Realty Income Corporation (Realty Income), The Monthly Dividend Company^® (NYSE:O) today announced operating results for the third quarter ended September 30, 2008. All per share amounts presented in this press release are on a diluted per common share basis, unless stated otherwise.

• Revenue increased 12.2% to $82.5 million
• Funds from Operations (FFO) available to common stockholders decreased 1.9% to $45.7 million
• FFO per share decreased 2.1% to $0.46 per share
• FFO per share before Crest’s contribution was unchanged at $0.45 per share
• Net income available to common stockholders was $0.29 per share
• Portfolio occupancy was 96.9%
• Same store rents increased 1.1% to $65.1 million
• Acquired one property for $400,000 at a 10.1% capitalization rate
• Dividends paid per common share increased 6.6%
• Increased the monthly dividend for the 44^th consecutive quarter to an annualized amount of $1.6935 per share
• Issued 2.925 million shares of common stock

Financial Results

Revenue Increases

Realty Income’s revenue for the third quarter ended September 30, 2008, increased 12.2% to $82.5 million as compared to $73.5 million for the same period in 2007.

Revenue, for the nine months ended September 30, 2008, increased 15.5% to $247.5 million as compared to $214.2 million for the same period in 2007.

Net Income Available to Common Stockholders

Net income available to common stockholders, for the quarter ended September 30, 2008, was $28.6 million as compared to $27.9 million for the same period in 2007. Net income per share for the quarter was $0.29 as compared to $0.28 for the same period in 2007.

Net income available to common stockholders, for the nine months ended September 30, 2008, was $79.3 million as compared to $89.0 million for the same period in 2007. Net income per share for the quarter was $0.79 as compared to $0.89 for the same period in 2007.

The calculation to determine net income for a real estate company includes gains from the sales of investment properties and impairments. The amount of gains on property sales and impairments varies from quarter to quarter. This variance can significantly impact net income.

During the third quarter of 2008, income from continuing operations available to common stockholders was $0.22 per share as compared to $0.24 per share for the same period in 2007.

During the first nine months of 2008, income from continuing operations available to common stockholders was $0.68 per share as compared to $0.78 per share for the same period in 2007.

FFO Available to Common Stockholders

FFO, for the third quarter ended September 30, 2008, decreased 1.9% to $45.7 million as compared to $46.6 million for the same period in 2007. FFO per share, for the third quarter ended September 30, 2008, decreased 2.1% to $0.46 per share, as compared to $0.47 per share for the same period in 2007. FFO before Crest’s contribution, for the third quarter ended September 30, 2008, was unchanged at $0.45 per share as compared to the same period in 2007. Crest Net Lease, Inc. (Crest) is a wholly-owned subsidiary of Realty Income.

FFO, for the nine months ended September 30, 2008, decreased 2.4% to $138.5 million as compared to $141.9 million for the same period in 2007. FFO per share, for the nine months ended September 30, 2008, decreased 2.1% to $1.38 per share, as compared to $1.41 per share for the same period in 2007. FFO before Crest’s contribution, for the nine months ended September 30, 2008, increased 2.2% to $1.37 per share as compared to $1.34 per share for the same period in 2007. For a calculation of FFO before Crest’s contribution, see page 7.

The Company considers FFO to be an appropriate supplemental measure of a Real Estate Investment Trust’s (REIT’s) operating performance as it is based on a net income analysis of property portfolio performance that excludes non-cash items such as depreciation. FFO is an alternative, non-GAAP measure that is also considered to be a good indicator of a company’s ability to generate income to pay dividends. Realty Income defines FFO consistent with the National Association of Real Estate Investment Trust’s (NAREIT’s) definition as net income available to common stockholders plus depreciation and amortization of real estate assets, reduced by gains on sales of investment properties and extraordinary items. See reconciliation of net income available to common stockholders to FFO on pages 7 and 8.

Dividend Information

In August 2008, Realty Income increased the amount of the monthly common stock dividend by 1.8% to an annualized amount of $1.686 per share. Then, in September 2008, the Company again increased the amount of the monthly dividend to an annualized amount of $1.6935. The September increase in the monthly dividend was the 44^th consecutive quarterly increase and the 51^st increase in the amount of the dividend since the Company’s listing on the New York Stock Exchange in 1994. Monthly dividends paid for the nine months ended September 30, 2008, increased 7.6% to $1.239 per share as compared to $1.152 per share in monthly dividends paid for the same period in 2007. Through September 30, 2008, the Company had paid 458 consecutive monthly dividends and continues its 39-year history of declaring and paying dividends every month.

