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Realty Income shares drop on new offering

Shares of Escondido’s Realty Income Corp. (NYSE: O) fell more than 2 percent in morning trading on Wall Street on Thursday after the company announced a secondary stock offering priced below the previous day’s market value.

Realty Income’s shares were selling at $40.79 on Wednesday afternoon after trading above the $41 mark for much of the preceding week and above $44 at the beginning of the month.

But after the market closed on Wednesday, the company announced it would sell 12 million new shares at a price of $39.96, expected to close on April 1.

In overnight trading, the shares dropped 2.6 percent to $39.72 per share, although by noon Thursday the price recovered to hover around the $39.96 price listed on the offering, which is intended to pay down its $1.5 billion line of credit that is used to fund new real estate acquisitions.

In a column on the Seeking Alpha investment website, investor Albert Alphonso -- who looks for stocks that show a strong track record for dividend growth -- said the declining price has given long-term investors “a clear buying opportunity" to buy on the dip.

An analysis from the ratings team at The Street.com reached the same conclusion, reiterating its previous “buy” on the company.

The analysts said that even though Realty Income has had weaknesses in its return on equity lately -- a problem it shares with many real estate investment trusts (REITs) -- its positives outweigh its weaknesses. Its net income has risen nearly 65 percent over the past year, exceeding the averages for the S&P 500 and the REIT market. And its cash flow was ahead of the 10.3 percent REIT average.

“The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, growth in earnings per share and expanding profit margins,” the report said. “We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."

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Realty Income Corp.

Company Website

600 La Terraza Blvd.
Escondido, CA 92025

Company Trade Data

Stock Symbol Close
Change
Chg %Chg
Volume
52-Week
High Low
O
48.61
  0.1  
+ 0.21%
3,772,121,000
55.54
43.15

Insider Trade Data

Date Insider Shares Type Value
06/22/2015 Mclaughlin, Gregory T 1,780 Sell $81,026
06/22/2015 Mclaughlin, Gregory T 1,780 Sell $81,026
06/08/2015 Israel, Robert J 3,313 Sell $151,967
06/08/2015 Israel, Robert J 3,313 Sell $151,967
06/05/2015 Huskins, Priya Cherian 7,500 Sell $337,500

Realty Income Corp. Executive(s):

Tom Lewis

  • Chief Executive Officer

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NAICS - 531120 - Lessors of Nonresidential Buildings (except Miniwarehouses)
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