What changed in this filing

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Item 1. Financial Statements

2022-08-04 compared with 2022-05-05 · 321 added, 387 removed, 699 unchanged (50% of the section changed)

3 unchanged sentences

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

ASSETS (unaudited)

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Stockholders’ equity:

Common stock and paid in capital, par value $ 0.01 per share, 740,200,000 shares authorized, 601,566,581 and 591,261,991 shares issued and outstanding as of March 31, 2022, and December 31, 2021, respectively

Common stock and paid in capital, par value $ 0.01 per share, 1,300,000,000 and 740,200,000 shares authorized, 617,564,272 and 591,261,991 shares issued and outstanding as of June 30, 2022, and December 31, 2021, respectively

31,303,383 29,578,212

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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

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

Three months ended March 31,

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

2022 2021 2022 2021

Rental (including reimbursable) $ 800,800 $ 460,256 $ 1,600,365 $ 899,621

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Gain on sales of real estate 40,572 14,901 50,728 23,302

Foreign currency and derivative gains (losses), net ( 590 ) 804

Loss on extinguishment of debt — ( 46,473 )

Equity in income of unconsolidated entities 954 —

Foreign currency and derivative gain, net 7,480 400 6,890 1,204

Gain (loss) on extinguishment of debt 127 — 127 ( 46,473 )

Equity in income and impairment of investment in unconsolidated entities ( 6,627 ) — ( 5,673 ) —

Other income, net 2,806 984 4,658 1,534

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Foreign currency translation adjustment ( 48,992 ) ( 49 ) ( 59,698 ) ( 308 )

Unrealized gain on derivatives, net 43,690 46,409

Unrealized gain (loss) on derivatives, net 33,454 ( 10,833 ) 77,144 35,576

Comprehensive income available to common stockholders $ 207,669 $ 113,597 $ 440,022 $ 255,687

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

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REALTY INCOME CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(dollars in thousands) (unaudited)

Three Months Ended March 31, 2022, and 2021

Three months ended June 30, 2022, and 2021

capital Distributions

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interests Total

Balance, December 31, 2020

Balance, March 31, 2022

601,566,581 $ 30,236,374 $ ( 4,772,112 ) $ 37,917 $ 25,502,179 $ 76,546 $ 25,578,725

Net income — — 223,207 — 223,207 615 223,822

Other comprehensive income — — — 46,150 46,150 — 46,150

Other comprehensive loss — — — ( 15,538 ) ( 15,538 ) — ( 15,538 )

Distributions paid and payable — — ( 450,245 ) — ( 450,245 ) ( 894 ) ( 451,139 )

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36,469 6,480 — — 6,480 — 6,480

Balance, June 30, 2022

617,564,272 $ 31,303,383 $ ( 4,999,150 ) $ 22,379 $ 26,326,612 $ 76,267 $ 26,402,879

Balance, March 31, 2021

373,509,822 $ 15,371,016 $ ( 3,827,660 ) $ ( 8,484 ) $ 11,534,872 $ 32,141 $ 11,567,013

Net income — — 124,479 — 124,479 289 124,768

Other comprehensive loss — — — ( 10,882 ) $ ( 10,882 ) — ( 10,882 )

Distributions paid and payable — — ( 265,152 ) — ( 265,152 ) ( 389 ) ( 265,541 )

Share issuances, net of costs 6,629,021 452,355 — — 452,355 — 452,355

Contributions by noncontrolling — — — — — 2,106 2,106

Share-based compensation, net 35,199 3,860 — — 3,860 — 3,860

Balance, June 30, 2021

380,174,042 $ 15,827,231 $ ( 3,968,333 ) $ ( 19,366 ) $ 11,839,532 $ 34,147 $ 11,873,679

Six months ended June 30, 2022 and 2021

capital Distributions

net income Accumulated

comprehensive

income (loss) Total

stockholders’

equity Noncontrolling

interests Total

Balance, December 31, 2021 591,261,991 $ 29,578,212 $ ( 4,530,571 ) $ 4,933 $ 25,052,574 $ 76,826 $ 25,129,400

Net income — — 422,576 — 422,576 1,217 423,793

Other comprehensive income — — — 17,446 17,446 — 17,446

Distributions paid and payable — — ( 891,155 ) — ( 891,155 ) ( 1,776 ) ( 892,931 )

Share issuances, net of costs 26,133,030 1,720,573 — — 1,720,573 — 1,720,573

Share-based compensation, net 169,251 4,598 — — 4,598 — 4,598

Balance, June 30, 2022

617,564,272 $ 31,303,383 $ ( 4,999,150 ) $ 22,379 $ 26,326,612 $ 76,267 $ 26,402,879

Balance December 31, 2020 361,303,445 $ 14,700,050 $ ( 3,659,933 ) $ ( 54,634 ) $ 10,985,483 $ 32,247 $ 11,017,730

Net income — — 220,419 — 220,419 585 221,004

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Share issuances, net of costs 18,747,415 1,124,576 — — 1,124,576 — 1,124,576

Contributions by noncontrolling interests — — — — — 2,106 2,106

Share-based compensation, net 123,182 2,605 — — 2,605 — 2,605

Balance, March 31, 2022

Balance, June 30, 2021

380,174,042 $ 15,827,231 $ ( 3,968,333 ) $ ( 19,366 ) $ 11,839,532 $ 34,147 $ 11,873,679

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

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REALTY INCOME CORPORATION AND SUBSIDIARIES

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(dollars in thousands) (unaudited)

Three months ended March 31,

Six months ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Non-cash revenue adjustments ( 25,332 ) ( 8,233 )

Loss on extinguishment of debt — 46,473

(Gain) loss on extinguishment of debt ( 127 ) 46,473

Amortization of net premiums on mortgages payable ( 7,091 ) ( 485 )

2 unchanged sentences

Loss on interest rate swaps 1,446 1,447

Foreign currency and derivative (gains) losses, net 590 ( 804 )

Foreign currency and derivative gain, net ( 6,890 ) ( 1,204 )

Gain on sales of real estate ( 50,728 ) ( 23,302 )

Income from unconsolidated entities ( 954 ) —

Equity in income and impairment of investment in unconsolidated entities 5,673 —

Distributions from unconsolidated entities 1,490 —

8 unchanged sentences

Proceeds from sales of real estate 272,245 91,616

Return of investment from unconsolidated entities 746 —

Insurance proceeds received 16,046 —

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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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022

June 30, 2022

Basis of Presentation

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Readers of this quarterly report should refer to our audited consolidated financial statements for the year ended December 31, 2021, which are included in our 2021 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.

Dollar (“USD”) is our functional currency.

Dollar (“USD”) is our reporting currency.

Unless otherwise indicated, all dollar amounts are expressed in United States USD.

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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 gains (losses), net in the consolidated statements of income.

At March 31, 2022, we owned 11,288 properties, located in all 50 U.S.

The resulting adjustment is reflected in 'Foreign currency and derivative gain, net' in the consolidated statements of income and comprehensive income.

At June 30, 2022, we owned 11,427 properties, located in all 50 U.S.

states, Puerto Rico, the United Kingdom (U.K.), and Spain, consisting of approximately 218.5 million leasable square feet.

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Under the REIT

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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, we generally will not be required to pay federal corporate 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.

Assuming our dividends equal or exceed our taxable net income in the US, we generally will not be required to pay U.S.

income taxes on such income.

However, we are liable for taxes in the United Kingdom and Spain.

Accordingly, a provision has been made for U.K.

and Spain income taxes, as well as U.S.

income taxes on our taxable REIT subsidiaries, but no provision was made for U.S.

income taxes for our U.S.

Lease Revenue Recognition and Accounts Receivable.

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Similarly, rent abatements granted, which are also accounted for as lease modifications, have impacted our rental revenue by an insignificant amount.

As of March 31, 2022, other than the information related to the reserves recorded to date, we do not have any further client 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 June 30, 2022, other than the information related to the reserves recorded to date, we do not have any further client 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 our clients 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.

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The step-up in fair value was allocated to the individual investment assets and liabilities and is being amortized over the estimated useful life of the respective underlying tangible real estate assets, the lease term of the intangible real estate assets, and the remaining term of the assumed debt.

Investment in unconsolidated entities is included in the accompanying consolidated balance sheets.

We record our proportionate share of net income from the unconsolidated entities in other income, net in the consolidated statements of income and comprehensive income.

The carrying value of our investment is included in 'Investment in unconsolidated entities' in the accompanying consolidated balance sheets.

We record our proportionate share of net income from the unconsolidated entities in 'Equity in income and impairment of investment in unconsolidated entities' in the consolidated statements of income and comprehensive income.

Segment Reporting.

During the second quarter of 2022, a re-evaluation of our business and management structure led to a change in identification of operating and reportable segments.

As we have grown in size and scale over recent years, including through the acquisition of VEREIT in November 2021, management has shifted its focus from managing primarily through identification of concentrations of risk from exposure to client industries or geographies, to now focused on seeking investments with attractive yields and risk adjusted returns regardless of client industry or geography.

