PowerPoint Presentation

INSTITUTIONAL INVESTOR PRESENTATION

SECOND QUARTER 2019

Contents

Investment Thesis

Company Overview

Performance Track Record

2Q19 Results and Recent Developments

Portfolio Diversification

Defensive Retail Portfolio

Asset

Management & Real Estate Operations

Investment Strategy

Capital

Structure & Scalability

Dependable

Dividends

Corporate Responsibility

Summary

Appendix

Superior Performance During Great Recession

Top Industries Overview

All data as of June 30, 2019 unless otherwise specified

Safe Harbor For Forward-Looking Statements

Statements in this investor presentation 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, domestic and foreign real estate conditions, tenant

financial health, 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, and the outcome of any legal

proceedings to which the company is a party, as described in the company's filings with the

Securities and Exchange Commission. Consequently, 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 investor

presentation. 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.

Investment Thesis

Business model offers attractive total return with minimal cash flow volatility

PROVEN TRACK RECORD OF RETURNS

PREDICTABLE CASH FLOW

POTENTIAL GROWTH OPPORTUNITIES

16.4%

0.4

22 of 23

93.7%

$12 Trillion

$30 Billion

Compound Average Annual Total Return Since

‘94 NYSE Listing

Beta vs. S&P 500

Years with Positive Earnings Per Share

Growth

(1)

Adjusted EBITDAre Margin

Corporate-Owned Real Estate in the US

and Europe

Average Annual Sourced

Acquisition Opportunities Since ‘13

(1)

AFFO / Excludes positive earnings from Crest Net Lease, a subsidiary of Realty Income, as earnings do not reflect recurring business operations

Realty Income Company Overview

S&P 500

REAL ESTATE COMPANY

DIVERSIFIED, HIGH-QUALITY

“NET LEASE” PORTFOLIO

TRACK RECORD OF SAFETY

AND CONSISTENCY

$29B

enterprise value

1 of only 2 REITs

in both categories

Member of S&P High-Yield

Dividend Aristocrats

index

1 of 8 U.S. REITs with

at least two A3/A- ratings

5,951

commercial real

estate properties

83%

of rent generated

from retail

properties

265

commercial tenants

industries

states, Puerto Rico,

and the U.K.

A3 / A-

(1)

AFFO through most recent calendar year/ Excludes earnings from Crest Net Lease, a subsidiary of Realty Income, as earnings do not reflect recurring business operations

16.4%

TSR since 1994

NYSE listing

$1.4B

annualized rental

revenue

years of operating

history

credit ratings by

Moody’s and S&P

22 OF 23

years of positive earnings

per share

(1)

growth

9.4

years weighted

average remaining

lease term

0.4

beta vs. S&P 500

since 1994 NYSE

listing

5.1%

median

earnings per

(1)

growth

49%

of rent from

investment-grade

rated tenants

93.7%

adjusted

EBITDAre

margin

Business model has generated above-market returns with below-market volatility since 1994

Consistent Annual Earnings Growth Since NYSE Listing

Positive earnings growth

(1)

in 22 out of 23 years as a public company

5.1%

6.8%

6.4%

6.0%

1.6%

3.2%

5.4%

5.1%

4.9%

6.0%

9.4%

3.4%

4.4%

-2.1%

0.5%

8.1%

2.5%

17.0%

6.6%

5.1%

6.3%

4.2%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

(1)

AFFO / Excludes positive earnings from Crest Net Lease, a subsidiary of Realty Income, as earnings do not reflect recurring business operations

(2)

FFO / Through 2018 / Includes all REITs currently included in MSCI REIT Index with earnings history since 2000 / Source: SNL

Historical Earnings Growth Rates (Median)

Realty Income

(1)

: 5.1%

Current REITs

(2)

: 3.6%

Compares favorably to REIT

median growth rates:

2008: -5.1%

2009: -6.9%

2010: -8.1%

Low Earnings Volatility Supports Low Share Price Volatility

Since 1994 NYSE listing, “O” annual TSR downside volatility is one of the lowest in the S&P 500

10%

15%

20%

25%

S&P 500

Deciles:

1st Decile 2nd Decile 3rd Decile 4th Decile 5th Decile 6th Decile 7th Decile 8th Decile 9th Decile 10th Decile

Annual Total Shareholder Return Among S&P 500 Companies:

Downside Volatility Since 1994

(1)

Source: Bloomberg

(1)

“Downside volatility” calculated as the standard deviation of annual total shareholder returns where positive values are assigned “0” value

(2)

n=278 S&P 500 constituents with trading histories dating to Realty Income’s 1994 NYSE listing

Realty Income’s TSR Downside Volatility Since 1994

NYSE Listing is 3.0%, the lowest of all S&P 500

constituents

(2)

other than JNJ and ROST

Track Record of Favorable Returns to Shareholders

Since 1994 NYSE listing, Realty Income shares have outperformed benchmark indices

16.4%

10.7%

10.6%

10.0%

9.8%

O Equity REIT Index DJIA Nasdaq S&P 500

Compound Average Annual Total Shareholder Return Since 1994

-10%

-5%

10%

15%

20%

25%

30%

35%

0.00.30.50.81.01.31.51.82.02.3

Total Return CAGR

Beta

Attractive Risk/Reward vs. S&P 500 Companies

Higher returns and lower volatility than majority of S&P 500 companies since 1994 NYSE listing

Realty Income return per

unit of market risk in the

percentile of all S&P

500 companies

(1)

Beta: 0.39

Return: 16.4%

(1)

n=278 / Excludes companies without trading histories dating to 1994 / Beta measured using monthly frequency

Source: Bloomberg

Realty Income return

per unit of market

risk is in the 98

percentile of all S&P

500 companies

(1):

Return: 16.4%

Beta: 0.37

JNJ

WMT

XOM

AAPL

DIS

REITs

MSFT

UNH

S&P 500

JPM

BAC

10%

15%

20%

25%

0.00.20.40.60.81.01.21.4

Attractive Risk/Reward vs. Blue Chip S&P 500 Equities

Excludes companies without trading histories since 10/18/1994 | Constituents plotted include S&P 500 and FTSE NAREIT US Equity REIT Index |

Beta measured using monthly frequency

Source: Bloomberg

Historically, more return per unit of risk vs. the 10 largest S&P 500 constituents and S&P 500 REITs

PSA

ESS

WELL

FRT

SPG

AVB

VTR

EQR

HCP

REG

VNO

AIV

KIM

MAC

HST

UDR

MAA

10%

15%

20%

0.00.20.40.60.81.01.21.4

Beta

Average Annual Total Shareholder Return

Top 10 largest S&P 500 constituents

S&P 500 REIT Peers

✓ Annual same-store rent growth run rate of ~1.0%

✓ Long lease terms limit annual volatility

1.5%

1.1%

1.3%

1.8%

1.5%

1.4%1.4%

1.7%

1.4%

1.5%

1.1%

1.3%1.3%

1.4%

1.1%

0.9%

1.6%

0.4%

1.0%1.0%1.0%1.0%1.0%

0.8%

1.5%

1.4%

Consistency: Steady Portfolio, Solid Fundamentals

Focus on quality underwriting and real estate supports predictable cash flow generation

