Realty Income O Form 10-Q filing Q2 FY2026

Item 1. Financial Statements (Unaudited)

Item 1: Financial Statements

The accompanying notes to consolidated financial statements are an integral part of these statements.

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The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands) (unaudited)

Three months ended June 30, 2026 and 2025

The accompanying notes to consolidated financial statements are an integral part of these statements.

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For supplemental disclosures, see note 16, Supplemental Disclosures of Cash Flow Information.

The accompanying notes to consolidated financial statements are an integral part of these statements.

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REALTY INCOME CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2026 (unaudited)

1.Summary of Significant Accounting Policies

Realty Income Corporation (“Realty Income,” the “Company,” “we,” “our” or “us”), a Maryland corporation, is an S&P

500 company and real estate partner to the world's leading companies®. The Company was founded in 1969 and

our shares of common stock trade on the New York Stock Exchange ("NYSE") under the symbol “O”.

As of June 30, 2026, we owned or held interests in a diversified portfolio of 15,588 properties located in all 50 states

of the United States ("U.S."), the United Kingdom ("U.K."), and eight other countries in Europe.

Basis of Presentation. These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). Intercompany accounts

and transactions are eliminated in consolidation. The U.S. Dollar ("USD") is our reporting currency. Unless

otherwise indicated, all dollar amounts are expressed in USD.

For our consolidated subsidiaries whose functional currency is not the USD, we translate their financial statements

into USD at the time we consolidate those subsidiaries’ financial statements. Generally, assets and liabilities are

translated at the exchange rate in effect at the balance sheet date. The resulting translation adjustments are

included in 'Accumulated other comprehensive income' ("AOCI") on our consolidated balance sheets. Certain

balance sheet items, primarily equity and capital-related accounts, are reflected at the historical exchange rate.

Income statement accounts are translated using the average exchange rate for the period.

We and certain of our consolidated subsidiaries have intercompany and third-party debt that is not denominated in

our functional currency. When the debt is remeasured to the functional currency of the entity, a gain or loss can

result. The resulting adjustment is reflected in 'Foreign currency and derivative loss, net' in our consolidated

statements of income and comprehensive income. In the statement of cash flows, cash flows denominated in

foreign currencies are translated using the exchange rates in effect at the time of the respective cash flows or at

average exchange rates for the period, depending on the nature of the cash flow items.

In the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary to present a

fair statement of results for the interim periods presented have been included. Operating results for the three and six

months ended June 30, 2026 are not necessarily an indication of the results that may be expected for the entire

year. Readers of this quarterly report should refer to our audited consolidated financial statements for the year

ended December 31, 2025, which are included in our 2025 annual report on Form 10-K, as certain disclosures that

would substantially duplicate those contained in the audited financial statements have not been included in this

report.

Principles of Consolidation. These consolidated financial statements include the accounts of Realty Income and all other entities in which we have a controlling financial interest. We evaluate whether we have a controlling

financial interest in an entity in accordance with Accounting Standards Codification ("ASC") 810, Consolidation.

Voting interest entities ("VOEs") are entities considered to have sufficient equity at risk and which the equity holders

have the obligation to absorb losses, the right to receive residual returns and the right to make decisions about the

entity’s activities. We consolidate voting interest entities in which we have a controlling financial interest, which we

typically have through holding of a majority of the entity’s voting equity interests.

Variable interest entities ("VIEs") are entities that lack sufficient equity at risk or where the equity holders either do not have the obligation to absorb losses, do not have the right to receive residual returns, do not have the right to

make decisions about the entity’s activities, or some combination of the above. A controlling financial interest in a

VIE is present when an entity has a variable interest, or a combination of variable interests, that provides the entity

with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance

and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially

be significant to the VIE. An entity that meets both conditions above is deemed the primary beneficiary and

consolidates the VIE. We reassess our initial evaluation of whether an entity is a VIE when certain reconsideration

events occur. We reassess our determination of whether we are the primary beneficiary of a VIE on an ongoing

basis based on current facts and circumstances.

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As of June 30, 2026, we are considered the primary beneficiary of our U.S. Core Plus Fund (the "Fund"), our

strategic joint venture with Apollo Global Management, Inc. ("Apollo"), Realty Income, L.P. and certain investments,

including investments in joint ventures. Below is a summary of selected financial data of such consolidated VIEs, included on our consolidated balance sheets as of June 30, 2026 and December 31, 2025 (in thousands):

The portion of a consolidated entity not owned by us is recorded as a noncontrolling interest. Noncontrolling

interests are reflected on our consolidated balance sheets as a component of equity. Noncontrolling interests that

were created or assumed as part of a business combination or asset acquisition were recognized at fair value as of

the date of the transaction. For further details, see note 9, Noncontrolling Interests.

Reclassification. The 'Other revenue' line item from prior periods has been disaggregated into the following line items: 'Interest income on financing receivables', 'Interest and dividend income on loans and preferred equity

investments', and 'Other' to provide further detail on amounts included as 'Other' in our consolidated statements of

income and comprehensive income. 'Provisions for impairment' has also been disaggregated into the following line

items: 'Provisions for impairment of real estate' and 'Provisions for credit losses on loans and financing receivables'

in our consolidated statements of income and comprehensive income. Finally, 'Investment in loans and financing

receivables, net' has been disaggregated from 'Other assets, net' on our consolidated balance sheets. Prior periods have been reclassified to conform with the current period’s presentation.

Use of Estimates. The consolidated financial statements were prepared in conformity with U.S. GAAP, which requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities,

the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts

of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Net Income per Common Share. Basic net income per common share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during each

period. Diluted net income per common share is computed by dividing net income available to common

stockholders, plus income attributable to dilutive shares and convertible common units for the period, by the

weighted average number of common shares that would have been outstanding assuming the issuance of common

shares for all dilutive common shares outstanding during the reporting period, including common shares required to

satisfy the exchange obligation for convertible notes under the if-converted method, assuming all such convertible

notes were converted at the beginning of the reporting period, or date of issuance, if later. The average closing price

of our common stock for the reporting period is used as the basis for determining the dilutive effect on earnings per share. For further details, see note 15, Net Income per Common Share.

Income Taxes. We have elected to be taxed as a real estate investment trust ("REIT"), under Section 856 of the

U.S. Internal Revenue Code of 1986, as amended (the “Code”). We believe we have qualified and continue to

qualify as a REIT. Under the REIT operating structure, we are permitted to deduct dividends paid to our

stockholders in determining our taxable income. Assuming our dividends equal or exceed our taxable net income in

the U.S., we generally will not be required to pay U.S. income taxes on such income. Accordingly, no provision has

been made for federal income taxes in the accompanying consolidated financial statements, except for federal

income taxes of our taxable REIT subsidiaries ("TRS"). A TRS is a subsidiary of a REIT that is subject to federal,

state and local income taxes, as applicable. Our use of TRS entities enables us to engage in certain business

activities while complying with the REIT qualification requirements and to retain any income generated by these

businesses for reinvestment without the requirement to distribute those earnings. We are liable for taxes in our

applicable international territories and have made the appropriate provisions in those territories. Therefore, the

income taxes recorded in our consolidated statements of income and comprehensive income represent amounts for

U.S. income taxes on our TRS entities, city and state income and franchise taxes, as well as income taxes for the

applicable international territories.

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We recognize deferred income tax in our taxable subsidiaries, including certain international jurisdictions. Deferred

income tax assets and liabilities are generally the result of temporary differences between book and tax accounting,

such as timing differences caused by different useful lives used for depreciation. We provide for a valuation

allowance for deferred income tax assets if we believe some or all of the deferred income tax assets may not be

realized. We had $8.7 million and $4.3 million of net deferred tax liabilities as of June 30, 2026 and December 31,

2025, respectively, which are reported in 'Other liabilities' on our consolidated balance sheets.

Earnings and profits that determine the taxability of distributions to stockholders differ from net income reported for

financial reporting purposes primarily due to differences in the estimated useful lives and methods used to compute

depreciation and the carrying value (basis) of the investments in properties for tax purposes, among other things.

We regularly analyze our various international, federal and state filing positions and only recognize the income tax

effect in our financial statements when certain criteria regarding uncertain income tax positions have been met. We

believe that our income tax positions would more likely than not be sustained upon examination by all relevant

taxing authorities. Therefore, no provisions for uncertain tax positions have been recorded on our consolidated

financial statements.

Lease Revenue Recognition and Accounts Receivable. The majority of our leases are accounted for as operating leases. Under this method, leases that have fixed and determinable rent increases are recognized on a

straight-line basis over the lease term. Any rental revenue contingent upon our client’s sales, or percentage rent, is

recognized only after our client exceeds its sales breakpoint. Rental increases based upon changes in the

consumer price indices are recognized only after the changes in the indexes have occurred and are then applied

according to the lease agreements. Lease termination fees, which are included in rental revenue, are amortized

over the remaining term of the lease until we have no continuing obligation to provide services to such former client.

Contractually obligated rental revenue from our clients for recoverable real estate taxes and operating expenses is

included in contractually obligated reimbursements by our clients, a component of rental revenue, in the period

when such costs are incurred. Taxes and operating expenses paid directly by our clients are recorded on a net

basis.

Other revenue includes certain property-related revenue not included in rental revenue. Interest income on financing

receivables includes interest income recognized on financing receivables for certain leases with above-market

terms.

We assess the probability of collecting substantially all of the lease payments to which we are entitled under the

original lease contract as required under ASC 842, Leases. We assess the collectability of our future lease

payments based on an analysis of creditworthiness, economic trends and other facts and circumstances related to

the applicable clients. If we conclude the collection of substantially all of lease payments under a lease is less than

probable, rental revenue recognized for that lease is limited to cash received going forward, existing operating lease

receivables, including those related to straight-line rental revenue, must be written off as an adjustment to rental

revenue, and no further operating lease receivables are recorded for that lease until such future determination is

made that substantially all lease payments under that lease are now considered probable. If we subsequently

conclude that the collection of substantially all lease payments under a lease is probable, a reversal of lease

receivables previously written off is recognized.

In addition to the client-specific collectability assessment conducted, we may also recognize a general allowance, as a reduction to rental revenue, for our operating lease receivables which are not expected to be fully collectible.

We had $5.3 million and $5.1 million of general allowance as of June 30, 2026 and December 31, 2025,

respectively.

Loans Receivable. Our investments in loans are classified as held for investment and are carried at their amortized cost basis. We recognize interest income on loans receivable using a method that approximates the effective-

interest method. Direct costs associated with originating loans, along with any premium or discount, are deferred

and amortized as an adjustment to interest income over the term of the loan using the effective interest method.

When management identifies that the full recovery of the contractually specified payments of principal and interest

of a loan is less than probable, we evaluate the expected loss amount and place it on non-accrual status. We have

made an accounting policy election to record accrued interest on our loan portfolio separate from our loan

receivable and other lending investments. These loans are presented in Investment in loans and financing

receivables, net' and the related interest receivable is presented in 'Other assets, net' on our consolidated balance

sheets.

