In Inter ernationa national l Ex Expa pansion: nsion: Sale- - - PowerPoint PPT Presentation

In Inter ernationa national l Ex Expa pansion: nsion: Sale-Leaseback with Sainsbury’s

REALTY INCOME

April 2019

Safe Harbor For Forward-Looking Statements

Statements in this investor presentation 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 and foreign real estate conditions, the completion of the transaction described herein or the anticipated future results therefrom, tenant financial health, the availability of capital to finance planned growth, continued volatility and uncertainty in the credit markets and broader financial markets, property acquisitions and the timing of these acquisitions, charges for property impairments, and the outcome of any legal proceedings to which the company is a party, as described in the company's filings with the Securities and Exchange Commission. Consequently, forward-looking statements should be regarded solely as reflections of the company's current operating plans and estimates. Actual

• perating results may differ materially from what is expressed or forecast in this investor
• presentation. 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. This investor presentation is for informational purposes only, does not constitute an offer to sell or the solicitation of an offer to buy any security of the company, and shall not constitute an offer, solicitation, or sale of any securities of the company in any jurisdiction in which such offer, solicitation, or sale would be unlawful.

2

Con Contents ents

5 : Addressable Market 4 : Overview 7 : Well-Positioned Domestic Business 8 : Transaction Highlights 9 : Investment Rationale 10 0 : Sainsbury’s Overview: A Natural Fit 24 4 : UK Grocery Industry Overview 12 2 : Portfolio At A Glance 13 13 : Investment Returns and Hedging Strategy 21 1 : UK Macroeconomic Analysis 28 8 : Additional Background on Sainsbury’s

3

Rea ealty ty In Inco come me An Anno noun unce ces s In Inter erna nati tiona

• nal

l Ex Expan ansi sion

• n

£429 Million Sale-Leaseback with Sainsbury’s(1)

35 5 : Summary and Next Steps 37 7 : Appendix and Property Profiles

(1) Expected to close on or around 5/22/19

4

Overview

Realty Income will expand to international markets starting with strategic sale-leaseback with Sainsbury’s

Strategic Rationale Our Intent and Approach

~ We estimate the size of the commercial real estate market in Europe to be approximately $11 trillion, with $30 - $35 billion of annual single-tenant transaction volume in our core verticals ~ We believe there is significant demand from high quality tenants in Europe for sale- leaseback capital on reasonable terms ~ The Sainsbury’s transaction is consistent with Realty Income’s approach of relationship-based transactions in partnership with industry leaders with strong management teams; geography is the only “difference” in this transaction ~ As this transaction demonstrates, Realty Income is uniquely positioned to build such relationships leveraging its industry-leading scale, size and cost of capital ~ Expanding to Europe is therefore a natural extension of Realty Income’s business model, with a focus on long-term triple net leases with annual growth ~ We intend to establish an office in London, and to judiciously grow our portfolio in Europe over time as we have done in the US ~ We expect our team in Europe to be staffed with our own employees, some of whom will relocate from our US office; in the near term we will outsource routine services like tax and regulatory filings ~ Our European platform will leverage the US business where it makes sense to do so for functions such as Finance, Legal, IT and HR

5

Europe Presents Compelling Market Opportunity

Realty Income’s portable business model, cost of capital and scalability represent core competitive advantages

(1) Property owned for the primary purpose of benefitting from investment returns, as distinct from owner-occupied and non-investment leased real estate (2) Includes owner-occupied and non-investment leased real estate

Sources: CBRE, MSCI, Bloomberg, Realty Income estimates

US vs. Eu Europe

• pe Compa

pari rison:

• n: Estimated Commercial Real Estate Market Value

CRE owned by Real Estate Companies(1) All Other Commercial Real Estate(2) Total Investable Commercial Real Estate

US $4 Trillion $4 Trillion $8 Trillion Europe $3 Trillion $8 Trillion $11 Trillion US + Eu Europe

• pe

$7 Trill rillion

• n

$12 12 Trill illion ion $19 9 Trill rillion

• n

~ Ripe f e for r sale le-le leaseb eback ck co consol nsolidation: ion: We estimate $11 trillion of commercial real estate stock in the European market, only $3 trillion of which is owned by professional real estate firms ~ Additive to Realty Income’s addressable market: We estimate that corporate-owned commercial real estate stock is 2x greater in Europe than in U.S., representing a void for a well-capitalized, sizable and scalable institutional investor like Realty Income to fill

Median EBITDA Multiple Comparisons

• Similar to the U.S., public companies in Europe can

unlock trapped RE value through sale-leaseback

• We expect market-ascribed valuation differentials

between real estate and operating businesses to benefit us

• We estimate annualized single-tenant real estate

transaction volume in Europe to be between $30 and nd $35 billion lion in our target verticals

16.7x 14.6x 11.1x 6.4x 6.3x

Illustrative SLB Multiple (at 6% cap rate) Europe Ex-UK Real Estate Companies (~700) UK-Domiciled Real Estate Companies (~90) UK-Domiciled Operating Companies (~1,500) Europe Ex-UK Companies (~3,700)

56.1 76.6 80.7 72.7 31.8 33.0 47.1 44.7 43.8 71.6 82.9 94.6 67.9 85.9 81.3

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Estim imat ated ed UK C K Comme merci cial al Rea eal l Estat ate e Annual l Inves estme tment nt Volume ume(1) USD in billions(2) Average = 64.7

UK is a Highly Liquid And Logical CRE Market For Our Initial Entry to Europe

Historically, ~$65 billion of CRE has traded on an annual basis in the United Kingdom

6 Global Financial Crisis Post-Brexit Referendum

(1) Property types include office, shopping centers, retail, industrial, leisure and alternative / mixed (2) Assuming GBP/USD spot rate as of 4/19/19

Source: Savills, CBRE, MSCI, Realty Income estimates

Investment volumes have held steady post- Brexit referendum despite political and economic uncertainty

In Incumbent bent competit tition ion is modest: t:

Enterprise value of the public REIT market in the UK estimated to be approximately $115 billion -- roughly the size of the publicly traded net lease REIT universe in the US Of the $81 billion of CRE transaction volume in 2018, we estimate $6 $6 - $8 bil illio ion of sin ingl gle- ten enant volu lume me in in our core re ver erti ticals cals

6 13 17 39 24 32 28 30 32 2010 2011 2012 2013 2014 2015 2016 2017 2018

Dom

• mes

estic tic Tra ransactions ctions So Source ced d and In d Invest estmen ment t Vol

• lume

me(1)

(1) (USD in billions) Investment Volume Transactions Sourced Selectivity

International Growth Augments Well-Positioned Domestic Business

Realty Income is expanding its total addressable market from a position of strength

