidiaries in the ordinary course of business.

Unless otherwise specified in the related prospectus supplement, each
series of securities will be a new issue with no established trading
market, other than the common stock. Our common stock is currently
listed on the NYSE. Unless otherwise specified in the related
prospectus supplement, any shares of common stock sold pursuant to a
prospectus supplement will be listed on the NYSE, subject to official
notice of issuance.  We may elect to list any series of debt
securities or preferred stock on an exchange or NASDAQ, but are not

                                                              Page 57

<PAGE>
obligated to do so. It is possible that one or more underwriters may
make a market in a series of securities, but will not be obligated to
do so and may discontinue any market making at any time without
notice.  Therefore, there can be no assurance as to the liquidity of,
or the trading market for, the securities.

If so indicated in any Prospectus Supplement, the Company will
authorize agents and underwriters or dealers to solicit offers by
certain purchasers to purchase Securities from the Company at the
public offering price set forth in the prospectus supplement pursuant
to delayed delivery contracts providing for payment and delivery on a
specified date in the future.  Such contracts will be subject to only
those conditions set forth in the applicable prospectus supplement,
and such prospectus supplement will set forth the commission payable
for solicitation of such offers.


                                EXPERTS

The consolidated financial statements and financial statement schedule
of Realty Income Corporation and Subsidiaries as of December 31, 1998
and 1997 and for each of the years in the three-year period ended
December 31, 1998 included in Realty Income Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 1998 and
incorporated by reference herein have been audited by KPMG LLP,
independent certified public accountants, and have been incorporated
herein by reference in reliance upon the reports of KPMG LLP,
incorporated herein by reference, and upon the authority of such firm
as experts in accounting and auditing.


                             LEGAL MATTERS

The validity of the securities will be passed upon for us by Ballard
Spahr Andrews & Ingersoll, LLP and Latham & Watkins.


                  WHERE YOU CAN FIND MORE INFORMATION

We file reports, proxy statements and other information with the SEC.
Our SEC filings are also available over the Internet at the SEC's web
site at http://www.sec.gov.  You may also read and copy any document
we file at the SEC's public reference rooms in Washington, D.C., New
York, New York, and Chicago, Illinois.  Please call the SEC at 1-800-
SEC-0330 for more information on the public reference rooms and their
copy charges.  You may also inspect our SEC reports and other
information at the New York Stock Exchange, 20 Broad Street, New York,
New York 10005.

The registration statement on Form S-3, of which this prospectus is a
part, summarizes some of the material provisions of contracts and
other documents that we refer you to.  Since this prospectus may not
contain all the information that you may find important, you should
                                                             Page 58

<PAGE>
review the full text of these documents.  We have included copies of
these documents as exhibits and schedules to our registration
statement and the reports, proxy statements and other information
filed by us with the SEC.


           INCORPORATION OF INFORMATION WE FILE WITH THE SEC

The SEC allows us to "incorporate by reference" the information we
file with them, which means:

  -  Incorporated documents are considered part of this prospectus;

  -  We can disclose important information to you by referring you to
     those documents; and

  -  Information that we file with the SEC will automatically update
     and supersede the information in this prospectus.

We incorporate by reference the documents listed below which we filed
with the SEC under the Securities Exchange Act of 1934 ("Exchange
Act"):

  -  Annual Report on Form 10-K for the year ended December 31, 1998;

  -  Quarterly Report on Form 10-Q for the quarter ended March 31,
     1999;

  -  Current Report on Form 8-K filed with the SEC on May 25, 1999;

  -  Information relating to executive compensation in our Definitive
     Proxy Statement on Schedule 14A dated March 30, 1999;

  -  The description of our common stock contained in our Registration
     Statement on Form 8-A (file no. 001-13374), including any
     subsequently filed amendments and reports filed for the purpose
     of updating the description;

  -  The description of our 9 3/8% Class B Cumulative Redeemable
     Preferred Stock contained in our Registration Statement on Form
     8-A (file no. 001-13374), including any subsequently filed
     amendments and reports filed for the purpose of updating the
     description;

  -  The description of our 8 1/4% Monthly Income Senior Notes
     contained in our Registration Statement on Form 8-A (file no.
     001-13374) including any subsequently filed amendments and
     reports filed for the purpose of updating the description; and

  -  The description of our Class A Junior Participating Preferred
     Stock contained in our Registration Statement on Form 8-A (File
     No. 001-13374) including any subsequently filed amendments and
     reports filed for the purpose of updating the description.
                                                              Page 59

We also incorporate by reference the documents listed below that we
file with the SEC after the date of this prospectus but before any
offering:

  -  Reports filed under Sections 13(a) and (c) of the Exchange Act;

  -  Definitive proxy or information statements filed under Section 14
     of the Exchange Act in connection with any subsequent
     stockholders' meeting; and

  -  Any reports filed under Section 15(d) of the Exchange Act.

