What changed in this filing

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Item 1. Financial Statements

2020-11-03 compared with 2020-08-04 · 237 added, 186 removed, 702 unchanged (38% of the section changed)

3 unchanged sentences

(dollars in thousands, except per share and share count data)

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

ASSETS (unaudited)

7 unchanged sentences

Cash and cash equivalents 724,750 54,011

Short-term investment 300,000 —

Accounts receivable 261,752 181,969

7 unchanged sentences

Other liabilities 241,425 262,221

Line of credit payable 628,551 704,335

Line of credit payable and commercial paper 856,142 704,335

Term loans, net 249,308 499,044

4 unchanged sentences

Stockholders’ equity:

Common stock and paid in capital, par value $ 0.01 per share, 740,200,000 shares authorized, 345,023,421 and 333,619,106 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

Common stock and paid in capital, par value $ 0.01 per share, 740,200,000 shares authorized, 350,595,869 and 333,619,106 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

14,050,494 12,873,849

10 unchanged sentences

(dollars in thousands, except per share data) (unaudited)

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

10 unchanged sentences

Gain on sales of real estate 13,736 1,674 53,565 15,828

Foreign currency and derivative gains (losses), net 502 136 ( 1,062 ) 136

Foreign currency and derivative gains, net 2,336 327 1,274 463

Loss on extinguishment of debt — — ( 9,819 ) —

3 unchanged sentences

Amounts available to common stockholders per common share:

Basic and Diluted $ 0.31 $ 0.31 $ 0.75 $ 0.67

Basic $ 0.07 $ 0.32 $ 0.81 $ 0.99

Diluted $ 0.07 $ 0.32 $ 0.81 $ 0.98

Weighted average common shares outstanding:

4 unchanged sentences

Foreign currency translation adjustment ( 964 ) ( 359 ) ( 550 ) ( 365 )

Unrealized loss on derivatives, net ( 10,534 ) ( 2,794 ) ( 36,396 ) ( 6,493 )

Unrealized gain (loss) on derivatives, net 1,602 1,357 ( 34,794 ) ( 5,136 )

Comprehensive income available to common stockholders $ 23,542 $ 102,047 $ 242,211 $ 301,684

3 unchanged sentences

(dollars in thousands) (unaudited)

Three Months Ended June 30, 2020 and 2019

Three Months Ended September 30, 2020 and 2019

capital Distributions

4 unchanged sentences

interests Total

Balance, March 31, 2020 343,402,030 $ 13,604,055 $ ( 3,173,468 ) $ ( 42,572 ) $ 10,388,015 $ 29,624 $ 10,417,639

Balance, June 30, 2020

345,023,421 $ 13,704,121 $ ( 3,306,588 ) $ ( 53,084 ) $ 10,344,449 $ 29,470 $ 10,373,919

Net Income — — 22,904 — 22,904 239 23,143

Other comprehensive loss — — — ( 10,512 ) ( 10,512 ) — ( 10,512 )

Other comprehensive income — — — 638 638 — 638

Distributions paid and payable — — ( 243,837 ) — ( 243,837 ) ( 401 ) ( 244,238 )

Share issuances, net of costs 5,571,223 343,335 — — 343,335 — 343,335

Reallocation of equity — 47 — — 47 ( 47 ) —

Share-based compensation, net

1,225 2,991 — — 2,991 — 2,991

Balance, September 30, 2020

350,595,869 $ 14,050,494 $ ( 3,527,521 ) $ ( 52,446 ) $ 10,470,527 $ 29,261 $ 10,499,788

Balance, June 30, 2019 318,218,713 $ 11,722,036 $ ( 2,869,937 ) $ ( 14,597 ) $ 8,837,502 $ 25,092 $ 8,862,594

Balance, March 31, 2019 303,807,421 $ 10,748,467 $ ( 2,752,775 ) $ ( 11,797 ) $ 7,983,895 $ 25,181 $ 8,009,076

Net income — — 101,049 — 101,049 226 101,275

Other comprehensive loss — — — ( 2,800 ) ( 2,800 ) — ( 2,800 )

Other comprehensive income — — — 998 998 — 998

Distributions paid and payable — — ( 218,232 ) — ( 218,232 ) ( 392 ) ( 218,624 )

Share issuances, net of costs 7,693,184 569,617 — — 569,617 — 569,617

Redemption of common units — 3 — — 3 ( 901 ) ( 898 )

Reallocation of equity — ( 653 ) — — ( 653 ) 653 —

Share-based compensation, net ( 1,616 ) 3,135 — — 3,135 — 3,135

Balance, June 30, 2019 318,218,713 $ 11,722,036 $ ( 2,869,937 ) $ ( 14,597 ) $ 8,837,502 $ 25,092 $ 8,862,594

Six Months Ended June 30, 2020 and 2019

Balance, September 30, 2019

325,910,281 $ 12,294,138 $ ( 2,987,120 ) $ ( 13,599 ) $ 9,293,419 $ 24,678 $ 9,318,097

Nine Months Ended September 30, 2020 and 2019

capital Distributions

9 unchanged sentences

Share issuances, net of costs 16,851,689 1,171,107 — — 1,171,107 — 1,171,107

Reallocation of equity — 47 — — 47 ( 47 ) —

Share-based compensation, net

125,074 5,491 — — 5,491 — 5,491

Balance, June 30, 2020 345,023,421 $ 13,704,121 $ ( 3,306,588 ) $ ( 53,084 ) $ 10,344,449 $ 29,470 $ 10,373,919

Balance, September 30, 2020

350,595,869 $ 14,050,494 $ ( 3,527,521 ) $ ( 52,446 ) $ 10,470,527 $ 29,261 $ 10,499,788

Balance, December 31, 2018 303,742,090 $ 10,754,495 $ ( 2,657,655 ) $ ( 8,098 ) $ 8,088,742 $ 32,236 $ 8,120,978

5 unchanged sentences

Redemption of common units — ( 6,866 ) — — ( 6,866 ) ( 14,257 ) ( 21,123 )

Reallocation of equity — ( 653 ) — — ( 653 ) 653 —

Share-based compensation, net 58,894 6,232 — — 6,232 — 6,232

Balance, June 30, 2019 318,218,713 $ 11,722,036 $ ( 2,869,937 ) $ ( 14,597 ) $ 8,837,502 $ 25,092 $ 8,862,594

Balance, September 30, 2019

325,910,281 $ 12,294,138 $ ( 2,987,120 ) $ ( 13,599 ) $ 9,293,419 $ 24,678 $ 9,318,097

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

2 unchanged sentences

(dollars in thousands) (unaudited)

Six months ended June 30,

Nine months ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Amortization of share-based compensation

13,420 10,478

Non-cash revenue adjustments

5 unchanged sentences

Loss on interest rate swaps

Foreign currency and derivative losses (gains), net 1,062 ( 136 )

Foreign currency and derivative gains, net ( 1,274 ) ( 463 )

Gain on sales of real estate

16 unchanged sentences

181,925 72,601

Purchase of short-term investment ( 300,000 ) —

Insurance and other proceeds received

5 unchanged sentences

( 716,535 ) ( 629,658 )

Borrowings on line of credit

2,324,409 1,404,000

Payments on line of credit

( 2,385,859 ) ( 1,648,000 )

Borrowings on line of credit and commercial paper program 3,141,828 1,619,282

Payments on line of credit and commercial paper program ( 3,002,717 ) ( 1,871,282 )

Principal payment on term loan

31 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

September 30, 2020

Basis of Presentation

2 unchanged sentences

Unless otherwise indicated, all dollar amounts are expressed in United States (U.S.) dollars.

At June 30, 2020 we owned 6,541 properties, located in 49 U.S.