As a result, we have reorganized our business activities into one operating and

reportable segment.

ASC Topic 280, Segment Reporting , establishes standards for the manner in which enterprises report information about operating segments.

We are engaged in a single business activity, which is the leasing of property to clients, generally on a net basis (whereby clients are responsible for property taxes, insurance and maintenance costs).

That business activity spans various geographic boundaries and includes property types and clients engaged in various industries, but ultimately all business activity involves similar economic characteristics of owning and leasing commercial properties under long-term, net lease agreements.

Therefore, we aggregate these business activities for reporting purposes and operate in one operating and reportable segment.

This segmental presentation is consistent with the information provided to our chief operating decision maker to make decisions about allocating resources and assessing our performance.

Newly Issued Accounting Standards.

In July 2021, the FASB issued ASU 2021-05 establishing Topic 842, Lessors - Certain Leases with Variable Lease Payments .

ASU 2021-05 improves ASC 842 classification guidance as it relates to a lessor's accounting for certain leases with variable lease payments.

This guidance requires a lessor to classify a lease with variable payments that do not depend on an index or rate as an operating lease if either a sales-type lease or direct financing lease classification would trigger a day-one loss.

This guidance is effective for reporting periods beginning after December 15, 2021, with early adoption permitted.

The adoption of this guidance did not have a material impact on our consolidated financial statements.

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In March 2020, the FASB issued ASU 2020-04 establishing Topic 848, Reference Rate Reform .

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The guidance may be elected over time as reference rate reform activities occur.

We are currently evaluating the impact that the expected market transition from LIBOR to alternative references rates will have on our financial statements as well as the applicability of the aforementioned expedients and exceptions provided in ASU 2020-04.

As, of June 30, 2022, all of our debt and derivative instruments have been converted from LIBOR to SOFR.

The interest rate swap on our term loan, which was converted to a SOFR benchmark from LIBOR during June 2022, continues to be accounted for as a cash flow hedge.

The adoption of this guidance had no impact on our consolidated financial statements.

Merger with VEREIT, Inc.

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The amount shown in the table above was based upon the balance outstanding immediately prior to November 1, 2021.

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Preliminary Purchase Price Allocation

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The finalization of our purchase accounting assessment could result in changes in the valuation of assets acquired and liabilities assumed up to a year after the date of our merger with VEREIT, which could be material.

As of June 30, 2022, we have recorded measurement period adjustments resulting in a net increase to Goodwill from the initial valuation of $ 54.8 million, which is reflected in the table above.

Due to the timing and complexity of the merger, we recorded the assets acquired and liabilities assumed at their preliminary estimated fair values.

As of March 31, 2022, we had not finalized the determination of fair values allocated to certain assets and liabilities, including land, buildings, lease intangible assets, lease intangible liabilities, and the allocation of goodwill.

The preliminary purchase price allocation is subject to change as we complete our analysis of the fair value at the date of the transactions, which could have an impact on our consolidated financial statements.

As of June 30, 2022, we had not finalized the determination of fair values allocated to certain assets and liabilities, including land, buildings, lease intangible assets, lease intangible liabilities, and the allocation of goodwill.

The preliminary purchase price allocation is subject to change as we complete our analysis of the fair value of real estate assets and associated intangible assets and liabilities at the date of the transactions, which could have an impact on our consolidated financial statements.

A preliminary estimate of approximately $ 3.72 billion has been allocated to goodwill.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired and liabilities assumed.

The recognized goodwill is attributable to expected synergies and benefits arising from the merger transaction, including anticipated financing and overhead cost savings, potential economies of scale benefits in both customer and vendor relationships and the employee workforce onboarded from VEREIT following the closing of the merger.

Goodwill has not yet been allocated to our individual operating segments;

the allocation is pending the finalization of our purchase accounting.

and vendor relationships and the employee workforce onboarded from VEREIT following the closing of the merger.

None of the goodwill recognized is expected to be deductible for tax purposes.

Merger and Integration-related Costs

In conjunction with our merger with VEREIT, we incurred approximately $ 6.5 million of transaction costs during the three months ended March 31, 2022.

There were no comparable costs incurred during the three months ended

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March 31, 2021, as the merger was first announced in April 2021 and associated costs began to accrue during the second quarter of 2021.

Merger and integration-related costs for the three months ended March 31, 2022, primarily consist of attorney fees, accountant fees and additional incremental and non-recurring costs necessary to convert data and systems, retain employees and otherwise enable us to operate the acquired business or assets efficiently.

In conjunction with our merger with VEREIT, we incurred approximately $ 2.7 million and $ 9.2 million of transaction costs during the three and six months ended June 30, 2022, respectively, compared to approximately $ 13.3 million of merger-related transaction costs during each of the three and six months ended June 30, 2021.

Merger and integration-related costs consist of advisory fees, attorney fees, accountant fees, SEC filing fees and additional incremental and non-recurring costs necessary to convert data and systems, retain employees and otherwise enable us to operate the acquired business or assets efficiently.

Unaudited Pro Forma Financial Information

Our consolidated results of operations for the three months ended March 31, 2022, include $ 258.3 million of revenues and $ 17.0 million of net income associated with the results of operations of VEREIT OP.

The following unaudited pro forma information presents a summary of our combined results of operations for the three months ended March 31, 2021, as if our merger with VEREIT had occurred on January 1, 2020 (in millions, except per share data).

There are no pro forma adjustments for the three months ended March 31, 2022, as the merger was completed November 1, 2021.

Amounts for the three months ended March 31, 2022, are presented for comparative purposes.

Our consolidated results of operations for the three and six months ended June 30, 2022, include $ 255.2 million and $ 513.5 million of revenues, respectively, and $ 9.0 million and $ 26.0 million of net income associated with the results of operations of VEREIT OP.

The following unaudited pro forma information presents a summary of our combined results of operations for the three and six months ended June 30, 2021, as if our merger with VEREIT had occurred on January 1, 2020 (in millions, except per share data).

There are no pro forma adjustments for the three and six months ended June 30, 2022, as the merger was completed November 1, 2021.

Amounts for the three and six months ended June 30, 2022 are presented for comparative purposes.

The following pro forma financial information is not necessarily indicative of the results of operations had the acquisition been effected on the assumed date, nor is it necessarily an indication of trends in future results for a number of reasons, including, but not limited to, differences between the assumptions used to prepare the pro forma information, basic shares outstanding and dilutive equivalents, cost savings from operating efficiencies, potential synergies, and the impact of incremental costs incurred in integrating the businesses.

In accordance with ASC 805, Business Combinations , the following information excludes the impact of the spin-off of office assets to Orion Office REIT Inc.

Three Months Ended March 31,

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

2022 2021 2022 2021

Total revenues $ 810.4 $ 765.3 $ 1,617.8 $ 1,507.8

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Accounts Receivable, net, consist of the following at:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Straight-line rent receivables, net $ 287,891 $ 231,943

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

In-place leases

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$ 5,154,994 $ 5,275,304

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Other assets, net, consist of the following at:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Right of use asset - operating leases, net $ 598,385 $ 631,515

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Right of use asset - financing leases 442,092 218,332

Restricted escrow deposits 84,066 68,541

Derivative assets and receivables – at fair value 124,011 29,593

Restricted escrow deposits 100,098 68,541

Prepaid expenses 28,347 18,062

Credit facility origination costs, net 19,663 4,352

Non-refundable escrow deposits 13,815 28,560

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Investment in sales type lease 5,902 7,492

Impounds related to mortgages payable 7,160 5,249

Note receivable 5,867 4,455

Credit facility origination costs, net 3,661 4,352

Impounds related to mortgages payable 718 5,249

Other items 20,239 18,592

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Accounts payable and accrued expenses consist of the following at:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Notes payable - interest payable $ 123,853 $ 108,227

Property taxes payable 40,543 36,173

Derivative liabilities and payables – at fair value 30,728 70,617

Value-added tax payable 34,730 11,297

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Accrued costs on properties under development 22,893 19,665

Derivative liabilities and payables – at fair value 18,899 70,617

Accrued income taxes 16,653 19,152

Merger and integration related costs 5,205 10,699

Mortgages, term loans, and credit line - interest payable 3,347 3,874

Merger and integration-related costs 1,165 10,699

Other items 65,613 44,080

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

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Below-market leases

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Other liabilities consist of the following at:

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Lease liability - operating leases, net $ 436,120 $ 461,748

Rent received in advance and other deferred revenue 243,102 242,122

Security deposits 11,323 11,340

Lease liability - financing leases 49,738 43,987

Security deposits 11,397 11,340

$ 740,357 $ 759,197

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Investments in Real Estate

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

Acquisitions During the Three Months Ended March 31, 2022, and 2021

Below is a summary of our acquisitions for the three months ended March 31, 2022:

Acquisitions During the Six Months Ended June 30, 2022, and 2021

Below is a summary of our acquisitions for the six months ended June 30, 2022:

Properties Leasable

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($ in millions) Weighted

(Years) Initial Average Cash Lease Yield (1)

Three months ended March 31, 2022 (2)

(Years) Initial

Lease Yield (1)

Six months ended June 30, 2022 (2)

Acquisitions - U.S.

