Realty Income Announces Third Quarter and Nine Month Operating Results

Realty Income Corporation (Realty Income), The Monthly Dividend Company ^® (NYSE: O) today announced operating results for the third quarter ended September 30, 2009. All per share amounts presented in this press release are on a diluted per common share basis, unless stated otherwise.

COMPANY HIGHLIGHTS:

(For the quarter ended September 30, 2009, as compared to the same quarterly period in 2008)

Revenue was $82.0 million as compared to $82.2 million
Funds from Operations (FFO) available to common stockholders increased 5.5% to $48.2 million
FFO per share increased 2.2% to $0.47
FFO per share before Crest’s contribution increased 2.2% to $0.46
Net income available to common stockholders per share was $0.26
Portfolio occupancy increased to 96.8%
Same store rents increased 0.4% to $75.1 million
Dividends paid per common share increased 2.4%
The monthly dividend increased for the 48 ^th consecutive quarter to an annualized amount of $1.71225 per share
Invested $10.7 million in three new properties

Financial Results

Revenue

Realty Income’s revenue, for the quarter ended September 30, 2009, was $82.0 million as compared to $82.2 million for the same quarter in 2008. Revenue, for the nine months ended September 30, 2009, was $246.2 million as compared to $246.5 million for the same period in 2008. Overall, comparing 2009 to 2008, revenue has generally been flat as the company now owns 2,334 properties compared to 2,355 properties at the end of the third quarter of 2008.

Net Income Available to Common Stockholders

Net income available to common stockholders, for the quarter ended September 30, 2009, was $27.1 million as compared to $28.6 million for the same quarter in 2008. Net income per share for the quarter was $0.26 as compared to $0.29 for the same quarter in 2008.

Net income available to common stockholders, for the nine months ended September 30, 2009, was $77.6 million as compared to $79.3 million for the same period in 2008. Net income per share, for the nine months ended September 30, 2009, was $0.75 as compared to $0.79 for the same period in 2008.

The calculation to determine net income for a real estate company includes impairments and/or gains from the sales of investment properties. The amount of impairments and/or gains on property sales varies from quarter to quarter. This variance can significantly impact net income.

During the third quarter of 2009, income from continuing operations available to common stockholders was $0.24 per share as compared to $0.22 per share for the same quarter in 2008.

During the first nine months of 2009, income from continuing operations available to common stockholders was $0.70 per share as compared to $0.68 per share for the same period in 2008.

FFO Available to Common Stockholders

FFO, for the quarter ended September 30, 2009, increased 5.5% to $48.2 million as compared to $45.7 million for the same quarter in 2008. FFO per share, for the quarter ended September 30, 2009, increased 2.2% to $0.47 as compared to $0.46 for the same quarter in 2008. FFO per share before Crest’s contribution, for the quarter ended September 30, 2009, increased 2.2% to $0.46 from $0.45 as compared to the same quarter in 2008. Crest Net Lease, Inc. (Crest) is a wholly-owned subsidiary of Realty Income.

FFO, for the nine months ended September 30, 2009, increased 2.6% to $142.1 million as compared to $138.5 million for the same period in 2008. FFO per share, for the nine months ended September 30, 2009, decreased 0.7% to $1.37 as compared to $1.38 for the same period in 2008. FFO before Crest’s contribution, for the nine months ended September 30, 2009, was unchanged at $1.37 per share as compared to the same period in 2008. For a calculation of FFO before Crest’s contribution, see pages 7 and 8.

The Company considers FFO to be an appropriate supplemental measure of a Real Estate Investment Trust’s (REIT’s) operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. FFO is an alternative, non-GAAP measure that is also considered to be a good indicator of a company’s ability to generate income to pay dividends. Realty Income defines FFO consistent with the National Association of Real Estate Investment Trust’s (NAREIT’s) definition as net income available to common stockholders plus depreciation and amortization of real estate assets, reduced by gains on sales of investment properties and extraordinary items. See reconciliation of net income available to common stockholders to FFO on pages 7 and 8.

Dividend Information

In September 2009, Realty Income announced the 48 ^th consecutive quarterly increase and the 55 ^th increase in the amount of the dividend since the Company’s listing on the New York Stock Exchange in 1994. The annualized dividend amount, as of September 30, 2009, was $1.71225 per share. The amount of the monthly dividends paid, for the nine months ended September 30, 2009, increased 3.2% to $1.279 per share from $1.239 per share for the same period in 2008. Through September 30, 2009, the Company has paid 470 consecutive monthly dividends and continues its 40-year history of declaring and paying dividends every month.

Real Estate Portfolio Update

As of September 30, 2009, Realty Income’s portfolio of freestanding, single-tenant, retail properties consisted of 2,334 properties located in 49 states, leased to 118 retail chains doing business in 30 retail industries. The properties are leased under long-term, net leases with a weighted average remaining lease term of approximately 11.3 years.