You may request a copy of any filings referred to above (excluding
exhibits), at no cost, by contacting us at the following address:

     Realty Income Corporation
     Attention:  Investor Relations
     220 West Crest Street
     Escondido, CA  92025-1707
     (760) 741-2111
































                                                              Page 60

<PAGE>
                                PART II
                 INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 10(b)(2)(iii)S-K.

We undertake no obligation to publicly update or revise any forward-
looking statements, whether as a result of new information, future
events or otherwise.  In light of these risks, uncertainties, and
assumptions, the forward-looking events discussed in this prospectus
supplement might not occur.

ITEM 14.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The estimated expenses, other than underwriting discounts and
commissions, in connection with the offerings of the Securities are as
follows:
<TABLE>
             <S>                                     <C>
             Securities Act Registration Fee         $111,200
             NYSE Listing Fee                          75,000
             Blue Sky Fees and Expenses                20,000
             Printing and Engraving Expenses          200,000
             Legal Fees and Expenses                  275,000
             Accounting Fees and Expenses             100,000
             Trustees' Fees                            15,000
             Miscellaneous                             65,000
                                                     --------
                  Total                              $861,200
                                                     ========
</TABLE>

ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

The MGCL permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for
liability resulting from

  -  actual receipt of an improper benefit or profit in money,
     property or services or

  -  active and deliberate dishonesty established by a final judgment
     as being material to the cause of action. Our charter contains
     such a provision which eliminates such liability to the maximum
     extent permitted by the MGCL.

Our charter authorizes us, to the maximum extent permitted by Maryland
law, to obligate ourselves to indemnify and to pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to
any present or former director or officer or any individual who, while
serving as one of our directors and at our request, serves or has
served another corporation, real estate investment trust, partnership,
joint venture, trust, employee benefit plan or any other enterprise as
                                                              Page 61

<PAGE>
a director, officer, partner or trustee of such corporation, real
estate investment trust, partnership, joint venture, trust, employee
benefit plan or other enterprise from and against any claim or
liability to which that person may become subject or which that person
may incur by reason of his or her stature as one of our present or
former director or officer.  Our bylaws obligate us, to the maximum
extent permitted by Maryland law, to indemnify and to pay or reimburse
reasonable expenses in advance of final disposition of a proceeding to
any present or former directors or officers who are made a party to
the proceeding by reason of his service in that capacity or any
individual who, while serving as one of our directors and at our
request, serves or has served another corporation, real estate
investment trust, partnership, joint venture, trust, employee benefit
plan or any other enterprise as a director, officer, partner or
trustee of such corporation, real estate investment trust,
partnership, joint venture, trust, employee benefit plan or other
enterprise and who is made a party to the proceeding by reason of his
service in that capacity.  Our charter and bylaws also permit us to
indemnify and advance expenses to any person who served a predecessor
of ours in any of the capacities described above and to any employee
or agent of ours or our predecessor.

The MGCL requires a corporation (unless its charter provides
otherwise, which our charter does not) to indemnify a director or
officer who has been successful, on the merits or otherwise, in the
defense of any proceeding to which he is made a party by reason of his
service in that capacity.  The MGCL permits a corporation to indemnify
its present and former directors and officers, among others, against
judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which
they may be made a party by reason of their service in those or other
capacities unless it is established that (a) the act or omission of
the director or officer was material to the matter giving rise to the
proceeding and (i) was committed in bad faith or (ii) was the result
of active and deliberate dishonesty, (b) the director or officer
actually received an improper personal benefit in money, property or
services or (c) in the case of any criminal proceeding, the director
or officer had reasonable cause to believe that the act or omission
was unlawful.  However, under the MGCL, a Maryland corporation may not
indemnify for an adverse judgment in a suit by or in the right of the
corporation or for a judgment of liability on the basis that personal
benefit was improperly received, unless in either case a court orders
indemnification and then only for expenses.  In addition, the MGCL
permits a corporation to advance reasonable expenses to a director or
officer upon the corporation's receipt of (a) a written affirmation by
the director or officer of his good faith belief that he has met the
standard of conduct necessary for indemnification by the corporation
and (b) a written statement by him or on his behalf to repay the
amount paid or reimbursed by the corporation if it shall ultimately be
determined that the standard of conduct was not met.



                                                              Page 62

We have entered into indemnification agreements with our executive
officers and directors.  The indemnification agreements require, among
other matters, that we indemnify our executive officers and directors
to the fullest extent permitted by law and advance to the executive
officers and directors all related expenses, subject to reimbursement
if it is subsequently determined that indemnification is not
permitted.  Under the indemnification agreements, we must also
indemnify and advance all expenses incurred by executive officers and
directors seeking to enforce their rights under the indemnification
agreements and may cover executive officers and directors under our
directors' and officers' liability insurance.  Although the form of
indemnification agreement offers substantially the same scope of
coverage afforded by law, it provides greater assurance to directors
and executive officers that indemnification will be available,
because, as a contract, it cannot be modified unilaterally in the
future by our board of directors or the stockholders to eliminate the
rights it provides.


