Realty Income Acquires $135 Million Property Portfolio of 86 Retail Tire Stores

ESCONDIDO, Calif.--()--Dec. 1, 2003--Realty Income Corp. (Realty Income), The Monthly Dividend Company(R), (NYSE:O) announced today that it has provided approximately $135 million in sale-leaseback financing to TBC Corp. (NASDAQ:TBCC) by acquiring 86 retail tire locations under long-term, net-lease agreements.

Realty Income acquired the 86 properties under 20-year, triple-net lease agreements. The stores were purchased for an average cost of $1.5 million and average approximately 10,500 in leasable square feet on a typical lot size of 1.2 acres. The properties are generally in desirable retail locations near major retail centers, located on high traffic thoroughfares. In addition, the properties acquired are primarily existing, seasoned, retail tire store locations with profitable operating histories. The 86 stores are located in 15 states including 29 properties in Texas (Dallas, Fort Worth, Houston, San Antonio, Austin, Waco and Beaumont), 11 in Illinois (Chicago MSA), 9 in Pennsylvania, 5 each in Massachusetts, Maryland and Ohio, 4 each in Missouri and Virginia, 3 each in New Jersey and New Hampshire, 2 each in Georgia, North Carolina and Tennessee, and 1 each in Kansas and West Virginia.

Realty Income also disclosed that it plans to hold approximately $110 million of the properties in its core portfolio as long-term investments and will place approximately $25 million of the properties in its Crest Net Lease Inc. subsidiary for future sales. After the sale of the Crest Net Lease properties, the company anticipates that TBC Corp. (TBC) will be its fourth largest tenant and generate approximately 5.8% of its annual revenue. The company also said that on November 18, 2003 it had issued $150 million of 12-year, 5.5% senior unsecured notes to pay down its bank facility and to fund the TBC acquisition. Following this acquisition, Realty Income will have a balance of approximately $60 million on its $250 million unsecured credit facility.

The company further disclosed that TBC used the financing proceeds to partially fund the acquisition of the 225-store, National Tire and Battery (NTB) retail chain from Sears (NYSE: S) for $225 million. TBC is the nation's largest independent tire retailer and, with the closing of this transaction, TBC will grow to over 1,160 locations throughout the United States. The acquired NTB stores will be integrated into TBC's "Tire Kingdom," company-operated retail store network, which will now have over 585 locations. TBC also has over 570 franchised tire and automotive service centers operating under the "Big O Tires" name.

Commenting on the acquisition, Tom A. Lewis, chief executive officer, stated, "We are pleased to have been able to participate in the financing of the NTB acquisition by TBC Corporation. The high quality stores, good locations, excellent operating histories and long-term leases, make these stores a welcome addition to our portfolio of properties. In addition, this immediately accretive acquisition further diversifies our real estate portfolio and provides us with increased lease revenue from which to pay monthly dividends."

Commenting further on Realty Income's acquisition of its properties, Tom Garvey, executive vice president and chief financial officer of TBC, said, "Realty Income's $135 million in sale-leaseback financing contributed greatly to the total financing we required to complete the acquisition of the National Tire & Battery Stores from Sears. Their management team thoroughly understood our industry, strategic growth initiatives and properties, which allowed them to move quickly to secure this transaction and assist us in financing this important acquisition."

Realty income also disclosed that this $135 million TBC acquisition, coupled with its previously disclosed $94.5 million acquisition of 114 convenience store properties from The Pantry Inc. (NASDAQ: PTRY), brings its total acquisitions for 2003 to approximately $360 million. Commenting on this activity, Lewis stated, "We are extremely pleased with the substantial increase in the level of acquisitions during the year. This represents the highest acquisition level in the company's history, significantly out-performing the previous record of $193 million in acquisitions during 1998. In addition, we've completed considerably more than the $150 million in acquisitions we had anticipated at the beginning of the year."

Consistent with Realty Income's disclosure policy, the company does not disclose the lease rate on an individual tenant transaction. Lease rates, terms and conditions are competitive in nature and are a major component of the company's new business development program. The company believes the disclosure of individual rate negotiations would be damaging to its competitive position and its ability to complete new property acquisitions. As in the past, Realty Income will announce its blended lease rate and lease terms on a cumulative basis in the company's quarterly press release on operations.

Forward-Looking Statements

Statements in this press release that are not strictly historical are "forward-looking" statements. Forward-looking statements involve known and unknown risks, which may cause the company's actual future results to differ materially from expected results. These risks include, among others, general economic conditions, local real estate conditions, the availability of capital to finance planned growth, property acquisitions and the timing of these acquisitions, and the profitability of the company's subsidiary, Crest Net Lease, as described in the company's filings with the Securities and Exchange Commission. Consequently, such forward-looking statements should be regarded solely as reflections of the company's current operating plans and estimates. Actual operating results may differ materially from what is expressed or forecast in this press release. The company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date these statements were made.

Realty Income is The Monthly Dividend Company(R), a New York Stock Exchange real estate company dedicated to providing shareholders with dependable monthly income. To date the company has paid 400 consecutive monthly dividend payments throughout its 34-year operating history. The monthly income is supported by the cash flow from over 1,300 retail properties owned under long-term lease agreements with leading regional and national retail chains. The company is an active buyer of net-leased retail properties nationwide.

Note to Editors: Realty Income press releases are available at no charge by calling our toll-free investor hotline number: 888-811-2001, or through the Internet at http://www.realtyincome.com/Investing/News.html.

Contacts

Realty Income Corp., Escondido
Tere Miller, 760-741-2111, ext. 177

Contacts

Realty Income Corp., Escondido
Tere Miller, 760-741-2111, ext. 177