Consistent Occupancy Levels, Never Below 96%

Steady Same-Store Rent Growth

Careful underwriting at acquisition

Solid retail store performance

Strong underlying real estate quality

Healthy tenant industries

Prudent disposition activity

Proactive management of rollovers

Tenets of Consistency:

Snapshot vs. S&P 500 REIT Peers

Tenets of Consistency:

Superior stability: Favorable occupancy, dividend growth, credit rating and total return metrics

98.3%

96.6%

93.7%

91.2%

Historical Median Lowest Year-End

Portfolio Occupancy

O S&P 500 REIT Median

4.6%

2.9%

% of Years w/ Negative

Growth

Dividend CAGR

Dividend Growth

(1)

O S&P 500 REIT Median

100%

200%

300%

400%

500%

0 10 20 30

Avg. Credit Rating (S&P/Moody’s)

BBB- / Baa3

BBB / Baa2

BBB+ / Baa1

A- / A3

A / A2

●

S&P 500 REIT Peer

# of Years with TSR < -10%

(1)

S&P 500 REIT Peer

●

Sources: SNL, Bloomberg | Excludes specialty REITs (i.e. infrastructure, timber, information services)

(1)

Since 1995. Excludes REITs with fewer years of history than Realty Income

RECENT DEVELOPMENTS

Our Approach and 2Q19 Results

Acquire well-located commercial properties

✓ ~$1.1 billion in acquisitions

Remain disciplined in our acquisition underwriting

✓ Acquired ~6% of sourced volume

Execute long-term net lease agreements

✓ Recaptured 100.4% of expiring rent

Actively manage portfolio to maximize value

✓ Ended quarter at 98.3% occupancy

Maintain a conservative balance sheet

✓ Ended quarter with Net Debt/Adjusted EBITDAre ratio of 5.4x

Grow per share earnings and dividends

✓ AFFO/sh growth: +2.5% | Dividend/sh growth: +2.9%

International Expansion (May 2019 Closing)

Estimated size of the commercial real estate market in

Europe is ~$11 trillion, with $30-$35 billion of annual

single-tenant transaction volume in our core verticals

Expanding to Europe is a natural extension of Realty

Income’s business model, with a focus on long-term triple

net leases with annual growth

We intend to establish an office in London, and to

judiciously grow our portfolio in Europe over time as we

have done in the US

First International Transaction: Sainsbury’s SLB

✓ AFFO accretion

(2)

: $0.04/sh | Base-case USD IRR

(3)

: 6.6%

Realty Income will expand to international markets starting with strategic sale-leaseback with Sainsbury’s

£429 Million Sale-Leaseback

with Sainsbury’s

(1)

We believe there is demand from high quality tenants in

Europe for sale-leaseback capital on reasonable terms

Realty Income is well-positioned to build an international

platform leveraging its scale, size, and sector-leading cost

of capital

(1)

Excluding acquisition transaction costs of approximately £4.9 million

(2)

Annualized leverage-neutral AFFO accretion

(3)

Unlevered IRR. Key assumptions: contractual annual fixed rent increases, residual value at 100% of purchase price

Structured to preserve simplicity of

business model, predictability of cash flow

stream, and quality of real estate portfolio

Europe Presents Compelling Market Opportunity

Realty Income’s portable business model, cost of capital and scalability represent core competitive advantages

(1)

Property owned for the primary purpose of benefitting from investment returns, as distinct from owner-occupied and non-investment leased real estate

(2)

Includes owner-occupied and non-investment leased real estate

Sources: CBRE, MSCI, Bloomberg, Realty Income estimates

US vs. Europe Comparison: Estimated Commercial Real Estate Market Value

CRE owned by Real Estate

Companies

(1)

All Other Commercial

Real Estate

(2)

Total Investable Commercial

Real Estate

$4 Trillion $4 Trillion $8 Trillion

Europe

$3 Trillion $8 Trillion $11 Trillion

US + Europe

$7 Trillion $12 Trillion $19 Trillion

~ Ripe for sale-leaseback consolidation: We estimate $11 trillion of commercial real estate stock in the

European market, only $3 trillion of which is owned by professional real estate firms

~ Additive to Realty Income’s addressable market: We estimate that corporate-owned commercial real

estate stock is 2x greater in Europe than in the US, representing a void for a well-capitalized, sizable and

scalable institutional investor like Realty Income to fill

Median EBITDA Multiple Comparisons

• Similar to the US, public companies in Europe can

unlock trapped RE value through sale-leasebacks

• We expect market-ascribed valuation differentials

between real estate and operating businesses to

benefit us

• We estimate annualized single-tenant real estate

transaction volume in Europe to be between $30 and

$35 billion in our target verticals

16.7x

14.6x

11.1x

6.4x

6.3x

Illustrative SLB

Multiple

(at 6% cap

rate)

Europe Ex-UK

Real Estate

Companies

(~700)

UK-Domiciled

Real Estate

Companies

(~90)

UK-Domiciled

Operating

Companies

(~1,500)

Europe Ex-UK

Companies

(~3,700)

56.1

76.6

80.7

72.7

31.8

33.0

47.1

44.7

43.8

71.6

82.9

94.6

67.9

85.9

81.3

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Estimated UK Commercial Real Estate Annual Investment Volume

(1)

USD in billions

(2)

Average = 64.7

UK is a Highly Liquid And Logical CRE Market For Our Initial Entry to Europe

Historically, ~$65 billion of CRE has traded on an annual basis in the United Kingdom

Global

Financial

Crisis

Post-Brexit

Referendum

(1)

Property types include office, shopping centers, retail, industrial, leisure and alternative / mixed

(2)

GBP/USD spot rate as of 4/19/19

Source: Savills, CBRE, MSCI, Realty Income estimates

Investment volumes

have held steady post-

Brexit referendum

despite political and

economic uncertainty

Incumbent competition is modest:

Enterprise value of the public REIT market in the UK estimated to be approximately $115 billion -- roughly the

size of the publicly traded net lease REIT universe in the US

Of the $81 billion of

CRE transaction volume

in 2018, we estimate

$6 - $8 billion of single-

tenant volume in our

core verticals

Sainsbury’s Sale-Leaseback Highlights

Accretive transaction establishes international growth platform with leading UK grocer

£429

million

Transaction size

(1)

5.3%

GBP 1

-year cash

cap rate

5.8%

USD-equivalent

-year cap

rate

(2)

>200 bps

Effective 1

-year

spread to

leverage-neutral

nominal WACC

Assets acquired

6.6%

Base-case

unlevered USD

IRR

~15 years

Weighted-average

lease term

$0.04 per

Annualized

leverage-neutral

AFFO accretion

(1)