ITEM 16.  EXHIBITS
          --------

1.1   Form of Underwriting Agreement for debt securities (1)

1.2   Form of Underwriting Agreement for Equity Securities (1)

3.1   Articles of Incorporation (filed as Appendix B to our Notice of
      Annual Meeting of Stockholders and Proxy Statement dated
      March 28, 1997 (the "Proxy Statement") filed with the Commission
      on March 28, 1997 and incorporated herein by reference)

3.2   Bylaws (filed as Appendix C to our 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).

3.4   Articles Supplementary of the 9 3/8% Class B Cumulative
      Redeemable Preferred Stock of Realty Income Corporation (filed
      as an exhibit to Realty Income's Registration Statement on Form
      8-A dated May 25, 1999, and incorporated herein by reference.

4.1   Form of indenture (filed as exhibit 4.1 to our Registration
      Statement on Form S-3 dated August 25, 1997, and incorporated
      herein by reference).

4.2   Form of Debt Security (1)

4.3   Form of Articles Supplementary for the preferred stock (1)

                                                              Page 63

4.4   Form of preferred stock Certificate (1)

4.5   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).

4.6   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).

4.7   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).

4.8   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).

4.9   Pricing Committee Resolutions (filed as an exhibit to Realty
      Income's Form 8-K, dated October 27, 1998 and incorporated
      herein by reference).

4.10  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).

4.11  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).

4.12  Pricing Committee Resolutions (filed as an exhibit to Realty
      Income's Form 8-K, dated January 21, 1999 and incorporated
      herein by reference.)

4.13  Form of 8% Notes due 2009 (filed as an exhibit to Realty
      Income's Form 8-K, dated January 21, 1999 and incorporated
      herein by reference.)

5.1   Opinion of Ballard Spahr Andrews & Ingersoll, LLP regarding the
      validity of the issuance of certain of the Securities being
      registered (2)

5.2   Opinion of Latham & Watkins regarding the validity of certain of
      the Securities being registered (2)

8     Opinion of Latham & Watkins regarding tax matters (2)

12    Statement of Computation of Ratios of Earnings to Fixed
      Charges and Earnings to Combined Fixed Charges and Preferred
      Stock Dividends (2)
                                                              Page 64

23.1  Consent of KPMG LLP (2)

23.2  Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in
      Exhibit 5.1)

23.3  Consent of Latham & Watkins (included in Exhibits 5.2 and 8)

24    Power of Attorney (included on signature page to the
      Registration Statement)

25    Statement of Eligibility of trustee on Form T-1 (1)
- -----------------------------------

(1)   To be filed by amendment or incorporated by reference in
      connection with the offering of Securities.

(2)   Filed herewith.


ITEM 17.  UNDERTAKINGS

(a)  The undersigned Registrant hereby undertakes:

     (1)  To file, during any period in which offers or sales are
          being made, a post-effective amendment to this Registration
          Statement:

          (i)    To include any prospectus required by Section
                 10(a)(3) of the Securities Act of 1933, as amended
                 (the "Securities Act");

          (ii)   To reflect in the prospectus any facts or events
                 arising after the effective date of this Registration
                 Statement (or the most recent post-effective
                 amendment thereof) that, individually or in the
                 aggregate, represent a fundamental change in the
                 information set forth in this Registration Statement;
                 and

          (iii)  To include any material information with respect to
                 the plan of distribution not previously disclosed in
                 this Registration Statement or any material change to
                 such information in this Registration Statement;

Provided, however, that subparagraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in the periodic reports
filed with or furnished to the Commission by the Registrant pursuant
to Section 13 or Section 15(d) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), that are incorporated by reference in
this Registration Statement;

                                                              Page 65

     (2)  That, for the purpose of determining any liability under the
          Securities Act, each such post-effective amendment shall be
          deemed to be a new registration statement relating to the
          securities offered herein, and the offering of such
          securities at that time shall be deemed to be the initial
          bona fide offering thereof; and

     (3)  To remove from registration by means of a post-effective
          amendment any of the securities being registered that remain
          unsold at the termination of the offering.

(b)  The undersigned Registrant hereby further undertakes that, for
     the purposes of determining any liability under the Securities
     Act, each filing of the Registrant's annual report pursuant to
     Section 13(a) or Section 15(d) of the Exchange Act that is
     incorporated by reference in this Registration Statement shall be
     deemed to be a new registration statement relating to the
     securities offered herein, and the offering of such Securities at
     that time shall be deemed to be the initial bona fide offering
     thereof.