Real Estate Portfolio Update

As of September 30, 2008, Realty Income’s portfolio of freestanding, single-tenant, retail properties consisted of 2,355 properties located in 49 states, leased to 118 retail chains doing business in 30 retail industries. The properties are leased under long-term, net leases with a weighted average remaining lease term of approximately 12.1 years.

Portfolio Management Activities

The Company’s portfolio of retail real estate, owned primarily under 15- to 20-year net leases, continues to perform well and provide dependable lease revenue supporting the payment of monthly dividends. As of September 30, 2008, portfolio occupancy was 96.9% with 73 properties available for lease out of 2,355 properties in the portfolio.

Rent Increases

Same store rents on 1,782 properties under lease, during the three months ended September 30, 2008, increased 1.1% to $65.1 million compared to $64.4 million for the same quarter in 2007. Same store rents on 1,782 properties under lease, during the nine months ended September 30, 2008, increased 1.3% to $195.0 million compared to $192.5 million for the same period in 2007.

Property Acquisitions

During the third quarter, Realty Income invested $4.3 million in retail properties. The Company invested $400,000 in one new convenience store property, with an initial lease term of 23.0 years and an initial average contractual lease yield of 10.1%, and funded $3.9 million in properties under development based on prior development agreements. All of the properties are 100% leased under net-lease agreements and the initial average contractual lease yield on third quarter real estate investments is 8.5%.

During the nine months ended September 30, 2008, Realty Income invested $188.5 million in 108 new properties and properties under development with an initial average contractual lease yield of 8.7%. The 108 properties are located in 14 states and are 100% leased under net-lease agreements with an initial average lease term of 20.6 years. They are leased to eight different retail chains in seven separate industries. Crest did not acquire any new properties during the first nine months of 2008.

Realty Income maintains a $355 million unsecured acquisition credit facility, which is used to fund property acquisitions in the near term. There was no outstanding balance on the Company’s acquisition credit facility, at the end of the third quarter, and $355 million is available to fund new property acquisitions. In addition, the Company had cash and cash equivalents of $112.6 million.

Property Dispositions

Realty Income continued to successfully execute its asset disposition program. The objective of the program is to sell assets when the Company believes the reinvestment of the sales proceeds will generate higher returns, enhance the credit quality of the Company's real estate portfolio or increase the average lease length.

During the third quarter ended September 30, 2008, Realty Income sold 13 properties for $11.0 million, which resulted in a gain on sales of $5.7 million.

During the nine months ended September 30, 2008, Realty Income sold 22 properties and a portion of land from another property for $19.2 million, which resulted in a gain on sales of $9.4 million.

Other 2008 Activities

Issued 2.925 million Shares of Common Stock

On September 30, 2008, Realty Income issued 2,925,000 shares of common stock, including 225,000 shares purchased by the underwriters upon the exercise of their over-allotment options. Net proceeds from the offering were approximately $74.5 million. These proceeds are expected to be combined with available cash on hand to repay the $100 million outstanding principal amount of the Company’s 8.25% Monthly Income Senior Notes, which come due in November 2008, and to repay the $20 million outstanding principal amount of the Company’s 8% Notes, which come due in January 2009.

Crest Net Lease

Crest is focused on acquiring and subsequently marketing net-leased properties for sale. During the third quarter ended September 30, 2008, Crest sold three properties for $4.6 million and reported a gain on sales of $199,000. Crest did not acquire any new properties during the third quarter.

During the nine months ended September 30, 2008, Crest sold 25 properties for $50.7 million and reported a gain on sales of $4.6 million. As of September 30, 2008, Crest carried an inventory of $6.0 million, which consisted of five properties held for sale. Crest did not acquire any new properties during the nine months ended September 30, 2008.

Crest’s contribution to Realty Income’s FFO (and net income) depends on the timing and number of property sales, if any, in a given quarter. Therefore, Crest’s contribution can fluctuate and add volatility to Realty Income’s reported FFO and net income on a comparable quarterly and annualized basis. During the third quarter of 2008, Crest contributed $238,000 of FFO, which represents $0.00 per share of Realty Income’s FFO, as compared to $1.9 million or $0.02 per share, generated by Crest for Realty Income during the same period in 2007.