Excluding acquisition transaction costs of approximately £4.9 million | Transaction closed on 5/23/2019

(2)

Reflects effective 1

-year USD cap rate net of annual cash flow FX hedge

Sainsbury’s Sale-Leaseback: Investment Rationale

Realty Income’s first international acquisition represents natural evolution and execution of strategy

Congruent with

existing investment

criteria

Accretive returns,

minimal FX risk

UK is an attractive

market with sizable

opportunity for

strategic growth

~ Tenant operates in defensive, non-discretionary industry

~ “Blue Chip” grocery operator with seasoned and highly-regarded management team

~ Proven strength through multiple economic cycles

~ ~15-year triple-net leases, attractive rent growth

~ Annualized AFFO accretion of ~$0.04/sh from Sainsbury’s transaction

~ Base-case 15-year unlevered USD IRR of 6.6% is attractive given tenant, asset quality

~ ~85% of FX risk on GBP cash flows to be hedged for 15 years through currency swap

~ Limited retail real estate supply per capita, healthy market fundamentals

~ Void of large-scale, pure-play net lease institutional competition

~ Significant demand for expansion capital from UK operators

~ Estimated >$1 trillion potential sale-leaseback market opportunity

Realty Income’s sector-leading cost of capital, size and scale are competitive advantages portable to the UK

PORTFOLIO DIVERSIFICATION

Portfolio Diversification: Tenant

Diverse tenant roster, investment grade concentration reduces overall portfolio risk

Orange represents investment grade tenants that are defined as tenants with a credit rating of Baa3/BBB- or higher from one of the three major rating agencies (Moody’s/S&P/Fitch).

49% of our annualized rental revenue is generated from properties leased to investment grade tenants, including approximately 8% from properties leased to subsidiaries of

investment grade companies.

TOP 20

TENANTS REPRESENT

54.5%

Of annualized rental revenue

Different

industries

Investment grade

rated tenants

5.8%

5.2%

4.5%

3.8%

3.5%

3.2%

3.1%

2.8%

2.3%

2.2%

2.0%

1.9%

1.8%

1.7%

1.5%

1.4%

1.3%

Service-Oriented

Non-Discretionary

N/A (Non-Retail Exposure

Portfolio Diversification: Industry

Exposure to 49 industries enhances predictability of cash flow (See Appendix for Industry Theses)

Exposure to defensive industries:

96% of total portfolio rent is protected against retail e-commerce threats and economic downturns

Non-Discretionary

Service-Oriented

Non-Discretionary, Low Price Point

Low Price Point

❶Convenience Stores: 11.9%

Service-oriented

❷ Drug Stores: 9.3%

Non-discretionary

❹ Dollar Stores : 7.2%

Non-discretionary, Low price point

❸ Health & Fitness: 7.5%

Non-discretionary, Service-oriented

❺Quick-Service Restaurants: 6.2%

Low price point, Service-oriented

❻ Theaters: 6.0%

Low price point, Service-oriented

❼ Grocery: 5.8%

(1)

Non-discretionary

79% of Total Rent:

Retail with at least one of the

following components:

Non-Discretionary

(Low cash flow volatility)

Low Price-Point

(Counter-cyclical)

Service-Oriented

(E-commerce resilient)

17%

Non-retail

(E-commerce resilient)

4% Other

(1)

Includes grocery stores in the U.S. and the U.K., which represent 5.0% and 0.8% of rental revenue for the quarter ended 6/30/2019, respectively

Portfolio Diversification: Property Type

Core exposure in retail and industrial single-tenant freestanding net lease properties

RETAIL (82.5%)

Number of Properties: 5,777

Average Leasable Square Feet: 11,800

Percentage of Rental Revenue

from Investment Grade Tenants: 44.4%

OFFICE (3.8%)

Number of Properties: 42

Average Leasable Square Feet: 73,900

Percentage of Rental Revenue

from Investment Grade Tenants: 86.1%

INDUSTRIAL (11.8%)

Number of Properties: 117

Average Leasable Square Feet: 229,000

Percentage of Rental Revenue

from Investment Grade Tenants: 79.4%

AGRICULTURE (1.9%)

Number of Properties: 15

Average Leasable Square Feet: 12,300

Percentage of Rental Revenue

from Investment Grade Tenants: -

Portfolio Diversification: Geography

Balanced presence in 49 states, Puerto Rico and the United Kingdom

2.1

1.6

2.0

3.0

1.3

2.5

1.6

1.5 1.7

4.0

2.3

3.0

3.2

2.3

2.2

2.7

1.4

3.2

2.9

Puerto Rico <1

1.0

1.7

1.5

8.9

11.2

6.2

5.2

4.5

5.5

Texas 11.2%

California 8.9%

Illinois 6.2%

Florida 5.5%

Ohio 5.2%

New York 4.5%

Top 6 States

% of Rental Revenue

Figures represents percentage of rental revenue

United Kingdom <1

DEFENSIVE RETAIL PORTFOLIO

Low Price Point

Service / Experiential

Top 20 Tenants Highly Insulated from Changing Consumer Behavior

All top 20 tenants fall into at least one category (Service, Non-Discretionary, Low Price Point Retail or Non-Retail)

Non-Retail

Walmart represented by Neighborhood Markets and Sam’s Club

Non-Discretionary

Total % of Rent - Top 15 Tenants 47.0%

Investment Grade % - Top 15 Tenants 29.2%

#1 Industry – Convenience Stores 11.9%

#2 Industry – Drug Stores 9.3%

Total % of Rent - Top 15 Tenants 53.0%

Investment Grade % - Top 15 Tenants 3.2%

#1 Industry – Restaurants 21.3%

#2 Industry – Convenience Stores 17.0%

Top Tenant Exposure: 2009 vs. Today

Less cyclicality and superior credit and diversification vs. prior downturn

TOP 15 TENANTS AS OF YE 2009 TOP 15 TENANTS AS OF 2Q 2019

Tenant Industry % of Rent

Hometown Buffet Casual Dining 6.0%

Kerasotes Showplace

Theatres

Theatres 5.3%

L.A. Fitness Health & Fitness 5.3%

The Pantry Convenience Stores 4.3%

Friendly’s Casual Dining 4.1%

Rite Aid Drug Stores 3.4%

La Petite Academy Child Care 3.3%

TBC Corporation Auto Tire Services 3.2%

Boston Market QSR 3.1%

Couche-Tard / Circle K Convenience Stores 3.0%

NPC / Pizza Hut QSR 2.6%

FreedomRoads / Camping

World

Sporting Goods 2.6%

KinderCare Child Care 2.5%

Regal Cinemas Theatres 2.3%

Sports Authority Sporting Goods 2.0%

Tenant Industry % of Rent

Walgreens Drug Stores 5.8%

7-Eleven Convenience Stores 5.2%

FedEx (Non-Retail) Transportation 4.5%

Dollar General Dollar Stores 3.8%

LA Fitness Health & Fitness 3.5%

Dollar Tree / Family Dollar Dollar Stores 3.2%

Regal Cinemas Theaters 3.2%

AMC Theaters Theaters 3.1%

Walmart / Sam’s Club Grocery / Wholesale 2.8%

Life Time Fitness Health & Fitness 2.3%

Circle K / Couche-Tard Convenience Stores 2.2%

Sainsbury’s Grocery 2.0%

BJ’s Wholesale Clubs Wholesale Clubs 1.9%

Treasury Wine Estates

(Non-Retail)