(c)  Insofar as indemnification for liabilities arising under the
     Securities Act may be permitted to directors, officers and
     controlling persons of the Registrant pursuant to the provisions
     under Item 15 above, or otherwise, the Registrant has been
     advised that in the opinion of the Commission such
     indemnification is against public policy as expressed in the
     Securities Act and is, therefore, unenforceable.  In the event
     that a claim for indemnification against such liabilities (other
     than the payment by the Registrant of expenses incurred or paid
     by a director, officer or controlling person of the Registrant in
     the successful defense of any action, suit or proceeding) is
     asserted by such director, officer or controlling person in
     connection with the securities being registered, the Registrant
     will, unless in the opinion of its counsel the matter has been
     settled by controlling precedent, submit to a court of
     appropriate jurisdiction the question whether such
     indemnification by it is against public policy as expressed in
     the Securities Act and will be governed by the final adjudication
     of such issue.

(d)  The undersigned Registrant hereby undertakes to file an
     application for the purpose of determining the eligibility of the
     trustee to act under subsection (a) of Section 310 of the Trust
     Indenture Act in accordance with the rules and regulations
     prescribed by the Commission under Section 305(b)(2) of the Trust
     Indenture Act.





                                                              Page 66

                              SIGNATURES

Pursuant to the requirements of the Securities Act, we certify that we
have reasonable grounds to believe that we meet all of the
requirements for filing on Form S-3 and have duly caused this
Registration Statement to be signed on our behalf by the undersigned,
thereunto duly authorized, in the City of Escondido, State of
California, on June 15, 1999.


                             REALTY INCOME CORPORATION



                            By: /s/ MICHAEL R. PFEIFFER
                                --------------------------------------
                                Michael R. Pfeiffer
                                Senior Vice President, General Counsel
                                and Secretary


                           POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and
appoints Michael R. Pfeiffer as his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him
and for his name, place and stead, in any and all capacities, to sign
any and all amendments (including post-effective amendments and any
Registration Statement pursuant to Rule 462(b)) to this Registration
Statement on Form S-3 and to file the same with all exhibits thereto
and any other documents in connection therewith, with the Securities
and Exchange Commission under the Securities Act of 1933, as amended,
granting unto said attorney-in-fact and agent full power and authority
to do and perform each and every act and thing necessary or desirable
to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or his substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities
indicated on June 15, 1999.

Signature                          Title
- ---------                          -----


/s/ THOMAS A. LEWIS
- -------------------------------
Thomas A. Lewis                    Chief Executive Officer, Director
                                   and Vice Chairman of the Board
                                                              Page 67


<PAGE>
Signature (cont'd)                 Title
- ---------                          -----


/s/ RICHARD J. VANDERHOFF
- -------------------------------
Richard J. VanDerhoff              President, Chief Operating Officer
                                   and Director


/s/ GARY M. MALINO
- -------------------------------
Gary M. Malino                     Chief Financial Officer (Principal
                                   Financial and Accounting Officer)


/s/ WILLIAM E. CLARK
- -------------------------------
William E. Clark                   Chairman of the Board


/s/ DONALD R. CAMERON
- -------------------------------
Donald R. Cameron                  Director


/s/ ROGER P. KUPPINGER
- -------------------------------
Roger P. Kuppinger                 Director


/s/ MICHAEL D. MCKEE
- -------------------------------
Michael D. McKee                   Director


/s/ WILLARD H. SMITH JR.
- -------------------------------
Willard H. Smith Jr.               Director














                                                              Page 68

                             EXHIBIT INDEX

EXHIBIT NUMBER
- --------------

1.1   Form of Underwriting Agreement for debt securities (1)

1.2   Form of Underwriting Agreement for Equity Securities (1)

3.1   Articles of Incorporation (filed as Appendix B to our Notice of
      Annual Meeting of Stockholders and Proxy Statement dated
      March 28, 1997 (the "Proxy Statement") filed with the Commission
      on March 28, 1997 and incorporated herein by reference)

3.2   Bylaws (filed as Appendix C to our 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).

3.4   Articles Supplementary of the 9 3/8% Class B Cumulative
      Redeemable Preferred Stock of Realty Income Corporation (filed
      as an exhibit to Realty Income's Registration Statement on Form
      8-A dated May 25, 1999, and incorporated herein by reference.

4.1   Form of indenture (filed as exhibit 4.1 to our Registration
      Statement on Form S-3 dated August 25, 1997, and incorporated
      herein by reference).

4.2   Form of Debt Security (1)

4.3   Form of Articles Supplementary for the preferred stock (1)

4.4   Form of preferred stock Certificate (1)

4.5   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).

4.6   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).

4.7   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).

4.8   Rights Agreement, dated as of June 25, 1998, between Realty
      Income Corporation and The Bank of New York (filed as an exhibit

                                                              Page 69

<PAGE>
      to the Company's registration statement on Form 8-A, dated
      June 26, 1998, and incorporated herein by reference).

4.9   Pricing Committee Resolutions (filed as an exhibit to Realty
      Income's Form 8-K, dated October 27, 1998 and incorporated
      herein by reference).

4.10  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).

4.11  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).

4.12  Pricing Committee Resolutions (filed as an exhibit to Realty
      Income's Form 8-K, dated January 21, 1999 and incorporated
      herein by reference.)