During the nine months ended September 30. 2008, Crest generated $1.3 million, or $0.01 per share in FFO for Realty Income as compared to $8.0 million, or $0.08 per share, in FFO for Realty Income for the same period in 2007.

CEO Comments on Operating Results

Commenting on Realty Income’s financial results and real estate operations, Chief Executive Officer, Tom A. Lewis said, “We are pleased with our results given a challenging environment in the overall economy and in the credit markets. During the quarter, we continued to position the Company for the current operating environment by further strengthening our balance sheet and liquidity position. In September we issued 2.925 million shares of common stock that, when combined with cash on hand, will allow us to repay both the outstanding $100 million Senior Notes due in November as well as the $20 million Senior Notes that are due in January 2009. With the repayment of these securities, we will have no further debt obligations maturing until 2013. Additionally, we have no borrowings on our $355 million acquisition credit facility and have no mortgages on any of our properties. With low leverage, no exposure to interest rate fluctuations and no need to access additional capital, we believe we are very well positioned from a liquidity and balance sheet perspective given the current uncertainty in the credit markets.”

“During the third quarter we experienced strong revenue growth of 12.2%. Funds from operation (FFO) per share generated by our core portfolio (or FFO before Crest’s contribution), from which we pay monthly dividends, was unchanged during the third quarter, in comparison to the prior year. During the first nine months of 2008, FFO per share generated by the core portfolio increased 2.2% to $1.37 per share as compared to $1.34 per share. Thus far in 2008, we have increased the dividend four times and we have increased the dividend for 44 consecutive quarters and 51 times since we went public in 1994.”

“We are also pleased with the ongoing stability of our portfolio, given difficult market conditions, and during the quarter we saw a small increase in our portfolio occupancy to 96.9%. In addition, same store rents grew 1.1% for the third quarter and 1.3% for the first nine months of the year.”

“We have also made significant progress in reducing the inventory and activity in our Crest Net Lease subsidiary that buys and subsequently sells property. Crest has been helpful to us in competing for large portfolio transactions so that we can manage tenant level concentration and maintain diversification in our core real estate portfolio. However, since we are currently experiencing less competition for acquisitions, we see a reduced role for Crest in the near term and believe that adding inventory in Crest would present more risk than is advisable in an unstable cap rate environment. We also continue to anticipate a weaker environment for selling properties in the 1031 tax-deferred exchange market, thus, we have felt it prudent to substantially reduce our operations in Crest until cap rates stabilize and the economy strengthens. Crest’s inventory at the end of the third quarter was just five properties valued at $6 million, down from a peak of over $130 million during 2007. Due to this reduction in Crest’s activity, we anticipate that the risks we see in the marketplace of rising cap rates and slow property sales should not have a material impact on Realty Income’s operations or financial position.”

“With respect to real estate acquisitions, we are continuing to be patient as we think cap rates are rising and property prices declining and, therefore, we believe that we will be rewarded with higher cap rates and lower prices in the future. We have previously provided guidance of $250 million in acquisitions for 2008. Through September 30, 2008, we have invested $188.5 million in 108 properties and properties under development with an initial contractual lease yield of 8.7%. However, we have acquired only a few properties in the second and third quarters and anticipate few, if any, additional acquisitions for the balance of the year. We have excellent liquidity and available capital to acquire properties should attractively priced, higher yielding opportunities present themselves in the future.”

“While we continue to operate conservatively in a challenging economic and retail environment, we have been fortunate to own a strong portfolio of good properties that have remained profitable to our retailers and are key to the continued profitability of their businesses. We believe this has kept our occupancy high and, when coupled with our conservative balance sheet and strong liquidity, has served us well during the current economic downturn.”

FFO Commentary

Realty Income’s FFO per share has historically tended to be stable and fairly predictable because of the long-term leases that are the primary source of the Company’s revenue. There are, however, several factors that can cause FFO per share to vary from levels that have been anticipated by the Company. These factors include, but are not limited to, changes in interest rates, occupancy rates, periodically accessing the capital markets, the level and timing of property acquisitions and dispositions, lease rollovers, the general real estate market, the economy, charges for property impairments, and the operations of Crest.

