President and Chief Executive Officer at Realty Income
Thank you, Julie. Welcome, everyone. 2022 was a year of significant growth for our company. I would like to express my gratitude and appreciation to the Realty Income team who have worked tirelessly to execute on our strategic objectives and all of our investors for their support. The result of our team's collective efforts was reflected in our 2022 results, highlighted by AFFO per share growth of 9.2%, the highest annual growth rate for our company since 2013. Additionally, we closed an approximately $9 billion of high-quality investments in 2022, including $3.9 billion in the fourth quarter. Both the annual and fourth quarter investment volume set record highs for the Company. Underpinning investment activity, transaction flow remains robust. We saw $17 billion in the fourth quarter bringing 2022 sourcing volume to $95 billion. Finally, we ended the year with occupancy of 99%, our highest occupancy rate at the end of a reporting period in over 20 years.
At Realty Income, we strive to provide stability and sustainable growth on behalf of our investors. And during periods of economic uncertainty like we find ourselves in today, the resilience demonstrated by our business model is important to highlight. During our 28-year history as a public company, our combined total return consisting of AFFO per share growth and dividend payments generated by our operations has not experienced a single year of downside volatility in the form of negative total returns. We believe we are in very limited company among companies in the S&P 500 who can make that claim. This is a testament to the durability of our underlying cash flows, which is supported by a diversified portfolio of properties under long-term leases with clients that are leaders in their respective industries. We are constantly working to incubate new swim lanes for growth that offer attractive risk-adjusted returns. Since the start of 2022, we have expanded our [Technical Issues] new verticals to our platform. In October, we completed our debut transaction in Italy, acquiring seven wholesale clubs operated by Metro AG, an investment-grade pan-European leader in the wholesale club industry. As we discussed in 2019, when we purchased our first property internationally, we were intentional about consolidating the fragmented commercial real estate market in Europe, and Italy represents the third country abroad in which we now have a presence.
In December, we closed our $1.7 billion acquisition of Encore Boston Harbor Resort and Casino from Wynn Resorts, which represent our first transaction in the gaming industry. The property is a good example of our strategy to partner with best-in-class operators to acquire high-quality real estate. It was purchased at a discount to estimated replacement cost, is subject to a long triple net lease of 30 years with attractive annual rent escalators and is located on prime real estate with structural barriers to competition. As anticipated in August 2022, Massachusetts partially legalized professional and collegiate sports wagering for the state, unlocking an estimated $850 million of gross annual gaming revenue and further supporting the strategic importance of this asset.
In addition, we are pleased to announce a significant investment in what we are calling the consumer [Technical Issues] through the acquisition of a 224-property portfolio of dental practices during the fourth quarter. We expect this $520 million transaction to be just the start of additional investments we hope to make in a sector that we estimate has a total addressable market in the U.S. of nearly $1.8 trillion in real estate. We believe the consumer-centric medical industry shares many of the same attributes of the nondiscretionary service-based uses that make up much of our portfolio and that have proven resilient throughout our company's long history. These locations offer essential goods and services in and around the major thoroughfares in which our assets are [Technical Issues] properties leased to clients in a consumer-centric medical industry is extremely fragmented, which creates consolidation opportunities we believe we are well suited to address. We believe this industry will continue to move toward a patient-centric model. The trend towards the outpatient model has been ongoing for decades, but we expect this shift to occur in an accelerated fashion post-pandemic and will manifest in several ways that support our investment in the industry.
First, the convenience of having care delivered closer to the patient will increase accessibility to the patient and reduce costs for all including patients, payers and providers. Second, existing clients of ours, like Walgreens and CVS, will continue to disrupt the status quo as they gain an increasing share of primary care over time. And third, we believe these industry dynamics will help lower the per-capita spend on healthcare in the U.S. and help improve the quality of outcomes. It is also important to note that the adjacency and fungibility of these assets are a strong fit with our existing footprint from a real estate standpoint. As we underwrote this industry, we conducted a study analyzing over 30,000 variables and found that our portfolio had a 90% similarity with a data set of assets in this industry, and we look forward to increasing our exposure over time.
Moving on, as we announced earlier this week, actually yesterday, we have entered into a strategic alliance with Plenty, an emerging leader in vertical farms operations, to support the development of Plenty's indoor vertical farms. As the initial transaction of the alliance, we will fund the development of an indoor vertical farm asset near Richmond, Virginia, located adjacent to an Amazon distribution facility. Plenty's highly automated farming architecture efficiently harnesses scarce natural resources to generate production yields that it believes are up to 350 times greater per acre than conventional farming. We regard Plenty at the forefront of a structural evolution in crop production and [Technical Issues] growth plans. In summary, these distinct new verticals are representative of the growth opportunities we expect to unlock over time to create value for our shareholders.
Moving on to our portfolio. In addition to our record occupancy at year end, we are proud to have delivered a rent recapture rate of 103.8% during the fourth quarter on properties renewed or released, bringing our full year recapture rate to 105.9%. We attribute these results to our proactive asset management efforts, the underlying quality of our real estate and our rent levels in the portfolio relative to market.
Despite our recent accomplishments, we are still working through the impact of the pending bankruptcy on our Cineworld exposure, which is 1.4% of our total portfolio annualized base rent. As a reminder, we own 41 assets, 17 of which are subject to a single master lease agreement and 22 of which have been accounted for under cash basis accounting since the third quarter of 2020. Following the announcement of the Cineworld bankruptcy in September 2022, we have collected 100% of contractual rent in each month from October 2022 through February 2023. As resolution on the bankruptcy has not yet materialized, we deemed it appropriate to revisit [Technical Issues] we've had on our Cineworld receivables balance as we continue to evaluate the collectability of these amounts. As a result of this analysis and in an abundance of caution, in the fourth quarter, we recorded $13.7 million of additional reserves associated with nine Cineworld properties previously on accrual accounting. In total, we now have $35.6 million of cumulative reserves on 31 properties that are on cash basis accounting, representing approximately 70% of our outstanding receivables from Cineworld. As a result of these changes, our unreserved receivable outstanding from Cineworld was $15.6 million at year end, excluding straight-line rent receivables and including both deferred contractual rent and deferred expense recoveries. The 31 properties on cash basis accounting currently account for approximately $2.6 million of monthly contractual base rent. Based on public information and our proprietary analysis, we continue to believe our portfolio of Cineworld assets is generally comprised of the stronger performers in the operator's portfolio, and we will provide an update on the outcome of our negotiations when appropriate.
Finally, in January, we were pleased to welcome Greg Whyte as Chief Operating Officer. The COO role has been vacant since 2018 when I assumed the role of CEO, and having known Greg for many years, I believe he has the experience, leadership qualities and business acumen to add immediate value to the management team. Most recently, Greg served as a senior advisor in the real estate and lodging investment banking group at UBS Securities. I admire Greg's extensive knowledge of the commercial real estate space, and his thoughtfulness and integrity will mesh well with our culture at Realty Income.
I will now pass the call off to Christie who will further discuss results from the quarter.