At September 30, 2020 we owned 6,588 properties, located in 49 U.S.

states, Puerto Rico and the United Kingdom (U.K.), consisting of approximately 108.5 million leasable square feet.

13 unchanged sentences

These impacts may continue and increase in severity as the duration of the pandemic lengthens, which may, in turn, adversely impact the fair value estimates of our real estate and recording of impairments on our properties.

As a result, we have evaluated certain key assumptions involving fair value estimates of our real estate and collectibility of our accounts receivable.

As a result, we have evaluated certain key assumptions involving fair value estimates of our real estate and collectability of our accounts receivable (see note 14 for our discussion of impairments).

We continue to evaluate the potential impacts of the COVID-19 pandemic and the measures taken to limit its spread on our business and industry segments as the situation continues to evolve and more information becomes available.

Based on the status of our business operations as of June 30, 2020, as a result of the COVID-19 pandemic, we expect to remain in compliance with the financial covenants for our unsecured notes and credit facility over the next 12 months.

Based on the status of our business operations as of September 30, 2020, as a result of the COVID-19 pandemic, we expect to remain in compliance with the financial covenants for our unsecured notes and credit facility over the next 12 months.

On April 8, 2020, the Financial Accounting Standards Board, or FASB, staff and FASB board members responded to questions about the accounting for COVID-19 related rent concessions under Topic 842, Leases .

3 unchanged sentences

In contrast, if the lessor is under no obligation to grant a rent concession, the lessor’s agreement to grant one should be accounted for as a lease modification.

The FASB staff has provided clarifying guidance for leases where the total lease cash flows will remain substantially the same or less than those after the COVID-19 related effects, though companies may choose to forgo the evaluation of the enforceable rights and obligations of the original lease contract as a practical expedient.

the company would account for rent concessions, whatever their form (e.g.

The FASB staff has provided clarifying guidance for leases for which the total lease cash flows will remain substantially the same or less than those after the COVID-19 related effects, though companies may choose to forgo the evaluation of the enforceable rights and obligations of the original lease contract as a practical expedient.

Instead, the company would account for rent concessions, whatever their form (e.g.

rent deferral, abatement or other), either (1) as if they are part of the enforceable rights and obligations of the parties under the existing lease contract;

2 unchanged sentences

Under either policy election, we must continue to assess the probability of collecting substantially all of the lease payments to which we are entitled under the original lease contract as required under Topic 842.

If we conclude collection of substantially all lease payments is less than probable, rental revenue recognized is limited to cash received and existing operating lease receivables must be written off as an adjustment to rental revenue.

The majority of concessions granted to our tenants during the second quarter of 2020 as a result of the COVID-19 pandemic have been rent deferrals with the original lease term unchanged.

In these cases, we have currently determined that the collection of substantially all rent payments is probable.

We also currently anticipate future concessions to be similar.

If a company concludes collection of substantially all lease payments under a lease is less than probable, rental revenue recognized for that lease is limited to cash received and existing operating lease receivables must be written off as an adjustment to rental revenue.

The majority of concessions granted to our tenants during the first nine months of 2020 as a result of the COVID-19 pandemic have been rent deferrals with the original lease term unchanged.

We currently anticipate future concessions to be similar.

In accordance with the April 8, 2020 guidance provided by the FASB staff, we have elected to account for these leases as if the right of deferral existed in the lease contract and therefore continue to recognize lease revenue in accordance with the lease contract in effect.

In limited circumstances, the undiscounted cash flows resulting from deferrals granted during the second quarter of 2020 increased significantly from original lease terms, which required us to account for these as lease modifications, and resulted in an insignificant impact to rental revenue for the three months ended June 30, 2020.

Similarly, rent abatements granted during the second quarter of 2020, which were also accounted for as lease modifications, impacted our rental revenue by an insignificant amount for the three months ended June 30, 2020.

In limited circumstances, the undiscounted cash flows resulting from deferrals granted during the first nine months of 2020 increased significantly from original lease terms, which required us to account for these as lease modifications, and resulted in an insignificant impact to rental revenue for the three and nine months ended September 30, 2020.

Similarly, rent abatements granted during the first nine months of 2020, which were also accounted for as lease modifications, impacted our rental revenue by an insignificant amount for the three and nine months ended September 30, 2020.

We assess collectability of our future lease payments based on an analysis of creditworthiness, economic trends (including trends arising from the COVID-19 pandemic) and other facts and circumstances related to the applicable tenants.

If the collection of substantially all of the future lease payments is less than probable, we write-off the receivable balances associated with the lease and cease to recognize lease income, including straight-line rent, unless cash is received when due.

If the collection of substantially all of the future lease payments is less than probable, we recorded a reserve of the receivable balances associated with the lease and cease to recognize lease income, including straight-line rent, unless cash is received when due.

The following table summarizes reserves recorded as a reduction of rental revenue (dollars in millions):

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

2 unchanged sentences

Total rental revenue reserves $ 24.1 $ 0.4 $ 34.4 $ 2.7

As of June 30, 2020, we do not have any further tenant specific information that would change our assessment that collection of substantially all of the future lease payments under our existing leases is probable.

As of September 30, 2020, other than the information related to the reserves recorded to date, we do not have any further tenant specific information that would change our assessment that collection of substantially all of the future lease payments under our existing leases is probable.

However, since the conversations regarding rent collections for tenants affected by the COVID-19 pandemic are ongoing and we do not currently know the types of future concessions, if any, that will ultimately be granted, there may be impacts in future periods that could change this assessment as the situation continues to evolve and as more information becomes available.

During the first six months of 2020, we reclassified 'Real estate held for sale, net', which was previously presented in 'Net real estate', into a new caption entitled 'Real estate and lease intangibles held for sale, net'.

We also evaluated certain properties impacted by the COVID-19 pandemic for impairment (see note 14).

During the first nine months of 2020, we reclassified 'Real estate held for sale, net', which was previously presented in 'Net real estate', into a new caption entitled 'Real estate and lease intangibles held for sale, net'.

The reclassification out of 'Net real estate' incorporates intangibles held for sale into a more appropriate presentation of the held for sale caption.

3 unchanged sentences

Accounts Receivable consist of the following at:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Straight-line rent receivables $ 167,470 $ 147,047

2 unchanged sentences

Lease intangible assets, net, consist of the following at:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

In-place leases

8 unchanged sentences

Other assets, net, consist of the following at:

June 30, 2020 December 31, 2019

Right of use asset - operating leases, net $ 117,444 $ 120,533

September 30, 2020 December 31, 2019

Right of use asset - financing leases $ 115,283 $ 36,901

Restricted escrow deposits 81,683 4,529

Right of use asset - operating leases, net 114,748 120,533

Financing receivables 98,896 81,892

1 unchanged sentence

Goodwill 14,282 14,430

Impounds related to mortgages payable 13,290 12,465

Prepaid expenses 14,232 11,839

Restricted escrow deposits 8,832 4,529

Credit facility origination costs, net 8,562 11,453

Corporate assets, net 7,485 5,251

Impounds related to mortgages payable 5,429 12,465

Non-refundable escrow deposits 1,000 14,803

3 unchanged sentences

Distributions payable consist of the following declared distributions at:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Common stock distributions

3 unchanged sentences

Accounts payable and accrued expenses consist of the following at:

June 30, 2020 December 31, 2019

Derivative liabilities and payables - at fair value $ 73,980 $ 26,359

September 30, 2020 December 31, 2019

Notes payable - interest payable $ 69,383 $ 75,114

Derivative liabilities and payables - at fair value 66,992 26,359

Property taxes payable 28,669 18,626

6 unchanged sentences

Lease intangible liabilities, net, consist of the following at:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Below-market leases

4 unchanged sentences

Other liabilities consist of the following at:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Lease liability - operating leases, net $ 117,148 $ 122,285

Rent received in advance and other deferred revenue 112,003 127,687

Security deposits 6,212 6,303

Lease liability - financing leases 6,178 5,946

Security deposits 6,096 6,303

$ 241,425 $ 262,221

Short-term investment

Short-term investment represents a term deposit with a bank that was not readily convertible to cash as of June 30, 2020.