Portfolio Management Activities

The Company’s portfolio of retail real estate, owned primarily under 15- to 20-year net leases, continues to perform well and provide dependable lease revenue supporting the payment of monthly dividends. As of September 30, 2009, portfolio occupancy was 96.8% with 75 properties available for lease out of a total of 2,334 properties in the portfolio.

Rent Increases

During the three months ended September 30, 2009, same store rents on 2,080 properties under lease increased 0.4% to $75.1 million, as compared to $74.8 million for the same quarter in 2008. Excluding 104 properties leased to Buffets, Inc. (for which rents were renegotiated in September 2008), for the quarter ended September 30, 2009, same store rents on 1,976 properties under lease increased 1.2% to $70.2 million, as compared to $69.34 million for the same quarter in 2008.

During the nine months ended September 30, 2009, same store rents on 2,080 properties under lease increased 0.4% to $225.5 million, as compared to $224.7 million for the same period in 2008. Excluding 104 properties leased to Buffets, Inc. (for which rents were renegotiated in September 2008), for the nine months ended September 30, 2009, same store rents on 1,976 properties under lease increased 1.3% to $210.7 million, as compared to $208.0 million for the same period in 2008.

Property Acquisitions

During the third quarter of 2009, Realty Income invested $10.7 million in three new properties and previously acquired properties. The new properties are located in two states and are 100% leased with an initial average lease yield of 10.2%.

During the nine months ended September 30, 2009, Realty Income invested $11.9 million in three new properties and previously acquired properties with an initial average lease yield of 10.1%. Crest did not acquire any properties during the first nine months of 2009.

Realty Income maintains a $355 million unsecured acquisition credit facility, which is used to fund property acquisitions in the near term. There is currently no outstanding balance on the Company’s acquisition credit facility, and the full $355 million is available to fund new property acquisitions. In addition, the Company had cash and cash equivalents of $20 million at September 30, 2009.

Property Dispositions

Realty Income continued to successfully execute its asset disposition program in 2009. The objective of this program is to sell assets when the Company believes the reinvestment of the sales proceeds will generate higher returns, enhance the credit quality of the Company's real estate portfolio, increase the average lease length, or decrease tenant or industry concentration.

During the quarter ended September 30, 2009, Realty Income sold seven properties for $4.6 million, which resulted in a gain on sales of $1.8 million. During the nine months ended September 30, 2009, Realty Income sold 17 properties for $11.0 million, which resulted in a gain on sales of $4.2 million.

Other Activities

Crest Net Lease

Crest is focused on acquiring and subsequently marketing net-leased properties for sale. Crest did not acquire or sell any properties during the third quarter. At September 30, 2009, Crest’s property inventory consisted of five properties valued at $5.7 million.

Crest’s contribution to Realty Income’s FFO (and net income) depends on the timing and number of property sales, if any, in a given quarter. Therefore, Crest’s contribution can fluctuate and add volatility to Realty Income’s reported FFO and net income on a comparable quarterly and annualized basis. During the third quarter of 2009 and 2008, Crest contributed $0.00 per share to Realty Income’s FFO per share. During the nine months ended September 30, 2009, Crest contributed $0.00 per share to Realty Income’s FFO per share, as compared to $0.01 per share during the same period in 2008.

CEO Comments on Operating Results

Commenting on Realty Income’s financial results and real estate operations, Chief Executive Officer, Tom A. Lewis said, “We continue to be pleased with our results given the challenges in the overall economy and have remained focused on maintaining our liquidity and managing our portfolio to maximize occupancy and cash flow. Core FFO per share (before Crest) was up 2.2% for the quarter, as compared to the same period one year ago, which is a positive considering that we have sold 24 properties in the past year, while acquiring only three properties.”

“At September 30, occupancy increased to 96.8%, as compared to 96.6%, at the end of the second quarter, and same store rents increased 0.4% for both the quarter and nine months ended September 30, 2009, compared to the same period one year ago. Given the ongoing softness in the retail industry, we are pleased with the increasing results in occupancy and same store rents.”

“Our ongoing focus on liquidity and balance sheet health has provided us with $20 million in cash on hand, at the end of the quarter, and the entire balance of our $355 million credit facility available to take advantage of acquisition opportunities as they arise. We also have no debt maturities until 2013, and we carry no mortgages on any of our 2,334 properties. Nor do we have any properties under development, no joint ventures and no off balance sheet assets or liabilities of any kind.”

“With respect to real estate acquisitions, during the third quarter, we invested just over $10 million in three new properties with an initial lease yield of 10.2%. While we are starting to see more acquisition prospects within the 9% to 10% cap rate range, to date the level of transactions available in the marketplace that would meet the Company’s due diligence requirements remains modest. We continue to review and perform due diligence on a number of properties and anticipate additional acquisitions for our core portfolio over the next few quarters. Given our substantial liquidity position, as attractive opportunities arise, we are prepared to invest.”