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Since it is possible that a client could default on the payment of contractual rent, we cannot provide assurance that the actual return on the funds invested will remain at the percentages listed above.

Contractual net operating income used in the calculation of initial average cash yield includes approximately $ 4.3 million received as settlement credits for 16 properties as reimbursement of free rent periods for the three months ended March 31, 2022.

Contractual net operating income used in the calculation of initial average cash yield includes approximately $ 6.8 million received as settlement credits as reimbursement of free rent periods for the six months ended June 30, 2022.

In the case of a property under development or expansion, the contractual lease rate is generally fixed such that rent varies based on the actual total investment in order to provide a fixed rate of return.

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estimated cash net operating income (determined by the lease) for the first full year of each lease, divided by our projected total investment in the property, including land, construction and capitalized interest costs.

(2) None of our investments during the three months ended March 31, 2022, caused any one client to be 10% or more of our total assets at March 31, 2022.

(3) Includes one U.K.

development property that represents an investment of £ 1.7 million Sterling during the three months ended March 31, 2022, converted at the applicable exchange rate on the funding date.

(2) None of our investments during the six months ended June 30, 2022, caused any one client to be 10% or more of our total assets at June 30, 2022.

(3) Includes two U.K.

development properties that represent an investment of £ 14.9 million Sterling during the six months ended June 30, 2022, converted at the applicable exchange rate on the funding date.

(4) Our clients occupying the new properties are 87.4 % retail and 12.6 % industrial, based on rental revenue.

Approximately 26 % of the rental revenue generated from acquisitions during the three months ended March 31, 2022, is from investment grade rated clients, their subsidiaries or affiliated companies.

The acquisitions during the three months ended March 31, 2022, which had no associated contingent consideration, were allocated as follows (in millions):

Approximately 33 % of the rental revenue generated from acquisitions during the six months ended June 30, 2022, is from investment grade rated clients, their subsidiaries or affiliated companies.

The acquisitions during the six months ended June 30, 2022, which had no associated contingent consideration, were allocated as follows (in millions):

Acquisitions - U.S.

Acquisitions - U.K.

Three months ended March 31, 2022

Six months ended June 30, 2022

(USD) (£ Sterling)

Land $ 203.5 £ 208.7

$ 480.3 £ 476.7

Buildings and improvements 843.9 368.2

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$ 1,675.5 £ 1,140.3

land includes £ 33.2 million of right of use assets under long-term ground leases.

(2) The weighted average amortization period for acquired lease intangible assets is 10.3 years.

other assets consists of $ 182.6 million of financing receivables with above-market terms and $ 32.1 million of right-of-use assets accounted for as finance leases.

other assets consists entirely of right-of-use assets accounted for as finance leases.

other assets consists of £ 3.8 million of financing receivables with above-market terms and £ 162.4 million of right-of-use assets accounted for as finance leases.

(4) The weighted average amortization period for acquired lease intangible liabilities is 11.4 years.

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

The properties acquired during the three months ended March 31, 2022, which were all accounted for as asset acquisitions, generated total revenues of $ 7.2 million and net income of $ 2.7 million during the three months ended March 31, 2022.

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Below is a summary of our acquisitions for the three months ended March 31, 2021:

other liabilities consists of $ 14.6 million of deferred rent on certain below-market leases and $ 8.6 million of lease liabilities under financing leases, offset by $ 2.1 million of mortgage discounts.

The properties acquired during the six months ended June 30, 2022, which were all accounted for as asset acquisitions, generated total revenues of $ 37.5 million and net income of $ 13.4 million during the six months ended June 30, 2022.

Below is a summary of our acquisitions for the six months ended June 30, 2021:

Properties Leasable

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($ in millions) Weighted

(Years) Initial Average Cash Lease Yield (1)

Three months ended March 31, 2021 (1)

(Years) Initial Weighted Average Cash Lease Yield (1)

Six months ended June 30, 2021 (2)

Acquisitions - U.S.

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254 9,634 $ 2,161.9 12.0 5.5 %

(1) None of our investments during the three months ended March 31, 2021, caused any one client to be 10% or more of our total assets at March 31, 2021.

(1) Contractual net operating income used in the calculation of initial average cash yield includes approximately $ 850,000 received as settlement credits as reimbursement of free rent periods for the six months ended June 30, 2021.

(2) None of our investments during the six months ended June 30, 2021, caused any one client to be 10% or more of our total assets at June 30, 2021.

(3) Our clients occupying the new properties are 75.8 % retail and 24.2 % industrial, based on rental revenue.

Approximately 39 % of the rental revenue generated from acquisitions during the three months ended March 31, 2021, was from investment grade rated clients, their subsidiaries or affiliated companies.

The acquisitions during the three months ended March 31, 2021, which had no associated contingent consideration, were allocated as follows (in millions):

Approximately 47 % of the rental revenue generated from acquisitions during the six months ended June 30, 2021, was from investment grade rated clients, their subsidiaries or affiliated companies.

The acquisitions during the six months ended June 30, 2021, which had no associated contingent consideration, were allocated as follows (in millions):

Acquisitions - U.S.

Acquisitions - U.K.

Three months ended March 31, 2021

Six months ended June 30, 2021

(USD) (£ Sterling)

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( 21.6 ) ( 0.3 )

land includes £ 560,000 of right of use assets under long-term ground leases.

$ 1,098.3 £ 715.1

(1) U.K land includes £ 1.3 million of right of use assets under long-term ground leases.

(2) The weighted average amortization period for acquired lease intangible assets is 12.7 years.

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

other assets consists entirely of financing receivables with above-market terms and a right-of-use asset accounted for as a finance lease.

(4) The weighted average amortization period for acquired lease intangible liabilities is 14.0 years.

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

The properties acquired during the three months ended March 31, 2021, which were all accounted for as asset acquisitions, generated total revenues of $ 5.1 million and net income of $ 2.0 million during the three months ended March 31, 2021.

U.K other liabilities consists entirely of a GBP mortgage premium.

The properties acquired during the six months ended June 30, 2021, which were all accounted for as asset acquisitions, generated total revenues of $ 24.9 million and net income of $ 6.1 million during the six months ended June 30, 2021.

Investments in Existing Properties

During the three months ended March 31, 2022, we capitalized costs of $ 12.0 million on existing properties in our portfolio, consisting of $ 2.4 million for re-leasing costs, $ 13,000 for recurring capital expenditures, and $ 9.6 million for non-recurring building improvements.

In comparison, during the three months ended March 31, 2021, we capitalized costs of $ 1.5 million on existing properties in our portfolio, consisting of $ 706,000 for re-leasing costs, $ 23,000 for recurring capital expenditures, and $ 769,000 for non-recurring building improvements.

During the six months ended June 30, 2022, we capitalized costs of $ 37.8 million on existing properties in our portfolio, consisting of $ 3.2 million for re-leasing costs, $ 2.8 million for recurring capital expenditures, and $ 31.8 million for non-recurring building improvements.

In comparison, during the six months ended June 30, 2021, we capitalized costs of $ 4.3 million on existing properties in our portfolio, consisting of $ 827,000 for re-leasing costs, $ 51,000 for recurring capital expenditures, and $ 3.4 million for non-recurring building improvements.

Properties with Existing Leases

Of the $ 1.56 billion we invested during the three months ended March 31, 2022, approximately $ 131.3 million related to development.

Of the $ 1.42 billion invested outside of development, $ 969.5 million was used to acquire 52 properties with existing leases.

In comparison, of the $ 1.03 billion we invested during the three months ended March 31, 2021, $ 57.9 million related to development.

Of the $ 969.9 million invested outside of development, $ 856.8 million was used to acquire 68 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.

Of the $ 3.23 billion we invested during the six months ended June 30, 2022, approximately $ 267.9 million related to development.

Of the $ 2.96 billion invested outside of development, $ 2.21 billion was used to acquire 168 properties with existing leases.

In comparison, of the $ 2.16 billion we invested during the six months ended June 30, 2021, $ 114.8 million related to development.

Of the $ 2.05 billion invested outside of development, $ 1.81 billion was used to acquire 143 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 assets, 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 three months ended March 31, 2022, and 2021 were $ 160.1 million and $ 35.8 million, respectively.

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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 three months ended March 31, 2022, and 2021 were $ 21.9 million and $ 12.4 million, respectively.