2008 Estimates

Management estimates that FFO per share for 2008 should range from $1.82 to $1.84. This represents a change from the Company’s previous annual FFO per share estimate range of $1.84 to $1.90. FFO for 2008 is based on an estimated net income per share range of $1.00 to $1.02, adjusted (in accordance with NAREIT’s definition of FFO) for estimated real estate depreciation of $0.89 and potential gain on sales of investment properties of $0.07 per share.

Management further estimates that Crest could contribute $0.01 per share to Realty Income’s FFO during 2008, as compared to $0.11 per share contribution to Realty Income’s FFO during 2007. Crest’s primary business is the purchase and sale of properties for a profit. These sales may occur at various times during the course of the year, which could cause FFO, in certain quarters, to fluctuate on a comparable quarterly and annualized basis. The Company does not intend to provide quarterly estimates of FFO.

2009 Estimates

Management estimates that FFO per share for 2009 should range from $1.86 to $1.96, which represents annual FFO per share growth of approximately 1.1% to 7.7%, as compared to an estimated 2008 FFO per share of $1.82 to $1.84. FFO for 2009 is based on an estimated net income per share range of $1.04 to $1.14, adjusted (in accordance with NAREIT’s definition of FFO) for estimated real estate depreciation of $0.87 and potential gain on sales of investment properties of $0.05 per share.

Management would note that, given the volatility in the markets, it is more challenging than usual to estimate a number of factors that will impact the Company’s future results. Specifically, new property acquisition levels could vary depending on the number of opportunities, cap rates and the availability of attractively priced permanent financing. As such, management would add that the $1.86 FFO per share estimate assumes no new property acquisitions for 2009. The $1.96 FFO per share estimate assumes property acquisitions of approximately $500 million in 2009.

Management further estimates that Crest could contribute between $0.00 and $0.01 per share to Realty Income’s FFO during 2009. Crest’s primary business is the purchase and sale of properties for a profit. These sales may occur at various times during the course of the year and could cause FFO, in certain quarters, to fluctuate on a comparable quarterly and annualized basis.

About Realty Income

Realty Income is The Monthly Dividend Company^®, a New York Stock Exchange real estate company dedicated to providing shareholders with dependable monthly income. As of September 30, 2008, the Company had paid 458 consecutive monthly dividends throughout its 39-year operating history. The monthly income is supported by the cash flows from 2,355 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.

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, continued uncertainty in the credit markets, property acquisitions and the timing of these acquisitions, charges for property impairments, the outcome of any legal proceedings to which the Company is a party, and the profitability of Crest, the Company’s subsidiary, 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.

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

⁽¹⁾ The above FFO per share amounts have been rounded to the nearest two decimals and, as such, the individual amounts may not add up to the “Total FFO” amount.

We define FFO, a non-GAAP measure, consistent with the National Association of Real Estate Investment Trust’s definition, as net income available to common stockholders, plus depreciation and amortization of real estate assets reduced by gains on sales of investment properties and extraordinary items.

⁽¹⁾ The above FFO per share amounts have been rounded to the nearest two decimals and, as such, the individual amounts may not add up to the “Total FFO” amount.

(a) Less than 0.1%

⁽¹⁾ Includes rental revenue for all properties owned by Realty Income at the end of each period presented, including revenue from properties reclassified as discontinued operations.

(a) Less than 0.1%

⁽¹⁾ Excludes ten multi-tenant properties and 73 vacant unleased properties, one of which is a multi-tenant property. The lease expirations for properties under construction are based on the estimated date of completion of those properties.

⁽²⁾ Includes rental revenue of $156 from properties reclassified as discontinued operations and excludes revenue of $2,557 from ten multi-tenant properties and from 73 vacant and unleased properties at September 30, 2008.

⁽³⁾ Represents leases to the initial tenant of the property that are expiring for the first time.

⁽⁴⁾ Represents lease expirations on properties in the portfolio, which have previously been renewed, extended or re-tenanted.

(a) Less than 0.1%

⁽¹⁾ Includes rental revenue for all properties owned by Realty Income at September 30, 2008, including revenue from properties reclassified as discontinued operations of $156.

Realty Income Corporation
Tere Miller
Vice President, Corporate Communications
760-741-2111 ext. 1177