The term deposit matured on July 24.

Investments in Real Estate

We acquire land, buildings and improvements necessary for the successful operations of commercial tenants.

Acquisitions During the First Six Months of 2020 and 2019

Below is a summary of our acquisitions for the six months ended June 30, 2020:

Properties Square Feet

Acquisitions During the First Nine Months of 2020 and 2019

Below is a summary of our acquisitions for the nine months ended September 30, 2020:

Properties Leasable

(in millions) Investment

1 unchanged sentence

(Years) Initial

Six months ended June 30, 2020 (1)

Nine months ended September 30, 2020 (1)

Acquisitions - U.S.

7 unchanged sentences

180 5.1 $ 1,298.9 13.1 6.3 %

(1) None of our investments during the first six months of 2020 caused any one tenant to be 10% or more of our total assets at June 30, 2020.

All of our investments in acquired properties during the first six months of 2020 are 100 % leased at the acquisition date.

(2) Represents investments of £ 180.1 million Sterling during the six months ended June 30, 2020 converted at the applicable exchange rate on the date of acquisition.

(1) None of our investments during the first nine months of 2020 caused any one tenant to be 10% or more of our total assets at September 30, 2020.

All of our investments in acquired properties during the first nine months of 2020 are 100 % leased at the acquisition date.

(2) Represents investments of £ 356.7 million Sterling during the nine months ended September 30, 2020, converted at the applicable exchange rate on the date of acquisition.

(3) The tenants occupying the new properties operate in 23 industries, and are 96.9 % retail and 3.1 % industrial, based on rental revenue.

Approximately 37 % of the rental revenue generated from acquisitions during the first six months of 2020 is from investment grade rated tenants, their subsidiaries or affiliated companies.

The acquisitions during the first six months of 2020, which had no associated contingent consideration, were allocated as follows (dollars in millions):

Approximately 56 % of the rental revenue generated from acquisitions during the first nine months of 2020 is from investment grade rated tenants, their subsidiaries or affiliated companies.

The acquisitions during the first nine months of 2020, which had no associated contingent consideration, were allocated as follows (dollars in millions):

Acquisitions - U.S.

Acquisitions - U.K.

Six months ended June 30, 2020

Nine months ended September 30, 2020

(USD) (£ Sterling)

7 unchanged sentences

land includes £ 6.4 million of right of use assets under long-term ground leases.

other assets consists of $ 810,000 financing receivables with above-market terms and $ 689,000 of right of use assets under ground leases.

other assets entirely consists of right of use assets under ground leases.

other liabilities entirely consists of lease liabilities under ground leases.

The properties acquired during the first six months of 2020 generated total revenues of $ 13.6 million and net income of $ 4.6 million during the six months ended June 30, 2020.

Below is a summary of our acquisitions for the six months ended June 30, 2019:

(2) The weighted average amortization period for acquired lease intangible assets is 17.5 years.

other assets consists of $ 18.8 million financing receivables with above-market terms and $ 689,000 of right of use assets under ground leases.

other assets consists entirely of right of use assets under ground leases.

(4) The weighted average amortization period for acquired lease intangible liabilities is 13.9 years.

other liabilities consists entirely of lease liabilities under ground leases.

The properties acquired during the first nine months of 2020 generated total revenues of $ 27.5 million and net income of $ 9.4 million during the nine months ended September 30, 2020.

Below is a summary of our acquisitions for the nine months ended September 30, 2019:

Properties Square Feet

2 unchanged sentences

(Years) Initial

Six months ended June 30, 2019 (1)

Nine months ended September 30, 2019 (1)

Acquisitions - U.S.

7 unchanged sentences

241 7.8 $ 2,025.7 15.5 6.2 %

(1) None of our investments during 2019 caused any one tenant to be 10% or more of our total assets at June 30, 2019.

All of our investments in acquired properties during the first six months of 2019 are 100 % leased at the acquisition date.

(2) Represents investments of £ 433.9 million Sterling during the six months ended June 30, 2019 converted at the applicable exchange rate on the date of the acquisition.

(1) None of our investments during 2019 caused any one tenant to be 10% or more of our total assets at September 30, 2019.

All of our investments in acquired properties during the first nine months of 2019 are 100 % leased at the acquisition date.

(2) Represents investments of £ 456.1 million Sterling during the nine months ended September 30, 2019, converted at the applicable exchange rate on the date of the acquisition.

(3) The tenants occupying the new properties operated in 19 industries, and are 89.6 % retail and 10.4 % industrial, based on rental revenue.

Approximately 18 % of the rental revenue generated from acquisitions during the first six months of 2019 was from investment grade rated tenants, their subsidiaries or affiliated companies.

The acquisitions during the first six months of 2019, which had no associated contingent consideration, were allocated as follows (dollars in millions):

Approximately 25 % of the rental revenue generated from acquisitions during the first nine months of 2019 was from investment grade rated tenants, their subsidiaries or affiliated companies.

The acquisitions during the first nine months of 2019, which had no associated contingent consideration, were allocated as follows (dollars in millions):

Acquisitions - U.S.

Acquisitions - U.K.

Six months ended June 30, 2019 (USD) (£ Sterling)

Nine months ended September 30, 2019

(USD) (£ Sterling)

$ 280.1 £ 171.3

3 unchanged sentences

Lease intangible liabilities (4)

( 28.6 ) ( 3.4 )

Other liabilities (5)

1 unchanged sentence

land includes £ 13.6 million of right of use assets under long-term ground leases.

other assets entirely consists of financing receivables with above-market terms.

other liabilities entirely consists of deferred rent on certain below-market leases.

The properties acquired during the first six months of 2019 generated total revenues of $ 19.7 million and net income of $ 10.0 million during the six months ended June 30, 2019.

(2) The weighted average amortization period for acquired lease intangible assets is 15.1 years.

other assets consists entirely of financing receivables with above-market terms.

(4) The weighted average amortization period for acquired lease intangible liabilities is 19.5 years.

other liabilities consists entirely of deferred rent on certain below-market leases.

The properties acquired during the first nine months of 2019 generated total revenues of $ 47.1 million and net income of $ 21.9 million during the nine months ended September 30, 2019.

The initial average cash lease yield for a property is generally computed as estimated contractual first year cash net operating income, which, in the case of a net leased property, is equal to the aggregate cash base rent for the first full year of each lease, divided by the total cost of the property.

4 unchanged sentences

Investments in Existing Properties

During the first six months of 2020, we capitalized costs of $ 4.4 million on existing properties in our portfolio, consisting of $ 1.1 million for re-leasing costs, $ 23,000 for recurring capital expenditures, and $ 3.3 million for non-recurring building improvements.

In comparison, during the first six months of 2019, we capitalized costs of $ 6.1 million on existing properties in our portfolio, consisting of $ 1.0 million for re-leasing costs, $ 172,000 for recurring capital expenditures, and $ 4.9 million for non-recurring building improvements.

During the first nine months of 2020, we capitalized costs of $ 5.1 million on existing properties in our portfolio, consisting of $ 1.0 million for re-leasing costs, $ 126,000 for recurring capital expenditures, and $ 4.0 million for non-recurring building improvements.