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Acquisition, Development and Construction ("ADC") Arrangements. We originate loans to third-party

borrowers for the acquisition, development, and construction of real estate. Each ADC arrangement is evaluated in

accordance with ASC 310, Receivables, which involves the determination of whether an arrangement should be

accounted for as a loan receivable or as an equity method investment. This analysis is applied only where the

borrower entity is not subject to consolidation under ASC 810, Consolidation. Specifically, we first assess whether

we are expected to receive more than 50% of the expected residual profits from the project, defined as profit above

a reasonable lender return from the sale, refinancing, or other use of the property. If our expected participation in

residual profits exceeds 50%, the arrangement must be accounted for as an equity method investment. If our

expected participation is 50% or less, we further evaluate whether the arrangement exhibits characteristics more

consistent with a loan or an equity method investment. This evaluation involves judgment and considers various

factors, including the significance of borrower equity in the project, loan-to-cost and loan-to-value metrics relative to

market, the existence of guarantees or binding lease arrangements, and interest rate and fee terms relative to

market, among others. We reassess the classification of each ADC arrangement if facts and circumstances

subsequently change in a manner that could affect the initial classification. Any reclassification is applied

prospectively. As of June 30, 2026, we have determined that all of our ADC loan arrangements have characteristics

more consistent with a loan than an equity method investment, and accordingly account for them as loan

receivables.

Financing Receivables. For properties we acquire that qualify as sale-leaseback transactions and for which the

purchase price is in excess of the fair value of the real estate acquired, the difference is accounted for as financing

receivables, presented within 'Investment in loans and financing receivables, net' on our consolidated balance

sheets. Rent payments are allocated between rental income and the financing receivable. Our net investments in

sales-type and direct financing leases are also accounted for as financing receivables. Interest income on financing

receivables is recognized using the interest rate implicit in the lease and presented within 'Interest income on

financing receivables' in our consolidated statements of income and comprehensive income.

Allowance for Credit Losses. The allowance for credit losses, which is recorded as a reduction to 'Investment in loans and financing receivables, net' on our consolidated balance sheets, is based on our clients' respective credit

ratings, our historical experience, and the expected value of the underlying collateral upon its repossession. We

generally apply probability of default, discounted cash flow, or loss rate methods considering the risk characteristics

of each asset or pool. If we determine a financing receivable no longer shares risk characteristics with other

financing receivables in the pool, we evaluate the financing receivable for expected credit losses on an individual

basis. Included in our model are factors that incorporate forward-looking information. The measurement of expected

credit losses is also applicable to off-balance sheet credit exposures such as unfunded loan commitments. The

allowance for credit losses attributed to unfunded commitments is included in 'Other liabilities' on our consolidated

balance sheets. Changes in our allowance for credit losses are presented in 'Provisions for credit losses on loans and financing receivables' in our consolidated statements of income and comprehensive income. For further details,

see note 5, Investments in Loans and Financing Receivables.

Goodwill. Goodwill is not amortized, but is subject to impairment reviews annually, or more frequently if necessary.

Goodwill is qualitatively assessed to determine whether a quantitative impairment assessment is necessary.

Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. If the

carrying value of the asset exceeds its estimated fair value, an impairment loss is recognized, and the asset is

written down to its estimated fair value. We perform our annual goodwill impairment assessment as of June 30. We also test goodwill between annual dates if an event or circumstance indicated impairment has likely occurred.

During the six months ended June 30, 2026 and 2025, there were no impairments of goodwill.

Merger, Transaction, and Other Costs, Net. Merger, transaction, and other costs, net, includes (i) expensed acquisition costs, including certain costs incurred for credit investment loans, (ii) organization costs for potential

strategic ventures and business lines, (iii) placement fees incurred in fundraising of the Fund, (iv) merger-related transaction costs, and (v) other costs that do not align with the ongoing operations of our business. During the three

and six months ended June 30, 2026, we incurred $2.1 million and $12.8 million, respectively, of merger,

transaction, and other costs, net consisting primarily of placement fees incurred in fundraising for the Fund and

certain joint venture formation costs.

Equity Offering Costs. Underwriting commissions and offering costs have been reflected as a reduction of additional paid-in capital on our consolidated balance sheets. Costs incurred in connection with the issuance of

noncontrolling interests, including direct and incremental costs associated with forming joint ventures and admitting

third-party investors, are capitalized as equity offering costs. Costs that are not directly attributable to the issuance of equity, such as fees associated with ongoing advisory, management, or other services, are expensed as incurred.

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Recent Accounting Standards Not Yet Adopted. In September 2025, the Financial Accounting Standards Board

("FASB") issued Accounting Standards Update ("ASU") 2025-06, Intangibles—Goodwill and Other—Internal-Use

Software, which simplifies the capitalization guidance by removing references to software development project

stages and further updates so that the guidance considers various software development methods. The

amendments in this ASU are effective for annual reporting periods beginning after December 15, 2027, and interim

reporting periods within those annual reporting periods, with early adoption permitted. The amendments in this

update permit an entity to apply the new guidance using a prospective, retrospective or modified transition

approach. While we are currently evaluating the impact of this pronouncement, we do not expect it will have a

material impact on our consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—

Expense Disaggregation Disclosures, requiring all public business entities to provide additional disclosure of the

nature of expenses included in the income statement. This ASU is effective for fiscal years beginning after

December 15, 2026, and for interim reporting periods beginning after December 15, 2027, on a prospective basis,

with early adoption permitted. While the adoption is not expected to have an impact on our financial statements, it is

expected to result in incremental disclosures within the footnotes to our consolidated financial statements.

2.Supplemental Detail for Certain Components of Consolidated Balance Sheets (in thousands):

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3.Investments in Real Estate

A.Acquisitions of Real Estate

Below is a summary of our acquisitions for the six months ended June 30, 2026 (unaudited):

(1) Our clients occupying the new properties are 51.8% retail, 48.1% industrial, and 0.1% other property types based on net operating income.

Approximately 48% of the net operating income generated from acquisitions during the six months ended June 30, 2026 was from investment

grade rated clients, their subsidiaries, or affiliated companies at the date of acquisition.

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The aggregate purchase price, including properties acquired through takeout financing and reported in properties under development in the table above, was allocated as follows (in millions):

(1) The weighted average amortization period for acquired lease intangible assets is 10.7 years.

(2) USD-denominated other assets consists entirely of $44.3 million of financing receivables allocated to sale-leaseback transactions.

(3) The weighted average amortization period for acquired lease intangible liabilities is 13.5 years.

(4) USD-denominated other liabilities consists entirely of $10.6 million deferred rent on certain below-market leases.

The aggregate Sterling-denominated purchase price of the assets acquired during the six months ended June 30,

2026 included contingent consideration obligations related to leasing activities for four U.K. retail park properties

acquired during this period. At June 30, 2026, we had accrued $11.5 million for remaining amounts deemed

probable and estimable.

The properties acquired during the six months ended June 30, 2026 generated total revenue and net income of

$49.8 million and $17.6 million, respectively.

B.Investments in Existing Properties

During the six months ended June 30, 2026, we capitalized costs of $81.0 million on existing properties in our

portfolio, consisting of $76.2 million for building improvements, $4.7 million for re-leasing costs, and $0.1 million for

recurring capital expenditures. In comparison, during the six months ended June 30, 2025, we capitalized costs of

$62.2 million on existing properties in our portfolio, consisting of $59.1 million for building improvements, $2.9

million for re-leasing costs, and $0.2 million for recurring capital expenditures.

C.Properties with Existing Leases

The value of the in-place and above-market leases is recorded to 'Lease intangible assets, net' on our consolidated

balance sheets, and the value of the below-market leases is recorded to 'Lease intangible liabilities, net' on our

consolidated balance sheets.

The values of the in-place leases are amortized as depreciation and amortization expense. The amounts amortized

to expense for all of our in-place leases for the six months ended June 30, 2026 and 2025 were $413.7 million and

$453.5 million, respectively.

The values of the above-market and below-market leases are amortized over the term of the respective leases,

including any bargain renewal options, as an adjustment to rental revenue in our consolidated statements of income

and comprehensive income. The amounts amortized as a net decrease to rental revenue for capitalized above-

market and below-market leases for the six months ended June 30, 2026 and 2025 were $15.0 million and $9.3

million, respectively.

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The following table presents the estimated impact during the next five years and thereafter related to the amortization of the above-market and below-market lease intangibles and the amortization of the in-place lease

intangibles as of June 30, 2026 (in thousands):

D.Gain on Sales of Real Estate

The following table summarizes our properties sold during the periods indicated below (dollars in millions):

4.Investments in Unconsolidated Entities

The following is a summary of our investments in unconsolidated entities for the periods indicated below (dollars in thousands):

(1) As of June 30, 2026, the total carrying amount of the investments exceeded the underlying equity in net assets (i.e., basis difference) by $9.9

million. This basis difference is primarily due to the capitalized interest related to the data center and Passport Park development joint

ventures.

(2) The joint venture with Digital Realty Trust, Inc. is expanding the capacity of its two data centers for the existing client, and our pro-rata share of

the estimated costs for this second phase of the development was $177.7 million as of June 30, 2026.

(3) During each of the six-month periods ended June 30, 2026 and 2025, we recognized interest income of $26.1 million for 8.1% preferential

cumulative distributions, included within 'Interest and dividend income on loans and preferred equity investments' in our consolidated

statements of income and comprehensive income. The unconsolidated entity had total debt outstanding of $3.0 billion as of June 30, 2026, all

of which was non-recourse to us with limited customary exceptions.

(4) As of June 30, 2026, we held a 95.0% common equity interest in the joint venture with Trammell Crow Company ("TCC"), with $70.4 million in

preferred equity. We have committed to investing an additional $60.1 million for development of three industrial facilities. We have determined

that we are not the primary beneficiary of this VIE because significant activities affecting economic performance are shared. TCC is the

managing member, and we do not have substantive kick-out rights. We will continuously evaluate whether we are the primary beneficiary as

power to direct significant activities can change during the joint venture's life. Our maximum loss exposure is limited to our common and

preferred equity investments and committed funding.

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5.Investments in Loans and Financing Receivables

A.Loans

The following table presents information about our loans as of June 30, 2026 and December 31, 2025 (dollars in millions):

(1) Total carrying value includes unamortized loan origination costs and allowances for credit losses. Total carrying amount excludes interest

receivable of $38.8 million and $27.8 million as of June 30, 2026 and December 31, 2025, respectively, which is presented in 'Other assets,

net' on our consolidated balance sheets.

(2) Our future funding commitments are subject to our borrowers’ compliance with the financial covenants and other applicable provisions of

each respective loan agreement.

(3) Based on original contractual maturity date assuming no extension options are exercised.

(4) The weighted average interest rate is based on outstanding principal balances and interest rates in place as of June 30, 2026 and December

31, 2025.

(5) Represents loans that have senior ranking security interests in certain assets pledged by borrowers, including material bank accounts,

receivables, real property, or equity securities, or a combination of such assets.

(6) Our investments in unsecured and mezzanine loans represent loans whose proceeds are being used by borrowers to fund data center and

industrial investments.

The following table summarizes the activity within loans receivable, net for the three and six months ended June 30,

2026 (in millions):

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B.Financing Receivables

The following table presents information about our investments in sales type and direct financing leases and sale- leaseback transactions accounted for as financing receivables in accordance with ASC 842, Leases, as of June 30,

2026 and December 31, 2025 (dollars in millions):

(1) Amounts represent the portion of the purchase price allocated to above-market lease terms in sale-leaseback transactions, representing an off-market adjustment, net of repayments. For further information, see note 1, Summary of Significant Accounting Policies.

