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Home > Investing > Spotlight on REITs: Realty Income Corporation

Spotlight on REITs: Realty Income Corporation

Money Manager | Monday, August 15th, 2011

Realty Income Corporation: This is a real estate investment trust, meaning that it pays a monthly dividend, in fact it is frequently known as the monthly dividend company for just that reason. This company was formed in 1969 by a husband and wife team, William E Clark and Evelyn J Clark. The company went public in 1970, the same year that it acquired its first big franchise lease, Taco Bell.

In the 1970’s and the 1980’s there were many changes in the real estate market, meaning that many of the companies buying big real estate where doing it mostly for tax breaks, since you needed only a small down payment and would save thousands on your income tax returns. Realty Income Corporation is a company that started small, with investors of $10,000 to $50,000 rather than the millions of dollars the large companies invested. And in 1985 the company had over 100 employees and millions of dollars worth of assets.

But the smaller investors and company policies paid off when the real estate market changed in 1986, taking away almost all the tax benefits of owning a big commercial building. Realty Income Corporation was one of the first REITs, It started with $5 million dollars raised by investors to $8.6 million then to $10 million, $20 million and then in 1994 it reached $50 million, these investments all took place over a 3 year period, and created a real estate trust that was growing by leaps and bounds every year, and by 1995 the company had $100 million dollars worth of unsecured credit, making it one of the largest real estate companies at that time.

One of the main things that set Realty Income Corporation apart from all other real estate investors of the time was its philosophy that you should own your buildings without debt, that through investors and well paying tenants you should never have to carry the debt load of any building. This worked well when the real estate market took a turn for the worst in the 1980’s, and most real estate investors were tied down to collecting rent to pay there million dollar debts.

By Dec 2008 Realty Income Corporation owned 2,355 properties, with a tenant rate that had never gone below 96% bringing in huge monthly dividends for shareholders and real estate investors.

Realty Income Corporation was listed on the New York stock exchange in 1994, with the symbol “o” today common shares in the company are worth $33.89US this price is based on Jan 4/2011.

On January 26th 2009, founding member William E Clark retired as chairman of the board, leaving the title of non-executive chairman to Donald R Cameron, as per request of William E Clark.

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