In comparison, during the first nine months of 2019, we capitalized costs of $ 11.0 million on existing properties in our portfolio, consisting of $ 1.9 million for re-leasing costs, $ 577,000 for recurring capital expenditures, and $ 8.5 million for non-recurring building improvements.

Properties with Existing Leases

Of the $ 640.2 million we invested during the first six months of 2020, approximately $ 500.3 million was used to acquire 57 properties with existing leases.

In comparison, of the $ 1.6 billion we invested during the first six months of 2019, approximately $ 929.7 million was used to acquire 75 properties with existing leases.

Of the $ 1.3 billion we invested during the first nine months of 2020, approximately $ 1.0 billion was used to acquire 96 properties with existing leases.

In comparison, of the $ 2.0 billion we invested during the first nine months of 2019, approximately $ 1.23 billion was used to acquire 100 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 first six months of 2020 and 2019 were $ 66.3 million and $ 57.8 million, respectively.

The amounts amortized to expense for all of our in-place leases, for the first nine months of 2020 and 2019 were $ 99.7 million and $ 84.5 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 on 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 first six months of 2020 and 2019 were $ 16.1 million and $ 7.9 million, respectively.

The amounts amortized as a net decrease to rental revenue for capitalized above-market and below-market leases for the first nine months of 2020 and 2019 were $ 20.4 million and $ 14.3 million, respectively.

If a lease was to be terminated prior to its stated expiration, all unamortized amounts relating to that lease would be recorded to revenue or expense, as appropriate.

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 at June 30, 2020 (dollars in thousands):

rental revenue

6 unchanged sentences

Totals $ ( 278,253 ) $ 1,013,514

Credit Facility and Commercial Paper Program

Credit Facility

2 unchanged sentences

dollars, and has a $ 1.0 billion expansion option, which is subject to obtaining lender commitments.

Under our credit facility, our investment grade credit ratings as of June 30, 2020 provide for financing at the London Interbank Offered Rate, commonly referred to as LIBOR, plus 0.775 % with a facility commitment fee of 0.125 %, for all-in drawn pricing of 0.90 % over LIBOR.

Under our credit facility, our investment grade credit ratings as of September 30, 2020 provide for financing at the London Interbank Offered Rate, commonly referred to as LIBOR, plus 0.775 % with a facility commitment fee of 0.125 %, for all-in drawn pricing of 0.90 % over LIBOR.

The borrowing rate is subject to an interest rate floor and may change if our investment grade credit ratings change.

1 unchanged sentence

Our revolving credit facility is unsecured and, accordingly, we have not pledged any assets as collateral for this obligation.

At June 30, 2020, credit facility origination costs of $ 9.4 million are included in other assets, net, as compared to $ 11.5 million at December 31, 2019, on our consolidated balance sheet.

At September 30, 2020, credit facility origination costs of $ 8.6 million are included in other assets, net, as compared to $ 11.5 million at December 31, 2019, on our consolidated balance sheet.

These costs are being amortized over the remaining term of our revolving credit facility.

At June 30, 2020, we had a borrowing capacity of $ 2.4 billion available on our revolving credit facility (subject to customary conditions to borrowing) and an outstanding balance of $ 628.6 million, including £ 329.5 million Sterling, as compared to an outstanding balance of $ 704.3 million, including £ 169.2 million Sterling, at December 31, 2019.

The weighted average interest rate on outstanding borrowings under our revolving credit facility was 1.6 % during the first six months of 2020 and 3.3 % during the first six months of 2019.

At June 30, 2020 and December 31, 2019, the weighted average interest rate on borrowings outstanding under our revolving credit facility was 0.9 % and 2.2 %, respectively.

Our revolving credit facility is subject to various leverage and interest coverage ratio limitations, and at June 30, 2020, we were in compliance with the covenants on our revolving credit facility.

At September 30, 2020, we had a borrowing capacity of $ 2.4 billion available on our revolving credit facility (subject to customary conditions to borrowing) and an outstanding balance of $ 556.1 million, consisting entirely of £ 430.5 million Sterling, as compared to an outstanding balance of $ 704.3 million, including £ 169.2 million Sterling, at December 31, 2019.

The weighted average interest rate on outstanding borrowings under our revolving credit facility was 1.5 % during the first nine months of 2020 and 3.2 % during the first nine months of 2019.

At September 30, 2020 and December 31, 2019, the weighted average interest rate on borrowings outstanding under our revolving credit facility was 0.8 % and 2.2 %, respectively.

Our revolving credit facility is subject to various leverage and interest coverage ratio limitations, and at September 30, 2020, we were in compliance with the covenants on our revolving credit facility.

Commercial Paper Program

In August 2020, we established a U.S.

dollar-denominated unsecured commercial paper program.

Under the terms of the program, we may issue from time to time unsecured commercial paper notes up to a maximum aggregate amount outstanding of $ 1.0 billion.

The commercial paper will rank on a parity in right of payment with all of our other unsecured senior indebtedness outstanding from time to time, including borrowings under our revolving credit facility and our term loan facility and our outstanding senior unsecured notes.

Proceeds from commercial paper borrowings will be used for general corporate purposes.

As of September 30, 2020, the balance of borrowings outstanding under our commercial paper program was $ 300.0 million.

The weighted average interest rate on outstanding borrowings under our commercial paper program was 0.3 % from inception of the program through September 30, 2020.

At September 30, 2020, the weighted average interest rate on borrowings outstanding under our commercial paper program was 0.2 %.

We expect to use our $ 3.0 billion revolving credit facility as a liquidity backstop for the repayment of the notes issued under the commercial paper program.

In October 2018, in conjunction with entering into our current revolving credit facility, we entered into a $ 250.0 million senior unsecured term loan, which matures in March 2024.

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Deferred financing costs of $ 1.2 million incurred in conjunction with the $ 250.0 million term loan which matured June 2020 and $ 1.1 million incurred in conjunction with the $ 250.0 million term loan maturing March 2024 are being amortized over the remaining terms of each respective term loan.

The net balance of deferred financing costs at June 30, 2020 of $ 742,000 relates to the $ 250.0 million term loan maturing March 2024.

The net balance of deferred financing costs at September 30, 2020 of $ 692,000 relates to the $ 250.0 million term loan maturing March 2024.

The net balance of deferred financing costs at December 31, 2019 of $ 956,000 related to the $ 250.0 million term loan that matured in June 2020 and the $ 250.0 million term loan maturing March 2024.

Mortgages Payable

During the first six months of 2020, we made $ 14.7 million in principal payments, including the repayment of one mortgage in full for $ 11.4 million.

During the first six months of 2019, we made $ 2.5 million in principal payments.

No mortgages were assumed during the first six months of 2020 or 2019.

During the first nine months of 2020, we made $ 73.7 million in principal payments, including the repayment of five mortgages in full for $ 69.2 million.

During the first nine months of 2019, we made $ 19.5 million in principal payments, including the repayment of one mortgage in full for $ 15.8 million.

No mortgages were assumed during the first nine months of 2020 or 2019.

Assumed mortgages are secured by the properties on which the debt was placed and are considered non-recourse debt with limited customary exceptions for items such as solvency, bankruptcy, misrepresentation, fraud, misapplication of payments, environmental liabilities, failure to pay taxes, insurance premiums, liens on the property, violations of the single purpose entity requirements, and uninsured losses.

Our mortgages contain customary covenants, such as limiting our ability to further mortgage each applicable property or to discontinue insurance coverage without the prior consent of the lender.

At June 30, 2020, we were in compliance with these covenants.

The balance of our deferred financing costs, which are classified as part of mortgages payable, net, on our consolidated balance sheets, was $ 1.1 million at June 30, 2020 and $ 1.3 million at December 31, 2019.