C.Allowance for Credit Losses

The following table summarizes the activity within the allowance for credit losses related to loans and financing receivable for the three and six months ended June 30, 2026 and June 30, 2025 (in millions):

(1) The provisions for credit losses on loans receivable were primarily attributable to initial expected credit losses on loans acquired or originated

during the three and six months ended June 30, 2026. For the three months ended June 30, 2026, the increase was partially offset by

favorable changes in estimated credit losses for existing loans.

(2) For the three and six months ended June 30, 2026, write-offs were primarily related to fully reserved financing receivables written off during the

periods.

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6.Credit Facilities and Commercial Paper Programs

A.RI Credit Facilities

We have $4.0 billion unsecured multicurrency revolving credit facilities, which include (a) a $2.0 billion unsecured

multicurrency revolving credit facility, consisting of two tranches, that will mature in April 2027 and (b) a $2.0 billion

unsecured multicurrency revolving credit facility, consisting of two tranches, that will mature in April 2029

(collectively, the “RI Credit Facilities”). The RI Credit Facilities also include two six-month extensions for each facility,

which can be exercised at our option.

The RI Credit Facilities allow us to borrow (a) under the two-year revolving credit facility (i) in up to four currencies

(including USD) under a $1.5 billion tranche thereunder and (ii) in up to 15 currencies (including USD) under a

$500.0 million tranche thereunder, and (b) under the four-year revolving credit facility (i) in up to four currencies

(including USD) under a $1.5 billion tranche thereunder and (ii) in up to 15 currencies (including USD) under a

$500.0 million tranche thereunder. The aggregate capacity of the RI Credit Facilities can be increased to up to $5.0

billion pursuant to an accordion expansion feature, which is subject to obtaining lender commitments.

Under the RI Credit Facilities, our investment grade credit ratings as of June 30, 2026 provide for (i) USD

borrowings at the 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

Euro Interbank Offered Rate (“EURIBOR”) plus 0.725%. 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.

As of June 30, 2026, we had a borrowing capacity of $3.0 billion available on our RI Credit Facilities (subject to

customary conditions to borrowing) and an outstanding balance of $1.0 billion, including £189.0 million GBP and

€692.0 million EUR borrowings. As of December 31, 2025, we had a borrowing capacity of $2.7 billion and an

outstanding balance of $1.3 billion, including £597.0 million GBP and €444.0 million EUR borrowings.

The weighted average interest rate on outstanding borrowings under our RI Credit Facilities was 3.3% during the six

months ended June 30, 2026. The weighted average interest rate on outstanding borrowings was 4.3% during the

six months ended June 30, 2025. As of June 30, 2026, the weighted average interest rate on outstanding

borrowings under our RI Credit Facilities was 3.3%.

As of June 30, 2026, origination costs of $14.3 million for RI Credit Facilities are included in 'Other assets, net', as

compared to $19.0 million as of December 31, 2025, on our consolidated balance sheets. These costs are being

amortized over the remaining term of our RI Credit Facilities.

In July 2026, we amended our RI Credit Facilities. For further details, see note 19, Subsequent Events.

B.Fund Credit Facilities

The Fund has a $1.38 billion unsecured credit facility, which provides for (a) up to $1.0 billion unsecured revolving

credit facility and (b) up to $380.0 million unsecured delayed draw term loan (collectively, the “Fund Credit

Facilities”). During the second quarter of 2026, the Fund drew all $380.0 million available under its unsecured

delayed draw term loan and used the proceeds to repay borrowings under its unsecured revolving credit facility. For

further details on the delayed draw term loan, see note 7, Term Loans. The revolving credit facility under the Fund

Credit Facilities matures in April 2029 and includes two six-month extensions, which can be exercised at our option.

The amount under the unsecured revolving credit facility can be increased to up to $2.0 billion pursuant to an

accordion expansion feature, which is subject to obtaining lender commitments.

Borrowings under the unsecured revolving credit facility bear interest at one-month term SOFR plus 1.050%. A

revolving credit facility commitment fee of 0.150% is payable on the total commitment amount.

As of June 30, 2026, we had available borrowing capacity of $718.5 million under our unsecured revolving credit

facility (subject to customary conditions to borrowing) and an outstanding balance of $281.5 million. As of December

31, 2025, we had available borrowing capacity under our Fund Credit Facilities of $1.2 billion and an outstanding

balance of $182.0 million, which included the delayed draw term loan until fully drawn in the second quarter of 2026.

The weighted average interest rate on outstanding borrowings under our unsecured revolving credit facility was

4.8% during the six months ended June 30, 2026. As of June 30, 2026, the weighted average interest rate on

outstanding borrowings under our unsecured revolving credit facility was 4.7%.

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As of June 30, 2026, origination costs of $5.3 million for the unsecured revolving credit facility are included in 'Other

assets, net' as compared to $6.2 million as of December 31, 2025, on our consolidated balance sheets, and are

being amortized over the remaining term of the facility. Prior to the second quarter of 2026, origination costs related

to the Fund Credit Facilities included costs for the delayed draw term loan.

C.Commercial Paper Programs

We have a USD-denominated unsecured commercial paper program, under which we may issue unsecured

commercial paper notes up to a maximum aggregate amount outstanding of $1.5 billion, as well as a EUR-

denominated unsecured commercial paper program, which permits us to issue additional unsecured commercial

notes up to a maximum aggregate amount of $1.5 billion (or foreign currency equivalent). Our EUR-denominated

unsecured commercial paper program may be issued in USD or various foreign currencies, including but not limited

to, EUR, GBP, Swiss Francs, Yen, Canadian Dollars, and Australian Dollars, in each case, pursuant to customary

terms in the European commercial paper market.

The commercial paper ranks pari passu in right of payment with all of our other unsecured senior indebtedness

outstanding, exclusive of unexchanged bonds from our merger with VEREIT, Inc. in 2021 and unexchanged Spirit

Realty Capital, Inc. (“Spirit”) bonds, including borrowings under our revolving credit facilities, our term loans and our

outstanding senior unsecured notes (and is structurally subordinated to all our subsidiary debt). Proceeds from

commercial paper borrowings are used for general corporate purposes.

As of June 30, 2026, the balance of borrowings outstanding under our commercial paper programs totaled $1.4

billion, including $961.1 million of USD borrowings and €421.0 million of EUR borrowings, compared to

$516.8 million outstanding commercial paper borrowings, including €407.0 million of EUR borrowings and $39.0

million of USD borrowings, as of December 31, 2025. The weighted average interest rate on outstanding borrowings

under our commercial paper programs was 3.0% for each of the six months ended June 30, 2026 and 2025. We

use our revolving credit facilities as a liquidity backstop for the repayment of the notes issued under the commercial

paper programs. The commercial paper borrowings generally carry a term of less than a year.

In July 2026, we amended our USD-denominated and EUR-denominated unsecured commercial paper programs.

For further details, see note 19, Subsequent Events.

D.Financial Covenants

Our credit facilities are subject to various leverage and interest coverage ratio limitations, and as of June 30, 2026,

we were in compliance with the covenants under our credit facilities.

7.Term Loans

A.2026 Term Loan Facility

In March 2026, we closed a $693.9 million unsecured term loan due January 2036 at a fixed rate of 4.9% (the "2026

Term Loan Facility") 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%. As of June 30, 2026, the outstanding

principal balance was $703.0 million.

B.2026 Delayed Draw Term Loan

During the three months ended June 30, 2026, the Fund fully drew on its $380.0 million unsecured delayed draw

term loan under the Fund Credit Facilities. The delayed draw term loan matures in April 2028, includes four six- month extensions, which can be exercised at our option, and is subject to interest rate swaps that fix the effective

interest rate at 4.92%.

C.2025 Term Loan Facility

Our term loan agreement governing our multi-currency term loan provides for a £900.0 million Sterling-denominated

term loan facility that will initially mature in January 2028, before giving effect to one twelve-month extension option.

As of June 30, 2026, we had an outstanding balance of $1.2 billion. Our A3/A- credit ratings provide for a borrowing

rate of 80 basis points over the applicable benchmark rate, which includes adjusted SOFR for USD-denominated

loans and adjusted SONIA for GBP-denominated loans. In conjunction with the closing, we executed variable-to-

fixed interest rate swaps, which fix the weighted average per annum interest rate at 4.3% over the two-year term.

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D.2024 Term Loan Facility

In January 2024, in connection with the merger with Spirit (the "Merger"), we entered into an amended and restated

term loan agreement that replaced Spirit's then-existing term loans with various lenders. As of June 30, 2026, we

had an outstanding balance of $500.0 million, due August 2027, which is subject to interest rate swaps that fix the

effective interest rate at 3.3%.

E.Deferred Financing Costs

Deferred financing costs were $14.5 million as of June 30, 2026 and are included net of the term loans' principal

balance, as compared to $9.4 million as of December 31, 2025 on our consolidated balance sheets. These costs

are being amortized over the remaining term of the term loans.

As of June 30, 2026, we were in compliance with the covenants contained in the term loans.

8.Notes Payable

A.General

As of June 30, 2026, our senior unsecured notes and bonds are USD-denominated, GBP-denominated, and EUR- denominated. Foreign-denominated notes are converted at the applicable exchange rate on the balance sheet date.

The following are sorted by maturity date (in thousands):

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(1) Interest paid annually. Interest on the remaining senior unsecured notes and bond obligations included in the table is paid semi-annually.

(2) Please refer to Convertible Bond Issuance below for more details.

The following table summarizes the maturity of our notes and bonds payable as of June 30, 2026, excluding unamortized net discounts, deferred financing costs (dollars in millions):

As of June 30, 2026, the weighted average interest rate on our notes and bonds payable was 3.9% and the

weighted average remaining years until maturity was 5.8 years.

Interest incurred on the notes and bonds was $250.3 million and $229.4 million for the three months ended June 30,

2026 and 2025, respectively, and $494.7 million and $449.3 million for the six months ended June 30, 2026 and

2025, respectively.

Our outstanding notes and bonds are unsecured; accordingly, we have not pledged any assets as collateral for

these or any other obligations.

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The notes and bonds contain various covenants, including: (i) a limitation on incurrence of any debt which would

cause our debt to total adjusted assets ratio to exceed 60%; (ii) a limitation on incurrence of any secured debt which

would cause our secured debt to total adjusted assets ratio to exceed 40%; (iii) a limitation on incurrence of any

debt which would cause our debt service coverage ratio to be less than 1.5 times; and (iv) the maintenance at all

times of total unencumbered assets not less than 150% of our outstanding unsecured debt. As of June 30, 2026, we

were in compliance with these covenants.

B.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. 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. Before October 15, 2028, noteholders have the right to convert their notes

only upon the occurrence of certain events, including when the Company's stock price exceeds 130% of the

applicable conversion price for a specified period, or upon the occurrence of certain corporate events, including a

fundamental change. From and after October 15, 2028, noteholders may convert their notes at any time at their

election until the close of business on the second scheduled trading day immediately before the maturity date. Upon

conversion, we are required to settle the principal amount in cash and may, at our election, settle any conversion

premium in cash, shares of our common stock, or a combination thereof, based on the applicable conversion rate.

The initial conversion rate is 14.4051 shares of common stock per $1,000 principal amount of notes, which

represents an initial conversion price of approximately $69.42 per share of common stock. The conversion rate will

be subject to adjustment upon the occurrence of certain events, including specified make-whole fundamental

change events as defined in the indenture.

