Realty Income Corporation
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q, including the documents incorporated by reference, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this quarterly report, the words “estimate,” “anticipate,” “assume,” “expect,” “believe,” “intend,” “continue,” “should,” “may,” “likely,” “plan,” “seek,” and similar expressions are intended to identify forward-looking statements. Forward-looking statements include discussions of our business, strategy, plans, and the intentions of management; joint ventures, partnerships, and portfolio including management thereof; our platform; growth and capital strategies including our private capital business, investment pipeline and intentions to acquire or dispose of properties (including geographies, timing, partners, clients and terms); re-leases, re-development and speculative development of properties and expenditures related thereto; operations and results; our share repurchase program; settlement of shares of common stock sold pursuant to forward sale confirmations under our At-the-Market (“ATM”) program; dividends, including the amount, timing and payments of dividends; and macroeconomic and other business trends, including interest rates and trends in the market for long-term leases of freestanding, single-client properties. Forward-looking statements are subject to risks, uncertainties, and assumptions about us which may cause our actual future results to differ materially from expected results. Some of the factors that could cause actual results to differ materially are, among others, our continued qualification as a real estate investment trust; general domestic and foreign business, economic, or financial conditions; competition; fluctuating interest and currency rates; inflation and its impact on our clients and us; access to debt and equity capital markets and other sources of funding (including the terms, structure and partners of such funding); volatility and uncertainty in the credit and financial markets; other risks inherent in real estate, private capital, credit and mezzanine investments, and joint ventures or co-investment ventures, including solvency, defaults under leases, bankruptcies, potential liability relating to environmental matters, illiquidity of real estate investments (including rights of first refusal or rights of first offer), and potential damages from natural disasters; impairments in the value of our real estate assets; volatility and changes in domestic and foreign laws and the application, enforcement or interpretation thereof (including with respect to tax laws and rates); property ownership through co-investment ventures, funds, joint ventures, partnerships and other arrangements which, among other things, may transfer or limit our control of the underlying investments; epidemics or pandemics; the loss of key personnel; the threat and outcome of any legal proceedings to which we are a party or which may occur in the future; acts of terrorism and war; and the anticipated benefits from mergers, acquisitions, co-investment ventures, funds, joint ventures, partnerships and other arrangements.
Additional factors that may cause risks and uncertainties include those discussed in the sections entitled “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report on Form 10-K, for the year ended December 31, 2025.
Readers are cautioned not to place undue reliance on forward-looking statements. These forward-looking statements are not guarantees of future plans and performance and speak only as of the date this quarterly report was filed with the Securities and Exchange Commission (the "SEC"). Past operating results and performance are provided for informational purposes and are not a guarantee of future results. There can be no assurance that historical trends will continue. Actual plans and results may differ materially from what is expressed or forecasted in this quarterly report and forecasts made in the forward-looking statements discussed in this quarterly report might not materialize. We do not undertake any obligation to update forward-looking statements or publicly release the results of any forward-looking statements that may be made to reflect events or circumstances after the date these statements were made or to reflect the occurrence of unanticipated events.
OVERVIEW
Realty Income (NYSE: O), an S&P 500 company, is real estate partner to the world's leading companies®. Founded in 1969, we serve our clients as a full-service real estate capital provider. As of March 31, 2026, we have a portfolio of over 15,500 properties in all 50 states of the United States ("U.S."), the United Kingdom ("U.K."), and eight other countries in Europe. We are known as “The Monthly Dividend Company®” and have a mission to invest in people and places to deliver dependable monthly dividends that increase over time. Since our founding, we have declared 670 consecutive monthly dividends and are a member of the S&P 500 Dividend Aristocrats® index for having increased our dividend for over 31 consecutive years.
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As of March 31, 2026, we owned or held interests in 15,571 properties, with approximately 347.6 million square feet of leasable space leased to 1,786 clients doing business in 92 separate industries. Of the 15,571 properties in our portfolio as of March 31, 2026, 15,206, or 97.7%, were single-tenant properties, and the remaining were multi–client properties. Our total portfolio of 15,571 properties as of March 31, 2026 had a weighted average remaining lease term (excluding rights to extend a lease at the option of the client) of approximately 8.7 years. Total portfolio annualized base rent (defined as our pro-rata share of contractual monthly base rent for all leases in place and exchange rates as of the balance sheet date, multiplied by 12) on our leases as of March 31, 2026 was $5.23 billion.
As of March 31, 2026, approximately 32.0% of our total portfolio annualized base rent comes from properties leased to our investment grade clients, their subsidiaries or affiliated companies. As of March 31, 2026, our top 20 clients (based on percentage of total portfolio annualized base rent) represented approximately 35.3% of our annualized base rent and 12 of these clients have investment grade credit ratings or are subsidiaries or affiliates of investment grade companies. Approximately 91% of our annualized retail base rent as of March 31, 2026, is derived from our clients with a service, non-discretionary, and/or low price point component to their business.