4.13  Form of 8% Notes due 2009 (filed as an exhibit to Realty
      Income's Form 8-K, dated January 21, 1999 and incorporated
      herein by reference.)

5.1   Opinion of Ballard Spahr Andrews & Ingersoll, LLP regarding the
      validity of the issuance of certain of the Securities being
      registered (2)

5.2   Opinion of Latham & Watkins regarding the validity of certain of
      the Securities being registered (2)

8     Opinion of Latham & Watkins regarding tax matters (2)

12    Statement of Computation of Ratios of Earnings to Fixed
      Charges and Earnings to Combined Fixed Charges and Preferred
      Stock Dividends (2)

23.1  Consent of KPMG LLP (2)

23.2  Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in
      Exhibit 5.1)

23.3  Consent of Latham & Watkins (included in Exhibits 5.2 and 8)

24    Power of Attorney (included on signature page to the
      Registration Statement)

25    Statement of Eligibility of trustee on Form T-1 (1)
- ---------------------------------------
(1)   To be filed by amendment or incorporated by reference in
      connection with the offering of Securities.

(2)   Filed herewith.
                                                              Page 70





                              EXHIBIT 5.1


                             [LETTERHEAD]

                                                           FILE NUMBER
                                                              872800


June 15, 1999


Realty Income Corporation
220 West Crest Street
Escondido, California 92025

Re:  Registration Statement on Form S-3 filed with the Securities and
     Exchange Commission June 15, 1999

Ladies and Gentlemen:

We have served as Maryland counsel to  Realty Income Corporation, a
Maryland corporation (the "Company"), in connection with certain
matters of Maryland law arising out of the registration of the
following securities of the Company having an aggregate initial
offering price of up to $400,000,000 (collectively, the "Securities"):
 (a) debt securities ("Debt Securities"), (b) shares of Preferred
Stock, $1.00 par value per share, of the Company ("Preferred Stock"),
and (c) shares of Common Stock, $1.00 par value per share, of the
Company ("Common Stock"), covered by the above-referenced Registration
Statement (the "Registration Statement"), filed by the Company with
the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "1933 Act").  Unless otherwise
defined herein, capitalized terms used herein shall have the meanings
assigned to them in the Registration Statement.

In connection with our representation of the Company, and as a basis
for the opinion hereinafter set forth, we have examined originals, or
copies certified or otherwise identified to our satisfaction, of the
following documents (collectively, the "Documents"):

1.   The Registration Statement and the related form of prospectus
     included therein in the form in which it was transmitted to the
     Commission under the 1933 Act;

2.   The charter of the Company (the "Charter"), certified as of a
     recent date by the State Department of Assessments and Taxation
     of Maryland (the "SDAT");

                                                              Page 1

3.   The Bylaws of the Company, certified as of the date hereof by an
     officer of the Company;

4.   Resolutions adopted by the Board of Directors of the Company (the
     "Board") relating to the sale, issuance and registration of the
     Securities, certified as of the date hereof by an officer of the
     Company (the "Resolutions");

5.   The form of certificate representing a share of Common Stock,
     certified as of the date hereof by an officer of the Company;

6.   A certificate of the SDAT as to the good standing of the Company,
     dated as of a recent date;

7.   A certificate executed by an officer of the Company, dated the
     date hereof; and

8.   Such other documents and matters as we have deemed necessary or
     appropriate to express the opinion set forth in this letter,
     subject to the assumptions, limitations and qualifications stated
     herein.

In expressing the opinion set forth below, we have assumed, and so far
as is known to us there are no facts inconsistent with, the following:

1.   Each individual executing any of the Documents, whether on behalf
     of such individual or another person, is legally competent to do
     so.

2.   Each individual executing any of the Documents on behalf of a
     party (other than the Company) is duly authorized to do so.

3.   Each of the parties (other than the Company) executing any of the
     Documents has duly and validly executed and  delivered each of
     the Documents to which such party is a signatory, and such
     party's obligations set forth therein are legal, valid and
     binding and are enforceable in accordance with all stated terms.

4.   Any Documents submitted to us as originals are authentic.  The
     form and content of the Documents submitted to us as unexecuted
     drafts do not differ in any respect relevant to this opinion from
     the form and content of such Documents as executed and delivered.
     Any Documents submitted to us as certified or photostatic copies
     conform to the original documents.  All signatures on all such
     Documents are genuine.  All public records reviewed or relied
     upon by us or on our behalf are true and complete.  All
     statements and information contained in the Documents are true
     and complete.

     There has been no oral or written modification of or amendment to
     any of the Documents, by action or omission of the parties or
     otherwise.
                                                              Page 2


<PAGE>
5.   The Securities will not be transferred in violation of any
     restriction or limitation contained in the Charter.

6.   In accordance with the Resolutions, the issuance of, and certain
     terms of, the Securities to be issued by the Company from time to
     time will be approved by the Board or a duly authorized committee
     thereof in accordance with the Maryland General Corporation Law,
     the Charter and the Bylaws (with such approval referred to herein
     as the "Corporate Proceedings").