The amounts amortized to expense for all of our in-place leases, for the six months ended June 30, 2022, and 2021 were $ 318.3 million and $ 77.5 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 the 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, 2022, and 2021 were $ 48.6 million and $ 19.7 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 March 31, 2022 (dollars in thousands):

(decrease) to

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

Three months ended March 31,

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

2022 2021 2022 2021

Number of properties 70 42 104 69

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Investment in Unconsolidated Entities

The following is a summary of our investments in unconsolidated entities as of March 31, 2022 (in thousands):

The following is a summary of our investments in unconsolidated entities as of June 30, 2022 (in thousands):

Ownership % (1)

Number of Properties Carrying Amount of Investment as of (2)

Equity in Income (2)

Investment March 31, 2022

March 31, 2022

March 31, 2021 March 31, 2022 March 31, 2021

Equity in income and impairment of investment in unconsolidated entities for the six months ended (2)(3)

Investment June 30, 2022

June 30, 2022

December 31, 2021 June 30, 2022 June 30, 2021

Industrial Partnerships 20 % 7 $ 113,562 $ 140,967 $ ( 5,673 ) $ —

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As a result, our actual economic interest (as distinct from its legal ownership interest) in certain of the properties could fluctuate from time to time and may not wholly align with legal ownership interests.

(2) The total carrying amount of the investments was greater than the underlying equity in net assets by $ 100.4 million as of March 31, 2022.

(2) The total carrying amount of the investments was greater than the underlying equity in net assets by $ 74.1 million as of June 30, 2022.

The difference relates to a step-up in fair value of the investment net assets acquired in connection with the merger with VEREIT on November 1, 2021.

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Prior to November 1, 2021, we did not own any unconsolidated entities.

The aggregate debt outstanding for unconsolidated entities was $ 431.8 million as of March 31, 2022, and December 31, 2021, all of which is non-recourse to us with limited customary exceptions which vary from loan to loan.

(3) As of June 30, 2022, the seven assets held by our Industrial Partnerships were under agreement of sale.

As the portion of the net proceeds applied to our investment basis that we expect to receive at closing was less than our $ 121.4 million carrying amount of investment in unconsolidated entities, we recognized an other than temporary impairment of $ 7.8 million , which is included in 'Equity in income and impairment of investment in unconsolidated entities' in the consolidated statements of income and comprehensive income for the three and six months ended June 30, 2022.

The aggregate debt outstanding for unconsolidated entities was $ 431.8 million as of June 30, 2022, and December 31, 2021, all of which is non-recourse to us with limited customary exceptions which vary from loan to loan.

Each of us and our unconsolidated entity partners are subject to the provisions of the applicable entity agreements for our unconsolidated partnerships, which include provisions for when additional contributions may be required to fund certain cash shortfalls.

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Revolving Credit Facility and Commercial Paper Program

Credit Facility

We have a $ 3.0 billion unsecured revolving credit facility with an initial term that expires in March 2023 and includes, at our option, two six-month extensions.

The revolving credit facility allows us to borrow in up to 14 currencies, including U.S.

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 March 31, 2022, 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.

We also have other interest rate options available to us under our revolving credit facility.

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

LIBOR is in the process of being discontinued.

While certain U.S.

dollar LIBOR settings will continue to be published on the current basis until June 30, 2023, all other LIBOR settings either are no longer being published or are being published only for a limited time and only on a “synthetic” basis (i.e., not on the basis of submissions made by panel banks).

The regulator of the administrator of LIBOR has prohibited any new use of LIBOR by firms subject to its supervision, and certain regulators in the United States have stated that no new contracts using U.S.

dollar LIBOR should be entered into after 2021.

Our revolving credit facility and term loan facility were amended in December 2021 to include provisions for establishing alternative reference rates when LIBOR is no longer available.

In April 2022, we amended our Credit Facility.

See note 20, Subsequent Events.

At March 31, 2022, credit facility origination costs of $ 3.7 million are included in other assets, net, as compared to $ 4.4 million at December 31, 2021, on our consolidated balance sheet.

In April 2022, we entered a new $ 4.25 billion unsecured credit facility to amend and restate our previous $ 3.0 billion unsecured revolving credit facility, which was due to expire in March 2023.

The new multicurrency credit facility matures in June 2026, includes two six-month extensions that can be exercised at our option and allows us to borrow in up to 14 currencies, including U.S dollars.

Similar to our previous revolving credit facility, the new revolving credit facility also has a $ 1.0 billion expansion option, which is subject to obtaining lender commitments.

Under the new revolving credit, our current investment grade credit ratings provide for financing on U.S.

Dollar borrowings at the Secured Overnight Financing Rate ("SOFR"), plus 0.725 % with a SOFR adjustment charge of 0.10 % and a revolving credit facility fee of 0.125 %, for all-in pricing of 0.95 % over SOFR and British Pound Sterling at the Sterling Overnight Indexed Average (“SONIA”), plus 0.725 % with a SONIA adjustment charge of 0.0326 % and a revolving credit facility fee of 0.125 %, for all-in pricing of 0.8826 % over SONIA.

At June 30, 2022, credit facility origination costs of $ 19.7 million are included in other assets, net, as compared to $ 4.4 million at December 31, 2021, on our consolidated balance sheets.

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

At March 31, 2022, we had a borrowing capacity of $ 2.43 billion available on our revolving credit facility (subject to customary conditions to borrowing) and $ 569.6 million outstanding balance, as compared to an outstanding balance at December 31, 2021, of $ 650.0 million.

The weighted average interest rate on outstanding borrowings under our revolving credit facility was 1.1 % during the three months ended March 31, 2022, and 0.8 % during the three months ended March 31, 2021.

At March 31, 2022, our weighted average interest rate on borrowings outstanding under our revolving credit facility was 1.2 %.

Our revolving credit facility is subject to various leverage and interest coverage ratio limitations, and at March 31, 2022, we were in compliance with the covenants on our revolving credit facility.

At June 30, 2022, we had a borrowing capacity of $ 4.03 billion available on our revolving credit facility (subject to customary conditions to borrowing) and an outstanding balance of $ 219.1 million, as compared to an outstanding balance at December 31, 2021, of $ 650.0 million.

The weighted average interest rate on outstanding borrowings under our revolving credit facility was 1.5 % during the six months ended June 30, 2022, and 0.9 % during the six months ended June 30, 2021.

At June 30, 2022, our weighted average interest rate on borrowings outstanding under our revolving credit facility was 2.2 %.

Our revolving credit facility is subject to various leverage and interest coverage ratio limitations, and at June 30, 2022, we were in compliance with the covenants on our revolving credit facility.

Commercial Paper Program

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dollar-denominated unsecured commercial paper program.

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

The commercial paper ranks 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, our term loan and our outstanding senior unsecured notes.

Proceeds from commercial paper borrowings are generally used for general corporate purposes.

As of March 31, 2022, the balance of borrowings outstanding under our commercial paper program was $ 950.0 million as compared to $ 901.4 million outstanding commercial paper borrowings at December 31, 2021.

The weighted average interest rate on outstanding borrowings under our commercial paper program was 0.5 % for the three months ended March 31, 2022, and 0.3 % for the three months ended March 31, 2021.

As of March 31, 2022, our weighted average interest rate on borrowings outstanding under our commercial paper program was 0.8 %.

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

The commercial paper ranks 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, our term loan and our outstanding senior unsecured notes.

Proceeds from commercial paper borrowings are used for general corporate purposes.

As of June 30, 2022, the balance of borrowings outstanding under our commercial paper program was $ 950.0 million as compared to $ 901.4 million outstanding commercial paper borrowings at December 31, 2021.

The weighted average interest rate on outstanding borrowings under our commercial paper program was 0.8 % for the six months ended June 30, 2022, and 0.3 % for the six months ended June 30, 2021.

As of June 30, 2022, our weighted average interest rate on outstanding borrowings under our commercial paper program was 1.8 %.

We use our $ 4.25 billion revolving credit facility as a liquidity backstop for the repayment of the notes issued under the commercial paper program .

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

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During July 2022, the U.S.

dollar-denominated unsecured commercial paper program was amended, and we entered into a new European unsecured commercial paper program.

See Note 19, Subsequent Events .

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.

Borrowing under this term loan bears interest at the current one-month LIBOR, plus 0.85 %.

In conjunction with this term loan, we also entered into an interest rate swap, which effectively fixes our per annum interest on this term loan at 3.89 %.

At March 31, 2022, deferred financing costs of $ 394,000 are included net of the term loan principal balance, as compared to $ 443,000 at December 31, 2021, on our consolidated balance sheet.

Prior to April 2022, borrowing under this term loan bore interest at the current one-month LIBOR, plus 0.85 %.

In connection with entering into our new unsecured credit facility in April 2022, the previous LIBOR benchmark rate was replaced with daily SOFR, based on a five day lookback period, and, due to our current credit ratings, is not subject to a credit spread adjustment.

In conjunction with this term loan, we also entered into an interest rate swap, which was based off the one-month LIBOR through June 30, 2022.

As of June 30, 2022, the interest rate swap was also converted to SOFR and the effective interest rate on this term loan, after giving effect to the interest rate swap, is 3.73 %.

At June 30, 2022, deferred financing costs of $ 344,000 are included net of the term loan principal balance, as compared to $ 443,000 at December 31, 2021, on our consolidated balance sheets.

These costs are being amortized over the remaining term of the term loan .