Unless otherwise specified, references to rental revenue in the Management's Discussion and Analysis of Financial Condition and Results of Operations are exclusive of reimbursements from clients for recoverable real estate taxes and operating expenses totaling $97.5 million and $87.4 million for the three months ended March 31, 2026 and 2025, respectively.
RECENT DEVELOPMENTS
Increases in Monthly Dividends to Common Stockholders
We have continued our 57-year history of paying monthly dividends by increasing the dividend twice during 2026. As of May 2026, we have paid 114 consecutive quarterly dividend increases and increased the dividend 134 times since our listing on the NYSE in 1994.
2026 Dividend increases | Month Declared | Month Paid | Monthly Dividend per share | Increase per share | ||||||||||||||||
| 1st increase | Dec 2025 | Jan 2026 | $ | 0.2700 | $ | 0.0005 | ||||||||||||||
| 2nd increase | Mar 2026 | Apr 2026 | $ | 0.2705 | $ | 0.0005 | ||||||||||||||
The dividends paid per share during the three months ended March 31, 2026 totaled $0.8100, as compared to $0.7960 during the three months ended March 31, 2025, an increase of $0.0140, or 1.8%.
The monthly dividend of $0.2705 per share represents a current annualized dividend of $3.246 per share, and an annualized dividend yield of 5.3% based on the last reported sale price of our common stock on the NYSE of $61.18 on March 31, 2026. Although we expect to continue our policy of paying monthly dividends, we cannot guarantee that we will maintain our current level of dividends, that we will continue our pattern of increasing dividends per share, or what our actual dividend yield will be in any future period.
Investments
During the three months ended March 31, 2026, we invested $2.8 billion; our pro-rata share was $2.6 billion at an initial weighted average cash yield of 7.1%, including investments in 194 properties, properties under development or expansion, unconsolidated entities, and loans. See notes 3, Investments in Real Estate, 4, Investments in Unconsolidated Entities, and 5, Investments in Loans and Financing Receivables to the consolidated financial statements for further details.
Establishment of Joint Venture with Apollo
In March 2026, we established our Managed Insurance and Retirement Annuity investment platform as a vehicle to pursue various co-investment opportunities with institutional investors. In connection with this initiative, on March 31, we closed a $1.0 billion strategic investment from Apollo in exchange for a 49% interest in a newly formed joint venture which owns an existing portfolio of 492 retail properties contributed by the Company.
Establishment of Joint Venture with GIC
In January 2026, we established a strategic relationship with GIC, a leading global institutional investor, including the formation of a build-to-suit development joint venture with total combined commitments of over $1.5 billion.
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Dispositions
During the three months ended March 31, 2026, we sold 97 properties with total net proceeds received of $188.0 million.
Equity Capital Raising
As of May 6, 2026, we had outstanding forward sale agreements under our ATM program for a total of 23.6 million shares of common stock, representing expected net proceeds of approximately $1.4 billion, of which 2.8 million shares were sold in April 2026 (assuming full physical settlement of such agreements).
Note Issuance
In April 2026, we issued $800.0 million of 4.750% senior unsecured notes due April 2033. In connection with the offering, we executed a $500 million U.S. Dollar-to-Euro 7-year cross currency swap, resulting in approximately €436 million of proceeds and a blended coupon rate of 4.16%. See note 19, Subsequent Events, to the consolidated financial statements for further details.
Term Loan Issuance
In March 2026, we closed a $693.9 million unsecured term loan due January 2036 at a fixed rate of 4.91% and executed a cross-currency swap on $500.0 million of proceeds for approximately €431.0 million, achieving an effective blended borrowing rate of 4.34%.
Convertible Bond Issuance
In January 2026, we issued $862.5 million principal amount of 3.500% convertible senior notes due January 2029 in a private offering, resulting in net proceeds of $845.1 million. We used approximately $101.9 million of the net proceeds to repurchase approximately 1.8 million shares of our common stock concurrently with the pricing of the offering.
Portfolio Discussion
Leasing Results
As of March 31, 2026, we had 172 properties available for lease or sale out of 15,571 properties in our portfolio, which represents a 98.9% occupancy rate based on the number of properties in our portfolio. Our property-level occupancy rates exclude properties with ancillary leases only, such as cell towers and billboards, and properties with possession pending, and include properties owned by unconsolidated joint ventures. Below is a summary of our portfolio activity for the period indicated below:
Three months ended March 31, 2026 | ||||
Properties available for lease as of December 31, 2025 | 173 | |||
Lease expirations (1) | 320 | |||
| Re-leases to same client | (220) | |||
| Re-leases to new client | (23) | |||
| Vacant dispositions | (78) | |||
Properties available for lease as of March 31, 2026 | 172 | |||
(1)Includes scheduled and unscheduled expirations (including leases rejected in bankruptcy), as well as future expirations resolved in the period indicated above.
