CEO Spotlight: Realty Income's Case Pleased with Diverse Portfolio

John Case, CEO of Realty Income Corp. (NYSE: O), joined REIT.com for a CEO Spotlight video interview at REITWorld 2013: NAREIT’s Annual Convention for All Things REIT at the San Francisco Marriott Marquis.

Realty Income owns nearly 4,000 commercial real estate properties spread across 49 states and Puerto Rico. Leases on those properties typically run from 10 to 20 years.

Case was recently named CEO of Realty Income. He was asked about any changes in strategy that he plans to implement.

“No major changes going forward,” he said. “We’re going to remain quite disciplined in our underwriting approach on our acquisitions. We’re also going to maintain a conservative balance sheet as we’ve always done, and our focus is really on our dividend.”

Case talked about the impact of investment activity in the net lease sector in 2013.

“There has been a tremendous amount of consolidation activity in our sector over the last two years,” he said. “A great deal of it has been private real estate companies in the net-lease sector coming into the public world, either through listings or through consolidation.  We have actually participated in this consolidation trend by making an acquisition in January of this year of ARCT, which was a $3.2 billion dollar transaction. I think it’s good for the sector.”

Case described the diversification of his company’s portfolio.

“We feel that it’s very well diversified, both by tenant, industry and geography,” he said. “No tenant represents more than 5.1 percent of our revenues right now, and no industry represents more than 11.2 percent of our revenues right now, and no single state represents more than 10 percent of our revenues. So we’re quite pleased with the overall diversification of our portfolio. Also, we’ve been able to enhance the tenant credit quality within the portfolio. Today, we have 40 percent of our properties leased to tenants with investor-grade ratings, and that number was zero percent in 2009. So we’re very pleased with the progress we’ve made on that front as well.”