Mortgages Payable

During the three months ended March 31, 2022, we made $ 43.6 million in principal payments, including the repayment of one mortgage in full for $ 42.5 million.

During the three months ended March 31, 2021, we made $ 18.1 million in principal payments, including the repayment of three mortgages in full for $ 17.2 million.

No mortgages were assumed during the three months ended March 31, 2022, or the three months ended March 31, 2021.

During the six months ended June 30, 2022, we made $ 226.0 million in principal payments, including the full repayment of seven mortgages for $ 223.9 million.

During the six months ended June 30, 2021, we made $ 42.6 million in principal payments, including the full repayment of five mortgages in for $ 40.9 million.

We assumed eight mortgages on 17 properties totaling $ 45.1 million during the six months ended June 30, 2022, as compared to the assumption of one Sterling-denominated mortgage on one property totaling £ 31.0 million for the six months ended June 30, 2021.

Assumed mortgages are secured by the properties on which the debt was placed and are considered non-recourse debt with limited customary exceptions which vary from loan to loan.

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 March 31, 2022, 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 $ 713,000 at March 31, 2022, and $ 790,000 at December 31, 2021.

At June 30, 2022, 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 $ 1.0 million at June 30, 2022, and $ 790,000 at December 31, 2021.

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

The following table summarizes our mortgages payable as of March 31, 2022, and December 31, 2021, respectively (dollars in thousands):

The following table summarizes our mortgages payable as of June 30, 2022, and December 31, 2021, respectively (dollars in thousands):

Properties (1)

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12/31/2021 267 4.8 % 3.5 % 1.8 $ 1,114,129 $ 27,866 $ 1,141,995

(1) At March 31, 2022, there were 21 mortgages on 221 properties.

(1) At June 30, 2022, there were 23 mortgages on 158 properties.

At December 31, 2021, there were 22 mortgages on 267 properties.

With the exception of one Sterling-denominated mortgage which is paid quarterly, the mortgages require monthly payments with principal payments due at maturity.

At March 31, 2022, and December 31, 2021, all mortgages were at fixed interest rates.

(2) Stated interest rates ranged from 3.0 % to 6.9 % at each of March 31, 2022, and December 31, 2021.

(3) Effective interest rates ranged from 2.6 % to 6.0 % at each of March 31, 2022, and December 31, 2021.

The following table summarizes the maturity of mortgages payable, excluding net premiums of $ 25.0 million and deferred financing costs of $ 713,000 , as of March 31, 2022 (dollars in millions):

At June 30, 2022, and December 31, 2021, all mortgages were at fixed interest rates.

(2) Stated interest rates ranged from 3.0 % to 6.9 % at each of June 30, 2022, and December 31, 2021.

(3) Effective interest rates ranged from 2.6 % to 6.6 % and 2.6 % to 6.0 % at each of June 30, 2022, and December 31, 2021, respectively.

The following table summarizes the maturity of mortgages payable, excluding net premiums of $ 19.2 million and deferred financing costs of $ 1.0 million, as of June 30, 2022 (dollars in millions):

Year of Maturity

Thereafter 26.0

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Notes Payable

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Principal Amount (Currency Denomination) Carrying Value (USD) as of

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

4.600 % notes, $ 500 issued February 2014, of which $ 485 was exchanged in November 2021, both due in February 2024 (1)

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$ 599 599 599

3.160 % notes, issued in June 2022 and due in June 2030

1.625 % notes, issued in October 2020 and due December 2030

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$ 950 950 950

3.180 % notes, issued in June 2022 and due in June 2032

2.850 % notes, $ 700 issued November 2020, of which $ 699 was exchanged in November 2021, both due in December 2032 (1)

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$ 250 250 250

3.390 % notes, issued in June 2022 and due in June 2037

2.500 % notes, issued in January 2022 and due in January 2042

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$ 13,588 $ 12,500

(1) Carrying Value (USD) includes the portion of the VEREIT OP notes that remained outstanding, totaling $ 39.1 million in the aggregate at each of March 31, 2022, and December 31, 2021, that were not exchanged in the exchange offers commenced by us with respect to the outstanding bonds of VEREIT OP in connection with the consummation of the merger with VEREIT (the "Exchange Offers").

(1) Carrying Value (USD) includes the portion of the VEREIT OP notes that remained outstanding, totaling $ 39.1 million in the aggregate at each of June 30, 2022, and December 31, 2021, that were not exchanged in the exchange offers commenced by us with respect to the outstanding bonds of VEREIT OP in connection with the consummation of the merger with VEREIT (the "Exchange Offers").

(2) These notes were originally issued by VEREIT OP in December of 2019 for the principal amount of $ 600 million.

The amount of Realty Income debt issued through the Exchange Offers was $ 599 million, resulting from cancellations due to late tenders that forfeited the early participation premium of $ 30 per $1,000 principal amount and cash paid in lieu of fractional shares.

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In April 2022 we entered into a definitive agreement for the private placement of £ 600 million of senior unsecured notes.

See note 20, Subsequent Events .

The following table summarizes the maturity of our notes and bonds payable as of March 31, 2022, excluding net unamortized premiums of $ 272.7 million and deferred financing costs of $ 60.6 million (dollars in millions):

The following table summarizes the maturity of our notes and bonds payable as of June 30, 2022, excluding net unamortized premiums of $ 257.0 million and deferred financing costs of $ 58.7 million (dollars in millions):

Year of Maturity

Thereafter 9,915

As of March 31, 2022, the weighted average interest rate on our notes and bonds payable was 3.2 % and the weighted average remaining years until maturity was 7.7 years.

Interest incurred on all of the notes and bonds was $ 103.1 million and $ 63.2 million for the three months ended March 31, 2022, and March 31, 2021, respectively.

As of June 30, 2022, the weighted average interest rate on our notes and bonds payable was 3.2 % and the weighted average remaining years until maturity was 7.6 years.

Interest incurred on all of the notes and bonds was $ 103.0 million and $ 62.7 million for the three months ended June 30, 2022 and June 30, 2021, respectively, and $ 206.1 million and $ 125.9 million for the six months ended June 30, 2022 and June 30, 2021, respectively.

Our outstanding notes and bonds are unsecured;

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and (iv) the maintenance at all times of total unencumbered assets not less than 150 % of our outstanding unsecured debt.

At March 31, 2022, we were in compliance with these covenants.

At June 30, 2022, we were in compliance with these covenants.

Note Repayment

In January 2021, we redeemed all $ 950.0 million in principal amount of our outstanding 3.250 % notes due October 2022, plus accrued and unpaid interest.

As a result of the early redemption, we recognized a $ 46.5 million loss on extinguishment of debt on our consolidated statement of income for the three months ended March 31, 2021.

There were no comparable repayments for the three months ended March 31, 2022.

As a result of the early redemption, we recognized a $ 46.5 million loss on extinguishment of debt in the consolidated statements of income and comprehensive income for the six months ended June 30, 2021.

There were no comparable repayments for the six months ended June 30, 2022.

Note Issuances

During the three months ended March 31, 2022, we issued the following notes and bonds (in millions):

First Quarter 2022 Issuances

During the six months ended June 30, 2022, we issued the following notes and bonds (in millions):

2022 Issuances

Date of Issuance Maturity Date Principal amount used Price of par value Effective yield to maturity

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January 2022 January 2042 £ 250 98.445 % 2.584 %

There were no comparable note issuances during the three months ended March 31, 2021.

3.160 % Notes

June 2022 June 2030 £ 140 100.000 % 3.160 %

3.180 % Notes

June 2022 June 2032 £ 345 100.000 % 3.180 %

3.390 % Notes

June 2022 June 2037 £ 115 100.000 % 3.390 %

There were no comparable note issuances during the six months ended June 30, 2021.

The proceeds from each of these offerings were used to repay borrowings outstanding under our credit facility, to fund investment opportunities, and for other general corporate purposes .

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In January 2021, we issued 12,075,000 shares of common stock in an underwritten public offering, including 1,575,000 shares purchased by the underwriters upon the exercise of their option to purchase additional shares.

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After deducting underwriting discounts of $ 19.3 million, the net proceeds of $ 669.6 million were used to fund property acquisitions and for general corporate purposes and working capital.

There were no comparative offerings during the three months ended March 31, 2022.

There were no comparative offerings during the six months ended June 30, 2022.

At-the-Market (ATM) Program

Under our "at-the-market" equity distribution plan, or our ATM program, up to 69,088,433 shares of common stock may be offered and sold (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 New York Stock Exchange ("NYSE:

In June 2022, we replaced our prior "at-the-market" program, or our prior ATM program, which authorized us to offer and sell up to 69,088,433 shares of common stock, with a new "at-the-market" equity distribution program, or our ATM program, pursuant to which we may offer and sell up to 120,000,000 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 New York Stock Exchange ("NYSE:

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

At March 31, 2022, we had 19,314,282 shares remaining for future issuance under our ATM program.

At June 30, 2022, we had 120,000,000 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.