During the three months ended March 31, 2026, the new annualized base rent on re-leased units was $73.3 million, as compared to the previous annual rent of $70.9 million on the same units, representing a rent recapture rate of 103.4% on the re-leased units.
As part of our re-leasing costs, we pay leasing commissions to unrelated, third-party real estate brokers consistent with the commercial real estate industry standard, and sometimes provide rent concessions to our clients. We do not consider the collective impact of the leasing commissions or rent concessions to our clients to be material to our financial position or results of operations.
Impact of Inflation
Leases generally provide for limited increases in rent as a result of fixed increases, increases in the consumer price index, retail price index in the case of certain leases in the U.K. (typically subject to ceilings), or increases in clients’ sales volumes. We expect that inflation will cause these lease provisions to result in rent increases over time.
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During times when inflation is greater than increases in rent, as provided for in the leases, rent increases may not keep up with the rate of inflation and other costs.
Moreover, our strategic focus on the use of net lease agreements reduces our exposure to rising property expenses due to inflation because the client is responsible for property expenses. Even though the utilization of net leases reduces our exposure to rising property expenses due to inflation, substantial inflationary pressures and increased costs may have an adverse impact on our clients if increases in their operating expenses exceed increases in revenue, which may adversely affect our clients' ability to pay rent. Additionally, inflationary periods may cause us to experience increased costs of financing, make it difficult to refinance debt at attractive rates or at all, and may adversely affect the properties we can acquire if the cost of financing an acquisition is in excess of our anticipated earnings from such property, thereby limiting the properties that can be acquired.
Impact of Real Estate and Capital Markets
In the commercial real estate market, property prices generally continue to fluctuate. Likewise, during certain periods, the global capital markets have experienced significant price volatility, dislocations, and liquidity disruptions, which may impact our access to and cost of capital. We continually monitor the commercial real estate and global capital markets carefully and, if required, will make decisions to adjust our business strategy accordingly.
Impact of Current Macroeconomic Conditions
We monitor developments related to macroeconomic factors that could have an adverse impact on our business and our clients. Our clients face challenges that may differ from or be additional to challenges we face, including potential changes in consumer confidence levels, behavior and spending and increased operational expenses, including potential impacts from changes in global trade policies. The extent of the future effects on our business, results of operations, cash flows, and growth strategies is highly uncertain and will ultimately depend on future developments, none of which can be predicted.
LIQUIDITY AND CAPITAL RESOURCES
Our primary cash obligations are included in the “Material Cash Requirements” table, which is presented later in this section. We expect to fund our operating expenses and other short-term liquidity requirements, including property acquisitions and development costs, payment of principal and interest on our outstanding indebtedness, property improvements, re-leasing costs, and cash distributions to common stockholders, primarily through a combination of the following:
•Cash and cash equivalents;
•Future cash flows from operations;
•Issuances of common stock or debt, or other securities offerings;
•Additional borrowings under our credit facilities or commercial paper programs, which are backstopped by our credit facilities;
•Short-term loans;
•Asset dispositions; and
•Credit investment repayments.
In addition to these sources of liquidity, we manage and own our interest in our perpetual life U.S. Core Plus Fund (the "Fund"). On January 1, 2026, within our Fund, we called $638.0 million of capital from third-party investors and redeemed $408.2 million of the Company's units, resulting in an indirect ownership of 38.5% in the Fund. On April 1, 2026, we called an additional $310.0 million of capital from third-party investors and redeemed $183.8 million of the Company's units, resulting in an indirect ownership of 26.8% in the Fund. We seek to hold additional closings during the life of the Fund. In March 2026, we also established a strategic relationship with Apollo, a high-growth, global alternative asset manager, and closed on $1.0 billion of gross proceeds in exchange for Apollo’s acquisition of a 49% interest in a joint venture that indirectly owns a diversified net lease portfolio comprised entirely of single-tenant retail properties. We intend to evaluate other opportunities to raise private capital in the future, including potentially through additional funds and/or joint venture opportunities.
We believe that our cash and cash equivalents on hand, cash provided from operating activities, and borrowing capacity are sufficient to meet our liquidity needs for the next twelve months. We intend, however, to use permanent or long-term capital to fund property acquisitions and to repay future borrowings under our credit facilities and commercial paper programs.
