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Realty Income CEO addresses tenant watch list

executives donot typically talk about non-top tenants on earnings calls, but they made an exceptionduring the first-quarter call, commenting briefly on Sports Authority in light ofthe reports about its planned liquidation.

An analystasked executives to speak about the bear case scenario with respect to its tenantwatch list, specifically regarding Sports Authority, which previously has croppedup in the company's top-20 tenant list.

CEO JohnCase said the sporting goods retailer is presently responsible for "well under1%" of the company's rent revenue.

"Thestores that we have are receiving significant interest from a number of nationalretailers — some sporting goods stores, but also retailers outside of that sector,"Case said. "Our … cash flow coverages are quite strong."

Casesaid the company's current 2016 guidance incorporates the company's expectationswith regard to Sports Authority "and any other credit issues." The companystill expects to close 2016 with the portfolio at a rough 98% occupancy rate, hesaid, noting that the portfolio started the year at 98.4% and is 97.8% occupiedas of April 27.

"Thebiggest hit was in the first quarter — late in the first quarter, when we receivedthe Ovation Brands … properties back," he said. "And that was principallythe … reason for the down-tick in occupancy. And they came in late in the quarter,so we didn't have a lot of opportunity to work those properties, in terms of re-leasingand sales."