Beverages 1.8%

CVS Pharmacy Drug Stores 1.7%

Bold tenants represent investment-grade rated credit

Differentiated Business Model from “Traditional” Retail REITs

Lease structure and growth drivers support predictable revenue stream relative to other forms of retail real estate

Initial

Length of Lease

15+ Years < 10 Years

Remaining Avg Term

~ 10 Years ~ 5-7 Years

Responsibility

for Property Expenses

Tenant Landlord

Gross Margin

> 98% ~ 75%

Volatility of Rental Revenue

Low Modest / High

Maintenance Capital Expenditures

Low Modest / High

Reliance on Anchor Tenant(s)

None High

Average Retail

Property Size / Fungibility

12k sf / High 150k–850k sf / Low

Target Markets

Many Few

External

Acquisition Opportunities

High Low

Institutional

Buyer Competition

Modest High

Ample external growth opportunities

Unique “net lease” structure drives lower cash flow volatility

Shopping Centers

and Malls

Shopping Centers

and Malls

Realty Income Not Materially Impacted by Recent Retailer Bankruptcies

Retail Industry

# of BK

Retailer Bankruptcy

Realty

Income

Exposure

Apparel

Gymboree| Vanity Shop| Papaya Clothing| Alfredo Angelo| Styles for

Diesel USA | Dressbarn

Specialty

Beauty Brands | Innovative Mattress Solutions | Things Remembered|

Z Gallerie | Charming Charlie

< 1%

Shoe Stores

Aerosoles | Charlotte Olympia | The Walking Company |

Nine West | Rockport | Payless ShoeSource | LK Bennett

< 1%

General Merchandise

Gordmans | Bon-Ton | Sears | Shopko | Fallas

< 1%

Sporting Goods

Eastern Outfitters / Bob’s Stores| Gander Mountain| MC Sports|

Remington Outdoor | Advanced Sports

< 1%

Grocery

Tops Market | Marsh Supermarkets | Southeastern Grocers | Seasons

< 1%

Restaurants

Macaroni Grill | Bertucci’s | RMH Franchise (Applebee’s) |

Taco Bueno | Kona Grill | RUI Holdings

Jewelry / Accessories

Charming Charlie| Claire’s | Samuels Jewelers

Consumer Electronics

RadioShack | hhgregg

Toy Stores

Toys ‘R’ Us

Total Realty Income Exposure (% of Rent) :

< 1%

48 of 59 U.S. retailer bankruptcies since 2017 associated with companies lacking a

non-discretionary, low price point, and / or service-oriented component to their business

Red retailers represent businesses lacking either a non-discretionary, low price point, and / or service-oriented component

ASSET MANAGEMENT &

REAL ESTATE OPERATIONS

Active Real Estate Management: Re-leasing Experience

Since 1996, Realty Income has achieved 100.3% recapture of prior rent on re-leasing activity

Recapture vs. Prior Rent: (All Re-Leasing Activity)

102.2%

95.6%

95.9%

2013 - Present

2006 - 2012

1996 - 2005

3,077

Lease Expirations since 1996

2,672

Re-Leased at 100.3% rent recapture

(1)

405

Sold and proceeds reinvested into higher

quality assets

(1)

Reflects cash rent recapture inclusive of tenant improvement spend (immaterial)

Actively-Managed Real Estate Portfolio

Proven track record of value creation, cash flow preservation and risk mitigation

✓ Largest department in the company

✓ Distinct management verticals

✓ Retail

✓ Non-Retail

✓ Leasing & dispositions

✓ Maximizing value of real estate

✓ Strategic and opportunistic

dispositions

✓ Value-creating development

✓ Risk mitigation

Healthy Leasing Results

6.9%

7.6%

7.3%

7.1%

11.5%

8.6%

11.6%

12.1%

8.5%

9.9%

8.1%

6.8%

2014 2015 2016 2017 2018 YTD 2019

Cap Rate on Occupied Dispositions

Unlevered IRR on All Dispositions

94.3%

% Re-leased to Existing Tenants

% Re-leased to New Tenants

Blended rent recapture

rate of 102.2% on

expired leases

YTD 2019

Renewal / New Lease Split

Favorable Returns on Dispositions

Asset Management &

Real Estate Operations

INVESTMENT STRATEGY

Investment Strategy: Key Considerations

Cost of capital advantage, size, track record represent competitive advantage

COMPETITIVE ADVANTAGES VS. NET LEASE PEERS

Supports investment selectivity

Drives faster earnings growth

(wider margins)

Critical in industry reliant on

external growth

Ability to buy “wholesale” (at a discount)

without creating tenant concentration

issues

Access to liquidity ($3 billion revolver)

Relationships developed since 1969

SIZE AND TRACK RECORDLOWEST COST OF CAPITAL

Investment Strategy: Aim to Exceed Long-Term WACC

WACC viewpoint balances near-term earnings per share growth with long-term value accretion

Cost of capital information uses illustrative assumptions only (as of 7/29/2019)

(1)

7% FCF weight assumes current acquisition guidance ($2.25 billion)

Long-term Weighted Average Cost of Capital

“Nominal” 1

-Year Weighted Average Cost of Capital

• Drives investment decision-

making at the property level

• Considers required

“growth” component of

equity returns

• Long-term WACC is the

hurdle rate (no spread

required) for acquisitions

• Focus on higher long-term

IRR discourages risk-taking

• Used to measure initial

(year one) earnings

accretion

• Higher stock price (lower

cost) supports faster growth

• Spread on short-term WACC

required to generate

accretion

• Unwilling to sacrifice quality

to generate wider spreads

Key Assumptions & Calculation – Nominal 1

-Year WACC

58% Equity: AFFO Yield (Midpoint of 2019 guidance) 4.7%

7% Free Cash Flow

(1)