7.   Articles Supplementary creating and designating the Preferred
     Stock will be filed with and accepted for record by the SDAT
     prior to the issuance of the Preferred Stock.

The phrase "known to us" is limited to the actual knowledge, without
independent inquiry, of the lawyers at our firm who have performed
legal services in connection with the issuance of this opinion.

Based upon the foregoing, and subject to the assumptions, limitations
and qualifications stated herein, it is our opinion that:

1.   The Company is a corporation duly incorporated and existing under
     and by virtue of the laws of the State of Maryland and is in good
     standing with the SDAT.

2.   Upon the completion of all Corporate Proceedings relating to the
     Securities that are shares of Common Stock (including shares of
     Common Stock which may be issued upon conversion of Debt
     Securities or shares of Preferred Stock) (the "Common
     Securities") and the due execution, countersignature and delivery
     of certificates representing Common Securities and assuming that
     the sum of (a) all shares of Common Stock issued as of the date
     hereof, (b) any shares of Common Stock issued between the date
     hereof and the date on which any of the Common Securities are
     actually issued (not including any of the Common Securities), and
     (c) the Common Securities will not exceed the total number of
     shares of Common Stock that the Company is then authorized to
     issue, the Common Securities are duly authorized and, when and if
     delivered against payment therefor in accordance with the
     Resolutions and the Corporate Proceedings, will be validly
     issued, fully paid and nonassessable.

3.   Upon the completion of all Corporate Proceedings relating to the
     Securities that are shares of Preferred Stock (including shares
     of Preferred Stock which may be issued upon conversion of Debt
     Securities) (the "Preferred Securities") and the due execution,
     countersignature and delivery of certificates representing
     Preferred Securities and assuming that the sum of (a) all shares
     of Preferred Stock issued as of the date hereof, (b) any shares
     of Preferred Stock issued between the date hereof and the date on
     which any of the Preferred Securities are actually issued (not

                                                              Page 3

<PAGE>
     including any of the Preferred Securities), and (c) the Preferred
     Securities will not exceed the total number of shares of
     Preferred Stock that the Company is then authorized to issue, the
     Preferred Securities are duly authorized and, when and if
     delivered against payment therefor in accordance with the
     Resolutions and the Corporate Proceedings, will be validly
     issued, fully paid and nonassessable.

4.   Upon the completion of all Corporate Proceedings relating to the
     Securities that are Debt Securities (including Debt Securities
     which may be issued upon exercise of warrants), the issuance of
     the Debt Securities will have been duly authorized by all
     necessary corporate action.

The foregoing opinion is limited to the substantive laws of the State
of Maryland and we do not express any opinion herein concerning any
other law.  We express no opinion as to the applicability or effect of
any federal or state securities laws, including the securities laws of
the State of Maryland, or as to federal or state laws regarding
fraudulent transfers.  To the extent that any matter as to which our
opinion is expressed herein would be governed by any jurisdiction
other than the State of Maryland, we do not express any opinion on
such matter.  The opinion expressed herein is subject to the effect of
judicial decisions which may permit the introduction of parol evidence
to modify the terms or the interpretation of agreements.  We express
no opinion as to compliance with the securities (or "blue sky") laws
of the State of Maryland.

We assume no obligation to supplement this opinion if any applicable
law changes after the date hereof or if we become aware of any fact
that might change the opinion expressed herein after the date hereof.

This opinion is being furnished to you for submission to the
Commission as an exhibit to the Registration Statement and,
accordingly, may not be relied upon by, quoted in any manner to, or
delivered to any other person or entity without, in each instance, our
prior written consent.

We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our firm in the
section entitled "Legal Matters" in the Registration Statement.  In
giving this consent, we do not admit that we are within the category
of persons whose consent is required by Section 7 of the 1933 Act.

                             Very truly yours,



                             /s/BALLARD SPAHR ANDREWS & INGERSOLL, LLP




                                                              Page 4





                              Exhibit 5.2


                              [Letterhead]


June 15, 1999

Realty Income Corporation
220 West Crest Street
Escondido, California 92025

    Re: $400,000,000 Aggregate Offering Price of Securities
        of Realty Income Corporation (the "Company")

Gentlemen:

We have acted as special counsel to you in connection with the
Registration Statement on Form S-3 (the "Registration Statement")
filed with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "1933 Act"), for the
registration of the following securities of the Company having an
aggregate initial offering price of up to $400,000,000: (a) debt
securities ("Debt Securities"), (b) Shares of preferred stock, $1.00
par value per share, and (c) shares of Common Stock, $1.00 par value
per share. Except as otherwise expressly indicated, the term
Registration Statement shall include all documents incorporated or
deemed to be included by reference therein.  Debt Securities will be
issued under one or more indentures, each in the form filed as an
exhibit to the Registration Statement (each, an Indenture) between the
Company and one or more trustees (each, a "Trustee").  This opinion is
based on various facts and assumptions, and is conditioned upon
certain representations made by the Company as to factual matters.

