ESCONDIDO, CA-Realty Income, a specialist in net-leased retail properties that has been buying heavily in recent years, posted record fourth-quarter and year-end results Thursday as the company reported spending nearly $770 million to acquire 378 properties in 2006. The acquisitions contributed to the record results, but company officials cautioned that investors cannot assume that it will continue to buy at this rate.

Tom Lewis, CEO, noted that the increases in property acquisitions “allowed us to raise the dividend again in the fourth quarter,” and the property acquisitions “substantially exceeded our expectations during the fourth quarter and for 2006.” However, Lewis said, Realty Income will continue to maintain its due diligence and underwriting standards in buying new properties.

Lewis and other Realty Income executives discussed the financial results in a conference call Feb. 15, in which they reported that the company’s FFO for the quarter ended Dec. 31, 2006 grew 25.1% to $44.9 million, while FFO per diluted common share increased 7% to $0.46 per share. The FFO came on revenue that increased 29.2% to $69.1 million as the company’s portfolio occupancy increased to 98.7% and same store rents increased 1.1% to $44.5 million.

The fourth quarter turned out to be the biggest period of the year in respect to acquisitions, with $510.8 million of deals closed on 240 properties, compared with full-year acquisitions of $769.9 million and 378 additional properties. For the year, revenue increased 22.5% to $240.1 million and FFO available to common stockholders increased 20.2% to $155.8 million, or an increase of 6.8% to $1.73 per share. Net income grew to $28.4 million compared with $25.5 million 2005.

The company closed the year with a portfolio of 1,955 freestanding, single-tenant, retail properties in 48 states, leased to 103 retail chains doing business in 29 retail industries. The properties are leased under long-term, net leases with a weighted average remaining lease term of approximately 12.9 years.

While the company benefited from its acquisitions and what Lewis called “record access to capital in 2006,” Lewis cautioned, “We do not believe that investors should perceive these levels of activity as a trend that can be projected into the future.” He noted that during 2006, the company’s investment committee reviewed more than $5 billion of potential real estate acquisitions in order to acquire the $769.9 million worth of properties that it bought.

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