7

(1) 2013 Sourcing and Investment Volume Excludes $3.2 Billion Acquisition of ARCT All data current as of 12/31/2018

12% 8% 7% 4% 6% 4% 7% 5% 6%

Realty Income will continue to remain highly selective in the US and internationally

0.7 1.0 1.2 1.5 1.4 1.3 1.9 1.5 1.8 Average Annual Domestic Transactions Sourced Since 2013

$31 billion

Average Annual Domestic Investment Volume Since 2013

$1.6 billion

Credit Ratings by Moody’s and S&P Support Lowest Cost of Capital in Net Lease Sector

A3/A-

Unsecured Revolving Credit Facility Provides Ample Liquidity and Flexibility

$3 billion 93%

Adjusted EBITDAre Margin (Highly Scalable Platform and Profitability Flow Through)

8

Sainsbury’s Sale-Leaseback Highlights

Accretive transaction establishes international growth platform with leading UK grocer

£429 £429 mi milli llion

• n

Transaction size(1)

5.3 5.3%

GBP 1st-year cash cap rate

5.8 5.8%

USD-equivalent 1st-year cap rate(2)

>2 >200 00 bp bps

Effective 1st-year spread to leverage-neutral nominal WACC

12 12

Assets acquired

6. 6.6% 6%

Base-case unlevered USD IRR

15 5 yea ears

Weighted-average lease term

$0 $0.0 .04 pe 4 per sh shar are

Annualized leverage-neutral AFFO accretion

(1) Excluding acquisition transaction costs of approximately £4.2 million / transaction expected to close on or around 5/22/19 (2) Reflects effective 1st-year USD cap rate net of annual cash flow FX hedge

9

Sainsbury’s Sale-Leaseback: Investment Rationale

Realty Income’s first international acquisition represents natural evolution and execution of strategy

Congruent with existing investment criteria Accretive returns, minimal FX risk UK is an attractive market with sizable

• pportunity for

strategic growth

~ Tenant operates in defensive, non-discretionary industry ~ “Blue Chip” grocery operator with seasoned and highly-regarded management team ~ Proven strength through multiple economic cycles ~ 15-year triple-net leases, attractive rent growth ~ Annualized AFFO accretion of ~$0.04/sh from Sainsbury’s transaction ~ Base-case 15-year unlevered USD IRR of 6.6% is attractive given tenant, asset quality ~ ~85% of FX risk on GBP cash flows to be hedged for 15 years through currency swap ~ Limited retail real estate supply per capita, healthy market fundamentals ~ Void of large-scale, pure-play net lease institutional competition ~ Significant demand for expansion capital from UK operators ~ Estimated >$1 trillion potential sale-leaseback market opportunity

Realty Income’s sector-lead leadin ing g cost of capi pital, al, siz ize e and d scale le are e compe petit itiv ive e adv dvant antages ages po portable ble to t the UK e UK

10 10

All data is as of the most recent reported period (9/22/2018) and derived from Sainsbury’s public filings or Bloomberg, unless otherwise noted

(1) Sainsbury’s is not currently rated; Implied investment grade rating is based on Realty Income analysis based on S&P credit methodology (2) Total 1,423 locations, consisting of 606 supermarkets and 817 convenience stores (3) Includes Sainsbury's supermarkets, c-stores, Argos & Habitats (4) Source: IGD estimates

Founded in 1869, Sainsbury's is one of the leading grocers in the UK operating over 1,400 grocery and convenience stores across the UK and Ireland. The company’s other businesses include Argos (catalog and

• nline retailer), Habitat Stores (furnishing retailer), and Sainsbury's Bank.

Sainsbury’s seasoned management team has significant experience in the UK retail market and is led by Mike Coupe, CEO since 2014, who has held senior management positions at both Asda and Iceland (discount grocer). Sainsbury’s same-store sales grew at an average annual rate of 4.7% during 2007 – 2010, significantly

• utperforming UK retail and GDP growth during the Great Recession.

irm

606 06

supermarket locations(2)

£28 28.9 .9

billion LTM retail sales(3)

£54 542 2

sales per gross SF(3)

Top

• p 3

UK grocery

• perator(4)

817 7

c-store locations(2)

£5.5 £5.5 Billion Enterprise Value £788 £788 Million Free Cash Flow 150 50-yea ear r History Implied In Investme estment nt Gr Grad ade(1)

1)

Ov Over er 185 85,0 ,000 00 Employees

4.9% 7.1%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0%

Grocery

0.0% 2.2%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0%

Rea ealty Income

• me Invest

estment ment Crit iter eria ia

Non-discretionary retail business

✓

Proven resilience through economic downturn

✓

Attractively-priced, high-quality real estate

✓

Long-term lease

✓

Annual rent increases

✓

Off-market sale-leaseback / relationship-driven

✓ Rea ealty Income

• me Invest

estment ment Crit iter eria ia – Grocer cery

Leading operator

✓

Strong balance sheet

✓

High-performing locations

✓

Differentiated business model

✓

Omni-channel platform

✓

Sainsbury’s Transaction a Natural Fit for Realty Income

Transaction is complementary to defensive portfolio characteristics and additive to core industry / UK

Realty Income Investment Criteria Pro Forma ma Portfoli

• lio
• Metr

etric ics: s: Before and After Transaction(1)

Representing 2.2% of revenue, Sainsbury's becomes Realty Income’s 12th largest tenant

81.7% 82.2%

Retail

11 11

Ben enef efit its of

• f siz

ize: e: Transaction does not materially impact tenant, geography, industry

• r property type diversification

(1) Based on rental revenue as of 12/31/2018

Banbury Banbury – South East England Bodmin min – South West England Bradfor

• rd – Yorkshire

Bridgw gwat ater er – South West England Cardiff – Wales Grims msby – Yorkshire Herefor

• rd – West Midlands

Kempston

• n – East of England

Locksbott ttom

• m – London

Northam ampton – East Midlands Sheffield ield – Yorkshire Southam ampton

• n – South East England

Portfolio at a Glance

Real estate portfolio consists of 12 established locations throughout the UK

12 12 Total Square Footage: 1.1 million Average Population(1)(2): ~116k Household Income Premium(1)(3): 7.9% Current Market Vacancy(1): 2.6% Estimated EBITDAR/Rent Ratio(4): >3x Sales PSF (on a gross sf basis)(4): ~£550

Portf tfolio

• lio Charac

aracteri eristics ics

(1) Portfolio weighted average based on rent (2) Within a 15 minute drive of portfolio locations (3) Measured as premium (discount) to UK average household income; market data based on company estimates (4) Data based on Realty Income estimates

