NEW YORK, Sept 13 (Reuters) - Realty Income could face trouble raising or maintaining its dividend if the number of customers renting space at the real estate investment trust's commercial properties falls more than Wall Street expects, Barron's reported on Sunday.
Ryan Levenson of Privet Fund Management, which is responsible for some of the 19 percent of Realty Income's shares that are sold short, said some of the company's larger tenants are companies with lots of debt or tough operating environments, including Friendly's restaurants, Rite Aid drugstores and Pier 1 Imports.
Of 148 lease expirations due this year, 43 came in the first half, Barron's said. It added that Realty Income has kept its occupancy rate above 96 percent.
Realty Income does not reveal its renters, but Chief Executive Tom Lewis said same-store rent was up last quarter and the tenant mix includes defensive convenience-store and fast food operators.
Beyond fears that some tenants might vacate if they run into financial difficulty, Realty Income shares look overvalued, Barron's said.
They trade around 14 times projected 2009 earnings, while other private-market values for similar properties are at or below 10 times earnings, Barron's said.
The newspaper also said that Lewis sold 20 percent of his personal holdings in Realty Income last month, and other executives sold 'substantial amounts' of stock at the same time.
(Reporting by Robert MacMillan; Editing by Diane Craft) Keywords: REALTYINCOME/ (robert.macmillan@thomsonreuters.com; +1 646 223 6012; Reuters Messaging: robert.macmillan.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Ryan Levenson of Privet Fund Management, which is responsible for some of the 19 percent of Realty Income's shares that are sold short, said some of the company's larger tenants are companies with lots of debt or tough operating environments, including Friendly's restaurants, Rite Aid drugstores and Pier 1 Imports.
Of 148 lease expirations due this year, 43 came in the first half, Barron's said. It added that Realty Income has kept its occupancy rate above 96 percent.
Realty Income does not reveal its renters, but Chief Executive Tom Lewis said same-store rent was up last quarter and the tenant mix includes defensive convenience-store and fast food operators.
Beyond fears that some tenants might vacate if they run into financial difficulty, Realty Income shares look overvalued, Barron's said.
They trade around 14 times projected 2009 earnings, while other private-market values for similar properties are at or below 10 times earnings, Barron's said.
The newspaper also said that Lewis sold 20 percent of his personal holdings in Realty Income last month, and other executives sold 'substantial amounts' of stock at the same time.
(Reporting by Robert MacMillan; Editing by Diane Craft) Keywords: REALTYINCOME/ (robert.macmillan@thomsonreuters.com; +1 646 223 6012; Reuters Messaging: robert.macmillan.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