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Long-Term Liquidity Requirements
Our primary goal is to deliver dependable monthly dividends to stockholders that increase over time. Historically, we have met our principal short-term and long-term capital needs, including the funding of high-quality real estate acquisitions, investments in loans to clients, property development, and capital expenditures by issuing common stock, long-term unsecured notes, and term loan borrowings. While the issuance of common stock has historically been an important component of our capital structure, we continue to broaden and diversify our sources of capital to reduce reliance on the public capital markets. This approach enhances capital availability across market cycles, improves cost‑of‑capital certainty, and increases financial flexibility. However, there can be no assurance that our efforts will be successful.
Capitalization
As of March 31, 2026, our total capitalization was $87.8 billion. Total capitalization consisted of $57.2 billion of common equity (based on the March 31, 2026 closing price on the NYSE of $61.18 and assuming the conversion of 2.7 million common units of Realty Income, L.P.), and total outstanding borrowings of $30.5 billion on our credit facilities, commercial paper, term loans, mortgages payable, and senior unsecured notes and bonds and our proportionate share of joint venture debt (excluding unamortized deferred financing costs, discounts, and premiums).
Share Repurchase Program
We are authorized to repurchase up to $2.0 billion in shares of our common stock under our share repurchase program, which will expire in January 2028. Repurchases under the repurchase program may be made at management’s discretion from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions, Rule 10b5-1 plans or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The repurchase program does not obligate us to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at our discretion. In January 2026, we repurchased 1.8 million shares of our common stock for $101.9 million under the repurchase program.
ATM Program
As of March 31, 2026, we had outstanding forward-sale agreements under our ATM program for a total of 20.8 million shares of common stock, representing approximately $1.2 billion in expected net proceeds, which have been executed at a weighted average price of $58.63 per share (assuming full physical settlement of all outstanding shares of common stock, subject to such forward sale agreements and certain assumptions made with respect to settlement dates). Additionally, as of March 31, 2026, we had 132.9 million shares remaining for future issuance under our ATM program. We anticipate maintaining the availability of our ATM program in the future, including the replenishment of authorized shares issuable thereunder.
Debt Financing Activities
As of March 31, 2026, our total outstanding borrowings of credit facilities, commercial paper, term loans, mortgages payable, and senior unsecured notes and bonds were $30.0 billion, with a weighted average maturity of 5.4 years and a weighted average interest rate of 3.8%. As of March 31, 2026, approximately 92% of our total debt was fixed rate debt. See notes 6 through 8 to the consolidated financial statements for additional information about our outstanding debt, along with our debt financing activities during the three months ended March 31, 2026 below.
Term Loan Issuance
In March 2026, we closed a $693.9 million unsecured term loan due January 2036 with an affiliate of The Goldman Sachs Group, Inc. at a fixed rate of 4.91% and executed a cross-currency swap on $500.0 million of proceeds for approximately €431.0 million, achieving an effective blended borrowing rate of 4.34%.
Convertible Bond Issuance
In January 2026, we issued $862.5 million principal amount of 3.500% convertible senior notes due January 2029 in a private offering, resulting in net proceeds of $845.1 million. We used approximately $101.9 million of the net proceeds to repurchase approximately 1.8 million shares of our common stock concurrently with the pricing of the offering. The notes are senior, unsecured obligations of Realty Income and accrue interest at a rate of 3.500% per annum, payable semi-annually in arrears. The notes will mature on January 15, 2029, unless earlier repurchased, redeemed or converted.
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Note Issuance
In April 2026, we issued $800.0 million of 4.750% senior unsecured notes due April 2033. See note 19, Subsequent Events, to the consolidated financial statements for further details. In connection with the offering, we executed a $500 million U.S. Dollar-to-Euro 7-year cross currency swap, resulting in approximately €436 million of proceeds and a blended coupon rate of 4.16%. See note 19, Subsequent Events, to the consolidated financial statements for further details.