At September 30, 2020, we were in compliance with these covenants.

The balance of our deferred financing costs, which are classified as part of mortgages payable, net, on our consolidated balance sheets, was $ 1.1 million at September 30, 2020 and $ 1.3 million at December 31, 2019.

These costs are being amortized over the remaining term of each mortgage.

The following table summarizes our mortgages payable as of June 30, 2020 and December 31, 2019, respectively (dollars in thousands):

The following table summarizes our mortgages payable as of September 30, 2020 and December 31, 2019, respectively (dollars in thousands):

Properties (1)

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12/31/2019 92 4.9 % 4.6 % 3.1 $ 408,419 $ 1,700 $ 410,119

(1) At June 30, 2020, there were 26 mortgages on 91 properties.

(1) At September 30, 2020, there were 22 mortgages on 72 properties.

At December 31, 2019, there were 27 mortgages on 92 properties.

The mortgages require monthly payments with principal payments due at maturity.

The mortgages were at fixed interest rates, except for one variable rate mortgage on one property, which has been swapped to a fixed interest rate, with a principal balance at June 30, 2020 and December 31, 2019 of $ 7.0 million and $ 7.1 million, respectively.

(2) Stated interest rates ranged from 3.8 % to 6.9 % at each of June 30, 2020 and December 31, 2019.

(3) Effective interest rates ranged from 3.8 % to 7.6 % at each of June 30, 2020 and December 31, 2019.

The following table summarizes the maturity of mortgages payable, excluding net premiums of $ 2.3 million and deferred financing costs of $ 1.1 million, as of June 30, 2020 (dollars in millions):

The mortgages were at fixed interest rates, except for one variable rate mortgage on one property, which has been swapped to a fixed interest rate, with a principal balance at September 30, 2020 and December 31, 2019 of $ 6.9 million and $ 7.1 million, respectively.

(2) Stated interest rates ranged from 3.8 % to 6.9 % at each of September 30, 2020 and December 31, 2019.

(3) Effective interest rates ranged from 3.8 % to 7.6 % at each of September 30, 2020 and December 31, 2019.

The following table summarizes the maturity of mortgages payable, excluding net premiums of $ 1.9 million and deferred financing costs of $ 1.1 million, as of September 30, 2020 (dollars in millions):

Year of Maturity

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Our senior unsecured notes and bonds consist of the following, sorted by maturity date (dollars in millions):

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

5.750 % notes, issued in June 2010 and due in January 2021

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3.250 % notes, issued in June 2019 and due in June 2029

3.250 % notes, issued in May 2020 and due in January 2031 (1)

3.250 % notes, $ 600 issued in May 2020 and $ 350 issued in July 2020, both due in January 2031

2.730 % notes, issued in May 2019 and due in May 2034 (1)

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$ 6,995 $ 6,288

(1) In July 2020, we issued $ 350 million of 3.250 % senior unsecured notes, which constituted a further issuance of, and formed a single series with, the $ 600 million senior notes issued in May 2020.

See note 21, Subsequent Events .

(1) Represents the principal balance (in U.S.

dollars) of the Sterling-denominated private placement of £ 315.0 million converted at the applicable exchange rates on June 30, 2020, and December 31, 2019, respectively.

The following table summarizes the maturity of our notes and bonds payable as of June 30, 2020, excluding net unamortized original issuance premiums and deferred financing costs (dollars in millions):

dollars) of the Sterling-denominated private placement of £ 315.0 million converted at the applicable exchange rates on September 30, 2020, and December 31, 2019, respectively.

In October 2020, we issued £ 400 million of 1.625 % senior unsecured notes.

See note 21, Subsequent Events.

The following table summarizes the maturity of our notes and bonds payable as of September 30, 2020, excluding net unamortized original issuance premiums and deferred financing costs (dollars in millions):

Year of Maturity

Thereafter 4,957

As of June 30, 2020, the weighted average interest rate on our notes and bonds payable was 3.8 % and the weighted average remaining years until maturity was 8.3 years.

All of our outstanding notes and bonds payable have fixed interest rates and contain various covenants, with which we remained in compliance as of June 30, 2020.

Additionally, interest on all of our senior unsecured note and bond obligations is paid semiannually.

As of September 30, 2020, the weighted average interest rate on our notes and bonds payable was 3.7 % and the weighted average remaining years until maturity was 8.2 years.

All of our outstanding notes and bonds payable have fixed interest rates and contain various covenants, with which we remained in compliance as of September 30, 2020.

Additionally, with the exception of our £ 400 million of 1.625 % senior unsecured notes issued in October 2020 where interest is paid annually, interest on our remaining senior unsecured note and bond obligations is paid semiannually.

Note Repayment

In January 2020, we completed the early redemption on all $ 250.0 million in principal amount of our outstanding 5.750 % notes due January 2021, plus accrued and unpaid interest.

As a result of the early redemption, we recognized a $ 9.8 million loss on extinguishment of debt on our consolidated statement of income for the six months ended June 30, 2020.

As a result of the early redemption, we recognized a $ 9.8 million loss on extinguishment of debt on our consolidated statement of income for the nine months ended September 30, 2020.

Note Issuances

In May 2020, we issued $ 600.0 million of 3.250 % senior unsecured notes due January 2031, or the 2031 Notes.

In July 2020, we issued $ 350.0 million of 3.250 % senior unsecured notes due January 2031 (the "2031 Notes"), which constituted a further issuance of, and formed a single series with, the $ 600.0 million of 2031 Notes issued in May 2020.

The public offering price was 108.241 % of the principal amount, for an effective yield to maturity of 2.341 % and gross proceeds of $ 378.8 million.

In May 2020, we issued $ 600.0 million of 2031 Notes.

The public offering price for the notes was 98.987 % of the principal amount, for an effective yield to maturity of 3.364 % and gross proceeds of $ 593.9 million.

In June 2019, we issued $ 500.0 million of 3.250 % senior unsecured notes due June 2029, or the 2029 Notes.

In June 2019, we issued $ 500.0 million of 3.250 % senior unsecured notes due June 2029.

The public offering price for the notes was 99.359 % of principal amount, for an effective yield to maturity of 3.326 % and gross proceeds of $ 496.8 million.

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After deducting underwriting discounts and other offering costs of $ 21.2 million, the net proceeds of $ 728.9 million were used to repay borrowings under our credit facility, to fund investment opportunities, and for other general corporate purposes.

In May 2019, we issued 12,650,000 shares of common stock in an overnight underwritten public offering.

After deducting underwriting discounts and other offering costs of $ 31.0 million, the net proceeds of $ 845.1 million were used to repay borrowings under our credit facility, to fund investment opportunities, and for other general corporate purposes.

At-the-Market (ATM) Program

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O") at prevailing market prices or at negotiated prices.

At June 30, 2020, we had 31,891,256 shares remaining for future issuance under our ATM program.

At September 30, 2020, we had 26,354,637 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.

The following table outlines common stock issuances pursuant to our ATM program (dollars in millions):

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

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Our DRSPP authorizes up to 26,000,000 common shares to be issued.

At June 30, 2020, we had 11,573,851 shares remaining for future issuance under our DRSPP program.

At September 30, 2020, we had 11,539,247 shares remaining for future issuance under our DRSPP program.

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

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

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Our DRSPP includes a waiver approval process, allowing larger investors or institutions, per a formal approval process, to purchase shares at a small discount, if approved by us.

We did not issue shares under the waiver approval process during the first six months of 2020 or 2019.

We did not issue shares under the waiver approval process during the first nine months of 2020 or 2019.

Noncontrolling Interests

The two noncontrolling interests in entities that we consolidate include an operating partnership, Realty Income, L.P., and a joint venture acquired during 2019.