: Free cash flow reinvested 0%

35% Debt: 10-year, fixed-rate unsecured 3.1%

Nominal 1

-Year WACC 3.8%

Key Assumptions & Calculation – Long-Term Cost of Equity

Historical Beta (vs. S&P 500) 0.37

Assumed long-term 10-year U.S. yield 4.0%

Equity market risk premium 4.7%

Long-Term Cost of Equity (CAPM methodology) 5.7%

Dividend yield 3.9%

Compound average annual dividend growth since 1994 listing 4.6%

Long-Term Cost of Equity (Yield + Growth methodology) 8.5%

Long-Term Cost of Equity (Average of two methodologies) 7.1%

Key Assumptions & Calculation – Long-Term WACC

65% Weight: Long-Term cost of equity 7.1%

35% Weight: Cost of debt (10-year, fixed-rate unsecured) 3.1%

Long-Term WACC 5.7%

LOW NOMINAL WACC LONG-TERM WACC

supports ability to spread invest

with high-quality acquisitions

considers growth requirements

of equity and supports focus on

residual value of acquisitions

1.5%

1.8%

2.0%

2.3%

2.6%

2.9%

3.1%

3.4%

3.7%

4.0%

4.2%

4.5%

4.8%

5.1%

0 bps

25 bps

50 bps

75 bps

100 bps

125 bps

150 bps

175 bps

200 bps

225 bps

250 bps

275 bps

300 bps

325 bps

Annualized AFFO/sh Growth

Investment Spread vs. Nominal 1

-Year WACC

Lower

cost of

capital

Wider

spreads

Higher

growth

rate

Higher

stock

price

Investment Strategy: Benefits of Low Cost of Capital

Low cost of capital is the most important competitive advantage in the net lease industry

Assumptions and Footnotes:

1) Assumes $2.25 billion in acquisition volume

2) Assumes ratable timing of acquisitions over next 12 months

3) Growth based on TTM AFFO/sh ($3.24/sh)

4) Growth rates include organic same-store rent growth of ~1.0% (unlevered)

Cost of capital information uses illustrative assumptions only

Reduces need to pursue lower-

quality, higher-yielding investments

to generate growth

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

8.0%

4.00%

4.25%

4.50%

4.75%

5.00%

5.25%

5.50%

5.75%

6.00%

6.25%

Acquisition Cap Rate to Achieve 150 bps Spreads

Nominal 1

-Year WACC

Lower cost of capital allows Realty

Income to invest in higher quality

opportunities to derive the same spread

“High Quality” Investment Characteristics (lower cap rates):

• At or below-market rents

• Strong credit / proven sponsors & tenants

• Above-average rent coverage

• Flexible alternative use

• Long lease terms

• Stable industries

Investment Strategy: Utilizing Low Cost of Capital Advantage

Low cost of capital allows Realty Income to acquire the highest quality assets in the net lease industry

Cost of capital information uses illustrative assumptions only

“High Yield” Investment Characteristics (higher cap rates):

• Above-market rents / financially-engineered cap rates

• Poor credit or limited credit availability and track record

• Thin industry-specific rent coverage

• Poor real estate (low residual value)

• Short lease terms

• Volatile industries

Higher cost of capital forces

companies to invest in riskier

investment opportunities to

derive 150 bps of spread

Investment Strategy: The Importance of Market Rents

Realty Income avoids lease structures with above-market rents, which can inflate initial cap rates

Illustrative Sale-Leaseback Example

Assumptions

Annual EBITDAR (000s) $8,500 Replacement cost (psf) $200

Total square footage (000s) 175 Market rent (psf) $15

Assuming identical real estate portfolio, consider two different lease structure scenarios….

Buyer and Seller Motivations:

Higher Risk & Cap Rate Lower Risk & Cap Rate

1. Maximize proceeds for seller 1. Maximize EBITDAR rent coverage

2. Maximize cap rate for buyer 2. Match purchase price w/ replacement cost

Implied Sale Price (000s)

$42,000 $35,000

Implied Cap Rate

7.5% 6.5%

Implied Rent (000s)

$3,150 $2,267

Implied Rent (psf)

$18.00 $12.95

Premium/(Discount) to Market Rent

20% (14%)

Implied EBITDAR rent coverage

2.7x 3.75x

Implied premium to replacement cost

20% 0%

Lower cap rates often imply:

✓ Lower purchase price

✓ Lower risk

✓ Higher residual value

✓ Higher IRR

• Above-market rents

• Lower rent coverage

• Lower residual value

• Higher default risk

• Lower long-

term IRR

• Below-market rents

• Higher rent coverage

• Higher residual value

• Lower default risk

• Higher long-

term IRR

Results

$13.9 billion

in property-level acquisition volume

$6.2 billion

in non-investment grade

retail acquisitions

85%

of volume associated with

retail properties

52%

of volume leased to

Investment grade tenants

Investment Strategy: Disciplined Execution

Consistent, selective underwriting philosophy on strong sourced volume

2010 2011 2012

2013

(Ex

ARCT)

2014 2015 2016 2017 2018

YTD

2019

Investment Volume

$714 mil $1.02 bil $1.16 bil $1.51 bil $1.40 bil $1.26 bil $1.86 bil $1.52 bil $1.80 bil $1.61 bil

# of Properties

186 164 423 459 507 286 505 303 764 199

Initial Avg. Cap Rate

7.9% 7.8% 7.2% 7.1% 7.1% 6.6% 6.3% 6.4% 6.4% 6.3%

Initial Avg. Lease Term

(yrs)

15.7 13.4 14.6 14.0 12.8 16.5 14.7 14.4 14.8 15.6

% Investment Grade

46% 40% 64% 65% 66% 46% 64% 48% 59% 18%

% Retail

57% 60% 78% 84% 86% 87% 86% 95% 96% 99%

Sourced Volume

$6 bil $13 bil $17 bil $39 bil $24 bil $32 bil $28 bil $30 bil $32 bil $31 bil

Selectivity

12% 8% 7% 4% 6% 4% 7% 5% 6% 5%

Relationship Driven

76% 96% 78% 66% 86% 94% 81% 88% 89% 89%

Key Metrics Since 2010 (Excluding $3.2 billion ARCT transaction):

Low selectivity metrics reflect robust opportunity set, disciplined investment

parameters, and cost of capital advantage

CAPITAL STRUCTURE &

SCALABILITY

21%

Common Stock,

76%

Debt, 24%

Unsecured Notes

Unsecured Term Loans

Mortgages

Revolving Credit Facility

Market Cap:

$22.0 billion

Debt: $7.1 billion

Unsecured Notes/Bonds: $6.3 billion

Unsecured Term Loans: $500 million

Mortgages: $296 million

Revolving Credit Facility: $8 million

Conservative Capital Structure

Modest leverage, low cost of capital, ample liquidity provides financial flexibility

Unsecured Debt Ratings: Moody’s A3 | S&P A- | Fitch BBB+

Numbers may not foot due to rounding

Total Enterprise Value: $29.1 billion

$18

$332

$317

$1,060

$765

$600

$502

$650

$600

$550

$1,709

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029+

Unsecured Notes Mortgages Revolver Term Loan GBP Denominated Notes

8.1 Years

Weighted Average Years

Until Maturity

3.9%

Weighted Average

Interest Rate

(1)