During the three months ended March 31, 2022, we issued 10,073,209 shares and raised approximately $ 660.2 million of gross proceeds under the ATM program.

We did no t issue any shares under the ATM program during the three months ended March 31, 2021.

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

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

2022 2021 2022 2021

Shares of common stock issued under the ATM program (1)

15,899,972 6,589,598 25,973,181 6,589,598

Gross proceeds $ 1,067.3 $ 454.8 $ 1,727.5 $ 454.8

Sales Agents' Commissions ( 7.0 ) ( 4.6 ) ( 10.9 ) ( 4.6 )

Other Offering Expenses ( 3.7 ) ( 0.2 ) ( 3.9 ) ( 0.3 )

Net proceeds $ 1,056.6 $ 450.0 $ 1,712.7 $ 449.9

(1) During the three and six months ended June 30, 2022 15,899,972 shares were sold pursuant to forward sale confirmations.

As of June 30, 2022, there were no open forward sale confirmations and 120,000,000 shares remained available for future issuance.

No shares were sold pursuant to forward sale confirmations during the three and six months ended June 30, 2021 .

Dividend Reinvestment and Stock Purchase Plan

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

At March 31, 2022, we had 11,294,008 shares remaining for future issuance under our DRSPP program.

At June 30, 2022, we had 11,250,748 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 March 31,

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

2022 2021 2022 2021

Shares of common stock issued under the DRSPP program 43,260 39,423 84,631 82,817

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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 no t issue shares under the waiver approval process during the three months ended March 31, 2022, or 2021.

We did no t issue shares under the waiver approval process during the six months ended June 30, 2022, or 2021.

Noncontrolling Interests

There are four entities with noncontrolling interests that we consolidate, including an operating partnership, Realty Income, L.P., a joint venture acquired in 2019, and two development joint ventures, one acquired in 2020 and one acquired in May 2021.

The following table represents the change in the carrying value of all noncontrolling interests through March 31, 2022 (dollars in thousands):

The following table represents the change in the carrying value of all noncontrolling interests through June 30, 2022 (dollars in thousands):

Realty Income, L.P.

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Allocation of net income

Carrying value at March 31, 2022

1,095 122 1,217

(1) 242,007 units were issued on March 30, 2018, 131,790 units were issued on April 30, 2018, 89,322 units were issued on March 28, 2019, 56,400 units were issued on November 1, 2021, 300,604 units were issued on November 30, 2021, and 240,586 units were issued on December 30, 2021.

1,060,709 remained outstanding as of both March 31, 2022, and December 31, 2021 .

At March 31, 2022, Realty Income, L.P.

Carrying value at June 30, 2022

$ 61,887 $ 14,380 $ 76,267

(1) 1,060,709 units were outstanding as of both June 30, 2022 and December 31, 2021 .

At June 30, 2022, Realty Income, L.P.

and certain of our joint venture investments are considered VIEs in which we were deemed the primary beneficiary based on our controlling financial interests.

Below is a summary of

Table of Content s

selected financial data of consolidated VIEs included in the consolidated balance sheets at March 31, 2022, and December 31, 2021 (in thousands):

March 31, 2022 December 31, 2021

Below is a summary of selected financial data of consolidated VIEs included on our consolidated balance sheets at June 30, 2022, and December 31, 2021 (in thousands):

June 30, 2022 December 31, 2021

Net real estate

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The fair value of short-term financial instruments such as cash and cash equivalents, accounts receivable, escrow deposits, loans receivable, accounts payable, distributions payable, line of credit payable and commercial paper borrowings, and other liabilities approximate their carrying value in the accompanying consolidated balance sheets, due to their short-term nature.

The fair value of our term loan approximates carrying value due to the frequent repricing of the variable interest rate charged on the borrowing, which is based on the daily SOFR.

The fair value of our financial instruments not carried at fair value are disclosed as follows (in millions):

Table of Content s

March 31, 2022 Carrying value

June 30, 2022 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 $ 25.0 million at March 31, 2022, and $ 28.7 million at December 31, 2021.

Also excludes deferred financing costs of $ 713,000 at March 31, 2022, and $ 790,000 at December 31, 2021.

The unamortized balance of these net premiums was $ 19.2 million at June 30, 2022, and $ 28.7 million at December 31, 2021.

Also excludes deferred financing costs of $ 1.0 million at June 30, 2022, and $ 790,000 at December 31, 2021.

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

The unamortized balance of the net premiums was $ 272.7 million at March 31, 2022, and $ 295.5 million at December 31, 2021.

Also excludes deferred financing costs of $ 60.6 million at March 31, 2022, and $ 53.1 million at December 31, 2021.

The unamortized balance of the net premiums was $ 257.0 million at June 30, 2022, and $ 295.5 million at December 31, 2021.

Also excludes deferred financing costs of $ 58.7 million at June 30, 2022, and $ 53.1 million at December 31, 2021.

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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Financial Instruments Measured at Fair Value on a Recurring Basis

For derivative assets and liabilities, we utilize interest rate swaps and forward-starting swaps to manage interest rate risk, and cross-currency swaps, currency exchange swaps, foreign currency forwards and foreign currency collars to manage foreign currency risk.

For derivative assets and liabilities, we may utilize interest rate swaps and forward-starting swaps to manage interest rate risk, and cross-currency swaps, currency exchange swaps, foreign currency forwards and foreign currency collars 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.

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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 March 31, 2022, and December 31, 2021, 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 June 30, 2022, and December 31, 2021, 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.

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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.

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

Three Months Ended March 31,

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

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

2022 2021 2022 2021

Carrying value prior to impairment $ 64.5 $ 45.6 $ 98.2 $ 59.2

total provisions for impairment ( 7.7 ) ( 17.2 ) ( 14.7 ) ( 20.0 )

Carrying value after impairment $ 56.8 $ 28.4 $ 83.5 $ 39.2

Number of properties:

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Classified as held for investment 3 5 3 6

(1) During the three months ended March 31, 2022, we recorded total provisions for impairment of $ 7.0 million, which reduced the carrying value of the properties from $ 44.8 million to their estimated fair value of $ 37.8 million.

During the three months ended March 31, 2021, we recorded total provisions for impairment of $ 2.7 million, which reduced the carrying value of the properties from $ 16.0 million to their estimated fair value of $ 13.3 million.

Sold 32 31 49 44

Derivative Designated as Hedging Instruments

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Forward points on the forward contracts are included in the assessment of hedge effectiveness.

Amounts reported in other comprehensive income (loss) related to foreign currency derivative contracts will be reclassified to other gains and (losses) in the same period during which the hedged forecasted transactions affect earnings.

As of March 31, 2022, we had one interest rate swap in place on our $ 250.0 million unsecured term loan.

Amounts reported in other comprehensive income (loss) related to foreign currency derivative contracts will be reclassified to other gain and (loss) in the same period during which the hedged forecasted transactions affect earnings.

In May 2019, we entered into four cross-currency swaps to exchange £ 130 million Sterling 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.

In June 2022, following the early prepayment of our Sterling-denominated intercompany loan receivable from our consolidated foreign subsidiaries, we terminated the four cross-currency swaps used to hedge the foreign currency exposure of the intercompany loan.

As the hedge relationship has been terminated and the future principal and interest associated with the prepaid intercompany loan will not occur, $ 20.0 million has been reclassified from AOCI to Foreign currency and derivative gain, net during the three months ended June 30, 2022.

As of June 30, 2022, we had one interest rate swap in place on our $ 250.0 million unsecured term loan.

Our objective in using derivatives is to add stability to interest expense and to manage our exposure to interest rate movements.

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This interest rate swap is recorded on the consolidated balances sheets at fair value.

Changes to fair value are recorded to accumulated other comprehensive income, or AOCI, and are amortized through interest expense over the term of the associated debt.

Changes to fair value are recorded to accumulated other comprehensive income (loss), or AOCI, and subsequently reclassified into interest expense in the same periods during which the hedged transaction affects earnings.

The following table summarizes the amount of unrealized gain (loss) on derivatives in other comprehensive income during the periods indicated below (in thousands):

Three Months Ended March 31,

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

Derivatives in Cash Flow Hedging Relationships 2022 2021 2022 2021

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The following table summarizes the amount of gain (loss) on derivatives reclassified from accumulated other comprehensive income (loss) during the periods indicated below (in thousands):

Three Months Ended March 31,

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

Derivatives in Cash Flow Hedging Relationships Location of Gain (Loss) Recognized in Income 2022 2021 2022 2021

Currency swaps Foreign currency and derivative

gains (losses), net

$ 6,114 $ ( 1,152 )

Currency swaps Foreign currency and derivative gain, net $ 21,527 $ ( 235 ) $ 27,641 $ ( 1,386 )

Interest rate swaps Interest expense ( 2,153 ) ( 2,578 ) ( 4,683 ) ( 5,119 )

Net increase (decrease) to net income $ 19,374 $ ( 2,813 ) $ 22,958 $ ( 6,505 )

We expect to reclassify $ 6.1 million from AOCI as an increase to interest expense relating to interest rate swaps and $ 5.3 million from AOCI to foreign currency gain relating to cross-currency swaps within the next twelve months.