Note Repayments
During the three months ended March 31, 2026, we repaid the following notes, plus accrued and unpaid interest, upon maturity:
| 2026 Repayments | Date of Issuance | Maturity Date | Principal amount (in millions) | ||||||||||||||
5.050% Notes | January 2023 | January 2026 | $ | 500.0 | |||||||||||||
0.750% Notes | December 2020 | March 2026 | $ | 325.0 | |||||||||||||
Note Covenants
The following is a summary of the key financial covenants for our senior unsecured notes, as defined and calculated per the terms of our senior notes and bonds. These calculations, which are not based on accounting principles generally accepted in the United States of America ("U.S. GAAP"), are presented to investors to show our ability to incur additional debt under the terms of our senior notes and bonds as well as to disclose our current compliance with such covenants and are not measures of our liquidity or performance. The actual amounts as of March 31, 2026, are:
Note Covenants | Required | Actual | ||||||
Limitation on incurrence of total debt | < 60% of adjusted assets | 41.4 | % | |||||
Limitation on incurrence of secured debt | < 40% of adjusted assets | 0.2 | % | |||||
Debt service and fixed charge coverage (trailing 12 months) (1) | > 1.5x | 4.7x | ||||||
Maintenance of total unencumbered assets | > 150% of unsecured debt | 242.5 | % | |||||
(1) Our debt service coverage ratio is calculated on a pro forma basis for the preceding four-quarter period on the assumptions that: (i) the incurrence of any Debt (as defined in the covenants) by us since the first day of such four-quarter period and the application of the proceeds therefrom (including to refinance other Debt since the first day of such four-quarter period), (ii) the repayment or retirement of any of our Debt since the first day of such four-quarter period, and (iii) any acquisition or disposition by us of any asset or group since the first day of such four quarters and subject to certain additional adjustments. Such pro forma ratio has been prepared on the basis required by that debt service covenant, reflects various estimates and assumptions and is subject to other uncertainties, and therefore does not purport to reflect what our actual debt service coverage ratio would have been had transactions referred to in clauses (i), (ii) and (iii) of the preceding sentence occurred as of the first day of four-quarter period, nor does it purport to reflect our debt service coverage ratio for any future period. Fixed charge coverage is calculated in the same manner as the debt service coverage. The following is our calculation of debt service and fixed charge coverage as of March 31, 2026 (in thousands, for trailing twelve months):
Net income attributable to the Company | $ | 1,120,542 | |||
Plus: interest expense, excluding the amortization of deferred financing costs | 1,126,716 | ||||
Plus: provision for taxes | 95,883 | ||||
Plus: depreciation and amortization | 2,545,540 | ||||
Plus: provisions for impairment | 484,014 | ||||
Plus: pro forma adjustments | 232,491 | ||||
Less: provisions for gains from sales or joint ventures | (190,746) | ||||
Income available for debt service, as defined | $ | 5,414,440 | |||
Total pro forma debt service charge | $ | 1,150,398 | |||
| Debt service and fixed charge coverage ratio | 4.7x | ||||
Credit Agency Ratings
The borrowing interest rates under our revolving credit facilities are based upon our ratings assigned by credit rating agencies. As of March 31, 2026, we were assigned the following investment grade corporate credit ratings on our senior unsecured notes and bonds: Moody’s Investors Service has assigned a rating of A3 with a “stable” outlook and Standard & Poor’s Ratings Group has assigned a rating of A- with a “stable” outlook. In addition, we were assigned the following ratings on our commercial paper as of March 31, 2026: Moody's Investors Service has assigned a rating of P-2 and Standard & Poor's Ratings Group has assigned a rating of A-2.
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Based on our credit rating agency ratings as of March 31, 2026, our credit facilities provide for (i) USD borrowings at Secured Overnight Financing Rate ("SOFR") plus 0.725% and (ii) British Pound Sterling ("GBP") borrowings at the Sterling Overnight Indexed Average (“SONIA”) plus 0.725%, and (iii) Euro ("EUR") borrowings at a benchmark rate selected in accordance with the credit agreement. A revolving credit facility commitment fee of 0.125% is payable on the total commitment amount. The credit agreement also provides flexibility to elect different interest rate tenors or daily rate options for each currency tranche.
In addition, our credit facilities provide that the interest rates can range between: (i) SOFR/SONIA/Euro Interbank Offered Rate (“EURIBOR”), plus 1.40% if our credit rating is lower than BBB-/Baa3 or our senior unsecured debt is unrated and (ii) SOFR/SONIA/EURIBOR, plus 0.70% if our credit rating is A/A2 or higher. In addition, our credit facilities provide for a facility commitment fee based on our credit ratings, which ranges from: (i) 0.30% for a rating lower than BBB-/Baa3 or unrated, and (ii) 0.10% for a credit rating of A/A2 or higher.
We also issue senior debt securities from time to time and our credit ratings can impact the interest rates charged in those transactions. If our credit ratings or ratings outlook change, our cost to obtain debt financing could increase or decrease. The credit ratings assigned to us could change based upon, among other things, our results of operations and financial condition. These ratings are subject to ongoing evaluation by credit rating agencies, and we cannot assure you that our ratings will not be changed or withdrawn by a rating agency in the future if, in its judgment, circumstances warrant. Moreover, a rating is not a recommendation to buy, sell or hold our debt securities or common stock.