8 12 1 5 10 7 6 4 11 9 3 2

CFC above Realty Income portfolio and US grocery industry averages Sales PSF is approximately 14% higher than UK grocery average

United Kingdom

In Investment estment Returns turns and Hed d Hedging ging Stra trategy egy

14 14

Investment Returns and Hedging Strategy Summary

Transaction expected to be immediately accretive to earnings with minimal FX risk

Investment spreads are accretive on a leverage-neutral basis FX risk is largely mitigated through financing and hedging strategy Current FX and interest rate dynamics are favorable

~ Estimated 1st-year nominal investment spreads of ~210 bps exceeds Realty Income’s historical average by ~60 bps ~ Lower borrowing cost of GBP-denominated debt (driven by lower benchmark yields and Realty Income’s A-/A3 credit ratings) supports lower WACC for UK acquisitions ~ Favorable FX curve, high-quality acquired assets and reasonable rent levels support 6.6% unlevered USD IRR (significantly above long-term UK and US WACC) ~ Realty Income expects to issue £300 million in 15-year debt, which hedges 70% of asset value and creates pound-denominated interest expense ~ ~£130 million equity contribution is sourced through GBP/USD cross currency swap ~ Realty Income expects to hedge ~85% of GBP cash flow via cross-currency swap, fixing USD cash flow for entirety of 15-year term ~ Current weakness in GBP currency affords Realty Income the ability to invest at reasonable USD cost ~ Historically wide interest rate spreads between the UK and US provides meaningful FX “carry” over long lease term ~ Cross currency swap on hedged GBP cash flow converts ~£12 million in average annual AFFO (hedged and unhedged) to estimated ~$18 million w/ minimal volatility

Str tructure ucture pr project ected ed to ge genera erate e pr pred edictab ictable le cash sh flow w and d hea ealth lthy y investmen estment t sp sprea eads ds

15 15

Historically Low Pound Creates Compelling Investment Opportunity

Weakness in pound allows Realty Income to buy “low” while locking in steep FX forward curve

1.30 1.65

1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8

GBP / USD FX Rate Median FX rate since 1971 Dollar lar purcha hasing sing power has rarely y been stronger: er: Current FX rate ~20% below historical median and in bottom 5th percentile of historical FX rates 136 (20)

(300) (250) (200) (150) (100) (50) 50 100 150 200 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

US vs. UK: 10y Gov't Yield Spread Median spread since 1992 Histor

• ric

ically ally wide inter eres est rate gap p converts ts GBP cash flow into increas asing ing flow of USD: Current steepness of FX forward curve is a function of interest rate differentials between the pound and dollar that accrues to Realty Income’s benefit

Source: Bloomberg FX curve and interest rate data as of 4/19/19

16 16

Favorable USD Investment Spreads

Initial projected returns on Sainsbury's transaction meet key Realty Income return hurdles Pr Project ected ed Short-Term erm WACC C (Actual Leverage and Leverage-Neutral)

Capit ital al Compo pone nent nt Cost Weight(1

(1)

Wtd Cost Weight Wtd Cost Assumpti tions ns / Commen mentar tary

Debt (15-yr GBP)(2)

2.8% 70% 1.96% 35% 0.98% Based on midpoint of indicative pricing range Equity (Stock) 4.7% 23% 1.08% 58% 2.73%

Nominal cost of equity (2019 AFFO yield at $68.53/sh)

Equity (FCF) 0% 8% 0% 8% 0% Annual FCF contribution to acquisitions funding Short-Term rm WACC: Actual al Lev 3.04% Lev Neutral al 3.71% Short-Term WACC is lower than US WACC given lower cost of borrow in GBP denominated notes issuance

Pr Project ected ed Year ar 1 Cash ash Cap ap Rat ate (GBP and USD-Equivalent)

Component ponent GBP USD Assumpti tions ns / Commen mentar tary Purchase Price (mm) £429 $558 Based of FX rate as of 4/19/2019 1st-Year NOI (mm) £23 $30 USD NOI represents GBP NOI converted at average NTM FX rate

Straight-Line Cash FX Accretion

• $2

Incremental CF on USD leg of cross-currency swap Year 1 Cash Cap Rate 5.31% 5.81% Currency y swap p provides vides ratable e coupon

• n recognition

nition of forward FX point ints

Project jected ed Nomin inal l 1st

st-Year

ar Invest estment ment Spr preads eads GBP GBP USD Actual Leverage 227 bps 277 bps Leverage Neutral 158 bps 208 bps

(1) May not sum to 100% due to rounding (2) Based on midpoint of estimated indicative rates of 2.7% - 2.9% given current market conditions as of 4/19/2019. Actual rate may differ.

Investment spread ~60 bps above Realty Income’s historical average

17 17

Expected USD IRR Exceeds Long-Term WACC Hurdle

Realty Income expects 6.6% USD IRR over the initial lease term using our standard assumptions Exp Expect cted d Long-Term erm WACC C (utilizing lower cost of debt in GBP currency)

Capit ital al Compo pone nent nt Cost Weight Wtd Cost Assumpti tions ns / Commen mentar tary

Debt (15-yr GBP)(1)

2.8% 35.0% 0.98% Based on midpoint of indicative pricing range

Equity (CAPM)

5.8% 32.5% 1.89% Historical monthly beta (0.4), 4% 10-yr UST, 4.7% equity mkt premium

Equity (Yield+Growth)

8.6% 32.5% 2.80% Current dividend yield + LT dividend CAGR (4.6%) Long-Term erm WACC: 5.67% 67% Represents LT hurdle rate for UK investment IRR ($564) $603 ($800) ($600) ($400) ($200) $0 $200 $400 $600 $800 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

(USD in millions) Year

Upward sloping FX curve drives outsized USD-equivalent unlevered IRR

Cumulative CF (USD)

6.6% 6.6%

USD

IRR

USD cash flows amplified

• ver time given steepness
• f today’s forward FX
• curve. USD IRR materially
• utperforms hurdle rate
• Contractual annual fixed rent incr

crea ease ses

• Residual

ual valu lue e = 100% of purchase price

• GBP/USD

/USD FX curve as of 4/19/19

Key y Assumptions ions

(1) Based on midpoint of estimated indicative rates of 2.7% - 2.9% given current market conditions as of 4/19/2019. Actual rate may differ.