Debt Profile

Well-Laddered Debt Maturity Schedule

Limited re-financing and variable interest rate risk throughout debt maturity schedule

All amounts are in millions unless stated otherwise

(1)

Weighted average interest rates reflect variable-to-fixed interest rate swaps on term loans and revolver interest rate as of 6/30/2019

(2)

GBP denominated private placement of ₤315 million, which approximates $399.9 million using relevant conversion rate at quarter end

Unsecured

Secured

Fixed Rate

Variable

Rate

Revolver

Availability

Revolver

Balance

96%

Unsecured

99.7%

Fixed

~$3B

Available on

Revolver

₤

(2)

Scalability as a Competitive Advantage

Leaders in the net lease industry in efficiency and ability to buy in bulk

5.8%

4.9%

G&A as % of Rental Revenue

(1)

2018 G&A excludes $18.7 million severance to former CEO paid in 4Q18 | percentage of rental revenue calculation excludes tenant reimbursements

64 bps

39 bps

G&A as % of Gross RE Book Value (bps)

92.4%

93.7%

Adjusted EBITDAre Margin

Larger Size Drives Superior Overhead Efficiency

Larger Size Provides Growth Optionality

$100 $200 $300 $400 $500 $1,000

$200

3% 6% 9% 12% 14% 25%

$400

2% 3% 5% 6% 8% 14%

$600

1% 2% 3% 4% 5% 10%

$800

1% 2% 2% 3% 4% 8%

$1,000

1% 1% 2% 3% 3% 6%

$1,400

1% 1% 2% 2% 2% 5%

Transaction Size & Impact

(2)

to Rent Concentration

Current

Rent

Size allows Realty Income to pursue large sale-

leaseback transactions without compromising prudent

tenant and industry diversification metrics

(2)

Assumes 6.5% cap rate

in millions

Current Net Lease Peer Median: 9.0%

Current Net Lease Peer Median: 87.7%

Current Net Lease Peer Median: 77 bps

DEPENDABLE DIVIDENDS

Dependable Dividends That Grow Over Time

Steady dividend track record supported by inherently stable business model, disciplined execution

$0.90

$0.91

$0.93

$0.95

$0.98

$1.04

$1.09

$1.12

$1.15

$1.18

$1.24

$1.35

$1.44

$1.56

$1.66

$1.71

$1.72

$1.74

$1.77

$2.15

$2.19

$2.27

$2.39

$2.53

$2.65

$2.72

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

YTD

Strong Dividend Track Record

consecutive quarterly increases

102

total increases since 1994 NYSE listing

82%

AFFO payout (based on midpoint of 2019 AFFO guidance)

4.6%

compound average annualized growth rate since NYSE listing

One of only

five REITs included in S&P High Yield Dividend Aristocrats

index

Data is as of July 2019 dividend declaration (annualized)

CORPORATE RESPONSIBILITY

VALUES

Environmental

Responsibility

Social

Responsibility

Corporate

Governance

• We remain committed to sustainable

business practices in our day-to-day

activities by encouraging a culture of

environmental responsibility by regularly

engaging our employees and our local

community

• As a leader in the net lease sector, we work

with our tenants to promote environmental

responsibility at the properties we own

• HQ energy efficiency, waste

diversion, and water efficiency

programs

• Tenant engagement with top 20

tenants (over 50% of revenue) to

discuss sustainable operations

• Internal “Green Team" led

sustainability initiatives and

education to engage employees

and community

• We are committed to providing a positive

and engaging work environment for our

team members, with best-in-class training,

development, and opportunities for growth

• Dedication to employee well-being and

satisfaction

• We believe that giving back to our

community is an extension of our mission to

improve the lives of our shareholders, our

employees, and their families

• Comprehensive employee

health and retirement benefits

• Employee engagement and

“O”verall wellbeing programs

• “Dollars for Doers” and

employee matching gift

program

• Dedicated San Diego Habitat

for Humanity volunteer day

• We believe nothing is more important than a

company’s reputation for integrity and

serving as a responsible fiduciary for its

shareholders

• We are committed to managing the

company for the benefit of our shareholders

and are focused on maintaining good

corporate governance

• Shareholder Engagement

• Board refreshment process

focusing on diversity and

expertise

• Board oversight of

environmental, social, and

governance matters

• Enterprise Risk Management

Overview

Focus

Corporate Responsibility

Realty Income strives to lead the net lease industry in Environmental, Social, and Governance initiatives

To learn more, visit https://www.realtyincome.com/corporate-responsibility

Summary

˃ Long term-focused business strategy

˃ Diversified and actively managed portfolio

˃ Proven and disciplined relationship-driven acquisition strategy

˃ Conservative capital structure able to withstand economic volatility

˃ Precedent of outperforming S&P 500 and REITs since 1994 listing

˃ Attractive risk/reward vs. other REITs and blue chip equities

˃ Dependable monthly dividends with long track record of growth

APPENDIX

SUPERIOR PERFORMANCE

DURING GREAT RECESSION

14.7%

-28.3%

2007-2009 Total Return

Superior Earnings Growth and TSR During Great Recession

1 of 2 S&P 500 REITs with positive earnings growth, dividend growth, and TSR during Great Recession

9.0%

-20.6%

2007-2009 Dividend Growth

Realty Income S&P 500 REITs

2.1%

-2.3%

2007-2009 Earnings CAGR

(1)

FFO/sh or operating FFO/sh (if available) used as proxy for earnings growth

(2)

Median of S&P 500 REITs, excludes non-property REITs AMT, CCI, WY, EQIX, IRM, PCL

All data is for the period between 1/1/2007 and 12/31/2009

Source: Bloomberg, SNL

(2)

1 of only 11 S&P 500 REITs with

positive earnings growth

1 of only 9 S&P 500 REITs without a

dividend cut

1 of only 5 S&P 500 REITs with

positive total shareholder return

-45%

-30%

-15%

15%

30%

45%

Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09

Historical Premium / (Discount) to NAV

Realty Income S&P 500 REITs

NAV Premium Persisted Through Great Recession

Cost of capital advantage (measured by premium to NAV) remained stable during recession

(1)

Median premium / (discount) of S&P 500 REITs, excludes non-property REITs AMT, CCI, WY, EQIX, IRM, PCL

Source: SNL

Realty Income’s median NAV premium was 10% during the downturn

(1 of only 6 S&P 500 REITs trading at a premium to NAV during this time period)

(1)

5.7x

5.2x

3.1x

0.7x

S&P 500 REIT

Median

Realty Income

Leverage

(1)

Ratio Range (2007-2009)

Min Leverage Spread

Stable Leverage and Coverage Ratios During Downturn

Lower credit metric volatility during Great Recession relative to other blue-chip REITs

5.9x

8.8x

Max Leverage

(1)

Calculated using year-end debt and preferred equity for leverage, and annual EBITDA

(2)