“Our conservative operations during a challenging economic and retail environment allowed us to increase the amount of the monthly dividend for the 55 ^th time since our listing on the New York Stock Exchange in 1994, to an annualized amount of $1.71225 per share. We have been fortunate to own a portfolio of properties that have generally remained profitable to our retailers, which is key to the profitability of our tenants’ businesses. We believe this has kept occupancy high and, when coupled with our conservative balance sheet and strong liquidity, is providing us with a solid foundation during the current economic downturn.”

FFO Commentary

Realty Income’s FFO per share has historically tended to be stable and fairly predictable because of the long-term leases that are the primary source of the Company’s revenue. There are, however, several factors that can cause FFO per share to vary from levels that have been anticipated by the Company. These factors include, but are not limited to, changes in interest rates, occupancy rates, periodically accessing the capital markets, the level and timing of property acquisitions and dispositions, lease rollovers, the general real estate market, the economy, charges for property impairments, and the operations of Crest.

2009 Estimates

Management estimates that FFO per share for 2009 should range from $1.83 to $1.84, which represents annual FFO per share growth of approximately 0.0% to 0.5%, as compared to 2008 FFO per share of $1.83. FFO for 2009 is based on an estimated net income per share range of $1.00 to $1.01, adjusted (in accordance with NAREIT’s definition of FFO) for estimated real estate depreciation of $0.88 and potential gain on sales of investment properties of $0.05 per share.

Management further estimates that Crest could contribute between $0.00 and $0.01 per share to Realty Income’s FFO during 2009. Crest’s primary business is the purchase and sale of properties for a profit. These sales may occur at various times during the course of the year and could cause FFO, in certain quarters, to fluctuate on a comparable quarterly and annualized basis.

2010 Estimates

Management estimates that FFO per share for 2010 should range from $1.86 to $1.92, which represents annual FFO per share growth of approximately 1.1% to 4.9%, as compared to an estimated 2009 FFO per share range of $1.83 to $1.84. FFO for 2010 is based on an estimated net income per share range of $0.99 to $1.05, adjusted (in accordance with NAREIT’s definition of FFO) for estimated real estate depreciation of $0.92 and potential gain on sales of investment properties of $0.05 per share.

Management notes that, given the volatility in the markets, it is more challenging than usual to estimate a number of factors that will impact the Company’s future results. For example, new property acquisition levels could vary depending on the number of opportunities, capitalization rates and the availability of attractively priced permanent financing. As such, management would add that the $1.86 FFO per share estimate assumes no new property acquisitions for 2010. The $1.92 FFO per share estimate assumes property acquisitions of approximately $250 million in 2010.

Management further estimates that Crest could contribute between $0.00 and $0.01 per share to Realty Income’s FFO during 2010. Crest’s primary business is the purchase and sale of properties for a profit. These sales may occur at various times during the course of the year and could cause FFO, in certain quarters, to fluctuate on a comparable quarterly and annualized basis.

About Realty Income

Realty Income is The Monthly Dividend Company ^®, a New York Stock Exchange real estate company dedicated to providing shareholders with dependable monthly income. As of September 30, 2009, the Company had paid 470 consecutive monthly dividends throughout its 40-year operating history. The monthly income is supported by the cash flows from 2,334 retail properties owned under long-term lease agreements with leading regional and national retail chains. The Company is a buyer of net-leased retail properties nationwide.

Forward-Looking Statements

Statements in this press release that are not strictly historical are “forward-looking” statements. Forward-looking statements involve known and unknown risks, which may cause the Company’s actual future results to differ materially from expected results. These risks include, among others, general economic conditions, local real estate conditions, the availability of capital to finance planned growth, continued volatility and uncertainty in the credit markets and broader

financial markets, property acquisitions and the timing of these acquisitions, charges for property impairments, the outcome of any legal proceedings to which the Company is a party, and the profitability of Crest, the Company’s subsidiary, as described in the Company’s filings with the Securities and Exchange Commission. Consequently, such forward-looking statements should be regarded solely as reflections of the Company’s current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this press release. The Company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.

Note to Editors: Realty Income press releases are available at no charge by calling our toll-free investor hotline number: 888-811-2001, or via the internet at http://www.realtyincome.com/Investing/News.html.