18 18

Currency Risk Hedged with GBP-Denominated Debt and Cross Currency Swap

Realty Income is not taking material cash flow risk associated with fluctuations in FX rate

£300 million

15-year Debt Issuance

“Natural Hedge”: Debt financing in GBP aligns with lease term and currency of purchase price, UK entity cash flows ~ Allows Realty Income to access lower-cost financing given lower benchmark rates in UK

£130 million

15-year Cross Currency Swap

Eq Equit uity y inves estmen ment t an and ca cash flo low w repatri epatriation ation hedge: ge: Currency swap fixes the USD value of equity investment for entirety of 15-year lease term ~ Interim cash flow exchanges fix the USD cash flow Realty Income receives in exchange for GBP each period for 15 years

Mechanics of Cross Currency Swap

(1) GBP cash flows include projected expenses and increase over time to reflect annual rent growth

Based on GBP / USD FX rate as of 4/19/19

Fina nal l Ex Excha change ge (EO EOY 15) Ban ank Counter erpa part rtie ies

~£130 million ~$169 million

15 15-Yea Year CF Ex Excha changes Ban ank Counter erpa part rtie ies

GBP cash flow(1) Fixed USD coupon

Initia nitial Ex Excha change ge at Ince nception ption Ban ank Counter erpa part rtie ies

~$169 million ~£130 million

19 19

Upward Sloping FX Curve Provides USD Upside

Fixed USD cash flow compensates Realty Income for GBP forward points over 15 years

1.30 1.32 1.34 1.35 1.37 1.38 1.40 1.41 1.43 1.44 1.46 1.47 1.49 1.51 1.53 1.55

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Year

Current FX forward curve (GBP/USD) delivers increasing USD revenue over duration of lease agreement

5.4% 5.5% 5.7% 5.8% 6.0% 6.2% 6.3% 6.5% 6.7% 6.9% 7.1% 7.3% 7.5% 7.7% 7.9%

5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 5 10 15 20 25 30 35 40 45 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Yield ld on

• n Cos
• st

Revenue in GBP/USD Year

GBP (Left Axis) USD (Left Axis) Yield on Cost (Right Axis)

Forward curve supports faster rate

• f growth in USD
• ver time (average

erage yie ield d on c cost st of 6.6%)

Source: Bloomberg Based on average FX rates implied by forward curve as of 4/19/19

GBP increases in value by >1% on an annual basis based on current forward curve

7.1% 10.2% 9.7% 9.7%

Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Sep-26 Dec-26 Mar-27 Jun-27 Sep-27 Dec-27 Mar-28 Jun-28 Sep-28 Dec-28 Mar-29 Jun-29 Sep-29 Dec-29 Mar-30 Jun-30 Sep-30 Dec-30 Mar-31 Jun-31 Sep-31 Dec-31 Mar-32 Jun-32 Sep-32 Dec-32 Mar-33 Jun-33 Sep-33 Dec-33 Mar-34 Jun-34

GBP Cash on Cash Returns -- Unhedged Repatriated Earnings (8.6% Average Yield) USD Cash on Cash Returns -- Hedged Repatriated Earnings (9.7% Average Yield) 8.4% 12.0% 11.0% 11.9%

Sep-20 Dec-20 Mar-21 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Sep-26 Dec-26 Mar-27 Jun-27 Sep-27 Dec-27 Mar-28 Jun-28 Sep-28 Dec-28 Mar-29 Jun-29 Sep-29 Dec-29 Mar-30 Jun-30 Sep-30 Dec-30 Mar-31 Jun-31 Sep-31 Dec-31 Mar-32 Jun-32 Sep-32 Dec-32 Mar-33 Jun-33 Sep-33 Dec-33 Mar-34 Jun-34

GBP Cash on Cash Returns -- Total (10.1% Average) USD Cash on Cash Returns -- Total (11.4% Average)

20 20

Cross Currency Swap Generates Favorable Returns and Reduces CF Volatility

Swap converts hedged GBP cash flows to fixed USD cash flow for duration of 15 year lease term

(1) Assuming FX conversion for unhedged earnings at FX rates implied by current forward curve

“Total” refers to earnings that are not expected to be repatriated to the US parent in addition to earnings that Realty Income expects to repatriate to the US parent Analysis begins after year 1 of investment to account for uneven GBP cash flows due to one-time non-recurring cash outflows that result in artificially low GBP yields

Anticipated 9.7% fixed USD equity yield on ~85% of total AFFO (Cross-Currency Swap) Anticipated 11.0% - 11.9% USD equity yield on total AFFO(1) with minimal volatility

UK UK Ma Macr croec

• econ
• nomic
• mic

An Analys lysis is

57 73 40 60 80

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041

Population Projected Population

24 5

US UK

UK Density Supports Long-Term Real Estate Stability

Limited retail supply and supply growth also supports long-term viability of stable cash flow generation

22 22

66.5M

Current Population(1)

93,628

Square Miles The UK, by population, is approximately the size of California and Texas combined

(1) Source: UK Office for National Statistics (2) Source: ICSC; Springboard

The UK, by land area, is approximately the size of Oregon The UK, by GDP, is approximately the size of California

$2.8

Trillion GDP(3) Population density and growth, combined with limited retail supply and supply growth, creates compelling opportunity for long-term real estate investors

UK P Popul pulation ation an and d Pr Projecti ections

• ns(1)

(1)

(in millions)

Reta etail il Square are Footage tage Per Capit apita(2)

(2)

66.5M

(3) Source: OECD National Accounts Data files; Bureau of Economic Analysis

• 8%
• 4%

0% 4% 8% '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18

UK Economic Data is Less Volatile Than EU

Economic data points tend to more closely mirror those of the US

23 23 UK GDP growth has demonstrated superior stability versus the EU since 2010. Current unemployment of ~4% is the lowest in over 40 years.

• 1%

0% 1% 2% 3% 4% 2010 2011 2012 2013 2014 2015 2016 2017 2018 3% 6% 9% 12% 2010 2011 2012 2013 2014 2015 2016 2017 2018

Annual ual GDP Growth Rate Since e 2010(1

(1)

Une Unemplo loyment yment Rate e Since 2010(2

(2)

Coeffic icient ient of Variation ion for GDP Growth Since 2010 Household disposable income in the UK continues to rise, with a compound average annual growth rate of 2.6% since 2000(1).