Median of maximum and minimum ratios of S&P 500 REITs, excludes non-property REITs AMT, CCI, WY, EQIX, IRM, PCL

Source: SNL

(2)

2.2x

2.5x

0.9x

0.5x

S&P 500 REIT

Median

Realty Income

Fixed Charge Coverage Ratio Range (2007-2009)

Min FCCR Spread

Max FCCR

(2)

3.0x

3.1x

Tighter metric

ranges reflect:

1) Inherently stable net

lease business model

2) Disciplined capital

allocation

3) Responsible balance

sheet management

Superior Relative Volatility Metrics vs. A-Rated REITs During Recession

2007 – 2009 relative rankings

0.3%

0.3% 0.4%

7.4%

0.1x 0%

0.2%

0.7%

3.1%

3.7%

4.0%

4.2%

9.7%

0.5%

1.1%

1.4%

1.7%

9.4%

0.6%

3.8%

4.3%

5.7%

9.7%

31.9%

0.8%

1.3%

2.0%

2.2%

20.3%

0.3x

0.5x

2.2x

1.5x

2.2x

3.3x

2.2%

2.0%

1.2%

1.5%

2.8%

4.9%

0.3%

0.7%

0.1%

3.4%

N/A

(3)

Rental Revenue

(1)

Gross Margin

(1)

EBITDA

(1)

EBITDA Margin

(1)

Debt/EBITDA

(2)

Unsecured/Total Debt

(1)

Occupancy Rate

(1)

More Volatile Less Volatile

Realty Income; Other colored ovals represent REITs that currently have at least two A-/A3 credit ratings or better

(1)

Downside Volatility calculated as the standard deviation around zero of quarterly percentage changes in each metric shown, where positive changes are replaced with zero

(2)

Upside Volatility calculated as the standard deviation around zero of quarterly percentage changes, where negative changes are replaced with zero

(3)

Company did not report consolidated quarterly portfolio occupancy during 2007-2009

Source: SNL

Rank

TOP INDUSTRIES OVERVIEW

Convenience Stores (11.9% of Rent)

Quality real estate locations with strong store-level performance

Industry Considerations

(1) Strong performance independent of gas sales: ~70% of

inside sales are generated by customers not buying gas

(1)

(2) Larger-format stores provide stability: Larger format stores

(average size ~3,200 sf) allow for increased food options

which carry higher margins

(3) Electric vehicles’ market penetration presents minimal risk

• EVs = Only 1% of all vehicles in US and 2% of new sales

(2)

• Cost, limited infrastructure/range present headwinds

$35.8

$55.7

$67.0

$82.1

$19.4

$24.8

$26.5

$36.9

2003 2008 2013 2018

Convenience Store Gross Profit

(3)

(in billions)

Fuel (4.4% CAGR since 2003) In-Store (5.7% CAGR since 2003)

70% of gross profit generated from

inside sales which is generally not

impacted by gasoline demand

(1)

Realty Income estimates based on industry component data

(2)

US Energy Information Administration, InsideEVs

(3)

National Association of Convenience Stores

3.8%

8.2%

13.2%

5.8%

6.4%

3.2%

4.9%

3.6%

3.2%

2.2%

2.5%

4.5%

6.7%

3.4%

1.7%

2.3%

In-Store Same Store Sales: 16 Consecutive

Years of Positive Same-Store Sales Growth

(3)

Recession

Drug Stores (9.3% of Rent)

Industry tailwinds, high barriers to entry, key real estate presence

Industry Considerations

(1) Consumer preference skews towards physical drug stores:

Prescription volumes have shifted away from mail order

(2) Positive brick-and-mortar fundamentals: 24 of 25 quarters

of positive pharmacy SS sales growth for Walgreens

(2)

(3) High barriers to entry: Difficult for new entrants to achieve

necessary scale and PBM partnerships to compete on price

(4) Bundled service partnerships and vertical integration

among incumbents insulates industry from outside threats

(5) Real estate presence matters: Estimated 80% of U.S.

population lives within 5-mile radius of Walgreens or CVS

(2)

21%

12%

(33%)

Chain

Drugstores

Mass

Merchants

Supermarkets Independent

Pharmacies

Mail

Pharmacies

Δ in 30-day Prescriptions by Pharmacy Format

(2012 – 2017)

(1)

Source: Pembroke Consulting

(2)

Source: Company Documents

2.0%

6.4%

7.2%

5.8%

6.3%

7.8%

8.1%

9.7%

9.1%

9.3%

3.7%

6.0%

5.0%

2.0%

4.2%

5.8%

5.6%

7.4%

5.1%

0.0%

1.3%

2.8%

1.9%

6.0%

3Q13

4Q13

1Q14

2Q14

3Q14

4Q14

1Q15

2Q15

3Q15

4Q15

1Q16

2Q16

3Q16

4Q16

1Q17

2Q17

3Q17

4Q17

1Q18

2Q18

3Q18

4Q18

1Q19

2Q19

3Q19

Walgreens: 24 of 25 Quarters of Positive

Same-Store Pharmacy Sales Growth

(2)

Drug Stores: Challenges Facing E-Commerce Disruptors

Pharmaceutical supply chain carries significant barriers-to-entry

50%

72%

90%

Drug Stores Pharmacy Benefit Managers Wholesalers

Combined Market Share of Top 3 Incumbents

(1)

Source: IQVIA, Pembroke Consulting, RBC Capital Markets

(1)

Drug store market share by Rx dispensed

PBM market share by total equivalent Rx claims managed

Wholesale market share by drug distribution and related revenues

23.6%

25.9%

28.4%

29.9%

34.0%

2013

2014

2015

2016

2021E

Prescription Mix with $0 Copay

+ Heavily concentrated market share

+ Efficient supply chain & logistics

+ Captive pricing model

+ 30% of the market has no out-of-

pocket responsibility, thereby limiting

the value proposition of an

E-commerce operator

21%

33%

47%

2012 2017 2022E

Specialty Drugs Are a Growing Component of the Market

+ High-margin specialty drugs (i.e.

oncology, hormonal therapy, immune

deficiencies, etc.) are heavily regulated

+ Network distribution is highly

concentrated with the top PBMs

Health & Fitness (7.5% of Rent)

E-commerce resilient supported by favorable demographic trends

Industry Considerations

(1) Favorable consumer trends and demographic tailwinds:

Growing market as consumers increasingly value health / Baby

Boomer age group has the highest attendance frequency

(2) E-Commerce resilient: Service-oriented business model

makes the core real estate essential to operations

(3) Attractive margin of safety, top operators: Average CFC of

portfolio

(1)

allows for 40% sales drop to breakeven. Top

exposure is with #1 operator (L.A. Fitness) and premium

provider that performed well during recession (Life Time

Fitness)

Illustrative Gym Rent Coverage Sensitivity

Life Time Fitness: Same-Center Revenue Growth Thru Downturn

(2)