In our capacity as the Company's special counsel, we have made such
legal and factual examinations and inquiries as we have deemed
necessary or appropriate for purposes of this opinion.  In our
examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the
conformity to authentic original documents of all documents submitted
to us as copies.  We have examined originals or copies, certified or
otherwise identified to our satisfaction, of such documents, corporate
records, certificates of public officials and other instruments as we
have deemed necessary or advisable for purposes of this opinion.

We are opining herein as to the effect on the subject transaction only
of the federal laws of the United States and the internal laws of the
State of New York, and we express no opinion with respect to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction.
                                                              Page 1

Subject to the foregoing and the other matters set forth herein, it is
our opinion that, as of the date hereof, when the Company and a
Trustee execute and deliver an Indenture and the specific terms of a
particular Debt Security have been duly authorized and established in
accordance with the Indenture, and the Debt Security has been duly
authorized, executed, authenticated, issued and delivered in
accordance with the Indenture, against payment therefor or upon
exchange in accordance with the applicable underwriting or other
agreement, the Debt Security will constitute the valid and binding
obligation of the Company.

In connection with the foregoing opinion, we have assumed that, at or
prior to the time of the delivery of any Debt Security, (i) the Board
of Directors of the Company shall have duly established the terms of
the Debt Security and duly authorized the issuance and sale of the
Debt Security, in each case in accordance with Maryland law, and such
authorization shall not have been modified or rescinded; (ii) the
Registration Statement shall have been declared effective and such
effectiveness shall not have been terminated or rescinded; (iii) the
applicable Indenture, if any, shall have been duly authorized,
executed and delivered in accordance with Maryland law and the
applicable Trustee shall have been qualified under the Trust Indenture
Act of 1939, as amended; (iv) there will not have occurred any change
in law affecting the validity or enforceability of the Debt Security;
and (v) the Debt Security is unsecured. We have also assumed that none
of the terms of any Debt Security to be established subsequent to the
date hereof, nor the issuance and delivery of the Debt Security, nor
the compliance by the Company with the terms of the Debt Security will
violate any applicable law or will result in a violation of any
provision of any instrument or agreement then binding upon the
Company, or any restriction imposed by any court or governmental body
having jurisdiction over the Company.

The foregoing opinion is subject to the following exceptions,
limitations and qualifications: (i) the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies
of creditors; (ii) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or law, and the
discretion of the court before which any proceeding therefor may be
brought; (iii) the unenforceability under certain circumstances under
law or court decisions of provisions providing for the indemnification
of or contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy; (iv) we
express no opinion concerning the enforceability of the waiver of
rights or defenses contained in the Indenture; and (v) we express no
opinion with respect to whether the acceleration of the Debt
Securities may affect the collectibility of that portion of the stated
principal amount thereof which might be determined to constitute
unearned interest thereon.


                                                              Page 2

To the extent the obligations of the Company under the Debt Securities
may be dependent upon such matters, we assume for purposes of this
opinion that the Trustee under the Indenture is duly organized,
validly existing and in good standing under the laws of its
jurisdiction of organization; that the Trustee is duly qualified to
engage in the activities contemplated by the Indenture; that the
Indenture has been duly authorized, executed and delivered by the
Trustee and constitutes a legally valid, binding and enforceable
obligation of the Trustee enforceable against the Trustee in
accordance with its terms; and the Trustee is in compliance, generally
and with respect to acting as trustee under the Indenture, with all
applicable laws and regulations; and that the Trustee has the
requisite organizational and legal power and authority to perform its
obligations under the Indenture.

This opinion is rendered only to you for submission to the Commission
as an exhibit to the Registration Statement. This opinion may not be
relied upon by you for any other purpose, or furnished to, quoted to
or relied upon by any other person, firm or corporation for any
purpose, without our prior written consent.

We hereby consent to the use of this opinion as Exhibit 5.2 to the
Registration Statement and to the use of our name therein.

                                Very truly yours,



                                /s/LATHAM & WATKINS





                               Exhibit 8

                              [Letterhead]

June 15, 1999



Realty Income Corporation
220 West Crest Street
Escondido, California  92025-1725

Re:   $400,000,000 Aggregate Maximum Offering Price of Securities of
      Realty Income Corporation

Ladies and Gentlemen:

We have acted as special counsel to Realty Income Corporation, a
Maryland corporation (the "Company"), in connection with the
registration of $400,000,000 aggregate maximum offering price of
securities of the Company, pursuant to a registration statement on
Form S-3 under the Securities Act of 1933, as amended, (such
registration statement, together with the documents incorporated by
reference therein, the "Registration Statement") filed with the
Securities and Exchange Commission (the "Commission") as of the date
hereof and the base prospectus related thereto (such base prospectus,
together with the documents incorporated by reference therein, the
"Prospectus").