EU UK US

Annual ual Ret etail il Sales Growth(1)

(1)

(1) Source: OECD National Accounts data files (2) Source: Bureau of Labor Statistics; UK Office for National Statistics; Eurostat

UK retail sales have a compound average annual growth rate of 2.5% since 2000, comparing favorably to the EU at 1.2% while demonstrating less volatility. Grocery accounts for approximately 50% of UK retail sales. UK UK EU EU US US 0.29 0.64 0.30

UK UK Gr Grocer

• cery

y In Indu dustr stry y Ov Over ervi view

£121 £124 £126 £130 £135 £140 £144 £152 £156 £161 £164 £164 £163 £166 £170

44% 46% 48% 50% 52% 54% 56% 58% 60% £0 £40 £80 £120 £160 £200 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Grocery Retailer Sales as % of Total Grocery Retailer Sales (GBP billion)

Historical

• rical UK Grocer

cery y Sal ales(1)

(1)

Grocery Retailers Sales (Left Axis) Grocery Retailers Sales as % of Total Retail Sales (Right Axis) Global Financial Crisis

UK Grocery Industry Has Proven to be Stable

Grocery sales in the UK have been resilient during the global financial crisis and Brexit uncertainty

25 25 Brexit Vote & Uncertainty

UK grocery sales have been growing consistently over the past 15 years in both nominal terms and as a percentage of retail market

(1) Grocery sales represent store-based sales only

Source: Passport Euromonitor International

CAGR R = 2.5% 5%

64% 19% 8% 7% 1%

UK Gr Grocer

• cery

y Ma Market t Sha hare re(1)(2)

Big 4 Discounters Premium Convenience "Pure play" online

UK Grocery Industry is Highly Concentrated

Sainsbury’s is one of the “Big 4” grocers that together comprise 64% of the UK grocery sales

26 26

(1) Source: IGD estimates (2) May not sum to 100% due to rounding (3) Big 4 market share includes all formats (supermarkets, hypermarkets, c-stores and online)

(3)

Quality product, excellent locations and differentiated assortment are hallmarks of the Sainsbury's brand

3.2% 4.3% 3.0% 4.6% 4.0% 4.0% 4.0% 2.4% 3.6% 3.5% 4.9% 5.8% 3.4% 2.6% 1.8% 1.0% 1.6% 2.8% 3.7% 3.1% 0.4% 3.8% 0.5% 0.8% 1.9%

• 1.5%
• 0.3% -0.4%
• 0.3%

0.5% 1.0% 1.0% 1.5% 4.8% 3.6% 4.8% 4.8% 2.8% 3.6% 2.0% 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18

UK R K Ret etail il and G d Grocer cery y Sales es Y/Y Growth wth(1)

(1)

Retail Sales (ex. fuel) Grocery Sales

UK Grocery Industry Has Been Stable Post-Brexit Referendum

UK grocery sales growth have improved since 2Q16

27 27

• Avg. ret

etail ail sales Y/Y growth: 2.5%

• Avg. gr

grocer

• cery sales Y/Y growth: 3.5%

(1) Source: UK Office for National Statistics

Brexit referendum 6/23/16

Addi dditi tional

• nal Back

ckgr ground

• und on
• n

Sainsbur insbury's y's

Realty Income Investment Thesis on Sainsbury’s

Leading operator, healthy balance sheet, high quality real estate and very defensive business model

Healthy Ba Balance lance Sheet eet

2

~ While not currently rated by agencies given lack of public debt, Sainsbury’s has an implied investment grade rating(3) ~ Sainsbury’s has ample liquidity to sustain any Brexit related supply chain issues

(1) Source: IGD estimates (2) Source: Realty Income’s analysis based on Sainsbury’s public filings (3) Implied investment grade rating is based on Realty Income analysis based on S&P credit methodology (4) Source: Eurostat (5) Source: Sainsbury’s public filings and Bloomberg

29 29

~ Above average stores based on sales and profitability ~ Average 15-minute drive time population

• f ~116,000

~ Average household income of local population above average for the UK

High-Quality Acquired Portfolio

4

~ Grocery is non-discretionary ~ UK food costs are amongst the lowest in the EU(4) ~ Same-store sales growth increased 4+% during Great Recession while EBITDAR margins and leverage improved(5)

Resilient to Economic Downturns

3

~ One of the top three largest UK grocery store operators (by sales)(1) ~ 7.5% EBITDAR margin is ahead of other grocers, reflecting differentiated product

• ffering and excellent locations(2)

Blue Chip UK Grocery Operator

1

Real alty ty Income come Exp Exposu

• sure

re % of Rent(1)

2.2% 1.3%(2) 1.4%

Summ mmar ary y Finan inancials cials (M (Most st Rece cent nt FYE) YE) Total Revenue(3)

$36,993 $500,343 $122,662

Gross Margin

23.3% 25.4% 22.0%

EBITDAR(3)

$2,761 $33,866 $5,545

Fixed Charge Coverage Ratio

1.4x 3.8x 1.3x

Sainsbury’s Consistent With Current Grocery Exposure

Sainsbury’s is a natural fit in Realty Income’s grocery exposure with high-quality operators

30 30

(1) Based on annualized rent as of 12/31/18, including, on a pro forma basis, the subject transaction (2) Represents only Walmart Neighborhood Market’s grocery stores, not entire Walmart exposure (3) USD in millions | Sainsbury’s financials are converted assuming 1.31 USD/GBP exchange rate

Source: Public filings of Sainsbury’s, Walmart and Kroger; company public filings

Representing 7.1% of revenue, the grocery industry will become Realty Income’s 5th largest industry

Sainsbury's: Solid Fundamentals, Improving Margins

As a “blue chip” grocer, Sainsbury's has a proven operating track record with improving trends

31 31

(1) Retail EBITDA adjusted for gains on disposal of properties (2) For the twelve months ended 9/22/2018 (3) (Net debt + Preferred + Capital & Operating lease obligations) / EBITDAR as of 9/22/2018. Sainsbury's Retail only, excludes Bank operations

Source: Sainsbury’s public filings 4.3x 4.0x 3.6x 3.2x

FY16 FY17 FY18 LTM

Total Debt/EBITDAR(3)

1,050 1,271

FY16 FY18

EBITDA, £m(1)

…and conservative leverage… Stable growth… …improving profits… …strong cash flow generation…

8 of l

• f last

st 9

Quarters with positive same-store sales (“SSS”) growth (ex. fuel)

21% %

Increase in EBITDA since 2016(1)

£662M M

Average free cash flow during last two fiscal years

1.1x

Decline in lease adjusted leverage since 2016(3)

+21% +21%

519 804 788

FY17 FY18 LTM

Free Cash Flow, £m

1.0% 0.3% 2.3% 0.6% 1.1%0.9% 0.2% 1.0%

• 1.1%

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

Historical SSS growth

FY17 FY18 FY19

(2) (2)

Business Model Highly Resistant to Economic Downturns

Sainsbury's sales growth, profitability, and leverage metrics remained strong during Great Recession

32 32

4.5x 4.1x 4.2x 4.0x 2007 2008 2009 2010

Sain insbur ury's y's Total l Deb ebt/EB /EBITD ITDAR AR(3)

(3)

2.5% 2.7% 3.1% 3.4% 2007 2008 2009 2010

Sain insbur ury's y's EBIT Margi gin(2)

