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How to Succeed in Business

John Case, the CEO of Realty Income and a 1986 graduate of Washington and Lee, recently shared some of his investing secrets in a San Diego Union-Tribune profile, “A REIT for Steady Income in Good, Bad Times.”

John, who majored in economics at W&L, joined Realty Income in 2010, after working for Merrill Lynch and RBC Capital Markets. Over the years, the firm has built a reputation for outperforming the market, and the 2013 numbers tell the story best: it acquired a record $1.5 billion in assets; revenue was up 61 percent; earnings increased 54.7 percent; and dividends were up 19.7 percent.

Earlier this year, the company celebrated its 20th year as a NYSE-listed company by ringing the closing bell on the NYSE on Sept. 11. On this memorable milestone, John said, “On the company’s first day of trading on the NYSE in 1994, our shares closed at $8.00 per share. As of Sept. 4, 2014, our shares closed at $44.62 per share, which, together with the reinvestment of dividends, has resulted in a compounded average annual total return of 17 percent to our shareholders”

In the U-T story, he attributes the firm’s success to “having a disciplined, conservative underwriting approach on the acquisition side. We have an investment strategy that we’ve employed since 1969, when the company was founded. We’re looking for the right types of real estate investments. On the retail side we really are focusing on businesses and properties that are leased to businesses that have a nondiscretionary component, service or low price-point orientation to their business (such as convenience, drug and dollar stores, as well as movie theaters). That allows them to compete in a variety of economic cycles and succeed, and also allows them to compete with e-commerce, which is important.”

He added, “Our own balance sheet is quite conservative. When we went through the Great Recession, we were one of 10 public REITS that didn’t have to cut their dividend. In fact we raised our dividend. We’ve raised it every year since we went public. We’ve been able to withstand the greatest recession our country has seen since the Great Depression.”

With Reality Income’s steady growth, the business has sought new real estate of its own—it will be moving from its current home in Escondido, California, to Carmel Valley, just north of San Diego.