CONSOLIDATED STATEMENTS OF INCOME For the three and nine months ended September 30, 2009 and 2008 (dollars in thousands, except per share amounts)

	Three Months Ended 9/30/09			Three Months Ended 9/30/08			Nine Months Ended 9/30/09			Nine Months Ended 9/30/08
REVENUE
Rental	$	81,534		$	81,951		$	244,918		$	244,692
Other		427			272			1,266			1,800
Total revenue		81,961			82,223			246,184			246,492

EXPENSES
Depreciation and amortization		22,930			22,754			68,716			67,459
Interest		21,374			23,915			64,151			71,230
General and administrative		4,906			5,097			15,862			16,564
Property		1,628			1,730			5,712			4,036
Income taxes		74			308			684			922

Total expenses		50,912			53,804			155,125			160,211

Income from continuing operations		31,049			28,419			91,059			86,281
Income from discontinued operations:
Real estate acquired for resale by Crest		207			238			308			567
Real estate held for investment		1,896			6,040			4,429			10,662
Total income from discontinued operations		2,103			6,278			4,737			11,229

Net income		33,152			34,697			95,796			97,510
Preferred stock cash dividends		(6,063	)		(6,063	)		(18,190	)		(18,190	)

Net income available to common stockholders	$	27,089		$	28,634		$	77,606		$	79,320

Funds from operations available to common stockholders (FFO)	$	48,154		$	45,748		$	142,069		$	138,497

Per share information for common stockholders:
Income from continuing operations:
Basic and diluted	$	0.24		$	0.22		$	0.70		$	0.68
Net income:
Basic and diluted	$	0.26		$	0.29		$	0.75		$	0.79
FFO, basic and diluted ⁽¹⁾
FFO before Crest contribution	$	0.46		$	0.45		$	1.37		$	1.37
Crest Net Lease	$	0.00		$	0.00		$	0.00		$	0.01
Total FFO	$	0.47		$	0.46		$	1.37		$	1.38
Cash dividends paid	$	0.427		$	0.417		$	1.279		$	1.239

⁽¹⁾The above FFO per share amounts have been rounded to the nearest two decimals and, as such, the individual amounts may not add up to the “Total FFO” amount.

FUNDS FROM OPERATIONS (dollars in thousands, except per share amounts)

	Three Months Ended 9/30/09			Three Months Ended 9/30/08			Nine Months Ended 9/30/09			Nine Months Ended 9/30/08

Net income available to common stockholders	$	27,089		$	28,634		$	77,606		$	79,320
Depreciation and amortization:
Continuing operations		22,930			22,754			68,716			67,459
Discontinued operations		29			171			236			1,395
Depreciation of furniture, fixtures & equipment		(80	)		(81	)		(239	)		(238	)
Gain on sales of investment properties:
Continuing operations		(15	)		--			(15	)		(236	)
Discontinued operations		(1,799	)		(5,730	)		(4,235	)		(9,203	)

Funds from operations available to common stockholders	$	48,154		$	45,748		$	142,069		$	138,497

FFO per common share, basic and diluted	$	0.47		$	0.46		$	1.37		$	1.38

Dividends paid to common stockholders	$	44,541		$	42,209		$	133,367		$	125,519

FFO in excess of dividends paid to common stockholders	$	3,613		$	3,539		$	8,702		$	12,978

Weighted average number of common shares used for computation per share:
Basic		103,470,512			100,362,872			103,528,952			100,400,212
Diluted		103,481,892			100,420,070			103,532,894			100,462,396

CONTRIBUTIONS BY CREST TO FUNDS FROM OPERATIONS
(dollars in thousands, except per share amounts)

Crest acquires properties with the intention of reselling them rather than holding them as investments and operating the properties. Consequently, we typically classify properties acquired by Crest as held for sale at the date of acquisition and do not depreciate them. The operations of Crest’s properties are classified as “income from discontinued operations, real estate acquired for resale”.

	Three Months Ended 9/30/09			Three Months Ended 9/30/08			Nine Months Ended 9/30/09			Nine Months Ended 9/30/08
Gain on sales of real estate acquired for resale	$	--		$	199		$	--		$	4,642
Rental revenue		66			129			198			1,764
Other revenue		351			353			1,053			561
Interest expense		(140	)		(359	)		(462	)		(1,424	)
General and administrative expense		(82	)		(110	)		(250	)		(397	)
Property expenses		(29	)		(41	)		(97	)		(106	)
Provisions for impairment		(29	)		(27	)		(340	)		(3,374	)
Income taxes		70			94			206			(328	)

Funds from operations contributed by Crest	$	207		$	238		$	308		$	1,338

Crest FFO per common share, basic and diluted	$	0.00		$	0.00		$	0.00		$	0.01
Total FFO	$	48,154		$	45,748		$	142,069		$	138,497
Less FFO contributed by Crest		(207	)		(238	)		(308	)		(1,338	)

FFO before Crest contribution	$	47,947		$	45,510		$	141,761		$	137,159

FFO before Crest contribution per common share, basic and diluted	$	0.46		$	0.45		$	1.37		$	1.37

We define FFO, a non-GAAP measure, consistent with the National Association of Real Estate Investment Trust’s definition, as net income available to common stockholders, plus depreciation and amortization of real estate assets reduced by gains on sales of investment properties and extraordinary items.