The following table represents the change in the carrying value of all noncontrolling interests through June 30, 2020 (dollars in thousands):

The following table represents the change in the carrying value of all noncontrolling interests through September 30, 2020 (dollars in thousands):

Realty Income, L.P.

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$ 24,596 $ 5,106 $ 29,702

Reallocation of equity ( 47 ) — ( 47 )

Distributions

1 unchanged sentence

Allocation of net income

Carrying value at June 30, 2020

Carrying value at September 30, 2020

$ 24,249 $ 5,012 $ 29,261

(1) 242,007 units were issued on March 30, 2018, 131,790 units were issued on April 30, 2018, and 89,322 units were issued on March 28, 2019.

463,119 remained outstanding at each of June 30, 2020 and December 31, 2019 .

At June 30, 2020 and December 31, 2019, Realty Income, L.P.

463,119 remained outstanding at each of September 30, 2020 and December 31, 2019 .

At September 30, 2020 and December 31, 2019, Realty Income, L.P.

and the joint venture acquired during 2019 were considered variable interest entities, or VIEs, in which we were deemed the primary beneficiary based on our controlling financial interests.

Below is a summary of selected financial data of consolidated VIEs included in the consolidated balance sheets at June 30, 2020 and December 31, 2019 (in thousands):

June 30, 2020 December 31, 2019

Below is a summary of selected financial data of consolidated VIEs included in the consolidated balance sheets at September 30, 2020 and December 31, 2019 (in thousands):

September 30, 2020 December 31, 2019

Net real estate

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We believe that the carrying values reflected in our consolidated balance sheets reasonably approximate the fair values for cash and cash equivalents, accounts receivable, escrow deposits, loans receivable, line of credit payable, term loans and all other liabilities, due to their short-term nature or interest rates and terms that are consistent with market, except for our mortgages payable assumed in connection with acquisitions and our senior notes and bonds payable, which are disclosed as follows (dollars in millions):

June 30, 2020 Carrying value

September 30, 2020 Carrying value

Estimated fair value

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(1) Excludes non-cash net premiums recorded on the mortgages payable.

The unamortized balance of these net premiums was $ 2.3 million at June 30, 2020, and $ 3.0 million at December 31, 2019.

Also excludes deferred financing costs of $ 1.1 million at June 30, 2020 and $ 1.3 million at December 31, 2019.

The unamortized balance of these net premiums was $ 1.9 million at September 30, 2020, and $ 3.0 million at December 31, 2019.

Also excludes deferred financing costs of $ 1.1 million at September 30, 2020 and $ 1.3 million at December 31, 2019.

(2) Excludes non-cash original issuance premiums and discounts recorded on notes payable.

The unamortized balance of the net original issuance premiums was approximately $ 3,000 at June 30, 2020, and $ 6.3 million at December 31, 2019.

Also excludes deferred financing costs of $ 38.5 million at June 30, 2020 and $ 35.9 million at December 31, 2019.

The unamortized balance of the net original issuance premiums was approximately $ 28.2 million at September 30, 2020, and $ 6.3 million at December 31, 2019.

Also excludes deferred financing costs of $ 40.3 million at September 30, 2020 and $ 35.9 million at December 31, 2019.

The estimated fair values of our mortgages payable assumed in connection with acquisitions and private senior notes payable have been calculated by discounting the future cash flows using an interest rate based upon the relevant forward interest rate curve, plus an applicable credit-adjusted spread.

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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 our notes and bonds payable is categorized as level two on the three-level valuation hierarchy.

During September 2020, we entered into a currency exchange swap to exchange £ 224.9 million for $ 300.1 million, which matured in October 2020.

The currency exchange swap was entered into to hedge our exposure to foreign currency risk associated with Sterling-denominated liabilities, with the proceeds used to pay a portion of the credit facility.

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 gains, net' in the consolidated statements of income and comprehensive income.

In February 2020, we entered into five forward starting treasury rate locks with notional amounts totaling $ 500.0 million.

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The treasury rate locks were designated as cash flow hedges, with any changes in fair value recorded in accumulated other comprehensive income, or AOCI.

The AOCI balance associated with the treasury rate locks on the date of initial issuance of the 2031 Notes in May 2020 is being amortized over the term of the 2031 Notes.

The AOCI balance associated with the treasury rate locks upon the initial issuance of the 2031 Notes in May 2020 is being amortized over the term of the 2031 Notes.

During June 2020, all five treasury rate locks were terminated and we entered into six forward starting interest rate swaps with notional amounts totaling $ 500.0 million in a cashless settlement of the terminated treasury rate locks.

The forward starting swaps were entered into to hedge our exposure to the changes in the 10-year US treasury rates in anticipation of potential future debt offerings through a current estimated range ending in 2023.

The forward starting swaps were entered into to hedge our exposure to the changes in the 3-month USD-LIBOR swap rate in anticipation of potential future debt offerings through a current estimated range ending in 2023.

The forward starting swaps are designated as cash flow hedges, with any changes in fair value recorded in AOCI.

Upon issuance of the 2031 Notes during July 2020, the AOCI balance associated with four of the forward starting swaps with a notional amount of $ 350.0 million is being amortized over the term of the notes.

However, we elected not to terminate the four forward starting interest rate swaps, and redesignated the swaps in a new hedging relationship for a future debt issuance to hedge our exposure to the changes in the 10-year US treasury rates in anticipation of potential future debt offerings between May 2020 and December 2023 .

Due to the size of the initial net investment resulting from the termination value of the treasury rate locks being rolled into them, two of the six forward starting swaps were determined to be hybrid debt instruments containing embedded at-market swap derivative instruments.

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In May 2019, we entered into four cross-currency swaps to exchange £ 130 million for $ 166 million maturing in May 2034, in order to hedge the foreign currency risk associated with our Sterling-denominated intercompany loan receivable from our consolidated foreign subsidiaries.

These cross-currency swaps were designated as cash flow hedges on their trade date.

These cross-currency swaps were designated as cash flow

hedges on their trade date.

Gains and losses, representing hedge components excluded from the assessment of effectiveness, are recognized in earnings over the life of the hedges on a systematic and rational basis, as documented at hedge inception in accordance with our accounting policy election.

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Changes to fair value are recorded to AOCI.

The following table summarizes the terms and fair values of our derivative financial instruments at June 30, 2020 and December 31, 2019 (dollars in millions):

The following table summarizes the terms and fair values of our derivative financial instruments at September 30, 2020 and December 31, 2019 (dollars in millions):

Derivative Type

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Fair Value - asset (liability)

June 30, December 31, June 30, December 31,

September 30, December 31, September 30, December 31,

2020 2019 2020 2019

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41.6 41.6 (5) 05/20/2019 05/22/2034 0.9 ( 3.2 )

Currency exchange swap (1)

Derivative N/A

300.1 — (6) 09/01/2020 10/01/2020 9.5 —

Forward-starting swap Derivative Cash flow

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$ 1,223.3 $ 673.4 $ ( 52.3 ) $ ( 26.3 )

(1) Represents British Pound Sterling, or GBP, United States Dollar, or USD, cross-currency swap.

(1) Represents British Pound Sterling, or GBP, United States Dollar, or USD, currency instrument.

(2) GBP fixed rates initially at 4.82 % and escalating to 10.96 %, and USD fixed rate at 9.800 %.

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(5) GBP fixed rates initially at 4.82 % and escalating to 10.96 %, and USD fixed rate at 9.755 %.

(6) The forward GBP-USD exchange rate is 1.33 .

Upon maturity on October 1, 2020, we paid £ 224.9 million and received $ 300.1 million.