7.7%

7.3%

6.1%

2.8%

(3.1%)

5.0%

5.1%

4.3%

4.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013

For stores open 13 months or longer

Modest revenue volatility during

economic downturns provides

ample margin of safety to landlord

(1)

Average CFC of portfolio based on locations that report sales

(2)

Life Time Fitness 10-K

Dollar Stores (7.2% of Rent)

Counter-cyclical protection and E-commerce resilient

Industry Considerations

(1) Consistent long-term performance: 29 and 13 consecutive

years of positive same-

store sales growth for Dollar General and

Dollar Tree / Family Dollar, respectively

(2) E-commerce resilient:

• 75% of US population lives within 5 miles of a Dollar General

• Average basket size is $11 - $12

• Dollar store consumers primarily pay with cash

(3) Well-performing locations: Average CFC of dollar store

portfolio is above total portfolio average

0.9%

7.3%

5.7%

4.0%

3.2%

2.0%

3.3%

2.1%

9.0%

9.5%

4.9%

6.0%

4.7%

3.3%

2.8%

0.9%

2.7%

3.2%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Dollar General: 29 Consecutive Years of Positive

Same-Store Sales Growth

5.7%

0.1%

1.0%

2.9%

0.5%

-0.8%

4.6%

2.7%

4.1%

7.2%

6.3%

6.0%

3.4%

2.4%

4.3%

2.1%

1.8%

1.9%

1.7%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Dollar Tree / Family Dollar: 13 Consecutive Years

of Positive Same-Store Sales Growth

Recession

Counter-cyclical sales growth

trends supports portfolio

during recessionary periods

Source: Company Filings

Quick-Service Restaurants (6.2% of Rent)

High-quality real estate, reliable sales growth

Industry Considerations

(1) Consistent demand: Approximately 75 million Americans

eat fast food every day

(1)

/ positive trend of same-store sales

growth supported by value-seeking consumers

(2) Fungibility of real estate: Positive re-leasing results on QSR

locations due to convenience of real estate location and

modest space footprint

(3) Less volatility than higher price point concepts: Weakness

during economic downturns limited due to “trade down” effect

from casual dining consumers

0.2%

-3.0%

1.1%

5.1%

3.1%

6.3%

2.3%

0.4%

0.7%

-0.4%

-6.6%

2.2%

3.3%

1.6%

2.3%

-0.5%

-2.0%

1.7%

QSR SSS Growth

Casual Dining SSS Growth

Same-Store Sales Growth Trends: QSR Industry Exhibits Lower Downside Volatility, Stronger Growth vs. Casual Dining

(2)

(1)

Source: Statista

(2)

Represents average same-store sales growth for constituents in each group ; Source: Restaurant Research LLC, FactSet

Theaters (6.0% of Rent)

Stability throughout economic cycles / Experiential component supports e-commerce resiliency

Industry Considerations

(1) Historical U.S. box office receipts illustrate stability: 3.8%

CAGR since 1981 / no year worse than -7.0%

(2) High variable cost structure limits rent coverage volatility:

Theaters in our portfolio require ~40% drop in sales to reach

breakeven on rent coverage

(3) Premium video on demand (PVOD) threat is minimal:

• Studios hesitant to cannibalize theatrical window

• Concentrated industry preserves negotiating leverage

• 95% of box office revenue made within 45 days of release

(1)

• PVOD offering lacks experiential component of theaters

7.9%

16.4%

9.1%

7.0%

-7.0%

0.8%

12.6%

4.8%

12.9%

-0.2%

-4.4%

1.4%

5.8%

4.7%

1.8%

7.6%

7.7%

9.2%

7.2%

2.9%

9.8%

8.8%

0.9%

1.5%

-5.8%

4.2%

4.9%

-0.3%

10.0%

-0.3%

-3.7%

6.5%

0.8%

-5.2%

7.4%

2.2%

-2.7%

7.4%

-6.3%

Annual Growth in U.S. Box Office Receipts: Stability through economic cycles

Growth During Recession

Record U.S.

box office

(1)

Based on top 20 movies in 2018

Source: Box Office Mojo as of August 4, 2019

E.T.

Batman

Indiana Jones

Titanic

Harry Potter

Lord of the Rings

Spider-Man

Star Wars Episode II

Avatar

Transformers

Star Wars

Jurassic World

➢ Industry is structurally healthy / Strong content drives annual growth

Black Panther

Avengers

Incredibles 2

64%

35%

24%

20%

Media Consumer

Electronics

Sporting

Goods

Apparel Home

Goods

Grocery

U.S. Grocery E-Commerce Market Share

Remains Modest

(2)

Grocery (5.8% of Rent)

Exposure to top operators in a largely e-commerce resistant industry

Industry Considerations

(1) Stable, necessity-based industry: Total food expenditure

accounts for 12.3% of U.S. average spending and has been

growing at 3% annually for the past decade

(1)

(2) Resiliency to Economic Downturns: Flat Food At Home

expenditure during Great Recession (2009)

(1)

(3) Partnership with top operators:

• Top three tenants (Walmart Neighborhood Markets,

Sainsbury’s and Kroger) are leading operators with

differentiated business models

25%

13%

39%

Walmart Kroger Costco Albertsons Ahold Amazon Other

U.S. Grocery Market Share

(2)

Realty Income’s top two U.S.

grocery tenants control over

1/3 of U.S. grocery market

(1)

U.S. Census Bureau

(2)

Wall Street Research, Company filings

64%

19%

U.K. Grocery Market Share

(1)(2)

Big 4 Discounters Premium Convenience "Pure play" online

Grocery: Overview of the U.K. Grocery Industry

Traditional grocery retailers remain the core distribution channel and dominate online sales

Industry Considerations

(1) Defensive, non-discretionary industry: U.K. grocery sales

have been growing consistently over the past 15 years in both

nominal terms (+2.5% CAGR) and as a percentage of retail

market (from 47% to 55% of total retail sales)

(3)

(2) Resiliency to e-commerce: U.K. online grocery currently

accounts for just 6% of the market and is expected to plateau

at around 8%

(2)

(3) Partnership with top operator:

•

Sainsbury’s is a “Blue Chip” grocery operator with seasoned

and highly-regarded management team

• Quality product, excellent locations and differentiated

assortment are hallmarks of the Sainsbury's brand

(1)

Source: IGD estimates

(2)

Source: IGD estimates, Knight Frank 2018

(3)

Passport Euromonitor International

(4)

Big 4 market share includes all formats (supermarkets, hypermarkets, c-stores and online)

£89

£40

£23

£16

£11

£10

100

Supermarkets Convenience Discounters Hypermarkets Online Other

£bn

2018 U.K. Grocery Sales by Channel

(1)

Traditional grocery retail formats

(supermarkets & hypermarkets)

account for ~55% of sales and an

estimated 80%+ of profits of U.K.

grocery store market

(2)

(4)