Material Cash Requirements
The following table summarizes the maturity of each of our obligations as of March 31, 2026 (in millions):
| 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | |||||||||||||||||||||||||||||||
Credit Facilities (1) | $ | — | $ | 1,342.3 | $ | — | $ | 551.9 | $ | — | $ | — | $ | 1,894.2 | |||||||||||||||||||||||
Commercial Paper (2) | 414.9 | — | — | — | — | — | 414.9 | ||||||||||||||||||||||||||||||
| Unsecured Term Loans | — | 500.0 | 1,189.5 | — | — | 693.9 | 2,383.4 | ||||||||||||||||||||||||||||||
| Mortgages Payable | 11.6 | 22.4 | 1.3 | 1.3 | 0.9 | — | 37.5 | ||||||||||||||||||||||||||||||
| Senior Unsecured Notes and Bonds | 1,550.0 | 2,358.9 | 2,499.8 | 3,674.4 | 2,446.4 | 12,699.1 | 25,228.6 | ||||||||||||||||||||||||||||||
Interest (3) | 848.2 | 1,033.1 | 860.1 | 774.8 | 627.2 | 3,053.2 | 7,196.6 | ||||||||||||||||||||||||||||||
Ground Leases Paid by the Company (4) | 17.1 | 13.8 | 11.7 | 12.9 | 13.4 | 569.2 | 638.1 | ||||||||||||||||||||||||||||||
Ground Leases Paid by Our Clients (5) | 23.8 | 30.0 | 27.2 | 24.9 | 23.3 | 311.1 | 440.3 | ||||||||||||||||||||||||||||||
Other (6) | 580.2 | 187.2 | 22.2 | — | — | 4.3 | 793.9 | ||||||||||||||||||||||||||||||
| Total | $ | 3,445.8 | $ | 5,487.7 | $ | 4,611.8 | $ | 5,040.2 | $ | 3,111.2 | $ | 17,330.8 | $ | 39,027.5 | |||||||||||||||||||||||
(1) The initial terms of the RI Credit Facilities expire in April 2027 and April 2029 and include, at our option, two six-month extensions. The initial term of the Fund Credit Facilities expires in April 2029 and includes, at our option, two six-month extensions.
(2) Commercial paper programs outstanding were $414.9 million, maturing between April 2026 and June 2026.
(3) Interest on the commercial paper programs, term loans, mortgages payable, and senior unsecured notes and bonds has been calculated based on outstanding balances at period end through their respective maturity dates.
(4) We currently pay the ground lessors directly for the rent under certain ground lease arrangements.
(5) Our clients, who are generally sub-tenant clients under ground leases, are responsible for paying the rent under these ground leases.
(6) “Other” consists of $736.3 million of commitments under construction contracts, $42.3 million for tenant improvements, recurring capital expenditures, and building improvements, and $15.2 million in contingent purchase consideration obligations related to leasing activities at four U.K. retail park properties acquired in 2026.
In addition to the contractual obligation presented above, as of March 31, 2026, we had approximately $390.1 million of unfunded loan commitments related to certain loan investments. These commitments are not reflected in the table above, as the timing of the funding is dependent on borrower request and the satisfaction of customary conditions, and therefore cannot be reasonably estimated by period. See Note 18 Commitments and Contingencies to the consolidated financial statements for further details.
Investments in Unconsolidated Entities
As of March 31, 2026, our pro-rata share of secured debt of unconsolidated entities was approximately $659.2 million.
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DIVIDEND POLICY
Distributions are paid monthly to holders of shares of our common stock.
Distributions are paid monthly to the limited partners holding common units of Realty Income, L.P., each on a per unit basis that is equal to the amount paid per share to our common stockholders (subject to the adjustment factor applicable to those units at the time of such distribution).
In order to maintain our status as a real estate investment trust ("REIT") for federal income tax purposes, we generally are required to distribute dividends to our stockholders aggregating annually at least 90% of our taxable income (excluding net capital gains), and we are subject to income tax to the extent we distribute less than 100% of our taxable income (including net capital gains). In 2025, our cash distributions to common stockholders totaled $2.92 billion, or approximately 159.0% of our estimated taxable income of $1.84 billion. Certain measures are available to us to reduce or eliminate our tax exposure as a REIT, and accordingly, no provision for U.S. federal income taxes, other than our taxable REIT subsidiaries (each, a "TRS"), has been made. Our estimated taxable income reflects non-cash deductions for depreciation and amortization. Our estimated taxable income is presented to show our compliance with REIT dividend requirements and is not a measure of our liquidity or operating performance. We intend to continue to make distributions to our stockholders that are sufficient to meet this dividend requirement and that will reduce or eliminate our exposure to income taxes. Furthermore, we believe our cash on hand and funds from operations are sufficient to support our current level of cash distributions to our stockholders. We distributed $0.81 per share to stockholders during the three months ended March 31, 2026, representing 71.7% of our diluted Adjusted Funds from Operations Available to Common Stockholders ("AFFO") per share of $1.13.