(7) The five treasury rate locks which were entered into during February 2020 were terminated in June 2020 and converted into six forward starting interest rate swaps through a cashless settlement of the terminated treasury rate locks.

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To comply with the provisions of ASC 820, Fair Value Measurement , we incorporate 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.

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 two on the three-level valuation hierarchy, the credit valuation adjustments associated with our derivatives utilize level three inputs, such as estimates of current credit spreads, to evaluate the likelihood of default by ourselves and our counterparties.

However, at June 30, 2020 and December 31, 2019, 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.

However, at September 30, 2020 and December 31, 2019, 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 two on the three-level valuation hierarchy.

Unrealized gains and losses in AOCI are reclassified to interest expense in the case of interest rate swaps and to foreign currency gains and losses, net in the case of cross-currency swaps, when the related hedged items are recognized.

During the three and six months ended June 30, 2020, we reclassified $ 3.7 million and $ 5.3 million, respectively, from AOCI as an increase to interest expense and $ 800,000 and $ 12.2 million for cross-currency swaps into foreign exchange gains.

During the three and six months ended June 30, 2019, we reclassified $ 454,000 and $ 1.1 million, respectively, from AOCI as an increase to interest expense for our interest rate swaps and $ 1.4 million for the three and six months ended June 30, 2019 for cross-currency swaps into foreign exchange gains.

During the three and nine months ended September 30, 2020, we reclassified $ 3.0 million and $ 8.3 million , respectively, from AOCI as an increase to interest expense and a $ 6.3 million loss and a $ 5.9 million gain, respectively, for cross-currency swaps into foreign exchange gains.

During the three and nine months ended September 30, 2019, we reclassified $ 890,000 and $ 2.0 million, respectively, from AOCI as an increase to interest expense for our interest rate swaps and $ 5.7 million and $ 7.1 million, respectively, for the three and nine months ended September 30, 2019 for cross-currency swaps into foreign exchange gains.

We expect to reclassify $ 12.1 million from AOCI as an increase to interest expense relating to interest rate swaps and treasury rate locks and $ 1.7 million from AOCI to foreign currency gain relating to cross-currency swaps within the next twelve months.

Operating Leases

At June 30, 2020, we owned 6,541 properties in 49 U.S.

At September 30, 2020, we owned 6,588 properties in 49 U.S.

states, Puerto Rico, and the U.K.

Of the 6,588 properties, 6,554 , or 99.5 %, are single-tenant properties, and the remaining are multi-tenant properties.

At June 30, 2020, 101 properties were available for lease or sale.

At September 30, 2020, 92 properties were available for lease or sale.

Substantially all of our leases are net leases where the tenant pays or reimburses us for property taxes and assessments, maintains the interior and exterior of the building and leased premises, and carries insurance coverage for public liability, property damage, fire and extended coverage.

Rent based on a percentage of a tenants’ gross sales, or percentage rents, for the second quarter of 2020 and 2019 was $ 547,000 and $ 495,000 , respectively.

Percentage rents for the first six months of 2020 and 2019 were $ 1.8 million and $ 4.1 million, respectively.

Major Tenants - No individual tenant’s rental revenue, including percentage rents, represented more than 10% of our total revenue for each of the six months ended June 30, 2020 and 2019.

Rent based on a percentage of a tenants’ gross sales, or percentage rents, for the third quarter of 2020 and 2019 was $ 532,000 and $ 407,000 , respectively.

Percentage rents for the first nine months of 2020 and 2019 were $ 2.3 million and $ 4.5 million, respectively.

Major Tenants - No individual tenant’s rental revenue, including percentage rents, represented more than 10% of our total revenue for each of the three and nine months ended September 30, 2020 and 2019.

Gain on Sales of Real Estate

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

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

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We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

A provision is made for impairment if estimated future operating cash flows (undiscounted and without interest charges) plus estimated disposition proceeds (undiscounted) are less than the current book value of the property.

Key factors that we utilize in this analysis include projected rental rates, estimated holding periods, capital expenditures and property sales capitalization rates.

If estimated future operating cash flows (undiscounted and without interest charges) plus estimated disposition proceeds (undiscounted) are less than the current book value of the property, a fair value analysis is performed and, to the extent the estimated fair value is less than the current book value, a provision for impairment is recorded to reduce the book value to estimated fair value.

Key assumptions that we utilize in this analysis include projected rental rates, estimated holding periods, capital expenditures and property sales capitalization rates.

If a property is classified as held for sale, it is carried at the lower of carrying cost or estimated fair value, less estimated cost to sell, and depreciation of the property ceases.

During the second quarter of 2020, we assessed the key assumptions used in our impairment analysis for the impact of the COVID-19 pandemic on our portfolio, focusing on tenants experiencing difficulties meeting their lease obligations to us.

As a result of this analysis, we determined that the carrying values of eight properties classified as held for investment were not recoverable.

As a result, we recorded provisions for impairments of $ 8.2 million on these properties, which are included as part of our total impairments recorded during the second quarter of 2020.

During 2020, we identified the impact of the COVID-19 pandemic as an impairment triggering event for properties occupied by certain tenants experiencing difficulties meeting their lease obligations to us.

After considering the impacts of the COVID-19 pandemic on the key assumptions noted above, we determined that the carrying values of 17 properties classified as held for investment for the three months ended September 30, 2020, and 25 properties classified as held for investment for the nine months ended September 30, 2020 were not recoverable.

As a result, we recorded provisions for impairment of $ 81.6 million for the three months ended September 30, 2020, and $ 89.8 million for the nine months ended September 30, 2020, on the applicable properties impacted by the COVID-19 pandemic.

Of the provisions for impairment recorded during the third quarter of 2020 for properties impacted by the COVID-19 pandemic, a total of 12 assets occupied by certain of our tenants in the theater industry were impaired for $ 79.0 million.

Impairments recorded on other properties during the three and nine months ended September 30, 2020 totaled $ 23.5 million and $ 33.6 million respectively.

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

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

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We pay monthly distributions to our common stockholders.

The following is a summary of monthly distributions paid per common share for the first six months of 2020 and 2019:

The following is a summary of monthly distributions paid per common share for the first nine months of 2020 and 2019:

January $ 0.2275 $ 0.2210

4 unchanged sentences

June 0.2330 0.2260

July 0.2335 0.2265

August 0.2335 0.2265

September 0.2335 0.2265

$ 2.0920 $ 2.0295

At June 30, 2020, a distribution of $ 0.2335 per common share was payable and was paid in July 2020.

At September 30, 2020, a distribution of $ 0.2340 per common share was payable and was paid in October 2020.

Net Income per Common Share

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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:

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

2020 2019 2020 2019

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Supplemental Disclosures of Cash Flow Information

Cash paid for interest was $ 149.4 million in the first six months of 2020 and $ 134.9 million in the first six months of 2019.

Cash paid for income taxes was $ 5.3 million in the first six months of 2020 and $ 3.1 million in the first six months of 2019.

Cash paid for interest was $ 224.7 million in the first nine months of 2020 and $ 214.2 million in the first nine months of 2019.

Cash paid for income taxes was $ 8.1 million in the first nine months of 2020 and $ 3.6 million in the first nine months of 2019.

The following non-cash activities are included in the accompanying consolidated financial statements:

During the first six months of 2020, the fair value of net derivative liabilities decreased by $ 28.6 million.

Non-refundable deposits from 2019 of $ 13.8 million were applied to acquisitions during the first six months of 2020.

During the first nine months of 2020, the fair value of net derivative liabilities increased by $ 26.0 million.

Non-refundable deposits from 2019 of $ 13.8 million were applied to acquisitions during the first nine months of 2020.