HISTORICAL FUNDS FROM OPERATIONS (dollars in thousands, except per share amounts)

For the three months ended September 30,		2009			2008			2007			2006			2005

Net income available to common stockholders	$	27,089		$	28,634		$	27,910		$	24,207		$	20,771
Depreciation and amortization		22,879			22,844			19,514			14,612			11,280
Gain on sales of investment properties		(1,814	)		(5,730	)		(799	)		(843	)		(303	)

Total FFO	$	48,154		$	45,748		$	46,625		$	37,976		$	31,748

Total FFO per diluted share	$	0.47		$	0.46		$	0.47		$	0.43		$	0.40

Total FFO	$	48,154		$	45,748		$	46,625		$	37,976		$	31,748
Less FFO contributed by Crest		(207	)		(238	)		(1,937	)		(99	)		(566	)

FFO before Crest contribution	$	47,947		$	45,510		$	44,688		$	37,877		$	31,182

FFO components, per diluted share ⁽¹⁾:
FFO before Crest contribution	$	0.46		$	0.45		$	0.45		$	0.42		$	0.39
Crest FFO contribution	$	0.00		$	0.00		$	0.02		$	0.00		$	0.01

Total FFO	$	0.47		$	0.46		$	0.47		$	0.43		$	0.40

Cash dividends paid per share	$	0.427		$	0.417		$	0.391		$	0.360		$	0.338
Diluted shares outstanding		103,481,892			100,420,070			100,252,953			89,267,138			79,843,553


For the nine months ended September 30,		2009			2008			2007			2006			2005

Net income available to common stockholders	$	77,606		$	79,320		$	89,043		$	71,033		$	64,239
Depreciation and amortization		68,713			68,616			56,071			42,901			33,326
Gain on sales of investment properties		(4,250	)		(9,439	)		(3,190	)		(3,036	)		(3,781	)

Total FFO	$	142,069		$	138,497		$	141,924		$	110,898		$	93,784

Total FFO per diluted share	$	1.37		$	1.38		$	1.41		$	1.27		$	1.18

Total FFO	$	142,069		$	138,497		$	141,924		$	110,898		$	93,784
Less FFO contributed by Crest		(308	)		(1,338	)		(7,967	)		(1,515	)		(1,695	)

FFO before Crest contribution	$	141,761		$	137,159		$	133,957		$	109,383		$	92,089

FFO components, per diluted share ⁽¹⁾:
FFO before Crest contribution	$	1.37		$	1.37		$	1.34		$	1.26		$	1.16
Crest FFO contribution	$	0.00		$	0.01		$	0.08		$	0.02		$	0.02

Total FFO	$	1.37		$	1.38		$	1.41		$	1.27		$	1.18

Cash dividends paid per share	$	1.279		$	1.239		$	1.152		$	1.060		$	0.999
Diluted shares outstanding		103,532,894			100,462,396			100,326,859			87,084,545			79,727,036

⁽¹⁾ The above FFO per share amounts have been rounded to the nearest two decimals and, as such, the individual amounts may not add up to the “Total FFO” amount.

CONSOLIDATED BALANCE SHEETS As of September 30, 2009 and December 31, 2008 (dollars in thousands, except per share amounts)

	2009			2008
ASSETS
Real estate, at cost:
Land	$	1,157,197		$	1,157,885
Buildings and improvements		2,247,767			2,251,025
Total real estate, at cost		3,404,964			3,408,910
Less accumulated depreciation and amortization		(612,622	)		(553,417	)

Net real estate held for investment		2,792,342			2,855,493
Real estate held for sale, net		8,160			6,660
Net real estate		2,800,502			2,862,153
Cash and cash equivalents		20,042			46,815
Accounts receivable, net		9,582			10,624
Goodwill		17,206			17,206
Other assets, net		54,043			57,381

Total assets	$	2,901,375		$	2,994,179

LIABILITIES AND STOCKHOLDERS’ EQUITY
Distributions payable	$	16,901		$	16,793
Accounts payable and accrued expenses		20,708			38,027
Other liabilities		11,357			14,698
Line of credit payable		--			--
Notes payable		1,350,000			1,370,000

Total liabilities		1,398,966			1,439,518

Stockholders’ equity:
Preferred stock and paid in capital, par value $1.00 per share, 20,000,000 shares authorized, 13,900,000 issued and outstanding		337,790			337,790
Common stock and paid in capital, par value $1.00 per share, 200,000,000 shares authorized, 104,286,381 and 104,211,541 shares issued and outstanding as of September 30, 2009 and December 31, 2008, respectively		1,628,239			1,624,622
Distributions in excess of net income		(463,620	)		(407,751	)

Total stockholders’ equity		1,502,409			1,554,661

Total liabilities and stockholders’ equity	$	2,901,375		$	2,994,179

Realty Income Performance vs. Major Stock Indices

					Equity												NASDAQ
	Realty Income				REIT Index ⁽¹⁾				DJIA				S&P 500				Composite
	Dividend		Total		Dividend		Total		Dividend		Total		Dividend		Total		Dividend		Total
	Yield		Return ⁽²⁾		Yield		Return ⁽³⁾		Yield		Return ⁽³⁾		Yield		Return ⁽³⁾		Yield		Return ⁽⁴⁾

1995	8.3	%	42.0	%	7.4	%	15.3	%	2.4	%	36.9	%	2.3	%	37.6	%	0.6	%	39.9	%
1996	7.9	%	15.4	%	6.1	%	35.3	%	2.2	%	28.9	%	2.0	%	23.0	%	0.2	%	22.7	%
1997	7.5	%	14.5	%	5.5	%	20.3	%	1.8	%	24.9	%	1.6	%	33.4	%	0.5	%	21.6	%
1998	8.2	%	5.5	%	7.5	%	(17.5	%)	1.7	%	18.1	%	1.3	%	28.6	%	0.3	%	39.6	%
1999	10.5	%	(8.7	%)	8.7	%	(4.6	%)	1.3	%	27.2	%	1.1	%	21.0	%	0.2	%	85.6	%
2000	8.9	%	31.2	%	7.5	%	26.4	%	1.5	%	(4.7	%)	1.2	%	(9.1	%)	0.3	%	(39.3	%)
2001	7.8	%	27.2	%	7.1	%	13.9	%	1.9	%	(5.5	%)	1.4	%	(11.9	%)	0.3	%	(21.1	%)
2002	6.7	%	26.9	%	7.1	%	3.8	%	2.6	%	(15.0	%)	1.9	%	(22.1	%)	0.5	%	(31.5	%)
2003	6.0	%	21.0	%	5.5	%	37.1	%	2.3	%	28.3	%	1.8	%	28.7	%	0.6	%	50.0	%
2004	5.2	%	32.7	%	4.7	%	31.6	%	2.2	%	5.6	%	1.8	%	10.9	%	0.6	%	8.6	%
2005	6.5	%	(9.2	%)	4.6	%	12.2	%	2.6	%	1.7	%	1.9	%	4.9	%	0.9	%	1.4	%
2006	5.5	%	34.8	%	3.7	%	35.1	%	2.5	%	19.0	%	1.9	%	15.8	%	0.8	%	9.5	%
2007	6.1	%	3.2	%	4.9	%	(15.7	%)	2.7	%	8.8	%	2.1	%	5.5	%	0.8	%	9.8	%
2008	7.3	%	(8.2	%)	7.6	%	(37.7	%)	3.6	%	(31.8	%)	3.2	%	(37.0	%)	1.3	%	(40.5	%)
YTD 3Q 2009	6.7	%	16.3	%	4.0	%	17.0	%	2.8	%	13.4	%	2.0	%	19.3	%	0.8	%	34.6	%

Compounded Average Annual Total Return ⁽⁵⁾			16.7	%			9.1	%			8.6	%			7.6	%			7.1	%

Note: All of these Dividend Yields are calculated as annualized dividend based on last dividend paid in applicable time period divided by closing price as of period end. Dividend Yield sources: NAREIT website and Bloomberg.

⁽¹⁾ FTSE NAREIT US Equity REIT Index, as per NAREIT website.

⁽²⁾ Calculated as closing stock price as of period end plus dividends paid in period divided by closing stock price as of end of previous period. Does not include reinvestment of dividends.

⁽³⁾ Includes reinvestment of dividends. Sources: NAREIT website and Factset.

⁽⁴⁾ Price only index, does not include dividends. Source: Factset.

⁽⁵⁾ All of these Compounded Average Annual Total Return rates are calculated in the same manner: from Realty Income’s NYSE listing on October 18, 1994 through September 30, 2009, and assuming reinvestment of dividends, except for NASDAQ. Past performance does not guarantee future performance. Realty Income presents this data for informational purposes only and makes no representation about its future performance or how it will compare in performance to other indices in the future.

Industry Diversification

The following table sets forth certain information regarding Realty Income’s property portfolio (excluding properties owned by Crest) classified according to the business of the respective tenants, expressed as a percentage of our total rental revenue:

	Percentage of Rental Revenue ⁽¹⁾
	For the Quarter		For the Years Ended
Industries	Ended September 30, 2009		Dec 31, 2008		Dec 31, 2007		Dec 31, 2006		Dec 31, 2005		Dec 31, 2004		Dec 31, 2003
Apparel stores	1.1	%	1.1	%	1.2	%	1.7	%	1.6	%	1.8	%	2.1	%
Automotive collision services	1.1		1.0		1.1		1.3		1.3		1.0		0.3
Automotive parts	1.5		1.6		2.1		2.8		3.4		3.8		4.5
Automotive service	4.7		4.8		5.2		6.9		7.6		7.7		8.3
Automotive tire services	6.8		6.7		7.3		6.1		7.2		7.8		3.1
Book stores	0.2		0.2		0.2		0.2		0.3		0.3		0.4
Business services	*		*		0.1		0.1		0.1		0.1		0.1
Child care	7.6		7.6		8.4		10.3		12.7		14.4		17.8
Consumer electronics	0.7		0.8		0.9		1.1		1.3		2.1		3.0
Convenience stores	17.0		15.8		14.0		16.1		18.7		19.2		13.3
Crafts and novelties	0.3		0.3		0.3		0.4		0.4		0.5		0.6
Distribution and office	1.0		1.0		0.6		--		--		--		--
Drug stores	4.3		4.1		2.7		2.9		2.8		0.1		0.2
Entertainment	1.3		1.2		1.4		1.6		2.1		2.3		2.6
Equipment rental services	0.2		0.2		0.2		0.2		0.4		0.3		0.2
Financial services	0.2		0.2		0.2		0.1		0.1		0.1		--
General merchandise	0.8		0.8		0.7		0.6		0.5		0.4		0.5
Grocery stores	0.7		0.7		0.7		0.7		0.7		0.8		0.4
Health and fitness	6.0		5.6		5.1		4.3		3.7		4.0		3.8
Home furnishings	1.3		2.4		2.6		3.1		3.7		4.1		4.9
Home improvement	1.9		1.9		2.1		3.4		1.1		1.0		1.1
Motor vehicle dealerships	2.7		3.1		3.1		3.4		2.6		0.6		--
Office supplies	1.0		1.0		1.1		1.3		1.5		1.6		1.9
Pet supplies and services	0.9		0.8		0.9		1.1		1.3		1.4		1.7
Private education	0.8		0.8		0.8		0.8		0.8		1.1		1.2
Restaurants	21.2		21.8		21.2		11.9		9.4		9.7		11.8
Shoe stores	--		--		--		--		0.3		0.3		0.9
Sporting goods	2.5		2.3		2.6		2.9		3.4		3.4		3.8
Theaters	9.2		9.0		9.0		9.6		5.2		3.5		4.1
Travel plazas	0.2		0.2		0.2		0.3		0.3		0.4		0.3
Video rental	1.0		1.1		1.7		2.1		2.5		2.8		3.3
Other	1.8		1.9		2.3		2.7		3.0		3.4		3.8
Totals	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%

* Less than 0.1%

⁽¹⁾ Includes rental revenue for all properties owned by Realty Income at the end of each period presented, including revenue from properties reclassified as discontinued operations.

Tenant Diversification

Largest Tenants based on Percentage of Total Portfolio Rental Revenue at September 30, 2009
Hometown Buffet	6.0	%	Boston Market	3.1	%
Kerasotes Showplace Theatres	5.4	%	KinderCare Learning Centers	3.0	%
L.A. Fitness	4.6	%	Couche-Tard/Circle K	3.0	%
The Pantry	4.4	%	NPC International/Pizza Hut	2.6	%
Friendly’s Ice Cream	4.1	%	FreedomRoads/Camping World	2.5	%
Rite Aid	3.5	%	Regal Cinemas	2.2	%
La Petite Academy	3.3	%	Sports Authority	2.0	%
TBC Corporation	3.2	%

Lease Expirations

The following table sets forth certain information regarding Realty Income’s property portfolio (excluding properties owned by Crest) regarding the timing of the lease term expirations (excluding extension options) on our 2,249 net leased, single-tenant retail properties as of September 30, 2009 (dollars in thousands):

	Total Portfolio						Initial Expirations ⁽³⁾					Subsequent Expirations ⁽⁴⁾
Year	Total Number of Leases Expiring ⁽¹⁾		Rental Revenue for the Quarter Ended September 30, 2009 ⁽²⁾		% of Total Rental Revenue		Number of Leases Expiring	Rental Revenue for the Quarter Ended September 30, 2009		% of Total Rental Revenue		Number of Leases Expiring	Rental Revenue for the Quarter Ended September 30, 2009		% of Total Rental Revenue
2009	92		$	2,017	2.6	%	20	$	468	0.6	%	72	$	1,549	2.0	%
2010	97			2,053	2.6		47		1,123	1.4		50		930	1.2
2011	107			3,226	4.1		59		2,119	2.7		48		1,107	1.4
2012	126			2,838	3.6		78		1,936	2.5		48		902	1.1
2013	141			5,100	6.5		98		4,043	5.2		43		1,057	1.3
2014	87			2,951	3.7		50		2,226	2.8		37		725	0.9
2015	114			2,940	3.7		85		2,316	2.9		29		624	0.8
2016	114			2,052	2.6		112		2,007	2.5		2		45	0.1
2017	49			1,833	2.3		40		1,648	2.1		9		185	0.2
2018	42			1,824	2.3		34		1,624	2.1		8		200	0.2
2019	98			4,853	6.1		92		4,483	5.6		6		370	0.5
2020	79			3,180	4.0		74		3,091	3.9		5		89	0.1
2021	177			7,530	9.5		176		7,475	9.4		1		55	0.1
2022	100			2,938	3.7		99		2,889	3.6		1		49	0.1
2023	248			8,079	10.2		246		8,007	10.1		2		72	0.1
2024	60			1,572	2.0		60		1,572	2.0		--		--	--
2025-2043		518		24,141	30.5		507		23,920	30.2		11		221	0.3
Totals	2,249		$	79,127	100.0	%	1,877	$	70,947	89.6	%	372	$	8,180	10.4	%

* Less than 0.1%

⁽¹⁾ Excludes ten multi-tenant properties and 75 vacant unleased properties, one of which is a multi-tenant property. The lease expirations for properties under construction are based on the estimated date of completion of those properties.

⁽²⁾Includes rental revenue of $127 from properties reclassified to discontinued operations and excludes revenue of $2,534 from ten multi-tenant properties and from 75 vacant and unleased properties at September 30, 2009.

⁽³⁾ Represents leases to the initial tenant of the property that are expiring for the first time.

⁽⁴⁾ Represents lease expirations on properties in the portfolio, which have previously been renewed, extended or re-tenanted.

Geographic Diversification

The following table sets forth certain state-by-state information regarding Realty Income’s property portfolio (excluding properties owned by Crest) as of September 30, 2009 (dollars in thousands):

State	Number of Properties	Percent Leased		Approximate Leasable Square Feet	Rental Revenue for the Quarter Ended September 30, 2009 ⁽¹⁾		Percentage of Revenue
Alabama	63	97	%	425,300	$	1,830	2.2	%
Alaska	2	100		128,500		277	0.3
Arizona	79	99		392,700		2,508	3.1
Arkansas	18	89		98,500		377	0.5
California	65	98		1,170,000		4,399	5.4
Colorado	52	98		478,900		1,856	2.3
Connecticut	24	96		276,600		1,183	1.4
Delaware	17	100		33,300		429	0.5
Florida	167	93		1,437,300		6,480	7.9
Georgia	131	98		914,300		3,920	4.8
Idaho	12	100		80,700		331	0.4
Illinois	74	97		877,800		4,207	5.1
Indiana	81	96		686,400		3,251	4.0
Iowa	22	95		296,100		1,011	1.2
Kansas	33	91		573,500		1,171	1.4
Kentucky	22	100		110,600		675	0.8
Louisiana	33	97		190,400		892	1.1
Maine	3	100		22,500		160	0.2
Maryland	28	100		266,600		1,601	2.0
Massachusetts	64	100		575,400		2,579	3.2
Michigan	52	100		257,300		1,276	1.6
Minnesota	21	95		392,100		1,548	1.9
Mississippi	71	96		347,600		1,466	1.8
Missouri	62	95		640,100		2,096	2.6
Montana	2	100		30,000		76	0.1
Nebraska	19	95		196,300		479	0.6
Nevada	15	93		191,000		775	0.9
New Hampshire	14	100		109,900		563	0.7
New Jersey	33	100		261,300		1,931	2.4
New Mexico	8	100		56,400		179	0.2
New York	40	93		502,300		2,339	2.9
North Carolina	96	97		548,300		2,837	3.5
North Dakota	6	100		36,600		57	0.1
Ohio	137	95		852,700		3,350	4.1
Oklahoma	24	100		137,400		585	0.7
Oregon	18	100		297,300		854	1.0
Pennsylvania	98	98		678,400		3,491	4.3
Rhode Island	3	100		11,000		57	0.1
South Carolina	100	100		374,400		2,239	2.7
South Dakota	9	100		24,900		102	0.1
Tennessee	134	97		629,300		2,955	3.6
Texas	212	95		2,280,000		7,843	9.6
Utah	4	100		25,200		91	0.1
Vermont	4	100		12,700		124	0.2
Virginia	104	100		637,100		3,553	4.4
Washington	35	94		230,300		735	0.9
West Virginia	2	100		23,000		121	0.1
Wisconsin	20	90		248,100		784	1.0
Wyoming	1	100		4,200		18	000
Totals/Average	2,334	97	%	19,070,600	$	81,661	100.0	%

* Less than 0.1%

⁽¹⁾ Includes rental revenue for all properties owned by Realty Income at September 30, 2009, including revenue from properties reclassified as discontinued operations of $127.