You have requested our opinion concerning the material federal income
tax considerations relating to the Company.  This opinion is based on
various facts and assumptions, including the facts set forth in the
Registration Statement and the Prospectus concerning the business,
properties and governing documents of the Company and its
subsidiaries. We have also been furnished with, and with your consent
have relied upon, certain representations made by the Company with
respect to certain factual matters through a certificate of an officer
of the Company (the "Officer's Certificate").

In our capacity as such counsel, we have made such legal and factual
examinations and inquiries, including an examination of originals or
copies certified or otherwise identified to our satisfaction of such
documents, corporate records and other instruments, as we have deemed
necessary or appropriate for purposes of this opinion.  In our
examination, we have assumed the authenticity of all documents submitted
to us as originals, the genuineness of all signatures thereon, the legal
capacity of natural persons executing such documents and the conformity
to authentic original documents of all documents submitted to us as
copies.

                                                              Page 1

<PAGE>
We are opining herein as to the effect on the subject transaction only
of the federal income tax laws of the United States, and we express no
opinion with respect to the applicability thereto, or the effect
thereon, of other federal laws, the laws of any state or other
jurisdiction or as to any matters of municipal law or the laws of any
other local agencies within any state.

Based upon such facts, assumptions and representations, including the
facts set forth in the Registration Statement and the Officer's
Certificate, it is our opinion that the information in the
Registration Statement set forth under the caption "Material Federal
Income Tax Considerations to Realty Income Corporation," to the extent
that it constitutes matters of law, summaries of legal matters,
documents or proceedings, or legal conclusions, is an accurate summary
of the material federal income tax consequences to the Company.

No opinion is expressed as to any matter not discussed herein.

This opinion is rendered to you as of the date of this letter, and we
undertake no obligation to update this opinion subsequent to the date
hereof.  This opinion is based on various statutory provisions,
regulations promulgated thereunder and interpretations thereof by the
Internal Revenue Service and the courts having jurisdiction over such
matters, all of which are subject to change either prospectively or
retroactively.  Also, any variation or difference in the facts from
those set forth in the representations described above, including in the
Registration Statement, the Prospectus or the Officer's Certificate, may
affect the conclusions stated herein. Moreover, the Company's
qualification and taxation as a real estate investment trust depends
upon the Company's ability to meet (through actual annual operating
results, asset diversification, distribution levels and diversity of
stock ownership) the various qualification tests imposed under the
Code, the results of which have not been and will not be reviewed by
Latham & Watkins.  Accordingly, no assurance can be given that the
actual results of the Company's operation for any one taxable year
will satisfy such requirements.

This opinion is rendered to you and is for your benefit and the benefit
of your stockholders in connection with the filing of the Registration
Statement with the Commission.  This opinion may not be relied upon by
you or your stockholders for any other purpose, or furnished to, quoted
to or relied upon by any other person, firm or corporation for any
purpose, without our prior written consent.  We hereby consent to the
filing of this opinion as an exhibit to the Registration Statement and
to the use of the name of our firm under the headings "Material
Federal Income Tax Considerations to Realty Income Corporation" and
"Legal Matters."  In giving this consent, we do not hereby admit that
we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933 or the rules or regulations of
the Commission promulgated thereunder.

                             Very truly yours,
                             /s/LATHAM & WATKINS
                                                              Page 2



                              Exhibit 12


              REALTY INCOME CORPORATION AND SUBSIDIARIES
                  STATEMENT OF COMPUTATION OF RATIOS
                        (dollars in thousands)

<TABLE>
                                     Three months ended March 31,
                                     ----------------------------
                                       1999               1998
                                     -------            -------
<S>                                  <C>                <C>
Net income                           $ 9,929            $ 9,924
                                     =======            =======

Fixed charges:
   Interest                            5,610              2,341
   Amortization of fees                  270                150
   Interest capitalized                  294                 80
                                     -------            -------
      Fixed charges                    6,174              2,571
                                     =======            =======


Net income before fixed charges       15,809             12,415
Divided by fixed charges               6,174              2,571
                                     -------            -------
Ratios of earnings to fixed charges      2.6                4.8
                                     =======            =======
(continued)


As of March 31, 1999, we had not issued any of our preferred
stock; therefore, the ratios of earnings to combined fixed
charges and preferred share dividends are the same as the ratios
of earnings to fixed charges for all periods presented.















                                                         Page 1



(table continued)

                                   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
                       -------   -------   -------   -------   -------
Ratios of earnings to
   fixed charges           3.8       5.1      13.7       9.9      39.4
                       =======   =======   =======   =======   =======
</TABLE>


As of March 31, 1999, we had not issued any of our preferred
stock; therefore, the ratios of earnings to combined fixed
charges and preferred share dividends are the same as the ratios
of earnings to fixed charges for all periods presented.

















                                                         Page 2





                             Exhibit 23.1






                     Independent Auditors' Consent




The Board of Directors
Realty Income Corporation:


We consent to the use of our report incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the
prospectus.



KPMG LLP




San Diego, California
June 14, 1999



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