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The following is a press release from Fitch Ratings: Fitch Ratings-New York-24 June 2010: Fitch Ratings has assigned a 'BBB+' credit rating to the $250 million par value 5.75% coupon rate senior unsecured notes issued by Realty Income Corporation (Realty Income, NYSE: O). The notes, which mature in 2021, were issued at 99.404% of par to yield 5.826% to maturity. Realty Income's Issuer Default Rating (IDR) is 'BBB+' and the Rating Outlook is Stable. The company will use the proceeds from the offering, along with borrowings under Realty Income's revolving credit facility, to acquire 13 winery and vineyard properties located throughout the Napa Valley in Napa, California, valued at $269 million. The properties are subject to 20-year triple-net lease agreements with Diageo Chateau & Estate Wines and are guaranteed by Diageo Plc (Fitch IDR of 'A-' with a Stable Rating Outlook). Fitch's ratings for Diageo reflect Diageo's global leadership position underpinned by its strong and well-recognized brands, broad product, geography and pricing-point diversification in the international premium spirits sector, as well as track record of category extensions and new product launches. The ratings for Diageo also reflect Diageo's high adjusted leverage relative to peers and acquisition spending. Diageo will become Realty Income's second largest tenant at 5.7% of revenue. The transaction will provide capital efficiencies to Diageo and will further diversify Realty Income's tenant industry composition. Fitch's ratings for Realty Income are supported by the cash flows generated by the retail property portfolio in excess of Realty Income's fixed charges, as well as the company's modest leverage, strong liquidity position, and unencumbered portfolio. The ratings are moderated by a history of tenant bankruptcies and Fitch's expectation that Realty Income's credit metrics will weaken modestly pro forma for the transaction. For the trailing 12 months ended March 31, 2010, Realty Income's fixed charge coverage ratio (defined as recurring operating EBITDA less recurring capital expenditures less straight-line rent adjustments divided by interest incurred and preferred stock dividends) was 2.7 times (x), compared with 2.5x and 2.7x during 2008 and 2009, respectively. Pro forma for the unsecured note offering and portfolio acquisition, the company's fixed charge coverage ratio would be 2.5x, which remains solid for the existing ratings. As of March 31, 2010, Realty Income's leverage ratio, defined as net debt to recurring operating EBITDA, was 4.6x, compared with 4.4x and 4.5x as of Dec. 31, 2008 and Dec. 31, 2009, respectively. Pro forma for the unsecured note offering and portfolio acquisition, leverage would be 5.1x, which is also strong for the existing ratings. Unencumbered asset coverage of unsecured debt as defined by the covenants under the company's bond indenture was 253% as of March 31, 2010, compared with 256% and 259%, as of Dec. 31, 2008 and Dec. 31, 2009, respectively. Pro forma for the unsecured note offering and portfolio acquisition, unencumbered asset coverage would be 230%, which remains in line with the existing ratings. The 'BBB+' rating is further reflective of Realty Income's liquidity profile. The company's sources of liquidity (cash, availability under the unsecured revolving credit facility pro forma for the acquisition, projected retained cash flows from operating activities after dividend payments) divided by uses of liquidity (debt maturities and projected capitalized leasing costs and commissions and capitalized building improvements) result in a liquidity coverage ratio of 65.0x. This stems primarily from the company's limited capital expenditures and long-dated debt maturity schedule, as it does not have a debt maturity until March 2013. The ratings take into account certain offsetting factors including a history of tenant bankruptcies. However, tenants' EBITDAR coverage of rents remains adequate at 2.5x, and Fitch anticipates that EBITDAR coverage will remain in that range going forward. In addition, although same-store rents increased by 80 basis points during 1Q'2010, certain industries such as the tire industry have offset same-store rental growth. Given the diversification embedded within Realty Income's tenant roster, certain industries may continue to have rental pricing power going forward. Relevant Fitch criteria available on the Fitch website at 'www.fitchratings.com' include: --Criteria for Rating U.S. Equity REITs and REOCs, April 16, 2010; --Equity Credit for Hybrids & Other Capital Securities - Amended, Dec. 29, 2009; --Rating Hybrid Securities, Dec. 29, 2009; --Recovery Rating and Notching Criteria for REITs, Dec. 23, 2009; --Corporate Rating Methodology, Nov. 24, 2009; --Evaluating Corporate Governance, Dec. 12, 2007. Realty Income Corporation is a real estate investment trust (REIT) based in Escondido, California that has a portfolio of retail properties leased to regional and national retail chains. As of March 31, 2010, Realty Income owned 2,344 properties, located in 49 states, containing over 19.2 million leasable square feet, along with three properties owned by its wholly-owned taxable REIT subsidiary, Crest Net Lease, Inc. As of March 31, 2010, Realty Income had $3.6 billion in undepreciated book assets and a total market capitalization of $4.9 billion. Contact: Sean Pattap +1-212-908-0642 or Kimberly Chan +1-212-908-0346, New York. Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278, Email: [email protected]. Additional information is available at 'www.fitchratings.com'. ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. (END) Dow Jones Newswires June 24, 2010 16:59 ET (20:59 GMT)