C.Note Issuances

During the six months ended June 30, 2026, we issued the following notes (in millions):

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.

D.Note Repayments

During the six months ended June 30, 2026, we repaid the following notes, plus accrued and unpaid interest, upon maturity:

9.Noncontrolling Interests

As of June 30, 2026, we have 13 entities with noncontrolling interests that we consolidate, including the Fund,

Apollo, Realty Income, L.P., and interests in consolidated property partnerships not wholly-owned by us.

The Fund is an open-end, perpetual life private fund, which is consolidated by Realty Income. In March 2026, we

closed our cornerstone equity capital raise round, securing $1.7 billion in commitments from third-party institutional

investors, of which $167.5 million was committed during the six months ended June 30, 2026. During the same

period, we called $948.0 million of capital. As of June 30, 2026, we owned approximately 26.8% of the outstanding

limited partnership interests in the Fund.

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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. On March 31, 2026, we completed the

formation of MDC Mercury 2604 Venture, LLC (the "Apollo JV") and entered into an Amended and Restated Limited

Liability Company Agreement (the “JV Agreement”) with Apollo in connection with our Managed Insurance and

Retirement Annuity strategic initiative. Pursuant to the JV Agreement, we contributed 492 net lease properties in

exchange for 51,000,000 Class A Shares in the Apollo JV, and Apollo contributed $1.0 billion in cash in exchange for

a noncontrolling equity interest of 49,000,000 Class B Shares in the Apollo JV (such contributions by Realty Income

and Apollo, collectively, the "Apollo JV Transaction").

The Apollo JV is a variable interest entity ("VIE") under ASC 810 because the decision-making authority of the

Manager (our wholly owned subsidiary, Realty Income Property Management Co I, LLC) is not conveyed through an

equity interest, and the equity holders as a group therefore lack the power to direct the activities that most

significantly affect the Apollo JV's economic performance. We consolidate the Apollo JV as its primary beneficiary

because we have both (i) the power to direct the activities that most significantly affect its economic performance

through our role as the sole exclusive Manager that is exercisable independent of our equity ownership and (ii) the

obligation to absorb losses and right to receive benefits that could potentially be significant to the Apollo JV through

our 51% equity interest and other contractual arrangements. The Class B Shares are classified as permanent equity

(noncontrolling interest) on our consolidated balance sheet because all redemption features are solely within our

control.

The Apollo JV Transaction was accounted for as an issuance of noncontrolling interest in a consolidated subsidiary

without a loss of control. We received $1.0 billion for Apollo’s initial capital contribution. The carrying amount of

Apollo's 49% share of the net assets was $778.9 million, which was recognized as noncontrolling interest, with the

difference of $238.5 million recorded as an increase to additional paid-in capital ("APIC"). Direct and incremental

transaction costs of $20.7 million were recorded as a reduction of APIC for the six months ended June 30, 2026.

The JV Agreement provides for, among other things, quarterly distributions of available cash flow to the Apollo JV’s

members. Prior to Apollo achieving the Target IRR (as defined in the JV Agreement), the Class B Member will

receive a default allocation of 55% of available cash flow, which may decrease to 49% if the Apollo JV’s NOI

outperforms an upper level of certain performance metric, or increase to 60% if the Apollo JV’s NOI underperforms

a lower level of certain performance metric. Because the parties' economic interests are not proportionate to their

stated ownership percentages, we allocate income and loss attributable to the noncontrolling interest using the

hypothetical liquidation at book value ("HLBV") method, taking into account any capital transactions between the

Company and Apollo.

With respect to Realty Income, L.P., as of June 30, 2026, outstanding common partnership units in our operating

partnership represented a 9.95% ownership interest owned by third parties. We hold the remaining 90.05% interest

and consolidate the entity.

The following table represents the change in the carrying value of all noncontrolling interests through June 30, 2026 (in thousands):

(1) 2,681,808 units were outstanding as of both June 30, 2026 and December 31, 2025.

As of June 30, 2026, we are considered the primary beneficiary of our Fund, Apollo, Realty Income, L.P. and other

VIEs. For further information, see note 1, Summary of Significant Accounting Policies.

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10.Fair Value Measurements

Fair value is defined as the price that would be received from the sale of an asset or paid to transfer a liability in an

orderly transaction between market participants at the measurement date (the exit price).

ASC 820, Fair Value Measurements and Disclosures, sets forth a fair value hierarchy that categorizes inputs to

valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted

prices in active markets for identical assets or liabilities and lowest priority to unobservable inputs. Categorization

within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

• Level 1 – Quoted market prices in active markets for identical assets and liabilities
• Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities,

quoted prices in markets that are not active, or other market-corroborated inputs

• Level 3 – Inputs that are unobservable and significant to the overall fair value measurement

We evaluate our hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or

liability may be classified differently from period to period. Changes in the type of inputs may result in a

reclassification for certain assets. We have not historically had changes in classifications and do not expect that

changes in classifications between levels will be frequent.

The following tables present the carrying values and estimated fair values of financial instruments as of June 30,

2026 and December 31, 2025 (in millions):

(1) Excludes non-cash net premiums and discounts, and deferred financing costs.

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A.Financial Instruments Not Measured at Fair Value on our Consolidated Balance Sheets

The fair value of short-term financial instruments such as cash and cash equivalents, accounts receivable, escrow

deposits, accounts payable, distributions payable, revolving credit facilities and commercial paper borrowings, and

other liabilities approximate their carrying value in the accompanying consolidated balance sheets, due to their

short-term nature.

The following table reflects the carrying amounts and estimated fair values of our financial instruments not measured at fair value on our consolidated balance sheets (in millions):

(1) Excludes non-cash net premiums and discounts, and deferred financing costs.

The estimated fair values of our mortgage loans receivable, unsecured and other loans, private senior secured

loans receivable, our 2026 Term Loan Facility, mortgages payable, and private senior notes payable have been

calculated by discounting the future cash flows using an interest rate based upon the relevant input, such as forward

interest rate curve, plus an applicable credit-adjusted spread. Because this methodology includes unobservable

inputs that reflect our own internal assumptions and calculations, the measurement of estimated fair values related

to the named financial instruments are categorized as level 3 of the fair value hierarchy.

The estimated fair values of our publicly-traded senior secured loans receivable, publicly-traded senior notes and

bonds payable, and other term loans as discussed in note 7, Term Loans are based upon indicative market prices

and recent trading activity of each financial instrument. Because this methodology includes inputs that are less

observable by the public and are not necessarily reflected in active markets, the measurement of the estimated fair

values related to these financial instruments is categorized as level 2 of the fair value hierarchy. The fair value

estimation of secured loans receivable that are not publicly traded similarly incorporates less observable, market-

corroborated inputs.

Prior to the second quarter of 2026, the aggregate fair value of our term loans approximated carrying value due to

the frequent repricing of the variable interest rate charged on the borrowing.

B.Financial Instruments Measured at Fair Value on a Recurring Basis

For derivative assets and liabilities, we may utilize interest rate swaps, interest rate swaptions, and forward-starting

swaps to manage interest rate risk, and cross-currency swaps and foreign currency forwards to manage foreign

currency risk. The valuation of these instruments is determined using widely accepted valuation techniques,

including discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the

contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs,

including interest rate curves, spot and forward rates, as well as option volatility.

Derivative fair values also include credit valuation adjustments to appropriately reflect both our own nonperformance

risk and the respective counterparty’s nonperformance risk in the fair value measurements. In adjusting the fair

value of our derivative contracts for the effect of nonperformance risk, we have considered the impact of netting and

any applicable credit enhancements, such as collateral postings, thresholds, mutual puts, and guarantees.

Although we have determined that the majority of the inputs used to value our derivatives fall within level 2 on the

fair value hierarchy, the credit valuation adjustments associated with our derivatives utilize level 3 inputs, such as

estimates of current credit spreads, to evaluate the likelihood of default by ourselves and our counterparties.

However, as of June 30, 2026 and December 31, 2025, we assessed the significance of the impact of the credit

valuation adjustments on the overall valuation of our derivative positions and determined that the credit valuation

adjustments are not significant to the overall valuation of our derivatives. As a result, we determined that our

derivative valuations in their entirety are classified as level 2. For more details on our derivatives, see note 11,

Derivative Instruments.

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C.Items Measured at Fair Value on a Non-Recurring Basis

Impairment of Real Estate Investments

Certain financial and nonfinancial assets and liabilities are measured at fair value on a non-recurring basis and are

subject to fair value adjustments only under certain circumstances, such as when an impairment write-down occurs.

Depending on impairment triggering events during the applicable period, impairments are typically recorded for

properties sold, in the process of being sold, vacant, in bankruptcy, or experiencing difficulties with collection of rent.

The following table summarizes our provisions for impairment on real estate investments during the periods indicated below (dollars in millions):

The valuation of impaired assets is determined by using widely accepted valuation techniques including income

capitalization approach, using net operating income for each property and applying a weighted average

capitalization rate of 8.6%, recent comparable sales transactions, broker opinions of value with discounts based on

management judgment, and purchase offers received from third parties, which are level 3 inputs. We may consider

a single valuation technique or multiple valuation techniques, as appropriate, when estimating the fair value of such

real estate. Estimating future cash flows is highly subjective and estimates can differ materially from actual results.

11.Derivative Instruments

In the normal course of business, our operations are exposed to economic risks from interest rates and foreign

currency exchange rates. We may enter into derivative financial instruments to offset these underlying economic

risks.

Derivatives Designated as Hedging Instruments - Cash Flow Hedges

We enter into foreign currency forward contracts to sell GBP or EUR and buy USD to hedge the foreign currency

risk associated with forecasted foreign-currency-denominated cash flows. There are no amounts excluded from the

assessment of hedge effectiveness for cash flow hedges of foreign exchange risk. We also use variable-to-fixed

interest rate swaps and interest rate swaption agreements to add stability to interest expense and to manage our

exposure to interest rate movements associated with our term loans or forecasted debt issuances. If it becomes

probable that a forecasted transaction will not occur within the specific time period or within an additional two-month

period thereafter, any related amounts deferred in AOCI are recognized immediately in earnings. During the six

months ended June 30, 2026, and 2025, no such amounts were recognized through the caption entitled 'Interest' in

our consolidated statements of income and comprehensive income.

Derivatives Designated as Hedging Instruments - Fair Value Hedges

Periodically, we enter into and designate fixed-to-floating interest rate swaps to manage interest rate risk by

managing our mix of fixed-rate and variable-rate debt. We also designate some of our cross-currency swaps as fair

value hedges as we use them to hedge foreign currency risk associated with changes in spot rates on foreign-

denominated on certain-foreign currency-denominated monetary assets and liabilities. For these hedging

instruments, we have elected to exclude the change in fair value of the cross-currency swaps attributable to the

difference between the spot and forward prices from the assessment of hedge effectiveness (the "excluded

component"). Changes in the fair value of the cross-currency swaps attributable to these excluded components are

recorded to other comprehensive income and subsequently recognized in 'Foreign currency and derivative loss, net'

on a systematic and rational basis, as net cash settlements and interest accruals on the respective cross currency

swaps occur, over the remaining life of the hedging instruments.