(2)

2.5%

• 0.3%
• 4.2%

1.7% 2.8% 0.5% 0.3% 0.2% 5.9% 3.9% 4.5% 4.3% 2007 2008 2009 2010

Y/Y Growth wth du durin ing g Grea eat t Rec ecessi ession

• n(1)

(1)

UK GDP UK Retail Sales (ex. fuel) Sainsbury's SSS

~ Grocery is non-discretionary ~ Sainsbury's SSS growth

• utpaced broader UK

economic growth during Great Recession Sainsbury's EBIT margins and leverage improved during Great Recession

(1) Source: UK Office for National Statistics, Sainsbury’s public filings (2) Source: Sainsbury’s public filings, Bloomberg (3) (Net debt + Preferred + Capital & Operating lease obligations) / EBITDAR as of 9/22/2018. Sainsbury's Retail only, excludes Bank operations

Source: Sainsbury’s public filings, Bloomberg

UK G K Grocer cery y Mark rket t Share re Change ge Durin ing g 2011-20 2018 18(1)

1)

2.3% 2.1% 1.8% 0.2%

• 1.9%
• 0.9%
• 0.6%

1.3% 0.8% 0.9% 0.8%

• 1.7%
• 4.8%
• 2.8%

1.0% 2.3% 2011 2012 2013 2014 2015 2016 2017 2018

Big ig 4 Groce cers Same-St Store

• re Sales

es Growth wth(2)

(2)

Sainsbury's Average of Tesco, Asda & Morrisons

Sainsbury's Has Protected Market Share During Industry Evolution

Relatively well-positioned against the threat of discount stores

33 33 When discounters grew aggressively during 2011 through 2015, Sainsbury’s average SSS growth of ~1% outpaced peers’ by 200 bps

During era of aggressive growth of discounters (e.g., Aldi & Lidl), Sainsbury’s has maintained its market share better than its Big 4 competitors

(1) Source: IGD estimates (2) Source: Public filings of Sainsbury’s, Tesco, Asda and Morrisons

Big 4 includes Tesco, Sainsbury's, Asda and Morrisons

• 6.4%
• 1.0%

+6.7%

2.6% 2.4% 1.9% 0% 2% 3% 5% 6% 2010 2011 2012 2013 2014 2015 2016 2017 2018

Und Under erly lying ing EBIT Margi gin(1)

(1)

Aldi Sainsbury's Tesco Coeff ffic icie ient t of v f vari riatio tion: n: Tesco: 0.78 Aldi: 0.39 Sain ainsbu sbury ry's: s: 0.1 .18

Sainsbury’s Margins Remain Attractive Relative To Its Peers

Savvy pricing and operational efficiency tactics have protected Sainsbury's margins

34 34

Sainsbury's margins have proven more stable than Aldi's as discounters have had to sacrifice more margin to remain competitive Recent cost cutting initiatives and pricing initiatives have driven greater efficiency and foot traffic to Sainsbury's stores

50 90 130 170 210 250 2010 2011 2012 2013 2014 2015 2016 2017 2018

Sainsbury’s Sales per Full-Time Time Emplo mployee, ee, £ ‘000(1)

(1)

29% 29%

(1) Source: Realty Income’s estimates based on companies’ public filings and IGD estimates (2) Source: Nielsen Panel

3.1% 4.5% 1.1% 2.4% Groce rocery Indu ry Industry stry

Groce cery y Y/Y Transacti action

• n

Growth wth(2)

(2)

FY FY 17 17 FY FY 18 18 FY FY 18 18 FY FY 17 17

Sainsbury’s has maintained healthy EBIT margins even after discounting price to better compete with Aldi & Lidl.

Summar ummary y and Ne d Next xt Steps eps

Summary and Next Steps

Realty Income intends to scale its international platform to drive long-term value creation for shareholders

36 36

International growth supplements continued strength in domestic investment pipeline

Sainsbury’s transaction is consistent with proven domestic investment strategy Transaction generates immediate earnings accretion and healthy IRR The UK economy and grocery industry remains healthy despite Brexit uncertainty Financing and hedging strategy has mitigated currency risk

Incubate “boots on the ground” operational platform internationally and develop long-term relationships with industry-leading operators Grow high-quality real estate portfolio across multiple tenants, industries and property types Pursue additional financing vehicles to diversify access to capital

Ap Appen endix: dix:

E-Commerce Threat is Limited for UK Grocery Property Profiles

72% 18% 10%

2018 18 Onlin ine e UK Gr K Groce cery y Sales es by Player er(1)

Tesco, Sainsbury's & Asda Ocado & Amazon Other

E-Commerce Threat Is Limited for UK Grocery

Traditional grocery retailers remain the core distribution channel and dominate online sales

38 38

Tesco, Sainsbury's and Asda dominate

• nline grocery

sales in the UK with 72% market share Traditional grocery retail formats remain the core channel in the UK grocery market

£89 £40 £23 £16 £11 £10

20 40 60 80 100

Superma upermarket kets Co Conven nvenien ience ce Disc iscounte

• unters

rs Hyp Hypermark rmarkets ets Onli Online ne Othe Other £bn

2018 18 UK Gr K Groce cery y Sales es by Channel el(1)

(1) More Profitable Less Profitable Less Profitable Unprofitable Lower Margins More Profitable

(1) Source: IGD estimates (2) Source: IGD estimates, Knight Frank 2018 (3) Big 4’s supermarket sales only are included in the “supermarkets” category. Big 4’s c-store sales are included in the “convenience” category (4) Other includes Morrisons and Waitrose

6.0% 7.9%

Onlin ine e UK G K Grocer cery y Mark rket et Share(1)

(1)

2018 2023E

Online grocery currently accounts for just 6% 6% of the market and is expected to plat atea eau u at around 8%(2) Sainsbur ury's y's is

• ne of the

major online grocery distributors

(4) (3)

Traditional grocery retail formats (supermarkets & hypermarkets) account for ~55% 55% of sale les and an estimated 80%+ + of profits

• fits of

UK grocery store market(2)

Prop

• per

erty ty Prof

• files

iles

Banbury

40

Reg egion: n: South East England Yea ear B r Bui uilt lt: 1994 Bui uild lding ng Si Size e (s (sf): ): 105,191 Lot Lot Si Size e (a (acr cres es): ): 6.9 Pa Parki rking ng Sp Space ces: s: 405 Popula pulation ion(1)

1):

61,874 Vaca canc ncy: 2.1% Su Supp pply ly Growth(2)

2):

1.1% Net et Abs bsorpti ption

• n(2)

2):

0.9%

Petrol Station Car Wash Sainsbury's Cafe Groceries Click & Collect Lloyds Pharmacy Sainsbury's Bank Travel Money Argos

Pr Prope perty ty Chara haract cterist ristics ics

Inves estme tment nt Highli ligh ghts: ts: ~ Limited competition in immediate vicinity ~ Strong real estate fundamentals in market ~ Healthcare industry is a key traffic driver

(1) Within a 15 minute drive of subject property (2) Trailing 5-year average for retail market

All data current as of 12/31/18 unless otherwise noted Source: CoStar; Oxford Retail Consultants

Retail tail Mar arket t Chara haract cteristics eristics

41

Bodmin

Reg egio ion: n: South West England Yea ear B r Bui uilt lt: 2006 Bui uild ldin ing Si Size e (s (sf): ): 35,953 Lot Lot Si Size e (a (acr cres es): ): 2.3 Parki Parking ng Sp Spac aces: es: 250 Popula pulation ion(1)

1):

29,922 Avg.

