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
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 June 30, 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
673 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 June 30, 2026, we owned or held interests in 15,588 properties, with approximately 353.2 million square feet
of leasable space leased to 1,798 clients doing business in 92 separate industries. Of the 15,588 properties in our
portfolio as of June 30, 2026, 15,218, or 97.6%, were single-tenant properties, and the remaining were multi–client
properties. Our total portfolio of properties as of June 30, 2026 had a weighted average remaining lease term
(excluding rights to extend a lease at the option of the client) of approximately 8.6 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 June 30, 2026 was $5.28 billion.
As of June 30, 2026, approximately 34.3% of our total portfolio annualized base rent comes from properties leased
to our investment grade clients, their subsidiaries or affiliated companies. As of June 30, 2026, our top 20 clients
(based on percentage of total portfolio annualized base rent) represented approximately 34.8% of our annualized
base rent and 13 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 June 30, 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 $91.1 million and $87.4 million for the three months ended June 30, 2026 and
2025, respectively, and $188.6 million and $174.8 million for the six months ended June 30, 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 three times during
2026. As of August 2026, we have paid 115 consecutive quarterly dividend increases and increased the dividend
135 times since our listing on the New York Stock Exchange (“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 |
3rd increase | Jun 2026 | Jul 2026 | $0.2710 | $0.0005 |
The dividends paid per share during the six months ended June 30, 2026 totaled $1.6215, as compared to $1.6015
during the six months ended June 30, 2025, an increase of $0.020, or 1.2%.
The monthly dividend of $0.2710 per share represents a current annualized dividend of $3.252 per share, and an
annualized dividend yield of 5.2% based on the last reported sale price of our common stock on the NYSE of
$61.96 on June 30, 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 June 30, 2026, we invested $2.6 billion; our pro-rata share was $2.1 billion at an
initial weighted average cash yield of 7.3%, including investments in 144 properties, properties under development
or expansion, unconsolidated entities, and loans.
During the six months ended June 30, 2026, we invested $5.3 billion; our pro-rata share was $4.7 billion at an initial
weighted average cash yield of 7.2%, including investments in 338 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 Cloud Capital
In June 2026, we announced a strategic joint venture with Cloud Capital and its affiliates (“Cloud Capital”) to invest
in hyperscale data centers, which we expect to invest up to $1.4 billion for a 45% stake in a three-asset Northern
Virginia portfolio valued at more than $6.0 billion, with leases running 15 to 20 years. Subsequent to June 30, 2026,
we closed on the first stabilized data center asset and expect to acquire the following two development assets upon
stabilization.
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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, 2026 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.
Dispositions
During the three months ended June 30, 2026, we sold 80 properties with total net proceeds received of $160.7
million. During the six months ended June 30, 2026, we sold 177 properties with total net proceeds received of
$348.6 million.
Equity Capital Raising
During the three months ended June 30, 2026, we raised $843.0 million of proceeds from the sale of common
stock, at a weighted average of $61.52, primarily through the settlement of 13.7 million shares of common stock
under our ATM program. As of August 5, 2026, we had outstanding forward sale agreements under our ATM
program for a total of 22.5 million shares of common stock, representing expected net proceeds of approximately
$1.3 billion, of which 1.4 million shares were sold in July 2026 (assuming full physical settlement of such
agreements).
Note Issuance
In July 2026, we issued €600.0 million of 3.625% senior unsecured notes due July 2032. See note 19, Subsequent
Events, to the consolidated financial statements for further details.
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%.
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 approximately $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.
Expanded Revolving Credit Facilities and Commercial Paper Programs
In July 2026, we closed on the recast and expansion of our $5.5 billion multicurrency unsecured revolving credit
facilities, upsized from the prior $4.0 billion capacity. In addition, we also announced an expanded combined
capacity of $5.5 billion for our global commercial paper programs, upsized from the prior $3.0 billion combined
capacity.
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Portfolio Discussion
Leasing Results
As of June 30, 2026, we had 188 properties available for lease or sale out of 15,588 properties in our portfolio,
which represents a 98.8% 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 periods indicated below:
Three months ended June 30, 2026 | |
Properties available for lease as of March 31, 2026 | 172 |
Lease expirations (1) | 480 |
Re-leases to same client | (385) |
Re-leases to new client | (34) |
Vacant dispositions | (45) |
Properties available for lease as of June 30, 2026 | 188 |
Six months ended June 30, 2026 | |
Properties available for lease as of December 31, 2025 | 173 |
Lease expirations (1) | 800 |
Re-leases to same client | (605) |
Re-leases to new client | (57) |
Vacant dispositions | (123) |
Properties available for lease as of June 30, 2026 | 188 |
(1)Includes scheduled and unscheduled expirations (including leases rejected in bankruptcy), as well as future expirations resolved in the periods
indicated above.
During the three months ended June 30, 2026, the new annualized base rent on re-leased units was $110.3 million,
as compared to the previous annual rent of $107.4 million on the same units, representing a rent recapture rate of
102.7% on the re-leased units.
During the six months ended June 30, 2026, the new annualized base rent on re-leased units was $183.5 million, as
compared to the previous annual rent of $178.2 million on the same units, representing a rent recapture rate of
103.0% 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.
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.
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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 an interest in our perpetual life U.S. Core Plus Fund
(the "Fund").
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-09-10 | McLaughlin Gregory indirect | Director | Sell | -3,475 | $60.15 | -$209,022 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-11-05 10-Q expected by 2026-11-09 (in 53 days)
- ~2027-02-25 10-K expected by 2027-03-04 (in 165 days)
- ~2027-05-08 10-Q expected by 2027-05-12 (in 237 days)
- ~2027-08-07 10-Q expected by 2027-08-11 (in 328 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-08-25 8-K Other Events; Financial Statements and Exhibits
- 2026-08-14 8-K Material Financial Obligation; Unregistered Equity Sale; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-08-12 8-K Other Events; Financial Statements and Exhibits
- 2026-08-11 8-K Other Events; Financial Statements and Exhibits
- 2026-08-06 10-Q Quarterly Report
- 2026-08-05 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-07-13 8-K Material Agreement Entered; Material Agreement Terminated; Material Financial Obligation; Other Events; Financial Statements and Exhibits
- 2026-07-07 8-K Other Events; Financial Statements and Exhibits
- 2026-06-30 8-K Other Events; Financial Statements and Exhibits
- 2026-06-30 424B5 Prospectus Supplement
- 2026-06-29 8-K Other Events
- 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