Future distributions will be at the discretion of our Board of Directors and will depend on, among other things, our results of operations, Funds from Operations Available to Common Stockholders ("FFO"), Normalized Funds from Operations Available to Common Stockholders ("Normalized FFO"), AFFO, cash flow from operations, financial condition, capital requirements, the annual distribution requirements under the REIT provisions of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), our debt service requirements, and any other factors the Board of Directors may deem relevant. In addition, our RI Credit Facilities contain financial covenants that could limit the amount of distributions payable by us in the event of a default, and which prohibit the payment of distributions on our common stock in the event that we fail to pay when due (subject to any applicable grace period) any principal or interest on borrowings under our RI Credit Facilities.
Distributions of our current and accumulated earnings and profits for federal income tax purposes generally will be taxable to stockholders as ordinary income, except to the extent that we recognize capital gains and declare a capital gains dividend, or that such amounts constitute “qualified dividend income” subject to a reduced rate of tax. The maximum tax rate of non-corporate taxpayers for “qualified dividend income” is generally 20%. In general, dividends payable by REITs are not eligible for the reduced tax rate on qualified dividend income, except to the extent that certain holding requirements have been met with respect to the REIT’s stock and the REIT’s dividends are attributable to dividends received from certain taxable corporations (such as our TRSs) or to income that was subject to tax at the corporate or REIT level (for example, if we distribute taxable income that we retained and paid tax on in the prior taxable year). However, non-corporate stockholders, including individuals, generally may deduct up to 20% of dividends from a REIT, other than capital gain dividends and dividends treated as qualified dividend income.
Distributions in excess of earnings and profits generally will first be treated as a non-taxable reduction in the stockholders’ basis in their stock, but not below zero. Distributions in excess of that basis generally will be taxable as a capital gain to stockholders. Approximately 33.6% of the distributions to our common stockholders, made or deemed to have been made in 2025, were classified as a return of capital for federal income tax purposes.
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RESULTS OF OPERATIONS
The following is a comparison of our results of operations for the three months ended March 31, 2026 and 2025.
Total Revenue
The following summarizes our total revenue (in thousands):
| Three months ended March 31, | |||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||||
Rental (excluding reimbursements) | $ | 1,343,332 | $ | 1,225,679 | $ | 117,653 | |||||||||||||||||||||||||||||||
Rental (reimbursements) | 97,485 | 87,378 | 10,107 | ||||||||||||||||||||||||||||||||||
| Interest income on financing receivables | 32,130 | 32,635 | (505) | ||||||||||||||||||||||||||||||||||
| Interest and dividend income on loans and preferred equity investments | 70,110 | 34,736 | 35,374 | ||||||||||||||||||||||||||||||||||
Other | 5,670 | 77 | 5,593 | ||||||||||||||||||||||||||||||||||
Total revenue | $ | 1,548,727 | $ | 1,380,505 | $ | 168,222 | |||||||||||||||||||||||||||||||
Rental Revenue (excluding reimbursements)
The table below summarizes the increase in rental revenue (excluding reimbursements) in the three months ended March 31, 2026 and 2025 (dollars in thousands):
| Three months ended March 31, | |||||||||||||||||||||||||||
| Number of Properties | 2026 | 2025 | Change | ||||||||||||||||||||||||
Properties acquired during 2026 & 2025 | 468 | $ | 77,650 | $ | 5,891 | $ | 71,759 | ||||||||||||||||||||
Same store rental revenue | 14,738 | 1,198,106 | 1,187,876 | 10,230 | |||||||||||||||||||||||
Constant currency adjustment (1) | N/A | 4,660 | (10,239) | 14,899 | |||||||||||||||||||||||
Properties sold during and prior to 2026 | 526 | 2,414 | 18,440 | (16,026) | |||||||||||||||||||||||
| Straight-line rent and other non-cash adjustments | N/A | (4,409) | (3,293) | (1,116) | |||||||||||||||||||||||
Vacant rents, development and other (2) | 365 | 24,569 | 25,606 | (1,037) | |||||||||||||||||||||||
Other excluded revenue (3) | N/A | 40,342 | 1,398 | 38,944 | |||||||||||||||||||||||
| Total | $ | 1,343,332 | $ | 1,225,679 | $ | 117,653 | |||||||||||||||||||||
(1)For purposes of comparability, same store rental revenue is presented on a constant currency basis using the exchange rate as of March 31, 2026.
(2)Relates to the aggregate of (i) rental revenue from 262 properties that were available for lease during part of 2026 or 2025 for the three months ended March 31, 2026 and (ii) rental revenue for 103 properties under development or completed developments that do not meet our same store pool definition for the three months ended March 31, 2026.