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We expect to reclassify $ 2.7 million from AOCI as an increase to interest expense relating to interest rate swaps and $ 8.5 million from AOCI to foreign currency gain relating to foreign currency forwards within the next twelve months.

Derivatives Not Designated as Hedging Instruments

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Our foreign currency collars generally have maturities of five months or less and are not designated as hedge instruments for accounting purposes.

The gains or loss on these derivative contracts are recognized in Foreign currency and derivative gains (losses), net based on the changes in fair value.

In addition, we enter into currency exchange swap agreements to reduce the effects of currency exchange rate fluctuations between the British Pound Sterling and Euro.

The gain or loss on these derivative contracts are recognized in 'Foreign currency and derivative gain, net' in the consolidated statements of income and comprehensive income based on the changes in fair value.

In addition, we enter into foreign currency exchange swap agreements to reduce the effects of currency exchange rate fluctuations between the British Pound Sterling and Euro.

These derivative contracts generally mature within one to three months 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 gains (losses), net' in the consolidated statements of income and comprehensive income.

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

Three Months Ended March 31,

Realized foreign currency and derivative gains (losses), net:

Losses on the settlement of undesignated derivatives $ ( 2,681 ) $ —

Gains (losses) on the settlement of designated derivatives reclassified from AOCI

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 gain, net' in the consolidated statements of income and comprehensive income

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

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

2022 2021 2022 2021

Loss on the settlement of transactions with third parties ( 52 ) —

Total realized foreign currency and derivative gains, net 3,381 ( 1,152 )

Unrealized foreign currency and derivative gains (losses), net:

Gains on the change in fair value of undesignated derivatives 22,720 3,724

Losses on remeasurement of certain assets and liabilities ( 26,691 ) ( 1,768 )

Total unrealized foreign currency and derivative gains (losses), net ( 3,971 ) 1,956

Total foreign currency and derivative gains (losses), net $ ( 590 ) $ 804

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The following table summarizes the terms and fair values of our derivative financial instruments at March 31, 2022, and December 31, 2021 (dollars in millions):

Realized foreign currency and derivative gain (loss), net:

Gain on the settlement of undesignated derivatives $ 79,308 $ — $ 76,628 $ —

Gain (loss) on the settlement of designated derivatives reclassified from AOCI 21,527 ( 235 ) 27,641 ( 1,386 )

Gain (loss) on the settlement of transactions with third parties 1,004 ( 104 ) 952 ( 104 )

Total realized foreign currency and derivative gain (loss), net $ 101,839 $ ( 339 ) $ 105,221 $ ( 1,490 )

Unrealized foreign currency and derivative gain (loss), net:

Gain on the change in fair value of undesignated derivatives $ 37,274 $ — $ 59,995 $ 3,724

Gain (loss) on remeasurement of certain assets and liabilities ( 131,633 ) 739 ( 158,326 ) ( 1,030 )

Total unrealized foreign currency and derivative gain (loss), net $ ( 94,359 ) $ 739 $ ( 98,331 ) $ 2,694

Total foreign currency and derivative gain, net $ 7,480 $ 400 $ 6,890 $ 1,204

The following table summarizes the terms and fair values of our derivative financial instruments at June 30, 2022, and December 31, 2021 (dollars in millions):

Derivative Type

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Fair Value - asset (liability) as of

Derivatives Designated as Hedging Instruments March 31, 2022 December 31, 2021 March 31, 2022 December 31, 2021

Derivatives Designated as Hedging Instruments June 30, 2022 December 31, 2021 June 30, 2022 December 31, 2021

Interest rate swap

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Cross-currency swaps (4)

4 Derivative 166.3 166.3 (5) May 2034 ( 7.2 ) ( 13.8 )

Foreign currency forwards 29 Derivative 166.4 176.1 (6) Apr 2022 - Aug 2024 10.3 7.6

— Derivative — 166.3 — — — ( 13.8 )

Foreign currency forwards 36 Derivative 177.5 176.1 (5) Jul 2022 - Aug 2024 20.4 7.6

Forward-starting swaps (6)

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Currency exchange swaps (7)

4 Derivative 1,361.4 1,639.5 (9) Apr 2022 - Jul 2022 22.7 ( 14.7 )

5 Derivative 833.2 1,639.5 (8) Jul 2022 - Nov 2022 36.9 ( 14.7 )

Total of all Derivatives $ 1,760.7 $ 2,731.9 $ 105.1 $ ( 41.1 )

(1) This column represents the number of instruments outstanding as of March 31, 2022.

(2) Weighted average strike rate is calculated using the current notional value as of March 31, 2022.

(3) This column represents maturity dates for instruments outstanding as of March 31, 2022.

(4) Represents four British Pound Sterling, or GBP, cross-currency swaps with notional amount of $ 166.3 million.

(5) GBP fixed rates initially at 4.82 % and escalating to 10.96 %, and USD weighted average fixed rate at 9.78 %.

(1) This column represents the number of instruments outstanding as of June 30, 2022.

(2) Weighted average strike rate is calculated using the current notional value as of June 30, 2022.

(3) This column represents maturity dates for instruments outstanding as of June 30, 2022.

(4) In June 2022, we terminated the four British Pound Sterling, or GBP, cross-currency swaps with notional amount of $ 166.3 million.

(5) Weighted average forward GBP-USD exchange rate of 1.40 .

(6) There were five treasury rate locks entered into during February 2020 that were terminated in June 2020 and converted into six forward starting interest rate swaps through a cashless settlement.

(8) Represents two GBP currency exchange swaps with notional amount of $ 1.09 billion and two Euro, or EUR, currency exchange swaps with notional amount of $ 268.3 million.

(7) Represents three GBP currency exchange swaps with notional amount of $ 564.9 million and two Euro, or EUR, currency exchange swaps with notional amount of $ 268.3 million.

(8) Weighted average Forward GBP-USD exchange rate of 1.26 and Weighted Average Forward EUR-USD exchange rate of 1.11 .

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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.

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Operating Leases

At March 31, 2022, we owned 11,288 properties in all 50 U.S.

At June 30, 2022, we owned 11,427 properties in all 50 U.S.

states, Puerto Rico, the U.K.

Of the 11,427 properties, 11,289 , or 98.8 %, are single-client properties, and the remaining are multi-client properties.

At March 31, 2022, 156 properties were available for lease or sale.

At June 30, 2022, 132 properties were available for lease or sale.

Substantially all of our leases are net leases where our client 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 our client's gross sales, or percentage rents, for the three months ended March 31, 2022, and 2021 was $ 3.7 million and $ 1.0 million, respectively.

Major Clients - No individual client’s rental revenue, including percentage rents, represented more than 10% of our total revenue for each of the three months ended March 31, 2022, and 2021.

Rent based on a percentage of our client's gross sales, or percentage rent, for the three months ended June 30, 2022, and 2021 was $ 2.2 million and $ 596,000 , respectively.

Percentage rents for the six months ended

June 30, 2022 and 2021 were $ 6.0 million and $ 1.6 million, respectively.

Major Clients - No individual client’s rental revenue, including percentage rents, represented more than 10% of our total revenue for each of the six months ended June 30, 2022, and 2021.

Distributions Paid and Payable

We pay monthly distributions to our common stockholders.

The following is a summary of monthly distributions paid per common share for the three months ended March 31, 2022, and 2021:

The following is a summary of monthly distributions paid per common share for the six months ended June 30, 2022, and 2021:

January $ 0.2465 $ 0.2345

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March 0.2465 0.2345

April 0.2470 0.2350

May 0.2470 0.2350

June 0.2470 0.2350

$ 1.4805 $ 1.4085

At March 31, 2022, a distribution of $ 0.2470 per common share was payable and was paid in April 2022.

At June 30, 2022, a distribution of $ 0.2475 per common share was payable and was paid in July 2022.

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 March 31,

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

2022 2021 2022 2021

Weighted average shares used for the basic net income per share computation

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1,060,709 463,119 1,060,709 463,119

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Supplemental Disclosures of Cash Flow Information

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

Three months ended March 31,

Six months ended June 30,

Supplemental disclosures:

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Net increase in fair value of derivatives $ 146,181 $ 60,414

Mortgages assumed at fair value $ 45,079 $ 43,779

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):

March 31, 2022 March 31, 2021

June 30, 2022 June 30, 2021

Cash and cash equivalents shown in the consolidated balance sheets

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Restricted escrow deposits (1)

100,098 34,636

Impounds related to mortgages payable (1)

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

Segment Information

We evaluate performance and make resource allocation decisions on an industry by industry basis.

For financial reporting purposes, we have grouped our clients into 70 activity segments.

All of the properties are incorporated into one of the applicable segments.

Unless otherwise specified, all segments listed below are located within the U.S.

Because almost all of our leases require our clients to pay or reimburse us for 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.