-25-

Derivatives Designated as Hedging Instruments - Net Investment Hedges

To mitigate the foreign currency exchange rate variations associated with our investment in EUR-denominated

foreign operations, we may enter into derivative instruments, such as cross-currency swaps that qualify as net

investment hedges under the criteria prescribed in accordance with ASC 815-20, Hedging - General. We use the

spot method of assessing hedge effectiveness and apply the consistent election to the excluded component by

recognizing changes in the fair value of the hedging instruments attributable to the excluded component in the same

manner as described above. Any difference between the change in the fair value of the excluded components and

the amounts recognized in earnings is reported in other comprehensive income as part of the foreign cumulative

translation adjustment. The gain or loss on the portion of the derivative instruments included in the assessment of

effectiveness is reported in other comprehensive income as part of the 'Foreign currency translation adjustment' line

item, to the extent the relationship is highly effective. If our net investment changes during a reporting period, the

hedge relationship will be assessed for whether a de-designation is warranted (only if the hedge notional amount is

outside of prescribed tolerance). Further, certain EUR-denominated and GBP-denominated bonds and borrowings

under our revolving credit facilities and term loans may also be designated as, and are effective as, net investment

hedges. Changes in the value of such borrowings, related to changes in the spot rates, will be recorded in the same

manner as foreign currency translation adjustments. As of June 30, 2026, the total principal amount of foreign

currency debt obligations designated as net investment hedges was $2.4 billion.

Derivatives Not Designated as Hedging Instruments

We enter into foreign currency exchange swap agreements to economically hedge foreign currency exposures

arising in the normal course of business. These derivative contracts generally mature within one year and are not

designated as hedge instruments for accounting purposes. As the currency exchange swap is not accounted for as

a hedging instrument, the change in fair value is recorded in earnings through the caption entitled 'Foreign currency and derivative loss, net' in our consolidated statements of income and comprehensive income.

The following table summarizes the terms and fair values of our derivative financial instruments as of June 30,

2026 and December 31, 2025 (dollars in millions):

(1) This column represents the number of instruments outstanding as of June 30, 2026.

(2) Weighted average strike rate is calculated using the notional value as of June 30, 2026.

(3) This column represents maturity dates for instruments outstanding as of June 30, 2026.

(4) During the three months ended June 30, 2026, we entered into five variable-to-fixed interest rate swaps in connection with the delayed draw

term loan under the Fund Credit Facilities.

(5) USD fixed rate of 5.625% and EUR weighted average fixed rate of 4.681%. USD fixed rate of 3.950% and GBP weighted average fixed rate of

4.392%. USD fixed rate of 4.910% and EUR weighted average fixed rate of 4.122%. USD fixed rate of 4.750% and EUR weighted average

fixed rate of 3.806%.

(6) USD fixed rate of 5.625% and EUR weighted average fixed rate of 4.716%.

(7) Weighted average exchange rates of 1.34 for GBP-USD and 1.21 for EUR-USD.

(8) Weighted average exchange rates of 0.87 for EUR-GBP, 1.34 for GBP-USD, and 4.32 for EUR-PLN.

-26-

We measure our derivatives at fair value and include the balances within 'Other assets, net' and 'Accounts payable

and accrued expenses' on our consolidated balance sheets.

We have agreements with each of our derivative counterparties containing provisions under which we could be

declared in default on our derivative obligations if repayment of our indebtedness is accelerated by the lender due to

our default.

The following table summarizes the amount of unrealized gain (loss) on derivatives and foreign currency translation adjustments in other comprehensive income (in thousands):

The following table summarizes the amount of gain (loss) on derivatives reclassified from AOCI (in thousands):

We expect to reclassify $13.6 million from AOCI as a decrease to interest expense relating to interest rate swaps

and $9.9 million from AOCI as a decrease to foreign currency loss relating to foreign currency forwards within the

next twelve months.

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The following table details our foreign currency and derivative loss, net included in income (in thousands):

12.Lessor Operating Leases

As of June 30, 2026, we owned or held interests in 15,588 properties. Of the 15,588 properties, 15,218, or 97.6%,

are single-tenant properties, and the remainder are multi-tenant properties. As of June 30, 2026, 188 properties

were available for lease or sale. The majority of our leases are accounted for as operating leases.

As of June 30, 2026, most of the properties in our portfolio were leased under net lease agreements where our

client pays or reimburses us for property taxes and assessments and carries insurance coverage for public liability,

property damage, fire, and extended coverage.

The following table details our rental revenue for the three and six months ended June 30, 2026 and 2025 (in thousands):

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13.Stockholders' Equity

A.Common Stock

We pay monthly distributions to our common stockholders. The following is a summary of monthly distributions paid per common share for the periods indicated below:

As of June 30, 2026, a distribution of $0.2710 per common share was payable and was paid in July 2026.

B.At-the-Market ("ATM") Program

In May 2026, we replaced our prior ATM program with a new ATM program, pursuant to which we may offer and sell

up to 150.0 million shares of common stock (1) by us to, or through, a consortium of banks acting as our sales

agents or (2) by a consortium of banks acting as forward sellers on behalf of any forward purchasers contemplated

thereunder, in each case by means of ordinary brokers' transactions on the NYSE under the ticker symbol "O" at

prevailing market prices or at negotiated prices. The current ATM program permits us to enter into both contingent

and non-contingent forward sale agreements. Under certain forward sale agreements, the applicable forward

purchaser may elect whether to exercise a purchase contingency (the "Contingency"), and any unexercised

Contingency is automatically exercised at expiration if the market price exceeds the applicable forward price. We

may receive a contingency premium in connection with such arrangements. Upon settlement, subject to certain

exceptions, we may elect, in our sole discretion, to cash settle or net share settle all or any portion of our obligations

under any forward sale agreements, in which cases we may not receive any proceeds (in the case of cash

settlement) or will not receive any proceeds (in the case of net share settlement), and we may owe cash (in the

case of cash settlement) or shares of our common stock (in the case of net share settlement) to the relevant forward

purchaser. As of June 30, 2026, we had 138.9 million shares remaining available for future issuance under our ATM

program. We anticipate maintaining the availability of our ATM program in the future, including by replenishing the

authorized shares issuable thereunder.

The following table outlines common stock issuances pursuant to our ATM programs (dollars in millions, shares in thousands):

(1) During the three and six months ended June 30, 2026, 13.9 million and 22.1 million shares were sold, respectively. As of June 30, 2026, 21.1

million shares of common stock subject to forward sale confirmations have been executed, but not settled, at a weighted average initial gross

price of $60.14 per share. We currently expect to fully settle forward sale agreements outstanding by September 30, 2026, representing $1.2

billion in net proceeds, for which the weighted average forward price as of June 30, 2026 was $58.34 per share.

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C.Dividend Reinvestment and Stock Purchase Plan ("DRSPP")

Our DRSPP provides our common stockholders with a convenient and economical method of purchasing our

common stock and reinvesting their distributions. It also allows our current stockholders to buy additional shares of

common stock by reinvesting all or a portion of their distributions. Our DRSPP authorizes up to 26.0 million common

shares to be issued. As of June 30, 2026, we had 10.4 million shares remaining for future issuance under our

DRSPP program.

The following table outlines common stock issuances pursuant to our DRSPP program (dollars in millions, shares in thousands):

D.Repurchases of Common Stock

We repurchased 1.8 million shares of our common stock during the six months ended June 30, 2026 for an

aggregate cost of $101.9 million. As of June 30, 2026, there was $1.9 billion remaining under the share repurchase

program authorized by the Board of Directors, which expires in January 2028.

14.Common Stock Incentive Plan

The amount of share-based compensation costs recognized in 'General and administrative' in our consolidated

statements of income and comprehensive income was $9.3 million and $8.1 million during the three months ended

June 30, 2026 and 2025, respectively, and $20.7 million and $14.0 million during the six months ended June 30,

2026, and 2025, respectively.

A.Restricted Stock and Restricted Stock Units

During the six months ended June 30, 2026, we granted a total of 304,832 shares of restricted stock and restricted

stock units under the Realty Income 2021 Incentive Award Plan (the "2021 Plan"). This amount included 32,140

shares granted to the independent members of our Board of Directors in connection with our annual awards in May

Restricted stock and restricted stock units granted to employees vest over a service period not exceeding four years, while those granted to directors vest over a period of up to three years based on each director's years of

service, and are subject to the director’s continued service through each applicable vesting date.

As of June 30, 2026, the remaining unamortized share-based compensation expense related to restricted stock

awards and units totaled $33.5 million, which is being amortized on a straight-line basis over the service period of

each applicable award. The amount of share-based compensation is based on the fair value of the stock at the

grant date. We define the grant date as the date the recipient and Realty Income have a mutual understanding of

the key terms and conditions of the award, and the recipient of the grant begins to benefit from, or be adversely

affected by, subsequent changes in the price of the shares.

B.Performance Shares

During the six months ended June 30, 2026, we granted 246,900 performance shares, as well as dividend

equivalent rights, to our executive officers. The performance shares are earned based on our Total Shareholder

Return (“TSR”) performance relative to select industry indices and peer groups as well as achievement of certain

operating metrics, and vest 50% as of the date of which the plan administrator determines the achievement of the

applicable goals during the applicable three-year performance period and the remaining 50% on January 1 of the

following year, subject to continued service.

As of June 30, 2026, the remaining share-based compensation expense related to the performance shares totaled

$34.0 million. The performance shares are recognized on a tranche-by-tranche basis over the service period. The

fair value of the performance shares was estimated on the date of grant using a Monte Carlo Simulation model.

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15.Net Income per Common Share

The following is a reconciliation of the denominator of the basic net income per common share computation to the denominator of the diluted net income per common share computation (shares in thousands):

16.Supplemental Disclosures of Cash Flow Information

The following table summarizes our supplemental cash flow information during the periods indicated below (in thousands):

The following table provides a reconciliation of 'Cash and cash equivalents' reported on our consolidated balance sheets to the total of the cash, cash equivalents, and restricted cash reported within our consolidated statements of

cash flows (in thousands):

(1) Included within 'Other assets, net' on our consolidated balance sheets (see note 2, Supplemental Detail for Certain Components of

Consolidated Balance Sheets). These amounts consist of cash that we are legally entitled to, but that is not immediately available to us. As a

result, these amounts were considered restricted as of the dates presented.

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17.Segment and Geographic Information

A.Segment Information

Our business is characterized as primarily owning and leasing commercial properties under long-term, net lease

agreements (whereby clients are responsible for property taxes, insurance and maintenance costs), and these

economic characteristics are similar across various property types, geographic locations, and industries in which our

clients operate. Our chief operating decision maker ("CODM") is our President, Chief Executive Officer. Information

reviewed by our CODM in evaluating performance and allocating resources is primarily operating results and cash

flow analysis on a consolidated basis. Therefore, we operate and manage the business in one operating and

reportable segment.

The CODM assesses performance and decides how to allocate resources based on net income that also is reported

on the income statement as consolidated net income. The measure of segment assets is reported on the balance

sheet as total consolidated assets. Our significant segment expenses include consolidated expense categories presented in our consolidated statements of income and comprehensive income, as well as additional significant

segment expense categories reported within 'Property (including reimbursements)' and 'General and administrative'

expense captions, as follows (in thousands):

(1) Represents 'General and administrative' expenses as presented in our consolidated statements of income and comprehensive income, less share-based compensation costs.