(3)"Other excluded revenue" primarily consists of reimbursements related to lease termination fees and other settlement income.
For purposes of determining the same store rent property pool, we include all properties that were owned for the entire year-to-date period, for both the current and prior year, except for properties during the current or prior year that; (i) were vacant at any time, (ii) were under development or redevelopment, or (iii) were involved in eminent domain and rent was reduced. Each of the exclusions from the same store pool are separately addressed within the applicable sentences above, explaining the changes in rental revenue for the period.
Of the 17,426 in-place leases in the portfolio, 13,972, or 80.2%, were under leases that provide for increases in rents through: base rent increases tied to inflation (typically subject to ceilings), percentage rent based on a percentage of the clients’ gross sales, fixed increases, or a combination of two or more of the aforementioned rent provisions.
Rent based on a percentage of our clients' gross sales, or percentage rent, was $4.2 million and $5.8 million for the three months ended March 31, 2026 and 2025, respectively. Percentage rent represents less than 1% of rental revenue.
As of March 31, 2026, our portfolio of 15,571 properties was 98.9% leased with 172 properties available for lease or sale, as compared to 98.5% leased with 231 properties available for lease as of March 31, 2025. It has been our experience that approximately 1% to 4% of our property portfolio will be available for lease at any given time; however, it is possible that the number of properties available for lease or sale could increase in the future, given the nature of economic cycles and other unforeseen global events.
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Rental Revenue (reimbursements)
A number of our leases provide for contractually obligated reimbursements from clients for recoverable real estate taxes and operating expenses. Contractually obligated reimbursements by our clients increased by $10.1 million for the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to higher reimbursable property taxes and maintenance due to growth in our portfolio.
Interest Income on Financing Receivables
Interest income on financing receivables decreased by $0.5 million for the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to lower interest income on certain sale-leaseback transactions.
Interest and Dividend Income on Loans and Preferred Equity Investments
Interest and dividend income on loans and preferred equity investments increased by $35.4 million for the three months ended March 31, 2026 as compared to the same period in 2025, primarily driven by growth in our loan and preferred equity portfolio.
Other Revenue
Other revenue increased by $5.6 million for the three months ended March 31, 2026 as compared to the same period in 2025, primarily due to higher solar electricity tax credits received during the quarter.
Expenses
The following summarizes our total expenses (in thousands):
| Three months ended March 31, | |||||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization | $ | 630,275 | $ | 608,935 | $ | 21,340 | |||||||||||||||||||||||||||||||||||||
| Interest | 291,940 | 268,374 | 23,566 | ||||||||||||||||||||||||||||||||||||||||
| Property (excluding reimbursements) | 19,358 | 19,303 | 55 | ||||||||||||||||||||||||||||||||||||||||
| Property (reimbursements) | 97,485 | 87,378 | 10,107 | ||||||||||||||||||||||||||||||||||||||||
| General and administrative | 58,885 | 44,044 | 14,841 | ||||||||||||||||||||||||||||||||||||||||
| Provisions for impairment | 129,268 | 116,589 | 12,679 | ||||||||||||||||||||||||||||||||||||||||
| Merger, transaction, and other costs, net | 10,787 | 279 | 10,508 | ||||||||||||||||||||||||||||||||||||||||
| Total expenses | $ | 1,237,998 | $ | 1,144,902 | $ | 93,096 | |||||||||||||||||||||||||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-04-02 | Bushore Michelle | See Remarks | Sell | -7,400 | $62.42 | -$461,908 |
| 2026-04-01 | McLaughlin Gregory indirect | Director | Sell | -3,275 | $61.87 | -$202,624 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-08-08 10-Q expected by 2026-08-12 (in 54 days)
- ~2026-11-05 10-Q expected by 2026-11-09 (in 143 days)
- ~2027-02-25 10-K expected by 2027-03-04 (in 255 days)
- ~2027-05-08 10-Q expected by 2027-05-12 (in 327 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-05-08 8-K Other Events; Financial Statements and Exhibits
- 2026-05-08 424B5 Prospectus Supplement
- 2026-05-07 10-Q Quarterly Report
- 2026-05-06 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-04-07 8-K Other Events; Financial Statements and Exhibits
- 2026-03-31 8-K Other Events; Financial Statements and Exhibits
- 2026-03-30 8-K Other Events
- 2026-03-02 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-02-25 10-K Annual Report
- 2026-02-24 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-01-08 8-K Material Financial Obligation; Unregistered Equity Sale; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-01-06 8-K Other Events; Financial Statements and Exhibits
- 2026-01-05 8-K Other Events; Financial Statements and Exhibits
- 2025-11-18 8-K Material Agreement Entered; Material Financial Obligation; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-11-07 8-K Other Events; Financial Statements and Exhibits