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

Assets, as of:

March 31, 2022 December 31, 2021

Segment net real estate:

Automotive service $ 894,082 $ 852,151

Beverages 360,894 362,570

Convenience stores - U.S.

2,896,397 2,844,800

Dollar stores 2,296,944 2,303,906

Drug stores 2,141,458 2,182,432

Financial services 565,437 576,065

General merchandise - U.S.

1,304,448 1,289,735

Grocery stores - U.S.

1,590,169 1,517,237

Grocery stores - U.K.

2,004,833 1,963,057

Health and fitness 1,303,126 1,325,932

Health care - U.S.

671,638 670,864

Home furnishings - U.S.

715,142 583,564

Home improvement - U.S.

956,195 946,870

Home improvement - U.K.

846,093 780,308

Restaurants - casual dining 1,988,707 2,016,017

Restaurants - quick service - U.S.

2,681,001 2,689,806

Theaters - U.S.

738,894 750,877

Transportation services 1,039,295 1,039,220

Wholesale club 873,026 865,658

Other non-reportable segments 6,848,753 6,427,803

Total net real estate $ 32,716,532 $ 31,988,872

Intangible assets:

Automotive service 123,378 125,543

Beverages 17,077 17,452

Convenience stores - U.S.

255,578 275,548

Dollar stores 348,709 366,319

Drug stores 345,852 355,779

Financial services 87,572 92,986

General merchandise - U.S.

251,379 254,343

Grocery stores - U.S.

370,607 378,181

Grocery stores - U.K.

443,576 426,714

Health and fitness 118,271 125,586

Health care - U.S.

100,396 103,143

Home furnishings - U.S.

203,480 210,654

Home improvement - U.S.

206,915 207,637

Home improvement - U.K.

158,519 158,667

Restaurants - casual dining 402,818 416,653

Restaurants - quick service - U.S.

247,549 270,092

Theaters - U.S.

32,369 33,527

Transportation services 119,598 125,971

Wholesale club 156,165 155,032

Other non-reportable segments 1,202,826 1,176,298

3,711,981 3,676,705

Other corporate assets 2,440,870 2,195,800

Total assets $ 44,062,017 $ 43,137,502

(1) As of March 31, 2022, grocery stores - Spain was not a reportable segment.

(2) Goodwill has not yet been allocated to our individual operating segments;

the allocation is pending the finalization of our purchase accounting.

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Three months ended March 31,

Revenue 2022 2021

Segment rental revenue:

Automotive service $ 20,395 $ 9,918

Beverages 9,535 8,952

Convenience stores - U.S.

65,943 50,128

Dollar stores 54,114 32,506

Drug stores 47,699 35,048

Financial services 13,834 7,718

General merchandise - U.S.

26,288 15,234

Grocery stores - U.S.

36,267 19,681

Grocery stores - U.K.

34,147 20,858

Health and fitness 35,810 28,610

Health care - U.S.

Home furnishings - U.S.

Home improvement - U.S.

22,086 13,038

Home improvement - U.K.

Restaurants - casual dining 47,510 11,748

Restaurants - quick service - U.S.

55,524 23,465

Theaters - U.S.

34,173 19,656

Transportation services 24,251 16,432

Wholesale club 18,663 9,941

Other non-reportable segments and contractually obligated reimbursements by our clients

206,649 102,476

Rental (including reimbursable) 799,565 439,365

Other 7,778 2,889

Total revenue $ 807,343 $ 442,254

(1) As of March 31, 2022, grocery stores - Spain was not a reportable segment.

Common Stock Incentive Plan

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This note should be read in conjunction with the more complete discussion of our 2021 Plan included in note 16 to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2021.

The amount of share-based compensation costs recognized in general and administrative expense on our consolidated statements of income and comprehensive income was $ 5.0 million and $ 3.7 million during the three months ended March 31, 2022, and 2021, respectively.

The amount of share-based compensation costs recognized in 'General and administrative' in the consolidated statements of income and comprehensive income was $ 6.6 million and $ 4.5 million during the three months ended June 30, 2022 and 2021, respectively and $ 11.6 million and $ 8.2 million during the six months ended June 30, 2022 and 2021, respectively.

Restricted Stock

During the three months ended March 31, 2022, we granted 110,426 shares of common stock under the 2021 Plan.

As of March 31, 2022, the remaining unamortized share-based compensation expense related to restricted stock totaled $ 15.1 million, which is being amortized on a straight-line basis over the service period of each applicable award.

During the six months ended June 30, 2022, we granted 153,105 shares of common stock under the 2021 Plan.

This included 40,000 total shares of restricted stock granted to the independent members of our Board of Directors in connection with our annual awards in May 2022, 20,000 shares of which vested immediately and 20,000 shares of which vest in equal parts over a three-year service period.

Our restricted stock awards granted to employees vest in equal parts over a four-year service period.

As of June 30, 2022, the remaining unamortized share-based compensation expense related to restricted stock totaled $ 14.6 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.

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Performance Shares and Restricted Stock Units

During the three months ended March 31, 2022, we granted 154,840 performance shares, as well as dividend equivalent rights, to our executive officers.

During the six months ended June 30, 2022, we granted 154,840 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 three months ended March 31, 2022, we also granted 24,456 restricted stock units, all of which vest over a four-year service period.

During the six months ended June 30, 2022, we also granted 24,456 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 March 31, 2022, the remaining share-based compensation expense related to the performance shares and restricted stock units totaled $ 27.6 million.

As of June 30, 2022, the remaining share-based compensation expense related to the performance shares and restricted stock units totaled $ 24.0 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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Stock Options

We did no t grant any stock options during the first three months ended March 31, 2022.

During the three months ended March 31, 2022, we recorded $ 47,000 of expense related to stock options.

There was no comparable expense for the three months ended March 31, 2021.

As of March 31, 2022, there was no unamortized expense relating to our outstanding stock options.

We did no t grant any stock options during the six months ended June 30, 2022.

During the six months ended June 30, 2022, we recorded $ 47,000 of expense related to stock options.

There was no comparable expense for the six months ended June 30, 2021.

As of June 30, 2022, there was no unamortized expense relating to our outstanding stock options.

Commitments and Contingencies

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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 March 31, 2022, we had commitments of $ 55.0 million for re-leasing costs, recurring capital expenditures, and non-recurring building improvements.

In addition, as of March 31, 2022, we had committed $ 485.7 million under construction contracts related to development projects, which is expected to be paid in the next twelve months.

In anticipation of entering into the agreements related to the private placement offering (see note 20, Subsequent Events ) in March 2022, we entered into an indemnity agreement with the investors to reimburse for certain transaction related costs associated with the private placement should the notes ultimately not be issued.

As of March 31, 2022, we have not recognized any liability associated with the guarantee as the current exposure was insignificant and the likelihood of ultimately incurring a loss was remote.

At June 30, 2022, we had commitments of $ 49.0 million for re-leasing costs, recurring capital expenditures, and non-recurring building improvements.

In addition, as of June 30, 2022, we had committed $ 678.6 million under construction contracts related to development projects, which is expected to be paid in the next twelve months.

Subsequent Events

In April 2022, we declared a dividend of $ 0.2470 per share to our common stockholders, which will be paid in May 2022.

Credit Facility Amendment

In April 2022, we amended and restated our unsecured revolving credit facility to increase the borrowing capacity to $ 4.25 billion and to extend the initial term to June 2026, among other things.

The amended and restated credit facility is otherwise substantively consistent with the prior credit agreement entered into in August 2019.

Private Placement Offering

In April 2022, we entered into a definitive agreement for the private placement of £ 140 million of senior unsecured notes due 2030, £ 345 million of senior unsecured notes due 2032, and £ 115 million of senior unsecured notes due 2037.

The combined notes, if issued, are expected to have a weighted average tenor of approximately 10.5 years, and a weighted average fixed interest rate of 3.22 %.

In July 2022, we declared a dividend of $ 0.2475 per share to our common stockholders, which will be paid in August 2022.

Commercial Paper Program

During July 2022, our U.S.

Dollar-denominated unsecured commercial paper program was amended to increase the maximum aggregate amount of outstanding notes from $ 1.0 billion to $ 1.5 billion.

We also established a new Euro-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), which may be issued in

Dollars or various other foreign currencies, including but not limited to, Euros, Sterling, Swiss Francs, Yen, Canadian Dollars, and Australian Dollars, in each case, pursuant to customary terms in the European commercial paper note market.

The notes offered under our European commercial paper program will rank pari passu with all of our other unsecured senior indebtedness, including borrowings under our revolving credit facility and our term loan, and our outstanding senior notes, including under our U.S.

Dollar-denominated commercial paper program.

Sale of Unconsolidated Joint Ventures

In July 2022, six of the seven properties owned by our industrial partnerships acquired in connection with the VEREIT merger were sold, with the seventh property expected to be sold later in the third quarter of 2022.

The gross purchase price for the properties is $ 905.0 million and our proportionate share of net proceeds (after mortgage defeasance and closing costs) is estimated to be approximately $ 120 million .

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