Other segment items included in consolidated net income consist of 'Gain on sales of real estate' and 'Other

income, net', as presented in our consolidated statements of income and comprehensive income.

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B.Geographic Information

The following table disaggregates domestic and international revenue by major asset types and geographic regions (in thousands):

(1) Other includes rental revenue generated from all other European countries we operate in.

(2) Other includes all other property types in our portfolio.

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No individual client’s revenue represented more than 10% of our total revenue for each of the three and six months

ended June 30, 2026 and 2025.

Long-lived assets include items such as property, plant, equipment and right-of-use assets subject to operating and

finance leases. The following table disaggregates domestic and international total long-lived assets (in millions):

(1) Other includes long-lived assets in all other European countries we operate in.

18.Commitments and Contingencies

In the ordinary course of business, we are party to various legal actions which we believe are routine in nature and

incidental to the operation of our business. We believe that the outcome of the proceedings will not have a material

adverse effect upon our consolidated financial position or results of operations.

As of June 30, 2026, we had $729.4 million of commitments under construction contracts related to development

projects, which have estimated rental revenue commencement dates between July 2026 and December 2028. In

addition, we had commitments of $81.1 million for tenant improvements, recurring capital expenditures, and building

improvements, and had accrued $11.5 million in contingent consideration obligations related to leasing activities at

four U.K. retail park properties acquired in 2026, representing the remaining amounts deemed probable and

estimable as of June 30, 2026.

In June 2026, we entered into an agreement with a joint venture to fund approximately $243.0 million for our equity

interest in the joint venture, among other costs. This purchase obligation is expected to close during the third

quarter of 2026.

As of June 30, 2026, we had approximately $375.4 million of unfunded loan commitments related to certain loan

investments, under which we are committed to provide funding upon borrower request, subject to satisfaction of

customary conditions. These commitments may be funded over the contractual commitment period and are

generally intended to support the financing needs of the borrowers, including project development costs, operational

expenditures, and interest obligations. These commitments are secured by the underlying real estate collateral or

pledges of equity interests in the borrowing entities.

In March 2026, we closed on a mezzanine loan entered into with a joint venture with a principal balance of

$375.0 million. As of June 30, 2026, we have an obligation to fund up to $135.6 million over the term of the

guarantee on third-party debt related to this loan, in the event of default. The guarantee is effective through the term

of the related loan, which matures in March 2029 and has two 12-month extension options available. The guarantee

requires fair value measurement. As such, we recorded the measured amount of $4.0 million as a liability at

inception, which is included in 'Other liabilities' on our consolidated balance sheets.

19.Subsequent Events

A.Dividends

In July 2026, we declared a dividend of $0.2710 per share to our common stockholders, which will be paid in August

B. Credit Facility Amendment

On July 10, 2026, we amended and restated our unsecured revolving credit facility to increase the borrowing

capacity to $5.5 billion, among other things. The revolving credit facility is bifurcated into two $2.75 billion tranches,

which initially mature on April 29, 2029 and July 10, 2030, respectively, before giving effect to two six-month

extension options. Pursuant to the terms of the revolving credit facility, the credit ratings at the time of the

amendment provided for a borrowing rate of 67.5 basis points over the SOFR for USD borrowings, with a facility

commitment fee of 12.5 basis points, for all-in drawn pricing of 80 basis points over SOFR, a reduction of 5.0 basis

points from the prior revolving credit facilities.

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C. Commercial Paper Program

On July 10, 2026, in conjunction with the closing of the updated revolving credit facility, we also expanded our global

unsecured commercial paper programs to a total combined capacity of $5.5 billion, including an upsized

$2.75 billion U.S. commercial paper program and a $2.75 billion European commercial paper program. The notes

will be sold under customary terms in the United States and European commercial paper note markets, respectively,

and will rank pari passu with all of our other unsecured senior indebtedness, including our outstanding senior notes

and borrowings under our multicurrency revolving credit facilities.

D. U.S. Core Plus Fund

On July 1, 2026, we called an additional $265.7 million of capital from third-party investors, resulting in an indirect

ownership of 23.6% in the Fund.

E. ATM Forward Offerings

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 (assuming full

physical settlement of such agreements), of which 1.4 million shares were sold in July 2026.

F. Note Issuance

In July 2026, we issued €600.0 million of 3.625% senior unsecured notes due July 2032.

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Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

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.

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:

(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"). During the six months ended June 30, 2026, within our Fund, we called an aggregate $948.0 million of

capital from third-party investors and redeemed an aggregate $591.9 million of the Company's units, resulting in our

indirect ownership interest of 26.8% in the Fund. On July 1, 2026, within our Fund, we called an additional

$265.7 million of capital from third-party investors, resulting in our indirect ownership interest of 23.6% in the Fund.

We seek to hold additional closings during the life of the Fund. 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. In March 2026, we 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.

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.

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Capitalization

As of June 30, 2026, our total capitalization was $90.0 billion. Total capitalization consisted of $58.8 billion of

common equity (based on the June 30, 2026 closing price on the NYSE of $61.96 and assuming the conversion of

2.7 million common units of Realty Income, L.P.), and total outstanding borrowings of $31.2 billion of our pro-rata

share of total debt principal.

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

During the three and six months ended June 30, 2026, we settled approximately 13.7 million shares of common

stock previously sold pursuant to forward sale agreements through our ATM program for approximately $824.3

million of net proceeds. As of June 30, 2026, we had outstanding forward-sale agreements under our ATM program

for a total of 21.1 million shares of common stock, representing approximately $1.2 billion in expected net proceeds,

which have been executed at a weighted average price of $58.34 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). In May 2026, we entered into a new ATM equity program that provides for the offer and

sale of up to 150.0 million shares of common stock pursuant to forward sale agreements. As of June 30, 2026, we

had 138.9 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 June 30, 2026, our total outstanding borrowings of credit facilities, commercial paper, term loans, mortgages

payable, and senior unsecured notes and bonds were $31.0 billion, with a weighted average maturity of 5.1 years

and a weighted average interest rate of 3.9%. As of June 30, 2026, approximately 91% 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 six months ended June 30, 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 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. 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.

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%.

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Note Repayments

During the six months ended June 30, 2026, we repaid the following notes, plus accrued and unpaid interest, upon

maturity:

Credit Facilities and Commercial Paper Programs

On July 10, 2026, we amended and restated our unsecured revolving credit facility to increase the borrowing

capacity to $5.5 billion, among other things. The revolving credit facility is bifurcated into two $2.75 billion tranches,

which initially mature on April 29, 2029 and July 10, 2030, respectively, before giving effect to two six-month

extension options. Pursuant to the terms of the revolving credit facility, the credit ratings at the time of the

amendment provided for a borrowing rate of 67.5 basis points over the SOFR for USD borrowings, with a facility

commitment fee of 12.5 basis points, for all-in drawn pricing of 80 basis points over SOFR, a reduction of 5.0 basis

points from the prior revolving credit facilities.

In conjunction with the closing of the updated revolving credit facility, we also expanded our global unsecured

commercial paper programs to a total combined capacity of $5.5 billion, including an upsized $2.75 billion U.S.

commercial paper program and a $2.75 billion European commercial paper program. The notes will be sold under

customary terms in the United States and European commercial paper note markets, respectively, and will rank pari

passu with all of our other unsecured senior indebtedness, including our outstanding senior notes and borrowings

under our multicurrency revolving credit facilities. We expect to use our $5.5 billion multicurrency revolving credit

facilities as a liquidity backstop for the repayment of notes issued under the programs.

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 June 30, 2026,

are:

(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 the 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 June 30, 2026 (in thousands, for trailing twelve months):

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Credit Agency Ratings

The borrowing interest rates under our revolving credit facilities are based upon our ratings assigned by credit rating

agencies. We are currently 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,

Standard & Poor’s Ratings Group has assigned a rating of A- with a “stable” outlook, and on August 3, 2026, we

received a credit rating of A with a "stable" outlook from Fitch Ratings. In addition, we are assigned the following

ratings on our commercial paper: Moody's Investors Service has assigned a rating of P-2, Standard & Poor's

Ratings Group has assigned a rating of A-2, and Fitch Ratings has assigned a rating of F1.

Effective September 1, 2026, our current investment grade ratings provide for a borrowing rate of 0.650% over the

SOFR for USD borrowings, with a facility commitment fee of 0.100%, for all-in drawn pricing of 75 basis points over

SOFR. Prior to the credit rating by Fitch Ratings, financing under the credit facility was 5 basis points higher.

In addition, if our credit rating is lower than BBB-/Baa3 or our senior unsecured debt is unrated, credit ratings

provide for a borrowing rate 1.350% over the SOFR for USD borrowings, with a facility fee of 0.300%. If our credit

rating is A/A2 or higher, credit ratings provide for a borrowing rate of 0.6250% over the SOFR for USD borrowings,

with a facility fee of 0.100%.

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 June 30, 2026 (in millions):

(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 $1.4 billion, maturing between July 2026 and August 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 $729.4 million of commitments under construction contracts, $243.0 million for our equity interest in a joint venture, among

other costs, $81.1 million for tenant improvements, recurring capital expenditures, and building improvements, and $11.5 million in contingent

purchase consideration obligations related to leasing activities at four U.K. retail park properties acquired in 2026.

As of June 30, 2026, we had approximately $375.4 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 June 30, 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 $1.62 per share to stockholders during the six months ended June 30, 2026, representing 73.0% of

our diluted Adjusted Funds from Operations Available to Common Stockholders ("AFFO") per share of $2.22.

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 and six months ended June 30, 2026

and 2025.

Total Revenue

The following summarizes our total revenue (in thousands):

Rental Revenue (excluding reimbursements)

The table below summarizes the increase in rental revenue (excluding reimbursements) in the three and six months

ended June 30, 2026 and 2025 (dollars in thousands):

(1) For purposes of comparability, same store rental revenue is presented on a constant currency basis using the exchange rate as of June 30,

(2) Relates to the aggregate of (i) rental revenue from 301 properties that were available for lease during part of 2026 or 2025 for the three and six

months ended June 30, 2026, respectively and (ii) rental revenue for 103 properties under development or completed developments that do

not meet our same store pool definition for the three and six months ended June 30, 2026, respectively.

(3)"Other excluded revenue" primarily consists of reimbursements related to lease termination fees and other settlement income.

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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 17,440 in-place leases in the portfolio, 13,918, or 79.8%, 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 $4.0 million and $2.8 million for the

three months ended June 30, 2026 and 2025, respectively. Rent based on a percentage of our clients' gross sales,

or percentage rent, was $8.2 million and $8.6 million for the six months ended June 30, 2026 and 2025,

respectively. Percentage rent represents less than 1% of rental revenue.

As of June 30, 2026, our portfolio of 15,588 properties was 98.8% leased with 188 properties available for lease or

sale, as compared to 98.6% leased with 212 properties available for lease as of June 30, 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.

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 $3.7 million and

$13.8 million for the three and six months ended June 30, 2026 as compared to the same periods in 2025,

respectively, 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 $0.4 million and $0.9 million for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to lower average

financing receivable balances outstanding.

Interest and Dividend Income on Loans and Preferred Equity Investments

Interest and dividend income on loans and preferred equity investments increased by $49.0 million and $84.4

million for the three and six months ended June 30, 2026 as compared to the same periods in 2025, respectively,

due to the growth in our loan and preferred equity portfolio. Our loans receivable and preferred equity investments

increased by approximately $2.8 billion compared to the same period in 2025 due to acquisitions.