• g. Vaca

canc ncy(2)

2):

1.6% Su Supp pply ly Growth(2)

2):

1.2% Net et Abs bsorpti ption

• n(2)

2):

1.3% Inves estme tment nt Highli ligh ghts: ts: ~ Limited competition in immediate vicinity and

• nly large grocer in center of town

~ Consistently low vacancy rate in submarket ~ Walkability of location

(1) Within a 15 minute drive of subject property (2) Trailing 5-year average for retail submarket

All data current as of 12/31/18 unless otherwise noted Source: CoStar; Oxford Retail Consultants

Argos Sainsbury's Cafe

Pr Prope perty ty Chara haract cterist ristics ics

Reta etail il Sub ubma market t Chara ract cteris eristic tics

42

Bradford

Petrol Station Car Wash Sainsbury's Cafe Groceries Click & Collect Sainsbury's Bank Travel Money Argos

Reg egion: n: Yorkshire Yea ear B r Bui uilt lt: 1983 Bui uild lding ng Si Size e (s (sf): ): 97,448 Lot Lot Si Size e (a (acr cres es): ): 6.5 Pa Parki rking ng Sp Space ces: s: 500 Popula pulation ion(1)

1):

168,323 Vaca canc ncy: 2.7% Su Supp pply ly Growth(2)

2):

0.7% Net et Abs bsorpti ption

• n(2)

2):

1.0% Inves estme tment nt Highli ligh ghts: ts: ~ Strong market with dense surrounding population ~ Limited supply growth ~ University and finance industry serve as key market drivers

(1) Within a 15 minute drive of subject property (2) Trailing 5-year average for retail market

All data current as of 12/31/18 unless otherwise noted Source: CoStar; Oxford Retail Consultants

Pr Prope perty ty Chara haract cterist ristics ics Retail tail Mar arket t Chara haract cteristics eristics

43

Bridgwater

Petrol Station Sainsbury's Cafe Groceries Click & Collect Lloyds Pharmacy Sainsbury's Bank Travel Money Argos

Reg egion: n: South West England Yea ear Bu r Buil ilt: 1989 Bui uild lding ng size ( e (sf): ): 68,085 Lot Lot Si Size e (a (acr cres es): ): 5.7 Pa Parki rking ng Sp Space ces: s: 502 Inves estme tment nt Highli ligh ghts: ts: ~ Strong location at the intersection of the town’s primary roads ~ Located in a complementary retail corridor ~ Industrial and manufacturing drivers in market Popula pulation ion(1)

1):

60,665 Avg.

• g. Vaca

canc ncy(2)

2):

1.9% Su Supp pply ly Growth(2)

2):

0.1% Net et Abs bsorpti ption

• n(2)

2):

0.6%

(1) Within a 15 minute drive of subject property (2) Trailing 5-year average for retail submarket

All data current as of 12/31/18 unless otherwise noted Source: CoStar; Oxford Retail Consultants

Pr Prope perty ty Chara haract cterist ristics ics

Reta etail il Sub ubma market t Chara ract cteris eristic tics

Cardiff

Petrol Station Sainsbury's Cafe Groceries Click & Collect Lloyds Pharmacy Sainsbury's Bank Travel Money Argos

Reg egion: n: Wales Yea ear B r Bui uilt lt: 1983 Bui uild lding ng Si Size e (s (sf): ): 130,055 Lot Lot Si Size e (a (acr cres es): ): 9.7 Pa Parki rking ng Sp Space ces: s: 650

44

Inves estmen tment t Hig ighli ligh ghts: ts: ~ Located in the capital city of Wales ~ Strong market with favorable demographics and growth trends ~ Located in retail corridor with significant population density in surrounding area Popula pulation ion(1)

1):

174,303 Vaca canc ncy: 2.0% Su Supp pply ly Growth(2)

2):

0.5% Net et Abs bsorpti ption

• n(2)

2):

0.8%

(1) Within a 15 minute drive of subject property (2) Trailing 5-year average for retail market

All data current as of 12/31/18 unless otherwise noted Source: CoStar; Oxford Retail Consultants

Pr Prope perty ty Chara haract cterist ristics ics Retail tail Mar arket t Chara haract cter eris istics tics

Grimsby

Petrol Station Car Wash Sainsbury's Cafe Groceries Click & Collect Lloyds Pharmacy Sainsbury's Bank Travel Money

Reg egio ion: n: Yorkshire Yea ear B r Bui uilt lt: 1988 Bui uild lding ng Si Size e (s (sf): ): 73,443 Lot Lot Si Size e (a (acr cres es): ): 5.8 Pa Parki rking ng Sp Space ces: s: 350

45

Inves estme tment nt Highli ligh ghts: ts: ~ Port logistics, fishing industry, and food processing industry are market drivers ~ Dense surrounding population ~ Retail and residential uses immediately surround property Popula pulation ion(1)

1):

94,820 Avg.

• g. Vaca

canc ncy(2)

2):

4.8% Su Supp pply ly Growth(2)

2):

0.7% Net et Abs bsorpti ption

• n(2)

2):

0.8%

(1) Within a 15 minute drive of subject property (2) Trailing 5-year average for retail market

All data current as of 12/31/18 unless otherwise noted Source: CoStar; Oxford Retail Consultants

Pr Prope perty ty Chara haract cterist ristics ics Retail tail Mar arket t Chara haract cteristics eristics

Hereford

Petrol Station Sainsbury's Cafe Groceries Click & Collect Lloyds Pharmacy Sainsbury's Bank Travel Money Argos

Reg egion: n: West Midlands Yea ear B r Bui uilt lt: 1988 Bui uild lding ng Si Size e (s (sf): ): 81,247 Lot Lot Si Size e (a (acr cres es): ): 6.6 Pa Parki rking ng Sp Space ces: s: 450

46

Inves estme tment nt Highli ligh ghts: ts: ~ Town is a regional hub for surrounding agriculture industry ~ Strong market with favorable growth trends ~ Retail and residential uses immediately surround property Popula pulation ion(1)

1):

66,036 Avg.