As a result of the adoption of Accounting Standards Update, or ASU, 2016-02 in 2019, we recorded $ 132.0 million of lease liabilities and related right of use assets as lessee under operating leases on January 1, 2019.

During the first six months of 2019, we issued 89,322 common partnership units of Realty Income, L.P.

During the first nine months of 2019, we issued 89,322 common partnership units of Realty Income, L.P.

as partial consideration for an acquisition of properties, totaling $ 6.3 million.

Per the requirements of ASU 2016-18 (Topic 230, Statement of Cash Flows ), the following table provides a reconciliation of cash and cash equivalents reported within the consolidated balance sheets to the total of the cash, cash equivalents and restricted cash reported within the consolidated statements of cash flows (dollars in thousands):

June 30, 2020 June 30, 2019

September 30, 2020 September 30, 2019

Cash and cash equivalents shown in the consolidated balance sheets

2 unchanged sentences

Impounds related to mortgages payable (1)

13,290 11,433

Total cash, cash equivalents, and restricted cash shown in the consolidated

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Because almost all of our leases require the tenant to pay operating expenses, rental revenue is the only component of segment profit and loss we measure.

Our investments in industries outside of the U.S.

are managed as separate operating segments.

The following tables set forth certain information regarding the properties owned by us, classified according to the business of the respective tenants (dollars in thousands):

Assets, as of:

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

Segment net real estate:

20 unchanged sentences

1,067,643 1,019,796

Home improvement

Home improvement - U.S.

547,396 495,305

28 unchanged sentences

Health and fitness 69,704 74,428

Home improvement 71,497 72,979

Home improvement - U.S.

97,207 72,979

Restaurants-casual dining 21,241 23,289

7 unchanged sentences

$ 19,785,370 $ 18,554,796

Three months ended June 30, Six months ended June 30,

Three months ended September 30, Nine months ended September 30,

Revenue 2020 2019 2020 2019

14 unchanged sentences

Health and fitness 25,905 26,437 82,145 78,915

Home improvement 11,382 10,664 22,692 20,479

Home improvement - U.S.

11,373 10,950 34,065 31,430

Restaurants-casual dining 11,731 10,939 35,699 33,614

4 unchanged sentences

Wholesale club 9,611 9,468 28,788 28,525

Other non-reportable segments and tenant reimbursements 92,395 80,886 182,603 161,734

Other non-reportable segments and

tenant reimbursements

90,660 80,560 273,209 242,292

Rental (including reimbursable) 401,869 372,312 1,224,227 1,090,601

1 unchanged sentence

Total revenue $ 404,572 $ 374,247 $ 1,233,549 $ 1,094,062

(1) Our investments in industries outside of the U.S.

are managed as separate operating segments.

Common Stock Incentive Plan

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The 2012 Plan has a term of ten years from the date it was adopted by our Board of Directors.

The amount of share-based compensation costs recognized in general and administrative expense on our consolidated statements of income and comprehensive income was $ 4.9 million during the second quarter of 2020, $ 4.5 million during the second quarter of 2019, $ 10.4 million during the first six months of 2020 (including $ 1.8 million of accelerated share-based compensation costs for our former Chief Financial Officer ("CFO") upon his departure from the company) and $ 7.3 million during the first six months of 2019.

The amount of share-based compensation costs recognized in general and administrative expense on our consolidated statements of income and comprehensive income was $ 3.0 million during the third quarter of 2020, $ 3.2 million during the third quarter of 2019, $ 13.4 million during the first nine months of 2020 (including $ 1.8 million of accelerated share-based compensation costs for our former Chief Financial Officer ("CFO") upon his departure from the Company) and $ 10.5 million during the first nine months of 2019.

Upon the departure of our former CFO in the first quarter of 2020, we incurred a severance charge of $ 3.5 million, consisting of $ 1.6 million of cash, $ 1.8 million related to share-based compensation expense and $ 58,000 of professional fees.

Restricted Stock

During the first six months of 2020, we granted 100,473 shares of common stock under the 2012 Plan.

During the first nine months of 2020, we granted 102,473 shares of common stock under the 2012 Plan.

This included 36,000 total shares of restricted stock granted to the independent members of our Board of Directors in connection with our annual awards in May 2020, 24,000 shares of which vested immediately and 12,000 shares of which vest in equal parts over a three-year service period.

Our restricted stock awards vest over a four-year service period, with the exception of shares granted to our independent directors, and 4,541 shares granted to our former CFO, which vested upon his departure from the Company.

As of June 30, 2020, the remaining unamortized share-based compensation expense related to restricted stock totaled $ 11.5 million, which is being amortized on a straight-line basis over the service period of each applicable award.

As of September 30, 2020, the remaining unamortized share-based compensation expense related to restricted stock totaled $ 10.0 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.

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Performance Shares and Restricted Stock Units

During the first six months of 2020, we granted 98,844 performance shares, as well as dividend equivalent rights, to our executive officers.

During the first nine months of 2020, we granted 83,379 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 % on the first and second January 1 after the end of the three-year performance period, subject to continued service.

During the first six months of 2020, we also granted 9,966 restricted stock units, all of which vest over a four -year service period.

During the first nine months of 2020, we also granted 9,966 restricted stock units, all of which vest over a four-year service period.

These restricted stock units have the same economic rights as shares of restricted stock.

As of June 30, 2020, the remaining share-based compensation expense related to the performance shares and restricted stock units totaled $ 13.8 million.

As of September 30, 2020, the remaining share-based compensation expense related to the performance shares and restricted stock units totaled $ 10.9 million.

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

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We believe that the outcome of the proceedings will not have a material adverse effect upon our consolidated financial position or results of operations.

At June 30, 2020, we had commitments of $ 12.2 million for re-leasing costs, recurring capital expenditures, and non-recurring building improvements.

In addition, as of June 30, 2020, we had committed $ 3.6 million under construction contracts related to development projects, which is expected to be paid in the next twelve months.

At September 30, 2020, we had commitments of $ 10.3 million for re-leasing costs, recurring capital expenditures, and non-recurring building improvements.

In addition, as of September 30, 2020, we had committed $ 96.1 million under construction contracts related to development projects, which is expected to be paid in the next twelve months.

Subsequent Events

• In July 2020, we declared a dividend of $ 0.2335 per share to our common stockholders, which will be paid in August 2020.

• In July 2020, we issued $ 350 million of additional aggregate amount of our existing 3.250 % senior unsecured notes due in January 2031, or the 2031 Notes.

The public offering price for the 2031 Notes was 108.241 % of the principal amount, for an effective yield to maturity of 2.341 %.

The gross proceeds of approximately $ 378.8 million from this offering will be used to repay borrowings under our credit facility, to fund potential investment opportunities and for other general corporate purposes.

• In October 2020, our Board of Directors appointed Christie Kelly as Executive Vice President, Chief Financial Officer and Treasurer, effective January 19, 2021.

Kelly joined our Board of Directors in November 2019 and currently serves as a member of the Audit Committee.

Effective upon the appointment of Ms.

Kelly to Chief Financial Officer on January 19, 2021, she will resign from our Board of Directors.

• In October 2020, we declared a dividend of $ 0.234 per share to our common stockholders, which will be paid in November 2020.

• In October 2020, we issued £ 400 million of 1.625 % senior unsecured notes due December 2030.

The public offering price for these notes was 99.191 % of the principal amount, for an effective annual yield to maturity of 1.712 %.

The proceeds of approximately £ 396.8 million from this offering were used to repay GBP-denominated borrowings outstanding under our $ 3.0 billion revolving credit facility, to settle an outstanding GBP/USD currency exchange swap arrangement and, to the extent not used for those purposes, to fund potential investment opportunities and for other general corporate purposes.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements