Realty Income Corporation (NYSE:O) Q4 2014 Earnings Conference Call - Final Transcript

Feb 18, 2015 • 02:30 pm ET


Realty Income Corporation (NYSE:O) Q4 2014 Earnings Conference Call - Final Transcript


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Good day and welcome to the Realty Income Fourth Quarter 2014 Operating Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. Janeen Bedard. Please go ahead, ma'am.

Janeen Bedard

Thank you all for joining us today for Realty Income's fourth quarter 2014 operating results conference call. Discussing our results will be John Case, Chief Executive Officer; Paul Meurer, Chief Financial Officer and Treasurer; and Sumit Roy, Chief Operating Officer and Chief Investment Officer.

During this conference call, we will make certain statements that may be considered to be forward-looking statements under Federal Securities Law. The company's actual future results may differ significantly from the matters discussed in any forward-looking statements. We will disclose in greater detail the factors that may cause such differences in the company's Form 10-K.

I will now turn the call over to our CEO, John Case.

John Case

Thanks, Janeen. Welcome to our call today. We're pleased with our fourth quarter results with AFFO per share increasing by 4.8% to $0.65 and 2014 AFFO per share increasing by 6.6% to $2.57. As announced in yesterday's press release, we are reiterating our 2015 AFFO per share guidance of $2.66 to $2.71, as we continue to anticipate another solid year of earnings growth. Paul will provide you with an overview of our financial results.


Paul Meurer

Thanks, John. So as usual, I will briefly comment on our financial statements and provide some highlights of our financial results for the quarter and the year starting with the income statement. Total revenue increased 14.5% for the quarter and 19.6% for the year. This increase reflects our growth primarily from new acquisitions over the past year, as well as same-store rent growth. Our annualized rental revenue at December 31st was approximately $920 million.

On the expense side, depreciation and amortization expense increased to $96.5 million in the quarter, as depreciation expenses obviously increased with our portfolio growth. Interest expense increased in the quarter to $59.1 million. This increase was primarily due to our two recent bond offerings. The $350 million tenure notes we issued in June and a $250 million 12 year notes issued in September.

On a related note, our coverage ratios both remained strong with interest coverage at 3.8 times and fixed charge coverage at 3.4 times. General and administrative or G&A expenses were approximately $15.6 million for the quarter and $51.1 million for the year. Both were decreases from last year, due to lower acquisition transaction costs, as well as lower stock compensation cost. Overall, our total G&A in 2014 as a percentage of total rental and other revenues represented only 5.7% of revenues. Our projection for G&A expenses in 2015 is approximately $55 million or about 5.5% of revenue.

Property expenses which were not reimbursed by tenants totaled $4.2 million for the quarter and $16.8 million for the year. Our current projection for property expenses that we will be responsible for in 2015 is approximately $20 million. Income taxes consist of income