Other Revenue

Other revenue increased by $0.4 million and $6.0 million for the three and six months ended June 30, 2026 as

compared to the same periods in 2025, respectively, primarily due to higher solar electricity tax credits received in

the first quarter of 2026.

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Expenses

The following summarizes our total expenses (in thousands):

(1) Excludes client reimbursements.

Depreciation and Amortization

Depreciation and amortization decreased by $3.2 million for the three months ended June 30, 2026 and increased

by $18.2 million for the six months ended June 30, 2026 as compared to the same periods in 2025, as a result of

accelerated amortization of in-place leases in the prior year period relating to certain properties leased to clients in

bankruptcy, partially offset by higher depreciation expense due to growth in our portfolio for the three and six months

ended June 30, 2026, respectively.

Interest Expense

The following is a summary of the components of our interest expense (in thousands):

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Interest expense increased by $28.3 million or 10.0%, and $51.8 million, or 9.4%, for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to higher average

borrowings in 2026, as well as higher amortization of mortgage and note premiums and discounts and deferred

financing costs. See notes to the accompanying consolidated financial statements for additional information

regarding our indebtedness.

Property Expenses (excluding reimbursements)

Property expenses (excluding reimbursements) consist of costs associated with properties available for lease, non-

net-leased properties and general portfolio expenses and include, but are not limited to, property taxes,

maintenance, insurance, utilities, property inspections and legal fees.

Property expenses (excluding reimbursements) increased by $1.3 million and $1.4 million for the three and six

months ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to higher

property taxes of $5.9 million and $7.4 million, partially offset by lower repairs and maintenance costs of $3.3 million

and $4.4 million.

Property Expenses (reimbursements)

Property expenses (reimbursements) consist of property taxes and operating costs paid on behalf of our clients.

Property expenses (reimbursements) increased by $3.7 million and $13.8 million for the three and six months ended

June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to higher reimbursable property

taxes and maintenance due to growth in our portfolio.

General and Administrative Expenses

General and administrative expenses are expenditures related to the operations of our company, including

employee-related costs, professional fees, and other general overhead costs associated with running our business.

General and administrative expenses increased by $8.3 million and $23.1 million for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to higher employee

costs as we continue to invest in our people and our platform.

Provisions for Impairment of Real Estate

Provisions for impairment of real estate decreased by $88.1 million and $95.3 million during the three and six

months ended June 30, 2026 as compared to the same periods in 2025, respectively. The decrease is primarily due

to larger impairments recorded in 2025 related to properties leased to clients in bankruptcy.

Provisions for Credit Losses on Loans and Financing Receivables

Provisions for credit losses increased by $6.2 million and $26.1 million for the three and six months ended June 30,

2026 as compared to the same periods in 2025, respectively. For the six months ended June 30, 2026, the increase

is primarily due to initial expected credit losses on loans acquired during the period. For the three months ended

June 30, 2026, the increase was due to initial expected credit losses on loans acquired during the period, partially

offset by favorable changes in estimated credit losses for existing loans.

Merger, Transaction, and Other Costs, Net

Merger, transaction, and other costs, net increased by $1.7 million and $12.2 million for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to placement fees

incurred in fundraising for the Fund and certain strategic venture formation costs incurred in the current year.

Gain on Sales of Real Estate

The following summarizes our property dispositions (dollars in thousands):

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Foreign Currency and Derivative Loss, Net

We borrow in the functional currencies of the countries in which we invest. Net foreign currency gain and loss are

primarily related to the remeasurement of intercompany debt from foreign subsidiaries and outstanding borrowings

denominated in the local currencies we invest in. Derivative gain and loss are primarily related to mark-to-market

adjustments on derivatives that do not qualify for hedge accounting and settlement of designated derivatives

reclassified from Accumulated Other Comprehensive Income ("AOCI").

Foreign currency and derivative loss, net increased by $4.4 million and $18.9 million, for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily due to the impact of foreign

currency fluctuations on our foreign-denominated assets and liabilities, as well as derivative instruments we

executed to reduce the effect of these fluctuations.

Equity in Earnings of Unconsolidated Entities

Equity in earnings of unconsolidated entities decreased by $1.1 million and $2.8 million for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily attributable to lower income

within our data center joint venture due to a gain on sale from an easement recorded in 2025 with no comparable

gain recorded in 2026, in addition to an adjustment to straight-line rent recognized in the prior year.

Other Income, Net

Other income, net decreased by $0.1 million for the three months ended June 30, 2026 and increased by $7.8

million for the six months ended June 30, 2026 as compared to the same periods in 2025, primarily due to a non-

recurring insurance commutation gain realized during the first quarter of 2026.

Income Taxes

Income taxes primarily consist of international income taxes accrued or paid by us and our subsidiaries, as well as

state and local taxes. The increase of $1.7 million and $12.3 million in income taxes for the three and six months

ended June 30, 2026 as compared to the same periods in 2025, respectively, is primarily attributable to higher

taxable income in the U.K. and Europe, offset with lower state franchise and income taxes in the U.S.

Net Income Attributable to Noncontrolling Interests

Net income attributable to noncontrolling interests increased by $24.5 million and $32.0 million for the three and six

months ended June 30, 2026 as compared to the same periods in 2025, respectively, primarily attributable to the

launches of our U.S. Core Plus Fund and Apollo joint venture, which contributed to increases of $24.6 million and

$32.5 million for the three and six months ended June 30, 2026.

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NON-GAAP FINANCIAL MEASURES

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate ("Adjusted

EBITDAre")

Nareit established an EBITDA metric for real estate companies (i.e., EBITDA for real estate, or EBITDAre) it

believed would provide investors with a consistent measure to help make investment decisions among certain

REITs. Our definition of “Adjusted EBITDAre” is generally consistent with the Nareit definition, other than our

adjustment to remove foreign currency and derivative gain and loss and merger, transaction, and other costs, net.

We define Adjusted EBITDAre, a non-GAAP financial measure, for the most recent quarter as earnings (net income)

before (i) interest expense, (ii) income taxes, (iii) depreciation and amortization, (iv) executive severance charge,

(v) provisions for impairment of real estate, (vi) provisions for credit losses on loans and financing receivables, (vii)

merger, transaction, and other costs, net, (viii) gain on sales of real estate, (ix) foreign currency and derivative gain

and loss, net, and (x) equity in earnings of unconsolidated entities. Our Adjusted EBITDAre may not be comparable

to Adjusted EBITDAre reported by other companies or as defined by Nareit, and other companies may interpret or

define Adjusted EBITDAre differently than we do. Management believes Adjusted EBITDAre to be a meaningful

measure of a REIT’s performance because it provides a view of our operating performance, analyzes our ability to

meet interest payment obligations before the effects of income tax, depreciation and amortization expense,

provisions for impairment, provisions for credit losses on loans and financing receivables, gain on sales of real

estate and other items, as defined above, that affect comparability, including the removal of non-recurring and non-

cash items that industry observers believe are less relevant to evaluating the operating performance of a company.

In addition, EBITDAre is widely followed by industry analysts, lenders, investors, rating agencies, and others as a

means of evaluating the operating performance of business activities prior to servicing debt obligations.

Management also believes the use of an Annualized Adjusted EBITDAre metric, which is calculated by multiplying

Adjusted EBITDAre for the applicable quarter by four, is meaningful because it represents our current earnings run

rate for the period presented. Adjusted EBITDAre should be considered along with, but not as an alternative to net

income as a measure of our operating performance. We define Annualized Pro Forma Adjusted EBITDAre as

Annualized Adjusted EBITDAre, subject to certain adjustments to incorporate Adjusted EBITDAre from investments

we acquired or stabilized during the applicable quarter and Adjusted EBITDAre from investments we disposed of

during the applicable quarter, and include transaction accounting adjustments in accordance with U.S. GAAP, giving

pro forma effect to all transactions as if they occurred at the beginning of the applicable quarter. Our calculation

includes all adjustments consistent with the requirements to present Annualized Adjusted EBITDAre on a pro forma

basis in accordance with Article 11 of Regulation S-X. We believe Annualized Pro Forma Adjusted EBITDAre is a

useful non-GAAP supplemental measure, as it excludes investments that were no longer owned at the balance

sheet date and includes the annualized base rent from investments acquired during the quarter. Management also

uses our ratio of Net Debt/Annualized Pro Forma Adjusted EBITDAre as a measure of leverage in assessing our

financial performance, which is calculated as net debt (which we define as total debt, excluding deferred financing

costs and net discounts, less consolidated cash and cash equivalents), divided by Annualized Pro Forma Adjusted

EBITDAre. The ratio of our net debt to our Annualized Pro Forma Adjusted EBITDAre is also used to determine

vesting of performance share awards granted to our executive officers.

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The following is a reconciliation of net income (which we believe is the most comparable U.S. GAAP measure) to

Adjusted EBITDAre and Annualized Pro Forma Adjusted EBITDAre calculations for the period indicated below

(dollars in thousands):

As described above, the Annualized Pro Forma Adjustments, which include transaction accounting adjustments in

accordance with U.S. GAAP, consist of adjustments to incorporate the Adjusted EBITDAre from investments we

acquired or stabilized during the applicable quarter and Adjusted EBITDAre from investments we disposed of during

the applicable quarter, giving pro forma effect to all transactions as if they occurred at the beginning of the

applicable quarter, consistent with the requirements of Article 11 of Regulation S-X. The following table summarizes

our Annualized Pro Forma Adjustments related to our Annualized Pro Forma Adjusted EBITDAre calculation for the

period indicated below (in thousands):

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FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS AND NORMALIZED FUNDS FROM

OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS

We define FFO, a non-GAAP measure, consistent with the National Association of Real Estate Investment Trusts'

definition, as net income available to common stockholders, plus depreciation and amortization of real estate

assets, plus provisions for impairments of depreciable real estate assets, and reduced by gain on property sales.

We define Normalized FFO, a non-GAAP financial measure, as FFO excluding merger, transaction, and other costs,

net. We define diluted FFO and diluted normalized FFO as FFO and normalized FFO adjusted for dilutive

noncontrolling interests.

The following summarizes our FFO and Normalized FFO (in millions, except per share data):

(1) All per share amounts are presented on a diluted per common share basis.

We consider FFO and Normalized FFO to be appropriate supplemental measures of a REIT’s operating

performance as they are based on a net income analysis of property portfolio performance that adds back items

such as depreciation and impairments for FFO, and adds back merger, transaction, and other costs, net, for

Normalized FFO. The historical accounting convention used for real estate assets requires straight-line depreciation

of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time.

Since real estate values historically rise and fall with market conditions, presentations of operating results for a

REIT, using historical accounting for depreciation, could be less informative.

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The following is a reconciliation of net income available to common stockholders (which we believe is the most

comparable U.S. GAAP measure) to FFO and Normalized FFO. Also presented is information regarding

distributions paid to common stockholders and the weighted average number of common shares used for the basic

and diluted computation per share (in thousands, except per share amounts):

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ADJUSTED FUNDS FROM OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS

We define AFFO, a non-GAAP measure, as FFO adjusted for unique revenue and expense items, which we believe

are not as pertinent to the measurement of our ongoing operating performance. We define diluted AFFO as AFFO

adjusted for dilutive noncontrolling interests.