• g. Vaca

canc ncy(2)

2):

2.0% Su Supp pply ly Growth(2)

2):

2.5% Net et Abs bsorpti ption

• n(2)

2):

2.5%

(1) Within a 15 minute drive of subject property (2) Trailing 5-year average for retail submarket

All data current as of 12/31/18 unless otherwise noted Source: CoStar; Oxford Retail Consultants

Pr Prope perty ty Chara haract cterist ristics ics

Reta etail il Sub ubma market t Chara ract cteris eristic tics

Kempston

Petrol Station Sainsbury's Cafe Groceries Click & Collect Lloyds Pharmacy

Reg egion: n: East of England Yea ear B r Bui uilt lt: 1975 Bui uild lding ng Si Size e (s (sf): ): 99,885 Lot Lot Si Size e (a (acr cres es): ): 5.1 Pa Parki rking ng Sp Space ces: s: 480

47

Inves estme tment nt Highli ligh ghts: ts: ~ Good visibility from one of Kempston’s primary thoroughfares ~ Limited competition in immediate vicinity ~ Dense surrounding population Popula pulation ion(1)

1):

100,173 Vaca canc ncy: 2.3% Su Supp pply ly Growth(2)

2):

0.4% Net et Abs bsorpti ption

• n(2)

2):

0.5%

(1) Within a 15 minute drive of subject property (2) Trailing 5-year average for retail market

All data current as of 12/31/18 unless otherwise noted Source: CoStar; Oxford Retail Consultants

Pr Prope perty ty Chara haract cterist ristics ics Retail tail Mar arket t Chara haract cteristics eristics

Locksbottom

Groceries Click & Collect Lloyds Pharmacy Argos

Reg egion: n: London Yea ear B r Bui uilt lt: 1981 Bui uild lding ng Si Size e (s (sf): ): 86,221 Lot Lot Si Size e (a (acr cres es): ): 7.1 Pa Parki rking ng Sp Space ces: s: 400

48

Inves estme tment nt Highli ligh ghts: ts: ~ Strong market with favorable population density ~ Stable key traffic drivers, largely due to proximity to London and nearby hospital ~ Property is located in a heavily trafficked intersection of two major thoroughfares Popula pulation ion(1)

1):

140,727 Avg.

• g. Vaca

canc ncy(2)

2):

1.4% Su Supp pply ly Growth(2)

2):

0.5% Net et Abs bsorpti ption

• n(2)

2):

0.5%

(1) Within a 15 minute drive of subject property (2) Trailing 5-year average for retail market

All data current as of 12/31/18 unless otherwise noted Source: CoStar; Oxford Retail Consultants

Pr Prope perty ty Chara haract cterist ristics ics Retail tail Mar arket t Chara haract cteristics eristics

Northampton

Petrol Station Car Wash Groceries Click & Collect Lloyds Pharmacy Sainsbury's Bank Travel Money Argos

Reg egion: n: East Midlands Yea ear B r Bui uilt lt: 1988 Bui uild lding ng Si Size e (s (sf): ): 126,538 Lot Lot Si Size e (a (acr cres es): ): 6.1 Pa Parki rking ng Sp Space ces: s: 595

49

Inves estme tment nt Highli ligh ghts: ts: ~ Strong market with favorable demographics and growth trends ~ Good visibility from major thoroughfare ~ Situated in the middle of a retail cluster with several schools located nearby Popula pulation ion(1)

1):

148,081 Vaca canc ncy: 2.7% Su Supp pply ly Growth(2)

2):

0.6% Net et Abs bsorpti ption

• n(2)

2):

0.9%

(1) Within a 15 minute drive of subject property (2) Trailing 5-year average for retail market

All data current as of 12/31/18 unless otherwise noted Source: CoStar; Oxford Retail Consultants

Pr Prope perty ty Chara haract cterist ristics ics Retail tail Mar arket t Chara haract cter eris istics tics

Sheffield

Petrol Station Specsavers Sainsbury's Cafe Groceries Click & Collect Lloyds Pharmacy Sainsbury's Bank Travel Money Argos

Reg egion: n: Yorkshire Yea ear B r Bui uilt lt: 1984 Bui uild lding ng Si Size e (s (sf): ): 101,593 Lot Lot Si Size e (a (acr cres es): ): 6.2 Pa Parki rking ng Sp Space ces: s: 900

50

Inves estme tment nt Highli ligh ghts: ts: ~ Favorable demographics ~ Diverse set of market drivers, including finance, steel industry, and higher education ~ Adjacent retail uses complementary to the site Popula pulation ion(1)

1):

148,505 Avg.

• g. Vaca

canc ncy(2)

2):

2.7% Su Supp pply ly Growth(2)

2):

0.5% Net et Abs bsorpti ption

• n(2)

2):

0.8%

(1) Within a 15 minute drive of subject property (2) Trailing 5-year average for retail market

All data current as of 12/31/18 unless otherwise noted Source: CoStar; Oxford Retail Consultants

Pr Prope perty ty Chara haract cterist ristics ics Retail tail Mar arket t Chara haract cteristics eristics

Southampton

Petrol Station Car Wash Sainsbury's Cafe Groceries Click & Collect Sainsbury's Bank Travel Money Argos

Reg egion: n: South East England Yea ear B r Bui uilt lt: 1977 Bui uild lding ng Si Size e (s (sf): ): 116,590 Lot Lot Si Size e (a (acr cres es): ): 7.9 Pa Parki rking ng Sp Space ces: s: 700

51

Inves estme tment nt Highli ligh ghts: ts: ~ Limited competition nearby ~ Favorable demographics and population density in surrounding area ~ Strong key market drivers, including a major port, universities, and healthcare industry Popula pulation ion(1)

1):

128,341 Avg.

• g. Vaca

canc ncy(2)

2):

2.2% Su Supp pply ly Growth(2)

2):

1.1% Net et Abs bsorpti ption

• n(2)

2):

1.2%

(1) Within a 15 minute drive of subject property (2) Trailing 5-year average for retail submarket

All data current as of 12/31/18 unless otherwise noted Source: CoStar; Oxford Retail Consultants

Pr Prope perty ty Chara haract cterist ristics ics

Reta etail il Sub ubma market t Chara ract cteris eristic tics

In Inter ernationa national l Ex Expa pansion: nsion: Sale-Leaseback with Sainsbury’s

REALTY INCOME

April 2019