Realty Income Acquires $135 Million Property Portfolio of 86 Retail Tire Stores

ESCONDIDO, Calif., Dec 1, 2003 (BUSINESS WIRE)

Realty Income Corp. (NYSE:O) announced today that it has provided approximately $135 million in sale-leaseback financing to TBC Corp. (NASDAQ:TBCC) by acquiring 86 retail tire locations under long-term, net-lease agreements. Realty Income acquired the 86 properties under 20-year, triple-net lease agreements. The stores were purchased for an average cost of $1.5 million and average approximately 10,500 in leasable square feet on a typical lot size of 1.2 acres. The properties are generally in desirable retail locations near major retail centers, located on high traffic thoroughfares. In addition, the properties acquired are primarily existing, seasoned, retail tire store locations with profitable operating histories. The 86 stores are located in 15 states including 29 properties in Texas (Dallas, Fort Worth, Houston, San Antonio, Austin, Waco and Beaumont), 11 in Illinois (Chicago MSA), 9 in Pennsylvania, 5 each in Massachusetts, Maryland and Ohio, 4 each in Missouri and Virginia, 3 each in New Jersey and New Hampshire, 2 each in Georgia, North Carolina and Tennessee, and 1 each in Kansas and West Virginia.

Realty Income also disclosed that it plans to hold approximately $110 million of the properties in its core portfolio as long-term investments and will place approximately $25 million of the properties in its Crest Net Lease Inc. subsidiary for future sales. After the sale of the Crest Net Lease properties, the company anticipates that TBC Corp. (TBC) will be its fourth largest tenant and generate approximately 5.8% of its annual revenue. The company also said that on November 18, 2003 it had issued $150 million of 12-year, 5.5% senior unsecured notes to pay down its bank facility and to fund the TBC acquisition. Following this acquisition, Realty Income will have a balance of approximately $60 million on its $250 million unsecured credit facility.

The company further disclosed that TBC used the financing proceeds to partially fund the acquisition of the 225-store, National Tire and Battery (NTB) retail chain from Sears (NYSE: S) for $225 million. TBC is the nation's largest independent tire retailer and, with the closing of this transaction, TBC will grow to over 1,160 locations throughout the United States. The acquired NTB stores will be integrated into TBC's "Tire Kingdom," company-operated retail store network, which will now have over 585 locations. TBC also has over 570 franchised tire and automotive service centers operating under the "Big O Tires" name.

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