The following summarizes our AFFO (in millions, except per share data):

(1) All per share amounts are presented on a diluted per common share basis.

We consider AFFO to be an appropriate supplemental measure of our performance. Most companies in our industry

use a similar measurement, but they may use the term “CAD” (for Cash Available for Distribution), “FAD” (for Funds

Available for Distribution) or other terms. Our AFFO calculations may not be comparable to AFFO, CAD or FAD

reported by other companies, and other companies may interpret or define such terms differently than we do.

We believe the non-GAAP financial measure AFFO provides useful information to investors because it is a widely

accepted industry measure of the operating performance of real estate companies that is used by industry analysts

and investors who look at and compare those companies. In particular, AFFO provides an additional measure to

compare the operating performance of different REITs without having to account for differing depreciation

assumptions and other unique revenue and expense items which are not pertinent to measuring a particular

company’s on-going operating performance. Therefore, we believe that AFFO is an appropriate supplemental

performance metric, and that the most appropriate U.S. GAAP performance metric to which AFFO should be

reconciled is net income available to common stockholders. Presentation of the information regarding FFO,

Normalized FFO, and AFFO is intended to assist the reader in comparing the operating performance of different

REITs, although it should be noted that not all REITs calculate FFO, Normalized FFO, and AFFO in the same way,

so comparisons with other REITs may not be meaningful. Furthermore, FFO, Normalized FFO, and AFFO are not

necessarily indicative of cash flow available to fund cash needs and should not be considered as alternatives to net

income as an indication of our performance. FFO, Normalized FFO, and AFFO should not be considered as

alternatives to reviewing our cash flows from operating, investing, and financing activities. In addition, FFO,

Normalized FFO, and AFFO should not be considered as measures of liquidity, our ability to make cash

distributions, or our ability to pay interest payments.

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The following is a reconciliation of net income available to common stockholders (which we believe is the most

comparable U.S. GAAP measure) to Normalized FFO and AFFO. Also presented is information regarding

distributions paid to common stockholders and the weighted average number of common shares used for the basic

and diluted computation per share (in thousands, except per share amounts).

(1) See reconciling items for Normalized FFO presented under “Funds from Operations Available to Common Stockholders and Normalized Funds

from Operations Available to Common Stockholders".

(2) Includes the amortization of the purchase price allocated to interest rate swaps acquired in the merger with Spirit.

(3) The executive severance charge reflects certain benefits related to our Chief Legal Officer's expected departure in September 2026.

(4) Includes primarily non-cash foreign currency losses (gains) from remeasurement to USD, mark-to-market adjustments on investments and

derivatives that are non-cash in nature, obligations related to financing lease liabilities, and adjustments allocable to noncontrolling interests.

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PROPERTY PORTFOLIO INFORMATION

As of June 30, 2026, most of the properties in our portfolio were leased under net lease agreements. A net lease

typically requires the client to be responsible for monthly rent and certain property operating expenses including

property taxes, insurance, and maintenance. In addition, clients of our properties typically pay rent increases based

on: (1) fixed increases, (2) increases tied to inflation (typically subject to ceilings), or (3) additional rent calculated as

a percentage of the clients' gross sales above a specified level.

We define total portfolio annualized base rent 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, and excluding percentage rent and income

on loans and preferred equity investments. If there is a rent abatement, we annualize the first monthly contractual

base rent following the free rent period. Total annualized base rent has not been reduced to reflect reserves

recorded as reductions to GAAP rental revenue in the periods presented. We believe total annualized base rent is a

useful supplemental operating measure, as it excludes properties that were no longer owned at the balance sheet

date and includes the annualized rent from properties acquired during the quarter.

Top 20 Industry Concentrations

We are engaged in a single business activity, which is the leasing of property to clients, generally on a net lease

basis. That business activity spans various geographic boundaries and includes property types and clients engaged

in various industries. Even though we have a single segment, we believe our investors continue to view

diversification as a key component of our investment philosophy and so we believe it remains important to present

certain information regarding our property portfolio classified according to the business of the respective clients,

expressed as a percentage of our total portfolio annualized base rent:

(1) Annualized Base Rent percentages have been recast to conform to the current period presentation.

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Property Type Composition

The following table sets forth certain property type information regarding our property portfolio as of June 30, 2026

(dollars and square footage in thousands):

(1) Represents leasable building square footage, which includes our portfolio of unconsolidated joint ventures based on ownership percentage

and deducts noncontrolling interests. Excludes 2,962 acres of leased land categorized as agriculture as of June 30, 2026.

(2)"Other" primarily includes 27 properties classified as agriculture with $35.8 million in annualized base rent, 15 properties classified as office

with $33.4 million in annualized base rent, 21 properties classified as country clubs with $28.0 million in annualized base rent, and three

properties classified as data centers with $25.0 million in annualized base rent, as well as one land parcel under development.

Client Diversification

The following table sets forth the 20 largest clients in our property portfolio, expressed as a percentage of total

portfolio annualized base rent, which does not give effect to deferred rent or interest earned on loans and preferred

equity investments, as of June 30, 2026:

(1) Amounts for each client are calculated independently; therefore, the individual percentages may not sum to the total.

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Lease Expirations

The following table sets forth certain information regarding the timing of the lease term expirations in our portfolio

(excluding rights to extend a lease at the option of the client) and their contribution to total portfolio annualized base

rent as of June 30, 2026 (dollars in thousands):

(1) Leases on our multi-tenant properties are counted separately in the table above.

Geographic Diversification

The following table sets forth certain geographic information regarding our property portfolio as of June 30, 2026

(square footage in thousands):

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IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

For information on the impact of new accounting standards on our consolidated financial statements, see note 1,

Summary of Significant Accounting Policies, to our Consolidated Financial Statements.

CRITICAL ACCOUNTING POLICIES

Our consolidated financial statements have been prepared in accordance with U.S. GAAP and are the basis for our

discussion and analysis of financial condition and results of operations. Preparing our consolidated financial

statements requires us to make a number of estimates and assumptions that affect the reported amounts and

disclosures in the consolidated financial statements. We believe that we have made these estimates and

assumptions in an appropriate manner and in a way that accurately reflects our financial condition. We continually

test and evaluate these estimates and assumptions using our historical knowledge of the business, as well as other

factors, to ensure that they are reasonable for reporting purposes. However, actual results may differ from these

estimates and assumptions. There have been no material changes to the Critical Accounting Policies disclosed in

our annual report on Form 10-K for the year ended December 31, 2025. This summary should be read in

conjunction with the more complete discussion of our accounting policies and procedures included in note 1,

Summary of Significant Accounting Policies, to our consolidated financial statements in our annual report.

Item 3: Quantitative and Qualitative Disclosures about Market Risk

We are exposed to economic risks from interest rates and foreign currency exchange rates. A portion of these risks

is hedged, but the risks may affect our financial statements.

Interest Rates

We are exposed to interest rate changes primarily as a result of our revolving credit facilities and commercial paper

programs, term loans, mortgages payable, and long-term notes and bonds used to maintain liquidity and expand

our real estate investment portfolio and operations. Our interest rate risk management objective is to limit the impact

of interest rate changes on earnings and cash flow and to lower our overall borrowing costs. To achieve these

objectives, we primarily issue long-term notes and bonds, primarily at fixed rates.

In order to mitigate and manage the effects of interest rate risks on our operations, we may utilize a variety of

financial instruments, including interest rate swaps, interest rate swaptions, interest rate locks and caps. The use of

these types of instruments to hedge our exposure to changes in interest rates carries additional risks, including

counterparty credit risk, the enforceability of hedging contracts and the risk that unanticipated and significant

changes in interest rates will cause a significant loss of basis in the contract. To limit counterparty credit risk, we will

seek to enter into such agreements with major financial institutions with favorable credit ratings. There can be no

assurance that we will be able to adequately protect against the foregoing risks or realize an economic benefit that

exceeds the related amounts incurred in connection with engaging in such hedging activities. We do not enter into

any derivative transactions for speculative or trading purposes.

The following table presents, by year of expected maturity, the principal amounts, average interest rates and

estimated fair values of our fixed and variable rate debt as of June 30, 2026. This information is presented to

evaluate the expected cash flows and sensitivity to interest rate changes.

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Expected Maturity Data

The following table summarizes the maturity of our debt as of June 30, 2026 (dollars in millions):

(1) Excludes net discounts recorded on mortgages payable, net discounts recorded on notes payable, and deferred financing costs on term loans,

mortgages payable, and notes payable.

(2) We base the estimated fair value of our 2026 Term Loan Facility, mortgages and private senior notes payable as of June 30, 2026, on the

relevant forward interest rate curve, plus an applicable credit-adjusted spread. We base the estimated fair value of the publicly traded fixed

rate senior notes and bonds, and other term loans as discussed in note 7, Term Loans as of June 30, 2026, on the indicative market prices

and recent trading activity of our senior notes and bonds payable. We believe that the carrying values of the credit facilities, and commercial

paper borrowings reasonably approximate their estimated fair values as of June 30, 2026.

(3) Calculated as the weighted average interest rate as of June 30, 2026. The weighted average interest rates reflect the effective fixed rate for

floating rate debt that is fixed through interest rate swaps.

(4) In connection with our merger with Spirit in January 2024, we effectively assumed Spirit’s existing term loans and fixed rate swaps, which carry

a weighted average fixed interest rate of 3.3% for our term loan maturing in August 2027. In November 2025, we entered into interest rate

swaps, which fixed our per annum interest rate at 4.3% for our term loan initially maturing in January 2028. In March 2026, we closed a

$693.9 million unsecured term loan due January 2036 at a fixed rate of 4.9%. Concurrently, we 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%. In June 2026, the Fund

fully drew on its $380.0 million unsecured delayed draw term loan, which initially matures in April 2028, and is subject to interest rate swaps

that fix the effective interest rate at 4.92%.

The table above incorporates only those exposures that exist as of June 30, 2026. It does not consider those

exposures or positions that could arise after that date. As a result, our ultimate realized gain or loss, with respect to

interest rate fluctuations, would depend on the exposures that arise during the period, our hedging strategies at the

time, and interest rates.

As of June 30, 2026, our outstanding mortgages payable, notes, and bonds had fixed interest rates. Interest on our

credit facilities and commercial paper borrowings and term loans is variable. However, the variable interest rate

feature on certain term loans has been mitigated by interest rate swap agreements, while one term loan bears a

fixed contractual rate. As of June 30, 2026, a 1% change in interest rates on our variable-rate debt would change

our interest rate costs by $27.6 million.

Foreign Currency Exchange Rates

We are exposed to foreign currency exchange variability related to investments in and earnings from our foreign

investments. Foreign currency market risk is the possibility that our results of operations or financial position could

be better or worse than planned because of changes in foreign currency exchange rates. We primarily hedge our

foreign currency risk by borrowing in the currencies in which we invest thereby providing a natural hedge. We

continuously evaluate and manage our foreign currency risk through the use of derivative financial instruments,

including currency exchange swaps, and foreign currency forward contracts with financial counterparties where

practicable. Such derivative instruments are viewed as risk management tools and are not used for speculative or

trading purposes. Additionally, our inability to redeploy rent receipts from our international operations on a timely

basis subjects us to foreign exchange risk.

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